Opinion ID: 389315
Heading Depth: 2
Heading Rank: 1

Heading: All the Evidence Should Be Considered on a Motion for Directed Verdict.

Text: 32 In reviewing a district court's grant of a motion for directed verdict, the standard to be applied by the court of appeals is the same as that applied by the trial court. 5A Moore's Federal Practice P 50.07(2) at 50-82 to -83 (2d ed. 1977); see C-Suzanne Beauty Salon, Ltd. v. General Insurance Co., 574 F.2d 106, 112 n.10 (2d Cir. 1978). That standard, which has long been settled in this circuit, was most recently enunciated in Chillicothe Sand & Gravel Co. v. Martin Marietta Corp., 615 F.2d 427 (7th Cir. 1980): 33 (I)t is our task to determine whether there is substantial evidence to support (appellant's) claim and upon which evidence a jury could properly have found in favor of (appellant) This standard requires this Court to view all of the evidence in the light most favorable to (the appellant). 34 Id. at 430 (Emphasis added. Citations omitted.); accord, Hannigan v. Sears, Roebuck & Co., 410 F.2d 285, 288 (7th Cir.), cert. denied, 396 U.S. 902, 90 S.Ct. 214, 24 L.Ed.2d 178 (1969). Both the Chillicothe and Hannigan expressions of the rule reflect the requirement that the evidence, taken as a whole, provide a sufficient probative basis upon which a jury could reasonably reach a verdict, without speculation over legally unfounded claims. Brady v. Southern Railway, 320 U.S. 476, 480, 64 S.Ct. 232, 234, 88 L.Ed. 239 (1943). 35 Thus, in Hohmann v. Packard Instrument Co., 471 F.2d 815 (7th Cir. 1973), this court upheld the grant of a directed verdict in a suit brought under SEC Rule 10b-5, 17 C.F.R. § 240.10b-5 (1980), finding that the defendant's failure to disclose its purpose to abandon the product accounting for two-thirds of its sales pursuant to a long-planned but undisclosed model changeover was not misleading, and that the plaintiffs had failed to provide a foundation of fact sufficient to sustain their burden of proof. In a thoughtful opinion, Judge Hastings reviewed the standards for ruling on a motion for directed verdict, and concluded that the role of the appellate court in the directed verdict determination is to evaluate the evidence to determine whether it is of sufficient probative value that members of the jury might fairly and impartially differ as to the inferences to be reasonably drawn therefrom. Id. at 820. 36 Although we view, in the present situation, the evidence in the most favorable light to appellants, on the other hand it is not the rule in this circuit that only testimony elicited on direct examination may be considered in a motion for directed verdict. As the Hannigan and Chillicothe courts acknowledged, the court must consider, ever mindful that it must do so in the light most favorable to the non-moving party, all the evidence in determining whether there is enough to create a jury question. As we pointed out in Brunner v. Minneapolis, St. Paul & Sault Ste. Marie Railroad, 240 F.2d 608 (7th Cir. 1957), (u)nder well established rules, plaintiff is entitled to have the credible evidence considered in the light most favorable to her. However, this does not mean that we may ignore uncontradicted, unimpeached evidence supporting defendants' position. Id. at 609 (emphasis added). 37 B. The Grant of a Directed Verdict May Be Appropriate in a Trial Where Motive and Good Faith Have Been Placed in Issue. 38 The plaintiffs also contend that because the question of the directors' motives and good faith has been placed in issue, resolution by directed verdict is inappropriate. They rely on language in two cases, Sartor v. Arkansas Natural Gas Corp., 321 U.S. 620, 64 S.Ct. 724, 88 L.Ed. 967 (1944) (issue as to amount of damages), and Staren v. American National Bank and Trust Co., 529 F.2d 1257 (7th Cir. 1976) (issue as to whether individuals purchased securities for their own account or as agents), in which a trial court's grant of summary judgment was overturned. These cases are inapt for two reasons. First, the motion for summary judgment under Fed.R.Civ.P. 56 requires that there be no genuine issue as to any material fact. Thus, to survive summary judgment a party need only raise an issue of fact, whereas the test on directed verdict is whether a party has presented sufficient evidence to support a finding in his favor on that contested issue. The directed verdict situation thus presents a higher evidentiary hurdle than the preliminary test of the summary judgment. Second, even under the Sartor standard, (t)hat state of mind should generally be a jury issue does not mean it should always be so in all contexts, especially where the issue is recklessness, which is ordinarily inferred from objective facts. Washington Post Co. v. Keogh, 365 F.2d 965, 967-68 (D.C.Cir.1966), cert. denied, 385 U.S. 1011, 87 S.Ct. 708, 17 L.Ed.2d 548 (1967) (footnote omitted). 39 In this case the plaintiffs have placed in issue whether the defendants violated the antifraud prohibitions of the federal securities laws. The requisite mental state for such violations is at least recklessness, as the plaintiffs recognize in their brief, citing Sundstrand Corp. v. Sun Chemical Corp., 553 F.2d 1033 (7th Cir.), cert. denied, 434 U.S. 875, 98 S.Ct. 224, 225, 54 L.Ed.2d 155 (1977). As the Keogh court correctly pointed out, that mental state must be inferred from objective facts. The question whether there are sufficient objective facts on which the jury can base a reasonable inference is the essence of any directed verdict determination by the trial court, Hohmann v. Packard Instrument Corp., 471 F.2d at 819, and a directed verdict is thus no less appropriate in this case than in any other.