United States Ex Rel. Miller v. Bill Harbert International Construction, Inc.

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
UNITED STATES OF AMERICA )
ex rel. RICHARD F. MILLER, )
)
Plaintiff, )
)
v. ) 95-cv-1231 (RCL)
)
BILL HARBERT INTERNATIONAL )
CONSTRUCTION, INC., et al., )
)
Defendants. )
)
MEMORANDUM OPINION
I. INTRODUCTION
Four years ago, following a seven-week trial, a jury concluded that defendants Bill
Harbert International Construction, Inc., Harbert International, Inc., and Harbert Corporation
(collectively, the “defendants”)1 engaged with several others in a conspiracy to defraud the
United States Agency for International Development (“USAID”) by rigging the bidding process
for several development contracts in Egypt, fleecing the U.S. government for more than $30
million. Based on the jury’s findings, this Court entered judgment on behalf of the government
in excess of $90 million under the False Claims Act, 31 U.S.C. §§ 3729 et seq. This past year,
the D.C. Circuit affirmed the judgment against several entities, but found that the government
prejudiced these defendants by introducing evidence that contradicted a stipulation concerning
BHIC’s formation and eliciting testimony concerning the wealth of HII and HC. Based on these
concerns, the Circuit Court vacated judgment as to defendants and remanded the matter for a
new trial. With retrial in sight, the government now argues that the Circuit Court’s mandate and
1
The Court will refer to these defendants by the now-familiar acronyms BHIC, HII, and HC, respectively.
opinion, read together, require the Court to leave the first jury’s conclusion that a conspiracy that
cost the government more than $30 million undisturbed by limiting the scope of the upcoming
proceedings to the sole question of whether defendants joined the conspiracy. Alternatively, the
government asks the Court to exercise its discretion to place equivalent constraints on the retrial.
Defendants counter that the Circuit Court’s mandate and opinion voided all findings of liability
and damages, insisting that the issues are so interrelated, and the prejudice caused by the errors
identified by the Circuit Court are so pervasive, as to necessitate a full trial on the merits. The
Court agrees, and will direct the parties to prepare for a trial on all issues.
II. BACKGROUND
The full history of this matter has been set forth many times, and is only briefly recounted
where relevant. In 1995, Richard F. Miller, then-vice president of an international construction
company, filed claims under the False Claim Act alleging that numerous entities had defrauded
the government’s USAID program by conspiring to rig the bids for construction contracts in
Egypt awarded by USAID in return for that country’s agreement to recognize Israel following
the Camp David Accords of 1979. For the next seven years, the government kept the complaint
under seal while undertaking an investigation that resulted in several criminal convictions. In
2002, the government unsealed the complaint and, after years of procedural maneuvering and a
transfer of judges, this matter proceeded to trial in 2007. After a seven-week trial, the jury
returned a verdict in favor of Mr. Miller and the government, finding that (1) an overarching
conspiracy to defraud the government with respect to several USAID contracts in Egypt existed,
Verdict Form 2, May 14, 2007 [858], (2) several entities—including defendants—took part in
that conspiracy, id. at 2–8, and (3) the government had lost $29,920,000 on Contract 20A—
which involved a sewer project in Cairo—$1,026,029.22 on Contract 07—which involved a
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sewer project in Alexandria—and $3,400,000 on Contract 29—which involved the construction
of a wastewater treatment facility in Cairo. Id. at 9–12. Based on the jury’s findings, the Court
entered judgment against defendants and several others for approximately $90 million,
Judgment, Aug. 10, 2007 [883], and subsequently denied defendants’ motions to set aside the
verdict. Miller v. Holzmann, 563 F. Supp. 54 (D.D.C. 2008) (“Miller I”).
On appeal the D.C. Circuit reversed this Court on three matters. First, the Circuit Court
found that the statute of limitations had run on all claims relating to Contracts 07 and 29, which
were only added by the government after the complaint was unsealed in 2002. United States ex
rel. Miller v. Bill Harbert Int’l Constr., Inc., 608 F.3d 871, 877–85 (D.C. Cir. 2010) (“Miller
II”). Second, the Circuit Court held that the introduction of, and references to, a document
implying that BHIC was formed in 1986 contradicted the parties’ stipulation that the company
did not exist before 1992, resulting in “substantial prejudice” to BHIC. Id. at 888–89. Third, the
Circuit Court explained that testimony concerning the wealth of HII and HC was not “of
consequence to the determination of the action” but did prejudice the jury. Aside from these
three errors, the Circuit Court found that there was sufficient evidence to support (1) the
existence of an overarching conspiracy, id. at 899–901, (2) other entities’ participation in that
conspiracy, id. at 901–904, and (3) the amount of damages awarded by the jury. Id. at 904–07.
The Circuit Court then issued the following mandate:
[T]he judgment of the District Court . . . is hereby vacated,
pursuant to the statute of limitations, with respect to the claims
concerning Contracts 07 and 29; vacated as to defendants HII, HC,
and BHIC and remanded for a new trial; and affirmed with respect
to the claims concerning Contract 20A against the remaining
defendants.
Mandate, Oct. 19, 2010 [1078]. The Miller II Court subsequently remanded this action for
further proceedings concerning these defendants. Id.
3
Following resolution of a dispute concerning attorneys’ fees, United States ex rel. Miller
v. Bill Harbert Int’l Contr., No. 95 Civ. 1231, 2011 U.S. Dist. LEXIS 50788 (D.D.C. May 12,
2011), the Court held a status conference at which the government stated its belief that retrial
must be limited to the question of whether BHIC, HII and HC joined the conspiracy. In
accordance with the Court’s invitation, the government subsequently moved to limit the scope of
the new trial. Motion to Limit Further Proceedings, June 14, 2011 [1102] (“Gov. Mtn.”). In
support of its request, the government asserts that a limited retrial is required by the Circuit
Court’s mandate and necessary to prevent inconsistent verdicts, and argues that the Court should
exercise its discretion to circumscribe future proceedings. Id. at 7–19. Defendants challenge this
position, insisting that vacatur of the earlier judgment mandates a full retrial and arguing that the
Circuit Court’s opinion in Miller II is incompatible with the government’s proposal. Opposition
to Motion to Limit Further Proceedings, June 28, 2011 [1103] (“Ds’ Opp.”). Having reviewed
the relevant background and applicable law, the Court turns now to the merits of the parties’
contentions.
III. DISCUSSION
“It is well settled that [an appellate court] may . . . divide the issues and limit the scope of
a new trial.” Wash. Gas Light Co. v. Connolly, 214 F.2d 254, 256 (D.C. Cir. 1954). Thus, in
reviewing the Circuit Court’s mandate and opinion, the question for the Court is not whether it
may limit the scope of the retrial, but whether it must or should circumscribe future proceedings.
The government argues that a full retrial could undermine earlier findings—upheld by the Circuit
Court—that an overarching conspiracy existed which cost the government nearly $30 million on
Contract 20A, and, alternatively, that a partial retrial—even if not compelled by the disposition
on appeal—is appropriate under the circumstances. The Court addresses each argument in turn.
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A. The D.C. Circuit’s Mandate
The government’s primary argument is that “it is the duty of this Court to determine
which issues relating to the remanded defendants were finally determined by the first trial and
affirmed on appeal and which issues remain open to redetermination,” Gov. Mtn. at 7, and that a
limited retrial on the question of whether defendants joined the overarching conspiracy is
compelled by the mandate rule in light of the Circuit Court’s disposition of the appeal in Miller
II. Id. at 13–19. When remanding an action for further proceedings, a federal circuit court
generally includes, along with any written opinion, a mandate directing the district court to take
certain action. See Black’s Law Dictionary 980 (8th ed. 2004) (defining “mandate” as “[a]n
order from an appellate court directing a lower court to take a specified action.”). “No principle
of law is better established than the rule that a District Court is bound ‘by the decree of the Court
of Appeals and must carry it into execution, according to the mandate.’” Consarc Corp. v. Dep’t
of Treasury, 71 F.3d 909, 915 (D.C. Cir. 1995) (quoting Mays v. Burgess, 152 F.2d 123, 124
(D.C. Cir. 1945)); Role Models Am., Inc. v. Geren, 514 F.3d 1308, 1311 (D.C. Cir. 2008)
(holding that district court on remand has “no ‘power or authority to deviate from the mandate’”)
(quoting Briggs v. Pa. R.R. Co., 334 U.S. 304, 306 (1948)). This general principle—known as
the “mandate rule”—is “a ‘more powerful version’ of the law-of-the-case doctrine, which
prevents courts from reconsidering issues that have already been decided in the same case.”
Indep. Petroleum Ass’n of Am. v. Babbitt, 235 F.3d 588, 597 (D.C. Cir. 2001). According to the
government, the Circuit Court’s mandate does not require a full retrial but—read in conjunction
with the opinion in Miller II, which makes clear that the conspiracy and damages issues were
finally decided—necessitates a partial retrial. Gov. Mtn. at 7–10 & 13–19. Defendants respond
that the mandate unequivocally commands a new trial on all issues, D’s Mtn. at 7–9, and that, in
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the alternative, a partial retrial cannot be squared with the Miller II opinion. Id. at 10–13. The
Court, for the reasons set forth below, finds that the Circuit Court’s mandate and opinion does
not strictly define the proper scope for the new trial.
1. The Plain Language of the Mandate
Where the text of a mandate is clear, the district court is without authority to act contrary
to those instructions. Role Models, 514 F.3d at 1311; see also United States v. White, 751 F.
Supp. 2d 173, 174–75 (D.D.C. 2010) (“A district court is without authority to take any action
that is inconsistent with an appellate court’s mandate.”). In this instance, the Circuit Court’s
mandate, which is quoted more fully above, declares that this Court’s earlier judgment is
“vacated as to defendants HII, HC and BHIC and remanded for a new trial.” Mandate at 1.
Nothing in this mandate expressly instructs the Court to hold a new trial on a limited number of
issues—thus distinguishing the situation from the circumstances before the district court in the
cases cited by the government. See, e.g., Role Models, 514 F.3d at 1311 (affirming lower court’s
decision to hold partial retrial because mandate “made clear that we were remanding only for the
re-screening of other interested parties”); New York v. Microsoft Corp., 224 F. Supp. 2d 76, 86
(D.D.C. 2002) (holding limited retrial on remedies based on court of appeals’ instructions to
“hold a remedies-specific evidentiary hearing’ and to ‘fashion an appropriate remedy’”) (quoting
United States v. Microsoft Corp., 253 F.3d 34, 103, 105 (D.C. Cir. 2001)). In other words, the
plain language of the mandate does not, standing alone, compel the government’s desired result.
At the same time, the language in the Circuit Court’s mandate also does not require a new
trial on every issue, as defendants urge. Defendants maintain that the Circuit Court’s instruction
to hold a “new trial,” Mandate at 1, bars the Court from “preclu[ding] . . . one or more issues for
retrial, absent specific limiting language in the mandate.” Ds’ Opp. at 8. But this position
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assumes that the requirement of a new trial inherently encompasses reconsideration of every
issue previously decided—an assumption lacking foundation. See Sherwin v. Welch, 319 F.2d
729, 731 (D.C. Cir. 1963) (noting that “judgment of reversal and remand did not necessarily
require a complete new trial”). A new trial may require reconsideration of every issue; but
nothing about this instruction commands a full retrial. See Black’s at 1543 (defining “new trial”
as “[a] postjudgment retrial or reexamination of some or all of the issues determined in an earlier
judgment”). And defendants’ fixation on the Circuit Court’s vacatur of the earlier judgment is
equally misplaced. In certain circumstances—such as those cited by defendants—the act of
vacating an earlier opinion has invalidated prior factual findings. See, e.g., Aviation Enters., Inc.
v. Orr, 716 F.2d 1403, 1408 (D.C. Cir. 1983) (noting that by vacating lower court’s judgment,
appellate court “drain[ed] the court’s underlying findings of fact of whatever vitality they might
otherwise have had”). Such broad statements, however, were made only in the context of a case
that was dismissed in its entirety for lack of standing. Id. at 1407.2 To “vacate,” which is to
“annul[] or set[] aside,” is to void the effect of a prior legal determination—such as a judgment.
Black’s at 1584. A court might vacate a judgment for an error in instructing on an affirmative
defense, or it might vacate a judgment in light of a pervasive error that infected the entire
proceedings. In either event, the procedural mechanism—vacatur—is not tied to the type or
effect of error, but rather to the fact that a judgment having legal effect was entered, and its
effects must be annulled. By vacating this Court’s earlier judgment, the Circuit Court did not
specifically determine that any particular findings of the jury were incorrect, but only that this
2
The other examples cited by defendants are equally unconvincing. For example, defendants point to
United States v. Musingwear for the Supreme Court’s observation that vacatur renders “null and void” the “former
judgment.” 76 U.S. 608, 610 (1869). That statement, however, pertains to a judgment—not to a particular finding
of fact. See also Pahuta v. Massey Ferguson, Inc., 60 F. Supp. 2d 74, 76 (W.D.N.Y. 1999) (“[T]he court vacated the
district court’s final judgment.”) (emphasis added). The Court is also unmoved by defendants’ citation to Kelso v.
Dep’t of State, as that case stands for the unremarkable principle that vacatur defeats application of the doctrines of
res judicata or collateral estoppel, 13 F. Supp. 2d 12, 17 (D.D.C. 1998)—doctrines the government does not pursue.
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Court’s entry of judgment based on those findings was improper. Absent more specific
instructions in the mandate, it is up to the Court, on remand, to determine why the entry of
judgment was improper—relying of course on the Circuit Court’s opinion. Accordingly, the
Circuit Court’s use of “vacatur” in this instance does not foreclose the survival of certain prior
factual determinations, provided they were not infected by the underlying errors identified by the
Circuit Court. And while defendants note that the Circuit Court could have expressly limited any
retrial had it so desired, it could just as easily have commanded a new trial on every issue if it
wished. In light of the ambiguous mandate, the Court turns to the Circuit Court’s opinion to
determine whether any further guidance is available.
2. Reading the Mandate and the Opinion Together
When a district court is considering proceedings on remand, a circuit court’s opinion
“may be consulted to ascertain what was intended by its mandate.” In re Sanford Fork & Tool
Co., 160 U.S. 247, 256 (1895); see also Sherwin, 319 F.2d at 731 (“The nature and extent of
proceedings on remand should be determined by the district court according to the circumstances
of each case, in light of any instructions in our mandate.”); Pahuta v. Massey-Ferguson, Inc., 60
F. Supp. 2d 74, 76 (W.D.N.Y. 1999) (including “a copy of the court’s opinion” among items
comprising mandate). In this instance, both parties point to certain aspects of the Miller II
opinion to support their position. The government, for example, quotes the Circuit Court’s
statement that—outside of the particular errors identified in the opinion—“‘[i]n all other
respects, we affirm.’” Gov. Mtn. at 13 (quoting Miller II, 608 F.3d at 875).3 It also argues
that—had the Circuit Court found that any evidence concerning BHIC’s existence or HII’s and
3
On this point, the government cites United States v. White, but in that case the appellate court directed the
lower court to dismiss the indictment as to one conviction, and upheld the conviction and sentences on the other
counts, leading the court to refuse to reconsider the defendant’s sentence on those counts, as it was “untouched” on
appeal. 751 F. Supp. 2d at 175. In this case, however, the Court cannot say that the Circuit Court left every aspect
of the jury’s verdict other than whether BHIC, HII, HC joined the conspiracy similarly “untouched.”
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HC’s wealth affected the jury’s findings on the overarching conspiracy or calculation of
damages—it would have vacated the judgment with respect to the other entities. Id. at 13–19. In
response, defendants explain that the Circuit Court “address[ed] only the sufficiency arguments
made by HUK and BIE,’” Ds’ Mtn. at 10 (quoting Miller II, 608 F.3d at 898), insisting that the
Circuit Court never considered any prejudicial effects on the jury’s determination of these issues.
Id. at 10–13. Defendants also maintain that the errors identified by the Circuit Court were too
broad to have been cabined to particular factual findings, but instead infected the entirety of the
earlier trial, necessitating a full retrial. Id. at 19–23.
The Court need not linger long on this matter. The fact that language from the Circuit
Court’s opinion at times indicates that a partial retrial is required and at other times suggests that
a full retrial is necessary is the best available evidence that the opinion—like the mandate—does
not unequivocally dictate a particular scope for retrial. On remand, the job of the Court is to
“scrupulously avoid implementing the mandate in a manner that exceeds, or limits, the appellate
decision.” Tex. Oil & Gas Corp. v. Hodel, 654 F. Supp. 319, 323 (D.D.C. 1987). In this
instance, where the mandate and opinion do not provide an unmistakable direction for further
proceedings, the Court will not finely parse the applicable language to fashion a clear appellate
instruction that the Circuit Court did not see fit to articulate itself.4
B. A Partial Retrial is Inappropriate
Having found no evidence in the Circuit Court’s mandate that the Court must proceed in
any particular manner, the Court now turns to whether it should limit the scope of a new trial.
4
The government also points to the Supreme Court’s statement that, in conspiracy cases, courts should
attempt to avoid “the scandal and inequity of inconsistent verdicts.” Zafiro v. United States, 506 U.S. 534, 537
(1993). But this statement was made in support of the “preference” for joint trials, id. (emphasis added), and cannot
be read to foreclose defendants’ ability to present a full defense in this instance. Indeed, just a few paragraphs after
this statement, the Zafiro Court recognized that coconspirators may sometimes need to be tried separately. Id. at
539. And as the D.C. Circuit has previously explained, concerns related to consistent conspiracy verdicts only arise
in “cases in which a single jury hear[d] the same evidence.” United States v. Lewis, 716 F.2d 16, 22 (D.C. Cir.
1983) (emphasis in original). No such risk exists here, as the jury on retrial will not hear the same evidence.
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The Supreme Court has explained that “where the requirement of a jury trial has been satisfied
by a verdict . . . that requirement does not compel a new trial of [one particular] issue even
though another and separable issue must be tried again.” Gasoline Prods. Co. v. Champlin Ref.
Co., 283 U.S. 494, 499 (1931). A district court’s authority to structure a retrial, codified in
Federal Rule of Civil Procedure 59, turns on two key questions: First, are the issues to be retried
sufficiently distinct from resolved issues so that only those issues may be presented to a jury
without causing undue confusion or prejudice? Second, did the error necessitating retrial affect
the earlier determinations on issues that might otherwise be treated as resolved? The former
inquiry rests principally on a party’s right to a full and fair hearing of the issues. And to protect
this right, “the power to grant a partial new trial ‘may not properly be resorted to unless it clearly
appears that the issue to be retried is so distinct and separable from the others that a trial of it
alone may be had without injustice.’” Camalier & Buckley-Madison, Inc. v. Madison Hotel,
Inc., 513 F.2d 407, 421 (D.C. Cir. 1975) (quoting Gasoline Prods., 283 U.S. at 500). The latter
inquiry invokes efficiency interests, in pursuit of which a court may limit future proceedings “to
prevent the retrial of any issue already properly decided.” Armstrong v. Burdette Tomlin Mem’l
Hosp., 276 F. Supp. 2d 264, 276 (D.N.J. 2003) (citing Yates v. Dann, 11 F.R.D. 386, 392–93 (D.
Del. 1951); emphasis added), rev’d on other grounds, 438 F.3d 240 (3d Cir. 2006). For the
reasons set forth below, the Court finds that some issues cannot be adequately segregated, and
that in all respects the errors identified by the Circuit Court permeated the earlier proceedings to
a degree requiring a full retrial of all relevant factual issues.
1. Separation of Issues
The first inquiry is whether the issue that all parties agree must be retried—whether
defendants joined an overarching conspiracy to rig the bidding process—can be separated in an
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equitable manner from questions of (1) whether a conspiracy existed and (2) what damages were
suffered as a result of the bid rigging. The key factor, in making this evaluation, is whether the
question of joining a conspiracy “‘is so interwoven with [the other questions] that the former
cannot be submitted to the jury independently of the latter without confusion and uncertainty.’”
Camalier, 513 F.2d at 421 (quoting Gasoline Prods., 283 U.S. at 500); see also Williams v. Rene,
72 F.3d 1096, 1101 (3d Cir. 1995) (holding that when one issue is “so intertwined” with another
“that one cannot be submitted to the jury independently of the other without confusion and
uncertainty, then a new trial must extend to all issues”).
a. The Overarching Conspiracy
Can a new jury be asked to determine whether defendants joined a conspiracy without
considering the nature, extent or existence of that illegal enterprise? The Court does not see how
it can. As an initial matter, to establish a civil conspiracy, a jury must find, inter alia, “an
agreement between two or more persons.” Second Amendment Found. v. U.S. Conf. of Mayors,
274 F.3d 521, 524 (D.C. Cir. 2001). But this inquiry is no different than the underlying question
of whether a particular defendant joined a conspiracy, which also requires a finding that each
defendant entered an agreement. Indeed, the first jury was instructed that it could find “that a
particular defendant willfully became a member of the conspiracy” relying on evidence allowing
it to “infer . . . an intent to participate in an unlawful enterprise.” Trial Tr. 59:22–60:2, Oct. 16,
2008 [1047]. Moreover, a fundamental aspect of determining whether an entity joined a
conspiracy is an understanding of the nature and scope of that conspiracy—which the fact-finder
must define. See United States v. Booze, 108 F.3d 378, 382 (D.C. Cir. 1997) (“To determine the
scope of the conspiratorial agreement entered into by a defendant, the district court must ‘spell
out specific findings about the individual defendants and their relation to the conspiracy.”). And
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finally, even if the Court were able to fashion a way around these obstacles, an instruction
barring defendants from challenging the existence of a conspiracy might have an undue influence
on the jury’s determination of whether these defendants participated in such an enterprise;
indeed, an entire line of cases in the D.C. Circuit concerns the ease with which evidence
concerning the existence of, and participation in, a conspiracy is readily transferrable. See, e.g.,
United States v. Gatling, 96 F.3d 1511, 1519–20 (D.C. Cir. 1996). Put simply, this is an instance
where the jury will need a thorough knowledge of the underlying conspiracy—one that cannot be
properly disassociated from the question of whether these defendants joined that conspiracy. See
Nissho-Iwai Co. v. Occidental Crude Sales, Inc., 729 F.2d 1530, 1538–39 (5th Cir. 1984)
(ordering full retrial where evaluation of particular claim required “understanding” of another
claim). Thus, just as the Gas Prods. jury could not “fix the amount of damages unless also
advised” of key contract terms—which necessitated further findings of fact, 283 U.S. at 499–
500—the Court is at a loss as to how the jury could determine whether BHIC, HII and HC joined
the enterprise without also defining the nature and scope of that conspiracy.
b. Damages
The difficulties inherent in the conspiracy question do not similarly intrude upon the
calculation of damages. As the Circuit Court observed, any injury suffered by the government in
this case is not tied to the nature of the conspiracy, but represented by “the difference between
what the United States paid and what it would have paid had there been no bid-rigging
agreement.” Miller II, 608 F.3d at 904. Consistent with this measure of damages, the Court in
the first trial instructed the jury: “The damages that the United States is entitled to recover under
the False Claims Act is the amount of money that the government paid out by reason of the false
claims over and above what it would have paid out had the claims not been false.” Trial Tr.
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65:11–15. And as the government correctly notes, the verdict form neither mandates that
damages be apportioned among defendants, nor requires any consideration of a particular
defendant’s involvement in any conspiracy. See generally Verdict Form at 9–12. In these
circumstances, the Court has little difficulty concluding that the jury could—were it otherwise
appropriate—determine whether an illegal enterprise exists and whether defendants were part of
that conspiracy without also evaluating the damages caused by such actions.
2. The Prejudice Identified by the D.C. Circuit Cannot be Isolated
The second inquiry for the Court is whether “the error which requires the new trial of [a
particular] issue does not affect the determination of any other” issue. Ecker v. Potts, 112 F.2d
581, 582 (D.C. Cir. 1940). As a general rule, the authority to permit a partial retrial should not
be exercised “when the error which necessitates a new trial is in respect of a matter which might
well have affected the jury’s determination of other issues.” Geffen v. Winer, 244 F.2d 375, 376
(D.C. Cir. 1957); see Feinberg v. Mathai, 60 F.R.D. 69, 70 (E.D. Pa. 1973) (explaining that
partial retrial of issues is proper only where “the error requiring a new trial has not affected the
determination of any other issue”). In other words, “a complete new trial is necessary . . . where
it would be manifestly prejudicial not to retry the entire case,” Channel 20 v. World Wide Towers
Servs., 607 F. Supp. 551, 558 (S.D. Tex. 1985), and a partial retrial is appropriate only “where
some error requires a new trial on some distinct and separable issues but leaves the verdict on
completely separate issues uninfected.” Id. at 559.
The errors identified by the Circuit Court are not expressly tied to a particular element of
the underlying claims, and therefore may not be readily cabined, as in other cases. See, e.g., East
Tex. Med. Ctr. Reg’l Healthcare Sys. v. Lexington Ins. Co., 575 F.3d 520, 532 (5th Cir. 2009)
(remanding for partial trial on whether defendant was prejudiced by late notice of suit, where
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jury’s findings on liability and damages were upheld); Ryan v. McDonough Power Equipment,
Inc., 734 F.2d 385, 388 (8th Cir. 1984) (permitting partial retrial where one count was overturned
for lack of evidence); Zanetti Bus Lines, Inc. v. Hurd, 320 F.2d 123, 129 (10th Cir. 1963)
(granting partial retrial where legal error occurred on instruction “which relates only to the
liability” and “would have no bearing on the amount of the jury’s award”); Channel 20, 607 F.
Supp. at 559 (collecting cases permitting partial retrial on damages where error was only “with
respect to damages”). In the absence of a direct link between the error and a particular jury
finding, the key issue for the Court is the effect of the identified errors, and whether the resulting
prejudice necessitates reconsideration of every factual issue or only certain matters.5 See
Brownlee v. United Fidelity Ins. Co., 117 F.R.D. 383, 389–90 (S.D. Miss. 1987) (noting that
where counsel inflamed jury during closing argument—causing prejudice—“a complete new
trial is the only adequate remedy”). The Circuit Court held that introduction of certain evidence
prejudiced defendants, and a necessary implication of a prejudice finding is that this evidence
improperly affected the jury’s judgment. See United States v. Gartmon, 146 F.3d 1015, 1021
(D.C. Cir. 1998) (explaining that finding of “unfair prejudice” implies that jury made its decision
“on an improper basis, commonly, though not necessarily, an emotional one”) (quotations
omitted). The Court therefore examines whether the prejudice identified by the Circuit Court
may have affected the prior jury’s findings on the conspiracy and damage issues.
a. BHIC
The error identified by the Circuit Court with respect to BHIC was that the government
was permitted to “introduce[] evidence that . . . contradicted the joint stipulation of fact that
5
While the government urges that “‘the same issue presented a second time in the same case in the same
court should lead to the same result,’” Mtn. at 19 (quoting United States v. Thomas, 572 F.3d 945, 949 (D.C. Cir.
2009)), it ignores the simple fact that where the evidence presented a second time varies—as it will by virtue of the
Circuit Court’s holdings with respect to certain pieces of evidence—it cannot be said that the retrial involves the
same issue presented a second time.
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BHIC did not exist at the time companies were bidding on and entering into the relevant
contracts.” Miller II, 608 F.3d at 888. According to the Circuit Court, because the government
was allowed to insinuate that BHIC existed earlier than 1992—the date of the parties’
stipulation—“the evidence establishes BLH was not in fact a predecessor to BHIC, but actually
the same company.” Id. at 889. The government argues that this error is confined to “the
question whether BHIC was in existence in order to have participated in the conspiracy.” Gov.
Mtn. at 14. On this understanding, the government insists that its earlier introduction of evidence
contrary to the stipulation “has no bearing on whether a conspiracy existed,” id., and that there is
otherwise “no plausible basis on which to suggest that the date of formation of BHIC somehow
affected the jury’s consideration of damages.” Id. at 17. The Court disagrees.
The government’s attempts to cabin this error cannot be squared with the opinion in
Miller II. Nowhere does the Circuit Court suggest that the harm befalling BHIC was limited to
the factual dispute of whether the company existed before 1992. Quite the contrary, the Circuit
Court emphasizes that the prejudice suffered by BHIC was realized through the discrediting and
undermining of its counsel: “[A]llowing the government to contradict the stipulation called into
question the credibility of BHIC’s counsel, severely impeding counsel’s ability to effectively
advocate for his client.” 608 F.3d at 889 (emphasis added). In contrast to the government’s
narrow version of prejudice, this statement speaks of no qualification or limit. In Camalier, the
D.C. Circuit found that the wrongful instruction of the trial judge—though concerning only
liability—could have had several effects on the damage calculation by either inflaming
prejudices or mitigating perceived harm, and therefore, “viewing the situation realistically,” held
that no assurance existed that prejudice did not have an effect warranting an entire new trial. 513
F.2d at 421–22; see also Feinberg, 60 F.R.D. at 71 (granting full new trial where “the Court has
15
no way of fathoming what motivated the jury”). In light of the Circuit Court’s understanding of
the pervasive nature of the prejudice befalling BHIC, the Court remains unconvinced that any
lingering questions as to the veracity or trustworthiness of BHIC’s counsel did not affect the
jury’s evaluation of either the conspiracy or damages issues. Accordingly, the Court concludes
that all these issues must be presented anew.
b. HII & HC
Turning to HII and HC, the error identified by the Circuit Court is the government’s
elicitation of testimony concerning the assets owned or controlled by HII or HC, as well as its
closing, in which the government “recalled this testimony and juxtaposed the wealth of all the
Harbert companies with the relative poverty of those in countries benefitting from projects
funded by the USAID, saying that the excess money . . . ‘could have been used for less fortunate
people in other countries.’” Miller II, 608 F.3d 871. With respect to this error, the government
asserts that “the wealth of HII and HC has no plausible relationship to the existence of a
conspiracy,” Gov. Mtn. at 14, and argues that because the “damages award here was not
defendant-specific but was for losses caused by the overarching conspiracy . . . . [h]ad the D.C.
Circuit concluded that the improper admission of wealth evidence with respect to HII and HC
had prejudicially affected the jury’s damages award, it necessarily would have vacated that
award as incorporated in the judgments against BIE and HUK.” Id. at 17. The government’s
understanding of Miller II cannot be reconciled with the plain language of the opinion.
As an initial matter, the government’s reading of the Circuit Court’s opinion in Miller II
with respect to HII and HC suffers the same problems that its understanding of the error as to
BHIC—it reads the opinion too narrowly. Once again, the government focuses strictly on the
logical result of the evidence in question, without also considering what the Circuit Court stated
16
with respect to the resulting prejudice. Nowhere does the Miller II Court imply that the evidence
concerning wealth could only affect the jury’s determination as to whether either HII or HC
joined the overarching conspiracy, but rather spoke in very broad terms, explaining that “[t]he
only way the information could have affected the jury was to prejudice it,” 608 F.3d at 898, and
noting that “arguments to the jury about a defendant’s wealth are grounds for a new trial.” Id. at
897 (citing Koufakis v. Carvel, 425 F.2d 892, 902 (2d Cir. 1970)). These broad statements of
prejudice—along with the Court’s earlier determination that the conspiracy existed—cannot be
fairly separated from the question of whether defendants joined that conspiracy, and counsel in
favor of a full retrial. See Shessel v. Murphy, 920 F.2d 784, 787 (11th Cir. 1991) (directing full
retrial where error below could have affected jury’s consideration of other issues).
Turning to the damages issue, it strains credibility to argue that remarks establishing the
significant wealth of defendants HII and HC had absolutely no effect on the jury’s calculation of
damages. Indeed, this Court previously acknowledged the effect in Miller I, observing that
“knowledge that a defendant has the resources to pay a judgment may increase jurors’ comfort
level in making a large damages award.” 563 F. Supp. 2d at 112 (collecting cases).6 And the
Supreme Court has observed that “the emphasis on the wealth of the wrongdoer increase[s] the
risk that the award may have been influenced by prejudice,” TXO Prod. Corp. v. Alliance Res.
Corp., 509 U.S. 443, 464 (1993), while the D.C. Circuit previously found grounds for a mistrial
where counsel made remarks concerning a plaintiff’s poverty and a defendant’s wealth. Wash.
Annapolis Hotel Co. v. Riddle, 171 F.2d 732, 740 (D.C. Cir. 1948). Finally, the Circuit Court
made clear that the “several inappropriate references to . . . wealth,” along with counsel’s
6
Though the Court found that the testimony had some prejudicial effect, it permitted the evidence because
it was relevant to the question of whether particular defendants joined the conspiracy, and could not otherwise find
that “a bare handful of remarks . . . created such unfair prejudice as to substantially outweigh the significant
probative value of evidence of defendants’ wealth.” Miller I, 563 F. Supp. 2d at 112 (emphasis in original). It is on
this point that the Court was overruled. See Miller II, 608 F.3d at 897 (finding wealth evidence irrelevant).
17
“insinuat[ion] that the money would be in better hands if it were taken from the defendants,”
caused substantial prejudice. Miller II, 608 F.3d at 898.7 And while the government’s argument
that the Circuit Court should have vacated the entire damage judgment if it believed that the
award was prejudiced by the evidence concerning certain defendants’ wealth may be logically
appealing, the Court will not place defendants’ right to a full and fair opportunity to be heard in
jeopardy by parsing the language of the Miller II opinion, particularly in light of the Circuit
Court’s own statement that it was only reviewing positions taken by the remaining defendants,
which did not include any argument that evidence of HII’s or HC’s wealth prejudiced the jury’s
damage calculations. Miller II, 608 F.3d at 898.
IV. CONCLUSION
Having completed one seven-week trial on the underhanded practices of many entities in
Egypt in the 1980s, the Court is less than enthusiastic at the prospect of having a second jury
review the entirety of the evidence, particularly where it previously concluded that the evidence
was more than sufficient to support the first jury’s findings. Miller I, 563 F. Supp. 2d at 138–39.
But when structuring a retrial, the Court must remain vigilant to neither confuse nor prejudice the
jury, and must provide defendants a full and fair opportunity to mount an unhindered defense.
The Circuit Court has declared that the first jury was broadly and unduly prejudiced when
BHIC’s counsel was undermined and when the wealth of HII and HC was exposed, and it has
said that a new trial is the only appropriate remedy. The Court shall see it done.
A separate Order consistent with these findings shall issue this date.
Signed by Royce C. Lamberth, Chief Judge, on August 29, 2011.
7
A second problem for the government is that it has stated that the damage calculation turns on the harms
caused by the conspiracy. Because the Court has held that the conspiracy question must be tried anew, the necessity
for new factual findings on the nature and scope of the conspiracy also require new findings regarding the damage
caused by that enterprise, as it is defined by the new jury.
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