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 2-5

Arvia T 20151119 PA DC on 5-2-17
Arvia T 20151119 PA DC on 5-2-17
Scene

1

Designation
6:14 -6:19

Source

Tx Duration Elapsed

Arvia, Thomas 2015-11-19

00:00:13

00:00:00

6:14

2

8:12 -8:13

Arvia, Thomas 2015-11-19

00:00:05

00:00:13

Arvia, Thomas 2015-11-19

00:00:08

00:00:18

M1.83

00:54:03

Arvia_T-111715-1of5

M1.3

00:53:56

Arvia_T-111715-1of5

M1.85

Arvia_T-111715-1of5

M1.4

A. 13.

Arvia, Thomas 2015-11-19

00:00:07

00:00:26

8:21

Q. What's your current position?

8:22

A. I'm a division vice president for product

8:23
8:24 -9:8

Arvia_T-111715-1of5

throughout your 20 years?

8:16

5

00:54:11

Q. How many positions have you held at Sears

8:15

8:21 -8:23

M1.2

A. 1994.

8:14

4

Arvia_T-111715-1of5

Q. When did you begin working at Sears?

8:13
8:14 -8:16

00:54:16

last name Arvia, A-r-v, as in Victor, i-a.

8:12

3

M1.1

A. Sure. First name is Thomas, T-h-o-m-a-s,

6:19

Arvia_T-111715-1of5

name for the record?

6:18

00:54:29

Q. Would you please state and spell your full

6:17

management for Craftsman.

Arvia, Thomas 2015-11-19

00:00:24

00:00:33

8:24

division vice president for product management?

9:2

A. Division vice president is the lead role for

9:3

the product management team. Product management for

9:4

Craftsman, the role encompasses all of Craftsman,

9:5

both tools and lawn and garden, all categories.

9:6

We're responsible for developing product assortments

9:7

and working with other teams to commercialize those

9:8
10:1 -10:17

Q. And what are the responsibilities of a

9:1

6

assortments.

Arvia, Thomas 2015-11-19

00:00:52

00:00:57

10:1

Q. What is DMM?

10:5

A. Divisional merchandise manager.

10:6

Q. When did you start as division merchandise

10:7

manager for the tools team?

10:8

A. 2009. Back half of 2009.

10:9

Q. And you had that role until October 2013?

10:10

A. Correct.

10:11

12:50:31PM

A. I was DMM for the tools team.

10:4

5/5/2017

October 2013, what position did you hold at Sears?

10:3

00:53:32

Q. Prior to your -- starting your position in

10:2

Printed:

Barcode

A. Good morning.

6:16

Media File

Q. Good morning, Mr. Arvia.

6:15

Remains

Q. What were your responsibilities as DMM of

Page 1 of 22

Arvia T 20151119 PA DC on 5-2-17
10:12
10:13

department. I had specific categories. Buyers would

10:15

report up to the DMMs, so we led -- we led the team

10:16

for essentially all activities for the retail side

10:17
10:18 -10:21

A. As DMM, I was one of three DMMs in the

10:14

7

tools, for tools?

for Sears and K-Mart.

Arvia, Thomas 2015-11-19

00:00:07

00:01:49

10:18

10:22 -11:8

8

Arvia, Thomas 2015-11-19

00:00:35

00:01:56

M1.7

00:50:59

Arvia_T-111715-1of5

M1.9

A. Under my responsibility was mechanics hand

11:2

tools, tool storage, garage door openers,

11:3

compressors, wet/dry vacs, automotive categories.

11:4

Q. What is included under mechanics hand tools?

11:5

A. Mechanics hand tools would be wrenches,

11:6

rachets, sockets.

11:7

Q. Does it include pliers?

11:8

A. Does not.

Arvia, Thomas 2015-11-19

00:00:59

00:02:31

16:23

Q. Mr. Arvia, Exhibit No. 2 is LoggerHead's

16:24

Rule 30(b)(6) deposition notice to Sears Holdings

17:1

Corporation.

17:2

Have you ever seen this document before

17:3

today?

17:4

A. I don't know specifically that I've seen

17:5

this document, but again, I'm familiar with

17:6

everything on here.

17:7

Q. And do you understand that there are certain

17:8

topics that are listed in Exhibit A to Arvia 2 and

17:9

some of those topics are the ones that Sears has

17:10

designated you to testify for the corporation?

17:11

A. If the question is a general question, do I

17:12

understand there's things I'm being asked to

17:13

Link > P333.1

Arvia_T-111715-1of5

under your responsibility?

11:1

28:9 -28:20

00:51:58

Q. What portion of the tools department was

10:24

10

M1.6

A. I had a portion of the tools department.

10:23

16:23 -17:13

Arvia_T-111715-1of5

Q. Yeah.

10:22

9

00:52:33

your question?

10:21

M1.5

A. The department was tools. Does that answer

10:20

Arvia_T-111715-1of5

Q. What was the department?

10:19

00:52:40

represent, the answer to that is yes.

Arvia, Thomas 2015-11-19
28:9

00:01:04

00:03:30

Q. I'm introducing Arvia 4, which is a document

28:10

5/5/2017

12:50:31PM

and this is an e-mail from Kim Schafer to you and

28:12

Printed:

produced by Sears, with the last two Bates Nos. 75,

28:11

others sent December 8, 2011, subject: Wow, Look At

Page 2 of 22

Arvia T 20151119 PA DC on 5-2-17
28:13

Those DRTV Sales.

28:14

Do you recognize this document?

28:15
28:16

sales for the Bionic Wrench at a particular point in

28:18

time?

28:19

A. I would say yes, this is a point in time

28:20
29:24 -30:14

Q. And is this e-mail a report about the DRTV

28:17

11

A. I recognize this document.

view of performance of the Bionic Wrench.

Arvia, Thomas 2015-11-19

00:00:52

00:04:34

00:49:55

29:24

line 42 is up 50 percent in sales over LY and

30:4

71 percent in margin."

30:5

Do you see that?

30:6

A. That's correct.

30:9

Q. And what do you understand her to mean when

30:10

she said -- when she wrote "71 percent in margin"?

30:11

A. I understand her to mean that the margin

30:12

dollars generated for her category for the point in

30:13

time in question increased by 71 percent versus prior

30:14

Link > P334.1

Q. What is LY? Is that last year?

30:8

50:2 -51:7

A. I do.

30:7

12

year.

Arvia, Thomas 2015-11-19

00:02:19

00:05:26

50:2

should have shortly on your screen. Arvia 7 is an

50:4

e-mail from Ron -- or Ran Duan to you and others

50:5

dated December 11, 2011, subject: DRTV Week 45

50:6

Update.

50:7

Let me know when you're ready?

50:8

A. Okay, I have it on the screen.

50:9

Q. Who is -- can you pronounce the gentleman's

50:10

name who sent you the e-mail?

50:11

A. I can. His name is Ran Duan. He was an

50:12

analyst on our finance team.

50:13

Q. What's your understanding for why Mr. Duan

50:14

sent this e-mail, Exhibit 7, to you?

50:15

A. This is an update on the DRTV performance

50:16

for all programs combined.

50:17

Q. He wrote to you in Exhibit 7, "Last week

50:18

DRTV totally generated 63K incremental units for

50:19

Bionic Wrench and Universal set resulting in

50:20

Link > P334.1.2

636 percent unit lift and 732K incremental margin."

50:21

Printed:

5/5/2017

12:50:31PM

00:49:03

Q. I'm introducing Arvia Exhibit 7, which you

50:3
Link > P334.1.1

M1.11

In four days we are already 111 percent to forecast,

30:3

Arvia_T-111715-1of5

writes, "Attached is the Bionic Wrench DRTV update.

30:2

M1.10

Q. You see in the e-mail Ms. Campana sent she

30:1

Link > P333.1.1

Arvia_T-111715-1of5

Do you see that?

Page 3 of 22

Arvia T 20151119 PA DC on 5-2-17
50:22

A. I do.

50:23

Q. What does it mean -- withdrawn.

50:24
51:1

Do you know what it means that DRTV
generated 63K incremental units for Bionic and

51:2

baseline forecast for what a program would produce

51:5

without DRTV support, so the incremental is the

51:6

amount that it produced above and beyond what they

51:7
51:14 -51:19

A. I do. The finance team would establish a

51:4

13

Universal?

51:3

would estimate the baseline to be.

Arvia, Thomas 2015-11-19

00:00:25

00:07:45

51:14
51:15

00:46:19

Arvia_T-111715-1of5

M1.13

00:45:39

Arvia_T-111715-1of5

M1.14

00:45:23

Arvia_T-111715-1of5

M1.15

A. In this example here, yes, the baseline
established was provided, created by this team and

51:19
57:14 -58:2

M1.12

compared to baseline forecast?

51:17
51:18

14

Arvia_T-111715-1of5

Exhibit 7 is referring to 636 percent lift from DRTV

51:16
Link > Hide

00:46:44

Q. The 636 percent unit lift referenced in

this is performance above that baseline.

Arvia, Thomas 2015-11-19

00:00:40

00:08:10

57:14
57:15

individual Craftsman tool?

57:18

A. I did not review a sales report of all items

57:19

in hand tools; however, I do recall a note from

57:20

Amanda stating that it was the number one tool in her

57:21

category at that point in time in the middle of

57:22

December, so I don't -- I don't recall anything at

57:23

this time at the end of December in those categories.

57:24

Q. Did Amanda's categories include Craftsman

58:1

tools?

58:2

Link > P462.1

hand tool for holiday 2011? Not together, but any

57:17

58:20 -58:22

Wrench outsold any other -- any Craftsman branded

57:16

15

Q. Are you aware, Mr. Arvia, whether the Bionic

A. They did.

Arvia, Thomas 2015-11-19

00:00:16

00:08:50

have shortly. This is another e-mail chain that

58:22
59:6 -60:1

Q. I'm introducing Arvia 9, which you should

58:21

16

58:20

includes you. This one is dated May 9, 2012.

Arvia, Thomas 2015-11-19

00:01:02

00:09:06

59:6

Q. Mr. Kiss wrote to you and others on May 9,

59:7

2012, "Last holiday what did we move most/sell out

59:8

Link > P462.2.1

of?"

59:9

Do you see that?

59:10
59:11

12:50:31PM

May 9, 2012?

59:13

5/5/2017

Q. Did you receive this e-mail from Mr. Kiss on

59:12

Printed:

A. I do.

A. I did.

Page 4 of 22

Arvia T 20151119 PA DC on 5-2-17
59:14

Q. Who is -- what was Bill Kiss's function at

59:15

Sears in May of 2012?

59:16

A. In May of 2012, Bill was the chief marketing

59:17

officer for the tools team.

59:18

Q. Chief marketing officer for all of tools?

59:19

A. That's correct.

59:20

Q. In response to Mr. Kiss's request,

Link > P462.1.1

59:21

Mr. Whitney responded "Bionic," and then you respond

Link > P462.1.2

59:22

"Yep, no question."

59:23

Is it accurate that you sent that e-mail,

59:24
60:1
17

60:22 -61:11

Link > Hide

"Yep, no question," on May 9, 2012?
A. That's accurate.

Arvia, Thomas 2015-11-19

00:00:39

00:10:08

00:44:21

Arvia_T-111715-1of5

M1.16

00:43:42

Arvia_T-111715-1of5

M1.17

00:43:37

Arvia_T-111715-1of5

M1.18

00:43:26

Arvia_T-111715-2of5

M1.19

your head when the chief marketing officer of the

60:24

company asked you what was the product that Sears

61:1

moved the most in holiday 2012 that you immediately

61:2

knew it was the Bionic Wrench, right?

61:3

A. I would say -- the question's broader than

61:4

that. It says "What did we move the most, sell out

61:5

of?" That's broader than just what did we move the

61:6

most of, and yes, I had direct knowledge of that

61:7

through the DRTV programs.

61:8

Q. And when Adam answered Mr. Kiss's question

61:9

with Bionic, you understood, didn't you, Mr. Arvia,

61:10

that he was talking about which tool Sears moved the

61:11
61:14 -61:15

Q. It was so successful you knew off the top of

60:23

18

60:22

most of, right?

Arvia, Thomas 2015-11-19

00:00:05

00:10:47

61:14

19

61:16 -61:20

A. Yeah, I'm reading the question the same way.

61:15

What did we move the most/sell out of.

Arvia, Thomas 2015-11-19

00:00:11

00:10:52

61:16
61:17

holiday 2011 on the tools side?

61:19

A. It was not. We sold out of other DRTV

61:20
64:17 -65:15

Q. Was Bionic the only thing you sold out of in

61:18

20

BY MR. SKIERMONT:

programs as well as shown in this e-mail.

Arvia, Thomas 2015-11-19

00:01:22

00:11:03

64:17
64:18

A. Correct.

64:21

Q. Would you characterize yourselves as peers?

64:22

A. I would.

64:23

12:50:31PM

correct?

64:20

5/5/2017

you and Mr. Whitney were both DMMs for tools,

64:19

Printed:

Q. Mr. Arvia, in the 2011 and 2012 time frame,

Q. Did Mr. Whitney ever confer or consult with

Page 5 of 22

Arvia T 20151119 PA DC on 5-2-17
64:24

you on discussions he was having with LoggerHead or

65:1

anything related to the Bionic Wrench?

65:2

A. There was one occasion.

65:3

Q. There was just one occasion?

65:4

A. One -- one that sticks out to me.

65:5

Q. What is the occasion that sticks out?

65:6

A. He initiated a contact with me on

65:7

February 17th, and that's when he told me that there

65:8

was a -- I believe the number is 55 percent price

65:9

increase on the table, and -- and he had some

65:10

questions he wanted to run past me.

65:11

Q. Why was he running them past you, do you

65:12

65:24 -68:11

Q. I'm introducing Arvia Exhibit 10, which is

65:15
21

A. Just for insight, feedback.

65:14

Link > P343.1

know?

65:13

Sears 224.

Arvia, Thomas 2015-11-19
65:24

00:03:38

00:12:25

A. That's the one I recall, yes.

66:3

Q. What did -- when -- in the first e-mail of

66:4

this chain, Mr. Whitney, after he discussed the price

66:5

increase that you just mentioned, he wrote "Is the

66:6

Clench Wrench an option?"

66:7

Do you see that?

66:8

A. I do.

66:9

Q. What's the Clench Wrench?

66:10

A. The Clench Wrench is a Craftsman item that

66:11

was under my categories, and what he was inferring by

66:12

this was is the Clench Wrench a potential option for

66:13

Q4, Q4 sales.

66:14

Q. What was your answer?

66:15

A. At this stage in the game, the answer was

66:16

yes, it's an option. This was very early in the

66:17

year. We are evaluating multiple options for DRTV

66:18

programs at the time.

66:19

Q. And you responded to Mr. Whitney's e-mail

66:20

that was entitled "Can you call me" --

66:21

A. I do.

66:22

Q. -- later that night.

66:23

A. Morning.

66:24

Q. Or the next day. And you said -- and you

67:1

said, "They," meaning LoggerHead, "are giving up

67:2

long-term stability for short-term gain."

67:3

Printed:

5/5/2017

12:50:31PM

M1.20

e-mail that you just described?

66:2

Link > P343.1.4

Arvia_T-111715-2of5

Q. So my question is, is Arvia Exhibit 10 the

66:1
Link > P343.1.1

00:42:04

Did you write that?

Page 6 of 22

Arvia T 20151119 PA DC on 5-2-17
67:4

A. Yes.

67:5

Q. What were you referring to with respect to

67:6

long-term stability?

67:7

A. What I was inferring at that time was we had

67:8

a -- what we established in the other conversation

67:9

was a successful program in 2011.

67:10

Q. Why did you write that LoggerHead, in your

67:11

view, was giving up long-term stability for

67:12

short-term gain?

67:13

A. There was a -- a former buyer at Sears, his

67:14

name is Scott Moore; I think he initiated the Bionic

67:15

relationship, my understanding is, with Sears. He

67:16

was at Home Depot at the time, and -- and if there

67:17

was a -- if there was a chance they were going to go

67:18

to another retailer, that would spread the sales out

67:19

over time, over -- over multiple channels.

67:20

Q. Why would that be LoggerHead giving up

67:21

A. If you look at the way the program was run

67:23

and the success of the program in 2011, it was driven

67:24

by DRTV, and DRTV is a vehicle that's used by Sears

68:1

in this space. Home Depot does not have a history of

68:2

using DRTV. Our other competitors use it on a very

68:3

limited basis.

68:4

Q. You also wrote, "No doubt Scotty is

68:5

repeating his program and they think they have a good

68:6

Link > P343.1.5

long-term stability?

67:22

deal with Depot."

68:7

Do you see that?

68:8

A. I do.

68:9

Q. And is the Scotty that you are referring to

68:10

22

69:1 -69:19

Scott Moore?

68:11

A. I did. It is, yes.

Arvia, Thomas 2015-11-19

00:01:03

00:16:03

69:1

A. I don't believe -- this was a weekend when I

69:8

look back at the date for time frame, so I believe it

69:9

was a couple days later.

69:10

Q. And what do you recall about the

69:11

conversation you had with Mr. Whitney a couple of

69:12

12:50:31PM

Q. When did you have a brief conversation?

69:7

5/5/2017

A. We did with a brief conversation.

69:6

Printed:

Mr. Whitney?

69:5

Link > Hide

follow-up conversation to this e-mail exchange with

69:4

M1.21

you said you would give him a call. Did you have a

69:3

Arvia_T-111715-2of5

Q. You also asked if he was free tomorrow and

69:2

00:38:26

days after this e-mail exchange in Exhibit 10?

Page 7 of 22

Arvia T 20151119 PA DC on 5-2-17
69:13
69:14

the proposed pricing, and the other one is the

69:16

proposed competitive -- competitive set, that if

69:17

Bionic Wrench was going to be sold at other channels,

69:18

it would potentially detract from Sears sales and

69:19
75:23 -76:12

one was the changing of the economics of the program,

69:15

23

A. I recall two key concerns from Adam. Number

make the DRTV program less profitable.

Arvia, Thomas 2015-11-19

00:01:07

00:17:06

00:37:23

75:23

Father's Day 2012, generally?

76:7

A. Based on what I recall, from the data that I

76:8

reviewed, the Bionic was -- came close to achieving

76:9

forecast; not quite the full forecast, and it was a

76:10

-- without subsidy, it was a break-even program. A

76:11

program that we, in hindsight, wouldn't have

76:12

otherwise done.

Arvia, Thomas 2015-11-19

00:00:31

00:18:13

00:36:16

76:13

Q. Did any -- and for Father's Day, 2012 was

76:14

there DRTV support for Craftsman branded hand tools?

76:15

A. There was.

76:16

Q. Did any of them outsell the Bionic Wrench on

76:17

a unit basis?

76:18

A. Based on my recollection, there was no one

76:19

single Craftsman item that outsold the Bionic during

76:20

that time frame for our DRTV program. From a unit

76:21

sales standpoint.

Arvia, Thomas 2015-11-19

00:00:24

00:18:44

00:35:45

87:20

a long e-mail chain that you were roped into on the

87:22

first page --

87:23

A. Yes.

87:24

Q. -- with Kim Schafer since you -- or

88:1

forwarded you the e-mail chain on Saturday, July 28,

88:2

2012.

88:3
88:22 -89:7

Q. I am introducing Arvia Exhibit 14, which is

87:21

26

A. Okay.

Arvia, Thomas 2015-11-19

00:00:52

00:19:08

88:22

5/5/2017

12:50:31PM

00:35:21

Q. And is it -- like I said, I think we'll get

88:23

Printed:

M1.30

Q. And how did the Bionic Wrench do on DRTV for

76:6

Link > P340.1.2

Arvia_T-111715-2of5

for Father's Day.

76:5

Link > P340.1

M1.29

e-mail. I can confirm that Bionic Wrench was on DRTV

76:4

87:20 -88:3

Arvia_T-111715-2of5

A. I don't recall a specific action off of this

76:3

25

M1.27

Bionic Wrench?

76:2

76:13 -76:21

Arvia_T-111715-2of5

request for DRTV support for Dad's Day 2012 for the

76:1

24

M1.26

Q. Ultimately what came of Mr. Whitney's

75:24

Arvia_T-111715-2of5

into the details eventually, but for the purpose of

Page 8 of 22

Arvia T 20151119 PA DC on 5-2-17
88:24

this exercise, can you describe generally what it was

89:1

was reaching out to Sam Solomon expressing some

89:4

concerns and so Kim was -- this was, based on the

89:5

timing estimate, a couple weeks after Adam left, so

89:6

Kim was looping me in in case there was any action I

89:7
89:8 -89:14

A. Yes. Generally Dan Brown from LoggerHead

89:3

27

Ms. Schafer was forwarding to you?

89:2

Link > P340.1.3

needed to be involved in.

Arvia, Thomas 2015-11-19

00:00:19

00:20:00

00:34:29

89:8

89:14
89:18 -90:16

Did you write that?
A. I did.

Arvia, Thomas 2015-11-19

00:01:38

00:20:19

00:34:10

89:18

Q. What did you mean by -- what sides were you

89:19

referring to?

89:20

A. My recollection is I was referring to Sears

89:21

and LoggerHead. It was an unfortunate situation; we

89:22

had a successful program together in 2011, and we

89:23

were not able to come to a resolution on that.

89:24

Q. What did you mean when you wrote "This is

90:1

not going to have a happy ending for either side"?

90:2

A. My recollection is that nobody wins in this

90:3

case. It was a successful program for LoggerHead in

90:4

2011 and it was a successful program for Sears in

90:5

2011. So -- so nobody wins when you're not having

90:6

access and being able to sell product. Can't come to

90:7

an agreement.

90:8

Q. Why did you think that this one was not

90:9

going to have a happy ending for Sears?

90:10

A. Because LoggerHead was a successful program

90:11

in 2011 and it was an item that, as we established,

90:12

sold a lot of units, drove margin for the department,

90:13

and -- excuse me, drove margin for the department.

90:14

So without it, you know, without it this

90:15

29

95:4 -95:24

year, you know, there would be other things we would

90:16

Link > Hide

need to do to offset that.

Arvia, Thomas 2015-11-19
95:4

00:01:26

00:21:57

12:50:31PM

Axess Locking Wrench initiated?

95:6

5/5/2017

00:32:32

Q. How was the product that became the Max

95:5

Printed:

M1.33

for either side."

89:13

28

Arvia_T-111715-2of5

wrote, "This one is not going to have a happy ending

89:12

M1.32

you replied on Saturday July 28th at 2:55 p.m. and

89:11

Arvia_T-111715-2of5

after Ms. Schafer forwarded the e-mail chain to you,

89:10

M1.31

Q. And do you see there about three hours or so

89:9
Link > P340.1.1

Arvia_T-111715-2of5

A. The first thing that I saw was an e-mail

Page 9 of 22

Arvia T 20151119 PA DC on 5-2-17
95:7

from Matt McDonnell to Jill Lowe and I think -- I

95:8

believe the date was February 22nd.

95:9

Q. Who is Matt McDonnell?

95:10

A. Matt McDonnell at the time was director of

95:11

product management for Craftsman.

95:12

Q. And you are referencing an e-mail from Matt

95:13

McDonnell, who is director of product management for

95:14

Craftsman, to Jill Lowe, who is an Apex employee, is

95:15

that correct?

95:16

A. That's what I recall and I believe I'm

95:17

correct that the 22nd was the date.

95:18

Q. And it was February 22, 2012?

95:19

A. Correct.

95:20

Q. Why did Mr. McDonnell reach out to Ms. Lowe

95:21

very short one-line e-mail that said we may have an

95:24
96:1 -98:16

A. My recollection of the e-mail is it was a

95:23

30

on February 22, 2012?

95:22

opportunity. I don't recall the exact words.

Arvia, Thomas 2015-11-19

00:04:10

00:23:23

00:31:06

96:1
96:2

Arvia_T-111715-2of5

M1.34

Q. Is it fair to say Sears first approached
Apex about designing a tool that became known as the

96:3

Max Axess Locking Wrench?

96:4

A. In my experience, that's not -- that's not

96:5

the process. The Sears team is responsible for

96:6

commercialization of the product in the Sears retail

96:7

store. The Craftsman team is responsible for

96:8

product.

96:9

Q. And so you're distinguishing between Sears

96:10

and Craftsman teams, right, in that answer?

96:11

A. Yeah, they're completely separate business

96:12

units. I'm sorry, yes, business units.

96:13

Q. So could you explain for the record this --

96:14

the relationship between Sears and Craftsman and how

96:15

the organizations work together?

96:16

A. So the relationship between Sears, the

96:17

retailer, and Craftsman, the business unit?

96:18

Q. Yes. And both entities, if I'm correct,

96:19

fall under the Sears Holding umbrella?

96:20

A. That's correct.

96:21

MR. HILMERT: And I'll just object it's

96:22

outside the scope, but I'm sure the witness knows the

96:23

answer, so go ahead and answer.

96:24
97:1
97:2

Printed:

5/5/2017

12:50:31PM

BY THE WITNESS:
A. The -- roughly between six and seven years

Page 10 of 22

Arvia T 20151119 PA DC on 5-2-17
97:3

ago, new business units were formed at Sears Holdings

97:4

and that's the time that the KCD business unit was

97:5

formed. KCD stands for Kenmore Craftsman DieHard.

97:6

Craftsman is a portion of that business unit. And

97:7

then -- and prior to that time, the merchant team or

97:8

the Sears team would be -- would be in charge of

97:9

anything pertaining to product.

97:10

When that change was made six to seven years

97:11

ago, the Craftsman team was charged with -- with the

97:12

product portfolio for Craftsman specifically;

97:13

identifying needs and opportunities in the market and

97:14

then working with suppliers to -- to solve those

97:15

needs through product. And then the Sears -- the

97:16

Sears team remained as leading the retail business.

97:17

Q. And so the buyers that we have talked about

97:18

a couple of times, the buyers, Sears buyers, are on

97:19

the Sears -- the retail side are where the buyers

97:20

live within the Sears organization, correct?

97:21

A. Correct. If there is a title of buyer, it's

97:22

on the Sears retail side.

97:23

Q. And DMMs are also on the retail side, right?

97:24

A. That's correct, DMMs are on the retail side.

98:1

Q. And although the Sears retail and the KCD

98:2

business units are both part of Sears Holding, is it

98:3

fair to say that Sears buyers interact with Craftsman

98:4

like they do other vendors that are not within the

98:5

Sears organization?

98:6

A. I -- I would say it's very similar.

98:7

Q. How would you say it's different?

98:8

A. There are circumstances where suppliers will

98:9

have Craftsman product and non-Craftsman product. So

98:10

as a buyer, you may have a relationship with a

98:11

supplier for one of their brands, then you may have a

98:12

relationship with the same people at the same

98:13

supplier for Craftsman branded product as well.

98:14

And then the other distinction is that

98:15

31

99:1 -99:7

Craftsman does not manufacture any product, so...

98:16

Craftsman as a brand unit within Sears.

Arvia, Thomas 2015-11-19

00:00:21

00:27:33

99:1

12:50:31PM

became the Max Axess Locking Wrench, correct?

99:6

5/5/2017

initiated contact with Apex about the product that

99:5

Printed:

understanding is that someone from Craftsman

99:4

M1.35

preparation for the deposition, it's -- it's Sears'

99:3

Arvia_T-111715-2of5

Q. So based on your review of the documents and

99:2

00:26:56

A. Based on what I've reviewed, that's the

Page 11 of 22

Arvia T 20151119 PA DC on 5-2-17
99:7
32

102:3 -102:20

first thing that I saw.

Arvia, Thomas 2015-11-19
102:3

00:01:07

00:27:54

00:26:35

Arvia_T-111715-2of5

M1.36

00:25:28

Arvia_T-111715-2of5

M1.37

00:25:17

Arvia_T-111715-2of5

M1.38

Arvia_T-111715-2of5

M1.39

Did Matt McDonnell discuss the idea of

102:4

contacting Apex to develop this new product with

102:5

anyone before he sent that e-mail?

102:6

A. Based on what I reviewed, I don't have any

102:7

record of any discussion he had with anyone.

102:8

Q. What was Matt McDonnell -- so director of

102:9

product management was his title, correct?

102:10

A. Correct.

102:11

Q. Did he have authority in February of 2012 as

102:12

the director of product management to initiate new

102:13

product development directly with Apex without

102:14

getting approval from anyone else?

102:15

A. Yes, that was his category. Everything was

102:16

hierarchical; he had a boss, but yes, he had

102:17

authority to initiate projects.

102:18

Q. Why did Sears think there was an opportunity

102:19

33

102:23 -103:4

to develop the product that became known as the Max

102:20

Axess Locking Wrench?

Arvia, Thomas 2015-11-19

00:00:11

00:29:01

102:23
102:24

that there was an opportunity in Matt's words.

103:2

BY MR. SKIERMONT:

103:3

Q. Is Matt McDonnell still with Sears?

103:4
107:5 -107:14

inferred why there was an opportunity, I just saw

103:1

34

A. I didn't read any document that -- that

A. He is not.

Arvia, Thomas 2015-11-19

00:00:45

00:29:12

107:5
107:6

within the organizational structure?

107:8

A. So when you say "final decision," I would

107:9

point out that there are multiple approval points, so

107:10

the ownership of a category goes on -- on a buyer, so

107:11

I would say the final approval would be the buyer and

107:12

the DMM. There are many approval points along the

107:13

way. It has to be signed off on by other support

107:14
109:18 -110:3

the final decision to buy or not buy a tool at Sears

107:7

35

Q. Who makes the decision at Sears -- who makes

groups.

Arvia, Thomas 2015-11-19
109:18
109:19

00:00:22

00:29:57

Bionic Wrench and the Max Axess Locking Wrench,

109:20

12:50:31PM

A. I understand.

109:22

5/5/2017

correct?

109:21

Printed:

00:24:32

You understand Kaleta was the buyer for the

Q. And you understand the DMM for those two

Page 12 of 22

Arvia T 20151119 PA DC on 5-2-17
109:23
109:24

Q. And Whitney is Kaleta's boss, right?

110:2

A. At that point in time, Adam was Kaleta's

110:3
112:4 -112:7

A. I understand.

110:1

36

products was Adam Whitney, correct?

boss.

Arvia, Thomas 2015-11-19

00:00:17

00:30:19

00:24:10

Arvia_T-111715-2of5

M1.40

Arvia_T-111715-2of5

M1.41

Arvia_T-111715-2of5

M1.86

00:22:38

Arvia_T-111715-2of5

M1.87

00:22:23

Arvia_T-111715-2of5

M1.43

00:22:18

Arvia_T-111715-2of5

M1.44

112:4
112:5

the Max Axess Locking Wrench, who gets to make that

112:7
112:10 -112:22

holiday 2012 period for either the Bionic Wrench or

112:6

37

Q. If Sears was only going to run DRTV for the

call?

Arvia, Thomas 2015-11-19

00:00:46

00:30:36

00:23:53

112:10

A. So I'll start by saying that as we review

112:11

DRTV programs as an organization, the -- the number

112:12

one goal is to create the best positive margin

112:13

outcome for the department. So at this point, every

112:14

buyer has candidates for DRTV.

112:15
112:16

one to recommend for DRTV would be -- would be

112:18

largely influenced, if not, you know, owned, by Adam

112:19

and Stephanie. They would be the ones that would say

112:20

of these two we've evaluated and this is -- if we

112:21

were going to choose from one of these two, this is

112:22
114:9 -114:14

Wrench versus Bionic Wrench, the decision on which

112:17

38

So for the question of Max Axess Locking

the one we would choose.

Arvia, Thomas 2015-11-19
114:9

00:00:29

00:31:22

00:23:07

Q. Yeah. Is the entirety of your knowledge

114:10

spring/summer of 2012 based on documents?

114:13

A. So the entirety of my personal knowledge,

114:14
115:3 -115:7

Bionic Wrench and the Max Axess Locking Wrench in the

114:12

39

about the decision making at Sears surrounding the

114:11

yes, is based on documents that I reviewed.

Arvia, Thomas 2015-11-19

00:00:15

00:31:51

115:3
115:4

documents that you've reviewed, correct?

115:6

A. That is correct. It's solely based on Sears

115:7
118:15 -118:17

details today, that is solely based on Sears

115:5

40

Q. And -- and to the extent you are aware of

documents that I have reviewed.

Arvia, Thomas 2015-11-19

00:00:05

00:32:06

118:15
118:16

118:20 -118:21

would you identify as the decision maker in this

118:17
41

Q. Based on the documents you reviewed, who
case?

Arvia, Thomas 2015-11-19
118:20

Printed:

5/5/2017

12:50:31PM

00:00:06

00:32:11

A. At that time, I would say it would be Adam

Page 13 of 22

Arvia T 20151119 PA DC on 5-2-17
118:21
42

125:19 -125:24

Link > P119.1

and Stephanie.

Arvia, Thomas 2015-11-19

00:00:18

00:32:17

00:22:12

Arvia_T-111715-3of5

M1.45

00:21:54

Arvia_T-111715-3of5

M1.46

00:21:40

Arvia_T-111715-3of5

M1.47

Arvia_T-111715-3of5

M1.48

Arvia_T-111715-3of5

M1.49

125:19

Q. Mr. Arvia, I'm introducing 15, which is

125:20

APEX_7774. Is this the e-mail that you were

125:21

referring to where Matt McDonnell reached out to Jill

125:22

129:23 -130:2

Link > Hide

A. That's the e-mail I was referring to

125:24
43

Lowe about an opportunity for Bionic 2.0?

125:23

earlier.

Arvia, Thomas 2015-11-19

00:00:14

00:32:35

people reside in the same building as the hand tool

130:1

buyers from Sears?

130:2
144:3 -144:14

Q. The Craftsman hand tool product development

129:24

44

129:23

A. Yes, that's correct.

Arvia, Thomas 2015-11-19

00:01:14

00:32:49

144:3

Q. Apart from the general Sears specification

144:4

that you reviewed that was sent to Apex, did Sears

144:5

provide any specifications to Apex specific to the

144:6

Max Axess Locking Wrench that was under development?

144:7

A. At any point in time?

144:8

Q. Yeah.

144:9

A. So the way I'd describe it is a -- is a

144:10

would work to create an execution of the product that

144:13

captured that market opportunity and there would be a

144:14
146:13 -147:2

a product, the supplier, in this case Apex, would --

144:12

45

feedback loop. If there was a market opportunity for

144:11

feedback loop from Sears.

Arvia, Thomas 2015-11-19
146:13

00:01:21

00:34:03

00:20:26

Did Sears expect that Apex would use the

146:14

Bionic Wrench as a benchmark when developing the Max

146:15

Axess Locking Wrench?

146:16

A. I can say that competitive benchmarking is

146:17

-- is one of the elements that you would incorporate

146:18

into a product development process.

146:19

Q. Does that mean that Sears would expect Apex

146:20

to use the Bionic Wrench as a benchmark when

146:21

developing the Max Axess Locking Wrench?

146:22

A. So if you're -- if you're reviewing the

146:23

product and you're benchmarking, you should look at

146:24

147:5 -147:6

Q. If you're creating a Bionic 2.0, you should

147:2
46

all available product in the marketplace.

147:1

probably look at the Bionic 1.0, is that fair?

Arvia, Thomas 2015-11-19

00:00:05

00:35:24

147:5

Printed:

5/5/2017

12:50:31PM

A. We were creating a product for market

147:6

00:19:05

opportunity.
Page 14 of 22

Arvia T 20151119 PA DC on 5-2-17
47

147:8 -147:9

Arvia, Thomas 2015-11-19

00:00:03

00:35:29

147:8

48

147:12 -147:14

Arvia_T-111715-3of5

M1.50

00:18:57

Arvia_T-111715-3of5

M1.51

00:18:48

Arvia_T-111715-3of5

M1.52

00:18:39

Arvia_T-111715-3of5

M1.53

00:18:21

Arvia_T-111715-3of5

M1.54

00:16:35

Arvia_T-111715-3of5

M1.55

00:16:30

Arvia_T-111715-3of5

M1.56

Q. How would you characterize the market

147:9

00:19:00

opportunity?

Arvia, Thomas 2015-11-19

00:00:09

00:35:32

147:12

147:16 -147:18

as there was a potential for demand in the market for

147:14
49

A. I would characterize the market opportunity

147:13

this product.

Arvia, Thomas 2015-11-19

00:00:09

00:35:41

147:16

147:21 -147:24

potential demand for Bionic 2.0 the fact that there

147:18
50

Q. And was Sears' understanding that there was

147:17

was demand for Bionic 1.0?

Arvia, Thomas 2015-11-19

00:00:18

00:35:50

147:21

the Craftsman team at this time felt there was an

147:24
148:2 -148:20

Bionic Wrench, and my interpretation is that -- that

147:23

51

A. So there was a demand for a product called

147:22

opportunity for an additional product.

Arvia, Thomas 2015-11-19

00:01:46

00:36:08

148:2

Q. And that additional product would be a

148:3

Craftsman branded wrench that would compete with the

148:4

Bionic Wrench, is that fair?

148:5

A. Based on what I've reviewed, I would -- I

148:6

would say "complement" is a better word.

148:7

Q. Why would you say "complement" is a better

148:8

word than "compete with"?

148:9

A. Because based on -- based on what I

148:10

reviewed, the intent was that if there was an

148:11

opportunity with Craftsman, it would be additive to

148:12

the assortment.

148:13

Q. What time frame are you talking about when

148:14

you just testified that the intent was to have an

148:15

additive opportunity to the assortment?

148:16

A. I would say -- based on what I reviewed, I

148:17

Sears' perspective, change from being an additive one

148:20
148:23 -148:24

Q. At some point did the opportunity, from

148:19

52

would say April.

148:18

to a replacement opportunity?

Arvia, Thomas 2015-11-19

00:00:05

00:37:54

148:23
148:24
53

163:7 -163:9

A. I don't see anything that indicates it was
ever intended to be a replacement.

Arvia, Thomas 2015-11-19

00:00:28

00:37:59

163:7

5/5/2017

12:50:31PM

Exhibit 18. The first page is SEARS_648. Have you

163:9

Printed:

Q. I'm introducing a document I'm marking Arvia

163:8

Link > P373.1

seen Exhibit 18 before today?

Page 15 of 22

Arvia T 20151119 PA DC on 5-2-17
54

163:10 -163:13

Arvia, Thomas 2015-11-19

00:00:11

00:38:27

00:16:02

163:10

163:16 -163:20

Arvia, Thomas 2015-11-19

00:00:18

00:38:38

00:15:51

A. My understanding is the good news is Apex is

163:17

able to reduce the width of the handle without

163:18

reducing the size range. In other words, they're not

163:19

changing the amount of fasteners that this tool would

163:20
163:22 -163:22

be able to work with.

Arvia, Thomas 2015-11-19
163:22

57

164:2 -164:5

00:00:02

00:38:56

00:15:33

Arvia_T-111715-3of5

M1.58

00:38:58

00:15:31

Arvia_T-111715-3of5

M1.82

Arvia_T-111715-3of5

M1.59

Arvia_T-111715-3of5

M1.60

Arvia_T-111715-3of5

M1.61

Q. And why was this such good news?

Arvia, Thomas 2015-11-19

00:00:12

164:2

of the product, allow it to be more accessible to a

164:5

Link > P373.1.2

the width of the handle would improve the ease of use

164:4

164:7 -164:14

A. So by -- my understanding is that reducing

164:3

58

wider range of users.

Arvia, Thomas 2015-11-19

00:00:23

00:39:10

00:15:19

164:7

Q. In the second paragraph of Ms. Lowe's e-mail

164:8

dated May 21st, she writes to Ms. Kaleta, "We can

164:9

reduce the width of the handle without reducing the

164:10

size range. The new handle width on the eight-inch

164:11

will be 120 MM, 4.75 inches. This is the same handle

164:12

width as the LoggerHead eight-inch."

164:13
164:14
59

164:19 -165:2

Do you see that?
A. I do.

Arvia, Thomas 2015-11-19

00:00:38

00:39:33

00:14:56

164:19

the LoggerHead eight-inch?

164:22

A. Where they're indicating it's the same width

164:23

as the LoggerHead eight-inch, that would be an

164:24

example of competitive benchmarking. The key here is

165:1

as Craftsman builds product for the -- for the

165:2

Link > P373.2

width of the handle to be the same handle width as

164:21

165:21 -166:6

Q. Was it good news that Apex had changed the

164:20

60

enduser, ease of use is a top priority.

Arvia, Thomas 2015-11-19

00:00:43

00:40:11

00:14:18

165:21

165:24

the first sentence, "I have received the following
ship dates from our Asia team on the six-inch and

166:2

12:50:31PM

to Kaleta and others at Craftsman and she writes in

166:1

5/5/2017

an e-mail that's also dated May 21st from Jill Lowe

165:23

Printed:

If you turn to page two of Exhibit 18, it's

165:22
Link > P373.2.1

M1.57

regarding the handle width of the Max Axess?

163:16

56

Arvia_T-111715-3of5

news Ms. Lowe was reporting to Ms. Kaleta and others

163:13
55

Q. What is your understanding of the very good

163:12

M1.89

A. I've seen this.

163:11

Link > P373.1.1

Arvia_T-111715-3of5

eight-inch Max Axess adjustable wrench based on your

Page 16 of 22

Arvia T 20151119 PA DC on 5-2-17
166:3

request from last week of an estimated 250K

166:4

eight-inch wrenches and 70K six-inch wrench buy."

166:5
166:6
61

166:21 -167:1

Do you see that?
A. I do.

Arvia, Thomas 2015-11-19

00:00:16

00:40:54

166:21

167:4 -167:6

00:13:19

Arvia_T-111715-3of5

M1.63

Arvia_T-111715-3of5

M1.64

Arvia_T-111715-4of5

M1.65

Arvia_T-111715-4of5

M1.66

for those volume of wrenches that Ms. Lowe writes

167:1
62

the week prior to May 21st and asked for ship dates

166:24

M1.62

Mr. Arvia, that Stephanie Kaleta contacted Jill Lowe

166:23

Arvia_T-111715-3of5

Q. And so it's fair to say, isn't it,

166:22

00:13:35

about in her e-mail, right?

Arvia, Thomas 2015-11-19

00:00:12

00:41:10

167:4
167:5

167:8 -167:18

would speculate that this is a request that came from

167:6
63

A. Yes, based on comments in Jill's e-mail, I
Sears.

Arvia, Thomas 2015-11-19

00:00:35

00:41:22

00:13:07

167:8

Q. This is a document, Exhibit 18, that you

167:9

reviewed in preparation to be Sears' corporate

167:10

representative, correct?

167:11

A. It is.

167:12

Q. So you don't have any reason to question

167:13

that Sears requested ship dates from Apex for 320,000

167:14

I have any reason to question it, I have no reason to

167:18

207:23 -208:3

communication from Sears, but if your question is do

167:17

64

A. I can't confirm or deny based on a

167:16
Link > Hide

thousand eight-inch and six-inch wrenches, right?

167:15

question it one way or the other.

Arvia, Thomas 2015-11-19
207:23

00:00:18

00:41:57

00:12:32

Q. Has Sears priced the Max Axess Locking

207:24

discretion of the retailers. It's the retailer's

208:3
208:12 -209:1

A. Pricing of any product is at the sole

208:2

65

Wrench below the price point of the Bionic Wrench?

208:1

decision what to price a product at.

Arvia, Thomas 2015-11-19

00:00:54

00:42:15

00:12:14

208:12
208:13

Q. And in their sole discretion, has Sears

208:16

priced the Max Axess Locking Wrench at a price point

208:17

below the Bionic Wrench?

208:18

A. To answer that question would need to be

208:19

done at a given point in time. Sears is a high-low

208:20

promotional retailer who promotes products at various

208:21

times for various promotional strategies. So I would

208:22
12:50:31PM

A. So in this case here, it's Sears.

208:15

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to?

208:14

Printed:

Q. Who is the retailer that you are referring

guess over the past few years, we would find a time
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Arvia T 20151119 PA DC on 5-2-17
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when Max Axess was priced lower and we would find a

208:24

66

218:24 -220:2

time when Bionic Wrench was priced lower, based on

209:1

the margin commitments of the department.

Arvia, Thomas 2015-11-19
218:24

00:02:02

00:43:09

00:11:20

A. Financial expectations at launch time?

219:4

Q. Yeah.

219:5

A. So the way I think through that with any

219:6

product launch, you're looking for a product that's

219:7

going to create a profitable outcome for the company

219:8

and -- and that's going to be incremental to not

219:9

having that product there. So makes the assortment

219:10

stronger with the product there.

219:11

Q. And did Sears expect that the Max Axess

219:12

Locking Wrench fit that bill?

219:13

A. I would say that our expectations was that,

219:14

based on the options we had for products to promote,

219:15

that was -- that was one of the best programs we had

219:16

to fit that bill for maximum margin outcome.

219:17

Q. Did Sears expect the Max Axess Locking

219:18

Wrench in holiday 2012 to do better or worse than the

219:19

Bionic Wrench did holiday season 2011?

219:20

A. Think our expectations are relative to other

219:21

options that we have at that time more so than prior

219:22

year, so this was among the best options we had at

219:23

that time. So I would say among the programs we had,

219:24

this was a DRTV program so it was among our best --

220:1

among the best programs we had in the department to

220:2

promote on DRTV.

Arvia, Thomas 2015-11-19
220:9

00:01:15

00:45:11

00:09:18

What are the criteria for choosing which

220:10

products Sears puts on DRTV?

220:11

A. As -- as you know, there is an expense to

220:12

DRTV, so when you evaluate a DRTV opportunity, you

220:13

estimate the total margin opportunity of the product

220:14

or program. You net that, you net out the expense of

220:15

any DRTV, add in the impact of any subsidy, and you

220:16

get a net margin impact.

220:17

best programs that provide the best net impact from a

220:19

margin standpoint.

220:20

Q. And -- and estimating total margin and the

220:21

12:50:31PM

So the expectations are that we select the

220:18

5/5/2017

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2012?

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the Max Axess Locking Wrench when it launched holiday

219:2

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What were Sears' financial expectations for

219:1

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other things you mentioned to -- for the criteria for

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DRTV, those things are based on Sears' expectations

220:23

about how the product will do? It's -- Sears is kind

220:24

of running a model or a forecast of what it thinks

221:1

the likely profitability or sales of the product will

221:2

68

221:4 -221:10

be?

221:3

A. Yes, that's fair.

Arvia, Thomas 2015-11-19

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00:46:26

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Q. What is the plan margin expectation at the

221:12

category level for products like the Max Axess

221:13

Locking Wrench and the Bionic Wrench?

221:14

A. That would be at the category level, so we

221:15

wouldn't have it at a product level. So the hand

221:16
221:17 -222:8

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what you mean.

221:11

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margin expectation at the category level, if that's

221:10

00:07:31

the category level there is a plan, you know, a plan

221:9

221:11 -221:16

A. So if I understand your question, yes, at

221:8

69

particular?

221:7

M1.69

the tool category and hand tool category in

221:6

Arvia_T-111715-4of5

Q. Does Sears have profit margin benchmarks for

221:5

00:08:03

tools category would have an expectation.

Arvia, Thomas 2015-11-19

00:00:56

00:47:17

221:17

Q. What is the hand tools category profit

221:18

margin expectation at Sears?

221:19

A. I don't -- I didn't review that for this.

221:20

Q. Do you know just from having worked in hand

221:21

tools?

221:22

A. I can give you -- so I'll give you an

221:23

estimation. Hand tools, hand tools category,

221:24

historically delivers a better-than-average margin

222:1

outcome for the department. What I mean by that, the

222:2

hand tools category margin as a rate to sale is

222:3

better than the total margin for the tools

222:4

department.

222:5

So the expectation of anything in this hand

222:6
222:7

222:9 -222:11

better than the average margin rate of the tools

222:8
71

tool category would be that the margin rate would be
department.

Arvia, Thomas 2015-11-19

00:00:12

00:48:13

222:9
222:10

264:1 -264:2

tools department?

222:11
72

Q. What was the average margin rate of the
A. At that time, 30 to 31 percent.

Arvia, Thomas 2015-11-19
264:1

Printed:

5/5/2017

12:50:31PM

00:00:21

00:48:25

Q. Okay, I'm marking a document, introducing
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Arvia T 20151119 PA DC on 5-2-17
Link > P441.1
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264:7 -265:14

Exhibit 33. Is it up?

Arvia, Thomas 2015-11-19

00:02:05

00:48:46

00:05:43

264:7

Arvia 33 is?

264:11

A. Arvia 33, which is up on screen, is an

264:12

example of an ad hoc -- excuse me, an ad hoc market

264:13

basket report.

264:14

Q. And what is an ad hoc market basket report?

264:15

A. This market basket report is representing

264:16

the Bionic Wrench for a period of time; the report

264:17

doesn't show a period of time, so I can't speak to

264:18

the time period.

264:19

And it's -- on the top of the report of it

264:20

gives the performance of the Bionic Wrench in and of

264:21

itself; sales, margins, units, and transactions.

264:22

Units is the total, number of sales units for this

264:23

time period, transactions is the total number of

264:24

transactions it appeared on. That number's going to

265:1

be lower; that would assume that a subset of people

265:2

bought more than one at a time.

265:3

The -- the next three are basket attachment

265:4

sales, basket attachment margin, basket attachment

265:5

units. Those numbers represent the sum total of any

265:6

other items that were purchased on a transaction that

265:7

also included a Bionic Wrench.

265:8
265:9

So what this does show is for those 114,000
transactions, we sold, for example purposes,

265:10

2.4 million in other stuff on those transactions.

265:12

It's a data output that gives you a sum total of the

265:13

transactions. It doesn't show causality. It doesn't

265:14
268:18 -269:20

2.9 million and change for the Bionic Wrench, and

265:11

74

show what drove what.

Arvia, Thomas 2015-11-19
268:18

00:01:49

00:50:51

A. I'm going to approximate a day. It's not a

268:21

-- the other systems we're referring to are Sears --

268:22

the Sears ad hoc reporting I'm referring to for ALEX

268:23

is stuff that's readily available on most associates'

268:24

systems. You run a report and it will come up in 15

269:1

to 60 minutes, depending on the complexity of the

269:2

report. These are done on a request basis.

269:3

12:50:31PM

report?

268:20

5/5/2017

00:03:38

Q. How long does it take to run a market basket

268:19

Printed:

M1.76

4171. Can you identify -- can you describe what

264:10

Link > P441.2.1

Arvia_T-111715-5of5

native version of a document produced to us at Sears

264:9

Link > P441.2

M1.75

Q. And this is a document that was -- that is a

264:8

Arvia_T-111715-5of5

Q. Where does Exhibit 33, this report, the

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Arvia T 20151119 PA DC on 5-2-17
269:4

basket report, how is it -- where does it come from?

269:5

A. I'm not aware of the specific system. It's

269:6

on a request basis, so transaction level data is --

269:7

it has more limited access, for example, than -- than

269:8

-- than more global data.

269:9

So what we would do in this case here, in

269:10

the tools team, is we would ask our finance team to

269:11

work with the team that houses the data and request

269:12

this report.

269:13

Q. And so what the market basket report at

269:14

Arvia 33 shows is that the -- the basket attachment

269:15

sales were nearly the same amount as the sales of the

269:16

total of other sales that were in the same

269:19

transaction as a Bionic Wrench, was within $510,000

269:20
275:20 -276:7

A. Yes. What this report shows is the sum

269:18

75

item itself, is that fair?

269:17

of sales of the Bionic Wrench.

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00:00:31

00:52:40

00:01:49

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M1.77

00:53:11

00:01:18

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M1.79

00:00:53

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M1.80

Link > P476.1

275:20

Q. Exhibit 35 is an e-mail from Kim Schafer to

Link > P476.1.1

275:21

you on August 22, 2012, subject: Basket Builders.

275:22

Do you see that?

275:23

A. I do.

275:24

Q. And did you receive this e-mail from

276:1

Ms. Schafer August 22, 2012?

276:2

A. I did.

276:3

Q. And the question in this e-mail that

276:4

Ms. Schafer poses to you is, "What about the

276:5

Craftsman version of the Bionic?"

276:6
276:7
76

276:8 -276:8

276:11 -276:16

A. I do.

Arvia, Thomas 2015-11-19
276:8

77

Do you see that?

00:00:01

Q. What was she asking you?

Arvia, Thomas 2015-11-19

00:00:24

276:11
276:12

program for basket builders, which was taking

276:14

specific items throughout the store and

276:15

cross-merchandising them in locations across the

276:16
276:18 -277:2

there happened to be a program, a Sears storewide

276:13

78

A. Some -- my recollection is in 2012 holiday,

store.

Arvia, Thomas 2015-11-19
276:18

00:00:32

00:53:36

Q. And what was she referring to when she said

276:19

5/5/2017

12:50:31PM

A. My assumption is that Kim was asking is --

276:21

Printed:

"What about the Craftsman version of the Bionic?"

276:20

is -- is there a Craftsman item that we have for this

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Arvia T 20151119 PA DC on 5-2-17
276:22
276:23

Bionic?

277:2

277:4 -277:10

about she referred to as the Craftsman version of the

277:1

79

Q. And the Craftsman item that she was asking

276:24
Link > Hide

basket builders program.

A. In her words, yes.

Arvia, Thomas 2015-11-19
277:4

00:00:25

00:54:04

277:5

M1.81

A. It did.

277:7

Q. What's Ms. Schafer's position at Sears?

277:8

A. Ms. Schafer is the VP of inventory for the

277:9

tools department, so as of 8-22, this would not yet

277:10

have been available in Sears stores.
Play Time for this Script:

00:54:29

Total time for all Scripts in this report:

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name by August 2012, didn't it?

277:6

Printed:

00:00:25

Did -- the Max Axess Locking Wrench had a

00:54:29

12:50:31PM

Page 22 of 22