Opinion
03 Civ. 8445 (RWS), 04 Civ. 2713 (RWS).
September 7, 2007
Attorney for Plaintiffs: JOEL BERGER, ESQ., New York, New York, By: JOEL BERGER, ESQ.
Attorneys for Defendants: MICHAEL A. CARDOZO, Corporation Counsel of the City of New York, New York, New York, By: DARA L. WEISS, ESQ., ARTHUR G. LARKIN, ESQ., SUSAN M. HALATYN, ESQ., Of Counsel.
OPINION
Plaintiffs Jessica J. Scherer ("Scherer") and Alexandra Linardakis ("Linardakis") (collectively, the "Plaintiffs") have moved the Court pursuant to Federal Rule of Civil Procedure 60(b)(2), (3), and (6) to set aside this Court's judgment of May 5, 2006, and to order a new trial on the ground that the Defendants' attorneys misinformed the Court by denying the City of New York's policy of indemnifying police officers against whom punitive damages have been awarded, thereby resulting in a misleading jury instruction. For the reasons set forth below, the motion is denied.
Prior Proceedings
Scherer filed her complaint on October 27, 2003, and Linardakis filed her complaint on April 9, 2004. Both actions alleged civil rights violations resulting from events surrounding the anti-war demonstration which took place on February 15, 2003 ("the Demonstration"). The cases were consolidated with others based on the date of the Demonstration for the purpose of fact and Monell discovery, and were referred to Magistrate Judge Michael H. Dolinger for the purpose of supervising discovery and other matters as appropriate.
A jury trial was commenced on April 24, 2006, and a verdict was rendered on May 1, 2006. Judgment was entered on May 5, 2006, dismissing the complaints and awarding Scherer $500 in compensatory damages and $1,000 in punitive damages.
The instant motion was considered to have been filed by the Plaintiffs on February 2, 2007, and considered fully submitted on March 12, 2007.
Due to an apparent docketing error, the motion was not officially filed on the docket until June 29, 2007.
The Indemnification Issue and the Jury Charge
Plaintiffs' motion is based on the "ground that the City's lawyers misinformed the Court by denying the City's policy of indemnifying police officers against whom punitive damages have been awarded, resulting in an instruction that misled the jury . . . into awarding very limited damages." (Notice of Motion, Feb. 2, 2007, 1-2.)
Plaintiffs had requested that the following charge be given to the jury:
Although punitive damages may be awarded only against the individually-named defendants and not against the City of New York, the City of New York has the authority under State law to indemnify the defendant officers for those punitive damages, that is, to pay the punitive damages out of City funds rather than requiring the officers to pay them out of their personal funds. You are not to speculate whether the City will or will not so indemnify the officers. Rather, you must decide the issue of punitive damages under the law as I have described it to you.
(Declaration of Joel Berger, Feb. 2, 2007 ("Berger Decl."), ¶ 4.) Defendants did not request an instruction on punitive damages. (See Defs.' Proposed Jury Charge, Apr. 7, 2006, 25-27.) Plaintiffs' proposed language was initially accepted by the Court and included in the jury charge that was circulated to the parties prior to the charge conference held on April 28, 2006.
In a letter sent to the Court the evening before the charge conference, Defendants objected to the charge on the indemnification issue, requesting that the language be removed from the charge as "unnecessary and extremely prejudicial." (Defs.' Ltr. to the Court, Apr. 27, 2006, 2.) The letter continued:
Section 50-k(3) of the General Municipal Law limits the City's duty to indemnify its employees by providing that "the duty to indemnify and save harmless . . . shall not arise where the injury or damage resulted from intentional wrongdoing or recklessness on the part of the employee." Punitive damages, in turn, can only be awarded where the individual acts intentionally and maliciously, and under such circumstances the City cannot be liable to indemnify.
(Id.)
At the charge conference the following day, Defendants again reasserted their objection to the indemnification instruction on page 45, lines five through ten, stating: "There is absolutely no law or case law to support this. The city is never liable for punitive damages." (Trial Tr., Apr. 28, 2006, 650:13-18.) The Court indicated that the language would be stricken from the charge, to which Plaintiffs' counsel responded, "Your Honor, if we strike the whole paragraph . . . that's fine with me." (Id. at 650:22-25.)
The paragraph consisted of lines five through ten on page 45, as objected to by the Defendants. The paragraph read as follows:
Although punitive damages may be awarded only against the individually-named Defendants and not against the City of New York, the City of New York has the authority under State law to indemnify the Defendant officers for those punitive damages, if imposed. You are not to speculate whether the City will or will not so indemnify the Defendant officers.
Plaintiffs' counsel went on to request that an additional instruction be included regarding compensatory damages, since "with respect to compensatories, that same statute says, the city shall indemnify and save harmless its employees." (Id. at 651:8-10.) The requested instruction was that the "jury is not to speculate as to who will pay any damages that are awarded. That is a matter of law that is not . . . for the jury to consider." (Id. at 651:23-652:1). Defendants objected to the proposal as prejudicial, and it was rejected by the Court. (See id. at 652:11-13.)
When the jury was charged, they were not given any instruction on indemnification. They were, however, instructed as to the City's potential liability:
The City of course is here because it was, and is, the employer of [the individual officers] at the time of the arrests. An employer, even a municipal corporation like the city, is responsible for the tortious conduct of its employees, including police officers, if their conduct is in furtherance of the employer's business and within the scope of their authority. . . . The employer need not have authorized the specific act in question.
Even if you were to find that the acts of the employee police officers were reckless and intentional rather than merely negligent, the municipal corporation is nonetheless liable for injury or damages if you find that they were acting in furtherance of their business of the municipal corporation and within their scope of authority.
(Id. at 740:3-19.)
In addition, with respect to punitive damages, the jury was instructed:
To make such a judgment it's important to keep in mind the reason for awarding punitive damages; that is, punish the defendant for malicious conduct against the plaintiff or callous disregard of her constitutional rights and to deter future conduct of the defendant and others like it [sic]. So that you should consider whether an award of punitive damages would accomplish this dual purpose of punishment and deterrence. . . .
In determining this amount of punitive damages you may also consider the financial ability of the defendants to pay such damages.
(Id. at 745:2-13.)
Although given an opportunity to do so out of the hearing of the jury, neither side raised a relevant objection after the jury was charged. (See Trial Tr. 755:18-757:6.)
Following the trial, in May 2006, the plaintiff in Gyasi v. The City of New York, 05 Civ. 9453 (SAS), served interrogatories on the defendants in that case, seeking information about the City's indemnification of individual officers for punitive damages assessments in a number of specific cases. (See Berger Decl Ex. D.) The interrogatories also sought identification of cases during the past ten years in which the City represented an individual officer and did not indemnify that officer for either compensatory or punitive damages assessed against the officer. (See id.)
The defendants submitted their supplemental responses to theGyasi interrogatories in November 2006. Stating both general and specific objections to the interrogatories, the defendants responded in the affirmative to each interrogatory regarding the City's indemnification for punitive damages assessed against an individual officer in a specific case, as well as identifying a number of additional cases in which the City indemnified individual officers for punitive damages. (See id. Ex. G. 1-4, 5-6.) The City also indicated, upon information and belief, that there were no cases in the last ten years in which the City represented an individual officer and did not indemnify that officer for either compensatory or punitive damages assessed against the officer. (See id. at 5-6.) The responses to the interrogatories also indicated that the defendant officer in the Scherer case was indemnified by the City of New York for the $1,000 in punitive damages assessed against him. (Id. at 4.)
Plaintiffs' Other Claims
Discussion 1. General Standard of Review
in limine Id. Id. 60
On motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a final judgment, order, or proceeding for the following reasons: . . . (2) newly discovered evidence . . .; (3) fraud . . ., misrepresentation, or other misconduct of an adverse party; . . . or (6) any other reason justifying relief from the operation of the judgment.
"A motion under Rule 60(b) is addressed to the sound discretion of the trial court." Velez v. Vassallo, 203 F. Supp. 2d 312, 333 (S.D.N.Y. 2002) (citing Mendell in Behalf of Viacom, Inc. v. Gollust, 909 F.2d 724, 731 (2d Cir. 1990)). Nonetheless, the Second Circuit has cautioned that Rule 60(b) provides "extraordinary judicial relief" to be granted "only upon a showing of exceptional circumstances." Nemaizer v. Baker, 793 F.2d 58, 61 (2d Cir. 1986); see also Employers Mut. Cas. Co. v. Key Pharm., 75 F.3d 815, 824-25 (2d Cir. 1996) (per curiam). In evaluating a Rule 60(b) motion, the courts of this circuit require that the evidence in support of the motion be highly convincing, that the movant show good cause for the failure to act sooner, and that no undue hardship be imposed on the other parties as a result. See, e.g., Kotlicky v. U.S. Fid. Guar. Co., 817 F.2d 6, 9 (2d Cir. 1987); Williams v. New York City Dep't of Corr., 219 F.R.D. 78, 84 (S.D.N.Y. 2003).
2. The Motion Is Timely
"All Rule 60(b) motions must be made within a reasonable time, and motions under Rule 60(b)(1), (2) and (3) must be made within one year after the judgment." Kotlicky, 817 F.2d at 9 (internal quotation marks and citations omitted). Plaintiffs' motion was filed approximately nine months after judgment was entered. Accordingly, Plaintiffs' motion under Rule 60(b)(2) and (3) is timely.
3. The Motion Will Not Be Construed Under Rule 60(b)(6)
A party may not depend on the broad "any other reason" provision of Rule 60(b)(6) where the basis for the Rule 60(b) motion may be construed under any other clause of Rule 60(b). See Liljeberg v. Health Servs. Acquisition Corp., 486 U.S. 847, 863-64 n. 11 (1988) (citing Klapprott v. United States, 335 U.S. 601, 613 (1949)). Since Plaintiffs have asserted the motion under Rule 60(b)(2) and (3) as well under Rule 60(b)(6), Fed.R.Civ.P., the motion will not be construed under Rule 60(b)(6), Fed.R.Civ.P.
4. The Rule 60(b)(2) Motion Is Denied
Federal Rule of Civil Procedure 60(b)(2) allows a district court to relieve a party from the operation of a final judgment "upon such terms as are just . . . for (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b)." Fed.R.Civ.P. 60(b)(2); see also United States v. Int'l Bhd. of Teamsters, 247 F.3d 370, 391 (2d Cir. 2001). Here, Plaintiffs have contended that the responses to the Gyasi interrogatories constitute "newly discovered evidence" for the purposes of their Rule 60(b)(2) motion.
The party moving for relief under Rule 60(b)(2) must meet an "onerous standard." Int'l Bhd. of Teamsters, 247 F.3d at 392. Specifically, the movant must demonstrate: (1) that the newly discovered evidence was of facts that existed at the time of the prior dispositive proceeding, (2) that the movant was justifiably ignorant of the facts despite due diligence, (3) that the evidence is admissible and of such importance that it probably would have changed the outcome, and (4) that the evidence is not merely cumulative or impeaching. Id. (citation omitted). Because Plaintiffs cannot satisfy their burden in demonstrating the second or third elements of a Rule 60(b)(2) motion, the motion is denied.
First, Plaintiffs have failed to demonstrate that they were justifiably ignorant of the facts in the responses to the Gyasi interrogatories despite due diligence. While Plaintiffs may not have been aware of all the exact facts that were revealed in the City's responses, they were admittedly aware of the City's practice of indemnifying officers for punitive damages. Such knowledge was evidenced by their request to the Court for Jury Instructions, which indicated in a supporting footnote:
It is the practice of the Corporation Counsel's Office to indemnify for punitive damages, provided the officer was (i) acting within the scope of the officer's public employment in the discharge of the officer's duties . . ., (ii) not in violation of any Police Department rule or regulation, and (iii) represented by the Corporation Counsel's office at trial. This can be proved at an evidentiary hearing if necessary — the indemnification decisions are a matter of public record — through the testimony of the NYC Law Department executives who make the indemnification decisions and have been doing so for many years. (The undersigned [Joel Berger, Esq,] was one such executive, from 1988-96.). . . .
(Berger Decl. ¶ 4 (emphasis added).) Therefore, Plaintiffs were not ignorant of the City's indemnification practices. Nor did the Plaintiffs exercise due diligence in obtaining the facts ultimately revealed in the responses to the Gyasi interrogatories. As Defendants have noted, the discovery in this case took place over many months, during which the Plaintiffs never attempted to obtain the information gained during discovery in the Gyasi case — information which Plaintiffs have indicated was a matter of public record at the time of trial in the instant actions. (Id.; Defs.' Mem. in Opp'n 4.)
Second, Plaintiffs have failed to demonstrate that the responses to the Gyasi interrogatories were of such importance that they probably would have changed the outcome in this case. Plaintiffs' counsel has asserted:
The very low damages awarded by the verdict were undoubtedly based upon the jury's mistaken belief that the defendant officer would have to pay them himself. Furthermore, the failure to find liability and assess damages as to other claims against both defendant officers, which were more serious and would have commanded higher damages, were necessarily tainted by that belief as well. . . . The verdict obviously was a compromise verdict, driven by the jury's confusion as to who was responsible for what and who would have to pay. . . . Had the jury been told the truth [about indemnification], it would not have considered the officers' "financial ability . . . to pay."
(Berger Decl. ¶¶ 8, 10.) Yet even if the Plaintiffs' requested instructions had been given, the jury still would have been instructed: "You are not to speculate whether the City will or will not so indemnify the officers" or "the jury is not to speculate as to who will pay any damages that are awarded. That is a matter of law that is not for the jury to consider." Assuming that the jury would have followed such instructions as given, under Rule 60(b)'s "highly convincing evidence" standard, Plaintiffs have not established a "probability" that the outcome of this case would have changed.
Therefore, Plaintiffs have failed to meet their burden under Rule 60(b)(2), Fed.R.Civ.P., and the motion is denied.
5. The Rule 60(b)(3) Motion Is Denied
Federal Rule of Evidence 60(b)(3) permits relief from the operation of a final judgment "upon such terms as are just . . . for (3) fraud . . ., misrepresentation, or other misconduct of an adverse party." To be entitled to relief under Rule 60(b)(3), the movant must show misconduct by clear and convincing evidence and that the misconduct substantially interfered with the movant's ability to present the case fully and fairly. See, e.g., State Street Bank Trust Co. v. Inversiones Errazuriz Limitada, 374 F.3d 158, 176 (2d Cir. 2004) (citations omitted); Fleming v. New York Univ., 865 F.2d 478, 484 (2d Cir. 1989). Additionally, a Rule 60(b)(3) motion cannot serve as a means of relitigating the action's merits. See Fleming, 865 F.2d at 484 (citing Mastini v. Am. Telephone Telegraph Co., 369 F.2d 378, 379 (2d Cir. 1966),cert. denied, 387 U.S. 933 (1967); Nederlandsche Handel-Maatschappij N.V. v. Jay Emm. Inc., 301 F.2d 114, 115 (2d Cir. 1962)).
Here, Defendants' counsel informed the Court accurately of the limitations on the City's duty to indemnify under the New York General Municipal Law. However, counsel did not, for whatever reason, simultaneously inform the Court of the City's actual indemnification practice, which is to regularly indemnify individual officers for both punitive and compensatory damages when those officers are granted legal representation by the City, as evidenced by the City's responses to the Gyasi interrogatories. Despite the questionable intent, if any, in selectively informing the Court in this manner, the conduct of Defendants' counsel did not rise to the level of outright misrepresentation or misconduct. At the time, Plaintiffs had not proffered any evidentiary basis for their assertion regarding the City's indemnification practices, and it was not the Defendants' duty to admit or provide such an evidentiary basis for the Plaintiffs.
Regardless of whether defense counsels' actions constitute misconduct for the purposes of Rule 60(b)(3), those actions did not "substantially interfere" with Plaintiffs ability to present their case. Plaintiffs were able to conduct discovery and present witnesses and evidence at trial. Plaintiffs were even successful at trial, garnering a verdict in favor of Scherer, even if the amount of the damages awarded did not reach the level that Plaintiffs may have anticipated or desired. Defendants did nothing that the Court is aware of to prevent Plaintiffs from obtaining discovery regarding the City's indemnification practices.
Therefore, having failed to meet their burden under Rule 60(b)(3), Fed.R.Civ.P., Plaintiffs' motion is denied.
Although Plaintiffs have styled the motion as one asserted under Rule 60(b)(3), Fed.R.Civ.P., it is clear from the Notice of Motion that the claim is also being asserted as one for fraud against the Court, and therefore will also be construed as a motion under Rule 60(b), Fed.R.Civ.P. See State Street Bank Trust Co., 374 F.3d at 176 (citing Campaniello Imports, Ltd. v. Saporiti Italia S.p.A., 117 F.3d 655, 661 (2d Cir. 1997)). Putting aside whether the Court and the overall process would have been better served in this case had defense counsel been more forthcoming about the City's actual indemnification practices, defense counsels' conduct did not constitute fraud against the Court under Rule 60(b).
As the Second Circuit has stated:
"'[F]raud upon the court' as distinguished from fraud on an adverse party is limited to fraud which seriously affects the integrity of the normal process of adjudication." Id. at 559 (citing Kupferman v. Consol. Research Mfg. Corp., 459 F.2d 1072, 1078 (2d Cir. 1972)). Fraud upon the court should embrace "only that species of fraud which does or attempts to, defile the court itself, or is a fraud perpetrated by officers of the court so that the judicial machinery cannot perform in the usual manner its impartial task of adjudging cases." Hadges, 48 F.3d at 1325 (quoting Kupferman, 459 F.2d at 1078 (internal quotation marks omitted)). Fraud upon the court must be established by clear and convincing evidence. See Madonna v. United States, 878 F.2d 62, 65 (2d Cir. 1989).King v. First Am. Investigations, Inc., 287 F.3d 91, 95 (2d Cir. 2002). "Examples of conduct that meet the definition of fraud upon the court include bribery of a judge, jury tampering, or hiring an attorney for the sole purpose of improperly influencing the judge." Stewart v. O'Neill, No. 00 Civ. 8560 SAS, 2002 WL 1917888, at *2 (S.D.N.Y. Aug. 20, 2002) (citing United States v. Buck, 281 F.3d 1336, 1342 (10th Cir. 2002); In re Genesys Data Techs., Inc., 204 F.3d 124, 130 (4th Cir. 2000)).
Here, defense counsels' reticence as to the City's indemnification practices, whether purposeful or not, did not necessarily rise to the level of fraud upon the Court. Defense counsel raised an objection to Plaintiffs' proposed jury instruction on indemnification, both prior to and during the charge conference, based on the City's interpretation of the New York General Municipal Law and concerns of bias and prejudice against the Defendants. Plaintiffs' counsel did not respond by reiterating its contention regarding the City's indemnification practices, did not object to striking the language from the charge, and did not object to the language included in the charge regarding consideration of the individual defendants' ability to pay. (Trial Tr., Apr. 28, 2007, 650:21-25, 755:18-757:6.) Plaintiffs' counsel did attempt to persuade the Court to include an instruction regarding indemnification and compensatory damages which Defendants opposed and the Court rejected. (Id. at 651:2-23.)
These actions were all part of the regular practice of developing and finalizing the jury charge, in compliance with the Federal Rules of Civil Procedure. Defense counsel may not have been as candid as they could have been during that process. However, their failure to fully inform the Court, while disappointing, did not constitute a fraud upon the Court. Accordingly, any Rule 60(b) motion for fraud upon the Court is also denied.
6. Plaintiffs Failed to File a Timely Appeal or Rule 59 Motion
Plaintiffs have brought this motion under Rule 60, Fed.R.Civ.P., based on treatment of the City's responses to the Gyasi interrogatories as "new evidence" and the related conclusion that defense counsel herein made certain "misrepresentations" regarding the City's indemnification practices. The real matter at issue here, however, is the end result — the charge that was given to the jury, which Plaintiffs have contended "misled the jury . . . into awarding very limited damages." (Notice of Motion 1-2.)
Since the jury charge is the real point of contention, it could be inferred that Plaintiffs brought this motion under Rule 60 only after having failed to timely file an appeal or Rule 59 motion for new trial. As already discussed, Plaintiffs admittedly were aware of the City's indemnification practices and even indicated that such practices were a matter of public record at the time of the trial in this case. Although the responses to the Gyasi interrogatories may have confirmed such practices, the responses were not necessary in order for Plaintiffs to have timely filed an appeal or Rule 59 motion based on the indemnification issue and the instructions given to the jury.
Defendants have contended that, based on Plaintiffs' counsel's statement that "if we strike the whole paragraph . . . that's fine with me," Plaintiffs' counsel "clearly did not preserve his right to object to removal of the [indemnification] charge under these circumstances, see Fed.R.Civ.P. 51(c)." (Defs.' Mem. in Opp'n 9.) However, according to the Advisory Committee Notes, Federal Rule of Civil Procedure 51(d)(1)(B) "establishes authority to review the failure to grant a timely request [for instruction], despite a failure to add an objection, when the court has made a definitive ruling on the record rejecting the request." FED. R. CIV. P. 51 advisory committee notes. Therefore, there was no failure to preserve under Rule 51 that would have prevented Plaintiffs from assigning error in the jury charge in either a timely appeal or Rule 59 motion.
To make a motion under Rule 60(b), the movant is generally required to show good cause for the failure to act sooner. See, e.g., Kotlicky, 817 F.2d at 9; Williams, 219 F.R.D. at 84. Accordingly, Plaintiffs will not be allowed to use Rule 60(b) to circumvent their failure to challenge the jury charge through a timely appeal or motion for new trial under Rule 59, Fed.R.Civ.P.
7. There Was No Basis for an Indemnification Instruction in This Case
Plaintiffs may have fallen short procedurally in their efforts to effectively pursue the indemnification issue, but it is not a situation solely of their creation. Moreover, although Plaintiffs' motion fails under the applicable standards of review and therefore a new trial will not be granted, the underlying substance and purpose of the motion is not without merit. If, in fact, the City regularly indemnifies individual police officers for punitive damages regardless of any limitations on the City's duty to indemnify under the New York General Municipal Law, what, if any, instruction should be given to a jury in cases where the defendants are individual officers? This Court concludes that an indemnification instruction may only be given when a factual basis for the practice has been established. Therefore, even if Plaintiffs had presented a viable motion for new trial, it would not have been granted because no factual basis for the City's indemnification practice had been established here.
The issue of an indemnification instruction with regard to compensatory damages has also been raised. Plaintiffs' motion having been denied, the Court limits this discussion to instructions with respect to indemnification for punitive damages. Since the amount of punitive damages is more discretionary than the amount of compensatory damages, an instruction on indemnification would have a greater potential impact on the amount of punitive damages awarded by a jury. Furthermore, a number of courts have already concluded that it would be improper to instruct a jury on indemnification with respect to a compensatory damages award in a Section 1983 context. See, e.g., Lazar, 16 F.3d at 1518-20 (citing Green v. Baron, 879 F.2d 305, 310 (8th Cir. 1989); Griffin v. Hilke, 804 F.2d 1052, 1057 (8th Cir. 1986), cert. denied, 482 U.S. 914 (1987)).
In determining the propriety of instructing a jury on indemnification with respect to a punitive damages award, it is instructive to examine whether a jury may consider evidence of any such indemnification.
The purpose of punitive damages is "to punish the defendant and to deter him and others from similar conduct in the future."Vasbinder, 976 F.2d at 121. "[B]ecause neither compensation nor enrichment is a valid purpose of punitive damages, an award should not be so large as to constitute 'a windfall to the individual litigant.'" Id. (quoting Aldrich v. Thomson McKinnon Sec., Inc., 756 F.2d 243, 249 (2d Cir. 1985)). As the Ninth Circuit has observed:
Although it is true that one important function of punitive damage awards in the § 1983 context is to create a strong incentive for police officers and other officials to respect the Constitution and federal laws, the "sting" of any given award should reflect the jury's determination of what level of damages would deter the individual defendant, and others in his or her position, from future violations. See Restatement (Second) of Torts § 908(1) (1979) ("Punitive damages are 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.").Larez v. Holcomb, 16 F.3d 1513, 1521 (9th Cir. 1994).
It follows that in the context of a Section 1983 claim, juries and courts may assess punitive damages against an offending official based on his or her personal financial resources. See Provost v. City of Newburgh, 262 F.3d 146, 163 (2d Cir. 2001) (quoting City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 269 (1981)). "Accordingly, an award should not be so high as to result in the financial ruin of the defendant." Vasbinder, 976 F.2d at 121 (citing Smith v. Lightening Bolt Prods., Inc., 861 F.2d 363, 373 (2d Cir. 1988)). Pursuant to Second Circuit precedent, "'it is the defendant's burden to show that his financial circumstances warrant a limitation of the award.'"Mathie v. Fries, 121 F.3d 808, 816 (2d Cir. 1997) (quoting Smith v. Lightning Bolt Prods, Inc., 861 F.2d 363, 373 (2d Cir. 1988)).
The Second Circuit has further held that the presentation of trial evidence regarding a defendant's financial resources renders relevant the presentation of similar evidence on the existence of an indemnity agreement:
[W]e rule that a fact-finder can properly consider the existence of such an agreement as obviating the need to determine whether a defendant's limited financial resources justifies some reduction in the amount that would otherwise be awarded. It would be entirely inappropriate for a defendant to raise the issue of his limited financial resources if there existed an indemnity agreement placing the burden of paying the award on someone else's shoulders. See Kemezy v. Peters, 79 F.3d 33, 37 (7th Cir. 1996) ("The defendant should not be allowed to plead poverty if his employer or an insurance company is going to pick up the tab.").Mathie, 121 F.3d at 816.
The Second Circuit has yet to opine on "whether a fact-finder can rely upon the existence of an indemnity agreement in order toincrease an award of punitive damages." Mathie, 121 F.3d at 816.
Based on the Second Circuit's holding in Mathie and similar conclusions by other courts, the Honorable Laura Taylor Swain concluded in Dallas v. Goldberg, No. 95 Civ. 9076(LTS) (RL), 2002 WL 1013291 (S.D.N.Y. May 20, 2002), that evidence of a state's statutory indemnification obligation would also be admissible to counter any evidence of the defendant's ability to pay any punitive damage award. See id. at *4-5 (citing Lawson v. Trowbridge, 153 F.3d 368, 380 (7th Cir. 1998); Kemezy v. Peters, 79 F.3d 33, 37 (7th Cir. 1996); Schaefer v. Ready, 3 P.3d 56, 59 (Idaho App. 2000)) ("Other courts have similarly concluded that a defendant's effort to limit a punitive damages award based on personal financial circumstances renders relevant evidence of collateral payment resources."). Judge Swain rejected the contention that the uncertainty of indemnification was an appropriate ground for precluding such evidence. Rather, Judge Swain found that the evidence being proffered was "indicative of some likelihood of ultimate indemnification," which could "properly be weighed by the jury . . . in determining whether such likelihood obviates the need for artificial reduction of a punitive damages award. . . ." Id. at *5.
The Second Circuit having found evidence of an indemnification agreement to be relevant under certain circumstances, it would appear that when indemnification is less than certain, admissibility of such evidence should be decided pursuant to the well-established constraints of Federal Rule of Evidence 403. The trial judge must examine the likelihood of indemnification, and determine whether the "probative value" of the evidence would be "substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury." FED. R. EVID. 403.
Having determined that there are circumstances under which a jury may be presented with evidence of both the defendant's ability to pay any punitive damages and the likelihood, if not certainty, that the defendant will be indemnified for any such damages, it is appropriate to consider the propriety of a jury instruction regarding indemnification.
When evidence of financial resources is presented at trial, it is accepted practice to instruct a jury as to consideration of a defendant's ability to pay when determining the amount of a punitive damage award. See, e.g., SAND, ET AL., MODERN FEDERAL JURY INSTRUCTIONS (CIVIL), Vol. 5, Inst. 87-92 (2006) (". . . if you find that punitive damages should be awarded against the defendant, you may consider the financial resources of the defendant in fixing the amount of such damages."). Conversely, the Second Circuit has held that where no evidence of financial resources is proffered by the defendant during the trial, it is improper to instruct a jury to consider the defendant's ability to pay in determining a punitive damages award. See Provost, 262 F.3d at 164. To do so would effectively relieve the defendant of his burden to show that financial circumstances warrant a limitation of the award. Id.; see also Mathie, 121 F.3d at 816 (2d Cir. 1997).
Plaintiffs' counsel has asserted that he objected to including the instruction on ability to pay without the instruction on indemnification. (Reply Declaration of Joel Berger, Mar. 8, 2007 ("Berger Reply Decl."), ¶ 12.) However, no such objection was made on the record, (see Trial Tr. 650:13-25, 755:18-757:6), in compliance with Rule 51(c), Fed.R.Civ.P., which states in relevant part:
(1) A party who objects to an instruction or the failure to give an instruction must do so on the record, stating distinctly the matter objected to and the grounds of the objection.
(2) An objection is timely if:
(A) a party that has been informed of an instruction or action on a request before the jury is instructed and before final jury arguments, as provided by Rule 51(b)(1), objects at the opportunity for objection required by Rule 51(b)(2); or
(B) a party that has not been informed of an instruction or action on a request before the time for objection provided under Rule 51(b)(2) objects promptly after learning that the instruction or request will be, or has been, given or refused.
FED. R. CIV. P. 51(c). Defense counsel explicitly indicated that they were objecting to "page 45, lines 5 through 10," (Trial Tr. 650:13-14), and Plaintiffs' counsel explicitly stated, "Your Honor, if we strike the whole paragraph . . . that's fine with me." (Id. at 650:22-25.) The language on ability to pay was not contained within lines five through ten on page 45 of the proposed jury charge, but rather in a completely separate paragraph on lines one through three of that same page. (See Court Ex. 3 at 45:1-10.)
Plaintiffs never recorded an objection to the jury charge on this ground in accordance with Rule 51, Fed.R.Civ.P., nor have they asserted that the jury charge was improper in this regard as part of the instant motion.
It therefore stands to reason that only when evidence of indemnification is admitted at trial should the jury be instructed accordingly. See Dallas, 2002 WL 1013291, at *5 n. 5 (indicating court's confidence that a properly instructed jury would be able to weigh the evidence "militating for and against the likelihood of indemnification").
If there is no attempt on the part of the defendant to limit a punitive damage award by proffering evidence of the defendant's ability to pay, then the counter-balance rationale for presenting evidence on indemnification is eliminated. Under those circumstances, evidence of indemnification becomes irrelevant; a punitive damage award will no longer have any punitive or deterrent effect on that defendant, and the fact of his or her indemnification will have no impact on the amount of punitive damages necessary to deter others like the defendant. See Larez, 16 F.3d at 1521.
Defendants have asserted that any instruction on indemnification would be improper. Analogizing indemnification to insurance, Defendants have asserted: "Under the state and federal law applicable to plaintiffs' claims, the jury may not be told that there is any form of 'insurance' available to pay a judgment against individual defendants." (Defs.' Mem. in Opp'n 6 (citing FED. R. EVID. 411; Stratis v. Corbett, 816 N.Y.S.2d 701 (Sup.Ct. 2006).) Defendants assertions are without merit. First, as already discussed, within the context of a Section 1983 claim, the Second Circuit has explicitly held that a fact-finder may consider the existence of an indemnity agreement in order to counter-balance any consideration of the defendant's ability to pay. Mathie, 121 F.3d at 816. Second, Federal Rule of Evidence 411 pertains to the admissibility of insurance evidence in relation to liability or fault, not with respect to the amount of a damage award. As the court stated in Dallas v. Goldberg:
Federal Rule of Evidence 411 states as follows:
Evidence that a person was or was not insured against liability is not admissible upon the issue whether the person acted negligently or otherwise wrongfully. This rule does not require the exclusion of evidence of insurance against liability when offered for another purpose, such as proof of agency, ownership, or control, or bias or prejudice of a witness.
FED. R. EVID. 411.
The Court notes that Federal Rule of Evidence 411, invoked by Defendants in support of their argument for preclusion of indemnity evidence, merely precludes the use of liability insurance evidence "upon the issue of whether the person acted negligently or otherwise wrongfully." Fed.R.Evid. 411. No such purpose underlies the proffer here; Rule 411 is therefore irrelevant to the issue at hand.2002 WL 1013291, at *5; see also Larez, 16 F.3d at 1520 n. 6 ("Rule 411 expressly covers the admissibility of evidence of insurance for purposes of determining liability, but it is unclear whether it reaches jury instructions concerning indemnification by the government.").
Applying the foregoing reasoning to the instant case, there was no basis for instructing the jury on indemnification. Here, Plaintiffs made no attempt to present any evidence at trial to establish the City's indemnification practices. Moreover, while Plaintiffs asserted in their proposed jury charge that it was the City's practice to indemnify for punitive damages when an officer met certain requirements, (see Pls.' Proposed Jury Charges 9 n. 2), Plaintiffs presented no factual basis to support this blanket assertion. They merely indicated that the assertion "can be proved at an evidentiary hearing if necessary." (Id.)
By way of comparison, in the Gyasi case, plaintiff's counsel served interrogatories on the defendants as part of the discovery process, seeking information from the City regarding the indemnification of individual officers in specific cases, as well as information on any cases in which the City failed to indemnify an officer who was provided legal representation by the City Law Department. In a letter to the court requesting that the discovery issue be addressed at an upcoming status conference, plaintiff's counsel indicated "it would be folly to defer such discovery until a charging conference, conducted while a jury is waiting to receive the case." (Berger Decl. Ex. E at 3.) At the status conference, the Honorable Shira A. Scheindlin indicated that if punitive damages were to be awarded, discovery pertaining to the City's indemnification practice would come into play:
[I]f that's the reality, that discovery would show that in the last 100 cases that punitive damages were awarded the city always paid, or 99 times out of 100 paid, if that's what the discovery would show, then I wouldn't allow any evidence at all about the poor officer and his tax return because it's totally irrelevant.
(Berger Decl. Ex. F 7:11-17.) No trial was held in the Gyasi case, however, and the case was eventually dismissed pursuant to settlement.
If Plaintiffs here had presented the Court with the kind of evidence obtained in the Gyasi case, the Court could have weighed the probative value of that evidence against any prejudice, confusion, or misleading of the jury and addressed the issue accordingly. Faced with nothing more than Plaintiffs' assertion regarding the City's practice of indemnification and Defendants' iteration of the New York General Municipal Law, refraining from instructing the jury on indemnification was not improper and does not warrant the extraordinary judicial relief provided under Rule 60(b), Fed.R.Civ.P.
8. The Aggravating Circumstances Need Not Be Addressed
Plaintiffs' counsel has conceded that the only motion before the Court pertains to the indemnification issue, and that the other incidents enumerated in Plaintiffs' submissions are merely examples of "aggravating circumstances." (Berger Reply Decl. 9.) Therefore, since the Rule 60(b) motion is denied, there is no need to address either of the aggravating circumstances asserted by the Plaintiffs.
Conclusion
Based on the foregoing reasoning, Plaintiffs' motion for a new trial is denied.
It is so ordered.