United States Court of Appeals
For the First Circuit
No. 04-2120
No. 04-2121
FONTEN CORP.; BELMANN CORPORATION,
Plaintiffs, Appellants,
v.
OCEAN SPRAY CRANBERRIES, INC.,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. William G. Young, U.S. District Judge]
Before
Lynch, Circuit Judge,
Stahl, Senior Circuit Judge,
and Lipez, Circuit Judge.
Lawrence R. Ehrhard, with whom Rose A. McGuirrin was on brief,
for appellant.
Cynthia D. Vreeland, with whom Brett R. Budzinski and Wilmer
Cutler Pickering Hale and Dorr LLP were on brief, for appellee.
November 17, 2006
STAHL, Senior Circuit Judge. Fonten Corp. and Belmann
Corp. appeal from a jury verdict and the district court’s denial of
its motion for a new trial in their suit against Ocean Spray
Cranberries, Inc. (“Ocean Spray”), for a claimed violation of a
settlement agreement. On appeal, plaintiffs argue that the
participation and conduct of Ocean Spray’s trial attorney
prejudiced the jury, and that the verdict was against the clear
weight of the evidence. We affirm.
I. Background
Fonten Corp. and Belmann Corp. were engaged in the
business of marketing fruit juice in Taiwan. Fonten, a California
corporation, purchased the juice in the United States and shipped
it to Taiwan where Belmann, a Taiwanese corporation, distributed
it; both corporations were controlled by Hong Chen (“Chen”), a
Taiwanese citizen. In 1994, Ocean Spray, a cooperative of
cranberry and grapefruit growers headquartered in Lakeville,
Massachusetts, began to market its fruit juices in Taiwan,
advertising their products using a Chinese phrase that translates
roughly as “100% natural fruit juices.”1 Chen took exception to
this phrase, interpreting it to mean that Ocean Spray was
advertising its products as 100% juice, when some of the products
were in fact of the “cocktail” variety–-a mixture of juice and
sugar water. Ocean Spray disputed that interpretation, saying that
1
The precise translation is not material here.
-2-
it was advertising its products only as 100% natural, and it
refused to change its advertisements. Three years after the
advertisements ran, plaintiffs brought an action in federal court
in the District of Massachusetts for false advertising and related
claims.
The parties eventually entered into a settlement
agreement, in which Ocean Spray agreed to pay Chen $100,000 and to
publish a series of corrective advertisements in Taiwanese
newspapers, but did not admit to having falsely advertised its
products. Ocean Spray was represented in the settlement
negotiations by Attorney Cynthia D. Vreeland. Following the
agreement, certain corrective advertisements ran in selected
newspapers in April of 1999. Because of a quirk in Taiwanese
newspaper advertising, some of the advertisements ran in only half
of a given newspaper’s circulation. Some of Taiwan’s newspapers
follow a practice of allowing an advertiser to purchase space in
only half of a day’s circulation. These two “single editions”2 are
then shuffled together so that each edition is distributed roughly
equally around the area.
Chen closed his fruit juice businesses in 1999 and sued
Ocean Spray in Massachusetts state court in late 1999 for breach of
2
The parties use different terms to describe such editions
including “half” and “full” editions, “single” and “double”
editions, and “A or B” and “A plus B” editions. For the sake of
clarity, we will refer to them as “single” and “double” editions.
-3-
the settlement agreement. Because the parties had consented to
federal jurisdiction, the state court dismissed the action. On
February 14, 2003, plaintiffs brought the same breach of contract
suit in U.S. District Court under diversity jurisdiction. At
trial, Ocean Spray was again represented by Attorney Cynthia
Vreeland, and it is her participation that is at issue here.
Shortly before trial, plaintiffs moved to have Vreeland
disqualified under Massachusetts Rule of Professional Conduct
3.7(a) (“Rule 3.7”)3 because she “ought to be called as [a]
witness[]” since she was a part of the negotiations at issue. The
motion was denied and trial proceeded without Vreeland being called
to testify. At the close of the trial, the jury returned a verdict
for Ocean Spray. Plaintiffs moved for a new trial, which the
district court denied. Plaintiffs now appeal both the verdict and
the denial of their motion for a new trial. They argue on appeal
that the district court erred in not ordering a new trial because
of the conduct of Attorney Vreeland and because the verdict was
against the weight of the evidence.
3
“(a) A lawyer shall not act as advocate at a trial in which
the lawyer is likely to be a necessary witness except where:
(1) the testimony relates to an uncontested issue;
(2) the testimony relates to the nature and value of legal
services rendered in the case; or
(3) disqualification of the lawyer would work substantial
hardship on the client.”
-4-
II. Discussion
A. Attorney Conduct
Plaintiffs argue that the district court should have
granted the new trial motion because Vreeland had engaged in
prejudicial misconduct during the course of the trial, and because
Vreeland’s mere presence lent undue weight to the testimony of
Ocean Spray’s witnesses, making it impossible for plaintiffs to
have a fair trial (the so-called “unsworn witness” problem).4
As to Attorney Vreeland’s trial conduct, plaintiffs point
only to the following exchange in which Vreeland cross-examined
plaintiffs’ expert on his use of an industry-wide return-on-equity
estimate to calculate damages, rather than one based just on
Taiwanese juice businesses:
Q. In your conversations with Mr. Ehrhard and Mr. Cheng
[counsel for plaintiffs], did they tell you that Daisy Hong
from Ocean Spray had collected audited public financial
statements from nine companies that actually sell fruit juice
products in Taiwan?
A. I did not make use of that report.
Q. Did you know that, did you know that your lawyers had that
report?
4
Plaintiffs do not appeal the denial of their motion to
disqualify Vreeland as a necessary witness under Rule 3.7, and
therefore we do not review that denial. Although they never cite
to Rule 3.7 in their allegations of misconduct at trial, they make
several comments which allude to the concerns Rule 3.7 addresses.
However, even if violation of Rule 3.7 was at issue, they make no
argument here that Vreeland was a “necessary” witness–-indeed, she
was never called as a witness. Therefore, we do not consider Rule
3.7 in reviewing Vreeland’s conduct at trial.
-5-
A. I’m not aware of that.
...
Q. Did you or did you not know that Mr. Chen’s lawyers had
public audited financial statements from nine companies
selling fruit juice products in Taiwan?
A. I did not know that.
Q. They didn’t tell you that?
A. No.
Plaintiffs did not contemporaneously object to the questioning, but
did raise the issue at the close of trial and again in their motion
for a new trial following the jury verdict. Their objection was
based on the fact that the financial reports Vreeland referenced
were not in evidence. The district court ruled that the line of
questioning was proper.
“Absent an abuse of discretion, this Court defers to a
district court's denial of a motion for a new trial based upon
improper argument or conduct of counsel.” S.E.C. v. Happ, 392 F.3d
12, 26-27 (1st Cir. 2004). Defendants argue that plaintiffs’
failure to timely object waives the issue. Failure to timely
object to an attorney’s misconduct will frequently result in the
denial of a motion for new trial, but such denials typically occur
in cases where a party did not raise the objection at all until
after the jury had returned a verdict. See, e.g., Computer Sys.
Eng’g, Inc. v. Quantel Corp., 740 F.2d 59, 69 (1st Cir. 1984). The
concern in those cases is that a party might hold back its
-6-
objections until after it sees the verdict. See id.; Wildman v.
Lerner Stores Corp., 771 F.2d 605, 610 (1st Cir. 1985) (“Counsel
cannot play a waiting game and after an adverse verdict is rendered
raise an objection to argument for the first time.”). Here, such
gaming is not a concern, since plaintiffs first brought their
concerns to the attention of the district judge prior to the jury
verdict. See Happ, 392 F.3d at 26-27 (applying an abuse of
discretion standard where attorney failed to immediately object to
closing arguments, but did object before the jury began
deliberations). Furthermore, even if the objection were not
preserved, we would still review for plain error in order to
correct substantial injustice. See United States v. Olano, 507
U.S. 725, 732-35 (1993); Smith v. Kmart Corp., 177 F.3d 19, 25 (1st
Cir. 1999) (failure to object to improper closing argument
forfeits, but does not waive, the issue, and plain error review
still applies); see also Computer Sys. Eng’g, 740 F.2d at 69-70.
Admittedly, the reasons for allowing a delayed objection
to an attorney’s conduct during closing argument are different from
those for allowing a delayed objection to an attorney’s conduct
during witness questioning. See Wilson v. Town of Mendon, 294 F.3d
1, 16 n.30 (1st Cir. 2002) (“We are loath to impose a rule that
would require counsel to abandon professionalism and decorum by
routinely interrupting the other side's closing argument to avoid
the risk of waiving an objection entirely.”). However, because it
-7-
does not affect the outcome of this case, we need not decide the
issue here. Instead, we will follow the practice we have adopted
in the closing-argument cases of assuming, arguendo, that the
objection was preserved. See United States v. Potter, 463 F.3d 9,
23-24 (1st Cir. 2006); United States v. Laboy-Delgado, 84 F.3d 22,
31 n.7 (1st Cir. 1996). Nonetheless, because we award a high
degree of deference to a district judge’s management of attorney
conduct, a showing of prejudice is still required before we will
reverse for an abuse of discretion. See Happ, 392 F.3d at 27
(reversal of an order denying a new trial on the basis of attorney
misconduct requires “a showing of prejudice”); P.R. Aqueduct &
Sewer Auth. v. Constructora Lluch, Inc., 169 F.3d 68, 82 (1st Cir.
1999) (“We reverse only upon a showing of prejudice.”).
The district judge ruled that Vreeland’s questioning had
not been improper, and that she was permitted to use her knowledge
of the case in asking leading questions. Plaintiffs are not
specific as to why such questioning would be improper, much less
why it would rise to the level of misconduct such as would leave
the district judge no option but to order a new trial. They say
only that Vreeland was “testifying” through these questions.
However, all that we can see that she was “testifying” to was the
existence of certain documents, and that they were in the
possession of plaintiffs’ counsel; she made no reference to any
facts contained in the documents, or whether the documents
-8-
contradicted the expert’s testimony. In addition, even assuming
such questioning was improper, it was not prejudicial. The
questioning went only to the amount of, not liability for, damages,
and that was a question that the jury did not reach. This is
hardly “play[ing] fast and loose with the judicial system” such as
would warrant a new trial. Polansky v. CNA Ins. Co., 852 F.2d 626,
632 (1st Cir. 1988) (internal quotation marks omitted).
Plaintiffs next argue that Vreeland’s mere presence at
the trial lent Ocean Spray’s view of the settlement negotiations an
added air of veracity that was prejudicial to them. They argue
that, because the jury knew that she had been part of the
settlement negotiations, her advocacy for Ocean Spray carried added
weight. Here, they rely on the so-called “unsworn witness rule.”
The contours of the unsworn witness rule–-if it can be
called a rule–-are unclear, and the parties provide little
authority to guide us. In some cases, it is treated as coextensive
with an applicable ethical rule such as Rule 3.7; that is,
disqualification will be appropriate only where an attorney is
likely to be called as a necessary witness. See, e.g., United
States v. Anderson, 319 F.3d 1218, 1221-22 (10th Cir. 2003). This
is the approach for which the defendant appears to argue, that any
unsworn witness problems be addressed through application of Rule
-9-
3.7.5 Plaintiffs, however, urge that we follow the more expansive
rule operating in the Second Circuit. There, the unsworn witness
rule addresses situations where “the attorney can subtly impart to
the jury his first-hand knowledge of the events without having to
swear an oath or be subject to cross examination” regardless of
whether he is a necessary witness. United States v. Locascio, 6
F.3d 924, 933 (2d Cir. 1993). The Second Circuit rule operates
almost exclusively in criminal cases, where, typically, the
attorney was present at the criminal act in question. Plaintiffs
have found only one (unreported) civil case discussing the rule.
See Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc., 2000 WL
1655054, at *5-6 (S.D.N.Y. Nov. 3, 2000) (denying request to
disqualify attorney).
This circuit has rarely been called upon to address this
problem, and we have not held whether there is any unsworn witness
rule that goes beyond Rule 3.7. See U.S. v. Diozzi, 807 F.2d 10,
14-15 (1st Cir. 1986) (expressing skepticism that attorneys with
first-hand knowledge would have an unfair advantage with a jury).
We decline now to decide whether to adopt any such rule, since,
even if we did, plaintiffs’ claim would still fail. Even under the
expansive Second Circuit rule, attorney disqualification is a
“drastic remedy,” reserved for cases where the attorney has
5
As already noted, there is no claim that Vreeland was a
necessary witness such as would trigger Rule 3.7. See supra, n.4.
-10-
“entangled himself to an extraordinary degree” with his client.
Locascio, 6 F.3d at 934. See Bristol-Myers, 2000 WL 1655054, at
*5. Overturning a verdict or ordering a new trial based on an
unsworn witness issue is at least as drastic.
Here, the district judge was aware of the risks that
accompanied Vreeland’s participation and warned her not to imply
that any witness’s version of events was inaccurate. The district
judge ably ensured that Vreeland did not cross any lines, and
plaintiffs are unable to point to any specific instances where her
presence or questioning may have prejudiced the jury. The one
colloquy with plaintiff’s expert, discussed supra, does not
qualify, even if it were improper, since it concerns information
that Vreeland gathered in her capacity as trial counsel, not as
counsel to Ocean Spray during the initial settlement negotiations.
Importantly, even if Vreeland had been disqualified, her
replacement would have had identical access to that information,
and there would have been the same risk of its use at trial.
Without other specific examples, plaintiffs instead claim
that it was simply Attorney Vreeland’s presence as counsel at trial
that prejudiced the jury against the plaintiffs. This is not
enough to establish abuse of discretion, for it would force,
contrary to the district court’s determination as to potential
prejudice, the disqualification from trial of any attorney who had
represented a client in pre-trial settlement negotiations. See
-11-
Diozzi, 807 F.2d at 14 (declining to disqualify counsel “merely for
having represented their clients in a preindictment
investigation”).
B. Weight of the Evidence
“A verdict may be set aside and new trial ordered when
the verdict is against the clear weight of the evidence, or is
based upon evidence which is false, or will result in a clear
miscarriage of justice.” Ahern v. Scholz, 85 F.3d 774, 780 (1st
Cir. 1996) (internal quotation marks omitted). Plaintiffs argue
that the jury verdict was against the clear weight of the evidence,
because all parties were operating under the assumption that the
corrective advertisements would run in all of a newspaper’s
circulation, rather than only half. Their argument essentially is
that, because Chen knew of the single and double editions and had
an intent for the advertisements to appear in the double editions,
and because Ocean Spray’s representatives at the settlement
negotiation did not even know that there was a single-edition
option, there is no way that the settlement agreement could be
interpreted to allow for anything other than double-edition
publication.
Whatever the merit of plaintiffs’ argument, they
presented it to the jury, and it decided otherwise. The issue
centers around the meaning of the word “publish.” The settlement
agreement went into detail regarding the size, wording, timing, and
-12-
other features of the advertisements, but said nothing about
single- or double-edition publication; it said only that “Ocean
Spray shall, at its expense, publish the statement . . . in each of
the three newspapers listed in Exhibit D.” Ocean Spray presented
evidence that the typical practice in Taiwan for newspapers with
single and double editions is to purchase advertising space only in
the single edition. Plaintiffs’ media buyer expert testified that,
although he would have recommended purchasing double-edition
advertisements in this instance, 75% of his clients purchased
single-edition advertisements. Ocean Spray’s country manager
testified that she had previously purchased only single-edition
advertisements for Ocean Spray. Ocean Spray also pointed to the
language in the settlement agreement calling for publication “at
the usual publication rates,” and it presented evidence that the
newspapers’ advertising price lists treated the single-edition
price as the “usual rate.”
To counter this, plaintiffs argue that informing as many
consumers as possible was important to Chen. We do not dispute
that it was, but that is not sufficient to sustain an argument that
no reasonable jury could have believed that publishing in single-
edition newspapers satisfied the contract, particularly when there
is no extrinsic evidence that Chen actually intended double-edition
publication. Nor is it enough to argue that Ken Rosenberger, Ocean
Spray’s general manager for the Asia-Pacific region, who
-13-
represented Ocean Spray in the settlement agreement, did not know
that single-edition publication was possible. A reasonable jury
could have found that Rosenberger, who managed Ocean Spray’s
operations in several different countries, could have intended
“publish” to mean “publish according to local practices.” The
district judge gave the jury a proper instruction on the
ambiguities in the contract, and the jury was entitled to return
the verdict it did.
III. Conclusion
Because the district court did not commit error in its
rulings, the judgement of the district court and its denial of
plaintiffs’ motion for a new trial are affirmed.
-14-