Sellner v. Mat Holdings, Inc.

Douglas James Sellner Plaintiff, v. MAT Holdings, Inc., Midwest Air Technologies, Inc., MAT Industries LLC, andSanborn Manufacturing Company, Defendants.

Civil No. 13-1289 ADM/JJK

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

August 5, 2015

MEMORANDUM OPINION AND ORDER

Stephen W. Cooper, Esq., and Stacey R. Everson, Esq., The Cooper Law Firm Chartered, Minneapolis, MN, on behalf of Plaintiff.

Bradley J. Lindeman, Esq., George H. Norris, Esq., Laura C. Sands, Esq., Margaret R. Ryan, Esq., Meagher & Geer, Minneapolis, MN, on behalf of Defendants.

I. INTRODUCTION

On May 5, 2015, the undersigned United States District Judge heard oral argument on Defendants MAT Holdings, Inc., Midwest Air Technologies, Inc., MAT Industries, LLC, and Sanborn Manufacturing Company's (collectively, the "Defendants") Motion for Summary Judgment [Docket No. 157] and Motion to Exclude Expert Testimony [Docket No. 148] and Plaintiff Douglas Sellner's ("Sellner") Motion to Exclude Expert Testimony [Docket No. 175]. In his Complaint [Docket No. 1-1], Sellner, a former MAT Industries, LLC ("MAT Industries") employee, alleges that MAT Industries wrongfully terminated him in violation of the Minnesota Whistleblower Act. For the reasons stated herein, Defendants' Motion for Summary Judgment is granted.

II. BACKGROUND

A. Parties

MAT Holdings, Inc. ("MAT Holdings") is a privately-held company owned by Steve Wang with six subsidiary companies within the United States, including Defendants Midwest Air Technologies, Inc. and MAT Industries. Ryan Decl. [Docket No. 162] Ex. 1; Ex. 2 ("Thomas Dep.") 8-10. MAT Holdings performs certain human resource and administration work related to MAT Industries, and MAT Industries pays a monthly management fee to MAT Holdings for these services. Ryan Decl. Ex. 8 ("Nebel Dep.") 9-10. MAT Industries is in the business of marketing air compressors, pneumatic driven air tools, and pressure washers, which are sold at multiple retailers and home centers. Thomas Dep. 198.

In 2008, MAT Industries purchased a facility in Springfield, Minnesota. Ryan Decl. Ex. 4 ("Beckman Dep.") 61. The Springfield facility was previously owned by Sanborn Manufacturing. MAT Industries refers to the facility as "Sanborn Mfg., a division of MAT Industries, LLC" ("Sanborn"), however Sanborn is not itself a legal entity. Ryan Decl. Ex. 33, fn.1. Paul Thomas serves as MAT Industries' Chief Operating Officer and Butch Stark is Sanborn's General Manager. Thomas Dep. 7; Ryan Decl., Ex. 3 ("Stark Dep.") 14.

B. 14CFM Pumps

Sanborn makes air compressors ("compressors") with oil-lubricated, single-stage, three-cylinder, 14 cubic-feet-per-minute pumps (the "14CFM pumps"). Beckman Dep. 65-68. The compressors operate by a motor driving the pump, which then injects air into a pressure vessel tank. The tank then stores the compressed air. Strong Decl. [Docket No. 171] ¶ 2. The amount of air within the tank is controlled by a pressure switch which turns the compressor on and off.Ryan Decl., Ex. 15 ("Swanson Dep.") 52-53.

MAT Industries manufactures the tank vessels at Sanborn and purchases the remaining compressor components from third parties. Beckman Dep. 60. In 2007, Sanborn started selling compressors with 14CFM pumps purchased from a third-party vendor. Ryan Decl. Ex. 5 ("Strong Dep.") 317-19; Beckman Dep. 65-67. However, due to delivery and quality issues related to the vendor, MAT Industries started purchasing 14CFM pumps from Suzhou Honbase Machinery Manufacture Co. ("Honbase"). Beckman Dep. 67-68. Honbase is now the primary supplier of 14CFM pumps (the "Honbase pump") for Sanborn. Strong Dep. 93. Honbase is also owned by Steve Wang, owner of MAT Holdings and its subsidiaries. Beckman Dep. 67-68.

C. Testing and Issues Related to the Honbase Pump

MAT Industries' specifications for the 14CFM pump called for one compression ring and one oil ring. Beckman Dep. 75. Honbase, however, modified the specifications and did not include a compression ring in their design. Id. at 180-81. MAT Industries was aware that Honbase made such modifications, but did not immediately direct Honbase to add the compression ring component. Strong Dep. 97, 128.

MAT Industries experienced problems with the Honbase pump, including difficulties with oil consumption and leakage. Strong Dep. 92, 97. During the course of their work on various compressors, laboratory technicians at Sanborn conducted internal performance and life span testing on the equipment. Beckman Dep. 38-41. The performance tests measured the CFMs achieved by the compressor and life span testing accelerates the supposed life span of the compressor to identify weaknesses. Ryan Decl., Ex. 18 ("Sellner Dep.") 120; Beckman Dep. 42. The internal goal for the 14CFM pump was 14CFM at 90 pounds-per-square-inch ("PSI") and1500 hours of life span testing. Beckman Dep. 71.

Kurt Beckman, Sanborn's Engineering Manager, commenced Test Request 136 ("TR136") on December 8, 2010. Defs.' Ex. 21. Test Request 136 conducted performance and life tests for five Honbase pumps. Id. When the tested pumps did not achieve the CFM goal, MAT Industries directed Honbase to continue to work on reducing the pump's oil consumption. Ryan Decl. Ex. 26.

D. MAT Industries Hires Sellner

In June 2011, MAT Industries hired Plaintiff Sellner as a lab-quality technician for the Sanborn facility. Ryan Decl. Ex. 7. Sellner understood that he was an at-will employee. Sellner Dep. 104. Sellner's primary responsibility was to conduct testing in the Sanborn testing lab, to collect corresponding testing data, and report the data to engineers and supervisors. Ryan Decl. Ex. 30, Interrog. No. 9. These reporting obligations included Sellner's observations of safety, vendor quality, and manufacturing issues. Id. Travis Strong, MAT's Quality Assurance and Product Service Manager, was Sellner's direct supervisor. Strong Dep. 9; Sellner Dep. 114.

On Sellner's first day at Sanborn, Strong reported to Sellner that the Honbase pumps had serious problems with oil leakage during testing. Sellner Decl. [Docket No. 184] ¶ 3. Sellner observed oil leaking to the floor, as well as oil spitting from the pump units during the pump testing process. Id.

E. Sears and Performance Testing

In August 2011, MAT Industries and Sears began working together to add a compressor with the Honbase pump to Sears' Craftsman product line. Ryan Decl. Ex. 31. Paul Thomas, MAT's Chief Operating Officer, and Chris Clare, MAT's National Sales Manager, requestedthat test data on the Honbase pump be compiled for Sears' Engineering Manager Dan Swanson. Ryan Decl. Exs. 31-32, Ex. 33, Interrog. No. 2; Swanson Dep. 13. On August 22, 2011, Clare sent the raw performance and life test data from TR136 to Swanson. Ryan Decl. Ex. 24.

On August 23, 2011, Beckman commenced Test Request 321 ("TR321"). Ryan Decl. Exs. 34-38. TR321 evaluated whether changes implemented by Honbase improved oil consumption and life performance in the Honbase pump. Sellner was assigned to complete TR321, with results to be completed in January 2012.¹ Ryan Decl. Exs. 39, 40.

On September 9, 2011, Clare sent an Executive Summary of TR136 to Sears. Ryan Decl. Ex. 48. According to Defendants, the Executive Summary reported identical performance data and oil consumption to the raw data recorded during the course of the testing. Compare Ryan Decl. Ex. 49 with Ex. 24. The summary noted several minor issues in the raw life test data, but did not identify any "major issues." Ryan Decl. Ex. 48. The summary did, however, recommend several improvements. Id.

In January 2012, MAT initiated Test Request 407 ("TR407"), designed to determine whether adding a compression ring to the Honbase pump would reduce oil leakage. Ryan Decl. Ex. 53-54. Sellner was also assigned to conduct TR407. Id. TR407 revealed that using a compression ring reduced the amount of oil leakage in the Honbase pump. Strong Dep. 144-45; Ryan Decl. Ex. 58. Based on this finding, MAT Industries notified Honbase that the ring configuration on the Honbase pump must include a compression ring. Ryan Decl. Exs. 59-66.

On February 15, 2012, Swanson requested that MAT Industries provide Sears withfurther performance and life testing data on the Honbase pump. Ryan Decl. Ex. 70. Clare forwarded Swanson's request to Stark. Id.; Stark Dep. 128. Because Stark had never prepared reports for Sears, Clare sent Stark several previous reports as examples. Stark Dep. 128. The examples included a form titled "Compressor Test Report" and Clare requested that Stark utilize a similar format when compiling the report for Sears. Ryan Decl. Ex. 72.

Knowing that Sellner had been assigned TR321, Stark asked for Sellner's assistance in responding to Sears' request for additional data. Stark Dep. 124-125. Defendants claim that Sellner sent Stark a February 28, 2012 Quality Department Laboratory Report on TR321 (the "Quality Report") that stated: (1) tests showed units passed performance and life testing benchmarks; and (2) units passed with minor [n]ormal service issues. Ryan Decl. Ex. 45. The Quality Report detailed that all compressor units tested achieved the desired 14CFM and exceeded 1500 hours of life testing. Id. Defendants contend that the life test data in the Quality Report accurately reflects the raw life test data on TR321 listed on a spreadsheet created by Sellner on February 28, 2012. See Ryan Decl. Ex. 76. Sellner, however, asserts that the Quality Report does not truthfully reflect the actual testing data for TR321 and that he did not prepare the report. Supp. Sellner Decl. [Docket No. 206-1] ¶ 4 ("Not only does this Report fail to truthfully reflect the actual testing data, but it also falsely purports to have been prepared by me. In this Report, just as in the false 3/6/2012 Report Defendants submitted to Sears, they renumbered the compressor units I tested, i.e., the compressor units Defendants identify as Units 7 through 11 in their Reports, reflects Units 1 through 5 from my testing.").

Stark...