Steves and Sons, Inc. v. Jeld-Wen, Inc.

Filing 794

MEMORANDUM OPINION. Signed by District Judge Robert E. Payne on 1/10/2018. (jsmi, )

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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Richmond Division STEVES AND SONS, INC., Plaintiff, Civil Action No. V. JELD-WEN, 3:16cv545 INC., Defendant. MEMORANDUM OPINION This INC.'S matter MOTION CONCERNING reasons denied is IN LIMINE NO. STEVES' set in before part 9: FUTURE forth below, subject the Court TO on EXCLUDE VIABILITY DEFENDANT LAY (ECF WITNESS No. JELD-WEN, TESTIMONY 553) . For the the motion will be denied in part and to renewal at trial, depending on the precise questions and the foundational evidence. BACKGROUND Steves & Sons, ('VELD-WEN") Inc. violated (''Steves") Section 7 of acquired CraftMaster Manufacturing, (ECF No. Steves 5) must (Under show substantially other remedies, to alleged that Inc. Seal) SlSl 175-78. that "the lessen the effect Act when it in 2012. Compl. prevail on claim, such competition." Steves seeks damages Clayton Inc. ("CMI") To of JELD-WEN, for 15 that acquisition U.S.C. § 18. future may be Among lost profits as a result of the CMI acquisition, based on evidence that JELD-WEN has given notice that it will not renew the parties' term doorskin supply agreement (''the Supply that contract expires in September 2021, 2012 long- Agreement") when leaving Steves without a stable supply of doorskins. Steves asserts that its witnesses will testify to the following five topics relevant to those issues: 1) ''the critical importance of interior molded doorskins to Steves' ability to manufacture interior molded doors; 2) the significance of business to Steves' 3) the witnesses' Steves' interior molded door business overall; efforts of doorskin supply termination of Steves' to secure alternative sources for the period following Supply Agreement with JELD-WEN and the results of those efforts; 4) the witnesses' expectations as to whether Steves will be able to obtain a stable, reliable supply of interior molded expectations; doorskins and the bases for these and 5) the harm that uncertainty regarding Steves' ongoing ability to access a stable, reliable supply of interior molded doorskins to PI. 0pp. states that (ECF No. that will viable cause it Agreement 618) "will confirm source Steves' of expires present 2021. will molded Id. at 1-2. evidence Steves interior in caused and will continue business." {Under Seal) that has at from not In addition, non-party have doorskins" 3. a Steves witnesses commercially when JELD-WEN moves the to Supply exclude at trial any opinions or testimony speculating that Steves will not remain a viable business after the completion of the Supply Agreement in September 2021, out of business at that or that Steves will liquidate or go time. DISCUSSION JELD-WEN's primary argument is that the evidence it seeks to exclude is lay witness opinion testimony that is inadmissible under Federal Rules of Evidence 602 and 701. Rule 602 allows a witness to testify about a particular issue ''only if evidence is introduced sufficient to support a personal knowledge of the finding that the witness has matter." Similarly, under Rule 701, lay opinion testimony must be '"rationally based on the witness's perception" and ''not based on scientific, technical, or other specialized knowledge within the scope of Rule 702." ''The modern trend favors the admission of opinion testimony [under Rule knowledge opinion 701], as is distinguished offered narrative facts Corp. Wanzer, V. quotations estimate provided that the is well founded on personal hypothetical basis of facts," relevant 897 F.2d As profits 703, a or 706 (4th result, losses Cir. "company as a lay and historical that the witness has perceived." MCI omitted). future "on from it the or Telecomms. 1990) {internal officials witness may if the estimates are based on personal experience." Sprint Nextel Corp. V. Simple (citing, Cell inter Inc., alia. 248 Lord F. Supp. & Taylor, 3d 663, LLC v. 675 White (D. Md. 2017) Flint, L.P., 849 F.3d 567, 575 Inc., Immtech Int^l, realm of allowed . (4th 570 lost . Cir. 2017)); F.3d 858, profits, . where the accord 862 Von (7th Cir. lay 2009) opinion witness bases der Ruhr v. ('^In the testimony is opinion on his particularized knowledge he possesses due to his position within the company."); Inc. , 414 exclude F.3d Nat^l 546, testimony matters that Hispanic 551-52 by (5th corporate or officer of a projected profits of the Lube, 1993) ) ) . that the Inc. 2005) officers see also Fed. Notes on Rules—2000 Amendment qualifying Cir. Inc. v. or v. Witco to an . Corp., projections of does Evid. 701, not owners such as 4 . testify to the . expert." F.Sd 1153, Under that line of authority, ''future 701 business without business, as Trucking, on industry Committee (''[M]ost courts have permitted the business witness R. Rex (^^Rule relate to their business affairs, practices and pricing."); owner Circus, a the value or necessity of (citing 1175-76 Lightning {3d Cir, courts generally require business or operation come from someone who has intimate and thorough knowledge of the business gathered either from authority." 73, 81 Donlin (3d Cir. JELD-WEN v. a lengthy Philips Lighting N. or Am. a position Corp., 581 of F.3d 2009). also argues that inadmissible under Rule 403. exclude tenure relevant evidence the evidence in Under that provision, if 4 its probative question is a court "may value is substantially outweighed by a confusing the time, or Evid. issues, misleading the Rule presenting of . . jury, . unfair prejudice, undue delay, evidence." Fed. R. categories of 701 JELD-WEN concedes testimony specified testimony. However, that above it the will not have argues a first could be that well as the evidence that will, Steves cumulative wasting 403. I. needlessly danger three admitted the as lay witness categories—as Steves claims, as other two "confirm that commercially viable source of interior molded doorskins" when the Supply Agreement expires in 2021—must be excluded witnesses market because to or predictions Steves' ability personal they would testimony make suppliers in 2021. the that Thus, knowledge have to about to necessarily the obtain says JELD-WEN, needed to speculate of the doorskins the doorskin from other the witnesses would lack admit about state requires that events testimony that because had not yet witnesses can all occurred. In response, Steves contends that its testify on the issues noted because they have personal knowledge about Steves' operation, its finances, and the importance of interior molded door sales to its financial wellbeing. They are also actions, familiar with JELD-WEN's which have threatened Steves' and Masonite's recent ability to obtain a steady supply of doorskins Steves' and which have made long-term witnesses will future. not these witnesses Moreover, testify on concerned about Steves speculative says that topics, its such as whether Teverpan—a Turkish supplier-will be selling doorskins in the United States in 2021, or whether Masonite will decide to categories of offer long-term doorskin supply agreements to customers. There is no dispute that the first testimony are admissible under Rules groups—the interior importance molded interior door molded of interior 602 and 701. molded manufacturing, door business three and to its The first doorskins the to Steves' of value overall two Steves' business—are precisely the sort of "industry practices" that a witness like Sam Steves experience company. II with Nat'l has personal Steves' Hispanic knowledge "business Circus, of given affairs" 414 F.3d at his while 552. extensive running the Likewise, the third category—efforts to secure alternative sources of doorskin supply—includes no opinions, only testimony which the witnesses were personally involved. 502. JELD-WEN's motion will therefore be about events See Fed. denied to R. the in Evid. extent that it seeks to exclude this testimony. The fourth and fifth categories, broad manner that invites however, speculative are defined in a testimony. The distinguishing factor between cases that permitted and excluded testimony or evidence that involved future projection, such as future profits estimates, extrapolation is is the grounds on which the witness's based. witnesses based their narrative facts that In cases testimony the[y] allowing primarily . . . ha[d] such on "historical perceived"—that events that had already occurred. MCI Telecomms. at 706 {bookkeeper's admissible because control testimony about evidence, Corp., company's and her ''personal accountant); see also knowledge Lord & and Taylor, profits within her perception" 849 is, 897 F.2d likely it was based on company records or F.3d as at an 575-76 (testimony projecting store construction costs admissible where witness ''the drew more estimate than 50 from ''on-the-job redesign projects Lightning Lube, 4 F.3d at 1175-77 experience," he ha[d] including overseen"); (company's owner could testify about future lost profits and harm to value of company, despite need for some predictions about business's performance, his past experience with business's contracts, and competition); (investigator damages company's affected for resulting Sprint cell by phone from expected fraud). Nextel, In company fraud revenue 248 contrast, operating costs, Supp. could where per F. given 3d estimate at future he phone simply multiplied by number of testimony has been phones excluded where it "would have involved predictions of future events, estimates Jones V. of amounts that had already Colonial Life & Accident Ins. 7 675 accrued Co., before not trial." 178 F.3d 1284, 1999 WL 261858, at *2 570 F.3d at 863 {4th Cir. May 3, 1999) ; see also Von der Ruhr, {lost profits estimates excluded where witness ''intended to testify to his expectation of millions of dollars in profits from a brand new drug, which had not been approved by the FDA, which still needed a corporate partner, and for which no competitive market analysis had been conducted"). The its intended testimony face to third-party be based interior on in the Steves' molded fourth category appears previous doorskin interactions suppliers, and, on with if the testimony is thusly confined it will be admissible to the extent that it is based on facts known to date. However, if the witnesses speculate about future events in the doorskin industry that affect their speculative. Jones expectations, involved a the testimony remarkably similar will be situation. There, the district court had allowed a witness to testify about his past earnings experience, time." the 1999 WL and rate at 261858, to "estimate[], which at *2. policy The based renewals Fourth on his past decline over Circuit, however, affirmed the district court's exclusion of testimony about the witness's "personal expectation or perception of his renewals in the future, given the present state of the situation." Id. It expressly distinguished that testimony from permitted testimony about the witness's renewals." Id. "past income (emphasis added). and past experience with Here, their current Steves' and the witnesses' knowledge expectations of the are success said to be based on (or lack thereof) of past negotiations with doorskin suppliers like Teverpan Masonite. present However, expectations results of Steves' to the requires future extent those that testimony witnesses to about predict the interaction with those suppliers and other foreign suppliers, which are ''hypothetical facts" of which the witnesses speculative. lack personal MCI Telecomms. knowledge, Corp., the 879 testimony would be F.2d at 706. Whether speculation will be offered must depend on the specific question and the foundation laid for i t . The concerns. fifth category of That must be decided at trial. proposed testimony Testimony concerning the harm that raises similar uncertainty about Steves' ability to access a stable doorskin supply has caused is admissible under Rule 701 because it involves a straightforward accounting of financial harm based on events that have already occurred, as in the cases detailed above. F. Supp. 3d at 675. On the other hand, See Sprint Nextel, 248 testimony about the harm that uncertainty will cause in the future requires witnesses to speculate affect from about the possible occurrence Steves' ability to companies besides JELD-WEN witnesses testifying business experience, obtain about Steves' an events adequate after future of 2021. profits witnesses that doorskin And, based might supply unlike on the their here would be applying their knowledge of the interior molded doorskin industry to an untested situation involving potential factors—like increased foreign doorskin supply—not accounted for in the past doorskin market. See Von der Ruhr, 570 F.3d at 862-63. Consequently, testimony about future harm would involve too much speculation to satisfy Rule 701. But here, too, the Court's decision must await the question presented at trial. Finally, the evidence that Steves will not have a commercially viable source of interior molded doorskins when the Supply Agreement expires in 2021 is speculative if that is to be the question. Steves' access to a commercially viable source of interior molded doorskins in 2021 appears to involve the very ^^predictions of future events" that have undermined other excludable evidence. Jones, 1999 WL 261858, at *2. However, that topic also must await foundation and a specific question. II. Rule 403 JELD-WEN events-the argues fourth that the and fifth evidence categories that implicates of testimony, future and the evidence of Steves' inability to access a viable doorskin supply in 2021-should also be excluded under Rule 403 because introducing such evidence invites the jury to speculate about events that might never occur. address this argument. 10 Steves does not explicitly JELD-WEN might well be correct. It may be true, as Steves argues, that testimony and evidence on all the specified issues is relevant to both the broader Section 7 claim for liability and Steves' related claim for future lost profits damages, because that evidence bears on the anticompetitive effects of the CMI acquisition and the specific effect on Steves' financial condition. See Fed. R. Evid. 401. At the same time, probative value of speculative evidence is non-existent, best, minimal. So if a witness is asked to the or at speculate about future events that might not happen. Rule 403 will foreclose it. It is up to counsel to frame questions that are not based on speculation. That will be measured at trial. CONCLUSION For MOTION the IN foregoing LIMINE CONCERNING STEVES' NO. reasons, 9: TO DEFENDANT EXCLUDE FUTURE VIABILITY LAY (ECF No. JELD-WEN, WITNESS INC.'S TESTIMONY 553) will be denied in part and denied in part subject to renewal at trial. I t is so ORDERED. /s/ Robert E. Payne Senior United States District Judge Richmond, Virginia Date: January /Q , 2018 11

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