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U.S. v. CAPUTO

June 16, 2005.

UNITED STATES
v.
ROSS A. CAPUTO, et al.



The opinion of the court was delivered by: RUBEN CASTILLO, District Judge

MEMORANDUM OPINION AND ORDER

Defendants Ross A. Caputo and Robert M. Riley ("Defendants") have filed two motions in limine seeking to exclude certain evidence from trial.*fn1 First, Defendants have moved to exclude the testimony of patients and doctors regarding eye injuries allegedly caused by the Plazlyte sterilizer and to exclude patient records documenting those injuries. (R. 157-1.) Second, Defendants have moved to exclude the expert testimony of Dr. Shayne Gad, a toxicologist who would testify regarding — among other things — information about eye injuries and blue-green residue that was available during the relevant time*fn2 and the adequacy of the steps Defendants took to determine the safety of their sterilizer. (R. 147-1.)

At trial, the Government intends to show that Defendants knew about the presence of blue-green residue on eye instruments processed in their sterilizer during the relevant time period and that they knew about serious eye injuries that occurred at various hospitals that used the sterilizer. (R. 161, Gov't's Obj. at 2 n. 1.) The Government will also submit evidence that the FDA repeatedly warned Defendants about inadequate information regarding their sterilizer and ordered them not to market it. (Id. at 9.) Defendants plan to defend against the charges by submitting evidence that they were acting in good faith throughout the time that they marketed the Plazlyte sterilizer. (R. 175, Defs.' Reply at 2.)

  Defendants' principal objection to the evidence addressed in the current motions is based on relevance. Defendants argue that the disputed evidence has no bearing on their intent to defraud the Food & Drug Administration ("FDA") because they were not aware of that evidence when they marketed the sterilizer. The Government argues that the disputed evidence is relevant to show that Defendants intentionally avoided information about the potential safety hazards of the Plazlyte sterilizer, and therefore acted in bad faith. The Government plans to request a conscious avoidance of knowledge jury instruction, which is commonly known as the "ostrich instruction." United States v. Nobles, 69 F.3d 172, 184 n. 11 (7th Cir. 1995). A brief discussion of the legal standards for the ostrich instruction is thus a necessary foundation to our determination of the relevance of the Government's proposed evidence.

  "An ostrich instruction informs the jury that actual knowledge and deliberate avoidance of knowledge are the same thing." United States v. Ramsey, 785 F.2d 184, 189 (7th Cir. 1986). The ostrich instruction essentially "states that a person cannot avoid the `knowingly' requirement of a crime by consciously avoiding the truth" about a set of circumstances and then claiming that "their actions arose through ignorance, accident or mistake." Nobles, 69 F.3d at 185 (quotation omitted). This instruction is appropriate for cases in which "there is evidence that the defendant, knowing or strongly suspecting that he is involved in shady dealings, takes steps to make sure that he does not acquire full or exact knowledge of the nature and extent of those dealings." United States v. Giovannetti, 919 F.2d 1223, 1228 (7th Cir. 1990).

  The ostrich instruction is not appropriate where the prosecution only presents evidence that "a reasonable man who knew what [the defendant] knew would have inquired further and discovered the illegal activity[.]" Id. at 1227-28. In other words, mere negligence in discovering harmful information or failure to display curiosity does not warrant the ostrich instruction. Id.; see also United States v. Draves, 103 F.3d 1328, 1333 (7th Cir. 1997). Instead, avoidance of knowledge must be established by evidence that the defendants took steps to actively avoid accessing damaging information or that they cut off their "normal curiosity by effort of will." Giovannetti, 919 F.2d at 1229. The Government may establish actual avoidance through circumstantial evidence that makes it "reasonable for a jury to infer that [the defendant] either actually knew or had strong suspicions of wrongdoing yet consciously avoided the possibility of fraud." Draves, 103 F.3d at 1334; see also United States v. Graffia, 120 F.3d 706, 713 (7th Cir. 1997) (noting that it was not an abuse of discretion to give an ostrich instruction where the government presented circumstantial evidence of knowledge that should have prompted the defendants to pursue further investigation of wrongdoing).

  It is not our task at this stage in the case to determine whether an ostrich instruction will be warranted at the conclusion of this trial. In resolving the current motions, however, we will consider the standards for the ostrich instruction as set forth above to determine whether the Government is entitled to introduce the disputed evidence to lay the groundwork for that instruction. We now turn to the arguments particular to each motion. I. Defendants' Motion in Limine to Exclude Testimony of Patients and Doctors and Patient Records

  Defendants' April 15, 2005 motion in limine seeks to preclude the Government from introducing the following evidence at trial: (1) the testimony of patients who suffered eye injuries allegedly caused by the Plazlyte sterilizer; (2) the testimony of doctors and hospital personnel who treated those patients; and (3) patient records of those who suffered eye injuries. (R. 158, Defs.' Mem. at 1.) In its objections to this motion the Government stated that it does not plan to offer patient files into evidence, so we must only determine whether to exclude the patients' and doctors' testimony. (R. 172, Defs.' Obj. at 3.) Defendants argue that this evidence should be excluded because it is outside the scope of our November 10, 2004 Order admitting evidence of eye injuries, because it has no probative value, and because, pursuant to Federal Rule of Evidence 403, any probative value it may have is outweighed by its prejudicial effect. (R. 158, Defs.' Mem. at 1.)

  A. This Court's November 10, 2004 Order

  In our November 10, 2004 Order modifying our denial of Defendants' motion in limine to exclude all evidence of eye injuries, we noted that evidence showing that Defendants were aware of eye injuries before March 31, 1998 is relevant to whether or not they acted in good faith. (R. 129, 11/10/04 Order.) We then stated that the Government would be permitted "to introduce any eye injury evidence known to Defendants on or before March 31, 1998." (Id.) Defendants argue that pursuant to that Order, the only evidence of eye injuries that the Government may introduce is the particular evidence which was actually known to Defendants prior to March 31, 1998. (R. 158, Defs.' Mem. at 2-3.) It follows, Defendants argue, that patient or doctor testimony about eye injuries is only permissible if Defendants spoke to those individuals prior to March 31, 1998. (Id. at 3.)

  Defendants' stilted interpretation of our prior order disregards this Court's explanation of allowable eye injury evidence in our January 12, 2005 Order denying Defendants' motion to clarify the November 10, 2004 ruling. (See R. 144, 1/12/05 Order.) In the January 12, 2005 Order, we made it clear that our November 10, 2004 order did not address the nature of the eye injury evidence that the Government could introduce. Instead, it set a temporal limit on eye injury evidence:
[w]e excluded post-March 31, 1998 eye-injury evidence under Rule 403 because it is only minimally probative of Defendants' state of mind at the time they were selling the device. Pre-March 31, 1998 eye-injury evidence, however, is highly probative of Defendants' state of mind during that time period, so we did not exclude that evidence under Rule 403.
(Id. at 4.) We further stated that "our November 10, 2004 minute order . . . only excludes post-March 31, 1998 eye injury evidence." (Id. at 5.) Our prior orders were designed to place a temporal cut-off on the eye injury evidence that the Government may present at trial. Neither our November 10, 2004 Order nor our January 12, 2005 Order excludes the type of evidence the Government may present regarding eye injuries that Defendants were aware of during the relevant period. As a result, the testimony of patients who incurred eye injuries prior to March 31, 1998 and the testimony of their treating doctors or other health personnel is not excluded by our November 10, 2004 Order.

  B. The Probative Value of Patient and Doctor Testimony

  Defendants argue that testimony by injured patients and their doctors "does nothing to make it more or less likely" that they are guilty of the charged offenses. (R. 158, Defs.' Mem. at 3.) We disagree. We have already found on two occasions that eye injury evidence is relevant to whether or not Defendants acted in good faith. (R. 129, 11/10/04 Order; R. 144, 1/12/05 Order.) In particular, we have found that "Defendants' knowledge that the modified sterilizer may have caused eye injuries is highly probative of whether they acted in good faith when marketing and selling the modified sterilizer." (R. 129, 11/10/04 Order.)

  Testimony from injured patients and their doctors regarding the manifestations, nature, and extent of their eye injuries is probative of whether Defendants actually avoided available knowledge during the relevant time period, which is sufficient to establish Defendants' knowledge. Ramsey, 785 F.2d at 189. The Government expects to show that Defendants were notified that eye injuries had occurred at hospitals that used its sterilizer, but that they deliberately avoided learning about the nature or extent of those injuries in an attempt to continue to market their sterilizer without incurring liability. (R. 172, Defs.' Obj. at 4.) In order to show that Defendants actually avoided knowledge about the extent and nature of eye injuries, the Government will have to demonstrate that this information was available and accessible during the relevant time period. As the prosecution in Nobles had to demonstrate that the defendant's bag contained cocaine to establish his actual avoidance of knowledge of the bag's contents, see 69 F.3d at 185, here the Government must establish that serious eye injuries existed during the relevant time period to establish that Defendants actually avoided that knowledge so they could continue marketing their sterilizer. Patient and doctor testimony would establish the serious nature of the reported injuries. Thus this testimony is probative because it helps to lay the Government's foundation for an ostrich instruction.

  We emphasize, however, the Seventh Circuit's requirement that the Government demonstrate Defendants' actual avoidance by some physical act or by a conscious mental effort, such as shutting down their normal curiosity. Giovannetti, 919 F.2d at 1229. Patient and doctor testimony is evidence that the harmful information existed, but the Government will be required to provide at least circumstantial evidence of Defendants' deliberate avoidance of that information to warrant an ostrich instruction. We also reiterate that the only relevant eye injury evidence is that which was available prior to March 31, 1998. While doctors are free to testify regarding the type and ...


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