56 F.3d 521 (3rd Cir. 1995), 94-5529, Affiliated Mfrs., Inc. v. Aluminum Co. of America

Docket Nº:94-5529.
Citation:56 F.3d 521
Case Date:June 06, 1995
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

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56 F.3d 521 (3rd Cir. 1995)




No. 94-5529.

United States Court of Appeals, Third Circuit

June 6, 1995

Argued March 7, 1995.

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Ross A. Lewin (argued), Jamieson, Moore, Peskin & Spicer, Princeton, NJ, for appellant.

Stuart Alderoty (argued), Thomas G. Griggs, LeBoeuf, Lamb, Greene & MacRae, L.L.P., Newark, NJ, for appellee.

Before: HUTCHINSON and ALITO, Circuit Judges, and RESTANI, Judge, Court of International Trade. [*]



Following a trial in this action brought by plaintiff-appellant Affiliated Manufacturers, Inc. ("AMI") alleging additional money was due on a contract, the jury returned a verdict in favor of defendant-appellee Aluminum Company of America ("Alcoa") on its counterclaim for failure to satisfy contract specifications

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and breach of warranties. AMI appeals from the district court's grant of a motion in limine brought by Alcoa to exclude certain documents and deposition testimony as evidence of settlement negotiations under Fed.R.Evid. 408. For the reasons set forth herein, we affirm the judgment of the district court.


AMI originally filed its complaint on June 3, 1991, against Alcoa in the Superior Court of New Jersey, seeking payment of invoices amounting to $488,130. The case was removed to the United States District Court for the District of New Jersey on July 2, 1991. Alcoa filed a motion in limine on November 5, 1993, and a supplemental submission dated November 23, 1993, seeking to exclude portions of a total of fifteen items from admission at trial, including excerpts from correspondence between AMI and Alcoa, Alcoa internal memoranda and deposition testimony. The district court granted this motion with respect to thirteen of the fifteen items, by memorandum order dated December 23, 1993.

The case was tried before a jury from March 1, 1994 to April 6, 1994. The jury returned a verdict of $100,000 for Alcoa on its counterclaim, and rejected all of AMI's claims. AMI moved for a new trial, but the motion was denied on July 19, 1994. This appeal was filed on August 17, 1994.

The dispute between AMI and Alcoa arose from a contract for design and fabrication of an automated greenline handling system ("the system"). 1 The system built under this contract was never put into production. During the construction of the system, AMI submitted to Alcoa invoices for work not included in the contract. Upon receipt, Alcoa processed the invoices for payment. The parties disagree concerning one unpaid invoice for hardware costs (four screen printers) totalling $280,000, and another unpaid invoice for $208,130 in software costs. These two invoices were submitted by AMI at the end of the project, on April 5, 1990, to the attention of Thomas Pollak ("Pollak"), Alcoa's procurement manager.

Pollak consulted with Alcoa employees Earle Lockwood ("Lockwood") and Phil Kasprzyk ("Kasprzyk") concerning the invoices, because both were closely involved with the project. In memoranda, Lockwood and Kasprzyk each evaluated one of the two invoices from AMI. At a meeting between Pollak, Lockwood and AMI's president, Benson Austin ("Austin"), on May 2, 1990, one topic of discussion was the issue of unpaid invoices, as reflected in handwritten contemporaneous notes. Appellant's App. at 54-57 ("App.").

Alcoa's original motion in limine sought exclusion of portions of the Lockwood and Kasprzyk memoranda and a letter from Austin dated June 26, 1990, as well as portions of the meeting notes from May 2, deposition exhibits and transcripts that were not specifically described. App. at 3-5. At the request of the district court, Alcoa supplied an additional submission detailing twelve items (meeting notes, deposition testimony and letters) for which Alcoa also sought portions excluded from admission at trial. See App. at 17-21. Each of the thirteen items, for which the district court ruled portions inadmissible, will be discussed in turn.

In particular, the district court excluded portions of the memorandum by Kasprzyk dated May 1, 1990, and Kasprzyk's deposition testimony concerning the memorandum. Affiliated Mfrs., Inc. v. Aluminum Co. of America, Civ. No. 91-2877, at 7 (D.N.J. Dec. 23, 1993) ("AMI I"). The memorandum stated in part

AMI's claim of 6251 hours of programming time is [un]reasonable when you consider the additional 4100 hours that ALCOA personnel contributed.


Since the original purchase order for the line did not thoroughly specify the capability of the line, I feel that AMI has a legitimate claim to some software compensation.

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I feel that AMI should only be compensated for 1/3 of the requested amount since the line does not meet the 600 card per hour specification.... 2

App. at 11; see AMI I at 7. The district court also excluded a section of the handwritten notes of the May 2, 1990 meeting between Alcoa and AMI, which contained a mathematical calculation of numbers, as well as the terms "software proposal" and "above settlement proposal by Alcoa unacceptable." AMI I at 12; see App. at 57.

The district court further excluded the following excerpts of Pollak's deposition testimony regarding the purposes of the May 2 meeting and a subsequent meeting held on January 7, 1991:

Q: [W]hat was the purpose of the visit ... on May the 2nd, 1990?

A: To the best of my recollection an attempt to reach agreement--


Q: So this was about a month after the shipment of the equipment that you were there with Mr. Lockwood?

A: Yes.

Q: Do you recall the purpose of that visit?

A: An attempt to reach agreement to get the equipment to perform in accordance with the specifications.


Q: The only other recorded visit that we have was on January 7th, 1991,.... [W]hat was the purpose of your visit?

A: My recollection is to reach settlement.

App. at 25-27 (Dep. Tr. of Thomas Pollak at 35-37); see AMI I at 9-10. The court also excluded portions of Austin's deposition testimony regarding his discussions with Pollak, particularly the following statements:

Q. You were in the process of trying to negotiate a settlement?

A. No. [Mr. Pollak] was. I wasn't. Not at all.

Q. You had presented a demand, ALCOA had made a proposal to settle the dispute?

A. Yes. At this point, he said, I'm not going to pay you for any profits. I'm just going to pay you for your cost ..., and I told him that I wasn't in business to supply products with manufacturing costs. I'm sorry. I have to make a profit.


A. Well, this had to do with the ALCOA offer. They offered what the cost of goods sold, $83,382.... The ALCOA offer of $101,000, which is from this batch, gives us a loss of $12,000.


A. I, frankly, was very surprised that we see such opposition from our, what we thought were most reasonable settlements on these, because you must remember we were still interested in doing more business with ALCOA....


A. Well, Mr. Pollak accepted both bills, and his comment was I will offer you so much on the printers now.... I will offer you this much now, and you change your invoice and we will pay it.


A. I think that offer was either made in the meeting or it was made in the letter, I don't know which.

App. at 47-52 (Dep. Tr. of Benson Austin at 74, 76-77, 88-90); see AMI I at 11-12.

Additionally, the district court excluded portions of four letters from Pollak to Austin dated June 11, August 22, September 24, and October 31, 1990. These letters, respectively, contained the following statements:

As a compromise, I will split the $7,500 amortization fee, adding $15,000 to my offer.

App. at 66; AMI I at 13;

Your letter of 1990 June 26 presented your logic for turning down our third proposed settlement for the screen printers.... I

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suggest we resolve this equipment issue by agreeing on my final offer for a settlement.... Please cancel your invoice...

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