The Hon. G reg ory F. Va n Tatenhove , United States District J udg e for the Easter

n * District of Ke ntucky , sitti ng by desig nation. NO T R EC OM M EN DE D F OR F UL L- TEX T P UB LIC AT ION F ile Nam e: 09a0774n.06 No. 07-3568 UN ITED STA TES C OU RT OF AP P EA LS F OR THE SI XT H C IR CU IT

______________________________________________________________________________ M A G IC A L F A R M S , IN C

. , an d M A J E S T IC MEADOWS AL PACAS, I NC., Pla int if fs -A pp e lla nts , v. L AND O’ L AKES, I

NC., and L AND O- L AKES F ARMLAN D F EE D, L L C, De fe nd ants -A

pp e lle e s.

_______________________________________ ) ) ) ) ) ) ) ) ) ) ) ) ) On Appea l from the United

States District Court for the No rt he rn Di str ic t of

Oh io

BEF ORE: BA TCHEL DER, Chief J udg e, DAU GHTREY, Circuit Judge, a nd VAN TA TENHOV E , District J udg e. *

VAN TATENHOVE , D istri c t Judg e . M a g ic a l F arm s , Inc ., and Ma je sti c Me a do ws Al pa c a s, I nc . (c oll e c tiv e ly “ the F arm s” ), c ha lle ng e fo ur de c isi on s ma de by the Di str ic t Court duri ngthe c ours e of their litigation with L and O’ L akes, Inc., and L and O’L akes Far mland Fe ed, L L C (collectively “the L akes” ). F or the re asons that follow, we RE VE RSE and REMAND for a new tria l. I. Th e F arm s ra ise a lpa c a s. I n th e wi nte r o f 2 00 3, the y purc ha se d a lpa c a

fe e d f ro m th e L a ke s. As a re s u l t of eating this fee d, many alpac as died or w ere injured. The a lpaca fee d had bee n-2-

manufa ct u red in the L akes’ Massillon plant, the same plant wher e chic ken fe ed, conta ining a n ion op ho re anti bio tic ing re die nt c a lle d s a lin omyc in, wa s ma nu fact ure d. Sa lin omyc in, wh ic h is extremely tox ic to alpac as, contaminated the fe ed purc hased by the Fa rms. Th e Farms alleg ed neg lige nce, ne g lige nce pe r se , s tr ic t li a bil ity in t or t, a nd fr a ud in

connec tion with the production o f t h e alpaca f eed. Prior to tria l, the L akes a dmitted that they

n egl i gen t l y

m an u fa ct u re d

t h e a l p ac a f

ee d , t h at t h e fe edwa s d ef

ec t i v e b ec au s e i td ev i at edfr o md es i gn specific ations at the time it left the manufa cture r, and that the tainted feed prox imately cause d the deaths of 73 alpac as owned or boar ded by Mag ical F arms that ing ested the f eed. T hus, the rema ining issues befor e the jury

wer e: (1) the amount of dama g es with reg ard to the 73 de cea sed alpa cas; (2)

c a us a tio n a s to the de a th o f o the r d e c e a se d a lpa c a s o wne d b y Ma g ic a l F arm s a

nd a ll M a je sti c Meadow s ’ d ec ea s ed alpac as; and (3) liability and dama g es on the F arms’ c laims related to a ll the aff ecte d alpac as that had c onsumed the contaminated fe ed but had not died. At the conc lusion of the trial, the j ury returne d a verdict in favor of the F arms. I t awar ded Mag ical F arms compe nsatory damag es in the amount of $1,607,666.60 and Majestic Mea dows

c o mp e n s a t o r

y d am a g e s i nt h e am o u n to f $ 3 0 , 5 0 0

. 0 0

. J u d g m e n tw a s e n t e r e d a c c o r d i n g l y. Although the Fa

rms reque sted punitive damag es among other forms of relief , befor e the tria l

c omm e nc e d, the Di str ic t Court g ra nte d th e L a ke s summa

ry jud g me nt o n a ll p un iti ve dama g e c la ims contained in the Complaint. Then, during the trial, at t he close of t he Farms’ c ase, the District Court g rante d the L akes judgme nt a s a matter of law on the Fa rms’ claim for fra

ud. Additionally , during the trial, the District Court instructed the jury on mitigation of damag es, thoug h the Fa rms objected both to the pro p ri et y

of the instruction and to its content. B efor e fina l judgment wa s entere d, the F ar m s m o v e d f

o r a n e w t r i a l , i n p art o n t h e g r o u n d t h a t t h e j u r y ’ s v e r d i c t w a s i n a d e qu a te to-3-

c omp e ns a te the m f

or the ir inj ur ie s and wa s ag a ins t the we ig ht of the e vid e nc e . Th e Di str ic t Co ur t, howeve r, denie d their motion. On appe al, the F arms cha lleng e the District Court’s de cisions with respec t to their punitive damag es claims, their fra

ud claim, the jury instruction on mitigation of dama g es, and the ir motion for a new tria l. Be cause we a g ree with the Fa rms, we r ever se. II. A. In C o u n t s I, II I, an d

IV o f t h e i r C o mp l a i n t , t h e F ar

m s a l l e g e d

n e g l i g e n c e , p r o d

u c t s l i a b i l i t y, and fr aud and soug ht to rec over punitive da mag es. The District Court gr anted the L akes summar y judgme nt on all of the F arms’ punitive damag es cla ims. This Court revie ws a district cour t’s order g ra nti ngsumma

ry jud g me nt de novo

. See D iCarlo v. Potter , 358 F.3d 408, 414 ( 6 Cir. 2004). th “Summary judgme nt is proper wher e there exists no g enuine issue of materia l fac t and the moving party is entitled to judgme nt as a matter of law .” Jones v . Potter , 488 F.3d 397, 402 ( 6 Cir. 2007) th (c iti ngF e d. R. C iv. P. 5 6( c )) . In c onsi deri ng a mot ion fo r s umm ary

jud g me nt, the Court

“ mus t construe the evidenc e and draw all rea sonable infe renc es in favor of the nonmoving party .” Id. at 4 0 2 -0 3 (c i t i n g Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587 (1986)). Ohio Revised Code § 2315.21 g ov er n s t h e award of punitive dama g es in “tort ac tions,” which th e s t at u t e defines as “ civil action[s] for damag es for injury or loss to person or pr operty .” O.R.C. § 2315.21(A)(1) . Under the statute, punitive damag es ar e only rec overa ble from a defe ndant in a tor t a c tio n if bo th o f t he fo llo wi ngre qu ir e me nts are me t: (1) The actions or omissions of that defe ndant demonstrate malice or ag g ravated or eg reg ious fraud, or

that defe ndant as principal or ma ster knowing ly authorized,-4-

pa rt ic ipate d in , o r r a tif

ie d a c tio ns or

omi ssi on s o f a

n a g e nt o r s e rv ant t

hat s o demonstrate. (2 ) T he tr ie r o f f

a c t ha s r e tur

ne d a ve rd ic t or

ha s made a

de te rm inatio n p ur su ant t o (B )(2) or (3) of t h i s s ection of the total compensatory damag es re cover able by

the pla int if f f ro m th a t de fe nd ant. O.R.C. § 2315.21(C)(1) -(2)

. Although “malice” is not defined by the statute, in Pr esto n v . M ur ty , 32 Ohio St.3d 334, 512 N.E.2d 1174, sy llabus (Ohio 1987), the Ohio Supreme Court de fined malice

a s “ that state of min d un de r wh ic h a pe rs on ’s c on du c t is c ha ra c te ri zed by hatr e d, ill wi ll o r a

sp ir it

o f re veng e” or , alternatively , “a c onscious disreg ard f or the rig hts and safe ty

of other pe rsons that h as a gr ea tp ro b ab i l i t y

o f c au s i n g s u

b s t an t i al h arm. ” In t h ei r C o mp l ai n t , t h e F arm s s p ec i fi ca l l y al l ege that the L akes’ “conduc t evidenc ed a c onscious disreg ard f or the saf ety of the Alpa cas which had a g re a t pr ob a

bil ity of c a us ingsu bs tanti a l ha

rm . D e fe nd ants ’ m a lic iou s a cti on s e nti tle Pla int if fs to punitive damag es.” Thus, only malice, a nd only the sec ond definitio n o f m al i ce p rovided by the Preston court, is at issue. The District Court found that the F arms could not re cover punitive dam ages beca

use they could not show t h at t h e L ak es consc iously disreg arde d the safe ty

of per sons, as the har

m cause d injury to alpaca s , n o t to humans. Wi th respec t to the Far ms’ products liability

claim, the District Court found support for its position in t he Ohio statutes. Ohio R ev i s ed C ode § 2307.80, which

e xpre ssl y g ov e rn s p ro du c ts l ia

bil ity c la ims , p ro vid e s th a t punitive and exemplary

damag es shall not be aw ar d ed . . . in connec tion with a products li ab i lity

claim unless the cla imant establishes, by clea r and c onvincing evidenc e, that har

m for which the claimant is entitled to rec over c ompensatory damag es . . . was the result of misconduct . . . that manifested a flag rant disre g ard of the sa fe ty of persons who might be harme d by the produc t in question.The District Court g rante d the L akes judg ment as a matter of law on the Fa rms’ fr aud 1 claim. For

the re asons set for

th below, howeve r, that dec ision will be re verse d.

-5- O.R.C. § 2307.80 (empha sis a dded). With respec t to the Far ms’ neg lige nce a

nd fra ud claims, the District Court pointed to the plain lang uag e of the Preston sy llabus, which def ined malice as “a

con sci ous d isr e g ard

fo r t he ri g hts and safety of other persons .” Preston , 512 N.E.2d at 1174 (empha sis added). The District Court’s holdi n g re gar d i n g t h e Fa rm s ’ p ro d u ct s liability claim is very straig htforwa

rd and falls s quare ly within the t ext of Ohio law. I n contra st, its hol ding r eg ardingthe Fa rms’ neg lige nce a

nd fra ud claims, for whic h it r elied on Preston , rests on less firm g round. Since

1 Preston , th e Oh io S up re me Court ha s per mitte d p un iti ve dama g e s c la ims to g o f or wa rd wh e re on ly

a c o n s c i o u s d i s r e g ar d

f o r t h e p l a i n t i f

f ’ s r i g h t s , a n d

n o th i s o r

h e r s a f e t y , h a s b e e na l l e g e d

. In Moskov itz v. Mt. Sinai Medical Center , 69 Ohio St.3d 638, 635 N.E.2d 331, 341 (Ohio 1994) , for exampl e, the court consider ed whe ther a punitive damag es aw ard ba sed upon the a lteration, falsification, or destruction of medic al records was proper . The case involved alleg ations of medica l malprac tice ag ainst Dr. Ha rry E. Fig g ie I I I , “who f

ail ed t o t i mely

diag nose and tre at a malig nant tumor on Moskovitz ’s left legand alter ed ce rtain re co rd s t o conce al the fa ct that malpra ctice ha d

occur red.” Id. at 335, sy llabus. The court, afte r citingthe Preston standard, he ld that the punitive damag es aw ard should stand, not bec ause a lteration of the r ecor ds d em o n s trated a conscious disreg ard f

or Mrs. Moskovitz’s safety , but rather beca use it “exhibit ed a total disre g ard f or the law and the r ights of Mr s. Moskovitz and her family .” Id. at 343. Specific ally , had the a lteration not be e n d isc ov e re d, the pla int if fs “wo ul d hav e be e n s ub sta nti a lly le ss l ike ly

to s uc c e e d” on

the ir medical malpr actice claim. Id.-6-

Th e Oh io S up re me Court

a lso c on sid e re d a c ha lle ng e to a jur y ’s punit ive dama g e s awa rd in Di gital & Analog Design Corp. v. North Supply Co. , 4 4 O hio St. 3d 36 , 5 40 N. E. 2d

13 58 (O hio 1989). In that case , Dig ital & Analog soug ht a nd was awa

rded punitive da

mag es as a result of the seizure of g oods from a w are house. Id. at 1359, s yllabus. The cour t expressly

stated that it was “looking to the rec ord her e to see whether the . . . standar d of Preston has bee n met, i.e. , whether the defe ndant ac ted with a ‘c onscious disreg ard f or the rig hts and safe ty of other persons that has a g reat probability

of ca using substantial ha

rm . . . .’” Id. at 1365. The c ourt held that the jury was pre sented with sufficient evidenc e fr om which it might re asonably infer malice f rom the circ umstances, f

inding that NSC ac ted “with a consc ious disreg ard for the r ig h ts o f

o th e r p e r s o n s th a t h a s a

g r e a t p r o b a

b il it y o f c a u s in g s u b s ta n tial h ar m . ” Having so conc luded, it was quite appr opriate f or this jury

to have deter mined that there had bee n a suff icient showing o f l egal malice upon which punitive damag es may

have be en asse ssed. Id. at 1366. There fore , in Digital , even more so than in Mo sk ov itz , it is c le ar t hat th e Oh io S up re me Court permitted a punitive dama g es aw ard to stand whe re the plaintiff a lle g ed only that the def

endant consciously

disreg arde d its rights, and spe cifica lly its property

rig hts, rather

than the saf

ety of a person. I n its decision gr anting summary judgme nt t o t h e L akes on the Fa rms’ punitive damag es claims, the District Cou rt n o t ed t h e “c onspicuous absenc e of the word ‘sa fety ’ in the Digital conclusion.” Additionally , the District Court found “a n internal c ontradiction in the def inition and application of the malice sta ndard f ound in the sy llabus of Preston with the internal a naly sis of the malice standa

rd found within the P reston h o l ding.” The District Court explained that, just a few lines afte r the Preston c ourt state s “ ri g hts and safe ty of other persons,” it state d, “F urthermor e, the

c ourt mus t de te rm ine tha

t su ff ic ie nt e vid e nc e is p re sente d r e ve a lin g that th e pa rt y c on sc iou slyTh e F arm s p oint to oth e r p os t- Preston case s in which the lower Ohio courts and the 2 fede ral c ourt applying O hio law have permitted punitive damag es cla ims to go for war d on the basis of a c onscious disreg ard f or rig hts alone. See, e .g., Lewis v. Horace M ann Ins. Co. , 4 10 F. Sup p. 2d 64 0, 66 5 (N. D. Oh io 2 00 5) (d e nyingthe de fe nd ant s umm ary jud g me nt w ithre sp e c t to punitive damag es bec ause the plaintiff pled that, by violating a

Michig an statutory

rule on ob ta ini ngsa lva g e tit le s, the de fe nd ant h a d c on sc iou sly dis re g ard e d o ne of

his ri g hts ); Morgan v. New Y ork Life Ins. Co. , 5 59 F .3 d 4 25 , 4 40 (6 Cir . 2 00 9) (“ We a re un a ble to c on c lud e that a th -7- dis re g ard e d th e inj ured part y ’s ri g hts or

safe ty .” Preston , 512 N.E.2d at 1176. Ac cordingto the District Court, however , based on the Ohio Rules for the Repor ting of Opinio n s , t he def

inition of malice se t forth in the Preston sy llabus controls. Reg ardle ss of these r

ules, it is the job of this C ourt to determine not only the black le tter law in Ohio with reg ard to punitive dama g es, but also the wa y that law has been interpre ted and a pplied by Ohio’s Supreme Court. See Northl and Ins. Co. v. Guardsman Prods. Inc

. , 141 F.3d 612, 617 (6 th Cir . 1 99 8) ; Im

pe ria l H ote ls C or p. v . D or e , 257 F.3d 615, 620 (6 Cir. 20 0 1 ). I n d ec isions th subsequent to Preston , th e Oh io S up re me Court ha s in dic a te d th a t a

pla int if f m ay g o f or wa rd wi th a cla im for punitive damag es whe re he or she a lleg es malice based on the defe ndant ’s conscious dis re g ard fo r h is o r h e r r ig hts a lon e . A c c or din g ly , th is C ourt mus t do the same . Ind e e d, it h a s, in the ca se of Ave ry Dennison Corp. v. Four Pillars Enterpris e Co. , 45 Fe d. Appx. 479 (6 Cir. 2002), th in which th is Co u rt a s s e rte d th a t “ [u ]n d e r

O h io la w , p u n it iv e d a ma g e s ma

y b e aw ar d e d

in a trade

secr et ca se if the plaintiff e stablishes that the defe ndant ac ted wit h m alice.” Id. at 489 (c iting Py ro ma tics v . P e tru

zie llo , 7 Ohio. App. 3d 131, 454 N.E.2d 588 (1983))

. This Court f urther stated that “ [t ]h e e le me n t o f

ma li c e c anb e e s ta

b li s h e d b y p r o o f o f c o n s c io u s , d e li b e r a te , o r inte ntional

w r o n g d o in g , o r b y s h o w in g th a t th e d e f e n dant had a co nscious disregard for the rights of other persons .” Id. (c i t i n g Ma lon e v . Co ur tya rd by Ma rri ott Ltd . P ar tne rsh ip , 74 Ohio St.3d 440, 659 N.E.2d 1242, 1247-48 ( Ohio 1996)) ( emphasis adde d). 2punitive damag es aw ard in this case violated Ohio law. The rec ord includes e vidence that New

Yo rk L if e c on sc iou sly

dis re g ard e d M or g an’ s r ig ht t o b e fr e e fr om a g e dis c ri min a tio n. ” ); Blust v. Lamar Advertising Co. , 157 Ohio App.3d 787, 801, 813 N.E.2d 902, 912 (O hio Ct. App. 2004) (“V iewing the re cord in the lig ht most favorable to the Blusts, we f ind substantial evidence from wh ic h r e a so na

ble min ds c ou ld c on c lud e that L a mar e mpl oy e e Me lis sa Kr a me r c on sc iou sly disreg arde d the B lusts’ property rig hts by order ing the cutting of

tree s on their prope rty .”). -8- Havingdeter

mined that Ohio law would per mit the F arms’ to r ecove r punitive da mag es for injury to rig hts alone, the Court now must consider whether a g enuine issue of materia l fac t exi sted

a s to wh e the r the L ake s’ a c tio ns de mon str a te d a c on sc iou s d isr e g ard fo r t he F arm s’ pr op e rt

y ri g hts in their alpac as that had a g reat pr obability of causingsubstantial harm. Construing the evidenc e and draw ing all rea sonable infere nces in f avor of the Fa

rms, we conclude that ther e w as s u fficient evidenc e to war

rant pre sentation of the F arms’ punitive damag es claims to the j ury . For example, a provision under

a sec tion labeled “Requireme nts” in the L akes’ Fe ed Qua lity Assuranc e Manua l (“Q A Manua l”) stated, “ To ensure companion animal sa fety and product quality , plants using ionophores will not manufac ture fe ed produc ts for ionophore se nsitive animals such as horse s and some exoti c species.” The Massill on plant, howeve r, m ix ed the alpac a feed on the same e quipment

a s th e c hic ke n f

e e d c on ta ini ngthe ion op ho re sa lin omyc in. F ur the r, at hi s dep os iti on , th e L a ke s’ quality assura nce c laims manag er, Stev e Br own, testified that he r eca lled havingconver sations wi t h i nt h e d ep ar t m en tre gar d i n g i o n o p h o re -f re e m an u fa ct u ri n g p l an t s . Acc ording to Brow n, “I f there is a harmf

ul product an d [ it] is not in a facility [,] it’s very unlikely that that particula

r har mful product c an inadve rtently wind up in the fee d mill.” And, although the Massillon plant h ad been mix ing a lpaca

fee d since 1999, and there is no evidenc e of ionophore contamination befor e the 2003 incident, deposit ion testimony from the L akes’ employ ees e stablished that other ty pes of f eed ha d been c ontaminated due to mixi ng problems, i ncluding fee d at t he Massil lon plant, prior to the alpa ca-9-

fee d incident. Fr om this evidenc e, it c ould be inferr ed that the L akes’ employ ees w ere awa re of and disreg arde d a risk of ionophore contamination of a lpaca feed at the Massillon plant, thereby

c on sc iou sly

dis re g ard ingthe F arm s’ pr op e rt y ri g hts in t

he ir a lpa c a s. Additionally , an insert in the QA Manual eff ective in F ebrua

ry of 2003 listed ionophores as a food a dditive with a high r isk of food saf ety issues. Acc ording to the Manual, ionophore s “[c]an

c a us e de a th i n h or se s, ra

bb its , a nd e xotic anim a ls. ” B ro wn fu rt he r t e sti fi e d th a t he kn e w why pla nts that manufa cture fee d for ionophore -sensitive animals should be ionophore-fr ee, and he stated that he knew specific ally that ionophore poisoni ng had ca used the de aths of horse s. From this evidenc e, it could be inferr ed that the L akes’ employ ees kne w that disreg ardingthe risk of c ontamination had

a g re a t pr ob a

bil ity of c a us ingsu bs tanti a l ha

rm to al pa c a s, inc lud ing de a th. I n o the r w or ds , it c ou ld be infe rre d that the L akes’ employ ees a cted with malice

. Citi ngOh io l aw, the L ake s argue that pu nit ive dama g e s ma

y no t be reco ver e d a g a ins t a corpor ation in the absenc e of e vidence that the cor poration authorized, par

ticipated in, conse nted to, acquie sced in, or r atified the ma licious conduct of i t s age n t s. Se e Tib bs v . Na tio na l H om e Con st. Corp. , 52 Ohio App.2d 281, 295-96, 369 N.E.2d 1218, 1227 ( Ohio Ct. App. 197 7 ); O. R

. C. § 2315.21(C)(1) . Her e, the F arms had suf ficient evidence of corporate authorization and ratific ation to g o f o r w ar d w it h th e ir p u n it iv e d ama g e s c la im s . Wh e n a s k e d a t a d e p o s it io n w h o d e c id e s what fee ds are manufa cture d at a pa rticular f acility , for e x ample, quality assura nce supe rvisor Jeffre y W o r k m a n r e s p o n d e d , “ T h a tw o u l d

b e b r o u g h td o w nt h r o u g hL an d O ’ L a k e s , I ’ m s u r e . ” A d d i t i o n a l l y, Workman testified that no L akes e mploy ee w as disciplined or re primanded in c onnection with the manufa cture of the c ontaminated alpa ca f eed.-10-

Th e L ake s argue tha

t, e ve n if thi s C ou rt de te rm ine s th a t pu nit ive dama g e s a

re ava ila ble to the Fa rms and that ther e wa s sufficient e vidence of malice to allow prese ntat i on of such e vidence to the J ury , the impositi on of punitive damag es i n this case would violate t he due proce ss clause of the United States Constit ution. Specifically , the L akes a rgue that they

had no notice that any

conduct relating to animals c ould subject them to punitive damag es. See B MW of North America, Inc. v

. Go re , 5 1 7 U. S. 559, 574 (1996) (“ Elementar y notions of fairne ss enshrined in our c onstitut ional jur isp ru de nc e dic tate that a pe rs on re c e ive fa ir

no tic e . . . o f t

he c on du c t th a t w ill su

bje c t hi m to punishment . . . .”). This arg ument, howeve r, i s without merit. As set forth above, i n at l east two decisions since Preston , the Ohio Supreme Court has permitted punitive damag es aw ards to stand wher e only

a consc ious disreg ard f

or a pe rson’s rig hts, not safety , was a lleg ed. Se e Mo sk ov itz , 635 N.E.2d at 343; Digital & Analog Design Corp. , 5 40 N. E. 2d a t 13 66 . Si mil arl y , lo we r O hio c ourt s and fe dera l courts applying O hio law have allowed punitive dama g es cla ims to go for war d on the basis of a conscious disreg ard for a per son’s rig hts alone. See Avery Dennison Corp. , 4 5 F e d

. A p p x.

a t 48 9; Le wis , 4 10 F . Su

pp . 2 d at 66 5; Morgan , 5 59 F .3 d at 44 0; Blus t , 813 N.E.2d at 912. I n light of these de cisions, the L akes ha d fair notice that they could be subjec ted to punitive damages f or

c on du c t r e late d to anim a ls, or , s tate d o the rw ise , f or c on sc iou sly

dis re g ard ingthe F arm s’ pr op e rt y ri g hts in t he ir a lpa c a s. For these rea sons, the District Court’s decision to awar d the L akes summar y judgme nt on the Fa rms’ punitive damag es cla ims arising f rom their neg lige nce a

nd fra ud claims is reve rsed. B.The fe dera l courts use e ssentially the same standa

rd. Se e Chr ist ian v . W

al- Ma rt S tor es, 3 Inc. , 252 F.3d 862, 867 ( 6 Cir. 2001). th -11- Duringtrial, afte r the F arms prese nted their case in c hief, the D istrict Court gr anted the L akes judgme nt a s a matter of law on the F arms’ f raud c laim, a dec ision the Far ms appea l. Under F eder al Rule of Civil P roce dure 50( a)( 1), I f a pa rty has bee n fully hear d on an issue during a jury trial and the c ourt finds that a re asonable jury

would not have a

leg ally sufficie nt evidentiary

basis to find for the p art y o nt h a ti s s u e , t h e c o u rtm ay: (A) r esolve the issue a g ainst the party ; and (B ) gra nt a motion for judg ment as a matter of law ag ainst the party

on a cla im or defe nse that, u n d er the controlling law, ca n be maintained or

defe ated only

with a favor able f

inding on that issue. Fe d. R. Civ. P . 50(a) (1)( A)-( B) . I n diversity case s, this C ourt revie ws cha lle n ges u n d er Rule 50 ba se d o n le g a l de te rm inatio ns d e n ovo , an d challeng es base d on insufficient e vidence under the forum state’ s standard of

revie w. K & T Enterprises, Inc. v. Zurich Ins. Co. , 97 F.3d 171, 176 (6 th Cir. 1996). I n Ohi o, “cour ts require that a cour

t presente d with a motion for a dire cted ve rdict

c on str ue the e vid e nc e and

a ll p e rm iss ibl e inf

e re nc e s th e re fr om m os t st ro ng ly in f a vo r o f t he pa rt y

a g a ins t w ho m th e mot ion

is m a de and

c on sid e r n e ith e r t

he we ig ht o f t

he e vid e nc e no r t

he c re dib ili ty of the witnesse s in disposi ng of the motion.” Cantrell v. GAF Corp. , 999 F.2d 1007, 1014- 15 (6 th C i r. 1 9 9 3 ) ( qu o t i n g Construction Interior Sys. Inc. v. M arriott Famil

y Re staurants, Inc. , 984 F.2d 74 9, 75 3 ( 6 Cir . 1 99 3) ). Th e mot ion sh ou ld be g ra nte d “ on ly if

, a ft e r c on sid e ri ng the e vid e nc e in th this lig ht, the re can be but one rea sonable conclusion as to the proper verdic t.” Id. (q u o ting Construction Interior Sys. Inc. , 984 F.2d at 753). 3-12-

Br iefly summarized, the Fa

rms’ fr aud cla im center s around a tag aff ix ed to ea ch bagof

alpac a fee d contaminated w ith salinomy cin which pur ported to list and provide a “guara nteed a naly sis” of all ingr edients in the feed. This analy sis did not mention salinomy cin. Acc ording to the Fa rms, the false r epre sentations contained on the se tag s wer e material to their dec ision to purchase the fee d and g ive it to their alpac as. F urther, the Fa rms contend that the L akes ma de these repr esentations intentionally

or with rec klessness as to their truth or falsity . The F arms cla im that they relied on the L a ke s’ re pr e se ntatio ns re g ard ingthe c on te nts of the fe e d, and tha t su c h r e lia

nc e wa s r e a so na

ble in the circ umstances. B oth pa rt ie s a g re e that, u

nd e r O hio law, the e le me nts of fr a ud are a s f oll ow s: (a ) a re pr e se ntatio n o r, wh e re the re is a duty to d isc los e , c on c e a lme nt o f a fa c t, (b) which is materia l to the transac tion at hand, (c) made falsely , with knowledg e of its fa lsity , or with such utter disre g ard a nd rec klessness as to whe ther it is true or f alse that knowle dg e may

be infe rre d, (d ) wi th t

he int e nt o f m isl e a din g ano the r i nto re lyingup on it, (e) justifiable relianc e upon the r epre sentation or conc ealment, a nd (f) a re sulting injury

proxi mately

cause d by

the re liance. Bu rr v. Sta rk

Cty . B d. Of

Com m’rs , 4 9 1 N. E

. 2 d

1 1 0 1 , ¶ 2 o f s yl l ab u s (O h i o 1 9 8 6 ) ( ci t i n g Cohen v. Lamko, Inc

. , 462 N.E.2d 407 (Ohio 1984)). I n Ohio, then, in an ac tion for fra ud, “it is not necessa

ry for the plaintiff to a lleg e or prove that the defe ndant made the repr esentation knowing it was f alse.” Pumphrey

v. Quillen , 1 35 N. E. 2d

32 8, ¶ 1 of

sylla bu s ( Oh io 1 95 6)

. Rathe r, the pla int if f ne e d o nly prove that the defe ndant m ade the repr esentation with such re cklessness a s to its t ruth or fa lsity that knowledg e may

be implied. Id. at ¶ 2 of sy llabus.-13-

He re , th e Di str ic t Co ur

t r e ste d it s d e c isi on

to g rant th e L a ke s’ mot ion fo r j ud g me nt a s a

m a t t e r o f l aw o n t h e F ar

m s ’ f a i l u r e t o e s t a

b l i s h t h e f

o u rt he l e m e n t : i n t e n tt o m i s l e a d

. S p e c i f i c a l l y, the Court he ld a s f oll ow s: L e t’ s mo ve on

to f ra ud . N ow , k

no wl e dg e is the fi rs t e le me nt o f t his c ount and

it i s a le sse r d e g re e of

pr oo f t ha n in te nt. Th e re fo re , e ve n if thi s Co ur t w ou ld a g re e wi th plaintiffs that there has been such an utter disreg ard for quality control, i

. e. what eventua lly

ends up in the fe ed and know ledg e is im p uted and ther e is sufficie nt evidenc e for

that, the plaintiffs still face the hurdle of intent to mis lead. Intention to mislead can only make sense i n this case such that oncedefendants had k no wle dge, th e n th e

y , wi th t ha t k no wle dge, in te nd

e d, th at is, pu rp os e ly

so ug ht to mislead the plaintiff

s to purchase the fee d knowing there was an adulterated additive. The undisputed evide nce in this ca se shows the de fenda nts only learned of the salinomy cin af

ter the alpaca s started dy ing and t ook immediate s teps to alleviate or lessen the im p ac t

. So even if this Court finds sufficient e vidence to give the fra ud c ount t o th e jur

y on a ll o the r e le me nts , th e int e nt to m isl e a d f a lls sh or t. A nd tha t is e no ug h to ke e p it

fr om r e a c hin g the jur

y . Th e mot ion is g ra

nte d on the fr a

ud c ount. Acc ording to the District Court, the L akes could not have intende d to misl ead the Fa rms unless they knew the f

eed c ontained salinomy cin, or, in other w ords, unless t h ey k n ew their repr esentations reg ardingthe contents of the fee d wer e fa lse. As the Fa rms point out, howeve r, the District Court’s ho ldi nge ff

e c tiv e ly ins e rt s an “ a c tua l kn ow le dg e ” re qu ir e me nt int o a c la im fo r f ra ud wh ic h is no t a pr e re qu isi te fo r m a int a ini ngthe c la im. F ur the r, its interpr etatio n o f O hio law w ou ld p re ve nt a plaintiff from e ver m ai n t aininga fr aud cla im by showing that a stateme nt was made with “utter disreg ard and rec klessness as to whether it is t rue or false,” even thoug h Ohio law spec ifically allows

su c h a c la im. I n Y o -C a n , Inc. v . Y

ogurt Exch., I

nc. , 778 N.E.2d 80, 89 (Ohio Ct. App. 2002), the c ourt states the same element of fra ud this wa y : “ intent to induce re liance on the repr esentation.” Plaintiffs-14-

asser ting a claim of fra

ud do not ha

ve to pr ove that the def

endant intende d to misl ead the m, which would imply

that the def

endant knew its re prese ntations were false. Rather, plaintiffs mer ely have to show that the defe ndant intended for t hem t o rely on the represe ntations that proved to be false. I nterpre ting the f

ourth element of fra

ud in this way , we c onclude that the F arms pre sented

su ff ic ie nt e vid e nc e a t tr ia l on e a c h e le me nt of

fr a ud to p re ve nt j ud g me nt a s a matte r o f l aw. F ir st, as st at ed p re v i ously , they demonstrated that the labels on the c ontaminated fe ed bag s contained repr esentations by

the L akes conce rning their contents. Second, they prese nted evidenc e that they

rea d the labels a

nd would not have pur chase d the fe ed if salinomy cin h ad been listed a s an ingr edient, sug g esting that those repr esentations we re materia l to the tr ansac tion at hand. Third, the Fa rms prese nted suffic ient evidenc e for a jury to find that the L akes a cted with utter disre g ard a nd

rec klessness as to the truth or f alsity of their r epre sentations conce rning the contents of the a lpaca fee d, as they

prese nted eviden ce that the L akes ma nufac tured the f

eed unde r circ umstances that made

c on ta min a ti o nl i k e l y

an d i nd i r e c tv i o l a t i o no f

t h e p r o h i b i t i o no f

t h e Q u a l i t y

A s s u r an c e M anu a l. Four th, the Fa rms prese nted evidence sugg esting that the L akes intended for them to re ly on the label in p ur c ha sin g the fe e d a nd g ivi ngit t o their

a lpa c a s f

or c on sumpt ion ; f

or e xamp le , th e F arm s demonstrated that the l abel stated that the i ng redie nts listed wer e subj ect to “gua rante ed ana ly sis.” Fifth, the F arms pre sented e vidence sug g esting that they justifiably

relie d on the re prese ntations made by the L akes via

the fe ed bag s’ labels. A ma nag er of the plant wher e the contaminate d fee d

wa s ma nu fa c tur e d a dmi tte d th a t “ g ua ra nte e d a na ly sis ” me ans that wh a t is i n th e ba g is s up po se d to be on the label, or w hat is on the label is supposed be in the ba g and nothing else, “ per the formula.” Finally , there was c erta inly sufficient evidence for a jury to find resulting injury , as the L akes admitted that 73 alpac as at Mag ical F arms died a s a re sult of inge sting the f eed.-15-

The L akes a

rgue that the ing redie nt labels on their alpa ca f eed ba g s are repr esentations and pr omi se s r e g ard ingfutur e e ve nts and thu s the Farm s’ fraud c la im c ann ot l ie . T he L a ke s st a te

c o r r e c t l y t h a t , i ng e n e r a l , f

r a u d i s n o t p r e d i c a t e d o n a r e p r e s e n t a t i o nc o n c e r n i n g a f u tu r e e v e n t

. In W illiams v. Edwards , 7 17 N. E.2d 36 8, 37 4 ( Oh io C t. A pp . 1 99 8) , th e c ourt

state d th a t “ fr a

ud is g ener ally predic ated on a misrepre sentation relating to a past or existi ng fac t, and not on promises

or re prese ntations relating to future a ction or conduc t.” Her e, howe ver, the ingr edient labels are not repr esentations reg ardingfuture e vents. Rather, they are repr esentations reg arding the contents of the fe e d at th e tim e it i s so ld. F ur the r, a s po int e d out by the F arm s, the mis la be lin g of the c on te nts of a pr oduct has been rec og nized as a proper basis for a fra ud claim under

Ohio law. See Delahunt v. CytodyneTech. , 241 F. Supp. 2d 827 (S.D. Ohio 2003). For these re ason s , t he District Court’s dec ision to gra nt the L akes judg ment as a matter of law is reve rsed. C. Th e Fa rm s ch alleng e both the District Court’s dec ision to give the jury an instruction on mitigation of damag es and the form of the instruction give n. I n revie wing a cha lleng e t o jury instructions, “[t] he standa rd on appe al . . . is whether the cha rg e, take n as a wh o l e, fairly and adequately submits the i ssues and applica ble law to the jury .” Fisher v. Ford Motor Co. , 224 F.3d 5 7 0 , 5 7 5 -7 6 (6 C i r. 2 0 0 0 ) ( qu o t i n g Un ite d S tates v . M ar tin , 740 F.2d 1352, 1361 ( 6 Cir. 1984)). th th “A ju d g me n t o n a ju

r y v e r d ic t ma

y b e v a c a te d w h e n th e in s tr u c ti o n s , v ie w e d a s a w h ole, wer e confusing , misleading , and pre judicial.” Jones v . Consolidat ed Rail Corp. , 800 F.2d 590, 592 ( 6 th C i r. 1 9 8 6 ) ( ci t i n g DSG Corp. v. Ande rson , 7 5 4 F

. 2 d 6 7 8 , 6 7 9 ( 6 Ci r . 1 9 8 5 ) )

. F u rth e r , a lt h o u g h“ [i ]t th is not error to r efuse to give a re quested instructi o n t h at co rr ectly states the law, a s long a s the-16-

instructions actually

g iven fa irly

and adequately cover the materia l issues,” it is err or “to instruct the jury on an issue when ther e has be en insuffic ient evidenc e pre sented to support a jury finding on that issue.” Jones , 800 F.2d at 592 (citations omitted). Wit h reg ard to the aff

irmative def

ense of mitigation of damag es, the District Court instructed the jur y a s f oll ow s: An inj ur e d p art

y ha s a duty to miti g a te dama g e s; that is, to tak e re a so na ble ste ps to minimi ze damag es re sulting fr om the injury

. The injured party may not rec over f

or damag es that co u l d re asonably have be en avoide d. Howeve r, the lawdoes not require a p ar t y t o take e x traordina ry eff orts to that which is unrea sonable or imp ra c tic a l. After completing the balanc e of the char g e and taking a short rec ess, t he Dist rict C ourt provided the following supplement to the mitigation instruction: Def endants c laim plaintiffs have f ailed to prope rly

mitigate da

mag es. This is an a f f i r m a t i v e d e f

e n s e . T h e b u r d e no f

p r o v i n g ana f

f i r m a t i v e d e f

e n s e b y a pr e po nd e ra

nc e of the e vid e nc e is o n th e de fe nd ants . Y ou sh a ll u se t he same ins tr uc tio ns pr e vio us ly g ive n on pre po nd e ra nc e of the e vid e nc e and

a pp ly it t o th is issue. The F arms ar g ue that the L akes did not prese nt suf ficient evidenc e to suppor t such an instruction, and we ag ree . As noted by the Farms, the L akes de fend the mitigation instruction on the g round that evidenc e wa s introduced at trial that some marke t ex i s t ed for the a lpaca s that had eaten the contaminated f

eed, a nd that the Fa

rms nonetheless r efuse d to sell the alpacas. The Farms’ c laim for damag es, howe ver, w as not based on a n asser tion that no market exis ted for the af fec ted alpac as, but

wa s in ste a d b a se d o n th e dim inutio n in the a lpa c a s’ mark e t va lue . F or e xamp le , th e F arm s’ e xpe rt , Michae l Safley , testified at trial that the mar ket value of

the surviving alpac as wa s reduc ed bytwothirds after they consumed the ionophore-c ontaminated feed. There fore , the Fa rms did not ask for the full marke t value of the affec ted alpacas; rather, they asked for dama g es base d on the price they-17-

would have rec eived ha d the alpac as bee n sold. Thus, it was error for the D istrict Court to give the mitigation cha

rg e. Additionally , with the mitigation instruction, the jury instructions, viewed a s a whole, w ere confusing , misleading , and pre judicial to the Fa

rms, see J

ones , 8 0 0 F.2d at 592, resulting in the jur y ’s pe rp le xing and

inc on sis te nt d ama g e s awa rd . T he jur

y , f or e xamp le , a

wa rd e d M a g ic a l F arm s $1 ,5 14 ,6 66 .6 0 f

or the va lue of

the 73 de c e a se d a lpa c a s f or wh ic h the L a ke s a dmi tte d li a bil ity . T his

a m o u n ti s a

p p r o x i m a t e l y o n e - t h i r d

o f t h e m ar k e tv a l u e f

o r t h o s e a l p a c a s a s t e s t i f

i e d t o b y S a f l e y. Ad dit ion a lly , the jur

y awa rd e d $5, 00 0 ea c h to Ma g ic a l F arm s f or its a lpa c a s Ma sq

ue ra de and

Ce le ste Mo on , tw o a lpa c a s f

or wh ic h the L ake s d id n ot a dmi t li a bil ity fo r t he ir de a ths . Sa fl e y

te sti fi e d th a t, be fo re the tw o a lpa c a s a te the c on tamin a te d fe e d, the y e a c h h a d a

mark e t va lue of

$1 5, 00 0. Thus , althoug h we a

re n o t m i n d rea ders, it appe ars the jur y may have mistake nly

believed that the mitigation i n s t ruction applied to damag es for the 73 dec ease d alpac as. I ndeed, the jury

may have improperly

reduc ed Safle y ’s appr aisals of t h e animals by two-thirds, eve n though the Fa rms wer e entitled to rec over the ir full value. The L akes a

rgue that the jury ’s damag es aw ards f or the de cea sed alpa cas r epre sent a re jection of Safley ’s testimony . I t cer tainly would have be en within the jury ’s discre tion to reject Safe ly ’s

a pp ra isa ls. Th e jur

y ’s awa rd s st ro ng ly su g g e st, ho we ve r, that, r a the r t han wholly

dis c ounti nghis testimony , they

acc epted Safley ’s testimony reg arding the values of the dece ased a lpaca s and then improperly

and uniformly

reduc ed those va lues by two-t h i rd s due to conf

usion reg ardingthe mitigation instruction. We c annot be cer tain, of course , but the mitigation in s t ru ct i o n raises sufficie nt confusion to war rant a finding of pre

judice.The F arms also tang entially argued for

a new trial on the g round that the L akes ma de 4 improper state ments reg ardingthe hea lth of the surviving alpac as duringclosing arguments that pr e jud ic e d th e F arm s and

un du ly inf lue nc e d th e jur

y ’s un su pp or te d d a ma g e s a

wa rd . In o rd e r t o be entitled to a ne w trial on this basis, the Fa rms neede d to “show both that the closingargument wa s im pr op e r a nd tha t [th e y ] we re pr e

jud ic e d b y

the imp ro pr ie ty , th a t is , th a t th e re is a rea sonable proba

bility that the jury ’s ver dict was influenc ed by the improper a

rgument.” Fuhr v. Sc ho ol D ist . o

f Cit yof H az e l P ar k, 364 F.3d 753, 760 ( 6 Cir. 2004). The F arms did not meet th their burde n. -18- F ur the r, the jur

y fo un d th a t Ma g ic a l F arm s pr ov e d th a t th e L a ke s c a us e d M a g ic a l F arm s to

su ff e r i nju ri e s f or its survi vi ng alpa c a s, but in e xplic a bly awa rd e d M a g ic a l F arm s $ 0 f or tho se injuries. This awar d o f z ero da mag es appe ars inconsistent, as the jury awa rded c ompensatory damag es to Majestic Mea dows for its s urviving animals, and a number of the surviving a lpaca s were

co-owned. Acc ording ly , we hold that it was e rror to ins t ru ct the jury

on mitigation of damag es. The gi v i n g o f t h e m i t i g a t i o ni n s t ru ct i o ncau s edt h e j u ry i n s t ru ct i o n s as a w h o l e t o b e c o n fu s i n g, mis le a din g , a

nd pr e jud ic ia l to the F arm s. D. After the j u r

y v e r d ic t b u t b e f

o r e th e c o u rt’ s e n tr

y o f f in a l j u d g me n t, th e F ar

ms mo v e d

the district c ourt for a new trial on the g round that the verdic t w as ag ainst the weig ht of the evidenc e. 4 The c ourt denied the motion and the Fa rms press that a s err or on appe al. W e review the denial of a party ’s m otion for a new trial for abuse of discre tion. Morgan v. New Y ork Life Ins. Co. , 559 F.3d 42 5, 43 4 ( 6 Cir . 2 00 9) . B a se d o n th e dis tr ic t c ourt ’s e rr or s, a s d e ta ile d in the fo re g oin g se c tio ns , th and the g r e a t w e ig h t o f

th e e v id e n c e a g a in s t t

h e ju r y ’ s v e r d ic t, w e c o n c lu d e th a t t h e d is tr ic t c o u rt abused its discre tion by

denying the Fa

rms’ newtrial motion in t his case.-19- III . For the fore g oing rea sons, we RE VE RSE and re mand this matter for a new tria l consistent with this opi nion.