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Mack Trucks Inc. scored a major victory yesterday in an antitrust suit brought by an Ohio Mack dealership when a federal jury not only rejected all of the plaintiff’s claims but also found in favor of Mack Trucks on its counterclaims for misappropriation of trade secrets and said the plaintiff should pay Mack more than $11.3 million. In the suit, plaintiff Toledo Mack Sales & Service claimed that Mack instituted policies designed to discriminate against it because its business approach was to sell trucks at low prices – an approach Toledo claimed conflicted with Mack’s interest in keeping truck prices high. But Toledo suffered a major setback midway through the month-long trial when Senior U.S. District Judge Ronald L. Buckwalter dismissed its only federal claim – an antitrust claim under the Sherman Act. That left only two claims to go to the jury — a claim of discrimination under the Ohio Motor Vehicle Dealers Act and a claim of tortious interference with contractual relations. Toledo’s lawyers — Wayne A. Mack and J. Manly Parks of Duane Morris — asked the jury to award Toledo more than $14 million in compensatory damages for the sales it allegedly lost, and to hit Mack with a substantial punitive damages award, keeping in mind that it was a “several billion-dollar company.” But Mack’s lawyers — Barbara W. Mather and Jeremy Heep of Pepper Hamilton — told the jury that Toledo hadn’t proven that it lost any sales due to Mack’s conduct. Instead, the defense team said, the evidence showed that the only illegal conduct was committed by Toledo when it gave valuable and secret information to a generic parts manufacturer. Mather told the jury that Mack routinely provided dealerships such as Toledo with price lists for more than 40,000 truck parts, and that Toledo violated its agreement to keep that price list confidential when it gave the massive document to PAI Industries Inc. An even more serious violation occurred, Mather said, when Toledo gave PAI access to MacSpec, a massive database that Mack spent $32 million developing that includes details on the design and repair histories of more than 1 million trucks. Mather said Toledo simply gave PAI the entire database on a set of compact discs. That action, she said, directly harmed Mack because it deprived it of a competitive advantage over PAI in the market for parts. In its verdict, the jury found that Toledo had misappropriated Mack’s trade secrets and engaged in a “civil conspiracy” with PAI. The jury awarded Mack $11.34 million on the claim relating to MacSpec and $16,500 on its claim relating to the price list and microfiches, for a total verdict of $11,356,500. Toledo had suffered another major setback earlier in the litigation when Buckwalter effectively granted a directed verdict in Mack’s favor on the MacSpec misappropriation claim. Buckwalter ruled that, due to previous litigation in the Ohio courts, the issue of Toledo’s liability had already been decided. In the Ohio litigation, Mack was seeking to terminate Toledo as a dealer. Although Mack lost the first two rounds of that litigation – in proceedings before the Ohio Board of Motor Vehicles and the Ohio Court of Common Pleas – it prevailed when it appealed to the Ohio Court of Appeals. Toledo has a petition pending before the Ohio Supreme Court, but Buckwalter ruled that the findings of the intermediate appellate court have collateral estoppel effect. Buckwalter concluded that since the Ohio litigation included Mack’s claim that Toledo had misappropriated MacSpec, that issue could not be relitigated. As a result, the jury’s only task on the MacSpec claim was to decide how much to award to Mack. In closing arguments on Tuesday, Toledo’s lead lawyer, Wayne Mack, focused on the plaintiff’s two remaining claims and made an impassioned argument that Mack Trucks violated Toledo’s rights due to the manufacturer’s “very bad corporate culture.” Using a series of charts displayed on a large screen, Wayne Mack argued that Toledo’s sales had tripled during the mid-1980s, but that Toledo “suddenly crashed” when Mack Trucks instituted its discriminatory policies. The policy, Wayne Mack said, was to prohibit Toledo from making sales outside its designated sales territory. At first, he said, the policy was a formal one, but Mack Trucks withdrew it because it knew that it was illegal. Nonetheless, he said, Mack continued to enforce it through “unwritten” rules and “more devious and underhanded tactics.” The reason, Wayne Mack said, was that Mack Trucks “did not want its dealers competing with each other.” The ultimate victims, Wayne Mack said, were consumers who were unable to take advantage of Toledo’s low prices because Mack Trucks routinely steered sales away from Toledo and to its favored dealerships. If not for Mack Trucks’ illegal conduct, Wayne Mack said, Toledo’s sales would have continued to grow. He cited an expert witness’s testimony that Toledo would have been selling more than 1,000 trucks per year, but sold only a tiny fraction of that amount. But Mather, in her closing argument for Mack Trucks, insisted that all of Toledo’s claims should be rejected because it could not point to a single lost sale. In the most compelling section of her speech, Mather used a massive chart that plotted the sales history over two decades for both Toledo and Mack Trucks. As Mather described the events chronologically, a technician updated the chart to add events at key dates that Mather said would explain Toledo’s rise and later loss of sales. At the point when Toledo’s sales began to drop, Mather said, Toledo’s owner, Dave Yeager, was diagnosed with depression and one of his top salesmen was convicted on criminal charges and left the company soon after. Mather also said Toledo drastically reduced its advertising budget, but that the chart showed that its sales started to improve in recent years when it hired new salesmen and began spending more on advertising. As for Toledo’s claim that it was thwarted in its efforts to sell outside its territory, Mather insisted that the sales records proved that simply wasn’t true since more than 90 percent of Toledo’s sales continued to come from outside its territory even after the disputed Mack policies began. Mather also told the jury that Mack had valid reasons for instituting the policies and that they were perfectly legal. Due to “intense competition” with other truck manufacturers, Mather said, Mack required dealers to seek company approval for the specific discounts that would be granted whenever there was head-to-head competition. Such decisions, Mather said, had to be made by Mack Truck executives since they alone were able to assess the specific discount needed to secure a sale based on the ever-changing dynamics of such a highly competitive market. But Mather said the records of those “sales assistance” decisions showed that Toledo never suffered any discrimination and was routinely given the identical discount quote given to other Mack dealers competing for the same sale. Wayne Mack told the jury that Toledo’s requests in such sales were often delayed by Mack in order to give the favored dealers an unfair advantage. But Mather insisted that Toledo had no evidence of any such delays, and that scrutiny of specific deals showed that the real reason Toledo lost sales often turned on the customer’s preference for a dealer that was able to provide the service it needed. A Duane Morris spokesman said yesterday that Toledo intends to file an appeal that will challenge Buckwalter’s decision to dismiss its Sherman Act antitrust claim and that Toledo’s lawyers are “confident that we will get a new trial on that claim.”

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