Petition for Writ of Certiorari — Louisiana-Pacific Corp. v. Orjias

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FILED.

94 536 SEP 25 iM

No. __QFFICE OF THE CLERK

In The

Supreme Court of the United States

October Term, 1994

LOUISIANA-PACIFIC CORPORATION,

a Delaware corporation,

Petitioner,

VS.

MARGARET ORJIAS, ARTHUR O. ORJIAS,

JOHN M. ORJIAS, ARTHUR G. ORJIAS,

SANDRA L. ORJIAS, STEPHEN H. PRIDY,

JANMARIE R. PRIDY, MICHAEL S. PRIDY,

KATHERINE M. PRIDY, JAMIE L. PRIDY,

ETHEL I. HINES, and WENDELL P. HINES,

Respondents.

Petition For A Writ of Certiorari

To The United States Court Of Appeals

For The Tenth Circuit

PETITION FOR WRIT OF CERTIORARI

Michael J. Sternick,Esq. CLIFFORD & REUTER, P.C.

(Counsel of Record) Keith R. Clifford, Esq.

Stanley L. Garnett,Esq. Allen D. Reuter, Esq.

BROWNSTEIN HYATT 44 East Mifflin St.,

FARBER & STRICKLAND, P.C. Suite 800

410 17th Street, 22nd Floor Madison, Wisconsin 53703

Denver, Colorado 80202 (608) 257-7900

(303) 534-6335

Counsel for Petitioner Co-Counsel for Petitioner

September 22, 1994

il.

IT.

IV.

QUESTIONS PRESENTED

Whether the Tenth Circuit erred in affirming

the District Court’s refusal to assign collateral

estoppel effect to United States v. Louisiana-

Pacific Corp., 682 F. Supp. 1141 (D. Colo.

1988), and in otherwise prohibiting

Louisiana-Pacific from making reference to

that decision.

Whether the Tenth Circuit erred in affirming

the trial court’s refusal to declare a mistrial

when a Colorado air pollution enforcement

official falsely testified that “it has not cost

Louisiana-Pacific any money to violate the air

quality standards” and its decision prohibiting

Louisiana-Pacific from conducting cross-

examination on this issue.

Whether the Tenth Circuit erred in affirming

the admission into evidence of six documents

alleging air quality violations at a Louisiana-

Pacific waferboard plant in Wisconsin which

were unrelated to this case.

Whether the Tenth Circuit erred in affirming

the jury’s awards of punitive damages in

ratios to compensatory damages ranging from

1.59:1 to 15.6:1.

PARTIES

The parties to the Tenth Circuit appeal are the

same as those listed on the caption to this petition

for writ of certiorari.

TABLE OF CONTENTS

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STATEMENT OF JURISDICTION ...........3

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ARGUMENT IN SUPPORT OF WRIT ........ 8

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TABLE OF AUTHORITIES

Francis v. Clarke Equipment Company, 993 F.2d 545

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Huddleston v. United States,

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Montana v. United States, 440 U.S. 147 (1979) . . .4,10

Pacific Mutual v. Haslip, 499 U.S. 1 (1991) ...... 12

Parklane Hosiery Co.., Inc. v. Shore,

RE ENE 60h boas os wow eden sueicas 4,10

United States v. Louisiana-Pacific Corp.,

682 F. Supp. 1141 (D. Colo. 1988) ............ 6,9

United States v. Moser,

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No.

In The

Supreme Court of the United States

October Term, 1994

LOUISIANA-PACIFIC CORPORATION,

a Delaware corporation,

Petitioner,

VS.

MARGARET ORJIAS, ARTHUR O. ORJIAS,

JOHN M. ORJIAS, ARTHUR G. ORJIAS,

SANDRA L. ORJIAS, STEPHEN H. PRIDY,

JANMARIE R. PRIDY, MICHAEL S. PRIDY,

KATHERINE M. PRIDY, JAMIE L. PRIDY,

ETHEL I. HINES, and WENDELL P. HINES,

Respondents.

Petition For A Writ of Certiorari

To The United States Court Of Appeals

For The Tenth Circuit

PETITION FOR WRIT OF CERTIORARI

Petitioner Louisiana-Pacific Corporation,

respectfully prays that a writ of certiorari issue to

review the Judgment and Opinion of the Court of

Appeals for the Tenth Circuit entered in

the above entitled proceeding August 1, 1994.

OPINIONS BELOW

Plaintiffs’ complaint against defendant

Louisiana-Pacific Corporation (“L-P”) was filed in

the United States District Court for the District of

Colorado on August 7, 1987. District Court Judge

Edward Nottingham issued Findings of Fact,

Conclusions of Law, and Order for Entry of

Judgment on March 25, 1992 in the District Court

case Civil Action No. 87N1181. The District Court

entered the First Amended Judgment on

April 1, 1992.

On April 14, 1992, L-P filed a timely Motion

for Judgment Notwithstanding the Verdict, New

Trial or Remittitur pursuant to Fed. R. App. P.

4(a)(4.. On April 1, 1993, the District Court issued

its Order Concerning All Post-Trial Motions,

denying L-P’s Motion’ for Judgment

Notwithstanding the Verdict, New Trial and

Remittitur. L.-P appealed to the Tenth Circuit Court

of Appeals pursuant to 28 U.S.C. § 1291 (1988).

The United States Court of Appeals for the Tenth

Circuit affirmed the District Court opinion.

STATEMENT OF JURISDICTION

Jurisdiction in the Federal Courts was based

on diversity pursuant to 28 U.S.C. § 1332 (1988).

Pursuant to 28 U.S.C. § 1254(1), the Supreme Court

may grant certiorari for review of a judgment or

decree from a United States Court of Appeals.

Petitioner seeks a review of that judgment entered

by the Tenth Circuit Court of Appeals on

August 1, 1994.

APPLICABLE LAW

It is believed that analysis of the issues of this

case will involve the following constitutional

provisions, statutes, and court rules:

Federal Rule of Evidence 404(b)

Federal Rule of Evidence 402

Federal Rule of Evidence 104(b)

Federal Rule of Evidence 403

Related case law including Huddleston v.

United States, 485 U.S. 681 (1988).

The doctrine of collateral estoppel as set forth

in Montana v. United States, 440 U.S. 147 (1979);

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

(1979); United States v. Moser, 226 U.S.

236 (1924), and related cases and their progeny.

STATEMENT OF THE CASE

In September, 1984, following the invitation

of state and local officials, L-P located and began

Operating a waferboard facility near Olathe,

Colorado. Waferboard is a building product which

is made by pressing wood wafers and resin together.

The process of manufacturing waferboard produces

air emissions of particulate matter from four

emissions points.

Since 1985, emissions from the facility’s

wafer dryer were controlled by a series of pollution

control equipment including, for a period of time, an

Electrified Filter Bed Device (EFB).

The Colorado Air Pollution Control Division

determined that, under normal operating conditions,

the pollution control devices selected would keep

L-P in compliance with emissions limitations

established by the state. However, it was expected

that occasional upset conditions would occur which

were unforeseen and outside of L-P’s control to

prevent.

The 12 plaintiffs are members of four families

who lived near the facility when it began its

operation. Within three years of the facility

opening, the plaintiffs filed this suit alleging several

state common law claims including nuisance and

negligence per se. These two common law claims

were the only claims presented at trial. The plain-

tiffs sought compensatory damages for alleged per-

sonal injuries and property damages along with

punitive damages under Colorado law.

A jury trial was held before the District Court

for the District of Colorado. During the trial, the

court made several evidentiary rulings which are rel-

evant to this appeal. First, the court permitted the

plaintiffs to present, over petitioner’s objection, evi-

dence that Louisiana-Pacific was accused by the

Wisconsin Department of Natural Resources on sev

ee Pen eNO

eral occasions of violating air pollution laws at its

plant in Wisconsin.

Secondly, the trial court refused to grant peti-

tioner’s motion for mistrial after a witness from the

Colorado Department of Health falsely

testified that:

If you looked at the amount of

time and effort and money that

the State of Colorado has invest-

ed in Louisiana-Pacific up

through this time, August 17 of

‘89, we have not collected one

penny in fines, and it has not cost

Louisiana-Pacific any money to

violate the air quality standards.

The trial court acknowledged that the jury

would draw the false impression from that statement

that Louisiana-Pacific had persistently violated

Colorado law, had caused the State to expend

substantial sums of money and had never been

penalized. The court nevertheless refused to declare

a mistrial and then prohibited defense counsel from

cross-examining the witness on the accuracy of the

statement. Instead the court erroneously instructed

the jury that the issue of prior fines was “a disputed

question of fact.”

The District Court also precluded Louisiana-

Pacific from presenting evidence or argument

regarding the findings of fact and judgment entered

in a prior case entitled United States v. Louisiana-

Pacific Corp., 682 F. Supp. 1141 (D. Colo. 1988)

(referred to by the parties and the courts in this

matter as the “Arraj decision”). The Arraj decision

arose out of a prosecution of the petitioner for

alleged violations of emission standards at its

two Colorado facilities, including the facility at

issue here.

In that case, Judge Arraj found after a trial on

the merits that emissions tests conducted in March

of 1985 (relied upon by the plaintiffs in this case)

were improperly conducted and grossly overstated

Louisiana-Pacific’s actual emissions. He further

concluded that the EFB control technology (criti-

cized by the plaintiffs in this case) was “the most

effective control equipment...that technology could

provide,” and that Louisiana-Pacific had “pio-

neered” the technology at “considerable expense.”

The District Court refused to grant collateral estop-

pel effect to Judge Arraj’s findings and prohibited

L-P from presenting evidence of the decision.

Following the trial, the jury awarded compen-

satory damages totalling $396,100 and assessed

punitive damages of $1,872,000. Compensatory

damages ranged from $10,000 for each of three

plaintiffs to a maximum of $98,320. Each plain

tiff was awarded $156,000 in punitive damages.

Although the District Court recognized that

there was no evidence that L-P presented a serious

hazard to the lives or health of the plaintiffs, nor any

evidence that L-P knew its facility endangered

people, it denied L-P’s alternative motions for judg-

ment notwithstanding the verdict, new trial or remit-

titur of the punitive damages award. In its ruling,

the court ignored the disparity in the various ratios

that punitive damages bore to the compensatory

damages award (1.59:1 to 15.6:1) and sustained

theaward based on the relationship of the total puni-

tive award to compensatory damages.

The petitioner appealed to the Court of

Appeals for the Tenth Circuit which affirmed the

judgment entered by the District Court.

ARGUMENT IN SUPPORT OF WRIT

This case provides an opportunity to define

the appropriate interrelationship between state and

federal regulatory proceedings and a common law

lawsuit brought pursuant to diversity jurisdiction in

Federal Court. In this case, L-P was forced to suf-

fer the adverse consequences of determinations or

accusations made in previous state actions both in

Colorado and Wisconsin but was precluded by legal

and evidentiary rulings of the District Court from

using previous favorable findings by a federal court

in a regulatory proceeding commenced

by the federal Environmental Protection Agency

(EPA).

The first issue upon which L-P seeks

certiorari review relates to the collateral estoppel

effect of a previous EPA Enforcement Action titled

United States v. Louisiana-Pacific Corp., 682 F.

Supp. 1141 (D. Colo. 1988). This case was referred

to by the parties and the Tenth Circuit as the “Arraj

decision”. In the Arraj decision, the Environmental

Protection Agency sued L-P under the Clean Air

Act, 42 U.S.C. §7401 et. seg. on the grounds that

L-P should have obtained a Prevention of

Significant Deterioration (PSD) permit at its Olathe,

Colorado facility (the “facility”). The EPA’s case

was based on compliance testing conducted at the

Facility in March, 1985. Judge Arraj found that

testing was deficient and ruled its results inadmissi-

ble, because the test results were, in Judge Arraj’s

words, “unreliable” and “valueless”.

Id. at 11581159.

Despite this finding and over repeated objec-

tion of L-P, the District Court permitted a State of

Colorado Regulatory Official to testify that the

results of the March 1985 stacks tests provided evi-

dence that L-P was in violation of applicable state air

pollution laws. L-P argued that because the

admissibility of the March 1985 compliance testing

was central to the court’s determination in the Arraj

case, and because that precise test was relied upon by

the plaintiffs to prove their negligence per se claim in

this case, that the Arraj decision should be accorded

collateral estoppel effect. The Tenth Circuit dis-

agreed and concluded that the issue was not

identical and thus that collateral estoppel should not

have applied.

This issue warrants Supreme Court review

because the Tenth Circuit Court decision is not in

compliance with applicable United States Supreme

Court decisions. This Court has previously held that

if a fact question or right has been distinctly

adjudged in a previous action then the doctrine of

collateral estoppel applies to a subsequent action

involving the same facts. Montana v. United States,

440 U.S. 147 (1979); See also, Parklane Hosiery

Co., Inc. v. Shore, 439 U.S. 322 (1979) and United

States v. Moser, 226 U.S. 236 (1924). In the regula-

tory environment faced by industries who are sub-

ject to both state and federal enforcement proceed-

ings (as well as private party common law actions),

the collateral estoppel effect of previous enforce-

ment determinations should be clarified so that

industries like L-P will know the effect of the

factual findings made in those enforcement proceed-

ings. The Tenth Circuit also erred in affirming the

District Court’s refusal to permit L-P to reference

numerous favorable comments made about L-P and

its pollution control efforts by Judge Arraj in the

Arraj case. In that case, Judge Arraj praised L-P’s

pollution control efforts and choice of pollution con-

trol technology. L-P sought to submit Judge Arraj’s

comments to the jury in this case as evidence of its

good faith, the reasonableness of its behavior and to

rebut the plaintiffs’ claims for punitive damages.

The second issue that warrants review is the

District Court’s refusal to grant a mistrial when a

state pollution control official falsely testified that

L-P had never “paid a penny in fines”. This testi-

mony was not only false and highly prejudicial, but

the court’s refusal to grant mistrial denied L-P of a

fair trial given the context of the issues raised,

particularly because the court precluded cross-

examination on the same point. In contrast, the

Sixth Circuit in Francis v. Clarke Equipment

Company, 993 F.2d 545 (6th Cir. 1993) has

approved cross-examination on improper testimony.

The third issue that warrants Supreme Court

review was the affirmance of the District Court’s

decision to admit evidence of pollution

violations at an unrelated L-P facility in Wisconsin.

This evidence was the subject both of a pretrial

motion in limine and repeated objections at trial.

L-P maintained that the proposed evidence did not

comply with Fed. R. Evid. 403 and Huddleston v.

United States, 485 U.S. 681 (1988). The District

Court and the Tenth Circuit disagreed and upheld

the admission of the evidence despite its obviously

prejudicial effect. This issue warrants Supreme

Court review because the dictates of Huddleston

were not complied with in this case.

Finally, the punitive damages in this case

were inherently unreasonable and because they were

based on inconsistent ratios of compensatory dam

ages to punitive damages they should not have been

affirmed by the Tenth Circuit. In this case, the ratio

of punitive to actual damages ranged from 15/1 to

approximately 2/1. In essence, despite widely

varying ratios of compensatory damages, the jury

awarded each plaintiff $156,000 in punitive dam-

ages. Such an award is inconsistent with this Court’s

attempt to establish clearer guidelines for award of

punitive damages pursuant to Pacific Mutual v.

Haslip, 499 U.S. 1 (1991).

CONCLUSION

Pursuant to Sup. Ct. R. 10.1 certiorari is prop-

er both to resolve conflicts between circuits and to

clarify developing areas of law. Both reasons exist

in this case. In an age of environmental regulation

by both the state and federal government where

such regulations are increasingly complex and over-

lapping, this case provides the Court with an oppor-

tunity to review and clarify these issues and provide

guidance for how they relate to state common

law tort actions.

Respectfully submitted,

Michael J. Sternick, Esq.

(Counsel of Record)

Stanley L. Garnett, Esq.

BROWNSTEIN HYATT FARBER &

STRICKLAND, P.C.

410 17th Street, 22nd Floor

Denver, Colorado 80202

(303) 534-6335

Counsel for Petitioner

CLIFFORD & REUTER, P.C.

Keith R. Clifford, Esq.

Allen D. Reuter, Esq.

44 East Mifflin St., Suite 800

Madison, Wisconsin 53703

(608) 257-7900

Co-Counsel for Petitioner

APPENDIX

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

MARGARET ORJIAS; ARTHUR 0. ORJIAS

JOHN M. ORJIAS; ARTHUR G. ORJIAS;

SANDRA L. ORJIAS; STEPHEN H. PRIDY,

individually and a next best friend of No. 93-1144

his minor children; MICHAEL S. PRIDY;

KATHERINE M. PRIDY; JAMIE L. PRIDY;

JANMARIE R. PRIDY; ETHEL 1. HINES;

WENDELL P. HINES,

Plaintiffs-Appellees,

and

MARTHA STEVENSON,

Plaintiff,

LOUISIANA-PACIFIC CORPORATION, a

Delaware corporation,

Defendant-Appellant.

APPEAL FROM THE UNITED STATES DIS-

TRICT COURT

FOR THE DISTRICT OF COLORADO

(D.C. No. 87-N-1181)

Keith R. Clifford (Allen D. Reuter of Clifford &

Reuter, Madison, Wisconsin, and Stanley L. Garnett

and Andrew W. Loewi of Brownstein, Hyatt, Farber

& Strickland, P.C., Denver, Colorado, with him on

the briefs) of Clifford & Reuter, Madison,

Wisconsin, for appellant.

Kevin S. Hannon (Wesley A. Light, Crested Butte,

Colorado, Stephen H. Cook, Boulder, Colorado, and

Joshua B. Epel, Denver, Colorado, with him on the

brief), Denver, Colorado, for appellee.

Before KELLY and BARRETT, Circuit Judges,

and *O”’CONNOR, District Judge.

BARRETT, Senior Circuit Judge.

*The Honorable Earl E. O'Connor, Senior Judge, United States

District Court for the District of Kansas, sitting by designation.

Appellant/defendant, Louisiana-Pacific

Corporation (L-P), appeals from the district court’s

judgment following a jury trial on the issues of

negligence per se and common law nuisance. The

appellees/plaintiffs were awarded actual and

punitive damages.

Factual Background

In September, 1984, following the invitation

of state and local officials, L-P located and began

operating a waferboard plant near Olathe, Colorado.

Waferboard is a building product which is manufac-

tured by pressing wood chips and gluing resin

together. The process of manufacturing waferboard

produces air emissions of particulates and waste

chemicals from at least four sources.

First, wet bark and sawdust are burned in a

furnace, called a Konus Thermal Oil Heater, to

generate most of the heat required by the plant. The

stack emissions from the heater include carbon

monoxide, particulates of ash and soot, resinous

materials, formaldehyde, and volatile organic com-

pounds (VOCS) which condense into a dust-like

particulate as the emission contacts cooler

outside air.

Second, wood, which has been chipped into

wafers, is dried in a wafer drier. The drying process

produces stack emissions which are similar to those

from the Konus heater.

Third, the dried wafers are compressed with

glue-like resins at high temperature to make the

final waferboard product. Initially, L-P used a

formaldehyde-based resin and later switched to a

resin called “MDI.” The heat and pressure from the

press process releases natural resins from the wood

and results in a stackemission containing steam and

VOCs from the natural and added resins.

Fourth, piles of waste wood ash which are

dumped on the ground can be blown into the air

during windy conditions and are sources of

particulate emissions.

Each source of emissions is regulated by the

State of Colorado for health and safety reasons, with

emission limits and conditions set in the regulatory

permits. The permits set, inter alia, a visible emis-

sion or “opacity” limitation not to exceed 20%,

Aplt. App., Vol 2 at 199, and specific pollutant limi-

tations measured in pounds per hour.

Id., Vol. 6 at 1029.

Various pollution control devices or methods

were implemented by L-P which, ideally, would

enable L-P to meet the emissions limitations in the

permits. For example, emissions from the Konus

heater were blown through a cyclone and then

through a fabric “bag house” to remove solid mater-

ial and particulates. Emissions from the wafer dryer

were passed through a series of cyclones and a bag

house. Since 1985, emissions from the wafer dryer

had also passed through an Electrified Filter Bed

device (EFB) to remove additional particulates.

To decrease opacity from VOCs from the wafer

dryer, heat going into the dryer was kept below a

certain temperature. Blowing ash emissions were

controlled by rain or by spraying water over the ash

piles to form a crust.

Under normal operating conditions, state

officials expected that all of the pollution control

devices would work to keep L-P in compliance with

the permits. It was expected that, occasionally,

events would occur which were unforeseen and

outside of LP’s control to prevent. Any valid

“upset” conditions allowed LP’s emissions to

exceed the permit limits for the short period of time

that was required to repair the faulty equipment or

process and was not a violation of the state

regulations. If no upset condition was reported, any

emission in excess of the permit limit was a

violation of the state regulations.

The twelve plaintiffs are members of four

families who had lived near the L-P plant when it

began its operation. Margaret and Arthur O. Orjias,

owned 55 acres east of the L-P plant on the other

side of a highway. They built a house and improved

the land to accommodate four mobile homes, two of

which were rental units. Their teenaged son, John,

lived with them. Their son and daughter-in-law,

Arthur G. and Sandy Orjias, lived in a mobile home

on the property. Ethel and Wendell Hines moved

their mobile home onto the Orjias property, paying

rent and making improvements to the land.

The Pridy family resided on and farmed the land

directly west of the L-P plant.

Within three years of the L-P plant opening,

the plaintiffs had brought this suit and vacated their

homes because of the noise, light, and irritating

emissions which coated their homes and

possessions with layers of grit and caused them

physical illness, annoyance, inconvenience, and dis-

comfort. During the approximately twelve-day jury

trial, extensive documentary evidence and expert

and lay witness testimony was presented to the jury.

The jury awarded appellees $396,100 in actual

damages and $1,872,000 in punitive damages.

Though each plaintiff received differing amounts of

actual damages, ranging from $10,000 for each of

the three Pridy children to $98,320 for Arthur 0.

Orjias, each plaintiff received $156,000 in punitive

damages. The district court denied L-P’s post trial

motions for a new trial, judgment notwithstanding

the verdict, and remittitur.

On appeal, L-P states the issues as (1)

whether the trial court erred by admitting evidence

of alleged environmental violations at a different

L-P plant in another state; (2) whether the trial court

erred in excluding testimony that plaintiffs’ key

witness, Scott Butler, was terminated from his

employment with L-P for precisely the improper

conduct he claimed was encouraged by LP; (3)

whether the trial court erred by not declaring a

mistrial when a Colorado air pollution enforcement

official falsely testified that “it had not cost L-P any

money to violate the air quality standards” and by

prohibiting L-P from conducting any cross examina-

tion on this issue; (4) whether the trial court erred in

not assigning collateral estoppel effect to United

States _v. Louisiana-Pacific Co., 682 F. Supp. 1141

(D. Colo. 1988), and in otherwise not permitting

L-P to reference that decision; and (5) whether the

trial court erred in submitting the issue of punitive

damages to the jury or alternatively in refusing to

remit the punitive damages award in accordance

with Colorado law.

L-P contends that because documentation of

six air quality violations at an L-P waferboard plant

in Wisconsin was improperly admitted under

Fed. R. Evid. 404(b), L-P was tried for these prior

bad acts and not for its own conduct in Olathe.

Decisions on evidentiary matters lie within

the sound discretion of the district court and will not

be disturbed absent a clear showing of abuse of

discretion. United States _v. Morgan,

936 F.2d 1561, 1571 (10th Cir. 1991), cert. denied,

U.S. (1992).

Rule 404(b) provides, in part: Other crimes,

wrongs, or acts. Evidence of other crimes,

wrongs, or acts is not admissible to prove the

character of a person in order to show action

in conformity therewith. It may, however, be

admissible for other purposes, such as proof

of motive, opportunity, intent, preparation,

plan, knowledge, identity, or absence of

mistake or accident

Fed. R. Evid. 404(b) applies to civil, as well

as criminal cases. Huddleston v. United States, 485

U.S. 681, 685 (1988). In Huddleston, a unanimous

United States Supreme Court, recognizing a trend

toward the improper exclusion of Rule 404(b) evi-

dence, examined the legislative history of Rule

404(b) and concluded that “Congress was not nearly

Al0

so concerned with the potential prejudicial effect of

Rule 404(b) evidence as it was with ensuring that

restrictions would not be placed on the admission of

such evidence.” Id. at 688-89.

Huddleston, decided that protection against

unfair prejudice can be afforded by four require-

ments to the admission of Rule 404(b) evidence: (1)

the evidence must be offered for a proper purpose;

(2) the evidence must meet the relevancy require-

ment of Rule 402, as enforced through Rule 104(b);

(3) the trial court must assess whether the probative

value of the evidence is substantially outweighed by

its potential for unfair prejudice under Rule 403;

and (4) the trial court shall, upon request, instruct

the jury that the similar acts evidence is to be

considered only for the proper purpose for which it

was admitted. Id. at 691-92; United States v.

Record, 873 F.2d 1363, 1374 (10th Cir. 1989);

Turley v. State Farm Mut. Auto. Ins. Co., 944 F.2d

669, 675 (10th Cir. 1991).

We understand L-P’s argument to be that the

first two Huddleston requirements are not met here.

L-P argues that because it is uncontroverted that L-P

had knowledge of its emissions and because there is

no evidence that L-P concealed or misrepresented

the contents of its emissions, the Wisconsin letters

were irrelevant and were not offered for a

proper purpose.

Assuming that L-P is correct that the contents

of the emissions were undisputed, still the

All

Wisconsin letters were relevant to the issue of

whether L-P was liable for willful misconduct or

negligence in bringing this plant to Colorado if it

had notice or knowledge that it could not comply

with the Colorado air quality regulations with its

existing technology.

Responding to L-P’s motion in limine to

exclude any evidence regarding the Wisconsin

violations, the district court stated, “Now, the

Wisconsin plant, I can see an argument for punitive

damages because [plaintiffs are] claiming that the

defendant knew about—something about the

technology based on the Wisconsin plant and didn’t

reveal it in [Colorado] or didn’t utilize it in

[Colorado].” (Aplt. App., Vol. 6 at 1101.)

At trial, Plaintiffs’ Counsel asked Mr. Klafka

of the Wisconsin Department of Natural Resources

these foundational questions for each of the six

Wisconsin letters:

Plaintiffs’ Counsel: Mr. Klafka, just briefly

describe for the jury with respect to the wafer

dryer process, what emissions violations was

Louisiana-Pacific notified of in this

document?

Plaintiffs’ Counsel: And does this letter

contain information that was provided to

Louisiana-Pacific regarding emissions from

the wafer dryer process, or excess emissions

from the wafer dryer process in Wisconsin?

Al2

Plaintiffs’ Counsel: With respect to the wafer

dryer process, Mr. Klafka, would you just

summarize for the jury what information is

contained in this letter with respect to the

wafer dryer process exceeding emission

standards?

Plaintiffs’ Counsel: And does this document

contain information regarding notification to

Mr. Dilworth at Louisiana-Pacific regarding

opacity violations in excess of 20 per cent

from the wafer dryer process?

Plaintiffs’ Counsel: Briefly describe for the

jury, Mr. Klafka, the information contained in

Exhibit 32 with respect to excess emissions

from the wafer dryer process.

Plaintiffs’ Counsel: And does this letter con-

tain information or notice to Mr. Dilworth of

Louisiana-Pacific regarding excess emissions

from the waferboard process in Hayward

(Wisconsin)?

(Aplt. App., Vol. 4 at 629-33.)

In the Order Concerning All Post-Trial

Motions, the district court stated:

All of the evidence in question was received

pursuant to Fed. R. Evid. 404(b) on the issue of

Al3

whether Louisiana Pacific had knowledge ‘or notice

concerning what sorts of things are emitted as by-

products of the waferboard manufacturing process.

Knowledge or notice of these matters was relevant

to the question of whether Louisiana Pacific was

negligent in designing and operating the Olathe

waferboard facility and whether its operation of the

facility constituted an unreasonable use of its prop-

erty. it was also relevant to the question of whether

Louisiana Pacific concealed certain facts from the

Colorado regulators or misrepresented certain facts

to the Colorado regulators. Such misrepresentations

Or omissions were relevant to the question of

whether plaintiffs’ punitive damages claim could be

premised on an allegation that Louisiana Pacific’s

conduct at Olathe was attended by circumstances of

fraud or willful conduct.

(Aplt. App., Vol. I at 52.)

L-P’s closing argument urged the jury to give

the Wisconsin letters little weight:

“The [Notices of Violation] from

Wisconsin, remember the talk about how you

were limited, Judge Nottingham limited you,

instructed you could only consider that as to

what L-P knew when they came out here to

see whether they’d know that we couldn’t

comply with Colorado standards. In fact, you

heard Mr. Cavadeas testify that the Hayward

Al4

plant was three times the size of this plant out

here. And so they believed, regardless of

their experience in Wisconsin, that they

wouldn’t have those problems here in

Colorado.

And beyond that, Mr. Reynolds said

one of the things you’ve got to consider is

source reduction. Do you remember that

phrase? That’s exactly what Louisiana-Pacific

did when it built a smaller plant here than the

one in Hayward. It was reducing the

potential emissions from a source.

(Aplt. App., Vol. 7 at 1336.)

We hold that the first two Huddleston require-

ments are met here because the evidence was rele-

vant and was offered for a proper purpose. The

evidence was properly offered to show L-P’s prior

knowledge and notice of the emissions, both content

and quantity, that would result from the operation in

Olathe.

Because L-P does not challenge the third and

fourth Huddleston requirements, we may briefly

mention them. Huddleston requires the trial court to

assess whether the probative value of the evidence is

substantially outweighed by the danger of unfair

prejudice under Rule 403. Under Rule 403, some

prejudice is allowed. However, the prejudice cannot

—S——__-:—

Al5

substantially outweigh the probative value.

During trial, the district court performed a

balancing test with respect to this evidence when it

stated, “I find that the evidence is admissible under

Rule 403, and that the probative value is outweighed

by—I’m sorry— that the probative value is not

outweighed by any possible prejudice.” (Aplt. App.,

Vol. 4 at 638.) The district court found that any

possible prejudice failed to outweigh, let alone sub-

stantially outweigh, the probative value.

Therefore, we hold that the third Huddleston

requirement is met.

Lastly, Huddleston directs the trial court to,

upon request, instruct the jury that the similar acts

evidence is to be considered only for the proper pur-

pose for which it was admitted. Here, following the

admission of the letters in evidence, the court, sua

sponte, instructed the jury:

THE COURT: Members of the jury, I’m

going to talk to you about these exhibits for a

moment and instruct you about these exhibits.

What happened back in Wisconsin is

really not relevant to what happened in [Olathe],

and Louisiana-Pacific is not on trial here for any-

thing that happened back in Wisconsin. Therefore,

you should not utilize these exhibits for the purpose

of—substantive purpose of establishing that there

Al6

was a violation in Wisconsin so there must

have been a violation in [Olathe}.

These exhibits are received for a limit-

ed purpose, and that limited purpose is to

show that the defendant, Louisiana-Pacific,

had knowledge of the matters that are asserted

in the letters. That’s the only purpose for

which these materials are received. You

should consider it for that limited purpose and

for no other purpose.

(Aplt. App., Vol. 4 at 633-34.)

We hold that the fourth Huddleston require-

ment was met. The district court, even though L-P

did not request the limiting instruction, went beyond

the requirements of Huddleston in giving

a sufficient limiting instruction.

Appellant further argues that we should apply

to this case the stringent requirements of United

States v. Kendall, 766 F.2d 1426, 1436 (10th Cir.

1985), cert. denied, 474 U.S. 1081 (1986). In

Kendall, we decided that the proponent of the

evidence “must articulate precisely the evidentiary

hypothesis by which a fact of consequence may be

inferred from the evidence of other acts.” We also

indicated, in Kendall, that the “trial court must

specifically identify the purpose for which such

evidence is offered and a broad statement merely

Neen

ae ———

A17

invoking or restating Rule 404(b) will not

suffice.” Id.

After the Huddleston case was decided, how-

ever, we revisited the Rule 404(b) issue. In United

States v. Orr, 864 F.2d 1505, 1511 (10th Cir. 1988),

we held that any failure to adhere to the Kendall

requirements would be considered harmless if “the

purpose for admitting the other acts testimony is

apparent from the record, and the district court’s

decision to admit was correct.” Here, because the

record demonstrates that the district court’s decision

to admit was improper under Huddleston, any fail-

ure to meet the Kendal requirements was harmless.

See Record, 873 F.2d at 1375 n.7.

Il.

L-P contends that the trial court abused its

discretion in excluding testimony that would tend to

prove that plaintiffs’ key witness, Scott Butler

(Butler), was terminated from his employment with

L-P for precisely the improper conduct he claimed

was encouraged by L-P.

Butler was a shift supervisor at L-P from

August 1984, until June, 1986. (Aplt. App., Vol. 2

at 297). His crew ran the entire plant for an eight

hour rotating shift. Id. at 298. At trial,

Butler testified that in order to meet the opacity air

standard of the wafer-dryer stack, the inlet tempera-

ture into the wafer dryer could not exceed 1,000

Al18

degrees. Id. at 308. He also testify that his

superiors required him to meet a certain level of

production of waferboard during his shift, with the

understanding that he would be fired if production

was not met. Id. at 309-10. However, Butler testi-

fied, it was impossible to dry enough wafers to meet

the required level of production unless the inlet tem-

perature was maintained between 1,100 degrees and

1,500 degree. Id. at 325. Butler called it a Catch-22

situation with production winning out over

pollution control. Id. at 309-10.

Butler testified that: frequently, L-P had no

restrictions or the inlet temperature, id. at 311; occa-

sionally, L-P would instruct its dryer operators to

stay within the inlet temperature, id. at 310-11; but

at those times, because there was no reciprocal

easing up of production levels, the dryer operator,

with management’s knowledge, id. at 320-21, would

use various methods to conceal or explain high

dryer inlet temperatures; the dryer operator could

falsify the graph readout on which the inlet tem-

peratures were recorded; and this would be accom-

plished by controlling the pen on the graph with a

finger, putting paper between the pen and the graph

so that it would appear that the pen ran out of ink, or

substituting the graph with a previous graph which

showed the proper temperature, id. at 311-12; the

dryer operator would manually increase the inlet

temperature or would increase the fuel into the

wafer dryer but would later claim that the automated

A19

equipment which controlled the inlet temperature

was defective, causing the high temperature, id. at

314-15; a fully operable temperature controller

would also be removed on the pretext that it needed

repairs; and a new controller would then be inserted

and adjusted to conceal the inlet temperature. Id.

at 315-16.

Butler also testified that the production of the

plant would be higher at night to make up for any

decrease in production during the day, id. at 324; the

increased nighttime production required higher inlet

temperatures, id. at 325; and the higher inlet temper-

atures, in turn, resulted in higher opacity which

could not be detected at night. id. at 325-26. Butler

stated that at one of the production meetings with

management, the shift supervisors were told to

change the focus of the outdoor lights away from

the stack to hide the nighttime opacity levels.

I-d. at 328.

On cross-examination, Butler admitted, inter

alia, that the falsification and other practices to

‘allow high temperature operation of the wafer dryer

were committed by the people he was supervising

with his knowledge and consent. id. at 338-39.

Butler recalled a conversation that he had with Juan

Maestas (Maestas), a subordinate of his. in the con-

versation, Maestas told Butler that allowing the

crew to violate the rules of operation could cause

Butler a problem and that Butler could lose his job.

Butler then admitted that he had been discharged

A20

from the company in June,1987.

This colloquy followed:

Defendant’s Counsel: And did some of the

reasons or any of the reasons relating to your

discharge have to do with your failure to

require your dryer operators to comply with

the rules?

Butler: No, sir.

Defendant’s Counsel: You deny that? You do

deny that? Butler: Louisiana-Pacific never

gave me a reason fordischarging me. I asked

for a copy of my records and I didn’t ever get

any copy of my records, so I don’t know.

Id. at 356

Later at trial, L-P called Maestas as a witness.

The pertinent portion of his direct testimony is as

follows:

Defendant’s Counsel: Now, in your position

as personnel manager, do you also have

involvement in termination of employees?

A21

Maestas: Yes. I handle all the terminations.

Defendant’s Counsel: And, do you know why

Scott Butler was terminated?

Plaintiffs’ Counsel: Objection, Your Honor.

He was not the personnel manager when Mr.

Butler was terminated. This calls for a

hearsay response I suspect.

The Court: All right. Foundation will need to

be established.

Defendant’s Counsel: You bet. Mr. Maestas,

when-first of all, when did you become

personnel manager?

Maestas: Maestas: Became personnel in July of

1988.

Defendant’s Counsel: And, are there person-

nel file [sic] that are kept with regard to

anybody’ that’s ever worked at

the plant?

Maestas: Yes.

Defendant’s Counsel: Okay. And, who is the

custodian? Who keeps track of those

personnel files?

A22

Maestas: I do.

Defendant’s Counsel: Okay. And, are those

files kept for everybody that’s ever worked at

the plant?

Maestas: Yes, they are.

Defendant’s Counsel: All right. And, have

you reviewed the file with regard to

Scott Butler?

Maestas: Yes, I have.

Defendant’s Counsel: And, based off of that

review, do you know why he was fired?

Plaintiffs’ Counsel: I object, Your Honor;

this—

The Court: Sustained.

Defendant’s Counsel: Mr. Maestas, let me

talk about just a couple more subjects. Have

you ever had a problem with—

The Court: Ladies and gentlemen, let me

interrupt at this point. You know, this is one

of those instances where it appears that the

lawyer is asserting that he knows something

A23

that the rest of us don’t know. The state of

the evidence in this case is that nobody knows

why Mr. Butler was fired. That’s the state of

the evidence now. You should not infer any-

thing from the fact that there’s been some sort

of suggestion about personnel files because

that is not competent evidence, and you

should disregard that.

Id., Vol. 4 at 776-78.

The district court ruled that Maestas’s testi-

mony was not competent evidence. Maestas

did not have firsthand knowledge ofthe firing.

L-P did not at any time offer Butler’s person-

nel filein evidence; rather L-P simply offered

Maestas’s testimony abouthis recollection of

the information in the file. This evidence was

double hearsay. Because both levels of

hearsay did not fall within an exception to the

hearsay rule, Fed. R. Evid. 805, the district

court properly excluded this testimony.

Later at trial, L-P made an offer of proof for

Jay Byers’s (Byers) rebuttal testimony:

Defendant’s counsel: Mr. Byers will testify

that [he’s] the one that terminated Mr. Butler.

He had the conversation with him.

A24

He told him why he was terminated. He was

terminated specifically for violating L-P

procedures with regard to managing his

people on the wafer dryer. it’s

critical evidence. It’s in rebuttal to what came

out in the plaintiffs’ case... .

The Court: All right. Well, I’ve heard

enough. I’m going to exclude that aspect of

Mr. Byers, testimony for several reasons. The

first reason is because in 1988-April 26,

1988, the plaintiffs propounded inter-

rogatories asking Louisiana-Pacific to “indi-

cate whether L-P disciplined, reprimanded,

criticized, or demoted, dismissed, or took any

other personnel actions with regard to any

employee of L-P based on that person’s in-

volvement in limiting or failing to limit air

emissions at the Olathe Plant.,, That was

Interrogatory #36 on a date which is unclear

from the answers. But, presumably, a short

time later in 1988, you answered Inter-

rogatory #36 saying, no, that nobody had

ever been disciplined with regard to that.

The Court: And, thereafter, the plaintiffs did

depose Mr. Byers. However, in light of your inter-

rogatory answer, they could reasonably conclude

that he had no testimony to give on the question of

whether Mr. Butler was disciplined for his

A25

actions or inactions with respect to the

wafer dryer.

The second basis for excluding this

information is that again. And, in 1990, you

were asked to detail what your witnesses

would testify to and you endorsed

Mr. Byers and I’m referring here to a docu-

ment called Defendants’ Responses to

Plaintiffs’ Interrogatories and Request for

Production of Documents Regarding

Non-Expert Witnesses which was dated April

18, 1990. Mr. Byers is endorsed and there is

no mention of anything close to the testimony

that you propose to have him give.

The third reason for not permitting it is

that I don’t think the testimony was al-1 that

important under Rule 403. Mr. Butler testi-

fied that he was discharged. That much has

been established, that he was fired by

Louisiana-Pacific. He testified that he was

never given a copy of the reasons for the dis-

charge. Now, that doesn’t mean that he was

not orally told the reason for the discharge,

but he was never given a copy of the reasons

for the discharge.

A26

So, the rebuttal or impeachment value of this

testimony is extremely limited and I think

considerations of wasting time, plus the fact

that you failed to respond to discovery,

justifies exclusion of his testimony.

Defendant’s Counsel: Your Honor,

With regard to the interrogatory which was a

question about pollution control equip-

ment,..... the connection between the wafer

dryer and pollution control equipment and

failure to properly handle that is tenuous, at

best, and my indication was that he was ter-

minated for failing to control his crew with

regard to the wafer dryer, not with regard to

pollution control equipment, not with regard

to monitoring, handling, the EFB, and,

frankly, Your Honor, I can tell you that’s not

the way that the L-P people saw it at the time.

He failed to follow orders, failed to control

his people. .. .

Id., vol. 5 at 785-88.

With regard to Byers’s testimony, the district

court prima-rily excluded his testimony because L-P

had twice failed to giveadequate discovery respons-

es about the content of his testimony. The imposi-

tion of sanctions for abuse of discovery under Fed.

R. Civ. Pro. 37 is a matter within the discretion of

the trial court. Robinson v. Audi NSU Auto Union,

A27

739 F.2d 1481, 1483 (10th Cir. 1984)(citing

National Hockey League v. Metropolitan Hockey

Club Inc., 427 U.S. 639, 642 (1976)). Rule 37(c)

provides:

Misleading Disclosure; Refusal to Admit.

(1) A party that without substantial justifi-

cation fails to disclose information required

by Rule 26(a) [for written interrogatories] or

26(e)(1) [for supplementation’ of

disclosure and responses] shall not, unless

such failure is harmless, be permitted to use

as evidence at a trial, at a hearing, or on a

motion any witness or information not so

disclosed.

Not withstanding Rule 37(c), the district court

may be found to have abused its discretion if the

exclusion of testimony results in fundamental

unfairness in the trial of the case. Smith V. Ford

Motor Co., 626 F.2d 784, 794 (10th Cir. 1980), cert.

denied, 450 U.S. 918 (1981),.

L-P’s response to interrogatory #36, which

asked whether any employee had been disciplined

for limiting or failing to limit air emissions at the

olathe plant, was an unqualified “no.,, Though LP

A28

argued that Butler was fired for failure to control his

crew on the wafer dryer, not,for failing to limit air

emissions, this is neither a substantial justification

nor a harmless failure under Rule 37(c). Moreover,

L-P failed to detail prior to trial those issues Byers

would testify about. Therefore, the trial court did

not abuse its discretion in excluding Byers’s

testimony.

Further, Butler’s bias or prejudice was

adequately shown to the jury. Butler acknowledged,

on cross-examination, that he had knowledge of,

and participated in, the acts of concealment which

he described. He admitted that these practices were

undertaken by people under his supervision. Butler

acknowledged that Maestas, whom he supervised at

the time and who later became personnel manager,

warned him that allowing his crew to violate rules

of operation could cause Butler to lose his job.

Butler also admitted that he had been fired by L-P,

although he was never notified of the reasons for his

termination. Butler’s conversation with Maestas

was confirmed by Maestas. Thus, the jury had

before it evidence that: Butler was a knowing partic-

ipant in the fraud; the employees under his supervi-

sion were also knowing participants; Butler was on

notice about possible termination for inadequate

super-vision; and, Butler was fired. Beyond the

evidence already before the jury, Byers’s testimony

went to the issue of whether Byers had told Butler

the reasons for his termination, a collateral issue.

A29

We hold that the exclusion of Byers’s

testimony did not result in fundamental unfairness

in the trial of the case and that the district court did

not abuse its discretion in limiting the testimony

of Maestas and Byers.

III.

L-P argues that the trial court erred by not

declaring a mistrial when a Colorado air pollution

enforcement official falsely testified that “it had not

cost L-P any money to violate the air

quality standards” and by prohibiting L-P from con-

ducting any cross examination on this issue.

We review for an abuse of discretion a district

court’s denial of a motion for a mistrial based on

potentially prejudicial testimony. Malandris v.

Merrill Lynch, Pierce, Fenner & Smith, 703 F.2d

1152, 1179 (10th Cir. 1981), cert. denied, 464 U.S.

824 (1983)(citing Standard Industries, Inc. v. Mobil

Oil Co=., 475 F.2d 220, 228 (10th Cir.), cert, denied,

414 U.S. 829 (1973)). Mistrial is not justified if an

affirmative direction to disregard is issued to the

jury and it does not clearly appear that the chal-

lenged remarks influenced the verdict. See Lambert

v. Midwest City Mem. Hosp. Auth., 671 F.2d 372,

375 (10th Cir. 1982); Ward v. H.B. Zachry

Const. Co., 570 F.2d 892, 895 (10th Cir. 1978).

On the first day of trial, plaintiffs called Scott

Miller (Miller), an engineer with the Colorado

Department of Health, Air Pollution Control

A30

Division, to testify about the regulatory

relationship between L-P and the State of Colorado.

The relevant portion of his testimony follows:

Plaintiffs’ Counsel: Mr. Miller, the reference

on the first page of this letter is that it’s called

a “Official Notice of Violation.” Do you see

that?

Miller: That’s correct.

Plaintiffs’ Counsel: up to this point in time,

the letters from the Department of Health to

Louisiana-Pacific on these types of issues had

been called “Revocations of Permit.,, Is that

correct?

Miller: That’s correct.

Plaintiffs’ Counsel: Why now in August of

1989 is the letter, this kind of notice being

called a “notice of Violation” as opposed to a

“Revocation of Permit” in previous years?

Miller: Since the last notice of revoca-

tion, Louisiana-Pacific did receive final per-

mits. In other words, they did meet the letters

or the conditions that were stipulated on those

permits. Once that happens, they receive

their final permit. A final permit cannot be

A31

revoked under state statutes, so they have it

for the life of the operation. After a final per-

mit is issued, if you find a violation of any

of.the air quality statutes, then you issue a

notice of violation, set up a hearing with the

company to hear their side of the story, and

then issue a compliance order. This is the

initial letter starting that process.

Plaintiffs’ Counsel: Given the history of

revocations and your memos in prior years,

can you explain for the jury what—your

understanding of why a final permit was

issued to L-P to kick over to this new

procedure?

Miller: At sometime between 1986 and

1989, and I don’t remember exactly when, we

went through and documented that they had

complied with each one of the conditions on

the permit, so the permit was issued. It’s a

situation where to continue to revoke the per-

mit would not suit the purposes of the State of

Colorado. In a_ situation where

you're trying to close a company in an area

where jobs are at a premium, you tend to gen-

erate a lot of controversy. Notices of viola-

tion and compliance orders, on the other

hand, are fines, they are not necessarily clos-

ing the plant. So it’s a different course in the

A32

enforcement of the air pollution control

regulations.

Plaintiffs’ Counsel: Was there any calculated

thinking on the part of the Department of

Health, and specifically that you were aware

of, that led to this new or this revised

procedural approach?

Defendant’s Counsel: objection to the form. I

think it calls for hearsay.

The Court: Sustained.

Plaintiffs’ Counsel: I can lay a foundation.

Plaintiffs’ Counsel: Were you a person who

had input—

Miller: I’m the one that recommended

the final approval.

Plaintiffs’ Counsel: Just a minute. Were you

a person who had input—

Miller: Yes.

Plaintiffs’ Counsel: into the decision to

give final approval for the permits that led to

this procedural! change?

A33

Miller: Yes. I recommended the final

approval.

Plaintiffs’ Counsel: What was the basis of that

recommendation? What was going on-in

your head when you did

that?

Miller: Basically what I just said. It’s

one of those that after three years of stirring

up the controversy over jobs versus environ-

ment, they documented or demonstrated that

at least on a short-term basis, they could com-

ply with the standards. So I recommended

issuance of. the final permit.

Plaintiffs’ Counsel: Was there any other moti-

vation to that recommendation in terms of

your thinking? Did you think it was going to

give you any new options or new approach

or new—

Miller: Well, you know, it’s—

Defendant’s Counsel: Objection, leading.

The Court: Overruled.

Plaintiffs’ Counsel: was there any other aspect

to your thinking behind making that

recommendation?

A34

Miller: If you look at the amount of time

and effort and money that the State of

Colorado has invested in Louisiana-Pacific up

through this time, August 17th of ‘89, we

have not collected one penny in fines, and it

has not cost Louisiana-Pacific any money to

violate the air quality standards.

Defendant,s Counsel: Objection—

The Court: Sustained.

(Aplt. App., Vol. 2 at 226-29.)

At that point,the district court excused the

jury for the evening. Id. at 229. L-P promptly

moved for a mistrial. The next day, after having

taken the matter under advisement and

hearing further arguments outside the presence of

the jury, the district court denied the motion for a

mistrial. Thereafter, the district court gave the

following limiting instruction:

I needed to talk to you very briefly

about what happened immediately before the

recess last night. You may recall that the wit-

ness, Mr. Miller, said some—or made an

offhand remark something to the effect of the

fact that the Louisiana-Pacific hadn’t paid any

fines to the State of Colorado and you also

A35

observed, undoubtedly, that I was not at all

happy with that remark. That remark tended

to introduce a collateral issue into this case,

the question of whether or not Louisiana-

Pacific has been fined and, if so, how much it

has been fined. This is not a case brought by

the State of Colorado where we’re litigating

the fine nor is the fact that it has been fined or

not fined an issue which is relevant to this

case. We’re here solely to determine whether

this corporation is liable to these plaintiffs in

damages. If we got off on debating the issue

of a fine, it’s a disputed question of fact and

Louisiana-Pacific has its own position, it has

its own version of events, and it would be

entitled to bring that up. The plaintiffs would

be entitled to get into it and you and I would

be sitting here for hours or days listening to

irrelevant material about whether or not

Louisiana-Pacific has been fined by the

State of Colorado.

For those reasons, I am ruling that that

remark was improper and should be entirely

disregarded by you. if you don’t disregard or

if you didn’t disregard it, we would be spend-

ing even longer here than we’re going to be

spending listening to this. So, please,

disregard that last remark that Mr. Miller

made during his testimony yesterday.

Id. at 255-56.

A36

Prior to Miller’s testimony, L-P, in its opening

statement, implied that its conduct had been proper

because the State of Colorado had the power to

revoke L-P’s permit and shut down the plant’s

operations, but never did so. Id., Vol. 7 at 1206. it

was within this context that plaintiffs called Miller

to testify about the regulatory relationship between

L-P and the State of Colorado. The improper

remark came as Miller was explaining that a final

permit had been issued, in spite of L-P’s previous

violations, in part to allow the state to collect fines

without repeatedly trying to revoke temporary

permits.

| Miller’s last statement on the first day of trial

did not deprive L-P of a fair trial. In light of the

entire context of Miller’s testimony, it is clear that

he was describing the Colorado r regulatory frame-

work. We are convinced that the jury did not

improperly focus on this isolated comment, and that

the district court’s curative instruction was adequate.

The jury was instructed to disregard Miller’s remark

and was adequately informed of the reasons for dis-

regarding it. Accordingly, we hold that the district

court did not abuse its discretion in denying L-P’s

motion for a mistrial.

L-P also argues that it was reversible error for

the district court to limit its cross-examination of

Miller on the issue of whether L-P had paid fines to

the State of Colorado.

A37

Trial courts retain broad discretion to impose

reasonable limits on cross-examination based on

concerns of harassment, prejudice, or confusion of

the issues. Delaware v. Van Arsdall, 475 U.S. 673,

679 (1986); United States v. Morgan, 757 F.2d

1074, 1076 (10th Cir. 1985). A matter is collateral

if it could not have been introduced in evidence for

any purpose other than for impeachment. United

States v. Walker, 930 F.2d 789, 791 (10th Cir. 1991).

In Francis v. Clark Equipment Co., 993 F.2d

545 (10th Cir. 1993), we affirmed the trial court’s

grant of the defendant’s motion for a new trial. Id. at

552. In that case the plaintiff first presented signifi-

cant evidence of strict liability under the

risk-benefit standard. Id. at 549. Before the defense

was allowed to cross-examine the witness, the plain-

tiff abandoned the risk-benefit standard. Id.

Because the defense was prevented from

presenting any evidence in rebuttal, the court

later.determined that, despite a limiting instruction,

the defendant had _ been _ prejudiced,

and it granted the motion for a new trial.

Id. at 55051.

Here, the plaintiffs’ witness, rather than

testifying extensively about fines, simply made one

improper comment. Though we do not believe that

the jury was likely to apply the comment out of

context, the district court’s curative instruction was

an added guarantee that any jury focus on the issue

of whether L-P had paid any fines was diverted.

A38

L-P’s attempt to raise the fines issue again on

cross examination was a collateral matter. Whether

L-P paid any fines after August 17, 1989, was not

relevant. Therefore the district court could properly

exclude it under Fed. R. Evid. 403 as a collateral

matter likely to lead to confusion of the issues.

From the record before us, we are satisfied

that the district court did not abuse its discretion in

either denying the motion for a mistrial or in

limiting the scope of Miller’s crossexamination.

IV.

L-P argues that the district court erred in not

assigning collateral estoppel effect to United States

v. Louisiana-Pacific Co=., 682 F. Supp. 1141 (D.

Colo. 198’6)(referred to by the parties as the Arraj

decision), and in otherwise not permitting L-P

to reference that decision.

In the Arraj decision, the Environmental

Protection Agency (EPA) sued L-P under the Clean

Air Act, 42 U.S.C. 7401, et seg. and its regulations

alleging violations of its prevention of significant

deterioration (PSD) permitting program. Id. at

| The PSD program is designed to protect areas of the country

where the air is relatively clean and to prevent the air quality in

areas where it exceeds the statutory minimum from degenerating

to that level. Id. at 1145. To achieve its goals, the PSD program

required new sources of emissions to contain the best available

control technology (BACT) to control air pollution. Id. at 1164.

A39

1144. The EPA sought the assessment of civil

penalties and an injunction against further alleged

violations at two L-P plants in Colorado,

Olathe and Kremmling. Id. at 1145.

In that decision the district court made the

limited determination that the specific March, 1985,

test for carbon monoxide emitted from the Olathe

Konus heater was improperly performed for purpos-

es of determining whether a PSD permit was

required. Id. at 1159. Thus, the claim against the

Olathe plant was dismissed. Id.

The court determined that the Kremmling

plant was in violation of the PSD regulations and

imposed a civil penalty against L-P. Id. at 1166. In

determining the amount of the penalty, the court

considered both aggravating and mitigating factors.

Id. at 1164-66. As a mitigating factor, the court

considered the fact that L-P had installed EFBs in

both of its Colorado plants. Id. at 1164.

The court stated:

I am aware that the determination n of what controls

constitute BACT for a particular source is an agency

determination to be made by the EPA, and not by

this court. However, the testimony of numerous

experts at trial did establish the fact that the pollu-

tion control equipment “pioneered” by [L-P], and

which was installed at Kremmling and Olathe at

considerable expense, was the most effective control

equipment for the particular

A40

application at issue that technology could pro-

vide. While this court cannot and does not

hold that this equipment (EFB) was BACT, I

can and do hold that, in light of the ultimate

purpose of the PSD program, these actions

taken by (L-P] mitigate against the imposition

of a heavy penalty.

Id. (footnote omitted).

In that case, the district court also denied the

EPA’s request for an injunction, because the govern-

ment had failed toestablish that there existed some

danger of recurrent violation, and further because an

injunction from further violations of the Clean Air

Act or state implemented plan would merely require

L-P to “obey the law.” Id. at 1167.

In the case before us, Miller testified that he

had made estimates of air pollution emissions from

the Olathe plant based on the March, 1985, stack

tests. (Aplt. App., Vol. 2 at 202-03.) On voir dire,

the district court prevented L-P from impeaching

this witness by introducing evidence that the stack

tests were ruled invalid by a federal court. Id. at

204. During this examination, the district court,

addressing the Arraj decision, stated:

All right. Let me try to clarify my ruling

before the jury comes in concerning the use of

———————————

A4l

Judge Arraj’s decision in United States v. Louisiana-

Pacific Corporation. That case was an action

brought by the United States in the form of the

Environmental Protection Agency against

Louisiana-Pacific Corporation. That being the case,

I can’t think of any principle on which the

plaintiffs in this case are collaterally estopped by the

result in that case, or that the defendant is entitled to

any res judicata effect from that case.

Therefore, my ruling is that except for

purposes of impeachment, Judge Arraj’s decision

and findings ought to be irrelevant in this case,

because the only possible issue that they could be

relevant on is the question of collateral estoppel.

Moreover, it’s highly prejudicial, I believe, to be

telling this jury that a federal court in the form of a

federal judge has already made findings of fact

contrary to the position the plaintiffs want to take

here. In effect, that’s giving the defendant the

advantage of a form of collateral estoppel that it’s

not entitled to.

Now, as far as I’m concerned, you may use

that decision in impeaching the testimony of wit-

nesses; that is to say, if a witness relies on a finding

that Judge Arraj rejected, you may say or ask the

witness if he relied on that finding and if he was

aware, in relying on that finding, that it had been

rejected by a Court or by Judge Arraj or words to

A42

that effect. But beyond that, I don’t

think that it’s proper to use that decision in this case.

Id. at 210-11.

Later in the trial, Mr. Reynolds, plaintiff’s

expert witness, testified that he had relied on the

March, 1985, wafer dryer stack tests in reaching his

conclusion that L-P had violated particulate emis-

sion levels. Id., Vol. 3 at 505. Following an objec-

tion, the district court ruled that the invalidity of the

March, 1985, tests was dictum in the Arraj decision

and prevented L-P from introducing this evidence

on cross-examination. Id. at 511.

After the jury was excused, the court stated:

I want to address briefly, the conversation that

we all had at the bench, the last one in which

defense counsel was precluded from some

cross-examination concerning Judge Arraj’s

finding regarding the accuracy of the March

1985 tests.

I am not by that ruling, and I trust it was

understood precluding examination into the underly-

ing facts that Judge Arraj was talking about. I was

only precluding the witness being asked, is he aware

that a federal court has found those facts to be inac-

curate or has found those findings to be inaccurate.

And I distinguished that from a question such ‘ as,

A42 a

are you aware of the following facts, the facts

underlying Judge Arraj’s finding. So, I

want to make that clarification.

Id., Vol. 3 at 512-13.

- The district court also precluded the plaintiffs

from mentioning the Arraj decision when it was

reading the deposition of Daniel Dilworth, L-P’s

Director of Waferwood Operations, in evidence.

The following side bar conference was held:

The Court: what on earth are you doing in the

EPA case that I’ve kept them from

mentioning?

Plaintiffs’ Counsel: Your honor, I have an EPA

deposition and he was cross examined on that

document and I was just cross examining him

on his credibility. He denies seeing it and I

get to ask him—

The Court: Well, what do you think they’re

entitled to cross examine?

Plaintiffs’ Counsel: It says EPA case. It could

have been any EPA case.

The Court: Well, I don’t care. They’re enti-

tled to bring up the result in the case that you

have now opened up.

A43

Plaintiffs’ Counsel: I respectfully disagree,

Your Honor. The question is worded EPA

case. it doesn’t say EPA case against—

The Court: I don’t care. I don’t care what it

says. The fact is that you have brought up a

quote and opened up the subject matter.

Plaintiffs’ Counsel: Your Honor, I would ask

the Court to consider to what extent it has

been opened up; that he was deposed in the

EPA case, the outcome of the EPA case, what

he said in the EPA case. I was impeaching

this man’s denial of prior testimony that held

given that was inconsistent with the first

Question I asked him.

The Court: You can’t have it both ways. If

you're going to keep the EPA case out of this,

then keep it out.

(Open Court.)

The Court: All right. Move on. Or else, if

you do go into this any more, you’re doing it

under the admonition that I previously

gave you.

A44

Plaintiffs’ Counsel: Into this document, at all,

Your Honor?

The Court: That’s right. Just so you’re clear,

I’m not prohibiting you from getting into this.

I told you at the bench what the consequences

of getting into it are going to be.

Plaintiffs’ Counsel: Then, I will skip to Page

408, Line 15.

Id., Vol. 3 at 408-10.

L-P argues that the district couri should have

collaterally estopped the plaintiffs from introducing

any evidence of the March, 1985, emissions tests as

evidence of negligence per se because the Arraj

decision had already decided that the tests were

invalid.

Our standard for reviewing the availability of

the collateral estoppel doctrine to bar issue relitiga-

tion is de novo. Meredithv. Beech Aircraft Corp.,

18 F.3d 890, 894 (10th Cir. 1994).

We apply the federal law of collateral

estoppel to this case because the issues sought to be

either introduced or precluded stem from a prior

federal court judgment. In Murdock v. Ute

Indian Tribe of Uintah and Ouray Reservation, 975

F.2d 683, 687 (10th Cir. 1992), cert. denied, U.S.

(1993), we held that collateral estoppel is available

if: (1) the issue previously decided is identical with

A45

the one presented in the present action, (2) the prior

action has been a final adjudication on the merits;

(3) the party against whom the collateral estoppel

doctrine is invoked was a party or in privity with a

party in the prior action, and (4) the party against

whom the collateral estoppel doctrine is raised had a

full and fair opportunity to litigate the issue in the

prior action. |

Here, because the identical issue was not

previously decided, we need not decide whether the

other elements of collateral estoppel are met. The

Arraj decision dealt with the narrow issue

of whether L-P’s Olathe plant had the potential to

emit 250 tons per year of carbon monoxide and

therefore was required to have a PSD permit. -

Louisiana-Pacific Corp., 682 F. Supp. at 1155. For

purposes of calculating the 250 tons, the court

decided that the March, 1985, stack tests were

invalid with respect to the amount of carbon monox-

ide coming from the Konus heater. The Arraj

decision neither addressed the other chemicals being

2 Lp argues that the district court, in refusing to apply collateral

estoppel, found that privity between these plaintiffs and the EPA

was lacking. (Aplt. App., Vol. 2 at 210-11.) Because the issues

between the two cases are not identical, we need not decide the

privity issue.

A46

emitted from the Konus heater nor emissions from

other stacks. Further, the Arraj decision did not

address Colorado’ regulations, opacity,

smoke, odor, lights, or noise.

In this case, Miller testified about the overall

emissions from the stacks, and we cannot find any

reference in the record of his testimony about car-

bon monoxide emissions from the Konus heater.

Reynolds testified about the wafer dryer, not Konus

heater, stack test. Therefore, the issues introduced

by the plaintiffs were not identical to the issue

decided in the Arraj decision.

Moreover, we do not believe that L-P was

prejudiced.by being unable to mention the Arraj

decision as an impeachment tool. Though plaintiffs’

were not collaterally estopped from presenting

evidence of the March, 1985, stack tests, by the

same token, L-P was allowed to present its evidence

to the jury showing the tests’ invalidity.

Accordingly, we hold that the district court did not

err in either allowing the plaintiffs to introduce evi-

dence of the March, 1985, stack tests or in prevent-

ing mention of the Arraj decision in L-P’s cross-

examination of Miller and _ Reynolds.

L-P also claims that even if the plaintiffs were

properly permitted to introduce the March, 1985,

stack tests, the district court improperly prevented

introduction of those portions of the Arraj decision

which were favorable to L-P. L-P argues that it

wanted to introduce the Arraj decision to show that

A47

it was not liable for negligence per se because the

EPA had failed to establish regulatory violations at

the Olathe plant and imposed no fine in

conjunction with that plant.

The Arraj decision dismissed the Olathe claim

because the EPA could not use the invalid carbon

monoxide results to prove a violation. We do not

interpret this as deciding that the Olathe plant was

not fined because it was in compliance with state

and federal regulations. Therefore, the Arraj deci-

sion was irrelevant as proof of overall compliance to

rebut plaintiffs’ negligence perse claim. The district

court did not abuse its discretion by

excluding it.

‘-L-P also argues that it attempted to offer the

Arraj decision to show that it believed it was acting

reasonably, and not recklessly, towards the public

when it installed the EFB. However, the Arraj deci-

sion was only minimally relevant to L-P’s subjective

belief because it was after-the-fact, conclusory evi-

dence about the EFB. Moreover, because the Arraj

decision did not decide that the EFB was BACT, its

introduction would likely give an unwarranted

stamp of approval to L-P’s use of the EFB. In any

event, L-P was not prejudiced because the district

court allowed L-P to introduce extensive evidence

of its subjective belief about the EFB before its

installation. (AplIt. App., Vol. 2 at 287-89, 394; Vol.

3 at 475-86, 499-505; Vol. 4 at 614.)

A48

From this record, we are convinced that the

district court did not err in excluding the evidence of

the Arraj decision in these specific instances. The

court allowed neither side to use the Arraj decision.

The jury was allowed to make its own objective

decision.

The jury awarded each plaintiff $156,000 in

punitive, or exemplary, damages based on its find-

ings of 11 [c]ircumstances of fraud” and “[w]anton

and reckless disregard for [the] rights and feelings

of others.” ( Aplee. Supp. App., Vol. VI at 1400.)

The actual damages ranged from $10,000 for the

Pridy children to $98,320 for Arthur 0. Orjias with

the punitive to actual damage award ratios ranging

from 15.6:1 to 1.6:1.

L-P argues that the district court erred in

submitting the issue of punitive damages to the jury

or, alternatively, in refusing to remit the punitive

damages award in accordance’ with

Colorado law.

A49

L-P claims that in Colorado the standards for

outrageous conduct and punitive damages are so

similar that, when the district court dismissed the

outrageous conduct claim, it was _ error

not to have also dismissed the punitive damage

claim.

L-P argues that Colorado has adopted the

Restatement (Second) of Torts 908 (1977), Punitive

Damages, which states:

3 Since 1970, Colorado has recognized the tort of outra-

geousconduct, also called the tort of intentional infliction of emo-

tional distress. Rugg v. McCarty, 476 P.2d 753, 756 (Colo. 1970),

Grandchamp v. United Air Lines, Inc., 854 F.2d 381, 383 (10th

Cir. 1988), cert. denied, 489 U.S. 1080 (1989). In Rugg, the

Colorado Supreme court adopted the Restatement (Second) of

Torts 46 (1965):

Outrageous Conduct Causing Severe Emotional Distress

(1) One who by extreme and outrageous conduct in-

tentionally or recklessly causes severe emotional distress to anoth-

er is subject to liability for such emotional distress, and if bodily

ha= to the other, results from it, for such bodily ha=.

Rugg, 476 P.2d at 756.

The court in Rugg also adopted comment (d) to 49 which

defines extreme and outrageous conduct:

Liability has been found only where the Conduct has

been so outrageous in character, and so extreme in degree as to go

beyond all possible bounds of decency, and to be regarded as atro-

cious, and utterly intolerable in a civilized community. Generally,

the case is one in which the recitation of the facts to an average

member of the community would arouse his resentment against

the -actor, and lead him to exclaim, ‘Outrageous!’

Rugg, 476 P.2d at 756.

A5S0

(1) Punitive damages are damages, other

than compensatory or nominal damages,

_ awarded against a person to punish him for

his outrageous conduct and to deter him and

others like him from similar conduct in the

future.

(2) Punitive damages may be awarded for

conduct that is outrageous, because of the

defendant’s evil motive or his reckless

indifference to the rights of others ....

We are not convinced that Colorado has

adopted this language from the Restatement. “In

Colorado, exemplary damages are a creature of

Statute.,, Mince v. Butters, 616 P.2d 127,

128 (Colo. 1980).

AS1

During the applicable time period, Colo. - Rev.

~ Stat. 13-21102 (1973) , Exemplary damages,

provided:

In all civil actions in which damages are

assessed by a jury for a wrong done to the

person, or to personal or real property, and the

injury complained of is attended by circum-

stances of fraud, malice or insult, or a wanton

and reckless disregard of the injured party’s

rights and feelings, the jury, in addition to the

actual damages sustained by such party, may

award him reasonable exemplary damages.

In 1986, the Colorado legislature amended this statute.

Colo. Rev. Stat. 13-21-102 (1987) currently provides, in

pertinent part:

(1)(a) In all civil actions in which damages are assessed by

a jury for a wrong done to the person or to personal or real

property, and the injury complained of is attended by

circumstances of fraud, malice, or willful and wanton

conduct, the jury, in addition to the actual damages sus-

tained by such party, may award him reasonable exem-

plary damages. The amount of such reasonable exemplary

damages shall not exceed an amount which is equal to the

amount of the actual damages awarded to

the injured party.

Section 2 of Laws 1986, H.B. 1197 provides: “This act shall take

effect July 1, 1986, and shall apply to civil actions accruing on or

after said date.

A52

Alley v. Gubser Dev. Co., 785 F.2d 849, 855 (10th

Cir.), cert. denied, 479 U.S. 961 (1986).

A “wanton and reckless” disregard involves

conduct that “creates a substantial risk of harm to

another and is purposefully performed with an

awareness of the risk in disregard of the

consequences.” Palmer v. A.H. Robin Co., 684 P.2d

187, 215 (Colo. 1984). In general, punitive

damages are allowable under 13-21102 when the

acts causing the injury were performed “with an evil

intent and with the purpose of injuring the plaintiff,

or with such a wanton and reckless disregard of his

rights as evidence a wrongful motive.” Frick v.

Abell, 602 P.2d 852, 854 (Colo. 1979)

(quoting Ress v. Rediess, 278 P.2d 183, 187 (Colo.

1954)).

Further, Colo. Rev. Stat. 13-25-127(2)

(1973), Civil actions - degree of proof required,

provides: “Exemplary damages . . . shall only be

awarded in a civil action when the party asserting

the claim proves beyond a reasonable doubt the

commission of a wrong under the circumstances set

forth in section 13-21-102...”

Because the standard for awarding punitive

damages is not the. same as that for the tort of

outrageous conduct, we hold that the district court

did not err in granting L-P’s motion to dismiss the

outrageous conduct claim while denying L-P’s

motion to dismiss the punitive damage claim.

A53

Next, we address the sufficiency of the

evidence under the statutory standard.

Viewing the evidence in a light most favor-

able to the plaintiffs, we must determine whether a

jury could find beyond a reasonable doubt that L-P’s

conduct was attended by circumstances of fraud,

malice or insult, or a wanton and reckless disregard

of the injured plaintiffs’ rights and feelings. Alley,

785 F.2d a, 856.

In this record we find significant evidence of

circumstances of fraud and a pattern of behavior

that indicated that L-P was wanton and reckless in

its pursuit of profit over concern for whether it was

creating either a public health risk or a nuisance to

its neighbors. There is evidence that L-P intention-

ally violated state pollution standards; manipulated

emissions output, monitoring instruments, and light

to conceal pollution problems; disregarded the

neighbor’s complaints; and withheld information

from Colorado Health officials. We hold that there

is sufficient evidence in the record for a jury to find

beyond a reasonable doubt that L-P’s conduct was

attended by circumstances of fraud and wanton and

reckless disregard of the injured plaintiffs’ rights

and feelings.

L-P argues that the amount of the punitive

damage award should now be remitted to establish

the “reasonable relationship” required under

AS4

Colorado law. L-P contends that the award of puni-

tive damages cannot be reasonable in this case

because disparate ratios ranging from 1.6:1 to

15.6:1, within the same verdict, are inherently

unreasonable.

The purpose of punitive damages is to punish

the wrongdoer and deter similar future conduct.

Frick, 602 P.2d at 854. “The proper factors to be

considered include: (1) the nature of the act which

caused the injury; (2) the economic status of the

defendant; and (3) the deterrent effect of the award

on others”. Malandris, 703 F.2d at 1177.

Under the Malandris factors, the focus for

punitive damages is on the defendant’s behavior and

the punishment and deterrent effects of the award.

Malandris, 703 F.2d at 1177. within this framework,

however, there are limits to the award of punitive

damages. When evaluating punitive damages, the

ultimate question becomes whether the punitive

damages awarded are so excessive that they shock

the judicial conscience or lead to an inescapable

inference that they resulted from improper passion

or prejudice on the part of the jury. Id. If we deter-

mine that punitive damages are reasonable and bear

some relationship to the actual damages awarded,

we can assume with some certainty that the

jury did not base its award on improper passion or

prejudice.

Specific ratios of punitive-to-actual damages,

while providing no bright-line answers, are a factor

A55

to consider when evaluating the reasonableness of

the relationship. Palmer, 684 P.2d at 220. “Indeed,

in some cases the purposes of punishment

and deterrence may only be achieved when the

award is such as to adequately impress upon the

defendant and others the seriousness and harmful

consequences of a particular form of misconduct.”

Id. Moreover, in our evaluation, “[it) is appropriate

to consider the magnitude of the potential harm that

the defendant’s conduct would have caused to its

intended victim if the wrongful plan had succeeded,

as well as the possible harm to other victims that

might have resulted if similar future behavior were

not deterred.”TXO Production Corp. v. Alliance

Resources Corp., 113 S. Ct. 2711 2721-22 (1993).

Though L-P’s arguments on appeal are slight-

ly different from those it presented to the district

court, the district court, in its post-trial Order,

placed the fact s of this case into the Malandris

framework when it observed:

In reviewing the jury’s punitive dam-

ages verdict in this case, I note, again, that the

verdict does not represent a rounded figure

picked out of thin air. The jury awarded

$156,000 to each plaintiff, for a total of

$1,872,000. While I am unable to reproduce

the jury’s exact mathematical calculation, the

award is less than 0.2% of the net worth

(stockholders, equity) revealed in Louisiana-

‘Pacific’s financial statement of June 30, 1987.

A56

To put the matter in terms which my “judicial

conscience” has some chance of understand-

ing, an award of 0.2% in this case would be

equivalent to imposing a fine of $200 upon a

person with a net worth of $100,000, a fine of

$1000 on a person with a net worth of

$500,000, and a fine of $2000 upon a person

with a net worth of $1,000,000. Thus, given

Louisiana-Pacific’s significant net worth and

the deterrent purpose to be served by

punitive damages, an award of $1,872,000 is

entirely reasonable; it is simply not so exces-

sive as to shock the judicial conscience-of this

court, at least.

Defendant’s challenge to the punitive

damages award focuses primarily on the first

of the three Malandris considerations - the

nature of the act which caused the injury.

Defendant’s focus is a little skewed, however,

since its argument actually fixes on plaintiffs’

injury, not on the nature of defendant’s acts

which caused the injury. Thus, defendant

stresses that the jury’s verdict did not reflect

any awards for permanent physical impair-

ment or medical expenses. As I have previ-

ously indicated on the record, I agree with

this contention: defendant was not operating

this plant with the knowledge that its actions

would probably cause death or serious,

A57

permanent injury to adjacent landowners and

residents. That Louisiana Pacific’s acts were

not as reprehensible as they might have been,

however, does not logically compel the con-

clusion that an award of punitive damages is

either inappropriate or excessive. As the

authorities cited by plaintiffs illustrate, seri-

ous or long-term personal injuries are not a

necessary predicate for a punitive damages

award. The jury was evidently satisfied, on

adequate evidence, that each plaintiff

deserved a substantial award for discomfort,

passing or temporary physical illness, passing

or temporary pain and suffering, inconve-

nience, annoyance, emotional distress, and

loss of enjoyment of the quality of life or of

property. Mainly through the efforts of

Margaret Orjias and others, Louisiana Pacific

was plainly on notice that its operations were

causing these sorts of injuries. Far from

acknowledging the problem and being candid

in its relations with the Colorado regulatory

authorities, Louisiana Pacific chose to con-

ceal the extent of the problem. The jury

could properly find that Louisiana Pacific

knew of the noneconomic injuries which

plaintiffs were suffering, did nothing about

the injuries, and affirmatively concealed the

extent of its polluting activity from the

Colorado regulatory authorities. Thus, I do

a eae a aks a ena anmnnaN St eiE

A58

not believe that defendant’s attempt to focus

on the nature of the act which caused the

injury detracts from the reasonableness

of the punitive damages in this case.

(Aplt. App., Vol. I at 44-46.)

We agree. Moreover, high ratios have been

upheld where the record shows that the jury.

properly based its verdict on the purposes

underlying punitive damages. See, e.g., Bradbury v.

Phillips Petroleum Co., 815 F.2d 1356, 1366 (10th

Cir. 1987) (affirming ratios of 50,000:1 and 50:1);

Palmer, 684 P.2d at 220 (affirming a ratio of 10:1);

Mailloux v. Bradley, 643 P.2d 797 (Colo. App.

1982) (affirming ratios of 10:1 and 35:1).

Aggregation of punitive damages to determine an

overall ratio has also been considered. See Alley v.

Gubser Dev. Co., 569 F. Supp. 36, 40 (D. Colo.

1983) (reversing a 17:1 individual with a 10:1

aggregated overall ratio as excessive in view of the

evidence), rev'd on- other grounds, 785 F.2d 849

(10th Cir.), cert, denied, 479 U.S. 961 (1986).

In this case, the jury likely arrived at a reason-

able punitive damage award of $1,1872,000 and

then divided that award equally among the

plaintiffs. Comparing this to the overall actual, or

compensatory, award of $396,100 gives an overall

punitive-to-actual ratio of 4.7:1. This ratio is not

unreasonable or excessive. It is also not unreason

A59

able for a jury, in light of the purposes for punitive

damages, to determine the overall punitive award

while at the same time considering each plaintiff’s

actual damages because L-P’s actions were not

directed toward any particular individual.

We hold that the punitive damage award was

not unreasonable or excessive. The award was not a

result of improper passion or prejudice on the part

of the jury.

AFFIRMED.

PETITIONER’S CORPORATE

DISCLOSURE NOTIFICATION

Petitioner Louisiana-Pacific Corporation,

hereby submits its Disclosure Statement pursuant to

Supreme Court Rule 29.1. Louisiana-Pacific

Corporation is a non-governmental corporate party

that has issued shares to the public with no parent or

subsidiary company to be listed.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.