John McShain, Inc. v. Cessna Aircraft Co., 563 F.2d 63

U.S. Court of Appeals for the Third Circuit

1977

Chapter

8

Title

A Return to Relevance I:  Limits Based on Policy

Page

360

Topic

FRE 408 Compromise Exception - Bias

Quick Notes

The landing gear on McShains Cessna plain malfunctioned several times resulting in repairs of both 11k+ and 24K+.  He sued Cessna and Cessna joined Butler.  McShain agreed to release Butler in exchange letting Harmon testify as their expert witness to the planes design defect.  The Trial judge allowed for this evidence to be admissible on the grounds of establishing bias of Mr. Harmon.

Rule 408. Compromise and Offers to Compromise

         (a) Prohibited Uses - Evidence of the following is not admissible on behalf of any party, when offered to prove liability for, invalidity of, or amount of a claim that was disputed as to validity or amount, or to impeach through a prior inconsistent statement or contradiction:

o    (1) furnishing or offering or promising to furnish or accepting or offering or promising to accept a valuable consideration in compromising or attempting to compromise the claim ; and

o    (2) Conduct or statements made in compromise negotiations regarding the claim, except when offered in a criminal case and the negotiations related to a claim by a public office or agency in the exercise of regulatory, investigative, or enforcement authority.

         (b) Permitted uses. This rule does not require exclusion if the evidence is offered for purposes not prohibited by subdivision (a). Examples of permissible purposes include

o    1) proving a witness's bias or prejudice ;

o    2) negating a contention of undue delay; and

o    3) proving an effort to obstruct a criminal investigation or prosecution.

Cessnas Rebuttal

o         The evidence was in fact admitted for the purpose of establishing the bias of Mr. Harmon, thus falling squarely within the exception to Rule 408.

o         The rule by its terms "does not require the exclusion [of] evidence" when offered for the purpose of "proving bias or prejudice of a witness."

Court Reasoning

o         The fact that a sister corporation of Harmon's employer had been released from liability in exchange for Harmon's testimony cast doubt upon Harmon's impartiality.

Book Name

Evidence: A Contemporary Approach.  Sydney Beckman, Susan Crump, Fred Galves.  ISBN:  978-0-314-19105-2.

Issue

o         Whether compromise activities that contain bias are admissible for impeachment purposes?  Yes.

Procedure

Trial

o         United States District Court for the Eastern District of Pennsylvania, which denied his motion for a new trial. The jury returned a verdict against appellee aircraft manufacturer for the cost of repairs to appellant's plane and found no design defect in the landing gear.

Appellant

o         Affirmed

Facts

Discussion

Key Phrases

Rules

Pl - McShain

Df - Cessna

Description

o         In May 1969, John McShain, Inc. purchased an aircraft manufactured by Cessna Aircraft Co.  from Wings, Inc. for $282,136.

o         In December 1969, several hundred landings and 147 hours of flight later, the main landing gear of the plane collapsed as the plane alighted on the runway in Baltimore.

o         After notifying Cessna, McShain had the aircraft repaired by Butler Aviation-Friendship, Inc. at a cost of $11,734.

o         During the course of the overhaul, Cessna representatives visited the Butler repair facilities.

o         The plane was then returned to McShain.

o         After 5 hours of further flight, the plane's landing gear once more gave way upon touchdown.

o         The cost of repairs this time totaled $24,681.

o         McShain refused to fly the craft again.

McShain Arg and Suit

o         Files suit to rescind original contract.

o         Alleged defective design in the landing gear

o         Cessnas failure to correct that design despite knowledge of the defects.

McShain - Reject judgment for the following

o         Cost of the repairs.

o         Consequential damages

o         $5,000,000 in punitive damages.

Cessna Joined Butler as a third party defendant.

McShain Released Butler

o         In exchange for $10 and the right to engage Ralph Harmon as a consultant.

o         He worked for a Butler sister company.

o         He would testify as an expert witness in support of the design defect.

Judge allow the release to be admissible

o         Enter into evidence

o         Read to the jury.

McShain FRE 408 Arg

o         Agreements in compromise of a claim are generally inadmissible on the issue of liability on such claim.

o         Cessna's reference to the Butler-McShain agreement, McShain insists, is such a proscribed use of evidence, since Cessna's counsel implicitly attempted to shift blame for the second failure from Cessna to Butler.

Cessnas Rebuttal

o         The evidence was in fact admitted for the purpose of establishing the bias of Mr. Harmon, thus falling squarely within the exception to Rule 408.

o         The rule by its terms "does not require the exclusion [of] evidence" when offered for the purpose of "proving bias or prejudice of a witness."

Court Reasoning

o         We believe that Judge McGlynn did not commit reversible error in admitting the agreement and in allowing comments upon it.

o         The fact that a sister corporation of Harmon's employer had been released from liability in exchange for Harmon's testimony cast doubt upon Harmon's impartiality.

o         Thus, as counsel for McShain appeared to contend at oral argument, McShain's claim is in reality that the potential prejudice from the admission of the agreement outweighed the agreement's probative value.

Affirmed

Rules

Rule 408. Compromise and Offers to Compromise

         (a) Prohibited Uses - Evidence of the following is not admissible on behalf of any party, when offered to prove liability for, invalidity of, or amount of a claim that was disputed as to validity or amount, or to impeach through a prior inconsistent statement or contradiction:

o    (1) furnishing or offering or promising to furnish or accepting or offering or promising to accept a valuable consideration in compromising or attempting to compromise the claim ; and

o    (2) Conduct or statements made in compromise negotiations regarding the claim, except when offered in a criminal case and the negotiations related to a claim by a public office or agency in the exercise of regulatory, investigative, or enforcement authority.

         (b) Permitted uses. This rule does not require exclusion if the evidence is offered for purposes not prohibited by subdivision (a). Examples of permissible purposes include

o    1) proving a witness's bias or prejudice ;

o    2) negating a contention of undue delay; and

o    3) proving an effort to obstruct a criminal investigation or prosecution.

Class Notes