Sellner v. MAT Holdings, Inc. et al
MEMORANDUM OPINION AND ORDER granting in part and denying in part 260 Defendants' Motion for Partial Summary Judgment; Defendants' Motion is DENIED with respect to punitive damages; Defendants' Motion is GRANTED with respect to dismi ssing Defendants; Defendants MAT Holdings, Inc., Midwest Air Technologies, Inc., and Sanborn Manufacturing Company are dismissed; granting 333 Defendants' Motion to Exclude Expert Testimony; granting 341 Plaintiff's Motion to Exclude Expert Testimony (Written Opinion). Signed by Judge Ann D. Montgomery on 02/08/2018. (TLU)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Douglas James Sellner,
Civil No. 13-1289 ADM/LIB
MAT Holdings, Inc.,
Midwest Air Technologies, Inc.,
MAT Industries, LLC, and
Sanborn Manufacturing Company,
Stephen W. Cooper, Esq., and Stacey R. Everson, Esq., The Cooper Law Firm Chartered,
Minneapolis, MN, on behalf of Plaintiff.
Donald M. Lewis, Esq., John J. Wackman, Esq., and Jeremy D. Robb, Esq., Nilan Johnson
Lewis PA, Minneapolis, MN, on behalf of Defendants.
On November 30, 2017, the undersigned United States District Judge heard oral
argument on Defendants MAT Holdings, Inc., Midwest Air Technologies, Inc., MAT Industries,
LLC, and Sanborn Manufacturing Company’s (collectively, “Defendants”) Motion for Partial
Summary Judgment [Docket No. 260] and Motion to Exclude Expert Testimony [Docket No.
333]. Plaintiff Douglas James Sellner’s (“Sellner”) Motion to Exclude Expert Testimony
[Docket No. 341] was also argued. For the reasons set forth below, Defendants’ motions are
granted in part and denied in part. Sellner’s motion is granted.
The factual background of this case is fully recited in this Court’s August 5, 2015
Memorandum Opinion and Order [Docket No. 208] and is incorporated here by reference.
Sellner alleges that he was terminated from his employment as a Quality Engineering Technician
for refusing to falsify testing data for certain models of air compressors.
1. Corporate Structure
MAT Holdings, Inc. (“MAT Holdings”) is a privately owned holding company owned
by Steve Wang (“Wang”). Second Ryan Decl. [Docket No. 263] Ex. 3. 1 It owns companies that
manufacture, market, and distribute automotive and consumer business products and brands. Id.
Ex. 1. MAT Industries, LLC (“MAT Industries”) and Midwest Air Technologies, Inc.
(“Midwest Air”) are two of MAT Holdings’ United States subsidiaries. Id. Ex. 3.
MAT Industries markets air compressors, pneumatic driven air tools, and pressure
washers, which are sold by retailers and home centers. First Ryan Decl. [Docket No. 162] Ex. 2
(“Thomas Dep.”) 198. MAT Holdings performs human resource and administrative work for
MAT Industries, for which MAT Industries pays a monthly management fee to MAT Holdings.
Second Ryan Decl. Ex. 4 (“Nebel Dep.”) 9–10.
In 2008, MAT Holdings purchased a facility in Springfield, Minnesota known as Sanborn
Manufacturing (“Sanborn”). Id. Exs. 10 (“Stark Dep.”) 14, 54; 11 (“Carnell Dep.”) 35–36.
MAT Industries refers to the facility as “Sanborn Mfg., a division of MAT Industries, LLC;”
however, Sanborn is not itself a legal entity. Defs.’ Joint Separate Answer [Docket No. 104] 1
n.1. Paul Thomas (“Thomas”) serves as MAT Industries’ Chief Operating Officer and Butch
Stark (“Stark”) is Sanborn’s General Manager. Thomas Dep. 7; Stark Dep. 14.
The exhibits attached to the Second Ryan Declaration are filed as docket numbers 263
2. 14CFM Pumps
Sanborn manufactures air compressors (“compressors”) with oil-lubricated, single-stage,
three-cylinder, 14 cubic-feet-per-minute pumps (the “14CFM pumps”). Second Ryan Decl. Ex.
13 (“Beckman Dep.”) 65–68. The compressors operate by a motor driving the pump, which then
injects air into a pressure vessel tank. The tank stores the compressed air. Strong Decl. [Docket
No. 171] ¶ 2. The amount of air within the tank is controlled by a pressure switch which turns
the compressor on and off. Second Ryan Decl. Ex. 24 (“Swanson Dep.”) 52–53.
MAT Industries manufactures the tank vessels at Sanborn and purchases the remaining
compressor components from third parties. Beckman Dep. 60. In 2007, MAT Industries started
purchasing 14CFM pumps from Suzhou Honbase Machinery Manufacture Co. (“Honbase”) (the
“Honbase pumps”) in China. Id. 67–68. Honbase is also owned by Steve Wang. Id.
The Honbase pumps struggled with excessive oil consumption and leakage. Id. Ex. 15
(“Strong Dep.”) 92, 97. Sanborn’s internal performance and life testing of the Honbase pumps
revealed that the pumps did not achieve certain benchmarks set by Sanborn. Second Ryan Decl.
B. Sellner is Hired
In June 2011, MAT Industries hired Sellner as a lab-quality technician for the Sanborn
facility. Id. Ex. 12. Sellner’s primary responsibility was to conduct testing in the Sanborn
testing lab, to collect corresponding testing data, and report the data to engineers and supervisors.
Id. Ex. 27, Interrog. No. 9. Sellner was instructed to report any safety, vendor quality, and
manufacturing issues. Id. Travis Strong (“Strong”), MAT Industries’ Quality Assurance and
Product Service Manager, was Sellner’s direct supervisor. Strong Dep. 9; Second Ryan Decl.
Ex. 19 (“Sellner Dep.”) 114.
On Sellner’s first day at Sanborn, Strong explained to Sellner that the Honbase pumps
had serious problems with oil leakage during testing. Sellner Decl. [Docket No. 184] ¶ 3.
Sellner observed oil leaking onto the floor, as well as oil spitting from the pump units during the
testing process. Id.
C. Sears and Performance Testing
In August 2011, MAT Industries and Sears, Roebuck and Company (“Sears”) began
working together to add a compressor with the Honbase pump to Sears’ Craftsman product line.
Second Ryan Decl. Ex. 28. On August 22, 2011, MAT Industries forwarded the raw data from
Test Request 136 (“TR136”), performance and life tests that were initiated in late 2010, to Sears’
Engineering Manager Dan Swanson (“Swanson”). Id. Ex. 22. The next day, Chief Operating
Officer Thomas wrote an email to Kurt Beckman (“Beckman”), Sanborn’s Engineering
Manager, and stated that he was “not sure [he] would approve these” based on the amount of oil
consumed during testing. Id. Ex. 29. Thomas suggested a new round of testing that included
pumps with recent changes. Id.
Sellner was assigned to complete the new test, Test Request 321 (“TR321”), that
evaluated whether changes implemented by Honbase improved oil consumption and life
performance in the Honbase pumps. Id. Exs. 34–35. Performance testing was completed on
September 28, 2011. Id. Ex. 42. All units passed performance testing. Id. Exs. 42–43.
Excessive oil leakage, however, remained an issue. On January 12, 2012, further testing
revealed that adding a compression ring to the pump reduced oil leakage. Id. Exs. 47–48. MAT
Industries required Honbase to add a compression ring on the new pumps, and MAT Industries’
existing inventory was re-ringed. Id. Exs. 49–50.
On February 15, 2012, Swanson asked MAT Industries for additional performance and
life test data on the Honbase pump. Id. Ex. 54. The test request was directed to Stark, who
asked Sellner to assist because he had been assigned TR321. Stark Dep. 124–125. On March 2,
2012, Sellner sent Stark an internal Quality Department Laboratory Report (“Quality Report”) on
TR321 that stated: 1) “[t]ests showed that units passed performance and life testing
benchmarks,” and 2) the units passed “with minor [n]ormal service issues.” Second Ryal Decl.
Ex. 43. Defendants contend that the life test data in the Quality Report accurately reflects the
raw life test data on TR321 listed on a spreadsheet created by Sellner on February 28, 2012.
Sellner, however, asserts that the Quality Report does not truthfully reflect the actual testing data
to TR321 and that he did not prepare the report. Id. Ex. 59 ¶ 3.
Using the information from the Quality Report, Stark prepared a Compressor Test Report
(“CTR”). Id. Ex. 62. The CTR summarized that TR321 tested 80-gallon units and concluded
that the “pump test samples exceeded minimum [l]ife test requirements set by customer.” Id.
Stark forwarded the CTR to Sellner with the instruction to “go through the data I have entered to
make sure that I haven’t made any mistake.” Id. Sellner made two edits, and the CTR was sent
to Swanson at Sears on March 7, 2012. Id. Exs. 41, 63. Sellner contends that the data sent to
Sears in the CTR does not accurately reflect the TR321 test results. First Everson Decl. [Docket
No. 206] Ex. 1 ¶ 3; Sellner Dep. 236.
D. Request to Falsify Data
On March 29, 2012, Sellner alleges that Stark told him “to get together everything [MAT
Industries] had on the [Honbase] pump.” Sellner Dep. 149. Following those instructions,
Sellner “updated the life test” by collecting all relevant testing results and entering the results
into a spreadsheet. Id. Sellner delivered the data to Stark.
Sellner alleges later that same day, Engineering Lab Manager Joe Schiller (“Schiller”)
entered his office with a copy of the spreadsheet Sellner had prepared and stated that the testing
results were “shit” and could not be used in any summary report for Sears. Id. at 150. Sellner
further alleges that shortly thereafter, Stark entered his office and claimed that MAT Industries
had been called “on the carpet” by Sears for overstating the performance and quality of the
Honbase pump. Id. Stark instructed Sellner to produce a report showing that the units did not
have major issues and adequately passed life tests of 1,500 hours. Id. Sellner claims that when
he told Stark that no units had performed to those specifications, Stark responded “well, if you
don’t do this, we’re all going to be on the street—no, you’re going to be on the street.” Id.
Sellner states that when he told Stark that he would not falsify any testing records, Stark urged
him to “get creative with [his] documentation.” Id.
Josh Beach (“Beach”) a lab technician, asserts that he overheard portions of this
conversation between Sellner and Stark. Beach recalls hearing Stark telling Sellner that Sears
was “calling them on the carpet” for overstating the performance of the Honbase pump, that
Stark encouraged Sellner to get creative with testing documentation, and that Sellner refused
Stark’s command for creativity. First Ryan Decl. Ex. 86 (“Beach Dep.”) at 130, 146–47. Beach
further claims that after the conversation with Stark, Sellner stated, “Well, there’s my job.” Id. at
Later that same day, March 29, 2012, Sellner alleges that Stark persisted in pressuring
him to complete an Executive Summary with falsified data. Sellner Decl. ¶¶ 25–30. Sellner
continued to refuse. Id. ¶ 35. According to Sellner, the next day Stark instructed him to use gocart data 2 for the Executive Summary. Id. ¶ 39. Sellner responded that this would not be
appropriate. Id. Later on March 30, 2012, Sellner called the Minnesota Department of Labor
and Industry and the Minnesota Occupational Safety and Health Administration (“MNOSHA”).
Id. ¶ 40. Beach reports that he was in the room with Sellner when he made the call, and that
Sellner reported that he was instructed to “doctor up some documentation.” Beach Dep. 49.
Sellner subsequently completed and submitted a MNOSHA form online. Sellner Decl. ¶ 40.
E. Sellner Travels to China
Sellner was scheduled to travel to China with Strong on April 3, 2012 to evaluate
Honbase’s operations and implement improvements to the Honbase pump. Sellner Dep. 123.
The day before their departure, Sellner alleges he received a call from Swanson about Honbase
pump data. Id. at 205. Specifically, Swanson requested the raw life testing data for the Honbase
pump that did not reflect any major issues. Id. 207–08. Sellner responded that there was no such
data in existence. Id. at 208. Swanson then told Sellner that MAT Industries “should have
worked the bugs out before it was presented to Sears” and hung up. Id. Swanson has no
recollection of this conversation with Sellner. Swanson Dep. 183–84.
While on the plane to China with Strong, Sellner claims that he told Strong about Stark’s
instruction to provide a falsified report for Sears. Sellner Dep. 208. Strong responded that “It
would be best if I didn’t hear about this” and held his hands up in a gesture for Sellner to stop
talking. Id. Strong denies this interaction took place. Strong Dep. 219–20.
While in China, Sellner discovered manufacturing issues with the Honbase pump,
“Go-cart” data came from enhanced units with CFM pumps that were altered or
tweaked for experimentation purposes. Pl.’s Mot. Opp’n Summ. J. [Docket No. 190] 16.
including use of pump testing equipment that had not been accurately calibrated. Sellner Decl. ¶
F. Sellner’s Performance Review and Promotion
On March 5, 2012, Sellner received a positive performance review from his immediate
supervisor, Strong. Second Ryan Decl. Ex. 69. MAT Industries posted a Quality
Assurance/Test Lab Leadperson position opening on March 30, 2012. Id. Ex. 79. After
interviewing Sellner for the position, Strong recommended that Sellner be promoted. Stark Dep.
43–44. Strong’s recommendation was approved by Stark, and Sellner learned of his promotion
just prior to his April 3, 2012 departure to China. Id.; Sellner Dep. 159.
G. Issues in the Sanborn Lab
In the Spring of 2012, tension in the lab was escalating. On March 7, 2012, lab
technician Beach sent Stark and Strong an email expressing his frustration about the working
conditions in the lab, specifically noting that Sellner and Clyde Knadel (“Knadel”) another lab
technician, were “at each other’s throats all day here so far and they are dragging me into the
situation.” Second Ryan Decl. Ex. 67. In response, Stark met with Sellner, Knadel, and Beach,
and emphasized that they all needed to get along and have a productive working relationship.
Beach Dep. 45.
H. Investigation of Sellner
On April 10, 2012, while Sellner was still in China, Janis Nebel (“Nebel”), the corporate
Director of Human Resources at MAT Holdings, received an anonymous email accusing Sellner
of inappropriate conduct and voicing concerns that Sanborn had done nothing to address his
behavior. Second Ryan Decl. Ex. 81. The email requested that a corporate representative
conduct an investigation. Id.
During an April 17, 2012 meeting, engineer Ryan Schwartz (“Schwartz”) told Stark and
Sanborn’s HR director, Vonda Carnell (“Carnell”), that Seller made derogatory remarks relating
to women. Sellner Dep. 166–68; Carnell Dep. 173–74. The next day, Carnell and Stark
interviewed other employees about Sellner. Carnell Dep. 180–81. Knadel reported that Sellner
had made disparaging comments about female employees. Second Ryan Decl. Ex. 64 at 376–80.
On April 19, 2012, Schwartz emailed Nebel and notified her that he had complained about
Sellner’s behavior and requested someone from corporate be involved with investigating his
complaint. First Ryan Decl. Ex. 105.
On April 23, 2012, Nebel traveled to Sanborn to investigate. Second Ryan Decl. Ex. 4
(“Nebel Dep.”) 25. She did not specifically seek out witnesses, but rather let individuals come to
her. Id. at 40. During the course of her investigation, Schwartz, Knadel, and others voiced
complaints about how Sellner interacted with his coworkers. Second Ryan Decl. Ex. 91. These
issues included complaints of Sellner being difficult to work with, disregarding safety
precautions, and having a condescending attitude toward other employees. Id.
I. Sellner’s Termination
When Nebel returned to her office on April 26, she reported to Thomas that “there was an
unproductive work environment now that probably was irreversible” at Sanborn. Thomas Dep.
at 180. Thomas spoke with Strong and Stark, and it was decided that Sellner would be
terminated that day, April 26, 2012. Id. at 177–81. MAT Industries maintains that Sellner was
terminated for his “unacceptable conduct,” including “inappropriate and offensive statements
made to and about his colleagues, an inability to maintain positive and productive relationships
with his co-workers, and engaging in conduct that adversely affected the productivity of the
workplace.” First Ryan Decl. Ex. 30, Interrog. No. 1.
J. Procedural History
Sellner commenced this lawsuit on May 29, 2013, alleging claims for 1) wrongful
termination under the Minnesota Whistleblower Act; 2) defamation; 3) intentional interference
with an economic advantage and/or contract; 4) breach of contract; 5) negligent supervision,
negligent training, negligent retention, and negligent hiring; and 6) negligence. See Compl.
[Docket No. 1].
On October 6, 2014, Magistrate Judge Jeffrey J. Keyes granted Sellner’s request to
amend the complaint to add a claim for punitive damages. See Min. Entry [Docket No. 96]; Text
Only Order [Docket No. 97]. On August 5, 2015, the Court granted summary judgment to
Defendants on all claims. See Mem. Op. Order [Docket No. 208]. Sellner appealed the
dismissal of his whistleblower claim, and on June 15, 2017, the Eighth Circuit Court of Appeals
reversed the dismissal the whistleblower claim and remanded that claim back to this Court.
Sellner v. MAT Holdings, Inc., 859 F.3d 610 (8th Cir. 2017). Because Sellner did not appeal the
dismissal of his non-whistleblower claims, those claims are no longer part of the case.
K. Present Motions
1. Summary Judgment
a. Punitive Damages
Because this Court initially dismissed all of Sellner’s claims on summary judgment,
Sellner’s claim for punitive damages was not addressed. On August 31, 2017, Magistrate Judge
Leo I. Brisbois 3 amended the pretrial scheduling order to permit Defendants to challenge the
punitive damages remedy alleged in the Amended Complaint [Docket No. 98] under Federal
Rule of Civil Procedure 56. See Order Amending Sixth Am. Pretrial Scheduling Order [Docket
Defendants are now moving for summary judgment on Sellner’s punitive damages
remedy, arguing that the record lacks clear and convincing evidence that Defendants’ conduct
shows a deliberate disregard for the rights or safety of others.
b. Dismissal of Some Defendants
Defendants also contend that MAT Holdings, Midwest Air, and Sanborn are not proper
defendants to this action and must be dismissed. According to Defendants, Sellner was
employed by MAT Industries, and MAT Holdings and Midwest Air are separate legal entities
that cannot be held liable for Sellner’s alleged unlawful discharge. Defendants contend that
Sanborn must be dismissed because it is not a legal entity.
2. Expert Testimony
Defendants have also filed a motion to exclude the testimony of Sellner’s expert witness,
Philip J. O’Keefe (“O’Keefe”). Sellner offers O’Keefe as an engineering expert to opine that: 1)
oil consumption by the compressor creates fire, explosion, or slip-and-fall hazards; 2) the people
who designed the Honbase pump were not qualified engineers; 3) Stark asked Sellner to falsify
data; 4) MAT Industries knowingly provided inaccurate data to a customer; and 5) MAT
Industries violated certain codes, regulations, and statutes. Defendants contend that O’Keefe’s
Due to Judge Keyes’ retirement, the case was reassigned to Judge Brisbois on July 10,
2017. See Docket No. 226.
expert opinions are inadmissible because they are unreliable, unsupported by data or method, and
because they invade the province of the jury.
Sellner has filed a motion to exclude the expert testimony of Mark Rudek (“Rudek”) and
John Freeman (“Freeman”). Defendants offer Rudek to provide rebuttal testimony to O’Keefe’s
opinions regarding alleged violations of codes, regulations, and statutes. Freeman is offered to
address Sellner’s claims that the compressor presents an unreasonable risk of injury.
A. Summary Judgment
1. Legal Standard
Summary judgment is appropriate if there are no genuine issues of material fact and the
moving party can demonstrate that it is entitled to judgment as a matter of law. Fed. R. Civ. P.
56(a). A fact is material if it might affect the outcome of the suit, and a dispute is genuine if the
evidence is such that it could lead a reasonable jury to return a verdict for either party. Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A court considering a motion for summary
judgment must view the facts in the light most favorable to the nonmoving party and give that
party the benefit of all reasonable inferences to be drawn from those facts. Matsushita Elec.
Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). However, the nonmoving
party “may not rest upon allegations, but must produce probative evidence sufficient to
demonstrate a genuine issue [of material fact] for trial.” Davenport v. Univ. of Ark. Bd. of Trs.,
553 F.3d 1110, 1113 (8th Cir. 2009) (citing Anderson, 477 U.S. at 247–49).
2. Punitive Damages
Defendants argue that Sellner’s request for punitive damages should be dismissed. Under
Minn. Stat. § 549.20, subd. 1, “[p]unitive damages shall be awarded in civil actions only upon
clear and convincing evidence that the acts of the defendant show deliberate disregard for the
rights or safety of others.” “Deliberate disregard” is defined by statute:
(b) A defendant has acted with deliberate disregard for the rights or
safety of others if the defendant has knowledge of facts or
intentionally disregards facts that create a high probability of
injury to the rights or safety of others and;
(1) deliberately proceeds to act in conscious or
intentional disregard of the high degree of
probability of injury to the rights or safety of others;
(2) deliberately proceeds to act with indifference to
the high probability of injury to the rights or safety
Minn. Stat. § 549.20, subd. 1(b).
Punitive damages are “an extraordinary remedy to be allowed with caution and within
narrow limits.” J.W. ex rel. B.R.W. v. 287 Intermediate Dist., 761 N.W.2d 896, 904 (Minn. Ct.
App. 2009). On summary judgment, the Court “must ascertain whether a jury could reasonably
find that [Sellner] proved his case for punitive damages by the quality and quantity of evidence
required by Minnesota law.” Kruszka v. Novartis Pharms. Corp., 19 F. Supp. 3d 875, 898 (D.
Defendants contend that there is no evidence they deliberately disregarded the rights or
safety of Sellner or others. Defendants argue that meeting this standard requires evidence that
Defendants knew it was illegal to discharge Sellner for engaging in protected activity, and
despite this knowledge they fired him because he made a report to MNOSHA. Sellner first
disagrees with Defendants’ interpretation of the standard for assessing punitive damages, arguing
that punitive damages are appropriate because there is evidence that Defendants marketed the
Honbase pump with its known consumer safety risks. Knowledge of these hazards, Sellner
argues, provides the basis for awarding punitive damages because it shows Defendants’
deliberate disregard for the safety of others. Sellner additionally argues that even if Defendants’
understanding of the standard is correct, punitive damages are nevertheless appropriate because
the record reflects that Defendants deliberately ignored Sellner’s right to be free from unlawful
Whether the Honbase pump’s alleged consumer safety hazards is a basis for an award of
punitive damages in an employment case is the first point of dispute. Sellner contends punitive
damages are appropriate here because Defendants knowingly placed a defective and dangerous
product into the market, exposing consumers to fire, explosion, and slip-and-fall hazards.
However, this is a whistleblower employment case. In this context, punitive damages are only
proper upon a showing of clear and convincing evidence that “Defendants knew of facts or
intentionally disregarded facts that created a high probability that [Sellner’s] right to be free from
retaliatory employment consequences under the whistleblower statute would be injured, and
deliberately proceeded to act in conscious or intentional disregard or with indifference to the
high probability of such injury.” Korbel v. Extendicare Health Servs., Inc., No. 13-2640, 2015
WL 13651194, at *3 (D. Minn. Jan. 22, 2015); Hern v. Bankers Life Cas. Co., 133 F. Supp. 2d
1130, 1135–36 (D. Minn. 2001); see also Morrow v. Air Methods, Inc., 884 F. Supp. 1353, 1359
(D. Minn. 1995) (“Employees have a right to refuse to follow an order to violate a law without
fear of reprisal. The deliberate disregard of that right by a defendant, if proved, may warrant an
award of punitive damages.”). Accordingly, evidence that the Honbase pump posed a risk to
consumer safety is not relevant to determining whether punitive damages are appropriate.
There is, however, sufficient evidence in the record to preserve a claim for punitive
damages because a reasonable jury could conclude that the decisionmakers involved in Sellner’s
termination deliberately disregarded his right to be free from unlawful retaliatory discharge.
Specifically, Nebel, Stark, Strong, and Thomas each played a role in the decision to terminate
Sellner, and the record includes evidence that this decisionmaking group had knowledge of
Sellner’s report to MNOSHA asserting he was being pressured to falsify test results. For
example, Sellner alleges Stark pressured him to falsify data, which Beach corroborated in his
deposition testimony. Sellner Dep. at 150; Beach Dep. at 146–47. Beach additionally testified
that he told Strong that Sellner made a report to MNOSHA about Stark’s request. Second
Everson Decl. [Docket No. 360] Ex. 1 [Docket No. 393] at 50–52. Sellner alleges telling Nebel
that he was asked to “fudge test results out of the lab when the units were failing to save the
Sears contract.” Sellner Dep. at 222. Nebel reported the results of her investigation to Thomas,
who then spoke with Stark and Strong. Thomas Dep. at 177–81. Thomas, Stark, and Strong
later decided to terminate Sellner. Id.
Stark, Strong, and Thomas were high-level employees, and their discharge decision was
influenced by Nebel, the Corporate Director of Human Resources. A jury might reasonably
conclude that the decisionmakers knew that Sellner had a right to report a suspected violation of
the law—i.e., fabricating test data—without fear of reprisal. Thus, sufficient evidence exists to
allow the jury to decide whether Defendants deliberately disregarded this right and award
Defendants next argue that MAT Holdings, Midwest Air, and Sanborn are not proper
defendants and must be dismissed. According to Defendants, MAT Industries is the only proper
defendant here, since it is the legal entity that directly employed Sellner. Sellner argues that
although he was directly employed by MAT Industries, there is evidence that MAT Holdings and
Midwest Air should remain in this case. 4 MAT Industries, Sellner’s employer, holds itself out as
being a part of Midwest Air’s “family of companies,” a group he was explicitly welcomed into
when he began his employment. Second Everson Decl. Ex. 13 [Docket No. 368]. Additionally,
Sellner contends that Defendants, although separate legal entities, have interrelated operations
and common management, as evidenced by the companies’ sharing certain human resources and
financial services and personnel. Sellner contends that this interrelatedness permits a jury to find
each defendant liable for Sellner’s illegal discharge under a joint-employer theory.
a. The Baker Test
Sellner argues that there are four determinative factors to whether co-defendants are
considered single or joint employers: 1) interrelated operations; 2) common management; 3)
centralized control of labor relations; and 4) common ownership or financial control. Baker v.
Stuart Broad. Co., 560 F.2d 389, 391 (8th Cir. 1977). 5 Defendants argue that Baker and its
Sellner agrees that Sanborn should be dismissed because it is not a legal entity.
Sellner also contends that another test, asking whether “the parent company is linked to
the alleged discriminatory action because it controls ‘individual employment decisions, can also
be used to break-up the corporate independence of the Defendants.’” Brown v. Fred’s, Inc., 494
F.3d 736, 739 (8th Cir. 2007) (quoting Leichihman v. Pickwick Int’l, 814 F.2d 1263, 1268 (8th
Cir. 1987)). Rather than being an independent test, as urged by Sellner, the Eighth Circuit stated
progeny do not apply here because they were decided in the Title VII context, which “use[s] a
broader definition of employer than appears in the Minnesota whistleblower statute.” Obst v.
Microtron, Inc., 588 N.W.2d 550, 554 (Minn. Ct. App. 1999), aff’d, 614 N.W.2d 196 (Minn.
2000), superseded on other grounds as stated in Friedlander v. Edwards Lifesciences, LLC, 900
N.W.2d 162 (Minn. 2017).
Despite the more expansive definition of “employer” in Title VII, the Baker test is still
appropriate here. The Minnesota Supreme Court has interpreted Minnesota employment statutes
in light of the United States Supreme Court’s interpretation of Title VII. LaMont v. Indep. Sch.
Dist. No. 728, 814 N.W.2d 14, 21 (Minn. 2012); Chavez-Lavagnino v. Motivation Educ.
Training, Inc., 767 F.3d 744, 749 (8th Cir. 2014). Title VII and Minnesota’s whistleblower
statute use similar language to protect employees from prohibited workplace conduct. This
shared language and intention supports interpreting the two statutes with some degree of
Additionally, the Baker test was applied in a Minnesota whistleblower case where an
employee alleged engaging in protected conduct with respect to one employer and was later
terminated by another employer operating within the same corporate structure. Krutchen v. Zayo
Bandwidth Ne., LLC, 591 F. Supp. 2d 1002, 1014 (D. Minn. 2008). Although the circumstances
that “Brown should not be read as establishing a new integrated enterprise test in our circuit.”
Sandoval v. Am. Bldg. Maint. Indus., Inc., 578 F.3d 787, 796 (8th Cir. 2009). The Sandoval
court continued by noting that Brown “may be harmonized with Baker by noting the traditional
four-factor standard is the means by which plaintiffs demonstrate corporate dominance over a
subsidiary’s operations and establish affiliate liability.” Id.
The Court is unaware of any case involving the Minnesota whistleblower statute or the
Minnesota Human Rights Act—Minnesota’s primary statute proscribing certain employment
practices—holding that “employer” should be defined narrowly.
here do not squarely overlap with Krutchen—the plaintiff there was not terminated by the same
company he blew the whistle on—that slight difference is not significant, especially considering
that Nebel, whose investigation informed the discharge decision, was employed by a different
Defendant than Sellner. 7 In sum, Title VII’s broad use of “employer,” by itself, is not grounds to
jettison the Baker test in this whistleblower case.
Having concluded the Baker test is appropriate to use in this context, two additional
considerations are important. First, the environment in which the Baker factors function is
colored by a presumption of corporate separateness. “In situations where the court is asked to
disregard the separate and distinct form of legal entities, the standards are narrow and rigorous,
imposing a presumption of corporate separateness.” Davis v. Ricketts, 765 F.3d 823, 827 (8th
Cir. 2014); Robinson v. Terex Corp., 439 F.3d 465, 468 (8th Cir. 2006) (noting that, in the
context of a parent-subsidiary relationship, “[s]eparate corporate entities should be disregarded
only when there is some abuse of the privilege to operate as separate corporations to the
detriment of a third party”). Second, no one factor is more determinative than the others. See
Baker, 560 F.2d at 392 (intimating that “no one of the enumerated factors is controlling”).
The interrelation of operations factor “considers sharing services such as check writing,
preparation of mutual policy manuals, contract negotiations, completion of business licenses,
sharing payroll and insurance programs, sharing services of managers and personnel, sharing
office space, equipment, and storage, and operating the entities as a single unit.” Sandoval, 578
The Maine Supreme Court found no clear error with applying the four factor test in a
case involving the Maine Whistleblowers’ Protection Act. Batchelder v. Realty Res. Hosp.,
LLC, 914 A.2d 1116 (Maine 2007).
F.3d at 793. Here, Sellner and his direct supervisors are employed by MAT Industries. Each
Defendant operates in a separate business space; MAT Industries’ business is primarily
hardware, whereas Midwest Air Technologies manufactures fencing, lawn, and garden
accessories, and pet containment and other pet accessories. MAT Holdings does not directly sell
consumer products. There is some evidence that certain employees perform work for multiple
Defendants. For example, Nebel is an employee of MAT Holdings, but she investigated
Sellner’s workplace conduct. Moreover, MAT Industries’ handbook referred to all Defendants
and welcomed Sellner “to the Midwest Air Technologies’ family of companies.” There is some
evidence that Defendants’ operations are interrelated. MAT Holdings performs certain human
resources functions for MAT Industries, for which MAT Industries pays a monthly management
fee for the service. Despite this evidence, the interrelation of operations factor does not weigh
convincingly in favor of destroying Defendants’ corporate independence. See Davis, 765 F.3d at
827–28 (maintaining corporate separateness despite parent company providing “accounts
payable, accounts receivable, payroll administration, benefits coordination, and some legal and
human resource services” to subsidiary).
The common management factor “includes whether the same individuals manage or
supervise the different entities or whether the entities have common officers and boards of
directors.” Sandoval, 578 F.3d at 793. The record reflects that although Wang is the sole owner
of each of the Defendants, each Defendant functions with an independent management team that
makes independent day-to-day decisions. The record does not include evidence that MAT
Industries’ business decisions are made by anyone other than its own management team. 8 The
Sellner argues that MAT Industries’ selection of Honbase as its manufacturer of
management of MAT Industries is sufficiently autonomous and free from direction and oversight
from any other Defendant to find that this factor favors maintaining corporate separateness. See
Davis, 765 F.3d at 828 (noting that, although parent and subsidiary shared common ownership,
there was “no evidence that the same persons were involved in management of the two entities”).
Davis is also instructive for the centralized control of labor relations factor. In Davis, the
common owner of both the parent company and its subsidiary was involved in the labor relations
for both entities, but final decisions regarding the subsidiary’s employment matters were
independently made by the subsidiary. Id. at 828–29. Here, although Nebel was involved in
Sellner’s investigation, the investigation informed the discharge decision that was ultimately
made by Thomas with input from Strong and Stark. Accordingly, this factor does not favor
disrupting the separation of Defendants’ corporate structure.
The final factor, the degree of common ownership or financial control, considers
“whether one company owns the majority of all shares of the other and if the entities share
common officers or directors.” Sandoval, 578 F.3d at 793. The record here shows that
Defendants are all owned by the same individual. The record further reflects that there is some
degree of financial commingling, in light of Midwest Air issuing the payroll checks and W-2s for
employees of MAT Holdings. But the record also includes evidence that Defendants maintain
some degree of financial independence from one another, as evidenced by the monthly
management fee MAT Industries pays to MAT Holdings for performing certain human resource
functions. The evidence relevant to this factor gives slight support to Sellner’s argument that the
compressor pumps indicates that Wang controls its business decisions, since Honbase is also
owned by Wang. There is no evidence, however, that Wang ordered this decision or required
MAT Industries to use Honbase.
Defendants should be treated as a single entity.
Sellner has produced evidence establishing common control and some degree of financial
overlap. Sellner can also point to evidence showing a slight amount of operational interrelation.
However, as was true in Davis, this is insufficient to overcome the presumption of treating
separate corporate entities separately. 765 F.3d at 829. The record reflects each Defendant made
day-to-day business decisions independent from the other Defendant companies, and were
managed by employees working for one company rather than all Defendants. Dismantling the
Defendants’ corporate structure demands stronger evidence than what is in the record.
Accordingly, MAT Holdings and Midwest Air are dismissed as defendants.
B. Daubert Motions
Sellner and Defendants have each proffered expert witnesses to testify at trial. Both
Sellner and Defendants argue that the opposing party’s experts should not be permitted to testify.
1. Legal Standard
The admission of expert testimony is governed by Rule 702 of the Federal Rules of
Evidence, which provides:
A witness who is qualified as an expert by knowledge, skill,
experience, training, or education may testify in the form of an
opinion or otherwise if: (a) the expert’s scientific, technical, or
other specialized knowledge will help the trier of fact to
understand the evidence or to determine a fact in issue; (b) the
testimony is based on sufficient facts or data; (c) the testimony is
the product of reliable principles and methods; and (d) the expert
has reliably applied the principles and methods to the facts of the
When evaluating the admissibility of expert testimony, a trial court serves as the
gatekeeper to ensure that the proffered testimony is reliable and relevant. Daubert v. Merrell
Dow Pharms., Inc., 509 U.S. 579, 589 (1993); Kumho Tire Co., Ltd. v. Carmichael, 526 U.S.
137, 141 (1999). A trial court has broad discretion in fulfilling its gatekeeping role. Wagner v.
Hesston Corp., 450 F.3d 756, 758 (8th Cir. 2006). The proffered testimony must be useful to the
fact-finder, the expert must be qualified, and the proposed evidence must be reliable. Lauzon v.
Senco Prods., Inc., 270 F.3d 681, 686 (8th Cir. 2001). The proponent of the expert testimony
bears the burden of showing by a preponderance of the evidence that the testimony is admissible.
“[R]ejection of expert testimony is the exception rather than the rule,” and expert
testimony should be admitted if it “advances the trier of fact’s understanding to any degree.”
Robinson v. GEICO Gen. Ins. Co., 447 F.3d 1096, 1100 (8th Cir. 2006). “As a general rule, the
factual basis of an expert opinion goes to the credibility of the testimony, not the admissibility,
and it is up to the opposing party to examine the factual basis for the opinion in crossexamination.” United States v. Finch, 630 F.3d 1057, 1062 (8th Cir. 2011) (internal quotations
and alterations omitted). “Only if the expert’s opinion is so fundamentally unsupported that it
can offer no assistance to the jury must such testimony be excluded.” Bonner v. ISP Techs., Inc.,
259 F.3d 924, 929-30 (8th Cir. 2001). Doubts about the usefulness of an expert’s testimony
should generally be resolved in favor of admissibility. Marmo v. Tyson Fresh Meats, Inc., 457
F.3d 748, 758 (8th Cir. 2006).
a. Defendants’ Motion
Sellner proffers O’Keefe to render an expert opinion that: 1) oil consumption by the
compressor creates fire, explosion, or slip-and-fall hazards; 2) the people who designed the
Honbase pump were not qualified engineers; 3) Stark asked Sellner to falsify data; 4) MAT
Industries knowingly provided inaccurate data to a customer; and 5) MAT Industries violated
certain codes, regulations, and statutes. Defendants argue that O’Keefe’s testimony must be
rejected in its entirety.
Sellner, in support of admitting O’Keefe’s opinions, responds that Defendants are
ignoring the two core issues in the case: “1) what did the Honbase 14-cfm-pump testing data
from 2010-2012 reveal; and 2) was that data accurately presented to retailers.” Pl.’s Mem.
Opp’n Mot. Exclude Expert Test. [Docket No. 359] 1. According to Sellner, “[t]he issue here is
not whether someone suffered bodily injury as a result of Defendants’ negligence, the issue is
what did the testing information reveal and was it accurately communicated to retailers.” Id. at
12. Sellner’s “core issues” are not at the heart of this case. This is a whistleblower case, and the
Eighth Circuit’s opinion in this case directly conflicts with Sellner’s framing of the issues. In
remanding this case, the Eighth Circuit stated “[t]he issue is the causal connection between
Sellner’s protected conduct and his firing.” Sellner, 859 F.3d at 614. Recovering under the
Minnesota whistleblower statute requires Sellner to prove that MAT Industries “took adverse
employment action against [him] because he engaged in statutorily protected conduct, here,
making a good faith report of suspected violation of law.” Fjelsta v. Zogg Dermatology, 488
F.3d 804, 808 (8th Cir. 2007). Critically, “[a]n employee alleging retaliation need not show that
the alleged conduct was actually unlawful, only that the employee ‘in good faith, reported a
violation or suspected violation of law to an employer.’” Sellner, 859 F.3d at 614 (quoting
Pedersen v. Bio-Med. Applications, 775 F.3d 1049, 1053 (8th Cir. 2015)). In Minnesota,
falsifying test data violates the law; reporting it is protected conduct under the whistleblower
statute. See Minn. Stat. § 325D.44; Minn. Stat. § 181.932.
In this context, some of O’Keefe’s testimony is irrelevant because it will not aid the jury
in determining whether MAT Industries “took adverse employment action against [Sellner]
because he engaged in statutorily protected conduct.” Fjelsta 488 F.3d at 808. The alleged
fire, explosion, and slip-and-fall hazards have no bearing on that determination. Similarly, the
qualifications of the engineers at the Honbase facility are irrelevant to Sellner’s discharge.
Likewise, whether MAT Industries followed industry codes and regulations for testing the
Honbase pump does not impact the legality of Sellner’s discharge. Rule 702 permits inclusion of
expert opinion testimony if it is “useful to the finder of fact in deciding the ultimate issue of
fact.” Lauzon, 270 F.3d at 686 (citation omitted). This evidence does not meet this requirement.
Even if this evidence were somehow relevant to deciding the legality of Sellner’s
discharge, it must be excluded under Federal Rule of Evidence 403:
The court may exclude relevant evidence if its probative value is
substantially outweighed by a danger of one or more of the
following: unfair prejudice, confusing the issues, misleading the
jury, undue delay, wasting time, or needlessly presenting
Fed. R. Evid. 403; United States v. Solorio-Tafolla, 324 F.3d 964, 966 (8th Cir. 2003) (“Even so,
under Daubert and Rule 403 of the Federal Rules of Evidence, the probative value of the expert
testimony must not be substantially outweighed by the danger of unfair prejudice, confusion of
issues, or misleading the jury.”). The Eighth Circuit has stated that “Rule 403 ‘does not offer
protection against evidence that is merely prejudicial in the sense of being detrimental to a
party’s case. The rule protects against evidence that is unfairly prejudicial, that is, if it tends to
suggest decision on an improper basis.’” United States v. Myers, 503 F.3d 676, 682 (8th Cir.
2007) (quoting Wade v. Haynes, 663 F.2d 778, 783 (8th Cir. 1981)). The Advisory Committee
Notes to Rule 403 explain that a decision on an “improper basis” is “commonly, though not
necessarily, an emotional one.” Fed. R. Evid. 403, Advisory Committee Notes; see also United
States v. Bell, 761 F.3d 900, 912 (8th Cir. 2014) (same).
Here, any probative value of O’Keefe’s testimony regarding alleged safety hazards, the
qualifications of the Honbase engineers, and whether MAT Industries violated certain codes,
regulations, or statutes, is significantly overshadowed by its prejudice. As discussed above, the
alleged fire, explosion, and slip-and-fall hazards of the Honbase pump have no direct bearing on
whether Sellner was terminated for making a report to MNOSHA. However, if this testimony is
admitted, a juror’s opinion of Sellner’s discharge will likely be influenced by antipathy towards
Defendants for pushing a product to market that allegedly posed a danger to consumers.
O’Keefe’s testimony regarding the quality of the engineers at the Honbase facility is similarly
problematic. A juror who hears testimony that Defendants employed inexperienced foreign
engineers to manufacture a defective and dangerous product for American consumers might be
guided by an emotional response rather than the facts surrounding Sellner’s discharge.
O’Keefe’s other opinions must also be excluded. Sellner seeks to introduce O’Keefe’s
opinions that MAT Industries told Sellner to fabricate data, and that the data MAT Industries
provided to Sears was inaccurate. O’Keefe opines that Defendants pressured Sellner to falsify
test data to save or obtain sales from Sears and other retailers. Lindeman Decl. [Docket No. 336]
Ex. 17 at ¶ 74. But O’Keefe’s opinion on this point is solely derived from reading non-technical
record evidence and crediting one witness over another. At trial, the jurors will hear competing
testimony from Sellner and Stark regarding Sellner’s allegation that Stark pressured him to
falsify testing data. The jury will be able to draw its own conclusion about whether Sellner was
requested to fabricate data, a non-technical conclusion that does not need expert testimony. 9
See, e.g., Ellis v. Miller Oil Purchasing Co., 738 F.2d 269, 270 (8th Cir. 1984) (“Where the
subject matter is within the knowledge or experience of lay people, expert testimony is
superfluous.”) (per curiam). Permitting the jury to hear O’Keefe’s testimony would mainly serve
to bolster Sellner’s credibility, amplifying Sellner’s depiction of their encounter over Stark’s.
This evidence is inadmissible in this context. See Am. Auto. Inc. Co. v. Omega Flex, Inc., 783
F.3d 720, 725 (8th Cir. 2015) (“[C]ourts must guard against invading the province of the jury on
a question which the jury was entirely capable of answering without the benefit of expert
The jury must also not consider opinion testimony regarding whether the figures MAT
Industries provided to Sears were actually fraudulent. Sellner, 859 F.3d at 614 (noting that “[a]n
employee alleging retaliation need not show that the alleged conduct was actually unlawful”).
Accordingly, the truth or falsity of the figures does not weigh into whether Sellner’s discharge
was illegal under the whistleblower statute, which protects an individual from retaliatory
discharge if they, “in good faith, report[ ] a violation or suspected violation of law.” Id.
(quotation marks omitted).
In remanding this case, the Eighth Circuit framed the remaining issue for trial: whether
MAT Industries “took adverse employment action against [Sellner] because he engaged in
statutorily protected conduct, here, making a good faith report of a suspected violation of law.”
The value of this testimony is further eroded because Sellner does not need to establish
that Defendants actually asked him to violate the law. As stated above, to prevail on his claim
Sellner only needs to prove that he “in good faith, reported a violation or suspected violation of
law.” Sellner, 859 F.3d at 614 (quotation marks omitted).
Id. (quotation marks omitted). For the reasons explained above, O’Keefe’s expert opinions must
b. Sellner’s Motion
Sellner seeks to exclude the testimony of Defendants’ expert witnesses, Rudek and
Freeman. Sellner argues that Rudek and Freeman lack the required experience and training to
render an expert opinion in this case. Sellner additionally argues that Rudek and Freeman did
not perform relevant testing, their conclusions are not premised on sufficient facts and data, and
that their methodology is contrary to recognized scientific principles. Defendants respond that
their experts’ opinions are responsive to O’Keefe’s proposed testimony; Freeman is proffered to
rebut O’Keefe’s opinions regarding the Honbase pump’s alleged safety issues, and Rudek is
proffered to address O’Keefe’s claim that Defendants violated law and regulations.
At the hearing, Defendants stated that they would withdraw Freeman and Rudek if
O’Keefe’s testimony was excluded. Defendants reasoned that because this case turns
exclusively on whether Sellner was discharged for engaging in protected activity, experts are not
needed for the jury to make that determination. The Court agrees. The jury is well-equipped to
decide if MAT Industries discharged Sellner because he reported to MNOSHA that he was being
asked to fabricate testing data without the aid of expert testimony. The introduction of expert
testimony will obscure the true issue in this case, and may result in a verdict that is tainted by
emotion and bias.
Based on the foregoing, and all the files, records and proceedings herein, IT IS
HEREBY ORDERED that:
Defendants MAT Holdings, Inc., Midwest Air Technologies, Inc., MAT
Industries, LLC, and Sanborn Manufacturing Company’s Motion for Partial
Summary Judgment [Docket No. 260] is GRANTED IN PART and DENIED
Defendants’ Motion is DENIED with respect to punitive damages;
Defendants’ Motion is GRANTED with respect to dismissing Defendants.
Defendants MAT Holdings, Inc., Midwest Air Technologies, Inc., and
Sanborn Manufacturing Company are dismissed.
Defendants’ Motion to Exclude Expert Testimony [Docket No. 333] is
Plaintiff Douglas James Sellner’s Motion to Exclude Expert Testimony [Docket
No. 341] is GRANTED.
BY THE COURT:
s/Ann D. Montgomery_____
ANN D. MONTGOMERY
U.S. DISTRICT JUDGE
Dated: February 8, 2018
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