# Opposition Brief — Carota v. Celotex Corp.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1990
- **Citation:** 497 U.S. 1004

## Text

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)

11

4n

4n
1}

4n

4n

Sn
Sn

13

12n

1]

10

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

2

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

3

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.’’).

4

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).

5

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).

6

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

8

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)

Y

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.

10

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]

1]

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.

12

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).

13

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-

14

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,
JANET L. MALOOF,
Trial Counsel,

RICHARD L. NEUMEIER,

LEONARD F. ZANDROW, JR.,*

B. DEIDRE BRENNAN,
Appellate Counsel,

PARKER, COULTER, DALEY & WHITE,
One Beacon Street,
Boston, Massachusetts 02108.
(617) 723-4500

*Counsel of Record

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385020_1433%3A2. Public record. Not legal advice.