Mewawalla v. Middleman

Background

The court largely accepted the parties’ stipulated jury instructions. After the pretrial conference, it ordered the parties to meet and confer about an updated instruction on the defense of unclean hands and revised breach-of-contract Instructions Nos. 33 and 34, including a citation to the Employment Agreement’s definition of “Cause.” The parties submitted a joint filing at Docket No. 266. The court also attached its overall proposed jury instructions and stated that it could make further modifications.

The order addressed Disputed Instructions Nos. 28, 35, 38, 39, 40, and 41. The underlying case includes claims involving fraud, breach of contract, and breach of the implied covenant of good faith and fair dealing. The opinion refers to Freedom and Xpanse, but it does not provide their full names.

Rulings on Disputed Instructions

Instruction No. 28: Reasonable Reliance

The parties proposed different instructions on whether Rahul Mewawalla reasonably relied on alleged false promises or concealed information. The defendants’ proposal would have told the jury to consider Mewawalla’s representation by counsel and the Employment Agreement’s integration clause, which stated that the written agreement superseded prior written or oral agreements and understandings. The plaintiff’s proposal would have directed the jury to consider the written contract’s terms.

The court adopted the plaintiff’s proposal with an addition. It ruled that whether particular provisions fell within the integration clause was for the defendants to prove and should not be included in the jury instructions. The court’s instruction retained the points that reliance on a preposterous promise or concealment, or on something obviously false based on facts within the person’s observation, is unreasonable.

Instruction No. 35: Definition of “Cause”

The court ordered the parties to revise their breach-of-contract instructions to cite the portion of the Employment Agreement defining “Cause.” It stated that no separate Instruction No. 35 would be given and accepted the parties’ revised stipulated Instructions Nos. 33 and 34.

Instruction No. 38: Fraud as an Affirmative Defense

An affirmative defense is a defense that can defeat a claim even if the claim’s basic allegations are otherwise established. The defendants’ proposal would have told the jury that Mewawalla could not recover on his contract and implied-covenant claims if he obtained the defendants’ consent to the Employment Agreement through fraud. The plaintiff’s proposal instead stated that, if the defendants proved the required elements, no contract was created.

The court adopted the plaintiff’s proposal because it was closer to the model instruction and did not include attorney argument.

Instruction No. 39: Unclean Hands

The defendants proposed an instruction asserting that Mewawalla could not recover on his contract and implied-covenant claims if he acted in bad faith or unconscionably while seeking employment by misrepresenting facts about his prior employment. Mewawalla contended that no instruction should be given.

The court accepted the parties’ stipulated instruction at Docket No. 266. The court had directed the parties to create one instruction clearly explaining that this defense applied to both the fraud and contract claims.

Instruction No. 40: After-Acquired Evidence

The defendants sought an instruction on the after-acquired-evidence defense. That defense concerns an employer’s discovery after termination of misconduct that would have justified termination independently. The proposed instruction would have required the employer to show that the misconduct was severe enough that established company policy would have required termination.

The court ruled that the defense was available for Mewawalla’s breach-of-contract claim. It found no persuasive reason to allow the defense for statutory discrimination or retaliation claims but not for a straightforward breach-of-contract claim. However, the defendants had not identified the specific after-acquired evidence that would need to be included in the instruction. The court therefore ordered the parties to meet and confer and file a stipulated instruction by January 23, 2025.

Instruction No. 41: Contract Damages

The parties disagreed about whether the damages instruction should list unpaid moving expenses among Mewawalla’s claimed contract damages. The court adopted the defendants’ proposal, which listed unpaid severance, unpaid benefits, and unpaid paid time off, but not moving expenses.

The court explained that it had previously found that Mewawalla chose to move and had dismissed his claim that he was fraudulently induced to change his residence from California to Washington. Because the moving expenses were not proximately caused by a contract breach, the court stated that Mewawalla could not argue that they were breach-of-contract damages.

Disposition and Next Steps

The order resolved the disputed jury-instruction proposals as described above. It did not enter judgment on the claims or announce a verdict. The parties were ordered to submit any remaining issues or objections to the proposed instructions, and a stipulated instruction on after-acquired evidence, by Thursday, January 23, 2025. Judge Edward Chen signed the order on January 21, 2025.