Lopez v. Delta International Machinery Corp. et al
Filing
111
MEMORANDUM OPINION AND ORDER by District Judge James O. Browning denying Plaintiff's Rule 59 Motion for New Trial and/or to Alter or Amend the Judgment 107 . (fm)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
ISMAEL LOPEZ,
Plaintiff,
vs.
CIV 15-0193 JB/GBW
DELTA INTERNATIONAL MACHINERY
CORPORATION; DELTA MACHINE
COMPANY, INC.; ROCKWELL
INTERNATIONAL CORPORATION;
ROCKWELL AUTOMATION, INC.;
STANLEY BLACK & DECKER, INC.;
BLACK & DECKER (U.S.), INC.;
PENTAIR, INC.; KEARNEY & TRECKER
CORPORATION and GLH, LLC,
Defendants.
MEMORANDUM OPINION AND ORDER
THIS MATTER comes before the Court on the Plaintiff’s Rule 59 Motion for New Trial
and/or to Alter or Amend the Judgment, filed August 23, 2017 (Doc. 107)(“Motion”). The
primary issues are: (i) whether the Court clearly erred when it relied on a contract that Plaintiff
Ismael Lopez submitted in supplemental briefing in granting Stanley Black & Decker Inc.’s
Motion and Brief for Summary Judgment, filed December 29, 2015 (Doc. 48)(“MSJ”); and
(ii) whether the Court abused its discretion in denying Lopez’ request to dismiss Defendants
Black & Decker (U.S.) Inc. and Stanley Black & Decker, Inc. (collectively “Black & Decker
Defendants”)’s MSJ despite Lopez’ assertions that he needed further discovery to oppose the
MSJ. The Court concludes that it did not err in either granting the MSJ or in denying Lopez
additional time for discovery. Under rule 56(c) of the Federal Rules of Civil Procedure, the
Court must consider the records that parties cite, and may consider other documents that are in
the record. Thus, it did not err when it reviewed and relied upon a contract that is in the record
and that the parties cited in supplemental briefing. Moreover, the Court did not err under rule
56(f)(2), because it gave notice to Lopez at the hearing that it would use the contract in its
opinion. The contract comports with rules 901 and 106 of the Federal Rules of Evidence, so it is
admissible evidence, and the Court’s consideration of it on summary judgment is proper.
Finally, the Court did not abuse its discretion in denying Lopez a chance for additional
discovery, because Lopez does not identify any material that would affect the Court’s ruling.
Accordingly, the Court denies Lopez’ Motion.
FACTUAL BACKGROUND
The Court draws its facts from its previous Memorandum Opinion, 2017 WL 3142028,
filed July 24, 2017 (Doc. 105)(“MOO”) and its Order, filed September 16, 2016
(Doc. 102)(“Order”) disposing of the MSJ. In his Motion, Lopez does not assert that the Court
erred factually in its MOO or Order, so the Court omits its footnotes from the MOO analyzing
the parties’ factual arguments. See Motion at ¶¶ 18-39, 8-21. See also MOO at 3-14, 2017 WL
3142028, at *2-7. The Court also relays some factual allegations from the pleadings for context.
1.
The Amended Complaint’s Factual Allegations.
Lopez resides in Sunland Park, New Mexico. See Plaintiff’s First Amended Complaint
for Personal and Injury Damages ¶ 1, at 1, filed December 18, 2015 (Doc. 45)(“Amended
Complaint”). On August 23, 2012, Lopez was sawing wood for 84 Lumber1 in El Paso, Texas
with an unguarded table power saw. See Amended Complaint ¶ 5, at 2. While he was sawing,
the blade jumped, and severed Lopez’ left middle and left index fingers.
See Amended
1
84 Lumber is a “privately held supplier of building materials, building supplies,
manufactured components and industry-leading services for single- and multi-family residences
and commercial buildings,” with over 250 stores in 30 states. 84 Lumber Company, About 84
Lumber Company, available at http://www.84lumber.com/About/About.aspx. 84 Lumber is not
a named party in this case.
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Complaint ¶ 5, at 2. Lopez accordingly brings product liability claims against the Black &
Decker Defendants. See Amended Complaint ¶ 6, at 2-3.
2.
Undisputed Facts.
“The events giving rise to this lawsuit . . . occurred entirely in El Paso, Texas.” MSJ
¶ 11, at 4 (asserting this fact). See the Plaintiff’s Rule 56(f) Motion in Opposition to Defendant
Black & Decker (U.S.) Inc. and Stanley Black & Decker, Inc.’s Motion for Summary Judgment
(Doc. 48), or Alternative Motion to Extend Time to File Response at 1-16, filed January 15, 2016
(Doc. 53), and the Plaintiff’s Rule 56(f) Motion in Opposition to Defendant Black & Decker
(U.S.) Inc. and Stanley Black & Decker, Inc.’s Motion for Summary Judgment (Doc. 48), or
Alternative Motion to Extend Time to File Response at 1-16, filed January 15, 2016
(Doc. 54)(collectively, the “MSJ Response/Motion”)(not disputing this fact);2 Plaintiff’s
Supplemental Brief in Support of Rule 56(f) Motion in Opposition to Defendant Black & Decker
(U.S.) Inc. and Stanley Black & Decker, Inc.’s Motion for Summary Judgment (Doc. 48), or
Alternative Motion to Extend Time to File Response at 1-8, filed July 12, 2016
(Doc. 90)(“Suppl. Brief”)(not disputing this fact).
The Black & Decker Defendants “did not design, manufacture, market or sell the subject
table saw.” MSJ ¶ 1, at 3 (asserting this fact). See MSJ Response/Motion at 1-16 (not disputing
this fact); Suppl. Brief at 1-8 (not disputing this fact). “The subject table saw, a Delta Unisaw
Model 36-812, serial number 01E31821, was manufactured by Delta International Machinery
2
CM/ECF -- the Court’s electronic filing system -- lists Document 53 as a “Response” to
the MSJ, and Document 54 as a “Motion” for an extension of time. Documents 53 and 54,
however, are identical. Accordingly, to avoid redundancy, the Court will refer to these
documents collectively as the “MSJ Response/Motion.”
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Corp. [] in May of 2001.” MSJ ¶ 2, at 3 (asserting this fact). See MSJ Response/Motion at 1-16
(not disputing this fact); Suppl. Brief at 1-8 (not disputing this fact).
Delta Intl. was a subsidiary of Pentair, Inc., a Minnesota corporation. See MSJ ¶ 3, at 3
(asserting this fact); MSJ Response/Motion at 1-16 (not disputing this fact); Suppl. Brief at 1-8
(not disputing this fact). On July 16, 2004, the Black & Decker Corp. executed an agreement
with Pentair, Inc. to acquire Pentair, Inc.’s and its affiliates’ “Intellectual Property” and “all of
the[ir] outstanding shares of capital stock, membership interests and other ownership interests
(the ‘Equity Interests’)” in several “Transferred Subsidiaries.” Suppl. Brief ¶ 12, at 4 (asserting
this fact)(quoting Purchase Agreement between the Black & Decker Corporation and Pentair,
Inc. at 1 (dated July 16, 2004), filed July 12, 2016 (Doc. 90-1)(“Purchase Agreement”)). One of
the transferred subsidiaries in which The Black & Decker Corp. acquired equity interests is Delta
Intl. See MSJ ¶ 3, at 3 (asserting this fact); MSJ Response/Motion at 1-16 (not disputing this
fact); Suppl. Brief at 1-8 (not disputing this fact). As of 2004, “Delta continues to exist as a
separate and distinct legal entity,” but “as an indirect subsidiary of The Black & Decker
Corporation.” MSJ ¶ 3, at 3 (asserting this fact). See MSJ Response/Motion at 1-16 (not
disputing this fact); Suppl. Brief at 1-8 (not disputing this fact).
In the Purchase Agreement, the Black & Decker Corp. and its “Affiliates” agree to
purchase from Pentair, Inc. and its “Affiliates designated on Schedule 1.1 (each a ‘Seller’[)] . . .
the Equity Interests” and “the U.S. Intellectual Property.” Suppl. Brief ¶ 13, at 4-5 (asserting this
fact)(emphases omitted)(quoting Purchase Agreement § 1.1, at 1).
See Black and Decker
Defendants’ Response to Plaintiff’s Supplemental Brief [Doc 90] (Filed Under Seal) at 1-5, filed
July 29, 2016 (Doc. 94)(“Suppl. Brief Response”)(not disputing this fact). Schedule 1.1, in turn,
lists Pentair Tools Group, Inc. (DE) -- Pentair, Inc.’s affiliate -- as the “Seller” of “Equity
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Interests” in Delta Intl., and Delta Acquisition Corp. -- The Black & Decker Corp.’s affiliate -- as
the “Purchaser” of those interests. Schedules to Purchase Agreement Between The Black &
Decker Corp. and Pentair, Inc. (the “Agreement”) at 2, filed July 12, 2016 (Doc.
90-2)(“Schedules”). Schedule 3.1(c) specifies that Delta Intl. is a wholly owned subsidiary of
Pentair Tools Group, Inc. (DE). See Schedule 3.1(c), at 4. The Schedules, moreover, outline the
intellectual property -- including trademark and patent rights -- that transfers with the Purchase
Agreement. See Schedule 3.1(r), at 33-91. Schedule 1.1 names The Black & Decker Corp. as
the “Purchaser” of the “U.S. Trademark Rights” from “All Holders of U.S. Trademark Rights,”
and Black & Decker (U.S.), Inc. as the “Purchaser” of the “U.S. Patent Rights” from “All U.S.
Holders of U.S. Patent Rights.” Schedule 1.1, at 2.
Also in the Purchase Agreement, The Black & Decker Corp., as the “Buyer,” makes
certain “Representations and Warranties” to Pentair, Inc., the transferred subsidiaries’ “Parent,”
including that it has “‘Authority’ to make the ‘valid and binding agreements enforceable in
accordance with their respective terms.’” Suppl. Brief ¶ 16, at 5-6 (asserting this fact)(emphases
omitted)(quoting Purchase Agreement § 3.2, at 14). See Suppl. Brief Response at 1-5 (not
disputing this fact). The Purchase Agreement provides that The Black & Decker Corp. shall
“indemnify” Pentair, Inc. for “all Losses . . . resulting from [] the breach of the representations
and warranties of [The Black & Decker Corp.]. . . .” Suppl. Brief ¶ 18, at 6 (asserting this
fact)(alterations added)(emphasis omitted)(quoting Purchase Agreement § 8.2, at 41).
See
Suppl. Brief Response at 1-5 (not disputing this fact). Pentair, Inc. also makes “Representations
and Warranties” to The Black & Decker Corporation. Purchase Agreement § 3.1, at 5-13. For
example, in the event of “[l]osses . . . resulting from [] any breach of any of the representations
and warranties of [Pentair, Inc.] . . . or [] any Indemnified Liability,” the Purchase Agreement
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provides that Pentair, Inc. shall indemnify The Black & Decker Corp. Purchase Agreement
§ 8.1, at 39-40 (alterations added). In its “Definitions” section, the Purchase Agreement defines
“Indemnified Liabilities” to include “all liabilities ‘of the Subsidiaries’ other than ‘Transferred
Liabilities.’”
Suppl. Brief Response at 3 (asserting this fact)(quoting Purchase Agreement
§ 11.17, at 56). See Plaintiff’s Reply in Support of His Supplemental Brief in Support of His
Rule 56(f) Motion in Opposition to the Black & Decker Defendants’ Motion for Summary
Judgment (Doc. 48), or Alternative Motion to Extend Time to File Response (Doc. 54) at 1-12,
filed August 12, 2016 (Doc. 95)(“Suppl. Brief Reply”)(not disputing this fact).
The Purchase Agreement defines “Transferred Liabilities” to include, among other
things, any “liabilities and obligations of the Subsidiaries arising out of bodily injury, death or
other damage relating to products manufactured prior to the Closing, including all Third Party
Claims relating to such bodily injury, death and other damage, whether or not such Third Party
Claims are successful . . . .”
Suppl. Brief ¶ 19, at 6-7 (asserting this fact)(emphases
omitted)(quoting Purchase Agreement § 11.17, at 60-61). See Suppl. Brief Response at 1-5 (not
disputing this fact). The “Subsidiaries” whose liabilities transfer with the Purchase Agreement
include “any corporation or entity engaged in the Business of which securities or other
ownership interests having ordinary voting power to elect a majority of directors or other persons
performing similar functions are directly or indirectly owned by [Pentair, Inc.] . . . .” Suppl.
Brief ¶ 21, at 7 (asserting this fact)(alteration added)(emphases omitted)(quoting Purchase
Agreement § 11.17, at 59). See Suppl. Brief Response at 1-5 (not disputing this fact). With
respect to these subsidiaries’ businesses, the Purchase Agreement provides that The Black &
Decker Corp. “will be able to continue to conduct the Business after Closing in the manner in
which the Business has been conducted by the Subsidiaries.” Purchase Agreement § 3.1, at 9-10.
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The Purchase Agreement provides that its provisions “shall be construed and interpreted
according to the internal laws of the State of Delaware, excluding any choice of law rules that
may direct the application of the laws of another jurisdiction.” Purchase Agreement § 11.4, at
49.
In March 2010, “The Black & Decker Corporation merged with a wholly owned
subsidiary of The Stanley Works and The Black & Decker Corporation became a wholly owned
subsidiary of The Stanley Works.”
MSJ ¶ 5, at 3 (asserting this fact).
See MSJ
Response/Motion at 1-16 (not disputing this fact); Suppl. Brief at 1-8 (not disputing this fact).
“The Stanley Works changed its name to Stanley Black & Decker, Inc. on March 12, 2010.”
MSJ ¶ 5, at 3 (asserting this fact). See MSJ Response/Motion at 1-16 (not disputing this fact);
Suppl. Brief at 1-8 (not disputing this fact). “Stanley Black & Decker, Inc. does not design,
manufacture or sell Delta Unisaws, it was not [in] existence in 2001, and it did not design,
manufacture, or sell the subject Delta Unisaw Model 36-812, which was manufactured in 2001.”
MSJ ¶ 9, at 4 (asserting this fact). See MSJ Response/Motion at 1-16 (not disputing this fact);
Suppl. Brief at 1-8 (not disputing this fact).
“Black & Decker (U.S.) Inc. has no corporate relationship with Delta other than that, as
of October of 2004, both of these separate and distinct entities are both subsidiaries of The Black
& Decker Corporation.” MSJ ¶ 7, at 3 (asserting this fact). See MSJ Response/Motion at 1-16
(not disputing this fact); Suppl. Brief at 1-8 (not disputing this fact). “Black & Decker (U.S.)
Inc. did not design, manufacture or sell Delta Unisaws at any time prior to October of 2004 and it
did not design, manufacture, or sell the subject Delta Unisaw Model 36-812, which was
manufactured in 2001.” MSJ ¶ 10, at 4 (asserting this fact). See MSJ Response/Motion at 1-16
(not disputing this fact); Suppl. Brief at 1-8 (not disputing this fact).
-7
PROCEDURAL BACKGROUND
Lopez commenced this action in the Third Judicial District Court, Doña Ana County,
State of New Mexico, on January 13, 2015. See Plaintiffs[’] Original Complaint at 1, Lopez v.
Delta International Machinery Corp., D-307-CV-215-00077, (Third Judicial District Court,
County of Doña Ana, State of New Mexico), filed in federal court on March 5, 2015 (Doc. 11)(“Original Complaint”).
The Original Complaint appears to assert two claims: (i) strict
products liability, see Original Complaint ¶ 14, at 7-8; and (ii) negligence, including one or more
of sixteen alternative theories, see Original Complaint ¶ 23, at 9-10. Lopez seeks compensatory
damages for medical care, lost wages, inability to perform household duties, and pain and
suffering. See Complaint ¶¶ 24-26, at 10. On March 5, 2015, the Black & Decker Defendants
removed the case to federal district court. See Notice of Removal at 1, filed March 5, 2015
(Doc. 1).
On September 18, 2015, the Court dismissed from the case all Defendants -- except for
the two Black & Decker Defendants -- for lack of personal jurisdiction. See Sept. 18, 2015,
Hearing Minutes at 1. See also Memorandum Opinion at 26, 2016 WL 1408152, at *14, filed
March 15, 2016 (Doc. 77). On December 23, 2015, Lopez moved to file an Amended Complaint
asserting claims against only the Black & Decker Defendants, see Motion to Amend at 1, and, on
January 8, 2016, the Court granted that motion, see Amendment Order at 1. The Amended
Complaint asserts the same two claims as the original Complaint: (i) negligence, including
sixteen alternative theories; and (ii) strict products liability.3 See Amended Complaint ¶ 6, at 2
3
In a section entitled “Facts,” the original Complaint alleges that the “Defendants are
strictly liable.” Complaint ¶ 14, at 7-8. Later, the original Complaint alleges sixteen alternative
theories of negligence under the heading “Negligence of Defendants.” Complaint ¶ 23, at 9-10.
The Amended Complaint, by contrast, groups these two claims under the heading “Count 1Product Liability of the Black & Decker Defendants.” Amended Complaint at 2. The Amended
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3. The Amended Complaint also seeks the same compensatory and punitive remedies as the
Original Complaint. See Amended Complaint ¶¶ 7-11, at 3-4.
The Black & Decker Defendants subsequently moved for summary judgment. See MSJ
at 1. They argued, in the MSJ, that they are not liable to Lopez, because (i) they did not design,
manufacture, market, or sell Lopez the table saw; and (ii) they could not be liable under a
successor liability theory, even though The Black & Decker Corp. -- Stanley Black & Decker’s
predecessor -- had acquired Delta Intl. -- the table saw manufacturer. See MSJ at 4-7. They
argued that successor liability could not attach, because Black & Decker (U.S.) Inc. has no
legally significant corporate relationship with Delta Intl., and because Stanley Black and Decker
Inc. did not expressly assume Delta Intl.’s liability with respect to the table saw. See MSJ at 4-7.
Lopez responded, in the MSJ Response/Motion, that summary judgment was premature, because
he had not yet been able to depose the Black & Decker Defendants’ rule 30(b)(6) witnesses nor
had he been able to conduct discovery about whether the Black & Decker Defendants had placed
the table saw into the stream of commerce. See MSJ Response/Motion ¶¶ 16, 18, at 4-6. He also
argued that the Black & Decker Defendants had incorrectly applied Texas’ successor liability
law, because New Mexico’s choice-of-law rules and public policy dictated a different outcome.
See MSJ Response/Motion ¶ 19, at 6. He added that more discovery could demonstrate that
application of Texas successor liability law is contrary to New Mexico public policy. See MSJ
Response/Motion ¶¶ 25-26, at 12-13. Accordingly, he requested that the Court dismiss the MSJ
Complaint also switches the order of these claims, alleging negligence first, see Amended
Complaint ¶ 6, at 2-3, and then strict liability, see Amended Complaint ¶ 6, at 3.
-9
without prejudice under rule 56(d)4 until discovery could be completed.
See MSJ
Response/Motion ¶ 35, at 16.
Subsequently, the parties produced the Purchase Agreement, and Lopez argued the
Purchase Agreement’s “Transferred Liabilities” section demonstrates that the Black & Decker
Corp. expressly assumed Delta Intl.’s liability when the former acquired the latter’s equity
interests. See Suppl. Brief ¶ 19, at 6-7. The Black & Decker Defendants rejoined that Lopez
misreads the Transferred Liabilities section, because the Purchase Agreement states that the
liabilities stay with the transferred subsidiaries and not that the liabilities are transferred to the
acquiring corporation. See Suppl. Brief Response at 3. The Defendants added that Lopez’
attempts to pierce the corporate veil, but that there is no evidence that the Black & Decker
Defendants dominate Delta Intl. See Suppl. Brief Response at 4.
The Court then granted the MSJ. See Order at 1-2; MOO at 71, 117, 2017 WL 3142028,
at *30, *48. It ruled that, under New Mexico choice-of-law rules, Texas law governed Lopez’
negligence and strict liability claims, because New Mexico choice-of-law rules follow “the
doctrine of lex loci delicti commissi”5 for tort claims, and the harm occurred in Texas. MOO at
76, 2017 WL 3142028, at *32. The Court also concluded that the successor liability issue, in this
case’s particular context, was “predominantly a matter of tort law.” MOO at 85, 2017 WL
3142028, at *36. Accordingly, it concluded that Texas law governs the successor liability issue,
so “the only exception” to the traditional nonliabilty rule for successors in interest is the “express
assumption of liability” exception. MOO at 92, 2017 WL 3142028, at *39. Because contract
4
Lopez referenced rule 56(f) in his MSJ Response/Motion, but says that he meant rule
56(d). See Motion ¶ 2, at 2. Rule 56(f) had been recodified in 2010 as rule 56(d). See Fed R.
Civ. P. 56(d) (2010 advisory committee notes).
5
Lex loci delicti commissi means the court will apply the law of the place where the harm
took place. See Mosley v. Titus, 762 F. Supp. 2d 1298, 1314 (D.N.M. 2010)(Browning, J.).
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principles required the Court to analyze whether the Black & Decker Defendants expressly
assumed liability, the Court effected the Purchase Agreement’s choice-of-law provision and
interpreted its terms under Delaware law. See MOO at 93, 2017 WL 3142028, at *38. After
disposing with the choice-of-law issues, the Court determined that the Black & Decker
Defendants were entitled to summary judgment on Lopez’ claims, because: (i) they did not
supply the table saw; (ii) Lopez could not pierce the corporate veil, because being an “affiliate”
does not “establish an alter ego theory” and because there is no evidence that the Black &
Decker Defendants controls Delta Intl.; and (iii) the Purchase Agreement transfers liabilities to
the existing subsidiaries and not to the Black & Decker Defendants. See MOO at 98-110, 2017
WL 3142028, at *40-45. The Court also denied Lopez’ rule 56(d) request, because Lopez
offered a conclusory affidavit that asserted that there are more relevant facts to be discovered,
but did not “identify[] the probable facts not available and what steps have been taken to obtain
these facts.” MOO at 115, 2017 WL 3142028, at *47 (citing Garcia v. U.S. Air Force, 533 F.3d
1170, 1179 (10th Cir. 2008)). Because there were no additional claims or parties before it, the
Court subsequently entered Final Judgment. See Final Judgment at 1-2, filed July 26, 2017
(Doc. 106)(“Final Judgment”).
1.
The Motion.
Lopez requests the Court to vacate, alter, or amend the MOO and Final Judgment,
arguing that the Court erred in granting the MSJ, and that the Court erroneously denied his 56(d)
request as “moot by simply reviewing and interpreting the Purchase Agreement -- submitted by
Plaintiff . . . and never submitted by the Black & Decker Defendants.” Motion ¶¶ 1-2, at 1-2
(underline and italics in original). He argues that the Court erred, because it should not have
relied on the Purchase Agreement in the MOO. See Motion ¶ 22-24, at 9-10. He contends that
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relying on the Purchase Agreement was error, because: (i) the Black & Decker Defendants
represented that the Court could grant their MSJ without reference to the Purchase Agreement;
(ii) Lopez -- and not the Black & Decker Defendants -- provided the Purchase Agreement to the
Court and proffered it to demonstrate why further discovery is needed; (iii) the Black and Decker
Defendants did not establish to Lopez that the Purchase Agreement “was a full and complete
copy of all documents reflecting the purchase agreement”; and (iv) the Black & Decker
Defendants “provided no evidence . . . to explain or interpret the meaning of any provisions in
the PA.[6]” Motion ¶¶ 22-26, at 9-11. Lopez adds that the Court should have required the Black
& Decker Defendants “like any defendant, to provide appropriate evidence to establish the PA
reflected a true and correct copy of the entire agreement.” Motion ¶ 27, at 11-12.
Lopez argues that the Court should interpret the Purchase Agreement’s “Transferred
Liabilities” provision as transferring all liabilities to the Black & Decker Defendants. See
Motion ¶¶ 28-35, at 12-19.7 Lopez also argues that Delaware or New Mexico law and not Texas
law applies to the successor liability issue, because product liability issues “are grounded in
contract, not tort law.” Motion ¶¶ 36-39, at 19-21. Thus, according to Lopez, the Court should
6
In his Motion, Lopez abbreviates Purchase Agreement to “PA.” Motion ¶ 13, at 6.
7
This argument is largely copy-pasted from Lopez’ Suppl. Brief Reply ¶¶ 1-9, at 1-8. See
also Defendants’ Response to Plaintiff’s Rule 59 Motion for New Trial And/Or to Alter or
Amend the Judgment at 6, filed September 6, 2017 (Doc. 108)(“Response”)(“Plaintiff devotes
over 10 pages of his Motion to copying and pasting verbatim the near entirety of Plaintiff’s
Suppl. Brief Reply.”). The Court has summarized Lopez’ argument before and declines to detail
it again. See MOO at 42-44, 2017 WL 3142028, at *19.
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either effect the parties’ intention that Delaware law applies or should apply New Mexico law for
public policy reasons. See Motion ¶¶ 36-39, at 19-21.8
2.
The Response.
The Black & Decker Defendants respond that Lopez’ rule 59 motion fails, because he
largely “revisit[s] issues already addressed” without “new arguments” or with “supporting
facts . . . available at the time of the original motion.” Response at 3 (citing Servants of the
Paraclete, 204 F.3d 1005, 1012 (10th Cir. 2000)). See Response at 6 (“Plaintiff devotes over 10
pages of his Motion to copying and pasting verbatim the near entirety of Plaintiff’s Supp. Brief
Reply.”). The Black & Decker Defendants also argue that Lopez has not shown error, because
the Court properly relied on the Purchase Agreement, as Lopez “is the one who placed the entire
Purchase Agreement into the record.” Response at 4. They add that, even if they had some
burden to put the Purchase Agreement into the record themselves, they did so by “plac[ing] the
controlling excerpts into the record.” Response at 4 (citing Purchase Agreement, filed July 29,
2016 (Doc. 94-2)). They also add that the Court may, under rule 56(c)(3), look to materials that
are in the record even if the parties do not cite them. See Response at 4 (citing Fed. R.
Civ. P. 56(c)).
The Black & Decker Defendants also argue that the Court is “fully capable of interpreting
contractual language” even absent “an affidavit from a contract-reader.” Response at 4. They
contend that, even if there is some requirement that a Court receive an expert opinion to interpret
a contract, the Black & Decker Defendants provided such an affidavit explaining their position.
See Response at 4-5 (citing Affidavit of Theodore C. Morris at 1 (executed December 17, 2015),
8
This argument is also largely copy pasted from Lopez’ Suppl. Brief Reply. See Suppl.
Brief Reply ¶¶ 10-13, at 8-10. See also MOO at 44-45, 2017 WL 3142028, at *20 (detailing this
argument).
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filed December 29, 2015 (Doc. 48-2)). They also argue that there is no legal authority for
Lopez’ contention that, before the Court may review the Purchase Agreement, the Black &
Decker Defendants must affirmatively prove that the Purchase Agreement “was a full and
complete copy of all documents” reflecting the Purchase Agreement. Response at 5. The Black
& Decker Defendants conclude that the Court should disregard Lopez’ repeated arguments
concerning contract interpretation and choice-of-law as the Court has already considered and
rejected them. See Response at 6.
3.
The Reply.
Lopez replies that the Court erred under rule 56(f)(2), because it granted the MSJ on a
“ground[] not raised by a party.” Plaintiff’s Reply in Support of Plaintiff’s Rule 59 Motion for
New Trial and/or to Alter or Amend the Judgment (Doc. 107) at ¶ 3, at 2, filed September 20,
2017 (Doc. 109)(“Reply”). According to Lopez, because the Black & Decker Defendants did
not produce the entire Purchase Agreement nor use it in their MSJ, and because the Court did not
give Lopez “notice and a reasonable time to respond” to the Purchase Agreement, the Court
erred. Reply ¶ 3, at 2. He adds that the Court erred, because it did not allow him discovery on
the Purchase Agreement. See Reply at ¶¶ 4-5, at 3. He concludes that there are issues of fact
regarding “the existence, meaning and interpretation of provisions of the Purchase Agreement,”
so the Court erred in granting the MSJ. Reply ¶ 6, at 4.
LAW REGARDING SUMMARY JUDGMENT
Rule 56(a) of the Federal Rules of Civil Procedure states: “The court shall grant summary
judgment if the movant shows that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “The movant bears the
initial burden of ‘show[ing] that there is an absence of evidence to support the nonmoving
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party’s case.’” Herrera v. Santa Fe Pub. Sch., 956 F. Supp. 2d 1191, 1221 (D.N.M. 2013)
(Browning, J.)(quoting Bacchus Indus., Inc. v. Arvin Indus., Inc., 939 F.2d at 891). See Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986). “If the moving party will bear the burden of
persuasion at trial, that party must support its motion with credible evidence -- using any of the
materials specified in Rule 56(c) -- that would entitle it to a directed verdict if not controverted at
trial.” Celotex Corp. v. Catrett, 477 U.S. at 331 (Brennan, J., dissenting)(emphasis in original).9
The party opposing a motion for summary judgment must “set forth specific facts
showing that there is a genuine issue for trial as to those dispositive matters for which it carries
the burden of proof.” Applied Genetics Int’l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238,
1241 (10th Cir. 1990).
See Vitkus v. Beatrice Co., 11 F.3d 1535, 1539 (10th Cir. 1993)
(“However, the nonmoving party may not rest on its pleadings but must set forth specific facts
showing that there is a genuine issue for trial as to those dispositive matters for which it carries
the burden of proof.”). Rule 56(c)(1) provides: “A party asserting that a fact . . . is genuinely
disputed must support the assertion by . . . citing to particular parts of materials in the record,
including depositions, documents, electronically stored information, affidavits or declarations,
stipulations (including those made for purposes of the motion only), admissions, interrogatory
answers, or other materials.” Fed. R. Civ. P. 56(c)(1). It is not enough for the party opposing a
properly supported motion for summary judgment to “rest on mere allegations or denials of his
pleadings.” Anderson v. Liberty Lobby, Inc., 477 U.S. at 256. See Abercrombie v. City of
Catoosa, 896 F.2d 1228, 1231 (10th Cir. 1990); Otteson v. United States, 622 F.2d 516, 519
9
Although the Honorable William J. Brennan, Jr., Associate Justice of the Supreme Court
of the United States, dissented in Celotex Corp. v. Catrett, this sentence is widely understood to
be an accurate statement of the law. See 10A Charles Allen Wright & Arthur R. Miller, Federal
Practice and Procedure § 2727, at 470 (3d ed. 1998)(“Although the Court issued a five-to-four
decision, the majority and dissent both agreed as to how the summary-judgment burden of proof
operates; they disagreed as to how the standard was applied to the facts of the case.”).
- 15
(10th Cir. 1980)(“However, once a properly supported summary judgment motion is made, the
opposing party may not rest on the allegations contained in his complaint, but must respond with
specific facts showing the existence of a genuine factual issue to be tried.”)(citation omitted).
Nor can a party “avoid summary judgment by repeating conclusory opinions, allegations
unsupported by specific facts, or speculation.” Colony Nat’l Ins. Co. v. Omer, 2008 U.S. Dist.
LEXIS 45838, at *1 (D. Kan. 2008)(Robinson, J.)(citing Argo v. Blue Cross & Blue Shield of
Kan., Inc., 452 F.3d 1193, 1199 (10th Cir. 2006); Fed. R. Civ. P. 56(e)).
To deny a motion for summary judgment, genuine factual issues must exist that “can be
resolved only by a finder of fact because they may reasonably be resolved in favor of either
party.” Anderson v. Liberty Lobby, Inc., 477 U.S. at 250. A mere “scintilla” of evidence will
not avoid summary judgment. Vitkus v. Beatrice Co., 11 F.3d at 1539 (citing Anderson v.
Liberty Lobby, Inc., 477 U.S. at 248). Rather, there must be sufficient evidence on which the
fact finder could reasonably find for the nonmoving party. See Anderson v. Liberty Lobby, Inc.,
477 U.S. at 251 (quoting Schuylkill & Dauphin Improvement Co. v. Munson, 81 U.S. 442, 448
(1871)); Vitkus v. Beatrice Co., 11 F.3d at 1539. “[T]here is no evidence for trial unless there is
sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. If
the evidence is merely colorable . . . or is not significantly probative, . . . summary judgment may
be granted.” Anderson v. Liberty Lobby, Inc., 477 U.S. at 249 (citations omitted).
When reviewing a motion for summary judgment, the court should keep in mind certain
principles. First, the court’s role is not to weigh the evidence, but to assess the threshold issue
whether a genuine issue exists as to material facts requiring a trial. See Anderson v. Liberty
Lobby, Inc., 477 U.S. at 249. Second, the ultimate standard of proof is relevant for purposes of
ruling on a summary judgment, such that, when ruling on a summary judgment motion, the court
- 16
must “bear in mind the actual quantum and quality of proof necessary to support liability.”
Anderson v. Liberty Lobby, Inc., 477 U.S. at 254. Third, the court must resolve all reasonable
inferences and doubts in the nonmoving party’s favor, and construe all evidence in the light most
favorable to the nonmoving party.
See Hunt v. Cromartie, 526 U.S. 541, 550-55 (1999);
Anderson v. Liberty Lobby, Inc., 477 U.S. at 255 (“The evidence of the non-movant is to be
believed, and all justifiable inferences are to be drawn in his favor.”). Fourth, the court cannot
decide credibility issues. See Anderson v. Liberty Lobby, Inc., 477 U.S. at 255.
There are, however, limited circumstances in which the court may disregard a party’s
version of the facts. This doctrine developed most robustly in the qualified immunity arena. In
Scott v. Harris, 550 U.S. 372 (2007), the Supreme Court of the United States of America
concluded that summary judgment was appropriate where video evidence “quite clearly
contradicted” the plaintiff’s version of the facts. 550 U.S. at 378-81. The Supreme Court
explained:
At the summary judgment stage, facts must be viewed in the light most favorable
to the nonmoving party only if there is a “genuine” dispute as to those facts. Fed.
Rule Civ. Proc. 56(c). As we have emphasized, “[w]hen the moving party has
carried its burden under Rule 56(c), its opponent must do more than simply show
that there is some metaphysical doubt as to the material facts . . . . Where the
record taken as a whole could not lead a rational trier of fact to find for the
nonmoving party, there is no ‘genuine issue for trial.’” Matsushita Elec.
Industrial Co. v. Zenith Radio Corp., 475 U.S. [at] 586-587 . . . (footnote
omitted). “[T]he mere existence of some alleged factual dispute between the
parties will not defeat an otherwise properly supported motion for summary
judgment; the requirement is that there be no genuine issue of material fact.”
Anderson v. Liberty Lobby, Inc., 477 U.S. [at] 247-248 . . . . When opposing
parties tell two different stories, one of which is blatantly contradicted by the
record, so that no reasonable jury could believe it, a court should not adopt that
version of the facts for purposes of ruling on a motion for summary judgment.
Scott v. Harris, 550 U.S. at 380 (emphases in original). Applying these standards to a factual
dispute over whether the plaintiff-respondent “was driving in such fashion as to endanger human
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life,” the Supreme Court held that the plaintiff-respondent’s “version of events is so utterly
discredited by the record that no reasonable jury could have believed him.” 550 U.S. at 380.
Thus, the Supreme Court concluded, “[t]he Court of Appeals should not have relied on such
visible fiction; it should have viewed the facts in the light depicted by [a] videotape,” which
showed the plaintiff-respondent driving extremely dangerously. 550 U.S. at 381.
The United States Court of Appeals for the Tenth Circuit applied this doctrine in
Thomson v. Salt Lake County, 584 F.3d 1304 (10th Cir. 2009), and explained:
[B]ecause at summary judgment we are beyond the pleading phase of the
litigation, a plaintiff’s version of the facts must find support in the record: more
specifically, “[a]s with any motion for summary judgment, when opposing parties
tell two different stories, one of which is blatantly contradicted by the record, so
that no reasonable jury could believe it, a court should not adopt that version of
the facts.” York v. City of Las Cruces, 523 F.3d 1205, 1210 (10th Cir.
2008)(quoting Scott, 550 U.S. at 380); see also Estate of Larsen ex rel. Sturdivan
v. Murr, 511 F.3d 1255, 1258 (10th Cir. 2008).
Thomson v. Salt Lake Cty., 584 F.3d at 1312 (brackets omitted). “The Tenth Circuit, in Rhoads
v. Miller, [352 F. App’x 289 (10th Cir. 2009)(Tymkovich, J.)(unpublished),] explained that the
blatant contradictions of the record must be supported by more than other witnesses’
testimony[.]” Lymon v. Aramark Corp., 728 F. Supp. 2d 1222, 1249 (D.N.M. 2010)(Browning,
J.)(citation omitted), aff’d, 499 F. App’x 771 (2012).
In evaluating a motion for summary judgment based on qualified immunity, we
take the facts “in the light most favorable to the party asserting the injury.” Scott
v. Harris, 550 U.S. 372, 377 (2007). “[T]his usually means adopting . . . the
plaintiff’s version of the facts,” id. at 378, unless that version “is so utterly
discredited by the record that no reasonable jury could have believed him,” id.
at 380. In Scott, the plaintiff’s testimony was discredited by a videotape that
completely contradicted his version of the events. 550 U.S. at 379. Here, there is
no videotape or similar evidence in the record to blatantly contradict Mr. Rhoads’
testimony. There is only other witnesses’ testimony to oppose his version of the
facts, and our judicial system leaves credibility determinations to the jury. And
given the undisputed fact of injury, Mr. Rhoads’ alcoholism and memory
problems go to the weight of his testimony, not its admissibility . . . . Mr. Rhoads
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alleges that his injuries resulted from a beating rendered without resistance or
provocation. If believed by the jury, the events he describes are sufficient to
support a claim of violation of clearly established law under Graham v. Connor,
490 U.S. 386, 395-96 (1989), and this court’s precedent.
Rhoads v. Miller, 352 F. App’x at 291-92.10 See Lymon v. Aramark Corp., 728 F. Supp. 2d at
1249-50 (quoting Rhoads v. Miller, 352 F. App’x at 291-92). In a concurring opinion in
Thomson v. Salt Lake County, the Honorable Jerome A. Holmes, United States Circuit Judge for
the Tenth Circuit, stated that courts must focus first on the legal question of qualified immunity
and “determine whether plaintiff’s factual allegations are sufficiently grounded in the record
such that they may permissibly comprise the universe of facts that will serve as the foundation
for answering the legal question before the court,” before inquiring into whether there are
genuine issues of material fact for resolution by the jury. 584 F.3d at 1326-27 (Holmes, J.,
concurring)(citing Goddard v. Urrea, 847 F.2d 765, 770 (11th Cir. 1988)(Johnson, J.,
dissenting))(observing that, even if factual disputes exist, “these disputes are irrelevant to the
qualified immunity analysis because that analysis assumes the validity of the plaintiffs’ facts”).
The Court has recently ruled on several summary judgment motions. In Simon v. Taylor,
252 F. Supp. 3d 1196 (D.N.M. 2017) the Court considered whether horse trainers and owners
were entitled to summary judgment on various New Mexico tort claims for purportedly
contaminating a race-winning horse with caffeine. See Simon v. Taylor, 252 F. Supp. 3d at 1240
10
Rhoads v. Miller is an unpublished Tenth Circuit opinion, but the Court can rely on an
unpublished Tenth Circuit opinion to the extent its reasoned analysis is persuasive in the case
before it. See 10th Cir. R. 32.1(A), 28 U.S.C. (“Unpublished opinions are not precedential, but
may be cited for their persuasive value.”). The Tenth Circuit has stated: “In this circuit,
unpublished orders are not binding precedent, . . . and . . . citation to unpublished opinions is not
favored. . . . However, if an unpublished opinion . . . has persuasive value with respect to a
material issue in a case and would assist the court in its disposition, we allow a citation to that
decision.” United States v. Austin, 426 F.3d 1266, 1274 (10th Cir. 2005). The Court concludes
that Rhoads v. Miller, Douglass v. United Auto Workers Local Union 31, Chavez v. Perry, and
Lounds v. Torres, have persuasive value with respect to a material issue, and will assist the Court
in its preparation of this Memorandum Opinion and Order.
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41 (Browning, J.). It concluded that the horse trainers and owners were entitled to summary
judgment, largely because the only evidence of caffeine contamination was a horse-urine sample,
but there was little to no evidence that the defendants had intentionally contaminated the horse,
or even knew that the horse had caffeine in him. See Simon v. Taylor, 252 F. Supp. 3d at 1246,
1248, 1253.
In Parrish v. Roosevelt County Board of County Commissioners, 2017 WL
6759103 (D.N.M. December 31, 2017)(Browning, J.), the Court concluded that Roosevelt
County was entitled to summary judgment on a FLSA overtime claim, because the prison official
suing for overtime qualified as an overtime-exempt prison administrator or executive. See
Parrish v. Roosevelt County Board of County Commissioners, 2017 WL 6759103, at *19-20
(“Parrish’s primary duty is directly related to Roosevelt Detention’s management.”)
LAW REGARDING RULE 56(d)
Rule 56(d) provides:
(d) When Facts Are Unavailable to the Nonmovant.
If a nonmovant shows by affidavit or declaration that, for specified reasons, it cannot
present facts essential to justify its opposition, the court may:
(1) defer considering the motion or deny it;
(2) allow time to obtain affidavits or declarations or to take discovery; or
(3) issue any other appropriate order.
Fed. R. Civ. P. 56(d).11 “A party who seeks relief under subdivision (d) may seek an order
deferring the time to respond to the summary-judgment motion.” Fed. R. Civ. P. 56(d) advisory
committee committee’s note to the 2010 amendments. The rule permits a nonmovant to show by
affidavit or declaration the need for additional discovery; a formal affidavit is thus not required.
11
Before 2010, this rule was rule 56(f); rule 56(d) “carries forward without substantial
change the provisions of former subdivision (f).” Fed. R. Civ. P. 56(d) advisory committee
committee’s note to the 2010 amendments.
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See Fed. R. Civ. P. 56(d).
The rule permits a “written unsworn declaration, certificate,
verification, or statement subscribed in proper form as true under penalty of perjury to substitute
for an affidavit.” Fed. R. Civ. P. 56(c) advisory committee committee’s note to the 2010
amendments.
When a party files an affidavit or declaration, and moves for additional discovery time
under rule 56(d), the party invokes the court’s discretion. See Jensen v. Redevelopment Agency
of Sandy City, 998 F.2d 1550, 1553-54 (10th Cir. 1993). “Unless dilatory or lacking in merit,” a
party’s 56[(d)] application “should be liberally treated.” Jensen v. Redevelopment Agency of
Sandy City, 998 F.2d at 1554 (internal quotation marks and citations omitted). “The general
principle of Rule 56(d) is that summary judgment should be refused where the nonmoving party
has not had the opportunity to discover information that is essential to [its] opposition.” Price ex
rel. Price v. W. Res., Inc., 232 F.3d 779, 783 (10th Cir. 2000). Rule 56(d) does not require,
however, that summary judgment not be entered until discovery is complete. See Price ex rel.
Price v. W. Res., Inc., 232 F.3d at 784.
“Rule 56[(d)] is not a license for a fishing expedition . . . .” Lewis v. Ft. Collins, 903
F.2d 752, 758 (10th Cir. 1990). To invoke rule 56(d), the party filing the affidavit or declaration
must state with specificity how the desired time would allow it to meet its burden in opposing
summary judgment. See Jensen v. Redevelopment Agency of Sandy City, 998 F.2d at 1554.
Rule 56(d) may not be invoked based solely upon the assertion that discovery is incomplete or
that specific facts necessary to oppose summary judgment are unavailable.
Redevelopment Agency of Sandy City, 998 F.2d at 1554.
See Jensen v.
Moreover, while the summary
judgment movant’s exclusive control of information weighs heavily in favor of relief under
56(d), see Price ex rel. Price v. W. Res., Inc., 232 F.3d at 783, merely asserting such is
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insufficient to justify denial of summary judgment, see Jensen v. Redevelopment Agency of
Sandy City, 998 F.2d at 1554. Furthermore, “if the party filing the Rule 56[(d)] affidavit has
been dilatory, or the information sought is either irrelevant to the summary judgment motion or
merely cumulative, no extension will be granted.” Jensen v. Redevelopment Agency of Sandy
City, 998 F.2d at 1554 (denying a 56(d) request stating “the record reflects that plaintiffs were
dilatory in pursuing discovery prior to the filing of their 56[(d)] affidavit”). See Johnson v.
Holmes, 377 F. Supp. 2d 1039, 1044-45 (D.N.M. 2004)(Browning, J.)(denying a 56(d) request
where plaintiff did not explain why, during the discovery period that the court allowed, he did
not obtain the discovery sought in his motion). The Tenth Circuit has summarized rule 56(d)’s
requirements as follows:
A prerequisite to granting relief pursuant to Rule 56[(d)] is an affidavit furnished
by the nonmovant. Although the affidavit need not contain evidentiary facts, it
must explain why facts precluding summary judgment cannot be presented. This
includes identifying the probable facts not available and what steps have been
taken to obtain these facts. In this circuit, the nonmovant also must explain[, with
specificity,] how additional time will enable him to rebut movant’s allegations of
no genuine issue of fact.
Price ex rel. Price v. W. Res., Inc., 232 F.3d at 783 (citations and internal quotation marks
omitted). See Tadlock v. Lahood, 2013 WL 6284428, at *5 (10th Cir. 2013)(unpublished)(citing
Price ex rel. Price v. W. Res., Inc. for the rule 56(d) requirements after the 2010 amendment);
Douglass v. United Auto Workers Local Union 31, 188 F. App’x 656, 658 (10th Cir.
2006)(stating that the affidavit must state how additional time will enable the party to meet its
burden “with specificity”). A rule 56(d) affidavit or declaration must state, with specificity,
exactly what additional discovery is believed necessary. See Burke v. Utah Transit Auth. and
Local 382, 462 F.3d 1253, 1264 (10th Cir. 2006); Chavez v. Perry, 142 F. App’x 325, 334 (10th
Cir. 2005)(“To resist summary judgment on this basis (56[(d)]), a party must specifically identify
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what facts it seeks to discover and show how those facts would materially aid its case on the
dispositive issues.”). If a party does not file an affidavit or declaration, a district court does not
abuse its discretion in denying discovery. See Tadlock v. Lahood, 2013 WL 6284428, at *5.
The Court has previously denied rule 56(d) motions where the information sought does
not relate to a relevant legal question. See Martinez v. Lucero, 2012 WL 2175772, at *30
(D.N.M. May 31, 2012)(Browning, J.)(“Because the information sought would not alter the
Court’s decision on either absolute or qualified immunity, the Court will deny the request for
discovery pursuant to rule 56(d).”). Similarly it has denied 56(d) requests where the party seeks
duplicative information.
See Todd v. Montoya, 877 F. Supp. 2d 1048, 1099 (D.N.M.
2012)(Browning, J.)(“There is little difference between the discovery he seeks and what he
would seek if Montoya had not raised a qualified-immunity defense.”). Finally the Court has
dismissed rule 56(d) motions where the proponent does not submit a rule 56(d) affidavit. See
Chavez v. County of Bernalillo, 3 F. Supp. 3d 933, 991 (D.N.M. 2014)(Browning, J.)(“He did
not submit a rule 56(d) affidavit or declaration.”)
LAW REGARDING 56(f)
Rule 56(f) reads:
After giving notice and a reasonable time to response, the court may:
(1)
Grant summary judgment for a nonmovant;
(2)
Grant the motion on grounds not raised by a party; or
(3)
Consider summary judgment on its own after identifying for the
parties materials facts that may not be genuinely in dispute.
Fed. R. Civ. P. 56(f). The advisory committee notes that “[s]ubdivision (f) brings into Rule 56
text a number of related procedures that have grown up in practice. . . . In many cases it may
prove useful first to invite a motion; the invited motion will automatically trigger the regular
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procedure of subdivision (c).” Fed. R. Civ. P. 56(f) (2010 advisory committee notes). Generally
the Tenth Circuit does not “favor granting of summary judgment sua sponte,” but “a district
court may do so if the losing party was on notice that she had to come forward with all of her
evidence.” Oldham v. O.K. Farms, Inc., 871 F.3d 1147, 1150 (10th Cir. 2017). See Celotex
Corp. v. Catrett, 477 U.S. 317, 326 (1986). “[E]ven if such notice is lacking, we will still affirm
a grant of summary judgment if the losing party suffered no prejudice from the lack of notice.”
Oldham v. O.K. Farms, Inc., 871 F.3d at 1150 (quoting Johnson v. Weld County, 594 F.3d 1202,
1214 (10th Cir. 2010)). The Tenth Circuit has suggested that a Court grants a motion on grounds
not raised by a party when neither party has briefed it. See Oldham v. O.K. Farms, Inc., 871
F.3d at 1150. See also Tabura v. Kellogg USA, 880 F.3d 544, 558 (10th Cir. 2018)(concluding
that a district court erred in granting summary judgment on a ground that the movant did not
raise, when the nonmovant only addressed the argument obliquely and did not marshal “all of
their evidence” against it). A court is not required to give explicit notice to a party that it will
rule on a particular ground, but a party must be sufficiently “aware that the district court planned
to rule on the issue” A.M. v. Holmes, 830 F.3d 1123, 1137 (10th Cir. 2016).
LAW REGARDING MOTION TO ALTER OR AMEND UNDER RULE 59(e)
Motions to reconsider in civil cases fall into three categories:
(i) a motion to reconsider filed within twenty-eight12 days of the entry of
judgment is treated as a motion to alter or amend the judgment under rule 59(e);
12
Former rule 59 provided for a ten-day period after entry of judgment to file motions to
reconsider. In 2009, the rule was amended, extending the filing period to twenty-eight days:
Experience has proved that in many cases it is not possible to prepare a
satisfactory post-judgment motion in 10 days, even under the former rule that
excluded intermediate Saturdays, Sundays, and legal holidays. These time
periods are particularly sensitive because Appellate Rule 4 integrates the time to
appeal with a timely motion under these rules. Rather than introduce the prospect
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(ii) a motion to reconsider filed more than [twenty-eight] days after judgment is
considered a motion for relief from judgment under rule 60(b); and (iii) a motion
to reconsider any order that is not final is a general motion directed at the Court’s
inherent power to reopen any interlocutory matter in its discretion.
Pedroza v. Lomas Auto Mall, Inc., 258 F.R.D. 453, 462 (D.N.M. 2009)(Browning, J.). See Price
v. Philpot, 420 F.3d 1158, 1167 & n.9 (10th Cir. 2005); Computerized Thermal Imaging, Inc. v.
Bloomberg. L.P., 312 F.3d 1292, 1296 n.3 (10th Cir. 2002).
Whether a motion for reconsideration should be considered a motion under rule 59 or rule
60 is not only a question of timing, but also “depends on the reasons expressed by the movant.”
Commonwealth Prop. Advocates, LLC v. Mortg. Elec. Registration Sys., Inc., 680 F.3d 1194,
1200 (10th Cir. 2011).
Where the motion “involves ‘reconsideration of matters properly
encompassed in a decision on the merits,’” a court considers the motion under rule 59(e). Phelps
v. Hamilton, 122 F.3d 1309, 1323-24 (10th Cir. 1997)(citation omitted). In other words, if the
reconsideration motion seeks to alter the district court’s substantive ruling, then it should be
considered a rule 59 motion and be subject to rule 59’s constraints. See Phelps v. Hamilton, 122
F.3d at 1324. In contrast, under rule 60,
[o]n motion and just terms, the court may relieve a party or its legal
representatives from a final judgment, order, or proceeding for the following
reasons:
(1)
mistake, inadvertence, surprise, or excusable neglect;
(2)
newly discovered evidence that, with reasonable diligence,
could not have been discovered in time to move for a new
trial under Rule 59(b);
(3)
fraud (whether previously called intrinsic or extrinsic),
of uncertainty in appeal time by amending Rule 6(b) to permit additional time, the
former 10-day periods are expanded to 28 days.
Federal Rules of Civil Procedure, Rule
https://www.law.cornell.edu/rules/frcp/rule_59.
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59,
Legal
Information
Institute,
misrepresentation, or misconduct by an opposing party;
(4)
the judgment is void;
(5)
the judgment has been satisfied, released or discharged; it is
based on an earlier judgment that has been reversed or
vacated; or applying it prospectively is no longer equitable;
or
(6)
any other reason that justifies relief.
Fed. R. Civ. P. 60(b). Neither a rule 59 nor a rule 60 motion for reconsideration
are appropriate vehicles to reargue an issue previously addressed by the court
when the motion merely advances new arguments, or supporting facts which were
available at the time of the original motion. . . . Grounds warranting a motion to
reconsider include (1) an intervening change in the controlling law, (2) new
evidence previously unavailable, and (3) the need to correct clear error or prevent
manifest injustice.
Servants of Paraclete v. Does, 204 F.3d at 1012. “[A] motion for reconsideration is appropriate
where the court has misapprehended the facts, a party’s position, or the controlling law.”
Servants of Paraclete v. Does, 204 F.3d at 1012. A motion for alter or amend under rule 59(e),
however, is an “inappropriate vehicle[] to reargue an issue previously addressed by the court
when the motion merely advances new arguments, or supporting facts which were available at
the time of the original motion.” Servants of Paraclete v. Does, 204 F.3d at 1012. A district
court has considerable discretion in ruling on a motion to reconsider. See Phelps v. Hamilton,
122 F.3d at 1324.
The Tenth Circuit reviews a district court’s ruling on a motion to alter or amend “under
an abuse of discretion standard.” Phelps v. Hamilton, 122 F.3d at 1324. Under that standard “a
trial court’s decision will not be disturbed unless the appellate court has a definite and firm
conviction that the lower court made a clear error of judgment or exceeded the bounds of
permissible choice in the circumstances.” 122 F.3d at 1324. “The purpose [of a Rule 59(e)]
motion is to correct manifest errors of law or to present newly discovered evidence.” Monge v.
- 26
RG Petro-Machinery (Group) Co. Ltd., 701 F.3d 598, 611 (10th Cir. 2012). “Where the motion
requests a substantive change in the district court’s judgment or otherwise questions its
substantive correctness, the motion is a Rule 59 motion, regardless of its label.” Yost v. Stout,
607 F.3d 1239, 1243 (10th Cir. 2010).
The Tenth Circuit has determined that the “law of the case doctrine has no bearing on the
revisiting of interlocutory orders, even when a case has been reassigned from one judge to
another.”
Rimbert v. Eli Lilly & Co., 647 F.3d 1247, 1252 (10th Cir. 2011)(emphasis
added)(citing Been v. O.K. Indus., Inc., 495 F.3d at 1225 (10th Cir. 2007). In this context, “the
doctrine is merely a ‘presumption, one whose strength varies with the circumstances.’” Been v.
O.K. Indus., Inc., 495 F.3d at 1225 (quoting Avitia v. Metro. Club of Chi., Inc., 49 F.3d 1219,
1227 (7th Cir. 1995)).
“[D]istrict courts generally remain free to reconsider their earlier
interlocutory orders.” Been v. O.K. Indus., 495 F.3d at 1225. In short, a district court can use
whatever standard it wants to review an earlier interlocutory order. It can review the earlier
ruling de novo and essentially reanalyze the earlier motion from scratch, it can review the ruling
de novo but limit its review, it can require parties to establish one of the law-of-the-case grounds,
or it can refuse to entertain motions to reconsider altogether.
The best approach, in the Court’s eyes, is to analyze motions to reconsider differently
depending on three factors. Cf. Been v. O.K. Indus., Inc., 495 F.3d at 1225 (“[T]he doctrine is
merely a ‘presumption, one whose strength varies with the circumstances.’”)(citation omitted).
First, the Court should restrict its review of a motion to reconsider a prior ruling in proportion to
how thoroughly the earlier ruling addressed the specific findings or conclusions that the motion
to reconsider challenges. How “thoroughly” a point was addressed depends both on the amount
of time and energy the Court spent on it, and on the amount of time and energy that the parties
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spent on it -- in briefing and orally arguing the issue, but especially if they developed evidence
on the issue. A movant for reconsideration thus faces a steeper uphill challenge when the prior
ruling was on a criminal suppression motion, class certification motion, or preliminary
injunction,13 than when the prior ruling is, e.g., a short discovery ruling. The Court should also
look, not to the prior ruling’s overall thoroughness, but to the thoroughness with which the Court
addressed the exact point or points that the motion to reconsider challenges. A movant for
reconsideration thus faces an easier task when he or she files a targeted, narrow-in-scope motion
asking the Court to reconsider a small, discrete portion of its prior ruling than when he or she
files a broad motion to reconsider that rehashes the same arguments from the first motion, and
essentially asks the Court to grant the movant a mulligan on its earlier failure to present
persuasive argument and evidence.
Second, the Court should consider the case’s overall progress and posture, the motion for
reconsideration’s timeliness relative to the ruling it challenges, and any direct evidence that the
parties may produce, and use those factors to assess the degree of reasonable reliance which the
opposing party has placed in the Court’s prior ruling. See 18B Charles Alan Wright, Arthur R.
13
The Court typically makes findings of fact and conclusions of law in ruling on these
motions. At first glance, it appears that the Federal Rules of Civil Procedure set forth additional
standards -- beyond that which applies to other interlocutory orders -- for amending findings of
fact and conclusions of law: “Amended or Additional Findings. On a party’s motion filed no
later than 28 days after the entry of judgment, the court may amend its findings -- or make
additional findings -- and may amend the judgment accordingly. The motion may accompany a
motion for a new trial under Rule 59.” Fed. R. Civ. P. 52(b). This rule appears to limit motions
to reconsider orders with findings of fact and conclusions of law to twenty-eight days. The
rule’s use of the term “entry of judgment,” its reference to rule 59, and its adoption of the same
time period that applies to motions to alter or amend a judgment, all lead the Court to conclude,
however, that rule 52(b) -- and its 28-day time limit -- does not apply to interlocutory orders.
The time limit applies only to findings of fact and conclusions of law supporting a case-ending
judgment -- such as those entered after a bench trial -- and to those giving rise to an interlocutory
appeal that, if filed, divests the district court of its jurisdiction -- such as those entered in support
of a preliminary injunction.
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Miller, Edward H. Cooper, Vikram David Amar, Richard D. Freer, Helen Hershkoff, Joan E.
Steinman & Catherine T. Struve, Federal Practice & Procedure § 4478.1 (2d ed.)(“Stability
becomes increasingly important as the proceeding nears final disposition . . . . Reopening should
be permitted, however, only on terms that protect against reliance on the earlier ruling.”). For
example, if a defendant (i) spends tens of thousands of dollars removing legacy computer
hardware from long-term storage; then (ii) obtains a protective order in which the Court decides
that the defendant need not produce the hardware in discovery; then (iii) returns the hardware to
long-term storage, sustaining thousands more in expenses; and (iv) several months pass, then the
plaintiffs should face a higher burden in moving the Court to reconsider its prior ruling than they
faced in fighting the motion for protective order the first time.
Third, the Court should consider the factors from Servants of the Paraclete v. Does.
The
Court should be more inclined to grant motions for reconsideration if the movant presents
(i) new controlling authority -- especially if the new authority overrules prior law or sets forth an
entirely new analytical framework; (ii) new evidence -- especially if the movant has a good
reason why the evidence was not presented the first time around; or (iii) a clear indication -- one
that manifests itself without the need for in-depth analysis or review of the facts -- that the Court
erred.
These three factors should influence the degree to which the Court restricts its review of a
prior ruling, but they do not necessarily mean that the Court should always apply a deferential
standard of review. The Court should pause before applying a standard of review to its own
interlocutory orders that is more deferential than the standard that the Court of Appeals will
apply to it, unless the Court concludes that the alleged error in the prior ruling was harmless, or
the party moving for reconsideration waived its right to appeal the alleged error by not raising
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the appropriate argument. Even in circumstances where the Court concludes that it is insulated
from reversal on appeal, there are principled reasons for applying a de novo standard. After all,
if the Court was wrong in its earlier decision, then, generally speaking, it is unjust to maintain
that result -- although the Court should weigh this injustice against any injustice that would result
from upending the parties’ reliance on the earlier ruling, which is the balancing test that the three
factors above represent.
What the Court means by “restricting its review” is less about applying a deferential
standard of review -- although that may be appropriate in some circumstances -- and more about
reducing (i) the depth of the Court’s analysis the second time around -- thus conserving judicial
resources; and (ii) the impositions that relitigation of the prior ruling will impose on the party
opposing the motion for reconsideration. The Court should consider the time and expense that
the party opposing reconsideration spent in winning the earlier ruling, and should try to prevent
that party from having to bear the same impositions again.
Basically, even if the Court
ultimately analyzes a motion to reconsider under the same standard which it analyzed the motion
that produces the earlier ruling, it should analyze the motion in a different way -- one focused on
reducing the litigation burdens of the party opposing reconsideration. For example, when a party
moves the Court for a preliminary injunction, standard practice is that the Court holds an
evidentiary hearing as a matter of course, regardless whether it looks as if the party has a good
chance of prevailing. If the party loses and the Court denies the injunction, however, and the
party moves for reconsideration, the party should not be entitled to the presumption of an
evidentiary hearing merely because he or she received that presumption the first time the Court
considered the motion.
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In light of these statements, it is perhaps better to characterize the increased burden that a
movant for reconsideration faces as one of production and not of persuasion. The Court analyzes
motions to reconsider by starting where it ended in the prior ruling -- not by starting anew.
Parties opposing reconsideration can do the same, and they may stand on whatever evidence and
argument they used to win the earlier ruling. Movants for reconsideration, on the other hand,
carry the full burden of production: they must persuade the Court, using only the evidence and
argument they put before it, that it should change its prior ruling; they must do all of the legwork,
and not rely on the Court to do any supplemental fact-finding or legal research; and they must
convincingly refute both the counterarguments and evidence that the opposing party used to win
the prior ruling and any new arguments and evidence that the opposing party produces while
opposing the motion to reconsider. Unlike the motion that produced the prior ruling, a motion to
reconsider is not -- and is not supposed to be -- a fair fight procedurally. The deck is stacked
against a movant for reconsideration, and if such a movant hopes to prevail, he or she must have
not only a winning legal position, but the work ethic and tenacity to single-handedly lead the
Court to his or her way of thinking.
The Court has recently commented on parties rearguing the same issues on a rule 59(e)
motion:
Under rule 59(e)’s framework, the Court is not restricted to rule 50(b)’s remedies
and may alter the judgment when there is: “(1) an intervening change in the
controlling law, (2) new evidence previously unavailable, [or] (3) the need to
correct clear error or prevent manifest injustice.” Servants of Paraclete v. Does,
204 F.3d at 1012. The Tenth Circuit has noted that motions to alter, amend, or
reconsider should not rehash old arguments, or advance new arguments or facts
that could have been raised earlier. See United States v. Amado, 841 F.3d [867],
871 [(10th Cir. 2016)](“A proper motion to reconsider does not simply state facts
previously available or make arguments previously made.”); Servants of Paraclete
v. Does, 204 F.3d at 1012 (“Thus, a motion for reconsideration is appropriate
where the court has misapprehended the facts, a party’s position, or the
controlling law. It is not appropriate to revisit issues already addressed or
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advance arguments that could have been raised in prior briefing.”). As the Court
has already noted, the Defendants’ Motion raises the same arguments that the
Defendants previously argued during their Motion to Alter. The Court, however,
also concludes that Servants of Paraclete v. Does does not force the Court to deny
a motion to amend or alter, simply because it raises identical issues; rather, it
affords the Court the option to deny that motion for reasons of judicial efficiency.
A court need not review a motion to alter or amend with the same rigor if the
motion raises issues already considered, because it would waste time by forcing a
judge to rewrite an opinion already rendered. If, on the other hand, a party raises
an identical issue on a motion to alter, and, upon the district judge’s reflection,
perhaps after passions have cooled, he or she concludes that he or she erred
previously, Servants of Paraclete v. Does does not chain that district judge to an
erroneous legal conclusion. There is no sound reason for a district judge to be
unable to change a ruling he or she has made if he or she has become concerned
that he or she is wrong.
Nelson v. City of Albuquerque, __ F. Supp. 3d __, 2017 WL 4776730, at *35 (D.N.M.
2017)(Browning, J.)(altering a judgment, because officers were entitled to qualified immunity).
LAW REGARDING THE RULE OF COMPLETENESS
“Rule 106 sets forth the rule of completeness.” United States v. Christy, 2011 WL
5223024, at *3 (D.N.M. Sept. 21, 2011)(Browning, J.). Rule 106 states: “When a writing or
recorded statement or part thereof is introduced by a party, an adverse party may require the
introduction at that time of any other part or any other writing or recorded statement which ought
in fairness to be considered contemporaneously with it.” Fed. R. Evid. 106. Accord Kangley v.
United States, 788 F.2d 521, 533 (9th Cir. 1986). By allowing the other party to present the
remainder of the writing or recorded statement immediately rather than later on crossexamination, this rule avoids the situation where a statement taken out of context “creates such
prejudice that it is impossible to repair by a subsequent presentation of additional material.”
Beech Aircraft Corp. v. Rainey, 488 U.S. 153, 171 n.14 (1988). Accord United States v. Cruz–
Calixto, 39 F. App’x 565, 567 (9th Cir. 2002)(unpublished); United States v. Oseby, 148 F.3d
1016, 1025 (8th Cir. 1998)(“The advisory committee notes to Rule 106 state that one of the
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considerations for this rule is to avoid the misleading impression created by taking matters out of
context.”); United States v. Rubin, 609 F.2d 51, 63 (2d Cir. 1979)(“The notes had been used
extensively and quoted from copiously by Rubin’s counsel on his cross-examination of Cox,
possibly leaving a confusing or misleading impression that the portions quoted out of context
were typical of the balance.”); United States v. Young, 2010 WL 1461558, at *3 (D. Me. Apr. 9,
2010). “Rule 106 by its terms does not apply to oral conversations, but only to writings and
recorded statements.”
United States v. Christy, 2011 WL 5223024, at *3 (citing
Fed. R. Evid. 106). As the Tenth Circuit has stated: “The rule of completeness, however, does
not necessarily require admission of [an entire statement, writing or recording]. Rather, only
those portions which are relevant to an issue in the case and necessary ‘to clarify or explain the
portion already received’ need to be admitted.” United States v. Lopez–Medina, 596 F.3d 716,
735 (10th Cir. 2010). The United States Court of Appeals for the Seventh Circuit has applied a
four-part test to determine whether to allow evidence under rule 106: “(1) does [the evidence]
explain the admitted evidence, (2) does it place the admitted evidence in context, (3) will
admitting it avoid misleading the trier of fact, and (4) will admitting it insure a fair and impartial
understanding of all of the evidence.” United States v. Velasco, 953 F.2d 1467, 1475 (7th Cir.
1992). Discussing the rule of completeness, the United District Court for the Central District of
California provided guidance on when a related statement should be admitted to rebut a
misleading impression:
The Rule of Completeness “does not compel admission of otherwise inadmissible
hearsay evidence.” However, the Rule of Completeness was designed to prevent
the Government from offering a “misleadingly-tailored snippet.” The Rule of
Completeness warrants admission of statements in their entirety when the
Government introduces only a portion of inextricably intertwined statements.
Statements are inextricably intertwined when the meaning of a statement, if
divorced from the context provided by the other statement, is different than the
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meaning the statement has when read within the context provided by the other
statement. Under those circumstances, a court must take care to avoid distortion
or misrepresentation of the speaker’s meaning, by requiring that the statements be
admitted in their entirety and allowing the jury to determine their meaning.
United States v. Castro-Cabrera, 534 F. Supp. 2d 1156, 1160 (C.D. Cal. 2008). Accord United
States v. Coughlin, 821 F. Supp. 2d 8, 30 (D.D.C. 2011)(“Coughlin is correct, however, that
regardless of whether this evidence is inadmissible hearsay or not, he can introduce it under the
rule of completeness.”); United States v. Peeples, 2003 WL 57030, at *3 (N.D. Ill. Jan. 7, 2003).
A related concept to the rule of completeness is the principle that, “[w]hen a party opens
the door to a topic, the admission of rebuttal evidence on that topic becomes permissible.”
Tanberg v. Sholtis, 401 F.3d 1151, 1166 (10th Cir. 2005).
“Permissible does not mean
mandatory, however; the decision to admit or exclude rebuttal testimony remains within the trial
court’s sound discretion.” Tanberg v. Sholtis, 401 F.3d at 1166. This principle reflects the
general proposition that “[c]ross examination may embrace any matter germane to the direct
examination, qualifying or destroying, or tending to elucidate, modify, explain, contradict, or
rebut testimony given in chief by the witness.” United States v. Burch, 153 F.3d 1140, 1144
(10th Cir. 1998). “[W]hether or not rebuttal evidence is admissible depends on whether the
initial proof might affect the case and whether the rebuttal evidence fairly meets the initial
proof.” Richie v. Mullin, 417 F.3d 1117, 1138 (10th Cir. 2005)(alteration in original). The
Tenth Circuit has recognized that, when the rebuttal evidence is “otherwise inadmissible,” it
must both: (i) “be reasonably tailored to the evidence it seeks to refute”; and (ii) “[t]here must be
a nexus between the purported rebuttal evidence and the evidence that the purported rebuttal
evidence seeks to rebut.” Richie v. Mullin, 417 F.3d at 1138 (quoting United States v. Stitt, 250
F.3d 878, 897 (4th Cir. 2001)). In a case where a wife was seeking damages for loss of
companionship in the context of an excessive force claim, the Tenth Circuit stated that the wife’s
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claim for damages opened the door to evidence of the deceased husband’s prior domestic abuse
conviction and arrest.
See Lounds v. Torres, 217 F. App’x 755, 758 (10th Cir.
2007)(unpublished)(“[E]vidence of Alford’s 2002 conviction and 2003 arrest for domestic abuse
of Ms. Fuston-Lounds was offered not to show his character, but for the proper purpose of
rebutting Ms. Fuston-Lounds’ claim for damages.”).
LAW REGARDING THE AUTHENTICATION OF EVIDENCE
Rule 901 of the Federal Rules of Evidence governs the authentication of evidence:
(a) In General. To satisfy the requirement of authenticating or identifying an item
of evidence, the proponent must produce evidence sufficient to support a finding
that the item is what the proponent claims it is.
(b) Examples. The following are examples only—not a complete list—of
evidence that satisfies the requirement:
(1) Testimony of a Witness with Knowledge. Testimony that an item is
what it is claimed to be.
(2) Nonexpert Opinion About Handwriting. A nonexpert’s opinion that
handwriting is genuine, based on a familiarity with it that was not acquired
for the current litigation.
(3) Comparison by an Expert Witness or the Trier of Fact. A comparison
with an authenticated specimen by an expert witness or the trier of fact.
(4) Distinctive Characteristics and the Like. The appearance, contents,
substance, internal patterns, or other distinctive characteristics of the item,
taken together with all the circumstances.
(5) Opinion About a Voice. An opinion identifying a person’s voice—
whether heard firsthand or through mechanical or electronic transmission
or recording—based on hearing the voice at any time under circumstances
that connect it with the alleged speaker.
(6) Evidence About a Telephone Conversation. For a telephone
conversation, evidence that a call was made to the number assigned at the
time to:
(A) a particular person, if circumstances, including self–
identification, show that the person answering was the one called;
or
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(B) a particular business, if the call was made to a business and the
call related to business reasonably transacted over the telephone.
(7) Evidence About Public Records. Evidence that:
(A) a document was recorded or filed in a public office as
authorized by law; or
(B) a purported public record or statement is from the office where
items of this kind are kept.
(8) Evidence About Ancient Documents or Data Compilations. For a
document or data compilation, evidence that it:
(A) is in a condition that creates no suspicion about its
authenticity;
(B) was in a place where, if authentic, it would likely be; and
(C) is at least 20 years old when offered.
(9) Evidence About a Process or System. Evidence describing a process or
system and showing that it produces an accurate result.
(10) Methods Provided by a Statute or Rule. Any method of authentication
or identification allowed by a federal statute or a rule prescribed by the
Supreme Court.
Fed. R. Evid. 901. Professors Charles Alan Wright and Victor James Gold explain:
Rule 901 has two purposes. First, the provision acknowledges the requirement of
authentication and provides examples. Second, Rule 901 allocates responsibilities
between the judge and jury for determining whether an item of evidence is what
its proponent claims it to be. The rule allocates most of those responsibilities to
the jury.
31 C. Wright & V. Gold, Federal Practice and Procedure: Evidence § 7102, at 12 (2000).
LAW REGARDING DIVERSITY JURISDICTION AND CHOICE OF LAW
When a court’s jurisdiction rests on diversity of citizenship under 28 U.S.C. § 1332, the
court should look to the forum state’s choice-of-law rules to determine which state’s substantive
law to apply. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. at 496-97; Pepsi-Cola Bottling
Co. v. PepsiCo., Inc., 431 F.3d 1241, 1255 (10th Cir. 2005). In New Mexico, choice-of-law
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analysis is a two-step process.
See Mosely v. Titus, 762 F. Supp. 2d 1298, 1314
(D.N.M. 2010)(Browning, J.)(citing Terrazas v. Garland & Loman, Inc., 2006-NMCA-111, ¶ 14,
142 P.3d 374, 377). “First, the Court must characterize the ‘area of substantive law -- e.g., torts,
contracts, domestic relations -- to which the law of the forum assigns a particular claim or
issue.’” Mosely v. Titus, 762 F. Supp. 2d at 1314 (quoting Terrazas v. Garland & Loman, Inc.,
2006-NMCA-111, ¶ 11, 142 P.3d at 377). The next step is to apply New Mexico’s choice-oflaw rule. See Mosely v. Titus, 762 F. Supp. 2d at 1314 (citing Terrazas v. Garland & Loman,
Inc., 2006-NMCA-111, ¶ 15, 142 P.3d at 377).14
“In tort actions, New Mexico courts follow the doctrine of lex loci delicti commissi and
apply the law of the place where the wrong took place.” Mosely v. Titus, 762 F. Supp. 2d at
1314 (citing Torres v. State, 1995-NMSC-025, ¶ 13, 894 P.2d 386, 390). The place of the wrong
is the location of the last act necessary to complete the injury. See Mosely v. Titus, 762 F. Supp.
2d at 1314 (citing Torres v. State, 1995-NMSC-025, ¶ 13, 894 P.2d at 390). “Where the
elements of the underlying claim include harm, the place of the wrong is the place where the
harm occurred.” Mosely v. Titus, 762 F. Supp. 2d at 1314 (citing First Nat’l Bank v. Benson,
1976-NMCA-072, ¶ 6, 553 P.2d 1288, 1289).
Under Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1983)(“Erie”), a federal district court
sitting in diversity applies “state law with the objective of obtaining the result that would be
reached in state court.” Butt v. Bank of Am., N.A., 477 F.3d 1171, 1179 (10th Cir. 2007).
Accord Mem. Hosp. v. Healthcare Realty Trust Inc., 509 F.3d 1225, 1229 (10th Cir. 2007). The
Court has held that if a district court exercising diversity jurisdiction cannot find a Supreme
14
The Court concludes that the Supreme Court of New Mexico would follow Terrazas v.
Garland & Loman, Inc., 2006-NMCA-111, ¶ 15, 142 P.3d at 377, as the Supreme Court of New
Mexico has cited it with approval. See Freeman v. Fairchild, __ P.3d __, 2018 WL 1149563, at
* 9 (N.M. March 5, 2018).
- 37
Court of New Mexico “opinion that [governs] a particular area of substantive law . . . [the district
court] must . . . predict how the Supreme Court of New Mexico would [rule].” Guidance
Endodontics, LLC v. Dentsply Intern., Inc., 708 F. Supp. 2d 1209, 1224-25 (D.N.M.
2010)(Browning, J.). “Just as a court engaging in statutory interpretation must always begin
with the statute’s text, a court formulating an Erie prediction should look first to the words of the
state supreme court.” Peña v. Greffet, 110 F. Supp. 3d 1103, 1132 (D.N.M. 2015)(Browning,
J.).15 If the Court finds only an opinion from the Court of Appeals of New Mexico, while
“certainly [the Court] may and will consider the Court of Appeal[s’] decision in making its
determination, the Court is not bound by the Court of Appeal[s’] decision in the same way that it
would be bound by a Supreme Court decision.” Mosley v. Titus, 762 F. Supp. 2d at 1332
15
In performing its Erie-mandated duty to predict what a state supreme court would do if
faced with a case, see Comm’r v. Estate of Bosch, 387 U.S. 456 (1987), a federal court may
sometimes contradict the state supreme court’s own precedent if the federal court concludes that
the state supreme court would, given the opportunity, overrule its earlier holding, see Anderson
Living Trust v. WPX Energy Prod., LLC, 27 F. Supp. 3d 1188, 1247 n.30 (D.N.M. 2014)
(Browning, J.). Courts should, obviously, be reticent to formulate an Erie prediction that
conflicts with state-court precedent; even if the prediction turns out to be correct, such
predictions produce disparate results between cases filed in state and federal courts, as the old
state supreme court precedent usually binds state trial courts. The factors to which a federal
court should look before making an Erie prediction that a state supreme court will overrule its
prior precedent vary depending upon the case, but some consistent ones include: (i) the age of
the state supreme court decision from which the federal court is considering departing -- the
younger the state case is, the less likely it is that departure is warranted; (ii) the amount of
doctrinal reliance that the state courts -- especially the state supreme court -- have placed on the
state decision from which the federal court is considering departing; (iii) apparent shifts away
from the doctrine that the state decision articulates, especially if the state supreme court has
explicitly called an older case’s holding into question; (iv) changes in the composition of the
state supreme court, especially if mostly dissenting justices from the earlier state decision remain
on the court; and (v) the decision’s patent illogic or its inapplicability to modern times. See Peña
v. Greffet, 110 F. Supp. 3d at 1132 n.17. See also Spurlock v. Townes, 2016-NMSC-014, ¶¶ 1620, 368 P.3d 1213, 1217-18 (adopting the Court’s Erie prediction in Peña v. Greffet). In short, a
state supreme court case that a federal court Erie predicts will be overruled is likely to be very
old, neglected by subsequent state-court cases -- perhaps because it is in a dusty corner of the
common law which does not get much attention or have much application -- and clearly wrong.
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(noting that, where the only opinion on point is “from the Court of Appeals, [] the Court’s task,
as a federal district court sitting in this district, is to predict what the Supreme Court of New
Mexico would do if the case were presented to it”)(citing Wade v. EMCASCO Ins. Co., 483 F.3d
657, 666 (10th Cir. 2007)(explaining that, “[w]here no controlling state decision exists, the
federal court must attempt to predict what the state’s highest court would do,” and that, “[i]n
doing so, it may seek guidance from decisions rendered by lower courts in the relevant state”)).16
16
The Supreme Court has addressed what the federal courts may use when there is not a
decision on point from the state’s highest court:
The highest state court is the final authority on state law, but it is still the duty of
the federal courts, where the state law supplies the rule of decision, to ascertain
and apply that law even though it has not been expounded by the highest court of
the State. An intermediate state court in declaring and applying the state law is
acting as an organ of the State and its determination, in the absence of more
convincing evidence of what the state law is, should be followed by a federal
court in deciding a state question. We have declared that principle in West v.
American Telephone and Telegraph Co., 311 U.S. 223 (1940), decided this day.
It is true that in that case an intermediate appellate court of the State had
determined the immediate question as between the same parties in a prior suit, and
the highest state court had refused to review the lower court’s decision, but we set
forth the broader principle as applicable to the decision of an intermediate court,
in the absence of a decision by the highest court, whether the question is one of
statute or common law.
. . . We have held that the decision of the Supreme Court upon the construction of
a state statute should be followed in the absence of an expression of a
countervailing view by the State’s highest court, and we think that the decisions
of the Court of Chancery [the New Jersey trial court] are entitled to like respect as
announcing the law of the State.
....
The question has practical aspects of great importance in the proper
administration of justice in the federal courts. It is inadmissible that there should
be one rule of state law for litigants in the state courts and another rule for
litigants who bring the same question before the federal courts owing to the
circumstance of diversity of citizenship. In the absence of any contrary showing,
the rule [set forth by two New Jersey trial courts, but no appellate courts] appears
to be the one which would be applied in litigation in the state court, and whether
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The Court may also rely on decisions by the Tenth Circuit interpreting New Mexico law. See
Anderson Living Trust v. WPX Energy Prod., LLC, 27 F. Supp. 3d at 1243 & n.30.17
believed to be sound or unsound, it should have been followed by the Circuit
Court of Appeals.
Fid. Union Trust Co. v. Field, 311 U.S. 169, 177-80 (1940)(footnotes and citations omitted).
The Supreme Court has softened this position over the years; federal courts are no longer bound
by state trial or intermediate court opinions, but “should attribute [them] some weight . . . where
the highest court of the State has not spoken on the point.” Comm’r v. Estate of Bosch, 387 U.S.
at 465 (citing King v. Order of United Commercial Travelers, 333 U.S. 153, 159 (1948)). See
17A James Wm. Moore et al., Moore’s Federal Practice § 124.20 (3d ed.
1999)(“Moore’s”)(“Decisions of intermediate state appellate courts usually must be
followed . . . [and] federal courts should give some weight to state trial courts
decisions.”)(emphasis and title case omitted).
17
In determining the proper weight to accord Tenth Circuit precedent interpreting New
Mexico law, the Court must balance the need for uniformity between federal court and state
court interpretations of state law with the need for uniformity among federal judges. If the Court
adheres too rigidly to Tenth Circuit case law, ignoring changes that a state’s law in the ensuing
years have undergone, then parties litigating state law claims will be subject to a different body
of substantive law, depending whether they litigate in state court or federal court. This result
frustrates the purpose of Erie, which held that federal courts must apply state court
interpretations of state law, rather than their own, in part so that parties achieve a consistent
result regardless of the forum. See Erie, 304 U.S. at 74-77. This consideration pulls the Court in
the direction of according Tenth Circuit precedent less weight and according state court
decisions issued in the ensuing years more weight. On the other hand, when the state law is
unclear, it is desirable for there to at least be uniformity among federal judges as to its proper
interpretation. Otherwise, different federal judges within the same circuit -- or even the same
district, as district courts’ decisions are not binding, even upon themselves -- would be free to
adopt differing interpretations of a state’s law. This consideration pulls the Court towards a
stronger respect for vertical stare decisis, because a Tenth Circuit decision on point -- regardless
whether it accurately reflects state law -- at least provides consistency at the federal level, so
long federal district judges are required to follow it.
The Court must decide how to weigh Tenth Circuit case law against more-recent state
court decisions, choosing a point on the spectrum between the two extremes: rigidly adhering to
Tenth Circuit precedent unless there is intervening case law directly on point from the state’s
highest court, on one end; and independently interpreting the state law, regarding the Tenth
Circuit precedent as persuasive authority, on the other. In striking this balance, the Court notes
that it is generally more concerned about systemic inconsistency between the federal courts and
the state courts than it is about inconsistency among federal judges. Judges, even those within a
jurisdiction with ostensibly identical governing law, sometimes interpret and apply the law
differently from one another; this inconsistency is part and parcel of a common-law judicial
system. More importantly, litigants seeking to use forum selection to gain a substantive legal
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advantage cannot easily manipulate such inconsistency: cases are assigned randomly to district
judges in this and many federal districts; and, regardless, litigants cannot know for certain how a
given judge will interpret the state law, even if they could determine the identity of the judge prefiling or pre-removal. All litigants know in advance is that whomever federal district judge they
are assigned will look to the entirety of the state’s common law in making his or her
determination -- the same as a state judge would. Systemic inconsistency between the federal
courts and state courts, on the other hand, not only threatens the principles of federalism, but
litigants may more easily manipulate the inconsistency. When the Tenth Circuit issues an
opinion interpreting state law, and the state courts subsequently shift away from that
interpretation, litigants -- if the district courts strictly adhere to the Tenth Circuit opinion -- have
a definite substantive advantage in choosing the federal forum over the state forum, or vice
versa.
The Court further notes that district courts may be in a better position than the Tenth
Circuit to be responsive to changes in state law. Tenth Circuit decisions interpreting a particular
state’s law on a specific issue are further apart in time than the collective district courts’
decisions are. More importantly, the Tenth Circuit does not typically address such issues with
the frequency that the state’s courts themselves do. As such, Tenth Circuit precedent can lag
behind developments in state law -- developments that the district courts may be nimble enough
to perceive and adopt. Additionally, much of the benefit of having a consistent Tenth Circuitwide interpretation of a particular state’s law is wasted. Other than Oklahoma, every state
encompassed by the Tenth Circuit contains only one federal judicial district, and there is
relatively little need for federal judges in Wyoming and Kansas to have a uniform body of New
Mexico law to which to look. Last, the Court notes, respectfully, that district courts may be in a
better position than the Tenth Circuit to develop expertise on the state law of the state in which
they sit. Every federal judicial district in the nation, except the District of Wyoming, covers at
most one state. See 28 U.S.C. § 131 (“Wyoming and those portions of Yellowstone National
Park situated in Montana and Idaho constitute one judicial district.”). It is perhaps a more
workable design for each district court to keep track of legal developments in the state law of its
own state(s) than it is for the Tenth Circuit to monitor separate legal developments in eight
states.
Having outlined the relevant considerations, the Court thinks the proper stance on vertical
stare decisis in the context of federal court interpretations of state law is as follows: the Tenth
Circuit’s cases are binding as to their precise holding -- what the state law was on the day the
opinion was published -- but lack the positive precedential force that its cases interpreting a
federal statute or the Constitution of the United States of America possess. A district court
considering a state law issue after the publication of a Tenth Circuit opinion on point may not
come to a contrary conclusion based only on state court cases available to and considered by the
Tenth Circuit, but it may come to such a conclusion based on intervening state court cases.
When interpreting state law, the Tenth Circuit does not and cannot issue a case holding
that x is the law in New Mexico; it holds that the proper interpretation of New Mexico law, at the
time the opinion is released, is x. Its holdings are descriptive, not prescriptive -- interpretive, not
normative. Because federal judicial opinions lack independent substantive force on state law
issues, but possess such force regarding federal law issues, the Court thinks the following is not
an unfair summary of the judicial interpretive process: (i) when interpreting federal law, the
federal appellate courts consider the existing body of law, and then issue a holding that both
- 41
reflects and influences the body of law; that holding subsequently becomes a part of the body of
law; but (ii) when interpreting state law, the federal appellate courts consider the existing body of
law, and then issue a holding that only reflects the body of law; that holding does not
subsequently become a part of the body of law. The federal district courts are bound to conclude
that the Tenth Circuit’s reflection of the then-existing body of law is accurate. The question is
whether they should build a doctrine atop the case and use the existence of the Tenth Circuit’s
case to avoid any responsibility to independently consider the whole body of state law that exists
when the time comes that diversity litigants raise the issue in their courtrooms. Giving such
effect to the Tenth Circuit’s interpretations of state law is at tension with Erie, giving
independent substantive effect to federal judicial decisions -- i.e., applying federal law -- in a
case brought in diversity.
The purpose of Erie is well-known and simple, and the Court should not complicate it
beyond recognition: it is that the same substantive law governs litigants’ cases regardless
whether they are brought in a federal or state forum. For simplicity’s sake, most courts have
settled on the formulation that “the federal court must attempt to predict how the states’ highest
court would rule if confronted with the issue.” Moore’s § 124.22[3] (citing Comm’r v. Estate of
Bosch, 387 U.S. at 465 (“[A]n intermediate appellate state court [decision] is a datum for
ascertaining state law which is not to be disregarded by a federal court unless it is convinced by
other persuasive data that the highest court of the state would decide otherwise.”)(citation and
internal quotation marks omitted). This formulation may not be the most precise one if the goal
is to ensure identical outcomes in state and federal court -- the Honorable Milton I. Shadur,
United States District Judge, looks to state procedural rules to determine in which state appellate
circuit the suit would have been filed were it not in federal court, and then applies the state law
as that circuit court interprets it, see Abbott Laboratories v. Granite State Ins. Co., 573 F. Supp.
193, 196-200 (N.D. Ill. 1983)(noting that the approach of predicting the state supreme court’s
holdings will often lead to litigants obtaining a different result in federal court than they would in
state court, where only the law of the circuit in which they filed -- and certainly not nonexistent,
speculative state supreme court law -- governs) -- but it is a workable solution that has achieved
consensus. See Allstate Ins. Co. v. Menards, Inc., 285 F.3d 630, 637 (7th Cir. 2002)(“[W]e
adhere today to the general rule, articulated and applied throughout the United States, that, in
determining the content of state law, the federal courts must assume the perspective of the
highest court in that state and attempt to ascertain the governing substantive law on the point in
question.”). This formulation, built out of ease-of-use, does not relieve courts of their Supreme
Court-mandated obligation to consider state appellate and trial court decisions. To the contrary,
even non-judicial writings by influential authors, statements by state supreme court justices, the
closeness of the vote on a prior case addressing the issue, and personnel changes on the
court -- considerations that would never inform a federal court’s analysis of federal law -- may
validly come into play. See generally SFF-TIR, LLC v. Stephenson, 2017 WL 1487439 (N.D.
Okla. 2017)(Browning, J.). The question is whether the district courts must abdicate, across-theboard, the “would decide” aspect of the Erie analysis to their parent appellate courts when the
Court of Appeals has declared an interpretation of state law.
The Erie doctrine results in federal cases that interpret state law withering with time.
While cases interpreting federal law become more powerful over time -- forming the
groundwork for doctrines, growing upward from one application (Congress may create a national
bank) to many (Congress may set quotas on wheat-growing for personal consumption),
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expanding outward from the general (states must grant criminal jury trials) to the specific (the
jury need not be twelve people, nor must it be unanimous) -- federal cases interpreting state law
often become stale. New state court cases -- even when not directly rebuking the federal court’s
statement of law -- alter the common-law legal landscape with their dicta, their insinuations, and
their tone. The Supreme Court, which picks its cases sparingly and for maximum effect, almost
never grants certiorari to resolve issues of state law.
The Court’s views on Erie, of course, mean little if the Tenth Circuit does not agree. In
Wankier v. Crown Equipment Corp., the Tenth Circuit said that,
[w]here no controlling state decision exists, the federal court must attempt to
predict what the state’s highest court would do. In performing this ventriloquial
function, however, the federal court is bound by ordinary principles of stare
decisis. Thus, when a panel of this Court has rendered a decision interpreting
state law, that interpretation is binding on district courts in this circuit, and on
subsequent panels of this Court, unless an intervening decision of the state’s
highest court has resolved the issue.
Wankier v. Crown Equip. Corp., 353 F.3d 862, 866 (10th Cir. 2003)(McConnell, J.). From this
passage, it seems clear the Tenth Circuit permits a district court to deviate from the Tenth
Circuit’s view of state law only on the basis of a subsequent case “of the state’s highest court.”
The American Heritage Dictionary of the English Language 1402 (William Morris ed., New
College ed. 1976)(defining “unless” as “[e]xcept on the condition that; except under the
circumstances that”). A more aggressive reading of the passage -- namely the requirement that
the intervening case “resolv[e] the issue” -- might additionally compel the determination that any
intervening case law must definitively and directly contradict the Tenth Circuit interpretation to
be considered “intervening.”
It is difficult to know whether Judge McConnell’s limitation of “intervening decision” to
cases from the highest state court was an oversight or intentional. Most of the Tenth Circuit’s
previous formulations of this rule have defined intervening decisions inclusively as all
subsequent decisions of “that state’s courts,” a term which seems to include trial and
intermediate appellate courts. Even Koch v. Koch Industries, Inc., 203 F.3d 1202, 1231 (10th
Cir. 2000), the primary authority upon which Wankier v. Crown Equipment Corp. relies, uses the
more inclusive definition. In fact, Wankier v. Crown Equipment Corp. quotes its relevant
passage:
In the absence of intervening Utah authority indicating that a plaintiff is not
required to prove a safer, feasible alternative design, we are bound to follow the
rule of Allen [v. Minnstar, Inc., 8 F.3d 1470 (10th Cir. 1993), a Tenth Circuit case
interpreting an issue of Utah law], as was the district court. “Following the
doctrine of stare decisis, one panel of this court must follow a prior panel’s
interpretation of state law, absent a supervening declaration to the contrary by that
state’s courts or an intervening change in the state’s law.” Koch v. Koch Indus.,
Inc., 203 F.3d at 1231.
Wankier v. Crown Equip. Corp., 353 F.3d at 867.
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Ultimately, “the Court’s task is to predict what the state supreme court would do.” Wade v.
EMCASCO Ins. Co., 483 F.3d at 666. Accord Mosley v. Titus, 762 F. Supp. 2d at 1332 (citation
omitted); Rimbert v. Eli Lilly & Co., 577 F. Supp. 2d 1174, 1188-89 (D.N.M. 2008)(Browning,
J.)(quoting Wade v. EMCASCO Ins. Co., 483 F.3d at 665-66).
NEW MEXICO LAW REGARDING FALSE CONFLICTS OF LAW
In Ferrell v. Allstate Insurance Co., 2008-NMSC-042, 188 P.3d 1156, the Supreme Court
of New Mexico described the “false conflict” or “actual conflict”18 doctrine: “Under this
Regardless whether the decision to limit the intervening authority a district court can
consider was intentional, the Tenth Circuit has picked it up and run with it. In Kokins v.
Teleflex, Inc., 621 F.3d 1290, 1297 (10th Cir. 2010)(Holmes, J.), the Tenth Circuit, quoting
Wankier v. Crown Equipment Corp., refused to consider an opinion from the Court of Appeals
of Colorado holding directly the opposite of an earlier Tenth Circuit interpretation of Colorado
law. See Kokins v. Teleflex, Inc., 621 F.3d at 1297 (“[T]he Colorado Court of Appeals decided
Biosera[, Inc. v. Forma Scientific, Inc., 941 P.2d 284 (Colo. Ct. App. 1998)], so it is not an
‘intervening decision of the state’s highest court.’”)(emphasis in original)(quoting Wankier v.
Crown Equip. Corp., 353 F.3d at 866).
The Tenth Circuit has set forth a stringent restriction on its district courts’ ability to
independently administer the Erie doctrine. More importantly, the Tenth Circuit’s view may be
at tension with the above-quoted Supreme Court precedent, as well as its own prior case law.
Moore’s lists the Tenth Circuit as having been, at one time, a “court[ that] hold[s] that a prior
federal appellate decision [interpreting state law] is persuasive.” Moore’s § 124.22[4] (citing
State Farm Mut. Auto. Ins. Co. v. Travelers Indem. Co., 433 F.2d 311, 312 (10th Cir. 1970)).
Still, the Court is bound to abide by the Tenth Circuit’s interpretation of Erie. This scheme may
be inefficient, because the plaintiffs may appeal, after trial, the Court’s ruling. The Tenth Circuit
may certify the question to the Supreme Court of New Mexico, and the Tenth Circuit may then
have to reverse the Court after a full trial on the merits.
18
The Supreme Court of New Mexico used the term “actual conflict” to refer to what the
Court of Appeals of New Mexico had called the “false conflict” doctrine, because
“false conflict” actually has two different meanings. See Robert A. Leflar et al.,
American Conflicts Law, § 92, at 270 (4th ed. 1986). The first meaning of “false
conflict” arises from the choice-of-law method advanced by Professor Brainerd
Currie, “the governmental interest” analysis. Id. at 270-71. Under Currie’s
method, a false conflict arises when “only one of the involved states would be
interested in applying its law.” Eugene F. Scoles et al., Conflict of Laws § 2.9, at
28 (4th ed. 2004). The second meaning of the term “false conflict” is “no conflict
of laws.” Leflar et al., supra, § 92, at 272.
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analysis, when the laws of the relevant states do not actually conflict, the court may avoid a
conflict-of-law analysis and may apply forum law to the entire class.” 2008-NMSC-042, ¶ 16,
188 P.3d at 1164 (citing Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 816 (1985)). “If,
however, the laws of the relevant states actually conflict, or if the laws of certain of the relevant
states conflict, then the forum court must resolve that conflict using the choice-of-law rules
contained in the forum state’s conflict-of-laws doctrine.” Ferrell v. Allstate Insurance Co., 2008NMSC-042, ¶ 16, 188 P.3d at 1164. The doctrine’s focus is “not on whether the laws are
superficially identical as written, but whether the effect of laws would be identical as applied to a
particular case.” Fowler Brothers, Inc. v. Bounds, 2008-NMCA-091, ¶ 9, 188 P.2d 1261. See
Ferrell v. Allstate Insurance Co., 2008-NMSC-042, ¶ 18, 188 P.3d at 1164.
In Fowler Brothers, Inc. v. Bounds, 2008-NMCA-091, 188 P.3d 1261, an unlicensed
contractor that was a purported employee of a licensed contractor working on an out-of-state
contractor brought action against the licensed contractor for breach of contract and unjust
enrichment after the licensed contract ceased to pay for work on the project. Fowler Brothers,
Inc. v. Bounds, 2008-NMCA-091, ¶¶ 2-4, 188 P.3d at 1263-64. The Court of Appeals of New
Mexico, in an opinion that the Honorable Michael Bustamante wrote and in which the Honorable
Lynn Pickard and Roderick T. Kennedy joined, held that Arizona and New Mexico contractor
licensing law did not conflict as applied to the action. Fowler Brothers, Inc. v. Bounds, 2008NMCA-091, ¶ 20, 188 P.3d at 1267. The district court had concluded that: (i) under either
Arizona or New Mexico law, the plaintiff was required to have an Arizona contractor’s license to
perform work on the project; and (ii) under either Arizona or New Mexico law, the plaintiff is
prohibited from recovering under any cause of action, including equitable remedies, for its work
Ferrell v. Allstate Ins. Co., 2008-NMSC-042, ¶ 16 n.2.
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on the project, because it did not have such a license. See 2008-NMCA-091, ¶ 5, 188 P.2d at
1264. The district court had avoided the choice-of-law issue by determining, albeit implicitly,
that the applicable law of Arizona and New Mexico were the same, or would yield the same
results. See 2008-NMCA-091, ¶ 8, 188 P.2d at 1265. More specifically, the district court had
dismissed the plaintiff’s claims on the basis of its legal conclusion that, “[u]nder either Arizona
or New Mexico law, Plaintiff is prohibited from recovering under any cause of action, including
equitable remedies, for its work on the Project, because it did not have [an Arizona contractor’s]
license.” 2008-NMCA-091, ¶ 5, 188 P.2d at 1264.
The Court of Appeals of New Mexico found that implicit in the district court’s
conclusion was its determination that there was no conflict between Arizona and New Mexico
law as it related to the case’s dispositive issue, i.e., whether the plaintiff was required to have an
Arizona contractor’s license to recover damages for its work on the project. See 2008-NMCA091, ¶ 8, 188 P.2d at 1265. Judge Bustamante said that the Court of Appeals of New Mexico
would first consider whether the district court correctly determined that no conflict existed
between Arizona and New Mexico law with respect to the case’s circumstances, and concluded
that no conflict existed. See 2008-NMCA-091, ¶¶ 8-11, 188 P.2d at 1265 (“This Case Presents
No Conflict Between Arizona and New Mexico Law.”)(emphasis omitted).
DELAWARE LAW REGARDING CONTRACT INTERPRETATION
Under Delaware law “[w]hen interpreting a contract, the Court will give priority to the
parties’ intentions as reflected in the four corners of the agreement.” GMG Capital Investments,
LLC v. Athenian Venture Partners I, L.P., 36 A.3d 776, 779 (Del. 2012). “The Court will
interpret clear and unambiguous terms according to their ordinary meaning.” GMG Capital
Investments, LLC v. Athenian Venture Partners I, L.P., 36 A.3d at 780.
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“Contract terms
themselves will be controlling when they establish the parties’ common meaning so that a
reasonable person in the position of either party would have no expectations inconsistent with the
contract language.” GMG Capital Investments, LLC v. Athenian Venture Partners I, L.P., 36
A.3d at 780. “A contract is not rendered ambiguous simply because the parties do not agree
upon its proper construction. Rather, an ambiguity exists ‘[w]hen the provisions in controversy
are fairly susceptible of different interpretations or may have two or more different meanings.’”
GMG Capital Investments, LLC v. Athenian Venture Partners I, L.P., 36 A.3d at 780 (quoting
Eagle Ind., Inc. v. DeVilbiss Health Care, Inc., 702 A.2d 1228, 1232 (Del. 1997)). “Where a
contract is ambiguous, ‘the interpreting court must look beyond the language of the contract to
ascertain the parties’ intentions.’” GMG Capital Investments, LLC v. Athenian Venture Partners
I, L.P., 36 A.3d at 780 (quoting Eagle Ind., Inc. v. DeVilbiss Health Care, Inc., 702 A.2d at
1232). “In construing an ambiguous contractual provision, a court may consider evidence of
prior agreements and communications of the parties as well as trade usage or course of dealing”
Eagle Indus., Inc. v. DeVilbiss Health Care, Inc., 702 A.2d at 1233.
ANALYSIS
The Court will not alter or amend its Final Judgment. Lopez’ arguments are unavailing,
largely because the Federal Rules of Civil Procedure permit the Court to properly consider the
Purchase Agreement in deciding the MSJ. To the extent that Lopez attacks the Court’s choiceof-law decisions, the Court determines that it did not previously err. Finally, the Court concludes
that it properly denied Lopez’ rule 56(d) motion, as additional discovery is highly unlikely to
alter the case’s outcome. Accordingly, the Court denies the Motion.
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I.
THE COURT DID NOT ERR IN GRANTING THE MSJ.
Lopez’ four new arguments do not demonstrate error. First, he argues that the Court
improperly considered the Purchase Agreement, because Lopez and not the Defendants offered
the Purchase Agreement as evidence. See Motion ¶ 23, at 9-10. Under rule 56(c), however, the
Court “need consider only the cited materials, but it may consider other materials in the record.”
Fed. R. Civ. P. 56(c). Both parties cited the Purchase Agreement -- albeit at a hearing and in
supplemental briefing -- so, according to rule 56(c)’s plain text, the Court “need consider” that
agreement.
Fed. R. Civ. P. 56(c).
See Suppl. Brief at 2-8; Supp. Brief Response at 2-3;
Transcript of Motion Proceedings 5:3-4 (taken March 15, 2016)(DeCandia), filed July 20, 2016
(Doc. 92)(“Tr.”). Even if that provision did not apply, however, the Purchase Agreement is in
the record, see Purchase Agreement at 1-66, filed July 12, 2016 (Doc. 90-1), so the Court “may
consider” it, Fed. R. Civ. P. 56(c).
Second, Lopez asserts that the Court should not have relied upon the Purchase
Agreement, because the Black & Decker Defendants did not attest that they provided “a full and
complete” copy of the Purchase Agreement during discovery. Motion ¶¶ 23, 26, at 9-11. The
Court interprets Lopez’ position as an argument that the Purchase Agreement is inadmissible
under rule 901 of the Federal Rules of Evidence -- the authentication rule -- or, alternatively, is
admissible, but was incomplete under rule 106, so cannot be considered in an order granting
summary judgment. See Fed. R. Civ. P. 56(c)(2); Law Co., Inc. v. Mohawk Const. and Supply
Co., Inc., 577 F.3d 1164, 1170 (10th Cir. 2009)(“Mohawk Const.”).
The Tenth Circuit does “not require an affidavit to authenticate every document
submitted for consideration at summary judgment.” Mohawk Const., 577 F.3d at 1170. Indeed,
it has held that “documents produced during discovery that are on letterhead of the producing
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party are authentic per se for purposes of Federal Rule of Evidence 901.” Mohawk Const., 577
F.3d at 1170. Typically, however, authentication is satisfied “by evidence sufficient to support a
finding that the matter in question is what its proponent claims.” Mohawk Const., 577 F.3d at
1170 (citing Fed. R. Evid. 901).
Satisfactory authentication evidence can come from the
document’s face. See Mohawk Const., 577 F.3d at 1170 (“Mohawk’s submitted exhibits might
be sufficiently authenticated taking into consideration the ‘[a]ppearance, contents, substance,
internal
patterns,
or
other
distinctive
characteristics,
taken
in
conjunction
with
circumstances.’”)(quoting Fed. R. Evid. 901(b)(4)).
That the Black & Decker Defendants did not produce an affidavit attesting to the
Purchase Agreement’s authenticity is no obstacle to the Court’s consideration of such an
agreement.
See Mohawk Const., 577 F.3d at 1170 (“We do not require an affidavit to
authenticate every document.”). Authentication is not a high threshold, especially where Lopez
gives the Court no evidence to question the Purchase Agreement’s genuineness. Moreover, the
Purchase Agreement appears to be what it purports to be: an acquisition-of-stock agreement
between the Black & Decker Corp. and Pentair, Inc. The document is entitled “Purchase
Agreement between the Black & Decker Corporation and Pentair, Inc., dated as of July 16,
2004.” Purchase Agreement at 1. It is labeled “Execution Copy” and contains terms consistent
with a stock acquisition. Purchase Agreement at 1. See, e.g., id. §§ 1.1-3.4, at 2, 9-20 (detailing
the representations and warranties of the Parent). The Black & Decker Defendants, at least one
of whom is a successor to the corporate entity that signed the contract, provides the Purchase
Agreement. See Suppl. Brief. ¶ 7, at 2-3. The circumstances surrounding its production and the
document’s contents thus sufficiently authenticate it for the Court to have considered the
document when granting the MSJ. See Denison v. Swaco Geolograph Co., 941 F.2d 1416, 1423
- 49
(10th Cir. 1991)(concluding a document was authenticated under rule 901(b)(4), because it had a
defendant’s letterhead and was produced by a former defendant); Krystal Inc. v. China United
Transport, Inc., 2017 WL 4339343, at *4 (C.D. Cal. 2017)(Lew, J.)(holding a sales contract
authentic, because “it names Dalian and the Chinese buyer and appears to be what Ms. Wang
claims it to be”).
To the extent that Lopez invokes the rule of completeness, see Fed. R. Evid. 106, the
Court also concludes that there was no error. The rule of completeness appears to be uniquely
applicable in a trial setting. See United States v. Lopez-Medina, 596 F.3d 716, 735 (10th
Cir. 2010). “The purpose of Rule 106 is to prevent a party from misleading the jury,” United
States v. Lopez-Medina, 596 F.3d at 735, but there is no jury on a summary judgment motion.
Nevertheless, the general principle animating the rule of completeness -- guarding against
deception -- is appropriate at the summary judgment phase. A judge, just like a jury, should not
be misled, especially on a dispositive motion. See United States v. Williston, 862 F.3d 1023,
1038 (10th Cir. 2017)(“[T]he rule functions as a defensive shield against potentially misleading
evidence proffered by an opposing party.”). See also Fed. R. Civ. P. 32(b)(6) (“If a party offers
in evidence only part of a deposition, an adverse party may require the offeror to introduce other
parts that in fairness should be considered with the part introduced.”). The rule of completeness’
remedy, however, is introduction of the missing material and not exclusion of the partial
material. See Fed. R. Evid. 106 (“If a party introduces all or part of a writing . . . an adverse
party may require the introduction, at that time, of any other part . . . that in fairness ought to be
considered.”). Lopez has, therefore, already been afforded the rule of completeness’ remedy,
because it introduced the full Purchase Agreement into the record. See Purchase Agreement at
1-66; Schedules at 1-110.
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To the extent that Lopez argues that the Court erred, because the Black & Decker
Defendants provided no evidence that the Purchase Agreement given to Lopez is complete, see
Motion ¶ 23, at 9-10, the Court concludes that there is enough evidence to conclude that the
Purchase Agreement, as admitted, is sufficiently complete. The Purchase Agreement’s table of
contents lists several sections, schedules, and three exhibits. See Purchase Agreement at 2-4.
The Purchase Agreement and the Schedules include each listed section and schedule, and are
consecutively paginated, thus indicating completeness. The admitted evidence does not include
the three exhibits, but those three exhibits’ titles suggest that they are irrelevant. See Purchase
Agreement at 4 (listing the exhibits as “Canadian Assumption Agreement,” “Asia Water Lease
Contract,” and “Asia Enclosure Lease Contract”). Because the case has nothing to do with
Canada or Asia, the Court concludes that the Purchase Agreement is sufficiently complete.19
Thus, the Court committed no error when it considered the entire Purchase Agreement.
19
To the extent that Lopez argues that the Court erred in denying its rule 56(d) request,
because the Black & Decker Defendants have not proffered evidence that the Purchase
Agreement is complete, the Court disagrees for the same reason as articulated above. Moreover,
the Court has already ruled:
Lopez does not identify any specific facts which he expects to discover which are
essential to his opposition to the MSJ. See Garcia v. U.S. Air Force, 533 F.3d
[1170], 1179 [(10th Cir. 2008)]. As the Tenth Circuit has said, a party cannot
invoke rule 56(d) ‘by simply stating that discovery is incomplete but must state
with specificity how the additional material will rebut the summary judgment
motion.” Garcia v. U.S. Air. Force, 533 F.3d at 1179.
MOO at 115, 2017 WL 3142028, at *47 (alterations added). Lopez’ Motion still does not
identify what additional material he expects to find that would rebut the summary judgment
motion. See Motion ¶¶ 23-24, at 9-10. The Reply suggests that he expects to find documents
explaining “the meaning and interpretation of a number of relevant provisions” in the Purchase
Agreement, Reply ¶ 4, at 2-3, but, as the Court explains infra, the Court may not look to extrinsic
evidence to interpret this contract. Accordingly, allowing discovery for those documents would
not “justify [Lopez’] position,” Fed. R. Civ. P. 56(d), so the Court does not disturb its original
56(d) ruling.
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Third, Lopez argues that the Court erred, because the Black & Decker Defendants
“provided no evidence . . . to explain or interpret the meaning of any provisions in the PA.”
Motion ¶ 23, at 10. This argument misunderstands Delaware law.20 Under Delaware law, the
20
The Court previously concluded that Delaware law applies to the Purchase Agreement’s
interpretation. See MOO at 86, 2017 WL 3142028, at *36 (“Because this inquiry is contractual,
the Court must effectuate the parties’ bargained-for choice-of-law provision, which chooses
Delaware law to govern interpretation of the agreement’s terms.”). Lopez, in fact, argued that
Delaware law should control. See Tr. at 21:16-18 (Isaac). The Court sees no reason to upend
that decision.
The Supreme Court of New Mexico has repeatedly indicated that it would honor
contracts’ choice-of-law provisions. See Fiser v. Dell Computer Corp., 2008-NMSC-046, ¶ 7,
188 P.3d 1215, 1218 (“New Mexico respects party autonomy; the law to be applied to a
particular dispute may be chosen by the parties through a contractual choice-of-law provision.”);
Burge v. Mid-Continent Cas. Co., 1997-NMSC-009, ¶ 11, 933 P.2d 210, 214 (“New Mexico law
recognizes the validity of choice of law provisions contained in contract.”); Stevenson v. Louis
Dreyfus Corp., 1991-NMSC-051, ¶ 6, 811 P.2d 1308, 1309 (“[P]arties are free to choose by
contract a law to govern the performance and enforcement of contractual arrangements between
them.”); United Wholesale Liquor Co. v. Brown-Forman Distillers Corp., 1989-NMSC-030,
¶ 11, 775 P.2d 233, 236. The Court notes, however, that the New Mexico UCC requires a court
to effect a contract’s choice-of-law provision, and all of these decisions but one involve a
contract for a sale of goods. See N.M. Stat. Ann. § 55-1-301(A); Fiser v. Dell Computer Corp.,
2008-NMSC-046, ¶ 2, 188 P.3d at 1217 (construing a computer sale contract); Stevenson v.
Louis Dreyfus Corp., 1991-NMSC-051, ¶ 3, 811 P.2d at 1309 (interpreting a cattle-sale
contract); United Wholesale Liquor Co. v. Brown-Forman Distillers Corp., 1989-NMSC-030,
¶ 2, 775 P.2d at 234 (construing an alcohol-distribution contract). But see Burge v. MidContinent Cas. Co., 1997-NMSC-009, ¶ 4, 933 P.2d at 212 (interpreting an insurance contract).
For choice-of-law decisions that the UCC does not govern, New Mexico follows the
Restatement (First) of Conflict of Laws. See Flemma v. Haliburton Energy Serv., Inc., 2013NMSC-022, ¶ 14, 303 P.3d 814, 819 (citing Restatement (First) of Conflict of Laws, § 332(c)).
In recently exploring the Restatement (First) of Conflict of Laws, the Supreme Court of New
Mexico has noted:
The Restatement (Second), unlike the Restatement (First), acknowledges the
realities of modern contracts and respects party autonomy by allowing the parties
to choose the law that will govern the dispute. Restatement (Second) § 187, at
561; see also Symeon C. Symeonides, Oregon’s Choice–of–Law Codification for
Contract Conflicts: An Exegesis, 44 Willamette L. Rev. 205, 222 (2007) (“[T]he
drafters of the First Restatement rejected party autonomy. . . . Recognizing this
reality, the Restatement (Second) formally sanctioned and codified the principle
of party autonomy.”). If the contract has a valid choice-of-law provision, that law
presumptively applies. Restatement (Second) § 187, at 561.
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Ferrell v. Allstate Ins. Co., 2008-NMSC-042, ¶ 54, 188 P.3d 1156, 1172 (ellipses in original). In
so noting, the Supreme Court of New Mexico might have been suggesting that, because it
follows the Restatement (First) of the Conflict of Laws, it would not honor choice-of-law
provisions for non-UCC contracts. Cf. Flemma v. Haliburton Energy Serv., Inc., 2013-NMSC022, ¶ 14, 303 P.3d at 819 (“[T]he DRP’s forum selection clause is not helpful to our
determination of which state law to apply. New Mexico follows the Restatement (First) of
Conflict of Laws when analyzing choice of law issues.”). Nevertheless, the Supreme Court of
New Mexico has never expressly held it will not honor choice-of-law provisions in non-UCC
contracts, nor has it repudiated its holding from Burge v. Mid-Continent Cas. Co., in which it
honored the parties’ choice-of-law provision in an insurance contract, which the UCC does not
govern. 1997-NMSC-009, ¶ 4, 933 P.2d at 212. Furthermore, the Supreme Court of New
Mexico has relaxed its adherence to the Restatement (First) of the Conflict of Laws in other
areas. Ferrell v. Allstate Ins. Co., 2008-NMSC-042, ¶ 56, 188 P.3d at 1173 (concluding that the
First Restatement is “ill-suited” for complex lawsuits, so ruling that the Second Restatement “is a
more appropriate approach for multi-state contract class actions”). The Court concludes that,
given Burge v. Mid-Continent Cas. Co. and its loose faithfulness to the First (Restatement) of the
Conflict of Laws, the Supreme Court of New Mexico would apply the Purchase Agreement’s
choice-of-law provision.
If the Supreme Court of New Mexico did not honor the choice-of-law clause, however,
the Court concludes that Delaware law would still apply. The Purchase Agreement is not a sale
of goods. See N.M. Stat. Ann. § 55-2-105(1) (“Goods means all things . . . which are movable at
the time of identification to the contract for sale other than . . . investment securities.”). It is a
contract to acquire another company’s stock and that company’s intellectual property. See
Purchase Agreement § 1.1, at 5 (“Buyer shall purchase . . . the U.S. Intellectual property, [and]
the Equity interests.”); Schedules at 2 (listing the “Equity Interests” to be purchased). See also
Stewart v. Lucero, 1996-NMSC-027, ¶ 9, 918 P.2d 1, 3 (“Article 2 of the New Mexico Uniform
Commercial Code does not apply to the sale of a business as a going concern.”). The Supreme
Court of New Mexico has not determined whether contracts to purchase intellectual property are
sales of goods under the UCC, but the Tenth Circuit, construing similar language in Oklahoma’s
UCC, which exists in New Mexico’s UCC, has ruled that the sale of intellectual property is not a
sale of a good, because “[i]ntellectual property is not a movable thing.” Eureka Water Co. v.
Nestle Waters N. Am., Inc., 690 F.3d 1139, 1147 (10th Cir. 2012). See Sys. Unlimited, Inc. v.
Cisco Sys., Inc., 228 F. App’x 854, 859 (11th Cir. 2007)(unpublished)(“The sale of intellectual
property, which is what is involved here, is not a transaction in goods.”); Architectronics, Inc. v.
Control Sys., Inc., 935 F. Supp. 425, 432 (S.D.N.Y. 1996)(Mukasey, J.)(“However, copyrights,
patents, and trademarks are classified as general intangibles under the UCC and are distinguished
from goods.”). The Court concludes that the Supreme Court of New Mexico would follow those
jurisdictions. At bottom, intellectual properties are ideas. See Eureka Water Co. v. Nestle
Waters N. Am., Inc., 690 F.3d at 1147. Even though the ideas can be expressed in a “movable
medium” such as in a trademark, “the intellectual property remains intangible.” Eureka Water
Co. v. Nestle Waters N. Am., Inc., 690 F.3d at 1147. In that way, intellectual property is
analogous to investment securities, which the New Mexico UCC expressly excludes. See N.M.
Stat. Ann. § 55-2-105(1) (“Goods means all things . . . which are movable at the time of
identification to the contract for sale other than . . . investment securities.”). Investment
securities are sometimes expressed in a movable medium -- for example, a stock certificate -- but
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Court is not only allowed to interpret a contract without extrinsic evidence; it is required to
interpret a contract without extrinsic evidence, unless the contract terms are ambiguous. See
the actual ownership interest is an intangible right. Accordingly, the Court rules that the
Supreme Court of New Mexico would conclude that New Mexico’s UCC does not encompass
the sale of intellectual property.
Even if the Supreme Court of New Mexico concluded that the sale of intellectual
property is a good, however, the Supreme Court of New Mexico would still rule that the
Purchase Agreement is a non-UCC contract. In a mixed contract of goods and other items, New
Mexico courts ask the contract’s “primary purpose” to determine whether the UCC applies.
Stewart v. Lucero, 1996-NMSC-027, ¶ 12, 918 P.2d at 4-5. Reviewing the Purchase Agreement,
the primary purpose is not the acquisition of intellectual property, but the acquisition of stock.
Indeed, only one paragraph of a sixty-six page document speaks about the intellectual property.
See Purchase Agreement § 3.1(r), at 16. Accordingly, the primary purpose is the sale of stock,
so the UCC does not apply. See Stewart v. Lucero, 1996-NMSC-027, ¶ 12, 918 P.2d at 4-5.
Because the Purchase Agreement is a non-UCC contract, the contracting location would
control what law to apply. There is little evidence, however, where the contract came into effect.
The only evidence in the record is that one contracting party is a Maryland corporation, and the
other is incorporated in Minnesota. See Purchase Agreement at 5. That provision would seem to
suggest that Minnesota or Maryland might be the place of contracting. Nevertheless, as
sophisticated entities, the final act creating the contract could be in any number of states. For
example, agents for the corporations could have signed the papers in Delaware or New York.
The Court concludes, however, that it is highly unlikely that the place of contracting is New
Mexico. New Mexico is not, shall we say, known for abundant corporate commerce. Were this
a contract between two green chile distributors, for example, the Court might conclude that New
Mexico was likely the state of contracting. The Court knows, however, of no connection
between these two corporations and New Mexico, and, given that the Purchase Agreement
indicates none, it concludes that the contract did not come into effect in New Mexico.
The Restatement (First) of Conflict of Laws is silent about the default law to apply if
there is no evidence of the contracting location, see Restatement (First) of Conflict of Laws
§§ 311-331, and the Supreme Court of New Mexico has not considered the issue. The Court,
however, has previously determined that, if there is no evidence about the place of contracting,
the Supreme Court of New Mexico would look to the choice-of-law provision -- if any exists -and public policy concerns, which might indicate that the forum’s law is more appropriate. See
City of Raton v. Arkansas River Power Authority, 760 F. Supp. 2d 1132, 1151-52 (D.N.M.
2009)(Browning, J.). Here, the contracting parties chose Delaware law. See Purchase
Agreement § 11.4, at 53. Neither litigation party has argued that another body of law should
apply to the Purchase Agreement’s interpretation. See Tr. at 21:16-18 (Isaac)(“[I]f they have a
choice of law provision, it’s going to be that, which is Delaware.”); Suppl. Brief Response at 1-6;
Motion ¶¶ 36-39, at 19-21. Moreover, the Court can discern no strong policy reason to apply
New Mexico contract interpretation rules to an acquisition contract where the contracting parties
chose Delaware law, one party is a Maryland corporation, and the other is incorporated in
Minnesota. See Purchase Agreement at 5. Accordingly, Delaware law remains the appropriate
law to interpret the Purchase Agreement.
- 54
GMG Capital Investments, LLC v. Athenian Venture Partners I, L.P., 36 A.3d at 779-80.
Reviewing the Purchase Agreement’s terms, the Court discerns no ambiguity requiring a resort
to extrinsic evidence. The Court previously explained:
In the Purchase Agreement, Pentair, Inc. and its affiliates “sell and
transfer” their “ownership interests . . . in each of the Transferred Subsidiaries” to
The Black & Decker Corporation and its affiliates. Purchase Agreement at 1.
Delta Intl., one of the “Transferred Subsidiaries,” Schedule 3.1(c), at 4, remains
fully intact as a distinct legal entity . . . . Thus, here, “transfer” denotes the
movement of wholly owned subsidiaries from one holding company to another,
without any alteration of the subsidiaries’ corporate form. Rhone-Poulenc Basic
Chem. Co. v. American Motorists Ins. Co., 616 A.2d 1192, 1195 (Del.
1992)(“Clear and unambiguous language . . . should be given its ordinary and
usual meaning.”).
Extrapolating from this construction, the Purchase
Agreement’s “Transferred Liabilities” provision simply defines which liabilities
remain with the “Transferred Subsidiaries” under their new ownership. To
interpret this provision to mean that the subsidiaries’ liabilities move from the
subsidiaries to their new owners, rather than with the subsidiaries as they move
between owners, would contravene the well-established principle that “‘a word
used by the parties in one sense will be given the same meaning throughout the
contract in the absence of countervailing reasons.’” Comerica Bank v. Glob.
Payments Direct, Inc., 2014 Del. Ch. LEXIS 127, at *34 n.77 (Del. Ch.
2014)(quoting 28 Richard A. Lord, Williston on Contracts § 32:6 (4th ed. 1999).
See Medicis Pharm. Corp. v. Anacor Pharm., Inc., 2013 Del. Ch. LEXIS 206, at
*7 (Del. Ch. 2013)(“[W]here the same word . . . is used on more than one
occasion in the same instrument, and in one instance its meaning is definite and
clear and in another instance it is susceptible of two meanings, there is a
presumption that the same meaning was intended throughout such instrument.”).
Here, there is no reason to construe “transfer” as having different meanings in
these two contexts; Lopez has not identified, for example, any provision explicitly
stating that The Black & Decker Corporation agrees to assume the subsidiaries’
liabilities.
Reading the transferred-liabilities provision together with other provisions
in the Purchase Agreement confirms the Court’s construction. In a provision
entitled “Indemnification By Parent,” Pentair, Inc. agrees to indemnify The Black
& Decker Corporation for “Losses . . . resulting from . . . any Indemnified
Liability.” Purchase Agreement ¶ 8.1, at 39-40. In its “Definitions” section, the
Purchase Agreement defines “Indemnified Liabilities” to include “all liabilities
and obligations of the Subsidiaries . . . other than ‘Transferred Liabilities.’”
Purchase Agreement ¶ 11.17, at 56. Thus, the indemnification provision carves
out the liabilities for which Pentair, Inc. retains responsibility; the transferredliabilities provision simply operates to identify the liabilities over which Pentair,
Inc. does not retain responsibility, because they transfer with the subsidiaries.
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Indeed, it is noteworthy that the term “Transferred Liabilities” appears only in the
“Definitions” section and not in any of the Purchase Agreement’s substantive
provisions. Purchase Agreement ¶ 11.17, at 56 (defining the term “Indemnified
Liabilities” as liabilities “other than the Transferred Liabilities”); id. at 59
(defining “Specified Liabilities” as the “liabilities and obligations of the
Subsidiar[ies] other than Transferred Liabilities”); id. at 60 (defining “Transferred
Liabilities”). It is not sound to read a definitional term, to which none of the
contract’s substantive terms refer, as effectuating an express assumption of
liabilities by the acquiring corporation.
MOO at 108-09, 2017 WL 3142028, at *44. Lopez does not offer new arguments against the
Court’s interpretation; instead, he copies and pastes the majority of his Suppl. Reply Brief into
his Motion. Compare Suppl. Reply Brief ¶¶ 2-13, at 2-10, with Motion ¶¶ 28-39, at 12-21. The
Court concludes that its prior reasoning is sound, so extrinsic evidence to interpret the Purchase
Agreement is superfluous. See GMG Capital Investments, LLC v. Athenian Venture Partners I,
L.P., 36 A.3d at 780 (“Contract terms themselves will be controlling when they establish the
parties’ common meaning.”). Accordingly, the Court did not err when it granted the Black &
Decker Defendants’ MSJ without requiring those defendants to provide extrinsic evidence to
interpret the contract.
Fourth, Lopez argues that the Court erred, because it granted summary judgment on
grounds that a party did not raise without giving Lopez “notice and a reasonable time to
respond.” Reply ¶ 3, at 2 (citing Fed. R. Civ. P. 56(f)(2)). Lopez raises this argument for the
first time in reply, so the Court need not consider it. See Martinez v. Salazar, 2016 WL
9724833, at *1 (D.N.M. November 7, 2016)(Gonzalez, J.). The Court is, however, allowed to
consider new arguments in a reply, so long as it affords the opposing party a long enough
interval to “request time to file a surreply.” Pippin v. Burlington Resources Oil and Gas Co., 440
F.3d 1186, 1192 (10th Cir. 2006). The Black & Decker Defendants have had six months since
Lopez filed his Reply to request time to file a surreply. They have not responded or requested
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the time to file such a surreply. The Court thus may consider the Reply’s new arguments,
although it is not required to consider them.
The Court concludes that it did not violate rule 56(f)(2). Under rule 56(f)(2), a court may
grant a summary judgment motion “on grounds not raised by a party” so long as it gives the
affected party “notice and a reasonable opportunity time to respond.” Fed. R. Civ. P. 56(f)(2).
Lopez contends that the Court relied on the Purchase Agreement in deciding the MSJ without
giving Lopez notice or an opportunity to respond. See Reply ¶¶ 1-3 at 1-2. The Court disagrees.
At the hearing, it received the Purchase Agreement for the first time and, after review and some
argument, the Court and Lopez’ attorney had the following exchange:
The Court: Well, you know, it looks like to me that I should grant the motion. I
need to study this new document here, and make sure I understand it. This is the
first time I’ve looked at it. . . . How do you feel about what you want to do in this
case?
Mr. Isaac: That’s a fair point, your honor. I would like an opportunity to have
somebody look at these, this lengthy agreement and the schedules.
....
The Court: Well, look, I’m barreling toward granting this thing. So if you get
anything and you want to send it to me. I’m not going to -- I can’t get an opinion
out today realistically. I need to look at this material. . . . If you get something,
send it to me.”
Mr. Isaac: Yes, sir.
Tr. at 45:23-48:18 (Court, Isaac).
After the Black & Decker Defendants asked for some
clarification on expert deadlines, given the Court’s inclination, this exchange took place:
The Court: What if I did this: Would this work for you, Mr. Isaac? They don’t
put any more money into the experts, because that’s probably going to have
nothing to do with this issue. It’s only having to do with the products liability
side. So I just slide that. If I get into this case, you find something, you send it to
me, and it changes dramatically the landscape that I’m seeing this morning, we’ll
get back together and set a new deadline for setting experts. But stop the clock a
little bit on -
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Mr. Isaac: Sure.
Tr. at 49:7-18 (Court, Isaac). These exchanges were sufficient to put Lopez on notice that the
Court would rely upon the Purchase Agreement in an opinion and invited Lopez, at least twice,
to send the Court argument on the Purchase Agreement if it chose.
See Tr. at 48:16-17
(Court)(“If you get something, send it to me.”); id. at 49:16-17 (“[Y]ou find something, you send
it to me.”). Indeed, Lopez accepted the Court’s invitation and submitted supplemental briefing
addressing the Purchase Agreement’s applicability to the MSJ. See Supp. Brief. ¶¶ 11-22, at 3-8.
The Court also concludes that it gave Lopez a reasonable time to respond about the Purchase
Agreement’s relevance to the pending MSJ. The Court did not rule on the MSJ until September
16, 2016 see Order at 1, six months after March 15, 2016 hearing, and two months after Lopez
had supplied supplemental briefing, see Supp. Brief at 9 (dated July 12, 2016). Accordingly, the
Court did not err under rule 56(f)(2).
The Court also notes that, even if Lopez did not have notice, he marshaled arguments
against the Purchase Agreement, so he was not prejudiced. See Oldham v. O.K. Farms, Inc., 871
F.3d at 1150 (“[E]ven if such notice is lacking, we will still affirm a grant of summary judgment
if the losing party suffered no prejudice from the lack of notice.”). A party is not prejudiced
under rule 56(f)(2) if he has had a meaningful opportunity to address a court’s sua sponte
reasoning. See Tabura v. Kellogg USA, 880 F.3d at 558; Oldham v. O.K. Farms, Inc., 871 F.3d
at 1151-52. Here, Lopez submitted supplemental briefing on the Purchase Agreements months
before the Court granted the MSJ, and the Court took into account those arguments when ruling.
See Suppl. Brief ¶¶ 11-22, at 3-8; MOO at 39-45, 100-12, 2017 WL 3142028, at *17-20, *41-46.
Indeed, Lopez argues that his supplemental briefing “discussed in detail why the PA showed
there were issues of fact.” Motion ¶ 13, at 6. Because Lopez had an opportunity to “discuss in
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detail” why the Purchase Agreement created a genuine issue, a lack of notice that the Court
would consider the Purchase Agreement did not prejudice him.
In addition to Lopez’ new arguments, Lopez asserts an old one: that the Court should
amend the judgment, because New Mexico or Delaware law -- and not Texas law -- applies to
the successor liability issue. See Motion ¶¶ 22, 27, 36-39 at 9, 11, 19-21. The Court will not,
however, amend the Final Judgment, because the Court previously determined that the successor
liability doctrine is inapplicable, as the Purchase Agreement embodies a stock acquisition and
not an asset acquisition. See MOO at 100-02, 2017 WL 3142028, at *41 (“As the Court noted at
the hearing, however, the successor-liability doctrine appears to be inapposite, because that
doctrine pertains to asset acquisitions, whereas here, The Black & Decker Corporation acquired
Delta Intl.’s stock via the Purchase Agreement.”). Accordingly, whether the Court erred on the
successor liability issue would not change the case’s outcome, so the Court need not amend the
Final Judgment.
Moreover, Lopez overlooks that the Court concluded that, even if New Mexico law
applies to the successor liability issue, Lopez’ claim would still fail. See MOO at 111-12, 2017
WL 3142028, at *45-46.
New Mexico law, unlike Texas law, recognizes two additional
exceptions to the traditional rule that successor corporations do not assume the liability of the
acquired corporation: the mere-continuation and the product line exceptions. See Garcia v. Coe
Mfg. Co., 1997-NMSC-013, ¶ 13, 21, 933 P.2d 243, 247, 249. Lopez does not challenge the
Court’s determination that the mere continuation exception does not apply, as there is no
evidence of a “common identity of officers, directors, and stockholders” between the Black &
Decker Defendants and Pentair Inc. MOO at 111, 2017 WL 3142028, at *45 (citing Garcia v.
Coe Mfg. Co., 1997-NMSC-013, ¶ 13, 933 P.2d at 247).
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See Motion ¶¶ 36-39 at 19-21.
Similarly, he does not rebut the Court’s determination that the product-line exception is
inapplicable:
There are no facts, however, demonstrating how Black & Decker (U.S), Inc.
represents itself to the public and to Delta Intl.’s customers, or whether Black &
Decker (U.S), Inc. has the same ability as Delta Intl. to ‘assess, control, and
distribute the risks and costs of injuries caused by’ any product defects.
MOO at 112, 2017 WL 3142028, at *46 (quoting Garcia v. Coe Mfg. Co., 1997-NMSC-013,
¶ 17, 933 P.2d at 248); See Motion ¶¶ 36-39 at 19-21. Indeed, it remains “undisputed that Delta
Intl. continues to exist and that it is available to respond in damages, if sued in a proper forum.”
MOO at 112, 2017 WL 3142028, at *46.
The Court also concludes that, under Delaware law, Lopez would not have a viable claim
under a successor-liability theory. The Supreme Court of Delaware has concluded that successor
liability attaches if the transaction is a de-facto merger. See Drug, Inc. v. Hunt, 168 A. 87, 96
(Del. 1933).
The elements necessary to create a de facto merger under Delaware law are the
following: (1) one corporation transfers all of its assets to another corporation;
(2) payment is made in stock, issued by the transferee directly to the shareholders
of the transferring corporation; and (3) in exchange for their stock in that
corporation, the transferee agreeing to assume all the debts and liabilities of the
transferor.”
Magnolia’s at Bethany, LLC v. Artesian Consulting Engineers, Inc., 2011 WL 4826106, at *3
(Del. Super. Ct. Sept. 19, 2011)(citing Drug, Inc. v. Hunt, 168 A. at 96)(italics in Magnolia’s at
Bethany, LLC v. Artesian Consulting Engineers, Inc.).21 The transaction between Black &
Decker (U.S) and Pentair Inc. is not a de facto merger, because payment was made in cash and
not in stock. See Purchase Agreement § 2.1, at 5 (“The purchase price . . . shall be in the amount
21
The Court concludes that the Supreme Court of Delaware would adopt these elements
as they are, largely, a summation of the doctrine outlined in Drug Inc. v. Hunt, and there is no
indication that the Supreme Court of Delaware would retreat from its prior, albeit New-Deal era,
holding.
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of $775,000,000.”). Furthermore, as previously determined, Black & Decker did not agree to
assume Pentair Inc.’s debts and liabilities. See MOO at 108-09, 2017 WL 3142028, at *44.
The Supreme Court of Delaware has not adopted any other successor liability theory,
although some Delaware lower courts recognize a version of the mere-continuation theory. See
Magnolia’s at Bethany, LLC v. Artesian Consulting Engineers, Inc., 2011 WL 4826106, at *3;
Fountain v. Colonial Chevrolet Co., 1988 WL 40019, at *8-9 (Del. Super. Ct. April 13,
1988)(“The continuation theory of corporate successor liability has been narrowly construed by
the Delaware courts. . . . [I]t must appear that the former is the same legal entity as that whose
obligation is sought to be charged upon it as one of its own.”). But see Spring Real Estate, LLC
v. Echo/RT Holdings, LLC, 2013 WL 6916277, at *5 (Del. Ch. December 31, 2013)(“Even if the
Court adopts the continuation theory here . . . .”). The Court could also find no Delaware
decision adopting the product-line exception, but it found at least two lower court decisions
critiquing it. See The O’Brien Corp. v. Hunt-Wesson, Inc., 1999 WL 126996, at *7 n.3 (Del. Ch.
February 25, 1999)(noting that the court “agree[s] with those who criticize” the product line
exception as “being not particularly well-thought out”); Mullen v. Alarmguard of Delmarva, Inc.,
1993 WL 258696, at *5 (Del. Super. Ct. June 16, 1993)(concluding that Maryland would not
adopt the product-line exception and noting that “the same problem exists with the product line
theory as exists with the continuity of enterprise exception: it imposes liability on entities that
have no connection with the acts causing injury”). Because Delaware typically assumes a probusiness approach to corporate law, see Hollis v. Hill, 232 F.3d 460, 473 (5th Cir. 2000), the
Court concludes that it is unlikely that the Supreme Court of Delaware would adopt the productline and the continuation exception, see also MOO at 91 n.41, 2017 WL 3142028, at *38 n.41
(“[T]he vast majority of jurisdictions have rejected the [product-line] exception.”) Even if it
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adopted those exceptions, however, Lopez’ arguments would fail for the same reasons that they
did under New Mexico law. See Magnolia’s at Bethany, LLC v. Artesian Consulting Engineers,
Inc., 2011 WL 4826106, at *3 (Del. Super. Ct. September 19, 2011)(“The primary elements of
continuation include the common identity of the officers, directors, or stockholders of the
predecessor and successor corporations, and the existence of only one corporation at the
completion of the transfer.”). Accordingly, the Court did not err, and it will not amend the Final
Judgment.22
II.
THE COURT DID NOT ERR IN DENYING LOPEZ’ 56(d) MOTION.
Lopez requests, in the alternative, that the Court vacate, alter, or amend its MOO and
Final Judgment under rule 56(d), and allow him to pursue additional discovery on the successor
liability issue. See Motion ¶ 2, at 2; Reply ¶¶ 4-5, at 3. He argues that the Court abused its
discretion in denying his original rule 56(d) motion “by simply reviewing and interpreting the
Purchase Agreement -- submitted by Plaintiff to the Court in July 2016 to show further discovery
was needed in order to resolve the potential successor liability issue, and never submitted by the
22
If Maryland or Minnesota law applied, the outcome would be the same. Maryland and
Minnesota have both rejected the mere-continuity rule. See Nissen Corporation v. Miller, 594
A.2d 564, 573 (Md. 1991); Niccum v. Hydra Tool Corp., 438 N.W.2d 96, 99 (Minn. 1989).
Minnesota has also rejected the product-line exception. See Niccum v. Hydra Tool Corp., 438
N.W.2d at 100. The Court concludes that the Court of Appeals of Maryland -- that state’s
highest court -- would also decline to adopt the product-line exception. In rejecting the merecontinuity rule, it noted that it so held, because, “in order to impose tort liability, there must be
fault,” but “[t]he continuity of enterprise exception is largely one of public or social policy under
which it has been determined that, irrespective of fault, a party should be held to respond for the
acts of another.” Nissen Corporation v. Miller, 594 A.2d at 574. Similar reasoning would lead
the Court of Appeals of Maryland to reject the product-line rule. The product-line rule is not
concerned with fault, but is designed to protect consumers who “may be left without a remedy if
the predecessor has dissolved, is defunct, or is otherwise unavailable to respond in damages.”
Garcia v. Coe Mfg. Co., 1997-NMSC-013, ¶ 17, 933 P.2d at 248. The product-line exception,
thus grounded in “public or social policy.” Nissen Corporation v. Miller, 594 A.2d at 574.
Accordingly, the Court concludes that the Court of Appeals of Maryland would reject the
product-line rule. Consequently, Lopez’ claims would also fail under Maryland or Minnesota
law.
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Black & Decker Defendants as grounds to support their motion for summary judgment.” Motion
¶ 2, at 2 (italics and underline in original). The Court disagrees.
“The general principle of Rule 56(d) is that summary judgment should be refused where
the nonmoving party has not had the opportunity to discover information that is essential to [its]
opposition.” Price ex rel. Price v. W. Res., Inc., 232 F.3d 779, 783 (10th Cir. 2000). Rule 56(d)
does not require, however, that summary judgment not be entered until discovery is complete.
See Price ex rel. Price v. W. Res., Inc., 232 F.3d at 784.
“Rule 56[(d)] is not a license for a
fishing expedition . . . .” Lewis v. Ft. Collins, 903 F.2d 752, 758 (10th Cir. 1990). To invoke
rule 56(d), the party filing the affidavit or declaration must state with specificity how the desired
time would allow it to meet its burden in opposing summary judgment.
See Jensen v.
Redevelopment Agency of Sandy City, 998 F.2d at 1554. Rule 56(d) may not be invoked based
solely upon the assertion that discovery is incomplete or that specific facts necessary to oppose
summary judgment are unavailable. See Jensen v. Redevelopment Agency of Sandy City, 998
F.2d at 1554.
The Court has already ruled:
Lopez does not identify any specific facts which he expects to discover which are
essential to his opposition to the MSJ. See Garcia v. U.S. Air Force, 533 F.3d at
1179. As the Tenth Circuit has said, a party cannot invoke rule 56(d) ‘by simply
stating that discovery is incomplete but must state with specificity how the
additional material will rebut the summary judgment motion.” Garcia v. U.S. Air.
Force, 533 F.3d at 1179.
MOO at 115, 2017 WL 3142028, at *47. Lopez’ Motion still does not identify what additional
material he expects to find that would rebut the summary judgment motion. See Motion ¶¶ 2324, at 9-10. As already explained, his request for more time to discover materials to interpret the
contract is unnecessary as a matter of law. See supra at 53, n.19. Moreover, because the Court
concludes that the Purchase Agreement unambiguously indicates it is a stock-acquisition
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agreement, there is almost no chance that additional discovery will alter the case’s outcome.
Thus, the Court will not alter, amend, or vacate the Final Judgment or the MOO on rule 56(d)
grounds.
IT IS ORDERED that the Plaintiff’s Rule 59 Motion for New Trial and/or to Alter or
Amend the Judgment, filed August 23, 2017 (Doc. 107), is denied.
________________________________
UNITED STATES DISTRICT JUDGE
Counsel:
Joseph Cervantes
Cervantes Law Firm
Las Cruces, New Mexico
-- and -Joseph G. Isaac
Scherr & Legate, P.L.L.C.
El Paso, Texas
Attorneys for the Plaintiff
Donald A. DeCandia
Tomas J. Garcia
Modrall, Sperling, Roehl, Harris & Sisk, P.A.
Albuquerque, New Mexico
Attorneys for Defendants Delta International Machinery Corporation, Stanley Black &
Decker, Inc., Black & Decker (U.S.) Inc., Rockwell Automation, Inc., and Pentair, Inc.
Stephen Simone
Chapman and Priest, P.C.
Albuquerque, New Mexico
Attorneys for Defendant GLH, L.L.C.
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