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Damages Case Analysis

The issue of whether evidence of insurance coverage for punitive damages can be presented on rebuttal is an important one that needs to be resolved sooner rather than later.

The defendant in this case forfeited any objection by choosing not to present evidence in its case-in-chief, lest it open the door to such evidence.

A number of courts in other jurisdictions have permitted evidence of insurance coverage in rebuttal, despite a rule against such evidence in the plaintiff’s case-in-chief, and parties should be familiar with these cases: Humana Health Ins. Co. of Florida, Inc., v. Chipps, 802 So.2d 492, 497-498 (Fla.App.2001); Wheeler v. Murphy, 452 S.E.2d 416, 424 (W.Va.1994); and Wilder v. Cody Country Chamber of Commerce, 933 P.2d 1098, 1108 (Wyo.1997).

In Humana, the court reasoned that such evidence was admissible, because the defendant attempted to portray itself as too poor to pay punitive damages.

Until this issue is resolved, defendants are hamstrung, in the awkward position of not knowing at what point they might cross the line, and be deemed to have opened the door to admission of such evidence.

Admission of such evidence, even on rebuttal, is objectionable for the same reason as in the case-in-chief, noted by the court of appeals in City of West Allis v. Wis. Elec. Power Co., 2001 WI App 226, 248 Wis. 2d 10, 635 N.W.2d 873, 889: it creates a floor for punitive damages.

That is, if the purpose of punitive damages is to punish the defendant, and the defendant has $10 million in coverage for punitive damages, then no amount less than that will punish the defendant, at all, and the jury must necessarily award at least that amount to impose any punishment at all, even if the actual conduct does not even arguably justify such an award.

Unfortunately, the issue is one that can easily escape appellate review, as defendants choose not to present evidence, rather than risk the admission of its insurance coverage, with no final, appealable ruling resulting.

Another holding by the court is noteworthy — the court’s holding that the report of the OSHA investigator was properly not allowed into evidence, pursuant to Rule 908.03(8), because it was not trustworthy.

The court is correct that the report was not trustworthy, inasmuch as it was based upon an incorrect assumption — that the top flange of the support was bent, rather than the bottom flange. When a report’s conclusions are based upon an factual assumption that is indisputably incorrect, the report’s trustworthiness is obviously undermined.

Likewise, the very favorable settlement that Kraemer reached with OSHA undermines the report’s credibility. Two of four citations were dismissed outright, and a third was significantly reduced.

However, one of the court’s reasons for holding the report untrustworthy is unsound, and parties in similar cases should emphatically object to use of this as a basis for finding a government report untrustworthy — the inability to cross-examine the report’s author.

Rule 908.08(3) creates a presumption that certain reports are trustworthy and admissible, notwithstanding that the author of the report cannot be cross-examined. As the court noted, "the rule contemplates the unavailability of the declarant."

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Nevertheless, the court wrote, "That factor cannot alone make a report unworthy, because the rule contemplates the unavailability of the declarant, but it is nonetheless proper to consider in deciding trustworthiness. We find this analysis sound. We conclude the circuit court properly considered the lack of an opportunity to cross-examine the investigator or someone else knowledgeable about the modifications to the citations."

However, any time a particular factor will invariably be present, it should not be a proper factor to consider; one might as well say that, because the sky is blue, this is a proper factor to consider in deciding the report untrustworthy.

By providing that certain evidence is admissible, even though the declarant is unavailable to testify, "unless … circumstances indicate lack of trustworthiness," the Rule should be read to means, "unless … circumstances other than the unavailability of the witness indicate lack of trustworthiness."

Parties in future cases on which the question is a closer one should preserve this argument for potential Supreme Court review, notwithstanding the court of appeals’ holding.

– David Ziemer

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David Ziemer can be reached by email.

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