McCammond v. Schwan's Home Service, Inc.

Filing 95

ORDER on Issues Raised by Trial Briefs The parties shall meet-and-confer regarding a joint Statement of the Case, as contemplated by WJM Practice Standard VI.B, and shall submit same to the Court not later than August 18, 2011 by Judge William J. Martinez on 8/17/2011. (erv, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 09-cv-02895-WJM-MJW
MICHAEL McCAMMOND,
Plaintiff,
v.
SCHWAN’S HOME SERVICE, INC.,
Defendant.

ORDER ON ISSUES RAISED BY TRIAL BRIEFS

On August 8, 2011, the Court ordered the parties to submit trial briefs addressing
the following:
1.

Whether Defendant should be permitted to present
evidence relating to whether the September 7, 1979
Contract of Employment for Retail Routes is the
operative employment contract or whether it was
cancelled, amended, or otherwise altered by later
documents and/or agreements. The parties should
specifically address the effect of Defendant’s failure
to include any reference to the cancellation,
amendment or otherwise non-binding nature of the
September 7, 1979 Contract of Employment in the
December 16, 2010 Final Pretrial Order, or in its
briefing on its motion for summary judgment.

2.

Whether Colorado or Minnesota law applies to the
question of whether the September 7, 1979 Contract
of Employment was cancelled, amended, or
otherwise altered by later employment documents
signed by Plaintiff.

3.

Whether expert testimony is necessary to prove

future damages.
(ECF No. 78.) The Court has received the parties’ filings and will address the issues
raised therein.
I.

CANCELLATION OR AMENDMENT OF PLAINTIFF’S EMPLOYMENT
CONTRACT
On October 15, 2010, Defendant moved for summary judgment arguing that

Plaintiff had failed to show the existence of a factual dispute as to whether he was
terminated for cause as required by his 1979 Contract of Employment. (ECF No. 32.)
In a footnote in the Motion for Summary Judgment, Defendant stated:
The material terms of Plaintiff’s employment changed
drastically over time from the terms contained in the 1979
Contract of Employment for Retail Routes. Solely for the
purpose of this Motion for Summary Judgment, Defendant
admits the existence of a contract. For all other purposes
(including trial of this action), Defendant reserves the right to
assert the dissolution/waiver of the contract, or any other
defense to the existence of a contract, as a defense to
Plaintiff’s claims.
(Id. at 9 n.2.) Finding a genuine dispute of material fact, the Court denied Defendant’s
Motion for Summary Judgment. (ECF No. 46.)
On December 13, 2010, Defendant filed its Proposed Pretrial Order. (ECF No. 35.)
In the section entitled “Claims and Defenses”, Defendant stated as follows:
Defendant contends Plaintiff was terminated for cause,
pursuant to the terms of his employment contract. Defendant
denies Plaintiff’s claims, denies that it wrongfully terminated
Plaintiff’s employment contract without cause, denies Plaintiff’s
termination was a breach of his employment contract, denies
Plaintiff’s termination was a breach of any covenant of good
faith and fair dealing, and states Plaintiff was terminated for
insubordination in violation of Schwan’s Home Service, Inc.’s
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Standards of Conduct. In addition, Plaintiff previously
communicated his refusal to work a five-day schedule as
required by the salary plus commission compensation program
for Customer Service Managers that required additional days
of work for Customer Service Managers who did not meet
specified sales targets.
In the alternative, Defendant contends, even if a jury
determines Plaintiff was not terminated for cause, Plaintiff is
not entitled to the damages he claims. In addition to the “for
cause” provision, Plaintiff’s employment contract granted either
party the right to voluntarily terminate the contract at any time
upon two weeks’ notice to the other party. Therefore, even if
Plaintiff was not terminated for cause (which he was), the
maximum damages to which Plaintiff would be entitled would
be two weeks’ wages for Defendant’s failure to provide two
weeks’ notice prior to termination.
(Id. at 2-3.) There was no mention of a defense related to cancellation or amendment of
the employment contract. On December 16, 2010, the Court entered its Final Pretrial
Order, which adopted Defendant’s Proposed Pretrial Order as far as it set forth
Defendant’s claims and defenses. (ECF No. 37.) The case was set for a three-day jury
trial to begin on August 22, 2011. (ECF No. 38.)
On August 4, 2011, Defendant filed its Proposed Disputed Jury Instructions. (ECF
No. 73.) Defendant’s Disputed Instruction A was a “Statement of the Case” that provided
as follows:
Schwan’s position is the following:
(1) The provisions relating to employment termination within
Plaintiff’s September 7, 1979 Contract of Employment were
cancelled by Plaintiff’s agreement to be bound by the “You and
Schwan’s” handbook on August 11, 1990, which stated that
Plaintiff’s employment could be terminated by either party, at
any time, and for any reason. In addition, Plaintiff specifically
agreed on January 29, 1995 that the “employment relationship
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between Schwan’s and [Plaintiff] is terminable at the will of
either Schwan’s or [Plaintiff].” Accordingly, the September 7,
1979 Contract of Employment was cancelled and Defendant
did not breach it.
(2) Even if the September 7, 1979 Contract of Employment
remained effective at the time of Plaintiff’s termination,
Defendant terminated Plaintiff for cause, as permitted by the
Contract.
(3) Even if the September 7, 1979 Contract of Employment
remained effective at the time of Plaintiff’s termination, and
even if Plaintiff was terminated without cause, Schwan’s was
entitled under the Contract to terminate Plaintiff’s employment
without cause upon two weeks’ notice to Plaintiff and to pay
Plaintiff $175.00 per week during such two week period.
Accordingly, Plaintiff’s damages, if he proves his claim for
breach of contract, are limited to $350.00.
(4) Even if the September 7, 1979 Contract of Employment
remained effective at the time of Plaintiff’s termination, and
even if the Plaintiff was terminated without cause, Schwan’s
provided notice of termination of Plaintiff’s employment more
than fifteen (15) days prior to the expiration of the contract
term ending September 6, 2009. Plaintiff’s employment
contract therefore did not automatically renew on September
7, 2009 and Plaintiff’s damages are limited to wages and
benefits he would have earned had he remained employed by
Schwan’s from December 23, 2008 through September 6,
2009.
(ECF No. 73 at 3-4.)
Comparing the “Claims and Defenses” submitted by Defendant and adopted by the
Court in the Final Pretrial Order with the “Statement of the Case” submitted by Defendant
as a Proposed Disputed Jury Instruction, it is clear that Defendant’s theory of the case has
evolved.

The question currently before the Court is whether Defendant should be

permitted at trial to argue its newly raised defense that the contract was modified or

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cancelled.
The Tenth Circuit has held that “the pretrial order is the controlling document for
trial.” Expertise Inc. v. Aetna Financial Co., 810 F.2d 968, 973 (10th Cir. 1987). “[C]laims,
issues, defenses, or theories of damages not included in the pretrial order are waived.”
Wilson v. Muckala, 303 F.3d 1207, 1215 (10th Cir. 2002). Modification of the final pretrial
order is discouraged.

Koch v. Koch Industries, 179 F.R.D. 591, 596 (D. Kan. 1998) (“A

policy of too-easy modification of pretrial orders not only encourages carelessness in the
preparation and approval of the initial order, but unduly discounts it as the governing
pattern at trial.”)
Defendant does not dispute the fact that it failed to assert its modification and/or
cancellation defense in the “Claims and Defenses” section of the Final Pretrial Order.
Defendant argues that, regardless of this omission, it should be permitted to assert its
modification and/or cancellation defense because it specifically reserved the right to raise
such argument in its Motion for Summary Judgment. (ECF No. 90 at 3.) Defendant argues
that, based on this assertion, Plaintiff was on notice that Defendant intended to raise
modification and/or cancellation of the contract.
The Court does not doubt that, at some point during this litigation, Plaintiff knew that
Defendant was pursuing a defense related to the modification or cancellation of the 1979
employment contract. However, it is not unheard of for a party to pursue multiple theories
of recovery or defenses during discovery and then to abandon one or more of those
theories as they prepare for trial. The purpose of the final pretrial order is to put the other
party on notice of which of theories of the case and/or defenses a party intends to pursue
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at trial.

Despite its prior reservation of the right to pursue a modification defense,

Defendant’s failure to include any reference to such defense in the Final Pretrial Order
constitutes waiver. See Lohmann & Rauscher, Inc. V. YKK Inc., 477 F. Supp. 2d 1147,
1152 (D. Kan. 2007) (defendant was precluded from raising defense at trial that was not
set forth in final pretrial order); Merril v. Cintas Corp., 941 F. Supp. 1040, 1044 (D. Kan.
1996) (refusing to consider arguments made in summary judgment papers where they
were not included in final pretrial order).
Defendant also contends that its list of proposed exhibits in the Final Pretrial Order
included Employee Handbooks that would be “offered for no purpose other than to
establish that Plaintiff acknowledged an at-will employment relationship in writing and
continued to work for Schwan’s for over a decade thereafter.” (Id. at 5.) Defendant argues
that the inclusion of these exhibits in the Final Pretrial Order preserved its right to present
the modification defense. The Court disagrees. Given the nature of Plaintiff’s claims and
the damages he seeks, the Employee Handbooks could have served many purposes, such
as providing a basis for challenging the value Plaintiff assigns to his fringe benefits or
arguing that Plaintiff was terminated for cause because he violated a policy set forth in the
Handbooks. The mere fact that Defendant included Employee Handbooks as proposed
exhibits in the Final Pretrial Order does not preserve its right to pursue a modification
defense when such defense was omitted from the “Claims and Defenses” section of the
Final Pretrial Order.
The Court finds that allowing Defendant to, in effect, amend the Final Pretrial Order

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at this point in the proceedings would significantly prejudice the Plaintiff.1 Defendant has
consistently defended against this action by arguing that Plaintiff was terminated for good
cause and, therefore, the 1979 Contract of Employment was not breached. That was
Defendant’s position in its Motion for Summary Judgment and its “Claims and Defenses”
set forth in the Final Pretrial Order. For over ten months, Plaintiff prepared for trial
anticipating that he would need to prove that there was no good cause for his termination.
To allow Defendant to change course less than a week before trial would cause undue
prejudice to Plaintiff that the Court will not allow. See Koch, 203 F.3d at 1223 (district court
did not err in refusing to amend final pretrial order where plaintiffs tried to change litigation
strategy immediately before trial).
The Final Pretrial Order in this case includes no reference to Defendant’s
modification or cancellation defense. (ECF No. 37.) Defendant failed to raise the defense
of modification or cancellation of the contract until its Statement of the Case filed in its
Proposed Disputed Jury Instructions eighteen days before trial.

That is too late.

Accordingly, the Court will not permit Defendant to argue that Plaintiff’s 1979 Contract of
Employment was modified or cancelled by later agreements or handbooks.
Given this ruling, the Court ORDERS the parties to meet-and-confer regarding a
joint Statement of the Case that would comply with the undersigned’s Revised Practice
Standard VI.B and to submit such Statement of the Case not later than August 18, 2011.

1

The Court notes that Defendant has not formally moved to amend the Final Pretrial
Order. However, its proposed Statement of the Case effectively does so as it would supercede
the “Claims and Defenses” set forth in the Final Pretrial Order.

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II.
WHETHER COLORADO OR MINNESOTA LAW APPLIES TO THE QUESTION OF
WHETHER THE EMPLOYMENT CONTRACT WAS MODIFIED OR CANCELLED
Because the Court will not allow Defendant to raise modification or cancellation of
the contract as a defense at trial, it need not address whether Colorado or Minnesota law
would govern on this issue.

III.

EXPERT TESTIMONY FOR PURPOSES OF ESTABLISHING FUTURE DAMAGES
Plaintiff seeks damages in the amount of $302,250.00. (ECF No. 37 at 2.) Plaintiff

arrived at this amount by multiplying his annual salary ($33,000.00/year) combined with the
alleged value of his fringe benefits ($6,000.00/year) by the 7 3/4 years he intended to work
before he retired. Plaintiff argues that, because this is a simple calculation, he is not
required to introduce any expert testimony to prove damages. (ECF No. 89 at 8-9.)
Defendant contends that Plaintiff is required to present expert testimony to prove any
future damages and that failure to do so shows that future damages are speculative.2
(ECF No. 90 at 13-15.)
Minnesota law provides that “[t]he measure of damages for breach of an
employment contract is the compensation which an employee who has been wrongfully
discharged would have received had the contract been carried out according to its terms.”
Feges v. Perkins Rests., Inc., 483 N.W.2d 701, 709 (Minn. 1992); see also Soules v.
Independent School Dist. No. 518, 258 N.W.2d 103, 106 (Minn. 1977) (“In cases where

2

Defendant also contends that Plaintiff is not entitled to future damages because that
would exceed the terms of the contract. (ECF No. 90 at 12-13.) However, the Court denied
Defendant’s Motion in Limine concerning this topic and ruled that the appropriate measure of
damages was a question for the jury. The Court sees no reason to reconsider its ruling.

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the amount of salary is fixed by an employment contract, a wrongfully discharged
employee’s damages are measured by the salary promised under the contract.”). Plaintiff
bears the burden of proving the amount of damages to a reasonable certainty. Pietrzak
v. Eggen, 295 N.W.2d 504, 507 (Minn. 1980). “However, it is not necessary that the
evidence be unequivocal or that it establish future damages to an absolute certainty.
Instead, the plaintiff must prove the reasonable certainty of future damages by a fair
preponderance of the evidence.” Id.
Defendant fails to cite any Minnesota law requiring expert testimony to prove
damages in a breach of employment contract case. The Court sees no reason why, given
the nature of the damages sought in this case, Plaintiff is required to present expert
testimony to meet his burden. See Wise v. Kansas City Life Ins. Co., 433 F. Supp. 2d 743,
752 (N.D. Miss. 2006) (where plaintiffs testified as to their actual contractual damages, no
expert was required); Bethley v. Allstate Ins. Co., 2009 WL 3481131, *4 (E.D. La. Oct. 26,
2009) (allowing plaintiff to prove future lost wages with tax documents and not requiring
expert testimony). At trial, Defendant is free to argue to the Court and the jury that Plaintiff
has failed to meet his burden of proving damages with reasonable certainty.3 But the Court
cannot say, as a matter of law, that Plaintiff is required to present expert testimony to do
so.
Defendant also argues that, to the extent the jury awards future damages, this
amount should be discounted to present value. (ECF No. 90 at 14-15.) In a breach of

3

The Court has separately asked the parties to brief whether front pay damages (if
any) should be determined by the Court or the jury. The Court will rule on that issue in a
separate order.

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contract case, Minnesota law permits damages to be discounted to present value but does
not require such. Board v. Simmons Industries, Inc., 1994 WL 454738, *3 (Minn. App.
Aug. 23, 1994) (“Whether to provide such a discounting instruction . . . is generally within
the trial court’s discretion.”) (citing Olsen v. Special Sch. Dist. No. 1, 427 N.W.2d 707, 714
(Minn. App. 1988)). The Court need not determine at this time whether it will instruct the
jury on discounting future damages to present value because even if it decides to do so,
Minnesota law does not require expert testimony on the subject to assist the jury. Busch
v. Busch Construction, Inc., 262 N.W.2d 377, 396 (Minn. 1977) (“The jury is generally left
to its own good discretion as to what discount factor should be used.”); Riha v. Jasper
Blackburn Corp., 516 F.2d 840, 845 (8th Cir. 1975) (“Inflation is a fact of life within the
common experience of all jurors.”). See also Brough v. Imperial Sterling Ltd., 297 F.3d
1172, 1180 (11th Cir. 2002) (holding that “the district court did not commit error by allowing
the jury to calculate damages without the testimony of an expert on present value.”)
Defendant is free to propose a jury instruction regarding discounting to present
value and the Court will consider whether to instruct the jury on discounting at the
appropriate time during trial. Additionally, should the jury’s damages award be exorbitant,
the Court can rectify it post-trial. See Riha, 516 F.2d at 845 (remanding to the district court
to allow defendant to request remittur of jury’s damages award).
IV.

CONCLUSION
For the reasons set forth above, the Court ORDERS as follows:

1.

Defendant will not be permitted at trial to pursue a defense related to modification
and/or cancellation of the 1979 Contract of Employment;
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2.

The parties shall meet-and-confer regarding a joint Statement of the Case, as
contemplated by WJM Practice Standard VI.B, and shall submit same to the Court
not later than August 18, 2011; and

3.

Plaintiff may attempt to prove his damages without expert testimony. The Court
makes no determination as to whether Plaintiff will be able to meet his burden of
proving damages to a reasonable certainty absent expert testimony. The Court
holds only that Plaintiff may attempt to do so.
Dated this 17th day of August, 2011.
BY THE COURT:

William J. Martínez
United States District Judge

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