United States District Court, E.D. Virginia, Richmond Division
E. Payne Senior United States District Judge.
matter is before the Court on PLAINTIFF STEVES AND SONS,
INC.'S MOTION IN LIMINE TO EXCLUDE EVIDENCE OR ARGUMENT
THAT CMI WOULD HAVE EXITED THE DOORSKIN MARKET HAD IT NOT
BEEN ACQUIRED BY JELD-WEN (ECF No. 499) . For the reasons set
forth below, the motion will be granted.
& Sons, Inc. ("Steves") alleged that JELD-WEN,
Inc. ("JELD-WEN") violated Section 7 of the Clayton
Act when it acquired CraftMaster Manufacturing, Inc.
("CMI") in 2012. Compl. (ECF No. 5) (Under Seal)
¶¶ 175-78. To prevail on that claim, Steves must
show that "the effect of such acquisition may be
substantially to lessen competition." 15 U.S.C. §
asserts that it will argue that the CMI acquisition could not
have substantially lessened competition because CMI's
"weakened competitive condition'' at the time of
the acquisition made it "unlikely to be able to compete
as effectively as a seller of doorskins, whether or not it
remained in business." Def. Opp. (ECF No. 654) (Under
Seal) at 2.
In particular, JELD-WEN will show through fact witnesses,
including Bob Merrill [ ("Merrill")], the CEO of
CMI at the time of the Acquisition, as well as JELD-WEN's
experts, that CMI was in severe financial distress when its
owners decided to sell the assets. CMI's financial
distress was a direct result of the catastrophic housing
market crash in 2007. CMI had lost money every year since
2008 and that had been kept afloat by a $36 million loan from
the two families who owned it. In 2010, CMI suffered a net
loss of $8.9 million. In 2011, it lost $11.9 million. As of
March 30, 2012, CMI owed an additional $16.7 million under
third party loan agreements that were set to expire in
October of that year, with no commitments from any of its
lenders to refinance those borrowings. As a result, CMI's
own independent auditors reported that these debts, combined
with the fact that "business has been negatively
impacted by the prolonged downturn in the U.S. homebuilding
industry . . . raise substantial doubt about [CMI]'s
ability to continue as a going concern."
Id. at 2-3 (alteration in original) (internal
citations omitted). Steves moves to exclude at trial: (1) any
evidence or argument that CMI "would have exited the
market" had it not been acquired by JELD-WEN; and (2)
any evidence or argument that CMI "would not have
continued to be an effective competitor" absent any
merger. PI. Mem. (ECF No. 502) (Under Seal) at 2, 10.
also says that:
JELD-WEN . . . will show the jury that there is no likelihood
of anticompetitive effects, because CMI would not likely have
remained an effective competitor absent the Acquisition.
JELD-WEN is entitled to present evidence to the jury that
would permit the jury to find that CMI would not have
remained an effective seller of doorskins in competition with
JELD-WEN absent the Acquisition, even if CMI somehow found a
way to survive as an independent entity.
Id. at 5. Similarly, it argues that:
JELD-WEN's economist, [Edward] Snyder
[("Snyder")], put the question squarely at issue,
critiquing Professor [Carl] Shapiro [("Shapiro")]
for failing to give this important evidence proper economic
consideration. E. Snyder Rep. at ¶¶ 117-121 . . .
(explaining how the substantial evidence of CMI's
weakness rebuts Professor Shapiro's analysis of
anticompetitive effects) .... In short, Professor Shapiro was
fully aware of the evidence and the competitive implications
of CMI's weakened financial state and inability to
compete that was developed during fact discovery in this
case; he simply chose not to address it other than to say it
did not satisfy the failing firm defense. . . .
It was the choice of Steves and its expert, not JELD-WEN, to
have Dr. Shapiro ignore the merits of CMI's inability to
effectively compete. He (and Steves) must live with his
failure to address the issue.
Def. Response to PI. Suppl. Brief (ECF No. 887) at 5-6.
arguments progressed on the issue, JELD-WEN took the view
that Snyder's evidence is really only to show that
Shapiro's analysis is flawed because he did not factor in
CMI's financial difficulties when he assumed that, absent
the merger, the market would continue in the way it was in
2012. So, as things ...