Troknya v. Cleveland Chiropractic Clinic

• Decision Date: 21 February 2002
• Docket Number: No. 01-1360.,01-1360.
• Citation: 280 F.3d 1200
• Parties: Michael TROKNYA, John M. Hafner, Scott Miller; Jennifer Allen, Jon Michael Wheat; Mitch Gadow; Don C. Wheeler, III; Carol Lister; Kevin Lehane; Eugene Johnson; Jonathan Lui; Brian Lane; Jason A. Hutchinson; Preston Wang; Laurie Rogers; Ron Muse; Timothy Laber; Chris Butler; Nicholas Calvino; Aubrey Gail, Appellees, v. CLEVELAND CHIROPRACTIC CLINIC, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

280 F.3d 1200

Michael TROKNYA, John M. Hafner, Scott Miller; Jennifer Allen, Jon Michael Wheat; Mitch Gadow; Don C. Wheeler, III; Carol Lister; Kevin Lehane; Eugene Johnson; Jonathan Lui; Brian Lane; Jason A. Hutchinson; Preston Wang; Laurie Rogers; Ron Muse; Timothy Laber; Chris Butler; Nicholas Calvino; Aubrey Gail, Appellees, v. CLEVELAND CHIROPRACTIC CLINIC, Appellant.

No. 01-1360.

United States Court of Appeals, Eighth Circuit.

Submitted: September 14, 2001.

Filed: February 21, 2002.

Rehearing and Rehearing En Banc Denied: March 29, 2002.

COPYRIGHT MATERIAL OMITTED

Allan V. Hallquist, Kansas City, MO, argued (Kirsten A. Roth, on the brief), for appellant.

James R. Jarrow, Kansas City, MO, argued, for appellee.

Before HANSEN,¹ Chief Judge, and McMILLIAN and BEAM, Circuit Judges.

McMILLIAN, Circuit Judge.

Cleveland Chiropractic College (CCC) appeals from a final judgment entered in the United States District Court for the Western District of Missouri, upon a jury verdict finding it liable to nineteen former CCC students (plaintiffs) for negligent misrepresentation and awarding them each $1.00 in actual damages and $15,000.00 in punitive damages. See Troknya v. Cleveland Chiropractic College, No. 99-0746-CV-W-2 (W.D.Mo. Jan. 8, 2001) (Troknya v. CCC) (final order denying motion for judgment as a matter of law); id. (Nov. 28, 2000) (judgment following trial). For reversal, CCC argues that the district court: (1) abused its discretion in excluding certain evidence at trial, (2) erred in upholding the jury's negligent misrepresentation finding and related actual damages awards of $1.00 per plaintiff, and (3) erred in upholding the jury's punitive damages awards of $15,000.00 per plaintiff. For the reasons set forth below, we affirm in part, reverse in part, and remand the case to the district court for further proceedings consistent with this opinion.

Jurisdiction in the district court was proper based upon 28 U.S.C. § 1332. Jurisdiction in this court is proper based upon 28 U.S.C. § 1291. The notice of appeal was timely filed pursuant to Fed. R.App. P. 4(a).

Background

The following is a brief summary of the relevant procedural history. Plaintiffs, who each paid CCC approximately $50,000 in tuition and each graduated in 1997, filed their original complaint on August 3, 1999, and an amended complaint on October 18, 1999, alleging that CCC had failed to provide the quality and quantity of clinical training promised to them prior to their enrollment at CCC. Plaintiffs asserted, among other claims, breach of contract, fraud, and negligent misrepresentation. They sought actual damages of at least $75,000 per plaintiff and punitive damages of $1,000,000 per plaintiff, or any amount deemed appropriate.

Following discovery, plaintiffs moved for partial summary judgment, arguing that CCC was collaterally estopped from denying liability for fraud in light of a jury verdict against CCC on a similar fraud claim brought by another CCC graduate in a separate civil action. CCC filed a cross-motion for summary judgment, asserting legal deficiencies as to each of plaintiffs' claims. Upon review, the district court denied plaintiffs' motion for partial summary judgment, holding that the facts of the prior case were not sufficiently identical to the facts of the present case for collateral estoppel to apply. The district court partially granted CCC's motion for summary judgment, dismissing several claims not presently at issue on appeal. Troknya v. CCC, slip op. at 7 (Nov. 10, 2000) (summary judgment order). The district court's summary judgment order left plaintiffs' breach of contract, fraud, and negligent misrepresentation claims remaining for trial.

Prior to trial, the parties submitted their lists of anticipated trial exhibits and witnesses and thereafter filed several motions in limine. The district court entered an order disposing of their motions which, among other things, sustained plaintiffs' objection to any witnesses CCC had included in its trial list but failed to list in its Fed.R.Civ.P. 26 disclosures or supplements thereto. The district court also sustained plaintiffs' objection to any exhibits not identified prior to the close of discovery. Troknya v. CCC, slip op. at 2 (Nov. 9, 2000) (order disposing of pretrial motions). CCC made an offer of proof on the record as to the evidence it otherwise would have introduced at trial.

The case proceeded to trial. Plaintiffs presented evidence to show the following facts. Prior to enrolling at CCC, plaintiffs were promised, orally and in writing, that CCC would provide them with ample clinical training and experience — a critical part of a chiropractic education and a requirement for graduation and obtaining a license to practice. More specifically, CCC expressly promised in writing that: (1) CCC would provide the clinical patients, (2) plaintiffs would see an ample volume of clinical patients, and (3) plaintiffs would see a variety of clinical patients. See Appendix, Vol. 7, at 2130 (The CCC "Viewbook") ("The Cleveland Clinic provides ample volume and variety of patients."). However, during their years as CCC students in the 1990s, plaintiffs bore most of the burden of finding the patients for their clinical training, the number of clinical patients they saw was inadequate, and the variety of clinical patients they saw was inadequate. Indeed, a significant portion of the "patients" seen by plaintiffs as part of their clinical training were actually healthy people, such as family members, whom plaintiffs had recruited to be stand-in patients. CCC knew as early as 1989 that it did not have the ability to provide sufficient patients, as evidenced by a report dated May 21, 1989, sent by CCC to the Council on Chiropractic Education (CCE), an accreditation body through which chiropractic colleges monitor and certify themselves. See id. at 2136-38 (Progress Report Prepared for the Commission on Accreditation of CCE). Responding to an earlier letter from CCE expressing concerns about the insufficiency in volume and variety of cases in the CCC clinic, CCC set forth its policy regarding patient recruitment in that 1989 report, including the following statements: "patient recruitment in the public clinic is a joint responsibility of the College [i.e., CCC] and the intern [i.e., student]" and "individual contacts are the main responsibility of the intern, under the guidance of the supervising clinicians." Id. at 2138. CCC went on to state: "This policy, or its successor, will be published in the next editions of publications such as the Clinic Manual, Student Handbook, and College catalog, and it is already being shared with entering students during Orientation." Id. On the contrary, however, this "joint responsibility" patient recruitment policy was not disclosed to prospective students until after 1996, when a former student obtained a jury verdict against CCC on a claim of fraud,² and CCC thereupon changed its written publications.³

In its defense, CCC presented evidence at trial to show the following facts. Plaintiffs each successfully graduated from CCC, having met all the clinical requirements to graduate. Each thereafter passed the board examination and obtained a license to practice, except for one who did not apply for a license. At the time plaintiffs were enrolling in CCC, the college had already been accredited by CCE for many years. In March of 1992, a CCE evaluation team visited the school specifically to evaluate CCC's compliance with the 1991 standards for chiropractic colleges and published a report referred to as "the 1992 CCE Accreditation Report." See id., Vol. 3, at 868-934. The 1992 CCE evaluation team reported: "The number and variety of patients seen in the [CCC] clinic is adequate to meet the learning requirements of the graduate"; "[t]here is evidence ... that the average number of out-patient visits is about 30% greater than required"; and "[o]nly one or two student Interns voiced concern as to the availability of adequate patients to meet the clinic requirements." Id. at 907. The 1992 CCE evaluation team also reported that: "Highly successful evaluation systems have been developed by the [CCC] clinic which demonstrate that students are becoming capable caregivers and meeting the minimum Standards of the Clinical Competence Document." Id. at 910. In addition, CCC had been accredited since 1984 by the Commission of Institutions of Higher Education of the North Central Association of Colleges and Schools (NCACS), which published a 1997 report favorably evaluating the CCC clinical program. See id., Vol. 4, at 1028-29.

The jury returned a verdict in favor of CCC on plaintiffs' breach of contract and fraud claims, but against CCC on plaintiffs' negligent misrepresentation claim. The jury awarded each plaintiff $1.00 in actual damages and $15,000.00 in punitive damages. CCC filed a post-trial motion for judgment as a matter of law, challenging the jury's finding of liability for negligent misrepresentation and the damages awards. The district court denied CCC's motion, and this appeal followed.

Discussion

Exclusion of witnesses and exhibits

We first address CCC's argument that the district court abused its discretion in granting plaintiffs' motion in limine requesting exclusion of all witnesses who appeared on CCC's trial exhibit list but had not been included in CCC's disclosures and supplements provided under Fed. R.Civ.P. 26. CCC relies, as it did in the district court, upon Rule 26(e)(1), which states in part:

A party is under a duty to supplement at appropriate intervals its disclosures under subdivision (a) if the party learns that in some material respect the information disclosed is incomplete or incorrect and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing.

Fed.R.Civ.P. 26(e)(1) (emphasis added).

CCC argues that it was not required to...