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i/ SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORI{ 1 - - - - - - - - - - - - - - - - - - -x Note of Issue Filed ROBERT BRIAN ASSOCI ATES , INC., . Not Ass i gned to an I.C. Part Plaintiff, . Index No. 6859/1977 -against- . AFFIDAVIT OF NEAL JOHNSTON LOEWS THEATRES, INC., Defendant. - - - - - - - - - - - - - - - - - - -x STATE OF NEW YORK ) ss.. COUNTY OF NEW YORK ) NEAL JOHNSTON, being duly sworn, deposes and says: 1. I am a member of the bar of the State of New York and am associated with the firm of Paul, Weiss, Rifkind, Wharton & Garrison, attorneys for defendant in this action. I submit this affidavit in support of defendant's motion for an order compelling plaintiff to produce certain material relating to its damage claim, more fully described below. 03"7093'74 2. The bulk of the material in issue here was promised to defendant by plaintiff months ago. There is no dispute that defendant is entitled to this material. On several occasions, we have been assured the material would be supplied by some date cer- tain, but qn each occasion plaintiff has simply failed to fulfill its promise, without explanation or apoloay.

,1 . ,. , 3. Plaintiff (hereafter "Robert Brian") is a sales promotion agency which had been retaine d by the Lorillard division of defendant during the period June 1970 through August 1971, and again for the first two or three months of 1972 to generate sales promotion ideas for defendant's cigarette lines. The principal line involved in this case is Kent cigarettes. Robert Brian claims that during the period in question, it submitted four sales promotion ideas to Lorillard, which were subsequently employed by Lorillard without credit or benefit to Robert Brian; Lorillard denies that it appropriated any of the four promotional ideas in question. 4. Three of the four promotional ideas involved in this case were allegedly presented to Lorillard by Robert Brian while the latter was under retainer. As to these three claims, Robert Brian claims that it was entitled (under the retainer agreement) to prepare finished art work and to submit a bid for actual production work on the promotion. does not claim that it was entitled to perform Robert Brian such production work even if it submitted the lowest bid, but has instead conceded that Lorillard remained free to select whatever production agency it desired. 03"7(:`~3'7:i 5. As to these three promotional schemes, Robert Brian claims, as damages, its lost profits with respect to the prep- aration of finished art work which was never in fact prepared by it, toqether with lost profits on actual production. r 6. The fourth promotional scheme was allegedly

submitted to Lorillard by Robert Brian at a time when the latter was not under retainer. As to this scheme, which involved the distribution of steak-knife premiums, Robert Brian claims not only a right to prepare finished art, work, but also an absolute right to execute actual production of the promotion. Plaintiff seeks lost profits on botY~, the art work and production. 7. Plaintiff's ad damnum clause claims $235,000 in damages with respect to all four promotions. The complaint does not distinguish damages relating to any specific promotion, nor does the complaint distinguish damages relating to the prepara- tion of art work from damages relating to promotion production. 8. Lorillard has sought,to obtain information break- ing down the damage claim into its component parts. In addition, since Robert Brian could only recover its lost profits, if lia- bil.ity were established, but could not recover its gross billings, Lorillard has attempted to obtain information revealing the rela- tionship between Robert Brian's gross billings and its net profits during the relevant period. In all of this, Lorillard has been wholly stymied. _ O370-95r7f; 9. On April 11, 1977, Robert Brian served and filed a Note of Issue and Statement of Readiness. Although Lorillard had not yet in fact completed its discovery of plaintiff at that time, Lorillard agreed not to move to strike the Note of Issue upon Robert Brian's promise that Lorillard's discovery could go for- d ward while the case was calendared. Robert Brian was expressly advised that one principal area of open discovery was the question

of its damage calculation. Attached is Exhibit A to a copy of my letter of April 27, 1977 to Robert Brian's attorney which sets forth the understanding of counsel and then expresses our concern with damage discovery. 10. Since filing its Note of Issue, however, Robert Brian has, with one exception, effectively resisted all of our almost continuous efforts to complete the discovery we require. The one exception is that on August 2, 1977, after many delays at plaintiff's request, we were allowed to continue our oral examination of plaintiff by its president and sole owner, Mr. Robert Sandelman. On that occasion, it was obvious that Mr. Sandelman, despite our already noted interest in the subject, was simply not prepared to provide us any useful information on Robert Brian's calculation of damages. Mr. Sandel:nan testi- fied that there did exist some written materials relating to damage calculations, that some of these written materials ante- dated the complaint and that other damage calculation materials had apparently been created in contemplation of the complaint. None of these materials have ever been produced to us. With respect to damage claims relating to some of the four promo- tional schemes in question, however, it appears that no written calculations had ever been prepared. 03709Z77 . 11. During the August 2nd deposition, Robert Brian's attorney agreed to supply to us copies of all pre-existing r materials relating to the calculation of damages and, in addi- tion, to supply to us a written statement revealing the means

by which the $235,000 total damage claim was calculated. Fur- ther, we were assured that if these written materials did not satisfy our need for discovery, that Mr. Sandelman would be pro- duced again so that we might have the oral discovery relating to damages which we expected to have at the August 2nd session. Pertinent pages from the transcript are attached as Exhibit B. 12. Since August 2nd, I have repeatedly sought to obtain this promised material. I wrote to Robert Brian's at- torney, Mr. Leonard Glass, on August 17th, August 31st and on September 13th. Finally, on September 26th, I advised Mr. Glass in writing that if I did not receive tr.e promised material on September 30th, I would make an appropriate motion. A day or two before my deadline, Mr. Glass called to apologize for the delay and then promised to supply the material to me by Wednesday, October 5th. October 5th came and went. A week later, having received nothing and having heard nothing from Mr. Glass, I telephoned him again, and on this occasion he promised to have the material to me perhaps by Friday, October 14th, and certainly no later than Monday, October 17th. I confirmed this representa- tion to Mr. Glass in a letter dated October 13th. Since then, nothing has been heard. On October 14th, I called Mr. Glass's office once more to inquire once more about the promised material but the call has not been returned. Copies of this correspondence are attached as Exhibit C. 03'7O-93'78 r

13. There is one document of clear relevance which has been requested but expressly refused. We now seek an order com- pelling production of that document. 14. If plaintiff were to establish liability, it would presumably be entitled to recover its lost profits. It would not be entitled to recover its gross billings. We know something about Robert Brian's gross billing practices; we know nothing about its profitability except for Mr. Sandelman's self-serving testimony that it operated on a gross profit percentage of ap- proximately 20%. 15. During calendar 1971, Lorillard was one of Robert Brian's chief customers, if not its most important single cus- tomer. We know from a document which Robert Brian prepared for the Federal Trade Commission that Robert Brian's gross revenues in 1971 were $598,203.30; we know that one single Kent cigarette promotion handled by plaintiff in 1971 resulted in payments by Lorillard to Robert Brian of $196,149.66. This document and the relevant transcript pages are attached as Exhibit D. 03iC 9579 16. We requested production of Robert Brian's 1971 tax returns in order to learn what its declared profit was in order to have hard data as to the relationship between Robert Brian's gross billings and net profit. That is a relationship which must be established before Robert Brian can establish any injury+whatsoever on its lost profit claim; we can see no

justification for depriving us of what may be the best evidence on the point of profitability. Production was flatly refused. 17. In addition we seek producticn of Robert Brian's tax return for those years subsequent to 1971 in order to deter- mine whether that company's profitability in 1971 was representa- tive of its general performance. WHEREFORE, I respectfully urge this Court to order plaintiff Robert Brian, Inc. to produce, without further delay, all materials in the possession of plaintiff relating to its calculation of damages and a written statement setting forth the component parts of plaintiff's total $235,000 damage claim showing, inter alia, the separate amounts claimed as lost profits with respect to preparation of finished art work and actual production on each of the four promotional claims in question and further order plaintiff to produce copies of its tax returns for the calendar vears 1971-1974. Sworn to before me this 28th day of October, 1977. 1 Neal Johnston ELIZABLTH PICCIONE Ncfary G_oi~c, _f '_w York Q.IGiicc L,i Naw 'lor'-~ C~,untv tcmmissicn Expiras Mar:n 30, i9ZI `~.. r„J r („~ O