United States District Court, D. Arizona
ORDER
DOUGLAS L. RAYES, UNITED STATES DISTRICT JUDGE.
Following
a ten-day trial in September 2017, the jury returned a
verdict in favor of Plaintiff Benjamin McClure on his breach
of contract and insurance bad faith claims. The jury found
that Defendants Country Life Insurance Company
(“Country Life”) and CC Services Incorporated
(“CCS”) were jointly liable for the conduct of
the insurance adjusters handling Plaintiff's claim. On
the breach of contract claim, the jury awarded Plaintiff $23,
469.35 for policy benefits and $1, 245.74 for un-refunded
premiums. On the bad faith claim, the jury awarded Plaintiff
damages in the amount of $1, 290, 000.00 for emotional
distress, humiliation, inconvenience, and anxiety; $45,
000.00 for the loss of enjoyment of life; and $173, 593.76
for policy benefits for the period in which the Plaintiff
will be totally disabled in the future. The jury also awarded
punitive damages in the amount of $2, 500, 000.00 against
each defendant.
Before
the Court is Defendants' motion for new trial pursuant to
Federal Rule of Civil Procedure 59 (Doc. 404), which includes
a request relief pursuant to Rule 50 regarding the jury's
finding that Defendants were operating as a joint venture.
The Court heard oral argument on July 10, 2018, and received
supplemental briefs shortly thereafter. (Docs. 420, 424.) For
reasons stated below, Defendants' motion is granted in
part and denied in part.
I.
Background
Country
Life issued a Disability Income Policy (“the
Policy”) to Plaintiff in 1995. In late November 2012,
Plaintiff suffered a head injury, was diagnosed with a
concussion, and found by his doctor to be unable to work.
Country Life accepted his claim for disability under the
Policy in March 2013. Country Life paid Plaintiff's claim
for about thirteen months, but terminated it on April 23,
2014. After Plaintiff filed this action, Country Life
reconsidered its termination and agreed to pay benefits
dating back to June 16, 2014. Although Country Life
reinstated benefits, it continued to deny Plaintiff's
disability claim for the period between April 23, 2014 and
June 16, 2014.
At
trial, Plaintiff contended that he was disabled because of
severe depression and that, Country Life and CCS (acting
jointly) terminated his claim without a reasonable basis and
adequate investigation, ignored medical facts that supported
the claim, and misinterpreted medical facts to their
advantage. Plaintiff also contended that he was especially
vulnerable and susceptible to emotional injury, and that the
bad faith termination of benefits exacerbated his depression,
resulting in extreme emotional distress and suicidal
ideations for which he was hospitalized a number of times.
Plaintiff
presented evidence that CCS employed all those at Country
Life with responsibility for handling Plaintiff's claim,
and that Country Life controlled the conduct of the CCS
employees. Defendants maintained that they were not operating
as a joint venture, did not act in bad faith, and had a
reasonable basis for terminating Plaintiff's claim.
Defendants
seek a new trial on the ground that prejudicial errors on
material issues unfairly distorted the evidence, resulting in
jury confusion and determinations based on passion or
prejudices as opposed to the evidence and instructions.
Plaintiff responds that the evidence was fairly presented,
Defendants' motion argues facts rejected by the jury, and
allegations that the jury was confused and its verdict was
based on passion or prejudice are conclusory.
II.
Standard of Review
“The
court may, on motion, grant a new trial on all or some of the
issues . . . after a jury trial, for any reason for which a
new trial has heretofore been granted in an action at law in
federal court[.]” Fed.R.Civ.P. 59(a)(1)(A). For
example, a court may order a new trial if the verdict is
“against the great weight of the evidence” or if
“it is quite clear that the jury has reached a
seriously erroneous result.” Venegas v.
Wagner, 831 F.2d 1514, 1519 (9th Cir. 1987) (internal
quotations and citation omitted). In making such a
determination, “[t]he judge can weigh the evidence and
assess the credibility of witnesses, and need not view the
evidence from the perspective most favorable to the
prevailing party.” Landes Const. Co., Inc. v. Royal
Bank of Canada, 833 F.2d 1365, 1371 (9th Cir. 1987).
However, “a decent respect for the collective wisdom of
the jury, and for the function entrusted to it in our system,
certainly suggests that in most cases the judge should accept
the findings of the jury, regardless of his own doubts in the
matter.” Id. (internal quotation and citation
omitted).
III.
Discussion.
A.
Limitations on Defense Expert's Testimony
Defendants
called Ms. Roberts as a trial witness to opine as an expert
on bad faith. After Defense counsel laid the foundation for
Ms. Roberts' qualifications, counsel for Plaintiff
conducted a “voir dire” of her, which revealed
that Ms. Roberts' definition of insurance bad faith was
not consistent with the definition utilized by Arizona
courts. Plaintiff then made an untimely challenge to Ms.
Roberts' testimony under Federal Rules of Evidence 702(c)
and (d). Despite the untimeliness of the challenge, the Court
considered it on its merits. After reviewing the
witness's deposition, the Court found that her definition
of bad faith was inconsistent with Arizona law. The Court
ruled that she could not opine that Defendants' conduct
amounted to good faith or bad faith because such opinions
either were not the product of reliable principles or did not
reliably apply the principles. (Trial Tr. at 1411:2-5.) The
Court also ruled, however, that Ms. Roberts could testify
about the Country Life procedures used to prevent bad faith,
and that she could give her opinions on whether Country Life
acted reasonably in adjusting the claim. (Trial Tr. at
1319:7-15.)
The
objective of the trial court's gatekeeping function,
described in Daubert v. Merrell Dow Pharmaceuticals,
Inc., 509 U.S. 579 (1993), is
to ensure the reliability and relevancy of expert testimony.
It is to make certain that an expert, whether basing
testimony upon professional studies or personal experience,
employs in the courtroom the same level of intellectual rigor
that characterizes the practice of an expert in the relevant
field. . . . [T]he trial judge must have considerable leeway
in deciding in a particular case how to go about determining
whether particular expert testimony is reliable.
Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137,
152 (1999). Defendants have not shown that the Court erred in
limiting Ms. Roberts' testimony as part of its
gatekeeping role. This case turned on Arizona law governing
bad faith claims. Because Ms. Roberts' definition of bad
faith differed from that of Arizona courts, any opinions she
could offer on whether Defendants' conduct amounted to
bad faith would not have been reliable.
Ms.
Roberts' opinions on whether Defendants acted in bad
faith also were inadmissible because they were opinions on an
ultimate issue of law. Although Rule 704 provides that expert
testimony that is “otherwise admissible is not
objectionable because it embraces an ultimate issue to be
decided by the trier of fact, ” “an expert
witness cannot give an opinion as to her legal conclusion,
i.e., an opinion on an ultimate issue of law.”
Mukhtar v. Cal. State Univ. Hayward, 299 F.3d 1053,
1066 n. 10 (9th Cir.2002), overruled on other grounds by
Estate of Barabin v. AstenJohnson, Inc., 740 F.3d 457
(9th Cir. 2014). Similarly, instructing the jury on the
applicable law “is the distinct and exclusive
province” of the court. United States v.
Weitzenhoff, 35 F.3d 1275, 1287 (9th Cir.1993) (internal
quotations and citation omitted).
Limiting
Ms. Roberts' opinions did not prejudice Defendants. Ms.
Roberts was allowed to give all of her relevant and otherwise
admissible opinions. She testified that Country Life acted
reasonably in the adjustment of Plaintiff's claim; that
County Life's claims handling process was reasonable; and
that Country Life's process reasonably provided for the
claims to be investigated, facts compared to the policy,
damages documented, medical reports reviewed when received,
and a nurse to help interpret the records. (Trial Tr. at
1322:11-1323:11.)
Ms.
Roberts addressed Plaintiff's accusations that
Defendants' investigation was inadequate. She testified
that the investigation was reasonable despite the failure to
obtain certain hospital records because the hospital records
were irrelevant. She explained that adjusters are not
required to do a “scorched earth to obtain every scrap
of medical information about a claimant.” (Trial Tr. at
1323:13-1324:8.) She testified that the adjusters acted
reasonably when they made the payments timely and when,
without prompting, they advised Plaintiff that he no longer
had to pay premiums after he had been on disability for a
certain period. She testified that, contrary to
Plaintiff's assertion, the decision to require Plaintiff
to undergo an independent medical examination
(“IME”) was reasonable and that Plaintiff's
contention that the adjuster should have called
Plaintiff's treating physicians was unheard of. Ms.
Roberts explained, “I've never known an adjuster to
call a physician directly” and opined that it was
reasonable for the adjusters not to attempt to talk to
Plaintiff's physicians. (Trial Tr. at 1324:9-1326:11.)
She testified to the reasonableness of Country Life's
decision to reinstate benefits when it did. Ms. Roberts also
was not precluded from rebutting the opinions of
Plaintiff's expert, Ms. Fuller, whose analysis and
opinions Ms. Roberts criticized. (Trial Tr. at
1331:1-1332:10.)
Defendants
identify four opinions that they claim Ms. Roberts was
prejudicially precluded from offering. The Court's ruling
was narrow, however, and based on the witness's
misunderstanding of the applicable definition of bad faith.
The Court precluded none of the four opinions Defendants
identify. Had these four opinions been offered, however, they
would have been inadmissible for reasons other than Rule
702(c).
Ms.
Roberts' opinion that there was no evidence that the
claims adjuster was financially motivated to harm Plaintiff
is not a proper expert opinion. Fed.R.Civ.P. 702(a). A jury
can make its own determination of whether financial
incentives motivated a certain action without the assistance
of expert witness testimony. Likewise, Ms. Roberts'
opinion that any wrongful termination of claim benefits must
have been a mistake because she found no indication of any
intent to harm Plaintiff is not relevant, nor would the
opinion have been helpful to the jury. Ms. Roberts'
opinion that people are not perfect and make mistakes, which
in her experience rarely constitutes bad faith, is
irrelevant, not helpful to the jury, and amounts to a legal
conclusion. Finally, Ms. Roberts' opinion that case law
does not require an insurer to prevent all harm and that an
insurer should not be liable because of a good faith mistake
in judgment so long as it acts honestly, addresses an
ultimate issue of law and is an opinion that would not be
helpful to the jury. Indeed, any point intended to be made by
this opinion was adequately covered by the jury instructions.
Defendants
additionally argue that the Court should have limited
Plaintiff's trial time, as it advised it would after the
untimely challenge to Ms. Roberts' opinions. Defendants
do not argue legal error or prejudice. Defendants'
initial representation to the Court about the time needed to
present their evidence was incorrect. Because the defense did
not need the amount of trial time the Court initially was
lead to believe was needed, the Court found that it was not
necessary to assess against Plaintiff's allotted time the
delay occasioned by the untimely challenge to Ms. Roberts.
Defendants had ample time to present their case and therefore
were not prejudiced. (Trial Tr. at 1365:14-24; 1415:11.)
Defendants also complain that the curative instruction given
to the jury was inadequate to cure the perceived error of not
letting Ms. Roberts opine on whether Defendants acted in bad
faith. The instruction the Court gave was proposed by
Defendants and agreed to as modified. (Trial Tr. at
1567:4-10.) The instruction was not intended to address the
limits on Ms. Roberts' opinions; it was intended to
address any negative perceptions by the jury from the
“voir-dire” that occurred during her direct
examination. The instruction was adequate for its intended
purpose and Defendants were not prejudiced.
B.
The ...