Wouldn’t it be great in a products liability case if you could link your defendant to Saddam Hussein, or introduce evidence that the defendant maintains a racially hostile workplace? Not so much, says the Fifth Circuit.
On April 25, 2018, the Fifth Circuit issued its decision in the Depuy Pinnacle Hip case (available here). The Court vacated the judgment and remanded, after concluding that certain evidentiary errors provided independent grounds for a new trial.
The first bellwether trial ended with a defense verdict. The second bellwether trial lasted nine weeks, and ended with a $502 million verdict ($500,000 in economic compensatory damages, $141.5 million in non-economic compensatory damages, and exemplary damages totaling $360 million). The district court, on account of Texas’ statutory exemplary-damages cap, reduced the $360 million to $9.6 million.
Defendants appealed the judgment, arguing that the district court erred in admitting several pieces of inflammatory character evidence against defendants (including claims of race discrimination and bribes to Saddam Hussein’s Iraqi “regime”), after the district court ruled that defendants had “opened the door” to such evidence by repeatedly presenting themselves as “wonderful people doing wonderful things.” Defendants also appealed based on plaintiffs’ counsel’s failure to disclose payments to two purportedly “nonretained” experts. (In preparation for a later bellwether trial, defendants discovered that before the trial at issue, plaintiffs’ counsel had made a $10,000 donation to a charity of one expert’s choosing, and that the other expert had expected to be paid when testifying and that the experts had received post-trial payments totaling $65,000.
The Fifth Circuit reversed the judgment, and ordered a new trial.
The Fifth Circuit held that evidence concerning Defendants’ “bad acts” required reversal. Plaintiffs had introduced evidence of “the bribes paid by non-party J&J subsidiaries to the ‘henchmen’ and ‘regime’ of Saddam Hussein in Iraq,” which plaintiffs’ counsel had mentioned several times, including during closing arguments. Because J&J owns more than 265 companies in 60 countries, the Fifth Circuit found that this evidence could not be introduced even where defendants “had supposedly ‘opened the door’ by eliciting testimony on their corporate culture and marketing practices”:
Even where the evidence serves some conceivable non-character purpose such as impeachment, we still must carefully consider whether the introducing party was actually “attempting to convince the jury that [the defendant] was a bad man” who acted in conformity with his bad character in the case at hand. If yes, the unduly prejudicial effect of such an argument will very likely substantially outweigh its probative value.
The Fifth Circuit found that plaintiffs’ counsel had urged the jury to infer “guilt based on no more than prior bad acts, in direct contravention of Rule 404(b)(1)” which “alone provides ground for a new trial.” Even though the district court had instructed the jury generally not to treat counsel’s statements as evidence, this instruction was not adequate, because plaintiffs’ counsel’s “statement was among the last thing[s] the jury heard before retiring to deliberate, and a colossal verdict followed.” (citations and quotations omitted).
Next, plaintiffs had lodged “hearsay allegations of race discrimination.” Specifically, while questioning DePuy’s president, plaintiffs’ counsel read excerpts from a resignation letter by a former DePuy employee wherein the former employee related that she had been subject to racial discrimination and slurs. Reference to the “filthy . . . racial email” made their way into plaintiffs’ closing argument. Although plaintiffs argued that defendants placed their character in issue by describing DePuy as an employee-friendly workplace, “the letter is valid impeachment only if introduced to prove the matter asserted: that racism infected DePuy’s workplace culture.” But “[t]hat is impermissible hearsay.” The Fifth Circuit found that the admission of this evidence also required a new trial.
A couple of additional rulings of interest:
- Unit-of-Time Arguments Are Impermissible: Plaintiffs’ counsel “told the jury, ‘If you don’t consider the damages by the day, by the hour, by the minute, then you haven’t considered their damages.’ Then, during rebuttal, [plaintiffs’ counsel] elaborated, ‘[P]lease, please, please, if they [the defendants] will pay their experts a thousand dollars an hour to come in here, when you do your math back there don’t tell these plaintiffs that a day in their life is worth less than an hour’s time of this fellow, or people they put on the stand.’” According to the Fifth Circuit, “As a general matter, unit-of-time arguments like this one are impermissible because they can lead the jury to believ[e] that the determination of a proper award for . . . pain and suffering is a matter of precise and accurate determination and not, as it really is, a matter to be left to the jury’s determination, uninfluenced by arguments and charts. [The] reference to expert fees was meant simultaneously to activate the jury’s passions and to anchor their minds to a salient, inflated, and irrelevant dollar figure. The inflammatory benchmark, bearing no rational relation to plaintiffs’ injuries, easily amplified the risk of an excessive verdict. The argument was design[ed] to mislead, and tainted the verdict that followed.”
- Payments To Experts Must Be Disclosed: The Fifth Circuit found that plaintiffs’ concealment of payments to two key expert witnesses required reversal. Planitiffs’ counsel had written a check to a charity of one expert’s choice, and the second expert had “expected compensation from the start” and both experts “received sizeabale sums after the verdict.” Plaintiffs’ counsel had written both experts letters post-verdict, thanking them for their “pro bono” testimony at trial and enclosing $35,000 for the first expert and $30,000 for the second expert. Plaintiffs’ counsel had suggested to the jury that these experts were not paid witnesses, and contrasted these experts with defendants’ experts’ “bought testimony.” The Fifth Circuit found this to be deceptive: “Lawyers cannot engage with a favorable expert, pay him ‘for his time,’ then invite him to testify as a purportedly ‘non-retained’ neutral party. That is deception, plain and simple. And to follow that up with post-trial ‘thank you’ check merely compounds the professional indiscretion.” (emphasis in original). Because the “falsehoods marred plaintiffs’ victory[,]” the “verdict cannot stand.”
- Texas’ Exemplary Damages Cap Is Constitutional: Also of interest is the fact that the Fifth Circuit resolved Plaintiffs’ cross-appeal—which argued that Texas’ exemplary-damages cap violated the Texas and United States Constitutions—in a footnote: “Plaintiffs’ cross-appeal is meritless, and we dispose of it by footnote.”