Rathe Salvage, Inc. v. R.
Brown & Sons, Inc., 2012 VT
18
Once upon a time, there was a jury trial. Two kingdoms, Hauler and Yard, were engaged
in a fierce battle because the King of Yard felt that the King of Hauler had
cheated the Kingdom of Yard out of its fair proceeds of their mutual endeavor: scrap
haulin’. When the smoke cleared, the jury said “Yea, verily, Hauler has
committed breach of contract, common law fraud, breach of the implied covenant
of good faith and fair dealing, and consumer fraud.” The trial court, at
Hauler’s request, overturned the jury’s finding of consumer fraud.
Okay, okay, so it really wasn’t all that feudal or regal. Insert “companies” for “kingdoms” and “principal”
for “king” and you have the modern version, but let’s not toss out such fun
imagery over technical objections.
The Kingdom of Hauler appealed, arguing (1) insufficient evidence;
(2) improper argument; and (3) faulty exclusion of lie-detector test results. The Kingdom of Yard cross-appealed the
judgment for Hauler on the consumer fraud claim. The SCOV responds with a resounding
“Nay. Thy judgment of the court of
trials shall be affirmed.” Or something
like that.
Historically, the two Kingdoms engaged in selling junked chariots
for parts and scrap. Yard would identify
the chariots to be sold; Hauler would transport them to the far-off land of
Montreal, and pay Yard at a predetermined price per ton. Yard relied on
hand-scribed weigh slips presented by Hauler to figure the tons for which their
price per ton was due.
In late 2003, Yard terminated this arrangement and contracted with
another chariot-hauling kingdom. While the chariot loads were similar, the new
kingdom reported significantly higher weights.
When confronted, the King of Hauler offered several reasons why the
replacement kingdom’s loads were heavier, but Yard inferred from the difference
that Hauler had been submitting fraudulent weigh slips. Yard sued for breach of contract, fraud, and
consumer fraud, the last claim based on the allegation that Yard was a consumer
of Hauler’s services.
This is the parties’ second visit to the SCOV. The first visit ended with reversal of a
default judgment. When Hauler couldn’t
produce the Montreal Kingdom’s parchment, the trial court sanctioned Hauler,
entering default judgment for Yard. But
because Hauler had no real control over Montreal’s records, the SCOV sent the
case back for trial.
Before that trial, Hauler filed a motion to allow testimony from a
polygraph expert on the results of a polygraph examination of Robert Brown, Hauler’s
King. The trial court denied this motion, finding that the testimony was
inadmissible per se, and refused to have a Daubert
hearing (a hearing to determine whether an expert’s testimony is
sufficiently scientific to be presented to the jury).
The jury heard evidence about discrepancies in the weights of the
chariot loads as reported and paid and the actual loads. One of Hauler’s knights testified that the
loads as delivered weighed more than reported.
The jury also heard from a
neighboring steel miller, who testified that Hauler’s reported loads were as a
rule “light.” Finally, the jury heard
that hauler directed the Montreal Kingdom, with whom it enjoyed a close working
relationship, not to disclose its parchment.
At closing argument, Yard highlighted that Hauler and its counsel had
visited the Montreal Kingdom in preparation for the trial, yet failed to
retrieve the Montreal Kingdom’s weigh slips for Hauler’s scrap deliveries from Yard.
Hauler’s counsel objected that the
argument was not in evidence, but the trial court declined to give a curative
instruction.
The jury ruled for Yard on all claims at issue in this appeal, and
Hauler renewed its motion for judgment as a matter of law. The trial court ruled for Hauler on the
consumer fraud claim only, reasoning that Yard did not pay Hauler for
“services” and so Yard was not a “consumer” as defined in Vermont’s consumer
fraud act.
Hauler’s first contention on appeal is that the evidence was
insufficient to support the common law fraud verdict. But the standard on
review is deferential to the prevailing party.
The verdict stands if any evidence fairly and reasonably supports
it. In this case, the SCOV concludes
that the verdict is supported.
Hauler asserts that the verdict is based solely on inference
stemming from the Montreal Kingdom’s failure to produce the weight slips, but
the SCOV disagrees. This is because Yard presented testimony from several
different drivers and carriers indicating that the weights reported by Hauler
to Yard were consistently short of the actual tons hauled. There was also
an issue with Hauler’s weigh parchment.
Hauler’s receipts were handscribed with “American-style” date stamps,
while other receipts from the same mill were on printed on mill letterhead with
“European-style” date stamps.
Hauler next argues that when Yard’s counsel remarked during
closing argument that Hauler and its counsel went to the Montreal Kingdom and
returned with pictures but no weigh parchment, a curative instruction was
required. Essentially, the standard on
appeal is whether there was prejudice that warrants a new trial.
The SCOV finds none. Given Hauler’s
admission on cross-examination that he told the mill not to turn over his
business records to plaintiff in this case, well, the remark was in bounds.
Regarding whether the argument was open to improper inferences the
SCOV defers to the judgment of the trial court, and concludes that there was no
abuse of discretion because the remark was not necessarily an accusation of
improper conduct by counsel, but a remark on Hauler’s failure to produce the
records that would’ve resolved the case.
Hauler also argues that the trial court should have held a
so-called Daubert hearing regarding
the admissibility of Hauler’s polygraph test. Daubert,
for the uninitiated, refers to this case they make you read in law school. Basically, the case stands for the we-want-to-keep-junk-science-out-of-the-courtroom
concept. A Daubert hearing is held to determine whether proffered evidence
passes the not-junk-science test.
In this case, the trial court declined to have a Daubert hearing because it concluded
that polygraph evidence infringes on the jury’s role in determining credibility
and is thus per se inadmissible under V.R.E. 403. The trial court cited a
Texas Federal District Court decision in concluding that the polygraph evidence
was inadmissible per se (under F.R.E. 403).
The SCOV affirms the trial court’s ruling but
does so on other grounds. Because it can.
That’s why. The SCOV notes that “Rule
403 admissibility determinations are usually based on a case-by-case weighing
of the evidence’s probative worth against its risk of unfair prejudice,
confusion, and the like, and are reviewed for abuse of discretion.” The SCOV also prefaces its analysis by
assuming without deciding the general question of whether polygraph evidence
could ever meet the Daubert standard.
Hauler makes what I believe to be a clever argument—it argues that
its polygraph evidence shows the witness’s measurable physiological reaction to
questions and not the “truth” of his answers.
So, really, it’s indicia of truthfulness and no more.
Unlike me, the SCOV is not so easily impressed and they “find this
a distinction without a practical difference.”
Boo. Only the jury gets to be the
“lie detector,” says the SCOV. No matter
which way you slice it’s still a witness commenting on the truthfulness of
another witness. There’s a lot of
discussion of polygraph evidence and case law, but I skimmed that for you. Think of this case if you need to make an
argument to introduce polygraph evidence.
And then have yourself a good cry, ‘cause it’s getting excluded.
In the end, the SCOV holds that “polygraph examination results are
redundant to, and an unnecessary influence, on a jury’s responsibility to judge
witness credibility or party liability, and that this limited, if not absence
of, probative value is substantially outweighed by risks of confusion, delay,
and time wasted on collateral issues related to variables in administration of
the polygraph.” Accordingly, no
error in not holding a Daubert hearing.
Yard’s cross-appeal is that the trial court erred when it granted
hauler judgment on the consumer-fraud claim.
The SCOV reviews the ruling de novo for any evidence that supports the
jury’s verdict (Hauler liable on the consumer-fraud claim), but affirms the
trial court’s holding that there is no such evidence.
The parties, as parties will do, make intricate arguments based on
the testimony and evidence at trial. But
the SCOV, as did the trial court, finds the problem quite simple: Yard sold
scrap. Hauler bought it. Yard is not a consumer under the Consumer
Fraud Act because Hauler did not provide “services” as required under the Act. Case closed.
Again, there’re a few pages of discussion, but I’ve skimmed them for
you.
And so Yard prevails, but as in any battle, it suffers collateral
losses. You can’t always get paid for
the lot, but if you trial sometimes, you just might find, you’ll get paid for
the steel.
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