In breach of contract action, counsel’s statement was admissible against the defendant party corporation, was relevant and not unfairly prejudicial where the trial court allowed the defense to place the statement in context, in Structural Polymer Group, Ltd. v. Zoltek Corp., 543 F.3d 987 (8th Cir. Oct. 8, 2008) (Nos. 07-2057, 07-2171)
Can statements of counsel during earlier proceedings be admitted at trial against a party. They were in a recent Eighth Circuit case. In Structural Polymer Group, a breach of contract action was filed over a large, ten-year supply agreement for carbon fibers (or Panex 35). When two orders went unfilled, Structural Plymyer Group (SP) sued Zoltek Corporation (Zoltek) for lost profits and future lost profits.
During a preliminary injunction hearing, in opposing a motion to enjoin Zoltek to provide Panex 35, Zoltek’s counsel stated: “[T]hey have no contract for Panex 35. All they have is some old Panex 33 contract which [Zoltek] is ready, willing and able to perform.” Structural Polymer Group, 543 F.3d at 996. Later, SP sought to admit counsel’s statement at trial. Zoltek objected that counsel’s statement was being taken out of context and misleading. The trial court admitted the statement but allowed Zoltek to place the statement in context. The Zoltek CEO stated that the counsel statement was a “mischaracterization of what he said,” and that “[i]n balance,” what counsel indicated was “reasonable.” The CEO explained that counsel intended to say that “there was a failed or an old contract which [Zoltek] would be ready, willing, and able to perform against if it [had not been] breached by multiple breaches,” and counsel’s “unfortunate single statement by itself [ ] is not representative of what should have [been] said.” Structural Polymer Group, 543 F.3d at 996. SP prevailed at trial as the jury awarded $36 million in lost profits, but declined to award future profits. The trial court reduced the award to $21 million.
The Eighth Circuit affirmed the admission of counsel’s statement. The circuit and parties spent little time addressing the admissibility of the statement under the hearsay rules. The circuit noted that counsel’s statement was admissible as a statement of a party’s agent. Structural Polymer Group, 543 F.3d at 996 (citing Harris v. Steelweld Equipment Co., Inc., 869 F.2d 396, 403 (8th Cir. 1989) (concluding that statements made by appellant’s counsel to appellant’s expert were an admission under FRE 801(d)(2)(D)), cert. denied, 493 U.S. 817 (1990))] The circuit stated, “Having made the statement in an effort to gain advantage in the litigation, we do not think Zoltek can establish that the district court abused its discretion by permitting SP to invoke counsel’s statement as a potential admission.” Structural Polymer Group, 543 F.3d at 996.
The primary challenge was on whether the statement was unfairly prejudicial under FRE 403. The circuit concluded the statement was not. Of note, the trial court allowed the defense to provide its view and context of the statement at trial. Finally, the circuit readily distinguished one case relied upon the defense, Schneider v. Lockheed Aircraft Corp., 658 F.2d 835, 843 (D.C. Cir. 1981), as involving a counsel statement concerning a defendant’s third-party complaint for indemnity and contribution, and an assumption that the statements were conditionally made since they were “assumed to be true” in discussing a motion to dismiss the third-party complaint.
The Structural Polymer Group case serves as a reminder that under the appropriate circumstances, statements of counsel may be admitted against a party at trial as a statement by a party’s agent. The case also underscores the trial court’s decision to allow both sides to explain the statement in context, which avoided unfair prejudice concerns.
Comments
Post new comment