Opposition Brief — Wilsmann v. Upjohn Co.

: Supreme Court, U.S,

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sal : i MAY 19 1906

No. 85-1712 | | 'yoscptt F. SPANIOL, JR,

A A

IN THE a aa

Supreme Court of the GQnited States

OCTOBER TERM, 1985

EDWARD J. WILSMANN,

Petitioner,

.

THE UPJOHN COMPANY

and

UPJOHN HEALTH CARE SERVICES, INC.,

Respondents.

On Petition for a Writ of Certiorari to the United

States Court of Appeals for the Sixth Circuit

BRIEF OF THE UPJOHN COMPANY AND UPJOHN

HEALTH CARE SERVICES, INC., IN OPPOSITION

CHARLES LISTER*

Covington & Burling

1201 Pennsylvania Avenue, N.W.

P.O. Box 7566

Washington, D.C. 20044

(202) 662-5168

THOMAS G. PARACHINI

DirK J. HOLKEBOER

Miller, Canfield, Paddock & Stone

444 West Michigan Avenue

Kalamazoo, Michigan 49007

(616) 381-7030

Attorneys for Respondents

The Upjohn Company and

Upjohn Health Care Services, Inc.

*Counsel of Record

PRESS OF BYRON S. ADAMS, WASHINGTON, D.C. (202) 347-8203

i

QUESTION PRESENTED

Whether the court of appeals erred in unanimously

holding that the trial court should have granted judg-

ment notwithstanding the verdict regarding ‘‘implau-

sible’ and ‘“‘conflicting’’ claims that required the jury

to indulge in “‘sheer speculation,” and as to which

the jury could not “within reason” have found for

plaintiff.

ii

TABLE OF CONTENTS

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TABLE OF AUTHORITIES

CASES: Page

Aaron Ferer & Sons Ltd. v. Chase Manhattan Bank,

Pe Ee Me I, BED Snsicesensencvcccvesssscese 6

Anderson v. City of Bessemer City, N.C., —_U.S.

, 105 Sup. Ct. 1504 (1984) SORES NOT 7

nin v. Commerce Tankers Corp., 423 F.2d 957

(2d Cir.), cert. denied, 400 U.S. 833 (1970)... 6

Brady v. Southern Railroad, 320 U.S. 476

RIE tacaneeesceppniecstsnccsnnerevsssenncenesinsrsnesecscceesseees 6

Campus Sweater & Sportswear Co. v. M.B. Kahn

Construc. Co. 515 F. Supp. 64 (D.S.C. 1979),

affd, 644 F.2d 877 (4th Cir. 1981)...

9

Denneny v. Siegei, 407 F.2d 433 (8d Cir. 1969) _... 6

Galloway v. United States, 319 U.S. 372 (1943) ..... a 7

Johnson v. Rogers, 621 F.2d 300 (8th Cir. 1980) 9

Juhnke v. EIG Corp., 444 F.2d 1323 (9th Cir.

La. castiatshusatecnssessoinons 9

Mattivi v. South African Marine Corp., 618 F.2d 163

se SSS FSA 6

Minton v. Southern Ry. Co., 368 F.2d 719 (6th Cir.

aa scsdatnicdbvcedsathsinencaakeesexessnsvee 9

Ricker v. Textilmaschinen GmBH, 506 F. Supp. 3

(E.D. Tenn. 1978), aff'd, 633 F.2d 918 (6th Cir.

i adiseehehickebsbiedenhsnbdirvchneaiveneneatess 9

IN THE

Supreme Court of the Gnited States

OCTOBER TERM, 1985

No. 85-1712

EDWARD J. WILSMANN,

Petitioner,

Vv.

THE UPJOHN COMPANY

and

UPJOHN HEALTH CARE SERVICES, INC.,

Respondents.

On Petition for a Writ of Certiorari to the United

States Court of Appeals for the Sixth Circuit

BRIEF OF THE UPJOHN COMPANY AND UPJOHN

HEALTH CARE SERVICES, INC., IN OPPOSITION’

Pursuant to Rule 22.1 of the Rules of this Court,

respondents The Upjohn Company and Upjohn Health

1In accordance with Rule 28.1, respondents state that Upjohn

Health Care Services, Inc., is a wholly-owned subsidiary of The

Upjohn Company, which in turn has no parent company. The

two companies have various subsidiaries and affiliates that are

not wholly-owned, but most of those exist outside the United

States. Within the United States, such companies include Ar-

kansas Breeders Corp., North Coast Hospital Home Care, Inc.,

and CARETEC, Inc.

Care Services, Inc. (collectively ‘‘Upjohn’’) oppose the

petition for certiorari filed by Edward J. Wilsmann.?

STATEMENT OF THE CASE

This case involves claims of federal securities fraud

and breach of contract asserted by Wilsmann in con-

nection with Upjohn’s acquisition of Homemakers in

1969 and an accompanying employment contract be-

tween Upjohn and Wilsmann. Wilsmann’s statement

of the case is inaccurate and incomplete, but the rel-

evant facts are conveniently summarized in the unan-

imous opinion of the Court of Appeals for the Sixth

Circuit. See the Appendix to the Petition (“‘Pet. App.’’)

at Al. The following statement therefore includes only

a brief description of the lengthy record.

Wilsmann is an experienced accountant and busi-

nessman who in 1969 was president of Homemakers,

a small company then selling franchises for the pro-

vision of home health care. By Wilsmann’s own es-

timate, the company was “broke.’* When Wilsmann

was unable to arrange a public offering of Home-

makers’ stock, he negotiated the company’s acquisi-

tion by Upjohn. The parties first contemplated an

arrangement under which Wilsmann would have been

given an investment interest in Upjohn’s new Home-

makers subsidiary, which Upjohn would have had a

later option to purchase. This proposal was abandoned

2 Wilsmann’s petition includes ‘Homemakers, Inc.,” as a

respondent. Homemakers was the company’s name in 1969 at

the time of its acquisition by Upjohn, but its name has subse-

quently been altered, and it now exists under the name of Up-

john Health Care Services, Inc.

* Trial transcript (‘‘Tr.”) 207.

after Upjohn was compelled to lend large sums to

satisfy Homemakers’ urgent financial needs. The par-

ties instead adopted a different arrangement later in

1969, under which Homemakers became a wholly-

owned subsidiary of Upjohn and Wilsmann’s proposed

investment interest was eliminated. The terms of the

acquisition were embodied in a detailed written agree-

ment that was expressly declared to be the parties’

“entire” agreement, superseding ‘‘all prior agree-

ments and understandings.’’* Wilsmann executed the

agreement on behalf of Homemakers.

The parties also agreed that Wilsmann would be-

come an employee of the new subsidiary. Upjohn and

Wilsmann entered into a written employment contract

that again represented their ‘“‘entire’’ agreement, ex-

pressly superseding all prior understandings.’ In ad-

dition to salary and other benefits, the employment

contract permitted Wilsmann to earn employment bo-

nuses contingent upon the sufficiency of Homemak-

ers’ post-acquisition earnings, as determined by an

eligibility formula set forth in the contract.®

Wilsmann brought this action in 1977, alleging vi-

olations of the federal securities laws and breach of

contract. His claims were vague and inconsistent, but

included allegations that Upjohn had breached the em-

ployment contract by failing to pay employment bo-

nuses and had violated the securities laws by failing

to make a “back-end’”’ payment assertedly promised

to him orally in 1969. At trial, Upjohn moved un-

successfully for a directed verdict regarding Wils-

‘ Plaintiff's trial exhibit 2, at page 26.

5 Plaintiff's trial exhibit 28, at pages 6-7.

Pet. App. at A7, n.13.

mann’s securities claim, based in part upon the

insufficiency of the evidence. The jury returned a ver-

dict for Wilsmann regarding his claim under the se-

curities laws, but did not reach his contract claims.

Following trial, Upjohn filed a timely motion for judg-

ment notwithstanding the verdict. Upon appeal, Up-

john argued in part that the trial court erred in

denying a directed verdict and judgment n.o.v. be-

cause of the insufficiency of the evidence.’

The Sixth Circuit held unanimously that the trial

court erred in not granting judgment n.o.v., and re-

manded the case for further consideration of Wils-

mann’s contract claims. The court held that

Wilsmann’s unsupported testimony*® regarding the al-

leged oral promise was ‘‘in conflict,” requiring the

jury to indulge in “sheer speculation.”’ Pet. App. Al4.

It emphasized that Wilsmann’s contentions were not

7 Upjohn also contended that Wilsmann’s claim was outside

the scope of the federal securities laws, that it was barred by

the statute of limitations, and that the trial court erred in award-

ing prejudgment interest. The Sixth Circuit did not reach the

last two contentions.

* Wilsmann’s claim that in 1969 he was orally promised a

“back-end” payment rests upon his own testimony, without cor-

roborative documentary evidence of any kind. To the contrary,

in addition to denying formally such oral understandings in both

the acquisition agreement and his employment contract, Wils-

mann prepared a lengthy memorandum describing his claims, in

which he never suggested that ne had been orally promised any

“back-end” payment. See Pet. App. at Al8. Similarly, Wils-

mann’s claim in the petition that he was supported at trial by

Upjohn’s witnesses is without basis. To the contrary, Upjohn’s

chief negotiator in 1969 testified that Wilsmann’s investment

interest in the abandoned first plan was replaced in the final

agreement by an “incentive” based on contingent employment

bonuses. Tr. 529.

ee a ee

5

only ‘‘totally implausible” but ‘‘also in conflict each

with the other.” Jd. at A19. Accordingly, the court

of appeals held that a jury “could not within reason”

have found that fraud occurred. Jd.

Wilsmann sought rehearing en banc, arguing for the

first time that Upjohn had not properly preserved the

sufficiency issue for appellate review. The court of

appeals unanimously denied rehearing, and this

petition for certiorari foliowed.®

REASONS WHY THE WRIT SHOULD BE DENIED

In accordance with Rule 17.1 of the Rules of this

Court, certiorari should plainly be denied. The court

of appeals did nothing except apply long-established

standards for directed verdicts and motions for judg-

ment n.o.v. No relevant conflict regarding those

standards exists among the Circuits or with prior de-

cisions of this Court. No other question of federal law

is involved, and the matters about which Wilsmann

purportedly seeks the Court’s guidance are irrelevant

to this case. He seeks certiorari merely because he

disagrees with the unanimous opinion of the court of

appeals regarding the insufficiency of his ‘‘conflict-

ing’ and ‘‘implausible’’ evidence. Pet. App. Al4, A19-

20. In these circumstances, there are no ‘“‘special’’ or

‘“important”’ reasons within the meaning of Rule 17.1

that justify certiorari.

® After the mandate of the court of appeals had issued but

before this petition was filed, Upjohn moved for summary judg-

ment in the district court regarding Wilsmann’s remaining con-

tract claims. Wilsmann filed a cross-motion for summary

judgment, arguing in the alternative that the district court should

relinquish penc'»< jurisdiction over the contract claims. Th> mo-

tions are now awaiting decision.

I.

The court of appeals concluded that Wilsmann’s se-

curities claim required the jury to engage in ‘“‘sheer

speculation.” Pet. App. A19-20. It held that a jury

“could not within reason‘‘ have found that fraud oc-

curred. Jd. Based upon these conclusions, it ruled that

the trial court erred in denying judgment n.o.v., and

remanded the case for consideration of Wilsmann’s

contract claims. In so doing, the court of appeals

applied familiar rules established in numerous deci-

sions by this Court and the courts of appeals.

This Court long ago held that, however the stand-

ard for directed verdicts and judgments n.o.v. may

be articulated, the ‘‘essential requirement is that mere

speculation” may not ‘‘do duty for probative facts.”’

Galloway v. United States, 319 U.S. 372, 395 (1948).

Accordingly, directed verdicts should be granted

whenever necessary to prevent the “mischance of

speculation.” Brady v. Southern Railroad, 320 U.S.

476, 480 (1948). Consistent with this Court’s instruc-

tions, the courts of appeals have repeatedly held that

“surmise and conjecture” cannot support a jury ver-

dict. H.g., Armstrong v. Commerce Tankers Corp., 423

F.2d 957, 959-60 (2d Cir.), cert. denied, 400 U.S. 833

(1970); Matti v. South African Marine Corp., 618

F.2d 163, 167-68 (2d Cir. 1980); Aaron Ferer & Sons

Ltd. v. Chase Manhattan Bank, 731 F.2d 112, 121

(2d Cir. 1984). See also Denneny v. Siegel, 407 F.2d

433, 440 (3d Cir. 1969) Gury may not act on “‘spec-

ulation and conjecture’’). In this case, the court of

appeals unanimously held that this well-settled prin-

ciple had been violated.

Wilsmann’s efforts to postulate some broader issue

worthy of review are without basis. In particular, his

effort to adduce some “‘implied’”’ misapplication of An-

derson v. City of Bessemer City, N.C., __U.S. __,

105 Sup. Ct. 1504 (1985), is frivolous. The decision

in Anderson was not even referred to by the court

of appeals. It was not cited in briefs or argument by

the parties. The passage in Anderson on which Wils-

mann unaccountably relies declares merely that spec-

ulation cannot support factual findings in non-jury

cases. This rule parallels the similar principle declared

40 years earlier for jury cases in Galloway +. United

States, supra, and certainly affords no justification

for review of this case. Similarly, Wilsmanr.’s claim

that this case offers a suitable vehicle for deciding

whether directed verdicts should be judged by the

narrow standard suggested in some FELA cases, or

by some less rigid standard, is without merit. The

court of appeals heid that Wilsmann’s claims required

the jury to engage in ‘‘sheer speculation,” which war-

rants a directed verdict under even the most restric-

tive standard. No question arises here regarding any

broader standard.

II.

Wilsmann’s petition mistakenly assumes that Up-

john failed to preserve the sufficiency issue for ap-

pellate review. As the court of appeals unanimously

held, the claim is without merit.!° At the close of

10 Wilsmann did not assert that the sufficiency issue had not

properly been preserved until rehearing in the court of appeals,

after the issue had already been briefed, argued and decided.

Upon rehearing, the court of appeals issued a brief order noting

that it had already considere’ Wilsmann’s arguments and that

8

\

Wilsmann’s case, Upjohn moved for a directed verdict

regarding numerous issues, including the sufficiency

of the evidence with respect to Wilsmann’s securities

claim. Counsel analyzed at length the evidence offered

by Wilsmann and specifically urged that ‘there is not

sufficient testimony to bring a claim for fraud to the

jury. ...”! Counsel went on to argue that the fraud

claim was also deficient because Wilsmann’s evidence

as to reliance was insufficient. In denying the mo-

tion, the trial court clearly recognized that the suf-

ficiency issue was before it. The court held specifically

that

“there is sufficient evidence from which a

jury could find ... for the plaintiff on the

allegations set forth in ... [the securities

fraud claim] and ... the motion ... is de-

nied,’’}8

Upjohn again presented the sufficiency issue at the

close of all the evidence. Upjohn’s counsel offered to

reiterate the earlier contentions ‘‘iJn order to pre-

serve our motion for directed verdict.’’* The trial

court responded that no further argument was needed,

but assured counsel that “the arguments that you

made previously” in support of the motion “are pre-

served.’’> The trial court thereupon again denied the

“no judge of this Court” had even “‘requested a vote on the

suggestion for rehearing en banc.”’ Pet. App. A22.

Tr, 889-90.

2 Tr, 890.

3 Tr. 918.

“Tr. 1277.

18 Td.

motion ‘‘for the reasons previously stated on the re-

cord.’

Following trial, Upjohn filed a timely motion for

judgment notwithstanding the verdict. While the mo-

tion did not specifically reiterate the sufficiency issue,

there was no need for repetition. Unlike Rule 50(a),

Rule 50(b) does nct require a statement of the grounds

for relief, but instead provides that the denial of a

directed verdict is ‘“‘deemed”’ to have submitted the

issue to the jury ‘“‘subject to a later determination of

the legal questions raised by the motion.”” Judgment

n.o.v. may thereafter be entered ‘‘in accordance with

... [the] motion for a directed verdict.”” The motion

for judgment n.o.v. is therefore a ‘‘renewal’’ of the

motion for directed verdict, Minton v. Southern Ry.

Co., 368 F.2d 719, 720 (6th Cir. 1966),!” in which the

legal issues presented by the motion for directed ver-

dict are deemed to be reiterated.

In any event, the preservation issue provides no

basis for certiorari. No conflict exists regarding the

relevant standards, and Wilsmann’s only coinplaint is

the application of those standards to the particular

facts of this case. The court of appeals unanimously

rejected Wilsmann’s last-minute contention, and no

“special” or “important” reascas within the meaning

of Rule 17.1 justify further review.

16 Tr, 1278.

17 See also Johnson v. Rogers, 621 F.2d 300, 305 (8th Cir.

1980); Juhnke v. EIG Corp., 444 F.2d 1323, 13825 (9th Cir. 1971);

Ricker .. Zinser Textilmaschinen GmbH, 506 F. Supp. 3, 6 (E.D.

Tenn. 1978), aff'd, 633 F.2d 918 (6th Cir. 1980); Campus Sweater

& Sportswear Co. v. M.B. Kahn Construc. Co., 515 F. Supp. 64,

74 (D.S.C. 1979), aff'd, 644 F.2d 877 (4th Cir. 1981).

10

CONCLUSION

No substantial issue of federal law exists here, and

the petition for writ of certiorari should therefore be

denied. The district court’s pending proceedings to

adjudicate Wiilsmann’s remaining claims should be

permitted to go forward without additional delay.

Respectfully submitted,

CHARLES LISTER*

COVINGTON & BURLING

1201 Pennsylvania Avenue, N.W.

P.O. Box 7566

Washington, D.C. 20044

(202) 662-5168

THOMAS G. PARACHINI

DIRK J. HOLKEBOER

MILLER, CANFIELD, PADDOCK & STONE

444 West Michigan Avenue

Kalamazoo, Michigan 49007

(616) 381-7030

Attorneys for Respondents

The Upjohn Company and

Upjohn Health Care Services, Inc.

*Counsel of record

May 20, 1986

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