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

Filing 794

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

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