Court Opinion

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Date Created: 2011-02-05 02:36:02+00
Date Added: 2024-06-11T17:26:18.617582
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       United States Court of Appeals
                  FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 21, 2002                   Decided November 29, 2002

                               No. 01–7143

            SHAN SPARSHOTT AND MORGAN J. SPARSHOTT,
                  APPELLEES/CROSS–APPELLANTS

                                     v.

                     FELD ENTERTAINMENT, INC.,
                     APPELLANT/CROSS–APPELLEE

                                    AND

                         CHARLES F. SMITH,
                      APPELLANT/CROSS–APPELLEE

                         Consolidated with
                  Nos. 01-7144, 01–7145 & 01–7146

         Appeals from the United States District Court
                  for the District of Columbia
                         (No. 99cv00551)
                           –————
 Bills of costs must be filed within 14 days after entry of judgment.
The court looks with disfavor upon motions to file bills of costs out
of time.
                              2

  Stephen M. McNabb argued the cause for appellant/cross-
appellee Feld Entertainment, Inc. With him on the briefs
were Joseph T. Small, Jr., John M. Simpson, Anthony E.
DiResta, and Karen M. Moran.
  Dawn E. Boyce argued the cause for appellant/cross-
appellee Charles F. Smith. With her on the briefs was
Whitney Adams.
  James M. Burns argued the cause for appellees/cross-
appellants Shan Sparshott and Morgan J. Sparshott. With
him on the briefs was Bruce L. Marcus. Richard J. Leon
and Robert C. Bonsib entered appearances.

  Before: GINSBURG, Chief Judge, HENDERSON, Circuit Judge,
and WILLIAMS, Senior Circuit Judge.
 Opinion for the Court filed by Senior Circuit Judge
WILLIAMS.
   WILLIAMS, Senior Circuit Judge: Shan Sparshott and
Charles Smith were both employees of Feld Entertainment,
Inc., the operator of the Ringling Bros. circus. Smith was
the Chief Financial Officer, a board member, and a minority
shareholder; his responsibilities included management of firm
security. Sparshott worked in the travel office. In 1993 the
two began a romantic relationship; early in 1994 Shan Spar-
shott moved out of the home that she and her daughter
Morgan had shared with her husband Tracy Sparshott and
into a house for which Smith paid the rent.
   Shan Sparshott has alleged, with powerful supporting evi-
dence, that Smith conducted surveillance over her in a variety
of ways virtually from the start of the relationship—having
her followed, videotaping her at home and work, and wiretap-
ping her home and office phones. Indeed, Smith brought the
relationship crashing to a halt on March 3, 1997 when he
confronted her with an audiotape of a phone call that he
claimed showed she was having an affair with another Feld
employee. Out of all this arose the welter of claims before us
now, as well as quite a few that have dropped by the wayside.
                               3

   Shan and Morgan Sparshott sued Smith and Feld for
violations of the wiretap provisions of the Omnibus Crime
Control and Safe Streets Act of 1968, ch. 119, 82 Stat. 197, 212
(1968) (‘‘Crime Control Act’’) (codified as amended at 18
U.S.C. §§ 2510–2522 (2000)), and sued Feld under Virginia
law for wrongful retention of Smith as an employee. They
also brought several other state law claims, but those claims
did not survive summary judgment and the Sparshotts have
not appealed their dismissal. (Although Morgan joined in the
surviving claims, the district court’s dismissal of her wiretap-
ping claims is not appealed, and in relation to negligent
retention her position is in no way superior to her mother’s
losing claim. Accordingly we refer to Shan Sparshott simply
as Sparshott and to Morgan not at all.) Smith brought
counterclaims against Sparshott, one for malicious prosecu-
tion and three others that were dismissed and are not appeal-
ed.
  At the close of the plaintiffs’ case, the judge granted
judgment as a matter of law for Feld on Sparshott’s claims
for punitive damages and for negligent retention. On the
wiretapping claims the jury found for Sparshott against Feld
and Smith, holding them jointly and severally liable for
$250,000 in compensatory damages. It also awarded her
$250,000 in punitive damages against Smith. Finally, it found
against Smith on his one then-surviving counterclaim.
   On appeal the parties raise a variety of issues. Feld and
Smith argue that Sparshott did not sue on the wiretapping
claim within the prescribed period, namely, within two years
of having ‘‘a reasonable opportunity to discover the violation,’’
18 U.S.C. § 2520(e), so that they should have been granted
judgment as a matter of law. We agree and reverse the
district court. This ruling moots their other arguments on
the wiretapping claims, as well as Sparshott’s cross-appeal for
punitive damages against Feld for the wiretapping.
  Next, Sparshott argues in a cross-appeal that the district
court erred in granting judgment as a matter of law for Feld
on the negligent retention claims. We affirm, finding that
there wasn’t enough evidence for a reasonable jury to find
                               4

that Feld knew or should have known that Smith posed a
danger to others.
   What remains is Smith’s counterclaim for malicious prose-
cution. Here we reverse the district court’s denial of Smith’s
request for a new trial. We agree with his argument that the
district court’s allowance of far less time for him to present
his case than for Sparshott to present hers was unjustified
and prejudicial. The only other issue Smith raises that
clearly relates to his counterclaim is whether the trial court
should have prevented a police officer from testifying as to
facts underlying a charge that had been expunged. We
affirm the district court, finding that Virginia law does not
prevent this sort of testimony.

                          * * *
  Statute of limitations. The statute of limitations for
§ 2520 states:
    A civil action under this section may not be commenced
    later than two years after the date upon which the
    claimant first has a reasonable opportunity to discover
    the violation.
18 U.S.C. § 2520(e). In other words, the statute bars a suit if
the plaintiff had such notice as would lead a reasonable
person either to sue or to launch an investigation that would
likely uncover the requisite facts. Cf. Davis v. Zirkelbach,
149 F.3d 614, 618 (7th Cir. 1998) (describing the inquiry as
requiring ‘‘enough to put [the plaintiff] on inquiry notice that
his rights might have been invaded.’’).
   On both the limitations and negligent retention issues we
review de novo the judge’s decision whether to grant judg-
ment as a matter of law. Holbrook v. Reno, 196 F.3d 255,
259–60 (D.C. Cir. 1999). A court can grant judgment as a
matter of law only if no reasonable juror could have resolved
the issues in the plaintiff’s favor. Id. We view the evidence
in the light most favorable to the plaintiff and draw all
inferences in favor of the plaintiff. Id. Here we find that no
reasonable jury could have found that Sparshott did not have
                               5

a reasonable opportunity to discover Smith’s wiretapping of
her more than two years before the start of the lawsuit.
  Sparshott brought suit on March 3, 1999, exactly two years
after March 3, 1997, when Smith used her recorded phone
conversations to accuse her of infidelity. Sparshott first
points to her testimony that she was unaware of the wiretap-
ping until that date, arguing that as the jury could believe
her, it could reasonably find notice inadequate. This argu-
ment misunderstands the law. Sparshott’s subjective state of
mind is irrelevant. Additionally, there is no need that some-
one actually ‘‘discover’’ or be aware of the violation. Rather,
the question is whether the person had a reasonable opportu-
nity to discover the wiretapping.
  From the very start of her relationship with Smith in 1993
Sparshott made successive discoveries not only of Smith’s
wiretapping but also of other similar intelligence gathering.
True, Smith put her off with promises never to do it again or
with explanations that (we may assume) were not transpar-
ently false. But even if the cumulative effect of the repeated
discoveries were not enough, she also received outside warn-
ings of his wiretapping—warnings with considerable objective
credibility. All told, notice was plainly sufficient well before
the critical date. Below we trace the details of these develop-
ments.
   In 1994 Sparshott found two recording devices under her
bed and connected to the phone jack. The discovery did not
itself tell her that it was Smith who was wiretapping her, but
was clearly evidence of a violation by someone. When Spar-
shott told Smith about this equipment, Smith suggested that
it was Tracy Sparshott, her ex-husband. Soon after that, she
enlisted Smith’s help in wiretapping her ex-husband, her
daughter, and her nanny, and he provided equipment strik-
ingly similar to the recording devices she had found under the
bed. In 1995, picking up a suit of Smith’s at the cleaner’s,
she found in the suit an audiotape of her business conversa-
tions from work. According to Sparshott’s own testimony,
Smith admitted making this recording but promised not to do
it again. This find gave her actual notice that Smith had
                               6

been wiretapping her, as well as added reason to suspect his
denial of the earlier recording. Later in 1995 or 1996,
Sparshott found a recording device attached to the home
office phone. Smith admitted owning the recording device
but claimed he was simply taping his own business calls.
Altogether, the evidence of wiretapping gave Sparshott good
reason to be skeptical of Smith’s explanations and promises.
   In addition, Sparshott had substantial evidence that Smith
was spying on her in other ways. Starting after she had first
moved into a house separate from her husband, Sparshott
several times noticed that someone was following her, and in
January 1997 confirmed that the shadow had been hired by
Smith. She confronted Smith and demanded that he get
counseling. In early 1996, Sparshott discovered five video
cameras hidden inside her house. Smith responded to her
inquiries by saying that the cameras were part of a security
mechanism to protect their house from burglary; but he had
told her nothing about the video cameras earlier, even though
it was she and her daughter who lived in the house. For a
reasonable person these events would surely undermine
Smith’s explanations, denials and promise to quit wiretapping
her.
   Finally, in 1996, Sparshott’s ex-husband, a police detective,
warned her that Smith was tapping her home and office lines.
He even had her sign an affidavit acknowledging that he had
told her of Smith’s wiretapping. Though entitled to discount
her ex-husband’s testimony to some extent (the marital
break-up was not a harmonious one, and active custody
disputes lingered), the fact that Mr. Sparshott was a decorat-
ed police detective and that he went so far as to have her
make an affidavit should have given her notice that she
needed to have this situation investigated. Her own actions
indicate that she at least took him somewhat seriously. As a
result of Mr. Sparshott’s statement, she began leaving her
office to use a payphone to call him. All of these events
occurred more than two years prior to Sparshott filing suit.
A reasonable person would have contacted the police or
someone at Feld to report the various grounds for suspicion.
                               7

Had Sparshott done so, she most likely would have discovered
clear evidence of Smith’s activities.
   Sparshott next seeks to draw a distinction between types of
wiretapping. In 1996 Smith had a caller ID unit installed on
her line at work, but with the display unit in his office, where
he could read what calls were coming in on her line. Some-
time later, he attached a recording device to it so that he
could record her calls. Since Sparshott would often have her
work phone calls forwarded to her home office, this enabled
Smith to wiretap any phone calls flowing through Sparshott’s
office at Feld, whether received by Sparshott at home or at
Feld. Evidently reasoning that the technology, or purpose,
or location of the earlier episodes differed from those of the
caller ID wiretapping, Sparshott claims that the earlier epi-
sodes did not put her on notice of the latter, which she
characterizes as a ‘‘corporate wiretapping scheme.’’
   This distinction fails. Knowledge of one set of incidents,
even if somewhat different in nature or purpose from later
ones (and even if the earlier incidents are not themselves
wiretapping violations, such as the evidence of Smith’s secre-
tive videotaping and shadowing), can provide a ‘‘reasonable
opportunity to discover’’ later violations; the question is what
a reasonable investigation of the known episodes would yield.
Here Sparshott had evidence that Smith had been wiretap-
ping her both at home and at work, and reasonable inquiry
would have uncovered the whole scheme. A plaintiff need not
even know the perpetrators of an illicit wiretapping if knowl-
edge of the wiretapping itself would lead to discovery of the
perpetrators. Andes v. Knox, 905 F.2d 188, 189 (8th Cir.
1990); see also Dyniewicz v. United States, 742 F.2d 484,
486–87 (9th Cir. 1984) (holding in a case presenting a similar
statute of limitations question that where the immediate
physical cause of an injury is known, it does not matter if the
plaintiff does not know who is responsible). She had a
reasonable opportunity to discover all of the violations.
  Sparshott finally argues that Smith fraudulently concealed
his offense, thereby tolling the statute in the absence of more
powerful evidence of notice than is normally required or is
                              8

present here. Indeed, we have indicated that fraudulent
concealment imposes a heavier burden on the defendant to
show notice—something closer to ‘‘actual notice’’—than in a
case untainted by such a concealment. Riddell v. Riddell
Washington Corp., 866 F.2d 1480, 1491 (D.C. Cir. 1989). But
where Congress has chosen a formula (‘‘reasonable opportuni-
ty to discover’’) for a specific and obviously self-concealing
crime such as wiretapping, we question whether it would
make sense to suppose that fraudulent concealment could
alter the test (as opposed to altering the underlying facts to
which it is applied). The two district court cases cited by
Sparshott to support her emphasis on fraudulent concealment
both found the doctrine applicable, and then went on to
inquire simply whether the defendant had shown ‘‘reasonable
opportunity to discover,’’ the statutory formula itself.
Schmidt v. Devino, 106 F. Supp. 2d 345, 350–51 (D. Conn.
2000); In re State Police Litig., 888 F. Supp. 1235, 1249–50
(D. Conn. 1995).
   Further, our interpretation is informed by the legal context
at the time Congress added an explicit mechanism for calcu-
lating the statute of limitations. See Crime Control Act, 82
Stat. at 223–25; Electronic Communications Privacy Act of
1986, Pub. L. No. 99–508, 100 Stat. 1848, 1854 (1986). Before
1986 courts had divided between those holding that the cause
of action became available when the plaintiff discovered it or
through due diligence could have discovered it, and those
holding that it started as soon as the act occurred but could
be tolled in the event of fraudulent concealment. See Brown
v. Am. Broad. Co., 704 F.2d 1296, 1304 (4th Cir. 1983)
(discussing cases). Congress’s 1986 decision to specify ‘‘rea-
sonable opportunity to discover’’ could well be read as simply
a choice of the former. Cf. Hobson v. Wilson, 737 F.2d 1, 35
(D.C. Cir. 1984) (‘‘The doctrine of fraudulent concealment
does not come into play, whatever the lengths to which a
defendant has gone to conceal the wrongs, if a plaintiff is on
notice of a potential claim.’’).
  Of course, as we suggested, the facts underlying fraudulent
concealment may alter application of the ‘‘reasonable oppor-
tunity’’ test. Here, for example, we have noted Smith’s lies
                                9

and his broken promises of reform, which might well impede
discovery of the ongoing wiretapping. In light of those
activities, it is Smith’s plain record of being caught red-
handed as a multiple recidivist (topped off with Tracy Spar-
shott’s emphatic assurance of his guilt) that establishes Spar-
shott’s ‘‘reasonable opportunity.’’
   The final question is whether there are any incidents of
wiretapping which occurred within two years of the plaintiffs’
filing suit. Sparshott argued below that there was enough
evidence to show a violation on March 3, 1997—exactly two
years prior to her suit. But the district court rejected this
argument and charged the jury that if it found that Sparshott
had a reasonable opportunity to discover the violations before
March 3, 1997, the defendants would not be held liable. Trial
Transcript at 1728, 1789–91. Thus, this question is not before
us, having been specifically rejected by the district court, and
not having been cited as error by Sparshott. Therefore we
reverse the district court and find as a matter of law that
Sparshott’s claims under the federal wiretap provisions are
barred by the statute of limitations.
  Negligent retention. Virginia law provides a cause of
action ‘‘for harm resulting from the employer’s negligence in
retaining a dangerous employee who the employer knew or
should have known was dangerous and likely to harm [oth-
ers].’’ Southeast Apartments Mgmt., Inc. v. Jackman, 513
S.E.2d 395, 397 (Va. 1999). In asserting that Feld should
have known Smith was dangerous, Sparshott asserts that
Feld knew about the installation of the caller ID units, that
this installation was itself illegal, and that the devices had
been converted to allow wiretapping to occur. Since Feld
admitted that Smith’s ‘‘investigation’’ was unjustified (a char-
acterization that in fact its managers applied only after its full
scope was revealed to them), Sparshott reasons that Feld was
unreasonable in allowing the investigation to continue. But a
key element in all this is mistaken: the installation of the
caller ID devices was not an illegal act under 18 U.S.C.
§ 3121, and thus provided no notice that Smith posed a
danger to others.
                               10

  Section 3121(a) provides that ‘‘[e]xcept as provided in this
section, no person may install or use TTT a trap and trace
device without first obtaining a court orderTTTT’’ 18 U.S.C.
§ 3121(a). Subsection (b) provides three exceptions, one of
which is relevant:
       (b) EXCEPTION.—The prohibition of subsection (a)
     does not apply with respect to the use of a pen register
     or a trap and trace device by a provider of electronic or
     wire communication service— TTT
       (3) where the consent of the user of that service has
       been obtained.
Id. § 3121(b). While a ‘‘provider of electronic or wire com-
munication service’’ did not install the caller ID display unit
at issue in this case, courts have found that the phrase ‘‘trap
and trace device’’ actually refers to the ‘‘signaling equipment
and software necessary to use’’ the display device, ‘‘and that it
is this equipment that performs the trap and trace.’’ Ohio
Domestic Violence Network v. Pub. Utils. Comm’n, 638
N.E.2d 1012, 1021 (Ohio 1994); see also Wisconsin Prof’l
Police Ass’n v. Pub. Serv. Comm’n, 555 N.W.2d 179, 187–88
(Wis. Ct. App. 1996). But see Barasch v. Bell Tel. Co., 605
A.2d 1198, 1201–02 (Pa. 1992) (finding under a similar Penn-
sylvania statute that a caller ID display unit is a trap and
trace device). If a contrary result were reached, it is hard to
see how any caller ID system, even that used for emergency
services, would be legal. See, e.g., Southern Bell Tel. & Tel.
Co. v. Hamm, 409 S.E.2d 775, 777–78 (S.C. 1991) (interpret-
ing similar provisions in its state code). Because a caller ID
unit is not a trap and trace device, Smith’s conduct was not
illegal under § 3121, and it therefore provided no reason for
Feld to believe he might be dangerous.
   Sparshott’s remaining arguments on negligent retention
are meritless. Sparshott argues that the caller ID devices
were converted to allow wiretapping to occur, which should
have put Feld on notice that Smith might use them to
wiretap.     But nowhere does Sparshott show that
management-level employees at Feld were on notice of the
conversion of the caller ID devices to wiretapping use. See
                              11

Barrett v. Applied Radiant Energy Corp., 240 F.3d 262, 264–
65, 269 (4th Cir. 2001) (applying Virginia law and finding that
where an employee had reported sexual harassment to sever-
al other employees and to the CEO’s son, but not to any
manager, the company did not have actual or constructive
notice sufficient to support a negligent retention claim). Nor
was there any other evidence that Feld knew at the time that
Smith’s investigation of Sparshott was unjustified or illegal in
any way.
  As no reasonable jury could have found that Feld knew or
should have known that Smith posed a danger to others, see
Holbrook v. Reno, 196 F.3d at 259–60, we affirm the district
court’s grant of judgment as a matter of law on the negligent
retention claims.
   Smith’s counterclaim for malicious prosecution. Smith
argues that the district court abused its discretion in allowing
him only six hours to try his case (including counterclaims),
compared to 15 hours for the other defendant and 16 hours
for the plaintiff. His ‘‘case’’ originally comprised four coun-
terclaims. Two were dismissed before trial and a third
before the case was sent to the jury. Smith has not appealed
the dismissal of his three claims. In considering whether or
not the amount of time he had at trial was reasonable, we
consider his two counterclaims that were alive at the time of
trial (as well as his defense). In considering whether he was
prejudiced, we consider only his counterclaim for malicious
prosecution—the only claim still alive.
   Federal Rule of Civil Procedure 59(a) states that a new
trial may be granted ‘‘for any of the reasons for which new
trials have heretofore been granted in actions at law in the
courts of the United StatesTTTT’’ Fed. R. Civ. P. 59(a).
Discretion to grant a new trial has generally been understood
to include actions rendering the trial unfair. See Montgom-
ery Ward & Co. v. Duncan, 311 U.S. 243, 251 (1940). The
district court’s decisions on how to structure time limits are
reviewable only for abuse of discretion. See, e.g., Deus v.
Allstate Ins. Co., 15 F.3d 506, 520 (5th Cir. 1994); cf. United
States v. Ramsey, 165 F.3d 980, 983 n.3 (D.C. Cir. 1999)
                              12

(holding that evidentiary rulings are subject to abuse of
discretion review). And a party arguing that time limits were
unfair must also show that he was prejudiced thereby. Deus,
15 F.3d at 520.
   Here the court gave Smith only six hours, compared to 15
for the other defendant and 16 for the plaintiffs. Clearly the
parties need not always be granted equal amounts of time to
try their case. Particularly in a case involving multiple
defendants (such as this one), a district court might reason-
ably conclude that overlap between defense theories warrants
giving each defendant a smaller amount of time. But the
court cannot make such a decision without considering how
much overlap there is between defense theories and what are
the likely time needs of all the parties. Sparshott points to
overlap between Smith and Feld on numerous issues, such as
the statute of limitations and the claim that Sparshott did not
suffer damages due to the wiretapping. But Smith had a
very different theory of the case than co-defendant Feld
(along with counterclaims not shared by Feld). Feld was
largely trying to show that it did not participate in or know
about Smith’s behavior. Smith, on the other hand, attempted
to persuade the jury that he did not wiretap Sparshott and
that Sparshott knew about and consented to his videotaping
and other behavior. In addition, Smith’s counterclaims were
not shared by Feld. Further, there is nothing peculiar about
Sparshott’s version of events that entitled her to more time to
present her side. Given Smith’s distinct counterclaims and
defenses, he should have been given an amount of time much
closer to the amount that Sparshott received.
   In Deus and in the other cases cited by Sparshott, the
court decided that the district court had not abused its
discretion since the parties had equal amounts of time to try
the case and there was little evidence that the moving party
had been prejudiced. 15 F.3d at 520 (finding that court did
not exceed discretion where the judge told the parties in
advance that they would each have three days to present
their case); Monotype Corp. v. Int’l Typeface Corp., 43 F.3d
443, 450–51 (9th Cir. 1994) (finding no abuse of discretion
where the parties were given equal amounts of time and a
                              13

party did not explain how it was prejudiced); Matton v.
White Mountain Cable Constr. Corp., 190 F.R.D. 21, 23 (D.
Mass. 1999) (finding no abuse of discretion where parties
were given equal amounts of time, the limits were clear, and
prejudice was highly questionable). These cases are not
closely analogous to our situation, where Smith received a
fraction of the time given to Sparshott.
   Sparshott’s claim that Smith acknowledged that the time
limit was not prejudicial is based on a single remark, the
facetiousness of which screams from the page. (‘‘We can
splurge. With our great six hours total.’’) While Smith’s
counsel did not go into great detail below about prejudice, she
objected below and named specific witnesses that she would
have called for the claim of malicious prosecution. She also
said that she wanted to call some witnesses on the issue of
damages for malicious prosecution. See Trial Transcript at
1566–68. Given the wide disparity in time limits, we hold that
this demonstration of prejudice is enough. Accordingly we
find an abuse of discretion by the district court, and reverse
and remand for a new trial on Smith’s counterclaim.
   Only one of Smith’s remaining arguments appears to be
relevant to his counterclaim of malicious prosecution. He
says that the trial court abused its discretion by allowing a
Fairfax county police officer to testify despite an order ex-
punging the record of a charge against Smith, later nolle
prossed, for unlawful videotaping. Smith’s brief does not
offer the text of the governing statute—always a bad sign.
In fact the statute makes it unlawful for one having access to
an expunged record ‘‘to open or review it or to disclose to
another person any information from it without an order
from the court which ordered the record expunged.’’ See Va.
Code Ann. § 19.2–392.3(A) (Michie 1950) (emphasis added).
Here, the officer was testifying as to information he acquired
in his investigation, not information learned from the ex-
punged record. See Trial Transcript at 389–97. We see no
reason to give the statute the reading claimed by Smith,
which would capriciously immunize a person from perfectly
valid evidence.
                             14

  The judgment against Feld and Smith is reversed; the
grant of judgment as a matter of law on the negligent
retention claim is affirmed; and judgment against Smith on
his surviving counterclaim is reversed. The case is remanded
to the district court for further proceedings consistent with
this opinion.
                                                 So ordered.