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McClure v. Country Life Insurance Co.

United States District Court, D. Arizona

August 8, 2018

Benjamin McClure, Plaintiff,
Country Life Insurance Company, et al., Defendants.



         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 ...

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