Opposition Brief — Sarkes Tarzian, Inc. v. U. S. Trust Co. of Florida Savings Bank

6

make any credibility determinations or attempt to weigh the

evidence. In ruling on a motion for summary judgment or a

motion for judgment as a matter of law, it does not matter

whether the testimony comes from an interested or a

disinterested witness. All that matters is whether there is a

legally sufficient evidentiary basis. When the cases STI cites

are looked at from this perspective, the cases are easily

reconciled and there is no material coniiict.?

2. For example, in Book v. Dettenrieder, 14 Fed. Appx. 40 (2d

Cir. 2001), the plaintiff's testimony was contradicted by “an ample

evidentiary basis for the jury’s refusal to believe Book’s testimony on

her pain-and-suffering for a wrist fracture.” That evidence included

statements by Book to her doctor; the doctor’s testimony that it was

“impossible to say” whether the fracture would cause pain; and the fact

that immediately after the accident Book had resumed training and

competition as an elite bicycle racer.

The other cases STI cites on pages 14 through 16 of its Petition fit

into the same mold. E.g., Willis v. State Farm Fire and Cas. Co., 219

F.3d 715 (8th Cir. 2000) (evidence that the plaintiff made material

misstatements during the fire investigation called into question plaintiff's

credibility); Hiltgen v. Sumrall, 47 F.3d 695, 700 (Sth Cir. 1995)

(“interested” driver’s testimony that his lights were on was countered

by eyewitnesses who testified that they did not see any lights); Amsted

Indus. Inc. v. Buckeye Steel Castings, Co., 24 F.3d 178 (Fed. Cir. 1994)

(plaintiff presented sufficient evidence to contradict interested

defendant’s testimony that he held good faith belief patent was invalid);

Bhaya v. Westinghouse Electric, Corp., 832 F.2d 258 (3d Cir. 1987)

(plaintiff presented prima facie evidence of age discrimination, therefore

the affirmative defense of good faith should have been submitted to

jury); Gregg v. U.S. Industries, Inc., 887 F.2d 1462 (11th Cir. 1989)

(plaintiff's testimony as to the value of his business contradicted the

testimony of defendant’s expert, thereby creating a jury question);

Anderson v. Russell, 247 F.3d 125 (4th Cir. 2001) (because there was

no evidence challenging officer’s testimony regarding use of deadly

(Cont’d)

: 7

Here, the Seventh Circuit clearly stated that it was not

judging credibility or weighing any evidence, but instead was

viewing all of the evidence in the light most favorable to STI.

Even having done that, there remained insufficient evidence in

the record to prove that Pressly had authority to bind U.S. Trust.

When there are no disputed factual issues or, as happened here,

when the party with the burden of proof “has been fully heard

on an issue and there is no legally sufficient evidentiary basis

for a reasonable jury to find for that party on that issue,” the

court is supposed to end the trial by entering judgment as a

matter of law. Fed. R. Civ. P. 50. This Court has upheld the

power of a court to direct a verdict for more than 150 years,

notwithstanding the Seventh Amendment right to jury trial.

Galloway v. United States, 319 U.S. 372, 389 n.19 (1943).

(Cont’d)

force or raising question as to officers’ credibility, directed verdict in

favor of defendant was proper.); Corrugated Paper Prod. v. Longview

Fibre, Co., 868 F.2d 908 (7th Cir. 1989) (summary judgment in favor of

defendant was proper when plaintiff submitted no significant probative

evidence to prove its case and failed to call defendant’s testimony into

question); Gillespie v. Sears, Roebuck & Co., 386 F.3d 21 (1st Cir. 2004)

(plaintiff’s conflicting and improbable testimony regarding his

knowledge of power tools and the utility of a blade guard placed his

credibility in issue and was legally sufficient to created a fact issue);

National Organization for Women v. Operation Rescue, 37 F.3d 646

(D.C. Cir. 1994) (the district court had no doubt as to the credibility of

the damages evidence; in dicta the court noted that if there had been

doubts as to the credibility of plaintiff's witness, the trier of fact would

be free to reject “even uncontroverted evidence if it doubts the credibility

of that evidence.”); Frank Music Corp. v. Metro-Goldwyn-Mayer, Inc.,

772 F.2d 505 (9th Cir. 1985) (trial court was not required to accept

plaintiff's testimony if it was inherently unbelievable or clouded with

uncertainty); Chicago, R. 1. & P. Ry. v. Howell, 401 F.2d 752 (10th Cir.

1968) (eyewitness testimony that conflicted with train engineer’s and

conductor’s testimony regarding circumstances of a fire created jury

question).

8

Turning to what happened here, the dispositive issue is that

U.S. Trust’s attorney was not authorized to enter into a binding

contract. Under New York law, an attorney must have actual or

express authority to bind his client to a contract. Nash v. Y and

T Distrib., 616 N.Y.S.2d 402, 403 (App. Div. 1994) (“It is settled

law that an attorney must be specifically authorized to settle

and compromise a claim.”’); Fennell v. TLB Kent Co., 865 F.2d

498, 500 (2d Cir. 1989) (client is not bound to a purported

settlement agreement reached in a telephone conference by

counsel in which the client did not participate).

At trial, STI had the burden to prove that U.S. Trust gave

Pressly authority to enter into a binding contract. Brumberg v.

Chunghai Chan, 204 N.Y.S.2d 315 (1959) (“In this jurisdiction

the burden of coming forward with proof as to the attorney’s

authority rests upon the party who asserts it.” ; Slavin v. Polyak,

470 N.Y.S.2d 38, 39-40 (App. Div. 1984) (if the client challenges

an agreement made in its absence, the opposing party “has the

burden of establishing that the attorney’s actions were, in fact,

authorized”); Nash, 616 N.Y.S.2d at 402 (same).* “[A] party

who relies on the authority of an attorney to compromise an

action in his client’s absence deals with such an attorney at his

peril.” Brumberg, 204 N.Y.S.2d at 319.

3. Because Pressly is a Florida lawyer representing a Florida-

based client, U.S Trust also cited Florida law, under which the same

result is reached. Rushing v. Garrett, 375 So.2d 903, 906-07 (Fla.

Dist. Ct. App. 1979) (“In the absence of express authority, an attorney

has no implied authority to execute a contract for the sale of real

estate binding on his client.”). :

4. Florida law is identical. Sharick v. Southeastern University

of Health Sciences, Inc., 891 So.2d 562 (Fla. Dist. Ct. App. 2004)

(“The party seeking to compel enforcement of a settlement bears

the burden of proving that an attorney has the clear and unequivocal

authority to settle on the client’s behalf.”).

9

STI offered no evidence that Pressly had actual authority

and, therefore, failed to meet its burden of proof. Now, STI

argues that despite its lack of affirmative evidence,’ the case

should have gone to the jury. STI claims that the jury should

have been able to find actual authority merely by disbelieving

the testimony of Callaway and Cavanaugh because they are

interested witnesses. This Court has held that an issue cannot

be left with a jury for determination if the party who bears the

burden of proof fails “to present a legally sufficient evidentiary

basis for a reasonable jury to find for that party on that issue.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251 (1986)

(“before the evidence is left to the jury, there is a preliminary

question for the judge ... whether there is any upon which a

jury could properly proceed to find a verdict for the party

producing it, upon whom the onus of proof is imposed.”).

5. There is no evidence in the record to support STI’s claim

that Pressly had actual authority. Two U.S. Trust officers testified

that Pressly’s authority was limited to negotiating and that he lacked

authority to enter into a contract. Ann Cavanaugh, a Senior Vice-

President, testified that Pressly “was authorized by U.S. Trust

Company as personal representative to negotiate a possible deal”

and that his authority was limited in that “he was not authorized to

actually execute a contract.” Toby Callaway, U.S. Trust’s Chairman

and CEO, testified that Pressly was to try to find a buyer for the

Sarkes Tarzian stock and he was given the authority to negotiate

terms, price, etc., but “was specifically instructed, and there was no

argument at all, that he would come back to us with those terms,

and present them to us for review, analysis, and a final decision as

to whether they were something that we should move forward with.”

Callaway testified that Pressly was not authorized to sign any

agreements for the Estate. As the Seventh Circuit determined, this

testimony was noi impeached or rebutted in any way.

10

In Anderson, this Court rejected the very argument made

by STI in this case. A plaintiff cannot simply rely on the

hope that the jury might disbelieve an interested witness,

but must offer “concrete evidence from which a reasonable

juror could return a verdict in his favor”:

As we have recently said, “discredited testimony

is not [normally] considered a sufficient basis for

drawing a contrary conclusion.” Instead, the

plaintiff must present affirmative evidence in

order to defeat a properly supported motion for

summary judgment. This is true even where the

evidence is likely to be within the possession of

the defendant, as long as the plaintiff has had a

full opportunity to conduct discovery.

Id. at 256-57.°

6. It is well-established that to survive a directed verdict motion

the nonmoving party must present more evidence than the mere

hope that a jury will disbelieve the moving party’s witnesses.

E.g., Quintana-Ruiz v. Hyundai Motor Corp., 303 F.3d 62, 78 (ist

Cir. 2002) (“a jury verdict cannot be based solely on a jury’s rejection

of the other side’s uncontradicted testimony. ...”); Perfetti v. First

Nat. Bank of Chicago, 950 F.2d 449, 452 (7th Cir. 1991), cert. denied,

505 U.S. 1205 (1992) (“[T]o avoid a directed verdict or a JNOV, ‘a

plaintiff must do more than merely argue that the jury might have

chosen to disbelieve all of the defendant’s evidence. ... A plaintiff

must offer substantial evidence to support the argument.’”);

Corrugated Paper Prod., Inc. v. Longview Fibre Co., 868 F.2d 908

(7th Cir. 1989) (“Opposing party may not merely recite the

incantation, ‘Credibility,’ and have a trial on the hope that a jury

may disbelieve factually uncontested proof.”); Rinieri v. Scantlon,

254 F. Supp. 469, 474 (S.D.N.Y. 1966) (same); Curl v. International

Bus. Mach. Corp., 517 F.2d 212, 214 (Sth Cir. 1975) (same).

11

Significantly, the witness at issue in Anderson was the

defendant, clearly an “interested” witness. That made no

difference to this Court. In deciding a properly supported

motion for summary judgment or judgment as a matter of

law, the issue is not whether the movant’s evidence is from

interested or disinterested witnesses. Many years earlier than

the Anderson decision, this Court expressed a similar view

when dealing with the testimony of an “interested” witness

who was an employee of a party:

We recognize the general rule, of course, as stated

by both courts below, that the question of the

credibility of witnesses is one for the jury alone;

but this does not mean that the jury is at liberty,

under the guise of passing upon the credibility of

a witness, to disregard his testimony, when from

no reasonable point of view is it open to doubt.

Chesapeake & O. Ry. Co. v. Martin, 283 U.S. 209, 216 (1931)

(noting that in the cases in which courts ruled that the

credibility of an interested witness should be submitted to

the jury,” there were circumstances tending to cast suspicion

upon the testimony of the witness, apart from the fact that

he was interested.’).

STI also argues on pages 16 and 17 that the jury has

more freedom to disregard the testimony of an interested

witness when the potentially dispositive facts are within the

exclusive control of one party. That argument is not supported

by New York substantive law because STI was required to

ask U.S. Trust, before claiming to have entered into a

contract, whether Pressly was authorized to bind U.S. Trust. -

If STI had made one phone call to Callaway, STI would have

known what Callaway knew, and the information concerning

12

”

the “private conversations between Pressly and his client

would no longer have been private. In other words, STI’s

problem is not that at the start of the day U.S. Trust alone

had knowledge of Pressly’s authority, but that STI made no

effort whatsoever to find out that information by contacting

U.S. Trust. STI did so at its own peril. Ford v. Unity Hosp.,

32 N.Y.2d 464, 472 (1973) (“{o]ne who deals with an agent

does so at his peril, and must make the necessary effort to

discover the actual scope of authority”).

Even if the testimony of Callaway and Cavanaugh is

disregarded in its entirety, there is still no relevant evidence

to support a finding that U.S. Trust gave Pressly actual

authority enter into a contract. Nothing the agent says or does

can create actual authority. STI, having made no effort in

advance to contact U.S. Trust to confirm Pressly’s authority,

presented absolutely no evidence that Pressly had actual

authority. That failure of proof, not any federal procedural

issue or the Seventh Amendment right to a jury trial, is what

this case is about. Despite STI’s best effort to invent one,

there simply is no federal issue in this case and no reason

why this Court should grant certiorari.

I]. THERE IS NO ISSUE WITH “FEDERALISM” IN

THE MANNER IN WHICH THE DISTRICT

COURT AND THE SEVENTH CIRCUIT TREATED

SUBSTANTIVE NEW YORK LAW ON APPARENT

AUTHORITY.

STI, having failed to present any evidence that Pressly

had actual authority, had a fallback argument that Pressly

had apparent authority to bind the Estate. That argument was

so weak on these facts and under New York law that the

district court judge refused even to instruct the jury on

13

apparent authority. On appeal to the Seventh Circuit, the

Panel addressed STI’s apparent authority argument and

concluded, again, that there was insufficient evidence of

apparent authority under New York law for that issue to be

submitted to the jury.

Contrary to STI’s argument, the Seventh Circuit did not

make up the law, but instead followed well-established New

York precedent. The fundamental flaw in STI’s position is

that it had absolutely no contact or communication with U.S.

Trust. Apparent authority must be created by the words, acts,

or omissions of the principal, and cannot be created by the

agent. Fennell v. TLB Kent Co., 865 F.2d 498, 502

(2d Cir. 1989); Hallock v. State, 64 N.Y.2d 224, 231 (1984);

Nash v. Y and T Dist., 616 N.Y.S.2d 402, 403 (App. Div.

1994).

In Nash, the court stated:

Essential to the creation of apparent authority are

words or conduct of the principal communicated

to a third party, that give rise to the appearance

and belief that the agent possesses authority to

enter into a transaction. These words and acts must

be the acts of the principal and must not be the

acts of the agent.

Id. at 403.

STI’s cannot prevail by asserting that Pressly

misrepresented the scope of his authority (in fact, he did not)

because there are numerous cases holding a third party cannot

rely upon a misrepresentation of authority by the agent in

14

the absence of confirmation by the client. Ford, 32 N.Y.2d

at 470 (“The apparent authority for which the principal may

be held liable must be traceable to him; it cannot be

established by the unauthorized acts, representations or

conduct of the agent.”); Melstein v. Schmid Lab., Inc., 497

N.Y.S.2d 482, 483 (App. Div. 1986) (there must be reliance

on a misrepresentation by the principal, not the agent.); N.X.

v. Cabrini Med. Ctr., 739 N.Y.S.2d 348, 351 n.3 (2002) (third

party must reasonably rely upon “the misrepresentation of

an agent’s authority through conduct of the principal”).

The evidence here is undispeted that no one from STI’s

side had any direct communication with anyone from U.S.

Trust (other than Pressly, its agent), either before or during

the negotiating meeting, concerning the scope of Pressly’s

authority. Thus, nothing Pressly did or said could give him

apparent authority in the eyes of STI. STI has no one to blame

but itself for failing to obtain clarification of Pressly’s

authority from U.S. Trust. Slavin, 470 N.Y.S.2d at 39-40

(“A party who relies on the authority of an attorney to

compromise an action in his client’s absence deals with such

an attorney at his own peril.”); Fennell, 865 F.2d at 503

(same).

In a desperate attempt to avoid this legal principle, STI

for the first time argues in its Petition that the doctrine of

apparent authority does not require that the third party have

made any inquiry at all into the scope of the agent’s authority,

relying upon Herbert Constr. Co. v. Cont’l Ins. Co., 931 F.2d

989, 995 (2d Cir. 1991). First, STI’s argument is directly

contrary to an earlier holding of the New York Court of

Appeals, Collision Plan Unlimited, Inc. v. Bankers Trust Co.,

63 N.Y.2d 827 (1984) (“By invoking the doctrine of apparent

authority to justify the propriety of its actions, the bank

15

concomitantly assumed a duty of reasonable inquiry as to

Nicholas Neu’s actual perimeter of authority.”); see also,

Fleet Bank v. Consola, Riccitelli, Squadere Post No. 17 Inc.,

701 N.Y.S.2d 182 (App. Div. 2000) (“The record

demonstrates that plaintiff failed to take even minimal steps

to discover the actual scope of Mastan’s authority. An ‘agent

cannot by his own acts imbue himself with apparent

authority.’”’).

Second, STI ignores the following critical language from

Herbert:

In the apparent authority context, the duty to

inquire only arises when “the facts and

circumstances are such as to put him on inquiry,”

the transaction is “extraordinary,”’ or the

“novelty” of the transaction alerts the third party

to the danger of fraud. Were this not the rule, such

a duty of inquiry would nullify the doctrine of

apparent authority in almost every case. Instead,

the duty of inquiry amounts to an alternative way

of asking whether the third party reasonably relied

on the representations of the agent that he

possessed authority to bind the principal.

Id. at 995-96 [emphasis added, internal citations omitted].

This proposed transaction was not in the ordinary course

of business and, in fact, was the epitome of extraordinary.

7. On this point, Herbert cites to Collision Plan, in which New

York’s highest court held that a mortgage arrangement whereby one

corporation guaranteed the debt of an unrelated corporation was

extraordinary and should have triggered the duty of reasonable

inquiry. Collision Plan, 63 N.Y.2d at 829.

16

The stock represented a 73% majority equity interest in STI

and was not publicly traded. The parties agreed that any

transaction would require a lengthy and detailed written

agreement to be drafted and reviewed by lawyers. Neither

the estate nor STI regularly buy or sell stock in closely held

companies. In fact, STI had repurchased its stock only on

one prior occasion. As to the estate, the stock was the single

largest asset and its disposition was a critical component of

the pre-death and post-death estate planning and

administration process. The proposed purchase and sale of

the STI stock was literally a once in a lifetime occurrence

from the view of both STI and the U.S. Trust. What would

be more extraordinary? Therefore, even according to Herbert,

STI was under a duty to inquire.

A few final points must be made relating to apparent

authority. Contrary to STI’s position, the law of apparent

authority is different for lawyers than ordinary agents.* Under

New York law, an attorney can have apparent authority only

in the context of an in-court settlement conference. Hallock

8. This principle is best demonstrated by the fact on pages 24

through 26 of its Petition, STI cites thirteen apparent authority cases,

but only one of those cases , N.L.R.B. v. G&T Terminal, 246 F.3d

103 (2d Cir. 2001), involved an agent who was acting as a lawyer.

The other cases involve insurance, automobile and advertising

salesman and agents and other nonlawyers. N.L.R.B. is

distinguishable for a number of reasons, the most important of which

was the fact that the company’s president had attended an earlier

negotiating session and had agreed to all of the contract terms except

an arbitration clause. /d., 246 F.3d at 114-15. Here, the parties held

only one negotiating session; no one from U.S. Trust attended; and

there is no evidence that U.S. Trust approved any of the terms.

In fact, Pressly did not speak to Callaway the entire day. The Seventh

Circuit expressly considered and distinguished N.L.R.B. in its

opinion. (Petitioner's Appendix at 16a)

17

v. State, 64 N.Y.2d 224, 231 (1984) (the applicable court rule

required that attorneys attending pretrial conferences have

authority to enter into binding in-court settlements on behalf

of their clients, and the client did not object to the settlement

for more than two months). Other New York courts

interpreting Haliock have held that it “can and should be

read” as limited to cases involving stipulations in open court.

Gordon v. Town of Esopus, 486 N.Y.S.2d 420, 421 (App.

Div. 1985); see also, Fennell v. TLB Kent Co., 865 F.2d 498,

500 (2d Cir. 1989) (“We do not think the rule stated in

Hallock would apply here, where a purported settlement

agreement was reached in a telephone conference by counsel

in which no party participated and Fennel made prompt

objection to that agreement upon being advised as to its

terms.”); Berwin v. National R.R. Passenger Corp., 152 F.3d

917 (Table), 1998 WL 398803 (2d Cir. 1998) (the settlement

agreement was reached in a telephone conference by counsel

in which no party participated and Berwin promptly objected

to the settlement by refusing to sign the general release.).

Here, no one from U.S. Trust participated in the negotiations

and U.S. Trust’s actions in notifying STI that the shares had

been sold to someone else equates to a prompt objection, as

in Fennell and Berwin.

Second, STI complains the Seventh Circuit’s decision

here will disrupt the certainty required for the transaction of

commerce in New York and also expresses concern that the

opinion in this case might lead to forum shopping. As to the

latter, this case will not lead to forum shopping (any more

than already occurs otherwise’) because the Seventh Circuit

9. STI chose to file this action in its home district in

Indianapolis, thereby deciding that any appeal would be heard in

the Seventh Circuit, rather than filing it in New York. U.S. Trust had

(Cont'd)

18

correctly applied New York law. As to the suggestion that

business people in New York would be better off having juries

decide contract cases, that would serve only to create more

uncertainty, especially when there are no disputed factual

issues and the question is the legal effect of the evidence.

Moreover, from a policy standpoint, commerce is better

served with clear rules that leave no doubt as to whether a

contract was made or not. New York already has clear rules

which require that a party negotiating with the opposing

party’s lawyer have some contact — even a simple phone call

— to determine that lawyer’s authority. That requirement of

New York law imposes no great burden on commerce.

(Cont'd)

wanted to litigate the issues in Florida and filed a petition in probate

court, but upon STI’s motion that case was dismissed for lack of

personal jurisdiction. STI could have sued U.S. Trust in New York

(because the parties’ only negotiations took place there, U.S Trust

would have been subject to personal jurisdiction). Instead, STI

brought suit in its hometown before a hometown jury, many of whom

had listened to or were familiar with local radio stations owned by

STI. Also, STI never sought to certify any important undecided legal

questions to the New York Court of Appeals. STI is in no position to

complain about the fact that the Seventh Circuit, rather than the

Second Circuit or a New York state court, decided this case.

19

CONCLUSION

For the foregoing reasons, U.S. Trust respectfully

requests that this Court deny the Petition.

Respectfully submitted,

L. Louts MRACHEK

Counsel of Record

ALAN B. ROSE

JENNILYNN E. LAWRENCE

PAGE, MRACHEK, FITZGERALD

& Rose, P.A.

505 South Flagler Drive

Suite 600

West Palm Beach, FL 33401

a (561) 655-2250

Scott D. HIMSsEL

ROBERT K. STANLEY

BAKER & DANIELS

300 North Meridian Street

Suite 2700

Indianapolis, IN 46204

(317) 237-0300

Counsel for Respondent

APPENDIX

la

APPENDIX — ENTRY DENYING MOTION FOR |

NEW TRIAL OF THE UNITED STATES DISTRICT

COURT FOR THE SOUTHERN DISTRICT OF

INDIANA, INDIANAPOLIS DIVISION

DATED JUNE 16, 2005

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF INDIANA

INDIANAPOLIS DIVISION

IP 99-C-0165-Y/S

SARKES TARZIAN, INC.,

Plainuff,

VS.

U.S. TRUST COMPANY OF FLORIDA SAVINGS BANK,

as Personal Representative of the Estate of Mary Tarzian,

Defendant.

ENTRY DENYING MOTION FOR NEW Tx IAL

Plaintiff Sarkes Tarzian, Inc. (“STI’’), moves the court,

pursuant to Fed.R.Civ.P. 59(a) and 60(b), for a new trial based

on the recent discovery of new evidence that it contends was

improperly withheld from STI by defendant U.S. Trust Company

of Florida Savings Bank, as personal representative of the Estate

of Mary Tarzian (“U.S. Trust’). For the reasons explained below,

the court DENIES STI’s motion.

2a

Appendix

I. Background

STI sued U.S. Trust for breach of an oral contract allegedly

entered into by U.S. Trust’s attorney, James Pressly

(“Mr. Pressly”). Following a six day trial, the jury returned a

verdict in favor of STI. Implicit in that verdict was a finding,

based upon the jury instructions, that Mr. Pressly had actual

authority to bind U.S. Trust to a contract for the sale of STI

stock owned by the Estate of Mary Tarzian. U.S. Trust appealed

the verdict to the Seventh Circuit, and a Panel of three circuit

judges (the “Panel’’) unanimously reversed with instructions to

enter judgment in favor of U.S. Trust.

The Seventh Circuit concluded that there was no evidence

__ __presented at trial that Mr. Pressly had actual authority to bind

U.S. Trust. Specifically, the Panel determined that there was

unrebutted testimony by U.S. Trust’s Chairman, Mr. Callaway,

and Senior Vice President, Ms. Cavanaugh, that Mr. Pressly’s

authority was limited to negotiating the terms of a potential

contract, subject to final approval by U.S. Trust. The Panel noted

that New York law imposes the burden on STI to ascertain that

Mr. Pressly had actual authority to enter into a contract on behalf

of U.S. Trust, and the Panel ultimately found that STI did not

discharge its burden because STI made no effort to reach out to

or call U.S. Trust’s principals to determine the extent of

Mr. Pressly’s authority.

STI now seeks a new trial based upon “newly discovered

evidence” in the form of Mr. Pressly’s handwritten notes related

to his conversations with Bull Run between the end of the

negotiation session with STI in New York on January 25, 1999,

and the sale of the STI stock to Bull Run three days later. Those

3a

Appendix

notes were designated as attorney work-product on the privilege

logs served in this case in 2000. (Declaration of Paul Sweeney

(“Sweeney Dec.”), Ex. E at 68). The notes were produced four

years later in litigation between STI and Bull Run pursuant to a

subpoena served on Mr. Pressly, after U.S. Trust elected to waive

the applicable work product privilege. STI contends these notes

are evidence that Mr. Pressly believed he had actual authority to

bind U.S. Trust to a contract.

If. Discussion

A party moving for a new trial under Rule 59, based on

newly discovered evidence, must prove: “(1) the evidence was

discovered following trial; (2) [dJue diligence on the part of the

movant to discover the new evidence is shown or may be inferred;

(3) [t]he evidence is not merely cumulative or impeaching;

(4) [t]he evidence is material; and (5) [t]he evidence is such that

a new trial would probably produce a new result.” Jones v.

Lincoln Elec. Co., 188 F.3d 709, 732 (7th Cir. 1999). If any

one of these elements is not satisfied, the movant’s motion must

be denied. /d.

The handwritten notes of Mr. Pressly read, in relevant part:

Steve Opler [Bull Run’s representative]

404-881-7693

Alston & Bird in Atlanta

How clean is their offer?

He says it is very clean.

It says that we represent that

we own the stock. They represent

that they'll close ‘tomorrow.’

I tell him we want to be indemnified.

4a

Appendix

(Sweeney Dec., Ex. A at 0001). Later that same day, Mr. Pressly

wrote, “We agreed upon terms and they are to draw up contract.

I asked him about indemnification.” (/d., Ex. A at 0002).

The court finds this evidence does not satisfy elements

(3), (4), or (5) above. The notes are cumulative and immaterial

because the notes do not address the deficiencies in STI’s proof.

For example, Mr. Pressly’s notes do not address the scope of

his authority. Mr. Pressly’s notes do not contradict Mr. Callaway’s

and Ms. Cavanaugh’s testimony that although Mr. Pressly had

the authority to negotiate a deal, he did not have the authority to

bind U.S. Trust to a contract without first obtaining its approval.

Finally, Mr. Pressly’s notes do not demonstrate an effort on the

part of STI to reach out to or call U.S. Trust’s principals before

or after the January 25th meeting to determine the scope of Mr.

Pressly’s authority. Accordingly, a new trial would not produce

a different result.

Hil. Conclusion

For the reasons stated above, the court DENIES STI’s

Motion for New Trial.

SO ORDERED this 16th day of June 2005.

s/ Richard L. Young

RICHARD L. YOUNG, JUDGE

United States District Court

Southern District of Indiana

MOTION FILED

AG 2 2 2005

No. 04-1712

IN THE

Supreme Court of the Anited States

SARKES TARZIAN, INC.,

Petitioners,

V.

U.S. TRUST COMPANY OF FLORIDA SAVINGS BANK,

as Personal Representative of the Estate of Mary Tarzian,

Respondent.

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Seventh Circuit

MOTION FOR PERMISSION TO FILE A BRIEF

AMICI CURIAE IN SUPPORT OF PETITIONER

AND BRIEF OF AMICI CURIAE PROFESSORS

LAUREN ROBEL AND AVIVA ORENSTEIN

IN SUPPORT OF PETITIONER

LAUREN ROBEL*

AVIVA ORENSTEIN

INDIANA UNIVERSITY

SCHOOL OF LAW

Sea naan tet 211 S. Indiana Ave.

Bloomington, IN 47405

* Counsel of Record (812) 855-8885

OREO RIC ESP T MS ETI ONDE CLOT FEE SES ILE IS DELILE LENE SL LLL LEE MSE LEE SDE LEDGE LAE TOOT: IB

WiLSON-EPES PRINTING Co.,INC. — (202)789-0096 -— WasHiINGTON, D. C.20001

IN THE

Supreme Court of the United States

No. 04-1712

SARKES TARZIAN, INC.,

Petitioners,

v.

U.S. TRUST COMPANY OF FLORIDA SAVINGS BANK,

as Personal Representative of the Estate of Mary Tarzian,

Respondent.

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Seventh Circuit

MOTION FOR PERMISSION TO FILE A BRIEF

AMICI CURIAE IN SUPPORT OF PETITIONER

Pursuant to this Court’s Rule 37 (b), Amici Curiae Lauren

Robel and Aviva Orenstein seek permission to file the

attached Brief in Support of Petitioner. Amici sought per-

mission from the parties to file this brief, and U.S. Trust

Company of Florida Savings Bank declined to provide that

permission. Amici are professors of procedure, federal juris-

diction, and evidence with an interest in the Court’s uni

form interpretation of U.S. Const. Amend. VII and Fed. R.

Civ. P. 50.

Respectfully submitted,

LAUREN ROBEL*

AVIVA ORENSTEIN

INDIANA UNIVERSITY

SCHOOL OF LAW

211 S. Indiana Ave.

Bloomington, IN 47405

* Counsel of Record (812) 855-8885

QUESTION PRESENTED

Does a per se rule forbidding a jury to disbelieve the

unrebutted testimony of an interested witness violate the

Seventh Amendment?

(1)

TABLE OF CONTENTS

Page

QUESTION PRESENTED... i

TADLE OF AUTHORS a a iii

INTERESTS OF AMICI CURIAE visceccsscecsessssssesesseeseeses |

INTRODUCTION AND BACKGROUND ...........000005 2

SUMMARY OF ARGUMENT .....cscesessesseescesssessesseeees 2

RII ee ee a, 3

. THE BSSENCE- OF THE. RIGHT. TO

TRIAL BY JURY IS THE FREEDOM OF

THE JURY TO FIND FACTS, DRAW

INFERENCES, AND WEIGH WITNESS

CUR APROAE TD ss canccuci icici canescens 3

CE FY shcsss seu insacadanaimabecansaianackaiieisavajsesuuvbdiees 7

ill

TABLE OF AUTHORITIES

CASES Page

Apprendi v. New Jersey, 530 U.S. 466 (2000) ...... y OR. ibe

Blakely v. Washington, 124 S.Ct. 2531 (2004) ..... 5

By:d v. Blue Ridge Rural Electric Cooperative,

HAE: BIG ALS DES, SOT EUOSE) yin scadossbeeniapians 5

Ex parie Peterson, 253 U.S. 300, 310 (1920)........ 5

Jones v. United States, 526 U.S. 227 (1999)......... 5

Parklane Hosiery Co. v. Shore, 439 U.S. 322,

PS EEF vvsnicckcnssscssiavieshancostausonamtieuiaasaabiondgal 4

Sarkes Tarzian, Inc. v. U.S. Trust Company of

Florida Savings Bank, 397 F. 3d 577 (7th Cir.

2005) quoting United States v. 2.4 Acres of

Land, More Or Less, In Lake County, Ill,. 138

F. 26295, 297 (Ft Car. BDGS) osoccecccsastanstotonvoses 2

United States v. Booker, 125 S.Ct. 738 (2005)...... 2.3

United States v. Sparf, 156 U.S. 51, 102-103

CR yikescactadisicscckvaseatinoed (tenon eae 4

Walker v. New Mexico & Southern Pacific

Railroad, 165 U.S. 593, 596 (1897) 0.0... 4

CONSTITUTIONAL PROVISIONS

Rh A AL. PU Ei isaicicncicsvicsinlesbicrslemaands passim

Re CIE. Fa VEE aio sonesacencstnccseaceubeosensmesbents passim

FEDERAL STATUTES

Judiciary Act of 1789, ch. 20, § 9... .eeeseeeseeeeeees 6

FEDERAL RULES

POG Te RE Co iisicsacannsclind cued 2

OTHER AUTHORITIES

Paul Carrington, The Seventh Amendment: Some

Bicentennial Rejlections, 1990 U. Chi. Legal

Dee Oe 0 PED cise skis ance gkeeanccmela 4

iV

TABLE OF AUTHORITIES—Continued

Page

3 Sir Edward Coke, Commentary on Littleton

460 (J.H. Thomas, Ed. 1818) 0.2.0.0... eee eeeeees 4

Bruce Mann, NEIGHBORS AND STRANGERS (Univ.

te cas I BET Picked ides iccitndsssenonsshdenccanhanes 4

Paul Kirgis, The Right to a Jury on Questions of

Fact under the Seventh Amendment, 64 Oh. St.

as es OO Oe I Ron dSticcdiibanabasioadasbicesacasss 6

IN THE

Supreme Court of the Anited States

No. 04-1712

SARKES TARZIAN, INC.,

Petitioners,

¥,

U.S. TRUST COMPANY OF FLORIDA SAVINGS BANK,

as Personal Representative of the Estate of Mary Tarzian,

Respondent.

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Seventh Circuit

BRIEF OF AMICI CURIAE PROFESSORS

LAUREN ROBEL AND AVIVA ORENSTEIN

IN SUPPORT OF PETITIONER

INTERESTS OF AMICI CURIAE |

Amici Curiae are professors who teach in the fields of civil

procedure, federal courts, and evidence. Dean Lauren Robel

is the author of a casebook on federal jurisdiction and numer-

ous articles on the federal courts and procedure. Professor

’ Pursuant to Rule 37.6 of this Court, we state that no counsel for a

party has written this bricf in whole or in part, and that no person or cn-

tity, other than amici, has made a monetary contribution to the preparation

or submission of this brief.

2

Aviva Orenstein is a teacher and scholar of procedure and

evidence and has written widely in the field of evidence. As

scholars and commentators in the field, amici have an interest

in maintaining a consistent and uniform interpretation of

the jury’s role under the Seventh Amendment and Fed. R.

Civ. P. 50.

INTRODUCTION AND BACKGROUND

In this case, a jury rejected the testimony of two interested

witnesses and determined that U.S. Trust Company of Florida

had reneged on a deal to sell stock through its agent. The

United States Court of Appeals for the Seventh Circuit re-

versed the jury’s verdict, holding that the jury was required to

believe the testimony of these witnesses that the person who

had entered the deal was unauthorized to bind the company.

Specifically, the court held that a jury may not “ignore or

discredit the testimony of unimpeached witnesses so far as

they testify as to facts.” Sarkes Tarzian, Inc. v. U.S. Trust

Company of Florida Savings Bank, 397 F. 3d 577 (7th Cir.

2005) quoting United States v. 2.4 Acres of Land, More Or

Less, In Lake County, Il., 138 F. 2d 295, 297 (7th Cir. 1943).

SUMMARY OF ARGUMENT

This case presents the opportunity for this Court to reaffirm

in the Seventh Amendment context what it has recently made

abundantly clear in the Sixth Amendment context: The jury’s

obligations to determine facts, draw inferences from those

facts, and determine witness credibility are at the core of the

constitutional jury-trial guarantees. While this Court has

recently reaffirmed those core obligations in the context of

the criminal jury, United States v. Booker, 125 S.Ct. 738

(2005); Apprendi v. New Jersey, 530 U.S. 466 (2000), the

textual and historical basis for reinforcing those obligations in

the Seventh Amendment context is even stronger.

3

The Seventh Circuit’s holding in this case, which requires

juries to accept the testimony of interested witnesses, imperils

these core obligations in the context of the civil jury. Its

holding degrades the jury’s function by creating a per se rule

that forbids jurors from exercising their prerogative to reject

testimony as incredible or inconsistent with other circum-

stantial evidence in a case, so long as the testimony is

“unimpeached,” regardless of the witnesses’ stake in the out-

come of the trial. Such a rule is deeply threatening to the

jury’s core function.

This case is particularly important because, unlike most of

the Court’s recent cases on the Seventh Amendment, it con-

cerns not the appellate standard of review but a direct limita-

tion on the inferences that a jury may draw from evidence. As

such, the case presents an important opportunity to reaffirm

under Seventh Amendment what this Court has recently made

abundantly clear under the Sixth Amendment: The core func-

tion of a jury is to find the facts, draw inferences from them,

and apply the appropriate legal standard to them.

ARGUMENT

I. THE ESSENCE OF THE RIGHT TO TRIAL BY

JURY IS THE FREEDOM OF THE JURY TO

FIND FACTS, DRAW INFERENCES, AND

WEIGH WITNESS CREDIBILITY

While the Sixth and Seventh Amendments have different

language and histories, both rely on a shared understanding of

the important mediating role played by lay juries between

litigants and the power of the judiciary. As Bruce Mann ex-

plained in his history of law in the early colonies:

In background, experiences, and outlook [jurors] were

much like the litigants whose disputes they determined,

and not very different from the judges who oversaw

them. They applied the same standards in their delibera-

tions that the litigants themselves would apply in similar

4

cases involving others, which is to say standards shaped

by a template of common beliefs and expectations as

to how neighbors should treat one another. It was

this commonality that gave substance and meaning to

the traditional description of jurors as “men of the

neighborhood.”

Bruce Mann, NEIGHBORS AND STRANGERS (Univ. of N.C.

Press 1987) at 71. This similarity in background and experi-

ences provides legitimacy to judicial process, and provided

what our Founders considered a crucial “bulwark against tyr-

anny and corruption, a safeguard too precious to be left to the

whim of the sovereign, or, tt might be added, to that of the

judiciary.” Parklane Hosiery Co. v. Shore, 439 U.S. 322, 343

(1979) (Justice Rehnquist, dissenting.)

While the respective roles of judge and jury have been

subject to change and revision over time, see, e.g., Paul Car-

rington, The Seventh Amendment: Some Bicentennial Reflec-

tions, 1990 U. Chi. Legal F. 33, 44 (1990)(noting early juries’

role in declaring law), there is no controversy that at the

core of the jury role is the power to find facts. 3 Sir Edward

Coke, Commentary on Littleton 460 (J.H. Thomas, Ed. 1818)

(“Judges do not answer questions of fact; juries do not answer

questions of law.”) Early interpretations of both the Sixth

and the Seventh Amendments described the jury’s power to

find facts and draw appropriate inferences as the key to its

constitutional role under either Amendment. In United States

v. Sparf, 156 U.S. 51, 102-103 (1895), this Court rejected the

idea that criminal juries were permitted to “nullify” the law

while describing the duty of the jury as applying the law “to

the facts as they, upon their conscience, believe them to be.”

Similarly, in Walker v. New Mexico & Southern Pacific

Railroad, {65 U.S. 593, 596 (1897), this Court described goal

of the Seventh Amendment as preserving not particular forms

of procedure, but “the substance of the right”; to do so “re-

quires that questions of fact in common-aw actions shal! be

settled by a jury, and that the court shall not assume, directly

5 z

or indirectly, to take from the jury or to itself such preroga-

tive.” See also Ex parte Peterson, 253 U.S. 300, 310 (1920)

(“[t}he limitation imposed by the Amendment is merely that

enjoyment of the right of trial by jury be not obstructed, and

that the ultimate determination of issues of fact by the jury

be not interfered with.”); Byrd v. Blue Ridge Rural Electric

Cooperative, Inc., 356 U.S. 525, 537 (1958) (“[a]n essential

characteristic of [the federal] system is the manner in which,

in civil common-law actions, it distributes trial functions

between judge and jury and, under the influence-if not the

command-of the Seventh Amendment, assigns the decisions

of disputed questions of fact to the jury.”).

In a recent string of cases, this Court has reiterated the

jury’s claim to find facts necessary to the ultimate punish-

ment of a criminal defendant. Booker, supra; Blakely v.

Washington, 124 S.Ct. 2531 (2004); Apprendi, supra; Jones

v. United States, 526 U.S. 227 (1999). In those cases, as this

Court recognized “(t]he effect of the increasing emphasis on

facts that enhanced sentencing ranges,” Booker, 125 S. Ct. at

751, it also recognized the need “to address the question how

the right of jury trial could be preserved, in a meaningful way

guaranteeing that the jury would still stand between the indi-

vidual and the power of the government... .” /d. at 752. The

answer this Court has given—to return the jury to its crucial

role in finding the facts—was “not motivated by Sixth

Amendment formalism, but by the need to preserve Sixth

Amendment substance.” /d.

The textual basis for the jury’s claim to its role as fact-

finder is stronger yet in the context of the Seventh Amend-

ment, which explicitly_recognizes this role through the

language of the Reexamination Clause, U.S. Const. Amend.

VII (“[N]Jo fact tried by a jury shall be otherwise re-examined

in any Court of the United States, than according to the rules

of the common law.”); cf U.S.Const. Amend. VI (“In all

criminal prosecutions, the accused shall enjoy the right to a

6

speed and public trial, by an impartial jury... .”). The

understanding that the civil jury’s core role is to find fact is

supported by the Judiciary Act of 1789, ch. 20, § 9, which

provided that “the trial of issues in fact, in the district courts,

in all causes except civil causes of admiralty and maritime

jurisdiction, shall be by jury.” As Professor Kirgis notes:

Although [the Judiciary Act’s] passage preceded the rati-

fication of the Seventh Amendment, the Judiciary Act

provides a window into the procedural mindset of the

first Congress, which comprised many of the men who

subsequently participated in the drafting and ratification

of the Bill of Rights. Those men would not have created

a constitutional right to a jury trial significantly different

from the jury guarantee they had imposed on federal trial

courts by statute just two years earlier.

Paul Kirgis, The Right to a Jury on Questions of Fact under

the Seventh Amendment, 64 Oh. St. L. J. 1125, 1133 (2003).

While this Court has considered many difficult Seventh

Amendment questions concerning the division of labor be- —

tween the judge and the jury, rarely has it considered an

encroachment on the jury’s core function as explicit as that

adopted by the Seventh Circuit. Forbidding the jury to take

into account the fact that a witness is interested in the out-

come in assessing that witness’s credibility runs counter to

both common sense and the jury’s historic role. {It contributes

to undermining the importance of the jury, and the role of

jury trials, in our system. It should be reversed.