Hathaway v. Idaho-Pacific Corporation

Filing 82

MEMORANDUM DECISION AND ORDER ON MOTION FOR RECONSIDERATION granting in part and denying in part 49 Motion for Reconsideration. Signed by Judge David C. Nye. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (st)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
ROSS HATHAWAY,
Case No. 4:15-cv-00086-DCN
Plaintiff,
MEMORANDUM DECISION AND
ORDER ON MOTION FOR
RECONSIDERATION

v.
IDAHO PACIFIC CORPORATION,
Defendant.

INTRODUCTION
This Court issued a Memorandum Decision and Order on October 23, 2017, that
did three things:
(1) granted Hathaway’s “Motion in Limine to Exclude Margaret Johnson as a
Witness, or in the Alternative, Prohibit Defendant from Re-Opening Discovery”;
(2) granted Hathaway’s “Motion in Limine Regarding Hearsay Evidence and
Unauthenticated Statements Made by Margaret Johnson and Linda Bair”; and
(3) denied Idaho Pacific Corporation’s “Motion for Leave to Take De Bene Esse
Deposition of Unavailable Witness Margaret Johnson, or, in the Alternative,
Motion to Reopen Discovery for Limited Purpose of Deposing Margaret
Johnson”.
On November 3, 2017, Idaho Pacific Corporation (“IPC”) filed a Motion for
Reconsideration, a Memorandum in Support, and a Declaration of Bradley J. Williams. In
those documents, IPC asks the Court to reconsider its decision because the Johnson and
Bair statements are not hearsay but rather admissible evidence and the discovery
sanctions imposed in the decision are too harsh and unfair in that they remove IPC’s

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primary defense to Hathaway’s claims. IPC asks the Court to permit the audio recording
and transcript of Johnson’s interview with IPC management to be introduced as evidence
at trial. On November 21, 2017, Hathaway filed his Memorandum in Opposition to
Defendant’s Motion for Reconsideration. Hathaway argues that IPC has raised nothing
new in the motion for reconsideration and that the Court should stand by its original
decision.
On December 5, 2017, IPC filed its Reply Brief. Trial is set to begin on December
11, 2017. Having reviewed the record and briefs, the Court finds that the facts and legal
arguments are adequately presented. Accordingly, in the interest of avoiding further
delay, and because the Court finds that the decisional process would not be significantly
aided by oral argument, the Court will decide the motion without oral argument. Dist.
Idaho Loc. Civ. R. 7.1(d)(2)(ii).
BACKGROUND
Both the factual background and the procedural background are set forth in the
Memorandum Decision and Order filed on October 23, 2017, and will not be repeated
herein. Any corrections or modifications to those backgrounds will be discussed below.
STANDARD OF REVIEW
While IPC does not state what rule it moves for reconsideration under, because it
moves for reconsideration prior to a trial taking place, the appropriate avenues for
reconsideration are Rules 59(e) or 60(b). See, School Dist. No. 1J, Multnomah County,

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OR v. ACandS, Inc., 5 F.3d 1255, 1262 (9th Cir. 1993).1 Under Rule 59(e),
reconsideration is appropriate if the district court (1) is presented with newly discovered
evidence, (2) committed clear error or the initial decision was manifestly unjust; or (3) if
there is an intervening change in controlling law. Id. at 1263. Rule 60(b) provides for
reconsideration only upon a showing of (1) mistake, surprise, or excusable neglect; (2)
newly discovered evidence; (3) fraud; (4) a void judgment; (5) a satisfied or discharged
judgment; (6) extraordinary circumstances which would justify relief. Id. at 1264. These
rules offer an “extraordinary remedy, to be used sparingly in the interests of finality and
conservation of judicial resources.” Kona Enterprises, Inc. v. Estate of Bishop, 229 F.3d
877, 890 (9th Cir. 2000). The grant or denial of a motion for reconsideration is a matter
within the district court’s discretion. Id. at 883.
IPC’s motion for reconsideration most likely falls within the realm of Rule 59(e)
as IPC makes arguments regarding an expanded factual record and also argues that
reconsideration is necessary to correct clear error and prevent manifest injustice.
ANALYSIS
The Court has reviewed the record and the parties’ brief and denies the motion for
reconsideration as far as it goes to the issues of whether Johnson can testify at trial,

IPC does cite Smith v. Massachusetts,543 U.S. 462, 475 (2005) for the proposition that “a
district court has the inherent power to reconsider and modify its interlocutory orders prior to the
entry of judgment.” However, the quoted language comes from the dissenting opinion in Smith
and is therefore not precedent and Smith is a criminal case involving the issue of whether it is a
violation of double jeopardy for a district court to reverse itself on the grant of an acquittal on
some or all crimes before the jury reaches a verdict. That issue is not involved in a civil case
such as this.

1

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whether ICP can take a De Bene Esse deposition of Johnson, or whether discovery can be
reopened. The Court stands by its decision that Johnson cannot testify as a sanction for
not disclosing Johnson and her pertinent contact information in a timely manner.2
As to the three things3 accomplished by the Court’s October 23, 2017,
Memorandum Decision and Order, ICP in its motion to reconsider focuses almost
exclusively on the second thing – the Court’s declaration that the Johnson and Bair
statements and recordings are hearsay and cannot be used at trial. This is made clear by
IPC’s Reply Brief wherein, IPC states that this Court “need only focus on a single issue
to decide its motion: whether the recordings and transcripts are being offered for a
relevant purpose other than to prove the truth of the matter asserted, i.e., the contents of
the recordings and transcripts.” Dkt 75, at 1 [emphasis in original] The Court will turn
now to this single issue.
IPC takes the position that the Court erred when it held that the recorded
statements were hearsay that had to fall under an appropriate exception before they could
be used at trial. Specifically, IPC objects to this language in the Court’s decision:
As the recording falls under the definition of hearsay and does not fall
under any of the exceptions to the hearsay rule, the Court bars IPC from
presenting the recording at trial.
Additionally, IPC objects to this language in the decision:

In so ruling, the Court did not, in the original decision or now, intend to infer that the sanctions
were the result of deliberate improper tactics by counsel. Instead, the Court held that IPC had
contact information in its personnel files and failed to timely disclose that information to
Plaintiff. The motive for nondisclosure is not relevant. IPC cannot demonstrate substantial
justification for the nondisclosure.
3
See above at page 1.
2

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The Court also notes that to permit IPC to present the Johnson recording
would allow IPC to circumvent the Court’s decision to bar IPC from calling
Johnson as a witness at trial. Allowing the recording would prejudice
Hathaway because it would permit IPC to present Johnson’s testimony
without giving Hathaway the benefit of cross-examination. Hathaway has
never had the opportunity to cross-examine Johnson because of IPC’s
dilatory conduct.
Having reviewed the file and the briefs of the parties, the Court understands and
accepts IPC’s argument that the recordings are not hearsay because they are not offered
for the truth of the matter asserted. The very nature of this case makes the hearsay issue
moot. In an employment discrimination case, the defendant can defend by proving that it
had notice of a statement and acted in good faith in reasonable reliance upon that
statement even if the statement is false. See, Villiarimo v. Aloha Island Air, Inc.,281 F.3d
1054, 1063 (9th Cir. 2002). If the defendant makes this showing, then the burden is back
on the plaintiff to show that the defendant’s articulated reason is “pretextual.” Flanagan
v. City of Richmond,2015 WL 5964881 (N.D. Cal. 2015). In the context of this type of
claim, the burden on plaintiffs to raise a triable issue of fact as to pretext is “hardly an
onerous one.” Noyes v. Kelly Servs., 488 F.3d 1163, 1170 (9th Cir. 2007). The recording
is not being offered to prove the truth of the matter asserted. The Court agrees that the
recording is not hearsay. The problem here is not really whether the recording is hearsay
or not. The issue is whether IPC should be allowed to circumvent the sanctions by using
the recording.
In its Answer to Plaintiff’s Complaint, filed on May 15, 2015, IPC admitted that
Hathaway was terminated from employment because of a statement he made to a coworker in which he stated he should trip and fall and then they’d have to pay. In its Initial
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Disclosures on July 24, 2015, IPC produced to Hathaway the names of Margaret Johnson
and Linda Bair as former co-employees who may have discoverable information IPC may
use to support its position in this case. Also in its Initial Disclosures, IPC provided
written transcripts of the Johnson and Bair recordings on July 24, 2015. Hathaway, in his
Requests for Production asked IPC for a copy of the entire recorded interview with
Margaret Johnson. This makes sense because without a copy of the recording Hathaway
has no way to verify the accuracy of the transcript. On December 7, 2015, IPC responded
to that request by stating it had already provided a copy of the transcript of that recording.
On February 17, 2016, Hathaway informed IPC that its response was inadequate and
Hathaway wanted a copy of the actual recording. IPC responded on March 23, 2016, that
the original recording was being obtained and would be provided. IPC did not produce a
functional copy of Johnson and Bair’s recordings until June 29, 2016.
The original Case Management Order required all discovery to be completed by
June 22, 2016. However, after that discovery deadline lapsed, the parties agreed to extend
the deadline until September 30, 2016. Dkt. 15. Thus, under this extended deadline IPC
timely produced the recordings. However, IPC did not timely produce contact
information for Johnson or Bair. Without that information Hathaway could not discover
from Johnson and Bair the circumstances of the interviews. Were they coerced into
making the statements? Were they coached by the managers before the recorder was
turned on? Are the recordings complete and accurate of everything that was said in the
meeting or is the recorded portion taken out of context? In other words, a timely
deposition or interview by plaintiff’s counsel with Johnson or Bair could address matters
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that go far beyond whether the statements were true. It could go to the heart of the pretext
issue. Out of fairness, the sanctions for untimely disclosure of contact information will be
extended to cover the recordings also.
IPC argues on reconsideration that the Court’s ruling guts IPC’s defense in this
case. The Court disagrees for two reasons. First, it was IPC’s failure to timely provide
contact information that clearly exists in the personnel files that precludes IPC from
putting on evidence from Johnson and Bair. Second, the Court’s ruling does not gut any
defense. IPC can use properly disclosed witnesses to develop the theory that IPC had a
valid reason for terminating Hathaway. Just as it does not matter whether the information
relied upon by IPC is objectively true, it does not matter which co-workers provided that
information.
ORDER
It is ordered:
1. IPC’s Motion for Reconsideration is granted in part. The recorded statements
from Johnson and Bair are not hearsay.
2. IPC’s Motion for Reconsideration is denied in part. As a discovery sanction, IPC
cannot call Johnson or Bair as witnesses at trial. Discovery will not be reopened
and no De Bene Esse deposition will be taken.
3. The discovery sanction is extended to include the recorded statements.
DATED: December 8, 2017

_________________________
David C. Nye
U.S. District Court Judge

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