Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_02-cv-01575/USCOURTS-caed-2_02-cv-01575-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition For Removal--Other Contract

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1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

JOHN HEALY,

NO. CIV. S-02-1575 LKK/DAD

Plaintiff,

v. O R D E R

MCI WORLDCOM NETWORK

SERVICE, INC., a Delaware,

corporation; ELECTRONIC

DATA SYSTEMS CORPORATION,

a foreign corporation; and 

EDS/SHL CORPORATION, a Delaware

corporation,

Defendants.

 /

On August 2, 2005, the court issued an order resolving the

parties’ cross-motions for summary judgment and/or summary

adjudication. Pending before the court is Electronic Data

Systems Corporation’s and EDS/SHL Corporation’s (“defendants”)

motion for reconsideration. Below, I address defendants’

arguments.

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2

I.

STANDARDS FOR MOTIONS TO RECONSIDER

“Under the ‘law of the case’ doctrine a court is generally

precluded from reconsidering an issue that has already been

decided by the same court, or a higher court in the identical

case.” United States v. Alexander, 106 F.3d 874, 876 (9th Cir.

1997)(citing Thomas v. Bible, 983 F.2d 153, 154 (9th Cir.),

cert. denied, 508 U.S. 951 (1993)). Although motions to

reconsider are directed to the sound discretion of the court,

see Kern-Tulare Water Dist. v. City of Bakersfield, 634 F. Supp.

656, 665 (E.D. Cal. 1986), aff’d in part and rev’d in part on

other grounds, 824 F.2d 514 (9th Cir. 1987), cert. denied, 486

U.S. 1015 (1988), considerations of judicial economy weigh

heavily in the process. Thus, Local Rule 78-230(k) requires

that a party seeking reconsideration of a district court’s order

must brief the “new or different facts or circumstances . . .

which . . . were not shown upon such prior motion, or what other

grounds exist for the motion.” Generally speaking, before

reconsideration may be granted there must be a change in the

controlling law or facts, the need to correct a clear error, or

the need to prevent manifest injustice. See Alexander, 106 F.3d

at 876. 

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3

As with motions to alter or amend a judgment made pursuant

to Fed. R. Civ. P. 59(a), motions to reconsider are not vehicles

permitting the unsuccessful party to “rehash” arguments

previously presented. See Costello v. United States Government,

765 F. Supp. 1003, 1009 (C.D. Cal. 1991). Nor is a motion to

reconsider justified on the basis of new evidence available

prior to the court’s ruling. See Fay Corp. v. BAT Holdings One,

Inc., 651 F. Supp. 307, 309 (W.D. Wash. 1987), aff’d, 896 F.2d

1227 (9th Cir. 1990). Finally, “after thoughts” or “shifting of

ground” do not constitute an appropriate basis for

reconsideration. See id. These relatively restrictive

standards “reflect[] district courts’ concern for preserving

dwindling resources and promoting judicial efficiency.”

Costello, 765 F. Supp. at 1009. Although defendants have failed

to make the requisite showing, the court will briefly discuss

the substance of the motion.

II.

DISCUSSION

A. MATURITY DATE FOR INCENTIVE STOCK UNITS (“ISUs”)

Defendants maintain that under the terms of the ISU

agreement, the maturity date for the units that are deferred is

the end of the deferral period, and that the shares did not

mature until February 2000 and February 2001. Defendants point

to language contained in the ISU Agreement which specifies that

the Maturity Date for the shares is three years after the grant

date. Mot. for Recon. at 2. The court previously found that

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1 As defendants should well be aware, motions for

reconsideration are not vehicles to rehash arguments that the court

has found to be unavailing. In their opposition brief, defendants

claimed that the disability provision applied because “these are

the terms that the parties understood would apply while plaintiff

was on disability leave.” Opp’n at 12. 

4

the maturity date for the ISUs was upon John Healy’s

(“plaintiff”) termination on December 31, 1998. As the court

explained in its order, the separation agreement specified that

“[t]he terms and conditions of the 1997 deferred incentive

program for a termination without cause will apply.” Notably,

the “termination of employment not for cause” provision of the

ISU agreement stated that “all Your non-vested Units will fully

vest on the date of your termination of employment.” Order at

22. Because the plain language of the separation agreement

specified that the termination without cause provision would

apply, plaintiff’s ISUs vested on the date of his termination. 

Defendants previously asserted that another provision of

the ISU agreement applied to determine when plaintiff’s ISUs

vested,1 and not the “termination of employment not for cause”

provision. The court emphasized in its order that if defendants

wanted another provision contained in the ISU agreement to apply

to the deferred incentive program, “defendants had every

opportunity to make that clear in the separation agreement.” 

Because defendants failed to do so, they cannot repeatedly

assert that plaintiff’s ISUs did not “fully vest on the date of

his termination of employment.” Pl.’s Ex. E.

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B. EDS’ LIABILITY

The court previously found that defendants were liable as a

successor corporation for MCI’s Systemhouse’s actions. EDS

conceded that “it is liable as a successor corporation to MCI

Systemhouse (the subsidiary of MCI Worldcom) if MCI breached

Plaintiff’s Separation Agreement.” Def.’s Opp’n at 10. 

Defendants argued previously that they are not liable for

damages flowing from the stock options because they “lacked

control over the stock options [plaintiff] was to receive from

MCI WorldCom.” Opp’n at 11. In their motion for

reconsideration, defendants again argue that EDS is not

responsible for the ISUs because “[c]ontrol over the delivery of

the ISUs was entirely within the control of MCI WorldCom.” Mot.

for Reconsideration at 3. Defendants tender the new argument

that “MCI WorldCom’s failure to properly administer its ISU

Agreement is a supervening cause that breaks the chain of

causation.” Id. at 4. Defendants’ arguments are unavailing for

several reasons. First, the court will not entertain new

arguments not tendered when the parties filed their crossmotions for summary adjudication. Further, the court is hard

put to understand defendants’ causation argument. As the court

explained previously, “[i]t is not self-evident . . . that lack

of control equates to lack of liability.” The question before

the court relates to successor liability, not causation. For

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the reasons stated above, the court will accept EDS’s general

admission of liability as a successor corporation to MCI

Systemhouse. 

IT IS SO ORDERED. 

DATED: August 18, 2005.

/s/Lawrence K. Karlton 

LAWRENCE K. KARLTON

SENIOR JUDGE

UNITED STATES DISTRICT COURT

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