973 F.3d 212
4th Cir.2020Background
- Defendants (Sparrows Point LLC, Commercial Development Co., and Michael Roberts) hired Macsherry as a local Baltimore "boots-on-the-ground" VP in Dec. 2012; a red-lined term sheet circulated contained a 0.75% commission clause (no signed formal contract was produced).
- Macsherry worked on site and engaged with state/local agencies and third-party broker Cassidy Turley; Hilco agreed to buy the property for $110 million in Sept. 2014.
- Macsherry requested his claimed 0.75% commission ($825,000) before closing; he was terminated at closing and alleges defendants refused to pay. He claims MWPCL violation, breach of contract, promissory estoppel, and quantum meruit; he also sought enhanced MWPCL damages for non–bona fide withholding.
- After termination, Macsherry alleges Roberts made "compromise" statements ("I know I owe you a commission...What will you take?") that defendants moved to exclude under Fed. R. Evid. 408; the district court admitted the statements and later the jury awarded $1,000,000 (compensatory plus $175,000 enhanced damages).
- On appeal defendants challenged (1) admission of the compromise statements under Rule 408, (2) sufficiency of evidence, and (3) the district court’s grant of a belated jury trial (Rules 38(b) and 39(b)). The Fourth Circuit vacated and remanded for a new trial because of the Rule 408 error but upheld the district court’s exercise of discretion under Rule 39(b) to permit a jury trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of post-termination "compromise" statements under Fed. R. Evid. 408 | Statements were not offers of compromise or were admissible for other purposes (e.g., to show bad faith for enhanced MWPCL damages) | The statements were made during compromise negotiations and thus barred by Rule 408(a); they were not admissible under Rule 408(b) because their probative purpose was inseparable from proving the claim | Statements were Rule 408(a) material and admission was error; 408(b) did not authorize their use because proving bad faith was inseparable from proving liability/amount; error required new trial |
| Impact of erroneously admitted statements on verdict (harmless error?) | Properly admitted other evidence supported verdict; error was harmless | The improperly admitted statements were highly probative and likely swayed the jury, especially on enhanced damages and pivotal issues | Error was not harmless; could have substantially swayed jury; new trial warranted |
| Whether Macsherry properly demanded a jury under Fed. R. Civ. P. 38(b) | Ad damnum language referencing "this Court or a jury" was sufficient to demand a jury | Language was equivocal and failed to comply with Rule 38(b) and Maryland requirements; Macsherry waived a jury as of right | Rule 38(b) demand was improper; Macsherry waived jury as of right |
| Whether district court properly exercised discretion under Rule 39(b) to grant belated jury request | Even if waived, court should grant jury because timely notice given, no prejudice, and no docket disruption | Granting 39(b) relief would undermine Rule 38 waiver rules | Fourth Circuit upheld broad district-court discretion under Rule 39(b) and found no abuse of discretion in granting a jury trial here |
Key Cases Cited
- Weems v. Tyson Foods, Inc., 665 F.3d 958 (8th Cir. 2011) (explains that Rule 408 covers offers made while a genuine dispute exists and that a dispute need not be in litigation to implicate Rule 408)
- United States v. Benson, 957 F.3d 218 (4th Cir. 2020) (standard of review for evidentiary rulings: abuse of discretion; legal questions de novo)
- Malbon v. Pennsylvania Millers Mut. Ins. Co., 636 F.2d 936 (4th Cir. 1980) (lists factors courts may consider under Rule 39(b))
- Gen. Tire & Rubber Co. v. Watkins, 331 F.2d 192 (4th Cir. 1964) (district courts have broad discretion over trial format; abstention from jury appropriate in exceptional circumstances)
- Lutz v. Glendale Union High Sch., 403 F.3d 1061 (9th Cir. 2005) (discusses when ad damnum language may suffice to show a jury demand)
- Rowlett v. Anheuser-Busch, Inc., 832 F.2d 194 (1st Cir. 1987) (Rule 39(b) confers very broad discretion; abuse of discretion is rare)