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CAUSE NO. 2017-22062
MATTRESS FIRM, INC., IN THE DISTRICT COURT OF
§
Plaintiff, §
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HARRIS COUNTY, TEXAS
TEMPUR-PEDIC NORTH AMERICA,
LLC and SEALY MATTRESS
COMPANY,
Defendants. 165th JUDICIAL DISTRICT
DEFENDANTS’ MOTIONS IN LIMINE TO EXCLUDE PRE-JANUARY 30, 2017
EVIDENCE AND OTHER IRRELEVANT EVIDENCE
Defendants, Tempur-Pedic North America, LLC (“Tempur-Pedic”) and Sealy Mattress
Company (“Sealy”) (collectively, “Tempur-Sealy”), move in limine, prior to the voir dire
examination of the jury panel and before the presentation of any evidence, that the Court (1)
exclude pre-January 30, 2017 evidence, including the audio recording of the parties’ January 23,
2017 meeting, and (2) exclude irrelevant evidence and testimony relating to Mattress Firm’s claim
that Tempur-Sealy ran improper “bait and switch” internet advertisements or any other allegedly
improper advertising efforts. Tempur-Sealy also asks the Court to order Plaintiff Mattress Firm,
Inc. (“Mattress Firm”) and its attorneys and witnesses not to refer, directly or indirectly, in the
presence of the jury panel or the jury finally selected to try this case to these issues.
Tempur-Sealy seeks to exclude this inadmissible evidence because it is wholly irrelevant,
unfairly prejudicial and misleading, and an improper attempt to conduct an end-around of the parol
On August 30, 2018, Tempur-Sealy filed a motion in limine to exclude pre-January 30, 2017
alleged wrongful conduct and the negotiations of the January 30, 2017 Letter Agreements on the grounds
that such evidence is irrelevant to Mattress Firm’s breach of contract claim, constitutes inadmissible parol
evidence, and is unfairly prejudicial and misleading. (See Defendants’ Motions in Limine). Tempur-Sealy
incorporates that motion herein, and files this motion in limine to address Mattress Firm’s anticipated
contention that such pre-January 30, 2017 evidence is admissible based on Mattress Firm’s fraudulent
inducement / promissory fraud.
evidence rule. As explained below, these categories of evidence should be excluded for the
following reasons:
First, the Court should exclude pre-January 30, 2017 evidence and testimony for at least
three reasons: (1) Mattress Firm disclaimed reliance on all pre-January 30, 2017 representations
not included in the Letter Agreements; thus, Mattress Firm cannot rely on such evidence as a matter
of law; (2) in seeking to introduce pre-January 30, 2017 evidence, Mattress Firm is attempting an
end-run around the parol evidence rule; but the statements made during the parties’ January 23,
2017 meeting are not probative of fraudulent intent and they were not even made during the
negotiations relating to the actual contracts at issue; and (3) the prejudicial effect of this evidence
substantially outweighs any probative value; the evidence should be excluded pursuant to Rule 403.
Second, the Court should exclude irrelevant evidence and testimony relating to alleged
“advertising” efforts of Tempur-Sealy for at least two reasons: (1) such evidence is not relevant
to Mattress Firm’s breach of contract claim because the parties’ contracts imposed no duty on
Tempur-Sealy not to engage in advertising activities; and (2) such evidence is not relevant to
Mattress Firm’s fraudulent inducement claim because evidence that Tempur-Sealy alleged engaged
in activity permitted under the contracts does not demonstrate that when Tempur-Sealy entered into
the contracts, it never intended to perform; and numerous inferences equally probable to fraudulent
intent can be drawn from the evidence, including that Tempur-Sealy simply intended to compete
against Mattress Firm in selling Tempur-Sealy mattresses to customers shopping online. Thus,
evidence of “advertising” efforts is not relevant to either of Mattress Firm’s claims, and the
probative value of such evidence is substantially outweighed by its prejudicial effect.
If Mattress Firm injects these matters into the trial of this case through a party, an attorney,
or a witness, it will cause irreparable harm to Tempur-Sealy’s case, which no jury instruction could
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cure. If any of these matters are brought to the attention of the jury, directly or indirectly, Tempur-
Sealy may therefore be compelled to move for a mistrial.
BACKGROUND
Prior to January 2017, Tempur-Sealy supplied Mattress Firm with bedding products for
resale for nearly twenty years; the most recent agreements between the parties were Master Retailer
Agreements (“MRAs”), dated January 1, 2014, between Mattress Firm and Tempur-Pedic and
Sealy. The Sealy MRA expired by its terms on January 1, 2017, (Sealy MRA, at § 8.a, Ex. 4 to
Defendants’ No Evidence and Traditional Motion for Summary Judgment (“Def. MSJ”) ), and the
Tempur-Pedic MRA was “terminable at the will of either party at any time, without or without
breach, default or cause, upon written notice,” (Tempur-Pedic MRA, at § 8.b, Ex. 3 to Def. MSJ).
Accordingly, throughout 2016, the parties engaged in business negotiations directed toward
entering into new master retailer agreements. By January 2017, the parties had exchanged
substantial drafts and fully negotiated a long-term supply agreement. When the parties met in
person at a national mattress convention on January 23, 2017, Tempur-Sealy was expecting to
execute the new master retailer agreements. (Ex. 1, Deposition of Scott Thompson (“Thompson
Dep.”), at 11:10-25). Instead, Mattress Firm informed Tempur-Sealy that it had decided to
terminate its relationship with Tempur-Sealy. (Ex. 2, Deposition of Richard Anderson (“Anderson
Dep.”), at 27:21-24). Mattress Firm secretly recorded this meeting.
Tempur-Sealy provides the following background information for the convenience of the Court.
As explained herein, none of this background is relevant to the parties’ disputes.
For the Court’s convenience and in lieu of re-filing exhibits already on file with the Court,
Tempur-Sealy refers the Court, where applicable, to exhibits previously attached to itspending No
Evidence and Traditional Motion for Summary Judgment, filed on August 6, 2018.
Not only did Mattress Firm secretly record this meeting on January 23, 2017, but Mattress Firm
failed to produce the recording until February 26, 2018, despite filing this lawsuit on March 30, 2017.
Indeed, on January 23, 2018, during the deposition of Mr. Anderson (Executive Vice President of Tempur-
Sealy and President of Tempur-Pedic), Mattress Firm’s counsel repeatedly asked Mr. Anderson whether he
had taken any notes or recorded any of the parties’ meetings (Mr. Anderson had not), and never once
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Following the meeting, Tempur-Sealy attempted to salvage the relationship with Mattress
Firm, but its attempts proved unsuccessful. Ultimately, Mattress Firm wanted a better subsidy
package from Tempur-Pedic than Tempur-Sealy was willing to provide, and the parties had
philosophical differences relating to the future of the mattress industry. On January 25, 2017,
Mattress Firm informed Tempur-Sealy that its counterproposal was “woefully inadequate.” (Id.
at 31:24-33:1). Following the parties’ failure to come to an agreement on a new deal and Mattress
Firm’s representation that it was terminating the relationship, Tempur-Sealy informed its Board
and the Board accepted a recommendation to terminate the relationship. (Id. at 42:3-43:18).
Accordingly, on January 27, 2017, Tempur-Pedic and Sealy provided notification of termination
to Mattress Firm, both verbally and by written letter. (Id. at 45:3-20).
Following formal termination of the parties’ business relationship, Tempur-Sealy and
Mattress Firm engaged in further negotiations; and on January 30, 2017, Tempur-Pedic and Sealy
entered into letter agreements with Mattress Firm for the wind-down and termination of their
business relationships (the “Letter Agreements”). Under those agreements, Mattress Firm was
permitted to continue ordering Tempur-Sealy products until April 3, 2017. The Letter
disclosed that Mattress Firm had secretly recorded the meeting.
Even before Mattress Firm informed Tempur-Sealy that it intended to terminate the parties’
relationship, Mattress Firm was in active negotiations to shift production to Serta Simmons, a competitor
of Tempur-Sealy. (Ex. 3, Deposition of Ken Murphy (“Murphy Dep.”), at 28:9-14, 40:17-41:13, 43:9-23);
Ex. 4, Federal Deposition of Stephen Stagner (“Stagner Federal Dep.”), at 50:23-51:6, 55:6-56:15).
Mattress Firm alleges that Tempur-Sealy “extract[ed] a $10 million payment from Mattress Firm
as a condition to entering into” the Letter Agreements, (see Third Amend. Pet., at ¶3), but the $10 million
payment was to reimburse Tempur-Sealy for a portion of the significant investments Tempur-Sealy had
already made in Mattress Firm programs and events, including providing a full-line of Stearns & Foster
products, in-store materials, and other promotional supplies, that cost Tempur-Sealy well in excess of $10
million and had been made with the expectation that the parties business relationship would continue
throughout 2017. (Ex. 2, Anderson Dep., at 46:12-24). In other words, the $10 million was not a simple
payment from Mattress Firm to Tempur-Sealy, but instead was reimbursement for investment that Tempur-
Sealy had already made in Mattress Firm with the understanding—at the time such investment was made—
that the parties’ relationship would continue. And Tempur-Sealy’s actual investment was far greater than
the $10 million reimbursement payment.
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Agreements were negotiated directly between senior executive officers at two large companies,
with the assistance of sophisticated legal counsel. The Letter Agreements also contained a mutual
release of all claims and conduct arising prior to the execution of the agreements, (Tempur-Pedic
Letter Agreement, at § 7, Ex. 5 to Def. MSJ; Sealy Letter Agreement, at § 7, Ex. 6 to Def. MSJ),
and the Letter Agreement specifically disclaimed any reliance on any statements or representations
not included in the agreements, (Ex. 5 to Def. MSJ, at § 9; Ex. 6 to Def. MSJ, at § 9).
On March 30, 2017, Mattress Firm brought an action for breach of contract, declaratory
judgment, and tortious interference. (See Original Pet.) As the lawsuit proceeded, Mattress Firm
voluntarily dismissed its claims for declaratory judgment and tortious interference, leaving one
breach of contract claim. (See, e.g., Second Amend. Pet.). On August 28, 2018, a year-and-a-half
after filing suit, Mattress Firm filed its Third Amended Petition—adding for the first time a claim
for promissory fraud (i.e., fraudulent inducement) and exemplary damages. (Third Amend. Pet.,
at ¶¶35-39, 41). Despite not alleging any new factual allegations, Mattress Firm now claims that
Tempur-Sealy entered into the Letter Agreements with no intention of performing under the
contracts. (Id. at ¶38). Mattress Firm filed this cause of action only two days before the parties’
pre-trial submissions were due, at the close of the discovery period, and on the eve of trial. As a
result, Tempur-Sealy had no opportunity to conduct discovery on this new cause of action.
Mattress Firm makes this claim despite the undisputed evidence that Tempur-Sealy fulfilled—
and Mattress Firm accepted—every single order placed between January 30, 2017 and April 3, 2017. See,
e.g., Bank One, Texas, N.A. v. Stewart, 967 S.W.2d 419, 445 (Tex. App.—1998, pet. denied) (holding that
there was no evidence that a party made representations with intent not to perform on note when party
subsequently made payment on note for five years); see also SEECO, Inc. v. K.T. Rock, LLC, 416 S.W.3d
664, 673 (Tex. App.—Houston [14th Dist.] 2013, pet. denied) (evidence was insufficient to support
fraudulent inducement where the defendant did not breach the contract; the court explained: “[i]t is simply
undisputed that SEECO did not breach the Contract. Instead of ‘slight circumstantial evidence’ of intent
to defraud coupled with the breach of the promise to perform, here we have undisputed evidence of
SEECO’s performance under the Contract.”).
On August 30, 2018, Tempur-Sealy filed a motion to strike the Third Amended Petition, on the
grounds that it is untimely under Texas Rule of Civil Procedure 63, operates as a surprise to Tempur-Sealy,
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ARGUMENT
I. THE COURT SHOULD EXCLUDE PRE-JANUARY 30, 2017 EVIDENCE AND
TESTIMONY, INCLUDING THE JANUARY 23, 2017 AUDIO RECORDING.
Mattress Firm’s Third Amended Petition makes clear that Mattress Firm intends to offer at
trial evidence of the parties’ negotiations and conduct leading up the execution of the Letter
Agreements. (See, e.g., Third Amend. Pet., at ¶38). In addition, Mattress Firm has listed trial
exhibits that predate the Letter Agreements, including the surreptitious audio recording of the
parties’ January 23, 2017 meeting. However, as explained herein, all of this pre-January 30, 2017
history and the audio recording of the January 23, 2017 meeting should be excluded because the
evidence is wholly irrelevant, unfairly prejudicial and misleading, and an improper attempt to
conduct an end-around of the parol evidence rule.
A. Pre-January 30, 2017 Evidence Is Irrelevant to Mattress Firm’s Fraudulent
Inducement Claim Because Mattress Firm Disclaimed Reliance on All Pre-
January 30, 2017 Representations Not Included in the Letter Agreements.
To establish its fraudulent inducement claim, Mattress Firm must prove: (1) Tempur-Sealy
made a material representation; (2) the representation was false; (3) when Tempur-Sealy made the
representation, Tempur-Sealy knew it was false or made it recklessly without any knowledge of
the truth and as a positive assertion; (4) Tempur-Sealy made the representation with the intention
that Mattress Firm act on it;(5) Mattress Firm acted in reliance on the representation; and (6)
and is prejudicial on its face. In the alternative, Tempur-Sealy has filed a motion for a continuance and to
re-open discovery, to allow it to take discovery on Mattress Firm’s new cause of action and new claim for
exemplary damages. (See Defendants’ Objections to, and Motion to Strike, Plaintiff’s Third Amended
Petition or, in the Alternative, Motion for a Continuance and to Re-Open Discovery).
Mattress Firm presumably relies on its new promissory fraud claim to support the inclusion of
pre-January 30, 2017 evidence at trial—as such evidence is clearly inadmissible with regard to Mattress
Firm’s breach of contract claim as parol evidence. See Bandera Drilling Co., Inc. v. Sledge Drilling Corp.,
293 S.W.3d 867, 872 (Tex. App.—Eastland 2009, no pet.) (holding that because the contract at issue
contained a merger clause, the Court cannot consider extrinsic evidence of the parties’ negotiations); ISG
State Operations, Inc. v. National Heritage Ins. Co., Inc., 234 S.W.3d 711, 722 (Tex. App.—Eastland 2007,
pet. denied) (holding that, because contract at issue contained a merger clause, “trial court did not err when
it excluded evidence of precontract negotiations”).
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Mattress Firm suffered injury. See IKON Office Solutions, Inc. v. Eifert, 125 S.W.3d 113, 124
(Tex. App.—Houston [14th Dist.] 2003, pet. denied); Johnson & Higgins of Texas, Inc. v. Kenneco
Energy, Inc., 962 S.W.3d 507, 524 (Tex. 1998). “A promise to act in the future constitutes fraud
only when made with the intention, design and purpose of deceiving—a promise made with no
intention of performing the act.” IKON Office, 125 S.W.3d at 124; Formosa Plastics Corp. v.
Presidio Eng’rs & Contractors, Inc., 960 S.W.3d 41, 47-48 (Tex. 1998). Although circumstantial
evidence may be used to establish any material fact, “it must transcend mere suspicion.” Lozano
v. Lozano, 52 S.W.3d 141, 149 (Tex. 2001). “Legally sufficient circumstantial evidence requires
a logical bridge between the proffered evidence and the necessary fact.” Id. at 152; IKON Office,
125 S.W.3d at 124.
“[A] party’s specific disclaimer of reliance on extra contractual representations may, under
certain circumstances, preclude a fraudulent inducement claim.” IKON Office, 125 S.W.3d at 124;
Italian Cowboy Partners, Ltd. v. Prudential Insurance Co. of America, 341 S.W.3d 323, 336-337
(Tex. 2011); Forest Oil Corp. v. McAllen, 268 S.W.3d 51, 58 (Tex. 2011); Schlumberger Tech.
Corp. v. Swanson, 959 S.W.2d 171, 180-181 (Tex. 1997). Such circumstances are present here.
The Letter Agreements contain specific disclaimers of reliance:
9. Entire Agreement. This letter agreement (including specific terms
referenced from the MRA and Program Agreement) reflects the Parties’ entire
agreement with respect to this subject matter, supersedes all prior discussions and
communications on this subject matter, and neither Party has relied on any
statement or representation from the other Party not included in this letter
agreement. In the event of any conflict between the terms of this letter agreement
and the terms in the MRA or Program Agreement, the terms of this letter agreement
will govern . . .
(Tempur-Pedic Letter Agreement, at § 9, Ex. 5 to Def. MSJ; Sealy Letter Agreement, at § 9, Ex. 6
to Def. MSJ). Such a disclaimer of reliance operates to preclude reference to any pre-contract
conduct not specifically included in the parties’ agreements in support of Mattress Firm’s
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fraudulent inducement claim, as a matter of law. See Italian Cowboy, 341 S.W.3d at 336
(distinguishing specific disclaimers of reliance from mere merger clauses; comparing contract
language that operated to disclaim reliance (e.g., “. . . none of us is relying upon any statement of
representation . . .”; “. . . they are not relying upon any statement or representation . . .”; to contract
language not sufficient to disclaim reliance (e.g., “. . . neither Landlord nor Landlord’s agents,
employees or contracts have made any representations or promises . . .”)) (emphasis in original);
IKON Office, 125 S.W.3d at 128 (“As a matter of law, given the merger clauses within the
Agreements, Eifert cannot rely on these representations to support his claim of fraudulent
inducement.”).
In Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171 (Tex. 1997),10 the Texas
Supreme Court considered the following factors when determining that the parties had disclaimed
reliance on any statements outside of their agreements for the purposes of a fraudulent inducement
claim: the parties (1) were attempting to end their relationship, (2) were “embroiled in a dispute,”
(3) were dealing at arm’s length, (4) were represented by highly competent and able legal counsel
during the negotiations over the terms of the release itself, (5) were knowledgeable and
sophisticated business players, and (6) the terms of the release “in clear language . . . unequivocally
disclaimed reliance.” 959 S.W.2d at 179-180.
Here, all factors are met. First, the parties were attempting to resolve all issues present
between them, and the parties specifically released all pre-Letter Agreement claims and conduct.
(Ex. 5 to Def. MSJ, at § 7; Ex. 6 to Def. MSJ, at § 7). Second, the parties were “embroiled in a
dispute,” with each party exchanging letters and correspondence relating to the termination of the
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In Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of America—although limiting the scope
of disclaimers of reliance—the Texas Supreme Court reaffirmed its holding in Schlumberger and the
relevant factors analyzed by the Schlumberger Court. 341 S.W.3d at 337 n.8.
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parties’ agreements and the conduct of the other side leading up to the execution of the Letter
Agreements. Third, the parties were dealing at arm’s length and were in an adversarial position.
Fourth, both parties were represented by sophisticated legal counsel and freely negotiated the terms
of the contracts. Fifth, all parties were knowledgeable and sophisticated business players; indeed,
the negotiations were conducted by C-level executives at two major corporations. Sixth, the
release clearly and unequivocally disclaims reliance on any statement or representative not
included in the Letter Agreements. In fact, the Letter Agreements use language substantially
similar to the language approved by the Texas Supreme Court in Italian Cowboy.
Thus, Mattress Firm cannot rely on any pre-January 30, 2017 representations outside of
the Letter Agreements themselves to establish their fraud claim. Because all of the pre-January
30, 2017 evidence that Mattress Firm intends to bring—including the January 23, 2017 audio
recording—are outside of the Letter Agreements, such evidence is legally insufficient to support,
and not relevant to, Mattress Firm’s promissory fraud claim. As such, it should be excluded.
B. In Seeking to Introduce Pre-January 30, 2017 Evidence, Mattress Firm Is
Attempting an End-Run Around the Parol Evidence Rule.
Moreover, rather than introduce evidence supporting their promissory fraud claim, it is
evident that Mattress Firm is attempting an end-run around the parol evidence rule. “Generally, the
parol evidence rule circumscribes the use of extrinsic evidence when interpreting an integrated
document.” ISG State Operations, 234 S.W.3d at 719 (citing Sun Oil Co. (Delaware) v. Madeley,
626 S.W.2d 726, 731 (Tex. 1981)). One exception to the parol evidence rule is to show that the
execution of a written agreement was procured by fraud. Id. at 719 n.11. However, in order to
avail itself of this exception, Mattress Firm must show that the extrinsic evidence is probative of
fraud. Here, the evidence is not probative of fraudulent intent. The pre-January 30, 2017 evidence,
including the parties’ statements during the January 23, 2017 meeting, do not make Mattress
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Firm’s promissory fraud allegations any more likely; nor do they demonstrate that Tempur-Sealy
did not intend to honor the January 30, 2017 Letter Agreements when they entered into them.
First, the statements demonstrate the exact opposite of fraud. On their face, they show that
Tempur-Sealy’s Chief Executive Officer—caught completely off guard by Mattress Firm’s
decision to terminate the parties’ relationship when Tempur-Sealy believed they would be
executing new master retailer agreements—was committed to ensuring that the parties’ wrapped-
up their business dealings in a professional manner. (Ex. 1, Thompson Dep., at 11:1-25, 14:10-
15:23). Thus, the statements do not show that Tempur-Sealy never intended to honor the Letter
Agreements. Second, Mattress Firm cannot claim that it relied on statements from January 23,
2017, when subsequent events make any such reliance unreasonable. No contract was entered into
during the January 23, 2017 meeting, nor was any formal agreement created. Instead, Tempur-
Sealy ultimately terminated the parties’ agreements. Only after that termination, did the parties
specifically negotiate and agree to the Letter Agreements. Mattress Firm cannot have reasonably
relied on statements outside of even the negotiations relating to the contracts at issue.
In short, Mattress Firm is seeking to use its allegations of fraud to create an end-run around
the parol evidence rule and to introduce at trial extrinsic evidence to modify the terms of the
parties’ contracts. But the parol evidence rule operates to preclude exactly such proof, whether or
not Mattress Firm purports to offer it to prove a fraud. Fisher Controls Intern., Inc. v. Gibbons,
911 S.W.2d 135, 141-142 (Tex. App.—Houston [1st Dist.] 1995, writ denied) (“Negotiations
preceding a written contract should not displace the terms of the written contract. When
experienced executives represented by counsel voluntarily sign a contract whose terms they know,
they should not be allowed to claim fraud in any earlier oral statement inconsistent with a specific
contract provision. Otherwise, contracts would be ‘nothing more than a scrap of paper.’”) (internal
citations omitted).
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C. Pre-January 30, 2017 Evidence Should Be Excluded Pursuant to Rule 403, As
the Probative Value, If Any, of Such Evidence Is Outweighed By Its
Prejudicial Effect.
“Otherwise admissible evidence may be excluded if, on balance, the benefits of admitting
such evidence are substantially outweighed by the dangers of doing so.” Service Lloyds Ins. Co.
v. Martin, 855 S.W.2d 816, 825 (Tex. App.—Dallas 1993, no writ); TEX R. VID. 403. “In making
its determination under [R]ule 403, the trial court must: (i) identify the probative value of the
proffered evidence; (ii) identify the costs of admitting the evidence; and (iii) weigh one against the
other. If the dangers substantially outweigh the probative value of the proffered evidence, it should
be excluded.” Service Lloyds, 855 S.W.2d at 825. Here, the balancing test weighs in favor of
excluding the pre-January 30, 2017 evidence.
As explained above, the evidence is not probative of Mattress Firm’s fraudulent
inducement claim: (1) Mattress Firm has specifically disclaimed reliance and thus, cannot claim
reliance as a matter of law; (2) the statements at the January 23, 2017 meeting fail to demonstrate
fraud on their face; and (3) Mattress Firm cannot have relied on the statements because they were
not even made in the process of negotiating the contracts at issue. In contrast, the evidence, if
admitted, will be highly prejudicial to Tempur-Sealy as it will allow Mattress Firm to re-write the
parties’ integrated contracts, in contravention to well-established and hornbook Texas law. Thus,
the dangers substantially outweigh the probative value (if any) of the pre-January 30, 2017
evidence, and such evidence should be excluded pursuant to Rule 403.
II. THE COURT SHOULD EXCLUDE IRRELEVANT EVIDENCE AND
TESTIMONY RELATING TO ALLEGED INTERNET ADVERTISEMENTS.
Mattress Firm also alleges that Tempur-Sealy purchased “ad words,” ran internet
advertisements, and encouraged competitors to run false and misleading advertisements
concerning Mattress Firm, in breach of the good-faith and fair dealing obligations in the Uniform
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Commercial Code. (Third Amend. Pet., at ¶33). Mattress Firm further contends that this alleged
internet advertisement activity is probative of its promissory fraud claim. (Id. at ¶36). However,
evidence relating to internet advertisement Tempur-Sealy alleged ran during the wind-down period
is neither relevant to Mattress Firm’s breach of contract claim nor its fraudulent inducement claim.
Moreover, any probative value would be substantially outweighed by the danger of unfair
prejudice, confusion of the issues, and misleading the jury; and accordingly, such evidence should
not be admitted.
First, this evidence is not relevant to Mattress Firm’s breach of contract claim because a
failure to “observe . . . reasonable commercial standards of fair dealing” does not support a breach
of contract claim unless tied to a specific duty or obligation under the contract. TEX US
OMM ODE § 1.203; see also Northern Nat. Gas Co. v. Conoco, Inc., 986 S.W.2d 603, 606-607
(Tex. 1998) (“In the absence of a specific duty or obligation to which the good-faith standard could
be tied, section 1.203 will not support Conoco’s claim for damages.”). Mattress Firm’s corporate
testimony makes clear that Tempur-Sealy’s alleged internet advertisements, including its purchase
of Google AdWords, did not violate any provision of the parties’ agreements. (Ex. 5, State
Deposition of Stephen Stagner (“Stagner State Dep.”), at 48:9-49:1, 79:24-81:15 (“Q. And you’re
not aware of anything in the letter agreements that restricted that on-line competition, correct? A.
I’m not aware. Correct.”)). Accordingly, such evidence is not relevant to Mattress Firm’s breach
of contract claim, and any probative value would be substantially outweighed by the danger of
unfair prejudice, confusion of the issues, and misleading the jury. TEX R. VID. 403; see also
Service Lloyds, 855 S.W.2d at 825.
Second, evidence of “advertising” efforts is not relevant to Mattress Firm’s fraudulent
inducement claim. Mattress Firm alleges that “Tempur-Sealy combined their actions with internet
marketing efforts designed to suggest to internet shoppers that they would get hit with a ‘bait and
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switch’ from Mattress Firm at a time when they orchestrated product delays approaching 40% of
Mattress Firm’s orders.” (Third Amend. Pet., at ¶36). But Tempur-Sealy’s advertising efforts
during the wind-down period are not circumstantial evidence that—at the time Tempur-Sealy
entered into the Letter Agreements—it never intended to honor the agreements.
To begin, Tempur-Sealy made no promise regarding internet advertisements in the Letter
Agreements. (Ex. 5, Stagner State Dep., at 79:24-81:15). Thus, whether or not Tempur-Sealy ran
internet advertisements does not make it more likely that Tempur-Sealy never intended to honor
the Letters Agreements (i.e., accept orders from Mattress Firm and ship product to Mattress Firm
under the Letter Agreements). See, e.g. SEECO, 416 S.W.3d at 672 (holding that even if the
plaintiff’s assertions of fraud were accepted as true, such evidence was not probative of fraudulent
intent because it did not relate to a promise to perform under the contract: “Even if we assume
that SEECO never intended to purchase 500,000 tons of rock per year or 1.5 million tons of rock
in three years, we could not conclude that this is sufficient evidence that SEECO did not intend[]
to fulfill its promise to perform under the contract because the contract provided for alternative
methods of performance. To sustain a jury verdict of fraud, we must find evidence that SEECO
did not intend to keep its promise to take or pay.”).
Next, “[t]he jury may not indulge [an] inference of fraudulent intent where the same
‘meager circumstantial evidence’ gives rise to other equally probable inferences.” Id. at 673;
Hancock v. Variyam, 400 S.W.3d 59, 70-71 (Tex. 2013). Here, that Tempur-Sealy ran internet
advertisements does not “indulge [an] inference of fraudulent intent.” But even if it did, there are
numerous equally probable inferences that can be drawn from Tempur-Sealy’s actions that do not
lead to the conclusion that Tempur-Sealy did not intend to honor the Letter Agreements when it
executed them on January 30, 2017, including that Tempur-Sealy simply intended to compete
against Mattress Firm in selling Tempur-Sealy mattresses to customers shopping online. (Ex. 5,
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Stagner State Dep., at 48:9-49:1 (Q. So, in terms of on-line sales, Tempur-Pedic and Mattress
Firm were competitors; is that true? A. Correct. Q. And that continued during the letter
agreement period. A. Correct.”)).
Accordingly, evidence of Tempur-Sealy’s alleged “advertising” efforts is not relevant to
Mattress Firm’s promissory fraud claim; and, as such, any probative value would be substantially
outweighed by the danger of unfair prejudice, confusion of the issues, and misleading the jury.
EX R. VID. 403; see also Service Lloyds, 855 S.W.2d at 825. For these reasons, such evidence
and associated testimony should be excluded.
CONCLUSION AND PRAYER FOR RELIEF
WHEREFORE, PREMISES CONSIDERED, Defendants Tempur-Sealy respectfully
request that the Court (1) exclude pre-January 30, 2017 evidence, including the audio recording of
the parties’ January 23, 2017 meeting, and (2) exclude irrelevant evidence and testimony relating
to Mattress Firm claim that Tempur-Sealy ran improper “bait and switch” internet advertisements
or any other allegedly improper advertising efforts. Tempur-Sealy also asks the Court to order
Mattress Firm and its attorneys and witnesses not to refer, directly or indirectly, in the presence of
the jury panel or the jury finally selected to try this case to these issues. Tempur-Sealy prays for
any additional legal and equitable relief to which they may be justly entitled.
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Respectfully submitted,
TEMPUR-PEDIC NORTH AMERICA, LLC
and SEALY MATTRESS COMPANY,
By their attorneys,
/s/ John P. Phillips
Robert J. Carty, Jr., Attorney-in-Charge
Texas Bar No. 00788794
Jesse M. Coleman
Texas Bar No. 24072044
John P. Phillips
Texas Bar No. 24083659
EYFARTH HAW LLP
700 Milam Street, Suite 1400
Houston, TX 77002
713-225-2300
Of Counsel
William N. Berkowitz (admitted pro hac vice)
Brandon Bigelow (admitted pro hac vice)
William F. Benson (admitted pro hac vice)
EYFARTH HAW LLP
Two Seaport Lane, Suite 300
Boston, MA 02210
617-946-4800
Dated: September 13, 2018
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing document was served upon
all counsel of record, as listed below via hand delivery, facsimile, email and/or My File Runner
using the CM/ECF system, on this the 13th day of September, 2018.
John B. Thomas, Esq.
J. Stephen Barrick, Esq.
Kelsey M. Machado, Esq.
ICKS HOMAS LLP
700 Louisiana St., Suite 2000
Houston, Texas 77002
/s/ John P. Phillips
John P. Phillips
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