Free Response in Opposition to Motion - District Court of Arizona - Arizona

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Joel L. Herz, Esq. State Bar No. 015105 Law Offices of Joel L. Herz 3573 East Sunrise Drive, Suite 215 Tucson, AZ 85718 Telephone: 520-529-8080 Facsimile: 520-529-8077 [email protected] Attorneys for Defendant GTFM, LLC UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA MEADOWLARK LEMON, et al., Plaintiffs, vs. HARLEM GLOBETROTTERS INTERNATIONAL, INC., et al.; Defendants. DEFENDANTS' OPPOSITION TO PLAINTIFFS' JOINT IN LIMINE MOTION TO EXCLUDE ANY EVIDENCE OF DEFENDANTS' COSTS OR EXPENSES Nos. CV-04-0299 PHX DGC and CV-041023 PHX DGC

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Defendants GTFM, LLC ("GTFM" or "FUBU"), Harlem Globetrotters International, Inc. ("HGI") and Mannie L. and Catherine Jackson submit this opposition to Plaintiffs' Joint In Limine Motion to Exclude Any Evidence of Defendants' Costs or Expenses ("Plaintiffs' Motion"). Plaintiffs' Motion should be denied because FUBU

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properly produced evidence of manufacturing costs during discovery and that information is relevant to this case because Defendants may establish deductions for costs. Order, June 27, 2006 at 17 (Dkt. # 425); Restatement (Third) of Unfair Competition § 49. Plaintiffs' Motion is premised on a fundamental misstatement: that "Defendants have failed to produce any evidence regarding what their costs or expenses were to manufacture the FUBU/HGI Apparel." Plaintiffs' Motion at 1. To the contrary,

Defendants produced hundreds of pages of documents during discovery setting forth
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their costs, which can be found in the Sales Detail Reports. The next to last column on each Sales Detail Report is entitled "Cost", and represents the Landed Duty Paid cost for the goods shown. For example, Defendants' Trial Exhibit ("DX") 1001 is the Sales Detail Report for Style H1402 (attached hereto as Exhibit A). It shows sales by account and total sales, in units and dollars on the last page, as well as total cost, and gross profit.1 Plaintiffs did not question the FUBU executives about these Sales Detail Reports at their depositions, even though FUBU first provided these documents in January 2005.2 Plaintiffs also falsely state that their very first request for production asked for this information and it wrongfully was not provided and that Defendants have the burden to

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produce evidence of their costs and expenses. Again, this is incorrect. Defendants only have an obligation to respond to proper discovery requests. FUBU properly objected to Plaintiffs' requests regarding costs as overbroad, unduly burdensome and vague (among other objections).3 Moreover, despite FUBU's proper objections, FUBU provided

hundreds of pages of responsive cost documents as early as January 7, 2005. See Sacks

The Sales Detail Reports comprise DX 1001, 1003, 1005 1007, 1009, 1011, 1013, 1015, 1017, 1019, 1021, 1023, 1025, 1027, 1029, 1031, and 1034 thru 1043, produced during discovery with production numbers GTFM LLC 000011-000098, 000115-000131, 001102-001156, 001248-1302, and 001646-001690. These exhibits are agreed by Plaintiffs to be admissible at trial. In addition to the Sales Detail Reports, Defendants also produced other cost information, including the Chart entitled "Projected Cost Structure of Sales (HGI)" which was an exhibit at the deposition of Bruce Weisfeld (DX 1093), as well as the Sales Representative Agreement with Samsung, the FUBU/HGI License Agreement and the Jordache Sublicense Agreement (DX 1064 thru 1065, 1067 thru 1069). These exhibits are agreed by Plaintiffs to be admissible at trial.
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For example, the Neal Plaintiffs requested "Any and all WRITINGS and RECORDINGS in YOUR possession, custody or control which refer to, relate to, or evidence any and all revenue and expenses of DEFENDANTS relating to PLAINTIFFS from January 1, 1993 to the present, including contracts, appearances, bookings, royalties and correspondence." See Neal Requests, dated October 19, 2004, attached as Exhibit F to the Sacks October 17, 2006 Declaration filed in connection with GTFM's Motion In Limine To Exclude Allegations of Discovery Abuses by GTFM (the "Sacks Oct. 17 Decl.") (Dkt # 465-466). Request No. 4 in the attached October 25, 2004 Lemon Requests is also illustrative in its impropriety. See Exhibit B attached hereto.

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Oct. 17 Decl. At no time prior to the FUBU depositions on August 2 and 3, 2005, did Plaintiffs seek to resolve the overbreadth and vagueness issues, otherwise narrow their requests, negotiate with FUBU as to FUBU's proper objections or move to compel. Instead, Plaintiffs chose to ignore the objections. This is not FUBU's fault. Beginning on August 3, 2005, the parties litigated the issue of whether GTFM had to produce further documents in response to Plaintiffs' numerous overbroad and vague requests. On at least three occasions the Court was critical of Plaintiffs' late efforts at taking critical discovery and their failure to contact the Court earlier regarding these issues. See August 3, 2005 Order (Dkt # 143); August 18, 2005 Order (Dkt # 148);

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October 7, 2005 Order (Dkt #173). Notwithstanding Plaintiffs' failure to follow through on the agreement, FUBU produced almost 500 more pages of documents, including additional cost documents. If Plaintiffs still had a problem with the production, they should have moved to compel; they chose not to.

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In preparing for the Settlement Conference and trial, GTFM updated the cost documents in order to have a more accurate calculation of their profits. That updated information is set forth in DX 1044. These updated cost documents reflect returns that were not taken into account in the Sales Detail Reports and other minor corrections over time. A cost comparison of the Inventory Cost Sheets (DX 1044) and the Sales Detail Reports for the nine styles at issue illustrates that the difference between DX 1044 and the Sales Detail Report are miniscule. See Exhibit C attached hereto. For example, Style H3002 shows a 0.5% difference in costs and Style HGB3002 shows a mere 1.1% difference in costs.
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Moreover, for the most part, the costs in the Inventory Cost Sheets are more beneficial to Plaintiffs because it shows that FUBU's costs are slightly lower than the Sales Detail reports show. See Exhibit C. GTFM was trying to be as fair as possible in calculating its profits and used these updated numbers. However, Defendants'

calculations can be replicated with the cost numbers in the Sales Detail Reports if the Court would prefer. See potential replacement DX 1094a-1096a, attached hereto as Exhibits D-F. Based on the foregoing, Defendants respectfully request that Plaintiffs' Motion be denied in its entirety.

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RESPECTFULLY SUBMITTED this 22nd day of November, 2006. By: s/ Ira S. Sacks_________________ By: s/ Edward R. Garvey____________ Ira S. Sacks, admitted pro hac vice Edward R. Garvey, admitted pro hac vice Safia A. Anand, admitted pro hac vice Christa Westerberg, admitted pro hac vice DREIER LLP GARVEY McNEIL & 499 Park Avenue McGILLIVRAY, S.C. New York, NY 10022 634 W. Main St. #101 Telephone: 212-328-6100 Madison, WI 53703 Facsimile: 212-328-6101 Telephone: 608-256-1003 [email protected] Facsimile: 608-256-0933 [email protected] Joel L. Herz, Esq. Ray K. Harris, # 007408 State Bar No. 015105 FENNEMORE CRAIG, P.C. Law Offices of Joel L. Herz 3003 N. Central Ave., Suite 2600 3573 East Sunrise Drive, Suite 215 Phoenix, AZ 85012-2913 Tucson, AZ 85718 Telephone: 602-916-5000 Telephone: 520-529-8080 Facsimile: 602-916-5999 Facsimile: 520-529-8077 [email protected] [email protected] Attorneys for Defendants Harlem Attorneys for Defendant GTFM, LLC Globetrotters Int'l, Inc. and Mannie L. & Catherine Jackson

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CERTIFICATE OF SERVICE

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I hereby certify that on November 22, 2006, a true and correct copy of

Defendants' Opposition to Plaintiffs' Joint In Limine Motion to Exclude Any Evidence of Defendants' Costs or Expenses was electronically transmitted to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: Safia A Anand [email protected] Florence M Bruemmer [email protected] Edward R Garvey [email protected], [email protected], [email protected] Robert Williams Goldwater III [email protected] Ray Kendall Harris [email protected], [email protected] Joel Louis Herz [email protected], [email protected] Alec R Hillbo [email protected], [email protected] Brandon Scott Peters [email protected], [email protected], [email protected] Anders V Rosenquist , Jr [email protected] Ira S Sacks [email protected] Clay M Townsend [email protected], [email protected]; [email protected] Christa O Westerberg [email protected]

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I hereby certify that on November 22, 2006, a true and correct copy of the attached

document was sent via U.S. Mail, postage paid thereon, to the following parties, at the addresses listed: Keith R. Mitnik Morgan & Morgan PA 20 N. Orange Ave. Suite 1600
Orlando, FL 32802

s/ Leslie Grant___________

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