Sunday, March 8, 2009

Floorgraphics v. News America Trial Begins

Trial in Floorgraphics v. News America began on March 3.

According to a March 2 article about the case in BNET Advertising:

At issue is whether News America has lied, cheated and stolen to maintain its market share. FGI claims News America "engaged in illegal computer espionage by breaking into FGI's password-protected computer system and obtaining proprietary FGI information." News America denies the allegations.

Henderson - After jury selection on March 3, Floorgraphics called its first witness on March 4: Gary Henderson, a sales executive who attended a lunch meeting between Floorgraphics and News America executives in 1999. At the meeting, Paul Carlucci of News America allegedly threatened to "destroy" Floorgraphics if it tried to compete with News America in the in-store shelf advertising business (as reported in this Inc. article).

Emmel - Floorgraphics' second witness was Robert Emmel, a former News America employee who testified under subpoena regarding alleged anti-competitive business practices by News, including efforts to wrest contracts with retailers away from Floorgraphics. Mr. Emmel was fired by News America, but he kept a copy of the files from his company computer, including documents reflecting News' aggressive tactics. News America learned about these files after Mr. Emmel was subpoenaed for a deposition by Floorgraphics, after which News America filed suit against him personally, alleging that his retention of the documents constituted a breach of contract and misappropriation of trade secrets. Mr. Emmel is represented by Phil Hilder, the same attorney who represented Enron whistleblower Sherron Watkins.

News' Trial Brief - Some of the documents regarding the computer break-in and News America's allegedly anti-competitive conduct are available here, from Bnet, along with News America's trial brief. In its trial brief, News America argues that "the law requires Floorgraphics to prove causation and damages to each retailer and each consumer packaged goods manufacturer that purportedly did less business with Floorgraphics because of News America Marketing's alleged tortious acts." Floorgraphics contends that News America's anti-competitive actions led to a massive decline in Floorgraphics' business, and intends to offer evidence of the overall business decline rather than testimony from each customer who switched from Floorgraphics to News America.

One reader wrote in to tell me that "lotsa juicy things came out the past couple of days" of testimony (though he didn't provide specifics). Trial transcripts won't be publicly released until June, so any additional details about the trial that readers can provide are appreciated:

Prior coverage of the case from this blog: FLOORgraphics' Suit Against News America Set for Trial October 1; Summary Judgment Motion Denied in FGI v. News America Marketing.

Revised 3/9/09.


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