Opinion
IP 00-1080-C-B/G
January 24, 2003
James T. Jackson, Stafford Jackson LLP, Santa Ana, CA.
Stephen Lepage, Harrison Moberly, Indianapolis, IN.
John R. Maley, Barnes Thornburg, Indianapolis, IN.
James A. Zapp, Paul Hastings Janofsky Walker, Los Angeles, CA.
Plaintiff Theodore Tremper filed suit against Defendants Air-Shields, Inc., Hill-Rom Co., Inc., and Hillenbrand Industries, Inc. (collectively referred to as "Defendants"), alleging several causes of action arising from his employment relationship with Defendants. The matter now comes before us on Defendants' Motion for Partial Summary Judgment and Plaintiff's Motion for Summary Judgment. For the reasons explained in detail below, we GRANT IN PART and DENY IN PART Defendants' Motion for Partial Summary Judgment and we GRANT IN PART and DENY IN PART Plaintiff's Motion for Summary Judgment.
Defendant expressly excludes from this Motion for Summary Judgment Tremper's claim regarding Defendants' payment of a noncompetition fee, also allegedly owed under the 1994 Employment Agreement, and so we do not pass on that claim in this Entry.
Factual Background This dispute arises from a contractual relationship between Plaintiff Theodore Tremper and Air-Shields, Inc. On May 6, 1994, an entity controlled by Tremper sold to Air-Shields a certain software program, in consideration of which Air-Shields agreed to pay Tremper royalties equal to 1% of net sales of the product for five years ("Purchase Agreement"). Defs.' Statement of Undisputed Facts ¶¶ 1-2. On the same date, Tremper entered into an Employment Agreement with Air-Shields ("1994 Employment Agreement"), which provided that Tremper would be employed as president of one of Air-Shields' divisions for three years. Id. ¶¶ 3-4. The 1994
Employment Agreement further provided that Plaintiff would receive compensation in the form of salary, a signing bonus, noncompetition compensation, reimbursement of certain expenses, and an executive bonus. Id., Exh. 3. At some subsequent point, before the end of 1997, Tremper alleges that he discussed with certain representatives of Air-Shields and Vickers, PLC ("Vickers"), the parent company of Air-Shields, the size of the executive bonus to which he was entitled. Pl.'s Statement of Disputed Facts ¶¶ 14-17. The parties disagree as to the precise amounts discussed, but Tremper acknowledged (in his deposition) that the negotiated bonus amount was subject to final approval by Vickers executives. Def.'s Statement of Undisputed Facts ¶ 15; Depo. of Theodore Tremper, at 123. Tremper neither alleges nor offers any facts to indicate that such approval was ultimately granted. Tremper also does not dispute Defendants' assertion that "Plaintiff and the [Air-Shields/Vickers' employees with whom he negotiated the bonus] did not agree on the concrete amount of [the] bonus." Defs.' Statement of Undisputed Facts ¶ 11.
In late 1997, Hillenbrand Industries, the parent company of Hill-Rom Company, Inc., purchased Air-Shields from Vickers by stock purchase agreement. Id. ¶ 6; Pl.'s Exh. 2. In December 1997, Tremper received written assurance from a representative of Vickers that his contractual rights vis-a-vis Air-Shields would continue under the 1994 Employment Agreement.
Pl.'s Statement of Disputed Facts ¶ 5. On September 15, 1998, Plaintiff entered with Air-Shields into an Executive Employment Agreement ("1998 Employment Agreement"), which provided that Plaintiff was employed at will, that he would be entitled to receive, among other forms of compensation, "[i]ncentive compensation, payable solely at the discretion of [Air-Shields], pursuant to the Company's Exempt Employee Executive Compensation Program," and that the terms of the 1998 agreement would supersede those of the 1994 contract. Defs.' Statement of Undisputed Facts ¶¶ 7-8; Defs.' Exh. 5 at 1. Tremper remained employed by Air-Shields under the terms of the 1998 Employment Agreement until he was terminated on or about March 22, 1999. Id. ¶ 9.
The following facts regarding the royalty calculation are undisputed: during the term of the contractual relationship between Air-Shields and Tremper, Hill-Rom employees calculated Tremper's royalties based on the agreed-upon 1% figure stipulated in the Purchase Agreement.
Id. ¶ 16-17. In 1999, Hill-Rom employee Shelley Haase assumed responsibility for the calculation of royalty payments owed to Tremper. Id. ¶ 18. Ms. Haase mistakenly calculated Tremper's March 1999 royalty payment to reflect sales for the period from September-November 1998, instead of the correct period from December 1998-February 1999. Id. ¶ 19-20.
This miscalculation resulted in a March 1999 overpayment of royalties to Tremper in the amount of $5,881.42. Id. ¶ 26. On June 4, 1999, Hill-Rom notified Tremper in writing of the overpayment, which as of the filing of Defendants' Motion had not been repaid. Id. ¶¶ 27-28.
Tremper does not dispute the formula by which Defendants calculated his royalties, nor the result of the calculation. Instead he argues that, although Defendants may have substantially overpaid him for the period from December 1998-February 1999, he is still entitled to an additional royalty payment for the period from March-May 1999. Defendants submitted sales summaries and a 1099 form as (unrebutted) evidence of royalties owed and payments made to Tremper. We note that our multiplication of the net sales figures by the 1% royalty rate yielded slightly different figures than those quoted in Ms. Haase's affidavit. However, the difference in these figures still indicates an overpayment to Tremper in the amount of $5,881.23 — which does not differ materially from the $5,881.42 overpayment Defendants allege (and which Tremper offers no evidence to dispute).
On or about May 10, 1999, Tremper submitted a number of expenses to Hill-Rom for reimbursement. Id., Exh. 7, Aff. of Billie Snyder, ¶ 10. Pursuant to Hill-Rom policy, reimbursement requests were to be submitted no more than 30 days after the expenses were incurred. Id., Exh. 7(a). The expenses Tremper submitted in May 1999 were incurred more than 30 days prior to the request for reimbursement — some as long as one year prior to the request.
Id. ¶ 37-38. Certain listed expenses lacked the documentation required by Hill-Rom policy to be eligible for reimbursement. Id., Exh. 7(a); Pl.'s Statement of Disputed Facts ¶ 13. Exh. 6. In a letter dated June 4, 1999, counsel for Hillenbrand notified Tremper of deficiencies in the reimbursement request. Pl.'s Exh. 1. Based on its review of the documentation submitted, Hill-Rom reimbursed Mr. Tremper $12,594.21 of the requested $26,399.48. Defs.' Statement of Undisputed Facts ¶ 40-42; Pl.'s Statement of Disputed Facts ¶ 12.
The 1998 Employment Agreement between Tremper and Air-Shields provided that Tremper would receive a severance package only if he signed the Severance Payment, Termination and Release Agreement ("Release"), discharging Air-Shields and its affiliates from "any and all rights, claims, costs expenses and compensation of whatever nature . . . which Executive . . . may now have or claim to have against or claim from the Company . . . arising out of any prior contract, agreement or understanding, whether oral or written, . . . including, but not limited to, any contract, agreement or understanding arising in any way out of, or as a result of, Executive's employment relationship with Company . . . and the agreements executed in connection therewith." Defs.' Statement of Undisputed Facts, Exh. 5 ¶ 5. Tremper admits that he never signed the Release, but alleges that he declined "due to threats by Defendants [sic] counsel that he would not get the money owed to him." Pl.'s Statement of Disputed Facts ¶ 18.
Approximately one week after Tremper's termination, several employees in his department initiated a work stoppage. Defs.' Statement of Disputed Facts ¶ 7. A meeting was held at Tremper's home to discuss the work stoppage. Id. ¶ 3. Cellular phone records indicate that Tremper made at least 33 phone calls to seven individuals engaged in the work stoppage during the stoppage. Id. at 5. These individuals included Jonas Frisk, Scott Michaels, David Darnall, Ron Hale, Glen Howell, Narayanan Raghuvaran, and David Winston. The work stoppage ended on May 10, 1999.
Tremper originally filed this suit in the Orange County Superior Court, from which it was removed to the United States District Court for the Central District of California and subsequently transferred here on June 29, 2000. Defendants filed an answer and counterclaim against Tremper on August 31, 2000. Defendants filed this Motion for Partial Summary Judgment on May 28, 2002. Tremper followed with his own Motion for Summary Judgment on August 15, 2002.
Although the parties have not raised the issue of whether we may properly exercise subject matter jurisdiction over this dispute, based on a review of the pleadings, it appears that both the diversity of citizenship and amount in controversy requirements for diversity jurisdiction are met. Compl., ¶¶ 1-4, 16(g), 18(a), 19(g); Defs.' Answer to Compl., at 1-3, 45-47.
Tremper argues that the Court should decline to consider Defendants' present motion on the basis that Defendants exhibited "a lack of diligence in preparing said motion by the required deadline," and that Defendants' counsel committed a "fraud upon both this Court and Plaintiff." Pl.'s Mot. to Refuse Defs.' Application for Partial Summ. J. at 1. However, on April 12, 2002, Defendants filed a motion requesting additional time to file summary judgment motions and describing the precise reason for the requested extension, namely the need to review deposition testimony taken in April 2002. Tremper did not oppose the motion. We are not inclined to find, based on these facts, that Defendants have perpetrated a fraud upon the Court, and we find the motion worthy of consideration.
Standard of Review
Summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). A genuine issue of material fact exists if there is sufficient evidence for a reasonable jury to return a verdict in favor of the non-moving party on the particular issue. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Eiland v. Trinity Hosp., 150 F.3d 747, 750 (7th Cir. 1998).
On a motion for summary judgment, the burden rests on the moving party to demonstrate "that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). After the moving party demonstrates the absence of a genuine issue for trial, the responsibility shifts to the non-movant to "go beyond the pleadings" and point to admissible evidence of a genuine factual dispute precluding summary judgment. Id. at 322-23. "If the non-movant does not come forward with evidence that would reasonably permit the finder of fact to find in her favor on a material question, then the court must enter summary judgment against her." Waldridge v. American Hoechst Corp., 24 F.3d 918, 920 (7th Cir. 1994), citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 585-87 (1986); Celotex, 477 U.S. at 322-24; Anderson, 477 U.S. at 249-52.
Summary judgment is not a substitute for a trial on the merits, nor is it a vehicle for resolving factual disputes. Waldridge, 24 F.3d at 290. Therefore, in considering a motion for summary judgment, we draw all reasonable inferences in favor of the non-movant. Venters v. City of Delphi, 123 F.3d 956, 962 (7th Cir. 1997). If genuine doubts remain, and a reasonable fact-finder could find for the party opposing the motion, summary judgment is inappropriate.
See Shields Enters., Inc. v. First Chicago Corp., 975 F.2d 1290, 1294 (7th Cir. 1992); Wolf v. City of Fitchburg, 870 F.2d 1327, 1330 (7th Cir. 1989). But if it is clear that a plaintiff will be unable to satisfy the legal requirements necessary to establish his case, summary judgment is not only appropriate, but mandated. See Celotex, 477 U.S. at 322; Waldridge, 24 F.3d at 920.
Defendants' Motion for Partial Summary Judgment Before discussing the substance of the Motion for Partial Summary Judgment, we note that compliance with the local rules regarding summary judgment motions is a necessary prerequisite to the consideration of such a motion. Pursuant to Local Rule 56.1, a party moving for summary judgment must provide a Statement of Undisputed Facts, "as to which the moving party contends there is no genuine issue of material fact and that entitles the moving party to judgment as a matter of law." S.D. Ind. Local Rule 56(a)(1). In response, the nonmoving party must provide "a section of the brief or a separate document . . . that contains a response to each material factual assertion in the moving party's Statement of Material Facts, and if applicable, a separate Statement of Additional Material Facts that warrant the denial of summary judgment."
Id., Rule 56(b). Any facts in the movant's statement that are not specifically denied will be deemed admitted in considering the motion for summary judgment. Failure to comply with the local rules governing the proper content of summary judgment motions is not a "harmless technicality." Waldridge v. American Hoechst Corp., 24 F.3d 918, 924 (7th Cir. 1994). Where a party fails to properly designate the facts supporting its position, the court is not required to scour the record to unearth material factual disputes or evidentiary support for that position. E.g., Carter v. American Oil Co., 139 F.3d 1158, 1162 (7th Cir. 1998).
Here, Tremper does not specifically deny or offer facts to refute many of Defendants' allegations, but instead offers a series of unresponsive factual assertions supported by legally insufficient evidence that he claims warrant the denial of summary judgment. In some instances, the only materials offered in support of Plaintiff's disputed material facts are selected self-serving passages from Tremper's unsworn correspondence or deposition testimony. For example, Tremper's only cited evidence of alleged conversations with Air-Shields and Vickers personnel such as Callie Frisk (Air-Shields president) or John Bostick (chief financial officer of Vickers) regarding Tremper's alleged entitlement to a bonus is Tremper's unsworn, faxed letter to counsel for Hillenbrand. It is well-established that a self-serving affidavit, unsupported by specific concrete facts reflected in the record, cannot preclude summary judgment. Albiero v. City of Kankakee, 246 F.3d 927, 933 (7th Cir. 2001); Slowiak v. Land O'Lakes, Inc., 987 F.2d 1293, 1295 (7th Cir. 1993). Surely, this principle applies equally to self-serving unsworn statements that lack support in the record.
In other instances, Tremper cites materials in support of his assertions that directly contradict the statements they are offered to support. For example, Tremper asserts in his Statement of Disputed Facts that "Defendants have approved expense reimbursement to Plaintiff in the amount of $26,399.48." Id. ¶ 12. However, neither of the exhibits cited by Tremper in support of this assertion indicates the "approval" of such an amount. Instead, both indicate that Tremper requested reimbursement for a number of expenses, many of which were rejected for lack of proper documentation or untimely filing. Also, Tremper alleges that "Defendants (sic) counsel admits Defendants own (sic) Plaintiff royalties." Pl.'s Statement of Disputed Facts ¶ 6.
However, the exhibit Tremper cites in support of this allegation contain no trace of any such admission — in fact, the document contains an unambiguous denial of such obligation. Such unresponsive, unsupported factual allegations do not comply with the requirements of Local Rule 56.1 in either form or substance. Pursuant to the local rule, those facts in Defendants' statement that Tremper has not specifically denied (and supported with admissible evidence) are deemed admitted.
1. Royalties
Defendants move for summary judgment as to Tremper's claims for the alleged breach of agreements to pay royalties. In support of their motion, Defendants submit copies of the series of agreements entered into by Tremper and Air-Shields, as well as citations to deposition testimony regarding written correspondence and conversations between Tremper and certain Air-Shields officers regarding his compensation. Citing these documents, other affidavits, and Tremper's own deposition testimony, Defendants assert that they did not breach any agreement to pay royalties, but simply miscalculated the royalties owed to Tremper for the quarter ending in March 1999, resulting in an overpayment in the amount of $5,881.42. As explained earlier (see, supra, Note 2), Tremper has not offered evidence to refute Ms. Haase's affidavit and Defendants' business records, nor any other legally sufficient evidence from which a jury could conclude that Defendants breached the agreement to pay royalties. He argues instead that "[t]he fact that Defendants claim TREMPER was allegedly overpaid in a prior period is irrelevant." Pl.'s Opposition to Defs.' Motion for Partial Summ. J. at 6. We disagree. It is undisputed that Defendants notified Tremper of the overpayment, first on June 4, 1999, and again on November 12, 1999. Pl.'s Exh. 6; Defs.' Exh. 6©). Both letters expressed Defendants' intent to apply the March 1999 overpayment to the royalties owed to Tremper in the final period, resulting in the overpayment of $5,881.42. Tremper's argument regarding the timing of the overpayment misses the mark and fails to adequately refute Defendants' evidentiary showing on this issue.
Tremper argues that "[t]he only documents Defendants have provided to TREMPER [regarding royalties] is a three page summary that summarizes sales, and the amount TREMPER is owed in royalties, (sic) this is wholly insufficient," without elaborating on why such documentation is insufficient. Magistrate Judge Shields issued an Order on April 1, 2002, requiring Defendants to file a notice setting forth the manner in which they have complied with all Tremper's discovery requests. Defendants filed such notice on April 10, 2002. Between April 11 and July 15, 2002, Tremper did not move for an extension of the discovery period for the purpose of acquiring any identified materials from Defendants, nor did he petition the Court to take action in response to Defendants' alleged failure to produce such materials. Absent some showing that Defendants have failed to respond to specific discovery requests, we are not persuaded that additional discovery is warranted here.
Accordingly, Defendants' motion is GRANTED with respect to Tremper's claim for unpaid royalty payments.
2. Bonus compensation
To support his claim for unpaid bonus compensation, Tremper relies primarily on his own unauthenticated, unsworn statement, consisting of a handwritten faxed note to a Hillenbrand counsel, in which Plaintiff stated his opinions and recollections regarding the moneys he is owed. This self-serving statement, by itself, would not be sufficient to give rise to a genuine issue of material fact. However, Plaintiff also offers an affidavit by Craig Hooson, formerly a consultant to Vickers responsible for calculating executive bonuses before the sale of Air-Shields to Hill-Rom in December 1997. Hooson recalls that "it was determined that Ted Tremper was entitled to an executive bonus of $75,000," but that "Ted's bonus would be held and paid by Hill-Rom shortly after the sale was completed as a means to ensure Ted's continued employment." Pl.'s Opposition to Defs.' Motion for Partial Summ. J., Exh. 8 ¶¶ 2-4. Although Hooson's affidavit does not conclusively establish that Tremper's bonus determination received final approval from the necessary Vickers officers-a step Tremper acknowledged was a prerequisite to forming a binding agreement-it at least raises a genuine issue of material fact regarding whether such approval was granted and, consequently, a binding agreement formed.
Accordingly, Defendant's Motion for Partial Summary Judgment as to the breach of contract claim regarding the bonus is DENIED.
3. Expense reimbursement
Defendants assert, and Tremper does not dispute, that the expenses Tremper submitted in May 1999 were incurred more than 30 days prior to the request for reimbursement — some as long as one year prior to the request. Moreover, although Tremper provided some supporting documentation along with his request for expense reimbursement, one of Tremper's own exhibits supports Defendants' assertion that certain items lacked the documentation required under Hill-Rom policy. Pl.'s Exh. 6, at unnumbered 2-6. Tremper responds to Defendants' proffered evidence by asserting that "Defendants have approved expense reimbursement to Plaintiff in the amount of $26,399.48," a statement directly contradicted by Tremper's own exhibits. The evidence submitted by both parties on this issue indicates that, although Tremper requested reimbursement for a number of expenses, many were rejected for reimbursement due to a lack of proper documentation or untimely filing, in accordance with Hill-Rom policy. Because Tremper has not identified a genuine of issue of material fact as to whether Defendants breached the contract provision regarding expense reimbursement, and because there is not sufficient evidence from which a jury could reasonably find in Tremper's favor on this issue, Defendants' motion is GRANTED as to this claim.
4. Severance payments
Citing the language of the 1998 Employment Agreement, Defendants contend that Tremper's failure to sign the Release precludes his alleged entitlement to severance benefits. Tremper cites his own deposition testimony in support of the assertion that he declined to sign the Release out of concern over "threats" by Hillenbrand's counsel that the contract would interfere with payments owed under his earlier contract. The terms of the Release provide that
[i]n consideration of the execution and delivery of this [Severance Agreement], the Executive . . . hereby fully and without limitation, releases and discharges the Company and each of its agents . . . from any and all rights, claims, costs expenses and compensation of whatever nature . . . which Executive . . . may now have or claim to have against or claim from the Company . . . arising out of any prior contract, agreement or understanding, whether oral or written, . . . including, but not limited to, any contract, agreement or understanding arising in any way out of, or as a result of, Executive's employment relationship with Company . . . and the agreements executed in connection therewith.
Def.'s Exh. 5. The "threat" that Tremper perceived was merely an accurate summary of the terms of the contract, not an attempt to coerce or extort Tremper to sign the agreement. In addition, Tremper's self-serving statement, unsupported by specific concrete facts reflected in the record, does not provide a sufficient legal basis for a jury to find in his favor on this issue. Albiero, 246 F.3d at 933; Slowiak, 987 F.2d at 1295. Therefore, as to Tremper's claim for breach of contract regarding the payment of severance benefits, Defendants' motion is GRANTED.
5. Emotional Distress/Defamation
Tremper has not set forth legally sufficient evidence tending to establish any defamatory statements attributable to Defendants or suggesting that Tremper suffered emotional distress arising from Defendants' negligence. Moreover, to the extent the defamation claim relies on statements made by the Sudhir Pahwa or Walter Rosebrough, claims against those defendants were dismissed by Order of the Court on August 27, 2001.
Tremper's paltry response regarding the defamation and emotional distress claims not only fails to comply with the formal or substantive requirements of Local Rule 56.1, it falls short of the necessary evidentiary showing to stave off a properly supported motion for summary judgment. Because Defendants have demonstrated that Tremper lacks evidence regarding any negligent acts by Defendants or any defamatory statements attributable to Defendants, and because Tremper has failed to respond with admissible evidence from which a jury could reasonably find in his favor on these issues, Defendants' motion is GRANTED as to these claims.
Tremper's Motion for Summary Judgment
Tremper moves for summary judgment on Defendants' counterclaim, which alleges that Tremper breached the terms of both the 1994 Employment Agreement and the 1998 Employment Agreement by influencing or attempting to influence Air-Shields employees to terminate or modify their employment with the company and by requesting and/or advising customers and others having business relations with Air-Shields to cease or modify their dealings. Defendants have chosen not to defend their claim regarding Tremper's alleged interference with customers and business relations, and so Tremper's Motion for Summary Judgment as to that claim is GRANTED. However, Defendants maintain that Tremper engaged in improper and interfering communications with several Air-Shields employees who participated in the work stoppage: Jonas Frisk, Scott Michaels, David Darnall, Ron Hale, Glen Howell, Narayanan Raghuvaran, and David Winston.
While Tremper offers facts to support the assertion that he did not influence certain employees to modify or terminate their employment with Air-Shields, his evidentiary materials do not address Defendants' claims regarding other employees, namely Ron Hale, Glen Howell, Jonas Frisk, and Narayanan Raghuvaran. The content and nature of Tremper's conversations with these employees, therefore, present genuine issues of material fact, presumably to be addressed by some evidentiary showing at trial. Therefore, because Tremper has not demonstrated the absence of a genuine issue of material fact with regard to his communication with these employees, Tremper's Motion for Summary Judgment on Defendants' counterclaim is DENIED.
Conclusion
Defendants moved for partial summary judgment, and Tremper responded with his own Motion for Summary Judgment. For the reasons explained in detail above, we find that 1) Tremper has failed to proffer evidence from which a jury could find in his favor on the breach of contract claims for royalties, expense reimbursement, or severance payments; 2) genuine issues of material fact remain regarding Tremper's alleged entitlement to a bonus payment under the 1998 Employment Agreement; 3) Tremper has not offered legally sufficient evidence tending to establish the elements of his claims for defamation or negligent infliction of emotional distress; 4) Defendants have not offered legally sufficient evidence to support their counterclaim regarding Tremper's alleged communications with Air-Shields' customers; and 4) genuine issues of fact remain regarding Defendants' counterclaim based on Tremper's alleged communications with certain Air-Shields' employees. Accordingly, we GRANT IN PART and DENY IN PART Defendants' Motion for Partial Summary Judgment and we GRANT IN PART and DENY IN PART Plaintiff's Motion for Summary Judgment.
It is so ORDERED