Thursday, March 11, 2010

Floorgraphics Seeks to Undo Settlement with News America Based on Non-Disclosure of Evidence

Floorgraphics Rule 60(b) Motion for Relief from Judgment - In the wake of News America's $500 million settlement with FSI competitor Valassis, News America's former in-store floor and shelf advertising competitor, Floorgraphics, has filed a motion pursuant to Fed. R. Civ. P. 60(b) to undo its $29.5 million mid-trial settlement with News America.

As grounds for its request, Floorgraphics cites News America's failure to disclose evidence to Floorgraphics in discovery – despite being responsive to Floorgraphics' discovery requests – that subsequently emerged during Valassis' trial against News America Marketing in Michigan state court. That evidence included, for example, videos of senior News America executives making statements about anticompetitive tactics that they were using against Valassis and Floorgraphics, and budget books purportedly showing that their contracts with retailers were unprofitable. This evidence proved to be very persuasive to a jury in the Valassis trial – which resulted in a $300 million verdict. If Floorgraphics had received this material in discovery, Floorgraphics presumably would have been less ready to settle.

Floorgraphics has asked the Court to grant it access to the sealed discovery materials from the Valassis case, and has also requested a hearing on whether the judgment in the Floorgraphics case should be vacated.

While Courts are generally reluctant to reopen a case after a final judgment has been entered, especially after a voluntary settlement, it appears that Floorgraphics may have a legitimate basis to complain about News America's failure to produce these materials. News America was previously found to have failed to produce relevant documents to Floorgraphics after whistleblower Robert Emmel revealed that his files contained numerous unproduced responsive documents that bolstered Floorgraphics' case.

I'll be interested to see how the Court responds. One thing that's certain, however, is that News America will fight tooth and nail to prevent the trial from being reopened.

Insignia v. News America - Meanwhile, Insignia Systems' lawsuit against News America Marketing is inching closer to trial in federal court in Minnesota. The Court has ordered a settlement conference on April 12, 2010, and originally ordered the parties to be ready for trial by that date. News America requested that the trial be delayed, however, and the Court granted that request, stating that a trial date will be set after the completion of the settlement conference.


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