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A federal civil jury came back after deliberating for five hours on Monday and said there was not enough evidence against the owner of Macy’s department stores to prove a price-fixing conspiracy in the high-end tableware market. Antitrust attorneys say the verdict was remarkable if only because the case made it all the way to trial. “In terms of a price-fixing class action going to trial, I honestly can’t think of one,” said James McGinnis, a partner at Sheppard, Mullin, Richter & Hampton, who briefly represented May Department Stores, one of the defendants, at an early stage in the case. Usually, said lawyers on both sides of the bar, a combination of sky-high financial risks and the prospect of criminal prosecution is enough to encourage a settlement. Defense attorneys, for example, may not want to lay all their cards on the table in a civil case while prosecutors are watching. But the tableware case appeared to be different. By the time the consumer plaintiffs filed their complaint in 2004, the New York state attorney general had already wrapped up a probe of the alleged price-fixing scheme, netting almost $3 million in civil penalties from four companies. Federated Department Stores, which owns Macy’s, paid out $900,000 to settle claims under a state antitrust law. Considering that antitrust violations can put large companies out of business, McGinnis said, payment of a civil penalty can’t be broadly construed as an admission of guilt. The Sheppard, Mullin partner added that the amount Federated paid was practically “de minimus.” The trial last week in California’s Northern District federal court gave Federated a chance to try to clear its name. “Federated believed strongly that it had acted appropriately and is pleased with the jury’s verdict,” said defense attorney Phillip Proger, a Washington, D.C., partner at Jones Day. Two other defendant companies extracted themselves from the case before trial: Wedgewood Waterford, a maker of fine crystal products, got out of the case on a summary judgment motion. Lenox, which makes fine china, paid $500,000 to settle. But even after U.S. District Judge Vaughn Walker certified the case as a class action, paving the way for potential treble damages of over $41 million, the remaining defendants proceeded to trial. For the plaintiffs’ attorneys to prove their case, they had to demonstrate that Federated conspired with a former retail competitor to force tableware suppliers to boycott Bed Bath & Beyond. During closing arguments, San Francisco plaintiff’s attorney Joseph Alioto claimed that the evidence tilted heavily in his favor and the defense arguments amounted to “red herrings.” At the same time, he acknowledged that there was only circumstantial rather than direct evidence pointing to a conspiracy between Federated and May Department Stores, a retailer swallowed by Federated two years ago. “Conspiracies do not happen by people saying, ‘Let’s conspire.’ They happen by suggestions and activity,” he told the jury. When defense attorney Martha Boersch took the podium, she argued there were holes in the plaintiff’s case. She said the record was “devoid of any evidence” that Federated and May communicated, much less conspired, with one another. “Who got together in this case? When did they get together? What were the terms of the agreement?” asked Boersch, a San Francisco-based Jones Day partner. After delivering a verdict Monday afternoon, two jurors said the lack of direct evidence led them to agree on a defense verdict. “That was the whole issue,” said juror Linda Aylor. “If not the whole case, a big part of it,” added jury foreman Phil Maresca, a retired high-tech executive. After the verdict was announced, plaintiff’s attorney Richard Saveri suggested that he might have been able to show direct communication between the companies if a former Federated executive hadn’t invoked the Fifth Amendment and refused to answer questions during a deposition. “Jurors said they didn’t see a connection. It’s hard to get a connection when the defendants refuse to answer questions,” Saveri said. “I think the parties both felt they had a good case,” he said. “The judge thought we had sufficient evidence to take to the jury. We just didn’t convince them.” Reporter Matthew Hirsch’s e-mail address is [email protected].

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