Opinion
Case No: 2:18-cv-423
03-11-2020
Magistrate Judge Deavers
Opinion and Order
This matter is before the Court on defendants' post-trial motion which seeks, among other things, a new trial on damages. For the reasons stated below, defendants' request for a new trial on damages is granted.
I.
Plaintiff Wallake Power System, LLC (d/b/a Graham Ford) brought this action for defamation per se, tortious interference with a business relationship and a violation of the Ohio Deceptive Trade Practices Act (ODTPA). Plaintiff alleged that defendants Engine Distributors, Inc. and Jerry Kosner made false statements to third-party engine supplier Ford Component Sales (FCS) about plaintiff's failure to comply with Environmental Protection Agency regulations.
A jury trial was conducted from December 9 to 16, 2019. The trial consisted of three stages: liability, compensatory damages and punitive damages. In the liability stage of the trial, the jury returned a verdict in favor of plaintiff on all three of its claims. The jury found that defendants had made defamatory statements about plaintiff to FCS and that the statements caused FCS to terminate its engine supply contract, known as the Powertrain Sales Agreement, with plaintiff.
Following the close of evidence at the compensatory damages stage, the Court granted in part and denied in part defendants' motion for judgment as a matter of law under Rule 50 of the Federal Rules of Civil Procedure. The motion was granted on the tortious interference and ODTPA claims. Briefly stated, the Court held that those two claims failed as a matter of law because plaintiff had not produced any evidence of actual damages resulting from defendants' conduct. See Dec. 16, 2019 Trial Transcript at 866-78.
The Court denied the Rule 50 motion with respect to the defamation claim. It did so on the grounds that Ohio law presumes harm to reputation in cases of defamation per se and that no evidence of actual harm is required in order for the jury to award damages for reputational harm. See id. at 878, 888.
The defamation claim then went to the jury for a determination of damages relating to reputational injury. The jury returned a compensatory damages verdict for plaintiff in the amount of $150,000. In the final stage of the trial, the jury returned a punitive damages verdict for plaintiff in the amount of $1 million and found that plaintiff is entitled to its attorney's fees.
II.
This matter is now before the Court on defendants' post-trial motion, which has numerous facets. Defendants renew their motion under Rule 50 for judgment as a matter of law with respect to the defamation claim. Defendants further move to set aside the compensatory and punitive damages verdicts on various grounds, including that the verdicts are not supported by sufficient evidence, are excessive and are the product of passion and prejudice. Defendants request a new trial on the damages issues, or, in the alternative, remittitur of the compensatory and punitive damages awards.
The Court will confine its resolution of defendants' post trial motion to two issues: (1) the renewed Rule 50, which the Court denies, and (2) the motion for a new trial on damages, which the Court grants on the grounds that plaintiff's counsel made prejudicial statements to the jury during closing argument at the compensatory damages stage.
III.
A.
Under Rule 50(a), a court may enter judgment as a matter of law upon a finding that "a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue." A Rule 50 motion that was denied before a verdict was rendered may be renewed following the trial and within 28 days after the jury was discharged. Fed. R. Civ. P. 60(b). Here, defendants filed their motion on January 8, 2020, well within 28 days after the jury was discharged on December 16, 2019.
"In this Circuit, a federal court sitting in diversity must apply the standard for judgments as a matter of law of the state whose substantive law governs." DXS, Inc. v. Siemens Med. Sys., Inc., 100 F.3d 462, 468 (6th Cir. 1996); accord Lindenberg v. Jackson Nat'l Life Ins. Co., 912 F.3d 348, 360 (6th Cir. 2018). Under Ohio law, a court evaluating a Rule 50 motion must construe the evidence "most strongly in favor of the party against whom the motion is made, and, where there is substantial evidence to support his side of the case, upon which reasonable minds may reach different conclusions, the motion must be denied." Cunningham v. Hildebrand, 142 Ohio App. 3d 218, 224, 755 N.E.2d 384, 388 (Ohio Ct. App. 2001). When a Rule 50 motion is made, "what is being tested is a question of law; that is, the legal sufficiency of the evidence to take the case to the jury. This does not involve weighing the evidence or trying the credibility of witnesses." Wagner v. Roche Labs., 77 Ohio St. 3d 116, 119, 671 N.E.2d 252, 255 (Ohio 1996).
B.
Defendants argue, as they did in their pre-verdict Rule 50(a) motion, that the defamation claim fails as a matter of law because even presumed damages must be proved. Defendants contend that plaintiff failed to offer evidence at trial of actual loss to its reputation resulting from FCS's termination of the Powertrain Sales Agreement. This failure of proof, defendants argue, rebutted the presumption and means that plaintiff should recover only nominal damages.
In denying the original Rule 50 motion, the Court relied on well-established case law providing that "damages were to be presumed as a matter of law" in cases of defamation per se. Gosden v. Louis, 116 Ohio App. 3d 195, 217, 687 N.E.2d 481, 495 (Ohio Ct. App. 1996). In Gosden, the Ohio Court of Appeals found that the trial court "erred in directing a verdict against Paul Gosden based upon the absence of proof that he suffered damages." Id. In a defamation per se case, the jury should be instructed that, if plaintiff has proved the other elements of defamation (falsity, publication, negligence), then "it should presume that plaintiffs suffered damages caused by the [defamatory statement]." Id., 116 Ohio App. 3d at 209, 687 N.E.2d at 490. "Proof of the defamation itself established the existence of some damages." Id., 116 Ohio App. 3d at 208, 687 N.E.2d at 489 (citing Gertz v. Welch, 418 U.S. 323, 349 (1974); Prosser, Law of Torts § 112 at 754 (4th ed. 1971)). See also Askew v. Collins, 283 Va. 482, 486, 722 S.E.2d 249, 251 (Va. 2012) ("[T]he jury needed no proof of damages suffered by Collins on which to predicate its compensatory award based upon the per se defamation . . . .").
Decisions by the United States Supreme Court and the Sixth Circuit confirm this understanding of the common law. In Gertz v. Welch, the Supreme Court observed:
The common law of defamation is an oddity of tort law, for it allows recovery of purportedly compensatory damages without evidence of actual loss. Under the traditional rules pertaining to actions for libel, the existence of injury is presumed from the fact of publication. Juries may award substantial sums as compensation for supposed damage to reputation without any proof that such harm actually occurred.418 U.S. at 349 (emphasis added). And the Sixth Circuit, applying Michigan common law in conformity with the Restatement of Torts, held that it was plain error for a trial court to "to tie the jury's finding" of defamation to a need to prove actual damages. See Chonich v. Wayne Cty. Cmty. Coll., 973 F.2d 1271, 1276-77 (6th Cir. 1992) (citing Wilkerson v. Carlo, 101 Mich.App. 629, 300 N.W.2d 658, 659 (Mich. Ct. App. 1980) ("Unlike an action for tortious interference with economic relations, a defamation claim will lie even where there is no proof of any damage to the individual's business relationships or expectancies.")).
C.
Defendants cite two unpublished Ohio cases, a New Jersey Supreme Court case and the Restatement of Torts in support of their renewed Rule 50 motion. See Sayavich v. Creatore, No. 07-MA 217, 2009 WL 3165555 (Ohio Ct. App. Sept. 29, 2009); Wilson v. Wilson, No. 21443, 2007 WL 127657 (Ohio Ct. App. Jan. 19, 2007); W.J.A. v. D.A., 210 N.J. 229, 249, 43 A.3d 1148, 1159 (N.J. 2012) (per curiam); Restatement (2d) of Torts § 620. The Court finds that these authorities do not warrant granting judgment as a matter of law.
The Court starts with the Restatement. Defendants cite a comment to the Restatement provision on nominal damages in defamation actions. The main text of the provision states, "One who is liable for a slander actionable per se or for a libel is liable for at least nominal damages." Restatement (2d) of Torts § 620. The comment cited by defendants provides,
Nominal damages are awarded when the insignificant character of the defamatory matter, or the plaintiff's bad character, leads the jury to believe that no substantial harm has been done to his reputation, and there is no proof that serious harm has resulted from the defendant's attack upon the plaintiff's character and reputation.Id., Cmt. a (emphasis added).
From this comment defendants craft an argument that plaintiff should be awarded nominal damages when it cannot prove actual damages. But more importantly for the present motion, the comment supports the Court's conclusion that a jury - and not a court on a Rule 50 motion - should be the one deciding whether any harm to reputation resulted. The jury may award damages for reputational injury even if plaintiff puts forth no proof of such damages: "At common law general damages have traditionally been awarded not only for harm to reputation that is proved to have occurred, but also, in the absence of this proof, for harm to reputation that would normally be assumed to flow from a defamatory publication of the nature involved." Restatement (2d) of Torts § 621, Cmt. a. If the jury determines that the presumed harm to reputation has no compensable value, then nominal damages are awarded. Id. at § 620.
Turning to the Ohio cases cited by defendants, the Court finds that the first, Sayavich v. Creatore, in fact supports denying the Rule 50 motion. It is true, as defendants point out, that the court in Sayavich stated that "the presumption of damages in a defamation per se claim is rebuttable." 2009 WL 3165555 at *9. But defendants again miss that it was the jury who was responsible for determining whether the presumption had been rebutted.
The trial court in Sayavich directed a verdict on a breach of contract claim because there was no evidence of actual damages, but it sent a defamation per se claim to the jury, which returned a verdict of $25,000 for the plaintiff. See id. at *2. The court instructed the jury as follows: "If you have found that the defendant's conduct constituted defamation per se, it is presumed that the plaintiff suffered monetary damage. State the amount of money that will fairly compensate the plaintiff for the injury incurred." Id. at *11 (DeGenaro, J., concurring in part). The court of appeals upheld the trial court's instruction. Id. at *10. Even with the trial court having found no evidence of actual damages, it was within the jury's province to decide what amount, with nominal damages being the floor, to award plaintiff.
Defendants also cite Wilson v. Wilson, where the appellate court affirmed a trial court's grant of summary judgment to defendant on a defamation per se claim. The trial court found that there was no evidence of reputational harm because the people who heard the defamatory statements "did not believe" them. 2007 WL 127657 at *2. Though conceding that "[d]amages should have been presumed," the appellate court stated without further legal analysis, "Legal presumptions are rebuttable, however." Id. at *3 (citing in a footnote to non-defamation decisions where presumptions regarding awards of attorney's fees and regarding agency law could be rebutted).
The Court finds that the decision in Wilson, unpublished and involving a pro se plaintiff, provides insufficient support for plaintiff. It is outweighed by the significant legal authority cited above establishing that damages are presumed for private-matter defamation per se claims and that proof of actual damages is not required for a jury to award damages for reputational harm. See also Gilson v. Am. Inst. of Alternative Med., 2016-Ohio-1324, ¶ 39, 62 N.E.3d 754, 770 (Ohio Ct. App. 2016) ("When defamation is per se, '[p]roof of the defamation itself establishe[s] the existence of some damages.'") (quoting Gosden, 116 Ohio App. 3d at 208, 217, 687 N.E.2d at 489); Ohio Jury Instr. Civil 431.07, Cmt. (in defamation per se cases, "[w]hile no proof is necessary, the plaintiff may offer evidence about the amount of damages"); Michael K. Steenson, Presumed Damages in Defamation Law, 40 Wm. Mitchell L. Rev. 1492 (2014). If there is to be a rebuttal of the presumption, it should be the jury who decides it is satisfied that no reputational harm resulted from the defamatory statement.
Finally, defendants cite W.J.A. v. D.A., a New Jersey Supreme Court decision that would fully support defendants' position if this Court were applying New Jersey law. That case examined the "continued vitality of the doctrine of presumed damages in a private citizen/private concern case." 210 N.J. 229, 246, 43 A.3d 1148, 1158. The court noted "some scholarly criticism" of the doctrine and that a handful of jurisdictions had abandoned the doctrine "in favor of proof of actual injury to reputation in all cases." Id. (citing David A. Anderson, Reputation, Compensation, and Proof, 25 Wm. & Mary L. Rev. 747 (1983-84), and citing Arkansas, Kansas, Missouri and New Mexico case law). The court observed, however, that "the majority of our sister states have retained the doctrine." Id. (citing cases). Its vitality can be accredited to the deep-rooted "belief that damage to reputation logically flows from defamation, even if difficult to prove." Id., 210 N.J. at 247, 43 A.3d at 1158.
The court elected to retain the doctrine in New Jersey, but with a twist. The court found the presumption plays a critical role in vindicating the "dignitary and peace-of-mind" interests which a private citizen has in one's reputation. Id., 210 N.J. at 249, 43 A.3d at 1160. Thus, the presumption enables a plaintiff to "survive summary judgment" on the damages issue. Id. The court nonetheless expressed concern over "unguided jury evaluation of presumed damages" and there being "no uniform way for a jury to value presumed damages." Id., 210 N.J. at 247, 249, 43 A.3d at 1159-60. This concern led the court to hold that plaintiff at trial "will be required to prove actual harm, pecuniary or otherwise, to his reputation through the production of evidence." Id., 210 N.J. at 249, 43 A.3d at 1160. Failure to do so results in a nominal damages award. Id.
This Court must express its agreement with the New Jersey Supreme Court's concern over "unguided jury evaluation of presumed damages" - an issue that will be addressed below with respect to defendants' well-taken argument that the remarks of plaintiff's counsel likely prejudiced the jury. Even so, the Court is bound to follow Ohio law, and defendants have not cited, nor has the Court found, an Ohio case adopting the position taken by the New Jersey Supreme Court in W.J.A. v. D.A.
Accordingly, the Court adheres to its earlier conclusion that it is for the jury to determine the amount of presumed damages for reputational injury. See Ohio Jury Instr. Civil 431.07 § 3(A) (providing that in a private-matter defamation per se case, the jury should be instructed on damages as follows: "If you find that the plaintiff proved by clear and convincing evidence that the defendant acted with negligence, it is assumed that plaintiff's reputation was injured and you may award the plaintiff an amount of money that you decide is reasonable and fair for the plaintiff's injury directly caused by [the defamatory statement]"). Thus, defendants' renewed motion under Rule 50 is denied.
IV.
Defendants move in the alternative for a new trial under Rule 59. Unlike with Rule 50, a federal court sitting in diversity applies the federal standard in deciding under Rule 59 to grant a new trial. See Conte v. Gen. Housewares Corp., 215 F.3d 628, 637 (6th Cir. 2000).
A.
A new trial may be granted "for any reason for which a new trial has heretofore been granted in an action at law in federal court." Fed. R. Civ. P. 59(a)(1)(A). This standard is met "when a jury has reached a seriously erroneous result as evidenced by: (1) the verdict being against the weight of the evidence; (2) the damages being excessive; or (3) the trial being unfair to the moving party in some fashion, i.e., the proceedings being influenced by prejudice or bias." Mosby-Meachem v. Memphis Light, Gas & Water Div., 883 F.3d 595, 606 (6th Cir. 2018) (internal quotation marks omitted).
Defendants contend that during closing argument of the compensatory damages stage, plaintiff's counsel improperly referenced 8,000 customers of Graham Ford as having been lost due to defendants' conduct. Defendants argue that this number was not supported by the evidence and almost certainly influenced the jury as they determined an amount of reputational damages.
If legal counsel makes an improper statement during closing argument and "there is a reasonable probability that the verdict of the jury has been influenced" by the statement, then the verdict "should be set aside." Strickland v. Owens Corning, 142 F.3d 353, 358 (6th Cir. 1998) (internal quotation marks omitted); accord CFE Racing Prod., Inc. v. BMF Wheels, Inc., 793 F.3d 571, 590 (6th Cir. 2015); City of Cleveland v. Peter Kiewit Sons' Co., 624 F.2d 749, 756 (6th Cir. 1980).
In evaluating whether "'there is a reasonable probability that the verdict of a jury has been influenced' by improper conduct, warranting that the verdict be set aside, a court must examine, on a case-by-case basis, the totality of the circumstances, including the nature of the comments, their frequency, their possible relevancy to the real issues before the jury, the manner in which the parties and the court treated the comments, the strength of the case (e. g. whether it is a close case), and the verdict itself." City of Cleveland, 624 F.2d at 756; accord CFE Racing, 793 F.3d at 590.
B.
Prior to closing arguments at the compensatory damages stage, the Court explained to the jury that the Court had made certain legal rulings, which resulted in the defamation claim being the sole claim remaining before the jury. See Dec. 16, 2019 Tr. at 901. The Court then explained, "Based on your verdict on the defamation claim, the plaintiff is entitled to recover damages for loss of reputation. You may award the plaintiff an amount of money that you decide is reasonable and fair for the plaintiff's loss of reputation which was directly caused by the defendants' defamatory statements." Id. at 901-02. The Court also instructed the jury that they could choose to award nominal damages. Id. at 902.
Counsel then presented closing argument. Plaintiff's counsel stated in relevant part:
At the time of termination [of the Powertrain Sales Agreement], you heard Mr. Wallake [owner of Graham Ford] testify to you the other day Graham Ford had approximately 8,000 customers across the entire world, 8,000 customers and decades of experience, presence in the marketplace, and reputation.Id. at 902-03.
All of that was destroyed when the defendants not once, not twice, but three times went to FCS and accused Graham Ford of repeatedly engaging in illegal conduct in violation of EPA regulations, resulting in FCS's decision to terminate Graham Ford.
This has removed Graham Ford's presence from the marketplace. They can no longer purchase engines or any of the other components - let me rephrase. They can no longer purchase engines from FCS, Ford Component Sales, anymore.
8,000 customers. And now you have to decide the sole issue of reputational loss.
In a sidebar conference, defendants' counsel objected "to counsel's statement that 8,000 customers were lost" because "[t]here is absolutely no evidence at all in this case that 8,000 customers were lost." Id. at 904. The Court invited defendants' counsel to "get up and tell [the jury] that." Id. And in closing argument, defendants' counsel stated, "There is categorically zero evidence in this case that any customers were lost by the defendants' defamatory act, let alone 8,000 customers. There is just no support at all. There is just no evidence." Id. at 904-05.
In his rebuttal closing argument, plaintiff's counsel stated, "[Defendants' counsel] is partially correct. I did misspeak earlier in my opening statement. Mr. Wallake testified that he had 6,000 customers. Not 8,000." Id. at 909. Plaintiff's counsel requested that the jury return a verdict of $100,000.
The Court then repeated its instruction on damages:
You may award the plaintiff an amount of money that you decide is reasonable and fair for the plaintiff's loss of reputation caused by defendants' defamatory statements. Your consideration of damages must be limited to only reputational injury or harm.
You may not consider any claims of lost profits, lost income, or lost business opportunities.Id. at 909-10.
If you find that the loss of reputation does not have a monetary value, then you may award nominal damages to the plaintiff, and that means in a small amount, generally of like $10 or less.
The jury returned a verdict of $150,00 in compensatory damages.
C.
As an initial matter, the Court finds that statements of plaintiff's counsel regarding the number of customers lost - be it 8,000 or 6,000 - were improper. As will be explained below, these statements were irrelevant because the 8,000-customer figure represented Graham Ford's automotive parts customers, a separate side of Graham's business that was not affected by defendants' defamatory statements and FCS's decision to terminate the Powertrain Sales Agreement.
Graham Ford was a large Ford dealer in Columbus, Ohio, selling new and used Ford cars, trucks and parts. The company had been in existence for many years and sold thousands of Ford cars and trucks to the citizens of central Ohio. It had an excellent reputation in the community. A small part of the business involved a completely different market: the sale of Ford industrial engines. The company's car and truck business collapsed in the economic downturn of 2008. The plaintiff here purchased what was left: the auto parts business and the industrial engine business.
Chris Wallake, president and owner of plaintiff, testified that he continued the auto parts business, using the Graham Ford name and selling Ford parts to "customers all over the country [and] 140 countries" over the world. Dec. 9, 2019 Tr. at 53-54. Wallake testified that Graham Ford had "6,000 customers on our list that bought those parts, not just in Columbus . . . . We shipped to . . . 120 countries because they ship Ford product overseas, and they buy the parts online like Amazon." Dec. 12, 2019 Tr. at 688-89. He later testified that after he took over Graham Ford, he continued dealing with "8,000 customers they had across the City of Columbus and the rest of the United States." Id. at 697.
Unlike the parts business, Graham Ford served only a few customers in its industrial engine business. It sold engines to H.F. Hauff, which placed the engines in windmills for agricultural use. See Dec. 9, 2019 Tr. at 48, 54. It sold wellhead gas engines to American Industrial Engines (aka American Rod Pump), see Dec. 9, 2019 Tr. at 89, and had "test" wellhead gas engines placed with a small number of companies, including B.P., Chevron and Natural Gas Service Group. Dec. 12, 2019 Tr. at 684.
The Court finds that counsel's statements during closing argument were a clear and direct reference to Graham Ford's parts customers. It was only the parts customers who numbered 8,000 and were located across the world.
The Court further finds that the number of Graham's parts customers was irrelevant to the remaining issue before the jury of reputational harm caused by defendants' conduct. Defendants accused plaintiff of violating EPA regulations with respect to the wellhead gas engines it had prepared for American Industrial Engines. The jury found that the statements caused FCS to terminate the Powertrain Sales Agreement by which FCS supplied industrial engines to Graham Ford.
Plaintiff's parts business and its industrial engine business served two different markets. Graham sold parts to many local businesses and individuals in central Ohio and online to customers worldwide. See Dec. 12, 2019 Tr. at 688-89. In contrast, Graham sold industrial engines to a select handful of clients in the agricultural and oil field sectors. Plaintiff offered no evidence of crossover of customers or marketing between its parts business and its industrial engine business. Nor did plaintiff offer any evidence that the defamatory statements were published to or received by the auto parts market or any parts customer.
In other words, plaintiff put forth no evidence that the defamatory comments and termination of the Powertrain Sales Agreement caused harm to Graham Ford's parts business. Furthermore, Wallake admitted in a March 2016 email (5 months before the defamatory statements and 1 year before the termination of the Powertrain Sales Agreement) that he and his wife had already decided to "get out of the parts business and simplify our lives." Defs.' Ex. T at WALLAKE001566; see Fed. R. Evid. 801(d)(2) (admissions against interest).
Plaintiff, moreover, has not offered a basis or rationale for why the presumed harm to Graham Ford's reputation in the industrial engine marketplace would extend to Graham's parts business. The doctrine of presumed damages pertains to "harm to reputation that would normally be assumed to flow from a defamatory publication of the nature involved." Restatement (2d) of Torts § 621, Cmt. a. In light of the evidence developed at trial, the Court finds that harm to Graham's reputation in the parts business would not normally be assumed to flow from defendants' defamatory statements about Graham's failure to comply with EPA regulations with respect to wellhead gas engines.
Accordingly, the Court finds that counsel's statements regarding Graham's parts customers during closing argument at the compensatory damages stage were improper.
D.
The Court additionally finds it is reasonably probable that counsel's statements influenced the jury's verdict on compensatory damages. As transcribed, counsel's closing argument was a mere one-and-a-half pages long. Id. at 902-03. In that short span, counsel emphasized the 8,000-customer figure three times and drew a direct line between that number and the alleged reputational harm resulting from defendants' defamatory statements. He told the jury that "Graham Ford had approximately 8,000 customers across the entire world, 8,000 customers and decades of experience, presence in the marketplace, and reputation" and that "[a]ll of that was destroyed when the defendants" defamed Graham Ford. Id. at 903. He followed those statements with this one: "8,000 customers. And now you have to decide the sole issue of reputational loss." Id. at 903. Counsel's statements thus focused the jury's attention on a fact (the existence of 8,000 parts customers) that was irrelevant to the remaining issue before the jury.
Greatly enhancing the risk of prejudice was that the remaining issue called for "unguided jury evaluation of presumed damages," as the New Jersey Supreme Court aptly put it. W.J.A. v. D.A., 210 N.J. at 249, 43 A.3d at 1160. A comment to the Restatement cautions, "This presumption of general damage to reputation from a defamatory publication that is actionable per se affords little control by the court over the jury in assessing the amount of damages." Restatement (2d) of Torts § 621, Cmt. a. And this same concern led the United States Supreme Court to impose First Amendment bounds on the scope of defamation liability. See Gertz, 418 U.S. at 349 ("It is necessary to restrict defamation plaintiffs who do not prove knowledge of falsity or reckless disregard for the truth to compensation for actual injury" because "[t]he largely uncontrolled discretion of juries to award damages where there is no loss unnecessarily compounds the potential of any system of liability for defamatory falsehood to inhibit the vigorous exercise of First Amendment freedoms.").
Here, the Court's instruction to the jury concerning compensatory damages followed the pattern Ohio instruction. See Ohio Jury Instr. Civil 431.07 § 3(A). After being told that plaintiff was entitled to recover damages for lost reputation, the jury was left with the amorphous task of determining "an amount of money that you decide is reasonable and fair for the plaintiff's loss of reputation caused by defendants' defamatory statements." Dec. 16, 2019 Tr. at 909-10.
During closing argument, the 8,000-customer figure was the only concrete number that plaintiff's counsel pointed the jury's attention to in arguing how it should determine damages. Given the absence of proof of actual damages, the Court believes that there is a substantial likelihood that the jury latched on to this number as it attempted, perhaps blindly, to pin a dollar amount to the presumed reputational harm.
In its response brief to the motion for a new trial, plaintiff argues that the jury should be presumed to have followed the Court's instructions, which included an instruction to "not be swayed by bias or prejudice or sympathy as to any party" and an instruction that closing arguments of counsel "are not evidence." Dec. 12, 2019 Tr. at 645, 648. Plaintiff points out too that defendants' counsel used their closing argument to tell the jury that there was no evidence of defendants' conduct causing the loss of 8,000 customers.
The Court, however, finds that this was not a matter of the jury following, or not following, instructions. The problem instead is that the damages instruction, though using the terms "reasonable" and "fair," was essentially standardless. As one observer commented about presumed damages,
Giving a jury guidance as to what that amount should be is impossible, however, because the law provides no criteria. Judges cannot give meaningful instructions when the substantive law concedes that "there is no legal measure of damages in actions for these wrongs. The amount which the injured party ought to recover is referred to the sound discretion of the jury." As a result, the process of fixing an amount of presumed damages is inherently irrational. As McCormick said, "damages in defamation cases are measurable by no standard which different men can use with like results."David A. Anderson, Reputation, Compensation and Proof, 25 Wm. & Mary L. Rev. 747, 749-50 (1984) (footnotes omitted) (quoting J.G. Sutherland, A Treatise on the Law of Damages, Vol. 4 § 1206 (4th ed. 1916) and C. McCormick, Handbook of the Law of Damages § 120 (1935)).
Nor was the problem one of the jury choosing to be swayed by prejudice against a party. Rather, plaintiff's counsel's direct reference to irrelevant matter is what caused the prejudice. Though the jury had heard Wallake testify about his parts business, the Court later held, prior to closing argument, that plaintiff had failed to establish its relevance to the remaining damages issue. See Dec. 16, 2019 Tr. at 880 ("There's no evidence that they [the 8,000 parts customers] were lost as a result of Ford's cancellation of his engine contract."). Closing argument therefore should have been limited to argument about the presumed loss of reputation resulting from FCS's termination of the Powertrain Sales Agreement. Plaintiff's counsel improperly emphasized the number of parts customers, and the Court believes that, again in light of the standardless nature of the task assigned to the jury, that the bell could not be unrung.
E.
The Court thus finds there is a reasonable probability that plaintiff's counsel's improper statements during closing argument influenced the jury's compensatory damages verdict. The Court further finds that the improper statements would have naturally influenced the jury's punitive damages verdict as well. Counsel argued, "8,000 customers across the entire world, 8,000 customers and decades of experience, presence in the marketplace, and reputation. All of that was destroyed when the defendants" falsely accused Graham Ford of violating EPA regulations. Dec. 16, 2019 Tr. at 903. The jury likely considered the alleged destruction of Graham Ford's parts business as they determined whether defendants acted with malice, which included a conscious disregard "that has a great probability of causing substantial harm," and whether defendants' conduct deserved to be punished. Id. at 913-14.
V.
Accordingly, defendants' post-trial motion (doc. 100) is granted in part and denied in part. The motion is denied as to the renewed motion under Rule 50 for judgment as a matter of law. It is granted as to the motion under Rule 59 for a new trial on the issues of compensatory and punitive damages, and the jury's verdicts as to damages are hereby set aside.
The Court will separately notice a status conference with the parties to discuss scheduling a new trial date.
s/ James L. Graham
JAMES L. GRAHAM
United States District Judge DATE: March 11, 2020