Tellez v. OTG Interactive, LLC

Background

Omar Tellez brought claims against OTG Interactive, LLC, now identified in the opinion as Flo Solutions, LLC, OTG Management, Inc., and OTG Management, LLC, concerning the termination of his employment as President of OTG Interactive. He ultimately tried one claim: that OTG Interactive breached his employment agreement. The jury returned a verdict for Tellez on November 15, 2019. The opinion also states that claims against Rick Blatstein, identified as Chief Executive Officer of OTG Interactive, had been dismissed before trial.

The defendants moved for post-trial relief under Rules 50 and 59 of the Federal Rules of Civil Procedure. A Rule 50 motion asks the court to enter judgment because a reasonable jury lacked a legally sufficient evidentiary basis for its verdict. A Rule 59 motion asks for a new trial when the verdict was seriously erroneous or resulted in a miscarriage of justice.

Judgment as a Matter of Law

The court held that Tellez’s breach-of-contract claim required him to prove that OTG Interactive did not terminate his employment because he had engaged in conduct that could reasonably be expected to materially and adversely damage the company’s business or reputation. The court found sufficient evidence in the trial record to support the jury’s verdict and overruled the defendants’ renewed motion for judgment as a matter of law.

New Trial

The defendants argued that a new trial was warranted because the court allowed Tellez to testify about Blatstein’s alleged fraud conviction in personal bankruptcy proceedings, refused to allow certain rebuttal witnesses, and gave the jury an early version of an instruction commonly used when jurors are unable to agree.

The court addressed only the testimony issue. Before trial, the court had considered evidence about Blatstein’s personal bankruptcy proceedings in the context of questioning Blatstein about his character for truthfulness. During cross-examination of Tellez, however, Tellez testified that he had learned Blatstein had been convicted of fraudulent transfers, had issues with the Internal Revenue Service, and had defrauded partners. The court determined that this testimony went beyond the permitted scope, was not directly responsive to the questioning, and falsely told the jury that Blatstein had been criminally convicted of fraud.

The court further ruled that the testimony’s prejudicial effect substantially outweighed its usefulness. Defendants were not allowed to present supporting evidence about the alleged fraud, and Tellez’s counsel later argued that the lack of such evidence showed the allegations were true. Although Tellez stipulated that Blatstein had not been prosecuted or convicted of any crime and the court included that stipulation in the jury instructions, the court concluded that this corrective measure was insufficient. Because the testimony became a focus of the trial and likely influenced the verdict, the court sustained the defendants’ motion for a new trial.

Disposition

The court ordered that the defendants’ post-trial motion was sustained in part. It overruled the motion for judgment as a matter of law but sustained the motion for a new trial. The court also set a new trial for March 16, 2020, at 9:30 a.m.