Appendix — Davis v. Siemens Medical Solutions USA, Inc. (No. 08-715)

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APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

No. 07-5420

[Filed May 28, 2008]

JERRY W. DAVIS,

Plaintiff-Appellant,

V.

SIEMENS MEDICAL SOLUTIONS USA,

INC.,

Defendant-Appellee.

a ee a a a ee ee el

ON APPEAL FROM THE UNITED

STATES DISTRICT COURT FOR THE

WESTERN DISTRICT OF KENTUCKY

Before: KEITH, DAUGHTREY, and ROGERS,

Circuit Judges.

PER CURIAM. In this diversity action for breach of

an employment contract, plaintiff Jerry Wade Davis

alleged that his former employer, defendant Siemens

Medical Solutions USA, Inc., was _ lhable for

approximately $1.77 million in sales commissions that

Davis claimed were unjustly withheld by the

defendant. He also sought damages based on other

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state law claims — specifically, conversion, promissory

estoppel, fraudulent misrepresentation, intentional

infliction of emotional distress, unpaid wages, and

breach of fiduciary duty.

After affording the parties extensive discovery, the

district court granted summary judgment to Siemens

on all but Davis’s claim of fraudulent

misrepresentation. See Davis v. Siemens Med.

Solutions USA, Inc. (Davis I), 399 F. Supp.2d 785

(W.D. Ky. 2005). In denying summary judgment to the

defendant on that one cause of action, the district

judge focused on a factual dispute about whether

Douglas Spotts, Siemens’s national sales manager in

the company’s Image Management Division, had

informed Davis that if he accepted a position as

product sales executive, the company would pay him

commissions on national sales made by other Siemens

sales agents who reported to Davis.

Consequently, the fraudulent-misrepresentation

claim was tried by a jury at a trial presided over by a

magistrate judge because the district judge was

confronted with “an unanticipated scheduling conflict.”

At the conclusion of four days of trial, the jury

returned a verdict in favor of Davis on the

misrepresentation claim, awarding him $200,000 in

compensatory damages but no punitive damages. Post-

verdict, Siemens filed a renewed motion for judgment

as a matter of law, a motion that the magistrate judge

later granted, ruling that, under principles of

Kentucky law, Davis could not have reasonably relied

upon any representations nade by Spotts that were in

contravention of the unambiguous, written language

contained in the Siemens Compensation and

Commission Plan under which Davis was hired. See

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Dautis v. Siemens Med. Solutions USA, Inc. (Davis IT),

No. 3:04CV- 195-MO, 2007 WL 710133, at *4 (W.D.

Ky. Mar. 6, 2007). Davis now appeals that posttrial

decision, those portions of the district court’s summary

judgment order that were adverse to him, and certain

evidentiary rulings made by the magistrate judge prior

to and during trial.

The Summary Judgment Ruling

In addressing the defendant’s claims for breach of

contract, conversion, promissory estoppel, intentional

infl.ction of emotional distress, and breach of fiduciary

duty, the district judge expertly outlined the facts

relevant to the dispute, provided a full exposition of

the case law relevant to any decision on the matter,

and accurately applied that law to the facts presented.

Indeed, insofar as the decision in Davis I addresses the

allegations of breach of contract, conversion,

promissory estoppel, intemtional infliction of emotional

distress, and breach of fiduciary duty, any additional

discussion of those claims by this court would be

merely duplicative and would serve no useful purpose.

We therefore affirm the grant of summary judgment to

Siemens based upon the reasons set out by District

Judge Heyburn in Davis J, reported at 399 F. Supp.2d

785.

Grant of Judgment as a Matter of Law

Similarly, Magistrate Judge Moyer’s treatment of

Siemens’s post-trial motion for judgment as a matter

of law accurately identified, explained, and applied the

law relevant to Davis’s claim of fraudulent

misrepresentation. In that decision, the magistrate

judge correctly noted that the district court’s earlier

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denial of summary judgment on this ground was based

upon the court’s assumption that a genuine dispute

existed as to whether Douglas Spotts made the

representation concerning the payment of commissions

that is alleged by the plaintiff. As emphasized by the

magistrate judge, however, even if such a

representation had been made by Spotts, Davis could

not have reasonably relied upon that promise, given

the clear contract language to the contrary. For the

reasons discussed in Magistrate Judge Moyer’s

memorandum opinion dated March 6, 2007, we also

affirm the district court’s decision granting Siemens

judgment as a matter of law on the claim of fraudulent

misrepresentation.

Claim of Unpaid Wages (K.R.S. § 337.385)

In the summary judgment decision, the district

court dismissed Davis’s claim for lost wages under

Section 337.385 of the Kentucky Revised Statutes

because “Davis did not pursue his necessary

administrative remedies before initiating his lawsuit.”

Subsequently, however, the plaintiff moved the court

to revise its decision in light of a Kentucky Supreme

Court decision overruling prior precedent that

required such an administrative exhaustion. See Parts

Depot, Inc. v. Beiswenger, 170 S.W.3d 354, 362 (Ky.

2005). The district judge granted that motion and filed

a supplemental memorandum that again granted

summary judgment to Siemens on this issue, this time

on the alternate ground that the commissions were not

“wages” because “Kentucky imposes no statutory duty

to provide an override commission” and because Davis

had not established that the commissions had been

“agreed upon ... or piovided to employees as an

established policy.” Ky. Rev. Stat. § 337.010(1)(c).

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To the extent that Davis’s statutory wage claim is

based upon the failure of Siemens te pay the plaintiff

commissions that he believes he is due, the district

court’s breach of contract analysis in Davis I is

applicable and fatal to the plaintiffs ~laim. To the

extent that Davis’s statutory claim is based upon the

failure of the defendant to pay the entire base salary

promised in the company’s guarantee rider, we are

informed by counsel that the issue has been resolved

out of court to the satisfaction of both parties.

Evidentiary Determinations

On appeal, Davis also challenges the magistrate

judge’s trial rulings that excluded evidence of

mistreatment of Davis and of other Siemens employees

at the hands of a management official not involved in

the salary negotiations with Davis and also excluded

evidence that the defendant failed to provide the

plaintiff with a company car, as promised in a letter

offering the product sales executive position to Davis.

These and all challenges to evidentiary determinations

at trial are reviewed on appeal only for an abuse of

discretion. See Gen. Elec. Co. v. Joiner, 522 U.S. 136,

141 (1997).

The magistrate judge’s exclusion of evidence of

alleged mistreatment suffered by Davis and by other

Siemens employees at the hands of manager Thomas

Riesenberg was proper. First, the sole remaining cause

of action at trial was the plaintiffs claim of fraudulent

misrepresentation, an alleged wrong that occurred

when national sales manager Douglas Spotts, not

Riesenberg, supposedly made certain promises to

Davis. The fact that Riesenberg may have “mistreated”

the plaintiff approximately a year later might have

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been relevant to the already-dismissed claim for

intentional infliction of emotional distress, but it had

no relevance whatever to the inquiry of whether Spotts

knowingly deceived Davis when discussing the job’s

payment scale with the plaintiff. Furthermore, Davis

is unable to point to any testimony supporting a

conclusion that Riesenberg had any role in the initial

conversations with the plaintiff about the salary

associated with the product sales executive position.

Because evidence of alleged mistreatment of Davis or

of other employees by Riesenberg is of no consequence

to the determination of whether Spotts fraudulently

misrepresented information to the plaintiff, such

testimony was thus irrelevant to the

misrepresentation claim before the jury and was

properly excluded. See Fed. Rule of Evid. 401.

Likewise, the decision of the magistrate judge to

disallow testimeny regarding the failure of the

employer to provide Davis with a company car was not

reversible error. Although a letter from the defendant

dated November 11, 2002, provided that it would

“provide a car for your use in accordance with Siemens

Company Car Policy,” Davis later disavowed any claim

to a company car. During his deposition testimony, the

following exchange occurred between the plaintiff and

defense counsel:

@. Are you claiming in this lawsuit that you

were entitled to a company car while you

worked as a product-sales executive?

A. As were all of us [phonetic], I was entitled to

one; but I don’t think 'm claiming it in my suit.

No.

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Q. You're not asking for any damages because

you didn’t get a company car?

Mr. Bishop: Object, insofar as it calls for a legal

conclusion.

Ms. Settle: You can answer it.

A. No.

Having asserted that the request for a company car

was no longer part of his contract claim, Davis cannot

now seek to resurrect that claim. Consequently, any

error in the decision of the magistrate judge to exclude

testimony relevant to that issue is harmless.

For the reasons set out above, we AFFIRM the

judgment of the district court, including both the order

granting summary judgment to the defendant and the

order granting judgment as a matter of law to the

defendant.

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APPENDIX B

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF KENTUCKY

AT LOUISVILLE

No. 3:04CV-195-MO

[Filed March 6, 2007]

JERRY W. DAVIS

PLAINTIFF

¥.

SIEMENS MEDICAL SOLUTIONS USA, INC.

DEFENDANT

me Ne eee ee” Se”

MEMORANDUM OPINION

Following a verdict in favor of the plaintiff, Jerry

W. Davis, Siemens Medical Solutions USA (“Siemens”)

renewed its motion for judgment as a matter of law

and, in the alternative, asked for a new trial (see

docket no. 114). It is rare for a court to grant such a

motion in a civil matter, particularly with respect to an

issue that has been adjudicated by a jury. Yet, after

reviewing Siemens’ motion and Mr. Davis’s response

thereto, reviewing the trial transcripts, and

considering prior rulings made in this matter, this

court concludes that Mr. Davis’s fraud claim fails as a

matter of law and, accordingly, there existed no legally

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sufficient basis for the jury to find that Mr. Davis

reasonably relied on any misrepresentations made by

Siemens.

The court has not reached this decision lightly,

without being mindful of the doctrine of the law of the

case, nor without considerable concern about possibly

invading the province of a jury. Nevertheless, when

this court has erred as a matter of law, or a jury has

reached a decision that is against the clear weight of

the evidence, a judge must correct any errors and

ensure that justice is served.

I.

All facts underlying this case were well-

summarized in the district court’s memorandum

opinion disposing of all but one of Mr. Davis’s claims.

See docket no. 56, reported as Davis v. Siemens

Medical Solutions USA, Inc., 399 F. Supp. 2d 785

(W.D. Ky. 2005). Accordingly, this court will restate in

this opinion only those facts relevant to an

understanding of Siemens’s present motion.

In the fall of 2002, Siemens offered Mr. Davis, who

was then one of its Division Marketing Specialists, a

sales executive position. Although he had worked for

Siemens as a commission-earning salesperson in the

past, Mr. Davis’s position at the time of the offer was

salaried, with an annual compensation of $85,000. The

compensation for the new position he was offered was

once again commission-driven, with a lower base

salary of $65,000, a one-year guaranteed salary rider

of $35,000 (the “Guarantee Rider”), and_ the

opportunity to earn commissions on certain sales.

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The offer was verbally communicated to Mr. Davis

in September 2002 during a meeting between him and

Mr. Douglas Spotts, one of Siemens’s National Sales

Managers. Siemens confirmed its offer in a writing

dated November 11, 2002, which expressly

incorporated the Guarantee Rider, which in turn

incorporated Mr. Davis’s Compensation and

Commission Plan (the “Plan”) that described the basis

by which his commissions would be calculated. On

November 14, 2002, Mr. Davis confirmed in writing his

acceptance of the offer letter, the Guarantee Rider, and

the Compensation and Commission Plan.

The parties agree that Mr. Davis was assigned a

national territory and that his Compensation and

Commission Pian states that Mr. Davis would earn

commissions only on those sales within his territory

for which he was “personally and directly responsible.”

Prior to trial, Mr. Davis argued that the phrase

“personally and directly responsible” was ambiguous

and could be interpreted, particularly with the aid of

parol and other extrinsic evidence, to entitle Mr. Davis

to commissions on sales for which he did not have

direct and unmediated involvement. See Davis, 399 F.

Supp. 2d at 792. The district court disagreed with Mr.

Davis’s assertion of ambiguity, and ruled that the

phrase “personally and directly responsible” is

“absolutely clear and unambiguous” and that its

meaning within the context of the Compensation Plan

‘is not subject to serious dispute.” Jd. at 792-93.

Accordingly, the district court dismissed with prejudice

all claims for which Mr. Davis’s’ advocated

interpretation of the Compensation and Commission

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Plan’s terms was necessary (in whole or in part) for

him to prevail.’

The district court permitted only one claim to

survive summary judgment — whether Siemens

fraudulently misrepresented the terms of Mr. Davis’s

commission structure to induce him to accept his new

job. Mr. Davis asserted that Mr. Spotts promised him

that he would receive commissions on all sales made to

national accounts, regardless of whether he was

responsible for securing the sale. As noted previously,

the Compensation and Commission Plan Mr. Davis

accepted says no such thing, and cannot reasonably be

interpreted otherwise. Yet, because Siemens denied

making the alleged misrepresentation, the district

court determined that a question of fact existed with

respect to Mr. Davis’s fraudulent misrepresentation

claim, because one of six necessary elements’ of a

fraud claim is the making of a materially false

statement. See Davis, 399 F. Supp. 2d at 800. The

district court did not evaluate in any detail the other

necessary elements of the fraud claim, except to note

that Mr. Davis alleged that he relied on the

misrepresentation and that Mr. Davis appeared to

' The district court also dismissed Mr. Davis’s claims for breach of

fiduciary duty and intentional infliction of emotional distress.

* The elements of a fraudulent misrepresentation claim in

Kentucky are (1) a representation of a material fact; (2) that was

false; (3) that the defendant either knew was false, or made

recklessly; (4) that was made to induce the plaintiff to act upon it;

(5) that was reasonably relied upon; and (6) that resulted in

damages to the plaintiff. See, e.g., United Parcel Service Co. v.

Rickert, 966 S.W.2d 464, 468 (Ky. 1999); Vest v. Goode, 209 S.W.2d

833, 836 (1948); see also Moore, Owen, Thomas & Co. v. Coffey,

992 F.2d 1439, 1447 (6" Cir. 1993).

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meet “the bare minimum for a prima facie case of

misrepresentation.” Jd. Notably, the district court did

not explicitly evaluate whether Mr. Davis reasonably

relied on the misrepresentation.°

On the eve of trial, and facing an unanticipated

scheduling conflict, the district court asked the parties

to consider allowing a magistrate judge to preside over

the trial of this matter. They did and, accordingly, the

trial judge was not the same judge who had previously

evaluated the merits of Mr. Davis’s claims and made

rulings on all pre-trial motions, including Siemens’s

motion for summary judgment. Thus, when Siemens

moved for directed verdict at the close of its proof, the

trial judge was reluctant to disturb what he considered

* An argument can be made that the district court did evaluate

whether Mr. Davis’s reliance was reasonable and determined that

it was not. One of Mr. Davis’s alternate theories of relief was that

he was entitled to recover the commissions allegedly promised

him on the theory of promissory estoppel. To succeed, such a claim

would also require proof of reasonable reliance. See Davis, 399 F.

Supp. 2d at 795. The district court dismissed Mr. Davis’s claim of

promissory estoppel on the following basis, however:

Promissory estoppel is meant for cases in which a

promise, not being supported by consideration, would be

unenforceable under conventional principles of contract

law. When there is an express contract governing the

relationship out of which the promise emerged, and no

issue of consideration, there is no gap in the remedial

system for promissory estoppel to fill.

Id. at 798. The court did not explicitly evaluate whether any

reliance on Mr. Spotts’s promise was reasonable, but its rejection

of Mr. Davis’s promissory estoppel claim is consistent with this

court’s conclusion that there should be no extra-contractual

recovery by Mr. Davis.

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to be the law of the case, as established by the district

court in its prior evaluation of Siemens’s motion for

summary judgment, and without the aid of

contemporaneous trial transcripts, concluded that

there existed one or more issues of fact requiring the

jury’s determination.

IT.

Post-trial Siemens requests two alternative forms

of relief. Siemens principally asks the court to

reconsider its denial of Siemens’s motion for judgment

as a matter of law, and asks the court to set aside the

jury’s determination that Siemens made a fraudulent

misrepresentation to Mr. Davis. Failing that, Siemens

asks for a new trial because certain of the statements

and evidence pertaining to alleged mistreatment of Mr.

Davis by Tom Riesenberg, one of his superiors at

Siemens, may have tainted the jury’s verdict. In this

court’s opinion, the latter argument is not sufficiently

meritorious to warrant extensive consideration.‘

* The court is not convinced that any such evidence was

improperly or erroneously admitted, or, if so, that Siemens did not

waive its right to object. This is not to say, however, that any

evidence pertaining to the alleged behavior of Mr. Riesenberg did

not affect the jury. Although the claim at trial sounded in tort, the

jury chose not to award punitive damages and, accordingly, the

method of measuring Mr. Davis’s damages was the same as if he

had proceeded on a breach of contract action. In other words, the

jury was instructed to award Mr. Davis the benefit of his alleged

bargain, namely the amount to which he would have been entitled

had the promise allegedly used to induce Mr. Davis to accept his

new position been true. See Jury Instruction No. 2 (docket no.

109). Ifthe promise that Mr. Davis would earn commissions on all

sales made to national accounts were true, the evidence was

uncontroverted that he would have been entitled to over 1.5

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Siemens’s principal request, however, both warrants

and has received weighty and careful consideration.

Federal Rule of Civil Procedure 50(a)(1) states that

judgment as a matter of law is not proper unless “no

reasonable juror could have found for the non-moving

party.” Similarly, it has long been the rule in the Sixth

Circuit that the same standard applies to a renewed

motion for judgment as a matter of law filed after the

return of a jury verdict. See, e.g., United States uv.

Alpine Industries, Inc., 352 F.3d 1017, 1022 (6th Cir.

2003)\(citations omitted). In applying this standard,

however, the court cannot weigh the credibility of the

witnesses or substitute its judgment for that of the

jury. Jd. Rather, it must view the evidence in the light

most favorable to the non-moving party (i.e., Mr.

Davis) and give him the benefit of all reasonable

inferences. Id.

Before weighing the evidence, however, the court

must first address what Mr. Davis was asked to prove

to the jury. In civil cases, the pluintiff is typically

million dollars. See, e.g., Not. of Reduction of Sought Damages

(docket no. 104); Tr. vol. II-B at 39-40. The award thus should

have been all or nothing. Based on the claim and sales figures

presented, there simply was no evidentiary support for any other

damages calculation. Inexplicably, however, the jury awarded Mr.

Davis $200,000 in compensatory damages. One could interpret

this figure as suggesting that the jury did not find Mr. Davis’s

fraud claim fully credible, yet felt he was owed something for his

alleged mistreatment by his supervisors at Siemens. Whether this

interpretation is accurate or not, one can never know. The court

simply notes that there is no readily apparent logical basis for the

jury’s damages calculations, and thus Siemens’s’ alternate

argument, while not legally viable as presented, may not be

entirely misplaced.

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asked to prove his claim by a preponderance of the

evidence. The preponderance standard is relatively low

—it simply means that a particular claim is more likely

than not. By contrast, a plaintiff alleging fraudulent

misrepresentation, bears the heightened burden of

proving his case by “clear and convincing evidence.”

See, e.g., United Parcel Service Co. v. Rickert, 966

S.W.2d 464, 468 (Ky. 1999). Kentucky’s highest court,

to which this court must turn for a definition of that

standard,’ has declared that “proof by clear and

convincing evidence’ is incapable of a definition any

more detailed or precise than the words involved,” but

requires the party with the burden of proof “to produce

evidence substantially more persuasive than a

preponderance of the evidence, but not beyond a

reasonable doubt.” Fitch v. Burns, 782 S.W.2d 618, 622

(Ky. 1990).

The jury was asked to determine whether Mr.

Davis had proven each of the following six necessary

elements of his claim by clear and convincing evidence:

(1) That Siemens made a representation of a

material fact to Mr. Davis;

(2) That the representation was false;

(3) That Siemens either knew the

representation was false or made it

recklessly;

° This is a diversity case and, accordingly, Kentucky's substantive

law governs the analysis and interpretation of the legal sufficiency

of his state-law claim of fraud. See, e.g., Moore, Owen, Thomas &

Co. uv. Coffey, 992, F.2d 1439, 1444 (6 Cir. 1993).

16a

(4) That Siemens made the representation to

induce Mr. Davis to act upon it (in other

words, that Siemens intended to deceive Mr.

Davis);

(5) That Mr. Davis acted in reasonable reliance

on the representation; and

(6) That Mr. Davis suffered damages as a

result.

See Jury Instruction No. 1 (docket no. 109). In its post-

trial motion Siemens does not dispute that the

evidence was sufficient to establish, clearly and

convinvingly, that it made a representation of a

material fact to Mr. Davis or that he would have

suftered damages if his claim of fraud was sustained

by the jury, and it does not contest (presumably for the

purposes of the motion) that the statement was false.

Rather, it asserts that Mr. Davis failed to prove by

clear and convincing evidence the third through fifth

enumerated elements of the claim above.

The court will assume, for the sake of argument

only, that Mr. Davis sufficiently proved at trial the

third and fourth elements of his fraud claim (i.e., that

Siemens knew that Mr. Spotts’s alleged oral

representations regarding Mr. Davis’s commission

structure were false and that Siemens intended to

deceive Mr. Davis into accepting its offer of

employment, which included the Commission and

Compensation Plan that contained a commission

structure quite different from the one Mr. Spotts

verbally described). The court makes_ these

assumptions because it is convinced that Mr. Davis did

not, as a matter of Kentucky law, establish that Mr.

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Davis reasenably relied on Siemens’s

misrepresentations

III.

It has long been the rule in Kentucky that there

can be no_ reasonable reliance on any

misrepresentation that a party knows or should have

known is inaccurate. See Mayo Arcade Corp. v. Bonded

Floors, Co., 41 S.W.2d 1104 (Ky. 1931). The corollary

to that rule — namely that as a matter of law there can

no be no misrepresentation of any issue that is

contradicted by the terms of a written contract — is

also a venerable part of Kentucky law, and is precisely

applicable in this matter. See, e.g., id; Vest v. Goode,

209 S.W.2d 833 (Ky. 1948).

Mr. Davis asserts that Mr. Spotts orally promised

him that he would receive commissions on all sales

made to national accounts, regardless of whether he or

another salesperson was directly responsible for

making the sale.° The Compensation and Commission

Plan subsequently sent to and accepted by him,

however, stated only that he would _ receive

commissions on sales for which he and he alone was

personally and directly responsible. At the time Mr.

Davis accepted his written offer, and its corresponding

Commission and Compensation Plan, he apparently

labored undcr the misperception that there was no

conflict between the oral representations and the

"Mr. Spotts testified that he told Mr. Davis that he would be paid

according to the terms of the written plan. See Tr. vol. III-A at 79-

80; Tr. vol. III-B at 83-84, 103. In construing the evidence in the

light most favorable to Mr. Davis, however, the court will

disregard this testimony

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written Plan.’ As the district court correctly

determined in the ruling on summary judgment, this

misperception was not reasonable, as the terms of the

written Plan are both clear and unambiguous. If Mr.

Davis was presented with a Plan whose commission

structure could reasonably be interpreted in only one

way, and that way directly contradicted the oral

representations allegedly made by Mr. Spotts

concerning his commission structure, it necessarily

follows that Mr. Davis’s reliance on the oral

representations was not reasonable, once he was

presented with, and accepted his written job offer.®

Thus, pursuant to Kentucky law, and as a matter of

law without regard to any other evidence that may

have been presented at trial, his claim of fraudulent

misrepresentation fails. See Mayo, 41 S.W.2d at 1108-

1109; Vest, 209 S.W.2d at 58-59; see also Moore, 992

F.2d at 1447.

Given this determination, this court must now

reconcile its current analysis of Mr. Davis’s claim with

the original judge’s prior opinion that, at least

implicitly, determined that the reasonableness of Mr.

Davis's reliance was legally sufficient to proceed to

trial. As noted previously, however, the district court

did not explicitly evaluate any element of the

fraudulent misrepresentation claim, except whether

” See Tr. vol. II-A at 32-33; Tr. vol. II-B at 63; Tr. vol. III-A at 21;

Pl’s Resp. Mem. at 8 n.2 (docket no. 116).

* Although there is testimony that suggests that Mr. Davis may

not have read his contract documents (see Tr. vol. IIB at 92, lines

4-5), in Kentucky, as elsewhere, a person is legally presumed to

have read any contract he executes, see, e.g., Mayo, 41 S.W.2d at

1109

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there existed a question of fact regarding the making

of a false statement. Rather, the court’s focus was on

whether representations as to future conduct would

support a fraud claim, and whether the claim was

barred by the economic loss doctrine.

“The [law of the case] doctrine posits that when a

court decides upon a rule of law, that decision should

continue to govern the same issues in subsequent

stages in the same case. Law of the case directs a

court’s discretion, [however,] it does not limit the

tribunal’s power.” Arizona v. California, 460 U.S. 605,

618 (1983)(internal citations omitted). Application of

the law of the case doctrine is a procedural issue to

which federal law applies, McDonald uv. Petree, 409

F.3d 724, 730 n.2 (6 Cir. 2005), and the Sixth Circuit

has recognized that “the law of the case doctrine is

discretionary when applied to a coordinate court or the

same court’s own decisions.” Bowling v. Pfizer, Inc.,

132 F.3d 1147, 1150 (6 Cir. 1998) (citing United States

v. Todd, 920 F.2d 399, 403 (6" Cir.1990)); see also In re

Kenneth Allen Knight Trust, 303 F.3d 671, 677-78 (6™

Cir. 2002) (doctrine is discretionary when a court

reviews its prior erroneous decision). Indeed, the Sixth

Circuit’ has gone so far as to say, “[a]t the trial court

level, the doctrine of the law of the case is little more

than a management practice to permit logical

progression toward judgment. Prejudgment orders

remain interlocutory and can be reconsidered at any

time.” Gillig v. Advanced Cardiovascular Sys. , 67 F.3d

586, 592-93 (6" Cir.1995) (quoting MOORE’S FEDERAL

PRACTICE J 0.401 (2d ed. 1994)). Consequently, the

law-of-the-case doctrine does not remove a trial court’s

jurisdiction to reconsider, or otherwise preclude a trial

court from reconsidering, an issue previously decided

in the case by another judge. See id. at 590.

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Having reconsidered whether Mr. Davis's

fraudulent misrepresentation should have survived

summary judgment, this court concludes that it should

not have. The claim is not viable (and was not viable at

the time of the prior ruling) because the contract Mr.

Davis read and accepted directly contradicted Mr.

Spotts’s prior oral promises with respect to a material

fact (his commission structure) that constituted the

particular inducement for Mr. Davis to accept his new

job. In Kentucky, under these circumstances, there can

be no fraudulent misrepresentation.

IV.

Even if Mr. Davis’s fraud claim did not fail as a

matter of law, however, the court would set aside the

jury’s verdict. As noted above, the applicable standard

for doing so is whether any reasonable juror could have

found for the plaintiff. The court does not suggest that

the jury did not perform its duty carefully, but mere

reliance is not sufficient to support Mr. Davis’s claim,

and there exists no testimony in the record that

explicitly pertains to the reasonableness of Mr. Davis’s

reliance on Mr. Spotts’s oral representations regarding

his commission structure. In addition, there ts scant

other testimony that would clearly and convincingly

permit a reasonable juror to find reasonable reliance.

Mr. Davis testified that he would not have taken

the job without the potential to earn a significantly

greater income than he currently made,” but that only

establishes that he relied on the misrepresentation,

not that his reliance was reasonable. Indeed, the

> Tr. vol. II-A at 14, 23; Tr. vol. II-B at 53-54.

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weight of the trial evidence that his reliance was not

reasonable. Mr. Davis admitted that before he

accepted his new job he received and read his offer and

Compensation and Commission Plan, which offered

him a substantially lower base salary than he was

currently earning and included only a one-year

guaranteed supplement to his salary that, in total,

promised only a modest guaranteed increase in pay for

a substantial increase in responsibility. Mr. Davis’s

fellow salespeople, whom he presented as witnesses,

testified that salespeople at Siemens thoroughly knew

their own Compensation and Commission Plans

because those plans determined how much they would

earn.’° Moreover, the evidence clearly established that

there was a monumental difference between the

commissions Mr. Davis allegedly was promised if he

would accept the job, and the commissions to which his

written job offer contractually entitled him.” Lastly,

Mr. Davis has previously worked as a salesman for

Siemens, so the system could not have been new to

him.”

Granted, there was testimony that “[dleals go down

all the time where salespeople have nothing to do with

'© See, e.g., Tr. vol. I-B at 71-72. None testified that they knew the

terms of Mr. Davis’s Plan (see, e.g., Tr. vol. I-B at 35, 81). They

also testified that it would have been an “anomaly” for two

product sales executives to earn commissions on the same sale (see

Tr. vol. I-B at 38, 87).

'! See Tr. vol. LI-B at 53-54.

'* See Tr. vol. I-B at 43.

22a

a project coming in and they get paid,”’* but that

testimony was quite limited, was not elaborated on or

duplicated by any other witness, and was contradicted

by Mr. Davis’s own admission that no one at Siemens

ever told him that his eligibility for commissions would

be different than what was expressed in the terms of

his written Plan.’ Accordingly, given that the

contractual terms of Mr. Davis’s Compensation and

Commission Plan were clear and unambiguous with

respect to his commission structure, there simply was

not enough evidence to permit a reasonable juror to

determine that Mr. Davis had met his heightened

burden of clearly and convincingly proving that his

reliance on Mr. Spotts’s oral promises was reasonable

once he reviewed the Plan.”

V.

This case should not have proceeded to trial and,

having proceeded to trial, should have concluded with

the granting of Siemens’s initial motion for judgment

as a matter of law. That did not happen and, once a

13 See Tr. vol. II-B at 70.

'4 See Tr. vol. II-B at 83.

'® The court also notes with curiosity that plaintiff does not argue

in his response to Siemens’s post-trial motion that Mr. Davis's

reliance was reasonable, except to state that it was in a section

heading, and to make a passing reference in another section

pertaining to the falseness of Mr. Spott’s statement. See Pl’s Resp.

Mem. (docket no. 116). He points to no evidence that clearly

supports this assertion and makes no direct argument. Ifhe, with

the aid of the written record, and the clarity of hindsight cannot

establish the reasonableness of his own reliance, the court is hard

pressed to determine how the jury could have done so.

23a

jury has been allowed to reach its decision, that

decision should not be overturned without a thorough

and exacting review of the law and the record, coupled

with careful, deliberate, and thoughtful consideration.

That has now been done and the court finds that the

jury’s verdict should be set aside and judgment as a

matter of law entered in favor of Siemens.

The court will enter a separate order consistent

with this memorandum opinion.

DATE: March 6, 2007

/s/ James D. Moyer

James D. Moyer

United States Magistrate Judge

cc: counsel of record

24a

APPENDIX C

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF KENTUCKY

LOUISVILLE DIVISION

CIVIL ACTION NO. 3:04CV-195-H

[Filed February 22, 2006]

JERRY W. DAVIS

PLAINTIFF

V.

SIEMENS MEDICAL

SOLUTIONS USA, INC.

DEFENDANT

Nee eee eee eee Se”

ORDER

Both parties have filed motions in limine to exclude

evidence pursuant to Fed. R. Evid. 403. The Court has

considered the parties’ briefs and the relevant

depositions and exhibits in the record.

Being otherwise sufficiently advised,

IT IS HEREBY ORDERED that Defendant’s

motions to exclude: (1) evidence that Thomas

Riesenberg (“Riesenberg”) mistreated the Plaintiff,

Jerry Davis (“Davis”); (2) evidence that the Defendant

25a

made errors in the payment of other employees’

commissions and corrected them after substantial

delay; and (3) evidence of the Defendant’s DINS-PAC

II contract with the Department of Defense are

DENIED.

IT IS FURTHER ORDERED that Defendant’s

motions to exclude: (1) evidence that Riesenberg

mistreated other Siemens employees; (2) evidence that

the Defendant failed to provide Davis with a company

car; (3) evidence that the Defendant failed to pay Davis

the entirety of his Guarantee Rider; and (4) evidence

that the Defendant’s parent company is a German

corporation are SUSTAINED.

ITIS FURTHER ORDERED that Plaintiffs motion

to exclude evidence of his current position and salary

at FujiFilm Medical Systems, Inc. is SUSTAINED.

This is not a final and appealable order.

This 22nd day of February, 2006.

/s/

JAMES D. MOYER

UNITED STATES MAGISTRATE JUDGE

cc: Counsel of Record

26a

APPENDIX D

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF KENTUCKY

LOUISVILLE DIVISION

CIVIL ACTION NO. 3:04CV-195-H

[Filed February 1, 2006]

JERRY W. DAVIS

PLAINTIFF

V.

SIEMENS MEDICAL

SOLUTIONS USA, INC.

)

)

)

)

)

)

)

)

)

DEFENDANT )

)

MEMORANDUM OPINION AND ORDER

Plaintiff, Jerry Davis (“Davis”), has moved to revise

the Court’s order entered on November 8, 2005. In that

order, the Court dismissed, inter alia, Davis’s claim for

the non-payment of wages under Ky. Rev. Stat.

§ 337.385. Plaintiff argues that the dismissal of that

claim was improper. The Court dismissed the claim

because Davis failed to assert his entitlement to

commissions before the Labor Cabinet prior to filing

his lawsuit in federal court. The Court’s reasoning was

27a

supported by two Kentucky Court of Appeals cases,

Early v. Campbell County Fiscal Court, 690 S.W.2d

398 (Ky. Ct. App. 1985), and Noel v. Season-Sash, Inc.,

722 S.W.2d 901 (Ky. Ct. App. 1986). However, prior to

the issuance of the Court’s November 8th order, the

Kentucky Supreme. Court overruled both of those

decisions in Parts Depot, Inc. v. Beiswenger, 170

S.W.3d 354, 362 (Ky. 2005).' In that case, the Supreme

Court held that Kentucky courts have subject matter

jurisdiction over a claim for non-payment of wages

under section 337.385 regardless of whether the

plaintiff asserts the claim before the Labor Cabinet

prior to filing suit. Jd. at 362. Therefore, Davis’s failure

to exhaust his remedies in front of the Labor Cabinet

does not require this Court to dismiss the claim.

Nevertheless, Siemens is still entitled to summary

judgment on Davis’s claim for non-payment of wages

on other grounds. Under section 337.385, an employee

has the right to assert a private cause of action against

her employer for failing to pay her the compensation to

which she is entitled. Here, Davis claims that Siemens

failed to pay him an override commission for every sale

made during his tenure in national and government

accounts. Because Kentucky imposes no statutory duty

to provide an override commission, Davis must show

that the override commission had been “agreed upon

by [Davis and Siemens] or provided to employees as an

established policy” in order to prevail. Ky. Rev. Stat.

§ 337.010. For the reasons explained in the Court’s

Memorandum Opinion issued on November 8, Davis

cannot prove that Siemens agreed to pay him the

' The Parts Depot decision was rendered on August 25, 2005 and

released for publication on September 15, 2005.

28a

commissions he seeks. Furthermore, there is no

evidence that Siemens had an established policy of

paying such an override commission. Instead,

Siemens’s express policy was to pay commissions on

sales for which an employee is “directly and personally

responsible.” Therefore, no reasonable juror could find

that Davis is entitled to the commissions under Ky.

Rev. Stat. § 337.385.

Being otherwise sufficiently advised,

IT IS HEREBY ORDERED that Plaintiffs motion

to revise is DENIED and Plaintiffs claim for non-

payment of wages is DISMISSED WITH PREJUDICE.

January 30, 2006 /s/ John G. Heyburn II

John H Heyburn, II

Chief Judge, U.S. District Court

cc: Counsel of Record

29a

APPENDIX E

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF KENTUCKY

AT LOUISVILLE

CIVIL ACTION NO. 3:04CV-195-H

[Filed November 8, 2005] ~”

JERRY W. DAVIS

PLAINTIFF

V.

SIEMENS MEDICAL SOLUTIONS USA, INC.

DEFENDANT

A A ee ae a Le

MEMORANDUM OPINION

Plaintiff, Jerry Davis (“Davis”), has brought this

action for additional compensation arising from his

employment relationship with Siemens Medical

Solutions USA, Inc. (“Siemens”). Davis says that both

the written compensation agreement and_ the

contemporaneous oral promises entitle him to $1.8

million in additional compensation and reimbursable

business expenses. He asserts state law claims for

breach of contract, conversion, promissory estoppel,

misrepresentation, breach of a fiduciary duty, unpaid

wages and intentional infliction of emotional distress.

Both sides have moved for summary judgment.

30a

These motions raise particularly interesting

questions about Kentucky’s treatment of the parol

evidence rule and the doctrine of promissory estoppel

as applied to an oral promise made prior to the

execution of a written agreement on the same subject

matter. The Court concludes that under Kentucky law

the evidence supports only Davis’ claim of fraudulent

misrepresentation.

I.

Siemens designs and sells health care information

technology. Davis began working for Siemens in

March, 1992. He has always been employed on an at-

will basis and has held a variety of well-paying sales

and non-sales jobs. In February of 2001, Davis

assumed the role of Division Marketing Specialist III

at an annual salary of $85,000.

In the fall of 2002 Siemens created severa] new

positions identified as Product Sales Executives

(“PSE”). These positions focused on _ various

governmental accounts. Siemens offered Davis one of

these pasitions and confirmed the offer by a writing

dated November 11, 2002. The offer stated that Davis

would receive a base compensation of $65,000 per year

as well as a one year guaranteed rider in the amount

of $35,000. The offer expressly incorporated a

document called the “Guarantee Rider” which, in turn,

incorporated the Product Sales Executive

Compensation and Commission Plan (the

“Compensation Plan”). The Compensation Plan set

forth the eligibility for commissions for all employees,

including Davis. On November 14, 2002, Davis

confirmed acceptance of the offer letter, the Guarantee

Rider and the Compensation Plan.

sla

The Guarantee Rider explained the purpose of the

“rider,” the role of the commission payments and the

application of the Compensation Plan:

This rider is made a part of the Product Sales

Executive Compensation and Commission Plan,

which is to be : sed as the basic instrument for

policy and procedure. The Guarantee Rider is

made available to assure a newly appointed

Product Sales Executive a guaranteed minimum

level cf income for a limited defined period of

time. It is expected that at the end of this

period, commissions for new orders generated

during the period of this period will replace the

requirement for guaranteed income... . All

commissions which would be credited and/or

payable during the defined period under the

standard Product Sales Executive

Compensation and Commission Plan will be

applied toward the total guarantee payable. ...

The Product Sales Executive shall retain all

excess guarantee commission payments

received during the defined period or, if

applicable, until the date of transfer or

termination. . . . In the event the total of

credited and/or payable commissions applied

exceed the total guaranteed commissions

payable during the defined period of the

Guarantee Rider, the Product Sales Executive

shall be entitled to full payment of such excess

in accordance with the “when paid” provisions of

the standard Compensation and Commission

Plan.

The Compensation Plan sets forth the basis for

entitlement to calculating commissions for all sales

32a.

exccutives. Thus, by its terms, its provisions would

apply to the newly created PSE’s. It contains the

following pertinent provisions.

7. To whom commission is credited and/or

payable

(a) Commission is credited or payable to

a Sales Executive who is assigned to

the territory in which the equipment

is to be installed. It is necessary, to be

entitled to commission, that the Sales

Executive be personally and directly

responsible, and have assigned such

responsibility for such sale.

(c) National and Group Accounts, as

identified in the District Office

manual or other’ relevant

announcements are Government

Agencies, Companies, Associations,

Chains, etc., with national buying

agreements for our _ products,

established in direct negotiation with

SMS Headquarters. In most

instances, commissions on orders for

these accounts are paid in accordance

with the procedures stated above.

However, from time to time, such

negotiations will provide a pricing

agreement in the best interest of the

Company which will necessitate a

change in the basis of the

compensation payment. Details of

such agreements and the commission

structure will be distributed by

33a

Headquarters to field offices as they

may occur.

VII. Territory

The territory or accounts assigned to the

Sales Executive shall be clearly defined

in a letter signed by the National Sales

Executive. A copy of this letter must be

forwarded to the responsible Senior Field

Executive. Sales Executives may be

transferred from one territory to another,

and the territory assigned to a Sales

Executive may be expanded or reduccd at

the discretion of the responsible National

Sales Executive. Territorial changes

must be defined in a letter signed by the

responsible National Sales Executive and

a copy must be forwarded to the

responsible Senior Field Executive.

Both parties agree that the Compensation Plan

comprises the entire written agreement concerning

Davis’s entitlement to commissions. However, Davis

says that two specific verbal exchanges between

himself and Siemens officials and other extrinsic

evidence is relevant to his claim for additional

compensation.

Two months prior to acceptance of the written

agreement, Davis says that he spoke with Douglas

Spotts (“Spotts”), the National Sales Manager in the

Image Management (“IM”) Division, about the new

position. During their meeting, which took place in

September of 2002 in the Breakfast Room of the

Sheraton hotel in Woodbridge, New Jersey, Davis and

34a

Spotts allegedly discussed the terms of employment,

the salary and the benefits that would accompany the

job. Spotts told Davis that he would be eligible to

receive commissions for sales credited to national and

government accounts. Because Davis knew that he

would be unable to visit each and every hospital in the

United States to make individual sales, he asked

Spotts whether he would be forced to split

commissions with the regional salesmen. Spotts

allegedly promised Davis that Siemens would pay a

separate, dual commission on every sale credited to

national and government accounts even though he

may have no direct involvement in the sales.

Sometime after he entered into his new job, Davis

realized that he was not being credited with

commissions for major national sales. He learned that

his name had not been entered into the commission

tracking system. He says that he asked Thomas

Riesenberg (“Riesenberg”), the IM Division Vice

President, what could be done to remedy the problem.

In response, Riesenberg allegedly told him that his

commissions would be calculated and paid at the end

of the year out of funds reserved for payment of

bonuses.

Davis says that Siemens never paid the

commissions due. He now seeks to recover $1.8 million

in commissions and benefits over and above his salary

for the one year term of his PSE assignment.

Il.

Before addressing the merits of Davis’s claims, the

court must first determine whether Kentucky or New

Jersey law applies to the dispute. Both parties appear

35a

to assume that Kentucky law applies. While the Court

ultimately agrees, this is not a foregone conclusion.

A federal court sitting in a diversity action must

apply the choice of law rules of the forum state. See

Wallace Hardware Co., Inc. v. Abrams, 223 F.3d 382,

391 (6th Cir. 2000). Although the Compensation Plan

contains a New Jersey choice of law provision, this is

not necessarily determinative of the issue. Jd. at 392

(noting that Kentucky courts do not always honor

choice of law provisions). The Sixth Circuit has held

that “in a standard breach-of-contract case ... the

Kentucky courts would choose to adopt § 187 of the

Restatement (Second) of Conflict of Law (1971) as their

analytical framework for addressing a contractual

choice-of-law clause.” Id. at 397. Section 187(2) of the

Restatement provides that a choice of law provision

will be enforced unless either:

(a) the chosen state has no_ substantial

relationship to the parties or the transaction

and there is no other reasonable basis for the

parties’ choice or

(b) application of the law of the chosen state

would be contrary to a fundamental policy of a

state which has a materially greater interest

than the chosen state in the determination of

the particular issue and which, under the law of

§ 188, would be state of the applicable law in

absence of an effective choice of law by the

parties.

Restatement (Second) of Conflict of Law § 187(2).

36a

Here, New Jersey does not have a substantial

relationship to the parties or the transaction between

them. Siemens, a Delaware corporation, has its

principal place of business in Pennsylvania. It

conducts business across the country and seems to

have no particular point of interest in New Jersey.

Davis is a resident of Kentucky and his employment

was focused there. The only facts connecting New

Jersey to the instant case that the court is aware of are

comparatively inconsequential. It appears that the

contract was negotiated in a New Jersey hotel and that

the Siemens employee who sent Davis the contract to

sign worked in New Jersey. These facts alone do not

establish a reasonable basis for the parties’ choice of

New Jersey law. In view of this analysis, the Court

need not enforce the contractual choice of law

provision.

In the absence of an enforceable choice of law

provision, the Court will apply the “most significant

relationship” test set forth in § 188 of the Restatement

and-adopted by Kentucky courts to determine which

state’s law governs. Breeding v. Massachusetts Indem.

and Life Ins. Co., 633 S.W.2d 717, 719 (Ky. 1982).

Kentucky has the most significant relationship to this

dispute. As noted, Siemens is not headquartered in

New Jersey and the contract was not to be performed

in New Jersey. While New Jersey may have some

interest in the outcome of this litigation based on the

contract’s being drafted within its borders, Kentucky’s

interest is more significant. Davis is a long-time

resident of Kentucky and his employment was

centered there. For the reasons already stated, the

Court will apply Kentucky law.

3la

ITI.

In Count One, Davis asserts his central claim:

breach of contract. He says that his employment

contract entitles him to commissions on each and every

sale of qualified equipment made during the term of

his employment.’ The Compensation Plan governs the

contractual entitlement to commissions and states two

prerequisites. First, the employee must be “assigned to

the territory within which the equipment is to be

installed.” Second, the employee must be “personally

and directly responsible . . . for such sale.” The Court

will assume that Davis was assigned to the sales

territory in question because it appears to be

undisputed that Davis’s assigned territory was a

national one.’ The sole remaining contractual issue is

whether Davis was “directly and _ personally

responsible” for the relevant sales within the meaning

of the Compensation Plan.

' The difference between the amount Davis actually received and

his demand is not a mere accounting error. Under his theory, he

would be entitled to commissions and benefits of $1.8 million over

and above his $65,000 base salary.

* The language of the Compensation Plan also provides that an

employee must be “assigned .. . responsibility, for such sale.” It

should be noted that another section of the Compensation Plan

requires that “the territory or accounts assigned to the Sales

Executive shall be clearly defined in a letter signed by the

National Sales Executive.” The record does not reveal any signed

letter defining Davis’s territory. However, both parties stipulate

that an employee who was personally and directly responsible for

a sale in his/her territory was assigned responsibility for the sale

as a matter of course.

38a

The interpretation of a contract is a question of law

for the court. Morganfield Nat'l Bank v. Damien Elder

& Sons, 836 S.W.2d 893, 895 (Ky. 1992). In the

absence of an ambiguity, Kentucky courts will enforce

a written instrument strictly according to its terms

and will assign those terms their ordinary meaning.

Frear v. P.T.A. Industries, Inc., 103 S.W.3d 99, 106

(Ky. 2003). Davis argues that the terms in the written

agreement, “personally and directly responsible,” are

ambiguous. The Court respectfully disagrees.

A contractual term is ambiguous if it is reasonably

susceptible to different or inconsistent interpretations.

Transport Ins. Co. v. Ford, 886 S.W.2d 901, 905 (Ky.

Ct. App. 1994). True, the term “personally and directly

responsible” may not be a precise term of art.

Nevertheless, its meaning is not reasonably

susceptible to different or inconsistent interpretations.

Each term is subject to clear definition. Random House

defines “responsible” as “chargeable with being the

author, cause, or occasion of something” and as

“answerable or accountable.” Random MHouse

Unabridged Dictionary (2d ed. 1993). It defines

“directly” as “in a direct line, way or manner” and it

defines “personally” as “through direct contact; in

person; directly.” Id. Moreover, as used together, those

meanings reinforce one another. They require direct

and unmediated involvement in the actual product

sale. The Court finds that as a general matter, the

term “personally and directly responsible” is absolutely

clear and unambiguous.

Davis asks the court to consider additional evidence

to determine what the parties meant by “personally

and directly responsible.” More specifically, he asks

the Court to consider three factual assertions extrinsic

39a

to the written agreement: (1) Siemens routinely paid

other salesmen dual commissions; (2) his supervisor

indicated that Davis would earn dual commissions in

a telephone conference with a group of regional

salesmen; and (3) his supervisor assured him that he

would be paid commissions at the end of the year. This

post-contract extrinsic evidence does not implicate the

parole evidence rule. Under Kentucky law, however,

the Court cannot reference extrinsic facts or aids, to

determine the meaning of an unambiguous contract.

Frear, 103 S.W.3d at 106; 11 Richard A. Lord,

Williston on Contracts § 30:6 (4th ed.).

Even a clear and unambiguous provision can be

difficult to apply in a given circumstance. That is not

true here, however. Davis admits that he had no direct

involvement in the actual sale of goods during his

employment as the National PSE. He supervised

salespeople and he put them in a position to make

sales; but he did not make any sales himself. Indeed,

Davis does not seem to make a serious argument that

he qualifies for commissions under any generally

accepted definition of the contract terms. Indeed, no

conceivable definition of the terms would entitle Davis

to compensation in one circumstance. As applied here,

the interpretation of the Compensation Plan is not

subject to serious dispute.

IV.

As an alternative means of enforcing his view of the

Compensation Plan, Davis presents statements made

prior to the execution of the written agreement

suggesting that Siemens actually meant to pay an

override commission on all national and government

sales. Specifically, Davis alleges that in September of

40a

2002, two months before he entered into the written

agreement, Spotts promised him a dual commission

scheme.

To succeed Davis must somehow avoid the

imperatives of the parole evidence rule. See, e.g.,

Luttrell v. Cooper Industries, Inc., 60 F. Supp. 2d 629,

631(E.D. Ky. 1998); M.R. Kopmeyer Co. v. Barnes, 276

S.W.2d 21, 23-24 (Ky. 1955) (defining parol evidence as

“a contemporaneous oral agreement on the same

subject matter” as a governing written agreement).

Generally, the paro] evidence rule bars evidence of oral

statements or writings made prior to or

contemporaneous with a written agreement that

contradict, vary or alter the language appearing in the

writing. Luttrel,60 F.Supp. at 631; Johnson v. Dalton,

318 S.W.2d 415, 417 (Ky. 1958). The rule is intended

to preserve the integrity of written agreements. O. P.

Link Handle Co. v. Wright, 429 S.W.2d 842, 847 (Ky.

1968).

Davis argues that Spotts’s oral promise merely

serves to clarify the agreement and that therefore the

parol evidence rule does not bar its admission. To be

sure, statements of the parties are admissible

whenever necessary to interpret ambiguous contract

language. See, e.g., Cantrell Supply, Inc. v. Liberty

Mut. Ins. Co., 94 S.W.3d 381, 385 (Ky. Ct. App. 2002);

Reynolds Metals Co. v. Barker, 256 S.W.2d 17, 18 (Ky.

1953). But for the exception to apply, ambiguity must

be apparent on the face of the instrument itself.

Hokeimer v. Hoheimer, 305.W.3d 176, 178 (Ky. 2000).

In other words, one cannot use parol evidence to create

ambiguity in an otherwise unambiguous document. As

the Court has explained above, the term “personally

and directly responsible” is unambiguous on its face.

4la

Therefore, under the parol evidence rule, the Court

may not consider Spotts’s alleged statement as

clarification of an unambiguous term.

Alternatively, Davis argues that the Spotts’s

alleged oral statement meets a second exception to the

parol evidence rule. Extrinsic evidence may add terms

to an incomplete agreement where the written

agreement constitutes only a “partial integration” of

the parties’ entire agreement. Kovacs v. Freeman, 957

S.W.2d 251, 257 (Ky. 1997); Bullock v. Young, 67

S.W.2d 941, 946 (Ky. 1933).° For extrinsic evidence to

be admissible under this exception requires two

showings: (1) the written agreement is only a partial

integration of the parties’ actual agreement; and (2)

the proffered additional term is consistent with the

language contained in the writing. See Ford v. Hurt,

265 S.W.2d 475, 477 (Ky. 1954); Citizens Nat. Bank of

Glasgow v. Damron, 149 S.W.2d 762, 765 (Ky. App.

1941) (“I]t is incompetent to defeat a _ positive

unqualified writing or written promise, by proving a

contemporaneous agreement in direct contradiction of

the terms of the writing.”). For obvious reasons, this

’ A writing is a “partial integration” of an agreement where the

writing is incomplete and is “adopted by the parties as the

expression of that portion of their larger parol agreement to which

it relates.” 11 Richard A. Lord, Williston on Contracts § 33:20 (4th

ed.). To determine whether a writing is a complete or partial

integration, a court must engage in a fact-specific analysis. The

question is whether the parties intended for the terms recorded in

the writing to be their entire agreement. 11 Richard A. Lord,

Williston on Contracts § 33:15 (4th ed.); Bullock v. Young, 67

S.W.2d 941, 946 (Ky. 1933). In the present case, the Court need

nut determine whether the Compensation Plan is a partial

integration because the Court finds the exception inapplicable on

other grounds

42a

exception is inapplicable here. Even if Davis can show

that the Compensation Plan is only a _ partial

integration of the terms of the actual agreement, the

Court may not consider Spotts’s oral statement. Davis

claims that Spotts assured him that he would receive

commissions on any sale made in the continental

United States even if he were not directly involved in

its making. This alleged statement directly contradicts

the Compensation Plan’s language requiring direct

and personal responsibility for entitlement to sales

commissions.‘

Finally, Davis cites Texas Gas Transmission Corp.

v. Kinslow, 461 S.W.2d 69 (Ky. 1970), as the basis for

yet another exception to the parol evidence rule. In

Texas Gas, the Kentucky Supreme Court held that in

the absence of a recital of consideration which the

parties intend to be contractual, parol evidence is

admissible to show the true consideration for the

contract. Id. at 71; see also Ky. Rev. Stat. § 371.030

* The non-existence of an actua! integration clause within the

Compensation Plan is not a dispositive or even a relevant factor

under these circumstances. An integration clause, which typically

states that there are no representations, promises or agreements

between the parties except those found in the writing, is only

relevant to the question of integration. See KFC Corp. v. Darsam

Corp., 543 F. Supp. 222, 225 (D.C. Ky. 1982). Because the

Compensation Plan did not contain an integration clause, in

theory it could represent only a partial integration of the actual

agreement between Siemens and Davis. However, to introduce

evidence of additional terms, those additional terms must be

consistent with the written agreement. Ford 265 S.W.2d at 477.

The term that Davis has proffered—that he is entitled to

commissions on every sale booked in national and governmental

accounts—directly contradicts the plain and unambiguous meaning

of the written agreement

43a

(“The consideration of any writing, with or without

seal, may be impeached or denied by pleading.”). Davis

argues that the Compensation Plan was a mere recital

of consideration and that the “true consideration” for

his employment contract was Spotts’s promise to pay

him an override commission for every national and

governmental sale. For the following reasons, the

Court concludes that Texas Gas does not decide this

case.

In Texas Gas, the consideration recorded in the

writing was of a nominal nature and open to question

and investigation.® Key matters of compensation were

omitted or unknown at the time of the execution of the

written agreement. Thus, our case is materially

distinguishable. First, the consideration provided for

in Davis’s written agreement is both substantial and

* The dispute in Texas Gas involved the plaintiffs’ grant of a right

of way to a gas company executed so that the company could lay

a gas pipeline across the farmers’ land. Texas Gas, 461 S.W.2d at

70. The plaintiffs and the gas company executed two written

agreements, each containing a recital of nominal consideration.

Id. One agreement contained a handwritten proviso stating that

“The above consideration dose [sic] not include any damage that

might occur to a spring near the R/W.” Jd. Subsequent to the

execution of the agreement, the gas company caused $7500 worth

of damage to the farmers’ spring. Jd. The farmers sued to recover

and the gas company argued that it had no contractual duty to

pay the damages. Jd. At trial, the farmers alleged that prior to the

execution of the agreements, the gas company had made an oral

promise to protect their spring and to pay any damages to it

caused by the laying of he pipe. /d. Because the “Damages

Release” expressly stated that the recital of consideration did not

fully encompass the scope of the agreement, the court found that

the recital of consideration was not contractual. Jd. at 71.

Therefore, the court held that evidence of the true consideration

was admissible. Id.

44a

determinable, rather than nominal and open to

question. The agreement provides that in

consideration for Davis’s employment, Siemens will

pay him an $65,000 base salary. a $35,000 guaranteed

rider, and the payment of commissions on all sales for

which he was personally and directly responsible.

Even more important, unlike Texas Gas, neither the

Compensation Plan nor any other writing indicates

that the parties did not intend for the consideration

recited in the Compensation Plan to be contractual and

conclusive.

For all these reasons, the Court finds no basis upon

which Davis might succeed on his breach of contract

claim.

V.

As an alternative to his contract claim, Davis

asserts promissory estoppel. Davis has two factual

grounds for that claim. First, he alleges that before he

entered into the written agreement, Spotts, his

supervisor, orally promised to pay him an override

commission on all national and international sales.

Second, he alleges that after he entered into the

agreement, Mr. Riesenberg, another supervisor,

promised him he would receive his commissions at the

end of the year. According to Davis, he detrimentally

relied on each of the promises because he accepted

Siemens’s offer of employment and continued to work

there even after Siemens failed to pay him the

commissions.

After reviewing the more recent relevant Kentucky

cases, the Court concludes that a claim of promissory

estoppel requires proof of the following elements: (1) a

45a

promise; (2) the promisee reasonably relies upon the

promise by acting or forbearing to act upon the

strength of it; (3) the promisor, at the time of making

his promise, foresees or expects that the promisee

would act or forbear in reliance upon it; and (4)

enforcement of the promise is necessary to avoid an

injustice. See Restatement (Second) of Contracts

§ 90(1) (1979); Meade Const. Co., Inc. v. Mansfield

Commercial Elec., Inc., Ky., 579 S.W.2d 105, 106 (Ky.

1979); Lichtefeld-Massaro, Inc. v. R. J. Manteuffel Co.,

Inc., 806 S.W.2d 42, 44 (Ky. Ct. App. 1991); Rivermont

Inn, Inc. v. Bass Hotels Resorts, Inc., 113 S.W.3d 636,

642 (Ky. Ct. App. 2003); Res-Care, Inc. v. Omega

Healthcare Investors, Inc., 187 F. Supp. 2d 714, 718

(W.D. Ky. 2001); Monumental Life Insurance Co. v.

Nationwide Retirement Solutions, Inc., 242 F. Supp. 2d

438, 451 (W.D. Ky. 2003); Bergman v. Baptist

Healthcare System, Inc., 344 F. Supp. 2d 998, 1003

(W.D. Ky. 2004).

It is tempting to view promissory estoppel as

merely an alternative to a standard breach of contract

claim. That is certainly not the traditional view of the

doctrine, however. “Historically, the doctrine of

promissory estoppel traces its roots primarily to four

or five principal categories of promises,” all of which

were gratuitous in nature: (1) promises by gratuitous

bailees; (2) promises to make charitable donations; (3)

promises made by one family member to another; (4)

gratuitous promises for the conveyance of land; and (5)

gratuitous promises regarding family settlements. 4

Richard A. Lord, Williston on Contracts § 8:6 (4th ed.).

When the doctrine first came into being, courts

universally held that promissory estoppel was not to

be used as a substitute for consideration when a

commercial bargain was contemplated. See, e.g.,

School District v. Sheidley, 40 S.W. 656 (Mo. 1897);

46a

Heisley v. Eastman, 201 P. 872, 879 (Or. 1921).

In one leading case, James Baird Co v. Gimbel

Brothers, 64 F.2d 344 (2d Cir. 1933), Judge Learned

Hand refused to apply the doctrine of promissory

estoppel to enforce a subcontractor’s bid because it was

part of an arms’ length commercial exchange. Jd. at

346. In describing the doctrine of promissory estoppel,

Judge Hand wrote:

Id.

Offers are ordinarily made in exchange for a

consideration, either a counter-promise or some

other act which the promisor wishes _ to

secure. .. . But a man may make a promise

without expecting an equivalent; a donative

promise, conditional or absolute. . . . The

doctrine of “promissory estoppel” is to avoid the

harsh results of allowing the promisor in such a

case to repudiate, when the promisee has acted

in reliance upon the promise... . But an offer

for an exchange is not meant to become a

promise until a consideration has been received,

either a counter-promise or whatever else is

stipulated. To extend it would be to hold the

offeror regardless of the stipulated condition of

his offer.

(citations omitted).

Likewise, the earliest Kentucky cases recognizing

the doctrine of promissory estoppel viewed the doctrine

as separate and apart from contractual, commercial

bargains. This Court can find only three occasions

between 1911 and 1967 where Kentucky courts applied

the doctrine of promissory estoppel and each occasion

47a

involved the promise of a charitable donation

unsupported by consideration. Lake Bluff Orphanage

v. Magill’s Ex’rs, 204 S.W.2d 224, 226 (Ky. 1947)

(finding the doctrine of promissory estoppel applicable

to a pledge by a private donor to an orphanage);

Transylvania Univ. v. Rees, 179 S.W.2d 890, 892 (Ky.

1944) (finding insufficient detrimental reliance on the

part of a private university to require the court to

enforce a private donor’s gratuitous pledge); Floyd v.

Christian Church Widows & Orphans Home, 176

S.W.2d 125, 130-31 (Ky. 1943) (holding that

promissory estoppel could make a charitable pledge

enforceable even if it is mot supported’ by

consideration).

More recently, outside this jurisdiction, the

interplay between promissory estoppel and a

bargained-for exchange has blurred. Some courts have

extended promissory estoppel to promises otherwise

unenforceable under traditional contract doctrine. See,

e.g., Palermo v. Warden, Green Haven State Prison,

545 F.2d 286 (2d Cir. 1976) (suggesting the

applicability of estoppel to a negotiated plea bargain

alleged to be unenforceable due to its illegality). Thus,

some courts have expanded the doctrine to embrace

promises which were too indefinite to support a

contract, see, e.g., Doll v. Grand Union Co., 925 F.2d

1363 (11th Cir. 1991), and promises which are illusory.

See, e.g., First Nat. Bank of Logansport v. Logan Mfg.

Co., Inc., 577 N.E.2d 949 (Ind. 1991). In fact, the

doctrine has even been applied to enable partial

enforcement of promises made when the resulting

contract, if it had been entered into, would have been

terminable at will. 4 Williston on Contracts § 8:6 (4th

ed.) (citing Restatement (Second) of Contracts § 90,

comment d, illustration 8).

48a

Other courts held to the more traditional approach,

concluding that the doctrine applies only when no

contract exists, oral or otherwise. See, e.g., Frost

Construction Co. v. Lobo, Inc., 951 P.2d 390, 397 (Wyo.

1998) (“Since promissory estoppel applies only if a

contract does not exist, a promissory estoppel

argument in this case, where the evidence

demonstrates the existence of a _ contract, is

incongruous.”); Walker v. KFC Crop., 728 F.2d 1215,

1220 (9th Cir. 1984); Spensley Feeds, Inc. v. Livingston .

Feed & Lumber, Inc., 381 N.W.2d 601, 607 n. 8 (Wis.

1985); Tuomala v. Regent University, 477 S.E.2d 501,

506 (Va. 1996).

Kentucky’s state courts have given little guidance

about the current scope of promissory estoppel. See

Eric Mills Holmes, Restatement of Promissory

Estoppel, 32 Willamette L. Rev. 263, 384 (1996)

(“There is a paucity of Kentucky promissory estoppel

cases.”). One consequence of this relative inattention

is that Kentucky courts have never ruled that the

doctrine applies exclusively to gratuitous promises or

that promissory estoppel is inapplicable to contractual

arrangements. More important, however, our courts

have not suggested an intent to extend the scope of

promissory estoppel. Kentucky courts have

consistently held that promissory estoppel applies to

gratuitous promises, unsupported by consideration.

See e.g., McCarthy v. Louisville Cartage Co., Inc., 796

S.W.2d 10, 12 (Ky. App. 1990) (“The whole theory of a

promissory estoppel action is that detrimental reliance

becomes a substitute for consideration under the facts

49a

of a given case.”)°; Lichtefeld-Massaro, Inc., 806S.W.2d

at 43-44 (holding that promissory estoppel made a

subcontractor’s bid an enforceable promise even

though the general contractor was not mutually bound

to accept the bid at the time it was made). They have

also suggested that promissory estoppel is

fundamentally different from a contract. See

McCarthy, 796 S.W.2d at 12 (promissory estoppel “is

not founded upon a legal duty and a breach thereof;

but rather, it is based upon a mere promise and

reliance on that promise”).

In sum, Kentucky courts seem to have so far

narrowly confined their use of the doctrine and, in

doing so, have suggested that promissory estoppel is

fundamentally different from a contract. With this in

mind, the Court will consider each of Davis’s claims in

turn.

A.

The Court first addresses Davis’s claim that he

detrimentally relied on Spotts’s alleged oral promise to

pay him override commissions. As discussed above, the

parol evidence rule would bar the use of the Spotts’s

statement to establish breach of contract. At issue here

then is whether a party may assert a promissory

° It should be noted that the McCarthy opinion appears to have

conflated the elements of promissory estoppel and equitable

estoppel. Nevertheless, McCarthy was certainly a promissory

estoppel case. Indeed, the Kentucky Supreme Court and various

federal courts have cited McCarthy as part of its adherence to the

doctrine of promissory estoppel. See, e.g., United Parcel Service

Co. v. Rickert, 996 S.W.2d 464, 470 (Ky. 1999); FS Invs., Inc. v.

Asset Guar. Ins. Co., 196 F. Supp. 2d 491, 506-507 (E.D. Ky. 2002).

50a

estoppel claim based on an oral promise that is

otherwise barred by the parol evidence rule. No

Kentucky state court has directly addressed this

issue.’ Accordingly, this Court must “ascertain from all

available data ... what the state’s highest court would

decide if faced with the issue.” Grantham and Mann,

Inc. v. American Safety Products, Inc., 831 F.2d 596,

608 (6th Cir. 1987). To do so, the Court will examine

decisions and rationales from other jurisdictions that

have decided this specific issue, general Kentucky law,

and policy considerations for guidance in determining

how the Kentucky Supreme Court would likely decide

this issue.

The majority of courts in other jurisdictions has

held that a prior inconsistent oral promise cannot be

the basis of a promissory estoppel claim. Durkee v.

Goodyear Tire & Rubber Co., 676 F. Supp. 189, 192

(W.D. Wis..1987) (“To entertain a theory of recovery

that makes a prior, inconsistent promise enforceable is

to write the [parol evidence] rule out of existence.”);

All-Tech Telecom, inc. v. Amway Corp., 174 F.3d 862,

‘For this Court’s purposes, the issue at hand is of first impression

for Kentucky state courts. Siemens cites Tractor and Farm

Supply, Inc. v. Ford New Holland, Inc., 898 F. Supp. 1998 (W.D.

Ky. 1995) as support for the proposition that Davis’s promissory

estoppel claim is precluded by Kentucky law. In Tractor Farm,

this Court held that under Kentucky law, “estoppel cannot be the

basis for a claim if it represents the same _ performance

contemplated under a written contract.” Jd. at 1205. While the

foregoing analysis eventually reaches the conclusion that

Kentucky courts would so hold, no Kentucky court has in fact

specifically decided the issue. In Tractor Farm, this Court relied

on General Avtation, Inc. v. Cessna Aircraft Co., 915 F.3d 1038,

1042 (6th Cir. 1984), a Sixth Circuit decision. However, in that

case the Sixth Circuit applied Michigan law.

5la

869-70 (7th Cir. 1999); Davis v. University of

Montevallo, 638 So.2d 754, 758 (Ala. 1994); Big G

Corp. v. Henry, 536 A.2d 559, 562 (Vt. 1987); Johnson

v. Curran, 633 P.2d 994, 9 °'6-97 {Alaska 1981);

Prentice v. UDC Advisory Services, Inc., 648 N.E.2d

146, 152-53 (Ill. App. 1995).

The Seventh Circuit case, All-Tech Telecom,

provides a well-reasoned explanation of the majority

rule. There, Judge Richard Posner found the doctrine

of promissory estoppel inapplicable to a series of oral

promises made du-ing the course of negotiations and

during the course of the performance of a written

agreement. All-Tech Telecom, 174 F.3d at 869-70.° The

Seventh Circuit affirmed the dismissal of the

promissory estoppel claim holding that a “promisee

cannot be permitted to use the doctrine to do an end

run... around the parol evidence rule.” Jd. at 869.

Judge Posner reasoned that where a written contract

governs the relationship between the parties,

promissory estoppel is a duplicative remedy:

Promissory estoppel is meant for cases in which

& promise, not being supported by

® In All-Tech Telecom, the defendant, Amway, offered to its

distributors a credit-card operated telephone system called

TeleCharge for sale to restaurants and hotels. Jd. at 864. All-Tech,

an Amway distributor, entered into a written agreement with

Amway to purchase a large number of the phones. /d. All-Tech

claimed to have been lured into the unsuccessful venture by a

senies of oral misrepresentations, including a promise that Amway

had conducted extensive research regarding the success of the

telephones. None of the warranties was included in the written

terms of the agreement. /d. All-Tech filed, inter alia, a promissory

estoppel claim based on these alleged oral misrepresentations. Jd.

52a

consideration, would be unenforceable under

conventional principles of contract law. When

there is an express contract governing the

relationship out of which the promise emerged,

and no issue of consideration, there is no gap in

the remedial system for promissory estoppel to

fill. To allow it to be invoked becomes in those

circumstances gratuitous duplication or, worse,

circumvention of carefully designed rules of

contract lav. Id. (citations omitted).

Because the parties’ contract covered the relationship

within the scope of the alleged warranty, the court

found no reason “for using the doctrine of promissory

estoppel to resuscitate it.” Id.

Thus, the general rationale for the majority rule is

that the written agreements supercede and

incorporate all prior oral statements on subjects

covered by the written agreement. The Seventh

Circuit’s interpretation of promissory estoppel is

consistent with the more limited scope of the doctrine

apparent from a full review of Kentucky cases. To hold

otherwise, makes the formalities of a written contract

meaningless.

The Kentucky courts have also been reluctant to

contravene the technical requirements of contract law.

In Rivermont Inn, Inc., Kentucky’s most recent and

most thorough explanation of the doctrine of

promissory estoppel, the Court of Appeals held that

promissory estoppel could not be applied to defeat the

statute of frauds under the particular circumstances

involved. Rivermont Inn, Inc., 113 S.W.3d at 643.

Rivermont is a different case from ours in many

53a

respects.” Its significance, however, is that the

Kentucky Court of Appeals was not inclined to allow

the doctrine of promissory estoppel as means of

avoiding rules of contract interpretation and

compliance. See id. at 642 (noting that detrimental

reliance on an oral promise is “not sufficient to defeat

the statute of frauds”).’°

The overarching principle suggested in Rivermont

Inn, Inc. applies just as clearly to the common law

parole evidence rule as it does to the statute of frauds.

Kentucky views the parol evidence rule as a firm and

well-established rule of law. The rule dates back to at

least the mid-19th-century. See, e.g., Park v. Price, 1

Ky. Op. 17 (1866) (“It is a well-settled principle that

parol evidence is not admissible to vary the terms or

import of a writing ... .”). Since then it has been

interpreted as “more than a rule of evidence... . It is

one of substantive law.” Gibson v. Sellars 252 S.W.2d

° In Rivermont, a hotel and resort company claimed that a

representative of the Holiday Inn Franchise Administration orally

promised to approve its application for a license to open a local

franchise. Jd. at 639. The court noted that if the alleged

conversation constituted an oral contract, it would be

unenforceable under the statute of frauds because the franchise

relationship was to last five years. Id. at 642. In the instant case,

the statute of frauds provides no bar to the enforceability of

Spotts’s alleged oral promise.

‘° The Court of Appeals did not hold that promissory estoppel

could never be used to defeat a statute of frauds defense. Instead,

after noting initially that detrimental reliance on an oral promise

is “not sufficient to defeat the statute of frauds,” the court held

that the plaintiff had failed to prove that its detrimental reliance

wasreasonable because the written agreement expressly provided

that oral promises would not be binding. Jd. at 642.

54a

911, 913 (Ky. 1952). To allow oral promises otherwise

inadmissible under the parol evidence rule to form the

basis of a promissory estoppel claim would eviscerate

the rule and disregard at least 140 years of

jurisprudence.

Accordingly this Court finds that an oral promise

made prior to the execution of a written agreement

that is inconsistent with the unambiguous terms of the

written agreement cannot form the basis of a

promissory estoppel claim. As applied to the instant

case, Davis is precluded from asserting promissory

estoppel as a grounds for relief.

B.

Next Davis argues that he is entitled to relief under

promissory estoppel because a few months after he

signed the Compensation Plan, his supervisor, Mr.

Riesenberg, assured him that he would receive his

commissions at the end of the year. Davis alleges that

after he took the National and Governmental Sales

position, he complained to Riesenberg that the

computer program used to calculate commissions was

not formulated to pay him his override commission.

“iesenberg allegedly reassured Davis that his

-ummissions would be calculated and paid at the end

of the year out of a stipend fund. Davis argues that

Riesenberg’s reassurance constituted a promise and

that he detrimentally relied on it by continuing to

work for Siemens.

Here, the alleged promise was made after the

execution of the written agreement. Davis’s reliance on

it, therefore, would not circumvent the parol evidence

rule. Thus, notwithstanding the Court’s analysis

55a

above, his allegation could constitute a viable claim of

promissory estoppel provided that he properly asserted

the prima facie elements. However, the Court finds

that Davis cannot make a prima facie case.

Taken alone, Riesenberg’s offhand, ministerial

statement is not a promise. See Restatement (Second)

of Contracts § 2 (defining a promise as a

“manifestation of intention to act or refrain from

acting in a specified way, so made as to justify a

promisee in understanding that a commitment has

been made”). To be sure, the fact that Riesenberg

reassured Davis that he would be paid at the end of

the year could be construed as a reaffirmation of

Spotts’s original promise to pay him override

commissions. Indeed, the statement arguably

corroborates the fact that the original promise was

made. However, it is not an independent enforceable

promise on its own. Therefore, no reasonable juror

could find that Davis is entitled to recover on the basis

of promissory estoppel.

VI.

Davis also asserts a claim for misrepresentation

based on the statements of Douglas Spotts in

September of 2002 during a meeting at the Sheraton

Hotel in Woodbridge, New Jersey. To state such a

claim, Davis must allege: (1) that Siemens made a

false statement; (2) regarding a material fact; (3) that

Siemens knew the statement to be false or acted

recklessly as to its truth or falsity; (4) that Siemens

intended to deceive Davis; (5) that Davis reasonably

relied upon the deception; and (6) that Davis suffered

damages as a result. United Parcel Service Co. v.

Rickert, 996 S.W.2d 464, 468 (Ky. 1999); Res-Care, Inc.

56a

v. Omega Healthcare Investors, Inc., 187 F. Supp. 2d

714, 717 (W.D. Ky. 2001); Hunt Enterprises, Inc. v.

John Deere Indus. Equipment Co., 18 F. Supp. 2d 697,

702 (W.D. Ky. 1997).

As previously discussed, during that meeting,

Spotts told Davis that in he would receive an override

commission on all national and governmental sales

regardless of his personal involvement in the actual

sales. Davis argues that this alleged promise was a

material misrepresentation of fact that Spotts knew to

be false. Davis further alleges that he relied on the

statement, as Spotts intended, when he accepted the

offer of employment. A misrepresentation claim is

considerably more difficult to prove than promissory

estoppel because it requires evidence of knowing

deception or fraud. Nevertheless, Davis appears to

meet the bare minimum for a prima facie case of

misrepresentation.

Under Kentucky law, representations as to future

conduct will not support a fraud claim. See, e.g., Res-

Care, Inc. v. Omega Healthcare Investors, Inc., 187 F.

Supp. 2d 714, 717 (W.D. Ky. 2001); Schroerlucke v.

Hall, 249 S.W.2d 130, 1381 (Ky.1952); Moseley v.

Owensboro Municipal Housing Commission, 252

S.W.2d 880, 881 (Ky.1952). However, a statement as to

future conduct may form the basis for a

misrepresentation claim if made with the intent to

induce the other party to enter into a contract. See

Evola Realty Co. v. Westerfield, 251S.W.2d 298, 300-01

(Ky.1952); Schroerlucke, 249 S.W.2d at 131. That

appears to be an inference available from our facts.

Davis has alleged that Siemens promised to pay him

commissions with the knowledge that it would never

pay him so as to induce Davis into accepting the offer

57a

of employment. This allegation is sufficient to state a

claim for fraud against Siemens."

Siemens also argues that the economic loss doctrine

bars Davis’s misrepresentation claim. Citing Ohio

Casualty Ins. Co. v. Vermeer Mfg. Co., 298 F. Supp. 2d

575 (W.D. Ky. 2004), Siemens argues that because

Davis’s misrepresentation claim is inseparable from

his contractual claims, Davis’s exclusive remedy is

breach of contract. There is some support for this

proposition. See, e.g., R.A.M. Sourcing Agency, Inc. v.

Seaboard Marine, Ltd., 995 F. Supp. 1465, 1467 (S.D.

Fla.1997) (a party may not raise tort claims to recover

solely economic losses arising from a breach of contract

unless there is evidence of physical injury or damage

to other property); Heller Fin., Inc. v. Grammco

Computer Sales, Inc., 71 F.3d 518, 527-28 (5th Cir.

1996) (tort damages are not recoverable for a

fraudulent inducement claim unless the plaintiff

suffers an injury that is distinct, separate, and

independent from the economic losses recoverable

under a breach of contract claim).

However, to date, no Kentucky court has held that

the economic loss rule applies so expansively. Instead

the economic loss rule has been limited to apply to

products liability cases, see, e.g., Ohio Casualty Ins.

Co., 298 F. Supp. 2d at 577-78, to business purchases,

see, e.v., Mt. Lebanon Personal Care Home Inc. v.

Hoover Universal Inc., 276 F.3d 845, 849 (6th Cir.

"' Tt should be noted that Davis has moved for summary judgment

on his misrepresentation claim as well. However, because Siemens

alleges that Spotts never made the alleged statement regarding

Davis’s entitlement to commissions; there is a genuine issue of

material fact. Therefore, summary judgment is inappropriate.

58a

2002), and to construction cases, see, e.g., Bowling

Green Municipal Utilities v. Thomasson Lumber Co.,

902 F. Supp. 134 (W.D. Ky. 1995). To expand the rule

so as to bar a fraudulent inducement claim in an

employment contract without further guidance from

the Kentucky courts would eviscerate the claim of

fraudulent inducement and would contravene contrary

Kentucky case law. See, e.g., Hanson v. American Nat'l

Bank & Trust Co., 865 S.W.2d 302, 309 (Ky. 1993)

(“The idea that any person or industry or enterprise

would be immune from liability for fraud and deceit is

not acceptable.”).

Therefore, a reasonable juror could find that Davis

is entitled to recover based on his misrepresentation

claim.

VII.

Davis also asserts claims for conversion,

misrepresentation, breach of fiduciary duty and for

violation of Kentucky’s wage statute. The claims are

more easily resolved as follows.

A.

Siemens argues that Davis’s conversion claim

cannot succeed because he had no ownership rights in

any particular property. Davis says that he may

pursue the conversion claim at the same time as his

contract claim irrespective of the similarity of the

remedies.

The elements of a conversion claim are (1)

ownership rights in a certain property, (2) the

wrongful act of taking or disposing of property, and (3)

59a

causing damages. Anderson v. Pine South Capital,

LCC, 177 F. Supp. 2d 591, 603 (W.D. Ky. 2001); Goss

vu. Bisset, 411 S.W.2d 50, 53 (Ky. 1967). A conversion

claim and contract claims are not always incompatible.

Here, however, the conversion claim does not lie

because the property right alleged to have been

converted arises entirely from the contractual rights to

compensation. In reality, Davis seeks payment of a

disputed debt, not payment for the conversion of a

specific asset or a specific property right. The

interpretation of the contract governs Davis's

entitlement to the disputed payments.

B.

Siemens argues that Davis’s claim for breach of

fiduciary duty simply does not apply in these

circumstances. A fiduciary relationship is one “founded

on trust or confidence reposed by one person in the

integrity and fidelity of another,” and that relationship

must involve “an undertaking in which a duty is

created in one person to act primarily for another’s

“benefit.” Monumental Life Ins. Co. v. Nationwide

Retirement Solutions, Inc., supra (emphasis added)

(quoting Steelvest Inc. v. Scansteel Serv. Ctr., Inc. , 807

S.W.2d 476, 485 (Ky. 1991); Auto Channel, Inc. v.

Speedvision Network, LLC, 144 F. Supp. 2d 784, 793

(W.D. Ky. 2001). Davis has offered no evidence that

Siemens had a duty to act primarily for Davis’s benefit

no is there evidence that Siemens and Davis were

involved in a “joint venture.” See Greenup v. Hewitt,

235 S.W.2d 1000, 1002 (Ky. 1951). Davis was a

salaried employee who under certain circumstances

was entitled to receive commissions. This does not

constitute a joint venture. Under the evidence here,

the Court concludes that Siemens did not assume

60a

fiduciary duties with respect to its employment

relationship.

C.

Siemens argues that Davis’s wage claim under KRS

337.385 fails because the claim is one not covered by

the statute and in any event, Davis did not pursue his

necessary administrative remedies before initiating his

lawsuit. The Court agrees.

Davis has not satisfied his administrative

prerequisites. Section 337 bars proceeding to a civil

lawsuit until the Labor Commissioner has conducted

his own proceeding. McMichael v. Falls City Towing

Co., 199 F. Supp. 2d 632, 637 (W.D. Ky. 2002). Thus,

claims brought pursuant to KRS 337.385 must first be

raised before the Labor Cabinet to resolve questions of

fact. Davis has failed to comply with this requirement

and, therefore, cannot avail himself of the benefits of

KRS 337.385.

Viti.

Siemens argues that Davis’s potential infliction of

emotional distress claim must be dismissed because its

conduct was not outrageous and did not cause severe

emotional distress to Davis. To make such a claim, one

must prove the following elements: (1) conduct that is

intentional and reckless; (2) conduct that is so

outrageous and intolerable that it offends generally

accepted standards of decency and morality; (3) a

causal connection between the alleged wrongful

conduct and the emotional distress; and (4) severe

emctional distress. Gilbert v. Barkes, Ky., 987 S.W.2d

bla

772, 777 (1999); Pennington v. Dollar Tree Stores, Inc.,

104 F. Supp.2d 710, 715 (E.D. Ky. 2000).

Davis’s claim is based almost entirely upon Mr.

Riesenberg’s actions and statements. He says that

Riesenberg verbally abused him with foul language;

that he filled out unfavorable appraisal sheets; that he

blocked his right to health care; all for the purpose of

driving Davis from the company. Although such

conduct may be offensive, it is not so outrageous and

intolerable that it offends generally accepted

standards of decency and morality. Therefore,

summary judgment is appropriate.

The Court will enter an order consistent with this

Memorandum Opinion.

November 8, 2005

/s/ John G. Heyburn IT

John G. Heyburn If

Chief Judge, U.S. District Court

cc: Counsel] of Record

62a

APPENDIX F

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

No. 07-5420

[Filed August 27, 2008]

JERRY W. DAVIS,

Plaintiff-Appellant,

Vv.

SIEMENS MEDICAL SOLUTIONS USA,

INC.,

Defendant-Appellee.

ee a, La Le La La Le

ORDER

BEFORE: KEITH, DAUGHTREY, and ROGERS,

Circuit Judges.

The court having received a petition for rehearing

en banc, and the petition having been circulated not

only to the original panel members but also to all other

active judges of this court, and no judge of this court

having requested a vote on the suggestion for

rehearing en banc, the petition for rehearing has been

referred to the original panel.

63a

The panel has further reviewed the petition for

rehearing and concludes that the issues raised in the

petition were fully considered upon the original

submission and decision of the case. Accordingly, the

petition is denied.

ENTERED BY ORDER OF THE COURT

/s/ Leonard Green

Leonard Green

Clerk

64a

APPENDIX G

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF KENTUCKY

LOUISVILLE DIVISION

CASE NO. 3:04CV-195

[Filed January 6, 2006]

JERRY W. DAVIS

PLAINTIFF

V.

SIEMENS MEDICAL

SOLUTIONS USA, INC.

)

)

)

)

)

)

)

)

)

DEFENDANT )

)

MOTION TO REVISE THIS COURT’S ORDER

ENTERED ON NOVEMBER 8, 2005

COMES NOW, the Plaintiff, Jerry W. Davis, and

respectfully moves the Court, pursuant to Fed. R. Civ.

Proc. 54(b), to partially revise its Order entered on

November 8, 2005. That order and memorandum

opinion, inter alia, granted summary judgment to the

Defendant on the Plaintiffs wage claim under KRS

337, based upon Kentucky law that was overruled by

the Kentucky Supreme Court, in Parts Depot, Inc. v.

65a

Beiswenger and Housing Authority of Middlesborough,

170 S.W.3d 354 (Ky. 2005), immediately after the

conclusion of briefing by the parties on their motions

for summary judgment.

The Kentucky Supreme Court, reversing precedent

to the contrary, has held in Parts Depot that an

employee is not required to exhaust administrative

remedies before bringing a claim under KRS 337. The

Kentucky Supreme Court decided that plaintiffs may

have immediate recourse to the civil courts, which

have been accorded original jurisdiction over KRS 337

claims.

The Court’s entry of summary judgment on Mr.

Davis’: claim for wages under KRS 337 should,

therefore, in light of this new decision by Kentucky’s

highest court, be revised to deny the Defendant

summary judgment, based on the current, controlling

Kentucky law relevant to this claim. The Plaintiff

submits in support hereof the attached proposed Order

and his Memorandum of Law in Support of Plaintiffs

Motion to Revise this Court’s Order Entered on

November 8, 2005.

Respectfully submitted,

/s/Robert W. Bishop

Robert W. Bishop, Esq.

Bishop & Associates, P.S.C.

6520 Glenridge Park, Suite 6

Louisville, Kentucky 40222-9998

(502) 425-2600

COUNSEL FOR PLAINTIFF

66a

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF KENTUCKY

LOUISVILLE DIVISION

No. 3:04CV-195

[Filed January 6, 2006]

JERRY W. DAVIS

PLAINTIFF

¥

SIEMENS MEDICAL

SOLUTIONS USA, INC.

)

)

)

)

)

)

)

)

)

DEFENDANT )

)

PLAINTIFF’S MEMORANDUM OF LAW IN

SUPPORT OF PLAINTIFF’S MOTION TO

REVISE THIS COURT’S ORDER ENTERED

ON NOVEMBER 8, 2005

I. Introduction

Plaintiff, Jerry Wade Davis, through the

undersigned counsel, respectfully submits this

memorandum of law in support of his motion to revise

the Court’s Order partially granting the Defendant’s

Motion for Summary Judgment, entered on November

8, 2005. Pursuant to FRCP 54(b), the Plaintiff has

moved that the Court revise its said Order as to the

Plaintiffs claim under KRS 337.385, in light of the

most recent Kentucky Supreme Court decision

67a

relevant to this claim. That decision was not rendered

until August 25, 2005, one day after the conclusion of

briefing by the parties on their motions for summary

judgment, and was not released for publication until

September 15, 2005, one day prior to the hearing date

set by the Court for oral argument on the summary

judgment motions, and was apparently, therefore,

overlooked by the parties.

Il. Plaintiff is not required to exhaust his

administrative remedies under KRS 337

When granting the Defendant’s motion for

Summary Judgment on the issue of the Plaintiffs

claim under KRS 337.385, this Court held, on page 25

of its Memorandum, that the Plaintiffs claim failed

because:

Davis has not satisfied his administrative

prerequisites. Section 337 bars proceeding to a

civil lawsuit until the Labor Commissioner has

conducted his own proceeding. Michael v. Falls

City Towing Co, 199 F. Supp.2d 632, 637 (W.D.

Ky. 2002). Thus claims brought pursuant to

KRS 337.385 must first be raised before the

Labor Cabinet to resolve questions of fact. Davis

has failed to comply with this requirement, and,

therefore, cannot avail himself of the benefits of

KRS 337.385.

The Kentucky Supreme Court has now dealt with

the specific issue of whether a claim must first be

brought before the Labor Cabinet in Parts Depot, Inc.

v. Beiswenger and Housing Authority of

Middlesborough, 170 S.W.3d 354 (Ky. 2005). (A copy

has been attached, for the Court’s convenience, as

68a

Exhibit A hereto.) The Kentucky Supreme Court ruled

on the issue of whether the Labor Cabinet had

exclusive jurisdiction over all claims arising under

KRS 337.385, or whether the state courts could have

criginal jurisdiction over these claims, in addition to

appellate jurisdiction over claims which were heard by

the Labor Cabinet.

The employer in the Parts Depot case argued that

KRS Chapter 13B “vests exclusive jurisdiction of all

wage-and-hour disputes in the Department of Labor,

requiring [employees] to exhaust administrative

remedies and limiting circuit court jurisdiction to

appellate review.” Jd. at 359. The Kentucky Supreme

Court specifically rejected this argument. It held that

a case may be brought under this statute in civil court,

and that the courts have original subject matter

jurisdiction over these types of claims.

The Supreme Court ruled that “nothing ... in KRS

Chapter 13B can be construed as conferring upon the

Department of Labor exclusive jurisdiction to resolve

all disputes pertaining to nonpayment of salary or

wages.” Id. at 362.

II. Conclusion

Due to the timing of the rendering and publication

of the Parts Depot opinion, as described above, this

Court was not provided with the benefit of this

precedent when making its analysis of this claim. As

the Court’s stated reason for granting summary

judgment on the Plaintiff's KRS 337.385 claim was the

issue of Plaintiff's failure to exhaust administrative

remedies, and as the Kentucky Supreme Court has

now held that such exhaustion of administrative

69a

remedies is not necessary in order to pursue a claim

under that statute in civil court, Plaintiff respectfully

submits that the Court should revise its Order entered

on November 8, 2005 to allow Plaintiffs claim under

KRS 337.385 to proceed to the jury trial in this matter

on February 21, 2006.

Respectfully submitted,

/s/Robert W. Bishop

Robert W. Bishop, Esq.

Bishop & Associates, P.S.C.

6520 Glenridge Park, Suite 6

Louisville, Kentucky 40222-9998

(502) 425-2600

COUNSEL FOR PLAINTIFF

70a

APPENDIX H

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF KENTUCKY

LOUISVILLE DIVISION

Case No. 3:04CV-195

[Electronically Filed March 13, 2006]

JERRY W. DAVIS,

Plaintiff,

v.

SIEMENS MEDICAL

SOLUTIONS USA, INC.,

Defendant.

Nee eee eee eee Se”

DEFENDANT’S RENEWED MOTION FOR

JUDGMENT AS A MATTER OF LAW,

OR FOR A NEW TRIAL

The Defendant, Siemens Medical Solutions, USA

(“Siemens” or “the Company”), by counsel and

pursuant to Rule 50 and Rule 59(a) of the Federal

Rules of Civil Procedure, submits this Renewed Motion

For Judgment As A Matter Of Law Or, Alternatively,

For A New Trial. Siemens has also submitted a

Memorandum of Law in Support for this motion

Fla

contemporaneously with this filing. As detailed more

fully in that Memorandum, Siemens asserts the

following primary arguments in support of its motion:

1. Siemens is entitled to judgment as a matter of

law because no reasonable jury could find by clear and

convincing evidence that Siemens fraudulently

misrepresented Plaintiffs commission eligibility to

him; and

2. In the alternative, Siemens is entitled to a new

trial because of statements in Plaintiffs opening

statement and closing argument and the improper

admission of evidence regarding alleged mistreatment

of Plaintiff by Tom Riesenberg were erroneous,

prejudicial and impermissibly tainted the jury’s

verdict.

As a result of the foregoing, Siemens moves this

Court to vacate the jury’s verdict in this action and

enter judgment as a matter of law in its favor. In the

alternative, Defendant moves this Court to vacate the

jury’s verdict and grant a new trial.

Respectfully submitted,

SIEMENS MEDICAL SOLUTIONS

By: s/Robert F. Holland

Counsel

Dana L. Rust

Michele L. Settle

Robert F. Holland

MCGUIREWOODS LLP

One James Center

901 East Cary Street

Richmond, Virginia 23219

(804) 775-1000

Mitzi D. Wyrick

WYATT, TARRANT & COMBS, LLP

2500 Citizens Plaza,

500 West Jefferson Street, Suite 2800

Louisville, Kentucky 40202-2898

(502) 562-7337

(502) 589-0309 (fax)

Counsel for Defendant

APPENDIX I

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF KENTUCKY

AT LOUISVILLE

No. 3:04-CV-195-H

[Dated February 22, 2006]

JERRY DAVIS

PLAINTIFF,

-VS-

SIEMENS MEDICAL SOLUTIONS

DEFENDANT.

i A A a_i

TRANSCRIPT OF JURY TRIAL.

VOLUME IB

BEFORE MAGISTRATE JAMES D. MOYER

UNITED STATES MAGISTRATE JUDGE

DERBY REPORTING SERVICES

Carola G. Strijek, RPR

1807 Northview Court

LaGrange, KY 40031

(502) 376-8895

Fax (502) 225-4646

[p.2]

APPEARANCES:

On behalf of the Plaintiff:

ROBERT W. BISHOP, ESQ.

JENNIFER LEIGH MCCARTY, ESQ.

Bishop & Associates, PSC

6520 Glenridge Park

Suite 6

Louisville, KY 40222-9998

On behalf of the Defendant:

DANA R. RUST, ESQ.

MICHELE L. SETTLE, ESQ.

McGuire Woods, LLP

901 East Cary Street

One James Center

Richmond, VA 23219-4030

* KOK

[p.11]

Q. Do you know how many sales --

A. Let me just finish. And then that territory split

in about -- with the growth of the product in the

industry into a split in about 2001 where I only

covered Texas, Oklahoma, New Mexico, and still parts

of Louisiana.

Q. Okay. *%0 you know how many sales territories

Siemens has for its product sales executives for

regional based?

75a

A. Yes. Again, we were up at about six until 2000,

2001 time frame. It went to thirteen, splitting that

piece. So the growth from ’97 until when I left in 2004,

was anywhere from about a half dozen of us to thirteen

of us, fourteen of us.

Q. So by 2001 or thereabouts it was up to thirteen

territories?

A. Yeah. I mean, it was growing at that rate, I

mean, so I wouldn’t say -- I don’t know exactly when

they populated every role, but I would say that’s about

right.

Q. Okay. In your sales position as a product sales

executive for “Siemens, what was the _ highest

commission tha. .»ou made as a regional PSE?

A. On my W-2 or actually what --

Q. Just tell us what you made.

A. Okay. Well, I mean, the highest year, 250.

* OK

[p.15]

Q. In one year.

A. That would be Christie Whelen and it was in the

$4- to $500,000.

@. Have you had the opportunity to see sales

people in this PACS field receive large commissions in

addition to what you just testified to?

76a

A. I mean, yeah. I mean, I’ve -- between leaving

Siemens and working and going into another company,

McKesson, executives I’ve seen solution sales that

people made commissions equivalent to a million

bucks.

THE COURT: I’m sorry, were you talking about

Siemens or another company?

THE WITNESS: Another company.

THE COURT: All right.

BY MR. BISHOP:

@. Did you attend the weekly sales conferences

that were held by telephone with Doug Spotts when he

was the national sales manager for Siemens’ IM

division?

A. Yes.

How did you do that? How did you attend?

Via phone.

Did you just call in?

> O& FP

Yeah, just call-in number.

Q. Are you aware of any professional connection

between Mr. Spotts and the IM Divisional Vice

President,

77a

[p.16]

Tom Riesenberg?

A. Yes.

Q. What is that?

A. They were friends at SMS and that’s how Doug

got the job or Doug was pulled over by Tom Riesenberg

to take the job after Bill Kelly, so.

Q. What types of things go back to the weekly sales

telephone conferences with Doug Spotts, what types of

things were discussed during those weekly telephone

calls?

A. They were updates, they were policies. I mean,

you know, if there was a particular project that we

were working on, just a quick round table on those

projects for Doug’s edification because he has to report

up. Anything that’s going on as far as, you know,

marketing efforts, any new things that we needed to be

doing, any roles, you know, responsibilities, product

updates, pricing changes, things of that nature.

@. Was the scope of Mr. Wade Davis’s new role

ever discussed during one of these conference calls?

A. Yes.

Q. And what was that new role?

A. Basically the role was that we needed support at

the national accounts layer for PACS and that Mr.

Davis would be involved with that layer to help

78a

[p.17}

facilitate the business and grow the business.

Q. And national accounts, what does that cover?

A. National accounts basically covers group

purchasing organizations, large entities, Tenants,

Triads, organizational, large organizations that are

health care based.

And so the way Siemens is set up is that they

correlate what they call executives and assign those to

the upper layer of those organizations, so they call on

those layers. They use specialists to help them with

those sales.

In this case Mr. Davis was going to be assigned

to that team, particularly Frank Biddlestone. He was

doing a lot of work with the Government, DOD, DIN

PACS II was coming up. There were other GPOs that

were going on. And so you had an account executive

base that were calling on Novation and Tenants and

Triads that were offering other Siemens’ products, but

they were intimidated talking about PACS. And it was

very difficult for us in the local level to motivate them

to talk about it.

Q. And you have testified here that the territory

that you covered, described for shorthand purposes, as

a southwestern territory. Did you understand Mr.

Davis's territory -- what did you understand the scope

of

79a

[p.18]

Mr. Davis’s territory to be?

A. The national accounts. So anywhere national

accounts went, which would cover the United States.

Q. Do you recall if during this telephone conference

where Mr. Spotts had announced Mr. Davis’s new role,

do you recall if Mr. Davis’s entitlement to earn

commissions was discussed?

A. It was basically -- when it was announced that

he would be in a sales role, you know, the first

question out of any sales guy’s mouth is how is that

going to impact my commission? So, is that going to be

-- is that going to impact my commission? And the

comment back was, it would not impact the local PSE’s

commission.

Q. Mr. Spotts told you that it would not impact --

Wade Davis’s commission would not impact --

A. That was communicated in the call. You have

twelve sales people en the call, every one of them

wanting to know point number one, is it ever going to

impede my dollar?

Q. Okay. Was it your understanding that Mr. Davis

would be able to earn commissions of -- as a result of

this phone conference, that he would be able to earn

commissions as a PSE for national accounts?

A. Yes.

Q. Was it uncommon for Siemens to pay double

80a

[p.19]

commissions to its sales people in the IM division?

A. Define double commissions. I mean, if a

transaction went down the way Siemens organized

was, if the AE and the PSE would be paid on a deal, so

they would pay a sales guy and they would pay what

would be the product guy. So that’s the structure of

Siemens. So, if you’re saying two individuals getting

paid for the same transaction, the answer is, yes.

Q. And they were being paid on the same sales

dollars?

A. Same sales dollars.

Q. What would you call that, a dual commission?

A. I mean, I don’t know if it’s called dual

commission or not. The reality is, if a transaction went

down, both people received an amount of money for

that transaction. Their scale is different from our

scale.

Q. If, for example, a sale was made to a particular

hospital, would both the account executive and the

regional PSE assigned to that hospital and that

regional PSF’s territory receive a commission?

A. Yes.

Q. And it would not be a split commission where

the PSE was taking part of the account executive’s

commission, would it?

8la

A. No, it would be according to your comp plan.

x mK

[p.35]

Q. And he never volunteered any specifics to you,

did he?

A. No

Q. How many years did you work for Siemens?

A. Fifteen.

Q. I think you testified the most you ever heard a

PSE making was somewhere around the $4- to

$500,000 range?

A. In one year, yeah.

Q. So you’ve never heard of a PSE making $1.77

million in one year?

A. The answer is not to my knowledge.

Q. Okay.

A. Not at Siemens.

Q. This conference call you mentioned with Mr.

Spotts on the phone --

A. Uh-huh.

Q. -- you remember Mr. Spotts saying it wouldn’t

impact your compensation, right?

82a

A. That’s correct. That was the message of the call.

Q. And that was pretty much all you recall about

that issue, right?

A. That’s my concern.

Q. And that’s what you remember about it because

* ke ok

[p.54]

A. That’s correct.

Q. To your knowledge, did all of the sales positions

at Siemens provide the opportunity to -- let’s just say

Siemens IM divisions, since that’s what we’re talking

about. Did all of the sales positions at Siemens IM

provide the opportunity to earn commissions?

A. That’s correct. They wouldn’t have been

classified as sales jobs at that point, they would have

been more of a support role.

Q. Was there ever a maximum amount of sales

commissions that sales people were eligible to earn in

the IM division?

A. No. In fact, the year that I did so well, we had

set a record of around $15 million that came out of my

region. The next year one of my counterparts, a lady by

the name of Christie Whelen, sold $24 million. I think

she made close to a half a million dollars that year.

And, again, in order to continue to maintain a good

living with the company and to have these years where

you're just completely blowing it out, making more

83a

money than you could ever imagine could be real, you

get paid the front end commission when the order gets

booked and then the back end commission is paid

when the customer pays their bill.

So, I mean, essentially in that year where I

[p.55]

did $300,000, I had had a $200-plus thousand year the

year before, and I had a lot of back-end commission

that was coming in along with the front ends of what

was sold that year. So even in my last year with

Siemens, which was one of the worst that I'd had since

I first started, I made $200,000.

But to go along with that when you start looking

at what some of the numbers that Christie had done,

she was in a very good territory, had done really well,

and I think she’s had a couple years running where

she made over half a million dollars running because

of back-end and front-end commissions that would run

together. And, again, this is when the territories that

shrunk in a three-state area.

Q. Do you recall the period of time for which Doug

Spotts was the national sales manager for the IM

division?

A. Absolutely.

Q. And do you recall when that was?

A. Date-wise, I would say shortly after Tom

Riesenberg came on as the division manager. There

was an individual who was in the role of the sales

84a

manager position, a gentleman by the name of Bill

Kelly, that Tom didn’t particularly lke too well. Tom

was on board, you know, less than six months when he

brought Doug in to

[p.57]

you know, the abuser --

MR. BISHOP: I didn’t anticipate him to answer

that.

THE COURT: Okay.

(The bench conference was then concluded.)

THE COURT: All right. Ladies and gentlemen

of the jury, I told you at the beginning we would

occasionally have conferences up here. That’s what’s

called the sidebar. They come over to the side of the

bench and we discuss an evidentiary point. Please

continue, Mr. Bishop.

MR. BISHOP: Thank you, Your Honor.

BY MR. BISHOP:

Q. At these weekly -- let me back up and ask you

about the weekly telephone sales conferences that

were held during Mr. Spotts’ tenure as the national

sales manager for the 1M division. What sort of things

were discussed in those telephone conferences?

A. Basically what was the order of the day,

oftentimes we talked about competitive stuff, as I

alluded to earlier. Any new developments, any new

85a

products that were coming out. Really, it was the

medium of communication of headquarters and Doug

being able to, you know, talk to his sales people, get

everybody in a forum where we could have active

discussion about what’s

[p.58]

going on in our lives. We might talk about a specific

deal where there’s compensation involved. We may

talk about a new product that was being introduced.

There was not a whole lot of structure to it, other than

it was whatever Deug wanted to talk about is what we

were on the call for.

Q. Do you remember a sales telephone conference

when Doug Spotts was the national sales manager in

which he informed the product sales executives about

Wade Davis assuming a new position?

A. I do.

Q. Could you tell us what you recall of that

telephone conference?

A. You know, the essence of Wade coming into this

role was essentially -- I had heard that this was

happening, but this was the formal introduction that

Wade was going to be taking on a new role within the

sales group, and that essentially his role was to be

handling national and government accounts. Upto this

point we had not had an individual in the national

accounts group whose expertise or focus was PACS.

And as PACS became more of a mainstream

product along with people buying CTs and MRIs and

86a

angiography rooms, these hospitals also, within their

GPO, those folks are saying two people like Premier

and

[p.59]

Consortium GPOs. Hey, we’re thinking about buying

PACS this year. So people like Premier and Novation

and what have you, would go to their membership and

say, okay, if we can sign up a Siemens, let’s say, and

negotiate for you in advance what the discounts will be

if you buy the Siemens product, is that something you

would be interested in? And absolutely they all raise

their hand and say, absolutely, we’d like for you to do

that for us because it makes their lives easier.

The GPOs are incentive to do that because

basically then they can gain 3 percent on whatever is

spent on that product, you know, through them. So,

essentially the goal in bringing Wade into that

capacity was we found oursclves locked out of a lot of

businesses. More and more hospitals would join in

with GPOs, they become compliant. Basically meaning,

if you're going to be a member of Novation, you have to

say to Novation, okay, I’m going to buy a certain

percentage of everything I buy in my facility is going to

go through your organization.

So in order for them to be compliant, if Siemens

wanted to sell PACS in any of these places that were

members of these group purchasing organizations, you

had to be on the contract. And so on more than one

occasion it was brought to the attention of the folks in

87a

[p.60]

our group if we don’t have this license to hunt, so to

speak, then the reality of it is, is regardless of what

the radiology director wants or a radiologist of any of

the clinicians within a facility, administration is going

to tell them, I’m sorry, Siemens is not on that GPO

contract. We’re compliant with them. We have to buy

whoever they’ve selected or given us an opportunity to

buy from.

So when it was announced that Wade was

taking on this role, we were all very excited about it,

number one, because we were happy to have him back

in the sales organization. Mr. Riesenberg had

eliminated his position prior to that, which was where

he was an OEM product manager dealing with

computer radiography products and liaisoning to those

external companies whose products we sold. Wade was

now back into the sales organization and we were

finally going to have an advocate on this GPO national

accounts front that would be there to position our

product and get us this hunting license so that for all

intents if you’re dealing with a Novation customer,

you're not locked out of the deal before you even walk

through the door.

Q. Okay. And what do you recall about this sales

telephone conference that Doug Spotts told you about

Wade coming on to assume this position?

[p.61]

A. Well, as sales people you can imagine that we’re

all very keen to have an understanding of how

something like this might impact our own commission.

88a

So, the question was asked by Christie Whelen, does --

if Wade is working on a project and dealing with a

national account, docs that somehow impact our own

commission? Are we somehow going to have to give or

will we be receiving less of a percentage on a dee:

because Wade would also be receiving a percentage on

a deal.

And the response to that was, you know, no.

Just as your account executives are comped on deals

that you sell, so too are you. So that there’s a dual

commission role served in that particular purpose. If

it’s a Novation account that Wade has been working or

a project that has been identified as a Novation

customer, then Wade would get a piece of that, so

would we, so would be the account executive.

Q. Prior to Wade being announced by Doug Spotts

as the national accovats product sales executive,

during any of the time that you were working in the

IM division from ’96 on, had there ever been a national

accounts product sales executive in the IM division?

A. No.

Q. So what was your understanding of the territory

that Wade was going to cover?

[p.62}

A. Itencompassed, you know, the entire geography

of the United States, as I know it.

Q. Was ther2 any other product sales executive at

that time when Wade came on as the PSE for national

accounts who had a national territory?

89a

A. No, not to my knowledge. Not selling PACS.

Now, granted, there were other national accounts,

people on the team and they had other expertise, but

not in PACS, no.

Q. When you say other national accounts people,

you're talking about Siemens globally, not the IM

division?

A. Correct. Absolutely.

Q. Did you understand when Mr. Spotts answered

that question the way you've just testified that he did,

Christie Whelen’s question about how it was going to

affect their commissions and his commission was going

to affect your commission, the regional product sales

executives commissions, did you understand that that

meant that Wade was not going to be splitting your

commissions?

A. Correct. You know, again, the response that I

would have expected had Doug wanted to indicate that

would be, you know, youre paid 2.5 percent of a deal,

okay? If it involves a project that Wade is engaged in

[p.63]

or then, you know, your commission is going to be cut

down to a percent-and-a-half because we have to give

him a percent. So I can only assume that if there was

going to be some sort of a decrease in what we’re going

to get paid, that Doug would ':ave responded in that

manner.

Q. What did you understand -- you've already

anticipated me a little bit in your earlier answer about

90a

the national accounts product sales executive position

announcement. But what did you understand Wade’s

responsibilities would be, anything other than or in

addition to what you’ve already testified?

A. You know, government business was equally

identified. You know, the reality of it is that we all

found ourselves in a situation, especially in positions

like what Wade had where he was a headquarters guy,

where you're really at the whim of the director of the

division to, really, he could put you really wherever he

wanted when you worked in that capacity. And when

he was the OEM product manager, essentially Tom

Riesenberg was the fellow he reported to.

When he got transferred over into sales, he

ultimately reported into Doug Spotts and then above

Doug was a gentleman by the name of Gordon Rice,

who had national sales manager responsibility for all

product lines that Siemens sells. You know, so I don’t

know if I

[p.88]

very example that I talked about.

Q. And he treated you fairly, didn’t he?

A. Doug was a fair boss.

Q. And you don’t remember him ever lying to you

about your compensation, do you?

A. No.

9la

Q. Okay. And you thought he was honest?

A. I did.

MR. RUST: That’s all I have.

THE COURT: Thank you. Any redirect, Mr.

Bishop?

MR. BISHOP: Yes, Your Honor.

REDIRECT EXAMINATION

BY MR. BISHOP:

Q. You were asked some questions by Mr. Rust

regarding commissions?

A. Yes, sir.

Q. Are you -- would you say that $130- to $140,000

income was average for a regional PSE when you were

at Siemens?

A. Well, I mean, the reality of it is that that was

the target income. You know, basically what they say

your quota is, let’s say, $6 or $8 million. If you sell $6

million in one year, Iet’s say, the target income that

we’re going to pay you is $130,000.

[p.89]

The reality of it is that that was the minimum

performance that was expected of you. That’s how you

were going to keep your job. But because there is no

cap on our ability to earn income with the company, as

92a

I said, you know there had been a string of years

where, you know, I had not made less than $200,000 at

Siemens and then my best year was $299,000.

Q. If a sale was made on product that was

involving a hospital, as you described, or a hospital

complex, as you described, that has its base where you

are and has its -- and also has product being placed in

California, would you get your commission on that

product and the regional PSE in California get his

commission on that product?

A. Yes. The original PSE in California would get

whatever amount of that order was to be placed in

their territory. In fact, there’s a provision in the plan

that talks about, you know, where it’s being placed and

what the provision is for the guy that sells it versus

the guy who has to, you know, install it and support it

after the fact. So, I mean, it’s -- it’s obviously an issue

that’s come up for Siemens on a couple of occasions,

otherwise they would not have put a specific entry in

here to cover that when that instance comes up.

MR. BISHOP: Thank you, Mr. Seiter.

* OK *

[p.95]

rather than counsel table. We know you're not sworn.

We know youre not the witness, but it may be a little

more representative of the give and take.

MR. BISHOP: So, Your Honor, [ll read the

questions and she'll answer them.

93a

THE COURT: That would be my expectation as

to how you would do it. And if you can be sure to let

Defense Counscl know what page you’re on. And if you

make any jump transitions, let them know and let

them catch up in the pagination, so they can be aware

of things.

MR. BISHOP: We have tried to slender this,

Your Honor, and so we will.

THE COURT: It’s not always the absolutely

most fascinating way compared to live witnesses, but

sometimes it’s absolutely the appropriate thing to do.

MR. BISHOP: Thank you, Your Honor.

(The deposition of CHRISTIE WHELEN was

then read to the jury in open court.)

MR. RUST: I object.

THE COURT: I take it the objection for the

grounds is the witness, Ms. Whelen, shouldn’t be

expressing an opinion as to Mr. Davis’s performance?

MR. BISHOP: Is that a relevance objection?

THE COURT: It’s a competency objection, I

[p.98]

MR. BISHOP: This is the deposition of Winn

Corder.

94a

THE COURT: Let’s let Defense Counsel retrieve

that. Everyone’s dream is that some day we will be

able to do all this without pieces of paper, and we’re

actually making a lot of progress in the legal system in

reducing paper, but we still -- it’s still a paper-related

world in a lot of ways. You'll see paper exhibits, paper

depositions, things like that. I think ten or fifteen

years from now probably we'll mostly be looking at

video monitors in the courtroom, and we’re kind of in

a transition zone on that. Mr. Bishop.

MR. BISHOP: All right.

(The deposition of WINN CORDER was then

read to the jury in open court.)

THE COURT: Mr. Bishop, do you have a feel for

how much more of this there is?

MR. BISHOP: There is a bit more, Your Honor.

We can stop after the conclusion of this.

THE COURT: Why don’t you find a convenient

stopping place and the reason is people are starting to

come in. We’ve got a criminal matter that was

continued yesterday that we'll need to attend.

MR. BISHOP: We'll stop at the section. Just a

few more lines.

95a

APPENDIX J

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF KENTUCKY

AT LOUISVILLE

No. 3:04-CV-195-H

[Dated February 23, 2006]

JERRY DAVIS

PLAINTIFF,

-VS-

SIEMENS MEDICAL SOLUTIONS

DEFENDANT.

Nee eee eee See”

TRANSCRIPT OF JURY TRIAL

| VOLUME ITA

BEFORE MAGISTRATE JAMES D. MOYER

DERBY REPORTING SERVICES

Carola G. Strijek, RPR

1807 Northview Court

LaGrange, KY 40031

(502) 376-8895

Fax (502) 225-4646

96a

[p.2]

APPEARANCES:

On behalf of the Plaintiff:

ROBERT W. BISHOP, ESQ.

JENNIFER LEIGH MCCARTY, ESQ.

Bishop & Associates, PSC

6520 Glenridge Park

Suite 6

Louisville, KY 40222-9998

On behalf of the Defendant:

DANA R. RUST, ESQ.

MICHELE L. SETTLE, ESQ.

McGuire Woods, LLP

901 East Cary Street

One James Center

Richmond, VA 23219-4030

* OK *

[p.12]

A. Yes.

Q. And did you have a proposal for Mr. Spotts as to

how your commission would work?

A. Did I have a proposal?

Q. Yes.

A. No. Actually, in bringing it up we agreed on

basically the lay of the job and how it would be

97a

covered. And basically the national accounts was to be

done as basically giving the sales guys the license to

hunt and go out and sell to the GPO hospitals,

themselves. We would basically be compensated

differently for those accounts. And then the

- Government side, while the Government actually has

two different segments in the U.S. and outside the

U.S., the same would apply to Government hospitals

here in the U.S. The local sales specialist would still be

responsible for making that individual sale, and then

outside of the country I became the primary sales

person.

Q. Okay. And how were your commissions to be

calculated? By what method were they to be calculated

for the national accounts?

A. It was described to me by the normal sales

executive comp plan. There was no caveats or anything

given. It was, you will be a PSE, you'll have a comp

plan, and you'll be paid accordingly.

[p.13]

Q. Did Mr. Spotts say anything to you about what

dollars you would be paid on and what relationship

your commissions would have to the other product, the

regional product sales executives?

A. It would be paid on anything that was booked

under national accounts. National accounts includes

both Government and GPOs.

‘ Q. Did you understand from this promise by Mr.

Spotts that you would be receiving a dual or override

commission?

98a

A. It wasn’t described as, quote, a dual, but

basically what was said is that the sales specialist and

local sales specialist would get their commission. I

would have my own comp plan and I would be paid by

it. And, so, in fact, it was a dual commission. One

didn’t have any determination with the other.

Q@. What did you expect would happen and what

did you understand from what Mr. Spotts promised

you would happen with regard to sales in territories

where regional products sales executives had been

assigned with national accounts sales dollars?

A. Again, my role was to give them the opportunity

to make that sale and to support them, if they needed

support, while pushing that individual deal. And when

that, if they were lucky enough to get that,

[p.14]

then I would be paid my commission based on that

order being booked through national accounts.

Q. Did you understand that you would be splitting

commissions in any way with any product sales

executives or account executives?

A. No, that was -- I brought that up with Doug

because the problem I didn’t want to get into -- outside

of being in sales, and you don’t want to split your sales

commission with somebody. I had worked with these

guys, many of them several years, and we were more

of a family than colleagues. And I would not accept the

job, one, in competing with my friends and, two, it

really wouldn’t have been beneficial for me if the local

sales guys felt I was going to come in and take half

99a

their sales commission. The GPO sales wouldn’t have

grown, so it didn’t make sense.

Q. And did Mr. Spotts agree with you with regard

to this?

A. Yes.

Q. And did Mr. Spotts represent to you that these

accounts would be -- these national accounts would be

subject to a commission paid to you on every dollar?

A. Yes.

Q. What did you expect to do for Siemens in this

new job?

[p.36]

end, when the year end is over and the books are

basically finished for the year, headquarters gets a

lump sum of money to the division that basically pay

bonuses to its people in headquarters. And it was

explained to me that my commission, he would pay me

out of that bonus at that time of the year because there

was no way to fix the problem in NASP, which is the

computer system.

Q. Did you tell Mr. Riesenberg or confirm with Mr.

Riesenberg what Mr. Spotts had told you about

receiving commissions on all GPO sales or national

account sales?

MR. RUST: Objection. It’s hearsay what he told

Mr. Riesenberg.

100a

THE COURT: Overruled.

BY MR. BISHOP:

@. You can answer the question.

A. Okay. I’m sorry, could you ask the question?

@. I can. Did you inform Mr. Riesenberg about

what Mr. Spotts had told you regarding your

commissions on al] sales booked to national accounts?

A. The conversation was basically, you know, I

went to Tom and | said, I’ve got a problem with my

national accounts. And basically just described that I

can’t get my name in the system to get paid because

it’s showing, you know, the local PSE. So, it wasn’t a

direct

[p.37]

relation to the conversation I had, but it was -- the fact

was still that if my name went in, | was going to bump

the local sales guy and that was not what we agreed

to.

Q. Okay. And did Mr. Riesenberg indicate in

anyway that he didn’t understand that or he didn’t

agree with that?

A. No.

Q. I think that you may have said when you were

‘rying to pin down when this trip happened and when

you went to see the bookings office, I think you may

have said January and then you said February, March

101la

time frame. I know that because of your work schedule

that it’s hard for you to track dates sometimes, but do

you recall about when this was?

A. It would have been after the first of the year.

January would have been the earliest. It was probably

February, March time frame would be my guess.

Q. Okay.

A. The reason that I know it would have been after

the ‘irst of the year is because right after I accepted

the job, there’s a trade show that comes up at the end

of November every year, the weekend after in Chicago

for a week. You come back you basically got the

holidays. So basically Siemens shuts down for a month

* AK OK

[p.56]

I just, I think that’s -- I think that’s an invitation to -

unfair prejudice. I think the question before the jury is

quite a narrow one and that was whether there was a

misrepresentation that meets those elements that

occurred back at the time that the job was offered to

them.

So [’m not going to allow the Riesenberg

termination related matters in. That will be the

Court’s ruling. I know it’s not -- it’s not the position

that the Plaintiff would advocate.

MR. BISHOP: It’s devastating to our case, Your

Honor. Devastating to our case.

102a

THE COURT: All right. Well, I will listen to the

evidence as it comes forward and I want to hear the

full context of this. If it turns out that my reading of

these deposition transcripts is undercut by testimony

and Mr. Riesenberg appears to be a front-end actor as

opposed to a back-end, unfair terminator, I will be

keenly aware of that and I can reconsider this ruling,

but that’s where I am at this point.

Let me return the deposition excerpts to the

parties and let’s call the jury back in and let’s continue

with where we are.

MR. BISHOP: Your Honor, those exhibits were

intended to show that Riesenberg was trying to get rid

of Wade rather than pay his commission and is it -- we

are —

APPENDIX K

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF KENTUCKY

LOUISVILLE DIVISION

No. 3:04cv195

[Dated February 23, 2006 |

JERRY W. DAVIS

Plaintiff,

VS

SIEMENS MEDICAL SOLUTIONS USA, INC.

Defendant.

’

Nee eee Nee eee Se”

TRANSCRIPT OF JURY TRIAL

VOLUME II-B

Heard before the Magistrate Judge Jarnes D. Moyer

on February 23, 2006, at approximately 1:00 p.m.

REPORTER: KIMBERLEY ANN KEENE

Registered Professional Reporter

kimberleycourtreporter@insightbb.com

23 P.O. Box 20516

Louisville, Kentucky 40250

Phone: 802-6305 Fax: 458-2420

[p.2]

APPEARANCES

FOR THE PLAINTIFF: BISHOP & ASSOCIATES

Robert W. Bishop, Esquire

Jennifer McCarty, Esquire

Suite 6

6520 Glenridge Park Place

Louisville, Kentucky 40222

FOR THE DEFENDANT: McGUIRE WOODS

Dana Rust, Esquire

Michele Settle, Esquire

One James Center

901 East Cary Street

Richmond, Virginia 23219

kK *

A. No.

Q. Okay. It is nice to have that guarantee, though,

isn’t it?

A. Im -- it’s a -- I was already guaranteed 85;

15,000 dollars, I wouldn’t have taken it for 15,000.

Q. What about an extra 35,000?

A. I wouldn’t have taken any sales job where they

told me that this is al! you have the hmit to make.

A hundred and 35,000, while more than I was

making, that is -- that’s not what I was looking to do.

I mean, I had been in this division for a long time. I

105a

also was already doing a large degree of this job. I

knew what several of sales guys were doing. And you

know, I was wanting to get back in and make the

money. There is no question about that.

Q. So, a 35,000 dollar raise wouldn’t have been

enough? .

A. Not for that job, no. For the marketing job,

maybe.

Q. How about a hundred thousand dollar raise?

A. That’s -- I never thought in those terms. So, I --

I never really considered it.

Q. Is it your position that you wouldn't have taken

the job unless Mr. Spotts promised you 1.77 million

dollars?

A. That’s -- Doug Spotts didn’t promise me 1.7

million.

[p.55]

He promised me commission on all sales to national

accounts.

Q. I know. But my question was: Had you known at

the time what you’re now asking this Jury to give you,

is that what you would have insisted on, 1.77 million

dollars?

A. No. I insisted on getting paid for the work that

was done on accounts that were sold.

106a

Q. So, you would have taken less than that?

A. Well, yeah.

Q. This job that you took on, this PSE role -- let me

back up.

Did you develop some sort of skills or undergo

some sort of transformation between 2001 and 2002

which makes you think that you should get paid 1.77

million dollars?

A. Again, I think I should get paid what the

commission plan said I would get paid on. That was

everything sold to national accounts. If we only sold

10,000 dollars that year, I wouldn’t be expecting no

where near that. That’s not the case.

We’re talking about, I am expecting to get paid

what they told me they were going to pay me for.

Q. Is the answer to my question no, that you didn’t

develop some skills or undergo some transformation?

A. I already had skills to do the job.

Q. So, no big change in who Wade Davis was?

A. No.

107a

APPENDIX L

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF KENTUCKY

AT LOUISVILLE

No. 3:04-CV-195-H

[Dated February 24, 2006]

JERRY DAVIS

PLAINTIFF,

-VS-

SIEMENS MEDICAL SOLUTIONS

DEFENDANT.

a a a a

FEBRUARY 24, 2006

TRANSCRIPT OF JURY TRIAL

VOLUME [III-A

BEFORE MAGISTRATE JUDGE JAMES D. MOYER

DERBY REPORTING SERVICES

Carola G. Strijek, RPR

1807 Northview Court

LaGrange, KY 40031

(502) 376-8895

Fax(502) 225-4646

108a

[p.2]

APPEARANCES:

On behalf of the Plaintiff:

ROBERT W. BISHOP, ESQ.

JENNIFER LEIGH MCCARTY, ESQ.

Bishop & Associates, PSC

6520 Glenridge Park

Suite 6

Louisville, KY 40222-9998

On behalf of the Defendant:

DANA R. RUST, ESQ.

MICHELE L. SETTLE, ESQ.

McGuire Woods, LLP

901 East Cary Street

One James Center

Richmond, VA 23219-4030

eas

[p.21]

it might work to pay somebody commissions in

addition to base compensation in that job before you,

right?

A. I’m not sure what the question is, I’m sorry.

Q. The company didn’t have any experience to

track what sort of commissions would result in how

much compensation for somebody in your role prior to

this?

109a

A. They had the tools. They knew how much they

booked in government accounts, so I would say, yes,

they did.

Q. But nobody actually held this job before, nobody

earned a living doing it before?

A. No. As far as I know it was the first time, which

was the reason they created it because nobody had

been doing it.

Q. Now, do you think Mr. Spotts said whatever he

said to you incidentally without intention of lying, but

simply because it wasn’t clear on how to pay you in

performing this new job?

A. Doug Spotts was a national sales manager. He

knew what the numbers were. He gave me a job, gave

me a compensation plan. What he thought, what he

meant, all I can say it ended with a compensation plan

that said I would get paid on national accounts.

Q. What I’m focusing on, do you think he was

deliberately lying to you or do you think he was

unclear

[p.22]

how the pay piece was going to work for somebody like

you in this new job?

A. Whether he lied, whether he didn’t understand

how to configure it, | can’t say for sure. I mean, shortly

after he offered me the position, he left, so I didn’t

have the opportunity to go back later and discuss it

with him.

110a

Q. Okay. Now, if Mr. Spotts in this conversation in

the restaurant had told you that you weren't going to

get commissions on all sales to national accounts and

government accounts, what would you have done?

Would you have quit or would you have stayed in the

job you already had?

A. I can’t answer that. I mean, that’s a theory.

Q. Well, you weren't thinking of leaving, though,

wére you?

A. Not at that time, no, but we had had discussions

prior to that, before I accepted the job, about wanting

to go back to sales. The PSEs had been asking for

somebody, so it wasn’t like a big surprise that

morning.

Q. Right. But you’re not thinking of leaving. Mr.

Spotts sits down with you, talks to you about this job,

and if he says to you right up front, you know, Wade,

we are not going to pay you commissions on all

[p.23]

national accounts, we can’t afford that. Isn’t it true

that what you would have done is just stayed put

where you were in the existing job?

A. No, that’s not true. If he would have told me

that, | would have asked him why they couldn’t afford

it. And if it’s because the way the commission plan is

set, then I would assume that Siemens could have

developed something differently. I wouldn’t say that I

would have quit. IT wouldn’t have said that I would

have left or I would have stayed where I was.

lila

Q. You would have tried to work out some other

arrangement?

A. Yeah, if it was brought up.

Q. Maybe you would have been happy with

$150,000?

A. No, I would never be happy being told what a

cap would be and that’s not why you go into sales.

Q. lL understand you don’t expect there to be a cap,

but at the same time, you probably have in your mind

some sort of expectation about what you might get?

A. I knew what other sales people were making,

people that I had trained, people that had much

smaller territory. So, yeah, I knew there was great

potential there, yeah, there’s no doubt about it. And, in

fact, | had already been doing that job. I had been

doing the presentation, I had been doing it. It was time

to get

[p.72]

Q. And so he was going to be the only product sales

executive who was doing work in sales that didn’t

carry a commission for that work on GPOs? That’s

your testimony?

MR. RUST: Objection. Vague and ambiguous,

Your Honor.

THE COURT: Answer the question as best

you're able to understand it

112a

THE WITNESS: Okay. Thank you. [f you could

ask it again, Mr. Bishop. Sorry.

BY MR. BISHOP:

@. Your testimony here today is that Wade Davis

was going to be the only product sales executive, and

1 suppose GPO, it’s your testimony here today that

Wade Davis was going to be the only product sales

executive who was assigned a particular sales

responsibility who was not going tc receive

commissions for that responsibility. Was there any

other product sales executive who was being assigned

responsibilities who was not going to receive any

commissions for those sales -- for that sales work?

A. Wade would receive commissions.

@. He wouid receive’ commissions on_ the

Government part is what you’re testifying to now, but

he wouldn’t receive any commissions on the GPO part;

is that correct?

[p.73]

A. Right.

Q. So that part of his job where he’s working on

these GPO accounts -- let me ask you this: You did say

that you hired him to work on these GPO accounts,

correct?

A. Yeah, that’s correct.

@. And his work on these GPO accounts was not

going to be commission based; is that your testimony?

113a

A. Understanding your question, yes, sir.

Q. If Wade Davis comes into, say, Kurt Seiter’s

territory, Kansas and Missouri, and as part of the GPO

contracts he makes a sale in Kurt Seiter’s territory, is

Wade going to split a commission with Kurt Seiter?

A. First of all, Wade wouldn’t make a sale to the

GPO.

Q. I’m using make a sale to the GPO in a sense

that I think it is used to refer to a sale to a GPO

member?

A. Wade wouldn’t go into Kurt’s territory and make

a sale to the GPO member. Kurt would make the sale

to the member.

Q. And what if Wade did do that? What if he, in his

GPO contracts, he finds out about a PACS that’s going

into a territory and he says, I worked this, I would like

a commission on it. I think in your testimony you

[p.74]

indicated that you would be responsible for equitably

splitting that?

A. In your question you asked if he would come in

for a GPO member. He wouldn’t come in for a GPO

member as GPOs are memberships.

Q. Well, a hospital is a member of a group

urchasing organization, is it not?

+

A. That is correct.

ll4a

Q. So wouldn’t it be appropriate or wouldn’t you

understand what I’m saying when I say a group

member to refer to a_ hospital? You wouldn’t

understand that?

A. I would agree with that.

Q. Okay. So if Wade in his work with the GPO

becomes aware that the GPO administrators know

that there is a hospital member that is looking for a

purchase of a PACS product, and Wade says, I would

like to be able to receive a commission on this and I’m

the one who became aware of the opportunity and so

it’s going to be placed here, you would equitably split

that commission, would you not?

A. The answer to that is, no.

Q. Okay.

A. Because the GPO member is owned by the local

rep.

Q. So in your testimony, did you -- were you

([p.75]

asked this question and did you answer in the

following fashion. It’s on page 63. “How would that

have happened? Would he have gone to the sales

executive that he maybe would have worked with and

said, let’s split the commission?” And you answered, “It

would have been my responsibility to equitably split

the deal between him and the local sales rep.”

115a

Do you reeaii being asked that answer and

question and answering that way?

A. I recall the questions. However, preceding that

Q. Let me get the answer on this. Did you answer

that way?

A. I did. It’s in testimony, sure.

Q. And you didn’t say there that Mr. Davis would

not be able to receive a split commission, you said he

would get a split commission and I would equitably

distribute it, did you not?

A. The question you asked me before was GPO

members, if I remember the testimony of my

deposition correctly. You had asked me, is there a

scenario in these national accounts. Give me a

hypothetical where Wade could own and drive and

book an order, and that’s how we led down the path of

the discussion you’re describing now.

[p.76]

Again, you got to remember national accounts,

as we define them, parts of it is GPOs. Some of it is

government accounts, as we talked about. There are

other national accounts that are supported by our

national accounts group that aren’t GPOs. They’re

multistate health systems. And if -- I believe my

testimony was describing an example in a multistate

health system that’s part of national accounts that

Wade would be supporting, that would be a scenario

where there potentially could be a split. So that’s how

1l6a

we got to the questions that you’re referring to now in

the deposition. But, again, you were asking me some

hypotheticals.

Q. Is it your testimony now that you got Wade to

take this position as the PSE for national and

government accounts on a representation that he was

only going to be paid commissions on government

account sales?

A. The representation I made to Wade --

Q. Can I have a yes or no on that and then --

THE COURT: Answer it, yes or no, if you’re able

to.

THE WITNESS: Well, Your Honor, it’s a tough

question to answer.

THE COURT: You can answer it yes or no and

then explain your answer.

* KOK

117a

APPENDIX M

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT

OF KENTUCKY

AT LOUISVILLE

No. 3:04cv195

[Dated February 24, 2006]

JERRY W. DAVIS

Plaintiff,

VS

SIEMENS MEDICAL SOLUTIONS USA, INC.

Defendant.

i a a a a a a

TRANSCRIPT OF JURY TRIAL

VOLUME III-B

Heard Before the Magistrate Judge James D

Moyer on February 24, 2006, at approximately

1:42 p.m.

REPORTER: KIMBERLY ANN KEENE

Registered Professional Reporter

kimberl ycourtreporter@insightbb.com

P.O. Box 20516

Louisville, Kentucky 40250

118a

Phone: 802-6305 Fax: 458-2420

[p.2]

APPEARANCES

FOR THE PLAINTIFF:

BISHOP & ASSOCIATES

Robert W. Bishop, Esquire

Jennifer McCarty, Esquire

Suite 6

6520 Glenridge Park

Louisville, Kentucky 40222

FOR THE DEFENDANT:

McGUIRE WOODS

Dana R. Rust, Esquire

Michele L. Settle, Esquire

One James Center

901 East Cary Street

Richmond, Virginia 23219

* * x

[p.5]

THE COURT: Let me explain to the jurors what

we're going do here. We’re going move really quickly

here for at least the next 40 minutes.

Mr. Bishop is going to conclude his examination

quickly of Mr. Spotts and then we're going to allow the

Siemens folks to take some witnesses -- the buzz word

is out of sequence. They have got some business people

who have been here for several days because they

119a

weren’t sure when they were going to be able to testify

and they have plane reservations this afternoon, so

were going to let them take some testimony as part of

their case next.

So, it will shuffle the order a little bit, but,

again, we're trying to accommodate a number of people

with schedule needs.

So, good to go. Mr. Spotts.

Mr. Spotts, you’re still under oath, [ll remind

you.

MR. BISHOP: If I may make one modification.

We are reserving -- we are finishing this part of our

examination of Mr. Spotts and reserving the rest of our

examination for this when he’s --

THE COURT: Well, if they put them on in their

case, you can certainly cross examine him.

[p.6}

CROSS-EXAMINATION

BY MR. BISHOP:

Q. Mr. Spotts, I think you’ve testified -- I want you

to confirm for me if this is correct -- that the GPO

accounts were part of Wade’s assignment as the new

PSE for national and government accounts; is that

true?

A. Yes. That’s correct.

120a

Q. Okay. What did you understand would be

Wade’s incentive for working on this important GPO

part of his job?

A. His incentive?

Q. Yes.

A. His incentive would be to get more licenses to

hunt, as we described.

Q. Wouldn’t that be -- wouldn’t that be his

objective? Wouldn’t that be what Siemens wanted him

to do? Wouldn’t that be objective?

A. Okay. Fair point.

Q. What would be his incentive? He was a

salesman, correct?

A. Correct.

Q@. And salesmen are incentivized by commissions

at Siemens?

A. Correct. For the GPOs, his compensation was

his base salary.

Q. And that’s it. There is no commission incentive

for

121a

APPENDIX N

IN THE UNITED STATES DISTRICT COURT

_ FOR THE WESTERN DISTRICT

OF KENTUCKY

AT LOUISVILLE

No. 3:04cv195

[Dated February 27, 2006]

JERRY W. DAVIS

Plaintiff,

VS

SIEMENS MEDICAL SOLUTIONS USA, INC.

Defendant.

ee ee ee ee

TRANSCRIPT OF JURY TRIAL

VOLUME IV-{A]

Heard Before the Magistrate Judge James D.

Moyer on February 27, 2006, at approximately

9:16 a.m.

REPORTER: KIMBERLY ANN KEENE

Registered Professional Reporter

kimberlycourtreporter@insightbb.com

P.O. Box 20516

122a

Louisville, Kentucky 40250

Phone: 802-6305 Fax: 458-2420

[p.2]

APPEARANCES

FOR THE PLAINTIFF:

BISHOP & ASSOCIATES

Robert W. Bishop, Esquire

Jennifer McCarty, Esquire

Suite 6

6520 Glenridge Park

Louisville, KY 40222

FOR THE DEFENDANT:

McGUIRE WOODS

Dana Rust, Esquire

Michele Settle, Esquire

One James Center

901 East Cary Street

Richmond, VA 23219

[p.35]

To the contrary, the only evidence is that Mr. Spotts

testified that he wasn’t authorized to make any such

promise and, likewise, there is no evidence that Mr.

Spotts previously made any representations regarding

any employees commission eligibility. The evidence

has consistently been that he did not.

123a

Under these circumstances, as a matter of law, the

plaintiff is not entitled to punitive damages.

THE COURT: All right. Thank you, Ms. Settle.

Mr. Bishop, I’m going to rule on this now. I don’t

mean to cut you off, but I think that -- that -- I thought

a great deal about this over the weekend. And I’m

convinced this is a case that has to be decided by the

Jury.

I’m going to overrule the Rule 50 motion. I know

it was thoughtfully prepared and well argued. But I

think that, essentially, what Ms. Settle has argued ts

that it was, at worst, a misunderstanding, taking a lot

of inferences in ways that are most favorable to the

defendant and not favorable to the plaintiff. And I

think it is ultimately up to the Jury to decide whether

it was a misunderstanding or misrepresentation and

if so, with what state of mind it was made.

You know, there are some tough judgment calls

here, but the Court is reluctant to substitute its view

of the facts for the view of the facts that the Jury --

they are the judge of the facts. And I acknowledge that

there are some questions

* * *

[p.49]

A. Yeah. The -- that’s a true statement. Yes.

Q. And I realize that technical distinction that

you're making, but you’re the national sales manager

position was -- and maybe it is the preposition --

maybe we should say was “with” the IM division.

124a

You were working with the IM division as

national sales manager for the IM division.

A. For the IM division, yes.

Q. And that is the proper title, national sales

manager, correct?

A. I think the proper title was national sales

director.

Q. Did you ever get called national sales manager?

A. I’m sure I did. Yes.

Q. And in working for the IM division, were you

aware of the group with which -- within which the IM

division was placed in Siemens?

Did you have a -- you had an IM, division and

then did you have a group that the IM division was

part of? Was it something like the ISG, group imaging

sales, or service group?

Are you aware of the group that that IM was in

A. A group? I mean, if -- I’m struggling with this

one, Mr. Bishop. I’m sorry.

The organizational structure -- let me answer

your question, I think I can get there, if you allow me

to kind of

[p.50]

explain how it could be aware of what group they’re in.

Q. Yes.

A. The divisions themselves within Siemens,

whether it be IM, MR, CT, I know we use these

acronyms before, those divisions report up to the

senior management of CSG, customer solution group.

Q. Right.

A. The sales directors and sales resources report to

the same senior managers within CSG. So, I guess I

am familiar with the organization that they’re a part

of, or their reporting structure, but IM was a division,

such as MR and CT, and they reported to the VP

within Siemens, as well as the sales force.

Q. All right. Let me ask you: If you don’t recognize

a group in there that the IM division was part of, do

you recognize a group called ultrasound? The

ultrasound group?

A. Yes, sir, I do.

Q. Okay. That is completely separate from the IM

division, correct?

A. Yes, they are.

. Okay.

Q

A. They’re like -- I’m sorry.

Q. They’re like?

A

—

)

}

. They’re another modality. Ultrasound. MR.

126a

MR. BISHOP: May I approach the witness, Your

[p.51]

Honor.

THE COURT: You may.

MR. BISHOP: This is Plaintiffs Exhibit 16.

BY MR. BISHOP:

Q. Just before we go to Plaintiff's Exhibit? -- And

going back to the ultrasound group, salespeople in the

IM division would not receive commissions on the sales

of equipment in the ultrasound group, correct?

A. Not that I’m aware of.

Q. Okay. All right. Let’s look at Exhibit 16.

The first page is a document that appears to be

an electronically generated pay stub. And it is for

Jerry W. Davis. And it is for the pay period beginning

9-30-2002 and ending 10-13-2002.

Do you see that at the top of the first page?

A. Yes, sir.

Q. And then you see that the pay rate is 3,269 and

23 cents biweekly?

A. Pay rate?

127a

Q. In the same -- in the same -- it is directly below

the box with the dates.

A. Yeah. Where it says “hours” and “earnings.”

Is that where you are?

Q. I’m actually a little above that. Employee I.D.,

department, location?

A. Yes. I’m sorry. I got it. ’m sorry.

Q. Okay. It says pay rate is 3,269 and 23 cents

biweekly?

A. Correct.

Q. Okay. And if I do the math, that’s 85,000 dollars

year.

Does that sound right to you?

A. I trust you.

Q. Okay. The job title is division marketing

specialist three?

A. Okay.

Q. Okay? Do you see that?

A. I do.

128a

Q. And that was your understanding that Wade

Davis up until at least October 13, was still a division

marketing specialist three, correct?

A. That’s correct.

Q. He’s making 85,000 a year?

A. Correct.

Q. So nothing surprising about that one.

Turn to the second page.

Now, you look at that same pay period, the

beginning date is January 6th of 2002. The ending

period is January 19, 2003, correct?

A. Correct.

[p.53]

Q. Okay. And at this tine, Wade has been offered,

accepted and assumed the position of PSE for national

government accounts, correct?

A. That’s correct.

Q. Okay. And if you look at pay rate, it 1s still

3,269 and 23 cents biweekly, correct?

A. That’s correct.

Q. Do you have any explanation for why Mr. Davis

is still being carried by Siemens as a division

marketing specialist three being paid 3,269.23

129a

biweekly after he’s accepted this position as PSE of

national and government accounts?

A. I do not.

Q. Okay. You v ere still national sales director or

manager of the IM division at this time, correct?

A. That’s correct.

Q. Okay. Now, if you'll turn to the third page, and

this has -- this is the next pay period, including,

actually, this has a starting date of January 20, 2003

and a pay ending date of February 2, 2003, correct?

Correct.

Still for Jerry Wade Davis, as was the last one?

> Oo >

That’s correct.

Q. And pay rate is still 3,269 and 23 cents

biweekly, correct?

[p.54]

A. Correct.

Q. All right. But the title has now changed. It says,

product sales executive, USG.

Can you explain to the Jury why Siemens didn’t

recognize Mr. Davis’s product sales executive position

until over two months after he had assumed that

position, after -- at least two months after he had

signed the paperwork on the position? Why is that?

130a

A. I don’t know.

Q. All right. Well, maybe you know this one: Why

is the product sales executive followed by a dash and

then followed by USG?

Do you know that?

A. No, I don’t.

Q. We have established that USG stands for

ultrasound group, correct?

A. I don’t know if we I agree with that.

You don’t know?

I do know that US is ultrasound.

Yes.

> O& Pp &

Not USG.

Q. Didn’t we establish that there was an

ultrasound group?

A. We did.

Q. Okay.

[p.55)

A. Yes, sir.

Q. And it is your testimony that you don’t know if

USG in Siemens refers to ultrasound group?

l3la

A. My answer to your question is, I think the

ultrasound group is referenced to by USD. Ultrasound

division.

Q. Well, I asked you specifically before about

whether it was a group or a division. I asked you about

IM being a division. It was. I asked you about

ultrasound being a group, you said it was.

Now you say ultrasound is a division.

A. Itis a division. Yes, sir. And when you asked me

before, I also -- I think I said, ultrasound is much like

CT, MR, a division within the organization.

Q. You said it was a modality, Mr. Spotts.

But in any case, look at the next document. And

this is Exhibit 16 of the Defendant’s. It is your Exhibit

16. You’re going to like this Mr. Spotts. It’s hard to see,

but this is the only copy that we have from the

defendant.

And I think you testified that IM salespeople

would not receive commissions from the sale of

ultrasound equipment, correct?

A. Yes, I did.

MR. BISHOP: Okay. And do you have a better

copy of this, Dana.

[p.56]

That is a better copy than I have, although it is

still -- it is still poor.

132a

THE COURT: Help the Court out a bit.

MR. BISHOP: It is Defendant’s 16.

THE COURT: Is it in evidence or not in

evidence?

MR. RUST: We have not submitted it yet.

MR. BISHOP: It’s --

THE COURT: Okay. I’ve got it in front of me.

BY MR. BISHOP:

Q. This is an SAP printout showing Sequoia

equipment, correct.

A. Sequoia eq

This text is long and has been trimmed here. Open the source document for the complete record.