Anthony_Damages

Document Sample
Anthony_Damages Powered By Docstoc
					Damages


Chris Anthony
 Harold‟s Stores Inc. and CMT
 Enterprises Inc. v. Dillard
 Department Stores Inc.



United States Court of Appeals, Tenth Circuit
May 3, 1996
Facts
• Harold‟s, a retail clothing store located mainly in TX and OK, was
  in the practice of purchasing original art and developing print
  fabrics with it that were produced by CMT
• Harold‟s represented to its customers that these garments were
  only available at Harold‟s
• These garments made up 56% of Harold‟s skirt sales, 40% of overall
  sportswear sales
• In 1993, Dillard offered for sale skirt sales with identical print
  patterns to those offered by Harold‟s in 1991 and 1992 for
  significantly less ($78-80 apiece vs. $28-$30).
• After Harold‟s filed its original complaint, Dillard redueced the
  prices to $12 or $12.25, which was below cost.
• Before trial, Dillard stipulated that it had infringed 19 (on 37,000
  garments) of Harold‟s patterns- the issue for the court was
  damages
  Damages Award
• There was no claim that Dillard‟s actions harmed Harold‟s sales of the
  copied prints (Dillard‟s didn‟t offer the prints until after Harold‟s had
  pulled them).
• Damages awarded for three claims:
    – Copyright infringement claim: $312,000 (factors in damage to reputation,
      goodwill as well, reduced by court to $260,220 to avoid double recovery)
    – OK Unfair Sales Act: $21,780
    – OK Antitrust Act: $30,000 (trebled by court to $90,000)
• Computation of damages relied largely on study of Dr. Daniel J.
  Howard
• Dillard objected to admission of Dr. Howard‟s survey, claimed
    – 1) Dr. Howard failed to survey a relevant universe of consumers
    – 2) the survey was not material or probative to establish copyright damages
 Survey Participants
• 1,231 surveys collected from female undergraduates at SMU
  (44.3% of undergraduate female population)
• No incentives
• Dillard complained that proper universe encompasses “Harold‟s
  overall customers” (geographically and demographically)
• Harold‟s claimed that they target the college market specifically,
  intentionally locating stores near campuses
• CEO claimed that buying patterns of college-age women were
  “identical to our older customers”
• Testimony before district court “established that purchasing
  patterns, consumer preferences, and the demand products were
  similar for all Harold‟s, regardless of geographic location”
• Court accepted this
Survey Results
• Only respondents that answered “yes” to Questions 1 and 2 (578
  0r 48.0%) were considered
• Question 4 was inserted to weed out unreliable or questionable
  respondents (asked about seeing purses with designs unique to
  Dillard‟s, although there was no such thing)
   – 160 answered “yes” to Question 3, but this is reduced to 66 by
     removing those who said “yes” or “unsure” to Question 4
   – Still leaves 66 (11.5%) who responded “yes” to Question 3 but “no” to
     Question 4
• Howard compared “yes, no” group (3.18 mean for likelihood to
  shop at Harold‟s to 4.75 for “no, no” group)
   – Howard says he wants to get rid of those who saw something that
     wasn‟t there (purses), those who were unsure and whose ambiguity
     renders their judgment difficult to interpret in a comparative sense.
   – Among the groups Howard eliminated 4 of the 7 had higher scores
     than 4.75, so this comparison doesn‟t seem to benefit Harold‟s
Howard‟s Interpretation
• Takes the mean difference (33.1%) as “an estimate of the
  proportional reduction in intentions of purchasing clothes at
  Harold‟s withing the next year due to seeing the disputed skirts on
  sale at Dillard‟s”
• Also looks at “negative word-of-mouth” effects
    – Past survey had estimated that 57% of dissatisfied customers
      complained
    – Assumes that hearing negative reports will have half the effect that
      observing the skirts
• Considered men‟s clothing as well
    – 55% purchased by women
    – 48% of other purchases (based on phone survey) influenced by
      women
    – Thus, Howard arrives at total of 76.4% of men‟s clothing estimated to
      be made by or influenced by women
Short-Term Damages Model


• Short-Term Damages= (the relevant proportion of consumers who
  observed Dillard‟s attempted sale of the disputed skirts) X (the
  resuilting proportional reduction in their intentions of purchasing
  clothing at Harold‟s withing the next year) X (the proportion of
  variation in behavior explained by purchase intentions) X (an
  appropriate sales figure for Harold‟s) X (the relevant maintained
  markup) + (the relevant proprtion of consumers who received
  negative word-of-mouth information about Harold‟s because of
  Dillard‟s attempted sale of the disputed skirts) X the resulting
  proportional reduction in their intentions of purchasing clothing
  at Harold‟s within the next year) X (the proportion of variation in
  behavior explained by purchase intentions) X (an appropriate
  sales figure for Harold‟s) X (the relevant maintained markup)
• Estimate for women‟s clothing: $51,675
• Estimate for men‟s clothing: $28,536
Long-Term Damages Model


• Calculated for three ensuing years
• Assumes effects fade over time, but still remain
• Assumes that each year, the effect will be half of the preceding
  year, discounts for advertising budget
• Long-term damages estimate for women: $42,767
• Long-term damages estimate for men: $23,617
• Howard admits that he has greatest confidence in short-term
  damages for women, least for long-term damages for men
Damage Estimates Attributable to Price Reduction


• Argument is that the cheap price offered by Dillard led to
  consumers downgrading their evaluation of the value for their
  money obtained by shopping at Harold‟s
• Lower price utilized for approximately 30% of time in question
    – Howard says that lower price more likely to attract attention, do more
      damage
    – Thus, assumes that 50% of the damage is from this time period
    – Concludes that 20% of damage ($29,318) can be attributed to lower-
      price period
Dillard Specific Objections


• 1) Question four on the survey- the “filter question”- rendered the
  survey inadmissible
• 2) The survey was fatally flawed because it did not mimic market
  conditions
• 3)The survey was inadmissible because it did not refer to the
  copyrighted fabric designs
• 4) The survey questions were slanted, leading and ambiguous

• Court declines to rule survey inadmissible, saying that
  “deficiencies in the survey bear on the weight and not the
  admissibility of the evidence”
Other Possible Objections


• Doesn‟t consider that people may shop at Harold‟s but not
  Dillard
• People who answered “yes, no” seem to be more perceptive
  shoppers, which suggests a difference in the two groups beyond
  what they‟ve been exposed to at the different stores
• Taking survey likely to incite people‟s emotions about being
  „duped‟ (possibly what Dillard refers to in 4th objection)
In re Chevron U.S.A. Inc



• United States Court of Appeals, Fifth Circuit,
  March 26, 1997
Facts


• P‟s contend that their subdivision was constructed on land used
  in the 1920‟s by Chevron for a crude storage pit
• Alleged that Chevron failed to take appropriate measures to
  secure the site, thereby allowing other waste to be deposited on
  the land
• Chevron later sold the property for residential development
• P‟s assert that hazardous substances which were stored in the
  waste pits have migrated into the environment, including the
  drinking water
• P‟s (over 3,000) claim personal injury and property damage
Court‟s “bellwether” plan


•   Because of large number of plaintiffs, the district court established a plan
    for a “unitary trial” on the issues of “general liability or causation” on
    behalf of the remaining plaintiffs, as well as the individual causation and
    damages issues of the selected plaintiffs
•   Bellwether group of 30 claimants, 15 chosen by P‟s and 15 by Chevron
•   P‟s chose 15 P‟s who were seriously ill, Chevron chose 15 who didn‟t seem
    to be harmed
•   Chevron contended that the goal of the “unitary trial” was to determine
    its liability, or lack thereof, in a single trial and to establish bellwether
    verdicts to which the remaining claims could be matched for settlement
    purposes (trial court doesn‟t actually explain exactly how verdicts for 30
    P‟s are supposed to establish liability for 2970 others)
•   Selection process is what Chevron argues with- says it will not result in a
    representative group of bellwether plaintiffs
Chevron‟s objection


• Submitted to trial court the affidavit off Ronald G. Frankiewicz,
  Ph.D
• Frankiewicz concluded that plan was “not representative”
• Detailed “stratified selection process” that should be used
  instead to result in a representative group of P‟s
• Frankiewicz‟s plan involved “smaller groups according to (I)
  primary medical complaint and (II) severity of the medical
  condition” which would be sampled at random
• Rejected by district court as untimely filed and redundant in
  substance
• Files petition for mandamus with Appeals Court
Appeals Court Response


• Says there is no pretense that the 30 P‟s are representative
• Because of this, the court can‟t draw sufficiently reliable
  inferences
• Sample must be random to have value
• Not fair to base the outcome on an unrepresentative sample
• However, court says that unitary trials with bellwether plaintiffs
  could be appropriate
• Doesn‟t force district court to adopt stratified system, but bars
  use of 15/15 system
• Concurrence doesn‟t “share… confidence that bellwether trials
  can be used to resolve mass tort controversies”
Faulk, Meadows, Colbert paper


• Danger of district court‟s plan was that it could become a
  “hammer for imposing an unjust settlement”
• Risk of all-or-nothing from unitary trial with unrepresentative
  sample
• If done incorrectly, conducting a unitary trial with bellwether
  plaintiffs would basically be equivalent to sanctioning a de facto
  premature class-action

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:2
posted:1/1/2012
language:
pages:19