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UNITED STATES DISTRICT COURT DISTRICT OF MAINE JOHN E. SPENLINHAUER,
ET AL.,

PLAINTIFFS v. R.R. DONNELLEY & SONS COMPANY, ET AL., DEFENDANTS

) ) ) ) ) ) ) ) ) )

CIVIL NO. 08-13-P-H

DECISION AND ORDER ON DEFENDANT R.R. DONNELLY & SONS COMPANY'S MOTION FOR SUMMARY JUDGMENT AND PLAINTIFFS' CROSS-MOTION FOR SUMMARY JUDGMENT This dispute involves interpretation of a corporate stock purchase agreement. Primarily, the parties disagree over which provision of the

agreement governs a settlement between OSHA and the sellers that occurred without the buyers' consent after the agreement was signed but before the transaction closed. I conclude that the contract provision dealing specifically with settlements governs. I GRANT
IN PART

the Plaintiffs' Motion for summary

judgment and DENY the defendants' motion for summary judgment. I. FACTS AND PROCEDURAL HISTORY The following facts are undisputed. On October 5, 2005, R.R. Donnelley & Sons Company and R.R. Donnelley Maine, Inc. (collectively "buyers") agreed to pay about $60,000,000 to purchase Spencer Press of Maine, Inc. ("SPI") from John E. Spenlinhauer, Stephen P. Spenlinhauer, JRS Realty Trust, and J & S

Trust of Maine (collectively "sellers").

They did so by executing a stock

purchase agreement ("SPA" or "Agreement"). SPA, Ex. A to Decl. of Audra D. Cohen ("Cohen Decl.") (Docket No. 30-4). The Agreement included several SPA Schedules

disclosure schedules, including one entitled "Litigation."

3.17(a), Ex. B to Cohen Decl. (Docket No. 30-12). On the Litigation Schedule, the sellers disclosed an active workers' compensation claim for employee James Moulton resulting from a chest contusion; they listed the insurance reserve amount as $350. Id. In addition, the sellers disclosed the existence of an

Occupational Safety and Health Administration ("OSHA") proceeding arising out of Moulton's injury:
OSHA issued a Notice of Alleged Safety or Health Hazards on August 15, 2005. The notice was issued after an anonymous complaint was filed relating to an injury received by James Moulton when his shirt became entangled with an unguarded printing press. The employee was able to continue working the day of the incident. A guard was fabricated and installed by SPI shortly after the incident. Based on the nature of the injury, SPI believes that a fine imposed by OSHA would be nominal.

SPA Schedules at 31. The Agreement provided that the sellers were to continue to operate the business in the ordinary course until the closing. On October 13, 2005, OSHA issued a "Citation and Notification of Penalty" to SPI, charging that the Moulton accident resulted from a "willful" violation of OSHA regulations and assessed a penalty of $63,000.00. OSHA Citation and Notification of Penalty, Ex. A to Decl. of Martin B. Jackson at 2 ("Jackson Decl.") (Docket No. 31-2). The sellers received the OSHA citation on October 17, 2005. R.R. Donnelley's Environmental, Health and Safety
2

Assessment Team Summary Report, Ex. A to Decl. of U. Charles Remmel ("Remmel Decl.") (Docket No. 37). The OSHA citation also notified SPI that an informal conference would be held on October 24, 2005. OSHA Citation and Notification of Penalty at 3. The buyers became aware of the OSHA Citation upon receiving an Environmental, Health, Safety ("EHS") Assessment dated October 20, 2005. It summarized "Open EHS Issues" as:
OSHA Citation Issued for Machine Guarding on October 13. Received Oct. 17. Willful Violation for $63,000. Guarding installed at time of inspection (8-18-05). Spencer plans to attend an informal conference on October 24. No further abatement required. No financial cost to correct expected. Payment will likely occur after 11-1-05.

R.R.

Donnelley's

Environmental,

Health

and

Safety

Assessment

Team

Summary Report. On October 24, 2005, the sellers agreed to an Informal Settlement Agreement ("Settlement Agreement") with OSHA. OSHA Informal Settlement

Agreement, Ex. B to Jackson Decl. (Docket No. 31-3). They did not seek the buyers' consent to the Settlement Agreement. The OSHA Settlement

Agreement required that SPI (i) pay a thirty-five thousand dollar ($35,000.00) penalty, (ii) "appoint and train an asst. safety director within [the] next 30 days," (iii) perform "an annual safety audit to be conducted by corporate and forwarded to the OSHA office for the next 3 years" and (iv) waive SPI's "rights to contest the [OSHA] citation(s) and penalties." Id. at 1-4. On November 2, 2005, the sellers provided the buyers a draft updated "Schedule 3.17(b)-Orders, Judgments, Etc." Supplemental Decl. of Audra D. Cohen (Docket No. 47)

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