may please the court my name is david abney representing the plaintiffs appellants we asked for every man for a trial on certain types of damages that the district court refused to allow the jury to consider in the original trial one of the major types as punit damages i submit to the court that the conduct of the companies in this case in failing to actually objectively test about the chemical composition of the toy beads right at the very start of the process before they started distributing them was something that reflects a conscious disregard and a deliberate indifference the toy beads were not really supposed to be used by infants and they were supposed to be eaten but the testimony the case was that naturally enough as any parent would know little children when they get a hold of bright colored things go straight into their mouths and if they can possibly eat them they not only put them in their mouths but the eat them as well but the companies didn't know what they were marketing they didn't know that the product was effectively a poison and that when you ingest that kind of thing that it changes in to the date rape drug which resulted in the hospital's ation on an emergency basis of the child three days in the hospital coma or respiratory problems vomiting and all the other very unpleasant symptoms that the child had to go through it seems logical to me and i submit to the court that is logical if you're going to be selling a product like this at the very least you should objective retest it and know exactly what it's made up unlike most toy beads you spritz water most toy beads they simply get wet you spritz you put these into a pattern  spits water on them and they they freeze together and stay put i think anybody would know there is some sort of chemical process going on there this is not a normal thing for beads to do and you want to know why and exactly what is in the product the second point for supporting punitive damages is that the chinese manufacturer j s s y intentionally put this compound this substance into the beets intentionally did a wrong thing here avar the evidence of that is that this i mean you know that the standard is so evil mine oh sure so what's your  distributors they put they supposedly provided samples for testing but there you got the fox in the henhouse kind of problem were those samples actually samples that they were using to substance but they were undeniably using this substance how do well i well there's two things there of the last part i don't think it's really as bad as people say it's conscious disregard deliberate indifference i think you can often show those sorts of circumstances to return to the first part colm is a fascinating when these old kind of flannery probably used them on camping ship used to pump them up and what would happen is oh and many times the the liquid would spurt out if we catch fire and bad things happen when that when that sort of thing occurs well the mine company unlike these companies had tested that over and over and had said well we think based upon our testing that this product is reasonably safe for use by consumers that's where the testing didn't happen here i don't think some testing so in  how do you i mean that's a lot more knowledge than you have here is that i'm not sure you you damages your strongest argument well on this particular point the problem is that there was no actual testing by the distributors of the product they relied why and its representation and what it was doing so there was some testing even the consumer product safety commission those said the testing was inadequate that the testing really wasn't the issue and that after the fact well yeah well i mean after the fact because j s s why was keeping this undercover and enterprises and spend master hadn't done their own objective testing at that point that didn't happen until october two thousand and seven after the fact after this young child was injured so there is there is enough there i submit that they they deliberately to have no clue that there was any sort of problem coleman had a prior had a clue and it decided that on balance it was ok to be selling this kind if you have a clue and that's not enough if you have damages how going to having no clue if you damaged well you deliberately blind yourself you're not you're not investigating at all you simply don't look and i think that's that's the big problem here on this aspect punitive damages they simply didn't book and how can you market a product like this when you simply don't book you need to know what you're putting out in the market especially when you know that this is going to get in the hands of little children because i mean it's designed to go into households with children a little bit older than sixteen months sure but if you're going to households with children a little older than up a little up in age you're going to have little ones around in many households and this is this sort of thing is going to happen when we're talking about j s s y though we're not talking i think the evidence is new or recently should have no reason we should have known they were putting this this particular chemical in and one of its known properties is that when it's metabolized within the human body it converts into g are there documents where they say we know if we put this in kids are going to comment i don't think so i don't think so but then again when you're dealing with evidence in a trial as you know the jury is allowed to make reasonable inferences from the evidence you can i think could make it reasonable inference that if you're putting this kind of chemical into into a toy and you are a manufacturer dealing with chemicals that you know or should reasonably know that it's going to cause problems another another thing i punitive damages it is a crime to import this kind of chemical into the united states so i mean how can most enterprises and spin masters say they're innocent here and there's no there's there's no wrongdoing when they were committ crime the other types of damages that they relate to the father i just want to touch that great braun that briefly made if i may irrigate myself here ok thank you the the trial court did not let the father present evidence motion with stress and damages past and future medical expenses on the basis of judicial stoppel and the father had gone through bankruptcy and did not disclose that this lawsuit was an asset of the estate that's a common problem i did it myself when i was first starting personal injury practice i got a call out of the blue after he settled a fifteen thousand dollars traffic accident from the trustee saying what are you doing and i had to sweet talk the trustee on my knees to say don't punish me i'm just dumb i did know that this is considered an asset of the state so the judicial stop all slams down and you really have sort of the dead hand of the common law a clear rule thought it sounds like you may have had a personal experience of getting around it but do we have any case law that says someone you have someone claims a mistake and continues to not correct it for many years  that is a way around i don't think there was any evidence of not not correcting it for many years it just it came up and he said you know i i i'm sorry the trustee comes in here with litigating this case for a long time right but didn't say anything didn't the bankruptcy didn't really yes or and didn't correct anything in the bank yes yes didn't realize that that was wrong didn't realize that he had made a mistake so the judicial stoppel comes in now and says ok and there are cases united states supreme court this this court's cases i cited mean the briefing that says there are circumstances where we don't apply judicial stoppel in this sort of circumstance with the bankruptcy cases tell me what your best case for the idea that just not realizing is a way the father but you're punishing the bankruptcy creditors because they can't get any money now how does the father or you how does anyone in here in the room have standing to argue about the creditors interest where the trustee came in and said i didn't ask is not here no but it was in the proceedings came in file papers and said i want this to go forward in the district court says no judicial system to heal no no the trust is not here so how do you have standing to be banking argument on behalf of the creditors well i'm well then surely the father has a duty to correct that error and to get the money into the hands of the creditors sort of makes it your position that all of the money the father would have would recover here he would give to the creditors he would give to the creditors every penny up until the point they are fully satisfied after that we'll talk with the court about what happens with the rest of the money maybe it's donated to a foundation for stray cats i don't know maybe it goes to the father i don't know maybe goes to a foundation for children who have poisoned but but the point being why punish the bankruptcy creditors what sense is there in that why not let him go forward get whatever money he can in the bankruptcy court get paid off to the full penny that of everything that they have and if there's anything left over we can fight about it then or at least i'd love to but i want to say i want to say two words hypoxia and neurotoxicity and a few words after that the expert that they had said that the there are long term effects here because of hypoxia but more likely because of neurotoxicity and the district court said i'm not convinced that that should go to the jury and i believe that was a mistake i'd like to ask you about something that troubles me in your brief which is that your briefing page twenty nine to thirty when you're talking about defendant's expert mr goodman and you say that neither you say that the experts said that that that he admitted that r m had suffered brain injury and when i read the statement that you seem to be citing it says that neither his ingestion of aqua dots or his experience in coma resulted in brain injury which seems like the opposite of saying that he suffered brain injury and i'm wondering if you can point to anything in that expert's report that would lead me to feel like your brief wasn't mischaracterizing the record i think if there's been a mischaracterization number one i apologize i don't do that unless a purely to have a midnight moment i'll check when i sit down and see if i can find that and if i can't find th confess error and throw myself on the mercy of the court it was pointed out in your opposing counsel's briefs i don't think it should be a surprise that i would be asking about this no no you are not surprise of aqua dots which were produced in manufactured by a company about three rungs up the production ladder there was a factory in china known as one she many a factory that was  subcontracted to do that by this company j s s y also a chinese company which was contracted to do that by moves enterprise's the inventor of this product and spinmaster was the united states distributors of the product so spinmaster introduced this product onto the american market in april two thousand and seven after having conducted and with respect my colleague and was mistaken that there was no product testing done an extensive battery of product testing was ordered by spinmaster from reputable certified independent third party testing agencies those were done both before and during the marketing and distribution of this product in the plane how the problem well some of the most of the tests were not geared towards specifically towards  ladder but there were some tests done in particular there was an oral toxicity test done using live animals they were they were fed this the product and the evidence in the record the report in the record shows that the animals showed no adverse symptoms now i don't know it's not in the record as to why that would be the case and this obviously this incident happened so obviously there was something there but i think the important point to remember here is that spinmaster had no knowledge or way of knowing prior to our ams that the child's incident in this case in july two thousand and seven that there might have been a problem now as your honor pointed out as friedland spinmaster was under no obligation at least from a punitive damages standpoint to do anything it could have just blindly sold this product on the market with no knowledge of what was in it but it didn't just do that it went beyond that that well the standard here is the evil mind standard as your are pointed out and that constitutes conscious and deliberate just disregard it's not just could have known it's it's conscious disregard so and so here  case which was mentioned earlier spinmaster could have even if it had known of a potential product defect still bill sold this product now that might have given rise to negligence liability of course but for purposes of the evil mind punitive damages standard that itself they would not have been liable we would not have been liable but spinmaster wanted to be a responsible corporate citizen and so it went beyond that and it did can order an extensive battery of product tests now plaintiffs argue that you know the testing should have been better in certain ways it could have been geared towards other types of things that may or may not be true but i think the important thing to keep in mind is nothing are leads to any sort of inference of conscious disregard of a known substantial risk to to consumers and again i think it's very important to remember that counsel mentioned  acted with intent to making this chemical switch spinmaster had no involvement in that decision had no knowledge or way of knowing of that decision it didn't discover that decision until october of two thousand and seven several months after the incident in this case which means that it is irrelevant for purposes of assessing the evil mind under arizona law in this case i'd also like to address one thing that my colleague on the other side mentioned which is that the consumer product safety commission which is different from the staff the commission accepted that settlement agreement without making any findings of liability or anything else and spinmaster did not admit to any liability now spinmaster excuse me the c p s the staff  made allegations about what it thought it could prove in court in a proceeding if it had gone forward in front of the commission but those allegations were never proved when evidence was not provided so and finally on the point that this was a spinmaster vigorously disagrees with that characterization but regardless of whether that's true or not the only crime that plaintiffs point to is the under it's under their interpretation a strict liability standard that simply importing even unknowingly importing a hazardous substance into the united states constitutes a crime according to plaintiffs that does not meet the evil mind standard arizona law if i could turn quickly to the judicial a stop point plaintiffs argue that the trustee should have been allowed to intervene as your honor i recognize there is no appellate standing here to raise that point but i think the larger issue of whether this should be allowed to proceed for the benefit of creditors this that argument was made in a couple earlier night circuit cases specifically the hamilton the state farm case and an earlier case a which rejected that argument was more in passing i believe hamilton made a more concerted analysis of it so the law the circuit bars that sort of argument off the bat beyond that i think the the judge recognized that the integrity of  the court the integrity the process was at stake and that's why judicial stoppel was important here even if this court were to disagree our brief lays out alternative arguments under arizona law why these particular claims fail anyway and just  ly on the expert exclusion point we brief that if this court has any questions i'd be happy to answer them but i think the district court properly exercised its wide discretion in excluding those opinions partly for  think i'll just talk about a few things that i think are extremely important and one of the things that were mentioned here this afternoon that is critical is the bar in arizona is very high for pe damages that is what the law says in arizona and that is the problem i think that plaintiff is facing in this particular case this is a situation where evil as as the is the traditional law in arizona says the defendants evil hand must be guided by the evil mind and in the cases talk about what an evil mind is it talks about looking at the nature of the conduct the duration but one of the key ingredients is the degree of awareness of the harm in the risk involved the main problem here is as admitted by plaintiffs is none none of the defendants were aware of the toxicity here the law in arizona is not it you should have tested the the law is such that it is something where you have an evil mind a conscious conscious disregard a conscious or intentional evil mind to commit an act by its very definition saying you should have tested and you didn't know is a significant significant problem and as a comment was made here this afternoon even if there was some kind of notice of some type of problem with the product we're in a situation with the volt's case with the piper case where there was actual knowledge of a problem with the product more than we have here and the court says the rule is continuing to market a product is not in and of itself sufficient to show evidence of state of mind necessary for punitive damages so i think in that way the law is very clear there was a reference to a lack of testing most in fact did testing it did testing in two thousand and seven it did so in relation to some concerns about not toxicity but choking there were a few reports where young children had swallowed  their found some type of debris in the throat for there was testing done and not just by to anywhere testing was done by world class laboratories to check the safety in assess to choking and for potential toxicity it can you explain how the testing didn't show this problem i can't your honor and possibly for whatever reason there was a problem associated with the testing but if there was a problem associated with the testing that would go to negligence it certainly wouldn't go to evil mind the fact that moose was outgoing and was concerned shows the opposite of evil mind so the bottom line there is that that action shows a lack of evil mind in fact it reminds me that that after the testing the actually added a better agent to to the products so that children would spit it out that is again i think the opposite of what we're looking at with an evil mind  there was a comment about j s s y that they at least committed some type of evil mind act and somehow should be held responsible under an agency theory  there is no no evidence in my review of this record to show that even if jesse used a different or substituted the particular ingredient that jesse knew it was toxic or w going to cause a problem it was that maybe negligent by not checking on it when it substituted it possibly but certainly not evil state of mind and there's also a significant problem as we raised in our cross appeal about the whole idea of agency in this case anyway this is the chain of distribution case and we agree with your side in the main appeal do we need to reach any of your cross appeal argument no your honor and i was going to say that that  absolutely conditional in every respect and so you would not have to address that at all i think we'll move on then to the judicial stoppel and the key there in my opinion is the law again is is very clear you know in a bankruptcy case in the context of a party will be judicially a stop from asserting a cause of action not raised in the reorganization plan or in the schedules and there's case authority that both parties cited for that but what's the reason for that the reason is to protect the integrity of the bankruptcy court judges in the bankruptcy court trustees in the bankruptcy court creditors the bankruptcy court all depend upon being honest with the schedule and i'll be honest with you here myself the trial judge here just didn't buy the story they didn't he didn't they didn't buy the story relative to not knowing what was going on this plaintiff by the way had a degree in finance he was a financial advisor at some capacity in his career we also know from the record that the lawsuit was filed and the discharge actually occurred three weeks later five years of litigation went by and no reopening of the bankruptcy when was it reopened when the when the actual claim was dismissed by the court the bottom line is that there isn't justification there's certainly no abuse of discretion for what the court did and under both the judicial stoppel issue and the punitive damage represent that it should be affirmed are checked that made him the in the copy i have of the the report by goodman and i believe you are absolutely correct i shy i should have said experience coma like symptoms instead of experience brain injury then that does my fault i apologize to the court for that  as far as the bankruptcy related precedent it's new hampshire vs maine united states supreme court five three to us seven four two specifically page seven five three two thousand and one new hampshire v maine in the second opinion is in re cory c o r e y eight one two fed second eight to nine at page eight three six nine circa one thousand nine hundred nine but there are any number of other cases standing for the same proposition but you know even think it does say that that it could be appropriate not to apply judicial thoughtful when the position with based on an for an answer a mistake but how can we view your parties your client's actions as totally inadvertent mistake when judicial looked up what was briefed then there is a ruling on it and it's not all five months later that your client correct the bankruptcy proceeding that doesn't look like it's in as it were in there might be an issue he corrected it well he's well they've learned about it  and before the critical point in these proceedings he asked asked for relief asked and the trust as the trustee to come in trustee comes in and tries to tries to deal with the problem but that stage before this is going to the jury before we actually worry about the damages but he can't do it because he didn't show father answered i mean when you were up earlier you made it sound like your client just didn't know this issue might exist it danno not true because as soon as it gets a brief summary judgment and people are arguing useless but but what if the original state happens way back at the beginning what matters is correcting it before this case goes to the jury now if he was a little bit slaughter full and getting a corrected before the case was ready to go the jury i don't see why that matters what matters is you've got to get it corrected so the bankruptcy creditors can get their money why should they be penalized for the original mistake and then you know because he's a little slow in correcting it way down the way to down the line  deliberate indifference and conscious disregard are not that hard to factor in especially in a case like this and especially a case where you've got the agent intentionally adding something that is that is bad to this product why shouldn't the principal wrap it up ok one thing i'll make a very long sentence if i may i think a lot of the confusion here is that we tend to focus on certain things which you had a duty to did do this particular thing where the duty is really to make sure that you are selling and distributing a safe product to the public all of the things that go into that relate to the standard of care and the standard of care the duties on question here and the standard of care they really exhibited behavior that's conscious disregard and deliberate indifference thank you very much your honour's thank you very much thank you both arguments you are excused if you are going to ask