Friday, April 11, 2008

Court Denies Insignia’s Request for Documents from Other Litigation Against News America

I recently received several e-mails from a reader of this blog who was very interested in my posts on the Insignia and Valassis litigation against News America Marketing. He asked me about the status of two other lawsuits against News – one involving Theme Promotions, and the other involving FLOORgraphics.

A recent development in the Insignia case relates to those suits and others:

Insignia's Request for Documents from Related Litigation Against News - Last month, the court in Insignia Systems v. News America Marketing in large part denied Insignia Systems' motion to compel News America Marketing to produce documents from several other lawsuits against News America Marketing alleging similar anticompetitive conduct as that alleged by Insignia. The request for documents was limited to expert reports and documents referenced in those reports, deposition transcripts and exhibits, interrogatory responses and admissions, and unredacted papers filed regarding dispositive motions.

The related cases targeted by Insignia, each of which alleges anticompetitive conduct by News America Marketing, are: (1) Valassis v. News America Marketing, No. 2:2006-cv-10240 (E.D. Mich. Filed Jan. 18, 2006); (2) FLOORgraphics v. News America Marketing, No. 04-CV-3500
(D.N.J.); (3) Theme Promotions v. News America Marketing, No. C-97-4617-VRW (N.D. Cal. 1998); and (4) Menasha v. News America Marketing.

1. Valassis v. News – Valassis alleged that News "created and implemented a scheme to obtain and then exploit monopoly power in the in-store advertising and promotions market with the goal of utilizing that monopolistic power to gain an unfair advantage over Valassis in the FSI market." I previously posted about the $1.5 billion Valassis lawsuit over free-standing inserts here and here.

2. FLOORgraphics v. News – FLOORgraphics, Inc. ("FGI") alleges in its Fourth Amended Complaint that "News commenced a deliberate and malicious campaign against FGI so that News could have exclusive control of all major in-store marketing programs." For example, News has allegedly engaged in illegal computer espionage by breaking into FGI's password-protected computer system and obtained propriety FGI information, disseminated false and misleading advertising about FGI to CPGs, threatened retailers, and spread negative rumors about FGI. A summary judgment motion is pending. (Disclosure: While I was working at another law firm, I was an attorney for FLOORgraphics in this suit and in an arbitration against Safeway).

3. Theme Promotions v. News - Theme Co-op Promotions ("Theme") alleged in its complaint that News America attempted to force it out of business by including and enforcing exclusivity provisions in its FSI contracts with CPGs to prevent them from participating in special event promotions organized by Theme. While Theme had previously been able to purchase FSI event ads from either News or Valassis, News required that any promotion involving a CPG under exclusive contract with News be placed solely through News and not Valassis, even though Theme had signed a contract with Valassis. Theme also alleged that News disparaged Theme's name and reputation. Theme prevailed at trial, and News' appeal to the Ninth Circuit is scheduled for oral argument on April 14, 2008. On appeal, News argues that there was insufficient evidence to support the jury's verdict against News. Theme cross-appeals, seeking additional damages.

4. Menasha v. News – Menasha alleged that News violated federal and state antitrust laws by signing retailers to exclusive contracts and by monopolizing the market for at-shelf coupon dispenser. The trial court granted summary judgment against Menasha, finding that it had not proven that at-shelf coupon dispensers were a unique product market. 238 F. Supp. 2d 1024 (N.D. Ill. 2003). The Seventh Circuit affirmed, criticizing Menasha's unscientific survey research and "armchair economics." 354 F.3d 661 (7th Cir. 2004).

Insignia Court's Order – Despite the similarities of these suits to the suit brought by Insignia, the court largely denied Insignia's request. In its Order, the court required production only of deposition transcripts and exhibits of four individuals in other cases who have been deemed to be relevant custodians.

While it seems that many of the documents requested by Insignia but denied by the Court would be relevant to Insignia's claims, I've seen courts deny similar requests in other cases, reasoning that the information should be obtained in the case at hand rather than through discovery in the related cases, which may be duplicative and burdensome to produce.


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