Opinion
02 Civ. 8613 (LAK).
March 21, 2005
ORDER
Now before the Court on the eve of trial are three motions for in limine and other relief: (1) Pfizer's motion to (a) foreclose Stryker from (i) adducing evidence of events prior to its breach of the contract to establish Pfizer's alleged failure to mitigate damages, (ii) suggesting that any part of the underlying settlements for which Pfizer seeks indemnification contained a punitive damages component, and (iii) denying its consent to the settlements to which Pfizer agreed, and (b) striking Pfizer's jury demand insofar as it relates to the quantum of attorneys' fees and prejudgment interest; (2) Stryker's motion to preclude Pfizer from introducing evidence as to how the plaintiffs in the underlying Orrik cases allocated among themselves the settlement amounts to which they agreed with Pfizer and Stryker's subsidiary, Howmedica; and (3) Stryker's motion to preclude Pfizer from calling Richard M. Barnes and Craig B. Merkle as witnesses and offering PX 14, 145, 156A, 156B, 157A, 157B, 158, 159, 160, 161, 162, 163, and 215 through 258.
Stryker's Motion to Preclude Messrs. Barnes and Merkle and Certain Exhibits
Stryker contends that Messrs. Barnes and Merkle should be precluded as witnesses because they were not among plaintiffs' witnesses identified in the joint pretrial order ("PTO") and that Merkle was not identified as a person likely to have information supporting Pfizer's claims a required by Fed.R.Civ.P. 26(a)(1)(A). This contention is without merit. Pfizer's witness list reserved the right to call any witness on Stryker's witness list, which included Mr. Barnes. Mr. Merkle, according to Pfizer, will be called only as a rebuttal witness. Pfizer therefore was not obliged to list him in the pretrial order.
Stryker's objection to use of some of the exhibits is somewhat more substantial, as Pfizer at least arguably should have disclosed some of them earlier. This is troublesome. Nevertheless, the rule of automatic preclusion incorporated in Rules 26(a) and 26(e)(1) applies only unless the failure was harmless. Given that the exhibits in question go entirely or principally to the amounts of legal fees and incurred in defending, and settlements paid in, the underlying actions, the Court is persuaded that Stryker's able counsel is fully capable of dealing with these matters at trial notwithstanding any belated disclosure. Moreover, their claims of prejudice ring hollow in light of their prolonged efforts to avoid delay trial of Pfizer's damage claims.
Stryker's Motion to Preclude Evidence of the Settlement Allocation Among the Orrik Plaintiffs
Stryker contends that all or a substantial part of the amounts paid by Pfizer to settle with the Orrik plaintiffs were paid to dispose of claims for punitive damages claims and, in consequence, that any requirement that Stryker indemnify Pfizer would violate public policy to that extent. Pfizer argues that the public policy prohibition does not come into play absent a judgment for punitive damages and, in any case, that the manner in which the individual plaintiffs in Orrik allocated the settlement tends to show that the settlements were not in respect of punitive damage claims.
The question whether public policy precludes indemnification for settlement payments to the extent they may be attributable to punitive damages claims is a close one. There is substantial authority to the effect that public policy precludes indemnification only where there has been a judgment for punitive damages. See, e.g., Gibbs-Alfano v. Burton, 281 F.3d 12, 21 (2d Cir. 2002). On the other hand, there also is some support for Stryker's argument, although the cases are distinguishable because, in each, there was a judgment for punitive damages prior to the settlement for which indemnification was sought. See, e.g., National Union Fire Ins. Co. v. Ambassador Group, Inc., 157 A.D.2d 293, 5566 N.Y.S.2d 549 (1st Dept. 1990), appeal dismissed, 77 N.Y.2d 973, 568 N.Y.S.2d 915 (1991); Ansonia Associates, L.P. v. Public Serv. Mut. Ins. Co., 180 Misc.2d 638, 642, 693 N.Y.S.2d 386 (Sup.Ct. N.Y. Co. 1998).
Determination of this issue in limine would be inappropriate. Were the Court to rule for Stryker and be proved wrong on appeal, the trial would have been a largely wasted effort. Per contra, if the case is tried to a jury (assuming that the parties persist in demanding a jury in a case not well suited for it), the jury could find that no part of the settlements were attributable to punitive damages claims, in which case the issue would be moot. The better part of valor, therefore, is to submit the factual issue to the jury in an appropriate fashion and then to determine the issue post-verdict if determination is required.
Pfizer's Motion
1. Pfizer's motion is granted to the extent that it seeks to preclude evidence of failure to mitigate damages based on conduct that occurred prior to the breach.
2. The Court already has determined that Stryker breached its contractual obligation to defend and indemnify Pfizer in the post-closing suits. It therefore is bound by Pfizer's reasonable settlements and by judgments in the cases that it refused to defend. It may not contend that it is not bound by Pfizer's reasonable settlements in such cases on the ground that it did not consent to them.
3. Pfizer's motion to strike the jury demand with respect to the quantum of attorneys' fees is granted insofar as it relates to the quantum of attorneys' fees in this action. McGuire v. Russell Miller, Inc., 1 F.3d 1306 (2d Cir. 1993). It is denied in all other respects.
4. Pfizer's motion to strike the jury demand with respect to the issue of prejudgment interest is without merit. N.Y. CPLR § 5001(c) specifically contemplates jury determination of the date from which prejudgment interest shall run if there is a genuine issue of fact on that matter.
Conclusion
Stryker's motion in limine to preclude the testimony of Messrs. Barnes and Merkle and for other relief is denied in all respects.
Stryker's motion to preclude evidence of the allocation of the Orrik settlement among the plaintiffs is denied subject to renewal of the issue following a verdict in the event it still is meaningful.
Pfizer's motion is granted to the extent set forth above and otherwise denied.
SO ORDERED.