Hardenbrook et al v. United Parcel Service, Inc.

Filing 203

MEMORANDUM ORDER Granting in part and Denying in part 157 MOTION for Judgment as a Matter of Law filed by United Parcel Service, Inc. Plaintiff shall have until 10/4/10 in which to file a notice indicating his intention of whether or not he will accept the remittitur. Signed by Judge Edward J. Lodge. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by jm)

Hardenbrook et al v. United Parcel Service, Inc.

Doc. 203

I N THE UNITED STATES DISTRICT COURT F O R THE DISTRICT OF IDAHO D A R E L HARDENBROOK, an individual, P A U L GOOCH, an individual and R O B E R T ORLOFF, an individual, Plaintiffs, vs. U N I T E D PARCEL SERVICE, CO., a D e l a w a r e corporation, Defendant. C a s e No. CV07-509-S-EJL M E M O R A N D U M ORDER

INTRODUCTION P e n d i n g before the Court in the above entitled matter is the Defendant's R e n e w e d Motion for Judgment as a Matter of Law and Alternative Motion for N e w Trial or to Alter or Amend the Judgment. (Dkt. No. 157.) The parties have f u l l y briefed the motion and it is now ripe for the Court's consideration. Having f u l l y reviewed the record herein, the Court finds that the facts and legal arguments a r e adequately presented in the briefs and record. Accordingly, in the interest of a v o i d i n g further delay, and because the Court conclusively finds that the d e c i s i o n a l process would not be significantly aided by oral argument, the motion s h a l l be decided on the record before this Court without oral argument.

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F A C T U A L AND PROCEDURAL BACKGROUND T h e Plaintiffs, Darel Hardenbrook, Paul Gooch, and Robert Orloff, initiated t h i s action on November 2, 2007 by filing a Complaint in state court against the D e f e n d a n t , United Parcel Service, Co. ("UPS"), alleging retaliation in violation of I d a h o public policy, breach of contract, and breach of the implied covenant of g o o d faith and fair dealing. (Dkt. No. 1, Att. 2.) On December 5, 2007, UPS r e mo v e d the case to this Court on diversity grounds. (Dkt. No. 1.) The dispute b e t w e e n the parties relates to employment actions taken by UPS as to each of the P l a i n t i f f s ; Mr. Gooch and Mr. Hardenbrook were terminated and Mr. Orloff was d e mo t e d . The Plaintiffs' complaint alleged that UPS' employment actions against t h e m were made in retaliation to their inquiries regarding the Department of T r a n s p o r t a t i o n ' s ("DOT") hours of service regulations. (Dkt. No. 1, Att. 2, p. 2.) T h e DOT regulations prohibit drivers of commercial vehicles from driving if they h a v e exceeded a specified number of work hours for a prescribed period of time. U P S denied the allegations and filed a Motion for Summary Judgment. (Dkt. No. 40.) O n December 8, 2009, this Court entered an Order granting in part and d e n y i n g in part the Motion for Summary Judgment. (Dkt. No. 84.) The Court's O r d e r dismissed all of Mr. Orloff's claims against UPS and dismissed two of the t h r e e claims raised by both Mr. Gooch and Mr. Hardenbrook. Eventually, Mr. G o o c h ' s claims were resolved by the parties and only Mr. Hardenbrook's claim for
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w r o n g f u l termination in violation of public policy remained. (Dkt. No. 97.) T h e r e a f t e r , the parties filed Motions in Limine, Trial Briefs, Proposed Voir Dire, a n d related pretrial filings. The Court entered Orders on certain of the Motions in L i mi n e . (Dkt. Nos. 118, 119, 123.) Trial began on January 12, 2010. The jury r e t u r n e d a Special Verdict on January 21, 2010 in favor of Mr. Hardenbrook a w a r d i n g a total amount of damages of $1,476,367.00. (Dkt. No. 142.) On March 4, 2010, UPS filed its Renewed Motion for Judgement as a Matter o f Law and the parties each filed Memorandums, Declarations, Affidavits and o t h e r materials regarding the motions. Having reviewed these materials, the trial t r a n s c r i p t s , and the entire record herein the Court finds as follows. 1 DISCUSSION 1. Rule 50(b) Renewed Motion for Judgment as a Matter of Law A t the close of Mr. Hardenbrook's case in chief, UPS made a Rule 50(a) mo t i o n . The Court denied the motion and the case was submitted to the jury r e s u l t i n g in the verdict in favor of Mr. Hardenbrook. UPS now moves to renew its mo t i o n for a judgment as a matter of law pursuant to Rule 50(b). A. Legal Standard for Rule 50(b) Motion

M o t i o n s for Judgment as a Matter of Law ("JMOL") and Alternatively M o t i o n for New Trial are made pursuant to Federal Rule of Civil Procedure 50(b) w h i c h states:

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In addition, both sides have filed Bills of Costs and a Motions for Attorney Fees which a r e referred to Chief Magistrate Judge Dale. (Dkt. Nos. 152, 153, 161, 162, 163, 184.) T h e s e motions will be ruled upon following the issuance of this Order. M E M O R A N D U M ORDER - 3

I f the court does not grant a motion for judgment as a matter of law ma d e under Rule 50(a), the court is considered to have submitted the a c t i o n to the jury subject to the court's later deciding the legal q u e s t i o n s raised by the motion. No later than 28 days after the entry o f judgment--or if the motion addresses a jury issue not decided by a v e r d i c t , no later than 28 days after the jury was discharged--the mo v a n t may file a renewed motion for judgment as a matter of law a n d may include an alternative or joint request for a new trial under R u l e 59. In ruling on the renewed motion, the court may: ( 1 ) allow judgment on the verdict, if the jury returned a verdict; (2) order a new trial; or (3) direct the entry of judgment as a matter of law. 2

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Rule 50(a) states: ( a ) Judgment as a Matter of Law. ( 1 ) In General. If a party has been fully heard on an issue during a jury t r i a l and the court finds that a reasonable jury would not have a legally s u f f i c i e n t evidentiary basis to find for the party on that issue, the court may: (A) resolve the issue against the party; and (B) grant a motion for judgment as a matter of law against the party on a c l a i m or defense that, under the controlling law, can be maintained or d e f e a t e d only with a favorable finding on that issue.

(2) Motion. A motion for judgment as a matter of law may be made at any t i m e before the case is submitted to the jury. The motion must specify the j u d g m e n t sought and the law and facts that entitle the movant to the judgment. MEMORANDUM ORDER - 4

" P u r s u a n t to Rule 50 of the Federal Rules of Civil Procedure, a court may g r a n t a motion for judgment as a matter of law ("JMOL") against a party on a c l a i m or issue where the party has been `fully heard on [that] issue during a jury t r i a l ' and the court finds that a `reasonable jury would not have a legally sufficient e v i d e n t i a r y basis' to find for that party." Fungi Elec. Co., Ltd. v. Daewoo E l e c t r o n i c s Corp., 593 F.Supp.2d 1088, 1092-93 (N.D. Cal. 2009) (citing Fed. R. C i v . P. 50(a) & (b)). "Where a party moves for JMOL in a case that has been tried t o a jury, the court must determine whether `there exists evidence of record upon w h i c h a jury might properly have returned a verdict in [the non-movant's] favor w h e n the correct legal standard is applied.'" Id. (citations omitted). "The test is w h e t h e r the evidence, construed in the light most favorable to the nonmoving p a r t y , permits only one reasonable conclusion, and that conclusion is contrary to t h a t of the jury." White v. Ford Motor Co., 312 F.3d 998, 1010 (9th Cir. 2002); see a l s o E.E.O.C. v. Go Daddy Software, Inc., 581 F.3d 951, 961 (9th Cir. 2009) ("The t e s t applied is whether the evidence permits only one reasonable conclusion, and t h a t conclusion is contrary to the jury's verdict."). "[I]n entertaining a motion for judgment as a matter of law, the court ... may n o t make credibility determinations or weigh the evidence." Go Daddy, 581 F.3d a t 961 (citation omitted). Rather, "[w]e must view the evidence in the light most f a v o r a b l e to the nonmoving party ... and draw all reasonable inferences in that p a r t y 's favor." Id. (citation omitted). "We review a jury's verdict for substantial e v i d e n c e in ruling on a properly made motion under Rule 50(b)." Go Daddy, 581
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F . 3 d at 961. 3 "However, in ruling on a Rule 50(b) motion based on grounds not p r e v i o u s l y asserted in a Rule 50(a) motion, we are limited to reviewing the jury's v e r d i c t for plain error, and should reverse only if such plain error would result in a ma n i f e s t miscarriage of justice." Id. (internal quotation marks and citation o mi t t e d ) . Plain error review "permits only extraordinarily deferential review that i s limited to whether there was any evidence to support the jury's verdict." Id. at 961-62. " T h u s , the court must conduct two inquiries. First, the court must determine t h e correct law. Next, the Court must review the jury's factual findings to d e t e r mi n e whether they are supported by substantial evidence." Fungi Elec., 593 F . S u p p . 2 d at 1092-93 (citations omitted). The jury's factual findings are given " s u b s t a n t i a l deference" and the legal standards the jury applies are considered de n o v o to determine, as a matter of law, whether the correct standards have been u s e d . Id. (citations omitted).

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"A Rule 50(b) motion for judgment as a matter of law is not a freestanding motion. R a t h e r , it is a renewed Rule 50(a) motion. Under Rule 50, a party must make a Rule 5 0 ( a ) motion for judgment as a matter of law before a case is submitted to the jury. If t h e judge denies or defers ruling on the motion, and if the jury then returns a verdict a g a i n s t the moving party, the party may renew its motion under Rule 50(b). Because it is a renewed motion, a proper post-verdict Rule 50(b) motion is limited to the grounds a s s e r t e d in the pre-deliberation Rule 50(a) motion. Thus, a party cannot properly raise a r g u m e n t s in its post-trial motion for judgment as a matter of law under Rule 50(b) that i t did not raise in its preverdict Rule 50(a) motion." Go Daddy, 581 F.3d at 961 ( c i t a t i o n s and quotations omitted). M E M O R A N D U M ORDER - 6

B.

Analysis

I n this case, on his claim of wrongful termination in violation of public p o l i c y , Mr. Hardenbrook had the burden of proving each of the following by a p r e p o n d e r a n c e of the evidence: 1. t h e Plaintiff engaged in or was engaging in an i mp o r t a n t public obligation under state law, that is t h e reporting of violations, or potential violations, o f federal Department of Transportation regulations; t h e Defendant subjected the Plaintiff to an adverse e mp l o y m e n t action, that is the termination of his e mp l o y me n t with the Defendant; and t h e Plaintiff was subjected to the adverse e mp l o y me n t action because he engaged in or was e n g a g i n g in the important public obligation of r e p o r t i n g violations, or potential violations, of f e d e r a l Department of Transportation regulations.

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( D k t . No. 143, Jury Instr. No. 32.) The jury was instructed that: P u b l i c policy considerations include where an employee is p e r f o r m i n g an important public obligation. In Idaho, reporting v i o l a t i o n s , or potential violations, of federal transportation r e g u l a t i o n s is an important public obligation falling within the public p o l i c y exception to the employment at-will doctrine. ( D k t . No. 143, Jury Instr. No. 30.) UPS maintains the jury's verdict is not s u p p o r t e d by the evidence presented at trial because there is no evidence that 1) M r . Hardenbrook ever reported any DOT violations and 2) his termination was l i n k e d to any protected conduct. (Dkt. No. 157.) Mr. Hardenbrook counters that t h e evidence was sufficient to support the jury's findings. (Dkt. No. 173.)

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(1)

Reporting DOT Violations

A s has been argued since the summary judgment phase of this case, the p a r t i e s ' dispute over whether Mr. Hardenbrook reported any DOT violations or p o t e n t i a l violations revolves around the events beginning in December of 2005 a n d Mr. Gooch's emails sent to his superior, Brad Whitworth at the time. (Dkt. N o . 84.) UPS argues Mr. Hardenbrook cannot rely upon Mr. Gooch's emails r e p o r t i n g the alleged violations but that it must be Mr. Hardenbrook's own c o n d u c t that reports such violations in order to invoke the public policy exception. ( D k t . No. 189, p. 2.) The Court agrees. T h e issue of whether the conduct in question violates public policy is a q u e s t i o n for the jury. See Thomas v. Medical Center Physicians, P.A., 61 P.3d 557, 5 6 4 (Idaho 2002). "In order for the public policy exception to apply, the d i s c h a r g e d employee must: (1) refuse to commit an unlawful act; (2) perform an i mp o r t a n t public obligation; or (3) exercise certain rights or privileges." Thomas, 6 1 P.3d at 564 (emphasis added). Based on the emphasized language in Thomas, t h e Court finds the public policy exception can only apply to Mr. Hardenbrook's c l a i ms where he performed an important public obligation; to-wit reporting v i o l a t i o n s or potential violations of DOT regulations. 4

The Idaho Supreme Court has considered, but not decided, whether a cause of action f o r wrongful termination in contravention of public policy can be based upon conduct of t h e employee's spouse. Edmondson v. Shearer Lumber Products, 75 P.3d 733, 739 ( I d a h o 2003). There the court did not have to resolve the question because the evidence d i d not support the claim regardless of whether it was the employee's own conduct or t h a t of his spouse. However, the court cited to Bammert v. Don's Super Valu, Inc., 646 N . W . 2 d 365, 370 (Wis. 2002) which refused to enlarge the narrow public policy e x c e p t i o n to include claims of wrongful terminations for conduct outside of the M E M O R A N D U M ORDER - 8

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M r . Hardenbrook argues the evidence shows Mr. Gooch's email was p r o mp t e d by his conversations with Mr. Gooch and that the email encompassed M r . Hardenbrook's concerns about possible DOT violations. (Dkt. No. 173.) Mr. H a r d e n b r o o k also points to his actions subsequent to the email that, he argues, r e f l e c t s his involvement in and knowledge of the email reporting alleged violations. In particular, Mr. Hardenbrook's telephone conversation with Mr.

W h i t w o r t h subsequent to the email, he argues, is a report of violations or potential v i o l a t i o n s and evidence that he and Mr. Gooch were in communication about the e ma i l s between December 17 and 22. During his phone call with Mr. Whitworth, M r . Hardenbrook argues he accepted responsibility for the emails and told Mr. W h i t w o r t h that he had asked Mr. Gooch to seek clarification regarding the DOT r e g u l a t i o n s . Because he was involved in the conception of the email and later took r e s p o n s i b i l i t y for the email, Mr. Hardenbrook contends there was evidence upon w h i c h the Jury could find he had engaged in a public obligation of reporting a l l e g e d or potential DOT violations. A s k i n g or talking to Mr. Gooch about possible DOT violations, UPS c o u n t e r s , does not amount to a performance of an important public obligation i n v o k i n g the public policy exception. Nor do Mr. Hardenbrook's subsequent actions. I n reviewing the evidence in this case, the Court finds there is evidence in t h e record to support the jury's verdict. Mr. Gooch's December 2005 emails to Mr.

employment relationships by someone other than the discharged employee. MEMORANDUM ORDER - 9

W h i t w o r t h could be considered "reports" invoking the public policy exception as t o Mr. Gooch. Mr. Hardenbrook and Mr. Gooch both provided testimony that they h a d discussed the issue of the DOT regulations and that Mr. Hardenbrook's i n q u i r i e s prompted Mr. Gooch to send the email to Mr. Whitworth. The fact that M r . Hardenbrook knew of or instigated the sending of these emails, however, does n o t constitute a "report." M r . Hardenbrook's subsequent phone calls to Mr. Whitworth about the e ma i l s may be evidence of a "report." In making this determination, the Court v i e w s "the evidence in the light most favorable to the nonmoving party ... and d r a w all reasonable inferences in that party's favor. The test applied is whether the e v i d e n c e permits only one reasonable conclusion, and that conclusion is contrary t o the jury's verdict." Go Daddy, 581 F.3d at 961 (citation omitted). I n this case, after Mr. Gooch sent his emails to Mr. Whitworth, Mr. H a r d e n b r o o k called Mr. Whitworth on December 31, 2005 and testified that he t o o k responsibility for the emails that discussed the DOT regulations. Jury I n s t r u c t i o n number 31 advised the jury that "[a]n employee who makes a report t h a t is protected under the public policy exception is protected by reporting the c o n d u c t to superiors within the company." (Dkt. No. 143.) Thus, the Jury here had e v i d e n c e upon which it could find that Mr. Hardenbrook reported violations or p o t e n t i a l violations of DOT regulations during this phone call. There is testimony f r o m both Mr. Gooch and Mr. Hardenbrook that indicates Mr. Hardenbrook was a w a r e of the emails prior to his telephoning Mr. Whitworth. This knowledge
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c o u p l e d with Mr. Hardenbrook's testimony taking responsibility for the emails in h i s conversation with Mr. Whitworth is evidence supporting the Jury's verdict that M r . Hardenbrook reported violations or potential violations of DOT regulations. T h o u g h UPS disputes this theory of the case, the evidence is viewed in the light mo s t favorable to Mr. Hardenbrook. The Motion is denied on this basis. (2) Termination Linked to Protected Conduct

U P S next argues the managers who made the termination decision, Mr. M o o r e and Mr. Kenney, did not connect Mr. Hardenbrook to Mr. Gooch's D e c e mb e r 2005 emails reporting alleged violations of DOT regulations. (Dkt. No. 1 5 7 , p. 5.) Thus, UPS contends, the evidence does not show that Mr. H a r d e n b r o o k ' s termination was linked to any protected conduct falling within the p u b l i c policy exception. UPS asserts that the evidence shows that just weeks after t h e December 2005 emails were sent, Mr. Hardenbrook was "rewarded" with an a s s i g n m e n t to UPS's Workplace Flexibility Committee, of which Mr. Moore and M r . Kenney were co-chairs. The termination was instead, UPS contends, a result o f Mr. Hardenbrook's alleged unprofessional and insubordinate behavior. M r . Hardenbrook counters that the evidence showed both Mr. Kenney and M r . Moore were aware that he was involved and supported Mr. Gooch's December 2 0 0 5 emails and disputes that they had anything to do with his appointment to the W o r k p l a c e Flexibility Committee; arguing instead that his involvement in the c o mmi t t e e served only to provide pretextual reasons for his termination. In p a r t i c u l a r , he points to Mr. Kenney's testimony where he stated that Mr.
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W h i t w o r t h had told him about Mr. Hardenbrook's involvement in the December 2 0 0 5 emails. (Dkt. No. 173, p. 7) (citing Kenney Test., P. 34, line 16 - p. 35, line 4 . ) Finally, Mr. Hardenbrook cites the evidence regarding his BEQ response which r e v e a l e d his involvement with the December 2005 email reports of alleged v i o l a t i o n s of DOT regulations. It was this response which, he argues, prompted M r . Moore and Mr. Kenney's decision to terminate him and any other stated r e a s o n was pretextual. T h e Court finds there is evidence in the record, when construed in the light mo s t favorable to Mr. Hardenbrook, upon which the Jury was able to find as they d i d in reaching their verdict. See Go Daddy, 581 F.3d at 961. The Jury's finding t h a t the decision to terminate Mr. Hardenbrook was based on his report of actual o r potential violations of DOT regulations is supported by the testimony of various w i t n e s s e s regarding what was known of Mr. Hardenbrook's involvement with the D e c e mb e r 2005 emails by Mr. Kenney and Mr. Moore. In particular, there was e v i d e n c e that Mr. Whitworth had told Mr. Kenney about Mr. Hardenbrook's i n v o l v e me n t with the December 2005 emails. Further, the testimony and evidence r e g a r d i n g Mr. Hardenbrook's placement on the Workplace Flexibility Committee a n d his BEQ responses can be construed either way such that this Court cannot s a y , having construed the evidence in the light most favorable to the non-moving p a r t y , that a "reasonable jury would not have a legally sufficient evidentiary basis' t o find for that party." Fungi Elec., 593 F.Supp.2d at 1092-93.

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(3)

Conclusion

B a s e d on the foregoing, the Court cannot say "the evidence, construed in the l i g h t most favorable to the nonmoving party, permits only one reasonable c o n c l u s i o n , and that conclusion is contrary to that of the jury." White v. Ford M o t o r Co., 312 F.3d at 1010; see also Go Daddy, 581 F.3d at 961. From the time o f the pretrial motions through the trial, the Court has perceived these questions to b e close calls which could only be resolved by the finder of fact who must weigh t h e credibility of the witnesses and evidence. Such credibility and weighing d e t e r mi n a t i o n s are not for this Court to second guess on this motion. See Go D a d d y , 581 F.3d at 961("[I]n entertaining a motion for judgment as a matter of l a w , the court ... may not make credibility determinations or weigh the e v i d e n c e . " ) . Rather, the Court "must view the evidence in the light most favorable t o the nonmoving party ... and draw all reasonable inferences in that party's f a v o r . " Id. Applying this standard here, the Court finds there was evidence offered at t r i a l upon which the jury could properly have returned their verdict on the liability i s s u e in favor of Mr. Hardenbrook, the non-movant, when the correct legal s t a n d a r d is applied. Fungi Elec., 593 F.Supp.2d at 1092-93. The testimony and e v i d e n c e regarding Mr. Hardenbrook's discussions with Mr. Gooch and Mr. W h i t w o r t h about potential and alleged violations of the DOT regulations and his p u r p o r t e d involvement in the emails sent by Mr. Gooch in December of 2005, w h e n viewed in favor of the non-moving party, is evidence upon which the Jury
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c o u l d conclude that Mr. Hardenbrook had reported such potential and alleged v i o l a t i o n s . Likewise, there was testimony upon which the Jury could have found t h a t the UPS managers who made the decision to terminate Mr. Hardenbrook, Mr. K e n n e y and Mr. Moore, knew of the reports regarding the potential and alleged v i o l a t i o n s of the DOT regulations and fired Mr. Hardenbrook because of them. As s u c h , the Court denies the Rule 50(b) Motion for a Judgment as a Matter of Law. 2. Rule 59(a) Motion for New Trial In the alternative to a judgment as a matter of law, UPS seeks a new trial p u r s u a n t to Rule 59(a). Pointing to the front pay damage awarded by the jury in t h i s case, UPS argues such award is not supported by the evidence, grossly s p e c u l a t i v e , and a new trial is warranted. (Dkt. No. 157, p. 7.) A. Legal Standard for Rule 59(a) Motion

" E v e n where the court finds that JMOL is not appropriate, it may order a n e w trial under Rule 59 of the Federal Rules of Civil Procedure. Rule 59 provides t h a t a court may, following a jury trial, order a new trial `for any reason for which a new trial has heretofore been granted in an action at law in federal court.'" Fungi E l e c . , 593 F.Supp.2d at 1093 (quoting Fed. R. Civ. P. 59(a)(1)(A)). "Historically r e c o g n i z e d grounds include but are not limited to claims that the verdict is against t h e weight of the evidence, that the damages are excessive, or that, for other r e a s o n s , the trial was not fair to the party moving." Id. (citation and quotations o mi t t e d ) . "The Ninth Circuit has held that a new trial may be granted `only if the v e r d i c t is contrary to the clear weight of the evidence, is based upon false or
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p e r j u r i o u s evidence, or to prevent a miscarriage of justice.'" Fungi Elec., 593 F . S u p p . 2 d at 1093 (citation omitted). "In contrast to JMOL motions, in d e t e r mi n i n g whether a verdict is contrary to the clear weight of the evidence, the c o u r t `has the duty ... to weigh the evidence as [the court] saw it' and may set a s i d e the verdict even if it is supported by substantial evidence." Id. (citation and q u o t a t i o n s omitted). B. Analysis

T h e Jury in this case returned a special verdict awarding back pay in the a mo u n t of $40,000 and front pay in the amount of $1,436,367. (Dkt. No. 142.) The f r o n t pay amount represents the total calculated by Plaintiff's expert in Scenario 2 o f Exhibit 280 for all twenty-seven years of Mr. Hardenbrook's work-life minus t h e $40,000 in back pay the Jury awarded. Mr. Hardenbrook contends the Jury's v e r d i c t and amount of damages are not against the clear weight of the evidence a n d , in fact, are supported by substantial evidence. (Dkt. No. 173, p. 10.) Mr. H a r d e n b r o o k argues state law controls this issue and the Idaho Supreme Court a l l o w s front pay damages. Further, he states that this Court must give substantial d e f e r e n c e to the Jury's finding as to the appropriate amount of damages. UPS presents four "independent reasons" this award warrants a new trial or r e mi t t i t u r : 1) evidence at trial showed Mr. Hardenbrook was going to leave UPS n e g a t i n g any award of front pay; 2) the promotion-based pay increase assumption i n Scenario 2 is based on pure speculation; 3) the assumptions in Scenario 1 are s p e c u l a t i v e and not the proper basis for any front pay damages award; and 4) the
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J u r y ' s front pay damage award was punitive in nature. Mr. Hardenbrook disputes U P S ' s characterization of the evidence asserting instead that 1) he was not likely t o leave his employment at UPS; 2) neither Scenario 1 or 2 were based on s p e c u l a t i o n ; 3) the stock values were not significantly overvalued; and 4) there is n o evidence that the Jury's award was punitive. C. Conclusion

I n this case, the Court cannot say that the jury's verdict as to UPS's liability " i s contrary to the clear weight of the evidence, is based upon false or perjurious e v i d e n c e , or [a new trial is necessary] to prevent a miscarriage of justice.'" Fungi E l e c . , 593 F.Supp.2d at 1093. This Court, in determining whether a verdict is c o n t r a r y to the clear weight of the evidence, has weighed the evidence as it saw it. I d . Though the Court may set aside the Jury's verdict on liability even if it is s u p p o r t e d by substantial evidence, the Court declines to do so here. Id. The verdict i t s e l f is not contrary to the clear weight of the evidence. The evidence and t e s t i mo n y painted a picture of the events leading up to the employment dispute in t h i s case which could be viewed in a number of ways depending on the weight and c r e d i b i l i t y given to each. If ever there were a case turning on disputed facts, it is t h i s case. The parties have diametrically opposite views of the events which they e a c h presented to the jury. The truth surrounding these events likely lies s o me w h e r e in the middle. Simply put, in its own view of the testimony and e v i d e n c e , the Court does not find the jury's verdict of liability "is contrary to the c l e a r weight of the evidence, is based upon false or perjurious evidence, or [a new
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t r i a l is necessary] to prevent a miscarriage of justice.'" Fungi Elec., 593 F . S u p p . 2 d at 1093. The arguments presented on this motion are a continuation of those p r e s e n t e d in the pretrial motions and at trial. Whether Mr. Hardenbrook intended t o leave his employment with UPS, the value of damages in terms of possible p r o mo t i o n s and stock if he were to have stayed at UPS, and that the front pay a w a r d was punitive are all arguments disputing the weight and credibility to be g i v e n to evidence and testimony offered at trial. There was testimony at trial going b o t h ways on each of these issues raised in UPS's motion that could, depending on h o w the finder of fact viewed it, support either side's argument. Ultimately it a p p e a r s the Jury found the Plaintiff's case to yield more weight than that of the d e f e n s e . The Court's own view of the evidence does not find the Jury's verdict h e r e to be contrary to the clear weight of the evidence, based on false or perjurious e v i d e n c e , or a new trial is necessary to prevent a miscarriage of justice. See Fungi E l e c . , 593 F.Supp.2d at 1093. Pointing to the Jury's award of $40,000 in back pay, UPS maintains that a w a r d indicates the Jury's finding that Mr. Hardenbrook intended to leave his e mp l o y me n t in 2006. From this, UPS opines that the Jury's front pay award "was me a n t to punish UPS." (Dkt. No. 157, p. 17.) Mr. Hardenbrook argues this c o n c l u s i o n is speculative and maintains the Jury's damages awards are supported b y and based upon the testimony and evidence offered at trial. The Court agrees. T h e lone fact that the Jury awarded back pay in an amount equal to that proposed
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b y the defense and then awarded front pay in the amount of that proposed by the p l a i n t i f f does not then mean the Jury's verdict was punitive in nature.5 As such, t h e Motion for a New Trial under Rule 59(a) is denied. The amount of the damages a w a r d , however, requires a different result which the Court will discuss below. 3. Rule 59(e) Motion to Alter or Amend Judgment (Remittitur) F i n a l l y , UPS asks that the Court evaluate the evidence from the trial and g r a n t a remittitur based on that evidence and, then, offer Mr. Hardenbrook the c h o i c e of accepting the remittitur or proceeding to a new trial. A. Legal Standard for Rule 59(e) Motion

A jury's finding on the amount of damages will be upheld unless the amount i s "grossly excessive or monstrous, clearly not supported by the evidence, or based o n l y on speculation or guess work." Del Monte Dunes at Monterey, Ltd. v. M o n t e r e y , 95 F.3d 1422, 1435 (9th Cir. 1996); see also Hemmings v. Tidyman's I n c . , 285 F.3d 1174, 1191 (9th Cir. 2002) (citation omitted). Thus, the damages a w a r d must be affirmed unless it is "shocking to the conscience." Brady v. Gebbie, 8 5 9 F.2d 1543, 1557 (9th Cir. 1988); see also Fungi Elec., 593 F.Supp.2d at 1093 ( " A n award of damages may be set aside where it is `grossly excessive or mo n s t r o u s , clearly not supported by the evidence or based only on speculation or guesswork.'").

5

Punitive damages are damages awarded in addition to actual damages to punish the d e f e n d a n t who acted in a certain manner. See Black's Law Dictionary 448 (9th Ed. 2009). M E M O R A N D U M ORDER - 18

" G e n e r a l l y , a jury's award of damages is entitled to great deference, and s h o u l d be upheld unless it is clearly not supported by the evidence or only based o n speculation or guesswork." In re First Alliance Mortgage Co., 471 F.3d 977, 1 0 0 1 (9th Cir. 2006) (internal quotation marks omitted); see also Del Monte D u n e s , 95 F.3d at 1434-35. In making this determination, the Court considers the e v i d e n c e in a light most favorable to the prevailing party. See Fenner v. D e p e n d a b l e Trucking Co., 716 F.2d 598, 603 (9th Cir. 1983). "Where the court d e t e r mi n e s that a damage award is excessive, the court may either grant the mo t i o n for a new trial or deny the motion conditional on the plaintiff accepting a r e mi t t i t u r , that is, agreeing to...a lesser amount of damages that the court considers j u s t i f i e d . The proper amount of a remittitur is the maximum amount sustainable by t h e evidence." Fungi Elec., 593 F.Supp.2d at 1093 (citations and quotations o mi t t e d ) . B. Analysis

A s stated previously, the Jury in this case awarded Mr. Hardenbrook back p a y in the amount of $40,000 and front pay in the amount of $1,436,367 for a total d a ma g e s award of $1,476,367. (Dkt. No. 142.) UPS contends this award amount is e x c e s s i v e and argues the appropriate award, if any, should be five years of front p a y , including five years of each of the following: future lost wages, RSU grants, p e n s i o n benefits, and retiree healthcare for a total damages award of $57,725.

MEMORANDUM ORDER - 19

( D k t . No. 157, p. 18.) 6 Mr. Hardenbrook maintains the Jury's damages award was s u p p o r t e d by the evidence offered at trial and should be upheld. P l a i n t i f f ' s expert witness, Dennis Reinstein, opined that over the course of M r . Hardenbrook's work-life, the Battery Systems position wages and benefits w o u l d be less than if he had remained at UPS for his entire career. Mr. Reinstein s u b mi t t e d an illustrative exhibit which details two scenario's of estimated losses i n c u r r e d as a result of Mr. Hardenbrook's termination from UPS. (Pl.'s Ex. 280.) S c e n a r i o 1 assumes Mr. Hardenbrook would not have received a promotion at UPS w e r e his employment to have continued. Scenario 2 assumes Mr. Hardenbrook w o u l d have received a large promotion at UPS in 2016 which significantly i n c r e a s e s the loss amounts. Each scenario is calculated for varying periods of time o v e r which Mr. Hardenbrook could have worked at UPS starting from his date of t e r mi n a t i o n then going forward nine years, eighteen years, and finally his "entire w o r k life" ending in 2037. For each time period, the scenarios incorporate: 1) v a l u e of past lost wages and benefits, 2) present value of future lost wages and b e n e f i t s , 3) present value of restricted stock unit grants, 4) present value of d e f i n e d benefit plan, 5) present value of retiree healthcare, and 6) present value of r e t i r e e healthcare for spouse. The total values for Scenario 1 ranged from

$ 3 1 5 , 9 8 7 to $673,169. The total values for Scenario 2 ranged from $412,637 to $1,476,367.

6

The specific calculation provided by UPS is: $15,574.00 in front pay, $42,151 in RSU g r a n t s , $0 pension benefits, and $0 in retiree healthcare benefits. (Dkt. No. 157, pp. 1819.) M E M O R A N D U M ORDER - 20

D e f e n d a n t ' s expert witness, Cornelius Hofman, also provided illustrative e x h i b i t s . (Def.'s Exs. 556, 557.) Exhibit Number 556 details his estimates of e c o n o mi c losses at the present value of wages and benefits for each year from the d a t e of Mr. Hardenbrook's termination, July 25, 2006, to January 1, 2037. This E x h i b i t arrives at a cumulative present value for each year taking into account: 1) U P S wages, 2) UPS benefits, 3) work life and unemployment adjustment, 4) UPS e a r n i n g s , 5) mitigating wages, 6) mitigating benefits, 7) mitigating earnings, 8) the d i f f e r e n c e , and 9) the present value of the difference. (Def. Ex. 556.) Exhibit 556, M r . Hofman testified, is "essentially Mr. Reinstein's table with a couple very s ma l l corrections" and done in a year-by-year basis. Mr. Hofman's "corrections" i n c l u d e 1) an increase in the percentage of benefits associated to the Battery S y s t e m' s job from eight to ten percent; 2) the work life expectancy factor should a c c o u n t for two percent of potential down time due to unemployment; and 3) p r e s e n t value adjustment should be half a percent instead of the 1.5 percent used b y Mr. Reinstein. (Hofman Test.) The main differences between the two reports h a v e to do with the unemployment adjustment, the difference between UPS e a r n i n g s and expected mitigated earnings, and the present value adjustment. The Jury ultimately awarded $1,476,367 in total damages which is the h i g h e s t figure calculated in Mr. Reinstein's Scenario 2. Having considered all of t h e evidence and testimony presented in this case and for the reasons stated herein, t h e Court finds the award of $1,476,367 in damages in this case to be "grossly e x c e s s i v e or monstrous" and "clearly not supported by the evidence." Fungi Elec.,
MEMORANDUM ORDER - 21

5 9 3 F.Supp.2d at 1093. Mr. Hardenbrook is a healthy 38-year-old man with two c o l l e g e degrees, eleven-plus years of experience at UPS, and three additional y e a r s of experience at his current job with Battery Systems. (Dkt. No. 224 and C o l l i n s Test.) Since his termination from UPS, Mr. Hardenbrook has secured new e mp l o y me n t at Battery Systems, Incorporated making a comparable salary to what h e was making at UPS. 7 (Collins Test.) This new position also provides benefits, a 4 0 1 ( k ) , a company car, and requires fewer weekly hours than his job with UPS. 8 F o r these reasons and upon the analysis to follow, the Court will issue a remittitur a s detailed below. (1) Plaintiff's Expert's Scenario 2

At trial, UPS objected to the admission of Exhibit 280. In particular, the i n c l u s i o n of Scenario 2 arguing it was based on hearsay and speculative because it i mp r o p e r l y presumes Mr. Hardenbrook would have received a promotion at all, let a l o n e when such promotion would materialize and the amount of any promotion. T h e Court allowed Exhibit 280, including Scenario 2, to be offered only for

7

A f t e r his termination, Mr. Hardenbrook testified he used four headhunters, online a v e n u e s , and other personal contacts to find a new job. In the process submitting in e x c e s s of 100 job applications. After his July 24, 2006 termination he started working at C o s t c o Wholesale as a part-time stocker in April of 2007 making $12 per hour. The first 6 months no benefits. He worked at Costco until January of 2008 when he went to work a t Battery Systems, Incorporated.
8

I n his first year at Battery Systems he made a salary of $60,000 as a salesperson and w a s paid roughly $500 a month for healthcare and dental. As a salesperson he had no r e t i r e m e n t benefits or stock ownership. On February 10, 2009, he became the branch m a n a g e r of southern Idaho which increased his salary to $72,000 per year and he r e c e i v e d an additional $100 a month for healthcare and dental. His work week is 40 to 4 5 hours. M E M O R A N D U M ORDER - 22

i l l u s t r a t i v e purposes so that Mr. Reinstein could explain and offer his opinion. 9 T h e r e a f t e r , Mr. Hofman and others testified regarding certain of the assumptions u p o n which Scenario 2 was based. In now viewing the totality of the evidence o f f e r e d at trial, the Court finds Scenario 2 to be based on speculation and a s s u mp t i o n s not supported by the evidence in the record. As UPS's expert opined, Scenario 2 is a one-in-a-million possibility and not w i t h i n a reasonable view of economic certainty. In particular, the assumptions u n d e r l y i n g the scenario that Mr. Hardenbrook would get a promotion in a certain y e a r and that it would be a 40 plus percent promotion is only based on speculation. U P S points to Mr. Hardenbrook's own testimony which raised serious questions a b o u t whether he intended to remain at UPS and whether, if offered, he would h a v e accepted a promotion that required him to move until after his children were o u t of school. Mr. Hardenbrook counters that Scenario 2 is supported by the evidence that w a s offered at trial including Mr. Hardenbrook's testimony that when he removed h i s name from the promotions list he inquired about whether he would be able to p u t his name back on the list after his children had finished school. Scenario 2, M r . Reinstein testified, takes into account Mr. Hardenbrook's desire to wait on a n y promotion until his children had completed school by moving the date of any s u c h promotion out to 2016 when his children would have completed their
9

At the time the Court admitted the exhibit, the evidence had not been admitted in its e n t i r e t y . Thus, allowing the Plaintiff's expert to opine regarding his findings was proper i n the context and at the time of the trial. M E M O R A N D U M ORDER - 23

s c h o o l i n g . Mr. Hardenbrook also points to the testimony of others at UPS who s t a t e d that UPS only promoted from within the company and that there were s e v e r a l promotional opportunities at UPS. The Court, having the benefit of v i e w i n g the testimony as it was offered and now having reviewed the same, finds S c e n a r i o 2 necessitates believing many levels of speculation and assumptions r e g a r d i n g : whether or not Mr. Hardenbrook would have remained at UPS, been o f f e r e d a promotion, when such an offer would have been made, if Mr. H a r d e n b r o o k would have accepted the offer, and the amount of such a promotion. T h e evidence does not support such findings. M r . Hardenbrook's own testimony was that he was unsure whether he would a c c e p t a promotion at this time, had asked that his name be removed from the list o f possible candidates, and that he was contemplating leaving UPS or at least e x p l o r i n g the possibility to some extent. Mr. Hardenbrook testified that he asked R i c h Hansen, the Idaho division manager, to pull his name off the promotion list i n early 2005, or late 2004 because his kids were just entering school and he didn't w a n t to relocate until his kids were older. He testified that he intended to put his n a me back on the list after his kids graduated from high school. His understanding w a s that he would be put back on the list as an "A" candidate. Such testimony g o e s to show what Mr. Hardenbrook's own thoughts were regarding his career p a t h but do not yield evidence supporting the assumption that he would be p r o mo t e d at all let alone that it would be in 2016 or that he would still be working a t UPS in 2016. Nor was there any evidence about what the amount of such a
MEMORANDUM ORDER - 24

p r o mo t i o n would be if it were offered and if Mr. Hardenbrook were to have a c c e p t e d at that time. Although opinion testimony valuing future losses requires some level of r e a s o n a b l y based assumptions, the Court finds the assumptions here upon which S c e n a r i o 2's calculations are based are too speculative. The testimony and e v i d e n c e in the record do not support the promotion assumptions upon which S c e n a r i o 2 is based without requiring the finder of fact to engage in improper g u e s s i n g and speculation. Scenario 2's prediction of a significant promotion at an a r b i t r a r y date in the future is without supporting evidence. The testimony from b o t h sides reveals that Mr. Hardenbrook's future at UPS was uncertain. Mr. H a r d e n b r o o k was an at will employee with UPS and had applied for two other jobs o u t s i d e of UPS. The Court finds the values in Scenario 2 are without evidentiary s u p p o r t . Because the amount of the Jury's damages award is obviously based on S c e n a r i o 2, the Court concludes the Jury's award must be set aside as it is grossly e x c e s s i v e and clearly not supported by the evidence and based only on s p e c u l a t i o n . As such, the Court will either grant UPS's motion for a new trial or d e n y the motion conditioned on Mr. Hardenbrook's accepting a remittitur in the a mo u n t the Court has determined to be justified and sustainable by the evidence p r e s e n t e d at trial as detailed below. (2) Remittitur

H a v i n g concluded the amount of the Jury's damages award in this case is g r o s s l y excessive, not supported by the evidence, and based on speculation, the
MEMORANDUM ORDER - 25

C o u r t will now detail the damages amount justified by the evidence as presented at t r a i l . As stated above, Scenario 2's fundamental assumption that Mr. Hardenbrook w o u l d be promoted in 2016 at a 40 percent increase in salary is too speculative to b e considered. Therefore, the Court will not weigh the amounts from Scenario 2 in i t s damages calculation. The Court will discuss below the differing opinions of the p a r t i e s ' experts regarding the damages calculations in arriving at the amount of the r e mi t t i t u r . (a) Years of Employment at UPS

P l a i n t i f f ' s expert, Mr. Reinstein, calculated damages for nine years, e i g h t e e n years, and twenty-seven years or until Mr. Hardenbrook is 66 years old in t h e year 2037. UPS's expert, Mr. Hofman, calculated damages annually for every y e a r starting from the date of termination through 2037. UPS maintains Mr. H a r d e n b r o o k was applying for jobs and was anticipating leaving his employment a t UPS so the estimated future losses, if any, should not extend for his entire c a r e e r ; or until 2037. Mr. Hardenbrook counters that his damages should be c a l c u l a t e d as if he worked his entire career at UPS because he intended to remain a t UPS for his entire career because of the salary, benefits, and promotional o p p o r t u n i t i e s available to him at UPS. 10 T h i s determination turns in large part on Mr. Hardenbrook's testimony at t r i a l and the credibility to be given to his testimony. In his testimony, Mr.

Mr. Hardenbrook testified that UPS only promoted from within the company and that h e was attracted to UPS because of the better wage/salary, stock options, healthcare, p e n s i o n , retirement, and other benefits. M E M O R A N D U M ORDER - 26

10

H a r d e n b r o o k detailed the many jobs he had at UPS from the time he started until a r o u n d 2005 when the events in question here occurred. 11 Mr. Hardenbrook t e s t i f i e d that in 2006 he prepared a resumÁ and, in May, submitted applications to b o t h Simplot and Idaho Power. (Pl.'s Exs. 32, 224.) He explained that the reason h e ' d applied for the non-UPS jobs was that "had to put my feelers out there" b e c a u s e he was frustrated with the current management. He testified he had a p p l i e d for two other positions in the eleven years he'd worked at UPS. He a d mi t t e d that he and another UPS employee had talked about exploring job o p p o r t u n i t i e s outside of UPS for four years but that he had not actually applied for a n y other positions until May of 2006. He testified he updated his resumé prior to h i s termination from UPS in anticipation of applying for the positions at Simplot a n d Idaho Power. He testified that he submitted these applications because he was c o n c e r n e d about what had happened in December of 2005. He was fired on July 2 4 , 2006. This testimony seems to suggest that on some level Mr. Hardenbrook w a s exploring job opportunities outside of UPS or was concerned about his c o n t i n u e d employment at UPS given the management was unlikely to change and e v e n if Plaintiff had been kept on at UPS, the evidence shows there were uneasy

M r . Hardenbrook testified that he began working at UPS in May of 1995 as a part-time u n l o a d e r on the "preload" in Boise, Idaho. He was promoted to a part-time supervisor a n d held various other positions in UPS until 1999 when he became a full-time package d r i v e r for a few months and then was promoted to a full-time specialist position. In J a n u a r y of 2000 he was promoted to on-road supervisor and held various other full-time m a n a g e m e n t positions thereafter until his termination in 2005 when he was a package d i s p a t c h supervisor in the Nampa, Idaho center. As a package dispatch supervisor, Mr. H a r d e n b r o o k testified he essentially held three positions as: a package dispatch s u p e r v i s o r , reload supervisor, and an on-road supervisor. M E M O R A N D U M ORDER - 27

11

f e e l i n g s between management and Mr. Hardenbrook. He also testified that he t u r n e d down a callback from Simplot which indicates either the Simplot job was n o t what he was looking for or that he had decided to remain at UPS. Mr. H a r d e n b r o o k did testify in July of 2006 he did not have any intention of quitting at U P S and that his intention was to remain at UPS for his entire career. At the very l e a s t the evidence shows Mr. Hardenbrook was conflicted about his future at UPS. H a v i n g been privy to the evidence offered at trial and having again r e v i e w e d the transcript of the testimony and evidence, the Court finds the evidence s u p p o r t s the Jury's finding that Mr. Hardenbrook's intention was to remain at UPS f o r his entire career. Though he did apply for other positions during a time of f r u s t r a t i o n at UPS, such an exercise seems reasonable given the circumstances s u r r o u n d i n g Mr. Hardenbrook's employment at UPS in late 2005 and early 2006. T h e fact remains that most UPS employees remain with UPS for their entire work l i f e because of the salary, benefits, and promotional opportunities UPS offers to its e m p l o y e e s . Likewise, the Court finds the calculations that Mr. Hardenbrook's w o r k - l i f e would extend to the year 2037 is reasonable. (b) Comparability of Mr. Hardenbrook's Jobs

P l a i n t i f f ' s expert testified that Mr. Hardenbrook's job at UPS was not c o mp a r a b l e to the job he has at Battery Systems. UPS's expert, Mr. Hofman, c h a l l e n g e d this testimony opining that any losses Mr. Hardenbrook suffered as a r e s u l t of losing his UPS job were mitigated by the Battery Systems job.

MEMORANDUM ORDER - 28

(I)

Work Hours

T h e hours Mr. Hardenbrook worked at UPS were greater than at his Battery S y s t e m' s job. Mr. Hardenbrook testified that during non-peak hours at UPS he w o r k e d on average between 60 and 75 hours a week and worked even more hours i n the peak times of the year. At Battery Systems, Mr. Hardenbrook stated he w o r k s an average of 40 to 45 hours a week. Because his salary is nearly the same a t both jobs, Mr. Hofman opined that beyond the year 2008 the tables are " n o n s e n s e " because the UPS job and the Battery Systems job were not comparable g i v e n the difference in the number of hours worked and the salary for each p o s i t i o n which are not accounted for in the estimates provided by Mr. Reinstein. The Court agrees the work hours required of Mr. Hardenbrook at UPS were f a r greater than those at Battery Systems. However, the value of this difference w a s not quantified at trial. Instead, Mr. Hofman only testified about the failure of M r . Reinstein's calculation to account for the difference and that it was improper t o assume the two positions were comparable. 12 Thus, there is no evidence upon w h i c h to value the difference. Further, Mr. Hardenbrook's salary at Battery S y s t e ms was comparable, but not equal, to his pay at UPS. Mr. Hardenbrook t e s t i f i e d that his starting salary at Battery System's was roughly $60,000 and by 2 0 0 9 he was making $72,000 per year. In 2004, Mr. Hardenbrook's UPS taxable

Mr. Hofman did testify that to account for the difference in hours between the two j o b s it would only take nine or ten hours at a minium wage job to mitigate or make up t h a t difference and the damages should be "truncated" to account for that. This t e s t i m o n y still has not quantifiable basis upon which the finder of fact could rely and to s i m p l y "truncate" the damages would be arbitrary and without any evidentiary basis. M E M O R A N D U M ORDER - 29

12

s a l a r y was $61,729 and his total direct pay was $78,532. (Pl.'s Ex. 225.) 13 A c c o r d i n g l y , the Court agrees with the Jury's determination in regards to this a r g u me n t . There is simply no evidence upon which to value or quantify the d i f f e r e n c e in hours between the two jobs. (ii) Advancement Opportunities

M r . Hofman also testified that the assumptions in Scenario 2 do not account f o r the fact that Mr. Hardenbrook could obtain promotions in his new job. Thus if o n e is to assume Mr. Hardenbrook would receive a promotion at UPS in 2016 one mu s t necessarily assume the same fact would be true in his new employment and i n c l u d e that in calculating the mitigating wage; the failure to do so is unfair and n o t economically justifiable. The Plaintiff countered with testimony that UPS gave f r e q u e n t merit and annual increases in wages but Battery Systems did not and, t h e r e f o r e , the UPS income reflected in Scenario 2 appropriately was grown faster t h a n that for Battery Systems. Mr. Hofman disagreed that the UPS income should be grown faster than B a t t e r y Systems and further countered that his criticism of Scenario 2 is that based o n Mr. Hardenbrook's age, training, and experience he would be able to receive m e r i t based increases in his mitigation wage that should have been included in the c a l c u l a t i o n of the Battery System salary. Thus, he testified, it was biased for S c e n a r i o 2 to increase the UPS salary by forty percent for a projected promotion b u t have no increase to the Battery System's salary for any possible promotions.
Mr. Hardenbrook's total compensation as of December 31, 2004 was $96,990 which i n c l u d e d $78,532 in direct pay and $18,458 in indirect pay. (Pl.'s Ex. 225.) M E M O R A N D U M ORDER - 30
13

T h e fact that Mr. Reinstein's estimates do not provide for promotions at B a t t e r y Systems but do include value increases based on promotions at UPS is s u p p o r t e d by the evidence in the record. Several witnesses testified about UPS's p r o mo t i o n a l opportunities. Though in the cross-examination of Mr. Reinstein, the d e f e n s e raised questions about the failure to value possible promotions at Battery S y s t e ms , Mr. Hardenbrook soundly rebutted the defense's claim that it was unfair f o r the wages at Battery Systems to not take into account possible promotions. 14 B a s e d on the evidence presented, it was appropriate for Mr. Reinstein not to i n c l u d e the possibility of promotions a Battery Systems. That being said, as stated a b o v e , the Court still does not find there is evidence to support Mr. Reinstein's p r o mo t i o n a l assumptions as is contained in Scenario 2. As such, any error in Mr. R e i n s t e i n ' s failure to include possible advancements for Mr. Hardenbrook at B a t t e r y Systems is corrected by the Court's ruling regarding Scenario 2.

14

M r . Hardenbrook offered the testimony of Mr. Reinstein, himself, and Mr. Jeffrey P r o o s t that the Battery Systems job does not offer the same salary, benefits, and p r o m o t i o n a l opportunities as were available to Mr. Hardenbrook at UPS. There was t e s t i m o n y at the trial offered by Jeffrey A. Proost that Battery Systems does not give a n n u a l increases or inflationary increases and that the only way for employees to i n c r e a s e their paycheck is through various bonus programs such as if a branch exceeds a t a r g e t e d number, they are eligible to split up a percentage of that over the target number. H e also testified that Mr. Hardenbrook is eligible for medical benefits, a dental program, v i s i o n program, company car, and a matching 401(k) at Battery Systems. No stock o p t i o n s or retiree benefit programs. The 401(k) program is a $2,000 match by the c o m p a n y annually. Mr. Hardenbrook testified that Battery Systems hiring process for m a n a g e m e n t positions, unlike at UPS, was to open positions up to outside as well as w i t h i n the company. No annual increases or inflation increases. The next promotion w o u l d be to regional manager of which there are only five positions in the country and t h e current regional manager, Jeff Proost, was not planning on leaving. Above that p o s i t i o n is vice president of the company and owner of the company both of which, Mr. H a r d e n b r o o k testified, he was not likely qualified for. M E M O R A N D U M ORDER - 31

(c)

Valuation of UPS Restricted Stock Units

The experts for both sides testified regarding the value of UPS's restricted s t o c k units ("RSU's") as a part of any damages award to Mr. Hardenbrook. For the mo s t part, the experts agreed on the calculations for the RSU with the exception of t h e net discount rate used to calculate the present value of the RSU. However, the d i f f e r e n c e in the present value calculation used by each expert is significant. Mr. R e i n s t e i n used a zero percent net discount rate to calculate the present value of the R S U which yields a total amount under Scenario 1 for all 27 years of Mr. H a r d e n b r o o k ' s work-life of $252,786. (Pl.'s Ex. 280.) Whereas Mr. Hofman used a 10.5 percent net discount rate resulting in a present value of the RSU at $79,541 f o r the same period of time. (Def.'s Ex. 557.) The resulting difference between the e x p e r t s ' calculations is $173,245. I n his direct testimony, Mr. Reinstein described UPS's program for r e s t r i c t e d stock and then described how he calculated Mr. Hardenbrook's loss as a s s o c i a t e d to the RSU. The loss calculation looked at what Mr. Hardenbrook had r e c e i v e d in the 2 years prior to his termination and assumed that his awards would h a v e been similar to that going forward. He testified that he looked at "various s o u r c e s " and compared UPS with the growth rates of other peer companies, large c a p i t a l companies, for the last 50 years based on Ibbotson and Associates which, h e testified, is a "publication that provides that kind of statistic" and arrived at the a v e r a g e growth rate of 8 to 9 percent. He testified that he then looked at UPS's g r o w t h rate since it became a publicly traded company and found it to be "fairly
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ma r g i n a l " and only about .5 percent. He then looked at UPS's stock price growth f o r the last year which was around 18 percent and at the forward projections e s t i ma t i n g growth of 23 to 24 percent for the next 12 months and around 8 percent f o r the next 5 years. The projections, Mr. Reinstein testified, were obtained from Y a h o o ! Finance. Based on these figures, Mr. Reinstein calculated a net discount r a t e of zero that he applied to determine the present value of the RSU. M r . Hofman challenged Mr. Reinstein's use of a zero percent net discount r a t e as unsound because, he argues, it does not properly value the risk associated t o the UPS stock nor discount the future money to present value. 15 Instead, he a p p l i e d a 10.5 percent net discount rate in compiling Defendant's Exhibit Number 5 5 7 which details his estimates of the present value analysis of RSU's for each y e a r from 2006 to 2037. This exhibit, Mr. Hofman testified, is essentially the same a s Mr. Reinstein's calculations for RSU except for the calculation of present value a n d cumulative present values. (Def.'s Ex. 557.) The 10.5 percent net discount rate was derived primarily by taking the value o f UPS Stock as contained in Mr. Reinstein's earlier report. Mr. Hofman testified t h e 10.5 percent net discount rate is the "UPS discount rate" figure of between 1 0 . 4 and 11.5 percent in Mr. Reinstein's earlier report, then he subtracts .3 percent

Mr. Hofman provided testimony regarding the future valuation of stocks. He stated the h i g h e r the risk of the asset you are valuing, the higher discount rate you use meaning the l o w e r the present value will be because it is more risky that you won't get that money in t h e future. "So the higher the discount rate, the lower the present value." (Hofman Test.) H e r e , the asset is UPS stock which, Mr. Hofman testified, carries a higher risk as c o m p a r e d to government treasury securities or bonds and that risk must be accounted for i n valuing the future stock. M E M O R A N D U M ORDER - 33

15

t o account for the historical growth of UPS stock, and arrives at a net discount rate o f 10.5 percent. (Hofman Test.) There was, however, no testimony or evidence as t o the basis for the "UPS discount rate" figure. Instead Mr. Hofman testified that h e "reviewed plaintiff's own report and their own opinion on what the discount r a t e is. My analysis was analyzing plaintiff's claim and in their own report they s a i d what they thought the UPS discounts rate was...I took their own discount rate a t face value and said, well, you should have applied it, and they didn't." On c r o s s - e x a m i n a t i o n , Mr. Hofman admitted he did not take into account any future p r o j e c t i o n s of UPS stock but, on redirect, testified that even considering future p r o j e c t i o n s , they would not result in a net discount rate of zero as applied by Mr. Reinstein. O n recall, Mr. Reinstein defended his use of zero as the net discount rate. T h e r e he testified that he calculated the net discount rate by taking the anticipated c o s t of capital of a company and subtracting those from the expected rate of r e t u r n . He opined the present value calculation has nothing to do with how risky t h e stock might be as Mr. Hofman opined. Mr. Reinstein then again testified as to t h e figures he used to arrive at the net discount rate. First, UPS stock had i n c r e a s e d at a rate of 18 percent over the previous 12 months and that the p r o j e c t i o n for the next 12 months was a 23 to 24 percent increase. The five year p r o j e c t i o n is approximately 8 percent. He then used "the capital asset pricing mo d e l " from which he determined the cost of capital for UPS would range b e t w e e n 7 and 8 percent. He then compared those numbers to the projections for
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U P S stock in the future that expected an increase in value. Finally, he looked at t h e last 50 years of stock increases for large capitalized companies, of which he a r g u e s UPS is considered, and found the average rate of return to be between 8 and 9 percent. Taking all of these figures into consideration he arrived at an expected f u t u r e increase in value of between 8 and 9 percent and estimated the cost of c a p i t a l to be between 7 and 8 percent yielding a difference of 1 percent which w o u l d create a negative net discount rate. To be conservative he applied a rate of z e r o rather than a negative. H a v i n g viewed the evidence first-hand and now having again reviewed the s a me in great detail, the Court finds the zero percent net discount rate used by Mr. R e i n s t e i n seems to ignore the time value of money when the expert also calculates a substantial growth rate in the value of the UPS stock in the future. The Court is c o n c e r n e d that the Plaintiff's expert's discount rate calculation for the stock is not s u p p o r t e d by basic economic principles and/or methodologies which would n o r ma l l y be used by economists in determining the present value of money to be e a r n e d in the future. Moreover, the Court is concerned that the growth rate for U P S stock in the future is quite possibly overstated based on the historical stock g r o w t h actually experienced by UPS since going public. On the other hand, the D e f e n d a n t ' s economist did not articulate how to properly calculate a discount rate f o r stock growth in this particular case, but instead testified the method used by P l a i n t i f f ' s expert, who is not an economist, but a business valuation expert, was n o t a normally accepted calculation method for discount rates on future stock price
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i n c r e a s e s over a significant number of years. 16 When it came to the calculation of t h e present value of the RSU, the Plaintiff's expert testified regarding his c a l c u l a t i o n and supporting basis for applying a net discount of zero. The D e f e n d a n t ' s expert was critical of this approach and, instead, calculated the RSU's p r e s e n t value using, primarily, a figure from the Plaintiff's expert's prior report. T h e defense did not, however, identify where the figure was derived from or what t h e basis for the figure was other than that it was in Mr. Reinstein's prior report. 17 N o n e of the expert reports are in evidence for the Jury or this Court to review and d e t e r mi n e whether Mr. Hofman's use of the figure is sound. Further, the defense e x p e r t does not seem to have given enough weight to the future growth projections f o r UPS stock. 18 Therefore, the Court does not have credible evidence before it

Mr. Reinstein testified that he had a bachelor's degree in agriculture, a bachelor's d e g r e e in accounting, and attended other classes on business financial advisory services a n d consulting. He stated that he is a member of the Idaho Society of Certified Public A c c o u n t a n t s , the American Institute of Certified Public Accountants, the National A s s o c i a t i o n of Certified Valuation Analysis, the American Society of Appraisers, and t h e American Academy of Economic and Financial Experts. Mr. Reinstein also testified t h a t he currently holds a license as a certified public accountant (CPA), a designation as a certified valuation analysis (CVA), a designation as accredited in b