Reply Brief — T. Harris Young & Associates, Inc. v. Marquette Electronics, Inc.

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| — DEC E eR

No. 91-679

CLERK

ee

IN THE

Supreme Court of the United States

: October Term, 1991

T. HARRIS YOUNG & ASSOCIATES, INC.

Petitioner,

¥.

MARQUETTE ELECTRONICS, INC.

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

PETITIONER’S REPLY TO BRIEF IN OPPOSITION

TO CERTIORARI

Eli H. Subin

(Counsel of Record)

John M. Brennan —

SUBIN, SHAMS, ROSENBLUTH

& MORAN, P.A.

Suite 900, 111 North Orange Ave.

Post Office Box 285

Orlando, Florida 32801

(407) 841-7470

and

James F. Ponsoldt

Professor of Law

University of Georgia

School of Law

Athens, Georgia 30602

Counse! for Petitioner

October, 1991

CASILLAS PRESS, INC., 1717 K STREET, N.W., WASHINGTON, D.C. 20036

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RULE 29.1 DISCLOSURE

The caption of the case in this Court contains the names

of all parties to the appeal in the United States Court of Ap-

peals for the Eleventh Circuit. The petitioner, T. Harris Young

& Associates, Inc., has no parent companies, subsidiaries or

affiliates. The following is a list of the parent companies, (ex-

cept wholly owned subsidiaries), and affiliates of the respon-

dent, Marquette Electronics, Inc. This representation is made

pursuant to Rule 29.1 of this Court:

Marquette N. Ireland, Ltd.

Marquette Gas Analysis Corp.

Marquette Electronics GB, Ltd.

Marquette Espana S.A.

Marquette Electronics SARL

Marquette Electronics GMBH

Marquette Italia S.A.

TABLE OF CONTENTS

Page

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SUPPLEMENTARY STATEMENT OF THE CASE......... 1

ee eh ive tre debe vevescv seuss 4

I. The Eleventh Circuit’s Restrictive Re-

Definition Of Tying Conflicts With the

Language and Policy Of The Antitying Statute ....... 4

II. There Was Ample ‘‘Non Hearsay”’

Evidence to Support The Jury’s Verdict That

Marquette Tortiously Interfered With Young’s

ai go hy ope week es 9

I 10

Sey hevuseetcveweioues 67a

PX 125, U.S. Testing Company

ES ee 67a

iV

Page

Table 1, Responses to Question #1, ‘‘What Is your

primary brand of EKG equipment?’’.......... ...-- 67a

Table 2, Responses to Question #2, ‘‘What is your

primary brand of stress testing equipment?’’... ..... 69a

Table 4, Question 1 and Question 2 Combined (63%

of Respondents Have Some Form of Marquette

Equipment) .......-.-- 06-0 s eee rere eee eee nee 71a

Testimony

David Taylor (R. 27-398 line 6 - 400 line 11)........... 72a

Charles Brinkley (R. 13-339-36-38)............--05005- 74a

Vv

TABLE OF AUTHORITIES

CASES

Faulkner Advertising v. Nissan Motor Corp.,

905 F.2d 769 (4th Cir. 1990), aff'd. en banc,

SES F BOGS Gb Cor. BOGE)... cv cevccccscccs

Image Technical Service, Inc. v. Eastman Kodak Co.,

903 F.2d 612 (9th Cir. 1990), cert. granted,

59 U.S.L.W. 3833 Gune 18, 1991)................

Jefferson Parish Hosp. Dist. No. 2 v. Hyde,

GE Se UI Se cc eve her bop ceeedunscec eden

Northern Pac. Ry. Co. v. United States,

ee a, © Oc ds kn baw aes Kae vaca ann eaeen

United States v. Loew’s, Inc.,

ee re er er rr ore

CONSTITUTION, STATUTES, AND RULES

Clayton Act

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IN THE

Supreme Court of the United States

October Term, 1991

No. 91-679

T. HARRIS YOUNG & ASSOCIATES, INC.

Petitioner,

v.

MARQUETTE ELECTRONICS, INC.

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

PETITIONER’S REPLY

SUPPLEMENTARY STATEMENT OF THE CASE

The testimony of Young’s expert Dr. Rubin (R. 27-529-530)

and his report (PX. 125) was substantial evidence that Mar-

quette was dominant in the tying product market and it justified

the jury’s finding that Marquette ‘‘had sufficient power in the

relevant market to raise prices or impose burdensome terms

to a significant number of buyers within the market’’ (3a).}

Marquette Division Manager Mickelson confirmed this by his

testimony that Marquette sold ‘‘better than 50% of the [EKG]

market in most areas of the country’’ (R. 13-339 at 315,

322-347-351). Marquette attacks the weight? of Dr. Rubin’s

opinion that it ‘‘occupies a dominant position in the market for

‘References to( _—a) are the appendix to Young’s petition for a writ

of certiorari. Additions to the appendix which are included with this reply

are numbered consecutively following the last numbered page of the ap-

pendix to the petition.

2Dr. Rubin’s qualifications as an expert were stipulated (R. 27-505); his

opinion and the U.S. Testing Company Market Research Report (PX. 125)

2

EKG, Stress testing equipment. . . ‘‘ (PX. 125 at 13), and

ignores its self-description as a ‘‘world leader’’ in electrocar-

diography (PX. 5, 108 and R. 18 at 52), and ignores its effort

made in this case to protect against Young’s alleged violation

of its tradename and trademark (R. 14-10-16; PX. 110, R.

20-939). Clearly, the Eleventh Circuit did not decide the ty-

ing claim on the question of proof of Marquette’s dominance

in the tying product market (39a).

Appleton Paper Company manufactured the paper stock us-

ed by Marquette and Young and it considered the difference

between the two papers to be subjective, ‘‘minimal’’ and

‘very slight.’’ (R. 13-339 at 117, 120-121). Young was able

to sell its generic paper to hospital customers at a price 18%

less than ‘‘Marquette’’ paper, and nevertheless retain a 10%

greater return (R. 18-141-142).

Marquette’s service and supply division (including paper)

showed a 50% pre tax profit as of August, 1986. Furthermore,

its supply sales yielded 15-20% of overall corporate profit

although they represented less than 5% of gross corporate

sales (R. 20-723-24; R. 22-1333-1336).

Marquette decided to establish its own supply facility in the

State of Florida (PX. 102, 103, 104), and in the words of War-

ren Cozzens, a co-founder and officer of Marquette, his com-

pany’s supply division had decided to make an effort to ‘‘put

[Young] out of business.’’ (PX. 93, R. 20-922-929 at 927).

In an effort to implement the corporate strategy of putting

Young out of business, and of increasing its sales of its own

higher priced paper Marquette pursued the tying strategy in

question:

(1) Marquette employees had telephone and face to face

were admitted into evidence (R. 27-523-525, 530); and the admission of

this evidence and Dr. Rubin’s qualification as an expert were not challenged

by Marquette on appeal.

3

contact with all potential customers in the southeast,? and false-

ly advised them that non-Marquette paper would damage print-

heads, and (2) Marquette would presume such as being the

caused of damage to customer’s machines and would not

render warranty and other contracted for service if the

custome: continued to use non-Marquette paper (R.

27-399-400; R. 13-339 at 36-38, 68-79, 293, 296, 382.

The Marquette warranty agreement provided to hospital

customers stated that:

This warranty does not cover repairs or replace-

ment parts which in the opinion of Marquette, are

required as the result of . . . use of . . . supplies

not recommended by Marquette (PX. 36) (emphasis

supplied) .4

Marquette senior management and service personnel knew

(R. 13-339 at 174-175; R. 22-1286, 1299; and R. 13-339 at

382), and the district court agreed (22-23a) that Young’s

generic paper did not, in fact, cause damage to Marquette

equipment and the contention that it did was conduct which

was a deliberate misrepresentation.

In response to Marquette’s statements, Veteran's Administra-

tion and other tax-supported hospitals decided to pay extra money

to purchase Marquette paper (R. 13-339 at 36-38 and 202).

3The Eleventh Circuit and Marquette have overlooked Taylor’s

testimony that he had heard the Marquette telemarketers tell customers

that their warranty or service contracts would be ‘‘no good”’ if the

customer used non-Marquette paper (R. 27-399) (72a). They have also

overlooked substantial evidence, other than the disputed hearsay, which

the district court concluded was ‘‘ample evidence’’ of Marquette’s tor-

tious interference (25a). Consequently, there was non-hearsay proof of

Marquette’s contact with all potential customers, and ‘‘ample’’ proof of

Marquette’s tortious interference with Young’s business.

‘Marquette never published specifications for paper it considered

satisfactory for use in its machines (R. 18-142; R. 21-1121; R. 22-1299,

1336; R. 13-339 at 536), and never approved the use of any paper other

than its own for use in its machines.

4

I. THE ELEVENTH CIRCUIT’S RESTRIC-

TIVE DEFINITION OF TYING CONFLICTS

WITH THE LANGUAGE AND POLICY OF

THE ANTITYING STATUTE.

Contrary to Marquette’s representation at pages 5-6 of its

brief in opposition, the Eleventh Circuit’s decision on the ty-

ing claim was not based on Young’s failure to define a rele-

vant market for the tying product.

Instead, the Eleventh Circuit decided that a tying arrange-

ment exists only where, as is frequently the case: (1) the seller

literally conditions the ‘‘sale’’ (rather than fixes a price or dis-

count) of the tying product upon the purchase of the tied pro-

duct; (2) the sale is completed at a discrete point in time and

is accompanied contemporaneously by ‘‘delivery’’ of the ty-

ing product oz service sold and paid for, and (3) the defendant

absolutely refuses to deliver the tying product unless the

customer continues to purchase the tied product.

The Eleventh Circuit opinion, limiting the concept of ‘‘ty-

ing’ to necessarily include the above requirements, is in er-

ror. First, it fails to acknowledge that the actual language of

the Clayton Act not only forbids the ‘‘sale’’ or ‘‘lease’’ of a

5Marquette states that ‘‘the Appellate Court’’ heid Young failed to define

a relevant market for the tying product, but it cites the district court’s

memorandum opinion and ignores the Eleventh Circuit’s disclaimer (39a).

The District Court’s opinion that proof of a relevant market for the ty-

ing product was required to prove Young’s per se claim was erroneous

and was the focus of Young’s appeal from the judgment n.o.v. on the ty-

ing claim. The district court properly identified the elements of proof of

a per se tying claim, but, without explanation, reversed the jury’s finding

of the relevant tying market and concluded that failure to define the rele-

vant market in equipment defeats showing Marquette’s power in that

market (21-22a). When a seller’s market share is high as is Marquette’s,

or when it offers a unique product that competitors are not able to offer,

the likelihood that market power exists and is being used to restrain com-

petition in a separate market is sufficient to make per se condemnation

appropriate. Jefferson Parish Hospital Dist. No. 2 v. Hyde, 446 U.S. 2,

19 (1984).

)

tying product, conditioned on the buyer’s also purchasing a ‘‘tied”’

product, the statute alternatively forbids a seller from ‘‘fix[ing]

a price charged therefor, or discount from, or rebate upon such

price’’ for a tying product conditioned upon the purchase of a

tied product. Moreover, the opinion ignores the alternative stat-

utory terms ‘‘understanding’’ and ‘‘agreement’’ contained in Sec-

tion 3 of the Clayton Act; fails to recognize that a ‘‘sale’’ is not

complete until delivery of the product or service sold which fre-

quently will not occur contemporaneously with the negotiation;

fails to acknowledge the lack of economic distinction between an

absolute and practical withholding of the tying product based upon

the creation of substantial price incentives; and fails to reflect Con-

gressional purpose underlying Section 3.

By analogy to Northern Pac. Ry. Co. v. United States, 356

U.S. 1 (1958), suppose, today Northern Pacific, mindful of Su-

preme Court precedent, signed a contract to sell mining and

timber rights, including necessary rights-of-way to its property,

to customers for a specified price. Thereafter, the customers

began shipping the minerals and timber by means of a less ex-

pensive trucking service rather than Northern Pacific’s rail ser-

vice. In response, Northern Pacific’s railroad division advised

customers that they would have to pay an additional price for

‘taccess’’ to the property unless they shipped the minerals and

timber using Northern Pacific’s rail service. The customers

thereupon acquiesced to Northern Pacific’s demand. In this sce-

nario, no tying arrangement existed initially but rather came into

existence upon ‘‘delivery’’ of the tying product. Moreover, Nor-

thern Pacific did not absolutely refuse to provide ‘‘access’’ to

the property but instead threatened to impose an additional,

duplicate charge for the tying product unless the customers pur-

chased the tied product.

Under the rationale of Northern Pacific, and Congressional in-

tent surrounding the enactment of Section 3 of the Clayton

Act, such a de facto economic conditioning is equally prohibited:

the defendant has used economic leverage which it posseses with

respect to the desired product to practically force customers to

purchase a second, less desirable product. The facts that imposi-

6

tion of the ‘‘conditioning’’ is delayed until delivery of the tying

product and that the threatened withholding of the tying product

is not absolute, but rather is based upon ‘‘fixing a price,”’ do

not change the character of the conduct. The economic means,

motive, and effect are the same in the two cases. In the hypo-

thetical case, just as in the actual case, customers of the tied

product are forced to pay a non-competitive price for a less

desirable product, and are practically prevented from purchasing

product (services) offered by the defendant’s competitors.

Delaying imposition of the tying arrangement until delivery of

the tying product, in fact, enhances the defendant’s leveraging

power. If customers knew in advance, at the time the terms of

the sale were negotiated, that Marquette would require them

to pay 18% more for paper if they wished to actually receive

warranty repair service without an additional, duplicate charge,

customers might rationally shop around more for alternative, ‘‘off-

brand’’ equipment. But once customers actually pay for the Mar-

quette equipment, receiving also a promise to provide future repair

services, they are locked into that choice. Marquette offered no

evidence that repair service for its machines was available from

any other source or that it competed for business in the repair

market.

Moreover, there is no meaningful difference between an ab-

solute withholding of repair service, on one hand, and the refusal

to provide that service at the negotiated, and already paid price,

or for any reasonable surcharge. In no tying case, after all, would

the withholding of the tying product be truly absolute; everything

has its price. In theory, purchasers of a desired tying product

could purchase the seller outright if the seller withheld the tying

product.

To place the analysis within statutory terms, Congress

specifically included the terms, ‘‘fix a price’ or ‘’discount’’

or ‘‘rebate,’’ as alternatives to ‘‘sell’’ or ‘‘lease’’ with respect

to the tying product. That alternative element of the offense

must be given meaning. In addition, Congress utilized the

terms ‘‘agreement’’ and ‘‘understanding’’ as alternatives to

7

the term ‘‘condition,’’ in Section 3 of the Clayton Act, thereby

characterizing the ‘‘condition’’ element more flexibly. In other

words, Marquette’s threat to deliver the tying product (repair

services) only on condition that the customer either (a) pur-

chase Marquette’s tied product (paper), or (b) pay an addi-

tional duplicate, non-competitive price for the tying product

constitutes an implied, rather than direct, conditioning, and

results in a coerced ‘‘agreement”’ or ‘‘understanding’’ (based

upon Marquette’s fixing of ‘‘variable’’ prices for the tying pro-

duct) that the customer will purchase its tied product.

It is beyond serious argument in this case that there is in-

deed proof of Marquette’s coercion and there is substantial

evidence of its dominance in the tying product which Marquette

did not rebut. Thus, the inquiry is whether the existence of

forcing is probable, and if it is then per se condemnation is ap-

propriate without extensive market analysis® Jefferson Parish

Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 9, 15 (1984). The

Eleventh Circuit’s restrictive re-definition of tying is the bar-

ner to a proven per se violation in this case wherein Marquette

submitted no credible evidence of justification that would make

its conduct procompetitive.”

6Mark P. Cohen who is counsel for Marquette in this case is counsel

of record for the National Office Machine Dealers Association, et al. as

Amicus Curiae in Image Technical Service, Inc. v. Eastman Kodak Co.,

903 F.2d 612 (4th Cir. 1990), cert. granted, 59 U.S.L.W. 3833 (June 18,

1991), argues at pages 16-17 of his brief (filed September 19, 1991) in

Kodak that the requirement for market analysis in order to survive a sum-

mary judgment ‘‘is overly burdensome and in direct conflict with this

Court’s opinion in United States v. Loew’s, which provided, ‘it should

seldom be necessary in a tie-in sale case to embark upon a full scale fac-

tual inquiry into the scope of the relevant market for the tying product

and into the corollary problem of seller’s percentage share in the market.’

’Tying arrangements such as the one Marquette has enforced are not

procompetitive or competitively benign because of the proven harm to

the public interest in the cost of health care resulting from foreclosure

of competition. Tying, generally, remains a present and important issue,

for example see Faulkner Advertising v. Nissan Motor Corp., 905 F.2d

769 (4th Cir. 1990) aff'd. en banc 945 F.2d 694 (4th Cir. 1991) which is

evidence of the importance of this Court’s authoritatively defining a

8

Marquette’s ‘‘implied’’ or ‘‘effective’’ conditioning is

unlawful, as in United States v. Loews, Inc., 371 U.S. 38, 45

(1962): ‘‘for two reasons — [it] may force buyers into giving

up the purchase of substitutes for the tied product . . . and

[it] may destroy the free access of competing suppliers of the

tied product to the consuming market.’’

Loew’s is evidence that the Court, as well as Congress, is

not concerned with form but is concerned with economic reali-

ty. Both of the expressed evils of tying arrangements are

demonstrated in this case, although the tying understanding

is not imposed by Marquette at the time of the original negotia-

tion, and although Marquette’s conditional refusal to deliver

the tying product (service and the corresponding benefit of

the equipment) is not absolute.

The reality of this case is that the public is paying substan-

tially increased prices for electrocardiographic recording paper

without any good reason for doing so. Thus, it appears that

the Eleventh Circuit’s apparent revision of the definition of

unlawful tying arrangements will sanction rising health care

costs.®

‘tying arrangement.’’ Faulkner affirmed by an evenly divided court the

dismissal of a complaint that automobile retailers were directly forced to

purchase a tied product (advertising) in order to receive delivery of the

tying product (automobiles). The auto dealers complained that they were

forced to pay an increased price for automobiles to cover the cost of adver-

tising which they could have purchased separately from another source.

’Anticompetitive abuses in the health care industry were said to be an

area of priority concern to the United States by James F. Rill, Assistant

Attorney General, Antitrust Division, United States Department of Justice

in a speech to the Antitrust Committee of the Litigation Section of the

American Bar Association, Antitrust Litigator, ABA Section of Litigation,

Newsletter No. 15, September, 1991.

9

II. THERE WAS AMPLE “NON HEARSAY”

EVIDENCE TO SUPPORT THE JURY’S VER-

DICT THAT MARQUETTE TORTIOUSLY IN-

TERFERED WITH YOUNG’S BUSINESS.

Marquette does not account for Taylor’s (Marquette’s

former printing plant supervisor) entire testimony (72-73a),

or that of Calenberg a Marquette telemarketer whose

testimony was not excluded as hearsay. These two Marquette

employees confirmed its strategy regarding Young.

Marquette also fails to acknowledge the district court’s opin-

ion on its decision denying a judgment n.o.v. on the tortious

interference claim which identified specific additional tortious

conduct by Marquette beyond fraudulent representations

(25a). The Eleventh Circuit purported to conclude, without

accurately describing the ‘‘reams of evidence’ (51a), that

there was insufficient evidence to support a rational jury ver-

dict but it was apparently unable to fully and accurately con-

sider the lengthy record.

This Court should rule that except in the most elementary

of cases having uncomplicated records that Federal appellate

courts should not exclude from review record evidence without

allowing the district court to evaluate the newly reduced record

to determine the necessity for a new trial in consideration of

the improper admission of evidence. The trial judge’s primary

role in reviewing the adequeacy of an entire record to sup-

port a verdict avoids the perception of a result-oriented bias

naturally following an abstract evaluation of less than the en-

tire record.

Marquette is mistaken in its representation of the pro-

ceedings on the judgment initially in Young’s favor for tortious

inference with business. Marquette’s alternative motion for

a new trial of Young’s tortious interference claim was denied

(24-28a), and it appealed from the judgment in Young’s favor.

The Eleventh Circuit’s decision granting Marquette a JNOV

10

on this claim on admissibility of evidence grounds was the first

cause for Young to have raised the point that a motion for a

judgment n.o.v. tests only the sufficiency of the evidence not

its admissibility. Young asked in a supplement to its petition

for rehearing on the tortious interference claim that a new trial

be ordered on that claim (55a). The Clerk of the Eleventh

Circuit accepted Young’s supplementary request which the

court ultimately denied (ral2).

CONCLUSION

The petition for a writ of certiorari should be granted.

Respectfully submitted,

Eli H. Subin

(Counsel of Record)

John M. Brennan

SUBIN, SHAMS, ROSENBLUTH

& MORAN, P.A.

Suite 900, 111 North Orange Ave.

Post Office Box 285

Orlando, Florida 32801

(407) 841-7470

and

James F. Ponsoldt

Professor of Law

University of Georgia

School of Law

Athens, Georgia 30602

Counsel for Petitioner

%Marquette has erroneously stated at pages 6 and 8 of its brief in op-

position that Young does not challenge the Eleventh Circuit’s hearsay rul-

ings. See footnote 8 at page 16 of Young’s petition for a writ of certiorari.

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72a

DAVID TAYLOR TESTIMONY

(R.27-398-400)

KEKE

Q Would you tell us what you did with Terry Johnson do-

ing your work?

A When Terry Johnson came in, he came from the out-

side and he confided in me. I was one of the few people that

he confided in. I think still today he doesn’t have anybody that

he confides in, but he confided in me. He thought I was his

best friend, I would say.

Q Did you work with Terry at the end of 1986?

A Right, directly I was with Terry. I worked under Terry

for the last year.

Q_ And, did you work with Terry in 1987 before you left?

A Right.

Q_ Did yuu have any discussions with Terry about a man

named Harris Young or a company named T. Harris Young

and Associates?

A Yes, we had a lot of conversations.

Q Would you please tell me about those conversations?

A Well, everything that he confided in me about the rela-

tionship, he brought in four telemarketers. We never had

telemarketers. Terry Johnson brought in four telemarketers

and we-just took sales direct for all the years that I was there.

And, the four telemarketers started working the country and

he worked the south, they worked the southeast here real

hard against Harris to try to take over the southeast. And,

with that, they were doing their sales pitch of the

telemarketers which was putting on if you continued to buy

Harris Young’s paper, your warranty would be no good and

also your service contract would be no good.

73a

Q_ Did you have any discussion with Terry Johnson about

that?

A He confided in me. He told me all about it and I stood

out there and listened to the telemarketers.

Q What did you listen to and what did you hear?

A Tim, that was the head telemarketer, in the first three

months that he put the telemarketers on, we had a million

dollar party. The telemarketers sold one million dollars in the

first three months that they had put those on.

Q Did Terry Johnson tell you that he instructed the

telemarketers about anything, about to say anything in par-

ticular about Mr. Young or his company?

A Well, just if you used other paper than Marquette’s

paper, that your service contract was no good and also your

warranty on your machines.

Q Did you have any discussions with Terry where Harris

Young or his company was specifically mentioned by Terry?

A Yes, we talked about it. It was a big laughing joke at

the time. They pulled in one million dollars in three months

so it was a —

Q All right; and, for how long did this go on?

A Until I left, it was still going on. I left in 1987, July 1

of 1987. It was still going on when I left.

74a

CHARLES BRINKLEY TESTIMONY

(R.13-339-36-38)

eRKREKEE

Q. Have you, during 1988, had the experience of having

Marquette representatives visit your facility, your hospital

facility or your department facility?

A. During ’88?

Q. Yes.

A. Yes.

Q Have you had the occasion personally to speak with any

representatives of Marquette while they were at the hospital

facility?

A. Yes.

Q. And during those occasions have you had the experience

of having Marquette representatives make statements to you

concerning what kind of recording paper that should be used

in the Marquette equipment?

A. I think most of tihs went on before 1988, and actually,

its been sort of an ongoing thing from the time that I was at

Marquette and my conversations that I’ve had with my super-

visor and so forth, and conversations that he’s had with peo-

ple at Marquette.

Q. Would you start with your experience at Marquette and

then take us forward and relate for me, please, what ex-

perience you had in conversations with Marquette folks about

recording paper.

A. There were questions, you know — like you said, there

were several people there from different hospitals being train-

ed, and there were questions about using different type paper

in the Marquette recorders. And we were told that, you know,

it might be possible to use a lot of different types of paper

in it and that they might be okay, but that “ey had had ex-

75a

perience with some types of papers that had too rough a sur-

face and which did cause scratches on the print head which

caused early failure of the print head, and that if that happen-

ed, that they wouldn’t be covered under a service warranty

or I believe under a service agreement. I really wasn’t too |

interested in the service agreement because we don’t have

one or probably won’t. But I’m sure they said that it wouldn’t

be covered under warranty if it was found that a paper had

been used which was not suitable for the thermal print head

and that it had been damaged because of the paper we used.

Q. Let’s stop for a minute and permit me to interrupt by

asking a question concerning statements of that regard made

at the training session. Was Graphics Control paper specifically

identified in that session as one that had been found unsuitable?

A. Idon’t believe so. They may have mentioned a specific

type paper, but I don’t remember if they did.

Q. Pardon the interruption. If you would then continue and

tell me when is the next time that you had the occasion to

have a statement made in your presence or to your super-

visor that you know of concerning this subject.

A. Well, we had just discussed it, and I didn’t know we

would be doing all this so I wasn’t keeping notes or keeping

dates or anything. But I know he had talked with some of the

folks at Marquette and had gotten the same impression that

I had, that there might be some problem with warranty if a

paper was used that was found to be damaging the heads, and

we discussed it, and we came to the conclusion that it would

just be better for us to use Marquette paper during the war-

ranty period so there wouldn’t be a problem with that, and

then when the warranty period was over, we could try other

papers and see if they seemed to work okay if there were

other papers available that were cheaper than the Marquette

paper.

76a

Q. Is the cost of health care delivery a concern to your

hospital?

A. Sure.

Q. Why?

A. Because, you know, it’s a big problem trying to keep

costs down. We always try to operate as economically as possi-

ble for that reason.

eKKKK