Loggerhead Tools, LLC v. Sears Holdings Corporation
Filing
456
MOTION by Defendants Apex Tool Group, LLC, Sears Holdings Corporation, Counter Claimants Apex Tool Group, LLC, Sears Holdings Corporation for judgment as a Matter of Law (Attachments: # 1 Table of Appendices, # 2 Appendix 1, # 3 Appe ndix 2-1, # 4 Appendix 2-2, # 5 Appendix 2-3, # 6 Appendix 2-4, # 7 Appendix 2-5, # 8 Appendix 2-6, # 9 Appendix 2-7, # 10 Appendix 2-8, # 11 Appendix 2-9, # 12 Appendix 2-10, # 13 Appendix 3 - PTX 1, # 14 Appendix 3 - PTX 3, # 15 Appendix 3 - PTX 4, # 16 Appendix 3 - PTX 51, # 17 Appendix 3 - PTX 119, # 18 Appendix 3 - PTX 157, # 19 Appendix 3 - PTX 175, # 20 Appendix 3 - PTX 467, # 21 Appendix 3 - PTX 503, # 22 Appendix 4 - DTX 1, # 23 Appendix 4 - DTX 2 , # 24 Appendix 4 - DTX 3, # 25 Appendix 4 - DTX 5, # 26 Appendix 4 - DTX 7, # 27 Appendix 4 - DTX 8R, # 28 Appendix 4 - DTX 9, # 29 Appendix 4 - DTX 9R, # 30 Appendix 4 - DTX 11, # 31 Appendix 4 - DTX 11R, # 32 Appendix 4 - DTX 23, # 33 Appendix 4 - DTX 24, # 34 Appendix 4 - DTX 74, # 35 Appendix 4 - DTX 75, # 36 Appendix 4 - DTX 212, # 37 Appendix 4 - DTX 213, # 38 Appendix 5)(Sernel, Marcus)
APPENDIX 2-4
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Whitney A PLAYED on 5_4 and 5_5 20151002 PA DA PC DC PCC on 5-2-17
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Whitney, Adam 2015-10-02
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Q. Please state and spell your name for the record.
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A. Adam Hopkins Whitney, A-D-A-M, space, H-O-P-K-I-N-S,
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9:18 -9:19
space, W-H-I-T-N-E-Y.
Whitney, Adam 2015-10-02
00:00:03
00:00:11
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Q. What's the name of your current company?
9:19
3
A. Meijer.
Whitney, Adam 2015-10-02
00:00:12
00:00:14
11:10
A. I do.
11:12
Q. What school did you earn that degree from?
11:13
A. University of Michigan.
11:14
Q. What year?
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Q. Do you have an undergraduate degree?
11:11
4
A. 1998.
Whitney, Adam 2015-10-02
00:00:26
00:00:26
16:17
Q. What was your title when you started at Sears?
16:18
A. I don't remember. Sears changed titles several times
16:19
when I was there. I believe when I started I was
16:20
inventory manager. It may have been senior
16:21
merchandise planner, but that was really the same role
16:22
fundamentally.
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19:17 -20:5
Q. That, you said, was around 2004?
16:24
5
A. As I recall, yes.
Whitney, Adam 2015-10-02
00:01:12
00:00:52
01:02:42
19:17
Q. What was your next role?
19:18
A. DMM of Sears hand tools and power tools.
19:19
Q. Was that approximately 2011?
19:20
A. To the best of my recollection, yes, approximately.
19:21
Q. What were your responsibilities in that role?
19:22
A. Really the same responsibilities as a divisional
19:23
merchandise manager, having several buyers report to
19:24
me, overall manage the financials -- financial
19:25
objectives of those categories and ultimately create
20:1
strategies to satisfy our customers.
20:2
Q. About how many buyers reported to you in that role?
20:3
A. I need to think. I don't remember. I believe four or
20:4
21:15 -22:5
five. There could be some that I'm forgetting. It's
20:5
6
been a while.
Whitney, Adam 2015-10-02
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Q. What was your role when you began at Meijer?
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A. DMM of toys.
21:17
Q. Is that your current role as well?
21:18
A. No.
21:19
Q. What is your current role?
21:20
A. Vice president of merchandise presentation and
21:21
21:22
pricing.
Q. When did you become the vice president of merchandise
21:23
presentation and pricing?
21:24
A. In late August of last year.
21:25
Q. Did you have any titles in between GMM and VP?
22:3
A. No, but my categories of responsibility expanded from
22:4
tools -- from toys, to school, home office, and then
22:5
29:23 -30:6
A. Yes, so it's been a little over a year.
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7
Q. 2014?
22:1
toys and electronics.
Whitney, Adam 2015-10-02
29:23
29:24
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01:00:38
Loggerhead's litigation against Sears and Apex?
A. Yes.
30:5
Q. And you understand you are under oath?
30:6
A. I do.
Whitney, Adam 2015-10-02
30:23
30:24
00:00:46
00:03:18
01:00:16
Q. When was the first time you started working with the
Bionic Wrench product that you can recall?
30:25
A. I guess what I clearly recall is my buyer approaching
31:1
me. I didn't work directly with items, so to speak.
31:2
I had a team of buyers that reported to me. I
31:3
remember my buyer reaching out to me for help with a
31:4
vendor and that was the LoggerHead vendor and the
31:5
Bionic Wrench was one of their items.
31:6
Q. Who was that buyer?
31:7
A. Stephanie Kaleta.
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Q. Approximately when did she first approach you about
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the vendor?
A. In February of 2012, I believe.
Whitney, Adam 2015-10-02
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personal knowledge and involvement regarding
30:4
Printed:
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Q. Do you understand that you need to testify about your
30:3
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A. Yes.
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based on a subpoena for a deposition?
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Q. Do you understand that you are testifying here today
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00:00:44
00:04:04
00:59:30
Q. Prior to the time where your buyer approached you
about the Bionic Wrench, did you have any contact with
LoggerHead?
A. No, not that I recall.
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Q. Was it typical for you to not have any contact with
the vendor unless an issue arose?
A. Yes, I dealt with hundreds of vendors. So it was very
33:7
33:8
35:15 -36:16
chance to meet with, but my buyers did business with
33:9
10
common to have many vendors that I would never have a
and that we bought and sold their items.
Whitney, Adam 2015-10-02
00:02:03
00:04:48
00:58:46
35:15
A. I very distinctly remember that phone conversation. I
35:19
remember calling to help sort out whatever issues the
35:20
LoggerHead team had so that we could come to an
35:21
agreement. I remember Dan Brown, Jr. being shockingly
35:22
abrasive and accusatory of me. This was my first
35:23
meeting, introduction with them. I remember being
35:24
really, really caught off guard with the level of
35:25
emotional aggression from him. I remember asking to
36:1
speak to his father to try and work with them and sort
36:2
out their concerns and hear their concerns. I
36:3
remember him distinctly saying that his father was not
36:4
involved and was not going to be involved and I could
36:5
not talk to him. He owned this relationship, Dan
36:6
Brown, Jr. owned this relationship moving forward.
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36:8
36:9
Q. When you say shockingly abrasive, what specifically
are you referring to?
A. I'm referring to my ethical nature and integrity being
36:10
called into question by somebody that I've just met
36:11
over the phone. That's, in my definition, shocking
36:12
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11
37:9 -37:17
and abrasive and unprofessional.
Q. What kinds of things did he say that made you feel
that way?
A. Well, telling me that I'm unethical without having met
me is, in my mind, inappropriate and not called for.
Whitney, Adam 2015-10-02
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37:10
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00:56:43
Q. At that point in time did you initiate the call or did
LoggerHead initiate it?
37:11
A. I remember Stephanie, my buyer, approaching me and
37:14
asking for help, that she was fairly new to the desk
37:15
and she had a vendor that she was really trying to
37:16
make progress with and come to an agreement with and
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Q. Do you remember why you initiated it?
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A. I did.
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Q. What do you recall about that phone conversation?
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A. I believe it was February 17. It was a Friday.
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Q. When was your first phone call with Dan Brown, Jr.?
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was not able to do that and wanted my help.
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Q. Did this phone conversation resolve those issues?
38:1
A. No.
38:2
Q. Do you recall any other phone conversations after this
38:3
particular one?
38:4
A. I remember the phone conversation on, I believe it was
38:5
May 25, with Dan Brown, Jr. I believe Dan Brown
38:6
joined the call at some point during the call.
38:7
Q. What do you recall about what was discussed?
38:8
A. We were calling to communicate that we were no longer
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able to put the product on DRTV for Q4.
Whitney, Adam 2015-10-02
38:10
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00:08:07
Q. Do you recall anything else about that phone
conversation?
A. Yes. I recall Dan Brown, Sr. telling me that if that
38:13
38:14
14
38:23 -38:24
was the case then we're effectively ending our
relationship.
Whitney, Adam 2015-10-02
00:00:05
00:08:22
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Q. Was Ms. Kaleta a part of that phone conversation?
38:24
A. She was.
Whitney, Adam 2015-10-02
00:00:37
00:08:27
00:55:07
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60:11
5346 through Sears 5347. I would like you to turn to
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the second page and take a look at that e-mail from
60:13
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Q. Exhibit 5 is a document bearing the Bates number Sears
Bill Kiss.
60:14
A. Mm-hmm.
60:15
Q. Who is Bill Kiss?
60:16
A. He was the marketing vice president. I don't remember
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Whitney, Adam 2015-10-02
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his specific title.
00:00:39
00:09:04
00:54:30
Q. He asked, "Last holiday what did we move most/sell out
of?"
A. "What we did move most and sell out of?" And I
answered, "Bionic."
60:25
Q. You answered "Bionic" in the next e-mail, right?
61:1
A. In that e-mail I answered "Bionic" and then Tom Arvia
61:2
replies, "Yep, no question."
61:3
Q. And the date of your e-mail is May 9, 2012, right?
61:4
A. Yes.
61:5
Q. So the last holiday would have been the holiday season
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of December of 2011?
A. Correct.
Whitney, Adam 2015-10-02
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Link > P459.1
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86:15
Q. If you would click on Exhibit 8, that is a document
with the Bates stamp Sears 5246 through 5247?
86:16
86:17
Link > P459.1.1
A. Okay.
Q. We are going to look at the second e-mail which is
86:18
from you dated January 6, 2012. Do you see that?
86:19
A. Yes, I do.
86:20
Q. This e-mail is directed to Dennis Carrie, right?
86:21
A. Yes.
86:22
Q. Who was Dennis Carrie?
86:23
A. He was our finance guy. I forget his title. I think
86:24
86:25
18
87:8 -87:14
he was ultimately our CFO. Again, I don't remember
time frames. He was the finance guy.
Whitney, Adam 2015-10-02
87:8
87:9
87:10
87:11
00:00:22
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question?
A. No. Technically he didn't have a role in approving
contracts. I would say no.
Whitney, Adam 2015-10-02
00:02:27
00:10:59
88:16
88:17
00:52:35
Q. If you would swipe at the top. Item 1 refers to an
overall halo/lift/attachment to the hand tools
88:18
category overall. Do you see that?
88:19
A. Yes.
88:20
Q. What does halo refer to?
88:21
A. Give me one quick second to read this.
88:22
Q. Sure.
88:23
A. "Overall halo/lift/attachment to the hand tools
88:24
88:25
category overall, not just this one item." You asked
me halo?
89:1
Q. Yes.
89:2
A. I would say that's the overall attachment to the
89:3
categories overall. I feel like I have basically
89:4
defined it right here. The halo is I'm expecting the
89:5
item to help the entire department, the entire
89:6
category, have lift, have sales lift. That's what I
89:7
would refer to as halo.
89:8
that item, then there is a higher proclivity for those
89:11
customers to buy other things. Generally in retail
89:12
there is different terminology used, but generally
89:13
some things are used to drive traffic, people into the
89:14
1:20:48PM
A. Because if you can drive customers into the store with
89:10
5/6/2017
Q. Why would one item help the entire department?
89:9
Printed:
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A. Approving contracts. What was the last word in your
Q. In your department or for your department.
87:14
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Whitney_A-100215-2
department?
87:13
88:16 -89:24
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Q. Did he have a role in approving contracts for your
87:12
19
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stores. We measure attachment which is affinity which
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is looking at the basket of sales in total and
89:16
understanding relationships between different items.
89:17
So it's reasonable to expect and to analyze and that
89:18
is what I'm asking for here, to understand the
89:19
benefits that this item could bring above and beyond
89:20
just looking at it individually.
89:21
Q. So the idea is a particular item would bring customers
89:22
to the store and the customers would purchase more
89:23
than just that item; is that right?
89:24
20
90:12 -91:6
A. That's right.
Whitney, Adam 2015-10-02
00:01:51
00:13:26
00:50:08
90:12
90:13
should do this item. I'm looking for as many
90:17
different angles and avenues that I can have to say
90:18
let's analyze this, not just based on a very narrow
90:19
perspective, but based on an overall perspective which
90:20
is why I use the term halo.
90:21
Q. I'm asking, though, is there a difference between what
90:22
halo means and what attachment means? My next
90:23
question will be what lift means.
90:24
A. So yes. Lift specifically is sales increase. That's
90:25
how I'm using that term lift. Attachment would be do
91:1
we notice any other items in this basket that see a
91:2
sales lift related to this item in this promotion.
91:3
Halo is the overall benefit that we receive based on
91:4
that relationship.
91:5
92:25 -93:21
Q. You use the term basket. What does that refer to?
91:6
21
A. The overall customer's transaction total.
Whitney, Adam 2015-10-02
92:25
Link > P459.1.2
00:01:24
00:15:17
00:48:17
Q. And towards the bottom of his -- the first paragraph
93:1
of his e-mail he says, "My primary interest is driving
93:2
traffic into the department as that is where the
93:3
success will lie." Do you see that?
93:4
A. Just bear with me. No.
93:5
Q. I'm looking at the first paragraph of Dennis's e-mail.
93:6
A. Okay.
93:7
Q. Starting where he says --
93:8
A. "As my primary interest is driving traffic into the
93:9
department, that is where the success will lie, not
93:10
necessary" -- maybe he meant not necessarily -- "in
93:11
the success of a specific item.
93:12
Printed:
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asking for as much help as I can get to show that we
90:16
Whitney_A-100215-2
overall halo/lift/attachment. In this case, I'm
90:15
M5.20
A. I think it's a more general term. That's why I put
90:14
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Q. Is the term halo the same thing as attachment?
Q. Yes. So is he saying that driving traffic would
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create that halo effect that we were talking about?
93:14
A. I think he is agreeing with me. I think he is saying
93:15
93:16
traffic is where the success will lie. I think he is
93:18
trying to agree and partner with me on my initial
93:19
e-mail to him which is, let's look at this from a
93:20
different perspective than just the nuts and bolts of
93:21
93:23 -94:2
assure that you will get subsidy, I agree that driving
93:17
22
I am going to support you here, Adam. As long you can
this doesn't work.
Whitney, Adam 2015-10-02
93:23
00:00:16
00:16:41
00:46:53
Whitney, Adam 2015-10-02
00:00:51
00:16:57
00:46:37
doesn't make us money, I'm trying build an argument
94:9
that says we need to look at this from a broader
94:10
perspective. It may be that we lose money here, but
94:11
it might create success over here. When you talk
94:12
halo, you talk about correlation and correlative
94:13
effect. It's hard in retail to prove that one thing
94:14
drove another. It is commonplace to say, let's look
94:15
at what this particular item did for this category or
94:16
for our store and make decisions based on that. It
94:17
doesn't mean that one thing in this e-mail or in the
94:18
context was more important.
Whitney, Adam 2015-10-02
94:20
00:00:17
00:17:48
00:45:46
Q. In this context, though, the profits derived from the
94:21
halo of the Bionic Wrench were significant enough that
94:22
you thought it would be a plus factor supporting DRTV,
94:23
right?
94:24
94:25
A. I thought it would be a supportive case for running
DRTV, yes, I did.
Whitney, Adam 2015-10-02
103:7
00:00:18
00:18:05
00:45:29
Q. Let's look at the next exhibit. This is going to be
103:8
Printed:
5/6/2017
Exhibit 10 with the Bates number Sears 553 through
103:9
Link > P365.1.1
555.
Whitney, Adam 2015-10-02
104:1
1:20:48PM
M5.26
being challenged by finance and they're saying this
94:8
104:1 -105:8
Whitney_A-100215-2
of cases in retail, especially in this case where I'm
94:7
26
M5.25
even more important, no. What I am saying is in a lot
94:6
Link > P365.1
Whitney_A-100215-2
A. I don't know that that is exactly what I'm saying,
94:5
103:7 -103:9
M5.24
itself?
94:4
25
Whitney_A-100215-2
important than the profits from the sale of the wrench
94:2
94:20 -94:25
M5.23
deriving from the Bionic Wrench are even more
94:1
24
Whitney_A-100215-2
basically saying that the halo profits that Sears is
93:25
94:4 -94:18
M5.22
In these e-mails you and Dennis are both
93:24
23
Whitney_A-100215-2
00:01:44
00:18:23
00:45:11
Q. It says "From Whitney, Adam"?
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Link > P365.2.1
A. I see. Okay.
Q. Going on to the next page, that is the rest of that
104:4
e-mail.
104:5
A. Yes.
104:6
Q. And it's dated January 5, 2012, right?
104:7
A. Yes.
104:8
Q. In this e-mail you are addressing Dennis?
104:9
A. Yes.
104:10
Q. Asking for help?
104:11
A. Yes.
104:12
Q. The topic appears to be "Bionic Wrench DRTV on
104:13
Father's Day for 2012," right?
104:14
A. Yes, in jeopardy.
104:15
Q. Under situation you say, "Vendor is in dire need of a
104:16
commitment in order to secure production for Father's
104:17
Day," right?
104:18
A. Yes.
104:19
Q. What did you mean by that statement?
104:20
A. I meant that I needed approval to -- I meant the
104:21
104:22
literally, "Dennis, need your help, scope, Bionic
104:25
Wrench, DRTV in 2012 Father's Day." I put dash "In
105:1
jeopardy." I'm saying the vendor needs our
105:2
commitment. I'm -- they need our orders in order to
105:3
secure production for Father's Day. Ran did the
105:4
analysis attached which indicates a negative ROI,
105:5
however, Amanda and I wanted to talk this through as
105:6
we feel it is too big of an opportunity to forego.
105:7
This is me pushing the finance team to align and say
105:8
Link > Hide
alignment on moving forward. I was calling out
104:24
107:17 -107:22
secure production for Father's Day. I needed Dennis's
104:23
27
vendor is in dire need of a commitment in order to
yes so that we can send the vendor our orders.
Whitney, Adam 2015-10-02
00:00:18
00:20:07
00:43:27
107:17
Q. Including the halo that we talked about earlier?
107:21
A. Possibly, but in and of itself a big opportunity as
107:22
Link > P399.1
well.
Whitney, Adam 2015-10-02
00:00:54
00:20:25
00:43:09
126:7
Q. This is going to be Exhibit 17 with the Bates number
126:8
Sears 1169 through 1170. I'm not sure why this one
126:9
was produced with this orientation. You are
126:10
definitely -- feel free to zoom in to see better.
126:11
Printed:
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M5.28
important for our department.
107:20
126:7 -126:16
Whitney_A-100215-2
A. Because it carried with it sales and margin that were
107:19
28
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Q. Why was it a big opportunity?
107:18
Whitney_A-100215-2
A. I have got it open here. Exhibit 17 from me to
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Link > P399.1.1
126:13
Stephanie on February 18.
Q. Looking at the e-mail at the bottom of the page from
126:14
you to Ms. Miller, you talk about an hour plus
126:15
conversation with Dan, Jr.?
126:16
29
126:17 -126:23
A. Yes.
Whitney, Adam 2015-10-02
126:17
126:18
00:00:21
00:21:19
00:42:15
things."
Whitney, Adam 2015-10-02
00:01:11
00:21:40
127:1
Ms. Kaleta and she is responding to your e-mail
127:3
00:41:54
Looking at the next e-mail in time, that's from
127:2
summary, right?
127:4
A. Yes.
127:5
Q. In that e-mail she says -- and I'm looking at the
127:6
second paragraph. In that she says in the third
127:7
sentence after the comma, "But assuming worse case
127:8
scenario, no subsidy, no VIR, 13.99 cost and DRTV. We
127:9
could still generate slightly better than the
127:10
2.7 million in margin we did LY for the year." Do you
127:11
see that?
127:12
A. Yes, I see that.
Whitney, Adam 2015-10-02
127:14
00:01:59
00:22:51
00:40:43
Does that mean that if Sears, at this point
127:15
in time, accepted all of these particular terms that
127:16
Ms. Kaleta refers to, Sears would still make
127:17
2.7 million, at least 2.7 million in margin?
127:18
A. It appears to me as though she is saying, worse case
127:19
we could generate 2.7 million in margin, but she also
127:20
goes on to say that the margin rate with subsidy would
127:21
of course be down dramatically, 37.6 percent compared
127:22
52.2 percent. So how she is coming with up the
127:23
dollars is assuming that we would sell a significant
127:24
increase in overall unit volume, but our margin rate
127:25
would go down precipitously, a huge amount from 52.2
128:1
percent to 37.6 percent.
128:2
Q. Yes.
128:5
1:20:48PM
A. How the margin rate could go down so drastically?
128:4
5/6/2017
Q. Could you explain to me how that would happen?
128:3
Printed:
M5.31
Dan said that Sears is unethical among many other
126:23
127:14 -128:16
Whitney_A-100215-2
His father is not willing to speak to me about it.
126:22
31
M5.30
with Dan, Jr. from LoggerHead. It did not go well.
126:21
Link > P399.1.2
Whitney_A-100215-2
A. Yes. "Karen, I just had an hour plus conversation
126:20
127:1 -127:12
M5.29
earlier?
126:19
30
Whitney_A-100215-2
Q. Is that the conversation you were referring to
A. If a cost goes up drastically.
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128:6
Q. What's the cost that would go up here?
128:7
A. I'm looking at her note. Whatever the cost was 13.99,
128:8
I forget what it was, $9 or $11 or whatever the cost
128:9
was, it's going up to 13.99. That's a significant
128:10
cost increase and it significantly reduces our margin
128:11
rate.
128:12
Q. What exactly is a margin rate?
128:13
A. Gross margin rate and it's the percentage of margin to
128:14
your total sales.
128:15
32
128:17 -129:6
Q. Is it basically a percent profit?
128:16
A. Yes, basically.
Whitney, Adam 2015-10-02
128:17
128:18
128:19
00:00:52
00:24:50
00:38:44
indications would be that we would sell a lot less at
even the same retail, especially not at a higher
128:25
retail.
129:1
My response to this is, "The real question
129:2
I have is can we make that volume or any item at
129:3
better than 37 percent margin. That's not a high
129:4
margin rate for hand tools, I'm thinking, but let's
129:5
discuss Monday so that we know what our backup plan
129:6
would be."
Whitney, Adam 2015-10-02
129:19
00:00:12
00:25:42
00:37:52
Q. Is it fair to say that even with all of these terms
129:20
that Ms. Kaleta refers to, Sears would still have a
129:21
129:22 -130:9
37 percent margin?
Whitney, Adam 2015-10-02
129:22
00:00:42
00:25:54
00:37:40
A. Well, when you say still have a 37 percent margin, our
129:23
sales plans are based off of generally what we do a
129:24
year historically. Without knowing what my sales plan
129:25
would have been still have 2.8 million or 2.7 million,
130:1
doesn't matter if my sales plan is to continue to have
130:2
the same margin rates that I had the year before.
130:3
That's assuming a much higher volume with a much
130:4
higher retail which I don't think is a good
130:5
assumption.
130:6
1:20:48PM
question is: Is it fair to say that even accepting
130:8
5/6/2017
Q. Okay. I don't think that answers my question. My
130:7
Printed:
M5.34
retail which on the product life cycle, all
128:24
34
Whitney_A-100215-2
that we're going to sell this thing for a much higher
128:23
Link > Hide
M5.33
based on the higher volume and retail. She's assuming
128:22
129:19 -129:21
Whitney_A-100215-2
2.7 million of profit?
A. 2.7 million of profit, right, based on -- she says
128:21
33
M5.32
Q. So when she says 2.7 million in margin, is that
128:20
Link > P399.1.3
Whitney_A-100215-2
all these terms that Ms. Kaleta refers to, Sears would
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130:9
35
130:12 -130:13
Whitney, Adam 2015-10-02
130:12
130:13
36
130:15 -130:17
have a 37 percent margin with this product?
00:00:09
00:26:36
00:36:58
Whitney, Adam 2015-10-02
00:00:09
00:26:45
00:36:49
131:8
131:9
131:10
131:11
131:12
00:00:16
00:26:54
00:36:40
M5.39
Q. What kind of backup plan were you contemplating at
this point?
A. A plan for us to make our sales and margin targets.
00:00:22
00:27:10
00:36:24
Q. What were the specific options that you conceived of
at that time?
A. I don't remember.
131:22
Q. You don't remember any of the backup plans you
131:23
131:24
considered?
A. Again, on February 18, if you are asking me to say
131:25
what would you have considered a backup plan at that
132:1
time, I don't remember.
Whitney, Adam 2015-10-02
132:2
132:3
132:4
00:01:09
00:27:32
00:36:02
Q. Okay. In the general time period of February of 2012,
what were the backup options you were considering?
A. Again, I don't remember the specific options at that
132:5
time in February. You know, you have shown me
132:6
documents that make me think that, you know, we were
132:7
talking about multiple different backup plans, but I
132:8
don't remember. I don't remember what specifics we
132:9
would have talked about then.
132:10
132:11
132:12
Q. What were the multiple different backup plans that you
saw in the documents we have seen?
A. I think the "Let's discuss Monday so that we know what
132:13
our backup plan would be" is a general statement that
132:14
says we need to talk about a backup plan. You are
132:15
asking me what were those backup plans and I'm saying
132:16
I don't remember. I don't remember specifically what
132:17
we talked about as a backup plan. We would have
132:18
talked about if these guys aren't going to sell us,
132:19
1:20:48PM
Whitney_A-100215-2
terms.
131:21
5/6/2017
M5.38
though, right?
A. Absolutely, based on the significant change of all the
131:20
Printed:
Whitney_A-100215-2
Q. You thought there was a need for the backup plan,
Whitney, Adam 2015-10-02
131:19
132:2 -132:21
M5.37
last year according to her note.
Whitney, Adam 2015-10-02
131:7
39
Whitney_A-100215-2
A. Which would be 37.6 percent compared to 52.2 percent
131:6
131:19 -132:1
M5.36
Q. Which would be 37 percent, right?
130:17
38
Whitney_A-100215-2
that we would generate $2.7 million in margin.
130:16
131:6 -131:12
M5.35
A. Assuming worse case scenario, Stephanie is indicating
130:15
37
Whitney_A-100215-2
what else are we going to do to put on TV or to sell
Page 11 of 27
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132:20
132:21
40
133:7 -133:21
to make up the significant sales and margin that we
need to generate to make our sales plan.
Whitney, Adam 2015-10-02
00:00:58
00:28:41
00:34:53
Whitney_A-100215-2
M5.40
Whitney_A-100215-2
M5.41
00:33:16
Whitney_A-100215-3
M5.42
00:33:05
Whitney_A-100215-3
M5.43
Whitney_A-100215-3
M5.44
133:7
Q. What other products did you consider?
133:8
A. I remember a conversation about lighted pliers. I
133:9
don't remember the details about lighted pliers. I
133:10
remember a conversation about, you know, would that be
133:11
an item that we could substitute if these guys do as
133:12
they're threatening which is to stop production and
133:13
not send us any product.
133:14
Max Axess. I don't recall exactly when that entered
133:17
into the conversation. To be clear, I don't recall
133:18
when that entered into the conversation as it relates
133:19
to an item that we would develop versus an item that
133:20
would replace the volume of the Bionic Wrench. I
133:21
134:3 -134:13
A. At some point in time we talked about the Craftsman
133:16
41
Q. Any other products that you discussed?
133:15
think that's an important distinction.
Whitney, Adam 2015-10-02
00:00:39
00:29:39
00:33:55
134:3
Q. When she says "explore another item," is that what you
134:4
were referring to in terms of considering the lighted
134:5
pliers or the Max Axess?
134:6
A. Yes, any other item. She says to explore another
134:7
item. From my point of view here on February 18,
134:8
we're discussing this is not good, we need to discuss
134:9
a backup plan.
134:10
Q. So at this point based on this e-mail, one of those
134:11
backup plans might be exploring another item for
134:12
134:13
42
156:5 -156:6
Whitney, Adam 2015-10-02
156:5
Link > P408.1
43
156:6
157:6 -157:8
Link > P408.1.1
157:6
157:8
157:25 -158:8
Link > P408.1.2
158:1
158:2
00:30:18
Exhibit 24. The Bates number is Sears 1418.
00:00:15
00:30:29
Q. That is an e-mail from Elliot Lourie to two
individuals at LoggerHead Tools. Do you see that?
A. Yes, I do.
Whitney, Adam 2015-10-02
157:25
00:00:11
Q. Okay. Let's look at the next document. It's
Whitney, Adam 2015-10-02
157:7
44
holiday DRTV; is that right?
A. Yes.
00:00:30
00:30:44
00:32:50
Q. And the last sentence says that, "This forecast is
subject to change pending Father's Day performance and
finalization of Q4 marketing assets," right?
158:3
158:4
5/6/2017
1:20:48PM
Q. So to the extent that there would be any changes to
158:5
Printed:
A. That's correct.
the forecast, these would be the two factors that
Page 12 of 27
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158:7
158:8
45
158:11 -158:14
would lead to that change, right?
A. Those would be the biggest single influences and
impacts to the change of the forecast, yes.
Whitney, Adam 2015-10-02
158:11
00:00:06
00:31:14
00:32:20
00:01:22
00:31:20
00:32:14
A. No. I think we reduced our projections within a
169:17
matter of days after setting the initial forecast.
169:18
That was after our conversation with Dan Brown, Jr.,
169:19
the conversation that I mentioned Dan Brown, Sr.
169:20
joined at some point.
169:21
Q. When did that conversation --
169:22
A. That was on May 25th.
169:23
Q. Who attended that conversation?
169:24
A. Myself and Stephanie and Dan Brown, Jr. and, as I
169:25
remember, Dan Brown, Sr. was also on the call, but I
170:1
think he joined -- if I remember correctly, after the
170:2
call began.
170:3
Q. During that call, did you tell LoggerHead that you
170:4
were reducing the forecast by about 210,000 units?
170:5
A. I don't remember if we gave him a specific number. We
170:6
told him that we were no longer pursuing DRTV and it
170:7
was going to drastically reduce the forecast. We very
170:8
well may told him what the unit was. I don't know if
170:9
we knew what the new forecast was at the time. I
170:10
don't remember.
Whitney, Adam 2015-10-02
172:9
00:00:24
00:32:42
00:30:52
Q. Well, when you said to them we are going to
172:10
drastically reduce the forecast, did you give them any
172:11
kind of number of how much you are planning or
172:12
reducing?
172:13
A. Again, I don't recall the specifics, so I'm not saying
172:14
we didn't, but I don't remember giving them a specific
172:15
number. I remember Dan Brown emphatically saying this
172:16
effectively ends our relationship with Sears.
Whitney, Adam 2015-10-02
190:10
190:11
Printed:
5/6/2017
1:20:48PM
M5.48
approximately 210,000 units; is that fair?
169:16
190:10 -191:11
Whitney_A-100215-3
June 20, 2012, Sears reduced its forecast by
169:15
48
M5.47
Q. Between May 15, 2012 and the date of this new forecast
169:14
172:9 -172:16
Whitney_A-100215-3
A. Correct.
Whitney, Adam 2015-10-02
169:13
47
M5.46
right?
158:14
169:13 -170:10
Whitney_A-100215-3
e-mail that could have an impact on the forecast,
158:13
46
M5.45
There is nothing else mentioned in this
158:12
Link > Hide
Whitney_A-100215-3
00:01:37
00:33:06
00:30:28
Q. Just to understand, the reason for the revised
forecast you gave to them was because you didn't have
Page 13 of 27
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190:12
the funding for DRTV; is that right?
190:13
A. We were not moving forward with DRTV.
190:14
Q. What are the reasons that you weren't moving forward?
190:15
A. I don't remember all the specific reasons. I know
190:16
that funding for DRTV was a major issue and concern.
190:17
At that point I think our lack of trust in the
190:18
LoggerHead team and what they were saying had a direct
190:19
bearing in that decision. I'm sure of it.
190:20
Q. When you say "lack of trust," what happened to create
190:21
that lack of trust between the May 15th forecast and
190:22
when you decided to drop the forecast?
190:23
A. Yeah. I think the lack of trust started back in
190:24
February and before. I think it culminated in having
190:25
to make final decisions. The final decisions all had
191:1
to happen around that middle of May time frame. I
191:2
think when we sent that forecast, we believed in that
191:3
forecast. We also said very clear in writing and
191:4
verbally this forecast will change based on DRTV and,
191:5
I believe, Father's Day performance.
191:6
Q. You said it's subject to change?
191:7
A. Subject to change. It's a forecast and it's subject
191:8
to change. That's standard language in our industry.
191:9
193:14 -194:8
That's why we were working so hard to get a more
191:11
49
It means exactly that, that's it subject to change.
191:10
formalized agreement.
Whitney, Adam 2015-10-02
193:14
00:01:11
00:34:43
00:28:51
wrench?
193:16
A. I don't recall.
193:17
Q. Was it during the time period you were thinking of
193:18
backup plans to selling the Bionic Wrench?
193:19
A. I don't recall.
193:20
Q. What do you recall about your involvement with the
193:21
193:22
locking wrench?
A. I remember a conversation about the handle and the
193:23
size of the grip on it, that was -- we felt --
193:24
multiple people felt that was too large and that we
193:25
wanted to make sure that it was smaller and could fit
194:1
in your hand more easily.
194:2
Q. Why were you involved in those conversations?
194:3
A. Because it was a product that was being considered for
194:4
194:5
194:6
194:7
5/6/2017
1:20:48PM
M5.49
Q. When did you first learn about the Max Axess locking
193:15
Printed:
Whitney_A-100215-4
development. I would give input on those sorts of
things for many different products.
Q. What was your understanding as to what kind of product
it was?
Page 14 of 27
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194:8
50
194:10 -194:17
A. It's a locking wrench.
Whitney, Adam 2015-10-02
194:10
194:11
194:12
00:00:28
00:35:54
00:27:40
Q. Including the Bionic Wrench?
A. I think certainly the Bionic Wrench would compete with
that item, yes.
Whitney, Adam 2015-10-02
195:12
195:13
00:01:39
00:36:22
00:27:12
Q. My question was: Would you say that the Max Axess was
a substitute for the Bionic Wrench in the marketplace?
195:14
A. No.
195:15
Q. Why not?
195:16
A. Because it's a different item. It's got different
195:17
features.
195:18
Q. What are the different features?
195:19
A. The single biggest feature I recall is the locking
195:20
mechanism. I don't remember specifics, but I believe
195:21
there are different specifications and standards for
195:22
it. I think it's more capable as far as having higher
195:23
standards and specifications. But I'm not an engineer
195:24
and I don't remember those specifics.
195:25
196:1
196:2
196:3
Q. Other than the locking mechanism, is there any other
feature you can remember?
A. The specs, the standards. It is applicable to
mechanics and folks that need a higher spec tool.
196:4
Q. What do you mean by specs?
196:5
A. Again, I don't remember the specifics, but specs would
196:6
be kind of gripping force or the amount of poundage or
196:7
torque that it could handle. Again, I'm not an
196:8
engineering. I'm just vaguely recalling that the
196:9
locking wrench had those features and the Bionic
196:10
Wrench did not. You asked me about if it's a
196:11
replacement, right?
196:12
Q. Yes.
196:13
A. No. As a matter of fact, we planned on having, and I
196:14
believe did have both items out for sale at the same
196:15
time. There was never an intention to be a
196:16
replacement of those.
Whitney, Adam 2015-10-02
197:9
Printed:
5/6/2017
197:10
1:20:48PM
M5.52
compete with that item.
194:17
Link > P461.1
Whitney_A-100215-4
Items that we market -- a broad range of items would
194:16
197:9 -197:11
M5.51
A. I think all of our gimmick-type items would compete.
194:15
52
Whitney_A-100215-4
What products would compete with the
194:14
195:12 -196:16
M5.50
locking wrench?
194:13
51
Whitney_A-100215-4
00:00:13
00:38:01
00:25:33
Q. All right. Let's look at the next exhibit which is
going to be Exhibit 29 with a Bates number Sears 5337
Page 15 of 27
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197:11
53
197:16 -198:19
Whitney, Adam 2015-10-02
197:16
Link > P461.1.1
through 5338.
00:01:34
00:38:14
00:25:20
see that?
197:22
A. I do.
197:23
Q. Mr. Pope writes, "We have a rough prototype to show
197:24
you." Do you see that?
197:25
A. I do.
198:1
Q. If you look early -- rather later in the chain to the
198:2
latest e-mail that's from Ms. Kaleta to you, do you
198:3
see that?
198:4
A. Yes.
198:5
Q. That's dated April 17, 2012?
198:6
A. Yes.
198:7
Q. And she says, "FYI, I have the protocol of the
198:8
Craftsman Bionic Wrench to show you." Do you see
198:9
that?
198:10
A. Yes.
198:11
Q. When she says Craftsman Bionic Wrench, do you
198:12
understand that mean the Max Axess?
198:13
A. Yes, I do.
198:14
Q. Why was it referred to as the Craftsman Bionic Wrench?
198:15
A. Because we didn't have a name for it and I think that
198:16
198:17
198:18
198:19
was the closest item that we knew to compare it to.
Q. As of this date, April 17, Ms. Kaleta has the
prototype of the Max Axess?
A. Yes.
Whitney, Adam 2015-10-02
200:15
200:16
200:17
200:18
200:19
200:20
200:21
200:22
00:00:36
00:39:48
00:23:46
Q. Did you understand it to be modelled after the
LoggerHead Bionic Wrench?
A. No. I definitely understood it to have similarities
with the LoggerHead Bionic Wrench, but modelled after,
no.
Q. But it was similar enough that when Ms. Kaleta says,
"Craftsman Bionic Wrench," you knew what she meant?
A. Absolutely. It definitely had shared characteristics.
200:23
1:20:48PM
similar looking objects. The functionality of them,
200:25
5/6/2017
If you look at the two items, you would say these are
200:24
Printed:
M5.55
Q. And the subject line of that e-mail is BIO II. Do you
197:21
203:4 -203:6
Whitney_A-100215-4
A. I do.
197:20
55
M5.54
that?
197:19
200:15 -200:25
Whitney_A-100215-4
the bottom of that page from Barry Pope. Do you see
197:18
54
M5.53
Q. Looking at the earliest e-mail time which starts at
197:17
Link > P461.1.3
Whitney_A-100215-4
in our opinion, was significantly different.
Whitney, Adam 2015-10-02
00:00:17
00:40:24
00:23:10
Page 16 of 27
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203:4
Link > P463.1
Q. Let's look at the next document this is going to be
203:11 -203:23
Exhibit 31 with the Bates stamp Sears 5348 through
203:6
56
203:5
5350.
Whitney, Adam 2015-10-02
203:11
Link > P463.2.1
00:00:42
00:40:41
00:22:53
Whitney_A-100215-4
M5.56
Whitney_A-100215-4
M5.57
00:21:39
Whitney_A-100215-4
M5.58
00:21:34
Whitney_A-100215-4
M5.59
Q. I would like you to look first at the e-mail that
203:12
begins on very bottom of the first page from you to
203:13
Ms. Kaleta. It goes to the next page and you are
203:14
requesting the Q4 unit estimate on the Teeny Turner,
203:15
also Bionic Wrench same info from last holiday. Do
203:16
you see that?
203:17
A. Yes.
203:18
Q. So you are asking Ms. Kaleta for certain information
203:19
about the Bionic Wrench, right?
203:20
A. Yes.
203:21
Q. Then you say, "This for a Sam president meeting at
203:22
203:23
57
204:10 -204:19
2:00 p.m. today"?
A. Yes.
Whitney, Adam 2015-10-02
00:00:32
00:41:23
00:22:11
204:10
204:11
A. Unit estimate would be a unit forecast, that's right.
204:12
Link > P463.1.1
Q. When you say "Q4 estimate," that's a forecast?
Q. Looking back on page 1, Ms. Kaleta gives you a little
204:13
chart for Bionic, right?
204:14
A. Okay. Yes.
204:15
Q. And the sales unit estimated there are presented for
204:16
2011 and 2012, right?
204:17
205:6 -205:7
Q. So at this point in time it was 374,000?
204:19
58
A. Correct.
204:18
A. Correct.
Whitney, Adam 2015-10-02
205:6
Link > P464.1
59
205:7
205:12 -206:1
Link > P464.1.1
205:13
00:41:55
Q. No. I'm sorry. I sent out a new exhibit. This is
Exhibit 32.
Whitney, Adam 2015-10-02
205:12
00:00:05
00:01:02
00:42:00
Q. The Bates stamped Sears 5351. Your e-mail on this
page, the second e-mail, is dated May 10, 2012?
205:14
A. Right, okay.
205:15
Q. I set that you talked to Sam at length about
205:16
Bionic/Apex version.
205:17
A. Okay.
205:18
Q. When you say "Apex version," you mean Apex's version
205:19
205:20
of the Bionic Wrench, right?
A. Let me read this. I needed to refamiliarize myself
205:21
5/6/2017
1:20:48PM
with no exclusivity and the fact that they're
205:23
Printed:
with it. So I say one Bionic. Sam is uncomfortable
205:22
unwilling to work with us and recognizing we're over a
Page 17 of 27
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barrel. This reenforces that we're paying for their
205:25
60
206:2 -206:3
marketing unit. Yes, I am referring to the Apex
206:1
Max Axess.
Whitney, Adam 2015-10-02
206:2
206:3
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right?
00:00:09
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00:20:27
A. I'm calling it the Apex version. Again, it's, in my
opinion, a different tool and has a locking mechanism.
Whitney, Adam 2015-10-02
206:8
00:43:02
Q. And you're calling it the Apex version of the Bionic,
Whitney, Adam 2015-10-02
206:5
00:00:05
00:00:06
00:43:16
00:20:18
Q. But you are referring to it here as the Apex version
of the Bionic, right?
A. Yes.
Whitney, Adam 2015-10-02
00:00:24
00:43:22
00:20:12
Link > P425.1
207:9
Q. Exhibit 33 has Bates number Sears 2075. Looking at
Link > P425.1.2
207:10
the e-mail at the very top, that's from Ms. Kaleta to
207:11
you, right?
207:12
A. Yes, 5/17/2012.
207:15
207:18 -208:23
Q. And it's dated May 17, 2012?
207:14
64
A. Mm-hmm.
207:13
Q. And it says Bionic versus Max Axess, right?
Whitney, Adam 2015-10-02
00:02:01
00:43:46
00:19:48
207:18
A. Yes, it does.
207:19
Q. It presents a comparison of Bionic and Max Axess for
207:20
A. Yes, it did.
207:22
Link > P425.1.3
Q4, right?
207:21
Q. If you read the comparison, she says, "The receipts
207:23
units seem much higher for Apex, but really only seem
207:24
higher because we enter Q4 of 40K units of Bionic
207:25
already on hand, and because we downtrended the Bionic
208:1
forecast by about 30K units to account for
208:2
cannibalization on the new Max Axess." Do you see
208:3
that?
208:4
A. I do.
208:5
Q. What did you understand her to mean by
208:6
208:7
cannibalization?
A. I understand that to mean we will sell 30,000 less
208:8
units of the Bionic Wrench due to their being more --
208:9
different options for the customer and in particular
208:10
the Max Axess.
208:11
208:12
208:13
208:14
Printed:
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1:20:48PM
Q. What does the term cannibalization mean in the
industry?
A. In the industry cannibalization would be one item
impacting another item is the simplest way to put it.
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Q. Impacting in what way?
208:16
A. Impacting sales.
208:17
Q. So replacing sales?
208:18
A. I don't know that I would use the word replacing.
208:19
208:20
Reducing sales.
Q. So in this context the introduction of the Max Axess
208:21
Link > Hide
65
would reduce the sales of the Bionic Wrench; is that
208:22
right?
208:23
213:15 -213:17
Whitney, Adam 2015-10-02
213:15
213:16
213:17
66
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67
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224:17 -224:25
224:18
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224:19
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Wrench other than the Max Axess?
A. No.
00:00:07
00:45:58
Q. I'm going to ask to mark another exhibit. This is
going to Exhibit 36.
Whitney, Adam 2015-10-02
224:17
00:00:11
Q. Are you aware of any other versions of the Bionic
Whitney, Adam 2015-10-02
222:7
Link > P428.1
A. Yes.
00:00:32
00:46:05
Q. You don't recall taking any steps to address that
particular issue?
A. I don't recall. I don't remember. I don't
224:20
224:21
I don't remember meeting with Loren. I don't
224:23
remember.
224:24
Q. Who is Loren?
224:25
225:3 -225:5
remember. I'm sure it looks like we met with Loren.
224:22
68
remember -- again, it's been so long ago, I don't
A. Loren one of the attorneys that works with the Sears.
Whitney, Adam 2015-10-02
225:3
225:4
225:5
69
225:13 -225:21
225:14
225:15
00:46:37
00:16:57
Q. I want to go back for a minute to something we were
talking about early which was the halo sales?
A. Yes.
Whitney, Adam 2015-10-02
225:13
00:00:09
00:00:34
00:46:46
00:16:48
Q. So how would you go about trying to figure out what a
particular product's halo is?
A. Looking at that item's basket or transactional
225:16
225:17
item tends to help the sales of another item or not.
225:19
Do we see baskets go up and customers stay in the
225:20
department longer. There are many different kinds of
225:21
244:3 -244:21
compare it over time to say, hey, do we find that this
225:18
70
information to say what else was in the basket and
variables that we would look at to determine that.
Whitney, Adam 2015-10-02
244:3
244:4
Printed:
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1:20:48PM
00:01:07
00:47:20
00:16:14
Q. In the beginning of your deposition today you were
recalling a conversation that you had with Dan Brown,
Page 19 of 27
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Jr. on the 17th of February. Do you recall that
general discussion?
244:7
A. I do. I very distinctly remember the discussion.
244:8
Q. How is it that you very distinctly remember that
244:9
244:10
discussion?
A. It was Friday evening and I was calling to understand
244:11
what these guys' concerns were and why Stephanie
244:12
having difficulty with them and what was going on. I
244:13
just remember Dan Brown, Jr. being so abrasives and
244:14
nasty. He called me unethical and he called Sears
244:15
unethical. I had not met Dan Brown in person and he
244:16
was attacking me. I think I will always remember that
244:17
conversation it was so unbelievable to me. It was
244:18
very upsetting. It was disruptive. I just very
244:19
244:20
244:21
71
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246:11 -246:19
246:12
00:00:02
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Whitney_A-100215-4
M5.72
Whitney_A-100215-4
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A. No, I cannot.
Whitney, Adam 2015-10-02
246:11
Link > D282.1
recall having a similar discussion with a vendor?
Whitney, Adam 2015-10-02
244:23
72
distinctly, whoa, what was that all about.
Q. Over the course of your business career, can you
Q. Mr. Whitney, you now have in front of you what has
been marked as Exhibit 40 to your deposition. Is that
246:13
A. Yes, it is.
246:15
Q. Can you just identify this document for the record?
246:16
Link > D282.1.1
correct?
246:14
A. This is an e-mail communication I sent to my boss,
246:17
246:18
248:10 -249:3
just of a the conversation I had with Dan Brown, Jr.
246:19
73
Karen Miller, it looks like after the conversation -from LoggerHead.
Whitney, Adam 2015-10-02
248:10
248:11
00:00:59
00:48:54
paragraph of your e-mail.
248:12
A. Okay.
248:13
Link > D282.1.2
00:14:40
Q. I'd like to direct your attention to the third
Q. It says, "To clarify, that is 55 percent higher than
248:14
last year's cost, if you include the subsidy and
248:15
24 percent higher cost than last year's full invoice."
248:16
Do you see that?
248:17
A. Yes.
248:18
Q. What were you referring to in that discussion there?
248:19
A. I was referring the fact that they had said they
248:20
1:20:48PM
can't move forward unless we, Sears, agree to this new
248:23
5/6/2017
which is part of also in this letter and that they
248:22
Printed:
had -- they had -- they said they cannot move forward
248:21
cost every day of 13.99, which is 55 percent higher
Page 20 of 27
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249:1
than last year's costs including subsidy, 24 percent
higher than the full invoice cost.
Q. In your business experience, had you encountered
249:2
249:3
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74
249:4 -249:4
circumstances where a vendor proposed a 55 percent
cost increase on you?
Whitney, Adam 2015-10-02
249:4
75
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00:00:01
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00:13:41
Whitney_A-100215-4
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Whitney_A-100215-4
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A. Never.
Whitney, Adam 2015-10-02
249:7
249:8
249:11 -249:22
A. That I recall.
249:9
76
Q. Was this the only time?
Q. How did you react to the price increase?
Whitney, Adam 2015-10-02
00:00:40
00:50:02
249:11
249:12
pressures and commodities ever day. We deal with
249:14
hundreds of requests to increase costs. We negotiate
249:15
and we talk about it and a lot of times it's related
249:16
to issues the supplier has and they're legitimate and
249:17
we want to work through those issues. Sometimes we
249:18
accept those increases. Sometimes we push back and
249:19
say we can't afford to do that. Never are we told
249:20
we're not moving forward unless and it's just a black
249:21
and white and it's a full or 55 percent or 24 percent
249:22
250:4 -250:19
it be that much of an increase. We deal with cost
249:13
77
A. I asked for an explanation of it. I asked how could
with no explanation.
Whitney, Adam 2015-10-02
250:4
250:5
250:6
00:00:53
00:50:42
00:12:52
Q. At this point in time, did you want to have a
relationship with LoggerHead and sell their wrench?
A. I would say absolutely I did. I wanted to sell their
250:7
wrench. And I feel as thought it's obviously based on
250:8
my conversations with Dennis internally and Dan
250:9
Connow. I was constantly negotiating to do work with
250:10
LoggerHead. I also feel as if we compromised in many
250:11
different ways and accepted their new demands on
250:12
multiple different occasions to try and work with
250:13
them. I feel as though we did a good job of
250:14
documenting that and trying to partner with these
250:15
250:16
guys.
Q. You talked earlier in your testimony with DRTV. How
250:17
important was DRTV for this particular product, the
250:18
Bionic Wrench product?
250:19
78
251:17 -251:21
Whitney, Adam 2015-10-02
251:17
251:18
Printed:
5/6/2017
1:20:48PM
A. I think it was incredibly important to this product.
00:00:18
00:51:35
00:11:59
Q. We had talked about earlier how LoggerHead had
rejected the Sears vendor agreement that it had
Page 21 of 27
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251:19
251:20
252:1 -252:5
vendor agreement on this product for 2012 for the
251:21
80
proposed. Did LoggerHead and Sears ever reach a
sales of the Bionic Wrench?
Whitney, Adam 2015-10-02
252:1
00:00:16
00:51:53
00:11:41
00:00:33
00:52:09
00:11:25
LoggerHead multiple times with multiple compromises.
252:10
I can say that I don't feel as though there was the
252:11
same level of desire for them to come to an agreement
252:12
with us based on the multiple times they came back and
252:13
said, we're refusing to meet with you, they didn't
252:14
answer e-mails or phone calls. We would send them
252:15
terms and they would change them and add terms, change
252:16
subsidies, change their willingness to support
252:17
television, et cetera.
Whitney, Adam 2015-10-02
253:10
253:11
253:12
253:13
00:00:08
00:52:42
00:10:52
Q. Mr. Whitney, you now have in front of you what's been
marked as Exhibit 41 to your deposition; is that
correct?
A. That's correct.
Whitney, Adam 2015-10-02
253:18
00:00:51
00:52:50
00:10:44
Q. Can you just identify for the record who the author
253:19
and the recipient of the e-mail are and the date it
253:20
Link > D283.1.1
was sent?
253:21
A. This is from Dan Brown, Jr. to Stephanie Kaleta on
253:22
Thursday, May 10th, 2012 at 10:58 a.m. The subject is
253:23
LoggerHead tools promotion agreement.
253:24
Q. And if you could, read into the record the first
253:25
paragraph in the e-mail that he sent to Ms. Kaleta.
254:1
A. "Hi, Stephanie, After reviewing your latest changes.
254:2
I think we should probably reschedule Friday's
254:3
meeting. LoggerHead has two main issues that need to
254:4
be
254:5
resolved before the lawyers get involved, otherwise it
254:6
will be a waste of everyone's time."
254:7
Q. What that did that tell you about LoggerHead's
254:8
5/6/2017
1:20:48PM
interest in finalizing an agreement as of May 10,
254:9
Printed:
M5.83
that we attempted to come to an agreement with
252:9
253:18 -254:9
Whitney_A-100215-4
A. It's an interesting question. I feel very strongly
252:8
83
M5.82
opinion on an agreement?
Whitney, Adam 2015-10-02
252:7
Link > D283.1
Whitney_A-100215-4
Q. Did Sears and LoggerHead attempt to come to terms
252:5
253:10 -253:13
M5.81
contract to supply agreement or any agreement.
252:4
82
Whitney_A-100215-4
recall, we did absolutely not come to an agreement, a
252:3
252:7 -252:17
M5.80
A. Not that I'm aware of. I left Sears in 2012. That I
252:2
81
Whitney_A-100215-4
2012?
Page 22 of 27
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Whitney, Adam 2015-10-02
254:11
00:01:16
00:53:41
00:09:53
credibility in the LoggerHead team as far as why they
254:19
continued to refuse to want to close this and come to
254:20
an agreement. Can I --
254:21
BY MR. HILMERT:
254:22
Q. If you have something to add --
254:23
A. As I read through the letter, I guess, to support my
254:24
point on why it was another example of being
254:25
disruptive, they say that, "Our offer of possible
255:1
exclusivity, to be clear LoggerHead will not be able
255:2
to offer exclusivity. In addition" --
Whitney, Adam 2015-10-02
255:14
00:00:13
00:54:57
00:08:37
Q. Is there anything else in this exhibit that was a
255:15
cause for concern for you regarding the LoggerHead
255:16
relationship at this time?
Whitney, Adam 2015-10-02
255:18
00:01:00
00:55:10
00:08:24
A. Yes.
255:19
BY MR. HILMERT:
255:20
Q. What was that?
255:21
A. The comment about LoggerHead not being able to provide
255:22
exclusivity to Sears and the changes in terms on
255:23
forecast dating and that because that in order for
255:24
LoggerHead to produce product for Christmas, at that
255:25
time we need to plan and build for the product for the
256:1
fourth quarter, all these things, in my opinion, were
256:2
shifting from prior conversations that Stephanie had
256:3
had with them and again, undermine in my mind their
256:4
credibility as far as why they were cancelling this
256:5
meeting that we had thought we were going to agree to
256:6
to close the deal. It was unusual and didn't make
256:7
256:8
256:9
256:10
5/6/2017
258:5
1:20:48PM
sense.
Q. How confident were you in the long-term partnership
with LoggerHead after receiving this e-mail?
A. Not confident.
Whitney, Adam 2015-10-02
258:6
Printed:
M5.87
disruptive and undermined further my trust and
254:18
258:5 -258:12
Whitney_A-100215-4
agreement. So it was in my mind perplexing,
254:17
Link > D284.1
M5.86
through any legalease needed and we could come to an
254:16
87
Whitney_A-100215-4
meet and have our attorneys there so they could talk
254:15
255:18 -256:10
M5.85
meeting up was so that we could formally sit down and
254:14
86
Whitney_A-100215-4
The whole purpose of the discussion and setting that
254:13
255:14 -255:16
M5.84
A. In my opinion, it was another unusual stall tactic.
254:12
85
Whitney_A-100215-4
00:00:30
00:56:10
00:07:24
Q. This has been marked as Exhibit 42 to your deposition
today. I'd like to direct your attention to the
Page 23 of 27
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middle e-mail on this page. Do you see that?
258:8
A. Yes, I do.
258:9
Q. And for the record, could you identify the author, the
258:10
Link > D284.1.1
258:11
258:12
88
258:16 -259:9
recipient, and the date of this e-mail?
A. It's from Dan Brown, Jr. to Stephanie Kaleta on
Thursday, May 17, 2012, at 11:08 a.m.
Whitney, Adam 2015-10-02
258:16
00:00:49
00:56:40
00:06:54
258:22
working on the POs as they are key to the promotional
program we have put together. In fact, as we have
258:25
previously discussed, LoggerHead is having a strong
259:1
demand for the fourth quarter. Although we have
259:2
increased our production capacity based on what you
259:3
have forecast, it appears we will be selling our
259:4
production out. In order for us to manage who gets
259:5
what and at what time, we are allocating production
259:6
and delivery according to the POs that we receive."
259:7
Q. Did the statement that LoggerHead would be selling out
259:8
259:9
its production present any concern to Sears or to you?
A. Absolutely.
Whitney, Adam 2015-10-02
00:00:35
00:57:29
00:06:05
259:12
Q. Why was that?
259:13
A. Because we needed this product to be able to put it on
259:14
television and make our plans which I'm held
259:15
accountable to ultimately keep my job. So it was
259:16
ultimately a concern in a major way.
259:17
Q. Can you characterize the degree of confidence that you
259:18
had as of May 17, 2012, that LoggerHead would actually
259:19
supply its product to Sears for the Christmas holiday
259:20
season?
Whitney, Adam 2015-10-02
259:22
00:00:24
00:58:04
00:05:30
A. I did not feel confident at all based on the language
259:23
we were going to be provided product which is why at
259:25
some point we started talking about a backup plan. We
260:1
felt that we were going to have no product to run DRTV
260:2
1:20:48PM
here and the multiple back and forths that we had that
259:24
5/6/2017
M5.91
A. We appreciate the forecast. I am hoping you are
258:24
Printed:
Whitney_A-100215-4
record, please?
258:23
261:8 -261:19
M5.90
Q. Could you just read that whole paragraph into the
258:21
91
Whitney_A-100215-4
A. Yes.
258:20
259:22 -260:2
M5.89
"We appreciate the forecast."
258:19
90
Whitney_A-100215-4
last paragraph of this e-mail, the one that begins,
258:18
259:12 -259:20
M5.88
Q. I'd like to direct your attention to the second to
258:17
89
Whitney_A-100215-4
and have major millions of dollars in liability.
Whitney, Adam 2015-10-02
00:00:32
00:58:28
00:05:06
Page 24 of 27
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261:8
Q. Did there come a time when you personally saw the
261:9
Bionic Wrench in competitors of Sears's retail
261:10
outlets?
261:11
A. Yes.
261:12
Q. I believe that you had mentioned in your testimony
261:13
261:14
earlier today that you saw the Bionic Wrench at the
Menards?
261:15
A. I did.
261:16
Q. How would you characterize Menards with respect to
261:17
Sears business-wise; would they be competitors?
261:18
A. Direct competitors in tools, lawn and garden, several
261:19
92
261:24 -262:23
Link > D285.1
different areas.
Whitney, Adam 2015-10-02
261:24
261:25
00:01:29
00:59:00
A. That's correct.
Q. Once again, if you look at the bottom item in the
262:3
262:4
262:5
262:6
262:7
e-mail chain here, could you identify the sender of
this e-mail, the date, and the recipient?
A. The sender is me. It's to me and it's from me and
it's from my iphone to my personal account and the
subject is "Menards has Bionic Wrench."
262:8
Q. And what is the date of this e-mail?
262:9
A. Saturday, June 9th.
262:10
Q. Do you recall when Father's Day is?
262:11
A. It is the -- I don't remember the specific date, but I
262:12
262:13
262:14
262:15
believe it was between June 15th and June 18th.
Q. Is it fair to say that you were in a Menards store in
the Father's Day general shopping season?
A. Generally we considered the three weeks leading up to
262:16
Father's Day being the core Father's Day spike.
262:17
Q. And is this during the period of time that Sears was
262:18
262:19
262:20
262:21
running the DRTV?
A. As I recall, it would have been, but I don't remember
the specific dates of DRTV.
Q. Was it relevant or concerning to you in your role at
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Sears to see the Bionic Wrench at Menards during this
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time?
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A. Yes.
Whitney, Adam 2015-10-02
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Q. And why is that?
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A. Because we were paying for direct response TV with the
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front of you; is that right?
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Q. Mr. Whitney, you now have Deposition Exhibit 43 in
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Link > D285.1.1
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understanding that we were only ones selling the item.
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in the marketplace. So understanding what the
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competition is doing and who is selling this item has
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a direct relevance to our forecast and our ability to
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partner and predict what we're going to need to buy
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absolutely direct correlation to our sales performance
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If we are not the only ones selling item, there is an
and sell.
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Whitney, Adam 2015-10-02
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A. I would have expected them to tell me that they're
selling it, at least if not they're going to give me
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specific competitors, at least that they're going to
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have the item out in a marketplace in a more material
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way. Because, as I said, it has a huge impact to our
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sales forecast. In a normal relationship with a
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vendor, we would both want to understand what that
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sales impact is so that we're not stuck with a
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significant amount of product after that holiday time
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frame and a huge mark down liability. It will damage
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the product's image in the marketplace to have to mark
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it all down and it will damage our profits and it
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ultimately will damage the vendor's profits. If there
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is a mutually sustainable relationship -- if not and
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one party doesn't care that the retailer is stuck with
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all these goods, then maybe, you know, we wouldn't
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have that conversation. I would fully expect to be
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advised on the general places that this item going to
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be sold.
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BY MR. HILMERT:
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Q. Looking back at the relationship as a whole as you sit
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here today three years later, can you give your
264:18
overall thoughts on your interactions with LoggerHead
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as compared to other retailers, other vendors that you
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have worked with over the course of your career?
Whitney, Adam 2015-10-02
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don't recall any that comes close. This is really so
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far out of bounds and out of the norm. The entire
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A. This is really such a unique situation and vendor, I
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for them to tell you that?
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Q. Would you have expected as a partner with LoggerHead
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A. No.
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Did you ever recall LoggerHead telling you
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that they were selling the Bionic Wrench to Menards?
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relationship was so contentious and so, you know,
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accusatory and lacking of trust and changing terms.
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It was just very, very unusual for me. I don't recall
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anything else in my career that really comes close to
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that.
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