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Date: 11-24-2018
Case Style:
Virginia Callahan; T.G. v. Pacific Cycle, Inc.
Case Number: 17-1739
Judge: Per Curiam
Court: United States Court of Appeals for the Fourth Circuit on appeal from the District of Maryland (Baltimore County)
Plaintiff's Attorney: Francis Joseph Collins
Defendant's Attorney: Jonathan M. Judge
Description:
Virginia Callahan and her minor granddaughter T.G. (“Appellants”) initiated this
action against Pacific Cycle and Toys “R” Us (“Appellees”). Appellants alleged various
strict liability, negligence, and breach of warranty claims, all arising from an accident
involving T.G. and a bike manufactured and sold by Appellees. On January 20, 2017, a
jury found that Appellants had not established that the bike was defective. Appellants
now challenge five of the district court’s evidentiary rulings, portions of its jury
instructions, and its decision to deny Appellant Callahan’s motion for entry of judgment.
Recognizing that the district court is in the best position to resolve these issues, we
affirm.
I.
In September 2011, Virginia Callahan bought a bike for her 11-year-old
granddaughter, T.G. Pacific Cycle designed and manufactured the bike. Toys “R” Us
assembled and sold it. According to Appellants, on September 16, 2012, T.G. rode the
bike for only the second time. During that second ride, T.G. rode the bike down a hill
and struggled to control her speed. After attempting and failing to apply the rear brakes,
T.G. applied the front brakes. The bike flipped forward. T.G.’s mouth crashed into the
bike’s handlebars. She lost three teeth and fractured another. Three years later,
Appellants sued Appellees, alleging that a manufacturing defect in the bike’s rear brake
made the brake too difficult for T.G. to engage.
On January 20, 2017, a jury found that Appellants had not demonstrated that the
bike was defective. As a result it did not reach the issue of causation. On appeal,
3
Appellants challenge many of the rulings that the district court made before, during, and
after trial. Appellants challenge five of the district court’s evidentiary rulings, including
the court’s decisions to (1) allow Appellees to make an argument not disclosed in the
joint pretrial order; (2) allow Appellees’ expert to testify regarding the cause of the
accident; (3) allow Appellees’ expert to use a stick figure illustration as a demonstrative;
(4) admit Appellees’ certificates of conformity under the business records hearsay
exception; and (5) prohibit the jurors from handling or testing the bike. Appellants also
challenge the district court’s decision to instruct the jury on spoliation of evidence.
Finally, Virginia Callahan challenges the district court’s denial of her motion to enforce
Appellees’ offer, made before trial pursuant to Federal Rule of Civil Procedure 68, to
allow judgment against them in exchange for $50,000.
II.
Appellants argue that the district court made several reversible errors in resolving
evidentiary disputes. Specifically, Appellants assert that the district court erred by
allowing Appellees “to vary their theories and evidence from what they disclosed in the
pretrial order”; allowing Appellees’ expert to “testify beyond his area of expertise and
render opinions on accident reconstruction” and “use a stick man drawing that was not a
fair and accurate depiction of the accident” as a demonstrative; admitting Appellees’
certificates of conformity over Appellants’ hearsay objections; and prohibiting the jury
“from inspecting and touching the bike.” Appellants’ Br. 7–8.
4
A.
This court reviews the district court’s evidentiary decisions for abuse of discretion.
See Campbell v. Boston Sci. Corp., 882 F.3d 70, 77 (4th Cir. 2018). That standard
applies to each of the challenged evidentiary rulings. See, e.g., McLean Contracting Co.
v. Waterman S.S. Corp., 277 F.3d 477, 479 (4th Cir. 2002) (reviewing a decision that the
parties’ pretrial order barred the presentation of a new theory for abuse of discretion);
Bresler v. Wilmington Trust Co., 855 F.3d 178, 195 (4th Cir. 2017) (reviewing a decision
on the admissibility of an expert opinion for abuse of discretion); United States v. Rucker,
557 F.2d 1046, 1049 (4th Cir. 1977) (reviewing a decision to permit demonstrative
evidence for abuse of discretion); Gen. Ins. Co. of Am. v. U.S. Fire Ins. Co., 886 F.3d
346, 357 (4th Cir. 2018) (reviewing an application of the business records exception to
hearsay for abuse of discretion); United States v. Aragon, 983 F.3d 1306, 1309 (4th Cir.
1993) (reviewing a decision to send properly admitted exhibits to the jury room for abuse
of discretion).
Accordingly, this court will overturn an evidentiary decision only if it was
“arbitrary and irrational.” Gentry v. E. W. Partners Club Mgmt. Co., 816 F.3d 228, 239
(4th Cir. 2016) (quoting Noel v. Artson, 641 F.3d 580, 591 (4th Cir. 2011)). In
determining whether a decision was arbitrary and irrational, this court “look[s] at the
evidence in a light most favorable to its proponent, maximizing its probative value and
minimizing its prejudicial effect.” United States v. Cole, 631 F.3d 146, 153 (4th Cir.
2011) (quoting United States v. Udeozor, 515 F.3d 260, 265 (4th Cir. 2008)).
Additionally, even where we determine that the district court erred in resolving an
5
evidentiary issue, that decision “is reversible only if it affects a party’s substantial rights.”
Schultz v. Capital Int’l Sec., Inc., 466 F.3d 298, 310 (4th Cir. 2006).
Viewing the evidence in the light most favorable to Appellants, none of the
challenged evidentiary rulings constitute reversible error.
1.
The first evidentiary ruling that Appellants challenge is the district court’s
decision to allow Appellees to argue that the condition of the bike changed even though
Appellees did not identify that argument in the parties’ joint pretrial order. Appellants
and Appellees filed a joint pretrial order approximately one month before the trial began.
The pretrial order outlined Appellants’ claim that a defective rear brake caused T.G.’s
accident. It also outlined Appellees’ defense that the brake was not defective. Appellees
took the position that “the back brake functioned properly.” J.A. 74–75.1 Additionally,
Appellees claimed that T.G.’s size, inexperience, and failure to follow warning labels
caused her accident.
A trial judge has broad discretion to admit or exclude evidence that is outside the
scope of the pretrial order. See Aiken Cty. v. BSP Div. of Envirotech Corp., 866 F.2d
661, 671 (4th Cir. 1989). Generally, if a party fails to identify an issue in the pretrial
order, that party loses the right to have the issue tried. See Fed. R. Civ. P. 16(c) advisory
1 Citations to the “J.A.” refer to the Joint Appendix filed by the parties in this
appeal.
6
committee’s note to 1983 amendment (“If counsel fail to identify an issue for the court,
the right to have the issue tried is waived.”). That means that the district court may
exclude evidence on the grounds that it was not included in the pretrial order. See, e.g.,
McLean, 277 F.3d at 479 (finding the district court’s decision to exclude certain evidence
was a proper exercise of discretion because the proponent failed to include the case
theory related to that evidence in the pretrial order despite having notice that the opposing
side would be pursuing a related theory).2 However, the district court also retains the
right to admit evidence even though it was not included in the pretrial order. See, e.g.,
Clark v. Newport News Shipbuilding & Dry Dock Co., 937 F.2d 934, 940 (4th Cir. 1991)
(finding the district court did not abuse its discretion in permitting the defendant to call
an expert witness not identified in the pretrial order because the plaintiff had been put on
notice of the addition during the pretrial conference and the plaintiff was permitted to call
an additional expert to counter the testimony).3
Courts consider five factors when deciding whether to admit or exclude evidence
supporting issues that a party did not identify in the pretrial order. Those include (1)
2 See also Burlington Ins. Co. v. Shipp, No. 98-2722, 2000 WL 620307, at *4 (4th
Cir. May 15, 2000) (per curiam) (finding the trial court did not abuse its discretion by
excluding evidence supporting an issue that was not identified in the pretrial order
because it would have disrupted the trial while yielding evidence that was only
marginally useful to the jury).
3 See also E. Associated Coal Corp. v. Loc. 781, United Mine Workers of Am., No.
98-1047, 1999 WL 3373, at *3 (4th Cir. Jan. 6, 1999) (per curiam) (finding the trial court
did not abuse its discretion by allowing evidence supporting an issue that was not
identified in the pretrial order because the failure to disclose was inadvertent and the
opposing party failed to demonstrate prejudice).
7
surprise to the party opposing the evidence; (2) feasibility of curing that surprise; (3)
extent to which allowing the evidence would disrupt the trial; (4) importance of the issue;
and (5) the explanation for the failure to identify the issue before trial. See Adalman v.
Baker, Watts & Co., 807 F.2d 359, 369 (4th Cir. 1986), abrogated on other grounds by
Pinter v. Dahl, 486 U.S. 622, 649 n.25, 650 (1988). Applying those factors here, it is
clear the district court did not abuse its discretion in allowing Appellees to present
evidence supporting their theory that the condition of the bike had materially changed
since the accident.
a. Surprise
To begin, the issue as to the condition of the bike should not have come as a
surprise to Appellants. Appellants had two indications that the condition of the bike
might become an issue at trial: First, on December 19, 2016 -- the same day that the
parties filed the pretrial order -- Appellees filed a motion to exclude in-court testing of
the bike on the grounds that the condition of the bike might have changed since the
accident. That should have been a clear indication to Appellants that the condition of the
bike might be an issue at trial. Second, Appellants should have realized that the
condition of the bike might be an issue at trial when the condition of the bike did, in fact,
change.
Appellants alone possessed the bike during the five years between the accident and
the trial. At some point during those five years, the position of the barrel at the end of the
rear brake cable and the position of the handlebars relative to the alignment of the front
wheel changed. Indeed, Appellants have never disputed that the condition of the bike
8
changed. See, e.g., J.A. 622 (“[T]he handlebars are slightly different from [where] they
were at one point . . . .”); id. at 623 (“[W]e didn’t dispute [that] . . . [a]t some point, [the
handlebars were] some other way. . . . Somehow [the handlebars] changed.”).
b. Feasibility of Curing Surprise
To the extent that Appellants were surprised by Appellees’ argument that the
condition of the bike had changed, the district court took steps to cure the surprise. For
instance, the district court allowed Appellants to recall their bike expert to rebut
Appellees’ evidence regarding the change in the condition of the bike.
c. Disruption
Allowing Appellees to argue that the condition of the bike changed might have
resulted in a slight disruption to the four day trial. Although Appellees raised their
concern that the condition of the bike might have changed before the trial began, they did
not argue that the condition of the bike had in fact changed until the morning of the third
day of trial. At that point, Appellants’ expert had already testified regarding the
condition of the bike and the cause of the accident. But the district court did not find that
allowing Appellees to raise the argument, and allowing Appellants to respond to it, to be
detrimentally disruptive: as noted above, at the end of the trial, the district court allowed
Appellants to recall their expert to rebut Appellees’ argument that the condition of the
bike had changed.
d. Importance
Next, the condition of the bike was significant. The relevance of the bike, in a
lawsuit alleging a manufacturing defect in that bike, is obvious. Nonetheless, Appellants
9
dispute this point. Appellants attempt to parse the parts of the bike by arguing that,
although the brake was important, the handlebars were irrelevant. As an initial matter, a
change in the condition of any part of the bike makes it more likely that the condition of
another part of the bike -- one that is perhaps more important to the merits of the case --
is not the same. But even if this court were inclined to dissect the bike, Appellants’
argument still fails. The odd orientation of the handlebars was a factor Appellees’ expert
took into consideration when he concluded that the accident was likely a “side-spill.”
J.A. 555–56. Thus, the orientation of the handlebars was material to Appellees’ defense
that a defect in the back brake would not have caused the accident.
e. Explanation
Finally, Appellees had an unimpeachable explanation for their failure to identify
the issue in the pretrial order: the bike was in Appellants’ custody. Before the trial began,
Appellees had no reason to suspect that its condition had changed. As soon as Appellees
did have reason to suspect the condition of the bike had changed, they raised the issue.
The balance of the factors weighs in favor of Appellees. Accordingly, the district
court did not abuse its discretion by allowing Appellees to present evidence regarding the
change in the condition of the bike.
2.
Appellants next argue that the district court abused its discretion by permitting
Appellees’ expert, Patrick Logan, to testify regarding the cause of the accident.
10
a.
Appellants assert that Logan’s testimony regarding the cause of the accident was
unreliable and should have been excluded under Daubert v. Merrell Dow Pharm., Inc.,
509 U.S. 579 (1993). Appellees argue in response that Appellants waived their objection
to the reliability of Logan’s opinion because they did not raise it at trial.
Appellees hired Logan, a mechanical engineer and an expert in bike design,
testing, and accessories, to investigate the cause of the accident. Logan conducted an
investigation and summarized his findings in an expert report. During the trial, Logan
testified that T.G.’s accident was the result of user error. Relying on “the fact that the
wheel [was] turned from the direction of the handlebar,” the “mark on the top of the top
tube,” and the “contact with teeth to the handlebar,” Logan characterized the accident as a
“side spill” caused by misuse as opposed to a “pitch-over” caused by brake malfunction.
J.A. 154.
During the trial, Appellants objected to Logan’s testimony several times. Most
often, Appellants objected to Logan’s testimony on the basis that Logan was not qualified
to testify as an accident reconstructionist. See, e.g., J.A. 516 (“I think I am done
regarding [Logan’s] qualifications, and I do oppose him providing any opinions regarding
accident reconstruction of any kind.”). At no time did Appellants object to Logan’s
testimony on Daubert grounds.
“To preserve an argument on appeal, [a party] must object on the same basis
below as he contends is error on appeal.” United States v. Zayyad, 741 F.3d 452, 459
(4th Cir. 2014). The basis of the objection must be stated specifically, and “an objection
11
on one ground does not preserve objections on different grounds.” Id. (quoting United
States v. Massenburg, 564 F.3d 337, 342 n.2 (4th Cir. 2009)). The specificity
requirement applies with equal force to Daubert objections. See Estate of Moreland v.
Dieter, 395 F.3d 747, 755–56 (7th Cir. 2005) (finding objections made at trial insufficient
to preserve a Daubert argument on appeal); United States v. Diaz, 300 F.3d 66, 75 (1st
Cir. 2002) (same); see also Cortes-Irizarry v. Corporacion Insular De Seguros, 111 F.3d
184, 189 (1st Cir. 1997) (“[W]e can envision few, if any, cases in which an appellate
court would venture to superimpose a Daubert ruling on a cold, poorly developed record
when neither the parties nor the nisi prius court has had a meaningful opportunity to mull
the question.”).
Appellants did not object on Daubert grounds before or during trial nor did they
request a Daubert hearing. Appellants did not even mention Daubert, Federal Rule of
Evidence 702, or any form of the word “reliability” in any objection at trial. When
Appellants attempted to have the district court exclude testimony regarding accident
reconstruction, Appellants did so by suggesting that Logan’s testimony was based on
speculation. See J.A. 350–51 (“[Logan] engaged in some sort of speculation . . . but he
has no forensic background for accident reconstruction, and he starts to just give some
wild opinions . . . we would ask that any such testimony about how the accident
happened, whether it was pitch-over or something else, be excluded from evidence.”).
But mentioning speculation and hinting at the reliability of an expert’s testimony is not
sufficient to preserve a Daubert argument for appeal. See Diaz, 300 F.3d at 75–76
(finding a vague reference to the “Daubert Trilogy” in a pretrial memorandum
12
insufficient to preserve an objection to the reliability of an expert’s methodology).
Without development of the issue below, this court declines to address the reliability and
relevance inquiry which Daubert requires.
b.
Appellants also argue that the district court should have excluded Logan’s
testimony regarding the cause of the accident because it was not covered in his expert
report and because Logan was not qualified to testify as an accident reconstructionist.
Neither of those arguments holds water.
First, Logan’s expert report did conclude that the accident was, at least in part, the
result of rider inexperience. But even if it did not, Logan discussed the cause of the
accident in detail in his deposition, which was taken ten months before the trial began.
For that reason, any failure to mention the cause of the accident in his expert report did
not prejudice Appellants. See Bresler, 855 F.3d at 190 (“[A] party who fails to comply
with the expert witness disclosure rules is prohibited from using that information or
witness to supply evidence . . . unless the failure was substantially justified or is
harmless.” (internal quotation marks omitted)).
Second, the district court agreed with Appellants that Logan was not qualified to
testify as an accident reconstructionist.4 The district court allowed Logan to testify
4 Logan is a mechanical engineer and an expert in “bicycle design, testing and
accessories.” J.A. 152. Appellees offered him as an expert in “bicycle design,
performance, and accident investigation.” Id. at 512. Logan’s “accident investigation”
involved determining “what potential causes could account for the post-accident
condition of the bicycle.” Id. at 517-18. Accordingly, Logan examined, the condition of
(Continued)
13
regarding “what happens to bicycles when certain kinds of accidents happen,” but ruled
that Logan would not be permitted to testify regarding “what happens to people when
they take certain actions and how they might be injured.” J.A. 548. At times, when
Appellants objected to Logan’s testimony on the grounds that it waded into accident
reconstruction, the district court disagreed and overruled the objection. But the district
court also stopped Logan’s testimony when he thought it did cross that line. See, e.g., id.
at 548-49 (“I think we are starting to cross a line into what [Appellants have] called
accident reconstruction . . . I don’t want [Logan] to go . . . into kind of showing to the
jury: Here is what happens when people hit the front brake too much.”). To the extent
Appellants are asking this court to review the district court’s application of its ruling on
Appellants’ objection, “we are obliged to accord [it] substantial deference.” Wolfe v.
Clarke, 718 F.3d 277, 284 (4th Cir. 2013) (quoting ABT Bldg. Prods. Corp. v. Nat’l
Union Fire Ins. Co., 472 F.3d 99, 113 (4th Cir. 2006)). Indeed, “to sustain appellate
review, district courts need only adopt a reasonable construction of the terms contained in
their orders.” Id. (quoting JTH Tax, Inc. v. H & R Block E. Tax Servs., Inc., 359 F.3d
699, 706)). The district court here reasonably interpreted and applied its own ruling.
the brakes and other damages marks on the bike’s pedals, handlebars, seat, crank, chain
ring, front wheel rim, and rear derailleur cable. See id. at 156-59. With that information,
Logan reached a conclusion regarding what could have caused the accident. See id. at
161-62. In contrast, an “accident reconstructionist” would determine how an accident
occurred by measuring “skid marks and tire tracks” at the scene of the accident and
noting “weather conditions and topography” that could have contributed to the accident.
Id. at 517-18.
14
c.
Appellants next argue that the district court abused its discretion by allowing
Logan to use a stick man demonstrative during his testimony. Logan prepared an
“illustration” that purported to show how, as a result of engaging the front left brake of a
bike, a rider could experience a “pitch-over” accident. J.A. 545–46. Appellants objected
to the illustration on the basis that it was “not a fair depiction of [the] bike, [the] Plaintiff,
[the] speed, or anything else about [the] accident.” Id. at 546. The district court
overruled Appellants’ objections and refused to prohibit Logan from using the
demonstrative. But, to cure any confusion that might have stemmed from Logan’s use of
the demonstrative, the court instructed the jury to consider the demonstrative with
caution. See id. at 551 (“So, ladies and gentlemen, you’re going to be shown a diagram,
and we’re going to have some testimony about that. I want to make it clear: This
diagram is not specific to this case. It is not representative of the Plaintiff or the bicycle
in question.”).
Federal Rule of Evidence 611 gives district courts broad discretion over the
presentation of evidence in the course of the trial “so as to make the . . . presentation
effective” and “avoid wasting time.” Fed. R. Evid. 611. Here, when Appellants objected
to Logan’s demonstrative on the basis that it was not “a fair and accurate representation
of something relevant to the case,” the district court concluded that it “illustrate[d]”
Logan’s testimony. J.A. 550–51. Additionally, the district court mitigated any risk of
prejudice that the stick man might have posed by instructing the jury that the diagram
was not specific to the accident at issue. With that in mind, there is no basis for this court
15
to conclude that the district court abused its broad discretion by allowing Appellees’
expert witness to use a demonstrative.5
3.
Appellants next argue that the district court abused its discretion by allowing the
admission of Appellee Pacific Cycle’s certificates of general conformity (“COGCs”)
under the business records hearsay exception. Appellants argue that the COGCs did not
satisfy the requirements of the business records exception. Specifically, Appellants argue
that Appellees failed to demonstrate that the COGCs were prepared by someone with
knowledge because the records rely on testing done by a third party.6
Pacific Cycle’s Senior Director of Bicycle Product Development, John Werwie,
laid the foundation for the COGCs as business records. Werwie testified that Pacific
Cycle uses the COGCs to certify to retailers that their products conform to Consumer
Product and Safety Commission (“CPSC”) standards. Werwie testified that Pacific Cycle
relies on a laboratory, SGS Testing Services (“SGS”), to conduct quality control tests on
5 Even if the trial court’s decision to allow Logan to use a stick man demonstrative
was an abuse of discretion, it was harmless. The demonstrative illustrated potential
causes of the accident. See J.A. 551 (describing the demonstrative as illustrating “a very
high level and just in general, the overall concept of a pitch-over accident following
strong application of the left front brake”). Without reaching causation, the jury
concluded that Appellants had not satisfied their burden to prove that the back brake was
defective. See id. at 104. On that issue alone, the jury reached a verdict in favor of
Appellees.
6 Appellants also argue that the trial court abused its discretion by admitting the
COGCs because they are irrelevant. Appellants argue that, because the inspections were
of exemplar bikes and not T.G.’s bike, they are irrelevant. However, it does not appear
that Appellants made that argument during trial. They thus waived the argument.
16
its bikes. Werwie testified that the COGCs are created in the regular course of business,
by Pacific Cycle employees, at or around the time they received passing CPSC testing
results from SGS, that these documents are maintained in the regular course of business,
that he was familiar with SGS’s pre-production testing, and that SGS’s testing was done
in the normal course of business.
During Werwie’s testimony, Appellants objected to the admission of the COGCs
on hearsay grounds. Appellants argued that Werwie did not have personal knowledge
regarding SGS’s quality control tests. The district court overruled the objection. In
doing so, the court noted that Werwie “established that he’s familiar with the process,
that he’s been to the factory ten times, that [at] one time he was a product manager, and
then, oversaw product managers.” J.A. 385.
The business records exception to the prohibition of hearsay evidence requires that
the record contain information transmitted by someone with knowledge of its contents.
See Fed. R. Evid. 803(6). Reliance on information from third parties does not render the
business records hearsay exception inapplicable. See Gen. Ins. Co., 886 F.3d at 358. A
witness laying the record’s foundation “must be able to testify that the record was kept in
the course of a regularly conducted business activity and also that it was a regular
practice of that business activity to make the record.” Id. (internal quotation marks
omitted). But that witness need not have participated in the creation of the record or have
even spoken to the individual who did create the document. Id. As detailed above,
Werwie’s testimony satisfies these requirements.
17
With that testimony in mind, we conclude it was not arbitrary or irrational for the
district court to rule that the COGCs’ reliance on information from SGS is consistent with
the business records exception to the hearsay rule. Gen. Ins. Co., 886 F.3d at 358
(finding documents that relied on information from third parties admissible under the
business records exception where the qualified witness was familiar with the creation of
the third-party information and that that information was created in the regular course of
business).
4.
Lastly, Appellants argue that the district court abused its discretion by prohibiting
the jurors from handling or testing the bike. Federal Rule of Evidence 403 allows a trial
court to exclude evidence if its potential to mislead or confuse jurors substantially
outweighs its probative value. Here, the district court granted Appellees’ motion to
exclude in-court testing of the bike primarily because the condition of the bike had
changed. On that basis, the court concluded that jurors might be misled regarding the
defectiveness of the brake at the time of the accident. Even assuming the maximum
probative value and minimum prejudicial effect, the district court’s decision not to allow
jurors to handle the bike was not arbitrary or irrational. So this court will not upset it.
III.
Appellants next challenge the district court’s jury instructions. Specifically,
Appellants argue that the district court abused its discretion by giving the jury a
spoliation instruction because there was no evidence that a change in the condition of the
bike was due to intentional conduct on the part of Appellants. Appellees’ motion to
18
include a spoliation instruction came after the second day of trial, when Appellees’ expert
“inspect[ed] the bike to assess its current condition” and observed that the brake was
more difficult to squeeze at that time than it was at the time of his initial inspection. J.A.
339. Appellees’ expert also noticed that the orientation of the handlebars had changed
since the time of his initial inspection. At the time of his initial inspection, the bike
“[was] in a permanent left-turn position” -- when the handlebars were positioned at a 90
degree angle from the body of the bike, the front wheel was askew at about a 45 degree
angle. Id. In contrast, on the morning of the second day of trial, the wheel was directly
aligned with the body of the bike.
At that point, Appellees raised their concerns regarding the condition of the bike
with the district court. Because of the change in the condition of the bike, Appellees
asked the court to instruct the jury on spoliation. Specifically, Appellees asked the court
to instruct the jury that they should “infer that the position of the front wheel relative to
the handlebar was in a condition favorable to the Defendants, and unfavorable to the
Plaintiffs” before the change in the bike’s condition. J.A. 133 n.9; see also id. at 649.
The court agreed to give the following spoliation instruction:
The condition of the front wheel of the bicycle and its
position relative to the handlebar has changed between the
time defendants’ expert inspected the bicycle and today. The
bicycle was in the possession of the plaintiffs during that
time.
The position of the front wheel relative to the handlebar was
evidence material to defendants’ expert’s opinions in this case
. . . . Therefore, you may, but are not required, to infer that
the position of the front wheel relative to the handlebar was in
19
a condition favorable to the defendants, and unfavorable to
the plaintiffs before this change.
If you make this inference, you should consider it in light of
all of the other evidence offered in the case as you reach your
verdict.
Id. at 644–45.
A.
A trial court’s decision to instruct the jury on spoliation is reviewed for abuse of
discretion. See Bunn v. Oldendorff Carriers GMBH & Co. KG, 723 F.3d 454, 468 (4th
Cir. 2013) (“[W]e review a trial court’s jury instruction for abuse of discretion, keeping
in mind that a trial court has broad discretion in framing its instructions to a jury.”
(internal quotation marks omitted)). Even if the district court included an erroneous
instruction, the resulting verdict will not be set aside unless it “seriously prejudiced the
challenging party’s case.” Id. (emphasis in original) (internal quotation marks omitted).
B.
Before permitting a jury to draw an adverse inference from the absence, loss, or
destruction of evidence, a trial court must find that the evidence at issue was relevant
such that it “would naturally have been introduced into evidence” and that the
“intentional conduct” of the party in control of the evidence contributed to its loss or
destruction. Vodusek v. Bayliner Marine Corp., 71 F.3d 148, 155–56 (4th Cir. 1995). To
that end, “the inference requires a showing that the party knew the evidence was relevant
to some issue at trial and that his willful conduct resulted in its loss or destruction.” Id.
But “willful conduct” does not necessarily require bad faith. See Buckley v. Mukasey,
20
538 F.3d 306, 323 (4th Cir. 2008). Rather, “willful conduct” in this context simply
means not accidental. See Vodusek, 71 F.3d at 155 (finding a spoliation instruction
appropriate where an expert’s investigative techniques required damaging relevant
evidence).
Considering the evidence that was before the district court at the time the court
made its decision on the spoliation instruction, the court reasonably concluded that
Appellants’ intentional conduct damaged relevant evidence. When weighing the
evidence related to the “willful conduct” requirement, the facts before the district court
were: (1) the bike was in Appellants’ exclusive control; (2) the bike’s condition changed
in a way that was more favorable to Appellants’ theory of what caused the accident; and
(3) reorienting the wheel in relation to the handlebars requires an intentional act, like
straddling the wheel and turning the handlebars.7 That Appellants acted willfully in
changing the orientation of the bike’s handlebars necessarily flows from this set of facts.
Appellants also argue that the district court abused its discretion by instructing the
jury on spoliation because Appellees had an opportunity to inspect the bike before the
change in its condition. But that argument also fails. In support of this exception to the
spoliation rule, Appellants cite several cases that supposedly stand for the proposition
7 Appellees’ expert testified that an intentional act was required to change the
orientation of the handlebars. Appellants’ counsel also stated that he could have changed
the orientation of the handlebars by straddling the wheel and turning them. See J.A. 641
(“As far as I’m concerned, we can [change the position of the handlebars] right now. I
can do it in five seconds. I’ve done it to my bike many a time . . . . You straddle the
wheel, as the witness said, and you turn the handle bars a little bit.”).
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that, once an opposing party has had an opportunity to inspect the evidence, a change in
its condition does not justify a spoliation instruction. But the cases Appellants cite are
not analogous to the instant case. In each of those cases, the opposing party was
negligent in not inspecting the evidence. See Pirrello v. Gateway Marina, No. 08-cv-
1798, 2011 WL 4592689, at *7 (E.D.N.Y. Sept. 30, 2011) (finding a spoliation
instruction was not justified because the defendant failed to request that the boatyard
holding the boat at issue preserve it); Cedar Petrochemicals, Inc. v. Dongbu Hannong
Chem. Co., 769 F. Supp. 2d 269, 292 (S.D.N.Y. 2011) (finding the defendant had
adequate time to inspect the evidence at issue before it was spoliated but failed to do so);
Gaffield v. Wal-Mart Stores E., LP, 616 F. Supp. 2d 329, 338 (N.D.N.Y. 2009) (same).
That is not the case here.
Appellees did not miss their opportunity to inspect the bike because they were
negligent. Indeed, the instruction was not intended to account for Appellees’ lack of
access to the bike. Rather, the instruction was intended to off-set Appellants’ testimony
that the condition of the bike had not changed. For these reasons, the district court did
not abuse its discretion by instructing the jury on spoliation.
IV.
Finally, Appellants argue that the district court erred by denying Callahan’s
motion for entry of judgment pursuant to Federal Rule of Civil Procedure 68. On
December 2, 2016, six and half weeks before trial, Appellees made Appellants a Rule 68
offer of judgment. That offer stated:
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Defendants Toys “R” Us-Delaware, Inc. and Pacific Cycle
Inc. (collectively, “Defendants”), by their attorneys, pursuant
to Federal Rule of Civil Procedure 68, hereby offer to allow
judgment to be taken against them in favor of Virginia
Callahan and T. G. (“Plaintiffs”) in the amount of $50,000.00,
inclusive of all costs, expenses, attorneys’ fees, and any other
fees accrued through the date of service hereof.
This offer of judgment is offered in full and complete
satisfaction of all claims that Plaintiffs have asserted or could
have asserted against Defendants in the above-captioned
lawsuit. This offer of judgment is not intended to resolve or
impact in any way any claims Defendants have or may have
against Plaintiffs.
This offer of judgment is not, and is not to be construed as, an
admission that Defendants are liable in this action for any
claim set forth in Plaintiffs’ Complaint.
In accordance with Rule 68, this offer will remain open for
fourteen (14) days after the service of this offer upon
Plaintiffs. If this offer is not accepted in writing within that
fourteen (14) day period, it shall be deemed withdrawn. If
any judgment finally obtained by Plaintiffs is not more
favorable than the offer contained herein, Defendants will
seek from Plaintiffs, in accordance with Rule 68, all of their
incurred costs after the date of this offer, including attorneys’
fees as and to the extent applicable.
J.A. 110–11.
On December 12, 2016, Callahan wrote to Appellees purporting to accept their
offer. However, Callahan noted that Appellees’ offer “was not explicitly contingent on
both Plaintiffs accepting the offer.” J.A. 113. Accordingly, she “accept[ed] the offer of
judgment on her own behalf” and not “on behalf of T.G.” Id. at 114. Significantly,
Callahan stated that T.G. would “continue to pursue her claim for personal injuries.” Id.
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On December 23, 2016, Appellees rejected Callahan’s acceptance. Appellees
interpreted Callahan’s “acceptance on her own behalf” as a counteroffer. J.A. 115.
Specifically, Appellees pointed to language in their original offer of judgment that made
the offer “contingent on acceptance by both Plaintiffs.” Id. Appellees informed Callahan
that, because her purported acceptance altered the terms of their offer, it served as a
rejection. On January 5, 2017, Callahan reiterated her position that she accepted
Appellees’ offer.
The parties proceeded to trial 12 days later. During the trial, Callahan pursued the
claims she purportedly settled. Six days after the jury reached its verdict in favor of
Appellees, Callahan moved for entry of judgment pursuant to the Rule 68 offer of
judgment. The court denied Callahan’s motion on February 22, 2017. The court
reasoned that Callahan’s December 12, 2016 letter amounted to a counteroffer.
A.
The district court’s decision to deny Callahan’s motion for entry of judgment is
reviewed de novo: In determining whether a Rule 68 offer of judgment has been offered
or accepted, courts apply traditional principles of contract interpretation. See Campbell-
Ewald Co. v. Gomez, 136 S. Ct. 663, 666 (2016); First Fin. Ins. Co. v. Hammons, 58 F.
App’x 31, 34 (4th Cir. 2003). And a trial court’s interpretation of a contract is reviewed
de novo. Sky Angel U.S., LLC v. Discovery Comms., LLC, 885 F.3d 271, 278 (4th Cir.
2018). Further, to the extent the district court’s decision involved an interpretation of
Federal Rule of Civil Procedure 68, the de novo standard applies. See Camacho v.
Mancuso, 53 F.3d 48, 51 (4th Cir. 1995) (reviewing a trial court’s interpretation of the
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scope of a federal rule of civil procedure de novo); Hammons, 2003 WL 264700, at *1
(noting that a trial court’s interpretation of Federal Rule of Civil Procedure 68 is
reviewed de novo).
B.
It is axiomatic that valid acceptance of an offer requires complete acceptance.
See Iselin v. United States, 271 U.S. 136, 139 (1926) (“It is well settled that a proposal to
accept, or an acceptance upon terms varying from those offered, is a rejection of the offer
. . . .”). That is to say, an offeree cannot accept the terms of a contract after changing the
terms of the contract. See id.
Applying traditional principles of contract interpretation, Callahan did not accept
Appellees’ offer of judgment because her acceptance changed the terms of the offer.
Appellees’ offer was made in exchange for “full and complete satisfaction of all claims
that Plaintiffs have asserted or could have asserted against Defendants in the abovecaptioned
lawsuit.” J.A. 110. For that reason, Callahan did not accept the offer by
accepting “on her own behalf” while T.G. “continue[d] to pursue her claim for personal
injuries.” Id. at 114. Indeed, Callahan continued to pursue her own claims.
Appellants argue that Callahan had no choice but to accept the offer. Because her
damages were limited by statute to medical expenses, the $50,000 satisfied her
grievances. For that reason, Appellants assert, Callahan either had to accept the offer or
face Rule 68 penalties, which require an offeree who rejects a Rule 68 offer but fails to
obtain a judgment more favorable than the offer, to pay the costs incurred after the offer
was made. It is unclear whether or not the offer, directed at both Appellants T.G. and
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Callahan, actually did require Callahan to accept it or face Rule 68 penalties. But
regardless, the fact that this was Callahan’s state of mind with regard to the offer actually
supports the district court’s ruling. Callahan’s purported acceptance of the offer was not
part of a sincere meeting of the minds because it was a perfunctory acceptance made to
ensure that Callahan would not face Rule 68 penalties. Callahan’s decision to proceed to
trial, pursuing the claims she purportedly settled, further supports this interpretation of
her “acceptance.” Accordingly, the district court correctly denied Callahan’s motion for
entry of judgment pursuant to Federal Rule of Civil Procedure 68.
Outcome: For the foregoing reasons, we affirm the district court’s evidentiary rulings, jury
instructions, and decision to deny Callahan’s motion for entry of judgment.
AFFIRMED
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