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Franklin Music Co. v. American Broadcasting Companies Inc.

December 21, 1979

FRANKLIN MUSIC COMPANY, APPELLANT
v.
AMERICAN BROADCASTING COMPANIES, INC., ABC RECORD AND TAPE SALES CORP., WIDE WORLD OF MUSIC, INC. AND ALBERT S. FRANKLIN; FRANKLIN MUSIC COMPANY V. AMERICAN BROADCASTING COMPANIES, INC., ABC RECORD AND TAPE SALES CORP., WIDE WORLD OF MUSIC, INC. AND ALBERT S. FRANKLIN, AMERICAN BROADCASTING COMPANIES, INC. AND ABC RECORD AND TAPE SALES CORPORATION, APPELLANTS ; FRANKLIN MUSIC COMPANY V. AMERICAN BROADCASTING COMPANIES, INC., ABC RECORD AND TAPE SALES CORP., WIDE WORLD OF MUSIC, INC. AND ALBERT S. FRANKLIN, ALBERT S. FRANKLIN, APPELLANT



ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA (D.C. Civil No. 74-2485)

Author: Gibbons

Before: SWITZ, Chief Judge and GIBBONS and SLOVITER, Circuit Judges

GIBBONS, Circuit Judge, announcing decision of the court as to all issues except the civil conspiracy verdict and dissenting in Part II. B. as to the civil conspiracy claim.

This case is before us on an appeal by the plaintiff Franklin Music Company (FMC) and cross appeals by the defendants American Broadcasting Companies, Inc., ABC Record and Tape Sales Corp. (hereinafter collectively ABC), and Albert S. Franklin (Franklin) from a final judgment in favor of FMC following a jury trial. The complaint alleges violations of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2 (1976), section 7 of the Clayton Act, 15 U.S.C. § 18, and various contract and tort claims under Pennsylvania law. The trial court granted motions for partial summary judgment on the section 2 Sherman Act and section 7 Clayton Act claims, from which no appeal has been taken. At the close of the plaintiff's case the court directed verdicts on the section 1 Sherman Act claim and on a count alleging trade libel under Pennsylvania law. The case was submitted to the jury on special verdict interrogatories, and the jury returned a verdict in favor of FMC for $2,013,000 in compensatory damages and $1,025,000 in punitive damages. The verdict reflected the jury's conclusion that the defendants had conspired to injure and destroy plaintiff, that with ABC's inducement and assistance, Franklin had breached fiduciary duties to FMC, and that the defendants had improperly interfered with the business relationship between FMC and it employees. Motions for judgment notwithstanding the verdict followed, and the district court granted those motions in part. The court granted judgment notwithstanding the verdict on the jury's award of damages for interference without privilege in the relationship between FMC and its employees. This left standing an award of $25,000 for damages due to Franklin's breach of fiduciary duty, and an award of $1,311,000 for the defendant's civil conspiracy against FMC. Judgment was entered in these amounts and all parties appealed. The court affirms these awards, but reversed the civil conspiracy award and the judgment notwithstanding the verdict on the employee interference award. We announce herein the opinion of the court as to all issues except the civil conspiracy award, an issue as to which I dissent herein.

I. BACKGROUND FACTS

In 1973 FMC operated a chain of eight retail music tores. Franklin, FMC's president and manager, owned 15% of its stock and the remaining shares were owned by Raymond Rosen & Co., a corporation, whose president, Edward Rosen, was FMC's board chairman. During that year ABC decided to enter the retail music business and began a search for personnel knowledgeable in that field. Franklin, who had had five years of experience with the successful FMC chain and prior experience with the Sam Goody retail music chain, was approached by ABC. Beginning in September 1973, meetings took place between Franklin and ABC, during which his employment by ABC and ABC's possible acquisition of FMC were discussed. While these discussions progressed representatives of ABC visited certain FMC places of business and were shown FMC's point of sale (POS) data processing system, which was alleged to be confidential. Rosen was not informed of these discussions until January 1,5 1974, when Franklin told Rosen he was leaving to join ABC and that ABC was prepared to make a purchase offer for FMC. Franklin's employment contract with FMC contained a covenant not to compete with FMC within 50 miles of City Hall, Philadelphia, for one year after Franklin terminated his at-will employment. He went to work in January 1974 at the headquarters for ABC's retail music venture in Cherry Hill, New Jersey, near Philadelphia, but no retail stores were operated by ABC within that fifty mile radius. Following his employment by ABC, Franklin approached various key employees of FMC and successfully induced them to leave FMC and join ABC. In the meantime discussions, which eventually proved to be unfruitful, were conducted with Rosen concerning ABC's acquisition of FMC. Franklin gave interviews to trade journals in which he disclosed ABC's plans and the negotiations for the acquisition of FMC, and preicted that ABC would be more successful than FMC. Following the departure of Franklin and other key people, FMC, which previously had been a profitable venture with an expanding business, began incurring losses. It lost $450,000 in 1974 and $426,000 in 1975. In July 1975, the Sam Goody chain purchased the FC stores in the Philadelphia area at book value. FMC's Atlanta stores continued in business, incurring further heavy losses, until June 1977, when they were sold at book value to another retail chain.

II. DEFENDANT'S CONTENTIONS

The defendants contend that as to each claim on which FMC recovered,the judgment should be reversed and judgment entered in their favor. They further contend that, even if we find that there was sufficient evidence to warrant submission of those claims to the jury, various trial errors require that we order a new trial.

A. Breach of Fiduciary Duty by Franklin

The jury answered affirmatively the following special verdict interrogatories:

1. (a) Did Mr. Franklin while employed by [FMC] breach his fiduciary duty to that company?

(b) Did [ABC] induce Mr. Franklin to breach his fiduciary duty to [FMC]?

Under Pennsylvania law, Franklin, as president and a director of FMC, owed his undivided loyalty to that corporation. Lutherland, Inc. v. Dahlen, 357 Pa. 143, 151, 53 A.2d 143, 147 (1947). The trial court described the evidence relied on to support a finding that Franklin breached his fiduciary duty as "far from overwhelming," but nevertheless legally sufficient. In reviewing this evidence, the court noted that the record established: that while Franklin was President of FMC, he held several discussions with ABC's management without the knowledge of other FMC personnel, at least six of which meetings took place during FMC's normal business hours; that at ABC's request Franklin guided ABC executives through FMC's stores and instructed his assistant, Terrence Sukalski, to show ABC visitors "whatever they wanted to see" although prior to this instruction it had been the policy of FMC not to disclose certain aspects of its business, in particular its point of sale data processing system, to its competitors; that during his negotiations with ABC Franklin missed two scheduled appointments with Rosen; that in the year prior to his departure, Franklin worked somewhat shorter hours than he had previously, although exceeding forty hours per week; that while he was president ABC executives expressed an interest in acquiring FMC, which Franklindid not disclose to Rosen until January, 1974, when he had already obtained a commitment from ABC for new employment; that while he was negotiating with ABC, Franklin for the first time delegated to a subordinate the task of obtaining advertising rebates and failed to supervise this subordinate, resulting in losses to FMC; that when he did disclose that he was leaving FMC, his conversation with Rosen implied not merely an interest in obtaining employment with better prospects, but actual hostility and an interest in demonstrating his indispensability to the 85% owner of the business; and that while employed at FMC Franklin failed to train others to perform necessary business functions, and so concentrated responsibility in himself as to make it difficult for the business to survive his departure. Some of the evidence referred to was hotly contested. As the court observed, Franklin and Rosen displayed in their testimony a longstanding mutual antagonism. If the jury had credited Rosen, it could have found an intention on Franklin's part, while he was president, to harm Rosen. There was also evidence from which the jury could have inferred that while he was president of FMC he and representatives of ABC discussed the possibility of hiring away other key FMC employees in the event that the company could not be acquired at a price satisfactory to @ABC, and that Franklin did not disclose this intention to Rosen, even when he announced his departure.There is evidence from which the jury could have found that he timed his departure in order to maximize his own good, leaving after Christmas so that the peak sale figures from that period would be the basis for calculation of his buy-out price. Moreover, the jury had before it evidence from which it could have found that immediately after announcing his departure, Franklin approached certain key employees about joining ABC, and it was certainly a permissible inference that this was the result of his previous discussions with ABC.

The court correctly instructed the jury that, as an officer and director of FMC, Franklin was bound by the strictest duties of honesty and individual loyalty, and could not engage in business conduct detrimental to FMC's best interests. The court also instructed, however, that since Franklin was an at-will employee the jury could not find a breach of his fiduciary duty solely because he sought new employment and failed to disclose that fact to his employer.*fn1 Rather the jury was instructed that it must also find some specific disloyalty or betrayal of FMC's interests during the time when he was president. The parties did not object to this aspect of the charge, and agree that it accurately reflects the law of Pennsylvania.*fn2

We agree with the trial court that there was evidence from which a jury could have found specific disloyalty going beyond merely seeking new employment. The jury could have found that Franklin was motivated by feelings of personal hostility to the 8k% owner of FMC, that he reduced his attention to FMC's business at a critical time, that he negotiated secretly with a company that had an incentive to purchase the business at a bargain price, that he arranged its affairs so that his departure would cause it aximum distress, and that in the interim he neglected some of the critical aspects of the business.*fn3 The dissent would have this court substitute its interpretation of the evidence for the findings made by the jury, and would have us do so without having observed the demeanor of the witnesses. The Supreme Court and this circuit have consistently held, however, that when reviewing jury verdicts the appellate court may not redetermine the facts as found by the jury, nor substitute its view of the evidence for that of the factfinder.*fn4 The scope of this court's review of jury findings is thus far narrower than the clearly erroneous standard to be applied in review of facts found in non-jury trials.*fn5 Although there is also ample evidence to support contrary findings, we cannot now replace the conclusions that the jury could have made in reaching its verdict with our own view of the facts. Thus, unless we are prepared to hold that as a matter of Pennsylvania law the factual findings that the jury could have made do not amount to a breach of fiduciary duty by the president and director of a corporation, we cannot require the entry of a judgment notwithstanding the verdict on interrogatories 1(a) and (b). The conduct which could have been found went beyond preparing for or accepting new employment in competition with FMC. It amounted to taking up a loyalty to a potential purchaser while at the same time inflicting harm upon the business of the present employer by neglecting its business and by arranging its affairs so that on Franklin's departure that business would suffer.

B. Civil Conspiracy Under Pennsylvania Law

Chief Judge Seitz and Judge Sloviter join to reverse the civil conspiracy verdict, a reversal from which I dissent. Pennsylvania recognizes the tort of civil conspiracy, which is defined as a combination between two or more persons to do an unlawful act, or to do a lawful act by unlawful means, or to accomplish an unlawful purpose.*fn6 Special verdict interrogatory 5 inquired:

5. Did [ABC] and Mr. Franklin conspire together to commit unlawful acts or lawful acts with an unlawful purpose in regard to the alleged breach of a fiduciary duty by Mr. Franklin, or in regard to the alleged systematic inducement of key [FMC] employees, or in regard to the alleged disclosure of trade secrets, for the purpose of destroying [FMC] in order to arrange its acquisition at a depressed price or to otherwise injure plaintiff?

The jury answered affirmatively. The interrogatory as framed is consistent with the trial judge's charge, quoted in the margin, a charge to which defendants made no objection.*fn7 The defendants do no argue that interrogatory 5 misstates the elements of the Pennsylvania tort. Rather, they attack the verdict on that interrogatory on two grounds: insufficiency of the evidence and inconsistency with another verdict answer. I turn first to the sufficiency of the evidence.

The jury could have found that a conspiracy arose because of the coincidence of interests of Franklinand ABC. ABC desired to buy FMC atthe lowest possible price, perhaps motivated by its obligations to its own shareholders. Franklin, motivated by his personal antagonism for Rosen, failed to reveal to Rosen that ABC desired to acquired FMC and acted so as to maximize the impact of his departure, thus depressing the price at which his new employer could acquire FMC. Thus, the jury could have found a conspiracy to depress FMC's price to ABC. Moreover, there is ample evidence of concert of action among Franklin and various agents of ABC. There is also evidence that the subject of acquiring FMC's business was discussed and that negotiations in preparation for that purchase actually took place. Moreover, there is evidence that ABC participated in Franklin's breach of fiduciary duty by acquiring from Franklin while he was President of FMC, confidential information about FMC's point of sale data processing system. When he became an employee of ABC, Franklin issued false statements to the press, which ABC never corrected, and which the jry could view as part of an effort to depress the market value of FMC. The jury could have found that, even before he left FMC, there was concert of action with respect to an approach by Franklin to other key FMC employees and evidence of a systeatic approach, following his departure, to FMC employees who ultimately were hired away and whose loss made it difficult to carry on FMC's business profitably.Assuming for present purposes that it was lawful for ABC to hire Franklin, or any other at-will employee of FMC, solely for its own purposes it was not lawful to do so in furtherance of a conspiracy to injury FC in order to acquire its business at a depressed price. Since there was concert of action both with respect to the hiring and with respect to the acquisition, and since the offered price was lower than FMC's owners thought reasonable, the jury could have found from all the circumstances a civil conspiracy under Pennsylvania law.

I agree with Chief Judge Seitz that the appropriate evidentiary standard to be applied whencivil conspiracy would be proven bycircumstantial evidence is the "full, clear and satisfactory" standard.*fn8 However, that standard is one to be applied by the jury and not a standard for this court to apply independently on appeal.*fn9 We are thus not free to substitute our weighing of the facts for the weight as determined by the jury. That jury was properly instructed and its verdict, supported by evidence which the jury could have found convincing may not be disturbed by this court.*fn10

The defendants also urge, however, that the affirmative answer to interrogatory 5 is inconsistent with the negative answer to interrogatory 2, which asked:

2. Did [ABC] or Mr. Franklin, for the purpose of crippling and destroying [FMC] rather than obtaining the services of particularly skilled employees, systematically induce key [FMC] employees to leave [FMC] and join [ABC]?

The role of this court in reviewing seemingly inconsistent answers to special interrogatories is to search for a reading of the jury's responses that makes them consistent. "Where there is a view of the case that makes the jury's answers... consistent, they must be resolved that way."*fn11 Defendants contend that the negative answer to interrogatory 2 established that the solicitation of FMC employees was not for an unlawful purpose and that therefore any concert of action did not amount to a civil conspiracy. The trial court rejected this contention, pointing out that interrogatory 2 dealt with the separate substantive tort of inducing employees to leave their employment for the purpose of destroying their employer's business.*fn12 In submitting that interrogatory the court instructed the jury to employ a balancing test to determine whether the purpose to cripple or destroy outweighed the permissible purpose to hire skilled employees for ABC's own business. At most, then, the negative answer to interrogatory 2 established that, on balance, if defendants had a purpose of crippling or destroying FMC by means of soliciting FMC employees, it was outweighed by ABC's purpose of obtaiing for itself the services of highly qualified employees.That finding, however, did not preclude the jury from further finding that, notwithstanding this permissible predominant purpose, ABC and Franklin also conspired to depress the market price at which FMC could be acquired.

This court need not decide whether the balancing charge on interrogatory 2 correctly stated the governing law of Pennsylvania. It is enough to note, as did the trial court, that there is no inconsistency between the answer to interrogatory 2 and a finding, on interrogatory 5, that the defendants conspired to commit acts for the purpose of injuring FMC enough to depress its sale price. I agree with the trial court that there are no grounds for granting a motion for judgment withwithstanding the verdict on interrogatory 5. Thus, I would affirm the civil conspiracy verdict.

C.Damages Awarded for the Torts Found by the Jury

The defendants also contend that even assuming tortious conduct they are entitled to judgment notwithstanding the verdict because there was insufficient proof of damages, or at worst that they are entitled to a new trial because the awards which are left standing duplicate elements of damage. The court submitted the interrogatories concerning liability, which included interrogatories 1 and 5, before the jury was permitted to consider damages. Thereafter a separate hearing on damages was held, and further interrogatories dealing solely with damages were submitted. These interrogatories and the jury's answers to them, included the following:

1. Where any of the defendants' acts which you found to be wrongful in the first phase of this case a substantial factor in causing loss to [FMC]?

ANSWER: Yes

2. State in dollars, the economic loss incurred by [FMC] which was substantially caused by all the acts of the defendants which you found to be wrongful.

$2,013,000

3. State i dollars, the amount of the economic loss incurred by [FMC], which was substantially caused by Mr. Franklin's breach of his fiduciary duty.

$25,000

4. State in dollars the amount of the economic loss incurred by [FMC] which was substantially caused by the defendants purposefully inducing (during the period of May to July, 1974) plaintiff's employees to terminate their employment.

$677,000

5. State in dollars the amount of the economic loss incurred by [FMC] which was substantially caused by the defendants' conspiracy.

$1,311,000

It is readily apparent that the jury found damages separately for the breach of fiduciary duty, the unlawful inducement of employees, and the civil conspiracy, which when totalled equalled $2,013,000. The court granted judgment notwithstanding the verdict on the $677,000 award, a matter which we discuss in Part III. F., infra. Here we are concerned with the findings that $25,000 in damages was occasioned by Franklin's breach of fiduciary duty, and that $1,311,000 in damages occurred as a result of the civil conspiracy as defined in interrogatory 5.

The alleged breach of fiduciary duty occurred during the time when Franklin was president and manager of FMC. As we have noted, there was evidence from which the jury could have found that during that time Franklin was no longer acting with undivided loyalty to FMC, but had entered into a course of conduct harmful to his employer. From the evidence the jury also could have found, however, that most of the harm resulting from that course of conduct did not occur while Franklin remained an employee of FMC; it was not until after Franklin's departure that large losses were incurred by FMC. There is, however, one item of damage that the jury probably attributed to Franklin's breach of fiduciary duty and which was incurred while Franklin was still an employee of FMC. In the damage phase of the trial, FMC offered evidence from which the jury could have found that while he was negotiating with ABC, Franklin delegated to an untrained subordinate the important duty of obtaining advertising rebates, that he had not previously delegated this responsibility, but had performed this task personally, and that this duty was neglected by both Franklin and the unsupervised subordinate. As a result $25,000 in advertising rebates to which FMC ordinarily would have been entitled was lost because applications for the rebates were not timely made. The jury award in answer to damage phase interrogatory 3, dealing with damages resulting from the breach of fiduciary duties, is for precisely the amount of lost rebates.

The defendants contend that the evidence concerning the $25,000 amount was not presented in the liability phase of the case and thus cannot be considered as evidence supporting the finding of a breach of Franklin's fiduciary duty. We do not rely on it for that purpose. There is in the record on the liability phase other sufficient evidence from which the jury could find a departure from the standard of undivided loyalty. There is evidence in the damage phase from which the jury could have found that Franklin's divided loyalty resulted in neglect on his part, to which the loss of $25,000 was attributable.

As the trial court pointed out, there is also evidence of Franklin's salary and of the value of the time he spent negotiating with ABC when he should have been managing FMC.Although the trial court could not determine precisely which evidence the jury relied upon in arriving at the $25,000 award, we hold that the court properly concluded that there was sufficient evidence from which an estimate of damages caused by the breach could have been made. No more is required by Pennsylvania law. Ashcraft v. C. G. Hussey & Co., 359 Pa. 129, 132-33, 58 A.2d 170, 172 (1948) ("reasonable quantity of information must be supplied... so that the jury may fairly estimate the amount of damages from the estimate"); see Marrazzo v. Scranton Nehi Bottling Co., 422 Pa. 518, 525, 223 A.2d 17, 21 (1966) (evidence must be sufficient to support verdict without resort to conjecture); Smith v. Bell Tel. Co., 397 Pa. 134, 138, 153 A.2d 477, 479 (1959). The defendants' motion for judgment notwithstanding the verdict i the amount of $25,000 for breach of fiduciary duty was therefore properly denied.

The loss attributed by the jury to the civil conspiracy is equal to the amount of all actual losses incurred by FMC in the fiscal years 1974 through 1977.Based upon the evidence referred to in Part I. B., supra, and upon other evidence concerning the key role Franklin played in FMC's prior successes, the jury could have found that these losses would not have been incurred but for the acts of defendants in furtherance of the conspiracy. ABC complains that $130,000 of the $1,311,000 of losses accrued in fiscal year 1974 prior to October, 1973, and was the result of start up expenses of new stores and other factors, and was not attributable to any acts of defendants. The jury could well have concluded, however, that had Franklin not joined in a civil conspiracy that $130,000 would have been earned in the period after Anuary 1, 1974, and therefore that the loss for the earlier period would have been eliminated. Since there is evidence upon which a reasonable estimate of damages could have been made by the jury, the verdict may not be disturbed.

Nor are we persuaded that there has been a duplication of damages. The trial court instructed the jury that it should find damages separately for each alleged tort and there is no indication that this instruction was discregarded. As we have pointed out, the $25,000 award probably reflects a determination that that specific revenue loss occurred as a result of Franklin's breach of fiduciary duty, while the accumulated losses were found to have been attributable to the conspiracy. There was evidence, including expert accounting testimony, sufficient to permit the jury to assess the damages in a nonspeculative manner, consistent with the requirements of Pennsylvania law. We will not impose in favor of a tortfeasor a rule that a verdict will be set aside in the absence of certainty as to the accuracy of the jury's estimate.

D. Trial Errors

The defendants further contend that even if the verdict should not be set aside for lack of evidence, a new trial must be ordered because of various trial errors. We turn to these alleged errors.

(1) Bifurcation

Franklin argues that the trial court erred in bifurcating the liability and damages phases of the trial. He relies, in particular, on a statement by the trial judge that he believed that every trial should be so bifurcated. The record discloses, however, that the court made an independent determination that bifurcation was appropriate in this case. Thus the trial court exercised the informed discretion to bifurcate which this court has held is required.Lis v. Robert Packer Hosp., 579 F.2d 819, 825 (3d Cir.), cert. denied, 439 U.S. 955 (1978). The case was complex, involving nine separate counts alleging state and federal law grounds for recovery. There were four separate parties. The pretrial order provided for 73 live witnesses, 353 exhibits, and hundreds of pages of deposition testimony to be read into the record. The trial would in any event be a long one, but could have been considerably shorter, had the jury decided in favor of the defendants in the liability phase. The court considered all of these factors in ordering bifurcation over the objection of all parties. On this record, we cannot hold that this ruling was an abuse of discretion.

Nor are we persuaded by Franklin's claim of prejudice. He argues that bifurcation eliminated, in the liability phase, the requirement of a finding of impact, while the damage awards were preordained by the reluctance of the jurors to erase their liability verdicts. This argument is entirely speculative. The liability phase of the case was submitted with appropriate instructions and detailed interrogatories, and on the damage phase the interrogatories were carefully tailored to the liability determinations. Thus, we reject defendants' arguments that a new trial is required because of improper bifurcation.

(2) Confusing Special Verdict Interrogatories

Defendant Franklin also contends that the special verdict interrogatories on the separate Pennsylvania law torts of employee inducement and conspiracy were hopelessly misleading, duplicative, and confusing and resulted in inconsistency requiring a new trial.*fn13 We here consider Franklin's contention that confusion over liability interrogatory 4, which concerned defendants' alleged purposeful inducement of FMC's employees, in some way tainted the verdict on interrogatory 5 concerning defendants' conspiracy. The jury answered affirmatively interrogatory 4:

(a) Did [ABC] purposefully induce or cause [FMC] employees to discontinue their business relationship with [FMC] without a privilege so to do?

(b) Did Mr. Franklin, after leaving [FMC], induce or cause [FMC] employees to discontinue their business relationship with [FMC] without a privilege so to do?

It also answered affirmatively interrogatory 5, quoted in Part II. B., supra. The source of the confusion, according to Franklin, is that the court instructed the jury that in considering whether there was a civil conspiracy it could consider the claim of the plaintiff under interrogatory 4 as well. That instruction was obviously correct, for inducement of employees might well evidence a conspiracy to harm FMC so as to reduce its market price. Thus the affirmative answers to interrogatories 4(a) and 4(b) are entirely consistent with the affirmative answer to interrogatory 5.

The trial court, however, granted defendants motion for judgment notwithstanding the verdict on interroatories 4(a) and 4(b). The defendants urge that this action, which we consider in Part III. E. infra, mandates a new trial because the jury may have relied on its verdicts on 4(a) and 4(b) in finding liability o interrogatory 5. We need not decide what effect the judgment notwithstanding the verdict on interrogatory 4 would have on the civil conspiracy verdict under interrogatory 5, for in Part III. E., infra, we conclude that the verdict on interrogatory 4 should not have been disturbed. The two interrogatories were addressed to separate torts under Pennsylvania law.Evidence of the tort of interference with employees was relevant on the civil conspiracy count, and the defendants could properly be found to have committed both torts. There is no indication that the jury was confused by the interrogatories, and thus we reject defendants' contention that a new trial is required on this ground.

(3) Exclusion of Testimony

The defendants offered the testimony of Larry Golinski, FMC's Atlanta Regional Manager, to rebut the plaintiff's damage evidence and to prove that the losses suffered in FMC's Atlanta stores were not caused by ABC. Golinski's testimony and that of several other witnesses, including some witnesses offered by FMC, was excluded because the parties failed to list those witnesses within the time restrictions set forth in the court's pretrial order. The defendants did not satisfy the court that their failure to list the witness Golinski in the time specified in the pretrial order was exclusable neglect. The court found that FMC would be prejudiced because of the probable necessity of disrupting the orderly and efficient trial of the case so as to afford it the opportunity for discovery respecting Golinski's testimony. Finally, the court noted that any prejudice to the defendants caused by the exclusion could be cured by resort to the testimony of other available witnesses. Recognizing that exclusion of critical testimony by unlisted witnesses is disfavored, Meyers v. Pennypack Woods Home Ownership Ass'n, 559 F.2d 894, 904-05 (3d Cir. 1977), we note that the trial court's exclusion of evidence because of the failure of counsel to adhere to a pretrial order will not be disturbed on appeal absent a clear abuse of discretion. De Laval Turbine, Inc., v. West Indian Kindus., Inc., 502 F.2d 259, 263-64 (3d Cir. 1974). The trial judge took into account all of the relevant considerations and we cannot say that, in weighing them when making the Golinski ruling, he abused his discretion. We therefore decline to order a new trial on this ground.

(4) Argument by Counsel for FMC

Finally, relying on Draper v. Airco, Inc., 580 F.2d 91 (3d Cir. 1978), defendants contend that the arguments of FMC's counsel were so inflammatory and imprper that a new trial should be granted.Id. at 94-95. The trial court rejected this contention. Observing that both sides were well represented by aggressive counsel, the court noted that the questioning of witnesses by FMC's attorney was entirely appropriate and that his argument to the jury did not exceed the scope of the evidence. There were references to the economic strength of the defendants as compared to that of the plaintiff. Evidence of this economic disparity was properly admitted in this case because one of plaintiff's contentions was that ABC and Franklin were engaging in predatory acts aimed at acquiring FMC's business. The arguments of FMC's counsel are not grounds for a new trial.

E. Summary

Thus we reject the defendants' contentions that the $25,000 award should be set aside and judgment entered instead in their favor. We reject, as well, their contention that they are entitled to a new trial on the breach of fiduciary duty count. Chief Judge Seitz and Judge Sloviter reverse the civil conspiracy award, a reversal from which I dissent herein.

III. PLAINTIFF'S CONTENTIONS

FMC appeals from the grant of directed verdict on three of its claims, and on the grant of judgment notwithstanding the verdict on two others.

A. Directed Verdict on the Negative Covenant Claim

The contract of employment between FMC and Franklin provided:

Franklin agrees that if his employment with the Company shall for any reason terminate, he will not for a period of one year following such termination in any way serve or be connected with or have any interest in any business operating within 50 miles from City Hall, Philadelphia, Pennsylvania, which shall compete in any respect with the business then being conducted by the Company...

The business of FMC was the sale at retail of records, phonographs, radios, televisions, musical instruments, and related products. Franklin went to work for ABC in Cherry Hill, New Jersey, well within fifty miles from City Hall. However, ABC did not engage in music retailing within that radius. Indeed the evidence is that during the life of the covenant ABC's only retail outlets were in Seattle, Washington, and Providence, Rhode Island. The trial court concluded that a directed verdict should be entered on the count charging a breach of the post employment negative convenant.We have examined the evidence in the light most favorable to FMC, and we agree that there was no evidence from which the jury could find a breach of the covenant. During the year following Franklin's departure from FMC there was no competition within the fifty mile radius between ABC and ...


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