[Posted October 12, 2009] The Supreme Court handed down two unpublished orders on Friday, while I was on the road to the State of Northern Virginia. These two orders resolve appeals that were argued in the September session. We are still almost four weeks away from the final opinion day of 2009 (November 6).

If the jury returns a verdict in favor of the plaintiff and fixes damages at zero dollars, who won? That’s the issue in Goodman & Company v. Costa Brava Partnership, a fight over millions of dollars of preferred stock. Goodman and Company is an accounting firm that prepared an audit opinion to a defense contractor named Telos Corporation. Costa Brava owned a chunk of Telos stock, and alleged that the accountants blew it in backing Telos’s representation that the shares were long-term obligations. That mattered because it meant that Telos didn’t have to redeem about $3 million of stock.

Costa Brava sued the accountants on four theories, including aiding and abetting breaches of fiduciary duties. The jury returned a defense verdict on the other three, but given a special interrogatory form, it paradoxically returned a verdict in favor of Costa Brava on the aiding and abetting count, and fixed damages at zero. The trial court refused the accountants’ request to enter judgment in their favor on the aiding and abetting count, deciding that it would carry out the jury’s finding exactly as it had been reported in the verdict.

The Supreme Court reverses. It notes that proof of damages is “an essential element of a cause of action.” And since the jury was instructed that Costa Brava had the burden to prove damages, and the jury found none, that makes it clear that Costa Brava didn’t win on that claim, so the accountants are entitled to judgment.

Why on earth does this matter? I mean, if the plaintiff gets zero, who cares who “won”? The truth is that it probably doesn’t make a lot of difference in this particular case, but it will matter for other kinds of cases. The typical one is where the suit is based on a contract with a fee-shifting provision. In that situation, a plaintiff could get damages of zero, but claim attorney’s fees anyway, since according to the verdict, he “won.”

In fact, this very circumstance has occurred, and the attorney’s fee award was huge. In Ulloa v. QSP, Inc., 271 Va. 72 (2006), a jury found in favor of QSP for breach of contract, but awarded zero damages. But because of the unique contractual language, the Supreme Court affirmed a fee award of almost $700,000. Today’s decision makes it clear that in the absence of such unique language, an award of zero means the claimant loses.

(So, if there wasn’t such a dispute here, why did anybody bother to appeal over a zero-dollar judgment? The answer is that the parties each assigned several errors to the judgment, but the court granted a writ only as to this one. At that point, the parties really don’t have a choice; they have to brief and argue an appeal in which nobody is going to get any money.)

Criminal law
Stanley Krasucki’s lawyer must have been beside himself. Defending a charge of DUI-2nd, he asked for discovery in Chesapeake GDC, including “all written or recorded statements” made by his client. He got a set of the officer’s notes, his client’s refusal form, a prior conviction, and a DMV abstract. You can imagine his surprise when he learned, at trial, that the stop and arrest had been saved for (ahem) posterity on the officer’s video recorder.

The traffic-court judge convicted Krasucki and gave him, among other things, three months to serve. (Practice tip for drunk drivers: Stay the hell out of Chesapeake.) He appealed, and his lawyer made a specific demand from the prosecutor for the video. Instead, he got the same stuff he had received downstairs (the officer’s notes, the abstract, etc.). He moved to dismiss, alleging a Brady violation, since the video would be powerful evidence of what really happened. The prosecution responded that the video no longer existed, because it had been destroyed.

The trial court denied the motion to dismiss and convicted Krasucki, giving him a comparatively-lenient sentence of just ten days to serve. On appeal, the case focuses on whether the motion to dismiss should have been granted.

The Court of Appeals refused the petition for appeal, but the Supreme Court granted a writ. That meaningful victory proves to be fleeting, however, because the Supreme Court affirms the conviction in Krasucki v. Commonwealth, analyzing three issues.

First, the destruction of the video didn’t violate Rule 3A:11, which requires the prosecution to permit inspection and copying of recorded statements. That rule doesn’t apply, because it is limited by its terms to (A) felonies and (B) direct-indictment misdemeanors. This case wasn’t in either of those categories; it was a misdemeanor that was tried on a warrant. Cops 1, Krasucki 0.

Second, the video wasn’t necessarily Brady material because at this point, no one knows what was on it. Brady material must be exculpatory, or else useful for impeachment, and without some information about what the video showed, it would be speculation to conclude that this fit either of those categories. Cops 2, Krasucki 0.

Krasucki’s final hope was a due-process claim based on spoliation. Police can’t just go around destroying evidence that could help criminal defendants, can they? They have to preserve it and turn it over, Krasucki argued. But the court doesn’t agree, in what would be a fairly-controversial part of this ruling if it were published. US Supreme Court jurisprudence establishes that destroyed evidence can only constitute a due process violation if three circumstances exist: It must be apparently exculpatory; the exculpatory quality must have been apparent before it was destroyed; and “the government acted in bad faith in destroying the evidence.” Krasucki didn’t prove those things at trial, so it’s Cops 3, Krasucki 0 – a three-game sweep.

If this doctrine is so well-established, where’s the controversy? It’s the possibility of abuse. An unprincipled officer might deliberately erase clearly-exculpatory evidence under circumstances where he knows that it’s impossible for anyone to prove that he acted in bad faith. Here, the arresting officer testified that that particular segment of the video had been taped over, perhaps 3-4 months after the arrest. That’s plausible enough, and no one suggested that he was lying; but suppose another officer in a similar circumstance did make up the whole thing? In that case, the Stanley Krasuckis of the world will be left to fume and complain that they’re getting a bum steer, deprived of proof positive of their innocence.

I am not about to argue that the Supreme Court was wrong to apply this doctrine; the ruling meticulously follows the precedent from Washington. But at some point, the US Supreme Court may well reexamine the three-part test to address the hypothetical unprincipled cop I described above. That may have to come in something like a capital murder case where the defendant insists that a video would prove that he’s innocent and should not be put to death. For now, the loss of evidence that’s only potentially-exculpatory isn’t enough to secure a reversal.