Opposition Brief — Carota v. Celotex Corp.

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No. 89-1674.

y Bor i ee ee eee ta ;

GN me Court, U.S.

o 1 LED

MAY 29 1990

In the JOSEPH F. SPANIOL,

CLERK

Supreme Court of the United States.

OCTOBER TERM, 1989.

ROSE CAROTA,

PETITIONER,

Vv.

THE CELOTEX CORPORATION,

RESPONDENT.

Brief in Opposition to Petition for a Writ of Certiorari

to the United States Court of Appeals

for the First Circuit.

THOMAS P. O’REILLY,

JANET L. MALOOF,

Trial Counsel,

RICHARD L. NEUMEIER,

LEONARD F. ZANDROW, JrR.,*

B. DEIDRE BRENNAN,

Appellate Counsel,

PARKER, COULTER, DALEY & WHITE,

One Beacon Street,

Boston, Massachusetts 02108.

(617) 723-4500

*Counsel of Record

BATEMAN & SLADE, INC. BOSTON, MASSACHUSETTS

Question Presented for Review.

Did the United States Court of Appeals for the First Circuit

correctly decide in this diversity jurisdiction case that the ad-

missibility of the evidence that the plaintiff had settled with

certain defendants prior to the trial represented a matter of

substantive Massachusetts law, rather than a matter controlled

by Rule 408 of the Federal Rules of Evidence?

> aw - 7 7

St SS

iil

Table of Contents.

Question presented for review i

Statement of the case |

Reasons why writ of certiorari should be denied 6

The First Circuit Court of Appeals correctly followed

the established precedent of this Court in deciding

this case 6

Conclusion 14

Table of Authorities Cited.

CASES.

Affiliated Capital Corp. v. City of Houston, 793 F.2d

706 (Sth Cir. 1986) 13

Alexander v. Town & Country Estates, Inc., 535 F.2d

108i (8th Cir. 1976) 1]

Allen v. Zurich Ins. Co., 667 F.2d 1162 (4th Cir. 1982) 10

Aubin v. Fudala, 782 F.2d 287 (1st Cir. 1986) 13

B&B Investment Club v. Kleinert’s, Inc., 479 F. Supp.

787 (E.D. Pa. 1979) 4n

Belton v. Fibreboard Corp., 724 F.2d 500 (Sth Cir.

1984) 4n

Bituminous Const., Inc. v. Rucker Enterprises, Inc.,

816 F.2d 965 (4th Cir. 1987) 4n

Boston Edison Co. v. Tritsch, 370 Mass. 260, 346

N.E.2d 901 (1976) 11, 12

IV TABLE OF AUTHORITIES CITED.

Bradbury v. Phillips Petroleum Co., 815 F.2d 1356

(10th Cir. 1987) 4n

Branch v. Fidelity & Casualty Co. of New York, 783

F.2d 1289 (Sth Cir. 1986) 5n

Breuer Electric Manufacturing Co. v. Toronado Sys-

tems of America, Inc., 687 F.2d 182 (7th Cir. 1982) 4n

Brocklesby v. United States, 767 F.2d 1288 (8th Cir.

1985) 4n

Carota v. Johns Manville Corp. , 893 F.2d 448 (Ist Cir.

1990) 2, 6, 7, 8, 9 et seq.

Cassino v. Reichhold Chemicals, Inc., 817 F.2d 1338

(9th Cir. 1987) 4n

Central Soya Co., Inc. v. Epstein Fisheries. Inc., 676

F.2d 939 (7th Cir. 1982) 4n

Crenshaw v. Quarles Drilling Corp, 798 F.2d 1345

(10th Cir. 1986) il

Crues v. KFC Corp., 768 F.2d 230 (8th Cir. 1985) 4n

Daniels v. Celeste, 303 Mass. 148, 21 N.E.2d 1 (1939) 11

Davis v. Wakelee, 156 U.S. 680 (1895) 10

Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938) 7,8, 10

Fasanaro v. Mooney Aircraft Corp., 687 F. Supp. 482

(N.D. Cal. 1988) 8n

Flaminio v. Honda Motor Co., 733 F.2d 463 (7th Cir.

1984) 8n

Franklin v. Guralnick, 394 Mass. 753, 477 N.E.2d

405 (1985) 1]

Guaranty Trust Co. v. York, 326 U.S. 99 (1945) 8

Hanna v. Plumer, 380 U.S. 460 (1965) 7, 8,9, 10

Hill v. Bache Halsey Stuart Shields, Inc. , 790 F.2d 817

(10th Cir. 1986) 13

TABLE OF AUTHORITIES CITED.

Holleman v. Gibbons, 27 Mass. App. Ct. 563, 541

N.E.2d 345 (1989)

In Re General Motors Corp. Engine Interchange Litiga-

tion, 594 F.2d 1106 (7th Cir. 1979), cert. denied,

444 U.S. 870 (1979)

In Re Japanese Electronic Products Antitrust Litigation,

723 F.2d 238 (3d Cir. 1983)

Jett v. Zink, 474 F.2d 149 (Sth Cir. 1973)

John McShain, Inc. v. Cessna Aircraft Co., 563 F.2d

632 (3d Cir. 1977)

Kennon v. Slipstreamer, Inc., 794 F.2d 1067 (Sth Cir.

1986)

Kotteakos v. United States, 328 U.S. 750, 66 S. Ct.

1239 (1946)

Lataille v. Ponte, 754 F.2d 33 (Ist Cir. 1985)

Losey v. North American Philips Consumer Electron-

ics Corp., 792 F.2d 58 (6th Cir. 1986)

McHann v. Firestone Tire & Rubber Co., 713 F.2d 161

(Sth Cir. 1983)

Moe v. Avions Marcel Dassault-Breguet Aviation, 727

F.2d 917 (10th Cir.), cert. denied, 469 U.S. 853

(1984)

Muzichuk v. Liberty Mutual Ins. Co., 2 Mass. App. Ct.

266, 311 N.E.2d 558 (1974)

O’Gilvie v. International Playtex, Inc., 821 F.2d 1438

(10th Cir. 1987), cert. denied, 486 U.S. 1032 (1988)

O'Neil v. National Oil Co., 231 Mass. 20, 120 N.E.

107 (1918)

Patriot Cinemas, Inc. v. General Cinema Corp., 834

F.2d 208 (Ist Cir. 1987)

12n

vi TABLE OF AUTHORITIES CITED.

Pennsylvania v. Bruder, 109 S.Ct. 205 (1988) 7

Ricciardi v. Children’s Hosp. Medical Center, 811 F.2d

18 (1st Cir. 1987) 10

Richardson v. Turner, 716 F.2d 1059 (4th Cir. 1983) 1]

Rioux v. Daniel Intern. Corp., 582 F. Supp. 620 (D.

Me. 1984) 8n

Ruhlin v. New York Life Ins. Co., 304 U.S. 202 (1938) 12n

Sharp v. Hall, 482 F. Supp. | (E.D. Okla. 1978) 4n

Smith v. Industrial Constructors, Inc., 783 F.2d 1249

(Sth Cir. 1986) 13

Triangle Mining Co., Inc. v. Stauffer Chemical Co.,

753 F.2d 734 (9th Cir. 1985) 5n

Tritsch v. Boston Edison Co., 363 Mass. 179, 293

N.E.2d 264 (1973) 3n, 11

United States v. City of Twin Falls, Idaho, 806 F.2d

862 (9th Cir. 1986), cert. denied, 482 U.S. 914 (1987) 13

United States v. Pisari, 636 F.2d 855 (Ist Cir. 1981) 5n

Wadsworth v. Boston Gas Co., 352 Mass. 86, 223

N.E.2d 807 (1967) 1]

Walker v. Armco Steel Corp., 446 U.S. 740 (1980) 8

Weir v. Federal Ins. Co., 811 F.2d 1387 (10th Cir.

1987) 4n

Willey v. Minnesota Mining & Manufacturing Co. , 755

F.2d 315 (3d Cir. 1985) 13

Woodiing v. Garrett Corp., 813 F.2d 543 (2d Cir. 1987) 13

TABLE OF AUTHORITIES CITED. Vil

STATUTORY PROVISIONS AND RULES.

28 U.S.C. § 2111 5n

Federa! Rules of Civil Procedure

Rule 49 2

Federal Rules of Evidence

Rule 103(a) 5n

Rule 407 &n

Rule 408 3, 4, 6, 7 et seq.

Supreme Court Rules

Rule 17.1(a) 7

Rule 28. | In

OTHER AUTHORITIES

1B Moore's Federal Practice ©0.405[8] (1988 ed.) 1]

| J. Weinstein & M. Berger, Weinstein’s Evidence

§ 103[06] (1982) Sn

23 C. Wright & K. Graham, Federai Practice and Pro-

cedure: Evidence § 5315 (1980) g

Note, “Rule 408 and Erie: The Latent Conflict,” 12 Ga

L. Rev. 275 (1977) g

No. 89-1674.

In the

Supreme Court of the United States.

OCTOBER TERM, 1989

ROSE CAROTA,

PETITIONER,

¥.

THE CELOTEX CORPORATION,

RESPONDENT

Brief in Opposition to Petition for a Writ of Certiorari

to the United States Court of Appeals

for the First Circuit.

Statement of the Case.

This case involves the issue of whether a single-sentence

reference to the fact that the plaintiff settled certain claims

For the limited purposes of Supreme Court Rule 28.1, The Celotex Corpor-

ation might be regarded as a wholly owned subsidiary of the Jim Walter

Corporation

with other defendants, which was presented to the jury in the

form of a “stipulation,” constituted reversible error requiring

a new trial. As discussed infra, this evidence did not violate

either the applicable state or federal law, and the First Circuit

Court of Appeals did not apply an incorrect standard of review

in analyzing the admissibility of this evidence.

The respondent The Celotex Corporation (“Celotex”) sub-

mits that the propriety of the First Circuit Court of Appeals’

analysis of the applicable law, as reported in this case in Carota

v. Johns Manville Corp., 893 F.2d 448 (1st Cir. 1990) and

as also set forth in the appendix to the petitioner Rose Carota’s

(“petitioner”) petition for writ of certiorari. stands on its own

with little need for commentary or explanation from Celotex.

Celotex submits this opposition, however, to address and

clarify certain allegations contained in the petition, which may

not be readily apparent or refuted by the text of the circuit

court’s opinion in this case. See Carota v. Johns Manville

Corp., supra at 448-451.

Celotex adopts the petitioner’s statements regarding “‘juris-

diction” and “statutory provisions in issue.” Celotex also adopts

the petitioner’s “statement of the case” with the following

exceptions.

First, the petitioner did not object to this case being submitted

to the jury on a general verdict basis only. See Petition for

Writ of Certiorari, p. 4. Relatedly, the petitioner did not suggest

that any specific interrogatories be submitted to the jury, pur-

suant to Fed. R. Civ. P. 49 or otherwise, to aid in the rendition

of a verdict. Accordingly, any complaint by the petitioner that

it is impossible to isolate what influence, if any, the pretrial

settlement evidence had upon the jury in this case has not been

preserved for appellate review. See Petition for Writ of Cer-

tiorari, pp. 4-5.

Second, and more importantly, the petitioner’s premise that

the admission of the pretrial settlement evidence in this case

substantially prejudiced her right to a fair trial, see Petition

for Writ of Certiorari, pp. 5, 6, 12, 13, is incorrect. In this

regard, it is an erroneous characterization of the record that

“(t]he sole issue on appeal before the First Circuit was whether

the admissibility of out of court settlement evidence was gov-

erned by Fed. R. of Evid. 408 or the law of Massachusetts.”’’

See Petition for Writ of Certiorari, pp. 6-7. See also id., p. 5.

To the contrary, and in order to place this petition in a proper

context, this Court should be aware that two alternative issues

were extensively presented to the circuit court, and these two

alternative issues remain potentially applicable if this Court

were ultimately to grant the petitioner the relief requested in

this case.

The first alternative issue previously raised before the cir-

cuit court was that, even if Fed. R. of Evid. 408 was ap-

plicable in this case, its provisions were not violated in the

circumstances. Regarding this alternative issue, Celotex previ-

ously argued that Fed. R. of Evid. 408, by its own terms,

permits the offer of settkement evidence for purposes other

than proving the validity or invalidity of a claim. See Fed. R.

of Evid. 408, sen. 4. Celotex argued that the settlement evi-

dence in this case was properly offered for such “other pur-

pose[s]” within the meaning of Fed. R. of Evid. 408, namely,

for the purpose of mitigating potential damages. Celotex noted

that, in general, there were a substantial number of federal

cases construing Fed. R. of Evid. 408 in which settlement

evidence was admitted under the rule and that, when admitted,

*The petitioner has apparently conceded in her petition, as she had done

before the circuit court, that the admission of the pretrial settlement evidence

in this case was proper — if Massachusetts law is considered applicable. See

Petition for Writ of Certiorari, pp. 6-7, n.4; Tritsch v. Boston Edison Co.,

363 Mass. 179, 182, 293 N.E.2d 264, 267 (1973) (“In mitigation of damages,

a defendant is entitled to show in evidence the amount of money paid or

promised to the plaintiff by a joint tortfeasor on account of the same injury.’’).

deference was given to the sound discretion of the triai judge

whose decision was not overturned absent a showing of abuse. '

The second alternative issue previously raised before the

circuit court was that, even if the admission of the settlement

evidence in this case was regarded as erroneous pursuant to

Fed. R. of Evid. 408, the error was harmless and did not affect

‘In its brief to the circuit court, Celotex identified the following cases in

which the federal courts have admitted evidence of settlements pursuant to the

“other purpose[s]” provisions of Fed. R. of Evid. 408. Belton v. Fibreboard

Corp., 724 F.2d 500, 504-505 (Sth Cir. 1984) (evidence that other asbestos

manufacturers had settled with plaintiff admissible to explain to jury why other

defendants were not in court and to prevent confusion); Breuer Electric Manu-

facturing Co. v. Toronado Systems of America, Inc., 687 F.2d 182, 185 (7th

Cir. 1982) (evidence of settlement negotiations admissible in hearing to set

aside default to show defendants’ awareness of claim); Central Soya Co., Inc.

v. Epstein Fisheries, Inc., 676 F.2d 939, 944 (7th Cir. 1982) (evidence of

settlement admissible to show partial forgiveness of primary debt in guaranty

case); In Re General Motors Corp. Engine Interchange Litigation, 594 F.2d

1106, 1124 (7th Cir. 1979), cert. denied, 444 U.S. 870 (1979) (evidence of

negotiations admissible on issue of fairness of partial settlement in class action);

John McShain, Inc. v. Cessna Aircraft Co. , 563 F.2d 632, 635 (3d Cir. 1977)

(evidence of settlement admissible to show bias or prejudice of a witness);

B&B Investment Club v. Kleinert’s, Inc., 472 F. Supp. 787, 791 (E.D. Pa.

1979) (evidence of settlement discussions admissible to show that negotiation

of class action was not successful). See also Cassino v. Reichhold Chemicals,

Inc., 817 F.2d 1338, 1342 (9th Cir. 1987); Bradbury v. Phillips Petroleum

Co., 815 F.2d 1356, 1363-1364 (10th Cir. 1987); Bituminous Const., Inc. v.

Rucker Enterprises, Inc., 816 F.2d 965, 968-969 (4th Cir. 1987); Crues v.

KFC Corp., 768 F.2d 230, 233 (8th Cir. 1985); Brocklesby v. United States,

767 F.2d 1288, 1292-1293 (8th Cir. 1985); In Re Japanese Electronic Products

Antitrust Litigation, 723 F.2d 238, 275 (3d Cir. 1983).

In addition, Celotex argued that, when the question of the admissibility of

a prior settlement is raised pursuant to the provisions of Fed. R. of Evid. 408,

this issue represents a matter “resting in the sound discretion of the trial court

which should use its best judgment as to which procedure is more appropriate

under the circumstances of the particular case.’ Sharp v. Hall, 482 F. Supp.

1, 2 (E.D. Okla. 1978). See also Weir v. Federal Ins. Co., 811 F.2d 1387,

1396 (10th Cir. 1987) (decision to exclude or admit evidence regarding settle-

ment, pursuant to Fed. R. Evid. 408, is within sound discretion of trial judge

and will not be reversed by Court of Appeals absent clear abuse of discretion);

Kennon vy. Slipstreamer, Inc., 794 F.2d 1067, 1069-1070 (Sth Cir. 1986)

(same).

the petitioner’s substantial rights in the underlying cir-

cumstances.* In this regard, Celotex argued that the settlement

evidence in this case was innocuously presented in the form

of a single-sentence “stipulation” during the course of a week

long trial, and no emphasis was placed on it. Ironically, if the

jury misapplied the settlement evidence to liability issues,

rather than to damages issues as they had been specifically

instructed to do by the trial judge, this misapplication would

have tended to undermine, rather than bolster, Celotex’s pre-

dominant defense theories at trial. These defense theories were

that the petitioner’s decedent had not suffered an asbestos-

related disease at all and, alternatively, that his health risks,

if any, could not have been anticipated given the “state of the

art” regarding medical knowledge of asbestos at the time of

his alleged exposure. In addition, any purported error in the

introduction of the settlement evidence at the trial would have

been cured by the trial judge’s clarifying instructions to the jury

considered erroneous in this case, this finding alone would not warrant the

award of a new trial. See Fed. R. of Evid. 103(a) (evidentiary ruling is not

reversible error “unless a substantial right of the party is affected”); 28 U.S.C.

§ 2111 (appellate court should render judgment “without regard to errors or

defects which do not affect the substantial rights of the parties”). As the First

Circuit Court of Appeals properly recognized in a prior case, the applicable

standard of review “for determining whether the admission of such evidence

is harmless error is whether [the court] can say ‘with fair assurance . . . that

the judgment was not substantially swayed by the error . . .” Lataille v.

Ponte, 754 F.2d 33, 37 (Ist Cir. 1985), quoting Kotteakos v. United States,

328 U.S. 750, 765, 66 S. Ct. 1239, 1248 (1946), United States v. Pisari, 636

F.2d 855, 859 (Ist Cir. 1981). In this regard, ‘“*[t}he centrality of the evidence,

its prejudicial effect, whether it is cumulative, the use of the evidence by

counsel, and the closeness of the case are all factors which bear on this

determination.” Lataille v. Ponte, supra at 37, citing | J. Weinstein & M.

Berger, Weinstein's Evidence § 103({06] at 103-61 to 103-63 (1982). See, by

analogy, Branch v. Fidelity & Casualty Co. of New York, 783 F.2d 1289,

1294 (Sth Cir. 1986) (error in admitting settlement evidence pursuant to Fed.

R. of Evid. 408 was harmless in circumstances); Triangle Mining Co., Inc.

v. Stauffer Chemical Co., 753 F.2d 734, 743 (9th Cir. 1985) (same).

in this case about such evidence. Celotex also argued that the

petitioner could not fairly complain on appeal that the trial

judge's clarifying instructions were inadequate or that his use

of a general verdict form was improper, because her counsel

had failed to make such objections at the trial.

In view oi the extensive presentation of these alternative

issues to the circuit court in this case, it is presumptuous for

the petitioner to speculate (see petition, pp. 5-6, 12, 13) that,

if the circuit court had ruled that Fed. R. of Evid. 408 applied

in this case, “the court would then have been compelled to

conclude by its own precedent that the admission of the settle-

ment evidence constituted prejudicial error which mandated a

new trial.” See Petition for Writ of Certiorari, p. 12. There is

simply no indication in the reported decision that, if Fed. R.

of Evid. 408 in actuality applied in this case, the circuit court

otherwise considered the exceptions contained within Rule

408, sen. 4 to be inapplicable or that, in any event, the circuit

court considered the settlement evidence to be substantially

prejudicial. See Carota v. Johns Manville Corp., 893 F.2d at

448-451.

Reasons Why Writ of Certiorari

Should Be Denied.

THE First Circuit CouRT OF APPEALS CORRECTLY FOL-

LOWED THE ESTABLISHED PRECEDENT OF THIS COURT IN DE-

CIDING THIS CASE.

This petition raises a routine question, namely, the applica-

tion of substantive state law in federal court cases based upon

diversity jurisdiction. Contrary to the petitioner’s allegations,

7 ‘

this petition does not raise any “first time” issues of significance

nor has the circuit court’s decision in this case “so far departed

from the accepted and usual course of judicial proceedings

. .”’ as to warrant or require intervention by this Court. See

Supreme Court Rule 17.1(a). See generally Pennsylvania v.

Bruder, 109 S. Ct. 205, 208 (1988) (Stevens, J., dissenting).

The petition mischaracterizes the decision of the circuit court

in this case. See Carota v. Johns Manville Corp., supra at

448-451. There is no support in the language of the reported

decision for the petitioner’s intimations that the circuit court

ruled that the Federal Rules of Evidence in diversity cases

generally, see Petition for Writ of Certiorari, p. 6, or that Fed.

R. of Evid. 408 specifically, see id., pp. 10-11, were “uncon-

stitutional.” To the contrary, the circuit court in this case

merely, and quite narrowly ruled that, in diversity jurisdiction

cases, the federal courts may appropriately apply the substan-

tive law of the forum state, particularly where that law repre-

sents an important and well established state policy, even

though the substantive state law may otherwise conflict with

federal law. See Carota v. Johns Manville Corp., supra at 451.

The circuit court in Carota did not modify the time-honored

tests for determining the application of federal and state law

in diversity jurisdiction cases announced by this Court in Erie

Railroad Co. v. Tompkins, 304 U.S. 64 (1938) and Hanna v.

Plumer, 380 U.S. 460 (1965), as the petitioner alleges. See

Petition for Writ of Certiorari, pp. 10, 13. In Erie Railroad

Co., this Court ruled that a federal court setting in a diversity

case must apply state substantive law. Erie Railroad Co. v.

Tompkins, supra at 78. More recently, this Court clarified that

the intent of the Erie Railroad Co. decision “was to insure

that, in all cases where a federal court is exercising jurisdiction

solely because of the diversity of citizenship of the parties,

the outcome of the litigation in the federal court should be sub-

stantially the same, so far as legal rules détermine the outcome

of a litigation, as it would be if tried in a State court.” Walker

v. Armco Steel Corp., 446 U.S. 740, 746 (1980), quoting

Guaranty Trust Co. v. York, 326 U.S. 99, 109 (1945). See

also Hanna v. Plumer, 380 U.S. at 468 (recognizing twin

aims of Erie rule: discouragement of forum shopping and

avoidance of inequitable administration of law). In this case,

the circuit court expressly cited, and correctly applied, the

principles set forth by this Court in the Erie Railroad Co and

the Hanna cases. See Carota v. Johns Manville Corp., 893

F.2d at 450-451.

The fact that the circuit court in Carota noted that the issue

of pretrial settlement evidence may “not fall neatly into the

substantive/procedural dichotomy,” id. at 450, does not indi-

cate, as the petitioner implies (see petition, p. 10), that the

circuit court ultimately abandoned the “substantive/procedural”

test adopted by this Court in Erie Railroad Co. and in Hanna.

In the Hanna case itself, this Court recognized that “(t]he line

between ‘substance’ and ‘procedure’ shifts as the legal context

changes.” Hanna v. Plumer, supra at 471.° The Hanna court

concluded that many legal principles should be seen as “falling

within the uncertain area between substance and procedure

. . rationally capable of classification as either.” /d. at 472.

In the specific context of Fed. R. of Evid. 408, moreover,

leading commentators have recognized that “Rule 408 surely

‘In this regard, the petitioner's reliance upon the Flaminio, Fasanaro, Rioux,

and Moe cases, see Petition for Writ of Certiorari, pp. 9-10, is misplaced

because each of these cases construe Fed. R. of Evid. 407, not Fed. R. of

Evid. 408, and thus involve an inapposite “legal context,” i.e., evidence of

subsequent remedial measures. Hanna v. Plumer, supra at 471. See contrast-

ingly Flaminio v. Honda Motor Co., 733 F.2d 463, 470-472 (7th Cir. 1984)

(construing Fed. R. of Evid. 407); Fasanaro vy. Mooney Aircraft Corp., 687

F. Supp. 482, 485 n.3 (N.D. Cal. 1988) (same); Rioux v. Daniel Intern. Corp.,

582 F. Supp. 620, 624-625 (D. Me. 1984) (same), Moe vy. Avions Marcel

Dassault-Breguet Aviation, 727 F.2d 917, 932-933 (10th Cir.), cert. denied,

469 U.S. 853 (1984) (classifying Fed. R. of Evid. 407 as substantive)

falls into that area in which the Hanna decision gave Congress

an option to treat rules as either substantive or procedural.”

23 C. Wright & K. Graham, Federal Practice and Procedure:

Evidence § 5315 (1980). See also Note, “Rule 408 and Erie:

The Latent Conflict,” 12 Ga. L. Rev. 275, 293 (1977) (fact

that issue may have some procedural aspect cannot alone pro-

vide excuse for disregard of state substantive law).° The circuit

court in Carota simply recognized that Fed. R. of Evid. 408

represented an area of jaw which was not readily classified as

being either purely substantive or purely procedural. See

Carota v. Johns Manville Corp., 893 F.2d at 450.

It is clear from the circuit court’s decision in Carota, how-

ever, that the court ultimately concluded that the issue of the

admissibility of settlement evidence was substantive in nature

and that substantive Massachusetts law thus applied in this case:

“(When a state permits the admission of out of

court settlement evidence with the intent that such

admission affect the damage award, then we must

deem the issue substantive. If a state has a substantive

policy to have a jury hear out of court settlement

evidence when determining damage awards, we will

not contravene that state law in a diversity action.”

Carota v. Johns Manville Corp., supra at 451. In so ruling,

the circuit court expressly relied upon and correctly applied the

‘Even the petitioner at one point acknowledges that the issue of the admis-

sibility of settlement evidence “was rationally capable of classification as either

substantive or procedural.’ See Petition for Writ of Certiorari, p. 12. It may

also be noted, as the circuit court observed, see Carota v. Johns Manville

Corp., supra at 450, that the petitioner had previously conceded that the

underlying settlement issue is substantive in nature. In her main brief to the

circuit court, the petitioner acknowledged that the settlement evidence issue

relates to or arises out of “the parties’ substantive right to a full recovery.

See petitioner's main brief to circuit court, p. 20.

principles adopted by this Court in the Erie Railroad Co. case

and its progeny.

Apart from the fact that the allegation is itself untrue, the

petitioner's criticism that the circuit court employed an errone-

ous test in this case adapted from the case of Ricciardi v.

Children's Hosp. Medical Center, 81\ F.2d 18, 21 (1st Cir.

1987) is particularly unfair to the court and inequitable in the

circumstances. See Petition for Writ of Certiorari, p. 10. Spe-

cifically, the petitioner faults the circuit court for purportedly

applying a test other than that set forth in the Erie Railroad

Co. and the Hanna cases. See Petition for Writ of Certiorari,

p. 10 (“Instead, the court applied a different test: whether the

federal rule ‘impinge[d] on some substantive state policy em-

bodied in the state rule.’”), quoting Carota v. Johns Manville

Corp., supra at 450-451. In her main brief to the circuit court,

however, the petitioner argued that this exact same language

represented a standard applicable to her appeal. See petitioner's

main brief to circuit court, p. 24 (“[T]he question is whether

the federal rule, in this case, Rule 408, ‘impinges on some

substantive state policy embodied in the state rule.’ /d. 811

F.2d at 21.”). The petitioner should not be heard to complain

that the circuit court employed particular language in its deci-

sion which it had been invited to consider in the first instance

by the petitioner herself. As this Court declared in Davis v.

Wakelee, 156 U.S. 680, 689 (1895), “[iJt may be laid down

as a general proposition that, where a party assumes a Certain

position in a legal proceeding, and succeeds in maintaining

that position, he may not thereafter, simply because his in-

terests have changed, assume a contrary position. . . .” See

also Patriot Cinemas, Inc. v. General Cinema Corp., 834

F.2d 208, 212 (1st Cir. 1987) (equity “precludes a party from

asserting a position in one legal proceeding which is contrary

to a position it has already asserted in another.”); Allen v.

Zurich Ins. Co., 667 F.2d 1162, 1166 (4th Cir. 1982) (“[A]

party may properly be precluded as a matter of law from

adopting a legal position in conflict with one earlier taken in

the same or related litigation.”); Jett v. Zink, 474 F.2d 149,

154-155 (Sth Cir. 1973) (party precluded from asserting posi-

tion on appeal inconsistent from that taken in earlier appeal

of same case); 1B Moore’s Federal Practice 4 0.405[8] at 240

(1988 ed.) (judicial estoppel may operate “to preclude changes

in position in successive stages of the same litigation . . .”).

See analogously Crenshaw v. Quarles Drilling Corp., 798

F.2d 1345, 1347 (10th Cir. 1986); Richardson v. Turner, 716

F.2d 1059, 1061 (4th Cir. 1983); Alexander v. Town & Country

Estates, Inc., 535 F.2d 1081, 1082 n.1 (8th Cir. 1976).

The circuit court in Carota appropriately deferred to Massa-

chusetts substantive law in affirming the admissibility of the

pretrial settlement evidence in this case. The Massachusetts

Supreme Judicial Court has identified “the introduction of set-

tlement agreements in evidence at trial” as ‘‘a longstanding

principle.” Franklin v. Guralnick, 394 Mass. 753, 755, 477

N.E.2d 405, 406 (1985). See Boston Edison Co. v. Tritsch,

370 Mass. 260, 266, 346 N.E.2d 901, 905 (1976); Tritsch v.

Boston Edison Co., 363 Mass. at 182, 293 N.E.2d at 267;

Wadsworth v. Boston Gas Co., 352 Mass. 86, 94, 223 N.E.2d

807, 813 (1967); Daniels v. Celeste, 303 Mass. 148, 152, 21

N.E.2d 1, 3 (1939); O’Neil v. National Oil Co., 231 Mass.

20, 28-29, 120 N.E. 107, 110 (1918); Holleman v. Gibbons,

27 Mass. App. Ct. 563, 570, 541 N.E.2d 345, 349 (1989);

Muzichuk v. Liberty Mutual Ins. Co., 2 Mass. App. Ct. 266,

276, 311 N.E.2d 558, 563-564 (1974). In the Franklin case,

the Massachusetts high court indicated that this evidence is

considered so important that the jury’s deliberations may be

interrupted to inform them of a settlement negotiated by a

co-defendant and the plaintiff during the course of jury delib-

erations. Franklin v. Guralnick, 394 Mass. at 755-756 and

n.7, 477 N.E.2d at 406-407 and n.7.

The substantive policies underlying this longstanding state

rule are not limited merely to preventing a “double recovery”

by plaintiffs as the petitioner alleges. See Petition for Writ of

Certiorari, pp. 10-11. This rationale could easily be satisfied

by having the court clerk perform the mathematical calculation

of subtracting a settlement sum from the jury’s verdict, a

readily apparent point which could not have escaped the atten-

tion of the Massachusetts appellate courts over the many years. ’

Rather, the substantive policies underlying the Massachusetts

rule regarding the admissibility of setthkement evidence also

concern questions of the mitigation of damages and the recov-

ery of interest on judgments in which settlement monies have

been previously received. These additional rationales reflect

the fact that the application of interest monies to the jury’s

verdict prior to the subtraction of a settlement sum can drasti-

cally alter the amount of damages payable by non-settling

defendants and thus substantially affect the parties’ total dam-

ages obligations. See Boston Edison Co. v. Tritsch, 370 Mass.

at 266 and n.10, 346 N.E.2d at 905 and n.10 (recognizing

that “the specifics of the accounting in a case like the present

where there has been substantial delay in the actual recovery

[may be significant], and interest factors are of practical impor-

tance.”).*

"In Massachusetts practice, contrary to the petitioner's assertions otherwise (see

Petition for Wnt of Certioran, p. 11), the clerks of courts, and not the jury,

routinely perform the actual deduction calculations for settlements received from

joint tortfeasors. See, e.g., Boston Edison Co. v. Tritsch, 370 Mass. at 266, 346

N.E.2d at 905.

"The substantive policies underlying the Massachusetts rule regarding settlement

evidence are thus more involved than those underlying the rule in Mississippi

construed in McHann v. Firestone Tire & Rubber Co., 7\3 F.2d 161, 166 (Sth

Cir. 1983), a case upon which the petitioner has heavily relied. See Petition for

Writ of Certiorari, pp. 10, 12. Regardless, this Court has noted that, “[a]s to

questions controlled by state law, however, conflict among circuits is not of itself

a reason for granting a writ of certiorari.” Ruhlin v. New York Life ins. Co., 304

U.S. 202, 206 (1938).

As the circuit court in this case correctly noted, “the decision

to grant juries the opportunity to hear settlement evidence

reflects a view of that evidence as substantive, because the

juries’ hearing of this evidence affects the substantive rights

of plaintiffs to damages.” Carota v. Johns Manville Corp.,

supra at 451. The circuit court properly recognized that dam-

ages are an element of the plaintiff's case and that the law of

damages is substantive. /d. at 451. In diversity jurisdiction

cases, the federal courts regularly look to state law to ascertain

the elements and application of allowable damages. See, e.g.,

O’Gilvie v. International Playtex, Inc., 821 F.2d 1438, 1448

(10th Cir. 1987), cert. denied, 486 U.S. 1032 (1988) (appli-

cation of punitive damages in diversity case governed by state

law); Woodling v. Garrett Corp., 813 F.2d 543, 557 (2d Cir.

1987) (income taxes and prejudgment interest governed by

State law); United States v. City of Twin Falls, Idaho, 806

F.2d 862, 879 (9th Cir. 1986), cert. denied, 482 U.S. 914

(1987) (attorney's fees governed by state law); Affiliated Cap-

ital Corp. v. City of Houston, 793 F.2d 706, 709 (Sth Cir.

1986) (item of accrued interest); Losey v. North American

Philips Consumer Electronics Corp., 792 F.2d 58, 62 (6th

Cir. 1986) (tax consequences of damages award); Hill v. Bache

Halsey Stuart Shields, Inc., 790 F.2d 817, 827 (10th Cir.

1986) (punitive damages); Smith v. Industrial Constructors,

Inc., 783 F.2d 1249, 1254 (Sth Cir. 1986) (income tax); Aubin

v. Fudala, 782 F.2d 287, 289 (Ist Cir. 1986) (prejudgment

interest); Willey v. Minnesota Mining & Manufacturing Co.,

755 F.2d 315, 321 (3d Cir. 1985) (loss of earnings).

In the present case, the circuit court correctly recognized

that the policies underlying the Massachusetts rule, which per-

mit the jury to hear pretrial settlement evidence, are so closely

linked with the substantive measure of damages, that federal

courts sitting in diversity must apply the state rule and allow

the admission of settlement evidence. The circuit court’s deci-

sion was, in all respects, consistent with the established prece-

dent of this Court and should not be disturbed.

Conclusion.

The petition for writ of certiorari should be denied.

Respectfully submitted,

THOMAS P. O'REILLY,