A 403 Ruling Will Be Overturned on Appeal Only in Extraordinary Circumstances — Evidence that Trademark Plaintiff Had Previously Sued Defendant Did Not Unfairly Depict Defendant as Recidivist

From PBM Prods., LLC v. Mead Johnson & Co., 2011 U.S. App. LEXIS 8084 (4th Cir. April 20, 2011):

Mead Johnson ... contends that the district court erred in admitting evidence of the 2001 and 2002 Lanham Act lawsuits filed by PBM. Mead Johnson argues that the evidence lacked relevance under Federal Rule of Evidence 401 and was more prejudicial than probative under Federal Rule of Evidence 403. These contentions lack merit.

Evidence is relevant if it has "any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." Fed. R. Evid. 401. In addition to its relevance, the probative value of evidence must not be substantially outweighed by the danger that it will cause unfair prejudice. See Fed. R. Evid. 403; United States v. Queen, 132 F.3d 991, 997 (4th Cir. 1997). The "mere fact that the evidence will damage the defendant's case is not enough — the evidence must be unfairly prejudicial, and the unfair prejudice must substantially outweigh the probative value of the evidence." United States v. Williams, 445 F.3d 724, 730 (4th Cir. 2006) (emphasis in original) (quoting United States v. Hammoud, 381 F.3d 316, 341 (4th Cir. 2004)). Evidence is unfairly prejudicial "when there is a genuine risk that the emotions of a jury will be excited to irrational behavior, and . . . this risk is disproportionate to the probative value of the offered evidence." Id.

We have previously noted that "[i]t is not an easy thing to overturn a Rule 403 ruling on appeal." United States v. Udeozor, 515 F.3d 260, 264 (4th Cir. 2008). Where the evidence is probative, "the balance under Rule 403 should be struck in favor of admissibility, and evidence should be excluded only sparingly." United States v. Lentz, 524 F.3d 501, 525 (4th Cir. 2008) (quoting United States v. Aramony, 88 F.3d 1369, 1378 (4th Cir. 1996)); see also Udeozor, 515 F.3d at 264-65 ("Rule 403 is a rule of inclusion, generally favoring admissibility."). Put simply, a district court's decision to admit evidence over a Rule 403 objection "will not be overturned except under the most extraordinary circumstances, where that discretion has been plainly abused." Udeozor, 515 F.3d at 265 (internal quotation marks omitted).

Here, Mead Johnson contends that the prior litigation was not probative and its admission was "designed simply to paint Mead Johnson as a serial lawbreaker so that PBM counsel could inflame the jury both at opening and closing by pitching this case as one in which a lawless out-of-town corporation sought to 'crush' the small hometown defendant." Appellant Br. at 46. We disagree. The evidence of prior litigation between the parties in regards to baby formula advertisement is relevant because it speaks to Mead Johnson's intent in making its misleading claims. In particular, the Fourth Circuit has "assume[d], without deciding, that a defendant's history of false advertising could, in a proper case, operate to relieve the plaintiff of presenting extrinsic evidence of consumer confusion created by an impliedly false advertisement." Scotts, 315 F.3d at 282 n.5. Mead Johnson attempts to distinguish Scotts by claiming that "[i]ntent to deceive is not a corporate attribute; only individual corporate agents have intent (which may be imputed to the corporation for purposes of respondeat superior liability)." Appellant Br. at 46 (quoting Makor Issues & Rights v. Tellabs, 513 F.3d 702, 707-708 (7th Cir. 2008)). However, this argument is inconsistent with Scotts because Scotts, like the case before us here, involved a major corporation.

Apart from its relevance, the probative value of the evidence was not substantially outweighed by the danger that it will cause unfair prejudice. Any unfair prejudice was limited by the court's exclusion of specific evidence regarding the settlements in the cases. Further, a jury limiting instruction was never sought. Contrary to Mead Johnson's allegation, the prior litigation was relevant to the instant case and its probative value was not substantially outweighed by any danger of unfair prejudice. Therefore, we conclude the district court did not abuse its discretion by admitting the evidence.

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