Sparshott, Shan v. Feld Entrtnmnt Inc

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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.