Keefe v. LendUs, LLC

659 F.Supp.3d 196

2023 DNH 022

Quentin KEEFE v. LENDUS, LLC

Civil No. 20-cv-195-JL

United States District Court, D. New Hampshire

Signed March 2, 2023

James Joseph Armillay, Jr., William E. Christie, Timothy John McLaughlin, Shaheen & Gordon, Concord, NH, for Quentin Keefe.

Tara E. Lynch, Stephen Joseph Orlando, I, Gordon Rees Scully Mansukhani LLP, Boston, MA, Brett Walker, Soldiers' Home in Holyoke, Ashland, MA, for LendUS, LLC.

ORDER ON DEFENDANT'S MOTIONS IN LIMINE

Joseph N. Laplante, United States District Judge

Quentin Keefe is seeking payment of bonuses that he contends LendUS, LLC owed him after his employment was terminated, and LendUS brings counterclaims against Keefe arising from the circumstances that lead to his termination. LendUS moves in limine for evidentiary rulings about testimony and evidence that LendUS expects Keefe to introduce at trial and about one document that LendUS intends to introduce. The court addresses each motion in turn.

The court reminds the parties that the rulings herein are made without prejudice to revisiting particular issues in response to circumstances that might arise during trial. Furthermore, these rulings are limited to grounds argued in the parties' filings and raised at the final pretrial conference. The court reserves the right to assess other factors at trial, such as authenticity, hearsay, and best evidence, see Fed. R. Evid. 800 et seq., 900 et seq., and 1000 et seq., and where appropriate, arguments and grounds not raised by counsel.

I. Testimony and evidence about Regency resignations

LendUS moves to prevent Keefe from testifying about any reasons Regency employees resigned from LendUS on the grounds that such testimony is inadmissible speculation and hearsay. LendUS also moves to exclude all e-mails and other documents that include reasons for the employees' decisions to resign as inadmissible hearsay. In response, Keefe opposes such a "blanket" exclusion order and contends that admissibility should be determined at trial. Keefe argues that, because the employees were all LendUS employees when they communicated their dissatisfaction with LendUS to him both orally and in writing, their statements are not hearsay under Federal Rule of Evidence 801(d)(2)(D). He also argues that his opinions about the reasons Regency employees left LendUS are based on his communications with the employees and are not hearsay.

Hearsay is an out-of-court statement that is offered to prove the matter asserted in the statement and is not admissible. Fed. R. Evid. 801(c) & 802. Under the familiar "admission of party opponent" rule, however, out-of-court statements offered for their truth are not hearsay, f they are "offered against an opposing party and: . . . [were] made by the party's agent or employee on a matter within the scopfe o that relationship and while it existed." A statement is "a person's oral assertion, written assertion, or nonverbal conduct, if the person intended it as an assertion." Fed. R. Evid. 801(a).

No such "blanket" ruling can issue on the admissibility of possible testimony and evidence about the reasons employees resigned from the Regency division of LendUS. With a proper foundation, some statements and evidence may be admissible as party-opponent admissions under Rule 801(d)(2)(D). Some statements may not be offered for their truth, and LendUS may open the door to allow certain evidence. LendUS has not presented any particular statement or document that would enable the court to make these determinations, instead seeking a "blanket" exclusionary ruling. If such evidence is eventually admitted, LendUS may request a limiting instruction if necessary to cabin the use of evidence within its admissible purpose. See Fed. R. Evid. 105. On the other hand, evidence may be excluded, even if an exception to the hearsay rule applies, "if its probative value is substantially outweighed by a danger of . . . unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence." Fed. R. Evid. 403. The court will undertake this analysis in response to proffers of, and objections to, evidence at the appropriate time.

The motion in limine to exclude testimony and evidence of reasons for employee resignations is denied without prejudice to raise appropriate objections at trial.¹

II. Evidence of witnesses' personal wealth

LendUS moves to exclude any inquiry into and evidence of the personal wealth of LendUS's CEO, Robert Hirt, and former CFO, Ava Noack, who will be witnesses at trial. LendUS contends that such information is irrelevant and is barred under Rule 403 because it would be more unfairly prejudicial than probative. In response, Keefe states that he intends to introduce evidence of Noack's financially advantageous relationship with LendUS after she started her own company to show her testimonial bias in favor of Hirt and LendUS. Keefe argues that evidence of Hirt's wealth and compensation is relevant to his defense against LendUS's counterclaims that Keefe's mismanagement caused the demise of Regency.

Ava Noack. Keefe asserts, supported by Noack's deposition testimony, that she left LendUS at the beginning of 2020 and started her own consulting company. Noack through her new company provides consulting services to LendUS, which are the same or similar to her work when she was CFO of LendUS. In 2021, the value of Noack's consulting contract with LendUS was about a million dollars. Keefe contends that Noack's relationship with LendUS is relevant to show that she has a reason, as a witness, to be biased in favor of LendUS.

"Evidence is relevant if: (a) it has any tendency to make a fact more or less probable than it would be without the evidence; and (b) the fact is of consequence in determining the action." Fed. R. Evid. 401. "Bias is a term used in the 'common law of evidence' to describe the relationship between a party and a witness which might lead the witness to slant, unconsciously or otherwise, his testimony in favor of or against a party." United States v. Abel, 469 U.S. 45, 52, 105 S.Ct. 465, 83 L.Ed.2d 450 (1984). Evidence of a witness's bias is relevant because "[a] successful showing of bias on the part of a witness would have a tendency to make the facts to which he testified less probable in the eyes of the jury than it would be without such testimony." Id. at 51, 105 S.Ct. 465. A relationship between the witness and a party is probative of the witness's bias in favor of that party. See United States v. Sumlin, 956 F.3d 879, 890-91 (6th Cir. 2020); Abernathy v. E. Ill. Railroad Co., 940 F.3d 982, 992 (7th Cir. 2019); Nadeau v. Hunter Lawn Care, LLC, 585 F. Supp. 3d 158, 160 (D. Mass. 2022).

Evidence of Noack's employment at LendUS and her subsequent and continuing contractual relationship with LendUS is relevant to the issue of her potential bias in favor of LendUS. That evidence has not been shown to be unfairly prejudicial, is subject to cross-examination, and, as evidence admissible for a limited purpose, may warrant a limiting instruction if requested. See Fed. R. Evid. 105.

Robert Hirt. Keefe represents that he intends to introduce evidence of Hirt's compensation at LendUS and his individual wealth to defend against LendUS's counterclaims against him that his mismanagement caused the Regency division employees to resign. Keefe states that he intends to show that Hirt, as CEO of LendUS, made certain corporate financial managerial decisions that caused dissatisfaction among Regency division employees, leading (in whole or in part) to their resignations. The evidence Keefe cites, however, pertains to LendUS's corporate assets (private jet travel and a corporate penthouse), but not to Hirt's personal wealth.

Under most circumstances, evidence of a defendant's wealth may be relevant only in limited circumstances that do not apply here. Jones v. Jasper Wyman & Son, 2022 WL 16854267, at *3-*4 (D. Me. Nov. 10, 2022); Curtis Mfg. Co., Inc. v. Plasti-Clip Corp., 933 F. Supp. 94, 101 (D.N. H 1995). Hirt is a witness, not the defendant. In the circumstances presented, evidence of Hirt's compensation and personal wealth might aggravate the sensibility of, and distract, more modestly compensated or resourced jurors, and thus be more unfairly prejudicial than probative. Fed. R. Evid. 403. Evidence of LendUS's corporate assets, however, may be relevant in the circumstances that Keefe suggests if properly supported by evidence of employee awareness. See Fed. R. Evid. 104(b) (conditional relevance). The admissibility determination must be made in the context of trial.

LendUS's motion in limine to exclude all evidence of Noack and Hirt's compensation and personal wealth is denied as to evidence of Noack's relationship with LendUS, including the compensation paid to her or her company as a consultant, and is granted as to evidence of Hirt's personal wealth and compensation but not as to LendUS's corporate assets and expenditures.²

III. Evidence of other lawsuits, investigations, and character

LendUS moves to exclude evidence of other lawsuits and disputes by or against LendUS or any of its officers or managers as irrelevant under Federal Rule of Evidence 404(b). LendUS also seeks to exclude other so-called "character evidence," such as evidence it delayed paying the employees who resigned from employment there, under Rules 404(a) and (b). In response, Keefe contends that LendUS's motion is overly broad because it addresses character evidence generally rather than specifically and that evidence of Hirt's personal character and credibility is relevant to the reasons Regency division employees left LendUS, for which LendUS holds Keefe responsible in its counterclaims.

"Evidence of a person's character or character trait is not admissible to prove that on a particular occasion the person acted in accordance with the character or trait." Fed. R. Evid. 404(a)(1). Evidence of that a person committed other wrongs...