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

United States District Court, E.D. Virginia, Richmond Division

March 13, 2019

STEVES AND SONS, INC., Plaintiff,
v.
JELD-WEN, INC., Defendant.

          MEMORANDUM OPINION

          Robert E. Payne Senior United States District Judge

         This matter is before the Court on JELD-WEN, INC.'S MOTION FOR A NEW TRIAL (ECF No. 1823). Having considered the motion, the supporting, opposing, and reply memoranda, JELD-WEN, INC.'S MOTION FOR A NEW TRIAL (ECF No. 1823) will be denied.

         BACKGROUND

         Under Fed. R. Civ. P. 59(a)(1)(A), a court can set aside the verdict and "grant a party's motion for a new trial if the verdict is contrary to the clear weight of the evidence, rests upon false evidence, or will cause a miscarriage of justice." Huskey v. Ethicon, Inc., 848 F.3d 151, 158 (4th Cir. 2017); see also Minter v. Wells Fargo Bank, N.A., 762 F.3d 339, 346 (4th Cir. 2014).

         I. The Bifurcation of the Trial of Steves' Breach of Contract and Antitrust Claims from the Trial of JELD-WEN's Misappropriation of Trade Secrets Claims

         The reason for the bifurcation of the trial of Steves' antitrust claims and breach of contract claims from JELD-WEN's misappropriation of trade secrets claims was set forth fully in the MEMORANDUM OPINION entered on May 17, 2017 (ECF No. 239) . Those reasons will not be repeated here, but the reasoning underlying the bifurcation decision is incorporated here in full.

         As explained in that MEMORANDUM OPINION, the high risk of jury confusion presented by having a jury sort through the very different, but complex claims, was the driving factor in ordering bifurcation. Id. at 28. Having presided over the trial of the antitrust and breach of contract claims presented by Steves in the first trial, and the misappropriation of trade secrets claims presented by JELD-WEN in the second trial, the Court is confident in saying that bifurcation was clearly the right decision. Bifurcation allowed both parties to fully present the evidence pertaining to their respective claims and foreclosed evidence that was being offered by JELD-WEN, (the misappropriation of trade secrets) in the antitrust/breach of contract trial for the purpose of prejudicing the jury against Steves and attempting to win the antitrust/breach of contract case by painting Steves as a thief. Both parties received fair trials on their respective claims from separate juries, each of which considered relevant evidence from each side.

         Nor did the bifurcation decision prejudice JELD-WEN in the presentation of its "barriers-to-entry" defense to Steves' antitrust claims. In fact, JELD-WEN introduced evidence to support that defense, and JELD-WEN argued it to the jury. As explained in the MEMORANDUM OPINION (ECF No. 239), evidence that Steves allegedly misappropriated JELD-WEN's trade secrets was not relevant to the barriers-to-entry defense. Id. at 19-21. Even if the Court is considered to have erred on that point, the alleged misappropriation would have marginal relevance to that defense, and the risk of prejudice and confusion substantially outweighed any conceivable relevance. On that point, all of the papers filed by JELD-WEN in opposition to bifurcation, including the papers in support of this motion, show that JELD-WEN's purpose was to distract the jury's attention from the antitrust and breach of contract issues by trying to prove Steves' misconduct. The evidence involved in Steves' antitrust and breach of contract claims was complicated, and it would have been fundamentally unfair to have allowed JELD-WEN to pursue that strategy.

         Contrary to the assertion of JELD-WEN, the Court did not order separate trials on the basis that unclean hands was not a permissible defense under Fourth Circuit precedent. As explained above, the decision to sever was based on concerns of prejudice in the trial of the antitrust and breach of contract claims if the confusing evidence about the misappropriation of trade secrets was admitted in the same trial. However, it is appropriate to note that the Fourth Circuit has established that ''unclean hands is no bar to antitrust recovery." Burlington Indus, v. Milliken & Co., 690 F.2d 380, 388 (4th Cir. 1982). The MEMORANDUM OPINION (ECF No. 239) fully discusses that issue. And, it is incorporated by reference here.

         II. Dismissal of JELD-WEN's Contract Counterclaims

         JELD-WEN argues in conclusory fashion, with no citation of authority, that somehow the dismissal of JELD-WEN's breach of contract counterclaims in the Court's MEMORANDUM OPINION (ECF No. 353) prejudiced its ability to defend against Steves' breach of contract claims. The argument made by JELD-WEN is unfathomable, and, in any event, it is irrelevant. Whether JELD-WEN had valid contract claims under Delaware law was decided as a matter of law. JELD-WEN has cited no authority that, under that circumstance, the Court should have allowed evidence in about those legally insufficient and dismissed claims. Nor has JELD-WEN explained how it was prejudiced in defending Steves' breach of contract claims by the dismissal of JELD-WEN's contract claims.

         III. The Evidentiary Rulings

         A. Evidence Respecting Trade Secrets Misappropriation

         JELD-WEN erroneously argues that the Court excluded wholesale evidence of Steves' theft of JELD-WEN's trade secrets. That simply is incorrect. The argument appears to be a challenge to the ORDER entered on January 9, 2018 (ECF No. 776). JELD-WEN's argument entirely mischaracterizes the ruling in that ORDER. The ORDER reflected the decision on PLAINTIFF STEVES AND SONS, INC.'S MOTION IN LIMINE TO EXCLUDE EVIDENCE RELATING TO THE PURPORTED MISAPPROPRIATION OF JELD-WEN'S ALLEGED TRADE SECRETS BY STEVES (ECF No. 513), wherein Steves asked the Court to exclude all evidence or argument respecting Steves' alleged misappropriation of JELD-WEN's alleged trade secrets. The Court did not grant that motion. Instead, the Court simply held that JELD-WEN could not "introduce evidence respecting how the information used by the plaintiff was obtained.'' ORDER (ECF No. 776), at 1. Contrary to JELD-WEN's argument, the ORDER does not provide that JELD-WEN would be precluded from proving what information Steves possessed about the manufacture of doorskins, and, at the Final Pretrial Conference, the Court made clear that JELD-WEN could introduce evidence about the information available to Steves regarding doorskins plant. And, in fact, JELD-WEN introduced evidence on those points.[1]

         JELD-WEN now argues that "[i]f the jury had heard that Steves had in fact stolen the trade secrets that it needed to build a new doorskin plant, it would have had a wholly different view of whether Steves was likely to enter the market." However, JELD-WEN expressly represented to the Court that it was "not attempting to prove that Steves misappropriated JELD-WEN's information" as part of its barriers-to-entry defense. DEFENDANT JELD-WEN, INC.'S MEMORANDUM IN OPPOSITION TO PLAINTIFF STEVES AND SON'S, INC.'S MOTION IN LIMINE TO EXCLUDE EVIDENCE RELATING TO THE PURPORTED MISAPPROPRIATION OF JELD-WEN' S ALLEGED TRADE SECRETS BY STEVES (ECF No. 646) at 1-2. That representation forecloses this argument in support of a new trial. Nor has JELD-WEN explained how evidence that Steves misappropriated information would have bolstered the evidence that JELD-WEN did present in support of its barriers-to-entry into the doorskins market. On the other hand, for reasons outlined above, that evidence would have caused unfair prejudice and confusion.

         B. Evidence that CMI was in Severe Financial Distress

         The admissibility of evidence on the issue of CMI's financial condition was thoroughly dealt with in the MEMORANDUM OPINION entered on February 6, 2018 (ECF No. 955), and JELD-WEN makes no argument here that would require the Court to reconsider that opinion. The reasoning in that MEMORANDUM OPINION is incorporated here by reference.

         As explained in that MEMORANDUM OPINION, JELD-WEN did not assert a "failing firm" defense, see (ECF No. 955) at 9-11, and, clearly, the record would not have supported one. Nor did JELD-WEN assert the "weakened competitor defense," sometimes called "the Hail-Mary pass of presumptively doomed mergers." ProMedica Health Sys., Inc. v. F.T.C., 749 F.3d 559, 572 (6th Cir. 2014). As explained in the MEMORANDUM OPINION, JELD-WEN did not have evidence sufficient to allow that issue to go to the jury. And, JELD-WEN has offered no suggestion that a weakened competitor defense was presented at trial. Indeed, it was not.

         Given that the evidence about CMI's financial condition would not support a weakened competitor defense or a failing firm defense, and that JELD-WEN stated that it was not asserting such defenses, it would have been prejudicial to allow evidence of CMI's financial condition because it would have been impossible to instruct the jury on how it could consider such evidence. In fact, JELD-WEN offered no argument or instruction respecting how such evidence could be considered absent the failing firm or weakened competitor defenses. Now, in this motion, JELD-WEN asserts that, even wholly apart from those defenses (which it acknowledges that it did not assert), it could have relied on evidence of CMI's financial condition to attack Professor Shapiro's analysis. This is a new argument, and JELD-WEN does not explain why evidence about CMI's financial condition would have impeached Professor Shapiro's testimony. JELD-WEN, INC.'S MEMORANDUM IN SUPPORT OF ITS MOTION FOR A NEW TRIAL (ECF No. 1824) shows that JELD-WEN, in reality, was attempting to demonstrate that, "even in the absence of the merger, Steves may well have had only two choices" for doorskins. That is the argument that JELD-WEN was foreclosed from making when it expressly disavowed the failing firm and weakened competitor defenses. Given its pre-trial disavowals respecting those defenses, JELD-WEN cannot now be heard to say that it wanted evidence of CMI's financial condition to support those specifically disavowed defenses.

         Finally, as previously held, given JELD-WEN's disavowal of a failing firm or weakened competitor defense, evidence of CMI's financial condition presented a high risk of jury confusion that substantially outweighed whatever minimal probative value it might have had. That is particularly so given that JELD-WEN has ...


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