Household Goods Carriers' Bureau v. John J. Terrell, John J. Terrell v. Aero Mayflower Transit Co., Inc. , 452 F.2d 152 ( 1971 )

AINSWORTH, Circuit Judge,

with whom BELL and SIMPSON, Circuit Judges, join, concurring in part and dissenting in part:

I respectfully dissent from the majority opinion which affirms the judgment below against the Bureau on the issue of liability and remands for retrial only on the issue of damages. I concur, however, in the remand on the damages issue.

The question of the Bureau’s liability was not fairly tried before the jury below, and because of prejudicial errors at the trial, a full and complete retrial should be ordered. A review of the proceedings shows that at the heart of plaintiff’s case is the Wyche letter with its allegedly libelous statements against Terrell. The letter was admitted in evidence, over objection, though the Bureau had previously paid $10,000 to Terrell to settle the libel suit based on the letter. Settlement of the libel suit should have ended the Wyche letter question. Otherwise, Terrell would be allowed to maintain two actions, libel and antitrust, out of the same letter. Cf., e. g., Norman Tobacco & Candy Co. v. Gillette Safety Razor Co., 5 Cir., 1961, 295 F.2d 362. Further, he was permitted improperly to use the so-called libelous portions of the letter as the central evidence of overt acts in his antitrust suit. No limiting or cautionary instruction was given by the Court when the evidence was received. The majority opinion holds that the Wyche letter was properly received in evidence, yet concedes the harm to the Bureau’s case which resulted from its use, especially in the closing argument of plaintiff's counsel to the jury. As the majority puts it, “In our opinion plaintiff’s attorney’s emphasis on the known falsity of the letter, while entirely proper on the issue of defendants’ intent to exclude competition unlawfully, implicitly invited the jury to award damages for the libel.”¹ The Trial Court’s one-sentence admonition to the jury in its lengthy charge that no damages should be awarded for the statements in the Wyche letter, was hardly adequate to offset the harm, as the majority agrees in its opinion when it states, “Moreover, we are in agreement with the original majority in their conclusion that the trial court’s limiting instruction was not sufficient to alleviate this very real danger that the jury would apply an improper measure of damages.”

Prejudicial error which flowed from improper use of the Wyche letter requires a new trial, not only on the measure of damages, but especially as to liability itself. It is extremely doubtful that the jury would have held that the Bureau was liable except for the harmful and prejudicial use of the Wyche letter. The distinction is too fine to comprehend that the letter was prejudicial only in that the jury was allowed to apply an improper measure of damages, but not also prejudicial on the question of liability itself. A lay jury certainly should not be expected to understand a distinction that subtle.

Improper use of the Wyche letter in itself is sufficient to warrant a new trial on all issues, but when compounded with what the majority terms “a flood of evidence tending to show attempts by both parties to influence the respective government agencies,” the prejudicial effect becomes much greater and it is even more apparent that the Bureau did not receive a fair trial below. The Trial Court applied the Noerr-Pennington rule (Eastern R. R. Presidents Conf. v. Noerr Motor Freight, Inc., 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961); United Mine Workers of America v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965)) when he stated in his pretrial order that plaintiff could not recover any damages as a result of any action of the Finance Center, DTMS, or any other agency of the United States, and further in prohibiting counsel for plaintiff from referring without the Court’s prior consent to any of the dealings between the parties and the two government agencies involved. Despite the order of the Court, the case was inundated by “a flood of evidence” properly admitted according to the majority, to show the “purpose and character of the transaction under scrutiny” in accordance with a phrase taken from a footnote in the Pennington decision. Pennington, supra, 381 U.S. at 670-71 n. 3, 85 S.Ct. at 1593. But according to the Pennington note the Trial Judge should admit this evidence “if he deemed it probative and not unduly prejudicial.” (Emphasis supplied.)

Under the circumstances the footnoted observation in the majority opinion (n. 13) is both interesting and informative. The majority states, “Thus, we agree with the original panel majority that the case has been mishandled and disagree only as to the scope of the prejudice growing out of the mishandling.”

The evidence relating to efforts of the parties to influence government agencies is inadmissible in view of the NoerrPennington rule that such activities are exempt from the provisions of the Sherman Act. Once this evidence was admitted — contrary to the Trial Judge’s pretrial order — the Court’s subsequent brief charge to the jury that damages cannot be allowed for any activities relating to governmental agencies obviously does not cure its prejudicial effect. Since, as the majority points out, “There was no limiting instruction given upon introduction of the evidence . . . ” the prejudice is even greater. The original panel majority opinion is quite explicit in regard to the admissibility of evidence. It states in pertinent part (417 F.2d 47, 52), “This is not a situation where the evidence might be regarded as cumulative; quite the contrary, the danger here is that the ‘purpose and character’ evidence will receive such force and weight so as to preclude a fair verdict on the substantive basis of the claim.” (Footnotes omitted.) It is difficult to understand, as with the Wyche letter, how this detrimental and prejudicial evidence can be received but, nevertheless, how its effect can later be dissipated by cautionary instructions to the jury. This requires more of a jury than we have a right to expect.

A fair verdict was not possible under the circumstances which prevailed in the trial of this case. Justice between the parties would best be assured by retrial of the entire matter, as was ordered by the original panel decision herein. Since, however, a majority of the en banc court has determined that the judgment as to liability should be affirmed, I have concluded to join in the remand on the issue of damages only, while reiterating my dissent on the liability question.

1 . The defendant Bureau points out in its brief on rehearing en banc that the Wyche letter was read in full to the jury and plaintiff Terrell testified to statements in the letter which he declared were false.

In his final address plaintiff’s counsel said the letter “was vicious,” “was untrue,” and “was calculated.” This demonstrates quite clearly the serious prejudicial effect which results from admitting this evidence even for the so-called “limited” purpose.