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Sellner v. MAT Holdings, Inc.

United States District Court, D. Minnesota

February 8, 2018

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

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

          Donald M. Lewis, Esq., John J. Wackman, Esq., and Jeremy D. Robb, Esq., Nilan Johnson Lewis PA, Minneapolis, MN, on behalf of Defendants.




         On November 30, 2017, 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, “Defendants”) Motion for Partial Summary Judgment [Docket No. 260] and Motion to Exclude Expert Testimony [Docket No. 333]. Plaintiff Douglas James Sellner's (“Sellner”) Motion to Exclude Expert Testimony [Docket No. 341] was also argued. For the reasons set forth below, Defendants' motions are granted in part and denied in part. Sellner's motion is granted.


         The factual background of this case is fully recited in this Court's August 5, 2015 Memorandum Opinion and Order [Docket No. 208] and is incorporated here by reference. Sellner alleges that he was terminated from his employment as a Quality Engineering Technician for refusing to falsify testing data for certain models of air compressors.

         A. Defendants

         1. Corporate Structure

         MAT Holdings, Inc. (“MAT Holdings”) is a privately owned holding company owned by Steve Wang (“Wang”). Second Ryan Decl. [Docket No. 263] Ex. 3.[1] It owns companies that manufacture, market, and distribute automotive and consumer business products and brands. Id. Ex. 1. MAT Industries, LLC (“MAT Industries”) and Midwest Air Technologies, Inc. (“Midwest Air”) are two of MAT Holdings' United States subsidiaries. Id. Ex. 3.

         MAT Industries markets air compressors, pneumatic driven air tools, and pressure washers, which are sold by retailers and home centers. First Ryan Decl. [Docket No. 162] Ex. 2 (“Thomas Dep.”) 198. MAT Holdings performs human resource and administrative work for MAT Industries, for which MAT Industries pays a monthly management fee to MAT Holdings. Second Ryan Decl. Ex. 4 (“Nebel Dep.”) 9-10.

         In 2008, MAT Holdings purchased a facility in Springfield, Minnesota known as Sanborn Manufacturing (“Sanborn”). Id. Exs. 10 (“Stark Dep.”) 14, 54; 11 (“Carnell Dep.”) 35-36. MAT Industries refers to the facility as “Sanborn Mfg., a division of MAT Industries, LLC;” however, Sanborn is not itself a legal entity. Defs.' Joint Separate Answer [Docket No. 104] 1 n.1. Paul Thomas (“Thomas”) serves as MAT Industries' Chief Operating Officer and Butch Stark (“Stark”) is Sanborn's General Manager. Thomas Dep. 7; Stark Dep. 14.

         2. 14CFM Pumps

          Sanborn manufactures air compressors (“compressors”) with oil-lubricated, single-stage, three-cylinder, 14 cubic-feet-per-minute pumps (the “14CFM pumps”). Second Ryan Decl. Ex. 13 (“Beckman Dep.”) 65-68. The compressors operate by a motor driving the pump, which then injects air into a pressure vessel tank. The tank 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. Second Ryan Decl. Ex. 24 (“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, MAT Industries started purchasing 14CFM pumps from Suzhou Honbase Machinery Manufacture Co. (“Honbase”) (the “Honbase pumps”) in China. Id. 67-68. Honbase is also owned by Steve Wang. Id.

         The Honbase pumps struggled with excessive oil consumption and leakage. Id. Ex. 15 (“Strong Dep.”) 92, 97. Sanborn's internal performance and life testing of the Honbase pumps revealed that the pumps did not achieve certain benchmarks set by Sanborn. Second Ryan Decl. Exs. 21-22.

         B. Sellner is Hired

         In June 2011, MAT Industries hired Sellner as a lab-quality technician for the Sanborn facility. Id. Ex. 12. 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. Id. Ex. 27, Interrog. No. 9. Sellner was instructed to report any safety, vendor quality, and manufacturing issues. Id. Travis Strong (“Strong”), MAT Industries' Quality Assurance and Product Service Manager, was Sellner's direct supervisor. Strong Dep. 9; Second Ryan Decl. Ex. 19 (“Sellner Dep.”) 114.

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

         C. Sears and Performance Testing

         In August 2011, MAT Industries and Sears, Roebuck and Company (“Sears”) began working together to add a compressor with the Honbase pump to Sears' Craftsman product line. Second Ryan Decl. Ex. 28. On August 22, 2011, MAT Industries forwarded the raw data from Test Request 136 (“TR136”), performance and life tests that were initiated in late 2010, to Sears' Engineering Manager Dan Swanson (“Swanson”). Id. Ex. 22. The next day, Chief Operating Officer Thomas wrote an email to Kurt Beckman (“Beckman”), Sanborn's Engineering Manager, and stated that he was “not sure [he] would approve these” based on the amount of oil consumed during testing. Id. Ex. 29. Thomas suggested a new round of testing that included pumps with recent changes. Id.

         Sellner was assigned to complete the new test, Test Request 321 (“TR321”), that evaluated whether changes implemented by Honbase improved oil consumption and life performance in the Honbase pumps. Id. Exs. 34-35. Performance testing was completed on September 28, 2011. Id. Ex. 42. All units passed performance testing. Id. Exs. 42-43.

         Excessive oil leakage, however, remained an issue. On January 12, 2012, further testing revealed that adding a compression ring to the pump reduced oil leakage. Id. Exs. 47-48. MAT Industries required Honbase to add a compression ring on the new pumps, and MAT Industries' existing inventory was re-ringed. Id. Exs. 49-50.

         On February 15, 2012, Swanson asked MAT Industries for additional performance and life test data on the Honbase pump. Id. Ex. 54. The test request was directed to Stark, who asked Sellner to assist because he had been assigned TR321. Stark Dep. 124-125. On March 2, 2012, Sellner sent Stark an internal Quality Department Laboratory Report (“Quality Report”) on TR321 that stated: 1) “[t]ests showed that units passed performance and life testing benchmarks, ” and 2) the units passed “with minor [n]ormal service issues.” Second Ryal Decl. Ex. 43. 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. Sellner, however, asserts that the Quality Report does not truthfully reflect the actual testing data to TR321 and that he did not prepare the report. Id. Ex. 59 ¶ 3.

         Using the information from the Quality Report, Stark prepared a Compressor Test Report (“CTR”). Id. Ex. 62. The CTR summarized that TR321 tested 80-gallon units and concluded that the “pump test samples exceeded minimum [l]ife test requirements set by customer.” Id. Stark forwarded the CTR to Sellner with the instruction to “go through the data I have entered to make sure that I haven't made any mistake.” Id. Sellner made two edits, and the CTR was sent to Swanson at Sears on March 7, 2012. Id. Exs. 41, 63. Sellner contends that the data sent to Sears in the CTR does not accurately reflect the TR321 test results. First Everson Decl. [Docket No. 206] Ex. 1 ¶ 3; Sellner Dep. 236.

         D. Request to Falsify Data

         On March 29, 2012, Sellner alleges that Stark told him “to get together everything [MAT Industries] had on the [Honbase] pump.” Sellner Dep. 149. Following those instructions, Sellner “updated the life test” by collecting all relevant testing results and entering the results into a spreadsheet. Id. Sellner delivered the data to Stark.

         Sellner alleges later that same day, Engineering Lab Manager Joe Schiller (“Schiller”) entered his office with a copy of the spreadsheet Sellner had prepared and stated that the testing results were “shit” and could not be used in any summary report for Sears. Id. at 150. Sellner further alleges that shortly thereafter, Stark entered his office and claimed that MAT Industries had been called “on the carpet” by Sears for overstating the performance and quality of the Honbase pump. Id. Stark instructed Sellner to produce a report showing that the units did not have major issues and adequately passed life tests of 1, 500 hours. Id. Sellner claims that when he told Stark that no units had performed to those specifications, Stark responded “well, if you don't do this, we're all going to be on the street-no, you're going to be on the street.” Id. Sellner states that when he told Stark that he would not falsify any testing records, Stark urged him to “get creative with [his] documentation.” Id.

         Josh Beach (“Beach”) a lab technician, asserts that he overheard portions of this conversation between Sellner and Stark. Beach recalls hearing Stark telling Sellner that Sears was “calling them on the carpet” for overstating the performance of the Honbase pump, that Stark encouraged Sellner to get creative with testing documentation, and that Sellner refused Stark's command for creativity. First Ryan Decl. Ex. 86 (“Beach Dep.”) at 130, 146-47. Beach further claims that after the conversation with Stark, Sellner stated, “Well, there's my job.” Id. at 147.

         Later that same day, March 29, 2012, Sellner alleges that Stark persisted in pressuring him to complete an Executive Summary with falsified data. Sellner Decl. ¶¶ 25-30. Sellner continued to refuse. Id. ¶ 35. According to Sellner, the next day Stark instructed him to use go-cart data[2] for the Executive Summary. Id. ¶ 39. Sellner responded that this would not be appropriate. Id. Later on March 30, 2012, Sellner called the Minnesota Department of Labor and Industry and the Minnesota Occupational Safety and Health Administration (“MNOSHA”). Id. ¶ 40. Beach reports that he was in the room with Sellner when he made the call, and that Sellner reported that he was instructed to “doctor up some documentation.” Beach Dep. 49. Sellner subsequently completed and submitted a MNOSHA form online. Sellner Decl. ¶ 40.

         E. Sellner Travels to China

         Sellner was scheduled to travel to China with Strong on April 3, 2012 to evaluate Honbase's operations and implement improvements to the Honbase pump. Sellner Dep. 123. The day before their departure, Sellner alleges he received a call from Swanson about Honbase pump data. Id. at 205. Specifically, Swanson requested the raw life testing data for the Honbase pump that did not reflect any major issues. Id. 207-08. Sellner responded that there was no such data in existence. Id. at 208. Swanson then told Sellner that MAT Industries “should have worked the bugs out before it was presented to Sears” and hung up. Id. Swanson has no recollection of this conversation with Sellner. Swanson Dep. 183-84.

         While on the plane to China with Strong, Sellner claims that he told Strong about Stark's instruction to provide a falsified report for Sears. Sellner Dep. 208. Strong responded that “It would be best if I didn't hear about this” and held his hands up in a gesture for Sellner to stop talking. Id. Strong denies this interaction took place. Strong Dep. 219-20.

         While in China, Sellner discovered manufacturing issues with the Honbase pump, including use of pump testing equipment that had not been accurately calibrated. Sellner Decl. ¶ 9.

         F. Sellner's Performance Review and Promotion

          On March 5, 2012, Sellner received a positive performance review from his immediate supervisor, Strong. Second Ryan Decl. Ex. 69. MAT Industries posted a Quality Assurance/Test Lab Leadperson position opening on March 30, 2012. Id. Ex. 79. After interviewing Sellner for the position, Strong recommended that Sellner be promoted. Stark Dep. 43-44. Strong's recommendation was approved by Stark, and Sellner learned of his promotion just prior to his April 3, 2012 departure to China. Id.; Sellner Dep. 159.

         G. Issues in ...

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