Georgia Supreme Court Draws Roadmap for Admission of Witness Compensation Evidence in Upholding $40M Verdict Against Chrysler

Javascript is required to watch this video

If you have enabled JavaScript and still cannot play the video, please contact support.

In upholding a $40 million award against Chrysler for the death of a four-year-old in a Jeep fuel tank explosion, a Georgia Supreme Court decision clarifies the reach of the state’s relatively new Evidence Code and helps address the important issue of when attorneys can introduce evidence of a corporate officer’s earnings.

The Background

Four-year-old Remington Walden died when the 1999 Jeep Grand Cherokee in which he was sitting was hit from behind, causing its fuel tank to explode. Walden’s parents sued Chrysler, contending it knew the vehicle’s fuel tank was dangerous and posed an explosion risk.

En route to a $150 million jury verdict, plaintiffs questioned Chrysler CEO Sergio Marchionne’s knowledge of the alleged defect, and successfully introduced evidence that Marchionne received more than $68 million in pay, stock options, and other compensation from the manufacturing giant.

Following remittitur of the verdict to $40 million, Chrysler appealed, arguing, among other issues, that the trial court erred in admitting evidence of Marchionne’s compensation.

The Georgia Court of Appeals affirmed the judgment, finding the compensation evidence was admissible under OCGA § 24-6-622, (Rule 622), which allows evidence addressing a witness’s feelings and relationship toward parties. 

However, Chrysler challenged the appellate decision, and contended Marchionne’s compensation should have been excluded under a common law rule banning evidence of party wealth.

The appeal implicated Georgia’s relatively new Evidence Code, which went into effect in 2013 and was modeled largely on the Federal Rules of Evidence. However, because Rule 622 has no federal counterpart, the Georgia Supreme Court’s consideration of the case promised to help set the boundaries of Rule 622 and determine what remaining weight, if any, common law rules of evidence carried in the state. 

The High Court’s Holding: Evidence of Witness Compensation May Be Admissible Under New Evidence Code

In a decision authored by Justice Britt Grant, the Court affirmed the lower court decision, but found both the lower appellate court and Chrysler erred in their stances on the application of the new evidence rules. 

With regard to Chrysler’s argument, the Court found that the state’s long-held common law rule excluding evidence of party wealth did not apply: first, because Marchionne was not a party, and second, and most importantly, because the rule had been abrogated by the state’s evidence code.

“Chrysler itself seems to recognize that the new rules overlay the old, quoting Rules 402 and 403 in arguing that ‘[t]he longstanding common-law prohibition on wealth evidence is a specific application of principles in the Georgia Evidence Code,” the Court explained. “But the new Evidence Code does not work in conjunction with the old evidence rules when the two cover the same territory—it replaces them.”

However, the Court found the Georgia Court of Appeals was also misplaced in holding that Rule 622 was akin to a super-admissibility rule,  based on language in the section that “[t]he state of a witness’s feelings towards the parties and the witness’s relationship to the parties may always be proved for the consideration of the jury.”

Rather than constituting a super-admissibility rule, the Georgia Supreme Court held, Rule 622 was subject to the provisions of Georgia's Evidence Rule 403, which excludes otherwise relevant evidence deemed unduly prejudicial, confusing, or a waste of time. 

“Rule 622 does not move the needle to automatically admit evidence in spite of any prejudicial effect it may have,” the Court stated. 

With these considerations in mind and turning to the case at issue, the Court acknowledged that, typically, the admission of compensation evidence would be reviewed under an abuse of discretion standard. However, because the defense failed to argue the unfair prejudice issue when invoking Rule 403 in its objection, the Court applied the much more deferential plain error review standard.

And, under that standard, the trial court’s decision to admit Marchionne’s compensation did not require reversal. 

“[W]e cannot conclude that under the facts of this case the prejudicial effect of the compensation evidence (which was admittedly significant) so dramatically outweighed its probative value that the decision below must be reversed,” the Court stated. “[T]he actions of the CEO were directly relevant to the claims at hand, and his credibility (or lack thereof) was central to the question before the jury.”

Rule 622 and the Admissibility of Witness Compensation Evidence Going Forward

The Walden holding is limited in part based on its lower standard of review. The Court notes its decision  “is not to say that we would make the same decision de novo, or even necessarily under the ordinary ‘abuse of discretion’ standard of review.” 

Indeed, in his concurrence, Presiding Justice Harold Melton urges restraint in the admission of compensation evidence. “I would caution the bench and bar to be wary of the use of employee compensation evidence as a means of showing a witness’ bias, because such evidence can be highly inflammatory and lead to unfair prejudice,” Melton wrote, “and because there are other ways to show an employee’s potential bias without referencing their actual income.”

On the other hand, the Court's majority opinion emphasizes that the exclusion of evidence under Rule 403 is “an extraordinary remedy which should be used only sparingly” and “[t]he application of the Rule 403 test is a matter committed principally to the discretion of the trial courts.”

Further, the long-standing common law rule excluding evidence of party wealth died in Georgia with the state’s Evidence Code. Objections to that issue must find their way under the new statute. 

Going forward, the Court’s opinion provides a road map regarding the admission of a corporate officer’s compensation in situations similar to Walden. Clearly, objections to compensation evidence under Rule 622 in similar situations are properly framed under Rule 403’s balancing test against prejudice. Rather than a blanket ban on such evidence, or any super-admissibility standard, that Rule allows a trial court relatively significant discretion in its admission. 

The admission of compensation evidence can be crucial in cases such as Walden. For example, after its admission for purposes of questioning of Marchionne, Butler was able to refer back to the Chrysler CEO's compensation as he discussed damages for the toddler’s death during closings:

“[Ford’s attorney] Mr. [Bruce] Kirbo got up here and asked you to return a verdict for wrongful death damages in the amount of $1.3 million,” Butler said, pointing out that a mortality table predicted Remington Walden would have lived to have been about 69, but for the crash. “If you do the math, what Mr. Kirbo is suggesting is that Remi’s life would have been worth, I think it’s about $57 a day. That’s it…. Marchionne made 43 times as much in one year.”

That line likely weighed heavily in the jury's minds as they deliberated a damage award. 

Evidence of a company officer’s compensation can be especially important in large cases: whether undercutting witness testimony, or potentially factoring in to damage determinations. And the Court’s ruling in Walden helps clarify the path of such evidentiary battles in the future. 

 Read the full opinion.

View Similar Clips

More from the Proceeding
Walden v. Chrysler Group LLC
More from Industry
Automotive
More from Practice Area
Products Liability

Suggest a Trial

Want to see a trial that you don't see in our list of upcoming trials?

Suggest a Case

CVN Essentials

The most important and informative moments of each trial

CVN Essentials

Video Library

Unlimited access to thousands of hours of past coverage of high stakes civil litigation

Video Library

  • Follow Us
  • Contact Us
  • 4901 Olde Towne Parkway
  • Suite 100
  • Marietta, GA 30068
  • 877-834-8627
  • 404-935-0321

Copyright 2024 Courtroom Connect.