Erhart v. Bofi Holding Inc., No. 3:2015cv02287 - Document 239 (S.D. Cal. 2022)

Court Description: Order Granting in Part BOFI's Motion in Limine No. 2 to Exclude Inflammatory Evidence that is Untethered to Erhart's Claims (ECF Nos. 215 , 232 ). Signed by Judge Cynthia Bashant on 1/10/22. (jmo)
Download PDF
Erhart v. Bofi Holding Inc. Doc. 239 Case 3:15-cv-02287-BAS-NLS Document 239 Filed 01/10/22 PageID.9807 Page 1 of 6 1 2 3 4 5 6 7 8 9 10 UNITED STATES DISTRICT COURT 11 SOUTHERN DISTRICT OF CALIFORNIA 12 13 CHARLES MATTHEW ERHART, Plaintiff, 14 15 16 Case No. 15-cv-02287-BAS-NLS consolidated with 15-cv-02353-BAS-NLS ORDER GRANTING IN PART BOFI’S MOTION IN LIMINE NO. 2 TO EXCLUDE INFLAMMATORY EVIDENCE THAT IS UNTETHERED TO ERHART’S CLAIMS (ECF Nos. 215, 232) v. BOFI HOLDING, INC., 17 Defendant. 18 19 And Consolidated Case 20 21 Presently before the Court is BofI Holding, Inc.’s Motion in Limine No. 2 to 22 Exclude Inflammatory Evidence that Is Untethered to Erhart’s Claims. (ECF Nos. 23 215, 232.) Erhart opposes. (ECF No. 223.) The Court heard argument on the motion. 24 (ECF No. 230.) For the following reasons, the Court GRANTS IN PART BofI’s 25 Motion in Limine No. 2. 26 27 28 –1– 15cv2287 Case 3:15-cv-02287-BAS-NLS Document 239 Filed 01/10/22 PageID.9808 Page 2 of 6 1 I. BACKGROUND 2 The Court and the parties are familiar with the story behind these consolidated 3 cases awaiting trial. Early on in this case, the Court discussed the scope of Erhart’s 4 federal whistleblower retaliation causes of action, explaining: 5 6 7 8 9 10 11 12 the federal statutes Erhart now seeks to invoke are not general compliance statutes. They do not police all employee grievances and suspicions of wrongdoing. Erhart’s alleged beliefs must be at least tethered to the conduct Sarbanes–Oxley and Dodd–Frank seek to uncover and prevent— fraud against shareholders, wire fraud, bank fraud, and the other violations of law these statutes encompass. He need not prove these laws were being violated, but he must plausibly allege a reasonable belief that they were being violated or that he was providing information relating to a possible securities law violation. (ECF No. 44.) 13 At summary judgment, the Court recognized a few of Erhart’s beliefs may be 14 actionable for his federal claims. (ECF No. 192.) These are: BofI allegedly giving 15 a false or misleading response to an SEC subpoena investigating securities fraud; and 16 BofI allegedly making unauthorized, risky loans to politically exposed persons and 17 criminals, which could impact the Bank’s financial condition. 18 Similarly, at summary judgment, the Court recognized Erhart’s California 19 whistleblower retaliation claim was broader than his federal claims. This claim can 20 encompass retaliation against an employee for reporting any believed violation of 21 law. (ECF No. 192.) The Court reasoned Erhart’s various allegations about BofI 22 hiding information from regulators at the Office of the Comptroller of the Currency 23 (“OCC”) could be actionable because laws require the Bank to comply with any 24 request for information from the agency’s examiners. Erhart’s alleged belief that the 25 Bank was not making timely 401(k) contributions in violation of federal labor 26 regulations and that its CEO was potentially engaging in tax fraud or money 27 laundering could also be actionable under his California retaliation claim. 28 –2– 15cv2287 Case 3:15-cv-02287-BAS-NLS Document 239 Filed 01/10/22 PageID.9809 Page 3 of 6 1 Throughout discovery, Erhart deposed current and former BofI employees 2 about their time at the Bank. Their testimony concerned a range of workplace 3 conduct, including individuals making inappropriate jokes and engaging in crude 4 behavior, BofI having a “fear-based” culture, the Bank being a “boys’ club,” and 5 BofI’s management allegedly lying to a regulator. (ECF Nos. 232-2 to 232-7.) BofI 6 now moves to exclude this evidence. 7 II. LEGAL STANDARD 8 A party may use a motion in limine to exclude inadmissible or prejudicial 9 evidence before it is introduced at trial. Luce v. United States, 469 U.S. 38, 40 n.2 10 (1984). Only relevant evidence is admissible. Fed. R. Evid. 402. Evidence is 11 relevant if it has any tendency to make a fact more or less probable than it would be 12 without the evidence, and the fact is of consequence in determining the action. Id. 13 401(a)–(b). 14 Relevant evidence may be excluded if its probative value is substantially 15 outweighed by, among other things, the danger of unfair prejudice or wasting 16 time. Fed. R. Evid. 403. The Rule 403 balancing inquiry is made on a case-by-case 17 basis, requiring an examination of the surrounding facts, circumstances, and 18 issues. United States v. Lloyd, 807 F.3d 1128, 1152 (9th Cir. 2015). 19 III. ANALYSIS 20 The Bank argues evidence of generalized grievances about BofI’s purported 21 culture, managerial style, and unrelated misconduct should be excluded because the 22 evidence is irrelevant to Erhart’s claims. (ECF No. 215.) BofI further argues that 23 actions and statements of individuals not involved in the Bank’s decision-making 24 process are not probative for Erhart’s employment retaliation claims. (Id.) 25 In addition, the Bank argues that even if evidence about BofI’s purported 26 culture or miscellaneous misconduct is relevant, that evidence should be excluded 27 under Rule 403 as unduly prejudicial, confusing, and a waste of time. Erhart 28 responds that evidence regarding the “hostile work environment and culture present –3– 15cv2287 Case 3:15-cv-02287-BAS-NLS Document 239 Filed 01/10/22 PageID.9810 Page 4 of 6 1 at BofI . . . speaks to the Bank’s purported reason for firing Mr. Erhart—that he was 2 not completing work—and whether it was a pretext for discrimination because of his 3 whistleblowing.” (ECF No. 233.) 4 The Court agrees that most of the evidence submitted with BofI’s motion is 5 irrelevant or should be excluded under Rule 403. The Bank is not on trial for any 6 possible grievance. Whether former employees, many of whom apparently did not 7 work with Erhart, witnessed sexual harassment or made distasteful comments is not 8 relevant to the believed violations of law Erhart has advanced throughout this case. 9 The fact that the Bank was purportedly a “boys’ club” likewise is not relevant to 10 Erhart’s retaliation claims. 11 To that end, Erhart’s argument that any evidence of any type of discrimination 12 supports his retaliation claims is not convincing. The cases he cites are ones where 13 evidence regarding other employees was relevant because they suffered similar 14 discrimination—such as where a court found evidence that other employees were 15 subject to race-based harassment supported the plaintiffs’ racial discrimination 16 claims. See Aman v. Cort Furniture Rental Corp., 85 F.3d 1074, 1082 (3d Cir. 1996). 17 There is not a comparable connection here for much of the evidence BofI seeks to 18 exclude. Therefore, the Court grants BofI’s request to exclude testimony about 19 potential sexual harassment, inappropriate jokes, employees being unhappy, 20 generalized complaints about a “hostile” or “toxic” work environment, and similar 21 matters. (See Ex. 1 – Heather Michaud Dep. Excerpts, ECF No. 232-2; Ex. 2 – 22 Jeffrey Smith Dep. Excerpts, ECF No. 232-3; Ex. 3 – Jacob Gantos Dep. Excerpts 23 (ECF No. 232-4); Ex. 6 – Daniel Crescitelli Dep. Excerpts (ECF No. 232-7).) 24 The Court declines, however, to exclude any evidence that BofI had a “fear- 25 based culture,” discouraged the reporting of wrongdoing, or reprimanded employees 26 for raising concerns. (See Ex. 4 – Michael Sisk. Dep. Excerpts 55–56 (ECF No. 232- 27 5) (testifying that employees were “suppressed,” and he was told he “wasn’t 28 supposed to talk to the SEC”). This evidence may be relevant to Erhart’s retaliation –4– 15cv2287 Case 3:15-cv-02287-BAS-NLS Document 239 Filed 01/10/22 PageID.9811 Page 5 of 6 1 claims. (See ECF No. 192 (setting forth the elements of Erhart’s claims).) Cf. 2 Lawson v. FMR LLC, 571 U.S. 429, 435 (2014) (explaining that in passing Sarbanes– 3 Oxley, Congress was particularly concerned about a “corporate code of silence,” 4 which discouraged employees from reporting fraudulent behavior not only to the 5 proper authorities, but also even internally). Specifically, BofI’s purported practices 6 go to whether BofI allegedly retaliated against Erhart for reporting believed 7 wrongdoing to his supervisor and regulators. See Fed. R. Evid. 404(b)(2) (providing 8 character evidence may be admissible to prove motive or intent); cf. Houserman v. 9 Comtech Telecommunications Corp., 519 F. Supp. 3d 863, 871–72 (W.D. Wash. 10 2021) (reasoning evidence of non-parties’ comparable complaints could be 11 admissible to prove intent of the employer to discriminate under Rule 404(b), but the 12 evidence can be excluded under Rule 403 as prejudicial under a fact-based inquiry). 13 In addition, the Court finds this evidence is relevant to BofI’s broad-sweeping 14 countersuit claims and Erhart’s defenses to those claims. 15 (discussing Erhart’s statements that he was “fearful that the Bank would delete or 16 alter material information” and that he took steps “in case something happened to 17 [him])”.) (See ECF No. 85 18 The Court turns to the testimony of Cynthia Brickey, which the parties 19 discussed at oral argument. Brickey, who left the Bank in 2013, testified that she 20 believed BofI covered up items from OCC regulators and bank management lied to 21 regulators. Erhart’s allegations regarding the OCC occurred in 2015. 22 Brickey’s testimony about specific prior acts is not admissible to establish BofI 23 engaged in the same conduct while Erhart was an employee. See Fed. R. Evid. 24 404(b)(1). If Erhart had knowledge of these events when he encountered comparable 25 conduct in 2015, this evidence could go to whether he reasonably believed BofI was 26 violating the law. (See ECF No. 192 (analyzing reasonable belief standard on 27 summary judgment).) But in opposing the Bank’s motion, Erhart failed to establish 28 he was aware of these allegations or interacted with Brickey. (See ECF No. 233.) –5– 15cv2287 Case 3:15-cv-02287-BAS-NLS Document 239 Filed 01/10/22 PageID.9812 Page 6 of 6 1 Hence, without a showing from Erhart, the Court grants the Bank’s request to exclude 2 Brickey’s testimony concerning prior specific acts where the Bank allegedly lied or 3 hid information from OCC regulators. See United States v. Bensimon, 172 F.3d 1121, 4 1127 (9th Cir. 1999) (noting testimony at trial “may bring facts to the district court’s 5 attention that it did not anticipate at the time of its initial [motion in limine] ruling”). 6 That said, like above, the Court will permit Brickey to testify that BofI discouraged 7 the reporting of wrongdoing or reprimanded employees for raising concerns. (See 8 Ex. 5 – Cynthia Brickey Dep. Excerpts 23:22–24 (ECF No. 232-6).) 9 IV. CONCLUSION 10 For the foregoing reasons, the Court GRANTS IN PART BofI’s Motion in 11 Limine No. 2 to Exclude Inflammatory Evidence that Is Untethered to Erhart’s 12 Claims. (ECF Nos. 215, 232.) The Court grants BofI’s request to exclude testimony 13 about potential sexual harassment, inappropriate jokes, employees being unhappy, 14 and generalized complaints about a hostile or “toxic” work environment. The Court 15 also grants in part the request to exclude Brickey’s testimony. The Court declines, 16 however, to exclude any evidence that BofI had a “fear-based culture,” discouraged 17 the reporting of wrongdoing, or reprimanded employees for raising concerns. 18 IT IS SO ORDERED. 19 20 DATED: January 10, 2022 21 22 23 24 25 26 27 28 –6– 15cv2287