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Inc. v. Hegna

United States District Court, E.D. Louisiana

November 5, 2019

SMITTY'S SUPPLY, INC.
v.
LINDSAY MORGAN HEGNA

         SECTION: "S" (3)

          ORDER AND REASONS

          MARY ANN VIAL LEMMON, UNITED STATES DISTRICT JUDGE.

         IT IS HEREBY ORDERED that the Motion for Judgment as a Matter of Law, or Alternatively, for a New Trial, filed by plaintiff, Lindsay Morgan Hegna (Rec. Doc. 454), is DENIED;

         IT IS FURTHER ORDERED that the Motion for Judgment as a Matter of Law, or Alternatively, for a New Trial, filed by plaintiff, Stephen Kelley (Rec. Doc. 453), is DENIED.

         BACKGROUND

         This matter is before the court on motions for judgment as a matter of law, or alternatively, for a new trial, filed by plaintiffs, Stephen Kelley (Rec. Doc. 453) and Lindsay Morgan Hegna (Rec. Doc. 454). Plaintiffs move the court to set aside the jury's verdict in favor of the defendant, Smitty's Supply, Inc.

         Plaintiffs Kelley and Hegna (hereinafter, sometimes collectively “plaintiffs”) filed suit against Smitty's alleging that Smitty's breached an oral employment agreement to establish a Phantom Stock Plan and a Stock Appreciation Rights Plan (collectively, “Stock Plans”), implement the Stock Plans, and designate plaintiffs as participants in the Stock Plans. In addition, Kelley alleged that Smitty's had breached a severance agreement made with him, which guaranteed him a severance payment if he resigned for good cause or was terminated without cause.

         Following a five-day jury trial, the jury returned a verdict in favor of defendant. The jury found that neither Hegna nor Kelley had proved by a preponderance of the evidence that they had an oral contract with Smitty's which granted them rights under the Stock Plans. The jury further found that Stephen Kelley had proved that he had a valid contract with Smitty's that granted him rights for severance payment, but that he had not proved that he resigned for good reason.

         Plaintiffs have moved for judgment as a matter of law, arguing that the verdict was against the great weight of the evidence. Alternatively, they seek a new trial based on alleged erroneous evidentiary rulings at trial. Finally, as an additional ground for a new trial, Kelley argues that he was unfairly prejudiced by evidence and testimony related to Hegna.

         DISCUSSION

         Legal Standards

         Pursuant to Rule 50(b), if the court does not grant a motion for judgment as a matter of law during a jury trial, the movant may file a renewed motion for judgment as a matter of law, and include an alternative or joint request for a new trial under Rule 59. “In evaluating [a Rule 50(b)] motion ... the court is to view the entire record in the light most favorable to the non-movant, drawing all factual inferences in favor of ... the non-moving party, and leaving credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts to the jury.” Conkling v. Turner, 18 F.3d 1285, 1300 (5th Cir.1994) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986)). A Rule 50(b) motion for judgment as a matter of law is granted

only if the facts and inferences point so strongly and overwhelmingly in favor of one party that the Court believes that reasonable men could not arrive at a contrary verdict . . . . On the other hand, if there is substantial evidence opposed to the motions, that is, evidence of such quality and weight that reasonable and fair-minded men in the exercise of impartial judgment might reach different conclusions, the motions should be denied.

Brown v. Bryan County, OK, 219 F.3d 450, 456 (5th Cir. 2000) (citations omitted).

         Granting a Rule 50 motion “is not a matter of discretion, but a conclusion of law based upon a finding that there is insufficient evidence to create a fact question for the jury.” In re Litterman Bros. Energy Sec. Litig., 799 F.2d 967, 972 (5th Cir.1986) (citing Lubbock Feedlots, Inc. v. Iowa Beef Processors, Inc., 630 F.2d 250, 269 n. 22 (5th Cir.1980), cert. denied, 107 S.Ct. 1373 (1987)).

         Rule 59 of the Federal Rules of Civil Procedure provides that the court may grant a motion for a new trial on some or all of the issues “after a jury trial, for any reason for which a new trial has heretofore been granted in an action at law in federal court.” Fed.R.Civ.P. 59(a)(1)(A). Rule 59 does not enumerate the specific grounds for which a new trial can be granted. See Id. However, “a district court may grant a new trial if the court finds that the verdict is against the weight of the evidence, the damages awarded are excessive or inadequate, the trial was unfair, or prejudicial error was committed in its course.” McFadden v. Wal-Mart Stores, 2006 WL 3087164, *2 (E.D. La. Oct. 27, 2006) (citing Smith v. Transworld Drilling Co., 773 F.2d 610, 613 (5th Cir.1985)). Whether to grant a motion for new trial is within the sound discretion of the trial court. Id. (citing Pryor v. Trane Co., 138 F.3d 1024, 1026 (5th Cir.1998)). However, “[c]ourts do not grant new trials unless it is reasonably clear that prejudicial error has crept into the record or that substantial justice has not been done, and the burden of showing harmful error rests on the party seeking the new trial.” Del Rio Distrib., Inc. v. Adolph Coors Co., 589 F.2d 176, 179 n. 3 (citing 11 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2803, at 31-33 (3d ed.1973)).

         Stepehn Kelley's Motion for Judgment as a Matter of Law

         1. Severance

         Kelley sued for severance benefits based on a provision which granted him severance benefits in the event that Kelly should "be terminated by employer without cause or by employee with good reason."[1] Kelley contends that he is entitled to judgment as a matter of law on his severance claim, because the weight of the evidence does not support a finding that he lacked good reason for his resignation. In fact, Kelley alleges that Smitty's presented no evidence at trial that Kelley's resignation was not for good reason, and thus reasonable jurors could not arrive at a verdict for Smitty's on this question.

         However, at trial, Smitty's owner Edgar Smith, III ("Ed Smith") testified that Kelley did not resign for good reason, but rather because he knew he was about to be terminated for cause.[2]Thus, the jury was tasked with making a factual determination of Kelley's motivation in resigning at the time he did. The trial testimony reflects that on cross-examination, Kelley admitted that he had been counseled several times for poor performance.[3] Smitty's also introduced into evidence Kelley's personal notebooks in which he noted that Smitty's was dissatisfied with his performance. For instance, in one entry Kelley acknowledges Smith's dissatisfaction with Kelley's furnishing him financials that were off by four million dollars.[4] In addition, two Employee Performance Counseling Forms were introduced into evidence, [5] including one which stated:

Your overall performance has been unacceptable to this point in your employment relationship with us and I consider your performance to be harmful to the company, which should be remedied and cured immediately. You are being advised that if I see future infractions following this notice in any area of concern as outlined above, further disciplinary action will be taken which may result in termination of employment.[6]

         Less than one month after execution of that counseling form, Kelley resigned.

         Based on this evidence, the court cannot conclude that the facts and inferences point so strongly and overwhelmingly in favor of Kelley on the issue of his motivation that the court believes that reasonable jurors could not arrive at a verdict in favor of Smitty's. A finding that Kelley resigned because he anticipated his termination for cause, rather than for good reason, is a reasonable conclusion. Moreover, Kelley's argument that the fact that Smitty's may have had cause to terminate Kelley, does not necessarily mean that Kelley also did not have good reason to resign, fails. The jury was asked to resolve the following interrogatory: Do you find by a preponderance of the evidence that Stephen Kelley has carried his burden of proving that he resigned from Smitty's for ...


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