Heimerl et al v. Tech Electric of Minnesota, Inc.
Filing
59
MEMORANDUM OPINION AND ORDER: Plaintiffs' Motion in Limine to Exclude Evidence and Testimony of Fund Counsel [Doc. No. 52] is DENIED (Written Opinion). Signed by Judge Susan Richard Nelson on 7/3/13. (LPH)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Jeff Heimerl and Fred Jahnke, as
Trustees of the IBEW Local No. 292
Health Care Plan; Trustees of the Electrical
Workers Local No. 292 Pension Fund; as
Trustees of the Electrical Workers Local
No. 292 Annuity & 401(k) Fund; as
Trustees of the Electrical Workers Local
No. 292 Vacation & Holiday Fund; and as
Trustees of the Minneapolis
Electrical Industry Board/JATC/LMCC;
and each of their successors,
Case No. 12-CV-612 (SRN/SER)
MEMORANDUM
OPINION AND ORDER
Plaintiffs,
v.
Tech Electric of Minnesota, Inc.,
Defendant.
Amanda R. Cefalu, Pamela Hodges Nissen, and Rebecca A. Peterson, Anderson, Helgen,
Davis & Nissen, PA, 333 South Seventh Street, Suite 310, Minneapolis, Minnesota 55402,
for Plaintiffs
Chad A. Kelsch, Fuller, Seaver, Swanson & Kelsch, P.A., 5500 Wayzata Boulevard, Suite
1025, Golden Valley, Minnesota 55416, for Defendant
________________________________________________________________________
SUSAN RICHARD NELSON, United States District Court Judge
This matter is before the Court on Plaintiffs’ Motion in Limine to Exclude Evidence
and Testimony of Fund Counsel [Doc. No. 52]. For the reasons set forth herein, Plaintiffs’
motion is denied.
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I.
BACKGROUND
A full discussion of the facts of this case is found in this Court’s Order of April 4,
2013 (the “Summary Judgment Order” [Doc. No. 43]), which this Court incorporates
herein by reference. In brief, Plaintiffs are trustees for the International Brotherhood of
Electrical Workers Local No. 292's (the “IBEW”) fringe benefit plans. Defendant Tech
Electric of Minnesota (“Tech Electric”) is a Minnesota corporation engaged in the
electrical industry.
In October 2000, the IBEW and Defendant signed a Letter of Assent
authorizing the Minneapolis Chapter of the National Electrical Contractors Association
(“NECA”) to be Defendant’s collective bargaining representative for all matters related to
the Inside Agreement between NECA and the IBEW. (Order at 2 [Doc. No. 43].) The
Letter of Assent authorized NECA to negotiate with the IBEW on Defendant's behalf and
recognized that the IBEW was the exclusive representative of its employees performing
electrical construction work in all present and future job sites. (Id.) The Letter of Assent
also provided that Defendant agreed to be bound by the provisions of the Inside
Agreement. (Id. at 3) (citing Roe-Hardie Aff. 2, Exs. A-B [Doc. No. 28]; Schmidt Aff. 2,
Exs. 1-2 [Doc. No. 24].)
In addition to the provisions of the Inside Agreement requiring Defendant to make
monthly contributions to the fringe benefit plans for which Plaintiffs serve as trustees, the
Inside Agreement contains an “evergreen” provision stating that it “shall remain in effect
until April 30, 2010, unless otherwise specifically provided herein.” (Id.) (citing
Roe-Hardie Aff. 3, Ex. B at § 6.13; §1.01 [Doc. No. 28].) Under the “evergreen”
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provision, the Inside Agreement was to “continue in effect from year to year thereafter
from May 1 to April 30 of each year, unless changed or terminated in the way later
provided herein.” (Id.)
Section 1.02 of the Inside Agreement provides how the agreement may be changed
or terminated. (Id. at 3-4 (citing § 1.02.) Section 1.02 of the Inside Agreement states:
(a)
Either party or an Employer withdrawing representation from the
Chapter or not represented by the Chapter, desiring to change or
terminate this Agreement must provide written notification at least
ninety (90) days prior to the expiration date of the Agreement or any
anniversary date occurring thereafter.
(b)
Whenever notice is given for changes, the nature of the changes
desired must be specified in the notice, or no later than the first
negotiating meeting unless mutually agreed otherwise.
(c)
The existing provisions of the Agreement, including this Article, shall
remain in full force and effect until a conclusion is reached in the
matter of proposed changes.
(d)
In the event that either party, or an Employer withdrawing
representation from the Chapter . . ., has given a timely notice of
proposed changes and an Agreement has not been reached by the
expiration date or by any subsequent anniversary date to renew,
modify, or extend this Agreement . . . either party or such an
Employer, may serve the other a ten (10) day written notice
terminating this Agreement. The terms and conditions of this
Agreement shall remain in full force and effect until the expiration of
the ten (10) day period.
...
(g)
Notice of a desire to terminate this Agreement shall be handled in the
same manner as a proposed change.
(Id.)
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Tech Electric contends that it notified both the IBEW and NECA in writing on
November 25, 2009 that it was immediately withdrawing from any affiliation with the
IBEW. (Summ. J. Order at 4 [Doc. No. 43]) (citing Schmitt Aff. ¶ 3, Ex. 3 [Doc. No. 24].)
NECA disputes that it ever received the letter. (Id.) (citing Cefalu Aff. ¶ 6 [Doc. No. 30].)
On December 21, 2009, the IBEW responded with a “formal grievance,” noting that
Defendant had “indicated its intent to prematurely repudiate the Agreement and was
advised by the [IBEW] that the terms of the Agreement do not expire until April 30,
2010.” (Id. at 5) (citing Schmitt Aff. ¶ 4, Ex. 4.) The IBEW requested that the Defendant
be “ordered to comply with all terms and conditions of the Agreement through April 30,
2010 for all electrical work performed by the employer within the scope of the [IBEW]’s
jurisdiction.” (Id.)
In April 2010, Plaintiffs’ counsel, Ms. Cefalu, sent email to defense counsel that
appears to acknowledge Defendant’s terminated relations with the IBEW. (Id.) (citing
Schmitt Aff. ¶ 5, Ex. 5.) Specifically, the e-mail stated, “I informed him that we would be
more than willing to enter into some kind of joint payment agreement with him and
[Defendant] to ensure that benefits owed on work performed through May 2010 (since you
abrogated the CBA) are paid.” (Id.) Additionally, on May 13, 2010, Plaintiffs’ counsel
sent another e-mail to defense counsel acknowledging that the inside agreement had been
terminated stating that April 30, 2010 was “when the [IBEW] contract ended-because you
terminated it I believe.” (Id. ¶ 6, Ex. 6.)
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On August 5, 2010, Plaintiffs inquired through their attorneys whether Defendant
had “re-signed with the [IBEW].” (Id. ¶ 7, Ex. 7.) Defense counsel responded on August
10, 2010 that Defendant had “not re-signed with the [IBEW].” (Id.) Defendant had no
further conversations with the IBEW about its termination of the Letter of Assent and its
obligations under the Inside Agreement until Plaintiffs initiated this action. (Id. ¶ 8.)
During this time, the IBEW did not request any payroll reports, contributions, or an audit
from Defendant. (Id.)
Plaintiffs filed the Complaint in this action on March 8, 2012, seeking to audit
Defendant’s records for compliance with the terms of the Inside Agreement. (Compl.
[Doc. No. 1].) In September 2012, the parties filed cross-motions for summary judgment,
seeking a determination as to whether Defendant properly terminated the Letter of Assent
such that Tech Electric was no longer bound by the Inside Agreement. The Court denied
the parties’ cross-motions for summary judgment. (Summ. J. Order at 15 [Doc. No. 43].)
Specifically, the Court found genuine issues of material fact as to the following:
The employer’s termination defense in this case requires inquiry into both the
plain language of the collective bargaining agreement and “the parties’ conduct
following a timely attempt to terminate.” Laborers Pension Trust Fund-Detroit
& Vicinity v. Interior Exterior Specialists Constr. Grp., Inc., 394 F. App’x 285,
292 (6th Cir. 2010) (per curiam). While there is evidence in the record
regarding the correspondence between the parties, there has been no
showing about whether the employer used IBEW employees for covered
work after its purported termination of the collective bargaining agreement.
Such evidence would provide the court with a “cursory review of the parties’
actions,” which is a proper inquiry into whether the employer may assert a
termination defense in an ERISA action. Id. at 291. Additionally, the
parties dispute whether the NECA received the purported November 25,
2009 termination notice from Defendant.
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(Id. at 14-15.)
In its pre-trial filings, Defendant lists Plaintiffs’ counsel as a trial witness. (Def.’s
Witness List [Doc. No. 48].) Defendant states that counsel will give relevant testimony on
the following subjects: “(1) understanding and acknowledgment of Tech Electric’s
termination of Agreement; (2) two previous lawsuits initiated by Plaintiffs and reduced to
judgments; (3) payments and collection activities related to two previous lawsuits.” (Id. at
1.) Plaintiffs move to exclude evidence and testimony “relating to settlement
correspondence with Defendant.” (Pls.’ Mot. in Limine at 1 [Doc. No. 53].) Plaintiffs
argue that the evidence and testimony should be excluded for two reasons: (1) the
underlying email communications between Scott Schmitt, the owner of Tech Electric, and
Ms. Cefalu, Plaintiffs’ counsel, are inadmissible under Fed. R. Evid. 408 as evidence
regarding settlement; and (2) communications between Tech Electric and Plaintiffs’
counsel are inadmissible parol evidence. (Id. at 2-5.) Plaintiffs also argue that because the
Summary Judgment Order defined the relevant factual scope to facts regarding “the
conduct of the parties,” and the “parties’ actions,” Ms. Cefalu’s testimony and the exhibits
are not relevant because she is not a “party.” (Id. at 3) (quoting Summ. J. Order at 14-15).
Plaintiffs also argue that they did not authorize their counsel to terminate the collective
bargaining agreement, in any event. (Id. at 3.)
Defendant argues in response that Tech Electric does not intend to introduce any
evidence regarding the content of settlement discussions between the parties. (Def.’s
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Opp’n to Pls.’ Mot. In Limine at 1 [Doc. No. 58].) Those settlement negotiations,
Defendant argues, were unrelated to this matter and pertained to payment arrangements on
two judgments obtained in prior litigation. (Id. at 1-4.) Instead, Tech Electric intends to
elicit testimony from Plaintiffs’ counsel that she stated that Defendant had terminated its
relationship under the Inside Agreement, an issue wholly unrelated to their settlement
negotiations. (Id.) Moreover, coupled with evidence that Plaintiffs treated Tech Electric as
having terminated the Agreement for a lengthy period of time, Defendant argues that
counsel’s testimony demonstrates that Plaintiffs ratified that termination (Id.).
II.
DISCUSSION
As a threshold matter, facts concerning the parties’ conduct and actions, along with
the terms of the Letter of Assent and Inside Agreement, are relevant to the ultimate
question of whether the termination defense applies to Defendant. (Summ. J. Order at 12
[Doc. No. 43].) Laborers Pension Trust, 394 F. App’x at 291. The fact that Plaintiffs’
counsel is not technically a “party,” is of little consequence. She acted on behalf of her
clients, who are parties. Moreover, given that Plaintiffs’ counsel communicated directly
with Mr. Schmitt of Tech Electric, the Court assumes that he was unrepresented at the
time. Since Plaintiffs were represented by counsel, the only person with whom Mr.
Schmitt could communicate was Plaintiffs’ counsel – he could not communicate directly
with a represented party. See Minn. R. Prof. Conduct 4.2.
Regarding Plaintiffs’ argument that the proposed testimony and evidence
constitutes impermissible parol evidence, the Court likewise disagrees. As discussed in
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detail in the Summary Judgment Order, the question of whether a defendant has
successfully terminated a collective bargaining agreement may be resolved by “examining
the language of the collective bargaining agreement in conjunction with the actions of the
parties.” (Summ. J. Ord. at 11 [Doc. No. 43]) (citing Laborers Pension Trust, 394 F.
App’x at 291). In this specific ERISA context, examination of the parties’ actions and
conduct, in conjunction with the terms of the collective bargaining agreement, is
permissible. Plaintiffs argue that their counsel lacked the authority to acknowledge or
ratify termination of the Inside Agreement. That issue, however, may be explored at trial,
but is not determinative of the instant motion.
Plaintiffs also argue that the evidence is subject to exclusion pursuant to Federal
Rule of Evidence 408. Rule 408 does not exclude all evidence of statements referencing
settlement or the compromise of a claim, but only prohibits the admission of such evidence
“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(a). The rule itself permits
the admission of such evidence when offered “for another purpose, such as proving a
witness’s bias or prejudice, negating a contention of undue delay, or proving an effort to
obstruct a criminal investigation or prosecution.” Id. 408(b). Subsection (b) therefore
provides an illustrative list of possible uses of such evidence.1 The 2011 Advisory
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Under the “another purpose” exception, courts have admitted evidence of
settlement or compromise offers in a variety of legal contexts. See, e.g., PRL USA
Holdings, Inc. v. United States Polo Assoc., Inc., 520 F.3d 109, 113 (2d Cir. 2008)
(affirming admissibility of parties’ earlier settlement discussions for “another purpose” of
establishing estoppel in subsequent infringement suit where trademark owner told
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Committee Notes state that “if offered for a purpose not barred by the Rule, [the]
admissibility [of such evidence] remains governed by the general principles of Rules 402,
403, 801, etc.” Discussing Rule 408 in Weems v. Tyson Foods, Inc., 665 F.3d 958, 966
(8th Cir. 2011), the Eighth Circuit stated, “Evidence relating to a compromise offer is
admissible if ‘offered for “another purpose,” i.e., for a purpose other than to prove or
disprove the validity of the claims that the offers were meant to settle.’”) (quoting Trebor
Sportswear Co. v. The Limited Stores, Inc., 865 F.2d 506, 510 (2d Cir.1989)).
“Rule 408 only prohibits admitting compromise evidence relating to a ‘claim’ that
was disputed when the settlement negotiations or offer to compromise took place.”
Weems, 655 F.3d at 965 (citing Crues v. KFC Corp., 768 F.2d 230, 233 (8th Cir. 1985)).
“A dispute exists for Rule 408 purposes so long as there is ‘an actual dispute or difference
of opinion’ regarding a party’s liability for or the amount of the claim. Id. (quoting
Affiliated Mfrs. v. Aluminum Co. of am., 56 F.3d 521, 527 (3d Cir. 1995)). Defendant
here does not seek to disprove the validity of the claims that the offers were meant to
potential defendant that it would not assert a claim of infringement and recipient of
assurance relied on the assurance to its substantial detriment); CCMS Publ’g Co., Inc. v.
Dooley-Maloof, Inc., 645 F.2d 33, 37-38 (10th Cir. 1981) (holding no violation of Rule
408 where district court admitted evidence of previous settlement offer to rebut
defendant’s subsequent claim that it had been willing to accept previous offer); C&E
Servs., Inc. v. Ashland Inc., 539 F. Supp.2d 316, 318-19 (D. D.C. 2008) (finding
admissible as evidence offered for “another purpose,” settlement agreement between
government and subcontractor to show that subcontractor made misrepresentations upon
which contractor allegedly relied); ABM Indus., Inc. v. Zurich Am. Inc. Co., 237 F.R.D.
225, 228 (N.D. Cal. 2006) (admitting evidence of mediation and settlement negotiations
when offered for “another purpose” – to demonstrate that the defendants unreasonably
denied coverage.)
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settle, i.e., Defendant’s amounts due under the contract through April 30, 2010. To the
contrary, the evidence in question shows Defendant’s willingness to try to meet those
obligations. Mr. Schmitt and Ms. Cefalu’s emails concern whether the union would agree
to a percentage of Defendant’s future payments from other sources to meet some of Tech
Electric’s obligations through April 30, 2010. (See, e.g., Email of 4/22/10, Ex. 2 at 7 to
Cefalu Aff. [Doc. No. 30-2].) Here, the gravamen of Plaintiffs’ Complaint is that
Defendant breached the terms of the Inside Agreement by failing to pay all contributions
due from May 2010 through the date of filing the Amended Complaint, or through January
2012, and by failing to timely submit fringe benefit reports from April 2010 to the
“present.” (Am. Compl. ¶ 13 [Doc. No. 18].) If the email settlement discussions
concerned the validity of these claims, then such evidence or testimony would be
inadmissible under Rule 408. Here, however, the scope of the settlement discussions did
not concern these claims and the proposed evidence will be offered for the factual
statements contained in the documents. Accordingly, the Court denies Plaintiffs’ motion
to exclude this evidence and testimony under Rule 408.
THEREFORE, IT IS HEREBY ORDERED THAT:
For the reasons set forth herein, Plaintiffs’ Motion in Limine to Exclude Evidence
and Testimony of Fund Counsel [Doc. No. 52] is DENIED.
Dated: July 3, 2013
s/Susan Richard Nelson
SUSAN RICHARD NELSON
United States District Court Judge
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