Bright Harvest Sweet Potato Company, Inc. v. H.J. Heinz Company, L.P.

Filing 125

MEMORANDUM DECISION AND ORDER Plaintiff's First Motion in Limine (Dkt. 85 ) is GRANTED in part, DENIED in part, and RESERVED in part. Plaintiff's Second Motion in Limine (Dkt. 86 ) is GRANTED. Plaintiff's Fifth Motion in Limine (Dkt. 110 ) is GRANTED. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (jp)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
BRIGHT HARVEST SWEET POTATO
COMPANY, INC.,

Case No. 1:13-CV-296-BLW
MEMORANDUM DECISION AND
ORDER

Plaintiff,
v.
H.J. HEINZ COMPANY, L.P.,
Defendant.

INTRODUCTION
The Court has before it three motions in limine filed by Plaintiff Bright Harvest
Sweet Potato Company, Inc. (Dkts. 85, 86, 110). The Court will address each motion
below.
ANALYSIS
1. Plaintiff’s First Motion in Limine Re: Conduct of Plaintiff.
Bright Harvest requests the Court exclude evidence that it breached or failed to
adequately perform under the Co-Pack Agreement (“CPA”). (Dkt. 85). The May 3, 2011
Settlement Agreement indeed bars claims of breach before April 25, 2011. However,
evidence of documents, statements, and actions prior to that date may be relevant for
another purpose. At this point, the Court is unable to rule on the admissibility of such
evidence. Bright Harvest insufficiently describes the evidence it wishes to exclude in

MEMORANDUM DECISION AND ORDER - 1

order for the Court to make an informed ruling. As such, the Court will reserve ruling on
the motion until trial.
Both parties stated they will not claim a breach occurred prior to April 25, 2011.
To the extent that Heinz seeks to introduce evidence of Bright Harvest’s actions and
statements for another purpose, it should be prepared to show why such evidence is
otherwise admissible. The Court will resolve any dispute on this issue outside the
presence of the jury.
The Court will note, however, its concern that such evidence may result in relitigating a previously settled claim. If necessary, the Court will instruct the jury on the
limited purpose for such evidence. Additionally, the Court will consider the rule of
completeness when determining the admissibility of evidence at trial. Exhibits may not
be redacted to change the exhibit’s meaning. The Court must tread carefully to avoid
redacting necessary context to ensure that events and decisions are not misleading to the
jury. Finally, the Court will balance the prejudicial effect of the evidence with its
probative value.
Bright Harvest also claims four exhibits are inadmissible compromise statements
and settlement offers. Specifically, Bright Harvest asks the Court to exclude BH00390203 (Ex. 2105), BH004318-25 (Exs. 2093, 2094), and Heinz002417-19 (Ex. 2098). The
Court will address each of these exhibits in turn.
Rule 408 prohibits evidence of conduct or statements made during compromise
negotiations “to prove or disprove the validity or amount of a disputed claim or to

MEMORANDUM DECISION AND ORDER - 2

impeach by a prior inconsistent statement or a contradiction.” FED. R. EVID. 408.
However, “[t]he court may admit this evidence for another purpose,” so long as it weighs
the policy considerations behind Rule 408 with the need for the evidence. Id. Rule 408 is
founded on two main policies: (1) “[t]he evidence is irrelevant since the offer may be
motivated by a desire for peace rather than from any concession of weakness of
position,” and (2) “promotion of the public policy favoring the compromise and
settlement of disputes.” FED. R. EVID. 408 advisory committee’s note; see
also Philadelphia's Church of Our Savior v. Concord Township, No. Civ. A. 03-1766
2004 WL 1824356 (E.D. Pa. July 27, 2004).
The Court applies Rule 408 to avoid deterring compromise and settlement of
disputes. Nevertheless, Rule 408 does not apply to all statements made during
compromise negotiations—only statements about the claim. FED. R. EVID. 408.
Additionally, these statements must be made during negotiations and not made in the
regular course of business. Id.
Exhibit 2093 is a letter from Rex King to Jonathan Bailey discussing Heinz’s
production volumes. Def.’s Opp’n, Dkt. 97, at 19-26. Exhibit 2094 is an annotated copy
of that letter. Id. Bright Harvest argues that Exhibits 2093 and 2094 are compromise
communications because “Mr. King offers to resolve the dispute through Defendant
restoring the current 2010 crop year production to the previously forecasted level while
dropping the production level for the 2011 crop year.” Pl.’s Reply, Dkt. 106, at 5.
However, Bright Harvest mischaracterizes the letter. The letter is not a statement made

MEMORANDUM DECISION AND ORDER - 3

during compromise negotiations; it is a performance letter demanding Heinz comply with
its commitments and other obligations under the CPA. In the letter, King discusses
production volumes, rolling forecasts, and Heinz’s requests to procure additional raw
sweet potatoes. As evidenced by the line “[w]e cannot accept however that Heinz feels
that it can ‘walk away’ from commitments to Bright Harvest for the 2010 crop year,"
Bright Harvest sent this letter to demand performance from Heinz. Def.’s Opp’n, Dkt. 97,
at 19-26. Although Bright Harvest states that it may “have to explore [its] legal position,”
it did not propose a settlement to a pending claim. Id. Instead, it engaged in business
communications with Heinz regarding Heinz’s commitment to purchase potatoes in 2010.
Therefore, the letter is not a “statement made during compromise negotiations about the
claim.” Consequently, the Court will not exclude Exhibits 2093 and 2094 under Rule
408.
Next, Exhibit 2098 is an April 5, 2011 letter from Donald Kerr to Jonathon Bailey.
Heinz does not object to exclusion of this Exhibit, so long as Plaintiff’s identical Exhibit
1041 is also excluded. Def.’s Sur-Reply, Dkt. 119, at 9. Accordingly, the Court grants
Bright Harvest’s motion.
Finally, Exhibit 2105 includes two e-mails – one from Rex King addressed to Tim
Hensley and Johnathan Bailey, and the other sent from Jonathan Bailey to Rex King in
response. The e-mails were written on April 26, 2011 as a follow up to April 25, 2011
settlement negotiations between Bright Harvest and Heinz. Bright Harvest contends that
these e-mails discuss “a significant contractual dispute between Bright Harvest and

MEMORANDUM DECISION AND ORDER - 4

Heinz” and were sent “during negotiations [commenting] on Bright Harvest’s claim and
damages.” Pl.’s Reply, Dkt. 106, at 5. In particular, Bright Harvest focuses on the
language in the first e-mail that reads, “there has been a violation of the agreement and
that needs to be remedied.” Def.’s Opp’n, Dkt. 97, at 27. Heinz, in response, maintains
that the e-mails may be introduced to demonstrate that Rex King and Donald Kerr knew
Heinz self-manufactured products before April 26, 2011. Thus, Heinz argues, the e-mails
should be admitted to prove notice.
Evidence offered to prove notice falls outside the scope of Rule 408 and is deemed
admissible (at least insofar as Rule 408 does not bar admission). U.S. v. Austin, 54 F.3d
394, 400 (7th Cir. 1995). Indeed, [w]hen statements made during settlement are
introduced for a purpose unrelated to liability, the policy underlying the Rule is not
injured.” Rhoades v. Avon Prods., Inc., 504 F.3d 1151, 1161-62 (9th Cir. 2007). To the
extent that Heinz seeks to introduce Exhibit 2105 to demonstrate notice, such evidence
may be admissible. However, the Court will defer ruling until the parties lay further
context and foundation at trial. As discussed above, the Court will balance the need for
this evidence against the policies of Rule 408.
2. Plaintiff’s Second Motion in Limine Re: Offers of Compromise.
Bright Harvest seeks exclusion of Heinz003724-27 (Ex. 2142) and Heinz005210-11
as inadmissible compromise offers. (Dkt. 86). Heinz agrees not to introduce
Heinz005210-11 at trial. The other document, Heinz003724-27, is a four-page e-mail
from Rex King to Jonathon Bailey “object[ing] to the recent actions taken by Heinz with

MEMORANDUM DECISION AND ORDER - 5

respect to the Co-Pack Agreement” and “propos[ing] a more reasonable middle ground.”
Def.’s Opp’n, Dkt. 99, at 8. Heinz argues that the Court can resolve any issue with
compromise statements by redacting the final three paragraphs of the e-mail. Heinz
further maintains that the remainder of the e-mail should not be excluded.
As discussed above, evidence of conduct or statements made during compromise
negotiations is “not admissible… to prove or disprove the validity or amount of a
disputed claim or to impeach by a prior inconsistent statement or a contradiction.” FED.
R. EVID. 408. It appears that Heinz seeks admission of the e-mail to interpret the
Settlement Agreement and to demonstrate King’s understanding of the CPA.
Although King wrote the e-mail to “object to the recent actions taken by Heinz
with respect to the Co-Pack Agreement” and “propose a more reasonable middle
ground,” King clearly wrote the e-mail to initiate settlement negotiations. Def.’s Opp’n,
Dkt. 99, at 8. Indeed, King may have proposed a settlement to promote compromise
rather than concede any issue.
Heinz seeks to introduce the e-mail to bolster its position that Bright Harvest knew
Heinz would not purchase product beyond September 2012. This impermissibly attempts
to prove the validity of a disputed claim. Likewise, the language regarding Heinz’s desire
to self-manufacture products also bolsters Heinz’s argument about the validity of a
disputed claim. These arguments seek to demonstrate that the CPA is not a requirements
contract, which the Court already held is at issue in this case and for the jury to

MEMORANDUM DECISION AND ORDER - 6

determine. Thus, Heinz seeks to prove liability for a disputed claim. Accordingly, the
Court will grant Bright Harvest’s motion.
3.

Plaintiff’s Fifth Motion in Limine Re: Intent Evidence.
Finally, Bright Harvest requests the Court preclude Heinz from presenting

evidence of Heinz’s subjective, undisclosed intent in entering into the CPA. (Dkt. 85).
The parties’ intent is only relevant when a contract is ambiguous. J.R. Simplot Co. v.
Bosen, 167 P.3d 748, 751 (Idaho 2006). The Court previously recognized that the CPA is
ambiguous. (Dkt. 61). Its interpretation, therefore, is a question of fact. See Pocatello
Hosp., LLC v. Quail Ridge Med. Investor, LLC, 330 P.3d 1067, 1078 (Idaho 2014).
The CPA should be interpreted “to determine the intent of the contracting parties
at the time the contract was entered.” Id. (citation omitted). “In determining the intent of
the parties, this Court must view the contract as a whole,” since the parties’ words are the
best evidence of their intent. Id. (citation omitted). Nonetheless, because the CPA is
ambiguous, the jury must discern the contracting parties’ intent, generally by considering
the objective and purpose of the CPA and the circumstances surrounding its formation.
J.R. Simplot Co, 167 P.3d at 751. However, “[a] party’s subjective, undisclosed intent is
immaterial to the interpretation of a contract.” Id. Indeed, “[t]he court will not attempt to
ascertain the actual mental processes of the parties in entering into the particular
contract.” Id. (citing 17 AM. JUR. 2D, Contracts, § 347 (2004)).
Nevertheless, communications between Bright Harvest and Heinz are relevant to
understanding the objective and purpose of the CPA. And a party’s subjective intent is

MEMORANDUM DECISION AND ORDER - 7

relevant, so long as that intent was disclosed. Recently, the Supreme Court of Idaho
ruled that a party’s subjective intent may not be considered when interpreting a contract if
the party did not communicate that intent to the other party. Pocatello Hosp., LLC, 330
P.3d at 1076. In that case, the defendant unilaterally modified the terms of a lease. Id. As
such, the defendant’s intent to modify the lease was undisclosed. Id. Thus, the Court
found that neither the modification nor one party’s subjective, undisclosed intent were
sufficient evidence of the parties’ mutual intent to modify the lease. Id. However, a
party’s subjective, disclosed intent is evidence of the parties’ mutual intent, and is
therefore relevant to interpreting a contract.
Similarly, in J.R. Simplot Co., the Supreme Court of Idaho refused to consider a
party’s subjective, undisclosed intent when interpreting a contract. 167 P.3d at 751.
There, the defendant argued that he did not intend to individually enter into an agreement
with the plaintiff or be personally liable on his company’s account. Id. at 751. However,
the plaintiff failed to “verbaliz[e] to any of [defendant’s] agents his intent not to be
personally obligated under the contract.” Id. The defendant had no way of knowing the
plaintiff’s intentions because the plaintiff never communicated those intentions. As such,
the Court found that the plaintiff’s subjective, undisclosed intent did not create a genuine
issue of material fact. Id.
In this case, Heinz intends to call witnesses that will testify about
“communications between the parties. . . regarding the intent of Heinz.” Def. Opp’n, Dkt.
118, at 3. Heinz’s witnesses may testify to Heinz’s subjective intent in entering into the

MEMORANDUM DECISION AND ORDER - 8

CPA, but only to the extent that Heinz disclosed its subjective intent to Bright Harvest
through those communications. Such disclosure notified Bright Harvest of Heinz’s
intentions and demonstrates the mutual intent of the parties in entering into the CPA.
Accordingly, the Court precludes Heinz from offering testimony of subjective,
undisclosed intent and grants Bright Harvest’s request to exclude such testimony. The
parties should be prepared to discuss proffered evidence concerning a party’s subjective
intent outside the presence of the jury.
Bright Harvest further requests the Court exclude evidence of Heinz’s subjective
intent when it entered into the Settlement Agreement. The Court will not address such
evidence. As noted above, the parties’ intent is only relevant when a contract is
ambiguous. Neither party points to an ambiguity in the Settlement Agreement, and the
Court is currently unaware of an ambiguity. The parties’ words are the best evidence of
their intent. Pocatello Hosp., LLC, 330 P.3d at 1078. “[T]he law presumes that the parties
understood the import of their contract and that they had the intention which its terms
manifest.” J.R. Simplot Co, 167 P.3d at 751 (citing 17 AM. JUR. 2D, Contracts, § 347
(2004)). Accordingly, any other evidence of a party’s subjective intent in entering into
the Settlement Agreement is irrelevant.

MEMORANDUM DECISION AND ORDER - 9

ORDER
IT IS ORDERED:
1.

Plaintiff’s First Motion in Limine (Dkt. 85) is GRANTED in part,
DENIED in part, and RESERVED in part.

2.

Plaintiff’s Second Motion in Limine (Dkt. 86) is GRANTED.

3.

Plaintiff’s Fifth Motion in Limine (Dkt. 110) is GRANTED.

DATED: March 12, 2015

_________________________
B. Lynn Winmill
Chief Judge
United States District Court

MEMORANDUM DECISION AND ORDER - 10