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Plantronics Cleared in Headset Antitrust Dispute

A Delaware federal jury on Wednesday ruled that Plantronics Inc.'s use of distributor agreements did not violate U.S. antitrust laws, rejecting rival GN Netcom Inc.'s claims during a weeklong trial that the headset maker had monopolized the market for sales to North American call centers.

A Delaware federal jury on Wednesday ruled that Plantronics Inc. s use of distributor agreements did not violate U.S. antitrust laws, rejecting rival GN Netcom Inc. s claimsduring a weeklong trial that the headset maker had monopolized the market for sales to North American call centers.

The panel deliberated for just over an hour in Wilmington before returning its verdict in favor of Plantronics, which had withstood a $3 million sanctions ruling for deleting evidence in the four-year-old case. Ultimately, the jury said, the Santa Cruz, California-based Plantronics use of so-called Plantronics-only distributors, or PODs, had not allowed it to control prices and box competitors out of the market.

Plantronics announced the verdict shortly after 10 a.m. on Wednesday, saying that it was now putting the matter behind us.

Today s verdict in favor of Plantronics validates our position that Plantronics has always operated fairly and lawfully in a highly competitive marketplace and that the claims brought by GN Netcom are without merit, Joe Burton, Plantronics president and CEO, said in a statement.

GN said that it was considering an appeal but that the decision had not impacted its bottom line for 2017.

GN had accused Plantronics in 2012 of developing its POD program in violation of the Clayton and Sherman Acts. According to GN, Plantronics developed its POD program around 1997, in response to increased competition for headset sales to call centers in the United States and Canada.

Eventually, GN said, Plantronics had enticed 80 percent of specialized independent distributors to enter agreements barring them from selling competitors headsets or purchasing competing products directly from the manufacturer. In 2012, Plantronics accounted for 75 percent of all headset sales to U.S. call centers, bringing in $713 million in net revenue, GN said in its complaint.

Plantronics contended that the PODs were actually pro-competitive. The firm said that no distributor was forced to enter the exclusive agreements and that they could be terminated at any time.

The company ran into trouble last summer after U.S. District Chief Judge Leonard P. Stark of the District of Delaware found last summer that Don Houston, Plantronics senior vice president of sales at the time, had ordered employees to delete corporate emails during discovery, wiping out potentially thousands of documents that could have helped GN build its case.

Houston left the company in July.

The bad-faith spoliation cost Plantronics $3 million in sanctions and another $2 million in attorney fees and costs, according to the company s regulatory filings. Stark also narrowed the scope of the company s unsuccessful motion for summary judgment earlier this year and instructed the jury at trial that it was allowed to infer that the deleted communications would have worked against Plantronics defense.

In other words, your role is to determine whether Plantronics spoliation tilted the playing field against GN, he said, according to a written copy of the final instructions presented to the jury at trial.

If so, the permission given to you by the court to infer that the missing documents would have been relevant and helpful to GN and/or harmful to Plantronics is designed to allow you to balance that playing field, should you feel it is necessary.

The spoliation issue, though, seemed to have little bearing on the jury s final determination. The panel knocked out GN s three claims for monopolization and restraint of trade under the Sherman Act and another for exclusive dealing under the Clayton Act.

As of Thursday afternoon, GN had not yet appealed the verdict.

The case was captioned GN Netcom v. Plantronics.

GN was represented by Christopher S. Finnerty, Jeffrey S. Patterson, Michael R. Murphy and Morgan T. Nickerson of K&L Gates and Joseph J. Farnan Jr., Brian E. Farnan and Michael J. Farnan of Farnan LLP.

Plantronics was represented by Jonathan M. Jacobson, Chul Pak, David H. Reichenberg, Robert Corp and Yuan Ji of Wilson Sonsini Goodrich & Rosati and Jack B. Blumenfeld, Rodger D. Smith II and Jennifer Ying of Morris, Nichols, Arsht & Tunnell.