concurring in part and dissenting in part.
Because I readily agree with' my colleagues that the military specifications were properly excluded, I join Parts I, II, and III.A.1 of the majority opinion. I believe the district court abused its discretion in refusing to admit the engineering reports, however, and therefore I must respectfully dissent from Part III.A.2.
To recover punitive damages, the plaintiff had to prove by clear and convincing evidence that the defendant acted with wanton disregard for the health, safety, and welfare of others. See O.R.S. §§ 18.537, 30.925. The plaintiff built his case for punitives on evidence tending to show that the defendant had wilfully disregarded its own accident data, ignored applicable safety standards, and lied to purchasers of its equipment, all as a part of an overall strategy to stave off product liability litigation. In response to these charges of bad faith, the defendant offered evidence that it had commissioned two independent engineering reports. These reports recommended against the installation of doors because the addition of doors would cause more injuries, and more serious injuries. The district court excluded the reports, however, and the jury returned a punitive damages award of $1.25 million.
Federal Rule of Evidence 403 provides,
*1038Although relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence.1
The significance of the independent reports is obvious. The plaintiff argued that Crown acted with reckless indifference in failing to include a forklift door, and that Crown ignored its own accident dáta, which allegedly showed a clear need for a door. Crown’s retention of multiple, independent consultants directly counters this theory of the case, and strongly supports its contention that it did not close its eyes to the need for a door. Rather, the reports tend to show that Crown went to the expense and trouble to solicit an independent assessment with regard to the .wisdom of adding doors to its forklift design. The fact that both of the independent consultants, after detailed analysis, reeom-mended against the addition of doors is strong evidence that Crown did not act in bad faith.
The only factor the district court pointed to in excluding the reports was that they were hearsay as to liability,2 and that therefore the jury may consider them for an improper purpose. To be sure, this-is a legitimate concern, but it is one that could have been negated by the issuance of a limiting instruction. See Fed.R.Evid. 105 (“When evidence is admissible ... for one purpose but not admissible ... for another purpose ..., the court, upon request, shall restrict the evidence to its proper scope and instruct the jury accordingly.”). Indeed, the defendant urged to the district court to admit the reports with a proper limiting instruction. - Given the unquestioned significance of . the reports, the district court’s failure to admit them with a proper limiting instruction was an error.
That error was prejudicial. See Freeman v. Allstate Life Ins. Co., 253 F.3d 533, 536 (9th Cir.2001) (reversal required *1039where evidentiary rulings result in prejudice). While the district court allowed Crown’s engineer to testify that he relied upon the views of outside consultants, the impact of the reports was lost because the jury was not allowed to review them directly. The jury was unable to observe that the reports were comprehensive and obviously prepared by experts in the field. Nor was the jury able to view the substance of the reports, which directly supports Crown’s contention that it, in good faith, believed the addition of a door would make its forklifts more dangerous.
That the failure to admit the reports was prejudicial to the defendant' is apparent when one considers the plaintiffs closing argument, where counsel argued that Crown did not “objectively reach a decision as to whether doors are a good thing or not.” The reports Crown commissioned provide a direct and highly relevant counter-point to this argument, but because of their exclusion, Crown was left with no comeback. The jury might well have come to a different conclusion on the issue of punitive damages had the district court admitted the reports with a proper limiting instruction, and in my view, “the lower court’s error tainted the verdict.” Tennison v. Circus Circus Enters., Inc., 244 F.3d 684, 688 (9th Cir.2001).
I am not unmindful of the fact that the district court, as it should, is afforded a great deal of discretion in making Rule 403 determinations. But that discretion is not unfettered. See, e.g., United States v. Crosby, 75 F.3d 1343, 1349(9th Cir.1996) (district court abused discretion in refusing to admit evidence pursuant to Rule 403); United States v. Blaylock, 20 F.3d 1458, 1464 (9th Cir.1994) (same); Baker v. Delta Air Lines, Inc., 6 F.3d 632, 642 (9th Cir.1993) (same); United States v. Armstrong, 621 F.2d 951, 953 (9th Cir.1980) (same). Where, as here, the probative value of the excluded evidence is great, and the danger that the evidence will be considered for an improper purpose is slight, and easily mitigated by the issuance of a proper instruction, Rule 403 requires that the evidence should be admitted. See 2 James B. Wein-stein et al., Weinstein’s Federal Evidence § -403.02[2][c] (2d ed.2003) (discussing the preference under Rule 403 for admissibility).
In sum, I respectfully dissent from the decision- to exclude the independent engineering reports. Because I would reverse for a new trial, I would not reach the issue as to whether the district court correctly denied the motion for a new trial on the issue of punitive damages.
. In excluding the independent reports, the district court misstated the standard for admissibility, stating that "it's a question, under Rule 403, whether the relevancy of those documents outweighs its potential prejudicial value.” In doing so, the district court impermis-sibly placed the burden on Crown to show that the reports’ probative value outweighed any potential for prejudice. While we have held that a district court abuses its discretion when it fails to apply the correct legal standard, see Bateman v. U.S. Postal Serv., 231 F.3d 1220; 1223-24 (9th Cir.2000), it may well be the case that the district court simply misspoke, and that it understood and applied the correct governing standard." It is not nec-essaiy to' reverse on that ground because, even if the district court got the standard right, it gave insufficient weight to the high probative value of the reports, and its decision to exclude the reports tainted the jury's verdict.
. The majority suggests that because the reports are hearsay as to liability, they are only admissible because they come within Rule 803’s 'state of mind’ exception. With respect, this is wrong. Whether an item of evidence is hearsay depends on the purpose for which it is offered. See Fed.R.Evid. 801(c). The reports may be hearsay as to liability, but they are not hearsay as to the claim for punitive damages. This is so because the purpose of the offer is not to prove the truth of the matter asserted in the reports, but to show that Crown engaged in a good faith decision-making process. See Keisling v. SER-Jobs for Progress, Inc., 19 F.3d 755, 762 (1st Cir.1994) (affirming district court's decision to admit out-of-court statements because not being offered to prove truth of matter asserted, but to negate allegations of bad faith); Worsham v. A.H. Robins Co., 734 F.2d 676, 686 (11th Cir.1984) (affirming district court’s decision to admit reports in a products liability action because reports offered only for purpose of showing notice, and not to prove truth of matters asserted in the reports). Therefore, for the purpose of showing Crown's good faith, the reports do not come within the definition of hearsay, and the majority's reliance on Rule 803 is misplaced.