1 

UNITED STATES DISTRICT COURT 

 SOUTHERN DISTRICT OF OHIO 

 EASTERN DIVISION 

PENN, LLC, et al., 

 

 Plaintiffs, 

 Case No. 2:10-cv-0993 

 v. JUDGE GREGORY L. FROST 

 Magistrate Judge Terence P. Kemp 

PROSPER BUSINESS DEVELOPMENT 

CORPORATION, et al., 

 Defendants. 

 

 OPINION AND ORDER

 This matter is before the Court on the motion of Plaintiffs Penn, LLC and BigResearch, 

LLC for judgment as a matter of law or, in the alternative, for a new trial. (ECF No. 309.)1

 

Defendants Prosper Business Development Corporation, Gary Drenik, and Phil Rist have filed a 

memorandum in opposition (ECF No. 313) and Plaintiffs have filed a reply (ECF No. 314). For 

the reasons set forth below, the Court DENIES Plaintiffs’ motion and instructs the Clerk to enter 

final judgment in Defendants’ favor in accordance with the jury verdict in this case. 

 

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 Plaintiffs’ motion is styled as one “FOR JUDGMENT AS A MATTER OF LAW OR, 

IN THE ALTERNATIVE, FOR A NEW TRIAL OR TO AMEND THE JUDGMENT.” (ECF 

No. 309 at PageID# 17626 (emphasis added).) While the body of Plaintiffs’ motion argues for 

judgment as a matter of law under Fed. R. Civ. P. 50(b) and for a new trial under Fed. R. Civ. P. 

59(a), it does not contain any argument for amending the judgment in this case under Fed. R. 

Civ. P. 59(e). Accordingly, the Court treats Plaintiffs’ motion as moving only for judgment as a 

matter of law under Fed. R. Civ. 50(b) or, alternatively, for a new trial under Fed. R. Civ. P. 

59(a). 

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I. 

 This case involves a contentious commercial dispute that has progressed through multiple 

lawsuits and arbitration proceedings over a span of several years. In a nutshell, Plaintiff Penn, 

LLC (“Penn”) and Defendant Prosper Business Development Corporation (“Prosper”) formed a 

limited liability company, BigResearch LLC (“Big Research”), which was in the business of 

performing consumer research for clients seeking such data. At the time Big Research was 

formed, the parties contemplated that Prosper would develop the consumer research products 

(e.g., consumer questionnaires) and interpret the resulting data while Penn would procure 

respondents for consumer research questionnaires using the e-mail network it had developed in 

connection with its other businesses. Not long after the parties formed Big Research, disputes 

began to develop, which ultimately led to Prosper taking steps to exclude Penn from decisions 

concerning the management of Big Research. 

 Penn filed this action on behalf of itself and derivatively on behalf of Big Research. Penn 

alleged that Defendants Prosper, Gary Drenik, and Phil Rist improperly transferred and diverted 

assets, revenues, and business opportunities of Big Research for the benefit of Prosper. 

Defendants filed counterclaims against Penn, alleging that Penn engaged in an abuse of process, 

theorizing that Plaintiffs used this lawsuit in order to leverage a more favorable outcome for 

Penn in other litigation between the parties. 

 This case proceeded to a jury trial that took place from September 23, 2013 to October 

17, 2013. After various rulings on motions for judgment as a matter of law, the only remaining 

claims for the jury’s consideration were (1) Plaintiffs’ claim for breach of fiduciary duty and (2) 

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Defendants’ counterclaims for abuse of process. After a three-week trial that included testimony 

from 18 witnesses and the admission of more than 200 exhibits, the jury returned a defense 

verdict on Plaintiffs’ breach of fiduciary duty claim and also found in favor of Defendants on 

their abuse of process counterclaims. The jury awarded Defendants compensatory damages in an 

aggregate amount of $1,200,000. The jury also awarded punitive damages in the amount of 

$25,000 to Defendant Drenik and $25,000 to Defendant Rist. 

 Plaintiffs now move the Court for judgment as a matter of law under Fed. R. Civ. P. 

50(b) on Defendants’ abuse of process counterclaims, arguing that the claims never should have 

been submitted to the jury in the first place. Plaintiffs also move for a new trial under Fed. R. 

Civ. P. 59 based on a series of perceived evidentiary errors the Court committed that produced, 

in Plaintiffs’ view, a trial that was unfair. 

II.

 The Court first addresses Plaintiffs’ motion for judgment as a matter of law under Fed. R. 

Civ. P. 50(b). Plaintiffs argue that the Court should set aside the jury’s verdict in Defendants’ 

favor on the counterclaims for abuse of process and render judgment in their favor as a matter of 

law on those counterclaims. 

 Fed. R. Civ. P. 50(b) provides: 

If the court does not grant a motion for judgment as a matter of law made under 

Rule 50(a), the court is considered to have submitted the action to the jury subject 

to the court's later deciding the legal questions raised by the motion. No later than 

28 days after the entry of judgment--or if the motion addresses a jury issue not 

decided by a verdict, no later than 28 days after the jury was discharged--the 

movant may file a renewed motion for judgment as a matter of law and may 

include an alternative or joint request for a new trial under Rule 59. In ruling on 

the renewed motion, the court may: 

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(1) allow judgment on the verdict, if the jury returned a verdict; 

(2) order a new trial; or 

(3) direct the entry of judgment as a matter of law. 

“The inquiry for resolving a motion for judgment as a matter of law pursuant to Rule 50 

is the same as the inquiry for resolving a motion for summary judgment pursuant to Rule 56.” 

White v. Burlington N. & Santa Fe Ry. Co., 364 F.3d 789, 794 (6th Cir. 2004) (citing Reeves v. 

Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000)). The Court views the evidence of 

record in the light most favorable to the nonmoving party and determines whether there was a 

genuine issue of material fact for the jury. Id.; see also Gray v. Toshiba Am. Cons. Prods., 263 

F.3d 595, 598 (6th Cir. 2001). 

 The Court must uphold the jury verdict “unless there was ‘no legally sufficient 

evidentiary basis for a reasonable jury to find for [the prevailing] party.’” White, 364 F.3d at 794 

(quoting Fed. R. Civ. P. 50(a)). The Court draws all reasonable inferences in favor of the 

prevailing party (here, the Defendants), does not make any credibility determinations, and does 

not weigh the evidence. Id. Thus, the court must “disregard all evidence favorable to the 

moving party that the jury is not required to believe.” Reeves, 530 U.S. at 151. Judgment as a 

matter of law is appropriate only “if a complete absence of proof exists on a material issue in the 

action, or if no disputed issue of fact exists on which reasonable minds could differ.” LaPerriere 

v. Int'l Union UAW, 348 F.3d, 127, 132 (6th Cir. 2003). The Court must also be mindful of the 

fact that he jury is allowed to draw inferences from the evidence at trial and that such inferences 

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may provide the basis for an appropriate verdict. See Karam v. Sagemark Consulting, Inc., 383 

F.3d 421, 429 (6th Cir. 2004). 

As to the tort claim for abuse of process (which the parties agree is governed by Ohio 

law), the elements are “(1) that a legal proceeding has been set in motion in proper form and with 

probable cause; (2) that the proceeding has been perverted to attempt to accomplish an ulterior 

purpose for which it was not designed; and (3) that direct damage has resulted from the wrongful 

use of process.” Yaklevich v. Kemp, Schaeffer & Rose Co., L.P.A., 68 Ohio St. 3d 294, 298, 626 

N.E. 2d 115 (Ohio 1994). Abuse of process occurs “where someone attempts to achieve 

through use of the court that which the court is itself powerless to order.” Robb v. Chagrin 

Lagoons Yacht Club, 75 Ohio St.3d 264, 271, 662 N.E.2d 9 (Ohio 1996). 

 Plaintiffs argue that Defendants’ abuse of process claim never should have reached the 

jury because there was no evidence that Plaintiffs used this lawsuit “with a wrongful collateral 

objective, unrelated to any legitimate goals of the suit itself,” which is the sine qua non of an 

abuse of process claim. (Pls.’ Mot., ECF No. 309 at PageID# 17633.) Plaintiffs contend that the 

“only evidence” of improper conduct that Defendants introduced was settlement negotiations in 

which Penn attorney Richard Cochran approached Defendant Prosper’s attorney James Arnold 

and stated that Plaintiff Penn would dismiss this lawsuit if Defendants settled this and other 

pending litigation on Penn’s proposed terms. 

 Though Plaintiffs downplay this evidence (which consisted mainly of testimony from 

Arnold), the evidence was enough for the jury to conclude that there was an ulterior purpose 

behind this lawsuit, namely, to obtain a more favorable settlement in the state court proceeding. 

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Just as it did when it denied Plaintiffs’ pretrial motion for summary judgment on Defendants’ 

counterclaims for abuse of process (Opinion and Order, ECF No. 254), the Court finds Luciani v. 

Schavone, 210 F.3d 372 (table), 2000 WL 331974 (6th Cir. Mar. 24, 2000), instructive here. 

In Luciani, the Sixth Circuit reversed a grant of summary judgment on an Ohio abuse of 

process claim based on the defendant’s role in instituting a legal separation action in an Ohio 

court on behalf of the plaintiff’s then-wife. The plaintiff’s wife had previously instituted a 

divorce proceeding in New Mexico (where she and her husband resided), but had moved to 

Ohio. The court of appeals held that a reasonable fact finder could infer that the defendant 

brought the Ohio action “to pressure [the husband] to submit to Ohio’s jurisdiction on issues that 

were not properly before the court.” Id., 2000 WL 331974 at *6. Specifically, the court of 

appeals found that “a jury could infer that [the defendant] was using the Ohio action as a 

bargaining chip to obtain a custody arrangement and property settlement that the Ohio court had 

no power to order” or to obtain judgments “that it had no power to grant.” Id. So characterized, 

the Ohio lawsuit was an attempt to achieve something that the Ohio court was powerless to 

order. Id. 

 Likewise here, the evidence at trial led to the reasonable conclusion that Plaintiff Penn 

instituted this lawsuit with the ulterior motive of using it as a bargaining chip to extract a more 

favorable settlement in the Ohio state court action arising from the parties’ prior arbitration. 

This Court was, of course, powerless to itself make any order with respect to the confirmation of 

the arbitration award, much less the amount of the award. Thus, the jury was within its rights to 

find Penn liable for abuse of process for using this lawsuit to obtain a collateral advantage in 

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another proceeding. 

 Plaintiffs argue, however, that settlement tactics, no matter how heavy handed, cannot 

form the basis of an abuse of process claim. Plaintiffs cite to a multitude of cases standing for 

the proposition that the use of a civil action to extract money from the other party is not abuse of 

process; rather, it is simply the use of process to obtain an objective contemplated by the process 

(i.e., succeeding in the lawsuit and obtaining compensation). Plaintiffs emphasize the principle 

that no abuse of process claim will lie “where the defendant has done nothing more than carry 

out the process to its authorized conclusion, even with bad intentions.” Yaklevich, 68 Ohio St. 3d 

at 298 n.2. Thus, Plaintiffs contend that Mr. Cochran’s tactics cannot form the basis of an abuse 

of process claim as a matter of law because he was simply pursuing a “global settlement” of this 

case and the state court case. 

 Plaintiffs’ characterization of Mr. Cochran’s conduct as the pursuit of a “global 

settlement” was not, however, the only way to interpret the evidence that came before the jury. 

The jury heard evidence that the state court reduced Penn’s arbitration award by approximately 

half a short time before Penn filed suit in this case. Then after Penn filed this lawsuit, Mr. 

Cochran approached Mr. Arnold and demanded that Defendants pay, in substance, the amount by 

which the state court reduced the arbitration award. Based on this evidence, the jury could have 

reasonably found that Mr. Cochran was pursuing not a “global” settlement but, in actuality, was 

leveraging this case to obtain a more favorable resolution of the state court and arbitration 

proceedings between the parties—a collateral objective. Further, there was evidence that Penn 

was trying to obtain another collateral objective, namely, to disqualify Mr. Arnold from 

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representing his client in the state court and arbitration proceedings. 

Plaintiffs also contend that judgment must be rendered in their favor on the abuse of 

process counterclaims because Defendants’ abuse of process claim must be premised upon 

conduct that occurred between the filing of Plaintiffs’ complaint and Defendants’ filing of the 

counterclaims in this action. This is so, argue Plaintiffs, because there must be something 

“improper or corrupt [that] occurred after the process was set in motion that would serve to 

pervert the proceeding.” Hershey v. Edelman, 187 Ohio App. 3d 400, 932 N.E. 2d 386, 2010-

Ohio-1992, at ¶ 44 (Ohio Ct. App. 2010) (emphasis added); see also Gillman v. Schlagetter, 777 

F. Supp. 2d 1084, 1099 (S.D. Ohio 2010). 

The Court is not persuaded by Plaintiffs’ argument in this regard. As an initial matter, 

the Court is not convinced that Ohio law is as clear on this subject as Plaintiffs posit. If 

anything, the abuse of process case law sends mixed signals as to what evidence is required to 

create a genuine issue for a jury. While Hershey and Gillman (among other cases) suggest that 

an abuse of process defendant commit some specific “improper” or “corrupt” act to pervert a 

proceeding after process is issued, other cases appear to suggest that the mere continued pursuit 

of an action with an ulterior motive collateral to the proceeding is enough to sustain an abuse of 

process claim. See e.g. E.E.O.C. v. Spitzer Mgmt., Inc., 866 F. Supp. 2d 851, 871 (N.D. Ohio 

2012) (finding a genuine issue of material fact on abuse of process claim when there was 

evidence to support “a finding that the lawsuit against [plaintiffs] personally was meant to 

silence their ongoing, protected speech”); Williams v. New Day Farms, LLC, No. 2:10-cv-394, 

2011 U.S. Dist. LEXIS 36543, at *16 (S.D. Ohio Mar. 31, 2011) (finding “material question of 

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fact” on an abuse of process claim when there was evidence “that the defendants instituted a 

lawsuit that was lawfully served upon plaintiffs, in an attempt to use the court to do something 

the court could not otherwise do”); Thompson v. R&R Service Sys., Inc., 10th Dist. App. Nos. 

96APE10-1277 and 96APE10-1278, 1997 Ohio App. LEXIS 2677, at *37 (Ohio Ct. App. 1997) 

(reversing a directed verdict on an abuse of process claim when plaintiffs presented evidence that 

defendants instituted criminal proceedings for the “improper, collateral purpose” of recovering 

property and excusing obligations under a contract). Indeed, in Robb, the Ohio Supreme Court 

found a viable abuse of process claim (and reversed a summary judgment in the defendants’ 

favor) when the defendants “instituted at least one of their suits with the intention to use it as a 

club to coerce” a course of action that the trial court had no authority to order. Robb, 75 Ohio St. 

3d at 271. 

 Even accepting Plaintiffs’ premise as true, however, there was evidence at trial to support 

a jury finding that Penn took “improper or corrupt action” after filing this lawsuit. Mr. Arnold 

testified that Mr. Cochran made a settlement demand in December 2010, after Penn initiated this 

lawsuit, and that the demand sought to obtain a more favorable (to Penn) outcome in the state 

court/arbitration proceedings than what the state court had previously ordered. 

 As an additional basis for judgment as a matter of law, Plaintiffs argue that Defendants 

did not present “any acceptable measure of direct damages.” (Pls.’ Mot., ECF No. 309 at 

PageID# 17637.) They argue that all Defendants presented was evidence of “undifferentiated 

attorneys’ fees incurred in this lawsuit in toto.” (Id.) The Court likewise rejects this argument 

for judgment as a matter of law. Defendants presented evidence of the attorneys’ fees they 

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incurred in defending the lawsuit in which the abuse of process occurred. Plaintiffs’ argument 

that the fees should have been “differentiated” somehow (e.g., separating fees incurred for 

pursuing the counterclaims versus fees incurred for defending “legitimate” aspects case) is not a 

basis for invalidating the jury’s award. Rather, it is a point that Plaintiffs had every opportunity 

to cross-examine Defendants’ witnesses about and argue to the jury. 

 Indeed, in any event, it seems that the jury may have done some differentiation on its 

own. As Defendants point out, the $1.2 million in compensatory damages awarded by the jury 

was only a fraction of the $1.8 million in attorneys’ fees that Defendants claimed at trial to 

having incurred in this action. Moreover, Defendants also presented evidence that they incurred 

$544,000 in lost business opportunity damages attributable to the abuse of process. If the jury 

credited that testimony, the $1.2 million figure is an even smaller portion of the damages 

Defendants claim to have incurred. Though Plaintiffs take issue with the strength of Defendants’ 

evidence of “lost business opportunity” damages, their arguments raise points that inform the 

weight of that evidence rather than to its admissibility. Plaintiffs had ample opportunity to crossexamine Defendants and argue to the jury that these damages were too uncertain to award. 

 For these reasons, the Court denies Plaintiffs’ motion for judgment as a matter of law on 

Defendants’ counterclaims for abuse of process. 

III. 

Alternatively, Plaintiffs move this Court for a new trial under Fed. R. Civ. P. 59(a). 

Under Rule 59(a)(1), a district court may grant a new trial following a jury trial “for any reason 

for which a new trial has heretofore been granted in an action at law in federal court.” The Sixth 

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Circuit has interpreted Rule 59(a)(1) to require a new trial “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.” Holmes v. City of Massillon, 78 

F.3d 1041, 1045-46 (6th Cir. 1996) (internal quotations omitted); see also Mike’s Train House, 

Inc. v. Lionel, L.L.C., 472 F.3d 398, 405 (6th Cir. 2006). An incorrect evidentiary ruling may 

also form the basis of a motion for new trial. See Cummins v. BIC USA, Inc., 727 F.3d 506, 510 

(6th Cir. 2013). But “[a]n erroneous evidentiary ruling amounts to reversible error, justifying a 

new trial, only if it was not harmless; that is, only if it affected the outcome of the trial.” Id. 

A. Mr. Arnold’s Role as Attorney and Witness 

Plaintiffs’ first argument for a new trial concerns an issue that this Court addressed prior 

to trial—Mr. Arnold, Prosper’s trial attorney, being allowed to testify at trial in support of 

Defendants’ counterclaims for abuse of process. Plaintiffs argue that the blurring of Mr. 

Arnold’s roles as advocate and witness created an unfair trial. 

The Court disagrees. As an initial matter, the Court observes that the cases Plaintiffs cite 

in support of their position deal with whether an attorney should be disqualified from 

representing a party in a case in which the attorney is a witness. See Jones v. City of Chicago, 

610 F. Supp. 350 (N.D. Ill. 1984); General Mill Supply Co. v. Rotenberg, 697 F.2d 704 (6th Cir. 

1982). Plaintiffs did not move to disqualify Mr. Arnold; they merely sought to exclude his 

testimony and argue now that allowing him to testify was error. But as this Court previously 

ruled: 

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Ohio’s Code of Professional Conduct “‘does not delineate rules of evidence but 

only sets forth strictures on attorney conduct.’” Mentor Lagoons, Inc. v. Rubin, 

31 Ohio St. 3d 256, 258, 510 N.E. 2d 379 (Ohio 1987) (quoting Universal 

Athletic Sales Co. v. American Gym, Recreational & Athletic Equip. Corp., 546 

F.2d 530, 539 (3d Cir. 1976)). Thus, an attorney’s testimony is not rendered 

inadmissible by the ethics rule. Id. The Court therefore cannot exclude Mr. 

Arnold’s testimony simply because he is trial counsel for Defendant Prosper. See 

BSW Dev. Group v. City of Dayton, No. C-3-93-438, 1995 U.S. Dist. LEXIS 

22183, at *10 (S.D. Ohio Sept. 13, 1995). 

(Opinion and Order, ECF No. 259 at PageID# 13054.) 

 Plaintiffs argue now that allowing Mr. Arnold to testify was confusing and prejudicial 

under Fed. R. Evid. 403 because of the “blending” of his roles as advocate and witness. The 

Court disagrees, in part because his testimony was highly relevant to Defendants’ abuse of 

process claim. Mr. Arnold and Mr. Cochran were the only parties to the alleged conversations 

that formed the basis for Defendants’ abuse of process counterclaims. To preclude Mr. Arnold 

from testifying as a witness would have unduly undermined Defendants’ ability to prove their 

counterclaims at trial. 

 Weighed against the highly probative nature of Mr. Arnold’s testimony in this instance, 

the Court does not find that the “blending” of his attorney and witness roles was unfairly 

prejudicial to Plaintiffs. The jury was specifically instructed to treat Mr. Arnold’s testimony as a 

witness the same as the testimony of any other witness; the jury was not to give Mr. Arnold’s 

testimony any greater or lesser weight because of his role as an attorney in this case. (Final Jury 

Instructions, ECF No. 285 at PageID# 14071.) Given the Court’s instruction to the jury, the 

Court does not find any undue prejudice that would warrant exclusion of Mr. Arnold’s testimony 

under Fed. R. Evid. 403. 

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 Plaintiffs also argue that Mr. Arnold’s testimony should have been excluded under Fed. 

R. Evid. 408, which bars evidence of statements made during settlement negotiations. But Rule 

408 prohibits only the admissibility of any conduct or statement made in settlement negotiations 

to prove or disprove the validity or amount of a disputed claim. Defendants did not use evidence 

of Mr. Cochran’s statements to prove or disprove the validity or amount of a disputed claim in 

this case. Rather, Defendants offered Mr. Arnold’s testimony about Mr. Cochran’s statements to 

demonstrate the ulterior motive underlying this lawsuit, namely, the alleged motive of trying to 

leverage more favorable terms in a settlement of a state-court lawsuit. Accordingly, Rule 408 

was not implicated by Mr. Arnold’s testimony. 

 Nor is the Court persuaded by Plaintiffs’ argument that Mr. Arnold’s testimony about Mr. 

Cochran was inadmissible hearsay under Fed. R. Evid. 802. The record does not indicate that 

Plaintiffs objected to Mr. Arnold’s testimony on this ground, thereby forfeiting any alleged error 

with regard to the admission of hearsay. Even if Plaintiffs had raised this objection, however, it 

is not well taken. Mr. Arnold’s testimony about what Mr. Cochran said was a non-hearsay party 

admission. See Fed. R. Evid. 801(d)(2)(C) and (D); see also Williams v. Union Carbide Corp., 

790 F.2d 552, 555 (6th Cir. 1986) (noting that statements made by an attorney concerning a 

matter within his employment are admissible against the party retaining the attorney). And even 

if not a party admission, Defendants did not offer the testimony about Mr. Cochran’s statements 

for the truth of the matters asserted therein; rather, Defendants offered them for the non-hearsay 

purpose of establishing Penn’s improper ulterior motive for bringing this lawsuit. 

 For these reasons, the Court finds no error with respect to allowing Mr. Arnold to testify 

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in this case. Accordingly, the Court’s allowance of Mr. Arnold to testify cannot form the basis 

for granting a new trial under Fed. R. Civ. P. 59(a). 

B. Evidentiary Rulings 

Plaintiffs also contend that certain evidentiary rulings by this Court were erroneous and 

caused an unfair trial. As to all of the evidence challenged, Plaintiffs argue that the evidence was 

inadmissible under Fed. R. Evid. 403, as being “highly prejudicial, irrelevant and cumulative.” 

(Pls.’ Mot., ECF No. 309 at PageID# 17639.) The Court finds none of these arguments 

persuasive, much less a valid basis for overturning the jury’s verdict and granting a new trial. 

1. The Dismissed RICO Claim 

Plaintiffs first argue that it was error for the Court to allow evidence of the “dismissed 

RICO claim that was not before the Court.” (Id. at PageID# 17640.) Mr. Arnold testified that 

the original complaint in this case (filed against Defendants as well as Mr. Arnold and his law 

firm) included a claim under the federal Racketeer Influenced and Corrupt Organizations Act, a 

statute usually reserved “for gangsters and organized crime.” Plaintiffs argue that allowing this 

testimony created the “clear misimpression” that this suit had been wrongfully filed even though 

the parties stipulated for purposes of trial that Plaintiffs had probable cause to bring this lawsuit. 

(Id.) 

The Court rejects Plaintiffs’ argument. Before trial, the Court denied Plaintiffs’ motion 

in limine seeking to exclude references to the dismissed RICO claim. The Court ruled: 

Penn’s filing of a RICO claim in this matter is probative of Defendants’ theory of 

abuse of process liability. The inclusion of a RICO claim in the Complaint is 

relevant to Defendants’ allegation that Penn brought the instant lawsuit with the 

improper ulterior purposes of (1) leveraging a more favorable settlement of an 

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action then pending in state court and (2) seeking to disqualify Prosper’s trial 

attorney and his law firm from representing Prosper in this action. Even 

indulging Penn’s argument that mere mention of the RICO claim is “prejudicial,” 

the Court does not view such evidence as unfairly prejudicial for purposes of Fed. 

R. Evid. 403. 

(Opinion and Order, ECF No. 255 at PageID# 12991.) 

 Having heard the testimony about the RICO claim in the context of the trial, the 

Court views the issue no differently now than it did then. Given the parties’ stipulation 

that there was “probable cause” to bring the lawsuit, Plaintiffs had powerful fodder for 

cross-examination and argument to blunt the so-called “misimpression” that this suit was 

wrongfully filed. 

 Nor is the Court persuaded by Plaintiffs’ argument that the admission of the 

evidence regarding the RICO claim was unfairly prejudicial due to this Court’s exclusion 

of evidence that the Court previously denied Defendant’s request for sanctions under Fed. 

R. Civ. P. 11 with respect to the filing of the RICO claim. As this Court previously 

explained, “failing to find an ‘improper purpose’ behind this lawsuit for purposes of Rule 

11 sanctions does not prevent Defendants from demonstrating to a trier of fact that Penn 

brought this lawsuit with an ulterior motive for purposes of an abuse of process claim.” 

(Opinion and Order, ECF No. 254 at PageID# 12985.) Allowing evidence of the Court’s 

denial of Rule 11 sanctions had the potential of confusing the jury, given the differing 

standards involved for Rule 11 sanctions versus an abuse of process claim. Moreover, 

the evidence of the denial of sanctions was unnecessary, as the parties had stipulated for 

trial purposes that Penn brought this lawsuit with probable cause. 

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2. Issues from the Rimstidt Arbitration 

Plaintiffs also argue that the Court impermissibly allowed Defendants to present 

testimony concerning (1) Penn being a “spammer” in 2003, (2) Penn’s subscriber 

network having been “misrepresented,” failed, or denied to Defendants in 2003, and (3) 

Penn sending misleading e-mails under the banner “Dear Kohl’s Shopper” in 2004. (Pls.’ 

Mot., ECF No. 309 at PageID# 17641.) Plaintiffs argue that these issues had been 

previously litigated and resolved in Penn’s favor during previous arbitration proceedings 

before Arbitrator Rimstidt. 

The Court disagrees with Plaintiffs that this evidence lacked relevance. Just 

because Arbitrator Rimstidt resolved these issues in Plaintiffs’ favor does not mean that 

Defendants should have been foreclosed from presenting evidence about them during the 

trial. Plaintiffs alleged breach of fiduciary duty against Defendants and presented 

evidence concerning Defendants’ efforts over the years to exclude Penn from the 

management decisions of Big Research (the “freeze out” as Plaintiffs referred to it 

repeatedly during trial). Defendants were entitled to present evidence regarding the 

reasons they took certain actions that Plaintiffs characterized as nefarious attempts to 

“freeze out” Penn from the operation of BigResearch. The fact that the arbitrator found 

that Prosper’s reasons for excluding Penn were not factually correct was powerful crossexamination and argument material for Plaintiffs. Accordingly, the Court finds no unfair 

prejudice that would outweigh the probative value of the evidence under Fed. R. Evid. 

403. 

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3. Stephen Denari 

Plaintiffs also complain that Defendants were allowed to present evidence 

regarding one Stephen Denari, who was formerly associated with Plaintiff Penn. 

Defendants presented, over objection, testimony that Denari was involved in an 

unspecified scheme to extort President Clinton, that Denari was litigious, that Denari may 

have been linked to organized crime, and that Denari was sued in connection with an 

alleged Ponzi scheme. 

The Court disagrees with Plaintiffs. In the context of trial, the Court finds that the 

testimony about Denari had relevance. Plaintiffs’ witnesses testified at length about Penn 

being frozen out of the operation of Big Research and intimated that Prosper orchestrated 

the series of transactions that led to Prosper becoming the majority shareholder of Big 

Research. The Denari evidence was relevant to place in context what the members of Big 

Research knew of Denari at the time. Such evidence helped to inform Defendants’ 

reasons for wanting to sever their business relationship with Penn and the animosity that 

developed between Penn and Defendants. Defendants were wary of Penn’s association 

with Denari and it was proper for Defendants to introduce evidence as to the reasons 

why. Plaintiffs had ample opportunity to cross-examine Defendants’ witnesses regarding 

Denari’s background and whether Defendants’ stated concerns about Penn’s association 

with Denari was legitimate. Viewing the three-week trial as a whole, the Court cannot 

say that the evidence concerning Denari’s background affected the outcome of the trial. 

 For the foregoing reasons, the Court rejects Plaintiffs’ arguments regarding the admission 

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of evidence. A new trial is not warranted. 

IV. 

The Court DENIES Plaintiffs’ motion for judgment as a matter of law or, in the 

alternative, for a new trial (ECF No. 309). The Court finds no basis upon which to overturn the 

verdict of the jury in this case. Accordingly, the Court instructs the Clerk to enter judgment in 

this action in accordance with the jury’s verdict. 

IT IS SO ORDERED. 

 /s/ Gregory L. Frost 

 GREGORY L. FROST 

 UNITED STATES DISTRICT JUDGE 

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