Ad-Vantage Telephone Directory Consultants, Inc. v. GTE Directories Corp.

• Decision Date: 14 November 1994
• Docket Number: AD-VANTAGE,No. 93-2038,93-2038
• Citation: 37 F.3d 1460
• Parties: , 40 Fed. R. Evid. Serv. 1029 TELEPHONE DIRECTORY CONSULTANTS, INC., Plaintiff-Appellant, Cross-Appellee, v. GTE DIRECTORIES CORPORATION, Defendant-Appellee, Cross-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1460

37 F.3d 1460

30 Fed.R.Serv.3d 485, 40 Fed. R. Evid. Serv. 1029

AD-VANTAGE TELEPHONE DIRECTORY CONSULTANTS, INC. Plaintiff-Appellant, Cross-Appellee, v. GTE DIRECTORIES CORPORATION, Defendant-Appellee, Cross-Appellant.

No. 93-2038.

United States Court of Appeals Eleventh Circuit.

Nov. 14, 1994.

John R. Ferguson, Thomas W. Szromba, Swidler & Berlin, Washington, DC, Jawdet I. Rubaii, Clearwater, FL, for appellant.

William J. Blechman, James J. Kenny, Miami, FL, for appellee.

Appeals from the United States District Court for the Middle District of Florida.

Before TJOFLAT, Chief Judge, COX, Circuit Judge, and YOUNG ^*, Senior District Judge.

COX, Circuit Judge:

Ad-Vantage Telephone Directory Consultants, Inc. (Ad-Vantage) appeals following a jury verdict of no damages after a trial only on the issue of damages. Finding that the trial court erred in failing to grant a new trial after permitting an improper cross-examination of Ad-Vantage's expert witness, under Federal Rule of Evidence 608(b), we reverse and remand.

I. Background

This is the third time this case has come before this court. In 1982, Ad-Vantage was in the business of selling yellow pages advertising space on behalf of yellow pages publishers. Based on a series of actions explained more fully in our earlier opinions, Ad-Vantage sued GTE Directories Corporation (GTEDC) for violation of federal and Florida antitrust law and for intentional interference with advantageous business relationships. See Ad-Vantage Telephone Directory Consultants, Inc. v. GTE Directories Corp., 849 F.2d 1336, 1338-40 (11th Cir.1987) (Ad-Vantage I ). Before the first trial, the parties consented to trial before a magistrate judge. The first jury returned verdicts in Ad-Vantage's favor on the state-law antitrust and interference claims.

In the first appeal, this court reversed the judgment in Ad-Vantage's favor on the state antitrust claim, but affirmed the jury's finding of liability on the interference claim. Id. at 1348, 1350. A remand followed for a trial on the issue of compensatory damages for the interference claim. Id. at 1353. At the second trial, the magistrate judge directed a verdict against Ad-Vantage based on his interpretation of this court's mandate in Ad-Vantage I. Ad-Vantage Telephone Directory Consultants, Inc. v. GTE Directories Corp., 943 F.2d 1511, 1517 (11th Cir.1991) (Ad-Vantage II ). On appeal, we reversed and remanded for yet another trial, again solely on the issue of damages. Id. at 1519.

At the third trial, Ad-Vantage called Leonard Anton, a CPA and lawyer, for expert testimony about Ad-Vantage's lost profits. On cross-examination, GTEDC's counsel questioned Anton extensively on his methods and calculations. GTEDC then moved away from Anton's lost profit estimates and into Anton's past. The personal questioning primarily concerned three events.

GTEDC first sought to inquire into Anton's bankruptcy several years before trial. The magistrate judge sustained Ad-Vantage's objection to explicit mention of the bankruptcy. GTEDC's counsel nonetheless delved into loans Anton had taken from his accounting clients that he did not repay in full because of his bankruptcy. GTEDC's counsel went down Anton's bankruptcy schedule, asking Anton about each client--by name--from whom Anton had borrowed money. The mention of each client was followed by the question whether Anton had repaid the debt. Ad-Vantage's repeated objections were overruled.

GTEDC's counsel then began inquiring into disciplinary proceedings of the Florida Bar Association and the American and Florida Institutes of Certified Public Accountants against Anton around 1990 and 1991. GTEDC revealed that all three organizations had investigated Anton for forging an endorsement on a client's check. No sanctions resulted, but Anton resigned from the Bar with leave to reapply. The Institutes of CPAs found no probable cause. On recross, the magistrate judge allowed GTEDC's counsel, over objection, to quote the grievance letter sent to the Florida Bar Association by one of Anton's accounting clients.

Finally, GTEDC's counsel questioned Anton about his censure by the Florida Board of Accountancy in 1969. GTEDC brought out that the offense was overreliance on a partner's work. Ad-Vantage moved twice for a mistrial during and immediately after the questioning about Anton's personal affairs.

GTEDC went on to present an eight-day case. During its case, GTEDC presented testimony showing that some of the forty-six accounts Ad-Vantage claimed to have lost because of GTEDC's tortious conduct were in fact lost for other reasons, such as more attractive offers from other yellow pages dealers. Some of this testimony was excluded by the trial judge as beyond the scope of the damages-only trial.

The jury returned a verdict awarding Ad-Vantage no damages. Ad-Vantage then moved for judgment as a matter of law or, alternatively, a new trial. The trial court denied both motions.

II. Issues on Appeal

On this appeal, Ad-Vantage challenges the magistrate judge's admission of evidence showing that some of the accounts Ad-Vantage claims were lost because of GTEDC's tortious conduct were in fact lost for other reasons. Ad-Vantage also contends that the trial court erroneously denied it a new trial in the wake of the improper and highly prejudicial cross-examination of Ad-Vantage's expert witness. ¹

III. Standard of Review

We review rulings on the admission of evidence and motions for new trial for abuse of discretion. Aetna Casualty & Surety Co. v. Gosdin, 803 F.2d 1153, 1159 (11th Cir.1986); see Redd v. City of Phenix City, 934 F.2d 1211, 1213 (11th Cir.1991).

IV. Discussion

A. Evidence Showing Reasons for Account Loss

Ad-Vantage contends that the trial court erroneously admitted GTEDC's evidence that some of the accounts Ad-Vantage claimed as lost because of GTEDC's conduct were in fact lost for other reasons, or not lost at all. Ad-Vantage argues that this "causation" issue was decided by the liability verdict in the first trial, and that therefore this evidence is irrelevant under our mandates in Ad-Vantage I and Ad-Vantage II. We disagree.

As Ad-Vantage had to concede in oral argument, it was not entitled to damages it did not suffer. See National Airlines, Inc. v. Edwards, 336 So.2d 545, 547 (Fla.1976). To that extent, what Ad-Vantage labels evidence of causation is in fact evidence necessary to measure damages. Ad-Vantage does not contend that it sought to limit the second or third trials to any issue narrower than damages. GTEDC was therefore properly permitted to present this evidence leading to an accurate measure of Ad-Vantage's damages.

B. Cross-Examination of Anton

Ad-Vantage contends that the magistrate judge abused his discretion in refusing Ad- Vantage a new trial after allowing GTEDC to question Anton on his bankruptcy, the 1990 accusation of forgery, and the sanction of the Florida Board of Accountancy in 1969. We agree. ²

We begin our analysis of the trial court's ruling on Ad-Vantage's new trial motion by observing that the trial court erred in permitting GTEDC to cross-examine Anton on these matters. Federal Rule of Evidence 608(b) permits inquiry, at the court's discretion, into specific instances of a witness's conduct that are "probative of truthfulness or untruthfulness." Fed.R.Evid. 608(b). Rule 403 circumscribes the court's discretion by requiring the court to weigh the probative value of the evidence against the danger of unfair prejudice from it. See Fed.R.Evid. 403.

Acts probative of untruthfulness under Rule 608(b) include such acts as forgery, perjury, and fraud. 3 Jack B. Weinstein & Margaret A. Berger, Weinstein's Evidence p 608 at 608-45 to 608-46 (1994). Unlike these acts, seeking discharge in bankruptcy does not show a disregard for truth that would cast doubt on a witness's veracity. ³ See United States v. Lanza, 790 F.2d 1015, 1020 (2d Cir.), cert. denied sub nom. Lyubarsky v. U.S., 479 U.S. 861, 107 S.Ct. 211, 93 L.Ed.2d 141 (1986). Anton's borrowing from his clients, while ethically questionable, is likewise irrelevant to his truthfulness as an expert. To infer untruthfulness from any unethical act "paves the way to the exception which will swallow the Rule." 3 Weinstein & Berger, supra, p 608 at 608-49.

The magistrate judge also erroneously admitted testimony concerning the 1990 accusation of forgery and the 1969 sanction for overreliance on his partner's work. To the extent the evidence was probative at all, it was relevant either to Anton's truthfulness or professional competency. See United States v. Jackson, 882 F.2d 1444, 1448 (9th Cir.1989) (disbarment because of misappropriation of client funds probative of untruthfulness); Alpha Display Paging, Inc. v. Motorola Communications & Elecs., Inc., 867 F.2d 1168, 1171 (8th Cir.1989) (compliance with ethical standards probative of accuracy). Given the absence of any sanctions from the 1990 accusation and the temporal remoteness of the 1969 sanction, we doubt the evidence's relevance. Nonetheless, the evidence--even if relevant--was certainly too weakly probative to survive Rule 403's balancing test.

The outcome of the grievance proceedings against Anton by the Florida Bar and the American and Florida Institutes of Certified Public Accountants negates the 1990 accusation's value as evidence probative of untruthfulness. After investigation, the Bar did find probable cause to believe that Anton had violated ethical rules. However, the charges were dismissed and Anton was permitted to resign with leave to reapply. Unlike the Bar, the Institutes of CPAs did not find probable cause. Neither of the investigations resulted in any sanction. In these circumstances, when the allegations of wrongdoing were grave but no sanctions resulted, the danger was great that the jury would infer more from the investigation than was fairly inferable. The magistrate judge should have excluded this line of questioning under ...