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
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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.
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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
5/5/2017
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
208:23
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
M1.68
2012?
219:3
Printed:
Arvia_T-111715-4of5
the Max Axess Locking Wrench when it launched holiday
219:2
220:9 -221:3
M1.67
What were Sears' financial expectations for
219:1
67
Arvia_T-111715-4of5
other things you mentioned to -- for the criteria for
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Arvia T 20151119 PA DC on 5-2-17
220:22
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
00:00:32
00:46:26
221:4
Arvia, Thomas 2015-11-19
00:00:19
00:46:58
00:07:12
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00:06:16
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00:06:04
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M1.88
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
M1.70
what you mean.
221:11
70
Arvia_T-111715-4of5
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
73
264:2
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
Page 20 of 22
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.
Arvia, Thomas 2015-11-19
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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M1.78
00:53:12
00:01:17
Arvia_T-111715-5of5
M1.79
00:00:53
Arvia_T-111715-5of5
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:
5/5/2017
Arvia_T-111715-5of5
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
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