Opinion ID: 486380
Heading Depth: 2
Heading Rank: 2

Heading: Evidentiary Rulings and Jury Instructions

Text: 67 Assuming that the issue of the settlement's reasonableness properly went to the jury, Lexington claims that improper evidentiary and procedural rulings nevertheless require a new trial. 68 First, Lexington claims that the district court improperly excluded expert testimony by Carol Strickland, the claims examiner assigned to the Soppe case by the CAT fund. Ms. Strickland had been a claims examiner for four and one half years with the CAT Fund and had handled approximately 500 claims. In her deposition Mrs. Strickland stated that the potential jury verdict was only between 2 and 2.5 million dollars, so a seven million settlement was unreasonable. 69 The district court refused to permit Ms. Strickland to testify about her evaluation of the potential jury verdict and excluded Ms. Strickland's written evaluation in her recommendation to the CAT Fund. The court also refused testimony regarding Ms. Strickland's opinion of the settlement eventually made. In doing so, the court relied heavily on the fact that Mrs. Strickland was not a lawyer and thus could not be familiar with the myriad factors that might influence a potential jury verdict. 70 A district court has broad discretion to determine the qualifications of an expert. Universal Athletic Sales Co. v. American Gym Recreational & Athletic Equipment Corp., 546 F.2d 530, 537 (3d Cir.) cert. denied, 430 U.S. 984, 97 S.Ct. 1681, 52 L.Ed.2d 378 (1976); 3 Weinstein & Berger, Weinstein's Evidence p 702, at 702-22 & nn. 4-5 (1985). Although we do not believe that only lawyers are qualified to comment on a claim's reasonable settlement value, we cannot say that the district court abused its discretion in this case. Strickland had had several years experience as a claims adjuster, but she was not shown to have any experience with claims approaching the magnitude presented by this case. 71 Lexington also challenges the district court's instructions to the jury about how it might consider statements admitted through transcripts of the state court settlement hearings. The district court admitted the transcript of the settlement hearings of April 4 and 5, 1984, at which HUP, Mrs. Soppe and Dr. Trotman presented the terms of the settlement. In that hearing the attorneys and Judge Goodheart made many statements that the settlement was reasonable. 10 The district court also admitted the transcript of May 17 hearing, at which the Deputy Attorney General of Pennsylvania 11 expressed his view that the settlement was wise and in the best interests of HUP. 72 The district court approved the reading of the transcripts largely on the grounds that the oral presentation to Judge Goodheart constituted the fullest representation of the terms of the settlement. In accordance with objection by Lexington's counsel, the district court agreed that the testimony in the transcripts would not be admissible to prove the reasonableness of the settlement. In its opinion denying Lexington's motions for judgment n.o.v. and for a new trial, the district court further stated that the transcripts were admissible not to prove the truth of the matter asserted, that in fact the settlement was reasonable, but were admissible merely to show what was presented in open court, an act of independent legal significance. 73 Despite these statements, the district court later permitted HUP's counsel to state during closing argument that Judge Goodheart approved the settlement as being fair and reasonable. The district court also told the jury: 74 You may take into consideration the fact that the Judge approved the settlement in a presentation in open court; the fact that Lexington did not object to it until after the present action was filed.... You may take into consideration the lawyers' opinions that are involved in the underlying action, their views as to whether or not it was a fair settlement. You may take that into consideration. 75 Later, the district court heightened its instruction regarding the testimony of the lawyers during the Soppe proceeding: 76 I remarked about the settlement proceedings before Judge Goodheart. I just want to add I did say that you can take into consideration the lawyers' view, that is, the lawyers involved in the Soppe litigation, their view of the fairness of the settlement, whether it was reasonable. Their views are entitled to great weight and you can take that into consideration. 77 Lexington objects that the district court erred in its use of the settlement hearing transcripts and particularly in permitting the jury to consider the opinion of Judge Goodheart that the settlement arrived at between Mrs. Soppe and the health care providers was reasonable. We agree that the district court partially erred. We do not doubt that the district court properly admitted the transcripts of the April 4th and 5th hearings before Judge Goodheart to indicate the content of the settlement agreement. Furthermore, because Lexington never sought to redact the transcript to exclude the alleged hearsay elements, the admission of Judge Goodheart's statement and the statements of counsel was proper. However, we disagree with the court's admission of the May 17 transcript containing the Deputy Attorney General's statements as well as the uses permitted of Judge Goodheart's statements and the statement of counsel in the April 4th and 5th hearings. 78 We first consider the statements of counsel for Soppe and HUP during the Soppe settlement proceedings. The district court properly admitted the April 4th and 5th transcripts to prove the content of the settlement because the mere fact that these assertions were made would itself affect the legal rights of the parties. Fed.R.Evid. 801, advisory committee's note. To the extent that the statements of counsel purport to demonstrate that the settlement was reasonable, however, or even that counsel believed it was reasonable, the statements were classic hearsay. Although the views of HUP's counsel may have been entitled to and accorded great weight in the Soppe litigation, and may also be highly probative here, those views cannot be put into evidence through out-of-court statements not subject to cross-examination. Indeed, these statements illustrate the purposes of the hearsay exception, for counsel made these statements after initiation of the Soppe litigation with the strong self-interest in demonstrating the settlement's reasonableness. 79 We also believe that the district court erred in its instructions about Judge Goodheart's statement and in its admission of the statements of the Deputy Attorney General. HUP offers no justification for admission of the May 17th hearing transcripts containing statements of the Deputy Attorney General. The hearing occurred solely for the Deputy to make his statement. With regard to Judge Goodheart's statements, although at first blush they might appear to have some independent legal significance, we cannot, upon analysis, identify any such basis for their admission in the Federal Rules of Evidence. 80 HUP attempts to justify the admission of Judge Goodheart's statements on the ground that they indicate Judge Goodheart's state of mind toward the settlement and were accordingly admissible under Fed.R.Evid. 803(3). But Judge Goodheart's statements went far beyond communicating his state of mind, and the district court permitted their use for more than that purpose. The essence of the state of mind exception is that there are circumstantial guarantees of trustworthiness attendant to a statement that reflects a then existing mental, emotional or physical condition such as intent, plan, motive, design, mental feeling, pain or bodily health. The rule explicitly does not encompass a statement of memory or belief, and, fairly read, it does not contemplate the kind of reflective judicial pronouncement that is subsumed within a statement that a settlement is fair and reasonable. See Rule 803(3) advisory committee's note (state of mind exception is specific example of Rule 803(1) exception for present sense impression). 81 HUP also seeks to justify the admission and use of these statements through an ambiguous reference to Rule 803(8). Although the Ninth Circuit has applied the rule to admit a transcript of a former proceeding, United States v. Arias, 575 F.2d 253, 254 (9th Cir.), cert. denied, 439 U.S. 868, 99 S.Ct. 196, 58 L.Ed.2d 179 (1978), it did so only to prove that testimony and an oath were given; the statements given were not admissible to prove truth of the matter asserted. Admission of prior testimony through a court transcript, merely because the testimony was observed and recorded pursuant to duty imposed by law, would emasculate large portions of the hearsay rule. The advisory committee's note to Rule 803(8) cites with approval the case of Wong Wing Foo v. McGrath, 196 F.2d 120, 123 (9th Cir.1952), which held that a transcript of a former proceeding is not admissible under the government records exception to prove the truth of matters asserted by a witness quoted therein. 82 Neither does Rule 803(8)(C) apply to the statements of Judge Goodheart. Rule 803(8)(C) specifically refers to factual findings resulting from an investigation made pursuant to authority granted by law, and the advisory committee's note focuses specifically on the findings of officials and agencies within the executive branch. Neither the advisory note nor the leading treatises make even the remotest reference to judicial findings. See, e.g., McCormick on Evidence Sec. 316, at 890 (E.W. Cleary, ed., 3d ed. 1984); J. Weinstein & M. Berger, 4 Weinstein's Evidence p 803(8) (1985). Furthermore, Rule 803(8)(C) requires the district court to determine if the source or other circumstances indicate lack of trustworthiness. Because a trustworthiness evaluation might involve calling the author of the fact-finding or his staff members to permit parties to impeach their work, the need for judicial confidentiality makes judicial findings unsuitable for this scrutiny. Finally, the general rule is that judicial findings are inadmissible against a party not present in the prior litigation. See McCormick on Evidence supra, Sec. 318, at 893-94; V.J. Wigmore, Evidence Sec. 1671a (Chadbourn rev. 1974). HUP's reading of Rule 803(8)(C) would contradict that rule, yet HUP has offered no indication that courts have altered their practice, nor do we believe that they should. 83 Even if Rule 803(8)(C) did apply to judicial findings, however, use of Judge Goodheart's statements would still be impermissible. The statements do not appear to constitute true judicial findings, for there appears to have been no warrant or authority for Judge Goodheart to approve the settlement. Even if there were, Judge Goodheart indicated that he judged the fairness of the settlement only from the standpoint of three parties, apparently referring to Mrs. Soppe, HUP, and Dr. Trotman. (The Deputy Attorney General similarly examined the reasonableness of the settlement from HUP's perspective, not from the perspective of Lexington.) Using these statements to prove the reasonableness of the settlement involved the use of bench statements out of context without opportunity for cross examination, implicating many of the dangers the hearsay rule is designed to prevent. 84 A final possibility is Rule 803(24), the so-called residual exception. That rule, however, was not invoked at trial, and we have required some degree of rigor attendant to its invocation. See Zenith Radio Corp. v. Matsushita Elec. Ind. Co., 723 F.2d 238 at 301-03 (3d Cir.1983), rev'd on other grounds, 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). In any event, the lack of demonstrated legal warrant for Judge Goodheart's approval. Judge Goodheart's explicit lack of focus on the interests of Lexington, and the absence of any party before Judge Goodheart with an interest in challenging the settlement's reasonableness undermine any possible reliance on the residual exception, the touchstone of which is special circumstantial guarantee of trustworthiness. 85 In sum, the transcripts of the April 4th and 5th hearings were admissible to indicate the terms of the settlement, but insofar as the district court permitted the jury to conclude that the settlement was reasonable on the basis of Judge Goodheart's statements, or the out-of-court statements of counsel, it erred. The court also erred in admitting the transcript of the May 17 hearing, for it was conducted solely to present the views of the Deputy Attorney General. 12