Opinion ID: 1272643
Heading Depth: 2
Heading Rank: 2

Heading: Sufficiency of the Evidence & Burden of Proof Instruction

Text: Minsor next argues that the district court erroneously denied its motion for a new trial on the grounds that the jury was given the wrong burden of proof on the fraud claim and that PSG did not present sufficient evidence `to support the jury's verdict on that claim. Under Wisconsin law, which the parties agree applies, PSG had to prove the following elements to support its fraud claim: (1) Minsor made a factual misrepresentation before contract formation, (2) Minsor knew the representation was untrue or made it recklessly without caring whether it was true, (3) Minsor made the representation intending to deceive PSG and induce PSG to act on it, and (4) PSG believed the representation to be true and justifiably relied on it. Kaloti Enters., Inc. v. Kellogg Sales Co., 283 Wis.2d 555, 699 N.W.2d 205, 211 (2005); Malzewski v. Rapkin, 296 Wis.2d 98, 723 N.W.2d 156, 162 (2006). Each element must be proven by clear, satisfactory, and convincing evidence. Digicorp, Inc. v. Ameritech Corp., 262 Wis.2d 32, 662 N.W.2d 652, 663 (2003) (internal quotation marks omitted). The jury, however, was instructed that in order to find that Minsor committed fraud, PSG had the burden of establishing each element by a preponderance of the evidence. PSG submitted the wrong instruction to the district court, and the error went unchecked. Minsor never supplied its own correct instruction and waited until its motion for a new trial to challenge the court's instruction. Fed.R.Civ.P. 51(d)(2) permits a court to consider a plain error in the jury instructions affecting substantial rights that has not been preserved as required by Fed.R.Civ.P. 51(d)(1). As in the criminal context, before an appellate court can correct an error not raised at trial, there must be (1) error, (2) that is plain, and (3) that affects substantial rights, and (4) the court must be convinced that the error seriously affects the fairness, integrity or public reputation of judicial proceedings. See Johnson v. United States, 520 U.S. 461, 466-67, 117 S.Ct. 1544, 137 L.Ed.2d 718 (1997) (internal quotation marks omitted); Higbee v. Sentry Ins. Co., 440 F.3d 408, 409 (7th Cir.2006). Although the district court clearly erred by giving the wrong instruction, we find that Minsor has not met its burden of establishing that the error affected substantial rights, i.e., that the outcome probably would have been different without the error. United States v. Pree, 408 F.3d 855, 869 (7th Cir.2005) (internal quotation marks omitted). We conclude that the jury probably would have found that Minsor committed fraud, even if it had been instructed under the proper, higher burden of proof of clear, satisfactory, and convincing evidence. In challenging this point, Minsor focuses principally on the last element of the fraud claim: that PSG believed the representation to be true and justifiably relied on it. Minsor points out that before PSG signed the contract, it had already begun working with the prototype forgings and knew that they contained more than 2.5 millimeters of excess material. Therefore, Minsor contends, PSG could not have justifiably relied on Minsor's statement that the machines it was making would only have to remove 2.0 millimeters to 2.5 millimeters of excess material from the forgings. This argument ignores the evidence that Minsor made further false representations about the excess material after PSG informed Minsor of the difficulties it was having with the prototype forgings. Rick Glowacki (of PSG) testified that Brett Stevenson (of Minsor) told him that the prototype forgings were just preliminary and could be changed later. Based on this statement, Glowacki was reassured that the original representations about the excess material to be removed from the forging would be honored even though the prototype forgings turned out to have more excess material than expected. PSG presented enough evidence for the jury to conclude that Stevenson's statement was knowingly false. Specifically, Patrick Smith (of Minsor) testified that he knew the prototype forgings probably could not be changed early in the process, around the same time that Stevenson told Glowacki the prototype forgings could be changed. Smith also testified that he had discussions with Stevenson about problems with the prototypes. The jury could easily infer from this testimony that at the time Stevenson told Glowacki that changes could be made to the prototypes, Stevenson, like Smith, knew that changes probably would not be possible. Indeed, that the jury awarded PSG punitive damages suggests that it found by clear, satisfactory, and convincing evidence [2] that Stevenhad made a knowing misrepresentation. Cf. United States v. Verrusio, 803 F.2d 885, 892 (7th Cir.1986) (finding plain error when an incorrect burden of persuasion was assigned to a criminal defendant because the evidence on the relevant issue was roughly in equipoise). In its reply brief, Minsor argues that PSG was not justified in relying on Stevenson's statement because all he said was that the forgings could be changed, not that they would be changed, and because PSG made no attempt to write this assurance into the contract. A party is not justified in relying on a representation that it should recognize as obviously false. Hennig v. Ahearn, 230 Wis.2d 149, 601 N.W.2d 14, 24 (1999). But Minsor's representation that changes could be made to the forgings was not obviously false. As we have pointed out, there was enough evidence for the jury to conclude that Minsor knew there was little possibility of changing the forgings when it told PSG otherwise. Furthermore, Glowacki testified that PSG relied on Minsor's statement that changes would be possible when it agreed to go through with the contract in spite of the problems it was having with the prototypes. The jury could have questioned whether PSG really did rely on Stevenson's statement about making changes to the forgings given the vague and uncertain nature of that statement. But the jury's verdict suggests that it believed Glowacki's testimony that PSG did rely on Stevenson's statement, and we do not ordinarily overturn a jury's credibility finding. Pearson v. Welborn, 471 F.3d 732, 738 (7th Cir.2006). At any rate, Minsor has failed to show that the particular error here is of the kind that if left uncorrected would result in a miscarriage of justice. As explained above, Minsor probably would have lost on PSG's fraud claim even if the jury had been properly instructed, so Minsor is hard-pressed in claiming that this error tainted the district court proceedings. And here, the civil litigant claiming that it alone has been harmed by an erroneous instruction bears significant responsibility for that error in the first place. Cf. Diaz-Fonseca v. Puerto Rico, 451 F.3d 13, 36 (1st Cir.2006) (vacating damages award stemming from an erroneous jury instruction in an Individuals with Disabilities Education Act case in part because the award would impact non-party school children by diverting scarce educational resources). Minsor had a chance to submit proposed jury instructions to the court. See Fed. R.Civ.P. 51(a). It chose not to do so, instead relying on the instructions submitted by PSG. Minsor has not provided any reason why the court should, cure this self-inflicted wound. See Rivera Castillo v. Autokirey, Inc., 379 F.3d 4, 10 (1st Cir.2004); see id. at 12 (finding no miscarriage of justice when a party failed to propose jury instructions or object to the court's instructions). Indeed, Minsor's failings run deeper: when the parties were hashing out the final instructions and the court sought to clarify that PSG's punitive damages claim required a higher burden of proof than the preponderance standard, Minsor's counsel simply agreed, never alerting the court that a higher burden should also apply to PSG's fraud claim. In sum, because Minsor has not given us a good reason to excuse its many mistakes, we conclude that the erroneous instruction here did not seriously affect[ ] the fairness, integrity or public reputation of judicial proceedings.