Opinion
Civil Case No. 97-2230 (DWF/AJB)
May 10, 2001
Thomas W. Pahl, Esq., Michael W. Dvorak, Esq., and Russell D. Melton, Esq., Foley Mansfield, Minneapolis, Minnesota, for Plaintiffs.
Richard W. Sobalvarro, Esq. and Frederick L. Grunke, Esq., Rajkowski Hansmeier, St. Cloud, Minnesota, for Defendant Sandoz Agro, Inc.
Jonathan C. Meisen, Esq. and Wallace G. Hilke, Esq., Lindquist Vennum, Minneapolis, Minnesota, for Defendant Terra International, Inc.
MEMORANDUM OPINION AND ORDER
Introduction
The above-entitled matter came before the undersigned United States District Judge, pursuant to Plaintiffs' motions to vacate judgment, for leave to amend complaint, and for attorney's fees and costs. In addition, Defendant Terra International, Inc. has filed a motion to exclude testimony, or in the alternative to assert third-party claims. For the reasons set forth below, the Court grants Plaintiffs' motion to vacate judgment and reserves judgment on Plaintiffs' motions for leave to amend complaint and for attorney's fees and costs. With respect to Defendant Terra International, Inc.'s motion to amend or file third-party claims, the Court will refer the matter to Magistrate Judge Arthur J. Boylan.
Background
Plaintiffs operate a 3,000-acre farm in central Minnesota. In 1996, the Plaintiffs contracted with Defendant Terra International, Inc. ("Terra") for the purchase and application of herbicide. When Terra was unable to supply the particular brand originally requested by the Hurrles, Terra recommended the alternative application of Frontier herbicide and indicated that the proper application rate would be calculated by Timm Gabrielson, a field sales representative for Defendant Sandoz Agro, Inc. ("Sandoz"), the manufacturer of Frontier. Upon Mr. Gabrielson's recommendation, Terra applied the herbicide, and substantial crop damage ensued. Plaintiffs allege that the crop damage was due to the over-application and mis-application of Frontier herbicide. In essence, the parties dispute the concentration of herbicide recommended and the manner in which it was applied.
On December 15, 1999, this Court issued an order granting summary judgment in favor of the Defendants to the extent that: (1) all claims against Sandoz were dismissed with prejudice; and (2) claims against Terra asserting strict liability, breach of warranty, fraud and misrepresentation, and violation of the Consumer Fraud Act were dismissed with prejudice. The dismissal of claims against Sandoz was based in relevant part on the testimony of Timm Gabrielson, which stated that he recommended an application rate of 24 ounces, and that he based his recommendation upon the information provided by the Frontier label.
Since the Court's December 15, 1999, Order, Mr. Gabrielson has been deposed two additional times. In a deposition conducted on August 22, and September 13, 2000, Mr. Gabrielson's testimony contradicted his earlier statements to the effect that he claimed to have recommended a rate of 28 ounces based upon his reliance on a Sandoz-generated rate card. In addition, Mr. Gabrielson claimed that both Defendants and certain witnesses concealed their knowledge of the 28-ounce recommendation, acknowledging that the concentration was too high for the Hurrles' soil.
On January 31, 2001, Mr. Gabrielson was deposed again, and a significant number of questions were left unanswered due to his alleged inability to remember and/or lack of knowledge. When the deposition was provided to Mr. Gabrielson for his signature, he changed numerous non-responsive answers, providing substantial substantive information. Plaintiffs also point to additional evidence, including several documents produced by way of Sandoz' partial waiver of attorney-client privilege, that allegedly support Plaintiffs' theory of fraudulent concealment.
With respect to Defendant Terra, the Court dismissed, by way of its December 15, 1999, Order, claims of fraud and misrepresentation and violation of the Consumer Fraud Act. The Court reasoned that Plaintiffs had not provided evidence that Defendants "misrepresented `that they knew the proper amount of herbicide to apply,'" relying in part on Mr. Gabrielson's uncontroverted testimony that he had based his 24-ounce recommendation on the herbicide label. With respect to the Consumer Fraud Act, however, the Court found, alternatively, that Plaintiffs' claim was precluded under the Act because of their "special knowledge and skill in the matter of pesticide and pesticide application." To the extent necessary, the Court will address the basis for its dismissal of other claims against Terra and Sandoz in its discussion below.
Plaintiffs now move the Court, pursuant to Fed.R.Civ.P. 60(b), to vacate its judgment and reinstate all claims against both Defendants. Plaintiffs contend that the judgment was procured by fraud, allegedly indicated by the changed testimony of Timm Gabrielson, with respect to the recommended rate of herbicide and the rate at which it was actually applied, and other documents recently produced due to the partial waiver of Sandoz' attorney-client privilege.
Plaintiffs also move the Court for leave to amend their complaint to add claims for: (1) fraud; (2) civil conspiracy to commit fraud; (3) intentional infliction of emotional distress; and (4) punitive damages. In addition, Plaintiffs move the Court for attorney's fees and costs with respect to this motion. Defendant Terra moves the Court to exclude the testimony of Timm Gabrielson or, in the alternative, to assert third-party claims against Mr. Gabrielson.
Discussion
1. Motion to Vacate
a. Standard of Review
Rule 60 of the Federal Rules of Civil Procedure provides in relevant part:
Rule 60. Relief From Judgment or Order
* * *
(b) Mistakes; Inadvertence; Excusable Neglect; Newly Discovered Evidence; Fraud, Etc. On motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a final judgment, order, or proceeding for the following reasons: . . . (2) newly discovered evidence which by due diligence could not have been discovered in time for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; . . . (6) any other reason justifying relief from the operation of the judgment.
Fed.R.Civ.P. 60(b). Plaintiffs have brought their motion to vacate under all three provisions cited, Fed.R.Civ.P. 60(b)(2), (3), (6).
In order to bring a successful motion under 60(b)(2), a movant must establish that: (1) the "new" evidence was discovered after trial; (2) due diligence was exercised to discover the evidence; (3) the evidence is material and not merely cumulative or impeaching; and (4) the evidence is such that a new trial would probably produce a different result. Mitchell v. Shala, 48 F.3d 1039, 1041 (8th Cir. 1995). To prevail on a 60(b)(3) motion, the moving party "must show, with clear and convincing evidence, that the opposing party engaged in a fraud or misrepresentation that prevented the movant from fully and fairly presenting its case." Atkinson v. Prudential Property Co., Inc., 43 F.3d 367, 372-73 (8th Cir. 1994). Finally, 60(b)(6) is a "catch-all" provision that allows a Court to vacate a judgment upon the finding of "exceptional circumstances" that warrant such equitable relief. In re Zimmerman, 869 F.2d 1126, 1128 (8th Cir. 1989).
b. Issues
The Court finds that the developments in discovery since its December 15, 1999, Order represent "exceptional circumstances" sufficient to warrant relief under Rule 60(b). Whether the evidence at issue constitutes "newly discovered evidence" under 60(b)(2) or indicates a fraud under 60(b)(3) is not determinative. The totality of the circumstances and the evidence now before the Court compromise its earlier decision to the extent that to leave it standing would be unfair.
If the Court had been presented with Mr. Gabrielson's testimony that he had recommended 28 ounces, as opposed to 24 ounces of herbicide, and that his recommendation was based on information on a Sandoz-generated rate card, then it would not have granted summary judgment in favor of Sandoz with respect to Plaintiffs' claims of negligence. The Court would have had to find that the recommended application rate and its derivation was in dispute. While the Court is unable to find with certainty at this time that fraud or concealment occurred, Plaintiffs have presented significant evidence to create a dispute of fact with respect to Defendants' participation and or knowledge of the alleged concealment. Consequently, if the Court had been presented with such evidence, it would not have issued summary judgment in favor of Defendants Terra and Sandoz with respect to Plaintiffs' claims of fraud and misrepresentation.
Both Defendants contend that Mr. Gabrielson has committed perjury and that his original testimony should stand as it is corroborated by the original testimony of the Hurrles and recent documents and testimony confirming the 24-ounce application rate. In addition, Defendants point to Mr. Gabrielson's behavior at depositions and his alleged threat to compromise the litigation as evidence that his recent testimony is not credible and should not be considered for purposes of this motion.
The Court acknowledges that Mr. Gabrielson's conflicting testimony certainly indicates that he has not been consistently truthful. However, in light of Mr. Gabrielson's allegations of concealment on the part of both Terra and Sandoz representatives and the potentially supporting documents relating to his rate recommendation and subsequent communications with Terra and Sandoz representatives, the Court does not find that his testimony during at least one of the depositions was not credible. The additional testimonial and documentary evidence pointed to by Defendants, i.e., the computerized method of documenting field notes and product sales and the recent Minnesota Department of Agriculture document finding a 24-ounce application rate, do not clearly establish that Mr. Gabrielson's testimony could not be true. To the extent that it becomes necessary and to the extent that it is appropriate under the Federal Rules of Evidence, Defendants will be permitted to use such evidence to impeach Mr. Gabrielson's testimony and any other evidence offered by Plaintiffs, assuming the evidence is deemed admissible at trial. However, the dispute of what application rate was recommended and applied remains and shall be determined by the ultimate trier of fact. Accordingly, the Court grants Plaintiffs' motion to vacate to the extent described above and outlined below.
2. Additional Motions and Requests for Relief
Plaintiffs also request that the Court grant attorney's fees and costs with respect to their motion to vacate. While the Court recognizes its authority to grant fees and costs on such a motion, it declines to do so at this time, reserving judgment for a later determination. It is not clear to the Court, at this time, that Defendants have opposed Plaintiffs' motion without reason or in bad faith. Such a determination cannot be made until the case has been played out and resolved, and thus the Court reserves judgment on the issue of appropriate costs and fees until a resolution has been achieved. Plaintiff also makes numerous requests within the text and footnotes of its memoranda for sanctions under Fed.R.Civ.P. 11 and 37(c) and for a finding of contempt under Fed.R.Civ.P. 56(g). The Court declines to grant such relief at this time.
The Court recognizes that Plaintiffs have filed a motion for attorney's fees (Doc. No. 88) and to the extent that it overlaps with Plaintiffs' request here, the Court will reserve judgment until the case is resolved.
With respect to Terra's motion to exclude testimony or, in the alternative, to assert third-party claims, the Court will treat the document as two separate motions. The first, the motion to exclude testimony, will be considered as a motion in limine and will be addressed by the Court at the appropriate time. The second, the motion to assert third-party claims, will be referred to Magistrate Judge Arthur J. Boylan. While the Court refers this matter as a separate motion, the parties will have to comply with any refiling or form requirements required by Magistrate Judge Boylan. All other motions to assert third-party claims or to amend the complaint will also be referred to Magistrate Judge Boylan.
Whether true or not, the allegations of a conspiracy to conceal or an individual's attempts to defraud must be considered with the utmost concern for truth and fairness. The Court recognizes that the discovery in this case has become increasingly complex due to the change in testimony of a key witness. However, the Court takes issue with counsel's straying focus on the character and potential sanction of the opposition and encourages their maintained focus on the factual and legal issues at hand.
For the reasons stated, IT IS HEREBY ORDERED THAT:
1. Plaintiffs' Motion to Vacate (Doc. No. 62) is GRANTED such that:
a. Counts I and V against Defendant Sandoz are REINSTATED;
b. Count V against Defendant Terra is REINSTATED;
2. Defendant Terra's Motion to Exclude Testimony or, in the Alternative, Assert Third-Party Claims (Doc. No. 104) is referred to Magistrate Judge Arthur J. Boylan such that:
a. The Court retains jurisdiction over Defendant Terra's Motion to Exclude Testimony; and
b. The Court refers Defendant Terra's Motion to Assert Third-Party Claims to Magistrate Judge Arthur J. Boylan. The Court directs the parties to contact Kathy Thobe, Magistrate Judge Arthur J. Boylan's Calendar Clerk, at 651-848-1210, to schedule a hearing as appropriate.
3. In addition, the parties are directed to contact Kathy Thobe, Magistrate Judge Arthur J. Boylan's Calendar Clerk, at 651-848-1210, to adjust the scheduling order as appropriate in preparation for a trial date of October 1, 2001.