Opposition Brief — Arnebergh v. E. F. Hutton & Co.

Supreme

2) FILED

No. 85-1611 APR 20 1986 |

JOSEPH F. SPANIOL, JR.

CLERK

IN THE . ae

SUPREME COURT —

OF THE UNITED STATES

October Term, 1985

ROGER ARNEBERGH,

Petitioner,

vs.

E.F. HUTTON & COMPANY, INC.,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT

OF APPEALS FOR THE NINTH CIRCUIT

RESPONDENT'S BRIEF IN OPPOSITION

ADAMS, DUQUE & HAZELTINE

MARTHA G. BANNE MAN

523 West Sixth Street

Los Angeles, California

Attorneys for Respondent

E.F. dutton & Company, Inc.

wee

QUESTIONS PRESENTED FOR REVIEW

l. Where the jury has announced its ver-

dict and been dismissed, and the

parties disagree as to the meaning of

that verdict, did the District Court

act improperly when, pursuant to

stipulation, it conducted a post-

trial interview of the former jurors

in order to ascertain the jury's true

verdict?

2. Whether the District Court acted

improperly when it entered judgment

in accordance with the jury's

understanding of its own verdict as

expressed in the post-trial

proceeding?

3. Whether the minimal post-trial con-

tact between E.F. Hutton's counsel

and two of the jurors somehow influ-

enced the jury's ability to recall

its intended verdict?

RESPONDENT’S CORPORATE AFFILIATIONS

E.F. Hutton & Company, Inc. is a subsidi-

ary of the E.F. Hutton Group, Inc. The E.F.

Hutton Group, Inc.'s other major subsidiary is

The E.F. Hutton Insurance Group, Inc.

No. 85-1611

IN THE SUPREME COURT

OF THE

UNITED STATES

OCTOBER TERM, 1985

ROGER ARNEBERGH

Petitioner,

vs.

E.F. HUTTON & COMPANY, INC.

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

RESPONDENT'S BRIEF IN OPPOSITION

I. INTRODUCTION

This litigation arises from two transac~-

tions in commodities trading accounts

maintained by Roger Arnebergh with E.F. Hutton

& Company, Inc. ("E.F. Hutton"). Judgment was

entered in the district court against Arnebergh

in the amount of $168,307. That judgment was

affirmed by the Ninth Circuit. Now, ina last

ditch effort to avoid the judgment, Arnebergh

has filed a Petition For A Writ of Certiorari

to this Court. The Petition is wholly without

merit. |

II. OPINIONS BELOW.

l. The opinion of the United States

Court of Appeals for the Ninth Circuit for the

consolidated cases Nos. 83-6195/6222 is pub-

lished as E.F. Hutton & Company, Inc. v.

Arnebergh, 775 F.2d 1061 (9th Cir. 1985), and

appears in Petitioner's Appendix page A-l.

2. The Ninth Circuit's Order amending

its Opinion and denying rehearing and hearing

en banc appears in Petitioner's Appendix page

A-22.

3. The District Court's Order Re Entry

of Judgment, and Judgment of General and

Special Verdicts were not published but appear

in Petitioner's Appendix pages A-29 and A-24,

respectively.

4. The Special Verdict in Favor of Roger

Arnebergh appears in Petitioner's Appendix page

A-36.

5. The Verdict in Favor of E.F. Hutton

appears in Petitioner's Appendix page A-56.

6. The District Court's Order Denying

Motion For Judgment Notwithstanding The Verdict

Or For New Trial And Denying Motion To Alter Or

Amend The Judgment Or For New Trial appears in

Petitioner's Appendix page A-58.

III. JURISDICTION.

Respondent E.F. Hutton agrees with Peti-

tfoner's statement of jurisdiction. The Ninth

Circuit opinion was filed November 5, 1985.

The Ninth Circuit denied Arnebergh's Petition

For Rehearing, together with a Request For

-3-

Hearing En Banc on January 23, 1986.

Arnebergh's Petition For A Writ Of Certiorari

was received by E.F. Hutton on March 31, 1986.

The jurisdiction of this Court was invoked

under 28 U.S.C. § 1254(1).

IV. CONSTITUTIONAL AND STATUTORY PROVISIONS

INVOLVED

le The Seventh Amendment to the United

States Constitution states:

"In Suits at common law, where

the value in controversy shall exceed

twenty dollars, the right of trial by

jury shall be preserved, and no fact

tried by a jury, shall be otherwise

reexamined in any Court of the United

States, than according to the rules

of the common law.”

2. Rule 606(b) of The Federal Rules of

Evidence states:

"Upon an inquiry into the validity of

a verdict or indictment, a juror may

not testify as to any matter or

statement occurring during the course

of the jury's deliberations or to the

effect of anything upon his or any

other juror's mind or emotions as

influencing him to assent to or dis-

sent from the verdict or indictment

or concerning his mental processes in

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connection therewith, except that a

juror may testify on the question

whether extraneous prejudicial infor-

mation was improperly brought to the

jury's attention or whether any

outside influence was improperly

brought to bear upon any juror. Nor

may his affidavit or evidence of any

statement by him concerning a matter

about which he would be precluded

from testifying be received for these

purposes.”

V. STATEMENT OF THE CASE

l. Pactual Background.

On March 7, 1980, Arnebergh bought five

December 1980 silver futures contracts through

E.F. Hutton. (RT 130, 199, 404) This

transaction required a total consideration of

more than $930,000. Under the margin require-

ments, however, Arnebergh was required to

deposit only approximately $225,000. (CR 17 at

5) At the time of his purchases, Arnebergh

believed that silver would increase in value.

This belief turned out to be wrong. For nine

consecutive trading days after Arnebergh's

purchase silver was “down limit.” (RT 133-134,

258) “Down limit" means that there was so much

downward pressure on the price of silver that

the exchange did not allow free trading but

rather allowed the price to fall only by a

particular prescribed limited amount. During

this period, Arnebergh lost approximately

$25,000 per day and by March 13, 1980 his

margin deposit was insufficient to secure the

balance of the required consideration.

(RT 205, 333-334, 406; CR 17 at 5) Orders to

liquidate the trades were entered, but could

not be executed because the market continued

"down limit” each day and there were no buyets.

On about March 17, 1980, it appeared that

trading might resume. (RT 413) Arnebergh

maintained his belief that silver would go up,

so he endeavored to provide E.F. Hutton with

more collateral to prevent his positions from

being liquidated. Arnebergh gave E.F. Hutton a

post-dated check for $100,000, but he did not

have sufficient funds to cover the check.

-6§-

(RT 136) Arnebergh also gave E.F. Hutton a

promissory note and a deed of trust on certain

real estate he owned. (RT 140-142, 143-144)

The market continued down limit for

several days until it experienced a very brief

rally on April 8, i980, at which time Arnebergh

and E.F. Hutton agreed to a "stop loss" sales

order. (RT 240, 443-44) When the market con-

tinued its downward trend, that order was exe-

cuted and Arnebergh's five December 1980 silver

contracts, purchased at $37.27 per ounce, were

sold at $16 40 per ounce. (RT 152-3, 453)

Arnebergh attempted to recoup his losses

with the purchase of one contract for silver in

the spot market (current month). (RT 149)

When his promissory note matured on May 27,

1980, Arnebergh was unable to pay it or other-

wise pay for the losses he sustained. (RT 241)

Accordingly, his spot contract was liquidated,

leaving a balance of approximately $267,500

Owing from him to E.F. Hutton in May 1980.

(RT 355)

-J-

E.F. Hutton filed its Complaint in the

federal district court for the Central District

of California on May 29, 1980 to recover the

balance due from Arnebergh, plus interest.

(CR 1) Arnebergh filed a separate Complaint in

California state court on May 20, 1980 which

sought both to avoid paying the amount owing on

his account through an offset, and to recover

other claimed damages. Arnebergh's theories

were based on his allegation that E.F. Hutton

had promised not to liquidate his silver posi-

tions in spite of the growing deficit in his

account. (CR 1A)

Y Procedural Background.

Arnebergh's Complaint was removed to fed-

eral court on June 25, 1980. (CRi1) Shortly

thereafter, the two cases were consolidated and

in February 1983, the consolidated cases were

tried to a jury in an eight-day trial. (CR

33) Contrary to Arnebergh's contentions at

page 27, these cases were not “separate and

distinct" since they involved the same set of

facts. The parties stipulated that Arnebergh

owed E.F. Hutton an account balance of

$336,614, which represented the $267,500 defi-

ciency plus interest. Counsel for E.F. Hutton

requested that the jury form include the fact

that the parties had stipulated to that amount.

Arnebergh objected and such a statement was

omitted. The stipulated amount, however, was

included in jury instruction No. 16 (CR 72).

Therefore, the jury knew that Arnebergh had

stipulated that he owed E.F. Hutton $336,614.

The jury was given a special verdict form as to

Arnebergh's claims and a general verdict form

as to E.F. Hutton's claims. (CR 77, 78)

In its verdicts, the jury awarded

Arnebergh half of the stipulated damages plus

punitive damages in the amount of $100,000.

The jury found that E.F. Hutton breached an

express contract and the implied covenant of

good faith and fair dealing. (CR 77 at 2, 3)

-9-

The jury further found both Arnebergh and E.F.

Hutton were equally negligent and that E.F.

Hutton had converted Arnebergh's property.

(CR 77 at 5, 7) The jury found E.F. Hutton

committed no fraud, did not violate the

Commodity Exchange Act, and did not breach a

fiduciary duty owed to Arnebergh. (CR 77 at 5,

6, 8)

The jury awarded compensatory damages in

favor of E.F. Hutton against Arnebergh and

compensatory and punitive damages in favor of

Arnebergh against E.F. Hutton. (CR 77, 78)

Contrary to Arnebergh's contention at page 17,

however, the amount of compensatory damages

awarded to each party is very much in dispute.

After the verdicts were announced, E.F.

Hutton's counsel, Edward Simpson, asked that

the jury be polled. Arnebergh's attempt to

characterize (page 33) the polling of the jury

as somehow indicative of a belief that E.F.

Hutton has lost the case is absurd. As every

-~10-

trial lawyer knows, it would be more unusual

for the jury not to be polled.

Confusion arose as to the meaning of the

jury's compensatory damage award. On February

9, 1983, the day after the trial, the District

Court clerk telephoned Mr. Simpson and stated

he was uncertain as to the form of the judgment

to be entered. (CR 82 at 16) Mr. Simpson told

the clerk that he believed the verdicts

reflected an equal division of the account

deficiency, and that the net judgment was in

favor of E.F. Hutton in the amount of $168,307,

from which the punitive damage award would be

subtracted. (Id.) The clerk suggested that

Mr. Simpson call Arnebergh's attorney and agree

on the form of the verdict. (Id.) Mr. Simpson

attempted to do so only to discover that

Arnebergh believed the account debit balance

owing to E.F. Hutton had been wiped out and

that Arnebergh owed E.F. Hutton nothing. (Id.)

-lli-

These conflicting interpretations of the

jury's verdicts led Mr. Simpson to initiate

contact with two former jurors to determine the

true meaning of their verdict. (CR 82 at 19

419) Four days after the trial, one juror,

Mrs. Adams, told Mr. Simpson that the jury had

agreed that Arnebergh was to pay back half of

the deficiency in his E£.F. Hutton account. (CR

82 at 20-21 9422) The second juror,

Mr. Hamilton, told Mr. Simpson that he did not

believe the verdicts were intended to cancel

each other out but that he would have to check

his notes to be sure. Before Mr. Simpson could

get back to Mr. Hamilton, District Court Judge

Malcolm M. Lucas ordered Mr. Simpson to show

cause why he should not desist from jury

interviews. (CR 80)

After the hearing on the Order to Show

Cause, Judge Lucas called all parties toa

conference. At that conference, Judge Lucas

acknowledged that there was confusion

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oe endo

Oe Oe OR ie A en el

surrounding the meaning of the verdict. The

parties could not determine whether the jury's

verdicts were gross figures, to be applied

against each other, or net figures after off-

sets, or some combination of the two (CR 82 at

16-17). Judge Lucas suggested an in camera

meeting between the Judge and the jurors.

Contrary to Arnebergh's argument at page

35, both counsel agreed to the in camera

proceeding. Though Arnebergh's attorney ini-

tially objected to examination of the jurors,

he did sign a stipulation for an in camera

examination. Judge Lucas approved the stipula-

tion and on March 2, 1983, ordered the in

camera examination. (CR 85)

The in camera proceeding was held on

March 15, 1983. At this time, Judge Lucas told

the jurors that the purpose of the proceeding

was to “assist the Court in understanding the

meaning of the verdicts that you [the jury]

rendered on February the 8th." (Reporter's

-13-

Transcript of in camera proceedings, herein-

after "RT-in camera," at 3)1/ The jurors were

then handed copies of the verdict. Judge Lucas

reminded the jurors that they had returned a

verdict in favor of E.F. Hutton and against

Arnebergh in the amount of $168,307 and also

returned a verdict in favor of Arnebergh in the

exact same amount. (RT-in camera at 3, 4)

Judge Lucas also reminded the jurors that

$168,307 was exactly one-half of the sum of

$336,614, the stipulated amount of E.F.

Hutton's damages. (RT-in camera at 4)

Judge Lucas told the jurors that their

verdicts had caused confusion because the

awards could be interpreted in two ways. The

verdicts could mean that Arnebergh was to pay

half of the deficiency in his account, i.e.,

Arnebergh would owe E.F. Hutton $168,307, and

1/ The Reporter's Transcript of the in camera

proceedings is included in the Appendix.

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ee i sete

a ee

TE AA an I eS ee ec ill Vio

ee a ee ee on ee

E.F. Hutton would absorb the other half and

incur a $168,307 loss. In the alternative, the

verdicts could mean that Arnebergh was to pay

E.F. Hutton $168,307 and E.F. Hutton was to pay

damages of the same amount to Arnebergh, thus

cancelling out the money owed by Arnebergh.

(RT-in camera at 5)

Judge Lucas asked the jurors to determine

whether they were in agreement as to their

verdict and if so, what the verdict meant.

(RT-in camera at 6, 7) Judge Lucas warned the

jurors that if they disagreed as to what was

intended, they should simply determine that

there was disagreement. (RT-in camera at 6)

Judge Lucas specifically told the jurors that

this proceeding "is not a period for further

deliberation." (RT-in camera at 7)

The jurors took less than five minutes to

determine that they were in accord as to the

meaning of their verdict. (RT-in camera at

7) Their verdict had always been intended to

“a

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:

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mean that Arnebergh was to pay back half of his

account deficiency, and E.F. Hutton was to

absorb the other half. (RT-in camera at 7-8)

Judge Lucas entered judgment in accordance with

the verdict on March 25, 1983. (CR 91)

Arnebergh made a Motion to Alter or Amend

the Judgment, Or in the Alternative, for a New

Trial. (CR 93) The Motion was denied.

Arnebergh then filed his Appeal to the Ninth

Circuit. (CR 103) In his Appellant's Brief,

Arnebergh contended that the District Court

erred in its examination of the jury by mis-

representing the facts, erred by doubling the

amount of compensatory damages awarded E.F.

Hutton and erred by denying Arnebergh's costs

and attorneys' fees. (Arnebergh Brief at 2-3)

E.F. Hutton Filed a cross appea] to the

Ninth Circuit. (CR 104) E.F. Hutton contended

that the District Court erred in awarding puni-

tive damages to Arnebergh because there was

insufficient evidence to establish the

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requisite “oppression, fraud or malice" and

that the punitive damage award was contrary to

law. E.F. Hutton also contended that the jury

instruction on breach of the implied covenant

of good faith and fair dealing in a commercial

setting was improper.

The Ninth Circuit found Judge Lucas'

actions to be proper and affirmed the decision

of the District Court. In a concurring

opinion, Judge Fletcher stated that the origi-

nal verdict was unambiguous and was consistent

with the District Court's ultimate judgment.

VI. SUMMARY OF ARGUMENT

The Ninth Circuit's opinion is consistent

with opinions in other circuits which allow

juror testimony to ascertain the intended ver-

dict. The in camera proceeding was fair and

reasonable. The jurors did not impeach their

verdict, but rather indicated that Arnebergh

had misinterpreted that verdict. At no time

did the jury re-examine their original factual

-l7-

determinations. Judge Lucas did not double the

amount of compensatory damages awarded, he

entered judgment in conformity with the jury's

understanding of its own verdict. Arnebergh

has not been deprived of his Seventh Amendment

right to trial by jury. Accordingly,

Arnebergh's Petition should be denied.

VII. REASONS FOR DENYING THE WRIT

A. Arnebergh Was Not Denied His Right To

A Jury Trial.

l. Post-Trial Examination Of The

Jury Was Proper, Fair And Rea-

sonable and in No Way Violated

Rule 606(b) Of The Federal Rules

of Evidence.

Arnebergh's Petition is based entirely on

the erroneous proposition that the District

Court examined the jurors to impeach their

verdicts, or to require further deliberation.

Contrary to Arnebergh's contentions at page 19

that the jury re-examined its factual deter-

minations, Judge Lucas specifically told the

jurors that the in camera proceeding was “not a

-~18-

;

priod for further deliberations.” (RT in

ameia at 7) At no time were the jurors asked

> impeach their verdicts.

Rule 606(b) of the Federal Rules of Evi-

ence prohibits use of juror testimony to

npeach a verdict. Arnebergh claims that Rule

06(b}) prohibited Judge Lucas from conducting

ne in camera proceedings. The federal rules,

owever, provide no prohibition against a dis-

rict court judge asking the jury to clearly

rate its verdict.

The federal courts’ central concern

>garding Rule 606(b) is the insulation and

rotection of the processes through which the

iry reaches its verdict. 10 J. Moore, Moore's

2deral Practice § 606.01(6). Since the in

amera examination of the jurors in no way

iquired into the jury's decision-making pro-

2>sses, it did not violate Rule 606(b).

Jurors are competent witnesses for the

irpose of showing that the verdict returned to

-19-

rhe court was not the agreement actually

reached in the jury room and not the verdict

actually agreed upon. Continental Baking Co.

7. Old Homestead Bread Co., 476 F.2d 97, 110

(10th Cir. 1973); Fox v. United States, 417

*,2d 84, 88-89 (Sth Cir. 1969); Young v. United

states, 163 F.2d 187, 189 (10th Cir.), cert.

Jenied, 332 U.S. 770, 68 S. Ct. 83, 92 L. Ed.

355 (1947) and 334 U.S. 859, 68 S. Ct. 1533,

92 L. Ed. 1779 (1948).2/

2/ See also, United States v. Love, 597 F.2d

31 (6th Cir. 1979); University Computing Co. v.

uykes-Youngstown Corp., 504 F.2d 518, 547 n.43

(‘Sth Cir. 1974); Freid v. McGrath, 135 F.2d

333, 834 (D.C. Cir. 1943); Hamburg-Bremen Fire

[ns. Co. v. Pelzer Manuf'g. Co., 76 F. 479,

181-482 (4th Cir. 1896); Rose v. Thau, 45

\pp.Div.2d 182, 357 N.Y.S.2d 201, 203-204

(1974); Moulton v. Staats, 83 Utah 197, 27 P.2d

155, 459 (1933); McCabe Lumber Co. v. Beaufort

>ounty Lumber Co., 187 N.C. 417, 121 S.E. 755,

155-756 (1924); Carlson v. Adix, 144 Iowa 653,

L123 N.W. 321, 321-322 (1909); Peters v.

fogarty, 55 N.J.L. 386, 26 A. 855, 855-856

(1893); 76 American Jurisprudence Second,

Trial, Section 1225, page 179; Annotation

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Mii

In Continental Baking Co. v. Old Homestead

read Co., supra, 476 F.2d 97, the jury

eturned a verdict in favor of the plaintiff on

ach of four claims in the amount of $262,125.

n response to a question posed by plaintiff's

ttorney, the foreman stated that it was the

ntention of the jury that the amounts awarded

n each of the four claims were to be added

ogether to arrive at the total amount of dam-

ges. The Judge submitted a supplemental

nterrogatory to the jury inquiring as to the

nount of total damages suffered by plaintiff

> which the jury responded $1,048,500. The

riginal four verdicts were then returned to

ne jury and the jury crossed out the amounts

F $262,125 and inserted $1,048,500 on each of

ne four verdicts. On appeal, defendant claims

ne interrogatory allowed the jury to impeach

ts verdict.

The Tenth Circuit affirmed the district

ourt's action and, citing Young v. United

-2l1-

states, supra, 163 F.2d at 189, stated at page

1103

"{J]jurors are competent witnesses for

the purpose of showing that... . the

substance of the verdict returned

into court, was not the verdict on

which agreement was actually reached

in the jury room..."

In goung v. United States, supra, 163 F.2d

87, three defendants were tried for various

triminal violations relating to liquor sales.

‘the jury returned guilty verdicts as to each

lefendant but on different counts. After the

jury was discharged, individual jurors realized

that the verdicts announced in open court were

liot the verdicts arrived at in the jury room.

‘ertain defendants had been found guilty of

‘ertain counts when the jurors intended that

they be found innocent and innocent when the

jurors intended that they be found guilty.

Though the Tenth Circuit stated that juror

iffidavits were impermissible to impeach the

rerdict, it allowed the juror affidavits to

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correct the verdict. The Court stated at 189:

"Correction or reformation of a verdict is one

thing. Impeachment is quite another." The

Court also stated that the exclusion of juror

testimony for impeachment

"does not prevent the reception of

evidence of jurors to show that

through mistake, the real verdict on

which agreement was reached in the

jury room was not correctly expressed

in the verdict returned into open

court.”

Where the agreement actually reached by the

jury is incorrectly expressed in the verdicts,

juror testimony may be used to rectify the

Situation without violating the rule against

impeachment.

In Fox v. United States, supra, 417 F.2d

B4, the United States government filed a libel

oF information which alleged that defendant was

in possession of substantial quantities of a

condemned and mislabeled drug product. The

jury returned a verdict in favor of the govern-

nent. After the verdict was announced, the

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clerk polled the jury by calling each juror's

name “in rapid succession." Each juror

answered with an audible "yes" except the

eighth juror who gave no audible response.

Immediately after the jury was discharged,

defendant's counsel approached the juror who

had given no response and inquired whether he

had in fact voted for the government. The

juror stated that he had not.

Defendant's counsel moved for a new trial

and attached the affidavits of five jurors to

his motion. The district court denied the

motion because it was of the opinion that the

affidavits could not be considered without

violating the rule against allowing a juror to

impeach his verdict. The Fifth Circuit

reversed the district court and stated: "It

has long been weli settied that the affidavit

of a juror is admissible to show the true ver-

Giet. « « o GE? Pi ze Ge Ge

—-24-

The case at bar did not involve a quotient

verdict or a verdict that was the result of a

compromise as Arnebergh suggests at pages 24-

26. At no time did Judge Lucas did not inquire

into the jury's decision-making processes.

Therefore, the cases cited by Arnebergh at

pages 24-26 are irrelevant.

In addition, Arnebergh cites Traver v.

Meshriy, 627 F.2d 934 (9th Cir. 1980), and

People v. Romero, 31 Cal. 3d 685, 646 P.2d 824

(1982), for the proposition that the in camera

proceeding was improper. Though the Traver

case correctly states the law regarding

impeachment, Arnebergh has missed the critical

distinction between ascertaining the jury's

"true verdict” and impeachment of that verdict.

Judge Lucas did not inquire into the jury's

deliberations as was the case in Traver.

Rather, Judge Lucas inquired as to the jurors’

intended meaning. At no time did he ask the

jurors to alter their verdict.

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Furthermore, Arnebergh fails to address

the strong dissent in Romero in which the Chief

Justice of the California Supreme Court states

at 696-97:

"In the courts of virtually all of

our sister states and the federal

Circuits, juror affidavits are admis-

sible to prove that a recorded ver-

dict does not conform to the actual

verdict agreed to by the jury after

deliberations. This doctrine is so

well settled that a complete listing

of the cases so holding would fill a

page." (citations omitted)

The majority opinion in People v. Romero is an

aberration of both state and federal law and

therefore

should not be considered.

The in camera procedure was fair to

211 parties. There had been disagreement among

-he parties as to the meaning of the jury's

jerdict.

As a result of this disagreement, the

Jistrict Court ordered an in camera examination

9—€ the for

mer jurors. The only question put to

-he jurors was whether they agreed on what

-heir verdict meant, not how they arrived at it

-26-

or whether it should be reconsidered. (RT-in

camera at 6) The District Court informed the

jurors of the source of confusion and allowed

them to discuss the issue in private. (RT-in

camera at 5-6) In less than five minutes, the

jury informed the Court that its verdict was

always intended to mean that Arnebergh and E.F.

Hutton were each responsible for one half of

the total debt of $336,614: Arnebergh was to

pay $168,307 to E.F. Hutton and E.F. Hutton was

to absorb the other $168,307 loss. (RT-in

camera at 7-8) The jurors did not intend the

verdict to mean the amounts cancelled each

other out, thereby resulting in Arnebergh owing

E.F. Hutton zero. Nothing in the law precludes

the District Court from asking jurors to deter-

nine whether they were in agreement as to the

neaning of their verdict. Judge Lucas inquired

into the jury's true verdict and his actions

were proper.

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2 The Judgment Entered By The District

Court Conforms To The Verdicts

Returned By The Jury.

Arnebergh's contention that the District

Sourt's judgment does not conform to verdicts

returned is directly contradicted by the jury's

inderstanding of its own verdict. The jurors

themselves intended the effect of their verdict

ro be a 50/50 split of the total damages. (RT-

in camera at 7-8) This decision is presumably

nased on the jury's attribution of 50% of the

1egligence to Arnebergh. Jury instruction No.

l6 informed the jury that the total amount of

lamages owed to E.F. Hutton claimed was stipu-

lated to be $336,614. The compensatory damages

yerdicts rendered by the jury were for identi-

“al amounts, $168,307. This amount is 50% of

the stipulated total.

The District Court did not double the

mount of compensatory damages as Arnebergh

2rroneously claims at page 19. Rather, the

Jistrict Court entered judgment exactly as the

-2?8-

jury intended. While Arnebergh may be dis-

satisfied with the judgment of the District

Court, his argument that the judgment is incon-

sistent with the jury's verdicts is meritless.

3 Post-Trial Contact With The Jurors

Was Permissible And Did Not Influence

The In-Camera Proceeding.

There is nothing wrong with an attorney

initiating communication with jurors after a

case has been completed. The only restriction

placed upon trial counsel's right to communi-

cate with jurors is the prohibition against

asking harassing and embarassing questions.

California Rules of Court, West Annotated

California Codes Civil and Criminal Court Rules

Part II, page 579-580; Martindale-Hubbell Law

Directory, Volume IIV, ABA Codes, Part IIIV,

page 27.

Furthermore, an attorney has an obligation

cf zealous representation to his or her client.

Oftentimes this duty cannot be fulfilled unless

the attorney speaks to former jurors. Ethical

-29-

Consideration 7-29 of the ABA Code of Profes-

sional Responsibility, Martindale-Hubbell,

Volume IIV, Part IIIV, American Bar Association

Codes, page 25 states:

"Were a lawyer to be prohibited from

communicating after trial with a

juror, he could not ascertain if the

verdict might be subject to legal

challenge, in which event the

invalidity of a verdict might go

undetected."

Further, ABA Opinion 319 (1968) states that

where:

"the testimony and affidavits of

jurors may be received in support of

Or against the motion for a new

trial, a lawyer, in his obligation to

protect his client, must have the

tools for ascertaining whether or not

grounds for a new trial exist and it

is not unethical for him to talk to

and question jurors."

Restrictions placed upon trial counsel in

his ability to interview jurors beyond the

prohibition against harassment or embarrassment

would interfere with counsel's obligation to

represent his client with zeal. The jurors who

served on the panel of this case served an

-30-

important public function. A juror's duty to

the judicial system, just as a lawyer's duty to

his client, however, does not end upon the

juror's discharge. Talking to counsel is not

an unreasonable burden to impose on a juror

where counsel is concerned that the basis for a

new trial may exist or, as in this case, the

verdict returned was not the verdict on which

agreement was reached. Jurors are as inter-

ested in ultimate justice as is the Court.

Mr. Simpson initiated contact with the jurors

for the sole purpose of exploring whether

grounds existed for a new trial for his client

and for the purpose of determining whether the

verdict, as interpreted by Arnebergh's

attorney, was actually the verdict reached by

the jury in the jury zoom. Such inquiry is not

only proper but, if not pursued, tantamount to

the abandonment of one's client.

Contrary to Arnebergh's contentions at

pages 33-35, Mr. Simpson's contact with the

-3l-

jurors did not “taint” their opinions. Immedi-

ately after the jury was dismissed, Mr. Simpson

spoke to three jurors in the hallway of the

courthouse. (CR 82 at 15 4 8) After some

general discussion, Mr. Simpson asked the

jurors whether the compensatory damage award

relieved Arnebergh of his $336,614 account

deficiency or whether he was to pay half of

that deficiency and E.F. Hutton was to absorb

the other half. Id. Before the jurors could

answer, Arnebergh and his attorney arrived in

an “ecstatic and exuberant” mood and thanked

the jurors for their decision. Id. One of the

jurors appeared to be confused. Id. There-

fore, if anyone's actions served to “taint” the

jurors’ impression, they were the actions of

Arnebergh.

Mr. Simpson's only other contacts were

short telephone calls. Seven days after the

trial, Mr. Simpson telephoned Mr. Hamilton and

left a message on his answering machine. (CR

-32-

82 at 19 4 17) The same evening Mr. Simpson

spoke to Mr. Hamilton who said he would call

Mr. Simpson the following day. (CR 82 at 19

4 18) On February 16, 1983 Mr. Hamilton tele-

phoned Mr. Simpson and stated that he did not

believe the verdicts were intended to cancel

each other out but that he would have to check

his notes to determine what was intended. (CR

82 at 19-20 4 20) Mr. Simpson had no further

contact with Mr. Hamilton.

On February 15, 1983, Mr. Simpson left a

message for Mrs. Adams who returned the call

the following day. (CR 82 at 19 ¥ 19 and 20 at

@ 21) Mr. Simpson told Mrs. Adams there was

"confusion to what the verdicts meant and that

perhaps the verdicts did not mean what the jury

intended."3/ Mrs. Adams stated that the jury

(1968) 18 A.L.R.3d 1132, 1137-1138, section 3

and cases cited; 8 Wigmore, Evidence

(McNaughton rev. ed. 1961) Section 2355, pp.

718-721; Model Code of Evidence, Rule 301, com.

ap. 175.

-33-

intended that Arnebergh pay half of the defi-

ciency in his account and that he was to pay

E.F. Hutton $168,307. (CR 82 at 20-21 ¥ 22)

On February 16, 1983, eight days after the

verdicts were announced, Mr. Simpson was

informed that Judge Lucas had issued an Order

to Show Cause re Jury Interviews. (CR 82 at 21

{ 25) At that time, Mr. Simpson ceased all

contact with the jurors.

Mr. Simpson's contact with the jurors was

considerate, professional and objective. He

only sought information. He in no way influ-

enced the jurors’ recollection of their

intended verdict. Arnebergh's arguments to the

contrary are without support.

VII. CONCLUSION

Arnebergh's Petition is without merit and

should be denied. His contention that the

District Court's effort to ascertain the true

meaning of the jury's verdict rendered and to

enter a judgment in accordance with those

-34-

verdicts was impermissible simply ignores the

District Court's intention and actions. It

also ignores the overwhelming authority which

permits the use of juror testimony to ascertain

the intended verdict. A review of the record

indicates that the judgment entered was exactly

consistent with the jury's true verdict.

Dated: May 1, 1986

Respectfully submitted,

ADAMS, DUQUE & HAZELTINE

MARTHA G. BANNERMAN

oy Maxhe. ae

g etude Se dace iise

Attorneys for Appellee

E.F. Hutton & Company, Inc.

-35-

APPENDIX

TABLE OF CONTENTS

Reporter's Transcript,

In Camera Proceeding....... oeccoroncseeees A-1

IN THE UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

HONORABLE MALCOLM M. LUCAS, JUDGE PRESIDING

E. F. HUTTON & COMPANY, ) Nos. CV 80-2273-MML

INC., etc. )

) CV 80-2721-MML

Plaintiff, )

)

vs. )

)

ROGER ARNEBERGH, et al., )

Defendants.

)

ROGER ARNEBERGH,

Plaintiff,

)

VS, )

)

E.F. HUTTON & COMPANY, )

INC., etc., )

Defendants.

)

REPORTER'S TRANSCRIPT OF PROCEEDINGS

Los Angeles, California

Tuesday, March, 1983

DON MEHLER, CSR

Official Court Reporter

442 United States Courthouse

312 North Spring Street

Los Angeles, California 90012

(213) 628-4687

APPEARANCES OF COUNSEL:

For Roger Arnebergh:

MARCUS CRAHAN, JR.

ROGER ARNEBERGH

707 Wilshire Boulevard

Los Angeles, California 90017

(NOT PRESENT)

For E.F. Hutton & Company, Inc.:

JONES, BELL & SIMPSON

BY: C. EDWARD SIMPSON

G. THOMAS FLEMING III

800 Wilshire Boulevard

Suite 580

Los Angeles, California 90017

(NOT PRESENT)

LOS ANGELES, CALIFORNIA; TUESDAY, MARCH 15,

1983; 8:40 A.M.

---600---

(The following proceedings were had

between the Court and the jurors in cham-

bers, with no counsel present: )

THE COURT: Well, we are meeting again

with the express intent and, for that matter, I

suppose, desire of counsel, and it's to assist

the Court in understanding the meaning of the

verdicts that you rendered on February the 8th.

This, of course, is a somewhat unusual proce-

duie as cases go, but it’s necessary in this

case. I believe that several of you have been

contracted by counsel in this case earlier, and

then the Court met with counsel, and we finally

determined together that it would be better and

necessary for the Court to make inquiry to

determine what the correct interpretation of

your verdict was.

So of course, as I say, counsel have

agreed that the court can and should meet with

you and discuss this matter. You've been given

a package here this morning. It has a copy of

the verdicts; I think it's all the verdicts,

some of which you, of course, didn’t fill out,

some of which you did, but a copy of all the

verdicts you were given, and your verdicts, of

course, that you returned on February the 8th.

Now, the apparent difficulty in this case

is in the interpretation as it concerns the

compensatory damages, thet is, damages other

than the punitive damages. We're not going to

concern ourselves at all today with the ques-

tion of the punitive damages; only with the

compensatory damages.

Now, you've been given a copy of jury

instruction No. 16, which I gave in this case,

and as you will see, on the bottom portion of

16, it provided as follows, and I'll read that

portion that I'm referring to: "In this case,

A-4

the parties have agreed that E.F. Hutton has

established by a preponderance of the evidence

all of the facts necessary to prove that the

amount of the deficiency in Roger Arnebergh's

commodity account maintained by him at E.F.

Hutton's Farmer's Market office is $336,614.11.

If you find that Roger Arnebergh has failed to

establish all of the facts necessary to prove

any of his several defenses or claims by a pre-

ponderance of the evidence, then you should

render your verdict for that amount against the

defendant Roger Arnebergh."

That's the end of the quotation on 16.

Now, as you will note, of course, or I'm sure

you remember, you returned a verdict in favor

of E.F. Hutton and against Roger Arnebergh in

the amount of $168,307, and you'll also remem-

ber that you returned a verdict in favor of

Roger Arnebergh in the same amount. This

amount, that is, $168,307, is half of the defi-

ciency in Roger Arnebergh's account.

A-5

So against the background of the Court's

jury instruction No. 16, which, of course, I

just read to you, one could interpret these

awards in one of two ways. On the one hand,

the verdicts could mean that Arnebergh is only

to pay half of the deficiency in his account.

Under this interpretation, Roger Arnebergh

would owe to Hutton $168,307, and E.F. Hutton

must absorb the other half, that is, $168,307,

as a loss.

On the other hand, these verdicts could

mean that Roger Arnebergh is to pay to E.F.

Hutton $168,307, and E.F. Hutton, or one or

more of its employees, is to pay damages of the

same amount to Roger Arnebergh, thus cancelling

out the money Roger Arnebergh is to pay, and

under the second interpretation, Roger

Arnebergh effectively pays no money to E.F.

Hutton on his deficiency account.

Now, there may be other interpretations of

your verdicts that were rendered as well as

A-6

this, and I'm not attempting to in any way

foreclose this possibility by suagesting that

there are only two interpretations. However,

these two alternate interpretations as I have

suggested them to you are those that I see, at

least, in the verdicts.

Now, I know it's been some time since you

returned your verdicts, and so I think it would

be appropriate for you to be able to discuss

alone among yourselves briefly what your

thoughts are and how you meant the verdicts to

be understood. So I'm going to ask that my law

clerk, reporter, and Duane, leave the room, and

give you a period of time for further delibera-

tion, or at least contemplation, about this.

And again, you should simply determine whether

Or not you alli meant the same thing by your

verdicts when you returned them on February the

8th, 1983, and, if so, what that meaning was.

If there is a disagreement among you now as to

what you intended, don't attempt to convince

A-7

one another of the correctness of a different

meaning. Simply determine that there is dis-

agreement. And once you have determined

whether or not you agree or disagree, then

Mr. Anderson, your foreman, should come out

into the secretary's office, tell us that you

are ready to discuss your findings, and then

we'll go back again on the record and discuss

your conclusion.

So to summarize, remember you're to ignore

the question of punitive damages at this time.

You are only to consider the meaning of the

verdicts concerning the so-called compensatory

damages. I have suggested two understandings

of the verdicts. Under the one, Roger

Arnebergh was to pay half of his account defi-

ciency, and E.F. Hutton was to absorb the other

half. Under the other understanding, Roger

Arnebergh was to receive from E.F. Hutton an

amount equal to the amount he was to pay to

E.F. Hutton, thus leaving the parties owing

each 1er nothing.

Now, again, you may also possibly conclude

that something different was intended than

these two interpretations. But, at any rate,

as soon as you have determined whether or not

you agree as to an interpretation, Mr. Anderson

should inform the secretary, and then I'll

return, and we'll discuss the matter together.

This, I should emphasize, is not a period for

further deliberation. We're really not reopen-

ing the case. We're trying to simply decide

what you meant when the verdicts were returned

on February the 8th.

Okay. We're going to withdraw, and you're

now, in the judge's chamber, judges of the

facts again, insofar as your verdicts, at any

rate. You let us know when you're ready.

(Recess taken.)

THE COURT: Well, I'd say that less than

five minutes is pretty speedy thinking on this

case.

JUROR ANDERSON: We pretty much thought it

out when we first deliberated. Just needed to

Clarify it. So it was number one of which you

had said, really.

THE COURT: Okay. For the record, then,

number one, as I described it, was that Roger

Arnebergh was to pay half of his account defi-

ciency, and E.F. Hutton was to absorb the other

half?

JUROR ANDERSON: Yes.

THE COURT: All right. Perhaps I

should --

JUROR ANDERSON: Because we worked on a

50-50 basis pretty much. So back on this one

question, I noticed --

JUROR ADAMS: We got confused with the

forms. We didn't realize they were going to

cancel each other out.

THE COURT: Okay. Let me --

JUROR HAMILTON: May I say one thing, your

Honor?

THE COURT: Sure. Perhaps, just for the

record, you should identify yourself.

JUROR HAMILTON: Okay. Warren Hamilton.

The reason we didn't fill out the -- I

think the guilty/not guilty with Robbins and

Weinman was, we felt that the verdict we

brought back basically superseded those. So

that's why we didn't. And I think there was

confusion on our part with that situation.

THE COURT: All right. At any rate, then,

finally, and again in summation, your verdict

is that Roger Arnebergh owed E.F. Hutton the

$168,307, and E.F. Hutton absorbs the other

half, that is $168,307; is that correct?

JUROR ANDERSON: That's correct.

THE COURT: Let me just go down the line

and ask each one of you, so we have a com-

pletely clear record.

A-11

Pauline Adams, is that your understanding

of the meaning of the jury verdict?

JUROR ADAMS: Yes, that's correct.

THE COURT: And Glen Anderson?

JUROR ANDERSON: Yes, it is.

THE COURT: Thank you. And Dana Hinman?

JUROR HINMAN: Yes.

THE COURT: And Albert Bocanegra?

JUROR BOCANEGRA: Yes, it is.

THE COURT: And Warren Hamilton?

JUROR HAMILTON: Yes, your Honor.

THE COURT: And Joyce Houle?

JUROR HOULE: Yes.

THE COURT: Thank you.

Well, we appreciate very much your coming

in, and we're sorry to have inconvenienced you.

I hope it's been made clear that those of you

who are still not on jury duty will receive, of

course, compensation, the usual daily compensa-

tion, for coming in today. I understood that

A-12

three of you are still on the panel and will be

going possibly for another jury service today.

Is that correct, Duane?

THE CLERK: At the time we talked, it was.

I understand from Mrs. Adams that her panel was

aut over, and i think that the others may be

desired upstairs. They weren't listed on

panels, but may F2 plugged in as balances if

they're available.

JUROR ANDERSON: Yes, because I never got

a notice except from you.

THE CLERK: ‘That was Frank's upstairs

decision as an easier way to deal with it.

THE COURT: All right. Well, thank you

again very much for coming in.

JUROR HAMILTON: You're welcome. Thank

you.

---000---

A-13

IN THE UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

HONORABLE MALCOLM M. LUCAS, JUDGE PRESIDING

E. F. HUTTON & COMPANY, Nos. CV 80-2273-MML

INC., etc.

CV 80-2721-MML

Plaintiff,

vs.

ROGER ARNEBERGH, et al.,

Defendants.

AND RELATED CROSS-ACTION.

me er ee ee ee Se ee ee ee ee eee See”

CERTIFICATE

I hereby certify that I am a duly

appointed, qualified and acting official court

reporter of the United States District Court

for the Central District of California.

I further certify that the foregoing is a

true and correct transcript of the proceedings

had in the above-entitled cause on Tuesday,

March 15, 1983, and that said transcript is

true and correct transcription of my steno-

graphic notes.

Dated at Los Angeles, California, this

day of March, 1983.

Official Reporter

VERIFICATION

STATE OF CALIFORNIA, COUNTY OF

I have read the foregoing

and know its contents.

@ CHECK APPLICABLE PARAGRAPH

Oo I am a party to this action. The matters stated in the foregoing document are true of my own knowledge except as to

those matters which are stated on information and belief, and as to those matters | believe them to be truc.

Oo 1 am CD an Officer 2 a partner____—_—_[Ja of

& party to this action, and am authorized to make this verification for and on its behalf, and | make this verification for that

reason. () | am informed and believe and on that ground allege that the matters stated in the foregoing document are

true. [[j The matters stated in the foregoing document are true of my own knowledge except as to those matiers which are

stated on information and belief, and as to those matters | believe them to be true.

0 1 am one of the attorneys for

a party to this action. Such party is absent from the county of aforesaid where such attorneys have their offices, and | make

this verification for and on behaif of that party for that reason. | am informed and believe end on that ground allege that

the matiers stated in the foregoing document are true.

Executed on a California.

1 declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.

Type or Print Name Signature

ACKNOWLEDGMENT OF RECEIPT OF DOCUMENT

(other than summons and complaint)

Received copy of document described as.

Type or Print Name Signature

PROOF OF SERVICE

STATE OF CALIFORNIA, COUNTY OF LOS ANGELES,

1 am employed in the county of Los Angeles, ___, State of California.

I am over the age of 18 and not # party to the within action; my business address is_223 West Sixth Street

Los Angeles, CA 90014

On_May 1 __1986 | 1 served the foregoing document described as RESPONDENT'S BRIEF _

IN OPPOSITION

on__interested parties

in this action by placing a true copy thereof enclosed in a sealed envelope addressed as follows:

Marcus E. Crahan, Jr., Esq.

707 Wilshire Blvd., Suite 400

Los Angeles, CA 90017

ps) (BY MAIL) | caused such envelope with postage thereon fully prepaid to be placed in the United States mail

a._Los Angeles, California.

Executed on. _May 1, 19 B86 Los Angeles, ._, California.

O (BY PERSONAL SERVICE) ! caused such envelope to be delivered by hand to the offices of the addressee.

Exccuted on 19, at . California.

LD (State) —I deciare under penalty of perjury under the laws of the State of California that the above is true and correct.

be: (Federal) 1 declare that | am employed in the office of a member of the bar of this court at whose Girection the service was

made. J :

LW

Signature

STUARTS EMBROOn Ta SAVER (REVIBED O63)

re 0 eet 9 Corre Sam @ fegere Corn