Opinion ID: 201377
Heading Depth: 3
Heading Rank: 1

Heading: Admission of Evidence of Galileo's Insider Trading Policies

Text: 52 Happ argues the district court erred in admitting evidence of Galileo's insider trading policies and in instructing the jury that it must decide whether Galileo had such a policy. He argues that such evidence is irrelevant, and, even if it were relevant, that there was no evidence Happ knew about the policy. 53 No error in the admission of evidence is ground for granting a new trial unless refusal to take such action appears to the court inconsistent with substantial justice. Fed.R.Civ.P. 61. Ordinarily, the admission of evidence is not prejudicial if the facts have already been shown by admissible evidence, but it would be inconsistent with substantial justice if the evidence is insufficient to support the verdict without the erroneously admitted evidence. deMars v. Equitable Life Assurance Soc'y of United States, 610 F.2d 55, 62 (1st Cir.1979). 54 Here, the evidence of Galileo's insider trading policy was arguably relevant to establish that Happ had a duty of trust or confidence, which he violated, to refrain from using material, nonpublic information. See supra note 1 (quoting 17 C.F.R. § 240.10b-5); Dirks v. SEC, 463 U.S. 646, 654-55, 103 S.Ct. 3255, 77 L.Ed.2d 911 (1983); Chiarella v. United States, 445 U.S. 222, 228-29, 100 S.Ct. 1108, 63 L.Ed.2d 348 (1980). In this case, the further evidence was of questionable necessity, as the parties stipulated that Happ was a Galileo director, and the court instructed the jury that a director of a corporation has a fiduciary duty to the corporation and its shareholders. See id. Happ testified that he knew of his fiduciary duty not to engage in trades of Galileo stock while in possession of nonpublic information. Given that Happ's duty to Galileo's shareholders was well-established by the above, the court might possibly have excluded as cumulative the evidence of Galileo's own insider trading policies. However, we need not and do not decide whether the court's decision to admit this evidence was error. At the very worst, assuming error, the error was harmless. See deMars, 610 F.2d at 62 (admission of cumulative evidence was harmless error). 9 By the same token, we see no adverse effect on Happ's substantial rights in the court's instruction to the jury that it should find whether Galileo had such a policy. See Sheek, 235 F.3d at 697. 55