Opinion ID: 4031017
Heading Depth: 4
Heading Rank: 2

Heading: Records from December and January

Text: Baker next cites Giles’s billing records from December 1999 and January 2000: Legal Work. Work on settling case. 0.25 12/24/99 Defendant offered $8,500.00. relay same to client and 125.00/hr discuss same. 12/30/99 Teleconference – Billable. Teleconference with Steve 0.25 brousard [sic] re client’s counter offer. Discuss same. 125.00/hr Relay update to client. 01/12/00 Talk to defense re their counter offer. 0.50 $10,000. Relay to client for consideration. 125.00/hr Teleconference – Billable. Teleconference with Mr. 0.25 01/17/00 Brousard [sic]. Counter $10,000 and fees of $1,500. 125.00/hr Mr. Brousard [sic] checked and counter was rejected. Relay same to client. 01/20/00 Legal Work. Notify Court of Settlement. 0.25 125.00/hr These records indicate that the parties were negotiating a settlement of the Oklahoma lawsuit as early as December 1999. Baker then notes that the entry for January 20, 2000 reads “Notify Court of Settlement.” This entry, according to Baker, establishes that the Oklahoma lawsuit was settled as of that date. In addition, Baker observes that Giles’s records from this time period do not reflect any discussions about a release of claims or obligations. Baker thus contends that the parties settled the Oklahoma lawsuit in January 2000 and did so without any release of Stevens from his confidentiality obligations. No. 15-2413 Baker Hughes, et al. v S&S Chemical, et al. Page 17 This argument suffers from two flaws. First, Baker raised this argument only in its reply brief. The argument is accordingly waived. See United States v. Abboud, 438 F.3d 554, 589 (6th Cir. 2006) (“An argument first presented to the Court in a reply brief is waived.”); Wright v. Holbrook, 794 F.2d 1152, 1157 (6th Cir. 1986) (“Since defendant was deprived of an opportunity to address the issue by plaintiff’s failure to raise this issue in his original brief, we will consider the issue waived.”). Second, Baker’s argument fails on the merits. Even if the parties had reached an oral agreement or a settlement in principle in January 2000, Giles’s later records—the same records that Baker itself cites in its opening brief—unambiguously indicate that the parties continued to refine the terms of their agreement in February and March of 2000. And those records, as analyzed above, show that the parties did not finalize their agreement (by Stevens dismissing his lawsuit after receiving payment from Baker) until the Settlement was circulated. This pattern of notifying the court of a tentative settlement, to be followed by putting the agreement in writing, is actually quite the norm. In addition, Oklahoma law expressly provides that the parties to a contract may subsequently alter its terms. Okla. Stat. tit. 15, §§ 236-37. Thus, even if Baker and Stevens originally settled the case without including the Release Provision, that original agreement does not preclude the parties’ later consent to the terms of the Settlement. C. The district court did not commit reversible error in declining to strike Giles’s declaration and billing records We next turn to Baker’s arguments based on the Federal Rules of Civil Procedure. Summary judgment in this case was based in part on Giles’s billing records and on a declaration in which Giles described the course of settlement negotiations between Baker and Stevens. Baker argues that the district court should have excluded these documents under Rule 26(a)(1) and (e), Rule 37(c)(1), and Rule 56(c)(4) of the Federal Rules of Civil Procedure.
Rule 26(a)(1) requires parties to disclose information regarding “each individual likely to have discoverable information . . . that the disclosing party may use to support its claims or No. 15-2413 Baker Hughes, et al. v S&S Chemical, et al. Page 18 defenses.” Fed. R. Civ. P. 26(a)(1)(A)(i). In addition, Rule 26(e) requires a party to supplement its disclosures “if the party learns that in some material respect the disclosure or response is incomplete or incorrect, and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing.” Fed. R. Civ. P. 26(e)(1)(A). A party failing to comply with these rules “is not allowed to use” the information or person that was not disclosed “on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless.” Fed. R. Civ. P. 37(c)(1). Baker asserts—and Defendants concede—that Giles and his records were not included in Defendants’ initial disclosures under Rule 26(a)(1). As a result, Baker contends that Giles and his records should have been excluded from the district court’s consideration under Rule 37(c)(1). In most cases, Baker’s argument would carry significant weight. See Sexton v. Uniroyal Chem. Co., 62 F. App’x 615, 616 n.1 (6th Cir. 2003) (“Rule 37 is written in mandatory terms and is designed to provide a strong inducement for disclosure of Rule 26(a) material.” (citation and internal quotation marks omitted)). The particular facts of the current case, however, make Baker’s argument unconvincing. To start with, Defendants’ counsel explain that they did not learn of Giles’s relevance to the case at hand until they received a draft of the Settlement (from Baker itself) on February 27, 2015, more than one month after the January 14, 2015 date on which the parties’ disclosures under Rule 26(a)(1) were due. Their failure to list Giles at the time of the original disclosures is thus fully understandable. Baker next argues that, even if Defendants had a justifiable reason not to identify Giles in their initial disclosures, Defendants nonetheless should have supplemented their initial disclosures in accordance with Rule 26(e). Their neglecting to do so, according to Baker, should have resulted in the exclusion of Giles’s declaration and records under Rule 37. Baker’s argument is unavailing because the specific facts of this case demonstrate that Defendants did in fact comply with Rule 26(e). That Rule, as noted above, requires a party to supplement its initial disclosures only if the new information “has not otherwise been made No. 15-2413 Baker Hughes, et al. v S&S Chemical, et al. Page 19 known to the other parties during the discovery process.” Fed. R. Civ. P. 26(e)(1)(A). Here, Giles and the information about his role in the settlement negotiations had in fact “otherwise been made known” to Baker. First, Baker itself produced the Settlement document that first alerted Defendants’ counsel to Giles’s relevance to the present lawsuit. Baker thus had access to the very document indicating that Giles played a key role in negotiating the Settlement. Second, Defendants asserted in their answer to Baker’s second amended complaint that the Settlement barred Baker’s claims. They also included as an exhibit the Settlement document signed by Stevens and Giles. Finally, both Giles himself and the negotiations surrounding the Settlement were discussed during a deposition of Baker’s in-house counsel that took place well before the discovery deadline. The discovery process in this case consequently revealed that (1) Giles was a central figure in the settlement negotiations between Baker and Stevens, and (2) Giles would clearly have information relevant to the parties’ claims or defenses. Giles and his role in this case were accordingly “otherwise . . . made known to [Baker],” so Defendants did not violate either Rule 26(a)(1) or Rule 26(e). Baker counters that the disclosure of Giles was insufficient because Defendants allegedly did not provide an explicit statement that they intended to rely on Giles and his records in moving for summary judgment. But Baker cites no binding authority for the proposition that Rule 26(e) requires such an explicit statement and, in any event, this alleged deficiency would not change our disposition of this issue. This is because Rule 37(c)(1) calls for the exclusion of a witness as a sanction for violating Rule 26(e) only if the violation was not “substantially justified or . . . harmless.” Fed. R. Civ. P. 37(c)(1). For the reasons previously discussed, Baker was plainly aware of Giles’s role in the negotiations resulting in execution of the Settlement. Moreover, Defendants’ assertion of the Settlement as an affirmative defense and the deposition of Baker’s in-house counsel occurred well before the July 30, 2015 close of discovery. Baker thus had both (1) knowledge of Giles and his role in this litigation, and (2) ample time to depose Giles or otherwise seek discovery with respect to Giles and his records. Any failure of Defendants to comply with Rule 26 was therefore a “harmless” violation that did not require the district court to exclude the Giles-related No. 15-2413 Baker Hughes, et al. v S&S Chemical, et al. Page 20 documents. See Fed. R. Civ. P. 37(c)(1); see also Howe v. City of Akron, 801 F.3d 718, 747 (6th Cir. 2015) (noting that a violation of Rule 26 is likely to be harmless when the opposing party already has “sufficient knowledge” of the undisclosed information).
Baker next argues that the district court should have excluded Giles’s declaration under Rule 56(c)(4) of the Federal Rules of Civil Procedure. That rule provides that a “declaration used to support or oppose a motion must be made on personal knowledge” and “set out facts that would be admissible in evidence.” Fed. R. Civ. P. 56(c)(4). Giles’s declaration purportedly did not satisfy this rule because it contained speculation and legal conclusions that went beyond anything that Giles “could actually know.” Baker identifies four allegedly objectionable statements: (1) As consideration for the execution of the Final Agreement and dismissal of the Case, Baker agreed to pay to Bruce Stevens the Sum of Ten Thousand Dollars ($10,000). (2) The Final Agreement was entered into as of March 31, 2000. (3) The Final Agreement that my office received from Broussard on or around March 30, 2000 was an offer . . . . (4) Stevens and Baker both performed pursuant to the terms of the Final Agreement. Baker contends that the first statement is “pure speculation as to why Baker Hughes might have paid Stevens.” But the Settlement itself provides that, “[i]n consideration for the execution of this Release, Baker agrees to pay to Stevens the sum of Ten Thousand Dollars ($10,000).” Thus, even assuming that Giles’s first statement is inadmissible speculation, the statement has no bearing on the outcome of this case because the documentary evidence in the record already reflects the substance of the statement. Baker next argues that the second statement is a “legal conclusion regarding if and when a contract was formed.” The Settlement, however, is dated March 31, 2000, and the parties’ conduct, as described above, did in fact result in the formation of a contract. Again, then, other evidence in the record is consistent with Giles’s statement, such that the statement itself is unnecessary to resolve any issues in this case. No. 15-2413 Baker Hughes, et al. v S&S Chemical, et al. Page 21 Baker then contends that Giles’s third statement is “pure speculation” about what Baker intended to accomplish by sending the Settlement. As explained above, however, see Part II.B.2. above, the language of the document and Baker’s action in sending it establish that the document was an offer. Giles’s statement on this issue is thus irrelevant. Finally, Baker maintains that the fourth statement is also “pure speculation” about why the parties acted the way they did. The Settlement, however, plainly calls for Baker to pay Stevens $10,000 and for Stevens to dismiss the lawsuit. Both parties undisputedly fulfilled these obligations, so the only reasonable inference is that the parties performed the terms of the Settlement. As a result, Giles’s fourth statement is irrelevant. For these reasons, the district court’s consideration of Giles’s affidavit was not necessary to the court’s decision to grant summary judgment in favor of Defendants. Any error in that consideration accordingly does not require reversal. See Fed. R. Civ. P. 61 (“At every stage of the proceeding, the court must disregard all errors and defects that do not affect any party’s substantial rights.”); see also Brainard v. Am. Skandia Life Assurance Corp., 432 F.3d 655, 667 (6th Cir. 2005) (applying harmless-error analysis to an alleged violation of Rule 56(c)(4)’s predecessor). D. The district court did not err in refusing to consider the parties’ post-settlement conduct when interpreting the Settlement Baker finally contends that the district court should have considered the interactions between Baker and Stevens in the years following the execution of the Settlement. It observes that, as noted above, it accused Stevens in 2002 of breaching his confidentiality obligations. In addition, Baker explains that it reminded Stevens of his confidentiality obligations in 2008 and 2013. Stevens did not assert in response to any of these accusations or reminders that he had been released from his obligations by the terms of the Settlement. Baker thus argues that Stevens’s conduct amounts to a tacit admission that the parties did not consent to the Release Provision. In response, Stevens points out that the interpretation of a contract under Oklahoma law depends primarily on the language of the contract itself. When that language is unambiguous, No. 15-2413 Baker Hughes, et al. v S&S Chemical, et al. Page 22 extrinsic evidence such as the parties’ course of conduct may not be used determine the contract’s meaning. Pitco Prod. Co. v. Chaparral Energy, Inc., 63 P.3d 541, 546 (Okla. 2003) (“If a contract is complete in itself, and when viewed as a totality, is unambiguous, its language is the only legitimate evidence of what the parties intended.”). If, in contrast, the language of the contract is ambiguous, then a court may use extrinsic evidence to interpret that language. State ex rel. Comm’rs of Land Office v. Butler, 753 P.2d 1334, 1343 n.23 (Okla. 1987) (“Extrinsic evidence to be used in search of the instrument’s intended meaning is admissible only when the language used is susceptible of multiple meanings and there is a dispute between the parties as to the intended meaning of the language in controversy.” (emphasis in original)). In the present case, the Release Provision of the Settlement is plainly broad enough to encompass the confidentiality obligations imposed by Stevens’s Termination Agreement with Baker. As a result, the district court correctly concluded that the release was not ambiguous and that the parties’ course of conduct was accordingly irrelevant to its interpretation of the effect of the release. Baker argues that this analysis is incorrect. It maintains that the proper question is not whether the Release Provision is ambiguous, but whether the parties agreed to enter into a contract that contained the Release Provision at all. Baker, in other words, acknowledges that it settled the Oklahoma lawsuit, but maintains that the terms of that agreement were different than those set out in the Settlement. And because Stevens never asserted in 2002, 2008, or 2013 that he had been released from his obligations, the actual terms of their agreement—according to Baker—must not have included any release. This argument is unavailing. For the reasons previously explained, the Settlement became a binding contract between Baker and Stevens when the two parties consented to its terms through the process of offer, acceptance, and performance. See Part II.B.2. above. The Release Provision is therefore binding on the parties, and Stevens’s subsequent conduct does not change the meaning of that provision. See Pitco, 63 P.3d at 546 (“If a contract . . . is unambiguous, its language is the only legitimate evidence of what the parties intended.”). No. 15-2413 Baker Hughes, et al. v S&S Chemical, et al. Page 23