# Petition for Writ of Certiorari — A. O. Smith Harvestore Products, Inc. v. Saylor

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1989
- **Citation:** 493 U.S. 919

## Text

89-3280 | FiLeD |
AUG 25 1989
JOSEPH F. SPANIOL, JR,
No. 89- CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1989

A.O. SMITH HARVESTORE PRODUCTS, INC.,
HERMITAGE HARVESTORE SYSTEMS, INC.,

and CHUCK DOWDY, a
Petitioners,

V.

JAMES D. SAYLOR and KAAREN SAYLOR
d/b/a UDDER NONSENSE DAIRY,

Respondents.

PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

DonaLp E. EGAn
LEE ANN WATSON
Counsel of Record
CYNTHIA PHotos ABBOTT
KaTTEN Mucuin & Zavis
525 West Monroe Street
Chicago, Illinois 60606
(312) 902-5200

Attorneys for Petitioners

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i
QUESTIONS PRESENTED

This case was tried twice, once in 1985, and again in
1987 on remand following reversal of the judgment in the
first trial. Because of potential prejudice, the district judge
insiructed all parties, counsel, and witnesses at the sec-
ond trial to refrain from informing the jury of the first
trial. However, during a postverdict judicial inquiry of the
jurors, the Petitioners established that a trial spectator,
who was a relative of one of the witnesses that testified
for Respondents, told a juror during a trial recess that
the case had been previously tried two years earlier.

The questions presented for review are:

1. Whether, having established that an extraneous com-
munication relating to the first trial was made to one
of the jurors, the Petitioners were entitled to the

rebuttable presumption of prejudice established in —

Remmer v. United States, 347 U.S. 227 (1954), and
applied by the majority of the circuit courts, or were
required to prove actual prejudice in accordance with
the Sixth Circuit’s minority view that Smith v. Phillips,
455 U.S. 209 (1982), a case involving juror bias, effec-
tively overruled the Remmer presumption of prejudice
in all juror misconduct cases.

2. Whether, contrary to decisions by other circuits, the
trial judge was permitted under Rule 606(b) of the
Federal Rules of Evidence prohibiting intrusion into
the jury’s mental processes, to inquire of the jurors
whether the extraneous communication had an “effect”
on their verdict as the Sixth Circuit held.

1 If the Petition is granted, Petitioners will also argue that the
Respondents did not rebut the presumption of prejudice by show-
ing that the extraneous communication was harmless.

ii

PARTIES TO THE PROCEEDING
AND RULE 28.1 LISTING

Petitioners are A.O. Smith Harvestore Products, Inc.,
Hermitage Harvestore Systems, Inc., and Chuck Dowdy.
Respondents are James D. Saylor and Kaaren Saylor d/b/a
Udder Nonsense Dairy.

A.O. Smith Harvestore Products, Inc.’s subsidiaries are
Sceptor Finance Company Ince. and 4-J Harvestore Sys-
tems, Inc. A.O. Smith Harvestore Products, Inc.’s cor-
porate parent is A.O. Smith Corporation, a publicly held
company traded on the American Stock Exchange. Sub-
sidiaries and affiliates of A.O. Smith Corporation are:

A.O. Smith Electric Motors (Ireland) Ltd.

A.O. Smith Enterprises Ltd.

AgriStor Credit Corporation

AgriStor Credit Corporation of Canada Ltd.

Claymore Insurance Company, Ltd.

Fabricadores de Componentes de Motores S.A.
De C.V.

Fabricantes de Componentes de Motrices S.A.
De C.V.

Fabricantes de Motores de Mexico S.A. De C.V.

Motores Electricos de Juarez S.A. De C.V.

Productos de Aqua S.A. De C.V.

Productos Electricos Aplicados S.A. De C.V.

Smith Fiberglass Products Inc.

Metalsa S.A.

A.O. Smith Water Products Company B.V.

A.O. Smith L’Eau Chaude, Sarl

AOS Holding Company

_ A.O. Smith Holdings (Ireland) Ltd.
A.O. Smith International Trading Co.
Smith Investment Company

Hermitage Harvestore Systems, Inc. has no corporate
parent, affiliates or subsidiaries.

TABLE OF CONTENTS

QUESTIONS PRESENTED .................

PARTIES TO THE PROCEEDING
AND RULE 28.1 LISTING ................

py hy 8) |: er
OPINIONS BELOW ....................... So
ET a ae, ic, sa awe vases ceens
STATUTORY PROVISION INVOLVED ......
STATEMENT OF THE CASE ...............
REASONS FOR GRANTING THE WRIT ....

I. Summary Of Reasons .................

II. The Sixth Circuit’s Decision Is In Direct

PAGE

Conflict With Decisions Of Other Circuits . li
III. The Issues Presented Are Important To
Civil And Criminal Litigants And The
SE EC Ca aU Sods ce kLeks cath eke ccics 18
ES og co coclvn ss tkaeeta4h sake bees 20
APPENDIX
Opinion Of The Court Of Appeals .......... App. 1
Denial Of Petition For En Banc Rehearing .. App. 17
Order Of the District Court ................ App. 19

iv

TABLE OF AUTHORITIES

CASES: PAGE
Abell v. Potomac Insurance Co., 858 F.2d 1104

SE 05 42s bean ee ene Rowe ies -4 9,19
Agristor Leasing v. Saylor, 803 F.2d 1401 (6th Cir.

SEE ONCOL TA ak oh Cub Cede Ehehadun keene 66 3
Attridge v. Cencorp Division of Dover Technologies

Int'l, Inc., 836 F.2d 118 (2d Cir. 1987) .... 13

Baca v. Sullivan, 821 F.2d 1480 (10th Cir. 1987) . 19
DeGrave v. United States, 820 F.2d 870 (7th Cir.

RUD | Weve GU eens ce diekees eepeaaeewebas ss 7
Haley v. Blue Ridge Transfer Co., 802 F.2d 1532

Se SEE Sick wake esanesdnusenavches . 6,138
Hobson v. Wilson, 737 F.2d 1 (D.C. Cir. 1984) ... 9
Irvin v. Dowd, 366 U.S. 717 (1961) ........... 10
Krause v. Rhodes, 570 F.2d 563 (6th Cir. 1977),

cert. denied, 485 U.S. 924 (1978) .......... 9
Mattox v. United States, 146 U.S. 140 (1892) .... 8,17
McDonough Power Equipment, Inc. v. Greenwood,

Be IIb Siw bh dnc cey bans cueesee 8, 10
Neron v. Tierney, 841 F.2d 1197 (1st Cir.), cert.

denied, 109 S. Ct. 90 (1988) ............ 12, 14, 19

Owen v. Duckworth, 727 F.2d 643 (7th Cir. 1984) . 13

Remmer v. United States, 347 U.S. 227 (1954) .. passim -

Rinker v. County of Napa, 724 F.2d 1352 (9th Cir.
ED. xb Acn case FcGesw ee Geka dhs Hp04 o's wen 9, 10

v

Stephens v. South Atlantic Canners, Inc., 848 F.2d
484 (4th Cir.), cert. denied, 109 S. Ct. 564
CRE danish Nan Sa nkWen Atonses CeaRAk Rees 9

Tanner v. United States, 107 S. Ct. 2739 (1987) . 8:15, 17

Transamerican Freight Lines v. Brada Mille.
Freight Systems, Inc., 423 U.S. 28 (1975) .. 2

United States v. Bagnariol, 665 F.2d 877 (9th Cir.
1981), cert. denied, 456 U.S. 962 (1982) .... 7,15

United States v: Bassler, 651 F.2d 600 (8th Cir.
SE ha W sd CGR ba aes eh cbdebeese cae dkeakes 15, 17

BE aS euk tbs odbes eves sobbbe Seuad oe oes 7, 16

ESE NRO EIA MNS RZ I ea a ues

United States v. Caporale, 806 F.2d 1487 (11th Cir.
1986), cert. denied, 482 U.S. 917 (1987) .... 7

United States v. Cooper, 868 F.2d 1505 (6th Cir.

SE: Sa An cdads udursdh nee uenias eubeuie os 11
United States v. Crane, No. 86-3917, slip op. (6th

6 eS SO er ee oe ree
United States v. Delaney, 732 F.2d 639 (8th Cir.

UE SG sn uv cade cdwancaeecbiewdsessisdesss 7,16 ~
United States v. DeLtis, 722 F.2d 902 (1st Cir.

DUE dh.danncdeagenedvhonkeeyeneretedeetnn 12
United States v. Greer, 620 F.2d 1383 (10th Cir.

SE a ib wicke bie den ch abd ape teens chen 7, 18, 17
United States v. Heller, 785 F.2d 1524 (11th Cir.

SES. i'n Unni ekeabwonnavauamnbden ieee hese 10, 18

United States v. Hornung, 848 F.2d 1040 (10th Cir.
SEE bbb cic 044040545 60000 000 sou 7

vi

United States v. Jelsma, 630 F.2d 778 (10th Cir.

ROR EN eS PCY PR 17
United States v. Jonnet, 762 F.2d 16 (8d Cir
Si soriciccs ops clea eet eek 7, 16

United States v. Kabir, Nos. 87-3850/3851, slip op.
(6th Cir. Dec. 28, 1988), cert. denied, 109 S. Ct:
SIE, hoch ke neea shah dobwhitesbasces 19, 20

SUE, 4060s aden chadssees bees Caseesesatene 6, 11

BOUND nc cc cacsnyensenseuhee sS5n0es
= = > oe lh ats — aa in in at A at

App. 1

[Filed April 26, 1989]

Nos. 87-5990/6002
88-5279/5314

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

JAMES SAYLOR and KAAREN SAYLOR
d/b/a UDDER NONSENSE DAIRY,

Defendants, Counterplaintiffs-
Third-Party Plaintiffs-Appellees,
v.
A. 0. SMITH HARVESTORE PRODUCTS, INC.,

(87-5990/88-5279); HERMITAGE HARVESTORE SYSTEMS,
INC., and CHUCK DOWDY (87-6002/88-5314),

Third-Party Defendants-Appellants.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TENNESSEE

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION

Sixth Circuit Rule 24 limits citation to specific situations.
Please see Rule 24 before citing in a proceeding in a court
in the Sixth Circuit. If cited, a copy must be served on other
parties and the Court.

This notice is to be prominently displayed if this decision
is reproduced.

BEFORE: KEITH, JONES and GUY, Circuit Judges.

PER CURIAM. The third-party defendants appeal the
jury verdict for the third-party plaintiffs, including the
pre-judgment interest award, in this diversity action for
strict product liability and fraudulent misrepresentation.

App. 2

For the reasons that follow, we affirm the district court’s
judgment as to the liability and compensatory damages
issues. However, because the record reflects that the pre-
judgment interest award was improperly calculated, we
find it necessary to order a remittitur of a portion of that
award.

I.

At all times relevant to this lawsuit, the third-party plain-
tiffs-appellees, James and Kaaren Saylor (“the Saylors’’)
were the owners and operators of the “Udder Nonsense
Dairy” in New Bedford County, Tennessee. Third-party
defendant-appellant, A.O. Smith Harvestore Products, Inc.
(“AOSHPI’’), is a New York corporation engaged in the
design and manufacture of farm feed storage systems. Third-
party defendant-appellant Hermitage Harvestore Products,
Inc. (““Hermitage’’) is a Tennessee corporation engaged
in the business of selling and distributing Harvestore sys-
tems designed and manufactured by AOSHPI. Third-party
defendant-appellant Chuck Dowdy (““Dowdy’’) is a sales
agent for Hermitage.

In January or February of 1980, the Saylors were ap-
proached by Dowdy about purchasing Harvestore feed
storage structures and related equipment manufactured
by AOSHPI for use on their dairy farm. The Harvestore
system was represented through AOSHPI literature and
by Dowdy as an “oxygen limiting’”’ system which was de-
signed to keep stored feed virtually airtight, thereby pre-
venting spoilage and yielding better feed and increased
milk production. Dowdy showed the Saylors an AOSHPI
film and a book published by AOSHPI, both of which
touted the oxygen limiting capabilities of Harvestore struc-
tures. The promotional material defined “oxygen limiting”

App. 3

as “{a] feed storage system in which ensiled feeds are pro-
tected from the access of oxygen.”

In March of 1980, the Saylors signed an agreement with
Hermitage to obtain the Harvestore system. In May of
1980, the Saylors entered a long-term lease with AgriStor
Leasing Company (“AgriStor’’), which financed the arrange-
ment. The Harvestore structures were in place and oper-
ating on the Saylors’ farm by July of 1980. After the first
month, however, James Saylor began noticing problems
in the dairy herd, including decreased -milk production,
a lack of energy in the cows, and swelling in their joints.

During 1981 several veterinarians came to the Saylors’
farm and examined the dairy herd; however, none of them
could determine the source of the problem. Although the
Saylors stopped using the Harvestore structures in Febru-
ary of 1982, the health of the herd continued to decline,
resulting in lower milk productivity and the death of a num-
ber of cows. Eventually, the Saylors were forced to slaughter
the dairy herd and close down their farm. When they de-
faulted on their lease payments, AgriStor repossessed the
equipment.

On October 28, 1983, AgriStor filed suit against the Say-
lors in the United States District Court for the Eastern
District of Tennessee, seeking the balance due under the
lease. The Saylors answered and filed a third-party com-
plaint against Dowdy, Hermitage and AOSHPI, seeking
damages for manufacturing a defective product, and for
false and fraudulent misrepresentations about the product.
At the beginning of the trial, the Saylors confessed judg-
ment on the AgriStor claim, and the district court granted
summary judgment to AgriStor for the remaining pay-
ments under the lease. The case was tried to a jury on
the Saylors’ claims of a defective product and fraudulent

App. 4

misrepresentation. The jury found the defendants jointly
and severally liable to the Saylors, and awarded compen-
satory and punitive damages in the amount of $1 million.

The defendants appealed the judgment to this court,
arguing that the district court had erred in refusing to
give a jury instruction on the statute of limitations, and
in refusing to direct a verdict in defendants’ favor on the
fraudulent misrepresentation claims. Regarding the latter
issue, the defendants argued that certain language in the
lease agreement expressly disclaimed that the Saylors had
relied upon any representations made by the defendants
in purchasing the Harvestore equipment. The defendants
contended that this contractual language precluded the
Saylors from proving reliance, thereby foreclosing their
fraudulent misrepresentation claims.

This court reversed the district court’s judgment and
remanded, agreeing with the defendants that the jury should
have been instructed on the statute of limitations issue.
Agristor Leasing v. James Saylor, 803 F.2d 1401, 1405-06
(6th Cir. 1986) (“Saylor I’). However, we rejected the de-
fendants’ assertions regarding the force of the “‘disclaimer-
of-reliance’”’ language in the contract. Noting a split of au-
thority in Tennessee as to whether such disclaimers were
effective to shield a defendant from liability for fraud, this
court deferred to the district judge’s interpretation of
state law and concluded that “the district court did not
err in denying summary judgment and a directed verdict
on the basis of the disclaimers of reliance.” Jd. at 1407.

On remand, the defendants filed a motion in limine
seeking to prevent any reference to the prior proceedings
in the presence of the jury. This motion was granted. In
addition, the defendants sought to preclude the Saylors
from presenting evidence regarding pre-judgment interest

App. 5

damages. The district court ultimately granted this mo-
tion, stating that if the jury awarded compensatory dam-
ages, the court would decide whether pre-judgment in-
terest should be awarded and in what amount.

The second trial commenced on June 8, 1987. In the sec-
ond week of trial, during a brief recess in the proceedings,
one of the jurors was approached by an old acquaintance
who was a spectator at the trial. The spectator, who was
a blood relative of one of the Saylcrs’ expert witnesses,
greeted the juror in the restroom and told the juror that
she had “sat through this whole case two years ago.” The
juror promptly told the spectator that she was not allowed
to taik about the case and walked out of the restroom.
The juror then informed the court marshal about what
had taken place, and the marshal informed the court and
counsel for the parties. Counsel for the defendants ques-
tioned the spectator about the incident, but did not ask
that the juror be replaced, or request any other relief at
that time. According to the defendants, they did not learn
of the spectator’s relation to the Saylors’ witness until
the trial had concluded.

At the close of the evidence, the defendants moved for
a directed verdict on the fraudulent misrepresentation
claims, again asserting that the disclaimer language in the
lease contract precluded the Saylors from recovering on
those claims. This motion was denied. The defendants also
requested that the jury be given a special verdict form,
citing the fact that multiple claims were being asserted
against multiple defendants. The district court also denied
this request.

Despite his pre-trial evidentiary ruling concerning pre-

judgment interest, and despite reaffirming that ruling dur-
ing trial, the district judge decided at the close of the

-

App. 6

proofs to submit this issue to the jury. The district judge
therefore instructed the jury, in accordance with Tennes-
see law, that they possessed the discretion whether to
award pre-judgment interest, and that they could award
such interest on the amount of compensatory damages “‘at
any rate of interest [they found] to be appropriate up to
but not greater than 10 percent per annum.” J. App. at
484-85.

On June 24, 1987, the jury returned a general liabil-
ity verdict against all defendants, awarding the Saylors
$875,000.00 in compensatory damages and $490,000.00 in
pre-judgment interest. The latter figure represented in-
terest at the rate of 8 percent per year on $875,000.00
over seven years.

The defendants filed various post-trial motions, including
a motion for judgment notwithstanding the verdict and
a motion for a remittitur of the damages award. In addi-_
tion, the defendants filed a motion seeking to interview |
the jurors concerning the extraneous juror contact, as well
as a motion for a judicial inquiry into this matter. While
all of these motions were denied initially, the district
judge later decided to conduct an inquiry into the circum-
stances surrounding the extraneous juror contact.

On January 21, 1988, the district judge conducted an
inquiry at which each of the jurors was examined indi-
vidually. All of the witnesses to the incident, including
the juror, the spectator, and an employee of the court
who witnessed the contact, either testified or submitted
an affidavit. All stated that the juror promptly terminated
the conversation upon hearing that the spectator had at-
tended the prior trial. Moreover, none of the witnesses
to the incident. stated that the juror was informed of the
outcome of the prior trial. On questioning by the trial

App. 7

judge, each of the jurors stated under oath that her vote
was based solely on the evidence presented at trial and
the instructions provided by the court.

After the hearing, the defendants filed a motion for a
new trial pursuant to Rule 60(b) of the Federal Rules of
Civil Procedure. On February 8, 1988, the district judge
denied that motion, concluding that “there was absolute-
ly no juror misconduct, that any contact which occurred
was harmless, and that all jurors exhibited exemplary be-
havior at all times.” J. App. at 55.

Il.

In their first argument, the defendants assert that the
district court erred in denying their motion for a directed
verdict on the fraudulent misrepresentation claims. They
maintain that the disclaimer-of-reliance language in the
lease agreement forecloses recovery on these claims be-
cause reliance is an essential element of fraud. The de-
fendants also attempt to distinguish between contractual
provisions purporting to disclaim liability and those
purporting to disclaim reliance, asserting that Tennessee
law disfavors only the former. Finally, the defendants con-
tend that our decision in Saylor J does not squarely ad-
dress the effect of reliance disclaimers under Tennessee
law, and that the law-of-the case doctrine therefore is not
applicable.

The pertinent terms in the lease contract provide as

follows:
* * *

10. The Seller hereunder is an independent con-
tractor none of whose representations are
binding on the Manufacturer.

App. 8

—

* * *

14. Preamble — Buyer understands the condi-
tions of the use of the products and is not
relying on the skill or judgment of the Manu-
facturer or Seller in selecting them because
Buyer acknowledges that farming and live-

. stock feeding results are very much the
product of individual effort combined with
various climatic, soil, water, growing and
feeding conditions which are beyond the con-
trol of the Manufacturer and Seller. Buyer
recognizes that any advertisements, bro-
chures, and other written statements which
he may have read, including any farm profit
plan which may have been shown to him,
as well as any oral statement which may
have been made to him, concerning the po-
tential of the Harvestore and or Slurrystore
units and allied machinery and equipment,
are not guarantees and he has not relied
upon them as such because the products will
be under Buyer’s exclusive management and
control ....

* * *

ACKNOWLEDGEMENT AND RELIANCE

I HAVE READ AND UNDERSTOOD THE
TERMS AND CONDITIONS OF THIS PUR-
CHASE ORDER INCLUDING THE WARRAN-
TIES. DISCLAIMERS AND TERMS AND CON-
DITIONS HEREIN GIVEN TO ME, EITHER BY
THE MANUFACTURER OR THE SELLER. I
RELY ON NO OTHER PROMISES OR CONDI-
TIONS AND REGARD THAT AS REASONABLE
BECAUSE THESE ARE FULLY ACCEPTABLE
TO ME.

J. App. at 824a (emphasis added).

App. 9

The defendants assert that in Saylor I, we do not
squarely address the effect of such a reliance disclaimer
under Tennessee law. However, the contractual provisions
at issue in Saylor I are the identical provisions involved
in this case, and the Saylor I court held that “the dis-
trict court did not err in denying summary judgment and
a directed verdict on the basis of the disclaimers of re-
liance.” 803 F.2d at 1407 (emphasis added). Moreover, the
same issue was presented to this court in Agristor Leas-
ing v. William Dayon Taylor, 865 F.2d 1267 (6th Cir.
1989), wherein the court stated as follows:

AOSHPI argues [that] the district court erred in
failing to give effect to its “disclaimer of reli-
ance.” AOSHPI attempts to distinguish its “dis-
claimer of reliance”’ from the “disclaimer of lia-
bility” in the Agristor lease in Saylor [I]. We
find the claimed distinctions to be ineffective in
light of Saylor [I] and Tennessee law, which
gives no effect to disclaimers in the presence of
fraud or negligent misrepresentations.

Slip op. at 10. Gontrary to the defendants’ assertions, the
Saylor I court expressly held that the contractual dis-
claimer involved in this case was not effective to shield
the defendants from liability for fraudulent misrepresenta-
tion. Moreover, We have since held in the Taylor deci-
sion that the defendants’ claimed distinction between lia-
bility disclaimers and reliance disclaimers is not effective.
Given the decisions in Saylor I and Taylor, we are bound
to reject the defendants’ arguments concerning this issue.

III.

The defendants next contend that the district court erred
in denying their motion for a new trial, which was filed

eS

App. 10

after the judicial inquiry into the circumstances and ef-
fect of the outside juror contact. The defendants assert
that the juror’s contact with the spectator was presump-
tively prejudicial to them, and that a new trial was re-
quired because the plaintiffs did not rebut that presump-
tion of prejudice.

The defendants filed their motion for a new trial pur-
suant to Rule 60(b) of the Federal Rules of Civil Pro-
cedure. Rule 60(b) states, in pertinent part, as follows:

On motion and upon such terms as are just, the
court may relieve a P ow or a party’s legal rep-
resentative from a final judgment, order or pro-
ceeding for the following reasons: .... (2) new-
ly discovered evidence which by due diligence
could not have been discovered in time to move
for a new trial under Rule 59(b) .... (6) any
other reason justifying relief from the operation
of the judgment.

The decision whether to grant a Rule 60(b) motion is com-
mitted to the sound discretion of the trial court, and the
granting or denial of such a motion may not be reversed
unless the trial court abuses its discretion. In Re Salem
Mortgage Co., 791 F.2d 456, 459 (6th Cir. 1986).

The defendants rely on Remmer v. United States, 347
U.S. 227 (1954), for the proposition that unauthorized con-
tacts with jurors are presumptively prejudicial, and that
the burden is on the party seeking to preserve the judg-
ment to show lack of prejudice. In Remmer, the Supreme
Court stated that:

In a criminal case, any private communication,
contact, or tampering, directly or indirectly, with
a juror during a trial about the matter pending
before the jury is, for obvious reasons, deemed

App. 11

presumptively prejudicial, if not made in pur-
suance of known rules of the court and directions
of the court made during the trial, with full
knowledge of the parties. The presumption is not
conclusive, but the burden rests heavily upon the
Government to establish, after notice to and
hearing of the defendant, that such contact with
the juror was harmless to the defendant.

347 U.S. at 451. While Remmer was a criminal case, the
doctrine of “presumed prejudice” also has been applied
in the civil context. See, e.g., Krause v. Rhodes, 570 F.2d
563, 568 (6th Cir. 1977), cert. denied, 485 U.S. 924 (1978);
Hobson v. Wilson, 737 F.2d 1 (D.C. Cir. 1984), cert.
denied, 470 U.S. 1084 (1985). Therefore, if Remmer were
controlling law, the burden would have been on the Say-
lors to establish lack of prejudice from the unauthorized
contact. However, in United States v. Pennell, 737 F.2d
521 (6th Cir. 1984), cert. denied, 469 U.S. 1158 (1985), this
court interpreted a more recent Supreme Court decision,
Smith v. Phillips, 455 U.S. 209 (1982), as superseding the
Remmer rule. Although Phillips did not expressly over-
rule Remmer, the Phillips Court stated that the “rem-
edy for allegations of juror partiality is a hearing in which
the defendant has the opportunity to prove bias.” 455 US.
at 215 (emphasis added). Interpreting this language in
Pennell, we stated:

Thus, the Court held that Remmer does not gov-
ern the question of the burden of proof where
potential jury partiality is alleged. Instead,
Remmer only controls the question of how the
district court should proceed where such allega-
tions are made .... In light of Phillips, the
burden of proof rests upon a defendant to demon-
strate that unauthorized communications with
jurors resulted in actual juror partiality. Prej-
udice is not to be presumed.

App. 12

737 F.2d at 532 (emphasis added; footnote omitted). Ac-
cord United States v. Zelinka, 862 F.2d 92, 95 (6th Cir.
1988) (noting that Pennell provides the controlling rule
in this Circuit).

The defendants in this case argue that Phillips and Pen-
nell apply only to pre-verdict hearings for juror prejudice,
and that Remmer continues to govern post-verdict hear-
ings for juror prejudice. While admitting that nothing in
Pennell so limits its holding, the defendants assert that
applying Pennell to post-verdict hearings would violate
Rule 606(b) of the Federal Rules of Evidence. Rule 606(b)
provides, in pertinent part, as follows:

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 that or any other juror’s mind or
emotions as influencing the juror to assent to or
dissent from the verdict or indictment or con-
cerning the juror’s mental processes in connec-
tion therewith, except that a juror may testify
on the question whether extraneous prejudicial

information was improperly brought to the
jury’s attention or whether any outside influence

was improperly brought to bear upon any juror.
(emphasis added).

Given the above-emphasized language, the defendants’
interpretation of Pennell must fail. Presumably, under the
Remmer rule, the party seeking to preserve the judgment
would be allowed to demonstrate the adsence of prejudice
by questioning the jurors, post-verdict, under the author-
ity of the Rule 606(b) exception. However, the defendants
assert that the post-verdict questioning of jurors to estab-
lish the existence of prejudice under the Phillips/Pennell
rule would violate Rule 606(b). Plainly, if post-verdict

App. 13

questioning of jurors was permissible when the Remmer
presumption was applicable, such post-verdict question-
ing is permissible under Phillips and Penneli. The inter-
pretation and application of Rule 606(b) does not turn upon
who has the burden -of proof.

Because the holding in Pennell applies equally well to
pre-verdict and post-verdict hearings for juror prejudice,
the defendants in this case bore the burden of proving
that the extraneous juror contact resulted in actual prej-
udice. Since the defendants failed to carry that burden,
the district court did not abuse its discretion in denying
their motion for a new trial on this ground.

IV.

The defendants’ final argument concerns the manner in
which the district court submitted the pre-judgment in-
terest issue to the jury. As stated earlier, the district
judge made a pre-trial ruling that the parties could not
introduce evidence on this issue because the court, not
the jury, would determine whether such damages should
be awarded and in what amount. The district court reaf-
firmed that ruling during trial. Nevertheless, at the close
of the evidence, the court decided to submit the issue to
the jury. The jury subsequently awarded $490,000.00 of pre-
judgment interest on compensatory damages of $875,000.00.
The jury applied an interest rate of eight per year [sic]
to the total compensatory damage award from July of
1980, when the Saylors purchased the Harvestore equip-
ment, to June of 1987, the date of the jury’s verdict. The
pre-judgment interest award thus represents $70,000 per
year for seven years.

The defendants contend that the pre-judgment interest
award is improper because the Saylors did not suffer all

App. 14

\

of their damages as soon as they leased the Harvestore
equipment. They argue that the Saylors suffered gradual
losses from 1980 until 1985, when they slaughtered the
herd and closed down the farm. The defendants further
assert that the jury’s error in this regard requires a new
trial, rather than a remittitur, because the absence of any
record evidence on this issue precludes a mathematical
computation of the proper amount of pre-judgment in-
terest. Moreover, the defendants assert that the district
court’s refusal to submit special interrogatories to the jury
forecloses a remittitur because the jury’s verdict does not
indicate what portion of the compensatory damage award
is for property losses (arising from the strict liability
claims) and what portion is for economic losses (arising
from the fraud claims). In the defendants’ view, this fact
precludes this court from determining when the vari-
ous losses were suffered, thereby preventing an accurate
determination of the. proper amount of pre-judgment in-
terest.

Tennessee Code Annotated § 47-14-123 (1980) states:

Pre-judgment interest, i.e., interest as an ele-
ment of, or in the nature of, damages, as per-
mitted by the statutory and common laws of the
states as of April 1, 1979 may be awarded by
courts or juries in accordance with the principles
of equity at any rate not in excess of a maxi-
mum effective rate of ten percent (10%) per

(emphasis added). Under this provision, courts and juries
possess wide discretion in the awarding of pre-judgment
interest, and their award should not be disturbed “ ‘unless
the record discloses a manifest and palpable abuse of
discretion.’ ”’ Schoen v. J.C. Bradford & Co., 667 S.W.2d
97, 101 (Tenn. App. 1984) (quoting Engert v. Peerless In-
surance Co., 382 S.W.2d 541, 550 (Tenn. App. 1964)). This

td
Te

App. 15

court has held recently that “[wJhere a jury grants a par-
ticular damage award and the district court refuses to dis-
turb that finding, an appellate court should be certain in-
deed that the award is contrary to all reason before it
orders a remittitur or a.new trial.” In Re Lewis, 845 F.2d
624, 635 (6th Cir. 1988).

Despite this deferential standard of review, we conclude
that the jury abused its discretion in calculating the pre-
judgment interest award. Under Tennessee law, “(plre-
judgment interest on a property damage award accrues
from the date that the defendant’s tortious conduct ef-
- fectively operates to destroy or diminish either the resale
value, the rental value, or even the personal use and en-
joyment of the plaintiff's property.” Sterling v. Velsicol
Chemical Corp., 855 F.2d 1188, 1213 (6th: Cir. 1988) (citing
cases). Likewise, pre-judgment interest on economic dam-
ages (e.g., lost profits) is “calculated from some specific
date or dates as found by the court that precede the date
of the judgment, and is computed from that date or dates
down to the date of the judgment at the prejudgment rate
....” American Buildings Co. v. DBH Attachments, Inc.,
676 S.W.2d 558, 566 (Tenn. App. 1984) (emphasis added).
In the instant case, the jury awarded pre-judgment inter-
est on the Saylors’ total compensatory damage award of
$875,000.00 from the time that they leased the Harvestore
equipment in July 1980, to the date of the jury verdict in
June 1987. This award constitutes a “manifest and palpa-
ble abuse of discretion” since it is clear from the record
that the Saylors did not incur all of their damages in 1980,
but instead suffered gradual losses from 1980 until 1985.
Therefore, the jury clearly erred in its calculation of pre-
judgment interest.

The defendants argue that the jury’s error requires a
new trial because, as they assert, there is no principled

App. 16

manner in which to calculate a remittitur on the present
state of the record. We disagree. Although the general
verdict in this case does not allow for a precise calcula-
tion on our part of the proper amount of pre-judgment in-
terest, the record permits us to fashion a minimum award.
Since it is clear from the record that the Saylors incurred
all of their damages (both property losses and economic
losses) by July 1985, we believe that the Saylors are en-
titled to at least two of .the seven years of pre-judgment
interest which the jury awarded. Therefore, applying the
jury’s chosen interest rate of eight percent per year to
the compensatory damage award of $875,000.00, we con.
clude that a pre-judgment interest award of $140,000.00
is permissible on the record presented. Accordingly, we
believe that a remittitur of $350,000.00 of the jury’s pre-
judgment interest award is required.

V.

For the reasons set forth above, the order of the dis-
trict court denying the defendants’ motion for a new trial
is REVERSED to the extent that it failed to direct a
remittitur of a portion of the pre-judgment interest award.
Accordingly, we REMAND this case to the district court
with instructions to grant a new trial limited to the dam-
ages issue, unless the plaintiffs file in the district court,
within thirty days of the filing of this opinion, a motion
requesting a remittitur of $350,000.00 of the pre-judgment
interest award.

-

App. 17

[Filed July 10, 1989]

No. 87-5990/6002
88-5279/5314

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

AGRISTOR LEASING, A WISCONSIN PARTNERSHIP,

Plaintiff,
JAMES SAYLOR AND KAAREN SAYLOR d/b/a
UDDER NONSENSE DAIRY,

Defendants, Counter Plaintiffs,
Third Party Plaintiffs-Appellees,

| -

A.O. SMITH HARVESTORE PRODUCTS,
Third Party Defendants-Appellants.

ORDER

BEFORE: KEITH, JONES and GUY, Circuit Judges.

The Court having received a petition for rehearing en
bance, and the petition having been circulated not only to
the original panel members but also to all other active
judges of this Court, and no judge of this Court having
requested a vote on the suggestion for rehearing en banc,
the petition for rehearing has been referred to the original
hearing panel.

App. 18

The panel has further reviewed the petition for rehear-
ing and concludes that the issues raised in the petition
were fully considered upon the original submission and
decision of the case. Accordingly, the petition is denied.

ENTERED BY ORDER OF THE COURT

/s/ LEONARD GREEN
Leonard Green, Clerk ~

~ App. 19

[Filed February 8, 1988]

IN THE
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TENNESSEE
WINCHESTER DIVISION

No. CIV-4-83-94

JAMES SAYLOR and wife, KAAREN SAYLOR,
individually and d/b/a ““‘UDDER NONSENSE DAIRY”

V.

A. 0. SMITH HARVESTORE PRODUCTS, INC.,
HERMITAGE HARVESTORE SYSTEMS, INC.,
and CHUCK DOWDY

ORDER

The defendants in this case contended that an outside
communication was made to a juror and that a juror was
previously acquainted with a witness in this case. In order
to investigate these allegations, this Court held a full
judiciary inquiry on January 21, 1988. After conducting
the inquiry, this Court finds that there was absolutely no
juror misconduct, that any contact which occurred was
harmless, and that all jurors exhibited exemplary behavior
at all times. Accordingly, the defendant’s motion for a new
trial is hereby DENIED.

ENTER:

/s/ THomMAS G. HULL
Thomas G. Hull
United States District Court

Juror

Bell?

Lawwell

Posey

Davidson

Bradford

Scarbrough

Decker

App. 20

Summary Chart Of Judicial Inquiry Testimony

Knowledge Knowledge
of Contact Substance of Other Contact of Contact
During Trial Communication Jurors Told Reported! After Trial
Yes First Trial No To Marshal =
(JA 519) (JA 520) (JA 522) (JA 519, 521)
Yes Mr. Saylor Yes — _
(JA 512) (JA 514) (JA 512)
Yes Cannot Recall Yes Not Certain _
(JA 525) (JA 527) (JA 527) (JA 525)
No _ — — Yes, Mrs. Bell
(JA 531-32) told all jurors
on day of
judicial inquiry
(JA 534)
No — _ — No
(JA 535) (JA 535)
No ~ _ _ No
(JA 536-37) (JA 537)
Yes Cannot Recall Yes To Clerk -
(JA 538) (JA 539) (JA 539) (JA 539)

1 One of Respondents’ counsel stated that his partner initially reported the
incident to the court. (JA 507).

2 Bell was the juror who had the extraneous communication with the interested

spectator.

Seat i

MAR

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385020_0212%3A1. Public record. Not legal advice.