Midwest Direct Logistics, Inc. v. Twin City Tanning Waterloo, LLC

• Decision Date: 23 August 2016
• Docket Number: No. 15-CV-2013-LRR,15-CV-2013-LRR
• Parties: MIDWEST DIRECT LOGISTICS, INC., Plaintiff, v. TWIN CITY TANNING WATERLOO, LLC, Defendant.
• Court: U.S. District Court — Northern District of Iowa

MIDWEST DIRECT LOGISTICS, INC., Plaintiff, v. TWIN CITY TANNING WATERLOO, LLC, Defendant.

No. 15-CV-2013-LRR

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF IOWA EASTERN DIVISION

August 23, 2016

ORDER

TABLE OF CONTENTS

I. INTRODUCTION ....................................... 2

II. RELEVANT PROCEDURAL HISTORY ........................ 2

III. ANALYSIS ........................................... 2

A. Midwest Motion .................................... 2

1. Undisclosed exhibits and witnesses ................... 3

2. Lerner's opinion testimony ........................ 4

3. Lerner's affidavit and deposition .................... 6

4. TCTW's interest in the hide trimmings ................ 8

5. Payment to Twin City Hide, Inc. ..................... 9

B. TCTW Motion ..................................... 9

1. Terms and conditions .......................... 10

2. Subsequent practice ............................ 11

3. Roos's past employment ......................... 14

C. Overarching Issue of Law ............................ 15

IV. CONCLUSION ....................................... 17

I. INTRODUCTION

The matters before the court are Plaintiff Midwest Direct Logistics, Inc.'s ("Midwest") Motion in Limine ("Midwest Motion") (docket no. 46) and Defendant Twin City Tanning Waterloo, LLC's ("TCTW") Motion in Limine ("TCTW Motion") (docket no. 47) (collectively, "Motions").

II. RELEVANT PROCEDURAL HISTORY

On August 4, 2016, Midwest filed the Midwest Motion. On that same date, TCTW filed the TCTW Motion. On August 11, 2016, TCTW filed a Resistance to the Midwest Motion ("TCTW Resistance") (docket no. 52). On that same date, Midwest filed a Resistance to the TCTW Motion ("Midwest Resistance") (docket no. 51). On August 18, 2016, the court held a Final Pretrial Conference ("FPTC"), at which the parties addressed the Motions. See Aug. 18, 2016 Minute Entry (docket no. 58).

III. ANALYSIS

A. Midwest Motion

In the Midwest Motion, Midwest argues that the court should prohibit TCTW from introducing the following:

(1) "Any and all exhibits or witnesses not timely disclosed";

(2) "Evidence of Michael Lerner's opinion that the bills of lading serve only as a receipt and not to indicate responsibility for payment";

(3) "Evidence contained in Michael Lerner's Affidavit either directly or through his deposition testimony";

(4) "Evidence of Michael Lerner's opinion that [TCTW] is not responsible for making payment to Midwest";

(5) "Evidence that [TCTW] had no beneficial interest in the hide trimmings"; and(6) "Evidence that Twin City Hides, Inc. has not been paid for the [twenty-seven] loads of hide trimmings represented by the bills of lading."

Midwest Motion at 1-2. The court shall address the admissibility of Lerner's opinion testimony together, but shall address each other objection separately.

1. Undisclosed exhibits and witnesses

Midwest argues that, "[s]hould [TCTW] attempt to call previously undisclosed witnesses and/or introduce undisclosed exhibits at trial, Midwest . . . objects . . . ." Brief in Support of the Midwest Motion (docket no. 46-1) at 1. Federal Rule of Civil Procedure 37(c)(1) states that, "[i]f a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless." Rule 26(a) governs initial disclosures by the parties, and Rule 26(e) requires the parties to supplement their initial disclosures as necessary. See Fed. R. Civ. P. 26(a), (e). TCTW does not dispute that such evidence should be timely disclosed. See Brief in Support of the TCTW Resistance (docket no. 52-1) at 1.

However, the court has discretion in determining whether to exclude late-disclosed evidence. See Fed. R. Civ. P. 37(c)(1) (providing that a failure to disclose that is "substantially justified or is harmless" will not result in the exclusion of the evidence); see also Davis v. U.S. Bancorp, 383 F.3d 761, 765 (8th Cir. 2004) ("Rule 37 does not provide for mandatory sanctions, and the district court may find that a party's failure to include a witness in the initial Rule 26(a)(1) disclosures was substantially justified or harmless."). Furthermore, even if the court finds a violation of Rule 26(a) or (e) and the violation was not substantially justified or harmless, the court is not required to exclude the evidence. It has considerable discretion in crafting an appropriate sanction. See Fed. R. Civ. P. 37(c)(1)(A)-(c)(1)(c); Carmody v. Kan. City Bd. of Police Comm'rs, 713 F.3d 401, 405 (8th Cir. 2013) (noting that the court's "'discretion to fashion a remedy or sanction' is'wide,' but 'narrows as the severity of the sanction or remedy . . . increases'" (alteration in original) (quoting Wegener v. Johnson, 527 F.3d 687, 692 (8th Cir. 2008)). The court finds that it is unable to make a determination as to the admissibility of any potentially undisclosed witnesses or evidence unless and until such time that a party offers such evidence. Accordingly, the court shall reserve ruling on the admissibility of any such evidence.

2. Lerner's opinion testimony

Midwest argues that Michael Lerner's testimony that he viewed the bills of lading as mere receipts should be excluded. Midwest argues that "testimony by a lay witness is allowed in the form of an opinion if it is . . . rationally based on [the] witness['s] perceptions; . . . helpful to clearly understand[] the witness['s] testimony or to determine a fact and issue; . . . and not based on scientific, technical or other specialized knowledge within the scope of [Federal Rule of Evidence] 702." Brief in Support of the Midwest Motion at 2-3 (citing Fed. R. Evid. 701). Midwest further argues that "Lerner's anticipated testimony that [TCTW] was not responsible for payment to Midwest is irrelevant . . . [and] is not rationally based on the witness's perception." Id. at 4. Midwest maintains that Lerner's mere assumption that Atlantic would be liable for shipping costs does not comport with Rule 701. Id.

TCTW argues that Lerner's testimony that the bills of lading operated as receipts "is not directed at bills of lading in general." Brief in Support of the TCTW Resistance at 1. TCTW maintains that such testimony stems from Lerner's personal knowledge of the particular terms of freight negotiated by Atlantic and Midwest. Id. TCTW argues that Lerner is merely a fact witness because "he was a party who negotiated the contract terms with [Midwest]." Id. at 2. TCTW further argues that Lerner's testimony that Atlantic was solely liable for the cost of shipping is admissible. See id. at 3-4. TCTW argues that any agreement between Atlantic and Midwest was based on Lerner's personal knowledge dueto his negotiation of freight terms with Midwest and the course of conduct between Midwest and Atlantic. Id. at 4. TCTW maintains that such evidence is relevant to Lerner's state of mind and intent. Id.

Federal Rule of Evidence 701 requires that any lay witness's opinion be based on the witness's perception, be helpful to understand the witness's testimony or to determine a fact at issue and not be based on scientific, technical or specialized knowledge. "If a witness is not testifying as an expert, his testimony in the form of opinions or inferences need only be rationally based on his perception and helpful to the determination of a fact at issue." Greenwood Ranches, Inc. v. Skie Constr. Co., 629 F.2d 518, 522 (8th Cir. 1980). A party may not evade the disclosure and reliability requirements of Federal Rule of Evidence 702, governing expert witnesses, merely by designating a witness as a lay witness. But where an opinion is based, not on experience, training or specialized knowledge within the realm of an expert, but instead on "the particularized knowledge that the witness has by virtue of his or her position" in relation to the action, such evidence is ordinarily admissible. Fed. R. Evid. 701 advisory committee's note to 2000 amendment; see also, e.g., United States v. Westbrook, 896 F.2d 330, 336 (8th Cir. 1990) (authorizing two lay witnesses who were heavy amphetamine users to testify that a substance was an amephetamine based on their experience with the substance).

With respect to Lerner's opinion that the bills of lading operated as receipts, Lerner testified in his deposition that, while he was not personally familiar with the bills of lading for the twenty-seven hide shipments at issue, he had prior experience with bills of lading from Midwest. See Exhibit 1 to the Midwest Motion (docket no. 46-2) at 6 (Lerner testifying that he saw bills of lading from Midwest "[o]n occasion"). Thus, even assuming that Lerner's testimony is indeed lay opinion testimony, the court finds that any testimony Lerner gives regarding the bills of lading at trial is rationally related to bills of lading that Atlantic received from Midwest over the course of their relationship. The court furtherfinds that Lerner's opinion that the bills of lading operated as mere receipts would be helpful to a fact finder in determining whether Atlantic agreed to be solely liable for the cost of shipping. Finally, regardless of whether Lerner's knowledge of the effect of Section 7 on a bill of lading was obtained from a Wikipedia article, as Midwest argues, see Brief in Support of the Midwest Motion at 2, Lerner's testimony as to his understanding of the effect of the bills of lading at issue was based on his experience purchasing and selling hide trimmings, as well as his long business relationship with Midwest. Any testimony as to his understanding of the bills of lading would not be based on specialized knowledge, but rather "particularized knowledge" that Lerner has due to his position as one of the owners of Atlantic and someone with whom Midwest regularly communicated. Therefore, the court finds that such testimony is admissible.

With respect to Lerner's opinion that...