Opinion ID: 2341867
Heading Depth: 1
Heading Rank: 12

Heading: evidence of dr. armstrong's cross-claim

Text: In September 1998, Dr. Armstrong's estate filed a cross-claim against Sandoz alleging fraudulent misrepresentation and gross negligence in Sandoz's marketing of Parlodel and seeking damages for injury to Dr. Armstrong's reputation as well as indemnification in the event Dr. Armstrong was found liable for Mrs. Gunderson's death. The cross-claim specifically alleged that Sandoz engaged in a deliberate marketing effort to misrepresent to prescribing doctors that Parlodel was safe and effective for PPLS when, in fact, it was not, and that had Sandoz fully disclosed the risks of the drug, Dr. Armstrong would not have prescribed it to Mrs. Gunderson. Prior to trial, Sandoz entered into an indemnification agreement with Dr. Armstrong whereby his claims were settled and Sandoz took over defense of the claims against Dr. Armstrong. Accordingly, the cross-claim was dismissed, and at trial, Dr. Armstrong offered no evidence against Sandoz. In response to Sandoz's motion in limine to exclude evidence of the cross-claim, the trial court ruled that the Gundersons could introduce the cross-claim as evidence of the Defendants' non-adverse relationship with each other pursuant to KRE 408 and as relevant to the credibility of Dr. Armstrong's evidence. The Gundersons quoted and discussed the cross-claim during their opening and closing statements. The cross-claim was also mentioned during voir dire (by Sandoz, apparently preemptively, after the motion in limine had already been denied) and introduced into evidence by the Gundersons. The Gundersons claimed at trial that the purpose of introducing the cross-claim was to show that prior to the settlement agreement, Dr. Armstrong claimed that Sandoz had failed to adequately inform him of the risks of Parlodel and deceptively marketed the drug. After the settlement agreement, Dr. Armstrong decided not to introduce any evidence critical of Sandoz's warnings about Parlodel or its marketing of Parlodel. The Gundersons argued that they were entitled to present the cross-claim pursuant to KRE 408 to expose to the jury how Dr. Armstrong's position changed after the settlement agreement and the collusive nature of their relationship at trial, i.e., bias. Sandoz argues that the cross-claim was blatant inadmissible hearsay introduced as substantive evidence against Sandoz. KRE 801. The Gundersons assert on appeal that the cross-claim was non-hearsay as an admission of a party-opponent (KRE 801 A(b)) because in the cross-claim, Dr. Armstrong averred that Parlodel was unsafe and caused Mrs. Gunderson's death, which directly contradicted Dr. Armstrong's position at trial that Parlodel was safe and did not cause postpartum hypertension or seizures. The Court of Appeals ruled that, although the cross-claim may not have been admissible under KRE 801 A, the trial court did not abuse its discretion in admitting the cross-claim under KRE 408 as evidence of the Defendants' potential motive to downplay each other's wrongdoing at trial. The Court of Appeals went on to state that even if it was an abuse of discretion to admit the cross-claim, it was harmless error in this case. Under KRE 408, evidence of a settlement agreement is not admissible to prove liability or invalidity of the claim, but is admissible to show the potential bias of parties who were previously adversaries in the litigation and who may now be motivated to downplay each other's fault. Miller ex. rel. Monticello Baking Co., 125 S.W.3d 274. Neither Defendant in the instant case questioned the admissibility of the settlement agreement. Sandoz simply argues that the cross-claim is wholly independent of the settlement agreement and, thus, does not fall within the ambit of KRE 408. The Gundersons maintain that the admission of the cross-claim was necessary to give meaning to the settlement agreement. While this argument may be tenable in theory, the cross-claim in this case was clearly used by the Gundersons to try to prove Sandoz's liability, as we shall explain below, which is not permitted by KRE 408. KRE 801A(b)1 allows the introduction as non-hearsay of an adverse party's admissions, including admissions contained in superceded or abandoned pleadings, but only against the declaring party. See Dalton v. Mullins, 293 S.W.2d 470 (Ky.1956) (pre-Rules holding that Appellant's abandoned pleading was admissible as competent evidence against Appellant). As this Court made clear in Fisher v. Duckworth, 738 S.W.2d 810, 813 (Ky.1987) (quoting Lawson, The Kentucky Evidence Law Handbook § 8.10 (2d ed.1984)), Admissions are not admissible against a declarant's coparty. See also James v. Wilson, 95 S.W.3d 875, 898 (Ky. App.2002). The Gundersons contend on appeal that the cross-claim was admissible pursuant KRE 801 A(b) because it was used against Dr. Armstrong to contradict his position at trial that Parlodel was safe and could not have caused Mrs. Gunderson's fatal seizure. However, a review of the record belies this contention. In arguing the admissibility of the cross-claim at trial, the Gundersons' counsel stated, this cross-claim only goes against the conduct of Sandoz and would tend to ... exculpate Dr. Armstrong. He further stated, this cross-claim is very prejudicial against, as far as the evidence, against Sandoz, not against Dr. Armstrong. In fact, all of the references to the cross-claim during the Gundersons' opening and closing statements were made in the context of arguing the liability of Sandoz (Dr. Armstrong's co-party), which is not permitted by either KRE 408 or KRE 801 A(b). The Gundersons primarily quoted and displayed pleadings alleging Sandoz's deliberate marketing scheme misrepresenting the safety of Parlodel and its failure to warn Dr. Armstrong of the dangers of the drug. The Gundersons did not qualify these references with any statement to the effect that these pleadings tended to show the bias of Dr. Armstrong's estate or how its position changed at trial after the settlement agreement had been executed. Accordingly, it was error to allow the cross-claim to be admitted for the purpose of proving Sandoz's liability. We must now determine if the error was reversible. KRE 103(a). It must be noted that Sandoz never asked for an admonition limiting the scope of the cross-claim to show only the bias of Dr. Armstrong, pursuant to KRE 105(a), which provides: When evidence which is admissible for one (1) purpose ... but not admissible... for another purpose is admitted, the court, upon request, shall restrict the evidence to its proper scope and admonish the jury accordingly. In the absence of such a request, the admission of the evidence by the trial judge without limitation shall not be a ground for complaint on appeal, except under the palpable error rule. As the Court of Appeals recognized in its analysis of whether the error was harmless: The cross-claim was merely one exhibit out of 172; it was introduced not through a witness but simply through a housekeeping motion after a recess; it occupied only three minutes of an opening argument that was nearly two hours long and comparable portions of lengthy voir dire proceedings and closing argument. The jury is thus not apt to have given it undue weight. It contributed no new facts but only reiterated allegations the Gundersons had already made. It was cumulative even with respect to the facts that Sandoz was footing the bill for Armstrong's defense and had agreed to indemnify him. We would add that the evidence that was cumulative of the cross-claim was voluminous and quite damning. In addition to evidence that we have discussed previously (Sandoz's failure to send the Dear Doctor letters, the language in the second letter maintaining that Parlodel was a reasonable and effective treatment for PPLS, the evidence that Sandoz misrepresented or failed to report known additional ADRs, the misleading ad in the journal of Obstetrics and Gynecology, the attempt to manipulate and downplay the risks of seizure in the ERI report, and Sandoz's instructions to their sales representatives to encourage the continued use of Parlodel for PPLS and not to mention the risks of the drug), there was considerable evidence of Sandoz's sales strategy to push Parlodel for PPLS and that Sandoz referred to Parlodel as their cash cow, despite the known problems with, and the FDA's position on, the drug. Dr. Armstrong's deposition testimony was also cumulative in that he testified that he had not received any information about the risks of Parlodel for PPLS from Sandoz, and that if he had, he would not have prescribed the drug to Mrs. Gunderson. While we recognize the bolstering nature of the allegations in the cross-claim in coming from a co-defendant in the case, in light of the vast amount of persuasive evidence that was cumulative of the allegations therein, we cannot say the error was palpable, i.e., no manifest injustice resulted. KRE 103(e); CR 61.02.