no. 15-16480 k roberts p.c. - university of arizona · pdf filecertificate of compliance with...

1

No. 15-16480 David L. Abney, Esq. Ariz. Bar No. 09001

KNAPP & ROBERTS, P.C. 8777 North Gainey Center Drive, Suite.165

Scottsdale, Arizona 85258

(480) 991-7677, [email protected]

Attorneys for Plaintiffs-Appellants

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MARK MONJE; BETH MONJE, individually and on

behalf of their minor son R.M.,

Plaintiffs/Appellants,

v.

SPIN MASTER INCORPORATED, a Delaware

corporation; SPIN MASTER LIMITED, a Canadian

company; TOYS “R” US, INC., a Delaware company;

MOOSE ENTERPRISES PROPRIETARY LIMITED,

an Australian company,

Defendants/Appellees.

____________________________________________

MARK MONJE; BETH MONJE, individually and on

behalf of their minor son R.M.,

Plaintiffs/Appellees,

v.


corporation; SPIN MASTER LIMITED, a Canadian

company; TOYS “R” US, INC., a Delaware company,

Defendants,

and

MOOSE ENTERPRISES PROPRIETARY LIMITED,

an Australian company,

Defendant/Appellant.

Case No. 15-16480

D.C. No. 2:09-cv-01713-JJT

U.S. District Court for Arizona

Phoenix (Hon. John J. Tuchi)

FIRST BRIEF

ON CROSS APPEAL

Case No. 15-16567

D.C. No. 2:09-cv-01713-JJT



Case: 15-16480, 02/08/2016, ID: 9857945, DktEntry: 21, of 71

2

Corporate Disclosure Statement

Under Fed. R. App. P. 28(a)(3) and 26.1, the undersigned attorney for

Appellants certifies that Plaintiffs-Appellants are private persons who have never

issued stock and have no parent corporation.

As for the opposing parties, on information and belief:

Spin Master, Ltd., is a Canadian corporation.

Spin Master, Inc. is a subsidiary of Spin Master, Ltd., acting as its

exclusive licensee in the United States.

Moose Enterprises Proprietary Limited is an Australian corporation.

DATED this 8th day of February, 2016.

KNAPP & ROBERTS, P.C.

/s/ David L. Abney

David L. Abney

Co-Counsel for Plaintiffs-Appellants


3

Table of Contents

Page

Corporate Disclosure Statement 2

Table of Authorities 3

Summary of Argument 12

Statement of Jurisdiction 13

Statement of the Issues 13

Standard of Review 14

Statement of the Case 15

Procedural History 15

Statement of Facts 18

Legal Argument 31

1. Arizona law favors letting juries decide if there is a basis for

assessing punitive damages. 31

2. In this case, substantial direct and circumstantial evidence

supported letting the jury decide if punitive damages should be

awarded. 32

3. Failing to stop importing and distributing the toxic toy beads—

and failing to promptly warn of their toxicity—support awarding

punitive damages under Arizona law. 35

4. In addition, the factors are present that are used to establish an

actor’s reprehensibility for punitive-damages purposes in Arizona. 37

5. Sound public policy supports imposing punitive damages against

Moose Enterprises and Spin Master. 40


4

6. Expert-causation testimony and other evidence presented at

the district court established that R.M. suffered permanent

neurological injuries. 43

7. The trial court misunderstood Dr. Richard Parent’s expert

toxicology causation opinions. 47

8. The trial court failed to apply substantive Arizona law on

causation and on the admissibility of Dr. Richard Parent’s

expert causation opinions. 50

9. The general-causation/specific-causation distinction for

expert-opinion testimony has no relevance to a case involving

permanent injuries to one child poisoned by toxic toy beads. 56

10. The “Bradford Hill criteria” are irrelevant in a case involving

one child who ate toxic toy beads. 64

11. The district court abused discretion by refusing to let Mark Monje,

or the bankruptcy Trustee, pursue Mark Monje’s personal-injury

claims for (a) past and future medical expenses, (b) emotional

distress, and (c) loss of consortium. 65

Conclusion 68

Certificate of Compliance with Federal Rule

of Appellate Procedure 32(a)(7)(B) 70

Certificate of Service 70

Statement of Related Cases 71

Certificate for Brief in Paper Format 71


5

Table of Authorities

Cases

Page

Arellano v. Primerica Life Ins. Co., 235 Ariz. 371, 332 P.3d 597

(App. 2014) 38

Avila v. Willits Environmental Remediation Trust, 633 F.3d 828

(9th Cir. 2011) 62

Bank of America v. J. & S. Auto Repairs, 143 Ariz. 416, 694 P.2d 246

(1985) 61

Barrett v. Harris, 207 Ariz. 374, 86 P.3d 954 (App. 2004) 54

Beesley v. Union Pacific Railroad Co., 430 F.Supp.2d 968 (D. Ariz. 2006) 61

BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996) 41

Bradshaw v. State Farm Mut. Auto. Inc. Co., 157 Ariz. 411, 758 P.2d

1313 (1988) 37

Bravo v. City of Santa Maria, 665 F.3d 1076 (9th Cir. 2011) 14

Castro v. County of Los Angeles, 797 F.3d 654 (9th Cir. 2015) 53

Crowe v. Marchand, 506 F.3d 13 (1st Cir. 2007) 55

Dawson v. Withycombe, 216 Ariz. 84, 163 P.3d 1034 (App. 2007) 40

Desert Palm Surgical Group, P.L.C. v. Petta, 236 Ariz. 568, 343 P.3d

438 (App. 2015) 32

DeVoto v. Pac. Fid. Life Ins. Co., 618 F.2d 1340 (9th Cir. 1980) 39

Diaz v. Eagle Produce Ltd. Partnership, 521 F.3d 1201(9th Cir. 2008) 14

Dole Food Co., Inc. v. North Carolina Foam Industries, Inc., 188 Ariz.

298, 935 P.2d 876 (App. 1996) 58


6

Domingo ex rel. Domingo v. T.K., 289 F.3d 600 (9th Cir. 2002) 51

Earl v. Nielsen Media Research, Inc., 658 F.3d 1108 (9th Cir. 2011) 18

Farr v. Transamerica Occidental Life Ins. Co. of Cal., 145 Ariz. 1, 699

P.2d 376 (App. 1984) 32

Felipe v. Theme Tech. Corp., 235 Ariz. 520, 334 P.3d 210 (App. 2014) 32

Fresno Motor, LLC v. Mercedes Benz USA, LLC, 771 F.3d 1119

(9th Cir. 2014) 14

Goodman v. Staples the Office Superstore, LLC, 644 F.3d 817

(9th Cir. 2011) 52

Hamilton v. State Farm Fire & Casualty Co., 270 F.3d 778

(9th Cir. 2001) 65

Haralson v. Fisher Surveying, Inc., 201 Ariz. 1, 31 P.3d 114 (2001) 41, 43

Hudgins v. Southwest Airlines, Co., 221 Ariz. 472, 212 P.3d 810

(App. 2009) 37

IB Property Holdings, LLC v. Rancho del Mar Apartments Limited

Partnership, 228 Ariz. 61, 263 P.3d 69 (App. 2011) 55

In re County of Orange, 784 F.3d 520 (9th Cir. 2015) 61

In re Estate of Reynolds, 235 Ariz. 80, 327 P.3d 213 (App. 2014) 58

In re Fosamax Products Liab. Litig., 645 F. Supp. 2d 164 (S.D.N.Y. 2009) 63

In re Hanford Nuclear Reservation Litigation, 292 F.3d 621

(9th Cir. 2002) 63

In re Krohn, 203 Ariz. 205, 52 P.3d 774 (2002) 60

Kuhn v. Sandoz Pharms. Corp., 14 P.3d 1170 (Kan. 2000) 62


7

Lay v. City of Mesa, 168 Ariz. 552, 815 P.2d 921 (App. 1991) 56

Lemire v. California Dept. of Corrections and Rehab., 726 F.3d 1062

(9th Cir. 2013) 54

Linthicum v. Nationwide Life Ins. Co., 150 Ariz. 326, 723 P.2d 675

(1986) 33, 36

Logerquist v. McVey, 196 Ariz. 470, 1 P.3d 113 (2000) 55

Markiewicz v. Salt River Valley Water Users’ Ass’n, 118 Ariz. 329,

576 P.2d 517 (App. 1978) 52

McKendall v. Crown Control Corp., 122 F.3d 803 (9th Cir. 1997) 51

Mendoza v. McDonald’s Corp., 222 Ariz. 139, 213 P.3d 288

(App. 2009) 32

Miller v. Glenn Miller Prods., Inc., 454 F.3d 975 (9th Cir. 2006) 19

Molever v. Roush, 152 Ariz. 367, 732 P.2d 1105 (App. 1986) 53

Murcott v. Best Western International, Inc., 198 Ariz. 349, 9 P.3d 1088

(App. 2000) 33

Nardelli v. Metro. Group Property and Casualty Ins. Co., 230 Ariz. 592,

277 P.3d 789 (App. 2012) 38

Newman v. Select Specialty Hospital-Arizona, Inc., 238 Ariz. 59, 356

P.3d 345 (App. 2015) 36

Nordstrom, Inc. v. Maricopa County, 207 Ariz. 553, 88 P.3d 1165

(App. 2004) 55

Norris v. Baxter Healthcare Corp., 397 F.3d 878 (10th Cir. 2005) 63

Ontiveros v. Borak, 136 Ariz. 500, 667 P.2d 200 (1983) 52

Owner-Operator Independent Drivers Ass’n, Inc. v. Swift Transp. Co.,

Inc. (AZ), 632 F.3d 1111 (9th Cir. 2011) 18


8

Piper v. Bear Medical Systems, Inc., 180 Ariz. 170, 883 P.2d 407

(App. 1993) 35

Quintero v. Rogers, 221 Ariz. 536, 212 P.3d 874 (App. 2009) 32-33

Robertson v. Sixpence Inns of America. Inc., 163 Ariz. 539, 789 P.2d

1040 (1990) 53

Rounds v. Porter, No. 1 CA-CV 14-0518, 2015 WL 7258940

(Ariz. App. Nov. 17, 2015) 37

Salica v. Tucson Heart Hospital-Carondelet, L.L.C., 224 Ariz. 414,

231 P.3d 946 (App. 2010) 54

Sandretto v. Payson Healthcare Management, Inc., 234 Ariz. 351,

322 P.3d 168 (App. 2014) 55

State v. Bernstein, 237 Ariz. 226, 349 P.3d 200 (2015) 55

Smith v. Chapman, 115 Ariz. 211, 564 P.2d 900 (1977) 53

State v. Clemons, 110 Ariz. 555, 521 P.2d 987 (1974) 55

State v. Davolt, 207 Ariz. 191, 84 P.3d 456 (2004) 56

State v. Quatsling, 24 Ariz. App. 105, 536 P.2d 226 (1975) 39

State ex rel. Montgomery v. Miller, 234 Ariz. 289, 321 P.3d 454

(App. 2014) 56

Stilwell v. Smith & Nephew, Inc., 482 F.3d 1187 (9th Cir. 2007) 52

Swoger v. Rare Coin Wholesalers, 803 F.3d 1045 (9th Cir. 2015) 14

Thompson v. Better-Bilt Aluminum Products Co., Inc., 171 Ariz. 550,

832 P.2d 203 (1992) 32

Tritschler v. Allstate Ins. Co., 213 Ariz. 505, 144 P.3d 519 (App. 2006) 36


9

T.W. Elec. Serv., Inc. v. Pacific Electrical Contractors Ass’n, 809 F.2d

626 (9th Cir. 1996) 18

United States v. Walls, 577 F.2d 690 (9th Cir. 1978) 40

Warner v. Southwest Desert Images, LLC, 218 Ariz. 121, 180 P.3d 986

(App. 2008) 36

White v. Mitchell, 157 Ariz. 523, 759 P.2d 1327 (App. 1988) 33

Statutes, Regulations, and Rules

15 U.S.C. § 1261(f)(1)(A) 21

15 U.S.C. § 1261(g) 21

15 U.S.C. § 1261(q)(1) 21

15 U.S.C. § 1263 21, 43

15 U.S.C. § 1264 21, 43

28 U.S.C. § 1291 13

Hillory J. Farias and Samantha Reid Date-Rape Drug Prohibition

Act of 2000, Pub. L. No. 106-172 § 2(4), 114 Stat. 7, 8 (2000) 21

76(213) Fed. Reg. 68168 (11/03/2011) 21, 24, 27

Fed. R. Evid. 702(a) 51

Other Authorities

7 More Children Fall Ill from Tainted Toy: Chinese-Made Aqua Dots

Have Been Recalled in Several Countries, Los Angeles Times

A-14 (11/10/2007) 42

Keith Bradshaw, China Confirms Poison Was on Toy Beads, New York

Times 14 (11/11/2007) 42


10

Keith Bradshaw, Chinese Company Says It’s Sorry for Making Poisonous

Toy Beads, New York Times C-4 (11/30/2007) 42

Keith Bradshaw, Sleuthing for a Danger in Toy Beads, New York Times

C-1 (11/08/2007) 42

Lester Brickman, The Use of Litigation Screenings in Mass Torts: A

Formula for Fraud?, 61 SMU L. Rev. 1221 (Fall 2008) 62

David L. Faigman, et al., How Good Is Good Enough?: Expert Evidence

Under Daubert and Kumho, 50 Case W. Res. L. Rev. 645 (2000) 62

Susan Haack, Proving Causation: The Holism of Warrant and the

Atomism of Daubert, 4 J. Health & Biomedical L. 253 (2008) 64

Austin Bradford Hill, The Environment and Disease: Association or

Causation?, 58 Proceedings of the Royal Society of Medicine

205 (1965) 64

Joe G. Hollingsworth & Eric G. Lasker, The Case Against Differential

Diagnosis: Daubert, Medical Causation Testimony, and the

Scientific Method, 37 J. Health L. 85 (Winter 2004) 64

M.P. McQueen and Jane Spencer, U.S. Orders New China Toy Recall:

Aqua Dots Are Pulled Off Shelves after Reports of Children Falling

Ill, Wall Street Journal A-3 (11/08/2007) 42

Jayne O’Donnell, Chinese-Made Beard Turn into ‘Date Rape’ Drug When

Ingested: Millions of Kids’ Aqua Dots Recalled, USA Today A-1

(11/08/2007) 42

Ed Pilkington and David Pallister, Chinese-Made Toy Beads Recalled

after Children Fall Ill: Chemical Similar to Liquid Ecstasy Blames

for Comas: Panic Spreads to North America from Australia,

Guardian [London, England] 19 (11/09/2007) 42

“Preliminary 6, Expert Witness,” Recommended Arizona Jury Instructions

(Civil) (5th ed. July 2013) 54


11

Reporter’s Note, Restatement (Third) of Torts: Physical and Emotional

Harm § 28 (2010) 65

Restatement (Second) of Torts § 8A cmt. b (1965) 36, 39

Restatement (Third) of Torts: Liability for Physical and

Emotional Harm cmt. (c)(1) (2010) 52-53, 58-60


Emotional Harm cmt. (c)(3) (2010) 59


Emotional Harm cmt. (c)(4) (2010) 60

Ted A. Schmidt, Punitive Damages in Arizona: The Reports of their

Death Are Greatly Exaggerated, 29 Ariz. L. Rev. 599 (1987) 60

Bill Taylor, Aqua Dots Toy Pulled on Fears of Poison Risk: Beads’

Coating Metabolizes into ‘Date Rape’ Drug, Toronto Star A-4

(11/08/2007) 42

Carly Weeks, Health Canada Launches Probe into Aqua Dots Toy:

Plaything Recalled Over Fears it Contains ‘Date Rape’ Drug,

Ottawa Citizen A-4 (11/08/2007) 42


12

Summary of Argument

This case concerns “R.M.,” who was a happy, healthy 16-month-old boy. He

was, at least, until he ate “Aqua Dots,” which were brightly-colored, small, tasty—

and toxic—toy beads. After eating them, R.M. vomited, could not breathe, passed

out, and fell into a coma. R.M. was hospitalized and suffered permanent brain

injury. Appellants are R.M. and his parents, Mark and Beth Monje (“Monjes”).

Appellees are Moose Enterprises, an Australian company that developed and

distributed the toxic toy beads, and Spin Master, a distributor of the toxic toy beads

in the United States. “Spin Master” refers collectively to Spin Master Ltd. (a

Canadian company) and Spin Master Inc. (a Delaware corporation).

The jury awarded compensatory damages for the immediate injuries that

R.M. had suffered just after eating the beads. But the district court refused to let

the jury consider whether to award three other important kinds of damages:

punitive damages;

damages for the extensive, permanent neurological and related

injuries that R.M. suffered after eating the toxic toy beads; and

“personal injury” damages to Mark Monje (a) to pay for his son’s

large past and future medical expenses, (b) for Mark Monje’s own

emotional distress over his son’s poisoning, and (c) for Mark

Monje’s loss of his child’s consortium.


13

Under Arizona law, the Monjes had the right to have the jury consider

whether to award those types of damages. The Monjes are therefore appealing the

district court’s refusal to let the jury consider whether to award them.

Statement of Jurisdiction

This Court has jurisdiction over this appeal under 28 U.S.C. § 1291.

Statement of the Issues

Punitive damages: Under Arizona law and the facts of this case, should the

jury have been allowed to determine whether the conduct of Moose Enterprises

and Spin Master demonstrated the “evil mind” needed for an award of punitive

damages?

Evidence on permanency. Expert-opinion testimony proved that R.M.’s

ingestion of the toxic toy beads was a proximate cause of permanent neurological

and related injuries. Did the district court err by preventing the jury from hearing

and considering evidence that the child suffered permanent injuries as a direct and

proximate result of eating the toxic toy beads?

Judicial estoppel. The district court invoked judicial estoppel to deny to

Mark Monje the opportunity to have the jury consider whether to assess and award

“personal injury” damages: (a) for his son’s large past and future medical

expenses, (b) for Mark Monje’s own emotional distress over his son’s poisoning,

and (c) for the loss of his child’s consortium. Was that error?


14

Standard of Review

The district court granted summary judgment against the Monjes on the

three types of damages at issue in this appeal. Grant of summary-judgment

motions is reviewed de novo. Swoger v. Rare Coin Wholesalers, 803 F.3d 1045,

1047 (9th Cir. 2015). When reviewing summary-judgment motions, the “court

views the evidence in the light most favorable to the non-moving party to

determine if there are any genuine issues of material fact and whether the moving

party is entitled to judgment as a matter of law. The court draws all justifiable

inferences in favor of the non-moving party.” Fresno Motor, LLC v. Mercedes

Benz USA, LLC, 771 F.3d 1119, 1125 (9th Cir. 2014) (emphasis added).

“Summary judgment is inappropriate if reasonable jurors, drawing all

inferences in favor of the nonmoving party, could return a verdict in the

nonmoving party’s favor.” Diaz v. Eagle Produce Ltd. Partnership, 521 F.3d 1201,

1207 (9th Cir. 2008). “If a rational trier of fact could resolve a genuine issue of

material fact in the nonmoving party’s favor, the court may not affirm a grant of

summary judgment because credibility determinations, the weighing of the

evidence, and the drawing of legitimate inferences from the facts are jury

functions, not those of a judge.” Bravo v. City of Santa Maria, 665 F.3d 1076,

1083 (9th Cir. 2011) (citation and internal punctuation omitted).

This Court reviews a district court’s decision to admit or exclude expert


15

testimony for abuse of discretion. But, as a matter of law, a trial court abuses its

discretion when it bases its decision on an erroneous view of the law. See United

States v. Cordoba, 104 F.3d 225, 229 (9th Cir. 2015) (citations omitted).

Statement of the Case

This case concerns three kinds of damages the district court wrongly refused

to let the jury assess: (1) punitive damages; (2) damages for the permanent

neurological and related injuries that R.M. suffered after eating the toxic toy beads;

and (3) Mark Monje’s “personal injury” damages (a) for his son’s large past and

future medical expenses, (b) for Mark Monje’s emotional distress, and (c) for Mark

Monje’s loss of his son’s consortium.

Procedural History

The basic procedural history is brief. On July 13, 2009, the Monjes filed

their Complaint against Toys “R” Us—and against Spin Master, Inc. and Spin

Master, Ltd. (collectively “Spin Master”)—in Maricopa County Superior Court in

Phoenix, Arizona. (Doc 1-1) On August 4, 2009, the Monjes filed an Amended

Complaint adding Moose Enterprises as a defendant. (Doc 1-1) On August 19,

2009, Toys “R” Us and Spin Master removed the case to the United States District

Court for the District of Arizona. (Doc 1)

On July 23, 2014, the parties filed the summary-judgment motions that

eventually led to this appeal. Moose Enterprises filed a motion for partial summary


16

judgment arguing, among other things, that: (1) the Monjes’ expert evidence had

not established causation between their son’s ingestion of Aqua Dots and his brain

injury and (2) there was no evidence to support an award of punitive damages

against it. (Doc 374) Spin Master and Toys R Us joined in that motion. (Doc 376)

Spin Master then filed its own motion for partial summary judgment, arguing that

there was no basis for awarding punitive damages against it. (Doc 377)

In an Order filed November 18, 2014, the district court held that, after

considering “the entire record on summary judgment,” there was a genuine issue of

material fact whether GHB intoxication could cause permanent brain injury. (Doc

442 at 4-5, ER-017 to ER-018) But on the punitive-damages issue, the trial court

held that Plaintiffs had “failed to identify any evidence that would allow a jury to

conclude, by clear and convincing evidence” that the Defendants had exhibited the

“evil mind” needed to support an award of punitive damages under Arizona law.

(Doc 442 at 9, ER-022) (emphasis added).

But in an Order filed May 6, 2015 (Doc 595, ER-007), a little over a month

before trial, the district court reversed itself, and held that, because the Monjes’

toxicology expert (Dr. Richard Parent) supposedly could not establish a causal

connection between eating the Aqua Dots and the permanent neurological injuries

that R.M. was suffering from, the Monjes would be prevented from presenting

expert and lay testimony that their son had indeed suffered permanent injuries from


17

eating the Aqua Dots. That change-of-heart Order, and the ruling on punitive

damages, meant that the Monjes were limited to seeking compensatory damages

for the few days in which R.M. suffered his “initial reaction to the ingestion of the

Aqua Dots” (Doc 595 at 6:6-8, ER-012). The jury would not hear about R.M.’s

bleak lifetime of coping with permanent injuries, the effect of those permanent

injuries on his educational, vocational, and career prospects, and the future medical

and therapeutic challenges he confronts.

A jury considered the case on June 9 to 12 and on June 15 to 18, 2015.

(Docs 713, 745, 747-52) In their June 18, 2009 verdict in favor of “R.M.,” the

jurors awarded damages of $435,000 to R.M., assessing fault as follows:

Jssy (a nonparty Chinese bead maker) 25%

R.M.’s father (Mark Monje) 2%

Moose Enterprises 33%

Spin Master 15%

Toys “R” Us 0%

Wang Qi Manufactory (another nonparty Chinese bead maker) 25%

(Doc 733) The jurors also found that a nonparty Chinese bead maker (Jssy) was

Moose Enterprise’s agent. (Doc 733)

On June 26, 2015, the district court entered a Judgment (Doc 742) that set

out the following percentages of jury-assessed fault:

Defendant Moose Enterprises Pty, Ltd. 33%

Nonparty Jssy, Ltd. 25%

Non-party Wang Qi Product Manufactory 25%

Defendants Spin Master, Inc. and Spin Master, Ltd. 15%

Non-party Mark Monje 2%


18

Based on the percentages of fault, the district court determined the monetary

amount of the Judgment (Doc 742) as follows:

Defendant Moose Enterprises Pty, Ltd. $ 252,000

Defendants Spin Master, Inc. and Spin Master, Ltd. $ 65,200

The Monjes filed a timely notice of appeal on July 24, 2015. (Doc 756)

Statement of Facts

Viewing the facts: The facts described in this section of the brief generally

derive from summary-judgment exhibits and statements of facts presented to the

district court. When “direct evidence” produced by a moving party conflicts with

“direct evidence” produced by a party opposing a summary-judgment motion, a

reviewing court “must assume the truth of the evidence set forth by the nonmoving

party with respect to that fact.” T.W. Elec. Serv., Inc. v. Pacific Electrical

Contractors Ass’n, 809 F.2d 626, 631 (9th Cir. 1996).

This Court conducts de novo review of a trial court’s grant of a summary-

judgment motion, “construing the facts in the light most favorable to the

nonmoving party and drawing all reasonable inferences in that party’s favor.” Earl

v. Nielsen Media Research, Inc., 658 F.3d 1108, 1112 (9th Cir. 2011). Reviewing

courts will go further, and will “infer all facts in favor of the non-moving party.”

Owner-Operator Independent Drivers Ass’n, Inc. v. Swift Transp. Co., Inc. (AZ),

632 F.3d 1111, 1114 (9th Cir. 2011).


19

Summary judgment is improper “where divergent ultimate inferences may

reasonably be drawn from the undisputed facts.” Miller v. Glenn Miller Prods.,

Inc., 454 F.3d 975, 988 (9th Cir. 2006).

The facts: This section focuses on facts particularly relevant to the punitive-

damage issue. Facts related to the district court’s mistake on the admissibility of

expert-opinion causation testimony primarily appear in Section 6 of this brief’s

Legal Argument section, just before the discussion of the district court’s analysis

of the expert general-causation and specific-causation evidence.

This appeal concerns “Aqua Dots,” which, at first glance would seem to be

an innocent toy. Aqua Dots were beads in arts-and-crafts kits. The kits contained

packets of hundreds of small (5-millimeter diameter) brightly-colored, easy-to-eat,

and tasty Aqua Dots beads. Children could arrange the Aqua Dots into two- and

three-dimensional shapes or designs. Those shapes or designs would then fuse

together when sprayed with water.1 In Australia and other parts of the world, Aqua

Dots were called “Bindeez.”2

Moose Enterprises and Jssy developed Aqua Dots.3 Jssy manufactured the

Aqua Dots in China, retaining sole control over the product’s ingredients, which it

1 Nicholson Depo. 40:19-25; 41:3-22 (04/27/2010) (Doc 379-06, R-092 to

ER-091); Spin Master Expert Report at 4 (12/19/2013) (Doc 378-06, ER-195). 2 Spin Master Expert Report at 4 (12/19/2013) (Doc 378-06, ER-195).

3 Spin Master Expert Report at 4 (12/19/2013) (Doc 378-06, ER-195).


20

regarded as a trade secret.4 As one of Moose Enterprises’ experts explained, the

Chinese “factory was reluctant to disclose the ingredients in the manufacture of the

beads,” supposedly “in order to protect the trade secrets that were developed in

their own labs.”5 Jssy refused to tell Spin Master the Aqua Dots formula.

6

But the real “trade secret” Jssy was hiding was the fact that, from quite early

in production, or even from the very beginning of production, Aqua Dots contained

1,4-butanediol. That chemical is an industrial solvent the body swiftly metabolizes

into gamma-hydroxybutyrate—GHB—the “date-rape drug.”7 In fact, Jssy “actually

manufactured the Aqua Dots beads with 1,4-butanediol until the latter half of

2007.”8 A reasonable factual inference is that the retail Aqua Dots placed in the

chain of distribution to American consumers were made with 1,4-butanediol until

some point after mid-2007.9

In 2000, Congress legislatively declared that, if 1,4-butanediol is “taken for

4 Spin Master Expert Report at 4-5 (12/19/2013) (Doc 378-06, ER-195);

Coates Expert Report at 5 (11/22/2013) (Doc 375-4, ER-169). 5 Coates Expert Report at 5 (11/22/2013) (Doc 375-04, ER-169).

6 Kennedy Depo. 48:4-10 (06/17/2014) (Doc 388-04, ER-070).

7 Kitzes Expert Report at 5, § IV(1) (Doc 379-05, ER-178); Consol.

Amended Class Action Complaint at 1, ¶ 1 (Doc 379-01); Poulus Depo. 181:9-18

(05/27/2010) (Doc 375-01, ER-130); Kennedy Depo.167:4-5 (06/17/2014) (Doc

388-04, ER-074). 8 Kam Depo.290:16-20 (06/15/2010) (Doc 385-02, ER-063).

9 Kam Depo.281:15-20, 290:17-20 (06/15/2010) (Doc 388-06, ER-061 to

ER-062).


21

human consumption,” the body “swiftly” converts it into GHB.10

Even a small

dose of GHB can cause confusion, respiratory distress, central-nervous symptoms,

seizures, lowered consciousness, coma, and death.11

Federal authorities regard

GHB as so dangerous that it is listed as a Schedule I controlled substance.12

More

to the point for this case, under the provisions of the Federal Hazardous Substances

Act, the Consumer Product Safety Commission determined that Aqua Dots were

“toxic” and were thus a “banned hazardous substance” that was legally prohibited

from being imported into and sold within the United States.13

Importing such a “banned hazardous substance into the United States would

be a misdemeanor, and, if done with intent to defraud or mislead, or if done more

than once, as happened here, would be a felony.14

Essentially, Moose Enterprises

and Spin Master imported and sold a “toxic” “banned hazardous substance” in the

United States. As a matter of fact and law, what they did was criminal.

Like Jssy, Moose Enterprises claimed that the Aqua Dots formula Jssy used

to make Aqua Dots was a manufacturer’s trade secret and supposedly would not

share that alleged secret with its American distributor Spin Master before October

10

Pub. L. No. 106-172 § 2(4), 114 Stat. 7, 8 (2000). 11

Drug Warnings (Doc 389-14, ER-223). 12

See 21 U.S.C. § 812, Schedule I; 21 C.F.R. § 1308.11 Schedule I(e)(1). 13

76(213) Fed. Reg. 68168 ¶¶ 18-19 (11/03/2011) (Doc 378-01, Page 84 of

206). See 15 U.S.C. § 1261(f)(1)(A) (“hazardous substance”), 15 U.S.C. § 1261(g)

(“toxic”), and 15 U.S.C. § 1261(q)(1) (“banned hazardous substance”). 14

See 15 U.S.C. §§ 1263-64.


22

2007.15

Jssy used 1,4-butanediol to manufacture the Aqua Dots for two reasons.

First, it was cheaper than using an equivalent non-toxic ingredient. Second, using

1,4-butanediol made the beads easier to remove from the production molds used to

make the beads.16

Although it was selling Aqua Dots to consumers having children so young

they could be expected to eat them, Spin Master was clueless about the product’s

ingredients and even claims it was not allowed in the factory making them.17

In its

punitive-damages summary-judgment motion, in fact, Spin Master admitted it “did

not know the chemical make-up of Aqua Dots.”18

For all Spin Master and Moose

Enterprises knew, Aqua Dots were made from cyanide coated with sugary arsenic.

Although Spin Master could have directed that the manufacturer add a

chemical (Bitrex) to make the Aqua Dots sold in the United States unpalatably

bitter tasting, Spin Master did not bother to do that until mid-September 2007.19

Samples were tested before October 2007. But the Aqua Dots manufacturer

(Jssy) either selected and tested the samples itself or supplied test samples for the

15

Kennedy Depo. 48:4-25 (11/18/2008) (Doc 378-01, ER-070). 16

Carpenter Depo. 71:16-22 (06/22/2010) (Doc 388-05, ER-058); Kam

Depo. 314:1-3 (Doc 388-06, ER 064). 17


Motion at 6:1 (07/23/2014) (Doc 377). 19

Kennedy Depo. 231:1-16, 238:14-22 (06/17/2010) (Doc 388-04, ER-075

to ER-076).


23

distributors to test.20

Moose Enterprises did no decomposition or chemical analysis

or any other chemical testing on the Aqua Dots to verify what ingredients were

actually in the beads.21

Thus, there was no effort at independent product oversight.

Instead, Moose Enterprises would get a supposed “production” sample from

Jssy’s factory and would submit that sample to Spin Master, which would then

arrange for “independent” lab testing for the Canadian and United States market.22

Moose Enterprises admits that “the bulk” of the responsibility for quality control

actually rested in the Jssy factories making the Aqua Dots.23

Moreover, the pre-October 2007 testing Spin Master authorized was limited.

In particular, Spin Master conducted no chemical-decomposition testing before

Aqua Dots were sold in the United States.24

And any pre-October 2007 third-party

“test” reports were based on ingredient lists (provided by the manufacturer),

general research the testers did, and general experience that they had with the listed

chemicals.25

None of the labs actually independently tested and confirmed the

20

King Depo. 43:17-19, 72:19-24 (06/16/2010) (Doc 388-03, ER-080, ER-

081); Kam Depo. 250:11-19, 343:7-14, 344:1-6 (06/15/2010) (Doc 388-06, ER-

060, ER-066, ER-067). 21

King Depo. 72:11-18, 84:10-21 (Doc 388-03, ER-081, ER-083, ); Poulus

Depo. 143:8-16, 148:10-13, 225:9-14 (05/27/2010) (Doc 388-07, ER-126, ER-127,

ER-131). 22

King Depo. 84:3-21 (Doc 388-03 ER-083). 23


Kennedy Depo. 279:1-4 (06/17/2014) (Doc 388-04, ER-077); Poulus

Depo. 165:10 to 166:4 (05/27/2010) (Doc 388-07, ER-128). 25

Kennedy Depo. 279:12-16 (06/17/2014) (Doc 388-04, ER-077).


24

chemical composition of the Aqua Dots themselves.26

Finally, Spin Master did not randomly select retail samples to test.27

That is,

Spin Master was not randomly testing the product as it was actually offered to

consumers in retail outlets in the United States. Moreover, before October 2007,

neither Spin Master nor Moose Enterprises ever conducted an audit or inquiry into

the supply chain to determine the actual materials used in the Aqua Dots.28

The U.S. Consumer Product Safety Commission itself found that, although

Spin Master had eventually “enlisted an outside testing agency to evaluate the

toxicity of the product, the testing was inadequate.”29

If Moose Enterprises and

Spin Master had actually objectively and thoroughly tested the Aqua Dots before

distributing them to American consumers, they would have discovered the toxic

1,4-butanediol that was in the Aqua Dots from the start.

Moose Enterprises’ own toy-marketing expert admitted that all toys

imported from China “should comply with safety standards and regulations of the

United States” and that all toy “designers, manufacturers, importers and

distributors have a responsibility to take reasonable care in assuring that products

do comply with the US standards and regulations and are safe for children’s

26


Kam Depo. 316:22-24 (06/15/2010) (Doc 385-02, ER-065); King Depo.

43:17-19 (Doc 388-03, ER-080); Coates Expert Report at 12, ¶ 44 (11/22/2013)

(Doc 375-4, ER-170A). 28

King Depo.80:2-21 (Doc 388-03, ER-082). 29

76(213) Fed. Reg. 68168 ¶ 14 (11/03/2011) (Doc 378-01, ER-212).


25

play.”30

Aqua Dots made with 1,4-butanediol did not comply with American safety

standards and regulations and were so toxic they were unsafe for children.

Moose Enterprises learned in May and June 2007 that animals and children

had swallowed Bindeez beads (the same as Aqua Dots) and had required medical

care, including hospitalization. So Moose Enterprises urgently demanded Jssy add

a bitter chemical to its bead formula to discourage infants from eating the beads.31

But neither Moose Enterprises nor Spin Master issued any product warning to

consumers and instituted no product recall of Aqua Dots.

From April to November 2007, Moose Enterprise and Spin Master imported

and distributed some 4.2 million Aqua Dots in the United States.32

Then retail

companies such as Toys “R” Us would sell the product to American consumers

such as the Monjes.33

The Aqua Dots product was sold with a warning that it might

present a choking hazard, but with no warning of any kind about toxicity.34

One of Spin Master’s own experts explained after the fact that, because of

the toxic ingredients and the “potential for oral misuse, the [product] label should

state: May be harmful if swallowed. May cause central nervous system effects.

30

Coates Expert Report at 7 (11/22/2013) (Doc 375-4, ER-170). 31

E-mails of 06/18/2007 to 06/22/2007 (Doc 375-04, ER-202 to ER-206). 32

Kitzes Expert Report at 5, § IV(1) (Doc 379-05, ER-178); Consol.

Amended Class Action Complaint at 1, ¶ 1 (Doc 379-01). 33

Spin Master Expert Report at 5 (12/19/2013) (Doc 378-06, ER-196). 34

Mark Monje Depo 140:1-5 (03/05/2014) (Doc 385-02, ER-090); Poulus

Depo. 180:12-16 (05/27/2010) (Doc 388-07, ER-129).


26

Use only with adult supervision.”35

The Spin Master expert also warned that: “Ingestion by children is possible

(a foreseeable misuse) and serious health effects could result from 1,4

butanediol.”36

The Spin Master expert also confirmed that 1,4-butanediol is rapidly

absorbed and metabolized to GHB, which “causes neuropharmacological effects,

such as central nervous system depressant effects,” as well as vomiting,

incontinence, agitation, and respiratory depression.37

The “threshold for these

effects,” the defense expert warned, “is not known,” although eating the Aqua Dots

“could result in acute central nervous system and related effects.”38

Spin Master asserts that it did not know until October 22, 2007 that Aqua

Dots contained 1,4-butanediol.39

Despite that, it was not until November 5, 2007

that Spin Master actually notified the U.S. Consumer Product Safety Commission

that Aqua Dots contained 1,4-butanediol.40

Even after that inexplicable delay, Spin Master did not understand or

appreciate the situation’s obvious ramifications. For instance, a November 5, 2007

e-mail from Ian Master, Spin Master, Ltd.’s Chief Operating Officer, directed

35

Dr. Clary Report (11/11/2007) (bold in original) (Doc 378-06, ER-161 to

ER-162). 36

Dr. Clary Report (11/11/2007) (Doc 378-06, ER-162 to ER-163). 37

Dr. Clary Report (11/11/2007) (Doc 378-06, ER-161 to ER-162). 38

Dr. Clary Report (11/11/2007) (Doc 378-06, ER-162). 39

Kennedy Depo. 86:19-25; 87:10-18; 88:1-3 (11/18/2008) (Doc 378-01,

ER-071, ER-072). 40

Kennedy Depo. 89:1-8 (11/18/2008) (Doc 378-01, ER-073).


27

continuing to ship the 1,4-butanediol beads (with the bittering agent added) until

there would a transition to shipping non-toxic beads.41

On November 7, 2007, in cooperation with the U.S, Consumer Product

Safety Commission, Spin Master finally voluntarily recalled the toxic Aqua Dots

from the marketplace.42

In Spin Master’s recall press release, Spin Master also

admitted that: “Children who swallow the beads [Aqua Dots] can become

comatose, develop respiratory depression, or have seizures.”43

Without admitting

its self-evident liability, Spin Master agreed to pay a $1.3 million fine to the U.S.

Consumer Products Safety Commission.44

The Monjes’ 16-Month-Old Son

Ate the Toxic Aqua Dots on July 16, 2007

At a minimum, Moose Enterprises knew about: (1) a March 21, 2007

incident where a dog showed severe signs of toxin poisoning after eating some of

the toxic beads, and (2) a May 11, 2007 incident where a two-year-old girl

swallowed some of the toxic beads, fell unconscious, and was taken to a hospital.45

Moose Enterprises itself admitted to the trial court that it has in fact received a

41

E-mail (11/05/2007) (Doc 388-22, ER-214). 42

76(213) Fed. Reg. 68168 ¶ 12 (11/03/2011) (Doc 378-01, ER-216). 43

76(213) Fed. Reg. 68168 ¶ 13 (11/03/2011) (Doc 378-01, ER-216). 44

76(213) Fed. Reg. 68169 ¶ 13 (11/03/2011) (Doc 378-01, ER-216). 45

Skliros Depo. 127:9-18, 129:5-21 (05/13/2000) (Doc 388-08, ER-133, ER-

135); Stul Depo. 171:5-16, 174:9-24 (05/25/2010) (Doc 388-09, ER-138, ER-139);

E-mails (Doc 388-18, Pages 17, 20, 22-24 of 30); E-mails (Doc 388-19, ER-212,

ER-213); Bindeez Complaint Log (Doc 388-23, ER-220, ER-221).


28

handful of reports of toxic incidents involving Aqua Dots and Bindeez (the

alternate name for Aqua Dots) before R.M. ate the Aqua Dots on July 16, 2007.46

But no recall or even a public consumer warning or notification was forthcoming,

although there must have been more cases where children ate Aqua Dots and

suffered toxic effects.47

Moose Enterprises admitted that parents are entitled to know if there is a

toxic chemical in their toys.48

Indeed, Spin Master expert Tim Pine admitted that if

proper, timely acute-oral-toxicity product testing had been done “Spin Master

could have recalled Aqua Dots before the Monjes allegedly made their purchase

and before [R.M.] allegedly ate a large quantity of [Aqua Dots] on July 16,

2007.”49

So, on June 30, 2007, Mark and Beth Monje had no warning of toxic danger

when they bought a box of “Super Studio” Aqua Dots at a Toys “R” Us store in

Maricopa County, Arizona.50

At that time, the Monjes had three sons, ages 11

46

Motion at 14:13-28 (07/23/2014) (Doc 374). 47

Suchard Depo. 192:18 to 193:12, 195:1-15, 196:8 to 197:1 (09/17/2010)

(Doc 388-10, ER-143 to ER-147). 48

Skliros Depo. 158:17-19 (05/13/2000) (Doc 388-08, ER-136). 49

Spin Master Expert Report at 3 (12/19/2013) (emphasis added) (Doc 378-

06, ER-194). 50

Spin Master Expert Report at 4 (12/19/2013) (Doc 378-06, ER-195);

Photograph of purchased product (Doc 385-02, ER-219); Elizabeth Monje Depo.

17:20-25; 18:1-25 (03/25/2014) (Doc 385-02, ER-085, ER-086); Mark Monje

Depo. 138:17 to 140:7 (03/05/2014) (Doc 385-02, ER-088 to ER-090).


29

years, 5 years, and 16 months.51

“R.M.,” their 16-month-old son, ate some of the

Aqua Dots on July 16, 2007.52

In mid-morning on July 16, 2007, Mark Monje put R.M. down for his nap,

noting that he cried for a couple of minutes and did not seem “to be right.”53

R.M.

started vomiting uncontrollably, with Aqua Dots in the vomit. In addition, he was

going in and out of consciousness.54

Mark rushed R.M. to Mercy Gilbert Medical

Center. At its emergency room, several Aqua Dots were recovered from R.M.’s

airway.55

R.M. was intubated and transported to Phoenix Children’s Hospital,

where he remained until his discharge home two days later.56

According to the trial court, the “controlling fact” on which “there is no

genuine dispute,” is that the Aqua Dots that R.M. ate “contained 1,4-butanediol

when they left [the] Defendants’ control.”57

Moose Enterprises admitted that, as a

direct result of eating the Aqua Dots, R.M. suffered from lethargy, vomiting,

unconsciousness, and depressed respiratory function.58

Dr. Julie Goodman, a defense expert, admitted that R.M. has experienced

“brain injury” and conservatively estimated that R.M. may have eaten about 50

51







Order at 12:13-15 (11/18/2014) (Doc 442, ER-025). 58

Motion at 2:24-26 (07/23/2014) (Doc 374).


30

milligrams of 1, 4-butanediol—which she admitted “would have been sufficient to

induce coma-like symptoms.”59

Dr. Dinesh Talwar, another defense expert, agreed

that “the acute toxic encephalopathy that [R.M.] had on 07/16/07 is well explained

by the ingestion of Aqua Dots.”60

Because of their small, colorful shape and appearance, small children could

admittedly confuse Aqua Dots for candy and swallow them.61

Expert testimony

confirmed that infant-eating of Aqua Dots was an “obvious foreseeable misuse”

since Aqua Dots were tiny and attractively-colored bits that tasted good.62

The

beads “are small enough, and the concentration of butanediol in them is high

enough that [children] only need to ingest . . . in the range of several dozen beads”

to suffer toxic effects.63

As one expert explained:

Now, ingesting them is not the intended use, but it is an easily

foreseeable misuse of the product not only by the children of ages for

which the product was intended, but also for potential siblings. Any

household that has a child of an appropriate age to use this product

has a reasonably high likelihood of having smaller children who are

even more likely to have the hand-to-mouth activity and swallowing

anything they get their hands on. So I think that this product presented

an imminent risk that was easily foreseeable.64

Even a Spin Master expert admitted it is “foreseeable that a very young child

59

Dr. Goodman Expert Report at 2 (11/21/2013) (Doc 378-01, ER-172). 60

Dr. Talwar Expert Report at 8 (10/25/2013) (Doc 378-01, ER-200). 61

Skliros Depo. 128:14-20 (05/13/2000) (Doc 388-08, ER-134). 62

Suchard Depo. 154:21 to 155:3 (09/17/2010) (Doc 388-10, ER-141 to ER-

142). 63

Suchard Depo. 155:3-6 (09/17/2010) (Doc 388-10, ER-14). 64

Suchard Depo. 155:7-18 (09/17/2010) (Doc 388-10, ER-142).


31

may ingest a few of the [Aqua Dots].”65

Legal Argument

1. Arizona law favors letting juries decide if there is a basis for assessing

punitive damages.

At the trial court, the Monjes argued that evidence established Spin Master

and Moose Enterprises ignored the probability of a substantial risk of significant

harm to young children (Doc 390 at 10:23-24). The district court acknowledged

that the Monjes had asserted that “numerous questions of material fact remain

regarding punitive damages” (Doc 442 at 7:7-8, ER 020). But the district court

concluded that its review of the record supposedly revealed “that Plaintiffs have

failed to identify a genuine dispute as to any material fact concerning punitive

damages” (Doc 442 at 7:19-20, ER 020). The trial court granted summary

judgment for Defendants on the punitive-damages issue, finding “no genuine issue

as to any material fact related to punitive damages” that would let a reasonable jury

conclude that the Defendants had exhibited the needed “evil mind” Arizona law

requires for an award of punitive damages (Doc 442 at 9:12-16, ER 022).

Under Arizona law, however, the facts that the parties presented to the trial

court were sufficient for a reasonable jury to find that Moose Enterprises and Spin

Master had acted with a conscious disregard of, or with deliberate indifference to,

the safety, health, and lives of children, such as R.M., who might reasonably be

65

Nelson Smith Expert Report at 8 (07/16/2010) (Doc 378-2, ER-198).


32

expected to eat Aqua Dots, which were invitingly small, colorful, and good-tasing.

Arizona law has long preferred letting juries decide if the facts support

assessing an award of punitive damages. Thus, “‘whether punitive damages are

justified should be left to the jury if there is any reasonable evidence which will

support them.’” Mendoza v. McDonald’s Corp., 222 Ariz. 139, 158 ¶ 63, 213 P.3d

288, 307 (App. 2009) (quoting Farr v. Transamerica Occidental Life Ins. Co. of

Cal., 145 Ariz. 1, 9, 699 P.2d 376, 384 (App. 1984)).

In fact, in Arizona, a motion for summary judgment on punitive damages

“must be denied ‘if a reasonable jury could find the requisite evil mind by clear and

convincing evidence.’” Felipe v. Theme Tech. Corp., 235 Ariz. 520, 528 ¶ 32, 334

P.3d 210, 218 (App. 2014) (emphasis added) (quoting Thompson v. Better-Bilt

Aluminum Products Co., Inc., 171 Ariz. 550, 558, 832 P.2d 203, 211 (1992)). If

there are reasonable, competing inferences that might support punitive damages,

the trial court is to let the jury choose among those reasonable inferences. Quintero

v. Rogers, 221 Ariz. 536, 542 ¶ 21, 212 P.3d 874, 880 (App. 2009).

2. In this case, substantial direct and circumstantial evidence supported

letting the jury decide if punitive damages should be awarded.

To obtain an award of punitive damages in Arizona, “a plaintiff must prove

by clear and convincing evidence that the defendant engaged in ‘reprehensible

conduct combined with an evil mind over and above that required for commission

of a tort.’” Desert Palm Surgical Group, P.L.C. v. Petta, 236 Ariz. 568, 584 ¶ 48,


33

343 P.3d 438, 454 (App. 2015) (quoting Linthicum v. Nationwide Life Ins. Co., 150

Ariz. 326, 332, 723 P.2d 675, 681 (1986)).

An award of punitive damages “may rest on an aggregation of several pieces

of evidence.” Murcott v. Best Western International, Inc., 198 Ariz. 349, 361 ¶ 68,

9 P.3d 1088, 1100 (App. 2000). The evidence may be circumstantial. That is, an

Arizona court will let a jury “consider a punitive damages award if sufficient

‘circumstantial’ evidence exists.” Quintero v. Rogers, 221 Ariz. 536, 541 ¶ 17, 212

P.3d 874, 879 (App. 2009) (quoting White v. Mitchell, 157 Ariz. 523, 529, 759

P.2d 1327, 1333 (App. 1988)).

Here, circumstantial and direct evidence supported awarding punitive and

exemplary damages. After all, Moose Enterprises and Spin Master imported and

distributed Aqua Dots in the United States although:

They were ignorant about the product’s formula and ingredients, and did

nothing to overcome that ignorance before distributing the toxic beads.66

They had enough information before the Aqua Dots were distributed to

the United States to suspect their toxicity and investigate further.67

They never identified product hazards and thus never identified the

severity of any hazards.68

66

See text and corresponding footnotes 4-6, 15, 17-18. 67

Kitzes Expert Report at 7-9, 11 (Doc 379-05, ER-180 to ER-182, ER-184). 68

Kitzes Expert Report at 6, § IV(3)(a) (Doc 379-05, ER-179).


34

They never performed a risk assessment to adequately integrate product

hazards and foreseeable consumer use.69

They failed to monitor the safety performance of the Aqua Dots.70

They never conducted or authorized any independent, random chemical-

analysis or chemical-decomposition testing of Aqua Dots.71

They knew, or reasonably should have known, that infants were likely to

eat the beads in households where older children play with them, since

infants would foreseeably find and eat objects like these small, colorful,

and tasty beads.72

They failed to conduct a product recall or even a consumer-warning

program once reports started appearing in May and June 2007 that the

beads were toxic and were poisoning animals and children.73

They failed to warn the Monjes about the toxicity of the Aqua Dots

before the Monjes bought them on June 30, 2007 and before R.M. ate

them on July 17, 2007.74

They criminally imported into—and distributed in—the United States a

69

Kitzes Expert Report at 6, § IV(3)(b) (Doc 379-05, ER-179). 70

Kitzes Expert Report at 6, § IV(3)(c) (Doc 379-05, ER-179). 71

See text and corresponding footnotes 20-29. 72

See text and corresponding footnotes 36, 62, 64-65. 73

Kitzes Expert Report at 6, § IV(3)(d) (Doc 379-05, ER-179). See also text

and corresponding footnote 50. 74

See text and corresponding footnotes 47, 49-50


35

produce compounded with a toxic “banned hazardous substance.”75

As a matter of evidence-supported (and jury-confirmed) fact, Spin Master

and Moose Enterprises negligently committed acts and omissions that

caused R.M. to suffer injuries. That is a judicial fact.

Based on direct and circumstantial evidence, reasonable jurors could find

that Moose Enterprises and Spin Master acted with a conscious disregard and

deliberate indifference to the health, safety, and life of R.M. and countless other

children—proving the evil mind needed to impose punitive damages in Arizona.

3. Failing to stop importing and distributing the toxic toy beads—and

failing to promptly warn of their toxicity—support awarding punitive

damages under Arizona law.

Reports of toxic effects in animals and children that had eaten Aqua Dots

began to appear in May and June 2007. At that point, Moose Enterprises and Spin

Master were still ignorant of the product’s ingredients, still continued to import and

sell the product, and failed to recall it or provide consumers with prompt and

effective warnings about its toxicity. Those are significant factors for the jury to

consider in deciding if to award punitive and exemplary damages. Piper v. Bear

Medical Systems, Inc., 180 Ariz. 170, 180, 883 P.2d 407, 417 (App. 1993) (“A jury

may infer an evil mind if defendant deliberately continued his actions despite the

inevitable or highly probable harm that would follow.”).

75

Kitzes Expert Report at 6, § IV(4) (Doc 379-05, ER-179). See also text

and corresponding footnotes 10-14


36

“When the wrongdoer is conscious of the harm posed by its tortious conduct,

but continues to ‘act in the same manner in deliberate contravention to the rights of

the victim,’ punitive damages are appropriate in order to both punish the

wrongdoer and deter others from acting in the same manner.” Newman v. Select

Specialty Hospital-Arizona, Inc., 238 Ariz. 59, 63 ¶ 11, 356 P.3d 345, 349 (App.

2015) (quoting Linthicum v. Nationwide Life Ins. Co., 150 Ariz. 326, 330, 723 P.2d

675, 679 (1986)).

It does not matter that Moose Enterprises and Spin Master may have had no

subjective intent to injure R.M. or other consumers. Proof of an evil mind to

support punitive damages does not require evidence of a subjective intent to injure.

Thus, liability for punitive damages can result simply from a “conscious disregard

of ‘a substantial risk of significant harm to others.’” Warner v. Southwest Desert

Images, LLC, 218 Ariz. 121, 130 ¶ 24, 180 P.3d 986, 995 (App. 2008) (quoting

Tritschler v. Allstate Ins. Co., 213 Ariz. 505, 517 ¶ 38, 144 P.3d 519, 531 (App.

2006)). Substantial risk is a lower threshold than either of the standards for intent

in tort—subjective desire or substantial certainty of a specific harm. Mein ex rel.

Mein v. Cook, 219 Ariz. 96, 99-100 ¶ 16, 193 P.3d 790, 793-94 (App. 2008)

(quoting Restatement (Second) of Torts § 8A (1965)).

In Arizona, punitive damages are available if facts exist “from which the

jury can conclude that even though [the] defendant had neither desire nor motive to


37

injure (i.e., neither intent nor spite), he [or she] acted to serve his [or her] own

interests, having reason to know and consciously disregarding a substantial risk

that his [or her] conduct might significantly injure the rights of others.” Bradshaw

v. State Farm Mut. Auto. Inc. Co., 157 Ariz. 411, 422, 758 P.2d 1313, 1324 (1988)

(citing Ted A. Schmidt, Punitive Damages in Arizona: The Reports of their Death

Are Greatly Exaggerated, 29 Ariz. L. Rev. 599, 601-02 (1987)).

The conduct of Moose Enterprises and Spin Master fits that pattern. They

acted to serve their own interests in importing and distributing a profitable toy

without knowing anything about its ingredients or toxicity. They then failed to

launch an immediate recall or consumer-warning program once reports of toxic

effects started to appear. Their conscious disregard and deliberate indifference

support assessing punitive and exemplary damages.

4. In addition, the factors are present that are used to establish an actor’s

reprehensibility for punitive-damages purposes in Arizona.

Reprehensibility of conduct is a factor in deciding whether to award punitive

damages, and in deciding how much the jury can award. Hudgins v. Southwest

Airlines, Co., 221 Ariz. 472, 487 ¶ 40, 212 P.3d 810, 825 (App. 2009) (“To

determine whether sufficient evidence exists that a defendant acted with an evil

mind, a court examines factors such as the reprehensibility of the conduct.”). But

all that is needed is “a moderate degree of reprehensibility.” Rounds v. Porter, No.

1 CA-CV 14-0518, 2015 WL 7258940 at *8 ¶ 39 (Ariz. App. Nov. 17, 2015).


38

When analyzing reprehensibility in a punitive-damages case, Arizona courts

consider whether:

(1) the harm caused was physical as opposed to economic;

(2) the tortious conduct evinced an indifference to or a reckless disregard

of the health or safety of others;

(3) the conduct’s target had financial vulnerability;

(4) the conduct involved repeated actions or was an isolated incident; and

(5) the harm came from intentional trickery or deceit, or mere accident.

Arellano v. Primerica Life Ins. Co., 235 Ariz. 371, 379 ¶ 36, 332 P.3d 597, 605

(App. 2014) (quoting Nardelli v. Metro. Group Property and Casualty Ins. Co.,

230 Ariz. 592, 609 ¶ 83, 277 P.3d 789, 800 (App. 2012)).

The usual five factors for finding reprehensibility are present in this case:

First, the harm that R.M. suffered was physical.

Second, the tortious conduct of Moose Enterprises and Spin Master

evidenced an indifference to, and a reckless disregard of, the health and

safety of R.M. and of innumerable other children.

Third, R.M. had utter financial vulnerability.

Fourth, the conduct that was inherent in importing and distributing millions

of toxic, hazardous Aqua Dots in the United States necessarily involved

repeated actions.


39

Fifth, the harm came, in large part, from intentional deceit Spin Master and

Moose Enterprises practiced on consumers in assuring them, directly and

indirectly, that the product they were buying was safe, although Moose

Enterprises and Spin Master actually knew nothing about the safety of the

Aqua Dots. After all, Moose Enterprises and Spin Master did not know the

ingredients and formula of Aqua Dots, had never obtained any effective,

random, independent testing of the retail product—and refused to take

corrective action at once after reports of toxic poisoning started to appear.

In this sort of case, actionable intent arises because “the actor knows that the

consequences are certain, or substantially certain, to result from his [or her] act,

and still goes ahead.” Restatement (Second) of Torts § 8A cmt. b (1965). “Tort

law,” after all, “ordinarily imputes to an actor the intention to cause the natural and

probable consequences of his [or her] conduct.” DeVoto v. Pac. Fid. Life Ins. Co.,

618 F.2d 1340, 1347 (9th Cir. 1980). The natural and probable consequences of

blind ignorance of a product’s formula, composition, and ingredients, and the

refusal to act immediately to take corrective action, resulted in what happened to

R.M.—preventable and nearly fatal toxic poisoning that permanently harmed him.

When facts are disputed, as they are here, “intent” is a jury question. State v.

Quatsling, 24 Ariz. App. 105, 108, 536 P.2d 226, 229 (1975) (“The existence of

intent is one of the questions of fact for the jury’s determination.”); United States


40

v. Walls, 577 F.2d 690, 696 n. 7 (9th Cir. 1978) (Because intent to defraud “is a

question of fact for the jury,” it can be found from circumstantial evidence.). From

the disputed facts developed in the summary-judgment proceedings, viewed in the

light most favorable to the Monjes, and with all reasonable inferences taken in

their favor, reasonable jurors could infer an “intent” to deceive further supporting

assessing punitive damages against Moose Enterprises and Spin Master.

In the end, the “intent or deliberate indifference required to justify the

additional imposition of punitive damages is focused on the harm to the plaintiff.”

Dawson v. Withycombe, 216 Ariz. 84, 111 ¶ 94, 163 P.3d 1034, 1061 (App. 2007).

The immediate harm to R.M. was severe, consisting of, among other things, the

loss of consciousness, nausea, respiratory failure, and coma that struck him down

on July 16, 2007. In addition, R.M. suffered permanent brain injury with lasting

adverse results, from loss of the senses of smell and taste to cognitive and

behavioral deficits. If Moose Enterprises and Spin Master had not been

deliberately indifferent to, and consciously disregarded, the risk of selling Aqua

Dots to the Monjes without proper safeguards and without even knowing the

product’s ingredients and formula, R.M.’s health, life, and future would not have

been damaged and turned upside down.

5. Sound public policy supports imposing punitive damages against Moose

Enterprises and Spin Master.

“Punishment, societal condemnation, deterrence, and public policy have


41

been recognized in Arizona as valid grounds for assessing punitive damages.”

Haralson v. Fisher Surveying, Inc., 201 Ariz. 1, 3 ¶ 7, 31 P.3d 114, 116 (2001).

Moose Enterprises and Spin Master deserve punishment and societal condemnation

because they distributed a toxic child’s toy in the United States without any

independent testing and without knowing the toxic toy’s formula and ingredients.

They then failed to act promptly to recall the toxic toy and to warn consumers

when reports of animal and child poisoning began to appear in May and June 2007.

Allowing punitive damages will deter Moose Enterprises and Spin Master (and

other feckless toy makers) from distributing similar dangerous, toxic toys. As a

matter of sound public policy, the jury should have been allowed to assess punitive

damages against Moose Enterprises and Spin Master.

“Punitive damages may properly be imposed to further a State’s legitimate

interests in punishing unlawful conduct and deterring its repetition.” BMW of

North America, Inc. v. Gore, 517 U.S. 559, 568 (1996). In this case, the jury

should also have been allowed to assess punitive damages to set an example for

other toy importers and distributors.

It is true that the press excoriated the Defendants when the toxic, deadly

nature of Aqua Dots became public knowledge and generated headlines in the

United States and other nations. Examples of the devastating publicity include the

following:


42

7 More Children Fall Ill from Tainted Toy: Chinese-Made Aqua Dots

Have Been Recalled in Several Countries, Los Angeles Times A-14

(11/10/2007).

Keith Bradshaw, China Confirms Poison Was on Toy Beads, New

York Times 14 (11/11/2007).

Keith Bradshaw, Chinese Company Says It’s Sorry for Making

Poisonous Toy Beads, New York Times C-4 (11/30/2007).

Keith Bradshaw, Sleuthing for a Danger in Toy Beads, New York

Times C-1 (11/08/2007).

M.P. McQueen and Jane Spencer, U.S. Orders New China Toy Recall:

Aqua Dots Are Pulled Off Shelves after Reports of Children Falling

Ill, Wall Street Journal A-3 (11/08/2007).

Jayne O’Donnell, Chinese-Made Beard Turn into ‘Date Rape’ Drug

When Ingested: Millions of Kids’ Aqua Dots Recalled, USA Today A-

1 (11/08/2007).

Ed Pilkington and David Pallister, Chinese-Made Toy Beads Recalled

after Children Fall Ill: Chemical Similar to Liquid Ecstasy Blames for

Comas: Panic Spreads to North America from Australia, Guardian

[London, England] 19 (11/09/2007).

Bill Taylor, Aqua Dots Toy Pulled on Fears of Poison Risk: Beads’

Coating Metabolizes into ‘Date Rape’ Drug, Toronto Star A-4

(11/08/2007).

Carly Weeks, Health Canada Launches Probe into Aqua Dots Toy:

Plaything Recalled Over Fears it Contains ‘Date Rape’ Drug, Ottawa

Citizen A-4 (11/08/2007).

That sort of adverse publicity may help discourage similar wrongdoing. But

an award of punitive damages against Moose Enterprises and Spin Master will

provide an even stronger example encouraging greater responsibility on the part of


43

individuals and companies distributing toys to Arizona and American consumers.

That would warn toy makers and distributors that they will face both bad publicity

and punitive damages if they fail to make honest, diligent efforts to determine the

safety—including toxicity—of the toys they distribute, and if they fail to swiftly

warn consumers and to recall the toys once there are indications they are toxic.

“Punitive damages,” after all, “have always served to set an example; hence, the

terms ‘punitive’ and ‘exemplary’ are used interchangeably in [Arizona] law.”

Haralson v. Fisher Surveying, Inc., 201 Ariz. 1, 3 ¶ 6, 31 P.3d 114, 116 (2001).

A primary purpose of punitive damages is to “express society’s disapproval

of outrageous conduct and to deter such conduct by the defendant and others in the

future.” Hawkins v. Allstate Ins. Co., 152 Ariz. 490, 497, 733 P.2d 1073, 1080

(1987). “Punitive damages ‘are aimed at deterrence and retribution’ and ‘serve the

same purposes as criminal penalties.’” Fisher v. Edgerton, 236 Ariz. 71, 79 ¶ 23,

336 P.3d 167, 175 (App. 2014) (quoting State Farm Mut. Auto. Ins. Co. v.

Campbell, 538 U.S. 408 416-17 (2003)). Deterrence and retribution are particularly

appropriate goals considering the fact that Moose Enterprises and Spin Master

committed misdemeanors, and possibly felonies, by importing and distributing the

toxic Aqua Dots in the United States. See 15 U.S.C. §§ 1263-64 (defining

prohibited acts and correlative criminal penalties).

6. Expert-causation testimony and other evidence presented at the district

court established that R.M. suffered permanent neurological injuries.


44

The Aqua Dots left R.M. with devastating permanent injuries. Even one of

the defense experts admitted R.M. experienced “brain injury.”76

Before eating the

toxic toy beads, R.M. had been going through a normal developmental course. But

after eating the toxic beads, he was forever changed—and much for the worse.

R.M. had been stringing words together but could not even speak when he returned

home from the hospital.77

In fact, he lost all language for about six months after

eating the Aqua Dots, and still requires ongoing speech therapy.78

By the time

R.M. was five years old, among other things, he had not adequately developed the

ability to communicate verbally, had become impulsive, banged his head when

frustrated, and had remained incontinent of stool.79

R.M.’s symptoms at age five included (1) language and speech deficits, (2)

decreased generalization, inference, and awareness, (3) poor executive function

and impulsivity, (4) hand-eye coordination difficulty, (5) neuropsychological

effects, and (6) other clinical symptoms.80

Those were consistent with neurological

problems due to hypoxic/toxic brain injury.81

The most probable cause of the listed

neurological and cognitive problems was the (1) anoxic, (2) toxic, or (3) combined

76

Dr. Goodman Expert Report at 2 (11/21/2013) (Doc 378-01, ER-172). 77

Clinical Correlation Report (04/14/2011) (Doc 375-02, ER-164). 78

Dr. Cardenas Child Neurology Report at 1-2 (03/03/3011) (Doc 375-02). 79

Clinical Correlation Report (04/14/2011) (Doc 375-02, ER-164 to165). 80

Clinical Correlation Report (04/14/2011) (Doc 375-02, ER 164 to 166). 81

Clinical Correlation Report (04/14/2011) (Doc 375-02, ER-166).


45

anoxic and toxic brain injury that occurred on July 16, 2007.82

The Monjes’ neuropsychological expert opined, to a reasonable degree of

medical certainty that, because of ingesting the Aqua Dots on July 16, 2007, R.H.

suffered permanent neurological injuries, including brain injury, encopresis

(involuntary defecation), innervation to pain, dyslexia, severe executive-function

deficit, severe impulsivity, difficulty sustaining attention to any tasks, balance

problems, deficits in fine motor control, damage to the thalamus, and impairment

in the senses of smell and taste.83

The Monjes’ neuropsychological expert also opined that R.M.’s “difficulties

with behavior (i.e., hyperactivity and impulsivity), emotional modulation (e.g., low

frustration tolerance), and social interaction (i.e., maintaining friendships) are

better explained by difficulties with executive functioning, which are likely

secondary to the TBI [traumatic brain injury] he sustained secondary to his

ingestion of Aqua Dots.”84

Because the GHB put R.M. into a comatose state, the biochemical reactions

in the brain occurring because of the GHB combined with the comatose state itself,

82

Clinical Correlation Report (04/14/2011) (Doc 375-02, ER-166). 83

Beljan Depo. 55:23-25, 56:1-22, 57:13-18, 58:14-18, 63:22-25, 64:1-22,

65:2-20, 82:2-16, 83:1-21, 171:20-25, 172:1-8, 180:17-18, 190:1-8, 193:22-25,

194:1-25, 195:1 to 196:17, 209:9-12, 225:19 to 226:17 (05/04/2014) (Doc 389-2,

ER-046 to ER-056). 84

Pediatric Developmental Evaluation by Dr. Beljan 14 (04/27/2014) (Doc

389-21, ER-156).


46

had an adverse effect on R.M.’s brain.85

There is an association between GHB

ingestion and brain injury from which R.M. has never recovered.86

The Monjes’

toxicological expert concluded that R.M.’s detailed medical sequelae are “clearly

consistent with anoxic brain injury and permanent brain damage.”87

The Monjes’ toxicological expert further opined “with a reasonable degree

of toxicological certainty that [R.M.’s] permanent brain injury . . . is related to the

ingestion of 50 Aqua Dots on July 16, 2007, at the very young age of 16 months

during a period of very active brain development.”88

Things “changed drastically”

for the worse in R.M.’s life after he ate the beads, at a time when his brain was

rapidly developing, and his “brain was quite susceptible to anything that would

reach it that was neurotoxic, hence the neurotoxicity of GHB.”89

The Monjes’ psychiatric expert testified R.M. was neurologically normal

before the coma induced by ingesting Aqua Dots. After that, he displayed profound

neurological deterioration with significant abnormalities on brain imaging, both on

the PET (positron emission tomography) and on the MRI-DTI (magnetic resonance

85

Parent Depo. 87:17-22; 88:1-4 (06/17/2014) (Doc 592-02, ER-116 to117). 86

Parent Depo. 111:19 to 112:20 (06/17/2014) (Doc 375-01, ER 121-122);

Parent Depo. 81:2-13; 82:1-10; 110:11-21 (06/17/2014) (Doc 592-02, ER-114 to

115, ER-120). 87

Dr. Parent Expert Report at 5 (05/06/2013) (Doc 592-02, ER-192). 88

Parent Depo. 32:3-9 (06/17/2014) (Doc 592-02, ER-102). 89

Parent Depo. 46:6-18 (06/17/2014) (Doc 592-02, ER-108).


47

imaging/diffusion tensor imaging).90

Given the lack of other likely explanations,

his opinion was that the most likely cause for R.M.’s lasting abnormalities and

deterioration was toxic brain injury from ingesting Aqua Dots.91

His expert opinion

was that R.M. had likely suffered encephalopathy (brain injury) from ingesting a

known neurotoxin.92

7. The trial court misunderstood Dr. Richard Parent’s expert toxicology

causation opinions.

In an Order filed May 6, 2015, the district court refused to let the Monjes

present expert evidence from Dr. Richard Parent that the neurological injuries their

son had suffered were causally related to eating the Aqua Dots (Doc 595, ER 007).

That effectively closed the door to evidence of the permanency of R.M.’s brain

injury—injuries that he started suffering after eating the Aqua Dots and that will

afflict him for the rest of his life.

(7)(a). Dr. Parent never disavowed the anoxic-event theory of causation.

Dr. Parent is a toxicologist. In his expert report, Dr. Parent explained that R.M.’s

medical sequelae, detailed neurological injuries, and deficits were, among other

things, “clearly consistent with anoxic brain injury and permanent brain damage.”93

At his deposition, Dr. Parent clarified his anoxic-cause opinion, explaining

90

Wu Depo. 25:2-12 (06/18/2014) (Doc 375-02). 91

Wu Depo. 25:12-18 (06/18/2014) (Doc 375-02). 92

Wu Depo. 147:10-12, 172:14-21, 223:4-10, 232:8-11, 239:12-17, 241:12-

23; 252:14 to 253:1 (06/18/2014) (Doc 389-03). 93

Dr. Parent Expert Report at 5 (05/06/2013) (Doc 592-02).


48

that anoxia was a component of the neurological injury, although he favored the

biochemical or neurotoxic process.94

Dr. Parent was not repudiating anoxia as a

causative factor. He still believed that ingesting the 1,4-butanediol was a causative

factor in the brain injury, in part because of the resulting respiratory failure and

consequent hypoxia and anoxia.95

Dr. Parent opined the symptomatology was

consistent with anoxia, although there was more going on—there were other

processes involved as well in causing the brain injury.96

The district court held Dr. Parent had “clearly disavowed the anoxic event

theory in favor of the single [neurotoxin] exposure theory (Doc 595 at 2:26-27, ER

008). The district court, however, misread the deposition. Dr. Parent never

disavowed his original anoxia-causation opinion. Instead, he now favored

neurotoxin as a direct causative mechanism working in combination with effects of

anoxia resulting from respiratory failure. In particular, he opined that respiratory

failure, which R.M. suffered, and which is a known result of GHB intoxication,

results in anoxia or hypoxia—and coma.97

Dr. Parent acknowledged that coma

always has the potential for causing brain injury.98

And in R.M.’s case, when he was 16 months old and went into a coma after

94

Parent Depo. 33:9 to 34:3 (06/17/2014) (Doc 592-02). 95


Parent Depo. 36:15-18; 40:17-25 (06/17/2014) (Doc 592-02). 97

Parent Depo. 76:9-24 to 77:16 (06/17/2014) (Doc 592-02). 98

Parent Depo. 80:6-9 (06/17/2014) (Doc 592-02).


49

eating the Aqua Dots, he was lastingly impaired.99

R.M. was unfortunately one of

those children who suffered chronic sequelae from being comatose for a period of

time.100

That is not surprising, since the dose of GHB that R.M. received was

sufficient to produce a coma.101

(7)(b). Dr. Parent presented a valid, useful neurotoxin theory of causation.

In his original May 6, 2013 report and at his deposition, Dr. Parent explained that

one of the causes of R.M.’s neurological injuries was the direct operation of the

GHB on his brain.102

Dr. Parent explained that the GHB can interact with various

processes in the brain and produce changes in the brain through killing neurons in

the brain through neurotoxicity.103

As noted above, although Dr. Parent concluded that anoxia was a

contributing factor, he favored the biochemical or neurotoxic effect as the main

cause of R.M.’s brain injury.104

He explained that the fact that this neurologically

active material finds its way to the brain makes it easy to see that it may make

detrimental changes 105

R.M.’s ingestion of the 1,4-butanediol at a time when his 16-month-old

99


Parent Depo. 101:2-10 (06/17/2014) (Doc 592-02). 101

Parent Depo. 127:20-25; 129:8-14 (06/17/2014) (Doc 592-02). 102


Parent Depo. 33:5-9 (06/17/2014) (Doc 592-02). 104


Parent Depo. 36:11 to 37:1 (06/17/2014) (Doc 592-02).


50

brain was actively developing and was quite susceptible to neurotoxins, changed

Ryan’s life drastically—causing his brain injury.106

Dr. Parent emphasized that the

evidence of causation with respect to GHB causing a permanent brain injury in

R.M. was “solid.”107

8. The trial court failed to apply substantive Arizona law on causation and

on the admissibility of Dr. Richard Parent’s expert causation opinions.

For compensatory damages, the most vital expert opinion is the ultimate

opinion that Dr. Parent provided, that, “to a reasonable degree of toxicological

certainty that [R.M.’s] permanent brain injury as described by [the Monjes’

psychiatric expert] is related to the ingestion of over 50 Aqua Dots on July 16,

2007” (Doc 375-01 at 5, ER-192. See also fn. 88 to this brief).

Dr. Parent expressed that vital ultimate expert opinion on causation, and his

other related causation opinions, based on his education, research, training, and

experience, and based on factual accounts of the bead ingestion, the medical

records, descriptions of the post-ingestion changes in R.M.’s abilities, affect, and

conduct, and reports by other experts who had examined R.M. and his permanent,

adverse medical sequelae.

The causation opinions were naturally specific to R.M., since he was the

child who suffered the direct, specific harm. The cause of his permanent

106

Parent Depo. 46:9-18 (06/17/2014) (Doc 592-02). 107

Parent Depo. 110:11-22 (06/17/2014) (Doc 592-02).


51

neurological injuries was a key damages issue. Dr. Parent could give the causation

opinions because he was a witness “qualified as an expert by knowledge, skill,

experience, training, or education may testify in the form of an opinion or

otherwise,” and because, among other things, his “scientific, technical, or other

specialized knowledge will help the trier of fact to understand the evidence or to

determine a fact in issue.” Fed. R. Evid. 702(a).

Of course, every aspect of an expert’s theory of causation need not “be

supported by research on the identical point,” and “it is not necessary to show how

a particular act or event caused an injury.” Domingo ex rel. Domingo v. T.K., 289

F.3d 600, 607 (9th Cir. 2002) (emphasis in original). Dr. Parent’s expert opinions

on causation in this toxic-poisoning case would help the jury understand that eating

the toxic beads contributed to causing R.M.’s permanent neurological injury.

The central inquiry for admissibility of expert-opinion testimony “is whether

the expert’s testimony is “facially helpful and relevant and seemingly reliable.”

McKendall v. Crown Control Corp., 122 F.3d 803, 807 (9th Cir. 1997). Dr.

Parent’s expert causation opinions are facially helpful, relevant, and seemingly

reliable. To be admissible, his expert causation opinions need not have been based

on “generally accepted” methodologies, but only had to be based on “scientific

knowledge” that would “assist the trier of fact.” Daubert v. Merrell Dow

Pharmaceuticals, Inc., 509 U.S. 579, 589-90 (1993). And so they were.


52

Substantive state law applies to a diversity-jurisdiction product-liability case

pending in federal district court. Stilwell v. Smith & Nephew, Inc., 482 F.3d 1187,

1193 (9th Cir. 2007). “Under Arizona law, causation is an essential element of a

negligence claim.” Goodman v. Staples the Office Superstore, LLC, 644 F.3d 817,

824 (9th Cir. 2011). In Arizona, liability in a case like this is “but for.” That

matches the general rule that, in a toxic poisoning case, a “plaintiff must prove by a

preponderance of the evidence that, but for the defendant’s tortious conduct with

respect to the toxic substance, the plaintiff would not have suffered harm.”

Restatement (Third) of Torts: Liability for Physical and Emotional Harm cmt.

(c)(1) at 404 (2010) (emphasis added). The facts, and Dr. Parent’s explication of

those facts in his expert causation opinions, established the “but for” connection.

“Arizona law holds that cause-in-fact exists if the defendant’s act helped

cause the final result and if that result would not have happened without the

defendant’s act.” Ontiveros v. Borak, 136 Ariz. 500, 505, 667 P.2d 200, 205

(1983). Thus, “there is liability if the result would not have occurred but for

defendant’s conduct, even if that conduct contributed ‘only a little’ to plaintiff’s

injuries.” Id. (quoting Markiewicz v. Salt River Valley Water Users’ Ass’n, 118

Ariz. 329, 338 n. 6, 576 P.2d 517, 526 (App. 1978) (emphasis added)). In Arizona

law, all that is needed for a jury to find liability for R.M.’s permanent neurological

injuries case is a determination that ingesting the GHB contributed “only a little” to


53

causing those permanent injuries.

There may “be more than one ‘proximate cause’ without which the resulting

injuries would not have occurred.” Smith v. Chapman, 115 Ariz. 211, 214, 564

P.2d 900, 903 (1977). “The civil burden of proof merely requires a preponderance

of the evidence, and the existence of other, plausible causal sets that cannot be

ruled out does not, by itself, preclude the plaintiff from satisfying the burden of

proof on causation.” Restatement (Third) of Torts: Liability for Physical and

Emotional Harm cmt. (c)(1) at 400-01 (2010).

Thus, the proximate, actionable cause of R.M.’s injury could be anoxia, or

neurotoxicity, or a combination of those causes. The negligent manufacturers and

marketers of the Aqua Dots are liable if R.M.’s permanent neurological injuries

would not have occurred “but for” the fact that toxins in their product contributed,

even if only a little bit, to causing R.M’s permanent injuries. Robertson v. Sixpence

Inns of America. Inc., 163 Ariz. 539, 546, 789 P.2d 1040, 1047 (1990).

“The general rule” in Arizona “is that the question of causation is one of fact

for a jury except in those instances where no reasonable persons could disagree.”

Molever v. Roush, 152 Ariz. 367, 374, 732 P.2d 1105, 1112 (App. 1986). The

Ninth Circuit is even more emphatic. See Castro v. County of Los Angeles, 797

F.3d 654, 667 (9th Cir. 2015) (“Actual causation is purely a question of fact.”)

(citation and quotation marks omitted).


54

An Arizona plaintiff can prove causation simply “by presenting facts from

which a causal relationship may be inferred.” Salica v. Tucson Heart Hospital-

Carondelet, L.L.C., 224 Ariz. 414, 419 ¶ 16, 231 P.3d 946, 951 (App. 2010). If

reasonable persons can differ on the question of causation, summary judgment is

improper and the causation question should be left to the trier of fact. Lemire v.

California Dept. of Corrections and Rehab., 726 F.3d 1062, 1080 (9th Cir. 2013).

See also Barrett v. Harris, 207 Ariz. 374, 378 ¶ 12, 86 P.3d 954, 958 (App. 2004)

(“Causation is generally a question of fact for the jury unless reasonable persons

could not conclude that a plaintiff had proved this element.”).

In this instance, reasonable jurors could infer causation from Dr. Parent’s

opinions that R.M. sustained permanent neurological injuries that resulted to some

degree from eating the toxic Aqua Beads. Of course, reasonable jurors could

decide not to accept Dr. Parent’s expert opinions, but that is their right. It is not a

right the district court had the power to take from them. See “Preliminary 6, Expert

Witness,” Recommended Arizona Jury Instructions (Civil) (5th ed. July 2013)

(“Expert opinion testimony should be judged just as any other testimony. You are

not bound by it. You may accept or reject it, in whole or in part, and you should

give it as much credibility and weight as you think it deserves, considering the

witness’s qualifications and experience, the reasons given for the opinions, and all

the other evidence in the case.”).


55

In Arizona, jurors decide the weight and credibility of expert testimony. It is

their job, and only their job, to decide “whom to believe and why, whose testimony

to accept, and on what basis.” Logerquist v. McVey, 196 Ariz. 470, 488 ¶ 53, 1

P.3d 113, 141 (2000). “No rule is better established” in Arizona “than that the

credibility of the witnesses and the weight and value to be given to their testimony

are questions exclusively for the jury.” State v. Clemons, 110 Ariz. 555, 556-57,

521 P.2d 987, 988-89 (1974).

“In close cases, the trial court should allow the jury to exercise its fact-

finding function, for it is the jury’s exclusive province to assess the weight and

credibility of [expert] evidence.” State v. Bernstein, 237 Ariz. 226, 230 ¶ 18, 349

P.3d 200, 204 (2015). Arizona courts may not “‘substitute [their] judgment for that

of the trier of fact on matters pertaining to the credibility and weight of expert

testimony.’” IB Property Holdings, LLC v. Rancho del Mar Apts. Ltd. P’ship, 228

Ariz. 61, 66 ¶ 13, 263 P.3d 69, 74 (App. 2011) (quoting Nordstrom, Inc. v.

Maricopa County, 207 Ariz. 553, 559 ¶ 24, 88 P.3d 1165, 1171 (App. 2004)).

The trial court’s function as a gatekeeper “‘ought not to be confused with the

jury’s function to separate wheat from chaff.” Sandretto v. Payson Healthcare

Management, Inc., 234 Ariz. 351, 359 ¶ 24, 322 P.3d 168, 176 (App. 2014)

(quoting Crowe v. Marchand, 506 F.3d 13, 18 (1st Cir. 2007)). “The court’s role as

gatekeeper does not supplant or replace the adversary system. [Thus, when] there


56

is contradictory, but reliable, expert testimony, it is the province of the jury to

determine the weight and credibility of the testimony and to decide between

competing methodologies within a field of expertise.” State ex rel. Montgomery v.

Miller, 234 Ariz. 289, 298 ¶ 20, 321 P.3d 454, 463 (App. 2014) (citations and

internal quotation marks omitted).

In addition, as a matter of basic Arizona law, a testifying expert witness need

not “have the highest possible qualifications or highest degree of skill or

knowledge” to testify, since the expert may qualify based on his or her actual

experience or study. Lay v. City of Mesa, 168 Ariz. 552, 554, 815 P.2d 921, 923

(App. 1991). The strength of any expert’s qualifications goes to the weight the jury

may give to the expert’s testimony, not to its admissibility. State v. Davolt, 207

Ariz. 191, 210, ¶ 70, 84 P.3d 456, 475 (2004).

The trial court erred by refusing to let the jury evaluate Dr. Parent’s expert

opinions and by thus denying the Monjes the right to present his expert evidence—

and other lay and expert evidence—on the permanent, adverse neurological and

related injuries R.M. suffered as a result of eating the toxic toy beads.

9. The general-causation/specific-causation distinction for expert-opinion

testimony has no relevance to a case involving permanent injuries to one

child poisoned by toxic toy beads.

Despite federal and Arizona legal principles that establish the admissibility

of Dr. Parent’s expert causation opinions, the district court refused to allow his


57

opinions since he was supposedly improperly only giving “specific causation”

opinions relevant to R.M. and was not giving “general causation” opinions that

would, in reality, only apply to other toxic-bead-ingestion victims. The district

court, for example, rejected Dr. Parent’s anoxic-causation expert opinions because

he was not expressing a “general causation opinion” (Doc 595 at 3:13-17, ER 009).

And the district court excluded Dr. Parent’s neurotoxin-causation expert opinions

because Dr. Parent had repeatedly explained he was not—naturally enough—

offering a general-causation opinion relevant to a general population of toxic

victims in a one-toxic-victim case (Doc 595 at 4:19-20, ER 010).

The district court pronounced that: “After more than five years of litigation,

Plaintiffs have failed to produce an expert opinion as to general causation, despite

the Court’s forgiving posture that allowed for repeated opportunities to do just

that” (Doc 595 at 5:20-22, ER 011). The district court then held that the defense

was entitled to summary judgment on causation for permanent brain injury and

limited the case exclusively to the Defendants’ liability for the limited damages

arising from R.M.’s initial adverse reaction to eating the toxic Aqua Dots (Doc 595

at 6:3-8, ER 012). But the district court’s insistent demand for “general causation”

expert opinions is contrary to legal principles that control any case based on

Arizona substantive law—including this case.

Of greatest importance to this issue is the fact that, in the absence of Arizona


58

law to the contrary, Arizona courts follow the Restatement of Torts. See, e.g., In re

Estate of Reynolds, 235 Ariz. 80, 83 ¶ 12, 327 P.3d 213, 216 (App. 2014)

(following the Third Restatement of Torts); Dole Food Co., Inc. v. North Carolina

Foam Industries, Inc., 188 Ariz. 298, 306, 935 P.2d 876, 884 (App. 1996)

(“Absent contrary precedent, Arizona courts follow the Restatement.”).

The Third Restatement of Torts instructs and directs that “general causation”

and “specific causation” are only “categories” that “function as devices to organize

a court’s analysis, not as formal elements of the cause of action.” Restatement

(Third) of Torts: Liability for Physical and Emotional Harm § 28 cmt. (c)(1) at 405

(2010) (emphasis added). That is, general causation and specific causation “are not

‘elements’ of a plaintiff’s cause of action, and in some cases may not require

separate proof. So long as the plaintiff introduces admissible and sufficient

evidence of factual causation, the burden of production is satisfied.” Id., cmt.

(c)(1) at 405 (emphasis added). The Monjes satisfied their burden of producing

expert testimony on factual causation when they presented admissible and

sufficient evidence—through Dr. Parent—of the specific factual proximate cause

of permanent neurological injury to one particular child as the result of ingesting a

known toxic substance that stopped his breathing and nearly killed him.

The Third Restatement of Torts acknowledges that when a party proffers

“group-based statistical evidence,” the toxic substance at issue “must be capable of


59

causing the disease (‘general causation’) and . . . the substance must have caused

the plaintiff’s disease (‘specific causation’).” Id., cmt. (c)(1) at 404. “In other

cases, when group-based evidence is unavailable or inconclusive, and other forms

of evidence are used, the general and specific causation issues may merge into a

single inquiry. In any case, plaintiff’s exposure to the toxic agent must be

established.” Id., cmt. (c)(1) at 404-05. Here, of course, the Monjes did not offer

group-based statistical evidence, since all parties knew and admitted that R.M. was

exposed to and damaged by a known toxic agent.

The general-causation/specific-causation issues in this particular case are

merged into a single inquiry, since everyone—from all relevant experts in this case

to all those who had a hand in making and distributing these toxic toy beads—now

knows and admits that the toxic toy beads were capable of poisoning (and did

poison) this particular child and actually caused him to suffer terrifying, life-

threatening, coma-producing injuries.

The Third Restatement of Torts also recognizes that, in some cases, “the

evidence bearing on specific causation may be sufficient to pretermit the need to

assess general causation.” Id., cmt. (c)(3) at 407. This case, which involves a

solitary child who ingested a known toxic substance, is surely one of those cases

where the need to assess general causation has been pretermitted. There is no need

to assess the effect of eating the toxic tort beads on any sort of general population


60

when toxicity to the general population is already a given—and the specific

disastrous effect on this one child is so apparent.

This case is not a general-population matter. Instead, this case involves an

effort to seek damages for harm inflicted on one and only one child. “Sometimes

proof of specific causation is easy and collapses into proof of general causation, as

when there are no alternative causal agents for a disease, and the disease is said to

be a ‘signature’ of the substance.” Id., cmt. (c)(4) at 407-08. This case fits that

pattern. The district court committed clear legal error by requiring general-

causation opinions where the Third Restatement of Torts does not require that sort

of opinion in a simple, specific case of one child who suffered specific permanent

neurological injury as the result of eating admittedly toxic toy beads.

The Third Restatement of Torts provides that the “admissibility” of general-

causation and specific-causation expert testimony in a toxic-injury case like this

“cannot be determined without reference to the substantive law.” Id., cmt. (c)(1) at

404. The “sufficiency of the evidence to meet the burden of production on

causation are matters of substantive tort law.” Id., cmt. (c)(1) at 404.

There is no substantive Arizona precedent contrary to the general-

causation/specific causation principles the Third Restatement of Torts describes.

Arizona courts will therefore apply the principles set out in the Third Restatement

of Torts. See, e.g., In re Krohn, 203 Ariz. 205, 210 ¶ 18, 52 P.3d 774, 779 (2002)


61

(The Arizona Supreme Court has long followed the rule that it will follow the

Restatement when not bound by previous decisions or legislative enactments.);

Bank of America v. J. & S. Auto Repairs, 143 Ariz. 416, 418, 694 P.2d 246, 248

(1985) (“In the absence of contrary authority Arizona courts follow the

Restatement of the Law.”).

As a result, this Court must also apply the general-causation/specific

causation principles set out in the Third Restatement of Torts. See In re County of

Orange, 784 F.3d 520, 523-24 (9th Cir. 2015) (Under the Erie doctrine, federal

courts apply substantive state law in diversity cases.). And, on remand, so must the

district court. See Beesley v. Union Pacific Railroad Co., 430 F.Supp.2d 968, 970

(D. Ariz. 2006) (“Because this is a diversity case arising from alleged negligence

occurring in Arizona, the Court must apply Arizona substantive law.”).

In a one-victim Arizona diversity-jurisdiction case like the present one, the

Third Restatement of Torts does not require proof of general causation on top of

proof of specific causation. When the district court held otherwise, it committed

legal error that severely prejudiced the Monjes by preventing them from presenting

evidence about the post-ingestion neurological and related injuries that their son

has both already suffered and will suffer for the rest of his life.

The district court’s specific-causation/general-causation reasoning was also

wrong—as a matter of general tort law—because the specific-causation/general-


62

causation distinction only really matters in mass toxic-tort or similar mass-victim

cases. That specific-causation/general causation distinction does not apply to a

solitary case about one young boy who suffered permanent neurological injury as

the result of one episode of eating toxic toy beads.

For instance, in the California-centered litigation entitled Avila v. Willits

Environmental Remediation Trust, 633 F.3d 828, 836 (9th Cir. 2011), this Court

explained that California mass toxic-tort plaintiffs must “establish that the

substance at issue was capable of causing the injury alleged (general causation),

and that the substance caused, or was a substantial factor in causing, the specific

plaintiff’s injury (specific causation).” See also Lester Brickman, The Use of

Litigation Screenings in Mass Torts: A Formula for Fraud?, 61 SMU L. Rev.

1221, 1223 (Fall 2008) (In “mass tort litigation” plaintiffs have the burden of

establishing both general causation and specific causation.).

But see Kuhn v. Sandoz Pharms. Corp., 14 P.3d 1170, 1184-1185 (Kan.

2000) (Kansas Supreme Court refuses to require proof of general causation in a

case in which there was not mass exposure and there was an absence of a body of

epidemiologic evidence.); David L. Faigman, et al., How Good Is Good Enough?:

Expert Evidence Under Daubert and Kumho, 50 Case W. Res. L. Rev. 645, 663

(2000) (“It is now clear that courts will not exclude causal opinions based on

nonepidemiological evidence in situations where a body of such data does not


63

exist.”).

The specific-causation/general-causation distinction only really matters if a

case involves a large “general population” that has suffered injury of a general,

widespread nature, such as through extensive exposure to a toxic substance. In re

Hanford Nuclear Reservation Litigation, 292 F.3d 621, 633 (9th Cir. 2002).

Indeed, the case the district court improperly relied on as support for applying to

this case the mass-tort specific-causation/general-causation distinction was In re

Fosamax Products Liab. Litig., 645 F. Supp. 2d 164, 187 (S.D.N.Y. 2009). But

that was a huge, multidistrict class action against a manufacturer of drugs designed

to prevent and treat osteoporosis.

The district court did not appreciate the ramifications of this particular one-

victim poisoning case. “General causation,” after all, “is whether a substance is

capable of causing a particular injury or condition in the general population and

specific causation is whether a substance caused a particular individual’s injury.”

Norris v. Baxter Healthcare Corp., 397 F.3d 878, 881 (10th Cir. 2005). But as far

as the causation issue is concerned, we are not dealing with a general population or

even with a large group of victims. Instead, the point of this specific case is

whether a particular admittedly toxic substance caused a particular individual’s

particular permanent neurological injury. This is solely and exclusively a specific-

causation case. Dr. Parent quite correctly rejected the eccentric notion that he had


64

to pontificate on general causation in a one-victim case.

10. The “Bradford Hill criteria” are irrelevant in a case involving one child

who ate toxic toy beads.

The district court likewise improperly relied on a set of environmental-

exposure injury factors proposed by Sir Austin Bradford Hill in a 1965 lecture.

Austin Bradford Hill, The Environment and Disease: Association or Causation?,

58 Proceedings of the Royal Society of Medicine 205 (1965). The district court

criticized Dr. Parent for failing to apply what it called the “Bradford Hill factors”

(Doc 595 at 4:19 to 5:5 and fn. 2, ER 011 to ER 012).

The criticism was unfounded. After all, the “Bradford Hill criteria” are not

criteria for determining the admissibility of expert-opinion evidence generally and

“apply only in a situation where there is already statistical evidence of an elevated

risk of D [a disorder] among those exposed to S [a substance].” Susan Haack,

Proving Causation: The Holism of Warrant and the Atomism of Daubert, 4 J.

Health & Biomedical L. 253, 274-75 (2008).

Applying the “Bradford Hill criteria” to the present case was categorically

wrong. The “Bradford Hill criteria” only apply to the reliability of epidemiological

evidence, which is not a factor in a case involving a solitary poisoned child. See

Joe G. Hollingsworth & Eric G. Lasker, The Case Against Differential Diagnosis:

Daubert, Medical Causation Testimony, and the Scientific Method, 37 J. Health L.

85, 91 (Winter 2004).


65

“The Hill factors were developed for the purpose of determining whether an

inference of causation is justified based on a study finding an association, and their

use to provide the sole basis for proof of general causation does not reflect

accepted epidemiologic methodology.” See Reporter’s Note, Restatement (Third)

of Torts: Physical and Emotional Harm § 28 at 441 (2010).

11. The district court abused discretion by refusing to let Mark Monje, or

the bankruptcy Trustee, pursue Mark Monje’s personal-injury claims

for (a) past and future medical expenses, (b) emotional distress, and (c)

loss of consortium.

The final issue concerns judicial estoppel. Rulings on judicial estoppel are

reviewed for abuse of discretion. Hamilton v. State Farm Fire & Casualty Co., 270

F.3d 778, 782 (9th Cir. 2001).

The judicial-estoppel issue relates to Mark Monje’s right to bring “personal

injury” claims in this case. The district court ordered that Mark could not bring

“personal injury” claims for (a) R.M.’s past and future medical expenses, (b)

emotional distress, and (c) loss of consortium. That occurred because Mark had

inadvertently not declared those “personal injury” claims as a bankruptcy estate

asset when filing for Chapter 7 bankruptcy on March 10, 2009 (Doc 442 at 16:25

to 19:16, ER 029 to ER 032). That ruling arose as follows:

On July 23, 2014, Moose Enterprises filed a motion for partial summary

judgment, claiming that, under the doctrine of judicial estoppel, Mark and Beth

Monje could not pursue the above-listed “personal injury” claims because those


66

claims were not disclosed in the Chapter 7 bankruptcy proceedings (Doc 374 at

10:15 to 13:5). In response to the motion, the Monjes explained that Mark Monje

had not understood that the contingent “personal injury” claims, which were no

sort of actual or guaranteed asset, were something that had to be listed as an asset

in a bankruptcy case (Doc 390 at 12:16-18; 13:1-6).

The district court did not accept that explanation, writing that it would not

“forgive” Mark Monje for not understanding that his contingent personal-injury

claims were a bankruptcy asset (Doc 442 at 18:11-16, ER 031). The district court

held that “all elements of judicial estoppel are met in this matter” and barred Mark

Monje’s personal-injury claims (Doc 442 at 19:15-16, ER 032). The important

factor was the fact that the bankruptcy discharge meant that many creditors would

have no chance for compensation if Mark were successful in his personal-injury

claims in his son’s case (Doc 442 at 19:1-9, ER 032). The district court’s reasoning

and its application of judicial estoppel were error and abuse of discretion because,

by denying Mark any chance to obtain a personal-injury recovery, the district court

itself guaranteed that the bankruptcy creditors could never get anything more.

In fact, a simple, fair solution appeared before trial. On May 15, 2015, the

bankruptcy Trustee filed a motion to substitute the bankruptcy Trustee as a party

plaintiff or to intervene in the case (Doc 606). The bankruptcy Trustee filed the

motion to “protect and prosecute the Monje Bankruptcy Estate’s Claim” (Doc 606


67

at 2:20 to 3:1). The goal was to “benefit [the] creditors of the bankruptcy estate,”

the same creditors that the district court was concerned about vindicating when the

district court granted the judicial-estoppel motion (Doc 606 at 4:15-18). But

instead of protecting the bankruptcy creditors, the district court denied any help or

relief to them when it denied the bankruptcy Trustee’s motion (Doc 648 at 2).

The end result of the district court’s refusal to grant the bankruptcy Trustee’s

motion was that the bankruptcy creditors suffered—the same creditors who were

supposedly unjustly deprived of the ability to share in any successful personal-

injury brought by Mark Monje. But this time, it was not Mark Monje who

jeopardized an unappreciated bankruptcy asset inadvertently. Instead, it was the

district court that extinguished that same bankruptcy asset advertently. That ruling

is illogical and implausible, which perhaps is as good a way as any characterize a

judicial abuse of discretion. See In re oracle Corp. Securities Litigation, 627 F.3d

376, 385 (9th Cir. 2010) (“A district court abuses its discretion if it reaches a result

that is illogical, implausible, or without support in inferences that may be drawn

from facts in the record.”).

“An abuse of discretion occurs when the district court, in making a

discretionary ruling, relies upon an improper factor, omits consideration of a factor

entitled to substantial weight, or mulls the correct mix of factors but makes a clear

error of judgment in assaying them.” Stearns v. Ticketmaster Corp., 655 F.3d


68

1013, 1018 (9th Cir. 2011). Here, the district court abused discretion because it: (1)

focused on punishing Mark Monje instead of focusing on protecting bankruptcy

creditors, (2) failed to consider the creditor-protection factor, which was entitled to

substantial weight, and (3) made a clear error of judgment in evaluating the factors

concerning the bankruptcy issue.

The Monjes thus respectfully ask the Court to overturn the judicial-estoppel

ruling, and to direct that Mark Monje may assert personal-injury claims on remand

(a) for his son’s past and future medical expenses, (b) for Mark Monje’s emotional

distress, and (c) for Mark Monje’s loss of consortium. That would be done in

coordination with the bankruptcy Trustee, for the benefit of creditors and, if their

claims are appropriately satisfied, for his and his son’s benefit as well.

Conclusion

This appeal concerns three kinds of damages the district court erroneously

refused to let the jury assess: (1) punitive damages; (2) damages for the permanent

injuries that R.M. suffered after eating the toxic toy beads; and (3) Mark Monje’s

“personal injury” damages (a) for his son’s past and future medical expenses, (b)

for Mark Monje’s emotional distress, and (c) for Mark Monje’s loss of consortium.

The Monjes respectfully ask the Court to reverse the district court’s orders

and judgments denying them the opportunity to present evidence and argument to

the jury supporting the award of these three important types of damages, and to


69

award to them the reasonable costs they have incurred in this appeal.



/s/ David L. Abney, Esq.

David L. Abney



70

Certificate of Compliance with

Federal Rule of Appellate Procedure 32(a)(7)(B)

This brief complies with the type-volume limitations of Fed. R. App. P.

32(a)(7)(B)(i) and 29(d). The brief contains 13,668 words, excluding parts of the

brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii), complies with the typeface

rules of Fed. R. App. P. 32(a)(5), and complies with the typestyle rules of Fed. R.

App. P. 32(a)(6), since it uses proportionally spaced 14-point Times New Roman

typeface using Microsoft Word 2003-2007.




David L. Abney


Certificate of Service

I hereby certify I electronically filed the foregoing brief with the Clerk of the

U.S. Court of Appeals for the 9th Circuit using the appellate CM/ECF system on

this 8th day of February, 2015, all participants in the case are registered CM/ECF

users, and service will be accomplished by the appellate CM/ECF service.




David L. Abney



71

Statement of Related Cases

Counsel for Appellants is unaware of any related cases, as Ninth Circuit

Rule 28-2.6 defines related cases.

Certificate for Brief in Paper Format

9th Circuit Case No. 15-16480

I, David L. Abney, certify that the written version of this brief that will be

submitted will be identical to the version submitted electronically on Feb. 8, 2016,

and that a copy of the written version of this brief was mailed on this same date to:

Richard W. Mear, Esq., THE CAVANAGH LAW FIRM, 1850 N. Central Ave.,

Ste. 2400, Phoenix, AZ 85004-4527, [email protected], (602) 322-

4143, Attorneys for Defendants-Appellees Spin Master, Inc., Spin Master Ltd.,

Toys “R” Us-Delaware.

Robert C. Ashley, Esq., Carl F. Mariano, Esq., LEWIS BRISBOIS BISGAARD &

SMITH LLP, 2929 N. Central Ave., Ste. 1700, Phoenix, AZ 85012-2761,

[email protected], [email protected], (602) 385-

1059, (602) 385-7845, Attorneys for Defendant-Appellant.




David L. Abney



Nos. 15-16480 and 15-16567

IN THE UNITED STATES CIRCUIT COURT OF APPEALSFOR THE NINTH CIRCUIT

MARK MONJE; BETH MONJE, individuallyand on behalf of their minor son R.M.,

Plaintiffs/Appellees

v.

SPIN MASTER INCORPORATED, a Delaware corporation, et al.,Defendants

and

MOOSE ENTERPRISE PTY, LTD., an Australian company,Defendant/Appellant

On Appeal from the United States District Court for Arizona,No. 2:09-cv-01712-JJT (Judge John J. Tuchi)

APPELLEE MOOSE ENTERPRISE PTY, LTD.’S ANSWERING BRIEF

(SECOND BRIEF ON CROSS-APPEAL)

Jeffry A. Miller, SBN 126074Carl F. Mariano, SBN 010994Robert C. Ashley, SBN 022335LEWIS BRISBOIS BISGAARD & SMITH LLPPhoenix Plaza Tower II2929 North Central Avenue, Suite 1700Phoenix, Arizona 85012Telephone: 602.385.1040Attorneys for Defendant/Appellant MooseEnterprise Pty, Ltd.

Case: 15-16480, 06/13/2016, ID: 10013370, DktEntry: 45, Page 1 of 79

CORPORATE DISCLOSURE STATEMENT

Pursuant to Rules 28(a)(3) and 26.1, Federal Rules of Appellate Procedure,

the undersigned attorney for Moose Enterprise Pty, Ltd., states that Moose

Enterprise Pty, Ltd. is a privately held company. No publicly held company owns

10% or more of the stock of Moose Enterprise Pty, Ltd.

DATED this 13th day of June, 2016.

LEWIS BRISBOIS BISGAARD & SMITH

LLP By s/ Robert C. Ashley

Jeffry A. Miller Carl F. Mariano Robert C. Ashley Attorneys for Defendant/Appellant Moose

Enterprise Pty, Ltd.


4837-2963-4866.1 i

TABLE OF CONTENTS

STATEMENT OF THE ISSUES PRESENTED FOR REVIEW ............................. 1

STATEMENT OF THE CASE .................................................................................. 2

I. INTRODUCTION ................................................................................. 2

II. R.M.’S MEDICAL TREATMENT. ...................................................... 3

III. THE MONJES’ EXPERTS ON CAUSATION. ................................... 6

IV. MEDICAL DISCOVERY AND DEPOSITIONS OF THE MONJES’ EXPERTS. ........................................................................... 8

V. RULINGS LIMITING OR EXCLUDING CAUSATION EXPERT TESTIMONY. ..................................................................... 11

VI. DEVELOPMENT, MARKETING AND SALE OF AQUA DOTS. .................................................................................................. 15

VII. INCORRECT FACTS IN APPELLANTS’ OPENING BRIEF. ........ 19

SUMMARY OF ARGUMENT ............................................................................... 20

ARGUMENT ........................................................................................................... 22

I. THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION TO EXCLUDE THE UNTIMELY AND UNSUPPORTED OPINIONS OF DR. PARENT. ............................. 22

A. Dr. Parent Is The Only Expert Who Could Testify To Causation. .................................................................................. 22

B. Admissibility Of Dr. Parent’s Testimony Is Governed By Federal Evidentiary Law, Not Arizona Substantive Law. ........ 24

C. Dr. Parent Expressed Two Distinct Opinions. .......................... 24

D. The “Single Exposure” Theory Was Properly Excluded As Untimely. ............................................................................. 26

E. The “Anoxia” Theory Was Properly Excluded As Unreliable. ................................................................................. 28

II. THE DISTRICT COURT PROPERLY APPLIED A GENERAL CAUSATION ANALYSIS. ............................................ 30

A. Dr. Parent Himself Recognized That The Toxicological Method Involves Analysis Of Both General and Specific Causation. .................................................................................. 31

B. General Causation Must Be Shown In Any Case Where


4837-2963-4866.1 ii

Questions Of Causation Are Beyond The Jury’s Understanding. .......................................................................... 33

C. General Causation Is Not Limited To Environmental Torts ........................................................................................... 36

D. The Absence Of Epidemiological Evidence Does Not Excuse The Need To Show General Causation. ....................... 39

E. Regardless of Whether He Should Have Applied The Hill Guidelines, Dr. Parent Failed To Establish General Causation ................................................................................... 42

III. MOOSE COULD NOT HAVE AN “EVIL MIND” BECAUSE IT HAD NO MORE KNOWLEDGE THAN THE MONJES OF THE RISK PRESENTED BY AQUA DOTS BEADS. ............... 43

A. The Monjes Seeks Punitive Damages On A New Set Of Facts. ......................................................................................... 44

B. Arizona Public Policy Is Hostile To Awards Of Punitive Damages. ................................................................................... 48

C. Punitive Damage May Not Be Awarded Through Appeals To Passion And Prejudice. .......................................... 50

D. Punitive Damages Would Not Serve A Deterrent Rationale Because Aqua Dots Were Recalled Even Before This Lawsuit Was Filed. ............................................... 52

IV. THE DISTRICT COURT PROPERLY APPLIED JUDICIAL ESTOPPEL TO BAR MARK MONJE’S DERIVATIVE CLAIMS. ............................................................................................. 53

V. THE DISTRICT COURT ERRED IN INSTRUCTING THE JURY ON WHETHER JSSY WAS MOOSE’S AGENT. ................. 56

A. Standard of Review. .................................................................. 59

B. The Monjes Did Not Properly Plead Agency or Vicarious Liability. .................................................................................... 59

C. The Agency Jury Instructions Were Erroneous As A Matter Of Law. .......................................................................... 61

D. The Monjes Did Not Present Sufficient Evidence for the District Court to Instruct on Agency. ........................................ 65

CONCLUSION ........................................................................................................ 67

STATEMENT OF RELATED CASES ................................................................... 68

CERTIFICATE OF COMPLIANCE ....................................................................... 69


4837-2963-4866.1 iii

TABLE OF AUTHORITIES

Federal Court Cases

Amorgianos v. Amtrak,

303 F.3d 256 (2d Cir. 2002) .................................................................. 32, 37

Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955 (2007) ..........................................................60

Berg v. E.I. DuPont de Nemours & Co., 293 F.3d 1127 (9th Cir. 2002) ......................................................................39

Best v. Lowe’s Home Ctrs., Inc., 563 F.3d 171 (6th Cir. 2009) ........................................................................37

Clausen v. M/V New Carissa, 339 F.3d 1049 (9th Cir. 2003) ......................................................................37

Cohen v. U.S. Dist. Court for N. Dist. of Cal., 586 F.3d 703 (9th Cir. 2009) ........................................................................29

Concrete Pipe & Prods. v. Constr. Laborers Pension Trust, 508 U.S. 602, 113 S. Ct. 2264, 124 L. Ed. 2d 539 (1993) ...........................29

Daly-Murphy v. Winston, 837 F.2d 348 (9th Cir. 1987) ........................................................................46

Dang v. Cross, 422 F.3d 800 (9th Cir. 2005) ........................................................................59

Daubert v. Merrell Dow Pharmaceuticals, Inc., 43 F.3d 1311 (9th Cir. 1995) ................................................................. 30, 32

Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993)......................................................................................28

Eberle v. City of Anaheim, 901 F.2d 814 (9th Cir. 1990) ..................................................... 22, 23, 27, 46

Estate of Spirtos v. One San Bernardino Cty. Sup. Ct. Case No. SPR 02211 443 F.3d 1172 (9th Cir. 2006) .......................................................................56

Gantt v. City of Los Angeles, 717 F.3d 702 (9th Cir. 2013) ........................................................................59

Gearhart v. Uniden Corp. of America, 781 F.2d 147 (8th Cir. 1986) ........................................................................52


4837-2963-4866.1 iv

Glastetter v. Novartis Pharms. Corp., 252 F.3d 986 (8th Cir. 2001) ........................................................................40

Golden v. CH2M Hill Hanford Group, Inc., 528 F.3d 681 (9th Cir. 2008) ........................................................................36

Guillory v. Domtar Indus., 95 F.3d 1320 (5th Cir. 1996) ........................................................................30

Hollander v. Sandoz Pharma. Corp., 289 F.3d 1193 (10th Cir. 2002) ....................................................................40

In re E.R. Fegert, Inc., 887 F.2d 955 (9th Cir. 1989) ........................................................................46

Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 119 S. Ct. 1167 (1999) ..........................................................31

Lowry v. Barnhart, 329 F.3d 1019 (9th Cir. 2002) ......................................................................46

Lust ex rel. Lust v. Merrell Dow Pharmaceuticals, Inc., 89 F.3d 594 (9th Cir. 1996) ..........................................................................23

McClain v. Metabolife Int’l., Inc., 401 F.3d 1233 (11th Cir. 2005) ....................................................................37

Mendez v. Cnty. of San Bernardino, 540 F.3d 1109 (9th Cir. 2008) ......................................................................59

Navellier v. Sletten, 262 F.3d 923 (9th Cir. 2001) ........................................................................59

New Hampshire v. Maine, 532 U.S. 742 (2001)......................................................................................54

Ochoa v. J.B. Martin & Sons Farms, 287 F.3d 1182 (9th Cir. 2002) ............................................................... 58, 64

Resendiz v. Kovensky, 416 F.3d 952 (9th Cir. 2005) ........................................................................25

Rodriguez v. Doral Mortgage Corp., 57 F.3d 1168 (1st Cir. 1995) .........................................................................60

Samuels v. Holland Am. Line-USA Inc., 656 F.3d 948 (9th Cir. 2011) ........................................................................30

Swinton v. Potomac Corp., 270 F.3d 794 (9th Cir. 2001) ........................................................................59

United States v. Wilkes, 662 F.3d 524 (9th Cir. 2011) ................................................................. 28, 45


4837-2963-4866.1 v

Yan Fang Du v. Allstate Ins. Co., 697 F.3d 753 (9th Cir. 2012) ........................................................................59

Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101 (9th Cir. 2001) ......................................................................26

State Court Cases

Barrett v. Harris, 207 Ariz. 374, 86 P.3d 954 (2004) ...............................................................35

Dietz v. General Elec. Co., 169 Ariz. 505, 821 P.2d 166 (1991) .............................................................62

Gersten v. Gersten, 223 Ariz. 99, 219 P.3d 309 (2009) ...............................................................55

Girouard v. Skyline Steel, Inc., 215 Ariz. 126, 158 P.3d 255 (App. 2007) .............52

Gurule v. Illinois Mut. Life & Casualty Co., 152 Ariz. 600, 734 P.2d 85 (1987) ...............................................................49

Hawkins v. Allstate Ins. Co., 152 Ariz. 490, 733 P.2d 1073 (1987) .................................................... 47, 48

Hudgins v. Southwest Airlines Co., 221 Ariz. 472, 212 P.3d 810 (App. 2009) ................................................................................................. 44, 47, 48

Hunter Contracting, Inc. v. Super. Ct., 190 Ariz. 318, 947 P.2d 892 (1997) .............................................................35

In re Estate of Friedman, 217 Ariz. 548, 177 P.3d 290 (App. 2008) ......................56

Jimenez v. Sears Roebuck and Co., 183 Ariz. 399, 904 P.2d 861 (1995) .............................................................62

Linthicum v. Nationwide Life Ins. Co., 150 Ariz. 326, 723 P.2d 675 (1986) .......................................... 47, 48, 49, 53

Medasys Acquisition Corp. v. SDMS, P.C., 203 Ariz. 420, 55 P.3d 763 (2002) .............................................................................................................48

Pierce v. Casas Adobes Baptist Church, 162 Ariz. 269, 782 P.2d 1162 (1989) ...........................................................53

Revels v. Pohle, 101 Ariz. 208, 418 P.2d 364 (1966) .............................................................35

Santiago v. Phoenix Newspapers, Inc., 164 Ariz. 505, 794 P.2d 138 (1990) .............................................................64

Saucedo ex rel. Sinaloa v. Salvation Army, 200 Ariz. 179, 24 P.3d 1274 (App. 2001) ....................................................45


4837-2963-4866.1 vi

State ex rel. Montgomery v. Miller, 234 Ariz. 289, 321 P.3d 454 (App. 2014) ..............................................................................................................24

State Farm Ins. Cos. v. Premier Manufactured Sys., 217 Ariz. 222, 172 P.3d 410 (2007) .......................................... 58, 62, 63, 64

State v. Quatsling, 24 Ariz.App. 105, 536 P.2d 226 (1975) .......................................................49

Thompson v. Better-Bilt Aluminum Prods. Co., 171 Ariz. 550, 832 P.2d 203 (1992) ................................................ 44, 47, 48

Volz v. Coleman Co., Inc., 155 Ariz. 567, 748 P.2d 1191 (1987) ...........................................................50

Western Bonded Products v. Industrial Comm’n of Ariz., 132 Ariz. 526, 647 P.2d 657 (1982) .............................................................35

Statutory Authorities

Arizona Revised Statutes § 12-2506 .......................................................... 61, 62, 64

Federal Rules and Regulations

Fed. R. App. P. 28.1(e)(2)(B) ..................................................................................69

Fed. R. App. P. 32(a)(5) ...........................................................................................69

Fed. R. App. P. 32(a)(6) ...........................................................................................69

Fed. R. App. P. 32(a)(7)(B) .....................................................................................69

Fed. R. Civ. P. 8(a) ...................................................................................................60

Fed. R. Civ. P. 26(a)(2) ............................................................................................27

Fed. R. Evid. 702 ............................................................................................... 30, 32

Fed. R. Evid. 702(b) .................................................................................................30

Fed. R. Evid. 801 ......................................................................................................51

Additional Authorities

Annotation, Statement by Counsel Relating to Race, Nationality, or Religion in Civil Action as Prejudicial, 99 A.L.R.2d 1249 (1965) ...............52

Clay Calvert, “Toxic Television, Editorial Discretion, & The Public Interest: A Rocky Mountain Low,” 21 Hastings Comm. & Ent. L.J. 163 (Fall 1998) ..............................................................................................51


4837-2963-4866.1 vii

Federal Judicial Center. Reference Manual of Scientific Evidence (3d Ed. 2011) ..............................................................................................................31

Joe G. Hollingsworth and Eric G. Lasker, The Case Against Differential Diagnosis: Daubert, Medical Causation Testimony, and the Scientific Method, 37 J. Health L. 85 (Winter 2004) .....................................................40

Restatement (Second) of Agency, §14K. .................................................................63

Restatement (Second) of Agency, §14N. .................................................................63

Restatement (Third) of Agency, § 1.01 (2006) ................................................. 61, 62

Restatement (Third) of Agency. ..............................................................................64

Restatement (Third) of Torts, Liability for Physical and Emotional Harm 33, 36, 37

Restatement (Third) of Torts, Liability for Physical and Emotional Harm § 26 ................................................................................................................34

Restatement (Third) of Torts , Liability for Physical and Emotional Harm § 28 ............................................................................................. 23, 34, 38, 39


4837-2963-4866.1 1

STATEMENT OF THE ISSUES PRESENTED FOR REVIEW

1. The Monjes’ experts identified no evidence that 1,4-butanediol can

cause lasting neurological injury, and their expert Dr. Richard Parent renounced his

toxicological opinions. Did the district court properly preclude Dr. Parent from

testifying that R.M. experienced a permanent brain injury?

2. Could the evidence identified by the Monjes in their product liability

case raise an inference sufficient to allow a jury to decide, by clear and convincing

evidence, that Moose Enterprise Pty, Ltd. (“Moose”) acted with an “evil mind” in

its development and sale of the subject toy?

3. Assuming Mark Monje had any surviving claims, did the district court

properly apply the doctrine of judicial estoppel to protect the integrity of the

judicial process from the inconsistent positions advanced by Mark Monje?

4. If this case is to be retried, should the jury be instructed that the

independent company Moose contracted with to manufacture the beads in question

may be considered Moose’s agent?


4837-2963-4866.1 2

STATEMENT OF THE CASE

I. INTRODUCTION

This personal injury matter comes to this Court following an eight day jury

trial culminating in a verdict in the Monjes’ favor. The Monjes sought damages

for an incident on July 16, 2007, when their minor son R.M., ate toy “Aqua Dots”

beads that had been developed by Moose and sold by Toys “R” Us. R.M. fell

unconscious, was taken to the hospital, and was discharged two days later. Moose

later learned that its vendor, Jssy, Ltd. (“Jssy”), had manufactured the beads using

1,4-butanediol (“1,4-BD”), a chemical that metabolizes into gamma-

hydroxybutyrate (“GHB”) when ingested.

The Monjes sued Moose in product liability, and also sued Spin Master, Inc.,

Spin Master, Ltd., and Toys “R” Us, Inc. (collectively “Spin Master”). At trial,

Moose and Spin Master admitted they shared responsibility for the consequences

of R.M. ingesting the Aqua Dots beads.1 The jury awarded $435,000.00 to the

Monjes, based on undisputed evidence of $58,569.76 of medical treatment

provided to R.M.2 After apportionment of fault, the court entered judgment in the

Monjes’ favor in the amount of $317,550.00.3 The Monjes do not challenge that

1 Trial Day 1 (Doc. 713, pp. 69, 123, 156), Supplemental Excerpts of Record (“SER”) 069-071. 2 Verdict (Doc. 733), Appellants’ Excerpts of Record (“ER”) 005. 3 Judgment (Doc. 742), ER-003.


4837-2963-4866.1 3

the verdict and judgment were appropriate based on the evidence presented at trial.

Rather, the Monjes seek reversal of the trial’s court’s pretrial rulings on

three subjects: (a) preclusion of unreliable and untimely expert testimony on

causation of a brain injury; (b) dismissal of their prayer for punitive damages; and

(c) dismissal of the derivative claims of Mark Monje under the doctrine of judicial

estoppel. The preclusion of the Monjes’ claim that R.M. experienced a brain

injury overshadows all other issues. The fact that R.M.’s injury was transitory

rather than permanent bars the Monjes’ derivative claims for loss of consortium

and emotional distress, and also weighs against imposition of punitive damages.4

The district court’s order excluding the Monjes’ brain injury claim (Doc.

595) did not represent a “change of heart” by the district court, but was the

terminus of a long journey. The district court examined the causation question in

detail over the course of numerous motions presented by both sides. The district

court’s final causation ruling is therefore best read in the context of the medical

records of R.M.’s treatment, the opinions of the Monjes’ specially retained experts,

and the incremental rulings addressing those experts’ opinions.

II. R.M.’S MEDICAL TREATMENT.

R.M.’s course of care from July 16 to 18, 2007 was well documented. R.M.

was initially evaluated by Sandra Indermuhle, M.D. at Mercy Gilbert Medical

4 See 6/5/15 Hearing (Doc. 684, p. 7), SER 060; 6/8/15 Hearing (Doc. 714, pp. 10, 30), SER 064.


4837-2963-4866.1 4

Center.5 R.M. was administered a CT scan that showed “no acute abnormality or

bleeding6.” Blood tests were also normal.7 Due to R.M.’s lethargy, Dr.

Indermuhle elected to intubate R.M. and have him transferred to the intensive care

unit (“ICU”) at Phoenix Children’s Hospital (“PCH”).8

About fifteen to twenty minutes into his initial examination at PCH with

David Beyda, M.D., R.M. “did awaken, opened his eyes spontaneously, responded

to commands, and was extremely appropriate.”9 The medical plan included

obtaining a neurological consultation if R.M. did not continue to respond

appropriately.10 R.M. was extubated on July 17, 2007 and “appeared awake and

alert and in no acute distress.”11 R.M was transferred to the general pediatric floor

under the care of David Solomon, M.D. for overnight observation.12 The following

day, R.M. was discharged with no instructions for neurological follow-up.13 The

Monjes have never criticized the care of Dr. Beyda or Dr. Solomon.

In the months following R.M.’s discharge, the Monjes did not seek out a

5 Mercy Gilbert Records (Doc. 375-2, pp. 108-111), SER 192-195. 6 Id., SER 193-194. 7 Id., SER 194. 8 Id., SER 194-195 9 PCH Records (Doc. 375-2, pp. 113-14), SER 196-197. 10 Id. 11 PCH Records (Doc. 375-2, p. 106), SER 199. 12 Id. 13 Id.


4837-2963-4866.1 5

neurological consultation. In his next well-baby check, on August 27, 2007, R.M.

was found to be “appropriate,” with no focal neurological deficits.14 Mr. Monje

reported R.M. could say 2-3 words.15 R.M. was given the MCHAT autism

screening , which proved negative.16

The day after the Aqua Dots were recalled in the United States, the Monjes

took R.M. to his pediatrician and reported he had not talked since the ingestion.17

The pediatrician provided a neurology referral out of concern that R.M. potentially

experienced a “hypoxic-ischemic event.”18 The first neurologist to evaluate R.M.

was John F. Kerrigan, M.D., on February 28, 2008.19 Dr. Kerrigan noted a recent

head MRI was “completely normal,” and an EEG “did not show any focal,

lateralizing or epileptiform features.”20 In his next evaluation on May 21, 2009,

Dr. Kerrigan was concerned over R.M.’s poor social skills, but reported “it is quite

likely that no specific cause may be determined.”21 The Monjes thereafter visited

five other neurologists in Arizona and California, with four of them only seeing

14 North Scottsdale Pediatric Records (Doc. 375-2, p. 127), SER 201. 15 Id.(Doc. 375-2, p. 126), SER200. 16 Id. (Doc. 375-2, p. 127), SER 201. 17 Id. (Doc. 375-2, p. 130), SER 203. 18 Id. (Doc. 375-2, p. 131), SER 204. 19 Kerrigan Records (Doc. 375-2, pp. 141-149), SER 210-213. 20 Id., SER 212. 21 Id., SER 206.


4837-2963-4866.1 6

R.M. on a single occasion.22 Not one of the six neurologists who have examined

R.M. diagnosed him with a brain injury.23

As discovery in this case was drawing to a close in early 2014, R.M. was

completing the second grade, without having received any special education

support for the entire school year.24 His teacher characterized R.M. as an

“average” student, and saw nothing suggesting he required special education.25 As

he embarked upon third grade in the Fall of 2014, R.M. maintained or even

improved his academic standing, with most grades and behavioral markers falling

in the “Excellent” range.26

III. THE MONJES’ EXPERTS ON CAUSATION.

Despite the foregoing evidence, the Monjes and their retained experts

attributed various behavioral and cognitive deficits to R.M., and claimed such

deficits were caused by R.M.’s ingestion of Aqua Dots. Four experts disclosed by

the Monjes are key to the causation analysis, as follows:

• Joseph Wu, M.D. is a psychiatrist. He did not evaluate R.M. personally, and

did not give psychiatric opinions. Rather, Dr. Wu’s commissioned imaging

22 Neurologist Records (Doc. 375-2, pp. 141-151; Doc.375-3, pp. 2-23), SER 205-235; (Doc. 375-2, pp. 135-37), ER-157 to 159. 23 Id. 24 Report Cards (Doc. 450-1, pp. 82-85), SER 236-239. 25 Upshaw Depo. (Doc. 450-1, p. 79, ll. 6-15), SER 183. 26 Report Card (Doc. 450-1, p. 85), SER 239.


4837-2963-4866.1 7

studies upon R.M. such as diffusion tensor imaging (“DTI”) and positron

emission tomography (“PET”), and opined that “The most probable cause of

the cognitive and neurological problems that [R.M.] is currently

experiencing is the hypoxic/toxic brain injury on July 16, 2007.”27

• Richard Parent, Ph.D. is a toxicologist. He also did not evaluate R.M., but

opined that the “permanent brain injury as described by Dr. Joseph Wu, is

related to the ingestion of over 50 Aqua Dots on July 16, 2007.”28 Elsewhere

in his report, Dr. Parent characterized R.M. as having experienced a

“permanent anoxic injury to the brain.”29

• Paul Beljan, Psy.D. is a neuropsychologist who was specially retained by the

Monjes to evaluate R.M. in 2009 and 2011. Dr. Beljan concluded R.M. “has

a history of ingesting Aqua Dots at 16 months old with resultant behaviors

and development that are consistent with traumatic brain injury.”30

• Christine Kwasnica, M.D. was retained to perform an independent medical

examination (“IME”).31

Dr. Wu and Dr. Parent initially focused on hypoxia or anoxia as the

27 Wu Report (Doc. 375-2, pp. 46-48), ER-164 to 166. 28 Parent Report (Doc. 590-1, p. 6), ER-192. 29 Id. (Doc. 590-1, pp. 3, 4), ER-189 to 190. 30 Beljan Reports (Doc. 449-1, pp. 16, 34), SER 183, 185. 31 Kwasnica Records (Doc. 450-1, pp. 2-5), SER 186-189.


4837-2963-4866.1 8

mechanism for the brain injury they alleged, possibly due to the pediatrician’s note

concerning a “hypoxic-ischemic event.”

IV. MEDICAL DISCOVERY AND DEPOSITIONS OF THE

MONJES’ EXPERTS.

Medical discovery in this matter focused on whether R.M. ever became

anoxic following the ingestion, as claimed by Dr. Wu and Dr. Parent. The first

physician to treat R.M., Dr. Indermuhle, did not recall or document that R.M. was

hypoxic at any point in her care.32 Dr. Beyda testified that R.M’s “appropriate”

presentation at PCH and his ability to communicate were not consistent with an

anoxic brain injury.33 Dr. Solomon agreed there was no medical evidence of

hypoxic encephalopathy, and he would have consulted with a neurologist if he had

felt R.M. had any significant neurological problem.34

Both Dr. Solomon and Dr. Beyda testified that anoxia sufficient to cause

brain injury would have generated significant metabolic acidosis and elevated liver

function tests, neither of which were present here.35 Dr. Kerrigan also testified

there was “no evidence to support [the] premise” that R.M. had experienced a

32 Indermuhle Depo. (Doc. 375-3 at p. 26), SER 93. 33 Beyda Depo. (Doc. 590-1, pp. 39-40, 42), SER 097-098.

34 Solomon Depo. (Doc. 375-2, pp. 118-121), SER 101-104. 35 Id. (Doc. 590-1, p. 63), SER 107; Beyda Depo (Doc. 590-1, pp. 41-42), SER 099-100.


4837-2963-4866.1 9

hypoxic brain injury.36 Even the Monjes’ neuropsychological expert, Dr. Beljan,

conceded the absence of a brain injury diagnosis in the medical records.37

Retained IME expert Dr. Kwasnica noted R.M.’s 100% oxygen saturation levels in

her report.38 At her deposition, though, Dr. Kwasnica avoided rendering any

opinion as to whether Aqua Dots ingestion caused a brain injury: “I am not the

causation expert . . . I am not going to testify as to causation.”39

Defendants concluded discovery by deposing Dr. Parent and Dr. Wu

regarding the anoxic brain injury theory. Dr. Parent conceded “there is nothing in

the record that I know of that [R.M.] was impaired from his respiratory system and

that it shut down or – and that he became anoxic40.” Dr. Parent also conceded that

his May 6, 2013 report was focused on anoxia, as opposed to other mechanisms of

brain injury.41

Not surprisingly, Dr. Parent distanced himself from his opinion that R.M.

experienced a hypoxic brain injury, and in fact disavowed any causation opinions

in his report:

36 Kerrigan Depo. (Doc. 375-2, p. 155), SER 111. 37 Beljan Depo. (Doc. 449-1, p. 38, ll. 23-25), SER 175. 38 Kwasnica Report (Doc. 450-1, p. 2), SER 188. 39 Kwasnica Depo. (Doc. 450-1, p. 56), SER 173.

40 Parent Depo. (Doc. 590-1, p. 11, ll. 11-16; p. 18, ll. 6-9), SER 115, 134. 41 Parent Depo. (Doc. 375-1, p. 58, ll. 17-20), SER 117 see also Order (Doc. 595, p. 4, ll. 13-15), ER-010.


4837-2963-4866.1 10

A. This is not a causation report that I’ve written . . . I do believe that I could write a good causation report, a general causation and specific causation.

* * *

Q. This report does not contain a general causation analysis, correct?

A. Right. I hope that Ms. McBride will ask me to produce a full blown causation report at some point in the future.

* * *

Q. In your May 6, 2013, report, did you endeavor to apply the Hill criteria?

A. Let me read the last sentence if I haven’t gotten through, ‘Since this report is not intended to be comprehensive, I reserve the right to supplement it should additional information become available or if requested to do so.’ Does that sound like I did a Hill criteria causation report? No. It's a preliminary look at this case.

* * *

Q. At that time, had you looked at any of the other Hill criteria apart from temporality? . . .

A. This is not a causation report. Why would I do that?42

In addition to renouncing his report, Dr. Parent attempted to offer a completely

new opinion: that a single episode of anesthetizing a young child, by any chemical

means, raises the risk of brain injury (the “single exposure” theory).43

Immediately upon completing Dr. Parent’s deposition, the Monjes’ counsel

42 Parent Depo. (Doc. 590-1, pp. 19-21, 23), SER 143-145, 147. 43 Parent Depo. (Doc. 375-1, pp. 76-77; Doc. 451-6, pp. 50-53), SER 135-140; 2/20/15 Hearing (Doc. 551, p. 40), SER 047.


4837-2963-4866.1 11

contacted Dr. Wu – who was to be deposed the following day – and provided him

with Dr. Parent’s expert file, including authoritative articles upon which he had

relied.44 Dr. Wu spent the evening reviewing Dr. Parent’s file and generating a

new report concerning the alleged toxic effects of GHB45. Like Dr. Parent before

him, Dr. Wu stated R.M. did not likely experience a hypoxic injury.46 Dr. Wu

claimed R.M. had experienced “some toxic injury,” but conceded he was not a

toxicologist, and had never been qualified as an expert in that field.47

V. RULINGS LIMITING OR EXCLUDING CAUSATION EXPERT

TESTIMONY.

On July 23, 2014, Moose moved for partial summary judgment on the

Monjes’ brain injury claim for lack of expert testimony on causation.48 The district

court denied that aspect of Moose’s motion, finding a question of material fact

created by Dr. Parent’s deposition testimony as to “the potential for an anesthesia-

induced comatose state to result in brain damage.”49 As the district court explained

in a later hearing, the summary judgment ruling was limited, and the court’s

analysis stopped once it identified a controverted question of fact in Dr. Parent’s

44 Wu Depo. (Doc. 375-2, pp. 6-7, 14-15, 17, 24-27), SER 153-154, 161-162, 164-168. 45 Id. (Doc. 375-2, pp. 7-8, 24-27), SER 154-155, 165-168. 46 Id. (Doc. 453-1 at p. 31), SER 170.

47 Id. (Doc. 375-2, at pp. 11-13; Doc. 453-1 at p. 31), SER 158-160, 170. 48 Motion for Partial Summary Judgment (Doc. 375). 49 Doc. 442 at p. 5, ll. 11-22, ER-018.


4837-2963-4866.1 12

testimony.50

Defendants thereafter addressed the causation question through motions in

limine to exclude experts Kwasnica, Beljan, Wu, and Parent from testifying that

R.M.’s ingestion of beads containing 1,4-BD resulted in a brain injury. The district

court addressed each expert in turn. First, the district court barred Dr. Beljan from

testifying that R.M. experienced a brain injury as a result of ingesting Aqua Dots.51

Because Dr. Beljan was not a toxicologist, he was not qualified to testify as to

causation of a brain injury.52 However, the court permitted Dr. Beljan to testify

that his observations of R.M. are “consistent” with brain injury, “as long as there is

causation proved by someone else.”53 At that time, the court postulated that

causation testimony would be provided by “Dr. Parent or something along those

lines.”54

Next addressing Defendant’s motion to exclude Dr. Kwasnica, the district

court barred her from testifying as to causation or even “characteriz[ing] the

condition for which she is laying out a prognosis.”55 The district court did permit

Dr. Kwasnica to testify as to R.M.’s prognosis, and to the likelihood of his needing

50 2/20/15 Hearing (Doc. 551, pp. 23-24), SER 045-046. 51 2/13/15 Hearing (Doc. 541, pp. 66-67, 72-73), SER 036-039. 52

Id. (Doc. 541, p. 66), SER 036.

53 Id. (Doc. 541, pp. 67, 72-75), SER 037-041. 54 Id. (Doc. 541, p. 72, ll. 8-9), SER 038. 55 2/20/15 Hearing (Doc. 551, p. 9), SER 044.


4837-2963-4866.1 13

particular interventions in the future.56 In its colloquy with counsel, the district

court raised the hypothetical of “another expert that is going to provide the

causative link” as a basis for permitting Dr. Kwasnica’s limited testimony on

prognosis.57 It was clear that admission of Dr. Kwasnica’s testimony was

conditioned upon the presence of another expert to provide a foundation of

causation.

Turning to Dr. Wu, the district court found him “qualified to offer his

opinion that R.M.'s scans and other diagnostic information are ‘consistent’ with a

brain injury.”58 But, the court expressly barred Dr. Wu from testifying as to

causation, i.e. that R.M. experienced a brain injury because of his ingestion of

Aqua Dots.59 The court found Dr. Wu was not a toxicologist and therefore not

qualified to opine on causation, and that his opinions were untimely disclosed for

the first time at his deposition.60 The district court also found Dr. Wu’s differential

diagnosis improper because he did nothing to “rule in” 1,4-BD ingestion as a

potential cause of brain injury before “ruling out” all other potential causes.61

As such, Dr. Parent was left as the only expert who could provide the

56 Id. 57 Id. (Doc. 551, p. 5, ll. 3-8), SER 043. 58 4/14/15 Hearing (Doc. 584, p. 11, ll. 20-21), SER 051.

59 Id. (Doc. 584, p. 12, ll. 13-15), SER 052. 60 Id. (Doc. 584, p. 12, ll. 16-20), SER 052. 61 Id. (Doc. 584, pp. 12-14), SER 052-054.


4837-2963-4866.1 14

necessary foundation of causation that would permit the Monjes’ remaining

experts to testify as to alleged sequelae of brain injury in R.M. The court

recognized that exclusion of Dr. Parent’s opinions “may result in there being no

triable issue of fact on causation of a brain injury.”62

Spin Master (joined by Moose) moved to exclude Dr. Parent’s “single

exposure” theory, which Defendants believed to be the only opinion to survive the

summary judgment ruling.63 The district court granted the motion, finding first

that the “single exposure” theory was never disclosed prior to Dr. Parent’s

deposition and so was untimely.64 Even if the “single exposure” theory had been

timely, the district court found the “analytical gap” between articles on animal

studies and R.M.’s alleged injury was too large for the opinion to be reliable.65

The district court left the door open for Dr. Parent to testify as to the “anoxia”

theory consistent with his May 6, 2013 report,66 but granted leave to Defendants to

challenge that original theory.67

In a supplemental brief, Defendants set forth Dr. Parent’s deposition

testimony disavowing both the “anoxia” theory, and any causation analysis in his

62 Id. (Doc. 584, p. 15, ll. 1-8), SER 055. 63 Motion to Exclude (Doc. 451). 64 2/20/15 Hearing (Doc. 551, p. 40, ll. 5-23), SER 047.

65 Id. (Doc. 551, p. 41, ll. 3-14), SER 048. 66 Id. (Doc. 551, p. 40, ll. 18-21), SER 047. 67 Order (Doc. 567).


4837-2963-4866.1 15

report.68 Defendants also pointed out the lack of factual support in the medical

records for any “anoxia” theory of brain injury to R.M.69 In granting the motion,

the district court sua sponte reconsidered its earlier summary judgment ruling and

excluded the brain injury claim, such that only damages at issue would be those

arising from R.M.’s hospitalization.70 The district court further called the Monjes

to task for continuing to advocate for two distinct theories of causation, when

fairness dictated that they settle on and disclose their theory years earlier.71

VI. DEVELOPMENT, MARKETING AND SALE OF AQUA DOTS.

The basic facts concerning the design, manufacture and sale of Aqua Dots

are largely undisputed, notwithstanding the Monjes’ inflammatory treatment of

those facts. The development and sale of the toy are also immaterial to liability,

given that Defendants accepted responsibility at trial.72 The toy’s manufacture and

marketing are only relevant to whether Defendants exhibited an “evil mind” that

could give rise to an award of punitive damages.

Moose developed the concept for the Aqua Dots toys (which Moose sold

68 Joint Supplemental Motion To Exclude (Doc. 590). 69 Id.

70 Order (Doc. 595), ER-007 to 012. 71 Id. (Doc. 595, p. 6, ll. 9-17), ER-012. 72 Trial Day 1 (Doc. 713, p. 69, ll. 15-17), SER 069.


4837-2963-4866.1 16

under the name “Bindeez”).73 Moose contracted out the manufacture of the bead

for the toy to a Hong Kong company called Jssy, Ltd. (“Jssy”).74 Jssy was

accredited by the International Code of Toy Industries, and Moose had previously

used Jssy for other products due to its experience with chemical manufacturing.75

Jssy in turn used a factory in mainland China called “Wang Qi” to perform

the actual manufacturing of the beads.76 A chemist in the Wang Qi factory by the

name of Zhou Jia Quan developed the chemical formula for the beads.77 Moose

provided input and opinions regarding the performance of the beads, but not with

respect to their chemical formulation.78 Moose did not have direct contact with the

factory or Mr. Zhou.79 Jssy served as the “middle party” between Moose and the

factories.80

The Monjes do not dispute that Jssy, the nonparty that actually manufactured

the beads, “retain[ed] sole control over the product’s ingredients.” Appellants’

73 Id. (Doc. 713, pp. 31-32), SER 067-068.

74 Moose Recall Report (Doc. 375-1, p. 2), SER 244. 75 Poulus Depo. (Doc. 375-1, p. 5), SER 177. 76 Trial Day 2 (Doc. 745, pp. 185-88), SER 076-079. 77 Trial Day 2 (Doc. 745, p. 188, ll. 4-18), SER 079. 78 Trial Day 2 (Doc. 745, p. 196, ll. 16-23), SER 080; Kam Depo. (Doc. 385-2, p. 23), ER-065

79 Trial Day 2 (Doc. 745, p. 202, ll. 16-24), SER 081; Poulus Depo. (Doc. 388-7, p. 28), ER-128. 80 Trial Day 2 (Doc. 745, p. 186, ll. 19-20; p. 187, ll. 2-5), SER 077-078.


4837-2963-4866.1 17

Opening Brief (“AOB”) at p. 20. The Monjes also do not challenge that Jssy

treated the bead ingredients as a trade secret, and did not disclose the ingredients to

Moose or Spin Master.81 AOB at pp. 20-21. Instead, Jssy separately provided the

ingredient list to certified third-party laboratories to perform toxicological risk

assessments.82

Moose ensured the toy complied with global safety standards including

EN71 and ISO 8124, and was aware Spin Master would follow additional United

States safety standards.83 Moose performed additional tests to evaluate choking

hazards related to the beads, including the rate of expansion of beads once exposed

to water.84

The original formulation for the beads included 1,5-pentanediol (“1,5-PD”)

as a plasticizer.85 Mr. Zhou made the decisions as to what ingredients to use, and it

was Mr. Zhou who chose to use 1,4-BD instead of 1,5-PD when the beads went

into production.86 Moose was not made aware of the substitution until at least

81 See also Recall Report (Doc. 375-1, p. 2), SER 244; Choy Depo. (388-3, p. 43), ER-080. 82 Id. 83 Coates Report, Doc. 375-4 at pp. 80, 87, ER-169 to170A; Moose Chronology (Doc. 379-17, p. 2), SER 245.

84 Trial Day 2 (Doc. 745, pp. 205-206), SER 084-085. 85 Recall Report (Doc. 375-1, p. 2), SER 244. 86 Trial Day 2 (Doc. 745, p. 208, ll. 12-17), SER 087.


4837-2963-4866.1 18

October 16, 2007, three months after R.M.’s ingestion.87

Moose kept a log of Bindeez-related incidents that were reported to it, and

followed up on each case.88 After learning of a child falling ill after consuming

beads, Moose decided in May 2007 to request Jssy add a bitterant to the beads to

discourage children from placing them in their mouth.89 Prior to July 16, 2007,

Moose only received a handful of reports of children being provided medical

treatment after ingesting beads (or, in one case, after the child inserted beads up his

nostril).90 None of the reports Moose received prior to July 16, 2007 suggested a

toxicological issue with children, only concerns over choking or airway blockage.91

The Monjes emphasize they were unaware the Aqua Dots beads contained

1,4-BD when they purchased them, and when R.M. ingested them. However, it is

undisputed that Moose also had no idea as of July 16, 2007 that the beads

contained 1,4-BD. Moose’s lack of knowledge of any toxicological issues with the

beads was a significant factor in the district court’s dismissal of the Monjes’ prayer

87 Poulus Depo. (Doc. 375-1 at p. 11), SER 179; Moose Chronology (Doc. 379-17, pp. 6-7), SER 249-250. 88 Poulus Depo. (Doc. 375-1 at p. 10), SER 178; Complaint Log (Doc.375-4, pp. 47-51), SER 239-243. 89 Poulus Depo. (Doc. 388-7, p. 28), ER-128; Complaint Log (Doc. 375-4, p. 47), SER 239; Trial Day 2 (Doc. 745, pp. 205-206), SER 084-085.

90 Poulus Depo. (Doc. 375-1, p. 10), SER 178; Complaint Log (Doc. 375-4, pp. 47-51), SER 239-243. 91 Complaint Log (Doc. 375-4, pp. 47-51), SER 239-243.


4837-2963-4866.1 19

for punitive damages.92

VII. INCORRECT FACTS IN APPELLANTS’ OPENING BRIEF.

It is necessary to clear up two key factual problems in the Monjes’ brief.

First, the Monjes claim Defendants’ neurological expert, Julie Goodman, Ph.D.,

“admitted R.M. experienced ‘brain injury’.” AOB at p. 45. In fact, Dr. Goodman

stated the opposite: “My conclusion is that, to a reasonable degree of scientific

certainty, neither Monje’s ingestion of Aqua Dots containing 1,4-BD or his

experiencing coma-like symptoms resulted in brain injury.”93

The Monjes also state the Aqua Dots beads were “tasty,” citing an expert’s

deposition testimony about a hearsay patient report .94 There is no record evidence

the beads were “tasty;” the jury was only told the bead formula was primarily

polyvinyl alcohol and plasticizer.95 In fact, Moose requested a bitterant be added

to discourage children from eating the beads – not to make the beads “tasty.” In

any case, the reputed flavor of the beads was not a fact the Monjes presented to the

district court in connection with any issue they now challenge on appeal.

92 Order (Doc. 442, p. 8, ll. 11-20), ER-021. 93 Goodman Report (Doc. 378-1, p. 92), ER-172.

94 Kitzes Depo., ER 141-42. 95 Trial Day 5 (Doc. 748, p. 76, ll. 5-21), SER 091; Kam Depo. (Doc. 388-6, p. 25), ER-061.


4837-2963-4866.1 20

SUMMARY OF ARGUMENT

The district court did not abuse its discretion in excluding the opinions of the

Monjes’ sole causation expert, Dr. Richard Parent. Dr. Parent’s own deposition

testimony left no doubt that he had abandoned the “anoxia” theory in his report.

The “single exposure” theory he offered for the first time at his deposition was

properly excluded as untimely by the district court, a ruling that remains

unchallenged here.

Dr. Parent’s opinions were properly excluded even without considering

whether it was necessary for him to opine as to general causation, i.e. whether the

toxin in question had the capability of causing a brain injury. Nonetheless, logic

and generally accepted principles of toxicology demand that an expert must first

establish general causation for a disease before opining that a toxin caused that

disease in a particular person. Reliable testimony from a qualified expert is

necessary to prove general causation, because the causative mechanisms involved

are beyond the understanding of the typical layperson. Even if epidemiological

evidence is unavailable, a plaintiff must identify some basis for opining that

general causation exists. The Monjes did not identify any source stating that 1,4-

butanediol ingestion has ever resulted in a permanent brain injury, confirming the

correctness of the trial court’s rulings.


4837-2963-4866.1 21

The trial court also correctly dismissed the Monjes’ prayer for punitive

damages. At the time of R.M.’s ingestion, Moose – like the Monjes themselves –

had no knowledge that the Aqua Dots beads contained 1,4-butanediol. The Monjes

criticize Moose for not following procedures that could have discovered the

ingredient substitution by its supplier, but such claims only go to liability, and do

not establish an “evil mind.”

The district court also properly exercised its discretion to dismiss the

derivative claims of Mark Monje under the doctrine of judicial estoppel. Exercise

of this doctrine protects the integrity of the courts by discouraging litigants like

Mr. Monje from taking inconsistent positions to gain an unfair advantage. The

Monjes lack standing to assert the rights of Mr. Monje’s creditors or the

bankruptcy trustee, and thus the dismissal should be affirmed.

If this Court orders this matter to be retried, Moose submits on cross-appeal

the district court’s error in instructing the jury that it could find Moose’s suppliers

to be its agents. In a product liability action such as this, each entity in the chain of

distribution is only liable for its own actions. Because Jssy was simply an

independent contractor, it was error to instruct the jury it could find Jssy to be

Moose’s agent. Even under the erroneous standard applied by the district court,

the Monjes did not present sufficient evidence to submit the question of agency to

the jury.


4837-2963-4866.1 22

ARGUMENT

I. THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION TO

EXCLUDE THE UNTIMELY AND UNSUPPORTED OPINIONS OF

DR. PARENT.

A. Dr. Parent Is The Only Expert Who Could Testify To Causation.

The district court explicitly excluded Dr. Beljan, Dr. Kwasnica, and Dr. Wu

from testifying that R.M.’s ingestion of Aqua Dots beads caused a lasting brain

injury. The district court further conditioned those experts’ proposed testimony

about R.M.’s condition and prognosis on the testimony of a separate causation

expert, i.e. Dr. Parent. The Monjes do not challenge any of the foregoing decisions,

and have therefore waived their ability to do so. Eberle v. City of Anaheim, 901

F.2d 814, 818 (9th Cir. 1990).

Likewise, the Monjes do not argue that a triable issue of fact was presented

by evidence of causation other than testimony of their experts. The Appellants’

Opening Brief almost exclusively limits itself to consideration of expert reports

and deposition testimony of Dr. Wu, Dr. Beljan, and Dr. Parent. AOB at pp. 45-

47. Because Dr. Wu and Dr. Beljan were excluded as causation experts, their

testimony cannot be considered for this purpose. Moreover, as described above, the

Monjes erroneously rely on the defense toxicologist, Dr. Goodman, whose

testimony actually contradicts the Monjes’ position on causation.


4837-2963-4866.1 23

The only non-expert evidence cited by the Monjes is a report by Dr. Javier

Cardenas, to whom they took R.M. on a single occasion on March 3, 2011.

Despite the history of neurological change provided by R.M.’s parents, Dr.

Cardenas’ own neurological examination was normal, and he found R.M. “alert,

interactive, playful,” and his speech “fluent to me.”96 Most importantly, Dr.

Cardenas, like the other five neurologists the Monjes visited, did not diagnose a

brain injury. In any case, the Monjes advance no argument that Dr. Cardenas’

single report can substitute for the admissible testimony of an expert on causation,

and thus the issue is waived. Eberle, 901 F.2d at 818.

The only basis for reversing the district court’s grant of partial summary

judgment on causation of a brain injury would be a finding that the district court

erroneously excluded Dr. Parent. See Restatement (Third) of Torts, Liability for

Physical and Emotional Harm (“Restatement (Third) of Torts”), § 28, Reporters

Notes, cmt. c(1) (“Expert-witness testimony is employed to prove agent-disease

causation, and the admissibility of an expert's opinion may be determinative as to

whether the plaintiff satisfies the burden of production on agent-disease

causation”). Even though exclusion of Dr. Parent’s testimony was dispositive of

the causation element, such exclusion is reviewed for an abuse of discretion. Lust

ex rel. Lust v. Merrell Dow Pharm., Inc., 89 F.3d 594, 597 (9th Cir. 1996).

96 Cardenas Records (Doc. 375-2, pp. 135-37), ER-157 to 159.


4837-2963-4866.1 24

B. Admissibility Of Dr. Parent’s Testimony Is Governed By Federal

Evidentiary Law, Not Arizona Substantive Law.

The Monjes rely heavily on the idea that Arizona law governs the quantum

of proof on causation needed to establish a prima facie case of negligence. This

case is not about the substantive law of negligence in Arizona, however, but the

admissibility of Dr. Parent’s opinion under Federal evidentiary and procedural

rules. Without Dr. Parent’s testimony, the Monjes cannot meet the “but-for” test of

causation they identify under Arizona law.

Even the Arizona authorities cited by the Monjes reinforce the necessity of

admissible expert testimony. A form instruction to the jury to weigh expert

testimony the same as other evidence is meaningless if there is no expert testimony

for the jury to consider. Likewise, the fact that the jury decides the credibility and

weight to be accorded expert testimony is immaterial if there are no admissible

expert opinions to present to that jury. Even under Arizona law, the jury’s fact-

finding function is only triggered when there is “contradictory, but reliable, expert

testimony.” See State ex rel. Montgomery v. Miller, 234 Ariz. 289, 298, ¶ 20, 321

P.3d 454, 463 (App. 2014).

C. Dr. Parent Expressed Two Distinct Opinions.

The Monjes allege the district court “misunderstood” Dr. Parent’s opinions

by treating them as two separate theories, i.e. an “anoxia” theory and a “single


4837-2963-4866.1 25

exposure to anesthesia” (or “neurotoxin”) theory. In their Opening Brief, the

Monjes attempt to synthesize yet another theory wherein both anoxia and

neurotoxicity are causative factors of a brain injury. There are fundamental

problems with this approach.

First, the Monjes never argued in the district court that Dr. Parent’s opinion

incorporates both anoxia and neurotoxicity.97 As such, this Court may not

entertain a characterization of Dr. Parent’s opinions that was presented for the first

time on appeal. Resendiz v. Kovensky, 416 F.3d 952, 960 (9th Cir. 2005). Second,

the Monjes do not quote – as the district court did – the relevant portions of Dr.

Parent’s report and deposition testimony.98 If Dr. Parent had properly and timely

enunciated such a “hybrid” theory it would be possible for the Monjes to set forth

that theory in Dr. Parent’s own words, and not solely through their attorney. The

district court admonished the Monjes for taking similar liberties with their

description of Dr. Parent’s report.99

97 See Docs. 390, 492, 592. 98 See Order (Doc. 595), ER-009 to 011. 99 Order (Doc. 595), ER-010.


4837-2963-4866.1 26

D. The “Single Exposure” Theory Was Properly Excluded As

Untimely.

The district court first addressed Dr. Parent’s opinion that a single exposure

to an anesthetic agent such as GHB raises the risk of brain injury.100 The court

found that “the opinion was not disclosed until [Dr. Parent’s] deposition,” and that

“this was not the result of an attempt to disclose earlier that went awry. There just

was not a disclosure.”101 As such, the court barred the Monjes from presenting the

opinion as a sanction for lack of disclosure.102

The district court supplemented its order when the Monjes attempted to

recast the “single exposure” theory as one addressing GHB as a “neurotoxin” that

“crossed the blood-brain barrier.”103 Because the “neurotoxin” theory still

addressed the use of GHB as an anesthetic, the Court found it to be the same as the

“single exposure” theory.104 Consequently, the Court found the theory should still

be excluded because it appears nowhere in Dr. Parent’s report.105

A district court’s imposition of discovery sanctions is reviewed for an abuse

of discretion. Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1106

100 2/20/15 Hearing (Doc. 551, pp. 40-41), SER 047-048. 101 Id. (Doc. 551, p. 40, ll. 9-17), SER 047. 102 Id. (Doc. 551, p. 41, ll. 1-2), SER 048.

103 Order (Doc. 595, p. 3, ll. 19-28), ER-009. 104 Id. 105 Order (Doc. 595, p. 4, ll. 1-18), ER-010.


4837-2963-4866.1 27

(9th Cir. 2001). The district court is given “particularly wide latitude” to exclude

expert opinions that were not properly disclosed pursuant to Fed. R. Civ. P.

26(a)(2). Id. Exclusion is “self-executing,” and operates even without a showing

of bad faith or willfulness. Id.

The Monjes do not ask this court to find the district court abused its

discretion when it excluded as untimely any of Dr. Parent’s opinions not expressed

in his report. As such, they have waived their ability to challenge the exclusion as a

discovery sanction. Eberle, 901 F.2d at 818. There is no reason to disturb the

district court’s broad discretion.

Instead the Monjes claim, as they did at the trial level, that Dr. Parent’s

report states a causation opinion premised on “the direct operation of the GHB on

[R.M.’s] brain.” AOB at p. 50. This is the same allegation that led the district court

to find the Monjes had “taken liberties” in identifying a fully-formed “neurotoxin”

opinion when Dr. Parent was only “discussing issues he believed Dr. Goodman

may have overlooked.”106 Dr. Parent himself recognized he was not stating an

opinion on neurotoxicity in his report but only “raising a question.”107 It was not

an abuse of the district court’s broad discretion to exclude the “single exposure” or

“neurotoxin” theory, however the Monjes wish to characterize it.

106 Order (Doc. 595, p. 4, ll. 11-18), ER-010. 107 Parent Depo. (Doc. 375-1 at p. 80, ll. 10-22), SER 141.


4837-2963-4866.1 28

E. The “Anoxia” Theory Was Properly Excluded As Unreliable.

The district court excluded the “anoxia” theory because Dr. Parent

disavowed both (1) that R.M. had experienced anoxia following the Aqua Dots

ingestion; and (2) that his original report contained a general causation analysis or

opinion.108 Because Dr. Parent had “clearly abandoned” his opinion that an anoxic

event occurred, and “embraced the single exposure theory” at the time of his

deposition, the district court found the opinion lacked the reliability needed for

admission under Rule 702, Federal Rules of Evidence (“FRE 702”), citing Daubert

v. Merrell Dow Pharms., Inc., 509 U.S. 579, 595-597 (1993).

The Monjes continue to deny Dr. Parent disavowed his “anoxia” theory at

deposition, and now claim that he was merely “clarifying” that opinion instead of

turning to an entirely different theory. As such, they claim the district court simply

“misread” Dr. Parent’s deposition. The district court’s interpretation of Dr.

Parent’s testimony is a factual matter, which is subject to an even more deferential

standard of review than its evidentiary rulings.

While the orders excluding Dr. Parent are reviewed for abuse of discretion,

the underlying factual findings necessary for those rulings are reviewed under the

“clearly erroneous” standard. United States v. Wilkes, 662 F.3d 524, 532 (9th Cir.

2011). Review for clear error is “significantly deferential,” requiring a “definite

108 Order (Doc. 595, p. 3), ER-009.


4837-2963-4866.1 29

and firm conviction that a mistake has been committed.” Cohen v. U.S. Dist. Court

for N. Dist. of Cal., 586 F.3d 703, 708 (9th Cir. 2009) (quoting Concrete Pipe &

Prods. v. Constr. Laborers Pension Trust, 508 U.S. 602, 623, 113 S. Ct. 2264, 124

L. Ed. 2d 539 (1993)).

The Monjes do not assist this Court’s review by failing to reproduce the

deposition testimony they claim was “misread,” instead offering their own

favorable reading. The district court, on the other hand, simply quoted Dr. Parent

rather than paraphrasing him, so as to leave no room for dispute as to the meaning

of his testimony: “as Dr. Goodman points out, there’s no indication he was ever

anoxic . . . there is nothing in the record that I know of that he was impaired from

his respiratory system and that it shut down or – that he became anoxic.”109 It was

not error, much less clear error, for the district court to understand Dr. Parent was

testifying that he no longer thought R.M. had received an anoxic brain injury.

As a consequence, the “anoxia” theory was deprived of its necessary factual

underpinning. While it is commonly understood that anoxia can result in a brain

injury, the Monjes required evidence that R.M. became anoxic after the Aqua Dots

ingestion for this theory to be scientifically reliable and relevant to the task at hand

(two step process for admissibility of expert testimony requires analysis of both

109 Order (Doc. 595, p. 3, ll. 3-6), ER-009.


4837-2963-4866.1 30

reliability and relevance). See Daubert v. Merrell Dow Pharmaceuticals, Inc., 43

F.3d 1311, 1315 (9th Cir. 1995).

Pursuant to Fed. R. Evid. (“FRE”) 702(b), an expert opinion must be based

on “sufficient facts or data,” and it is not an abuse of discretion to exclude an

expert opinion lacking any factual foundation whatsoever. See Samuels v. Holland

Am. Line-USA Inc., 656 F.3d 948, 952 (9th Cir. 2011); Guillory v. Domtar Indus.,

95 F.3d 1320, 1331 (5th Cir. 1996). Likewise, an opinion that 1,4-BD can cause an

anoxic brain injury would no longer be relevant to this case because there is no

evidence of an anoxic event. See id. (“an opinion based totally on incorrect facts

will not speak to the case at hand and hence will be irrelevant”). The district court

correctly saw no way that an opinion Dr. Parent “so unambiguously abandon[ed]”

could be found to meet the reliability and relevance thresholds of FRE 702.

II. THE DISTRICT COURT PROPERLY APPLIED A GENERAL

CAUSATION ANALYSIS.

Ultimately it is not even necessary to address general causation to affirm the

district court’s exclusion of Dr. Parent’s testimony. The district court did not abuse

its discretion in finding that Dr. Parent disavowed his original “anoxia” theory, and

that his “single exposure” theory was untimely. Moreover, the Monjes do not

challenge the exclusion or limitation of other experts.

Nonetheless, the district court properly applied the concept of general

causation to the facts of this case. And, the district court is granted as much latitude


4837-2963-4866.1 31

to its “decisions about how to determine reliability as to its ultimate conclusion.”

Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 152, 119 S. Ct. 1167, 1176

(1999). Thus, the decision to require proof of general causation as a measure of the

reliability of Dr. Parent’s toxicological decisions is reviewed for abuse of

discretion, just like the ultimate decision to exclude Dr. Parent. Id.

A. Dr. Parent Himself Recognized That The Toxicological Method

Involves Analysis Of Both General and Specific Causation.

Significantly, the Monjes’ position as to general causation is at odds with the

perspective of Dr. Parent himself. In his deposition, Dr. Parent agreed, without

reservation, with the following statement: “An agent cannot be considered to cause

the illness of a specific person unless it is recognized as a cause of that disease in

general.”110 The foregoing statement, affirming the necessity of general causation

before opining on specific causation, comes from the guidelines for interpreting

scientific evidence published by the Federal Judicial Center. See Federal Judicial

Center, Reference Manual of Scientific Evidence at p. 611 (3d Ed. 2011). Dr. Parent

himself has cited the foregoing Reference Manual in support of his opinions in

other cases.111

Dr. Parent also confirmed that were he to create a “comprehensive report” in

this matter, he would “provide an appropriate causation analysis both for general

110 Parent Depo. (Doc. 590-1, pp. 16-17), SER 125-126. 111 Parent Depo. (Doc. 590-1, p. 16), SER 125.


4837-2963-4866.1 32

causation and for specific causation.”112 As such, the Monjes miss the mark with

their comment that “Dr. Parent quite correctly rejected the eccentric notion that he

had to pontificate on general causation in a one-victim case.” AOB at pp. 64-65.

Quite the opposite: Dr. Parent recognized that 1,4-BD or GHB must be shown to

have the ability to cause a brain injury before one can opine that R.M. received a

brain injury as a result of his ingestion.

Analysis of general causation necessarily ties in to the reliability of Dr.

Parent’s testimony. The reliability requirement of FRE 702 demands that experts

“show that they have followed the scientific method, as it is practiced by (at least)

a recognized minority of scientists in their field.” Daubert, 43 F.3d at 1319. An

expert’s failure to follow his own methodology, or the accepted methodology in his

field of expertise, defeats any pretense at reliability. See Amorgianos v. Amtrak,

303 F.3d 256 (2d Cir. 2002).

The industrial hygienist in Amorgianos testified that analysis of the

concentration of xylene fumes at the time of the plaintiff’s exposure required

analysis of variables including the volatility and vapor pressure of xylene, and the

temperature and humidity at the scene. Amorgianos, 303 F.3d at 268. Despite the

fact that information on these points was available to the expert, he did not

consider any of it. Id. As such, his testimony that the xylene was evaporating more

112 Parent Depo. (Doc. 590-1, pp. 19-20), SER 143.


4837-2963-4866.1 33

slowly than usual was properly excluded for failure to reliably apply his

methodology to the facts of the case. Id. at 268-69.

Dr. Parent testified from the perspective of a toxicologist, and thus the

reliability of his opinions depends on whether he used the methods practiced

within his field. Here, Dr. Parent freely admitted that he did not follow his own

method of analyzing whether 1,4-BD is generally capable of causing a brain injury.

His admission therefore establishes he failed to reliably apply his own

methodology to the facts, and constitutes a further admission that he cannot opine

whether R.M. received an ingestion-related brain injury.

The Monjes attempt to excuse Dr. Parent’s failure by arguing that

toxicological practice does not require proof of general causation in a “single

victim” case. But in so doing the Monjes necessarily accuse Dr. Parent of not

following the method they advocate as being the “correct” and “reliable” one. All

the Monjes do with such argument is to call their own expert – who agrees with the

necessity of establishing general causation – unreliable.

B. General Causation Must Be Shown In Any Case Where Questions

Of Causation Are Beyond The Jury’s Understanding.

The Monjes place great weight on the Restatement (Third) of Torts, and

claim it should be applied in this diversity case. Without taking a position as to the

applicability of the Restatement (Third) of Torts, it is clear that its principles

demand a showing of general causation in this case. The Restatement (Third) of


4837-2963-4866.1 34

Torts recognizes upfront that cases involving an allegation of toxicological harm

are subject to different considerations from other torts:

In toxic-substances cases, the causal inquiry is modified by the limits of and available forms of scientific evidence. That inquiry often must address whether the agent for which the actor is responsible is capable of causing the disease from which another suffers (known as general causation). In addition, the question whether the agent caused the specific plaintiff's disease (known as specific causation) is confronted.

Restatement (Third) of Torts § 26 (“Factual Cause”), cmt. g (emphasis added).

Cases involving allegations of toxic harm are different because the causative

mechanism is not as readily grasped to the average juror. In a vehicular negligence

case where the plaintiff fractured a limb, “common experience” permits the jury to

understand that the forces involved in the accident are sufficient to cause a fracture.

Restatement (Third) of Torts § 28, cmt. c(1). Trauma cases do not require proof of

general causation “because other causes that might explain the injury are absent,

and we have a reasonably good understanding of the causal mechanisms involved

from trauma to injury”). Id., cmt c(3).

On the other hand, “the causes of some diseases, especially those with

significant latency periods, are generally much less well understood.” Id., cmt.

c(1). It is for this reason that expert testimony on causation is necessary, and

particularly testimony as to general causation. The Monjes offer no basis, legal or

otherwise, for the proposition that a layperson could understand how 1,4-BD,

GHB, or any anesthetic drug could cause a permanent brain injury.


4837-2963-4866.1 35

The foregoing principles are entirely consistent with Arizona law, which

recognizes that expert testimony is required on topics that are beyond the

understanding of the average juror. For example, questions of professional

negligence may require expert testimony when “the question to be determined is

strictly within the special and technical knowledge of the profession and not within

the knowledge of the average layman.” Hunter Contracting, Inc. v. Super. Ct., 190

Ariz. 318, 320-21, 947 P.2d 892, 894-95 (1997), quoting Revels v. Pohle, 101 Ariz.

208, 210, 418 P.2d 364, 366 (1966); see also Thomas v. Goudreault, 163 Ariz. 159,

171,786 P.2d 1010 (1991) (standard of care of an HVAC contractor fell outside

“the common understanding of jurors” and required expert testimony to prove).

It has been a longstanding requirement of Arizona law to require medical

expert testimony when the cause of an injury would not be apparent to a layperson.

Western Bonded Products v. Industrial Comm'n of Ariz., 132 Ariz. 526, 527, 647

P.2d 657, 658 (1982); see also Barrett v. Harris, 207 Ariz. 374, 378, 86 P.3d 954

(2004) (medical expert testimony on causation necessary in medical malpractice

cases). The court in Western Bonded Products cited “the loss of a limb or an

external lesion” as conditions that would be “clearly apparent to laymen” as being

caused by an industrial accident, and which would therefore not require expert

testimony. Western Bonded Products, 647 P.2d at 659.


4837-2963-4866.1 36

During the April 14, 2015 pretrial conference, the district court offered its

own analogy to explain why expert proof of general causation would be necessary

in this case: “[W]hen a heavy scaffolding falls on top of a worker's leg[,] a juror's

common experience is sufficient to lead her or him to a finding that the force of

that heavy object was capable of causing that worker's broken leg.”113 On the other

hand, the district court found “that common experience and knowledge of the lay

fact-finder is not sufficient to find such a relationship between a drug or other

chemical substance such as GHB and a brain injury.”114 The district court’s

reasoning places it squarely in line with both Arizona law and the Restatement

(Third) of Torts as to the requirement of expert testimony on general causation.

C. General Causation Is Not Limited To Environmental Torts

As they did before the trial court, the Monjes argue that “the specific-

causation/general-causation distinction only really matters in mass toxic-tort or

similar mass-victim cases.” AOB at pp. 62-63. Yet the Monjes identify no

authority holding that general causation need only be proven in “mass tort” cases.

This Court has had no difficulties requiring proof of general causation in a case

involving a single toxic exposure to a single person. See Golden v. CH2M Hill

Hanford Group, Inc., 528 F.3d 681 (9th Cir. 2008) (nuclear plant worker splashed

with radioactive liquid). Another leading case relied upon by the district court did 113 4/14/15 Hearing (Doc. 584, p. 7), SER 050

114 Id.


4837-2963-4866.1 37

not even involve humans, but examined whether a single oil spill was the cause of

the subsequent deaths of oysters in a bay. Clausen v. M/V New Carissa, 339 F.3d

1049 (9th Cir. 2003). The Clausen court approved the admission of expert

testimony that determined the oil spill could potentially have caused oyster deaths,

and never suggested a general causation analysis would be inappropriate or

inapplicable to its facts. Id., 339 F.3d at 1059-61.

Courts in other Circuits have also required proof of general causation in

cases involving a single exposure to a single plaintiff. Amorgianos, 303 F.3d at

269-70 (requiring proof that exposure to xylene comparable to what plaintiff

experienced while spray-painting bridge is generally capable of causing chronic

neurological problems); Best v. Lowe's Home Ctrs., Inc., 563 F.3d 171, 180-81 (6th

Cir. 2009) (expert properly determined pool chemicals splashed on face could

cause damage to nasal and sinus mucosa); McClain v. Metabolife Int’l., Inc., 401

F.3d 1233, 1239, 1253 (11th Cir. 2005) (three plaintiffs required to prove herbal

supplement could cause ischemic events and myocardial infarctions).

The Monjes point to the Restatement (Third) of Torts’ characterization of

general and specific causation as “devices to organize a court's analysis, not as

formal elements of the cause of action.” Nonetheless, that same comment in the

Restatement (Third) of Torts still instructs that summary judgment is properly

entered on the issue of causation where reasonable minds could not differ as to


4837-2963-4866.1 38

“whether the agent is generally capable of causing the disease.” Restatement

(Third) of Torts § 28, cmt. c(1). Moreover, the Monjes advance no coherent

argument why this “logical device” should function only when a certain threshold

of plaintiffs is claiming injury, or when the exposure happens over a certain

minimum period of time. The Monjes do not bridge the gap of explaining how a

jury could determine causation other than by speculating where the cause of the

alleged disease or condition is not “readily understood” by a layperson, and where

there is no proof that the toxin in question has the capability of causing that disease

or condition.

At points, Appellants’ Brief reflects a fundamental misunderstanding of the

concept of general causation. For example, the Monjes argue that general causation

would only prove whether individuals other than R.M. can receive a permanent

brain injury from ingesting 1,4-BD. In fact, general causation examines whether

anyone, including R.M., could experience a lasting brain injury from that

ingestion. Absent proof of general causation, then the claim of any person,

including R.M., that 1,4-BD ingestion caused a permanent brain injury should be

dismissed. The district court properly used its discretion to find that a reliable

toxicological opinion required proof of general causation.


4837-2963-4866.1 39

D. The Absence Of Epidemiological Evidence Does Not Excuse The

Need To Show General Causation.

Appellants unnecessarily tie the general causation requirement to the

existence vel non of epidemiological evidence. While epidemiology may be a

common method of proving general causation, it is not the only way. See Berg v.

E.I. DuPont de Nemours & Co., 293 F.3d 1127, 1130 (9th Cir. 2002).

Epidemiological analysis involves a comparison of the rates of incidence of a

condition in a population known to have been exposed to a potential toxin with the

rates in non-exposed populations. Restatement (Third) of Torts § 28, cmt. c(1). If

there is a statistically significant increase in occurrence of the condition in the

exposed population, then an “association” is said to exist between the toxin and the

condition. Id.

If there is no “group-based statistical evidence,” or if the evidence available

does not reflect an association, the general causation inquiry does not grind to a

halt. A plaintiff is not relieved of the burden of proving that a toxin can result in a

particular condition. Rather, the Restatement (Third) of Torts § 28 permits a

plaintiff to use “other forms of evidence” than epidemiological studies to prove

general causation. Id.; Berg, 293 F.3d at 1130; see AOB at p. 60.

“Other forms of evidence” that have been offered to prove general causation

include animal studies, chemical structure comparison, case studies, government

regulatory materials, and clinical reasoning. See Joe G. Hollingsworth and Eric G.


4837-2963-4866.1 40

Lasker, The Case Against Differential Diagnosis: Daubert, Medical Causation

Testimony, and the Scientific Method, 37 J. Health L. 85, 92-98 (Winter 2004).

Each of these methods has its own shortcomings, such as the difficulty of

extrapolating from animal studies to humans, or from the known effects of one

chemical to the potential effects of one with a similar chemical structure. Id. at 92-

94.

Case studies, which are individual anecdotal reports concerning exposure to

a particular substance in the medical literature, have very little value in comparison

to epidemiological studies. Case studies “are not controlled tests, frequently lack

analyses, and often make little attempt to screen out alternative causes for a

patient’s condition.” Id. at 95; see Glastetter v. Novartis Pharms. Corp., 252 F.3d

986, 989-90 (8th Cir. 2001). By itself, such anecdotal evidence is insufficient to

demonstrate general causation. Id.; Hollander v. Sandoz Pharma. Corp., 289 F.3d

1193, 1211 (10th Cir. 2002).

What is notable about the present case is that Dr. Parent had access to such

“other forms of evidence,” including case studies on ingestion of GBH and 1,4-

BD. He even had case studies examining multiple reports of ingestion of Aqua

Dots beads, which reflected symptoms similar to those experienced by R.M., but

no lasting neurological sequelae.115 Dr. Parent’s file also included government fact

115 Doc. 389, Exs. 20, 22.


4837-2963-4866.1 41

sheets and summaries for 1,4-BD and GBH, which collected case studies, medical

journals, and animal studies.116

But, as the district court found, the anecdotal evidence from case studies

contains no reports of lasting brain injury following ingestion of GBH or its

precursors.117 Finally, the district court observed that Dr. Parent was not a

physician or pediatrician, and thus could not use clinical reasoning to opine as to

the potential effects of GHB on the developing brain.118 In short, the record below

reflects no evidence – epidemiological or otherwise – demonstrating the potential

for GBH or its precursor to cause a lasting neurological injury by any mechanism.

Dr. Parent acknowledged that when there is not even an “association”

between a particular exposure of a chemical and a disease, it can be said general

causation does not even exist.119 Dr. Parent further conceded that there are not

even any anecdotal case studies to support his ultimate opinion, and that the

present case represents the only instance known to him where somebody claimed a

brain injury as a result of 1,4-BD ingestion.120

116 See Doc. 389, Exs. 15-17. 117 Order (Doc. 595, p. 5), ll. 6-9, ER-011.

118 Order (Doc. 595, p. 5, ll. 9-12), ER-011. 119 Parent Depo. (Doc. 375-1, p. 73, ll. 11-23), SER 131. 120 Parent Depo. (Doc. 375-1, p. 90, ll. 9-23), SER 150.


4837-2963-4866.1 42

The Monjes argue they did not present any epidemiological evidence

(“group-based statistical evidence”) because it was undisputed R.M. was exposed

to a “known toxic agent.” The Monjes misstate the record, since the case studies,

the secondary materials, and all other evidence all show that the “toxic” effects of

GHB include unconsciousness, bradycardia, even respiratory depression – but not

brain injury. The Monjes’ burden was not to show that 1,4-BD was “toxic” in the

most general sense, or that it could cause an “acute toxic encephalopathy,” i.e.

temporary unconsciousness. Their burden was to prove 1,4-BD in the dosages at

issue has the capacity to cause a permanent brain injury. The reason the Monjes did

not present epidemiological evidence is because none existed – and no other

evidence, even anecdotal evidence, supports the theory that 1,4-BD ingestion can

result in a permanent brain injury.

E. Regardless of Whether He Should Have Applied The Hill

Guidelines, Dr. Parent Failed To Establish General Causation

Finally, the Monjes argue it would be wrong to apply the “Bradford Hill

criteria” to this case because those criteria are only to be used to analyze a causal

relation once an epidemiological association has been established. But it was the

Monjes’ own expert, Dr. Parent, who stated he would apply the Hill criteria to

evaluate general causation, without first considering whether an association had


4837-2963-4866.1 43

been identified.121 Once again, the Monjes’ criticisms only redound to the

reliability of the method used by their sole causation expert.

Moreover, once again Dr. Parent failed to follow his own stated

methodology. Dr. Parent admitted that a causation analysis premised solely on

temporality, which is one of the “Hill criteria,” would be insufficient.122 Yet Dr.

Parent also admitted that temporality was the only one of the “Hill criteria” that he

examined in this case.123

Correct application of the Hill criteria would not change the result here.

There is no epidemiological association between 1,4-BD ingestion and brain injury.

Thus, there would be no need to look closer at whether a causal relationship

actually exists. The district court was correct in finding that no reasonable juror

could differ as to whether 1,4-BD could cause a brain injury. Dr. Parent only

accelerated the process by disclaiming any causation analysis.

III. MOOSE COULD NOT HAVE AN “EVIL MIND” BECAUSE IT HAD

NO MORE KNOWLEDGE THAN THE MONJES OF THE RISK

PRESENTED BY AQUA DOTS BEADS.

The Monjes miss the mark both as to the facts and the law on punitive

damages. The “reprehensibility” factors set forth by the Monjes only apply to the

amount of punitive damages, and not to the decision of whether to permit a jury

121 Parent Depo. (Doc. 590-1, p. 17; Doc. 375-1, p. 68), SER 126-127. 122 Parent Depo. (Doc. 375-1 at p. 74; Doc. 590-1, p. 24), SER 132. 123 Parent Depo. (Doc. 590-1 at pp. 22-24), SER 146-148.


4837-2963-4866.1 44

instruction on punitive damages. AOB, p. 39, citing Arellano v. Primerica Life Ins.

Co., 235 Ariz. 371, 379, ¶ 36, 332 P.3d 597, 605 (App. 2014). As such, those

factors, and the Monjes’ arguments, are inapplicable here.

Rather, the factors relevant to the “evil mind” that must be found before

awarding punitive damages include the reprehensibility of the conduct, the severity

of harm likely to result, the severity of the harm that did result, the duration of the

evil behavior, the defendant’s awareness of harm, and any efforts at concealment.

Thompson v. Better-Bilt Aluminum Prods. Co., 171 Ariz. 550, 556, 832 P.2d 203,

209 (1992); see also Hudgins v. Southwest Airlines Co., 221 Ariz. 472, 487, ¶ 40,

212 P.3d 810, 825 (App. 2009).

A. The Monjes Seeks Punitive Damages On A New Set Of Facts.

Before applying the “evil mind” standards, it is necessary to identify just

what conduct is being alleged to justify a punitive damages award. Hudgins, 212

P.3d at 825. At the summary judgment stage, the Monjes offered the following

facts in opposition to Moose’s motion to dismiss their punitive damages prayer:124

• E-mails sent in October and November 2007 wherein Moose allegedly

“lied” to consumers about the bead ingredients (Doc. 388, Exs. 59-61);

• Knowledge of incidents where children fell ill or were hospitalized after

eating beads (Doc. 389, Exs. 17-18);

124 Order (Doc. 442), pp. 7-9, ER-020 to 022.


4837-2963-4866.1 45

• Moose “knew that JSSY had a history of using toxic chemicals in children’s

toys and lying about it;” (Doc. 390, p. 11) and

• E-mails containing secondhand statements from Jssy’s owner contending

that Moose directed Jssy to change the bead ingredients (Doc. 388, Exs. 76,

85).

The district court found that actions by Moose, and notice received by

Moose, after July 16, 2007 could not have proximately caused harm to R.M. and

thus properly ruled that such events could not give rise to punitive damages. Doc.

442 at pp. 7-8, ER-020 to 021, citing Saucedo ex rel. Sinaloa v. Salvation Army,

200 Ariz. 179, 183, 24 P.3d 1274, 1278 (App. 2001).

The district court also found that incidents of which Moose had knowledge

before July 16, 2007 “involved either blocked airways or ingestion followed by a

doctor’s visit, with no mention of a toxic reaction.”125 The Monjes mention

“reports of toxic effects,” but fail to address, much less challenge, the district

court’s finding that the incidents did not give rise at all to knowledge of problems

with toxicity. The district court’s factual findings as to the content of the notices

must stand because the Monjes have not shown them to be “clearly erroneous.”

Wilkes, 662 F.3d at 532. Finally, the Monjes do not address the district court’s

findings that Moose’s past history with Jssy, and the hearsay e-mails from Jssy’s

125 Order (Doc. 442), p. 8, ER-021.


4837-2963-4866.1 46

owner, do not create a triable issue of fact on punitive damages. The Monjes have

therefore waived their ability to argue the district court abused its discretion.

Eberle, 901 F.2d at 818.

Rather, the Monjes present to this Court an entirely new set of facts. This

includes the expert report of William Kitzes prepared in the Multi-District

Litigation,126 and Mr. Kitzes’ criticisms of Moose’s monitoring, risk assessment,

and failure to conduct a recall in May of 2007. AOB at pp. 35-36. The Monjes also

cite Mr. Kitzes’ report to argue that Defendants “criminally imported” a product

containing a “banned hazardous substance” in violation of the Federal Hazardous

Substances Act (“FHSA”). Id.

The Monjes presented neither Mr. Kitzes’ report, nor the factual allegations

now advanced, for the district court’s consideration on Moose’s motion for partial

summary judgment.127 This Court should not supplement the record with the

foregoing facts and arguments because they were not considered by the district

court when it ruled on punitive damages. Daly-Murphy v. Winston, 837 F.2d 348,

351 (9th Cir. 1987); In re E.R. Fegert, Inc., 887 F.2d 955, 857 (9th Cir. 1989) (to

be considered on appeal, “the argument must be raised sufficiently for the trial

court to rule on it”); Lowry v. Barnhart, 329 F.3d 1019, 1025 (9th Cir. 2002) (“The

126 In Re Aqua Dots Products Liability Litigation, United States District Court for the Northern District of Illinois, Cause No. 08-cv-02364.

127 Order (Doc. 442), pp. 7-9; ER-020 to 022.


4837-2963-4866.1 47

appellate process is for addressing the legal issues a case presents, not for

generating new evidence to parry an opponent's arguments”).

Moreover, even if such new materials could be considered by this Court,

they would not create a triable issue of fact on punitive damages. Arizona

jurisprudence makes clear that punitive damages are an “extraordinary remedy,”

and that they are available only on proof of “something more” than a tort. Hawkins

v. Allstate Ins. Co., 152 Ariz. 490, 504, 733 P.2d 1073, 1087 (1987); Linthicum v.

Nationwide Life Ins. Co., 150 Ariz. 326, 330, 723 P.2d 675, 679 (1986). The

Monjes’ new facts at most would be proof of negligence, and thus insufficient to

justify punitive damages. Whether Moose chose an adequate product testing

regime that could uncover Jssy’s ingredient substitution only goes to its potential

liability in negligence. Putting aside whether Moose, an Australian company, could

even be subject to the FHSA, the Monjes do nothing to show how an FHSA

violation, if proven, equates to “evil mind” as opposed to negligence or negligence

per se.

Ultimately all of the Monjes’ arguments regarding punitive damages boil

down to the accusation that Moose was “ignorant” of the ingredients of the beads

manufactured by Jssy. The punitive damages factors identified in Thompson and

Hudgins, on the other hand, concern a defendant’s knowledge rather than its

ignorance: knowledge of the risk of harm, knowledge of the actual harm that


4837-2963-4866.1 48

occurred, and knowledge that the defendant should have done something else. The

Monjes cannot demonstrate Moose was “consciously aware” of a risk of harm with

evidence that only shows Moose – like the Monjes themselves – knew nothing

about the toxicological risks posed by the Aqua Dots beads.

The facts that were considered by the district court do not support imposition

of punitive damages under the factors set forth in Thompson and Hudgins. The

harm to R.M. was transitory, involving a temporary state of unconsciousness with

no lasting effects. Moose had no knowledge of R.M. prior to July 16, 2007, no

knowledge that the beads contained 1,4-BD, and no knowledge that the beads

posed any kind of toxicological risk. Considering Moose’s lack of knowledge, it is

self-evident there could be no concealment, or “misconduct” over any length of

time. The district court was entirely correct in finding the evidence fell short of the

level needed to instruct the jury on punitive damages.

B. Arizona Public Policy Is Hostile To Awards Of Punitive Damages.

Public policy does not support erring on the side of allowing juries to decide

awards of punitive damages. The Arizona Supreme Court has repeatedly made

clear that punitive damages should only be imposed in the “most egregious of

cases.” Medasys Acquisition Corp. v. SDMS, P.C., 203 Ariz. 420, 424, ¶ 17, 55

P.3d 763, 767 (2002); Hawkins, 733 P.2d at 1087; Linthicum, 723 P.2d at 681. The

Arizona Supreme Court preserved the extraordinary character of the remedy by


4837-2963-4866.1 49

requiring a higher standard of proof – clear and convincing evidence – than that

required for the “mere commission of a tort.” Linthicum, 723 P.2d at 681 (“As this

remedy is only to be awarded in the most egregious of cases, . . . we believe it is

appropriate to impose a more stringent standard of proof”).

Allowing punitive damages in every case where the jury finds a tort was

committed would cause defendants to be “overdeterred.” Gurule v. Illinois Mut.

Life & Casualty Co., 152 Ariz. 600, 601-602, 734 P.2d 85, 86-87 (1987). An ever-

present threat of punitive damages may cause defendants to settle claims they

might otherwise have defended, a situation the Gurule court described as “bad

policy as well as bad law.” Id. Allowing juries to award punitive damages for

every garden-variety tort would defeat the policy of reserving this extraordinary

remedy to matters that present “something more” than a tort.

Appellants confuse the “evil mind” standard under civil law with the

standard for “intent” under criminal law – which is entirely inapplicable. AOB at p.

40, citing State v. Quatsling, 24 Ariz.App. 105, 108, 536 P.2d 226, 229 (1975).

Questions of intent are inapposite to a product liability case such as this, due to the

nature of the conduct that can give rise to liability. Under strict product liability,

Moose can be found liable even though it exhibited all due care in its development

of the toy, its choice of Jssy to manufacture the beads, and its testing and


4837-2963-4866.1 50

monitoring of the toy’s safety. A manufacturer can be found liable in strict

liability even where its intent and motivation are without blame.

Consistent with the fact that strict product liability does not require proof of

a culpable mind, Arizona courts have been reluctant to impose the punitive

damages remedy against manufacturers. The high bar for punitive damages in

Arizona is exemplified by the leading case of Volz v. Coleman Co., Inc., 155 Ariz.

567, 748 P.2d 1191 (1987). In Volz, the defendant had notice that a discontinued

model of camp stove could spray fuel through the pump handle’s vent hole under

certain circumstances. Id., 748 P.2d at 1193-94. Despite the fact the defendant did

not recall or issue warnings about the older model, the Arizona Supreme Court

found the case at most represented “gross negligence,” and thus it was improper

for the trial court to have instructed the jury on punitive damages. Id. at 1194-95.

Indeed, the court found the evidence would have been insufficient even under the

lower “preponderance of the evidence” standard. Id. at 1195. Due to Moose’s lack

of knowledge of any toxicological danger whatsoever, this case was easy for the

district court to decide in comparison to Volz.

C. Punitive Damage May Not Be Awarded Through Appeals To

Passion And Prejudice.

Finally, in arguing that the district court should have permitted punitive

damages to be imposed against Defendants as a deterrent, the Monjes cite a series

of newspaper articles about the Aqua Dots recall and its aftermath. Newspaper


4837-2963-4866.1 51

articles are not legal authority. As evidence, the articles were never presented to

the district court, are not part of the record, and may not be considered on appeal.

Even if these articles had been part of the record below, they are not

evidence that can be considered by any court. Newspapers by their very nature are

hearsay. FRE 801. Furthermore, the particular articles selected by the Monjes

seem to have been chosen due to their shock value. Certainly the Aqua Dots recall

contained all the ingredients for sensationalist reporting: innocent children, toys

with an illicit chemical, Chinese manufacturing, and the opportunity to use the

term “date rape drug.” Three of the Monjes’ articles use the term “date rape drug”

in their title, two use the term “poison,” and another refers to “liquid ecstasy.”

Articles about the Aqua Dots recall are irrelevant to this matter and would be

subject to the district court’s order excluding evidence post-dating R.M.’s

ingestion.128 Moreover, such articles concentrate on the most lurid aspects of the

Aqua Dots situation for the purpose of profit, but to the detriment of truth-seeking.

See Clay Calvert, “Toxic Television, Editorial Discretion, & The Public Interest: A

Rocky Mountain Low,” 21 Hastings Comm. & Ent. L.J. 163, 192 (Fall 1998).

References to China as the country of origin of the beads is a classic

example of the appeal to racial or national bias that is strictly forbidden in a court

of law. See Annotation, Statement by Counsel Relating to Race, Nationality, or

128 2/13/15 Hearing (Doc. 541, pp. 40-41), SER 034-035; Order (Doc. 534, p. 2).


4837-2963-4866.1 52

Religion in Civil Action as Prejudicial, 99 A.L.R.2d 1249, 1255 (1965); Gearhart

v. Uniden Corp. of America, 781 F.2d 147, 153 (8th Cir. 1986) (references to

defendant’s foreign parent improper because they could appeal to xenophobia).

Where the evidence is undisputed, or where there is equally probative but less

inflammatory evidence, the danger of prejudice increases from the use of

inflammatory evidence. Girouard v. Skyline Steel, Inc., 215 Ariz. 126, 129, ¶ 11,

158 P.3d 255, 258 (App. 2007). The newspaper articles offered by the Monjes are

not probative of any fact in issue, and appeal only to passion and prejudice as a

basis for finding against Moose. As such, they should not be considered as part of

the record on appeal.

D. Punitive Damages Would Not Serve A Deterrent Rationale

Because Aqua Dots Were Recalled Even Before This Lawsuit Was

Filed.

The Monjes’ arguments in favor of deterrence as a rationale to impose

punitive damages in this case do not withstand scrutiny. Because Moose’s actions

and state of mind do not rise above those necessary to prove a garden-variety tort,

the availability of compensatory damages already provides a deterrence factor.

Moreover, Moose recalled the toy in question years before the present lawsuit was

filed, and thus a lawsuit could not have compelled Moose to take a different course

of action.


4837-2963-4866.1 53

Inflicting punitive damages in this case would be overly burdensome to

manufacturers who perform a useful social function, counter to public policy in

Arizona. See Linthicum, 723 P.2d at 681 (“When punitive damages are loosely

assessed, they become onerous not only to defendants but the public as a whole”).

Permitting juries to award punitive damages in every tort case would actually

undermine their deterrent effect. Id. The deterrence rationale is better served by

limiting the punitive damages remedy to those “egregious” cases for which it is

intended.

IV. THE DISTRICT COURT PROPERLY APPLIED JUDICIAL

ESTOPPEL TO BAR MARK MONJE’S DERIVATIVE CLAIMS.

The Monjes assert that the district court’s application of judicial estoppel

eliminated Mark Monje’s claims for emotional distress, medical expenses, and loss

of consortium. AOB at p. 66. In fact, the jury’s verdict awarded the Monjes all of

the medical expenses they incurred for R.M.’s hospitalization. Only Mr. Monje’s

derivative claims for emotional distress and loss of consortium were eliminated by

way of judicial estoppel.129

But, because a loss of consortium claim would require that R.M. have

suffered a “severe, permanent and disabling” injury, such a claim could not survive

dismissal of the brain injury claim. See Pierce v. Casas Adobes Baptist Church,

162 Ariz. 269, 272, 782 P.2d 1162, 1165 (1989). The district court dismissed both

129 Order (Doc. 442), ER-029 to 032.


4837-2963-4866.1 54

the parents’ consortium and emotional distress claims under the factual premises in

place at time of trial.130 As a result, affirmation of the rulings precluding the

Monjes’ brain injury claim renders moot their appeal of the judicial estoppel issue.

The Monjes characterize the district court’s judicial estoppel ruling as one

directed to “punishing” Mark Monje and ultimately harming his bankruptcy

creditors. Neither argument carries the day here. Judicial estoppel is an equitable

doctrine “to protect the integrity of the judicial process by prohibiting parties from

deliberately changing positions according to the exigencies of the moment.” New

Hampshire v. Maine, 532 U.S. 742, 750 (2001). The district court was not

motivated by animus to Mr. Monje, but could not let his advantageous silence

stand without emboldening future litigants to play fast and loose with the facts.

The Monjes assert that Mark Monje “inadvertently” failed to report his

contingent personal injury claims as assets in his bankruptcy due to his lack of

understanding. In fact, Mr. Monje received his finance degree in 2002, and

worked as a financial advisor, and thus presumably had some understanding of

what might constitute “assets” for purposes of bankruptcy.131 This financial

advisor not only “inadvertently” failed to report his claim when he filed for

bankruptcy, he also “inadvertently” failed to amend his scheduled after filing the

130 6/5/15 Hearing (Doc. 684, p. 7), SER 060; 6/8/15 Hearing (Doc. 714, pp. 10, 30), SER 064. 131 Mark Monje Depo. (Doc. 375-4 at p. 44), SER 179.


4837-2963-4866.1 55

present suit, and prior to receiving a discharge on August 4, 2009.132 Mr. Monje

then “inadvertently” failed to re-open his bankruptcy over the following five years

of litigation to advise his creditors that he had a contingent claim that had accrued

two years prior to the date of his bankruptcy discharge.133

It was only after the district court had dismissed his claims that Mark Monje

moved to reopen his bankruptcy, at the same time seeking relief from the court’s

order dismissing his claims.134 Mr. Monje’s inexplicable delay in moving to

reopen his bankruptcy led the district court to deny Mr. Monje’s request for relief

from judgment.135

The Monjes do not appeal the denial of their request for relief from the

judgment, instead challenging only the subsequent ruling136 denying the

bankruptcy trustee’s motion to intervene. The Monjes argue that this ruling should

be overturned because it harmed the creditors for whom the trustee was acting.

However, the Monjes do not have standing to assert any error in this ruling; only

the bankruptcy trustee would have standing to do so. In re marriage of Gersten v.

Gersten, 223 Ariz. 99, 108 fn. 13, 219 P.3d 309, 318 (2009) (appellant could not

132 Order (Doc. 442 at p. 17, ll. 19-28), ER-030. 133 Order (Doc. 442 at p. 18, ll. 16-18), ER-031.

134 Docs. 575, 593, 599, 601; 5/12/15 Hearing (Doc. 645, p. 4, ll. 15-21), SER 057. 135 Id. (Doc. 645, pp. 4-5), SER057-058. 136 Order (Doc. 648).


4837-2963-4866.1 56

challenge the district court’s denial of a nonparty’s motion to intervene because he

is not aggrieved by it); see In re Estate of Friedman, 217 Ariz. 548, 552, ¶ 11, 177

P.3d 290, 294 (App. 2008); see also Estate of Spirtos v. One San Bernardino Cty.

Sup. Ct. Case No. SPR 02211, 443 F.3d 1172, 1175 (9th Cir. 2006) (only trustee

has standing to assert claims on behalf of bankruptcy estate).

Accordingly, this Court should affirm the district court’s order granting

Moose’s partial summary judgment as to Mark Monje’s personal injury claims.

The district court did not abuse its discretion, and the Monjes cannot demonstrate

any abuse of discretion by asserting the trustee’s claims for which they have no

standing.

V. THE DISTRICT COURT ERRED IN INSTRUCTING THE JURY ON

WHETHER JSSY WAS MOOSE’S AGENT.

Moose filed a notice of protective/conditional cross-appeal137 in order to

preserve its ability to appeal the district court’s instructions to the jury that they

could find Jssy or its factory, Wang Qi, were agents of Moose.138 If this Court

affirms the district court with respect to all grounds for appeal sought by the

Monjes, such that no retrial is necessary, Moose will abandon and waive all

matters raised in this cross-appeal.

137 Doc. 759. 138 Doc. 731, Instructions 16, 20, and 23-27.


4837-2963-4866.1 57

The district court instructed the jury that it could find nonparties Jssy and

Wang Qi were the agents of Moose, and thereby assign all of their fault to Moose.

The first time the Monjes alleged that Jssy was Moose’s agent was in proposed

jury instructions served on May 29, 2015 on the eve of trial.139 The Monjes never

alleged in their Complaint that Jssy or Wang Qi was Moose’s agent, or that Moose

should be held jointly and severally liable with Jssy or Wang Qi.140

Moreover, the district court had previously denied the Monjes’ motion to

strike Jssy as a non-party at fault at the dispositive motion stage.141 At that time,

the Monjes accepted that Jssy was an independent contractor, but argued that

Moose had a non-delegable duty such that fault could not be apportioned to Jssy.142

The jury instructions at issue effectively nullified the district court’s prior order as

to Jssy, which was decided on extremely similar if not identical legal grounds. Yet

the district court had additional time to consider the relevant issues at the

dispositive motion stage, as opposed to having to rule on a previously unpled claim

in the course of trial.

Moose objected to instructing the jury that Jssy or Wang Qi could be

139 Plaintiffs’ Proposed Jury Instructions (Doc. 644, p. 41). 140 Complaint (Doc. 1-2). 141 Order (Doc. 442 at pp. 15-16), ER-028 to 029. 142 Id.


4837-2963-4866.1 58

considered its agent.143 Nonetheless, the district court instructed the jury it could

weigh eight factors to determine whether Jssy or Wang Qi should be considered

Moose’s agent, relying on Ochoa v. J.B. Martin & Sons Farms, 287 F.3d 1182 (9th

Cir. 2002).144 The jury ultimately apportioned 25 percent of fault each to Jssy and

Wang Qi, and found Jssy (but not Wang Qi) was Moose’s agent.145 As a result,

Moose was found responsible for an additional 25 percent of the jury’s

$435,000.00 verdict.146

The court gave the agency instruction in error for several reasons. The

Monjes did not properly plead agency or vicarious liability. Further, Moose cannot

be vicariously liable for JSSY’s actions because every party in the chain of

distribution of a defective product is severally liable based on its own actions and

not because of its relationship to other tortfeasors. State Farm Ins. Cos. v. Premier

Manufactured Sys., 217 Ariz. 222, 226, 172 P.3d 410, 414 (2007). Moreover, the

Monjes did not present sufficient evidence for the district court to instruct on

agency. The instruction prejudiced Moose because the jury found that JSSY was

Moose’s agent and therefore, Moose was vicariously liable for JSSY’s negligence.

143 See Docs. 664; 672; 720; 749, pp. 72-87, SER 009-024. 144 Jury Instructions (Doc. 731, p. 29), SER 032; Trial Day 6 (Doc. 749, pp. 75-76), SER 012-013. 145 Verdict (Doc. 733, p. 3), ER-006. 146 Judgment (Doc. 742), ER-003.


4837-2963-4866.1 59

As such, this Court should reverse the judgment as to the finding of vicarious

liability against Moose for JSSY’s actions.

A. Standard of Review.

In civil cases, the Ninth Circuit generally reviews de novo the question

whether a jury instruction misstates the applicable law. Navellier v. Sletten, 262

F.3d 923, 944 (9th Cir. 2001). The appellate court generally reviews the particular

formulation of civil jury instructions for abuse of discretion. Gantt v. City of Los

Angeles, 717 F.3d 702, 706 (9th Cir. 2013).

Jury instructions “must fairly and adequately cover the issues presented,

must correctly state the law, and must not be misleading.” Dang v. Cross, 422 F.3d

800, 804 (9th Cir. 2005) (quotation marks, citation omitted). There must be a

sufficient evidentiary foundation to support giving the instruction. Yan Fang Du v.

Allstate Ins. Co., 697 F.3d 753, 757 (9th Cir. 2012) (citing Mendez v. Cnty. of San

Bernardino, 540 F.3d 1109, 1117-18 (9th Cir. 2008)). The sufficiency of evidence

to support a jury instruction is reviewed for abuse of discretion. Yan Fang Du, 697

F.3d at 757. Prejudicial error results when the district court has not fairly and

correctly covered the substance of the law addressing the instruction. Swinton v.

Potomac Corp., 270 F.3d 794, 802 (9th Cir. 2001).

B. The Monjes Did Not Properly Plead Agency or Vicarious

Liability.

The district court found the Monjes sufficiently pled that Jssy was Moose’s


4837-2963-4866.1 60

in paragraph 30 of the Amended Complaint.147 Paragraph 30 simply states that

“[t]he Aqua Dots at issue were designed, manufactured, constructed, marketed

and/or distributed by and through the agents and/or representatives of Spin Master

and Moose Enterprise.”148 The complaint does not identify Jssy or Wang Qi as

Moose’s agent, or allege that Moose should be found vicariously or jointly liable

for their actions. In fact, other paragraphs of the complaint suggest a typical

supplier-purchaser agreement between Moose and the “Chinese manufacturer” of

Aqua Dots.149

The basic pleading requirement is that the complaint contain “a short and

plain statement of the claim showing that the pleader is entitled to relief.” Fed. R.

Civ. P. 8(a). While brevity is required, it is not enough simply to allege that a

wrong has been committed and demand relief. The pleading must give “fair notice”

of the claim being asserted and the grounds upon which it rests.” Bell Atlantic

Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 1964 (2007). A district

court may not enter judgment for plaintiff on a claim not pleaded in the complaint.

Rodriguez v. Doral Mortgage Corp., 57 F.3d 1168, 1172 (1st Cir. 1995).

Here, the district court entered judgment in favor of plaintiff, which imposed

vicarious liability on Moose for Jssy’s share of fault. However, none of the

147 6/5/15 Hearing (Doc. 684, p. 18, ll. 11-19), SER 062. 148 Complaint (Doc. 1-2, p. 7). 149 Complaint (Doc. 1-2, pp. 4-6, ¶¶ 19, 23).


4837-2963-4866.1 61

Monjes’ three counts against Moose set forth a legal or factual basis for vicarious

liability relief. Nothing in the complaint sets forth the essential elements of a claim

for agency regarding whether: (1) Jssy and Moose had a fiduciary relationship; (2)

that Jssy acted on Moose’s behalf; (3) that Jssy was subject to Moose’s control;

and (4) that Jssy manifested assent or otherwise consented to act on behalf of

Moose. Restatement (Third) of Agency, § 1.01 (2006). In fact, the complaint does

not even mention Jssy, vicarious liability, or joint liability. As such, Moose was not

on notice that the Monjes would seek to hold it vicariously liable for Jssy’s actions.

Moreover, apportionment of fault to Jssy or Wang Qi is a substantive issue

that should have been addressed at the summary judgment stage, and in fact the

district court ruled in Moose’s favor at that time. The district court’s jury

instructions on agency effectively permitted the Monjes an opportunity to obtain

reconsideration of the district court’s comprehensive summary judgment ruling, six

months later and in the course of trial. Accordingly, the district court should have

found that the Monjes were untimely in seeking to hold Moose jointly and

severally liable with Jssy through a jury instruction on agency.

C. The Agency Jury Instructions Were Erroneous As A Matter Of

Law.

Under Arizona Revised Statutes (“A.R.S.”) § 12-2506(A), “[i]n an action for

personal injury, property damage or wrongful death, the liability of each defendant

for damages is several only and is not joint, except as otherwise provided in this


4837-2963-4866.1 62

section.” A.R.S. § 12-2506 provides only three exceptions to the general regime of

several-only liability, one of which is a situation where the one of the defendants

“was acting as an agent or servant” of another defendant.

Arizona’s comparative fault principles apply to this product liability action.

Jimenez v. Sears Roebuck and Co., 183 Ariz. 399, 405, 904 P.2d 861, 867 (1995).

Consequently, all parties and nonparties in the chain of distribution of the Aqua

Dots beads are liable only for their own actions in designing, manufacturing,

and/or selling the toy. Premier, 217 Ariz. at 226; see also Dietz v. General Elec.

Co., 169 Ariz. 505, 510, 821 P.2d 166, 171 (1991) (comparative fault principles

make “each tortfeasor responsible for paying for his or her percentage of fault and

no more”). Under product liability law, actions taken to bring a defective product

to market constitute an “actionable breach of legal duty.” Premier, 217 Ariz. at

227. Fault lies in what each tortfeasor does rather than because of its relationship to

other actors in the chain of distribution. Id.

Here, the Monjes claimed that several-only liability should not apply

because Jssy was supposedly acting as an agent of Moose. Agency is defined as

“the fiduciary relationship that arises when one person (a ‘principal’) manifests

asset to another person (an ‘agent’) that the agent shall act on the principal’s behalf

and subject to the principal’s control, and the agent manifests assent or otherwise

consents so to act.” Restatement (Third) of Agency, § 1.01 (2006). An independent


4837-2963-4866.1 63

contractor, on the other hand, “contracts with another to do something for him but

[] is not controlled by the other nor subject to the other's right to control with

respect to his physical conduct in the performance of the undertaking. Id., § 2.

Independent contractors may be agents, in which case they are considered

fiduciaries that owe the principal basic obligations of agency—loyalty and

obedience. Id. at § 2, § 14N, cmt. a. Independent contractors who may be

considered “agents” include: brokers, factors, attorneys, collection agencies, and

selling agencies. Id.

Generally, a person who contracts to accomplish something for another or to

deliver something to another, but who is not acting as a fiduciary for the other, is a

non-agent contractor. Restatement (Second) of Agency, §14N. As such, a supplier

of goods is only properly thought of its customer’s agent “if it is agreed that he is

to act primarily for the benefit of the other and not for himself.” Restatement

(Second) of Agency, §14K.

The Premier court rejected application of an agency analysis to tortfeasors in

the chain of distribution of an allegedly defective product. The question at issue in

Premier was whether a defendant that assembled, packaged and sold a water

filtration system could be held jointly liable with the manufacturer that supplied it

with the plastic canisters, on the grounds that the manufacturer was the agent of the

defendant. Premier, 172 P.3d at 413-14. The Premier court refused to find the


4837-2963-4866.1 64

seller jointly liable under A.R.S. § 12-2506, stating that “[t]he mere purchase of a

product from a supplier does not establish a master-servant or principal-agent

relationship between the buyer and seller.” Id. at 226.

Instead of applying Premier, the district court relied upon Ochoa to

determine that an agency instruction was appropriate. Ochoa, however, was

directed to whether a recruiter was an independent contractor or employee. Ochoa,

287 F.3d at 1189. The Ochoa court based its eight-factor test upon an Arizona

Supreme Court case directed at whether an individual was an employee or

independent contractor for purposes of vicarious liability. Id., citing Santiago v.

Phoenix Newspapers, Inc., 164 Ariz. 505, 794 P.2d 138, 142 (1990).

The question here is not whether Jssy was the “employee” of Moose, but

whether it could be considered Moose’s “agent.” Because this is a product liability

action, the district court should have relied upon Premier and rejected any

instructions that would allow the jury to find an agency relationship. At the very

least, if the district court were to look further into the agency issue, it should have

crafted instructions consistent with the law of agency, such as represented in the

Restatement (Third) of Agency. The jury would then be instructed on matters such

as whether Jssy held a fiduciary duty, and whether Moose was Jssy’s only

customer. The instructions taken from the servant-master context were erroneous

and should not have been given.


4837-2963-4866.1 65

D. The Monjes Did Not Present Sufficient Evidence for the District

Court to Instruct on Agency.

Even under the erroneous master-servant standard applied by the district

court, the Monjes did not present sufficient evidence on agency to allow the matter

to be submitted to the jury. Those factors are as follows:150

(1) the extent of Moose’s control over Jssy’s work and the degree of

supervision;

(2) the distinct nature of Jssy’s business;

(3) the occupation's required specialization;

(4) the provider of materials and the place of work;

(5) the duration of employment;

(6) the method of payment;

(7) the relationship of work done to Moose’s regular business; and

(8) the belief of Moose and Jssy.

Here, Moose was both the developer of the toy concept, and also it sold the

completed toy in a number of countries outside North America. Jssy handled the

manufacture of the beads in question through factories in China, and sold the

completed beads to Moose. The evidence produced at trial did not support a

finding of agency, but confirmed that Jssy was an independent contractor within

the chain of distribution.

150 See Jury Instructions (Doc. 731, p. 29), SER 032.


4837-2963-4866.1 66

At trial, the Monjes presented the deposition of Jssy’s manager, Danny Yiu

Ming Kam (“Kam”). Kam testified that Moose was a client or customer of Jssy,

and that Moose contracted with Jssy (through purchase orders) to manufacture

various toys for it over the years.151 Jssy was a limited liability company located in

Hong Kong, and was a separate entity from the factories in China where the actual

manufacturing took place.152 The Wang Qi factory that made the Aqua Dots beads

was owned by the government of China rather than Jssy.153

The facts evinced at trial do not show (1) Moose controlled Jssy’s activities;

(2) that Jssy’s business was indistinct from Moose; (3) that Moose provided

materials to Jssy, or a place to work; or (4) that Moose or Jssy thought Jssy was

Moose’s agent. The only evidence as to the manner of payment was that Moose

sent purchase orders, just as any company would do with an independent vendor.

Importantly, there was no evidence that Moose directed Jssy to contract with the

Wang Qi factory, and no evidence that Moose dictated the bead formulation. The

evidence was simply that Moose and Jssy were separate corporate entities in the

chain of distribution who dealt with each other at arms’ length. It was therefore

error for the district court to permit the jury to find that Jssy was Moose’s agent.

151 Trial Day 2 (Doc. 745, p. 182, ll. 2-9; pp. 183-84), SER 073-075. 152 Trial Day 2 (Doc. 745 at p. 185, ll. 18-24), SER 076. 153 Trial Day 2 (Doc. 745, pp. 209-210), SER 088-089.


4837-2963-4866.1 67

CONCLUSION

The Monjes were accorded substantial latitude granted by the district court

to identify and disclose an expert to testify that 1,4-BD can result in a brain injury.

Their failure to identify a timely, reliable opinion led to the proper result –

exclusion of Dr. Parent, and all the experts whose opinions depended upon proof of

causation. Even without proof of a brain injury, the Monjes received a favorable

verdict after an eight day trial, awarding R.M. substantial sums based on the actual

damages he was shown to have experienced.

The Monjes’ continued efforts in this Court to manufacture an expert

opinion should not be rewarded. Likewise, the Monjes should not be allowed to

submit new evidence, not considered by the district court, to revive their punitive

damages prayer. Accordingly, Moose requests this Court affirm the district court’s

orders in all respects, which would render moot any further questions regarding

judicial estoppel and agency.

RESPECTFULLY SUBMITTED this 13th day of June, 2016.

LEWIS BRISBOIS BISGAARD & SMITH LLP By s/ Robert C. Ashley




4837-2963-4866.1 68

STATEMENT OF RELATED CASES

Moose is unaware of any related cases.


4837-2963-4866.1 69

CERTIFICATE OF COMPLIANCE

The undersigned hereby certifies that this brief complies with the type-

volume limitation of Fed. R. App. P.28.1(e)(2)(B) because it contains 15,679

words, excluding the parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii),

and the typeface requirements of Fed. R. App. P. 32(a)(5) and the type style

requirements of Fed. R. App. P. 32(a)(6) because it has been prepared in a

proportionally spaced typeface using Microsoft Word 2010 14 pt. Times New

Roman.

RESPECTFULLY SUBMITTED this 13th day of June, 2016.

LEWIS BRISBOIS BISGAARD & SMITH

LLP By s/ Robert C. Ashley




K!jgtgd{!egtvkh{!vjcv!K!gngevtqpkecnn{!hkngf!vjg!hqtgiqkpi!ykvj!vjg!Engtm!qh!vjg!Eqwtv!hqt!vjg!

Wpkvgf!Uvcvgu!Eqwtv!qh!Crrgcnu!hqt!vjg!Pkpvj!Ektewkv!d{!wukpi!vjg!crrgnncvg!EO0GEH!u{uvgo!

qp!)fcvg*!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!/!!

!

K!egtvkh{!vjcv!cnn!rctvkekrcpvu!kp!vjg!ecug!ctg!tgikuvgtgf!EO0GEH!wugtu!cpf!vjcv!ugtxkeg!yknn!dg!

ceeqornkujgf!d{!vjg!crrgnncvg!EO0GEH!u{uvgo/

EGTVKHKECVG!QH!UGTXKEG!

Yjgp!Cnn!Ecug!Rctvkekrcpvu!ctg!Tgikuvgtgf!hqt!vjg!Crrgnncvg!EO0GEH!U{uvgo

K!jgtgd{!egtvkh{!vjcv!K!gngevtqpkecnn{!hkngf!vjg!hqtgiqkpi!ykvj!vjg!Engtm!qh!vjg!Eqwtv!hqt!vjg!

Wpkvgf!Uvcvgu!Eqwtv!qh!Crrgcnu!hqt!vjg!Pkpvj!Ektewkv!d{!wukpi!vjg!crrgnncvg!EO0GEH!u{uvgo!

qp!)fcvg*!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!/!

!!

Rctvkekrcpvu!kp!vjg!ecug!yjq!ctg!tgikuvgtgf!EO0GEH!wugtu!yknn!dg!ugtxgf!d{!vjg!crrgnncvg!

EO0GEH!u{uvgo/!

!!

K!hwtvjgt!egtvkh{!vjcv!uqog!qh!vjg!rctvkekrcpvu!kp!vjg!ecug!ctg!pqv!tgikuvgtgf!EO0GEH!wugtu/!!K!

jcxg!ockngf!vjg!hqtgiqkpi!fqewogpv!d{!Hktuv.Encuu!Ockn-!rquvcig!rtgrckf-!qt!jcxg!fkurcvejgf!kv!

vq!c!vjktf!rctv{!eqoogtekcn!ecttkgt!hqt!fgnkxgt{!ykvjkp!4!ecngpfct!fc{u!vq!vjg!hqnnqykpi!

pqp.EO0GEH!rctvkekrcpvu<

Ukipcvwtg!)wug!#u0#!hqtocv*

EGTVKHKECVG!QH!UGTXKEG!!!

Yjgp!Pqv!Cnn!Ecug!Rctvkekrcpvu!ctg!Tgikuvgtgf!hqt!vjg!Crrgnncvg!EO0GEH!U{uvgo

;vj!Ektewkv!Ecug!Pwodgt)u*

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Ukipcvwtg!)wug!#u0#!hqtocv*

!PQVG<!Vq!ugewtg!{qwt!kprwv-!{qw!ujqwnf!rtkpv!vjg!hknngf.kp!hqto!vq!RFH!)Hkng!@!Rtkpv!@!RFH!Rtkpvgt0Etgcvqt*/

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

u0 Tqdgtv E/ Cujng{

26.27591 cpf 26.27678

702403127


1

Nos. 15-16480 and 15-16567

UNITED STATES COURT OF APPEALS


MARK MONJE; BETH MONJE, individually

and on behalf of their minor son R.M.,

Plaintiffs/Appellants,

v.


corporation, et al.,

Defendants/Appellees.

_______________________________________

MARK MONJE; BETH MONJE, individually

and on behalf of their minor son R.M.,

Plaintiffs/Appellees,

v.


corporation, et al.,

Defendants,

and

MOOSE ENTERPRISES PROPRIETARY

LIMITED, an Australian company,

Defendant/Appellant.

Case No. 15-16480

D.C. No. 2:09-cv-01713-JJT



THIRD BRIEF

ON CROSS-APPEAL

Case No. 15-16567

D.C. No. 2:09-cv-01713-JJT



David L. Abney, Esq. Ariz. Bar No. 09001

KNAPP & ROBERTS, P.C., 8777 North Gainey Center Drive, Suite.165

Scottsdale, Arizona 85258, (480) 991-7677, [email protected]



2

Table of Contents

Page

Table of Authorities 4

Legal Argument 10

1. At trial, the Monjes relied on the full range of facts to show

the district court that Arizona law allowed the issue of punitive

damages to go to the jury. 10

2. Deliberate indifference and conscious disregard about the

composition of the Aqua Dots also support letting the jury

decide whether to award punitive damages. 17

3. Jssy—Moose Enterprises’ manufacturing agent—intentionally

used a toxic chemical to make the Aqua Dots. Jssy is thus liable

to pay punitive damages, as are its principals. 25

4. The district court properly instructed the jurors that they could

find that Jssy and its Wang Qi factory were agents of Moose

Enterprises. 27

5. The district court should have let Mark Monje’s emotional-

distress claim go to the jury. 33

6. The district court should have let Mark Monje’s loss-of-

consortium claim go to the jury. 36

7. The district court should have let Mark Monje’s claim for his

son’s past and future medical expenses go to the jury. 37

8. The district court should not have applied judicial estoppel to bar

Mark Monje’s claims for medical-expense, loss-of-consortium,

and emotional-distress damages. 38

9. The permanent decline of the neurological health of the

Monje’s son is not a mere coincidence. Before eating the Aqua

Dots he was a typical child; after eating the Aqua Dots he was

not a typical child. After eating the Aqua Dots he has suffered


3

from permanent neurological problems. Expert testimony merely

confirms the causal connection and helps dispel the defense of

coincidence. 42

10. The general-causation/specific-causation distinction for expert-

opinion testimony is irrelevant in our case because we are dealing

with one set of toxicology opinions about one child injured in one

poisoning incident. 47

Conclusion 50

Certificate of Compliance with Federal Rule of Appellate Procedure

32(a)(7)(B) 51

Certificate of Service 51

Certificate for Brief in Paper Format 52


4

Table of Authorities

Cases

Page

Ah Quin v. County of Kauai Department of Transportation,

733 F.3d 267 (9th Cir. 2013) 41-42

Arellano v. Primerica Insurance Company, Co., 235 Ariz. 371,

332 P.3d 597 (App. 2014) 26

Atchison, Topeka & Santa Fe Railway Co. v. Hicks, 64 Ariz. 15, 165 P.

167 (1946) 12

Buzard v. Griffin, 89 Ariz. 42, 358 P.2d 155 (1960) 12

Campus Sweater and Sportswear Co. v. M.B. Kahn Constr. Co.,

515 F.Supp. 64 (D.S.C. 1979) 22

Coleman v. Watts, 87 F.Supp.2d 944 (D. Ariz. 1998) 17

Cramer v. Starr, --- Ariz. ---, 375 P.3d 69, 2016 WL 3917096

(Ariz. July 18, 2016) 34

Echols v. Beauty Built Homes, Inc., 132 Ariz. 498, 647 P.2d 629 (1982) 17, 26

Estate of DeSela v. Prescott Unified School District No. 1, 226 Ariz.

387, 249 P.3d 767 (2011) 37

Falcon v. Beverly Hills Mortgage Co., 168 Ariz. 527, 815 P.2d 896 (1991) 21

Farr v. Transamerica Occidental Life Ins. Co. of Cal., 145 Ariz. 1,

699 P.2d 376 (App. 1984) 11

Filasky v. Preferred Risk Mut. Ins. Co., 152 Ariz. 591, 734 P.2d 76

(1987) 12

Galindez v. Miller, 285 F.Supp.2d 190 (D. Conn. 2003) 17

Gila Water Co. v. Green, 29 Ariz. 304, 241 P. 307 (1925) 21


5

Gurule v. Ill. Mut. Life and Cas. Co., 152 Ariz. 600, 734 P.2d 85 (1987) 22

Hall v. A.N.R. Freight System, Inc., 149 Ariz. 130, 717 P.2d 434 (1986) 31

Harbor Ins. Co. v. Industrial Commission, 25 Ariz. App. 610, 545 P.2d

460 (1976) 43

Haralson v. Fisher Surveying, Inc., 201 Ariz. 1, 31 P.3d 114 (2001) 27

Hyatt Regency Phoenix Hotel Co. v. Winston & Strawn, 184 Ariz. 120,

907 P.2d 506 (App. 1995) 26

In re Corey, 892 F.2d 829 (9th Cir. 1989) 40, 42

In re Estate of Hanscome, 2013 WL 5519583 (Ariz. App. Oct. 3, 2013) 11

In re Marriage of Williams, 219 Ariz. 546, 200 P.3d 1043 (App. 2008) 16

John S. Clark Co. v. Faggert & Frieden, P.C., 65 F.3d 26

(4th Cir. 1995) 40

Lay v. City of Mesa, 168 Ariz. 552, 815 P.2d 921 (App. 1991) 50

Lyall v. City of Los Angeles, 807 F.3d 1178 (9th Cir. 2015) 27

Mein ex rel. Mein v. Cook, 219 Ariz. 96, 193 P.3d 790 (App. 2008) 11

Newman v. Select Specialty Hospital-Arizona, Inc., 239 Ariz. 558,

374 P.3d 433 (App. 2016) 12

New Hampshire v. Maine, 532 U.S. 742 (2001) 40, 42

Niehus v. Liberio, 973 F.2d 526 (7th Cir. 1992) 37

Ontiveros v. Borak, 136 Ariz. 500, 667 P.2d 200 (1983) 46

Pankratz v. Willis, 155 Ariz. 8, 744 P.2d 1182 (App. 1987) 46

Pierce v. Casas Adobes Baptist Ch., 162 Ariz. 269, 782 P.2d 1162 (1989) 36


6

Piper v. Bear Medical Systems, Inc., 180 Ariz. 170, 883 P.2d 407

(App. 1993) 24-25

Quintero v. Rogers, 221 Ariz. 536, 212 P.3d 874 (App. 2009) 11

Ranburger v. Southern Pacific Transportation Co., 157 Ariz. 551,

760 P.2d 551 (1988) 21

Rawlings v. Apodaca, 151 Ariz. 149, 726 P.2d 565 (1986) 13

Ritchie v. Krasner, 221 Ariz. 288, 211 P.3d 1272 (App. 2009) 46

Royal Globe Insurance Co. v. Industrial Commission, 20 Ariz. App. 432,

513 P.2d 970 (1973) 42

Salt River Project Agricultural Improvement and Power District v.

Westinghouse Electric Corp., 176 Ariz. 383, 861 P.2d 668 (1993) 33

Sands v. Bill Kay’s Tempe Dodge, Inc., 2014 WL 1118149 (Ariz. App.

March 20, 2014) 16

Sellinger v. Freeway Mobile Home Sales, Inc., 110 Ariz. 573, 521 P.2d

1119 (1974) 16

Seltzer v. Chesley, 512 F.2d 1030 (9th Cir. 1975) 33

Spector v. Spector, 17 Ariz. App. 221, 496 P.2d 864 (1972) 42

State v. Davolt, 207 Ariz. 191, 84 P.3d 456 (2004) 50

State Farm Insurance Companies v. Premier Manufactured Systems,

Inc., 217 Ariz. 222, 172 P.3d 410 (2007) 32

Thompson v. Better-Bilt Aluminum Products Co., Inc.,

171 Ariz. 550, 832 P.2d 203 (1992) 10, 21, 26

Tobel v. State, 189 Ariz. 168, 939 P.2d 801 (App. 1997) 29

United States v. Gomez-Osorio, 957 F.2d 636 (9th Cir. 1992) 28


7

United States v. Renzi, 769 F.3d 731 (9th Cir. 2014) 27

Unitherm Food Systems, Inc. v. Swift-Eckrich, Inc., 546 U.S. 394 (2006) 30

US Express Leasing, Inc. v. Leland, 2014 WL 2902249 (Ariz. App.

June 24, 2014) 16

Volz v. Coleman Co., 155 Ariz. 567, 748 P.2d 1191 (1987) 23-24

Warner v. Southwest Desert Images, LLC, 218 Ariz. 121, 180 P.3d 986

(App. 2008) 12

Webster v. Culbertson, 158 Ariz. 159, 761 P.2d 1063 (1988) 34

Statutes, Regulations, and Rules

15 U.S.C. § 1261(f)(1)(A) (“hazardous substance”) 15

15 U.S.C. § 1261(g) (“toxic”) 15

15 U.S.C. § 1261(q)(1) (“banned hazardous substance”) 15

76(213) Fed. Reg. 68168 (11/03/2011) 15-16, 20

Fed. R. Civ. Proc. 56(c)(1)(3) 11

Ariz. Const. art. 18, § 5 30-33

A.R.S. § 12-2505(A) 32-33

A.R.S. § 12-2506(B) 32

A.R.S. § 12-2506(F)(2) 32

Other Authorities

Ann K. Chapman & Douglas R. Ticks, Oregon State Bar, Personal

Injury Claims and Bankruptcy, 103 In Brief 1 (Feb. 2008) 39


8

Noel Fidel, Preeminently a Political Institution: The Right of Arizona

Juries to Nullify the Law of Contributory Negligence, 23 Ariz. St.

L.J. 1 (Spring 1991) 31

John D. Leshy, The Arizona State Constitution: A Reference Guide

(1993) 31

Julia A. Phillips, Does “Made in China” Translate to “Watch Out”

for Consumers? The U.S. Congressional Response to Consumer

Product Safety Concerns, 27 Penn. St. Int’l L. Rev. 217 (2008) 21

Restatement (Second) of Torts § 8A (1965) 12

Restatement (Second) of Torts § 908 (1979) 17

Restatement (Third) of Torts: Liability for Physical and Emotional

Harm § 28 cmt. (c)(1) (2010) 48-49


Harm § 28 cmt. (c)(3) (2010) 49


Harm § 48 (2012) 34


Harm § 48 cmt. a (2012) 35


Harm § 48 cmt. f (2012) 35


Harm § 48 cmt. i (2012) 35


Harm § 48 cmt. l (2012) 35


Harm § 48 cmt. m (2012) 36


9

Angela Scoifforo, Mark C. Leffler, and Emily Fort, Scheduling and

Protecting Personal Injury and Other Causes of Action in

Bankruptcy Cases, 64 Va. Law. 24 (Feb. 2016) 38

Jeffrey R. Suchard, Sergey A. Nizkorodov, and Stacy Wilkinson,

1, 4-Buitanediol Content of Aqua Dots Children’s Craft Toy

Beads, 5(3) J. Med. Tech. 120 (Sep. 2009) 14

Reed C. Tolman, Comparative Negligence in Arizona, 1979 Ariz. St.

L.J. 581 (1979) 31

Calli A. Turner, Inadvertence or Unfair Advantage: The Fifth Circuit’s

and Texas Supreme Court’s Applications of Judicial Estoppel

Following a Bankruptcy Non-disclosure and How a PACER

Search Can Spare the Cleanup, 45 Tex. Tech L. Rev. Online

Ed. 131 (2012) 38


10

Legal Argument

1. At trial, the Monjes relied on the full range of facts to show the district

court that Arizona law allowed the issue of punitive damages to go to

the jury.

Under Arizona law, when considering if a trial court has properly withdrawn

punitive damages from the jury, a reviewing court must construe “the evidence and

all reasonable inferences that may be drawn from the evidence” in the light most

favorable to the party seeking punitive damages. Thompson v. Better–Bilt Alum.

Prods. Co., Inc., 171 Ariz. 550, 558, 832 P.2d 203, 211 (1992).

Moose Enterprises argues that the Monjes did not identify for the district

court the full range of punitive-damages facts the Monjes identified for this Court.

Second Brief on Cross-Appeal at 46 (06/13/15) (Dkt. Entry 45). But the Monjes are

not relying on “new facts.” They are, instead, relying on the wide range of

evidence that they and the other parties presented to the district court.

At the district court, the Monjes filed a combined opposition to the defense

motions for summary judgment—including to the motion for summary judgment

on punitive damages.1 That combined opposition incorporated all the statements of

facts that the Monjes had prepared, encompassing all exhibits, testimony, expert

opinions, and facts identified in the First Brief on Cross-Appeal as support on the

1 Plaintiffs’ Combined Response to Defendants Moose Enterprise’s Motion

for Summary Judgment, Spin Master and Toys R Us’ Joinder Therein, and Spin

Master’s Motion for Partial Summary Judgment Re: Punitive Damages at 1:24 to

2:4; 14:2-5 (08/23/14), Doc. 390.


11

punitive-damages issue. The Monjes, together with the other briefing parties,

provided the district court with a full range of relevant facts needed to determine

that the jury should consider whether to award punitive damages.

Indeed, the district court consolidated and ruled in one Order on all major

pending motions to strike and liability and damages summary-judgment motions.

Order at 1:15-27 (11/18/14) (Doc 442), ER-014. The district court reviewed the

full range of relevant facts in the record before ruling on the pending motions. In

fact, the district court cited Fed. R. Civ. Proc. 56(c)(1)(3), explaining that, although

not obligated to do so, it could “consider the entire record on summary judgment,

and [had] done so”—and had specifically conducted a “review of the Record”

before ruling on punitive damages. Order 5:11-12; 7:19-29 (11/18/14) (Doc 442),

ER-018, ER-020. See Fed. R. Civ. Proc. 56(c)(1)(3) (“The court need consider

only the cited materials, but it may consider other materials in the record.”).

Uniquely among American jurisdictions, an Arizona trial “court must submit

the issue of punitive damages to the jury if any reasonable view of the evidence

would support an award of punitive damages.” In re Estate of Hanscome, 2013 WL

5519583 at *2 ¶ 9 (Ariz. App. Oct. 3, 2013) (emphasis added) (citing Quintero v.

Rogers, 221 Ariz. 536, 542 ¶ 24, 212 P.3d 874, 880 (App. 2009)). The “question of

whether punitive damages are justified should be left to the jury if there is any

reasonable evidence which will support them.” Farr v. Transamerica Occidental


12

Life Ins. Co. of Cal., 145 Ariz. 1, 9, 699 P.2d 376, 384 (App. 1984).

As a corollary, if the issue of punitive damages is actually submitted to the

jury, a “jury’s decision to award punitive damages should be affirmed if any

reasonable evidence exists to support it.” Filasky v. Preferred Risk Mut. Ins. Co.,

152 Ariz. 591, 599, 734 P.2d 76, 84 (1987).

In Arizona, evidence of subjective intent to injure is not required to prove a

punitive-damages claim. All that is needed is evidence from which a jury can infer

a “conscious disregard of a substantial risk of significant harm to others.” Warner

v. Southwest Desert Images, LLC, 218 Ariz. 121, 130 ¶ 24, 180 P.3d 986, 995

(App. 2008). “Substantial risk” is a lower threshold than either of the standards for

intent in tort: (1) subjective desire or (2) substantial certainty of a specific harm.

See Mein ex rel. Mein v. Cook, 219 Ariz. 96, 99-100 ¶ 16, 193 P.3d 790, 793-94

(App. 2008) (quoting Restatement (Second) of Torts § 8A (1965)).

“An inference is a fact which may be presumed from the proof of the

existence or non-existence of other facts. It is a conclusion from a proven fact o[r]

facts.” Buzard v. Griffin, 89 Ariz. 42, 48, 358 P.2d 155, 159 (1960). “An inference

may be said,” after all, “to be nothing more than a permissible deduction from the

testimony.” Atchison, Topeka & Santa Fe Railway Co. v. Hicks, 64 Ariz. 15, 23,

165 P. 167, 171 (1946).

Thus, there need not be any direct evidence to prove the needed “evil mind.”


13

Circumstantial evidence and reasonable inferences drawn from that circumstantial

evidence are enough. Newman v. Select Specialty Hospital-Arizona, Inc., 239 Ariz.

558 ¶ 10, 374 P.3d 433 (App. 2016). After all, the jury “is in the best position to

consider whether” a defendant’s “motive or conduct evidenced the ‘evil mind’”

needed for punitive damages. Rawlings v. Apodaca, 151 Ariz. 149, 163, 726 P.2d

565, 579 (1986). Here, for several reasons, the district court should have let the

jury deduce and infer from the wide range of direct and circumstantial evidence

that there was a basis for awarding punitive damages:

First, on appeal, as at trial, the defense admitted that Moose Enterprises and

Spin Master “shared responsibility for the consequences of” the Monjes’ son eating

the toxic Aqua Dots. Second Brief on Cross-Appeal at 2 (06/13/15) (Dkt. Entry

45). Jury Instruction No 16 explained that Moose Enterprises and Spin Master

“admit they were partially at fault, and, therefore, are liable to [the Monjes’ son].”2

Second, the Aqua Dots were toxic. That was why they sickened the Monjes’

son so badly that he vomited, passed out, suffered respiratory distress, had to be

intubated for many hours to let him breathe, and had to be hospitalized for two

days. The level of toxicity and permanency of harm may be debatable, although the

unmistakable, long-lasting deterioration in the neurological health of the Monje’s

son after he ate the Aqua Dots cannot be mere coincidence. But there is no debate

2 Jury Instruction No. 16 (06/18/15) (Doc 731), SER 026.


14

about the rapid onset of toxic poisoning and about the product’s toxicity.

Third, Moose Enterprises and Spin Master sold massive amounts of the

popular Aqua Dots—cute small toys little kids were sure to grab.3 When little kids

grab cute, small toys, they go into their mouths. That reflex is something every

adult knows and every parent dreads.

Fourth, as discussed in more detail later, Moose Enterprises and Spin Master

did not conduct or arrange for vigorous, independent, objective, random chemical-

analysis and chemical-decomposition testing to find out whether the Aqua Dots

were toxic before selling them to the Monjes and other consumers.

Fifth, Spin Master and Moose Enterprises conducted no product recall or

even a consumer-warning program after reports started surfacing in May and June

2007 that the beads were toxic and were poisoning animals and children.4 And so

they failed to warn the Monjes about the toxicity of the Aqua Dots before the

Monjes bought them on June 30, 2007 and before the Monjes’ son ate them on July

17, 2007.5

3 “In 2007, Aqua Dots was listed among Toy Wishes magazine’s ‘Hot

Dozen’ top toys and was named the ‘Toy of the Year’ in Australia, where it was

marketed under the name Bindeez. More than 12 million craft kits, containing over

8 billion beads, were sold worldwide. An estimated 4.2 million units were

distributed in the United States alone between April and November 2007.” Jeffrey

R. Suchard, Sergey A. Nizkorodov, and Stacy Wilkinson, 1, 4-Bitanediol Content

of Aqua Dots Children’s Craft Toy Beads, 5(3) J. Med. Tech.120 (Sep. 2009). 4 Kitzes Expert Report at 6, § IV(3)(d) (Doc 379-05, ER-179). 5 See First Brief on Cross-Appeal at 28 and fns. 47, 49-50 (02/08/16).


15

Moose Enterprises knew of the toxic hazard before the Monjes’ son ate the

Aqua Dots that decisively sickened him. Before then, Moose Enterprises knew

about: (1) a March 21, 2007 incident where a dog ate some of the beads and was

poisoned, and (2) a May 11, 2007 incident where a two-year-old girl swallowed the

beads, passed out, and was hospitalized.6 Moose Enterprises itself admits it had

received a handful of reports of toxic incidents involving Aqua Dots and Bindeez

(alternate name for Aqua Dots) before the Monjes’ son ate the Aqua Dots on July

16, 2007.7 But no recall or public consumer warning or notice was forthcoming,

although there must have been more cases where children ate Aqua Dots and

suffered toxic effects.8

Sixth, it was illegal to import or sell Aqua Dots in Arizona, or anywhere

within the United States. The U.S. Consumer Product Safety Commission, in fact,

found Aqua Dots were “toxic” and were thus a “banned hazardous substance”

illegal to import into and sell within the United States.9 The Commission also

found that Spin Master had “acquired knowledge that Aqua Dots were toxic and

6 Skliros Depo. 127:9-18, 129:5-21 (05/13/2000) (Doc 388-08, ER-133, ER-

135); Stul Depo. 171:5-16, 174:9-24 (05/25/2010) (Doc 388-09, ER-138, ER-139);

E-mails (Doc 388-18, Pages 17, 20, 22-24 of 30); E-mails (Doc 388-19, ER-212,

ER-213); Bindeez Complaint Log (Doc 388-23, ER-220, ER-221). 7 Motion at 14:13-28 (07/23/2014) (Doc 374). 8 Suchard Depo. 192:18 to 193:12, 195:1-15, 196:8 to 197:1 (09/17/2010)

(Doc 388-10, ER-143 to ER-147). 9 76(213) Fed. Reg. 68168 ¶¶ 18-19 (11/03/2011) (Doc 378-01, Page 84 of

206). See 15 U.S.C. § 1261(f)(1)(A) (“hazardous substance”), 15 U.S.C. § 1261(g)

(“toxic”), and 15 U.S.C. § 1261(q)(1) (“banned hazardous substance”).


16

constituted a banned hazardous substance and were prohibited from being

imported and sold.”10

Neither Spin Master’s Brief nor the Second Brief on Cross-Appeal dispute

the illegality of importing Aqua Dots into America and selling them in Arizona to

the Monjes. That is an important fact, since, in Arizona, a “pattern of illegal

activity” is something that “clearly” will “allow for an award of punitive

damages.” US Express Leasing, Inc. v. Leland, 2014 WL 2902249 at *2, ¶ 9 n. 9

(Ariz. App. June 24, 2014). Although Spin Master claimed no wrongdoing, it paid

a $1.3 million civil penalty to the U.S. Consumer Product Safety Commission.11

Moose Enterprises and Spin Master seem to assume that ignorance of federal

law excuses them. But in Arizona, a “party’s ignorance of the law is not an excuse

for failing to comply with it.” In re Marriage of Williams, 219 Ariz. 546, 549 ¶ 13,

200 P.3d 1043, 1046 (App. 2008).

Reasonable jurors could infer that illegally selling untested or inadequately

tested cute, toxic toy beads that trusting, defenseless kids were sure to eat shows

the “evil mind” needed for punitive damages. They could infer that the conduct

displays a “‘reckless indifference to the interests of others’” sufficient to support

punitive damages. Sands v. Bill Kay’s Tempe Dodge, Inc., 2014 WL 1118149 at

*5, ¶ 27 (Ariz. App. March 20, 2014) (quoting Sellinger v. Freeway Mobile Home

10 76(213) Fed. Reg. 68168 ¶ 9 (11/03/2011) (Doc 378-01, Page 84 of 206). 11 76(213) Fed. Reg. 68169 ¶ 36 (11/03/2011) (Doc 378-01, Page 85 of 206).


17

Sales, Inc., 110 Ariz. 573, 577, 521 P.2d 1119, 1123 (1974)).

2. Deliberate indifference and conscious disregard about the composition

of the Aqua Dots also support letting the jury decide whether to award

punitive damages.

“Ultimately,” Moose Enterprises contends, “all of the Monjes’ arguments

regarding punitive damages boil down to the accusation that Moose was ‘ignorant’

of the ingredients of the beads.” Second Brief on Cross-Appeal at 47 (06/13/15)

(Dkt. Entry 45). That is not fully accurate, but it does highlight one of the most

troubling aspects of the conduct of both Moose Enterprises and Spin Master.

Conscious disregard and deliberate indifference to the rights of others

support an award of punitive damages. Restatement (Second) of Torts § 908

(1979); Echols v. Beauty Built Homes, Inc., 132 Ariz. 498, 501, 647 P.2d 629, 632

(1982). A repeated or longstanding failure to investigate can demonstrate the

deliberate indifference or conscious disregard needed to support an award of

punitive damages. Coleman v. Watts, 87 F.Supp.2d 944, 957 (D. Ariz. 1998). See

also Galindez v. Miller, 285 F.Supp.2d 190, 200 (D. Conn. 2003) (Failure to

investigate claims of misconduct supported finding of deliberate indifference.).

The chemicals composing Aqua Dots bonded instantly when water was

applied but were supposed to be harmless—although they proved to be toxic in the

formula actually used in the Aqua Dots. Even a layperson, however, would know

that chemicals forming an instant bond in the presence of water are hardly run-of-


18

the-mill chemicals. That is, they are not chemically bland or inert. Aqua Dots were

chemically strange beads that did not behave or react like ordinary beads which,

when exposed to water, just get wet. See Spin Master’s Reply Brief at 15

(06/13/16) (Dkt. Entry 43) (“Aqua Dots was a children’s toy that consisted of

beads of different colors; when placed in a tray in various shapes and designs and

sprayed with water, the beads stuck together.”).

Samples were objectively tested in October 2007, after the Monjes’ son was

hurt. But before then, the Aqua Dots product maker (Jssy) that had put the toxic

ingredient in the Aqua Dots either selected and tested the samples itself or supplied

test samples for the distributors.12 The fox was in the hen house sampling the

chickens. Moose Enterprises did no decomposition or chemical analysis or other

chemical testing what ingredients were actually in the beads.13 Thus, there was no

independent product testing or oversight before the Monjes’ son ate the beads.

Instead, Moose Enterprises would get a supposed “production” sample from

Jssy’s factory and would submit that sample to Spin Master, which would then

arrange for “independent” lab testing for the Canadian and United States market.14

12 King Depo. 43:17-19, 72:19-24 (06/16/2010) (Doc 388-03, ER-080, ER-

081); Kam Depo. 250:11-19, 343:7-14, 344:1-6 (06/15/2010) (Doc 388-06, ER-

060, ER-066, ER-067). 13 King Depo. 72:11-18, 84:10-21 (Doc 388-03, ER-081, ER-083, ); Poulus

Depo. 143:8-16, 148:10-13, 225:9-14 (05/27/2010) (Doc 388-07, ER-126, ER-127,

ER-131). 14 King Depo. 84:3-21 (Doc 388-03 ER-083).


19

Moose Enterprises admits that “the bulk” of the responsibility for quality control

actually rested in the Jssy factories making the Aqua Dots.15 Once again, Jssy was

in charge of product quality control. That was the same agent of Moose Enterprises

that deliberately put a toxic chemical in the Aqua Dots in the first place.

Moreover, the pre-October 2007 testing Spin Master authorized was sharply

limited. In particular, Spin Master conducted no chemical-decomposition testing

before Aqua Dots were sold in the United States.16 And any pre-October 2007

third-party “test” reports were lazily and naively based on ingredient lists

(provided by the culpable Jssy manufacturer), general research the testers did, and

general experience that they had with the listed chemicals.17 No labs actually

independently tested and confirmed the chemical composition of the Aqua Dots.18

Finally, Spin Master was not randomly selecting retail samples to test.19

That is, Spin Master was not randomly testing the product as it was actually

offered to consumers in retail outlets in the United States. And before October

2007, neither Spin Master nor Moose Enterprises ever conducted an audit or

inquiry into the supply chain to determine the actual materials used in the Aqua

15 Kennedy Depo. 17:7-18 (06/17/2014) (Doc 388-04, ER-069). 16 Kennedy Depo. 279:1-4 (06/17/2014) (Doc 388-04, ER-077); Poulus

Depo. 165:10 to 166:4 (05/27/2010) (Doc 388-07, ER-128). 17 Kennedy Depo. 279:12-16 (06/17/2014) (Doc 388-04, ER-077). 18 Kennedy Depo. 279:17-25 (06/17/2014) (Doc 388-04, ER-077). 19 Kam Depo. 316:22-24 (06/15/2010) (Doc 385-02, ER-065); King Depo.

43:17-19 (Doc 388-03, ER-080); Coates Expert Report at 12, ¶ 44 (11/22/2013)

(Doc 375-4, ER-170A).


20

Dots product.20

The novelty of the odd, instantaneous chemical binding of colorful beads

was the basis of the toy’s marketing strategy and appeal. But neither Moose

Enterprises nor Spin Master bothered to commission adequate, objective testing to

ensure that what these strange Aqua Dots were made of that let them act in such an

weird way was non-toxic. Thus, the U.S. Consumer Product Safety Commission

found that, although Spin Master had “enlisted an outside testing agency to

evaluate the toxicity of the product, the testing was inadequate.”21 For all Moose

Enterprises and Spin Master knew, the Aqua Dots toy beads were a poisoned glue

made of toxic chemicals—which turns out to be a reasonably accurate description.

Reasonable jurors could infer and deduce that Moose Enterprises and Spin

Master saved money by not testing the product rigorously and by not investigating

its ingredients thoroughly. That served their own selfish financial interests and

showed a conscious disregard of—and a deliberate indifference to—the risks

inherent in selling untested, chemically-reactive toy beads that little children would

surely eat. As one commentator remarked, the Aqua Dots “chain of production and

visible inattention to product manufacturing highlights the complexity of the

Chinese supply chain and both the occurrence and ability of manufacturers to cut

20 King Depo.80:2-21 (Doc 388-03, ER-082). 21 76(213) Fed. Reg. 68168 ¶ 14 (11/03/2011) (Doc 378-01, ER-212).


21

costs to make their own profits larger.”22

In Arizona, a jury may award punitive damages if the jury has “inferred” a

defendant acted to serve its “own interests, consciously disregarding a substantial

risk of significant harm to others.” Ranburger v. Southern Pacific Transportation

Co., 157 Ariz. 551, 553, 760 P.2d 551, 553 (1988). And an Arizona jury may

award punitive damages to punish a defendant that “pursues a course of conduct to

serve its own interests despite knowledge that its acts were wrongful.” Thompson

v. Better–Bilt Aluminum Prods. Co., 171 Ariz. 550, 558, 832 P.2d 203, 211 (1992).

Spin Master in particular continues to claim—despite the Consumer Product

Safety Commission’s conclusion that its alleged “testing” was “inadequate”—that

it exercised due diligence. But only the jury could decide if Spin Master and

Moose Enterprises had exercised due diligence. Falcon v. Beverly Hills Mortgage

Co., 168 Ariz. 527, 530, 815 P.2d 896, 899 (1991) (The issue of “due diligence is a

question of fact.”); Gila Water Co. v. Green, 29 Ariz. 304, 306, 241 P. 307 (1925)

(Whether a party has used due diligence “is a question of fact for the jury.”). The

jury’s verdict, the jury’s award of substantial compensatory damages against Spin

Master and Moose Enterprises, and their own concession of fault at trial, refute any

due diligence excuse or defense.

22 Julia A. Phillips, Does “Made in China” Translate to “Watch Out” for

Consumers? The U.S. Congressional Response to Consumer Product Safety

Concerns, 27 Penn. St. Int’l L. Rev. 217, 229 (2008) (emphasis added).


22

Reasonable jurors could infer that failing to thoroughly and objectively test a

chemically-active toy like Aqua Dots—before importing and selling that toy in the

United States—especially when little kids would be attracted to and eat that

product, is conduct reflecting a conscious disregard of and deliberate indifference

to the rights and safety of those little kids. See Campus Sweater and Sportswear

Co. v. M.B. Kahn Constr. Co., 515 F.Supp. 64, 104 (D.S.C. 1979) (Jury properly

awarded punitive damages against a company showing conscious disregard by,

among other things, failing to test roofing product before putting it on the market.).

The state of mind sufficient to support punitive damages may be established

or inferred by a wide range of factors, “even if [the] defendant’s conduct was

outwardly unexceptional.” Gurule v. Illinois Mut. Life and Cas. Co., 152 Ariz. 600,

602, 734 P.2d 85, 87 (1987).

Given the toxicity of the beads, their unusual chemical behavior and

characteristics, the many months when objective testing could have occurred

before the beads entered the United States, the right and need to test the beads

fully, the increasing reports of poisoning, the studious ignorance of Moose

Enterprises and Spin Master about the actual chemical composition of the beads

they were peddling, and the vulnerability of the children who would surely eat the

toxic beads, reasonable Arizona jurors could have deduced and inferred that Moose

Enterprises and Spin Master should have thoroughly tested the Aqua Dots and


23

learned their toxic composition before illegally importing and selling them within

the United States. The failure to fully and objectively test reflects a conscious

disregard of and a deliberate indifference to the health, safety, rights—and lives—

of vulnerable children sufficient to let an Arizona jury consider awarding punitive

damages.

The defense has argued that continuing to market a defective product after

learning that it is defective is not enough, by itself, to impose punitive damages.

But the two cases the defense relies on for that proposition are distinguishable. In

the first case, Volz v. Coleman Co., 155 Ariz. 567, 748 P.2d 1191 (1987), a young

camper was severely burned when a defective Coleman camp stove spewed a

stream of fuel onto her. Coleman’s designers and engineers knew that the vent-hole

filler cap on the camp stove was capable of spewing fuel, but did not recall the

product or place warnings on it because spewing would not occur if a consumer

simply used the product in a common-sense manner. Id. at 568-69, 748 P.2d at

1192-93. A jury, however, awarded $6.8 million in compensatory damages and

$1.06 million in punitive damages.

On appeal from the punitive-damages award, the Arizona Supreme Court

held that the “fact that a manufacturer continues to market a product is not in itself

enough to show the evil mind necessary for punitive damages.” Id. at 570, 748

P.2d at 1194. But in our case, the evil is not continuing to market a legal product


24

that designers and engineers had thoroughly and objectively examined and

reasonably believed was safe for ordinary use, the evil is importing and selling an

unexamined or inadequately examined illegal product (toxic toy beads) that was

unsafe for its intended use and that defenseless little kids would eat. That conduct

shows conscious disregard and deliberate indifference not present in Volz.

In the second case the defense relies on, Piper v. Bear Medical Systems, Inc.,

180 Ariz. 170, 883 P.2d 407 (App. 1993), a negligently designed device used to aid

an adult patient’s respiration (an “adult volume ventilator”) had a history of several

failures before one malfunctioned and caused Ila Piper’s death. A jury awarded

$10,000 in compensatory damages and $750,000 in punitive damages. Id. at 173,

883 P.2d 410. In Piper, the Arizona Court of Appeals relied on Volz for the

proposition that the “fact that a manufacturer continued to market a product was

not itself enough to show the evil mind necessary for punitive damages.” Id. at

180, 883 P.2d at 417.

But unlike the Aqua Dots distributors and sellers, the adult volume

ventilator’s manufacturer in Piper had thoroughly evaluated their legal product and

had exclusively sold its product to doctors—with the only intended users being

doctors or qualified ventilation practitioners. Id. at 178, 883 P.2d at 415. In

contrast, there were no restrictions on who could buy the illegal Aqua Dots, which

were deliberately aimed at households with little kids sure to eat the poisonous


25

beads. Despite that, the Aqua Dots distributors and sellers exhibited conscious

disregard for and deliberate indifference to young, defenseless product users by

failing to conduct any objective, adequate testing before illegally importing and

selling the toxic beads in Arizona. That sort of evil mind was absent in Piper.

3. Jssy—Moose Enterprises’ manufacturing agent—intentionally used a

toxic chemical to make the Aqua Dots. Jssy is thus liable to pay punitive

damages, as are its principals.

Finally, the defense responses to the First Brief on Cross-Appeal ignore the

punitive-damages significance of the fact that Moose Enterprises’ agent (Jssy)—

which the jury decided was 25% at fault—had supposedly intentionally and

fraudulently used the toxic date-rape drug when it manufactured the Aqua Dots

and sent them to its principals for importation and sale throughout the United

States. See Spin Masters’ Brief at 2, 6, 11 (In the manufacturing process, Jssy

substituted a chemical that transformed into the date-rape drug.); Second Brief on

Cross-Appeal at 2 (06/13/16) (Moose Enterprises’ vendor, Jssy, made the toy

beads using a toxic chemical.). See also Amended Complaint ¶ 30 (08/04/09)

(Alleging that Moose Enterprises’ agents designed, manufactured, constructed,

marketed, and distributed the Aqua Dots.) (Doc. 1-1).

The Jssy-agent’s intentional, fraudulent act in using a toxic chemical to

make the toy beads in the scope and course of its service to its principals is

sufficient to impose punitive damages against it. Jssy acted to serve its own


26

interests (and those of its principals), with reason to know and consciously

disregarding a substantial risk that its conduct in making toxic toy beads might

significantly injure the health, safety, rights, and lives of the little kids who would

be eating those toxic toy beads. Thompson v. Better–Bilt Aluminum Prods. Co.,

171 Ariz. 550, 558-59, 832 P.2d 203, 211-12 (1992).

In turn, a principal is liable to pay punitive damages for acts of its agent

(taken in the course and scope of its agency) that warrant imposing punitive

damages against that agent. See, e.g., Arellano v. Primerica Insurance Company,

Co., 235 Ariz. 371, 379 ¶ 37, 332 P.3d 597, 605 (App. 2014) (“An award of

punitive damages against an employer . . . serves to encourage an employer to

exercise control over its employees and agents.”).

The Jssy-agent’s intentional wrongdoing is sufficient to impose punitive-

damage liability against its principal, Moose Enterprises. After all, Arizona’s

common-law doctrine of respondeat superior liability “allows punitive liability

against a principal for the conduct of its agent without any showing of the

principal’s evil mind.” Hyatt Regency Phoenix Hotel Co. v. Winston & Strawn, 184

Ariz. 120, 130, 907 P.2d 506, 516 (App. 1995). See also Echols v. Beauty Built

Homes, Inc., 132 Ariz. 498, 502, 647 P.2d 629, 633 (1982) (“Punitive damages

may be assessed against a principal for wrongs committed by its agent if the acts

were committed in furtherance of the employer's business and within the scope of


27

the agent’s employment.”); Haralson v. Fisher Surveying, Inc., 201 Ariz. 1, 6-7 ¶

24, 31 P.3d 114, 119-20 (2001) (In Arizona, punitive damages may be awarded

against an employer for acts of the employee if the acts are done in furtherance of

the employer’s business and are within the scope of the employment.).

4. The district court properly instructed the jurors that they could find

that Jssy and its Wang Qi factory were agents of Moose Enterprises.

The premise of Moose Enterprises’ “protective/conditional cross-appeal” is

that the district court had improperly instructed the jurors that they could find that

Jssy or its factory (Wang Qi) were Moose Enterprises’ agents. Second Brief on

Cross-Appeal at 56 (01/13/16) (Dkt. Entry 45). Moose Enterprises admits that it

had an opportunity to discourage the district court from instructing the jury that it

could conclude that Jssy was Moose Enterprises’ agent. Second Brief on Cross-

Appeal at 57-58 (01/13/16) (Dkt. Entry 45).

“District courts have wide discretion in crafting jury instructions.” United

States v. Renzi, 769 F.3d 731, 754 (9th Cir. 2014). Moose Enterprises is correct

that this Court reviews de novo whether a district-court jury instruction has

misstated the law. Lyall v. City of Los Angeles, 807 F.3d 1178, 1194 (9th Cir.

2015). But that is not necessarily the controlling standard of review, because the

agency jury instructions accurately stated the elements needed to establish agency.

Instead, the correct standard of review is more likely abuse of discretion, because

the relevant point is whether there was a factual basis for the agency jury


28

instructions. See United States v. Gomez-Osorio, 957 F.2d 636, 642 (9th Cir. 1992)

(“Logically, if the parties dispute whether the required factual foundation exists,

the court should apply an abuse of discretion standard of review.”).

Moose Enterprise is arguing that giving the agency jury instructions was

wrong for two main reasons. First, it claims that the Monjes did not properly plead

agency or vicarious liability. Second, it claims that Moose Enterprises cannot be

liable for Jssy’s acts because every party in a defective product’s chain or

distribution is supposedly “severally liable” for its own acts and not simply

because of its relationship to other tortfeasors. Second Brief on Cross-Appeal at 58

(01/13/16) (Dkt. Entry 45). The first argument is factually wrong; the second

argument misapprehends Arizona constitutional, statutory, and common law.

First, the Monjes properly pleaded agency when they alleged in their

Complaint that entities identified as Moose Enterprises’ agents had designed,

manufactured, constructed, marketed, and distributed the Aqua Dots.23

Moose Enterprises had itself also designated Jssy as a nonparty at fault, and

had successfully opposed the Monje’s motion to strike Jssy as a nonparty at fault.24

The jury was thus free to assess fault against Jssy, which the jury did. That was

what Moose Enterprises wanted when Moose Enterprises itself had named Jssy as

being at least partly at fault for the injuries sustained by the Monjes.

23 Complaint at ¶ 30 (Doc. 1-2). 24 Order at 15-16 (Doc. 441), ER-028 to ER-029.


29

The district court understood that there was “an ongoing course of conduct

of supply” between Jssy and Moose and “indicia of control” and other agency

elements.25 Other factors supporting the existence of agency included the right to

inspect and the right to consult.26 The district court understood that the fact that

Jssy may have been an independent contractor did not mean that it could not be an

agent as well.27 In the Ninth Circuit, when it is necessary to determine if an

independent contractor is always an agent, the finder of fact must apply eight

defined criteria.28 And that is one of the agency instructions the district court gave.

In addition, Arizona comparative-fault law preserves liability for entities that are in

the chain of product distribution if there is a principal-agent relationship.29

The district court reasonably concluded that, in light of the allegations in the

Complaint and in light of Jssy role in the chain of manufacture and distribution,

Jssy appeared to be acting as Moose Enterprises’ agent in manufacturing the toxic

Aqua Dots that Moose Enterprises then distributed—and that Jssy itself was

allegedly at fault in what Jssy did. It was up to the jury to decide if agency existed,

based on the evidence it had heard concerning Jssy’s relationship with Moose

Enterprises and based on Moose Enterprises’ own designation of Jssy as being at

25 Transcript at 847:11-15 (06/17/15), SER-006. 26 Transcript at 815:20 to 816:2 (06/13/15), SER-018 to SER-019. 27 Transcript at 806:9-12 (06/16/15), SER-009. 28 Transcript at 809:20-22 (06/16/15), SER-012. 29 Transcript at 806:13-22 (06/16/15), SER-009.


30

fault. In light of controlling agency-law principles, the district court concluded that

the jury should decide if the elements of agency, such as evidence of control, were

present.30 After all, the district court recognized that, under Arizona law, the

question of the existence of agency is a fact question for the jury to decide.31

Basically, Moose Enterprises claims that “the Monjes did not present

sufficient evidence on agency to allow the matter to be submitted to the jury.”

Second Brief on Cross-Appeal at 65 (06/13/16) (Dkt. Entry 45). Moose Enterprises

argues that the facts presented at trial were not enough to establish agency. Second

Brief on Cross-Appeal at 66 (06/13/16) (Dkt. Entry 45). But Moose Enterprises

cannot challenge the sufficiency of the evidence on the agency issue because it did

not move for a new trial or for judgment as a matter of law on the basis of

insufficiency of the evidence on agency. Unitherm Food Systems, Inc. v. Swift-

Eckrich, Inc., 546 U.S. 394 (2006).

Second, as a matter of fundamental Arizona law, the jury was free to assess

any percentage of fault it wanted to assess against Jssy—or against any other entity

in the chain of creating, manufacturing, and distributing the Aqua Dots. Since

1912, the comparative-fault defense has been an issue of fact solely for an Arizona

jury to decide under the terms of Article 18, § 5 of the Arizona Constitution.

Article 18, § 5 explains that, in Arizona: “The defense of contributory negligence

30 Transcript at 848:12-20 (06/17/15), SER-007. 31 Transcript at 807:1-3 (06/16/15), SER-010.


31

or of assumption of risk shall, in all cases whatsoever, be a question of fact and

shall, at all times, be left to the jury.”

The 1910 Arizona Constitutional Convention’s delegates adopted Article 18,

§ 5 to end widespread corporate abuse of the common-law assumption-of-risk and

contributory-negligence doctrines. For many decades, those doctrines had shielded

corporations, such as mines, railroads, and manufacturers, from liability for the

deaths and personal injuries their negligence and wrongdoing had caused. See Noel

Fidel, Preeminently a Political Institution: The Right of Arizona Juries to Nullify

the Law of Contributory Negligence, 23 Ariz. St. L.J. 1, 8-19 (Spring 1991)

(discussing the reasons for and history of the adoption of Ariz. Const. art. 18, § 5).

The concept that juries alone—and not judges—decide the validity of a

comparative-fault defense was a startling constitutional innovation. See, e.g., Reed

C. Tolman, Comparative Negligence in Arizona, 1979 Ariz. St. L.J. 581 (1979)

(“Arizona has a virtually unique approach to the common-law doctrine of

contributory negligence.”); John D. Leshy, The Arizona State Constitution: A

Reference Guide 309 (1993) (“The framers’ intent was to license juries to weigh

comparative negligence by depriving judges of their common law power to direct

verdicts where there was sufficient evidence of assumption of risk or comparative

negligence.”); Hall v. A.N.R. Freight System, Inc., 149 Ariz. 130, 133, 717 P.2d

434, 437 (1986) (“Article 18, § 5 was designed to ameliorate the draconian


32

consequences of contributory negligence by leaving to the jury the question of its

existence.”).

That unique Article 18, § 5 constitutional innovation became the foundation

for the Arizona Legislature’s 1984 Uniform Contribution Among Tortfeasors Act.

That is why A.R.S. § 12-2505(A) strikingly echoes Article 18, § 5 when it directs

that: “The defense of contributory negligence or of assumption of risk is in all

cases a question of fact and shall at all times be left to the jury.” And A.R.S. § 12-

2506(B) implements that directive when it orders that: “In assessing percentages of

fault the trier of fact shall consider the fault of all persons who contributed to the

alleged injury, death or damage to property, regardless of whether the person was,

or could have been, named as a party to the suit.”

Arizona’s product-liability system fosters and implements the constitutional

and statutory goal of holding all parties comparatively accountable for the harms

they contribute to causing. In an Arizona strict product-liability action, therefore,

“every party in the chain of distribution of a defective product has committed its

own ‘actionable breach of legal duty.’ Fault is thus found because of what each

tortfeasor did on its own—distribute a defective product—rather than because of

its relationship to other wrongdoers.” State Farm Insurance Companies v. Premier

Manufactured Systems, Inc., 217 Ariz. 222, 227 ¶ 21, 172 P.3d 410, 415 ¶ 21

(2007) (quoting A.R.S. § 12-2506(F)(2)).


33

In an Arizona tort case, only the jury assesses percentages of comparative

fault. No trial court or appellate court can nullify or modify any jury assessment of

fault. In this case, the jury could have found Jssy 100% at fault or 0% at fault, or

could have assessed any other percentage of fault the jury found reasonable. See,

e.g., Seltzer v. Chesley, 512 F.2d 1030, 1033 (9th Cir. 1975) (Under Article 18, § 5,

“a rather unusual provision,” the “the jury has not only the right to determine the

facts, but also to apply or not apply, as it sees fit, the law of contributory

negligence as a defense.”); Tobel v. State, 189 Ariz. 168, 173, 939 P.2d 801, 806

(App. 1997) (Comparative fault is always a question of fact for the jury and cannot

be taken away or established by the court.).

Arizona courts have long ago concluded that Article 18, § 5 applies in all

cases whatsoever, including to all forms of product-liability actions. Salt River

Project Agricultural Improvement and Power District v. Westinghouse Electric

Corp., 176 Ariz. 383, 388-89, 861 P.2d 668, 673-74 (1993).

Because of Article 18, § 5’s and A.R.S. § 12-2505(A)’s broad, strong, clear

words, the jury’s assessment of comparative fault is immune from judicial scrutiny,

fiddling, or nullification. An Arizona jury, and only an Arizona jury, gets to assess

percentages of comparative fault, at all times, and in all cases whatsoever—even in

this product-liability case.

5. The district court should have let Mark Monje’s emotional-distress

claim go to the jury.


34

Shifting from punitive damages to damages for emotional distress, the trial

court should have let the jury evaluate Mark Monje’s emotional-distress claim.

After all, a parent like Mark may assert a direct claim for emotional distress,

without having to be in any “zone of danger.” In the context of a parent-child case,

a tortfeasor that negligently causes serious bodily harm to a child is subject to

liability for serious emotional harm caused to that child’s parent if that parent

perceives the injury-causing event contemporaneously and is indeed the parent of

the child who suffers bodily injury. Restatement (Third) of Torts: Liability for

Physical and Emotional Harm at 199-200, § 48 (2012).

Unless there is directly contrary authority, Arizona courts traditionally adopt

new sections of the Restatements as the American Law Institute promulgates them.

See, e.g., Cramer v. Starr, --- Ariz. ---, 375 P.3d 69, 2016 WL 3917096 at *5 ¶ 21

(Ariz. July 18, 2016) (Arizona “generally will embrace the Restatement if it

prescribes ‘a sound and sensible rule.’”) (quoting Webster v. Culbertson, 158 Ariz.

159, 162, 761 P.2d 1063, 1066 (1988)).

A recovery is available for emotional harm if the person suffering the harm

has “contemporaneously perceived the events that caused physical harm to the

third person.” Id. at 201, cmt. e. In mid-morning on July 16, 2007, Mark Monje

saw that his son cried for a couple of minutes, did not seem “to be right,” and then

started throwing up uncontrollably, with Aqua Dots in the vomit. In addition, his


35

son was going in and out of consciousness. Mark rushed his son to Mercy Gilbert

Medical Center, where several Aqua Dots were recovered from his son’s airway.

Mark’s son was then intubated and taken to Phoenix Children’s Hospital, where he

remained until discharged home two days later.32 Mark may not have seen his son

eat the Aqua Dots, but Mark did contemporaneously perceive the terrible events

that caused his son to suffer physical harm.

There are other requirements. For instance, a recovery for emotional distress

is only proper if the person suffering the emotional harm is, like Mark’s father, a

close family member. Restatement (Third) of Torts: Liability for Physical and

Emotional Harm at 202, cmt. f (2012). The primary victim (the son) must suffer

serious bodily injury. Id. at 205, cmt. l. An injury like the one the son suffered has

“immediate medical treatment” meeting that requirement. Id. at 206, cmt. l.

The emotional harm need not create physical symptoms in the person who

contemporaneously witnessed the events that caused physical harm to another. Id.

at 200, cmt. a. Recovery for emotional harm is not restricted “to cases in which the

emotional harm has caused illness or other bodily manifestations” because the

“contemporaneous perception of serious bodily injury or death to a close family

member is sufficient to provide confidence in the genuineness of the harm.” Id. at

205, cmt. i. Finally, the injury to the third person “must occur in a sudden and

32 Spin Master Expert Report at 4 (12/19/2013) (Doc 378-06, ER-195).


36

dramatic manner.” Id. at 206, cmt. m. The rapid onset of the poisoning symptoms

and the rush to the hospital emergency room to save his son’s life were sudden,

dramatic, and terrifying events for Mark Monje—events that inflicted emotional

harm on him and left him an emotional wreck.

6. The district court should have let Mark Monje’s loss-of-consortium

claim go to the jury.

Moose Enterprises recognizes that, under traditional Arizona law, a parent

can assert a loss-of-consortium claim when the parent’s child has suffered a

“severe, permanent and disabling injury.” Second Brief on Cross-Appeal at 53

(06/13/15) (Dkt. Entry 45) (quoting Pierce v. Casas Adobes Baptist Church, 162

Ariz. 269, 272, 782 P.2d 1162, 1165 (1989)). If the Monjes are correct in their

contention that there was admissible evidence of injury beyond the immediate loss

of consciousness, respiratory distress, vomiting, and other acute symptoms ending

in a two-day stay for the Monje’s son at a hospital, Mark could make a claim for

loss of consortium.

But what about a shorter interference with a parent’s normal relationship

with a child, such as that caused by vomiting, unconsciousness, and coma followed

by a two-day hospitalization? Will Arizona law let a parent bring a loss-of-

consortium claim under those circumstances? Some courts have held that an

actionable loss of consortium can “be as minor and transient as a wife’s losing a

month's help from her husband in mowing the lawn and washing the dishes and


37

grooming the cat.” Niehus v. Liberio, 973 F.2d 526, 534 (7th Cir. 1992).

There seems to be no logical or public-policy reason to deny a recovery for a

temporary loss of consortium if the evidence establishes a significant interference

with the normal parent-child relationship that has clearly caused the parent to lose

the affection, companionship, and love of the parent’s child. A temporary loss of

consortium will necessarily limit loss-of-consortium damages, but the harm to the

parent, while transitory, can still be wrenching.

Arizona law should recognize that the right to bring a claim for short-term

loss of consortium, just as it has recognized a claim for long-term loss of

consortium. On the other hand, there may be no need to predict that progress in the

present case, where there was evidence from which the trier of fact could have

concluded that the Monjes’ son suffered permanent neurological injuries resulting

in a permanent loss of consortium.

7. The district court should have let Mark Monje’s claim for his son’s past

and future medical expenses go to the jury.

Because of the permanent neurological injuries that Mark Monje’s son

suffered, Mark sought medical-expenses damages for medical care beyond the

initial hospitalization for the acute injuries. The trial court denied a recovery for

those damages. The Arizona Supreme Court, however, has held that “the right to

recover pre-majority medical expenses belongs to both the injured minor and the

parents.” Estate of DeSela v. Prescott Unified School District No. 1, 226 Ariz. 387,


38

390 ¶ 15, 249 P.3d 767, 770 (2011). The district court therefore erred in refusing to

let Mark Monje pursue a claim for his son’s past and future medical expenses.

8. The district court should not have applied judicial estoppel to bar Mark

Monje’s claims for medical-expense, loss-of-consortium, and emotional-

distress damages.

The district court relied on judicial estoppel in ordering that Mark Monje

could not bring personal-injury claims for (a) his own emotional distress, (2) his

own loss of consortium, and (3) his son’s past and future medical expenses. Mark

inadvertently had not declared those personal-injury claims as bankruptcy-estate

assets when filing for Chapter 7 bankruptcy on March 10, 2009 (Doc 442 at 16:25

to 19:16, ER 029 to ER 032).

“Bankruptcy-related judicial estoppel arises when a plaintiff who has filed

bankruptcy pursues a civil cause of action that was not disclosed to the bankruptcy

court.”33 Moose Enterprises implies that Mark Monje should have known that a

personal-injury claim was a bankruptcy asset because he had earned a finance

degree and had worked as a financial advisor. Second Brief on Cross-Appeal at 54-

55 (06/13/16) (Dkt. Entry 45). But there is no evidence that Mark understood his

speculative or contingent personal-injury claims were any sort of bankruptcy-estate

asset. For consumers in bankruptcy, the error is common. See Angela Scoifforo,

33 Calli A. Turner, Inadvertence or Unfair Advantage: The Fifth Circuit’s

and Texas Supreme Court’s Applications of Judicial Estoppel Following a

Bankruptcy Non-disclosure and How a PACER Search Can Spare the Cleanup, 45

Tex. Tech L. Rev. Online Ed. 131, 133 (2012).


39

Mark C. Leffler, and Emily Fort, Scheduling and Protecting Personal Injury and

Other Causes of Action in Bankruptcy Cases, 64 Va. Law. 24 (Feb. 2016).

That is also a common (one-time-only and spectacularly unforgettable) error

for personal-injury lawyers. See, e.g., Ann K. Chapman & Douglas R. Ticks,

Oregon State Bar, Personal Injury Claims and Bankruptcy, 103 In Brief 1 (Feb.

2008). After all, until burned once, many personal-injury lawyers do not know that

a personal-injury claim of a client in bankruptcy is an asset of the bankruptcy

estate and that the bankruptcy court needs to grant permission to pursue the claim

in a state or federal personal-injury lawsuit.

But applying judicial estoppel to an ignorant bankrupt consumer (like Mark

Monje) does far more than punish that bankrupt consumer. Even if Mark were

trying to cheat his creditors—which he was not—punishing Mark does no one any

good. Applying judicial estoppel penalizes Mark’s bankruptcy creditors, who

completely forfeit any chance to collect (up to the limit of their claims, if there

were a large personal-injury damages recovery) from the personal-injury damages

Mark might have been able to collect from the tortfeasors who injured him. That

use of judicial estoppel makes no legal, equitable, or logical sense. It gives a

windfall to the tortfeasors; harms Mark by depriving him of the right to pursue

claims for past and future medical expenses and for other damages; and severely

injures Mark’s bankruptcy creditors.


40

The district court erred by applying judicial estoppel against Mark Monje to

prevent him from asserting claims for loss-of-consortium, medical-expense, and

emotional-distress damages.

The Monjes submit that courts should only apply legal doctrines like judicial

estoppel when they make sense. In this case, where there is no evidence that Mark

Monje meant to bamboozle the bankruptcy court or bilk his bankruptcy creditors,

applying judicial estoppel to “vindicate” the legal system and punish Mark does no

one any good—other that giving a gift to Spin Master and Moose Enterprises.

The United States Supreme Court itself does “not question that it may be

appropriate to resist application of judicial estoppel ‘when a party’s prior position

was based on inadvertence or mistake.’” New Hampshire v. Maine, 532 U.S. 742,

753 (2001) (quoting John S. Clark Co. v. Faggert & Frieden, P.C., 65 F.3d 26, 29

(4th Cir. 1995) (“The vice which judicial estoppel prevents is the cold

manipulation of the courts to the detriment of the public interest. It is

inappropriate, therefore, to apply the doctrine when a party’s prior position was

based on inadvertence or mistake.”)).

In New Hampshire, the Supreme Court also cited this Court’s 1989 case

explaining that judicial estoppel has never been applied when a party’s assertions

were based on mistake or inadvertence. New Hampshire, 532 U.S. at 753 (citing In

re Corey, 892 F.2d 829, 836 (9th Cir. 1989)).


41

This Court has likewise more recently suggested that “rather than applying a

presumption of deceit, judicial estoppel requires an inquiry into whether the

plaintiff’s bankruptcy filing was, in fact, inadvertent or mistaken, as those terms

are commonly understood.” Ah Quin v. County of Kauai Department of

Transportation, 733 F.3d 267, 276 (9th Cir. 2013) (emphasis added). This Court

also held that, if a plaintiff’s “bankruptcy omission was mistaken, the application

of judicial estoppel in this case would do nothing to protect the integrity of the

courts, would inure to the benefit only of an alleged bad actor, and would eliminate

any prospect that [the plaintiff’s] unsecured creditors might have of recovering.”

Id. That reasoning makes good sense and good public policy.

In our case, the bankruptcy Trustee tried to persuade the district court to let

Mark Monje’s personal-injury claims move forward. The bankruptcy Trustee filed

a motion to substitute the bankruptcy Trustee as a party plaintiff or to intervene in

the case (Doc 606). The bankruptcy Trustee explained that he had filed the motion

to “protect and prosecute the Monje Bankruptcy Estate’s Claim” (Doc 606 at 2:20

to 3:1). The bankruptcy Trustee explained that the goal was to “benefit [the]

creditors of the bankruptcy estate,” the same creditors whose interests the district

court was concerned about vindicating when it granted the judicial-estoppel motion

(Doc 606 at 4:15-18). But the district court denied the bankruptcy Trustee’s motion

(Doc 648 at 2).


42

The Monjes submit that, under the inadvertence principle recognized in the

New Hampshire, Ah Quin, and In re Corey cases, the district court erred in

applying judicial estoppel against Mark Monje to prevent him (and the bankruptcy

Trustee, for that matter) from asserting claims for (a) Mark’s own emotional

distress, (2) his own loss of consortium, and (3) his son’s past and future medical

expenses.

9. The permanent decline of the neurological health of the Monje’s son is

not a mere coincidence. Before eating the Aqua Dots he was a typical

child; after eating the Aqua Dots he was not a typical child. After eating

the Aqua Dots he has suffered from permanent neurological problems.

Expert testimony merely confirms the causal connection and helps to

dispel the defense of coincidence.

The long-lasting neurological problems that the Monje’s son suffered did not

exist before he ate the Aqua Dots. Their appearance after he ate the Aqua Dots is

no coincidence. Expert testimony based on the son’s personal history, medical

records and facts, diagnostic tests, personal examination, and direct observation

supports that conclusion.

In Arizona, a medical opinion on causation may be based on the victim’s

personal history, medical records, medical facts, diagnostic tests, personal

examination, or direct observations. Royal Globe Insurance Co. v. Industrial

Commission, 20 Ariz. App. 432, 434, 513 P.2d 970, 972 (1973); Spector v.

Spector, 17 Ariz. App. 221, 226, 496 P.2d 864, 869 (1972). Because positive

knowledge about medical causation is impossible, “the fact that one opinion is


43

expressed more positively than another does not require that it be given more

weight” and a testifying “doctor’s opinion does not have to be positive to be given

some value as evidence.” Harbor Ins. Co. v. Industrial Commission, 25 Ariz. App.

610, 612, 545 P.2d 458, 460 (1976).

The defense attacks causation by attacking the Monjes’ toxicology expert,

Dr. Richard Parent. It is true that Dr. Parent had first thought that a lack of oxygen

(anoxia) after the Monje’s son ate the Aqua Dots and passed out was the main

causative factor in the son’s post-Aqua-Dots-eating neurological injuries.34 After

considering the available facts more closely, at his deposition Dr. Parent clarified

his original opinion by explaining that, although anoxia was a component of the

neurological injury, he now favored a biochemical or neurotoxic process to explain

the son’s post-ingestion neurological injuries.35

The district court, and the defense, incorrectly concluded that Dr. Parent had

repudiating anoxia as a possible causative factor. But that is incorrect. Dr. Parent

still believed that the son’s eating of the 1,4-butanediol contained in the Aqua Dots

product was a causative factor in the brain injury. In part, that was so because of

the resulting respiratory failure and consequent hypoxia and anoxia.36

Dr. Parent continued to opine that the Monjes’ son’s adverse neurological

34 Dr. Parent Expert Report at 5 (05/06/2013) (Doc 592-02). 35 Parent Depo. 33:9 to 34:3 (06/17/2014) (Doc 592-02). 36 Parent Depo. 101:21 to 102:4 (06/17/2014) (Doc 592-02).


44

symptoms were consistent with anoxia, although there was more going on. That is,

there were other processes involved as well that played a part in causing the child’s

severe and lasting neurological injuries.37 In particular, Dr. Parent opined that

respiratory distress and failure, which the Monjes’ son had suffered—and which is

a known result of GHB intoxication, results in anoxia or hypoxia, and in coma.38

Dr. Parent also opined that coma always has the potential for causing brain injury.39

The dose of GHB that the Monjes’ son took into his system when he ate the Aqua

Dots was, in Dr. Parent’s opinion, sufficient to produce the coma that the son

experienced.40 Indeed, no one has ever proffered any other cause for the coma.

One thing that Dr. Parent considered in reaching his opinions was the

striking change in the Monjes’ son. Before the Monjes’ son ate the Aqua Dots, he

was a normal kid. After eating the Aqua Dots, he was a neurologic wreck. We

covered this in the First Brief on Cross-Appeal, but for reference and in brief

summary, these are some of the striking post-eating-Aqua-Dots differences in the

Monjes’ son:

Before eating Aqua Dots, the Monjes’ son had been stringing words

together. But he could not even speak when he returned home from

the hospital.41

37 Parent Depo. 36:15-18; 40:17-25 (06/17/2014) (Doc 592-02). 38 Parent Depo. 76:9-24 to 77:16 (06/17/2014) (Doc 592-02). 39 Parent Depo. 80:6-9 (06/17/2014) (Doc 592-02). 40 Parent Depo. 101-2-10; 127:20-25; 129:8-14 (06/17/2014) (Doc 592-02). 41 Clinical Correlation Report (04/14/2011) (Doc 375-02, ER-164).


45

The Monjes’ son lost all language ability for about six months after

eating the Aqua Dots. The Monjes’ son still requires speech therapy.42

By the time the Monjes’ son was five years old, he had not adequately

developed the ability to communicate verbally, had become

impulsive, banged his head when frustrated, and could not control his

bowels.43

At age five, the Monjes’ son suffered from (1) language and speech

deficits, (2) decreased mental generalization, inference, and awareness

abilities, (3) poor executive function and impulsivity, (4) hand-eye

coordination difficulty, (5) neuropsychological effects, and (6) other

clinical symptoms.44

Other post-eating-Aqua-Dots symptoms included innervation to pain,

dyslexia, difficulty keeping attention on any tasks, balance problems,

deficits in fine motor control, damage to the thalamus, and impairment

in the senses of smell and taste.45

Additional post-eating-Aqua-Dots symptoms included hyperactivity,

emotional modulation problems (such as low frustration tolerance),

and poor and social interaction ability, such as keeping friends.46

That is not coincidence. Moose Enterprises and Spin Master admitted at trial

that they “shared responsibility for the consequences of [the Monjes’ son]

ingesting the Aqua Dots.” Second Brief on Cross-Appeal at 2 (06/13/16) (Dkt.

Entry 45). When the Monjes’ son ate Aqua Dots, the toxic effects were immediate

42 Dr. Cardenas Child Neurology Report at 1-2 (03/03/3011) (Doc 375-02). 43 Clinical Correlation Report (04/14/2011) (Doc 375-02, ER-164 to165). 44 Clinical Correlation Report (04/14/2011) (Doc 375-02, ER 164 to 166). 45 Beljan Depo. 55:23-25, 56:1-22, 57:13-18, 58:14-18, 63:22-25, 64:1-22,

65:2-20, 82:2-16, 83:1-21, 171:20-25, 172:1-8, 180:17-18, 190:1-8, 193:22-25,

194:1-25, 195:1 to 196:17, 209:9-12, 225:19 to 226:17 (05/04/2014) (Doc 389-2,

ER-046 to ER-056). 46 Pediatric Developmental Evaluation by Dr. Beljan 14 (04/27/2014) (Doc

389-21, ER-156).


46

and severe. At the case’s start, in fact, the district court told the jury that the

Monje’s son experienced major symptoms after eating Aqua Dots, “including

dizziness, vomiting, nausea, respiratory arrest, and coma or unconsciousness for

several hours as a result of the ingestion.”47 But the effects of eating Aqua Dots

have lingered. The Monjes’ son has never been the same. He suffers neurological

problems of a lasting nature that only started after eating Aqua Dots.

Common sense says it’s no fluke; expert opinion says it’s no coincidence.

The jurors should have been allowed to compare their common sense with Dr.

Parent’s toxicological causation opinions to decide if Aqua Dots caused the new—

and permanent—neurological symptoms or whether those neurological symptoms

were a bizarre coincidence. In Arizona, causation is generally for the jury to

decide. Ontiveros v. Borak, 136 Ariz. 500, 505, 667 P.2d 200, 205 (1983) (cause in

fact); Ritchie v. Krasner, 221 Ariz. 288, 298-99 ¶ 23, 211 P.3d 1272, 1281-82

(App. 2009) (proximate cause).

“Coincidences and ambiguous circumstances abound in life, but there is a

point on the continuum where a given set of coincidences and circumstances takes

on an appearance such that reasonable people can say that they discern the

likelihood of a design.” Pankratz v. Willis, 155 Ariz. 8, 15, 744 P.2d 1182, 1189

(App. 1987). The facts, circumstances, and evidence here are such that reasonable

47 Transcript at 32:9-12 (06/11/15), SER 068.


47

jurors could say that they discern causation between a neurologically healthy child

eating toxic beads and that same neurologically healthy child then becoming

neurologically unhealthy—permanently.

10. The general-causation/specific-causation distinction for expert-opinion

testimony is irrelevant in our case because we are dealing with one set of

toxicology opinions about one child injured in one poisoning incident.

The district court refused to admit Dr. Parent’s anoxic-causation expert

opinions to reach the jury because he was not expressing a “general causation

opinion” (Doc 595 at 3:13-17, ER 009). And the district court then excluded Dr.

Parent’s neurotoxin-causation expert opinions because Dr. Parent had repeatedly

explained he was not—naturally enough—offering a general-causation opinion

relevant to a general population of toxic victims in a one-toxic-victim case (Doc

595 at 4:19-20, ER 010).

Applying that sort of general-causation versus specific-causation analysis in

this case makes no sense. In fact, the focus on specific-causation versus general

causation testimony obscures the key question: Was it a civil wrong (tort) to put a

toxic chemical into toy beads little kids were certain to eat, and then sell those toy

beads in Arizona to a family whose little boy ate them and was harmed because of

that? Undeniably.

Even Moose Enterprises and Spin Master conceded fault. Indeed, what they

did was not just a lapse of judgment and a life-threatening tort, it was illegal. And


48

so the jury had no problem finding they had committed a tort and no problem

awarding serious damages for the frightening, severe initial symptoms that the

Monjes’ son suffered.

We have one specific child who suffered immediate harm (including nausea,

coma, labored respiration, intubation, and a two-day hospitalization) and who

arguably suffered permanent harm. We have facts and expert testimony to tie the

tortfeasors to the wrongs committed against that specific child. In fact, both Spin

Master and Moose Enterprises admitted to the jury that their toy beads had

sickened the Monjes’ son. The issue Dr. Parent addressed was whether the terrible

acute symptoms were the only harm that the toxic toy beads caused, when there

were specific indicia of lasting neurological injury that started when the Monjes’

son first ate the toxic toy beads. Why is there need to add a general-causation

expert opinion to the specific-causation expert opinion?

The Restatement of Torts’ latest version explains that “general causation”

and “specific causation” are only “categories” that “function as devices to organize

a court’s analysis, not as formal elements of the cause of action.” Restatement

(Third) of Torts: Liability for Physical and Emotional Harm § 28 cmt. (c)(1) at 405

(2010) (emphasis added).

General causation and specific causation “are not ‘elements’ of a plaintiff’s

cause of action, and in some cases may not require separate proof. So long as the


49

plaintiff introduces admissible and sufficient evidence of factual causation, the

burden of production is satisfied.” Id. cmt. (c)(1) at 405 (emphasis added). The

Monjes satisfied the burden of producing expert testimony on factual causation

when they presented admissible and sufficient evidence—as through Dr. Parent—

demonstrating the specific factual proximate cause of permanent neurological

injuries to one child as the result of ingesting a known toxic substance that nearly

killed him and left him permanently injured.

Indeed, “the evidence bearing on specific causation may be sufficient to

pretermit the need to assess general causation.” Id. cmt. (c)(3) at 407. This case,

where one child ate admittedly toxic beads, is a case where any need to assess

general causation has been pretermitted. The district court therefore erred, as a

matter of law, in rejecting Dr. Parent’s specific-causation opinions because he

proffered no general-causation opinions—in a case where those general-causation

opinions were not needed.

Dr. Parent merely testified that the toxic toy beads had caused specific

anoxic effects (from respiratory distress) and specific neurotoxic effects (expressed

in acute seizures and coma and then in long-term neurological harm) in one

specific child. All Dr. Parent needed to address was causation for specific injuries

suffered by a specific person, which he did. The jury had the right to hear and

weigh his opinions. In Arizona law, it “is not necessary that the expert have the


50

highest possible qualifications or highest degree of skill or knowledge . . . to

testify.” Lay v. City of Mesa, 168 Ariz. 552, 554, 815 P.2d 921, 923 (App. 1991).

The strength of an expert’s qualifications goes to the weight the jury may

give to the expert’s testimony, not its admissibility. State v. Davolt, 207 Ariz. 191,

210, ¶ 70, 84 P.3d 456, 475 (2004). The district court erred by refusing to let Dr.

Parent state his specific-causation opinions for the jury’s evaluation and judgment.

Conclusion

The trial court erred by refusing to let the jury assess: (1) punitive damages;

(2) damages for the permanent injuries the Monjes’ son suffered after eating the

toxic toy beads; and (3) Mark Monje’s “personal injury” damages (a) for his own

emotional distress, (b) for his own loss of consortium; and (c) for his son’s past

and future medical expenses.

The Monjes respectfully ask the Court to reverse the district court’s

decisions denying them the opportunity to present evidence and argument to the

jury supporting the award of these three important types of damages, and to award

to them the reasonable costs they have incurred in this appeal.

DATED this 12th day of August, 2016.



David L. Abney



51

Certificate of Compliance with

Federal Rule of Appellate Procedure 32(a)(7)(B)

This brief complies with the type-volume limitations of Fed. R. App. P.

32(a)(7)(B)(i) and 29(d). The brief contains 10,148 words, excluding parts of the

brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii), complies with the typeface

rules of Fed. R. App. P. 32(a)(5), and complies with the typestyle rules of Fed. R.

App. P. 32(a)(6), since it uses proportionally spaced 14-point Times New Roman

typeface using Microsoft Word 2003-2007.




David L. Abney


Certificate of Service

I hereby certify I electronically filed the foregoing brief with the Clerk of the

U.S. Court of Appeals for the 9th Circuit using the appellate CM/ECF system on

this 12th day of August, 2016, all participants in the case are registered CM/ECF

users, and service will be accomplished by the appellate CM/ECF service.




David L. Abney



52

Certificate for Brief in Paper Format

9th Circuit Case No. 15-16480

I, David L. Abney, certify that the written version of this brief that will be

submitted will be identical to the version submitted electronically on Aug. 12,

2016, and that a copy of the written version of this brief was mailed on this same

date to:

Richard W. Mear, Esq., THE CAVANAGH LAW FIRM, 1850 N. Central Ave.,

Ste. 2400, Phoenix, AZ 85004-4527, [email protected], (602) 322-

4143, Attorneys for Defendants-Appellees Spin Master, Inc., Spin Master Ltd.,

Toys “R” Us-Delaware.

Robert C. Ashley, Esq., Carl F. Mariano, Esq., LEWIS BRISBOIS BISGAARD &

SMITH LLP, 2929 N. Central Ave., Ste. 1700, Phoenix, AZ 85012-2761,

[email protected], [email protected], (602) 385-

1059, (602) 385-7845, Attorneys for Defendant-Appellant.




David L. Abney



Nos. 15-16480 and 15-16567

IN THE UNITED STATES COURT OF APPEALS


MARK MONJE, BETH MONJE, individually and on behalf of their minor son, R.M.,

Plaintiffs—Appellants, v.

SPIN MASTER, INC., SPIN MASTER, LTD., TOYS “Я” US, INC., MOOSE ENTERPRISES PTY., LTD.,

Defendants—Appellees.

MARK MONJE, BETH MONJE, individually

and on behalf of their minor son, R.M., Plaintiffs—Appellees,

v. SPIN MASTER, INC., SPIN MASTER, LTD.,

TOYS “Я” US, INC., Defendants,

and MOOSE ENTERPRISES PTY., LTD.,

Defendant—Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA JOHN J. TUCHI, DISTRICT JUDGE • CASE NO. 2:09-CV-01713-JJT

APPELLEES’ BRIEF OF SPIN MASTER, INC., SPIN MASTER, LTD., AND TOYS “Я” US, INC.

HORVITZ & LEVY LLP PEDER K. BATALDEN

JOHN F. QUERIO 15760 VENTURA BOULEVARD, 18TH FLOOR

ENCINO, CALIFORNIA 91436-3000 (818) 995-0800

THE CAVANAGH LAW FIRM RICHARD J. WOODS RICHARD W. MEAR

1850 NORTH CENTRAL, SUITE 2400 PHOENIX, ARIZONA 85004

(602) 322-4000

ATTORNEYS FOR DEFENDANTS—APPELLEES SPIN MASTER, INC., SPIN MASTER, LTD.,

AND TOYS “Я” US, INC.


CORPORATE DISCLOSURE STATEMENT

Spin Master Corporation, a publicly owned company, owns

100 percent of the common stock of Spin Master, Ltd., which owns

100 percent of the common stock of Spin Master, Inc.

Toys “Я” Us, Inc. does not have a parent corporation. Three entities

own 10 percent or more of its common stock. Those three entities are:

Affiliates of Bain Capital Investors, LLC, Toybox Holdings, LLC (whose

members are affiliated with KKR & Co. L.P.), and Vornado Truck, LLC.

More detailed information about the ownership of these entities can be

found at the following link: https://goo.gl/jpAxGC.


https://goo.gl/jpAxGC

i

TABLE OF CONTENTS Page

CORPORATE DISCLOSURE STATEMENT ........................................... 1

TABLE OF AUTHORITIES ..................................................................... vi

INTRODUCTION ...................................................................................... 1

JURISDICTIONAL STATEMENT ........................................................... 4

STATEMENT OF ISSUES PRESENTED ................................................ 4

STATEMENT OF THE CASE .................................................................. 5

A. A toy called Aqua Dots is developed by Moose and manufactured in China by JSSY. The toy is distributed in the United States by Spin Master, and sold by retailers such as Toys “Я” Us. ................................................. 5

B. Unbeknownst to Moose and Spin Master, JSSY replaces the intended ingredient 1,5-pentanediol with 1,4-butanediol, which metabolizes into GHB when ingested. .................................................................................. 6

C. Before and after placing Aqua Dots on the market, Spin Master submits the product for safety and toxicity testing. ..................................................................................... 6

D. Spin Master receives one report of ingestion of Aqua Dots before R.M.’s incident, and it does not involve an injury. ...... 8

E. R.M. ingests a number of Aqua Dots beads while under his father’s care. R.M. vomits and loses consciousness. He is brought to the hospital and fully recovers. ................... 9

F. No doctor who treats R.M. at the hospital observes signs of oxygen deprivation or brain injury. .................................. 10


ii

G. Spin Master learns of JSSY’s chemical substitution in October 2007, and shortly thereafter voluntarily recalls all Aqua Dots products from the American market. ............ 11

H. R.M.’s parents report no further consequences from R.M.’s Aqua Dots ingestion until the day after the toy is recalled. None of R.M.’s treating neurologists subsequently diagnose R.M. with a brain injury. ................ 12

I. R.M.’s parents file this lawsuit in Arizona state court against Moose, Spin Master, and TRU, who remove to federal court. ......................................................................... 13

J. Mark Monje declares bankruptcy and secures a discharge of his debts, but he fails to list his derivative claims in this case on his asset disclosure schedules. .......................... 13

K. Plaintiffs’ expert toxicologist, Richard Parent, submits a report stating that R.M. suffered anoxia/hypoxia from ingesting Aqua Dots, resulting in permanent brain injury. .................................................................................... 14

L. At his deposition, Parent disavows the anoxia/hypoxia theory from his report and embraces a new causation theory. He admits that his expert report is silent on general causation. ................................................................. 15

M. Plaintiffs’ expert psychiatrist, Dr. Joseph Wu, belatedly discloses an opinion that R.M. suffered an idiosyncratic reaction to GHB in Aqua Dots that caused permanent brain injury. .......................................................................... 17

N. The district court excludes Dr. Wu’s belated causation opinion as untimely. .............................................................. 19

O. The district court grants Defendants partial summary judgment on punitive damages and judicially estops Mark Monje from pursuing his derivative claims. ............... 20

P. The district court initially denies partial summary judgment on causation of permanent brain injury in R.M.. 22


iii

Q. The district court ultimately excludes Parent’s anesthesia-induced coma causation opinion as untimely and unreliable. ...................................................................... 23

R. The district court precludes Dr. Wu from testifying about causation of permanent brain injury. ................................... 24

S. The district court excludes Parent’s remaining anoxia/hypoxia causation opinion, as well as Plaintiffs’ newly proffered neurotoxin causation opinion, and grants partial summary judgment on causation of permanent brain injury. .......................................................................... 25

T. The district court denies Mark Monje’s last-minute attempts to undo its judicial estoppel ruling. ....................... 28

U. The jury awards Plaintiffs substantial damages after trial. The district court enters judgment, and Plaintiffs appeal. ................................................................................... 29

SUMMARY OF ARGUMENT ................................................................. 30

ARGUMENT ........................................................................................... 33

I. THE DISTRICT COURT PROPERLY EXCLUDED PARENT’S CAUSATION OPINIONS AS UNTIMELY AND UNRELIABLE. ............................................................................... 33

A. District courts have wide discretion to exclude expert testimony that is untimely disclosed or unreliable. ............. 33

B. The district court properly excluded Parent’s neurotoxin/ anesthesia-induced coma causation opinion as untimely. ... 35

C. The district court properly excluded Parent’s other causation opinions as unreliable. ......................................... 37

1. Parent disavowed the anoxia/hypoxia theory, which was unsupported by evidence and incapable of explaining how R.M. could have suffered permanent brain injury. .............................................. 37


iv

2. Parent’s neurotoxin theory was unreliable. ................ 39

D. Plaintiffs’ attempt to eliminate the general causation requirement fails. .................................................................. 43

E. Plaintiffs’ argument that Arizona causation law requires a different result is incorrect. ............................................... 47

II. THE DISTRICT COURT CORRECTLY GRANTED SUMMARY JUDGMENT ON PUNITIVE DAMAGES. ................ 49

A. To obtain punitive damages under Arizona law, Plaintiffs must show (by clear and convincing evidence) that Defendants acted with an evil mind. .................................... 49

B. The district court correctly concluded that no reasonable jury could find that Spin Master acted with an evil mind. .. 51

C. Plaintiffs’ six arguments for punitive damages are meritless. ............................................................................... 53

III. THE DISTRICT COURT CORRECTLY ESTOPPED MARK MONJE FROM PURSUING HIS DERIVATIVE CLAIMS. ......... 59

A. Legal standard and standard of review. ............................... 59

B. Mr. Monje failed to disclose his derivative claims on his bankruptcy schedules, then sought to pursue those claims in this action. ............................................................. 61

C. Alternatively, this Court should affirm in full the summary judgment on the derivative claims because they lack merit. ............................................................................. 64

IV. THIS COURT SHOULD AFFIRM THE JUDGMENT IN FAVOR OF TRU. ............................................................................ 65

CONCLUSION ........................................................................................ 67

STATEMENT OF RELATED CASES .................................................... 68

CERTIFICATION OF COMPLIANCE ................................................... 69


v

TABLE OF AUTHORITIES

Page(s)

CASES

Arellano v. Primerica Life Ins. Co., 332 P.3d 597 (Ariz. Ct. App. 2014) ..................................................... 56

Avila v. Willits Envtl. Remediation Tr., 633 F.3d 828 (9th Cir. 2011) ......................................................... 38, 43

Barker v. Bellamy, No. 00–6019–CV–SW–GAF, 2002 WL 34698910 (W.D. Mo. Dec. 6, 2002) ...................................................................... 18

BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996) ............................................................................. 57

Claar v. Burlington N. R.R. Co., 29 F.3d 499 (9th Cir. 1994) ............................................... 38, 43, 47, 48

Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993) ..................................................................... passim

Daubert v. Merrell Dow Pharm., Inc., 43 F.3d 1311 (9th Cir. 1995) ................................. 35, 39, 40, 42, 43, 47

Domingo ex rel. Domingo v. T.K., 289 F.3d 600 (9th Cir. 2002) ............................................. 35, 42, 43, 45

Fondiller v. Robertson (In re Fondiller), 707 F.2d 441 (9th Cir. 1983) ............................................................... 62

Gasoline Prods. Co. v. Champlin Ref. Co., 283 U.S. 494 (1931) ............................................................................. 66

Gen. Elec. Co. v. Joiner, 522 U.S. 136 (1997) ........................................................... 34, 35, 37, 43

Golden v. CH2M Hill Hanford Grp., Inc., 528 F.3d 681 (9th Cir. 2008) ......................................................... 38, 43


vi

Goodman v. Staples The Office Superstore, LLC, 644 F.3d 817 (9th Cir. 2011) ............................................................... 33

Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778 (9th Cir. 2001) ................................................... 60, 63, 64

Hay v. First Interstate Bank of Kalispell, N.A., 978 F.2d 555 (9th Cir. 1992) ......................................................... 60, 64

In re Hanford Nuclear Reservation Litig., 292 F.3d 1124 (9th Cir. 2002) ....................................................... 38, 43

In re Welding Fume Prods. Liab. Litig., No. 1:03-CV-17000 MDL 1535, 2005 WL 1868046 (N.D. Ohio Aug. 8, 2005) ..................................................................... 42

Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999) ................................................................. 35, 39, 45

Lies v. Farrell Lines, Inc., 641 F.2d 765 (9th Cir. 1981) ............................................................... 66

Linthicum v. Nationwide Life Ins. Co., 723 P.2d 675 (Ariz. 1986) .............................................................. 50, 53

Lust v. Merrell Dow Pharm., Inc., 89 F.3d 594 (9th Cir. 1996) ..................................................... 35, 42, 45

McClain v. Metabolife Int’l, Inc., 401 F.3d 1233 (11th Cir. 2005) ........................................................... 45

Medasys Acquisition Corp. v. SDMS, P.C., 55 P.3d 763 (Ariz. 2002) ...................................................................... 50

New Hampshire v. Maine, 532 U.S. 742 (2001) ....................................................................... 59, 60

Penney v. Praxair, Inc., 116 F.3d 330 (8th Cir. 1997) ............................................................... 18

Pierce v. Casas Adobes Baptist Church, 782 P.2d 1162 (Ariz. 1989) ............................................................ 64, 65


vii

Piper v. Bear Med. Sys., Inc., 883 P.2d 407 (Ariz. Ct. App. 1993) ............................. 50, 51, 54, 55, 58

Primiano v. Cook, 598 F.3d 558 (9th Cir. 2010) ............................................................... 47

Rawlings v. Apodaca, 726 P.2d 565 (Ariz. 1986) ........................................................ 49, 50, 52

Rodriguez v. Robbins, 803 F.3d 502 (9th Cir. 2015) ............................................................... 62

Saucedo ex rel. Sinaloa v. Salvation Army, 24 P.3d 1274 (Ariz. Ct. App. 2001) ............................................... 51, 54

Smith v. Marsh, 194 F.3d 1045 (9th Cir. 1999) ....................................................... 36, 66

State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003) ............................................................................. 57

Thompson v. Better-Bilt Aluminum Prods. Co., 832 P.2d 203 (Ariz. 1992) .................................................................... 57

United States v. City of Oakland, 958 F.2d 300 (9th Cir. 1992) ............................................................... 63

United States v. Hinkson, 585 F.3d 1247 (9th Cir. 2009) (en banc) ....................................... 33, 34

Volz v. Coleman Co., 748 P.2d 1191 (Ariz. 1987) .......................................... 50, 51, 54, 55, 58

STATUTES

Restatement (Third) of Torts: Liability for Physical and Emotional Harm (Am. Law Inst. 2005) § 28(a), cmt. c(1) .................................................................................. 44 § 28(a), cmt. c(3) ............................................................................ 39, 46 § 28(a), Reporters’ Note, cmt. c(3) .......................................... 39, 44, 46


viii

RULES

9th Cir. Rule 28-2.2 ................................................................................... 4

Fed. R. App. P. 28(b)(1) ............................................................................. 4

Fed. R. Civ. P. rule 26 ................................................................................................. 23 rule 26(a)(2)(B) .................................................................................... 33 rule 37 ................................................................................................. 23 rule 37(c)(1) ......................................................................................... 33 rule 60(b) ............................................................................................. 28

Fed. R. Evid. rule 702 ....................................................................... 23, 34, 39, 43, 47 rule 702(b) ........................................................................................... 37


1

IN THE UNITED STATES COURT OF APPEALS


MARK MONJE, BETH MONJE, individually and on behalf of their minor son, R.M.,

Plaintiffs—Appellants, v.

SPIN MASTER, INC., SPIN MASTER, LTD., TOYS “Я” US, INC., MOOSE ENTERPRISES PTY., LTD.,

Defendants—Appellees.

MARK MONJE, BETH MONJE, individually

and on behalf of their minor son, R.M., Plaintiffs—Appellees,

v. SPIN MASTER, INC., SPIN MASTER, LTD.,

TOYS “Я” US, INC., Defendants,

and MOOSE ENTERPRISES PTY., LTD.,

Defendant—Appellant.

APPELLEES’ BRIEF OF SPIN MASTER, INC., SPIN MASTER, LTD., AND TOYS “Я” US, INC.

INTRODUCTION

R.M., the son of Plaintiffs Mark and Beth Monje, ingested some Aqua

Dots, a toy consisting of small colored beads. R.M. vomited and was

lethargic initially. But he was hospitalized, intubated, and soon


2

discharged after he recovered. Several doctors observed no abnormal

behavior. His parents reported no adverse consequences in the months

immediately following the incident. And R.M.’s pediatrician later gave

him a clean bill of health at his eighteen-month-old wellness examination.

The day after Aqua Dots were voluntarily recalled from the market,

however, the Monjes began reporting that R.M. had a brain injury and was

developmentally delayed. The Monjes later filed this action against

Defendants Moose Enterprises Pty., Ltd. (Moose), Spin Master, Ltd. and

Spin Master, Inc. (collectively, Spin Master), and Toys “Я” Us, Inc. (TRU).

Moose developed Aqua Dots, Spin Master distributed them in the

United States, and TRU was one of several retailers that sold the toy.

Spin Master had ordered numerous safety tests of Aqua Dots—including

an oral toxicity test on live animals—before and while distributing them in

the American market. Spin Master received only one report involving

ingestion of Aqua Dots before the incident here, and that report did

not involve adverse health effects or claims of toxicity.

As it happened, the Aqua Dots beads had been made in China by

JSSY, Ltd., and unbeknownst to Defendants, JSSY decided to switch an

ingredient in the product specification. A replacement chemical used by


3

JSSY metabolized, when ingested, into gamma-hydroxybutyrate (GHB),

which (in large doses) can cause short-term symptoms of lethargy,

vomiting, depressed respiratory function, and unconsciousness.

Here, prior to trial, the district court excluded Plaintiffs’ ever-

shifting expert testimony on causation because it was either unreliable or

untimely disclosed. The court also granted Defendants summary

judgment on punitive damages, ruling that they did not act with the “evil

mind” required under governing Arizona law because JSSY had

bamboozled them. Finally, the district court estopped Mr. Monje from

pursuing derivative claims—for medical expenses, loss of consortium, and

negligent infliction of emotional distress (NIED)—because he failed to

disclose them in prior bankruptcy proceedings.

Notwithstanding these adverse rulings, Plaintiffs proceeded to trial

on their remaining theories and won a substantial verdict against Moose

and Spin Master. Spin Master paid its portion of the judgment, but

Plaintiffs have appealed in an effort to win a new trial in which they might

recover even greater sums. The jury assigned no fault to TRU, and

Plaintiffs do not contest that finding in this appeal. For the reasons

explained below, this Court should deny a new trial and affirm. The


4

subset of the district court’s rulings challenged in this appeal are legally

correct or proper exercises of discretion.

JURISDICTIONAL STATEMENT

Spin Master and TRU are satisfied with Plaintiffs’ jurisdictional

statement. See Fed. R. App. P. 28(b)(1); 9th Cir. R. 28-2.2.

STATEMENT OF ISSUES PRESENTED

1. Did the district court abuse its discretion in excluding the

opinion testimony of Plaintiffs’ toxicology expert (Richard Parent) that

R.M.’s ingestion of Aqua Dots caused permanent brain injury?

2. Did the district court err in granting partial summary

judgment to Spin Master and TRU on the issue of punitive damages

because Plaintiffs failed to raise a triable issue of fact that, by clear and

convincing evidence, they acted with an evil mind under Arizona law?

3. Did the district court err in granting partial summary

judgment on Mark Monje’s derivative claims for medical expenses, loss of

consortium, and NIED on the ground of judicial estoppel due to

Mr. Monje’s failure to disclose those claims in his bankruptcy case?


5

4. Should the judgment for TRU be affirmed on the separate basis

that the jury assigned TRU no fault and Plaintiffs have not argued any

ground for disturbing the judgment for TRU?

STATEMENT OF THE CASE

A. A toy called Aqua Dots is developed by Moose and manufactured in China by JSSY. The toy is distributed in the United States by Spin Master, and sold by retailers such as Toys “Я” Us.

Aqua Dots was a children’s toy that consisted of beads of different

colors; when placed in a tray in various shapes and designs and sprayed

with water, the beads stuck together. (2 ER 88:1-5, 92-93, 216 (¶ 6); 1 SER

21 (¶ 16).) It was labeled for children aged four years and older. (2 SER

431:10-432:12.) In accordance with federal regulations, Aqua Dots’

packaging bore labels stating “CHOKING HAZARD,” “DO NOT EAT,” and

“‘for ages 4+.’” (2 SER 382-88, 431:10-15; 4 SER 811.)

Moose created and developed the toy, which was originally sold in

Australia as “Bindeez.” (1 SER 19 (¶ 7), 21 (¶ 17).) Moose contracted with

Spin Master to distribute the product in the United States as “Aqua Dots.”

(Id.; 4 SER 843.) Aqua Dots were sold to American consumers by

numerous retailers, including TRU. (1 SER 19 (¶ 6), 20 (¶ 11), 22 (¶ 20).)


6

B. Unbeknownst to Moose and Spin Master, JSSY replaces the intended ingredient 1,5-pentanediol with 1,4-butanediol, which metabolizes into GHB when ingested.

In late 2006, pursuant to its contract with Moose, Chinese company

JSSY, Ltd. started manufacturing the Bindeez/Aqua Dots product. (2 SER

438, 443:16-444:6.) Moose’s chemical formulation called for

1,5-pentanediol to be used in molding the beads. (1 SER 55.) Instead,

from the beginning of production and without the authorization or

knowledge of Moose or Spin Master, JSSY substituted 1,4-butanediol for

1,5-pentanediol in the manufacturing process. (2 ER 216 (¶ 9); 1 SER 55;

2 SER 438-39.) When ingested, 1,4-butanediol metabolizes in the human

body into GHB, a substance found in the central nervous system that, in

high doses, can cause lethargy, vomiting, depressed respiratory function,

and unconsciousness. (1 SER 71-72, 80-82.)

C. Before and after placing Aqua Dots on the market, Spin Master submits the product for safety and toxicity testing.

Spin Master did not distribute Aqua Dots until it had submitted the

product for a battery of safety and toxicity tests by independent

laboratories certified by the Consumer Product Safety Commission

(CPSC). (2 SER 394:21-395:20, 397:6-399:25; 3 SER 532-60, 574-675, 718-


7

92, 800-06; 4 SER 812-13, 815-16.) These tests concluded that Aqua Dots

were safe and non-toxic, and that they complied with the standards of the

American Society for Testing and Materials (ASTM) and with all federal

toy safety standards, including Federal Hazardous Substances Act (FHSA)

regulations. (2 SER 398:13-399:25; 3 SER 534-808; 4 SER 812-13, 815-16.)

Once Aqua Dots passed these tests, Spin Master began distributing Aqua

Dots in the United States in April 2007. (2 SER 407 (100:19-101:5).)

Spin Master also directed several agencies to perform toxicological

risk assessments and production audits while the product was being

distributed (April through September 2007). (3 SER 534-808; 4 SER 816,

822-35.) These audits occurred on average more than once per week,

though the CPSC recommended only one audit annually. (4 SER 816.)

In June 2007, one month before R.M.’s ingestion, Spin Master hired

an independent laboratory to perform an acute oral toxicity test using live

animals exposed to 5,000 mg/kg of Aqua Dots. (2 SER 405:18-409:9; 4 SER

819-20.) The results were favorable: “All animals survived, gained body

weight and appeared active and healthy during the study. There were

no signs of gross toxicity, adverse pharmacological effects or abnormal


8

behavior. Based on these results, the test substance is not considered to

be toxic according to [federal regulations].” (4 SER 820.)

D. Spin Master receives one report of ingestion of Aqua Dots before R.M.’s incident, and it does not involve an injury.

Prior to R.M.’s ingestion of Aqua Dots, Spin Master received only one

report involving a child ingesting Aqua Dots. (4 SER 837.) That report

was from a mother who had called Spin Master because her child had

ingested a few Aqua Dots beads; the mother inquired whether the beads

were toxic. (Id.) Based on its understanding at that time, Spin Master

told the mother that the beads were non-toxic. (Id.) The mother stated

the child was not suffering any adverse reaction, and Spin Master asked

her to call back if that changed. (Id.) She never called back. (See id.)

Moose had received isolated reports from customers in foreign

markets regarding ingestion of Bindeez (4 SER 845), but Moose did

not inform Spin Master of those incidents before R.M.’s ingestion (1 SER

63 (170:4-12); 2 SER 414:18-25, 416:15-418:20, 418:9-419:1, 421:9-422:6,

426:5-428:21). In any case, most foreign reports were unrelated to toxicity

(they involved, for example, airway blockage, skin rash, and the insertion

of beads into the nose or ear). (2 SER 366-70; 4 SER 845.) In response to


9

the risk of choking, Moose ordered a bittering agent added to the beads to

discourage children from ingesting them. (1 SER 61 (162:16-163:16),

62 (168:13-20), 63 (169:21-170:3).)

E. R.M. ingests a number of Aqua Dots beads while under his father’s care. R.M. vomits and loses consciousness. He is brought to the hospital and fully recovers.

On the morning of July 16, 2007, while under the care of his father,

sixteen-month-old R.M. began exhibiting symptoms of lethargy, vomiting,

and altered consciousness. (1 SER 215, 218, 223.) R.M.’s older brother

said that R.M. had ingested some Aqua Dots, and Mr. Monje noticed some

beads in R.M.’s vomit. (1 SER 215, 218.) Mr. Monje took R.M. to Mercy

Gilbert Medical Center. (Id.) R.M. was intubated at Mercy Gilbert, then

transported to Phoenix Children’s Hospital. (1 SER 215, 220-21.) During

intubation, a few beads were found in R.M.’s airway. (1 SER 215, 223.)

In the intensive care unit at Phoenix Children’s, R.M. regained full

consciousness approximately fifteen to twenty minutes into Dr. David

Beyda’s examination. (1 SER 223.) R.M. opened his eyes spontaneously,

responded to commands, and exhibited age-appropriate behaviors. (Id.)

Dr. Beyda planned to evaluate R.M.’s neurological status, and to order an


10

MRI and neurological consultation if R.M. did not respond appropriately.

(1 SER 224.)

The next morning, R.M. was extubated; he was alert and not in

distress. (1 SER 216.) R.M. was then transferred to the general pediatric

floor for overnight observation. (Id.) The next day, Dr. David Solomon

examined R.M. and found him to be normal; R.M. was discharged from the

hospital without a neurological consultation having been requested or

performed. (Id.; 1 SER 227:12-21, 228:3-18, 232:14-21.)

F. No doctor who treats R.M. at the hospital observes signs of oxygen deprivation or brain injury.

Dr. Sandra Indermuhle, who initially treated R.M. at Mercy Gilbert,

never observed any sign that R.M. was suffering from hypoxia (deprivation

of oxygen) while in her care, although she was vigilant for such signs.

(2 SER 285:1-7, 286:25-287:4, 288:21-24.) Her notes stated that R.M. had

100 percent oxygen saturation at all times. (1 SER 220.)

Dr. Beyda, who treated R.M. at Phoenix Children’s, likewise

observed no signs of hypoxic encephalopathy. (2 SER 298:22-299:22.)

Dr. Beyda’s notes confirm that R.M. never turned blue and never stopped

breathing on his way to the hospital or afterwards. (1 SER 223.) The fact


11

that R.M. opened his eyes and responded appropriately within fifteen to

twenty minutes of arriving at Phoenix Children’s led Dr. Beyda to

conclude that R.M. did not suffer a brain injury. (2 SER 300:18-23.)

Dr. Solomon, who examined R.M. before discharge, also saw no signs

that R.M. suffered a lack of oxygen or a brain injury. (1 SER 228:3-18,

230:25-231:14.) If Dr. Solomon had seen any sign of brain injury, he would

not have discharged R.M., but would instead have brought in a neurologist

to consult. (1 SER 228:16-229:15, 232:14-25.)

G. Spin Master learns of JSSY’s chemical substitution in October 2007, and shortly thereafter voluntarily recalls all Aqua Dots products from the American market.

On October 18, 2007, Spin Master learned that JSSY had secretly

substituted 1,4-butanediol in the place of 1,5-pentanediol in the chemical

formulation of Aqua Dots. (2 ER 216 (¶ 9); 2 SER 400:21-403:25, 417:3-

419:1, 429:15-25, 439.) During the following week, Spin Master executives

visited JSSY’s Chinese factory and confirmed the chemical substitution.

(2 SER 400:21-403:25, 420:5-422:4 (158:5-161:4), 429:15-25.)

On November 7, 2007, Spin Master voluntarily recalled all Aqua

Dots packages from the U.S. market, in cooperation with the CPSC. (2 ER

216 (¶ 12); 2 SER 432:13-24.)


12

H. R.M.’s parents report no further consequences from R.M.’s Aqua Dots ingestion until the day after the toy is recalled. None of R.M.’s treating neurologists subsequently diagnose R.M. with a brain injury.

In the four months between R.M.’s discharge and the Aqua Dots

recall, the Monjes did not report any illness, developmental problems, or

behavioral issues with R.M. (2 SER 503-07.) The notes of an eighteen-

month-old well child examination stated that R.M. had no neurological

focal deficits, that R.M. was experiencing “normal growth and

development” in all facets, and that R.M. was a “[w]ell appearing child,

appropriate for [his] age.” (2 SER 506.) The notes even stated that R.M.

could say two to three words. (2 SER 505.)

But the day after hearing about the Aqua Dots recall, Mr. Monje

called the pediatrician and expressed concern that R.M. was not saying

any words, although he had been speaking several words months earlier.

(2 SER 507-08.) R.M. was examined by his physician the next day and

referred to neurological specialists. (1 SER 236-37.)

R.M. was evaluated by a series of neurologists and psychiatrists over

the next few years; none diagnosed R.M. with a brain injury or concluded

that R.M. had suffered a hypoxic event. (1 SER 239-62; 2 SER 264-82,


13

291-94, 302-12.) R.M. underwent two MRIs in 2008 and 2011, and neither

showed any sign of brain injury. (2 SER 292:14-17, 293:8-11.)

I. R.M.’s parents file this lawsuit in Arizona state court against Moose, Spin Master, and TRU, who remove to federal court.

R.M.’s parents filed this lawsuit against Spin Master and TRU in

Arizona Superior Court in July 2009. (1 SER 7-17.) Plaintiffs asserted

claims for strict products liability, negligence, and breach of implied

warranty, and they sought punitive damages. (Id.) Plaintiffs later

amended their complaint to add Moose as a defendant. (1 SER 18-29.)

On August 19, 2009, Defendants removed this case to federal court.

(1 SER 1-4.)

J. Mark Monje declares bankruptcy and secures a discharge of his debts, but he fails to list his derivative claims in this case on his asset disclosure schedules.

In March 2009, Mark Monje filed a petition for Chapter 7

bankruptcy. (2 SER 325-60.) In a schedule of assets that must be

disclosed in the bankruptcy proceeding, Mr. Monje did not list his

derivative claims related to R.M.’s injuries, even though the form required

disclosure of “[o]ther contingent and unliquidated claims of every nature.”

(2 SER 334.)


14

In August 2009, one month after filing this action (1 SER 7),

Mr. Monje received a full discharge of his debts from the bankruptcy court

(2 SER 362-64). During that one-month period, Mr. Monje did not attempt

to amend his asset disclosure schedules to reveal his derivative claims in

this case or to notify the bankruptcy court of this lawsuit. (2 SER 325-60.)

Mr. Monje should have known of his derivative claims by December 2008,

when he and his wife began preparations with counsel to file this lawsuit.

(2 SER 314-23.) By his own admission, Mr. Monje had actual knowledge of

his claims by July 2009. (5 SER 1248 (¶ 5).)

K. Plaintiffs’ expert toxicologist, Richard Parent, submits a report stating that R.M. suffered anoxia/hypoxia from ingesting Aqua Dots, resulting in permanent brain injury.

During discovery, Plaintiffs offered toxicologist Richard Parent to

opine on whether the 1,4-butanediol/GHB in the Aqua Dots caused a brain

injury in R.M. (1 SER 131.) Parent did not diagnose whether R.M.

actually suffered a brain injury, relying on other experts for that

conclusion. (1 SER 97:25-98:7, 99:22-100:3.)

In his expert report, Parent opined that R.M.’s alleged “permanent

brain injury as described by Dr. Joseph Wu [Plaintiffs’ expert

psychiatrist], is related to the ingestion of over 50 Aqua Dots on July 16,


15

2007, at the very young age of 16 months, during a period of very active

brain development.” (2 ER 192.) Parent identified a single causal

mechanism for this permanent brain injury—anoxia/hypoxia induced by

R.M.’s ingestion of Aqua Dots. (2 ER 189-90, 192.)

L. At his deposition, Parent disavows the anoxia/hypoxia theory from his report and embraces a new causation theory. He admits that his expert report is silent on general causation.

During his deposition, Parent switched gears. He disavowed the

anoxia/hypoxia theory he had disclosed in his expert report. (6 SER

1319:22-1320:25, 1322:20-1323:21, 1327:4-9.) Parent admitted that there

was no evidence that R.M. ever suffered a loss of oxygen, and that every

medical record in R.M.’s file indicated he had 100 percent oxygen

saturation. (6 SER 1320:9-16, 1322:20-1323:16, 1327:4-9.)

Parent then embraced a new, previously undisclosed causation

theory. (6 SER 1319:22-1320:25, 1322:8-1323:21, 1330:4-10, 1330:24-

1331:10.) He opined that the anesthetic effect of the GHB in the Aqua

Dots put R.M. into a coma, which caused permanent brain injury. (Id.)

When pressed about this new theory, Parent conceded that he was not

offering a firm opinion; he claimed he was merely raising a question about

this possible causation mechanism. (1 SER 117:10-22.) Parent admitted


16

that he had not disclosed this opinion in his expert report filed before the

closure of expert discovery. (2 ER 188-92; 1 SER 30-31; 4 SER 905:1-25,

909:23-910:4.)

Parent further conceded that his expert report did not offer an

opinion on general causation—whether 1,4-butanediol/GHB is generally

capable of causing permanent brain injury. (6 SER 1328:5-1329:11.)

Parent agreed that an expert cannot offer an opinion on specific causation

(whether 1,4-butanediol/GHB actually caused permanent brain injury in

R.M.) without first establishing general causation. (6 SER 1325:11-

1326:14.) Parent conceded that he knows of no other documented instance

of permanent brain injury from ingestion of 1,4-butanediol/GHB. (1 SER

127:9-23.)

Parent acknowledged that, if he had offered a general causation

opinion, he would have analyzed the so-called “Hill factors” (named after a

famous lecture by Sir Austin Bradford Hill) employed by toxicologists to

evaluate general causation. (1 ER 10 n.2; 6 SER 1326:15-23.) These

factors include strength and consistency of the association between

exposure to a chemical agent and an examined condition, specificity of the

association, and the temporal relationship between exposure and


17

emergence of the condition. (1 ER 10 n.2; 1 SER 105:1-106:14.) Parent

conceded that he had not analyzed any of the Hill factors other than

temporality, and that an expert toxicologist cannot render an opinion on

general causation without thoroughly analyzing the Hill factors. (6 SER

1330:14-23, 1331:11-1333:4.)

M. Plaintiffs’ expert psychiatrist, Dr. Joseph Wu, belatedly discloses an opinion that R.M. suffered an idiosyncratic reaction to GHB in Aqua Dots that caused permanent brain injury.

Plaintiffs identified Dr. Joseph Wu as their expert on radiological

imaging; Dr. Wu is a psychiatrist, not a radiologist or neurologist. (1 SER

199; 4 SER 1033:1-10, 1034:6-24, 1035:4-22, 1036:3-12, 1036:20-1041:2.)

In June 2011, Dr. Wu produced a report in which he purported to

perform a differential diagnosis of R.M. Besides hypoxic/anoxic brain

injury, Dr. Wu considered alternative diagnoses of Alzheimer’s disease,

Parkinson’s disease, epilepsy, stroke, tumor, radiation treatment,

schizophrenia, and unipolar depression. (1 SER 180.) There is no

indication that children R.M.’s age can suffer from most of these


18

conditions.1 (Id.) Dr. Wu opined that the PET and MRI-DTI scans of

R.M.’s brain showed injuries consistent with hypoxic encephalopathy. (Id.)

Immediately after Parent’s deposition concluded on June 17, 2014,

Plaintiffs’ counsel told Dr. Wu about Parent’s deposition and gave him

Parent’s expert file. (1 SER 138:15-140:13, 146:14-147:1, 156:1-157:18,

158:11-18.) Working through the night of June 17 with Parent’s materials,

Dr. Wu produced an “addendum” to his own expert report; he opined for

the first time that the toxicity of 1,4-butanediol/GHB in the Aqua Dots

produced an idiosyncratic response in R.M. that caused permanent brain

injury. (2 SER 139:21-140:13, 151:22-155:21, 157:19-158:10, 158:19-

159:22, 164:1-168:15, 170:14-171:7, 173:25-175:6, 191-93.) Dr. Wu finished

his “addendum” on the morning of June 18, 2014, and produced it to

Defendants’ counsel shortly before his deposition that same day. (1 SER

139:21-140:13, 158:19-159:12.) Dr. Wu’s new causation opinion was not

1 Other courts have excluded Dr. Wu’s causation testimony as unreliable. See, e.g., Barker v. Bellamy, No. 00–6019–CV–SW–GAF, 2002 WL 34698910, at *3-*4 (W.D. Mo. Dec. 6, 2002) (excluding Dr. Wu’s opinion that brain injury was caused by exposure to toxic substance as unreliable); see also Penney v. Praxair, Inc., 116 F.3d 330, 332, 333-34 (8th Cir. 1997) (affirming the exclusion of Dr. Wu’s opinions finding brain injury from PET scans as unreliable).


19

disclosed by the deadline (which the district court had previously extended

to March 12, 2014, specifically for Dr. Wu (Dist. Ct. ECF No. 315)). (1 SER

149:21-150:19, 164:1-168:15, 195, 212-13.)

Dr. Wu tried to explain his new causation opinion during his

deposition, even as he conceded it was not timely disclosed. (1 SER 144:1-

145:18, 151:22-155:21, 164:1-168:15, 170:5-175:6.) He admitted that he is

not a toxicologist, has not studied toxicology in any detail, has never

testified as an expert on toxicology, and was not holding himself out as a

toxicologist in this case. (1 SER 143:21-25, 148:2-12, 163:22-23.) He could

not explain the difference—fundamental to toxicology—between general

and specific causation. (1 SER 160:23-162:17.) Indeed, Dr. Wu has not

done any research into whether a particular area of the brain could be

affected by GHB exposure. (1 SER 169:4-21.)

N. The district court excludes Dr. Wu’s belated causation opinion as untimely.

Defendants moved to exclude as untimely the opinions Dr. Wu first

announced in the “addendum.” (4 SER 859:25-861:18, 864:11-866:9,

870:15-873:23, 876.) At the hearing on that motion, which was coupled

with Plaintiffs’ request to exclude one of Defendants’ experts, the district


20

court gave the parties a choice between strictly adhering to the expert

disclosure deadlines or allowing a more permissive approach. (4 SER

860:2-861:25.) Plaintiffs opted for the strict approach, believing that

would ensure the exclusion of Defendants’ expert (which it did). (4 SER

862:1-864:9, 869:12-14, 876-77.) Adopting the strict approach, the district

court struck Dr. Wu’s addendum and his causation opinion due to

untimely disclosure. (4 SER 876-77.)

O. The district court grants Defendants partial summary judgment on punitive damages and judicially estops Mark Monje from pursuing his derivative claims.

Moose, Spin Master, and TRU moved for partial summary judgment,

arguing that there were no triable issues of fact that Defendants had acted

with the “evil mind” Arizona law requires to impose punitive damages by

clear and convincing evidence, and that Mark Monje should be judicially

estopped from pursuing his derivative claims due to his failure to disclose

those claims in his bankruptcy. (1 ER 14, 16-17, 19-20, 29-30.)

The district court granted partial summary judgment on these

issues. (1 ER 19-22, 29-32.) It ruled that Plaintiffs had failed to raise

triable issues of fact regarding punitive damages for three reasons. (1 ER

19-22.) First, most of Plaintiffs’ evidence addressed Defendants’ conduct


21

after R.M. ingested Aqua Dots, evidence that is legally irrelevant to

showing the requisite “evil mind” because it could not have proximately

caused the harm inflicted. (1 ER 20-21.) Second, the few prior incidents

involving ingestion did not provide Defendants sufficient notice that Aqua

Dots could be toxic since the incident reports mentioned choking, not a

toxic reaction. (1 ER 21.) Finally, the court noted that, under Arizona

law, the “fact that a manufacturer continues to market a product is not in

itself enough to show the evil mind necessary for punitive damages.” (Id.

(citation omitted).)

Regarding judicial estoppel, the district court granted partial

summary judgment to Defendants because it was undisputed that

Mr. Monje failed to disclose his derivative claims in his bankruptcy prior

to discharge. (1 ER 29-32.) The court ruled that the elements of judicial

estoppel were satisfied because Mr. Monje took inconsistent positions in

this case and his bankruptcy case, such that allowing him to pursue

derivative claims would accord him an unfair advantage. (1 ER 31-32.)

Finally, the court rejected Mr. Monje’s conclusory excuse based on

inadvertence or neglect; he had failed to explain the excuse, and his failure


22

to reopen his bankruptcy case up to that time “cast[ ] serious doubt on the

credibility of his claims of uncertainty and inadvertence.” (1 ER 31.)

P. The district court initially denies partial summary judgment on causation of permanent brain injury in R.M.

The district court denied a separate aspect of Defendants’ request for

partial summary judgment in which they had argued that R.M.’s ingestion

of Aqua Dots did not cause a permanent brain injury. (1 ER 17-18.)

The district court took Plaintiffs to task for failing to identify specific

parts of the record raising triable issues of fact (1 ER 17:17-23, 18:1-10),

but the court concluded that Parent’s new theory at deposition—that

1,4-butanediol/GHB in Aqua Dots can cause permanent brain injury via an

anesthesia-induced comatose state—raised a triable issue as to general

causation (1 ER 18:11-22). The court disagreed with Plaintiffs’ view that

they were not required to demonstrate general causation by, instead,

relying on a differential diagnosis. (1 ER 18 n.2.) The court cautioned that

it was not ruling on Defendants’ argument that Parent’s new causation

theory was untimely disclosed; the court left that issue for another day.

(1 ER 18-19 n.3.)


23

Q. The district court ultimately excludes Parent’s anesthesia-induced coma causation opinion as untimely and unreliable.

In light of the district court’s earlier caution that it was not ruling on

the timeliness of Parent’s new opinion, Defendants later raised that issue

directly. Defendants moved to exclude Parent’s opinion—that the

1,4-butanediol/GHB in the Aqua Dots that R.M. ingested caused him

permanent brain injury via an anesthesia-induced coma—as untimely

under Federal Rules of Civil Procedure 26 and 37, and as unreliable and

irrelevant under Federal Rule of Evidence 702 and Daubert v. Merrell Dow

Pharmaceuticals, Inc., 509 U.S. 579 (1993). (5 SER 1154:20-1171:9.)

The district court granted that motion and excluded Parent’s new

anesthesia-induced coma causation opinion as both untimely and

unreliable. (5 SER 1183:5-1184:14, 1238.) The court ruled that Parent’s

failure to disclose his opinion until deposition—well past the expert

disclosure deadline—was inexcusable, and that Defendants did not open

the door by asking Parent questions about his newly disclosed opinion at

his deposition. (5 SER 1183:9-18, 1184:1-2.) The district court also found

Parent’s new opinion unreliable under Daubert. (5 SER 1184:3-14.) The

court concluded that Parent’s theory (that a single exposure to anesthesia

can cause permanent brain damage) had not been subjected to peer review


24

or become generally accepted in the toxicology profession. (5 SER 1184:6-

8.) The court also found there was too large an analytical gap between

Plaintiffs’ proffered articles linking anesthesia and brain injury in animals

and Parent’s theory that a single exposure to anesthesia can cause human

brain injury. (5 SER 1184:8-14.)

R. The district court precludes Dr. Wu from testifying about causation of permanent brain injury.

Defendants moved to exclude Dr. Wu’s opinion that R.M.’s Aqua Dots

ingestion caused permanent brain injury on the grounds that the opinion

was not timely disclosed and was unreliable. (5 SER 1206:12-1228:13,

1269:11-15, 1303.)

The district court granted the motion. The new opinion was

indisputably late, and Dr. Wu had no reliable basis for stating it, since he

was not a toxicologist and his differential diagnosis could not reliably

demonstrate that GHB is capable of causing permanent brain injury.

(5 SER 1270:13-1272:22, 1303.)


25

S. The district court excludes Parent’s remaining anoxia/hypoxia causation opinion, as well as Plaintiffs’ newly proffered neurotoxin causation opinion, and grants partial summary judgment on causation of permanent brain injury.

In a supplemental Daubert motion, Defendants moved to exclude

what remained of Parent’s opinions on causation—the view that ingesting

1,4-butanediol/GHB in the Aqua Dots caused R.M. anoxia/hypoxia leading

to permanent brain damage. (1 ER 8:1-15.) Plaintiffs defended Parent’s

anoxia/hypoxia theory while also arguing that Parent had timely disclosed

yet another causation theory—that GHB was a neurotoxin that crossed the

blood-brain barrier and directly harmed R.M.’s brain development. (1 ER

8:15-21.)

The district court granted Defendants’ motion and excluded all of

Parent’s remaining causation opinions. (1 ER 7-13.) It concluded that

Ninth Circuit law required Plaintiffs to provide reliable expert testimony

showing both general and specific causation of permanent brain injury

from 1,4-butanediol/GHB exposure. (5 SER 1262:15-1266:22.) It excluded

Parent’s anoxia/hypoxia causation theory because Parent himself had

abandoned that theory in his deposition, and because Parent had admitted

repeatedly that his expert report on that theory did not offer a general

causation opinion. (1 ER 8:23-9:17.)


26

The district court barred the neurotoxin causation theory for several

reasons. (1 ER 9:18-11:18.) First, the court found that this theory was

no different from Parent’s anesthesia-induced coma causation opinion that

it had already excluded. (1 ER 9:19-28.) Second, the court ruled that this

opinion was not timely and adequately disclosed in Parent’s expert report.

(1 ER 10:1-18.) The court noted that “Plaintiffs have taken liberties in

describing the breadth and support for Dr. Parent’s opinion regarding

GHB’s effect on a developing brain, including characterizing it as an

independent ‘opinion,’” and it “caution[ed] counsel for Plaintiffs, as it ha[d]

in at least one previous order, to avoid inaccuracies in its representations

to the Court.” (1 ER 10:11-13 & n.1.) Finally, the court held that Parent’s

neurotoxin theory was unreliable. (1 ER 10:19-11:14.) The court pointed

to Parent’s admitted failure to demonstrate general causation, to his

failure to analyze the Hill factors, to Parent’s exclusive reliance on articles

not addressing long-term follow-up or diagnosis of permanent brain injury,

and to the fact that Parent was neither a physician nor a pediatric

neurologist and was therefore unqualified to opine on the pace of a

toddler’s brain development or the specific effect GHB exposure would

have on future development. (Id.)


27

The court concluded that, “[a]fter more than five years of litigation,

Plaintiffs have failed to produce an expert opinion as to general causation,

despite the Court’s forgiving posture that allowed for repeated

opportunities to do just that.” (1 ER 11:20-22.) The court remained

troubled that—even upon filing its response on this issue—Plaintiffs still have not settled on their expert’s theory of causation. They offer arguments supporting two completely different opinions on causation of a brain injury . . . to be offered by the same expert. That cannot happen. Such a tactic not only calls into question the reliability and helpfulness to the jury of the expert’s opinion, but it is unfair to Defendants, who are entitled to know what it is they have to defend against and prepare to do so, not only at this late stage in the case, but all the way back at the close of expert discovery.

(1 ER 12:9-17.) Since it had excluded all of Parent’s causation opinions,

the district court sua sponte reconsidered its earlier ruling denying partial

summary judgment on causation of permanent brain injury and granted

Defendants partial summary judgment on that issue. (1 ER 12:3-6, 20-22.)

The court limited Plaintiffs (at trial) to seeking damages stemming

from R.M.’s initial reaction to his Aqua Dots ingestion. (1 ER 12:6-8.)


28

T. The district court denies Mark Monje’s last-minute attempts to undo its judicial estoppel ruling.

Two months before trial, Mark Monje moved under Federal Rule of

Civil Procedure 60(b) for relief from the district court’s judicial estoppel

ruling. (5 SER 1242-58.) Mr. Monje argued that, the day before he filed

this motion, he moved to reopen his bankruptcy case in order to belatedly

disclose his derivative claims on his asset schedules. (Id.) The bankruptcy

court subsequently reopened Mr. Monje’s case and reappointed the same

bankruptcy trustee who had administered his estate to do so again.

(6 SER 1355-58.)

The district court denied Mr. Monje’s motion for relief from the

judicial estoppel ruling. (6 SER 1362:2-1363:20, 1398.) It grounded that

denial on Mr. Monje’s failure to explain why he waited nearly six years

after receiving his discharge, and five months after the judicial estoppel

ruling, to seek to reopen his bankruptcy case. (6 SER 1362:7-1363:8.) The

court also noted that reviving Mr. Monje’s claims at this stage would

eviscerate the deterrent effect of the judicial estoppel doctrine and

incentivize bankruptcy debtors to omit information from their schedules.

(6 SER 1363:9-20.)


29

After this denial, and less than one month before trial, the trustee of

Mr. Monje’s bankruptcy estate moved to substitute for Mr. Monje, or to

intervene, in the case to prosecute Mr. Monje’s claims. (6 SER 1400-04.)

The district court denied that motion as untimely because it was made on

the eve of trial, and because allowing the trustee to intervene or otherwise

participate in the case at that stage would complicate the presentation of

issues. (6 SER 1411:18-1412:17, 1498.)

U. The jury awards Plaintiffs substantial damages after trial. The district court enters judgment, and Plaintiffs appeal.

Plaintiffs’ claims were tried to a jury over eight days. (2 ER 300-06.)

The jury returned a verdict for Plaintiffs (1 ER 4-6) and awarded them

$435,000 in damages (1 ER 5). The jury allocated 15 percent fault to the

Spin Master entities jointly, 0 percent to TRU, 33 percent to Moose,

2 percent to Mr. Monje, 25 percent to JSSY, and 25 percent to another

Chinese manufacturer of Aqua Dots. (1 ER 6.)

The district court entered judgment for Plaintiffs and ordered Spin

Master to pay $62,250 and Moose to pay $252,300. (1 ER 2-3.) The court

entered judgment for TRU against Plaintiffs. (1 ER 3.)


30

Plaintiffs filed a timely appeal to this Court. (1 ER 1.) Neither Spin

Master nor TRU has appealed.

SUMMARY OF ARGUMENT

1. The district court properly excluded Plaintiffs’ expert testimony

on causation of permanent brain injury. To prove that GHB from ingesting

Aqua Dots caused R.M. permanent brain damage, Plaintiffs proffered an

expert opinion from toxicologist Richard Parent. Parent’s report opined

only that Aqua Dots caused R.M. to become anoxic/hypoxic (i.e., deprived

of oxygen), in turn causing permanent brain injury. Parent later

disavowed that opinion at deposition and embraced a new theory (long

after expert discovery had closed) that GHB acted as a neurotoxin, putting

R.M. into a coma and causing permanent brain injury. Ultimately, the

district court excluded Parent’s anoxia/hypoxia opinion as unreliable, and

excluded Parent’s neurotoxin opinion as both untimely and unreliable.

Plaintiffs challenge these rulings on appeal, but they were sound.

The neurotoxin theory was untimely disclosed, and Plaintiffs have

forfeited that point by failing to contest it in their opening brief. The

neurotoxin theory was unsupported by peer-reviewed publications, and

was also unreliable because Parent admitted that he was not offering any


31

opinion that GHB is generally capable of causing permanent brain

damage. Parent abandoned his anoxia/hypoxia theory, but it was

unreliable in any event. Parent admitted this theory lacked an

evidentiary basis because there was no evidence R.M. lacked oxygen after

ingesting Aqua Dots.

2. The district court properly barred recovery of punitive damages.

Despite conducting extensive product safety and toxicity testing before

introducing Aqua Dots into the American market, Spin Master had

no knowledge of JSSY’s chemical switch. Arizona law bars punitive

damages unless the defendant acted with an “evil mind,” which means a

subjective intent to injure or a conscious disregard of a known substantial

risk of harm. Spin Master’s extensive testing efforts defeat Plaintiffs’

attempt to prove an “evil mind.” Plaintiffs’ evidence mostly addressed

Spin Master’s conduct after R.M. ingested Aqua Dots, yet such evidence

cannot show an “evil mind.” A defendant lacks that mental state simply

because it continues to market a product that turns out to be unsafe.

3. The district court properly estopped Mr. Monje from pursuing

derivative claims. Mr. Monje asserted inconsistent positions by omitting

from his bankruptcy asset schedules claims that he later asserted in this


32

case. Well-settled principles of judicial estoppel furnish an appropriate

remedy for this attempt to play fast and loose with the courts. And even if

judicial estoppel did not apply, Mr. Monje still cannot proceed on his loss of

consortium and NIED claims because they are barred under Arizona law.

Mr. Monje’s claims for R.M.’s medical expenses are also barred because

Plaintiffs have already recovered for R.M.’s past medical expenses, and

Plaintiffs’ inability to prove causation of permanent brain injury precludes

them from recovering future medical expenses.

4. In any event, the judgment for TRU should be affirmed. The

jury allocated zero percent responsibility to TRU, and Plaintiffs make

no argument in their opening brief attacking that finding. The jury’s fault

allocation is distinct from the issues Plaintiffs raise on appeal, so they

have forfeited any opportunity to contest the judgment for TRU. Thus,

there should be no further proceedings against TRU.


33

ARGUMENT

I. THE DISTRICT COURT PROPERLY EXCLUDED PARENT’S CAUSATION OPINIONS AS UNTIMELY AND UNRELIABLE.

A. District courts have wide discretion to exclude expert testimony that is untimely disclosed or unreliable.

1. Timeliness. Federal Rule of Civil Procedure 26(a)(2)(B)

requires an expert to submit a report containing his opinions and the

reasoning behind them by a court-ordered deadline. Federal Rule of Civil

Procedure 37(c)(1) imposes an automatic penalty of exclusion on untimely

opinions, unless the proponent establishes that the late disclosure was

substantially justified or harmless. Goodman v. Staples The Office

Superstore, LLC, 644 F.3d 817, 824, 826-27 (9th Cir. 2011). This Court

reviews Rule 37(c)(1) expert exclusion rulings for an abuse of discretion.

Id. at 822.

Under this Court’s abuse-of-discretion standard, the first step

is to determine de novo whether the trial court identified the correct legal rule to apply to the relief requested. If the trial court failed to do so, we must conclude it abused its discretion. . . . If the trial court identified the correct legal rule, we move to the second step of our abuse of discretion test.

United States v. Hinkson, 585 F.3d 1247, 1261-62 (9th Cir. 2009) (en banc).

At the second step, the Court evaluates whether the district court’s


34

determinations “were illogical, implausible, or without support in

inferences that may be drawn from facts in the record.” Id. at 1251.

2. Reliability. Federal Rule of Evidence 702 allows an expert

witness to offer opinion testimony if

(a) the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case.

Under this gatekeeping rule, courts admit opinions that are relevant and

reliable, Daubert, 509 U.S. at 589-93, while excluding testimony when

“there is simply too great an analytical gap between the data and the

opinion proffered,” Gen. Elec. Co. v. Joiner, 522 U.S. 136, 146 (1997).

In determining whether an expert’s testimony is reliable, district

courts examine

(1) whether the scientific theory or technique can be (and has been) tested; (2) whether the theory or technique has been subjected to peer review and publication; (3) whether there is a known or potential error rate; and (4) whether the theory or technique is generally accepted in the relevant scientific community.


35

Domingo ex rel. Domingo v. T.K., 289 F.3d 600, 605 (9th Cir. 2002).

Opinions developed for litigation, rather than through independent

research or laboratory work, may be viewed with skepticism. Daubert v.

Merrell Dow Pharm., Inc., 43 F.3d 1311, 1317 (9th Cir. 1995) (Daubert II).

Expert exclusion rulings are reviewed for an abuse of discretion, even

when such rulings are outcome-dispositive. Joiner, 522 U.S. at 138-39,

141-43; Lust v. Merrell Dow Pharm., Inc., 89 F.3d 594, 597 (9th Cir. 1996).

“[T]he law grants a district court the same broad latitude when it decides

how to determine reliability as it enjoys in respect to its ultimate

reliability determination.” Kumho Tire Co. v. Carmichael, 526 U.S. 137,

142 (1999).

B. The district court properly excluded Parent’s neurotoxin/ anesthesia-induced coma causation opinion as untimely.

Parent’s expert report discussed only his opinion that R.M.’s Aqua

Dots ingestion rendered him anoxic/hypoxic, causing permanent brain

damage (the “anoxia/hypoxia theory”). (2 ER 188-92.) See supra pp. 14-15.

At his deposition, however, Parent sprang a new opinion on Defendants—

that the 1,4-butanediol/GHB in Aqua Dots acted as a neurotoxin whose

anesthetic effect caused permanent brain damage by putting R.M. into a


36

coma (the “neurotoxin theory”). (6 SER 1319:3-1320:25, 1322:3-1323:21,

1327:4-9.) Parent admitted that he had not previously and timely

disclosed this opinion in his report. (1 SER 30-31; 4 SER 905:1-25, 909:23-

910:4.) The district court excluded Parent’s neurotoxin theory as

untimely. (1 ER 9:18-10:18; 5 SER 1183:9-1184:2, 1238.)

Plaintiffs do not address this untimeliness ruling in their opening

brief, so they have forfeited any argument for contesting the ruling. See

Smith v. Marsh, 194 F.3d 1045, 1052 (9th Cir. 1999). Plaintiffs claim

Parent discussed his neurotoxin theory in his expert report (AOB 50), but

they never cite that report in support of this claim. And for good reason—

that opinion is nowhere to be found in Parent’s report. (2 ER 188-92.) The

district court reprimanded Plaintiffs’ counsel for misstating the record in

this very fashion. (1 ER 10:11-13 & n.1.) Thus, the district court acted well

within its discretion in excluding this opinion for untimeliness.2

2 The district court also excluded as untimely the causation opinions and reports of Dr. Wu and Dr. Paul Beljan (plaintiffs’ expert neuropsychologist) for essentially the same reasons. (4 SER 876-77; 5 SER 1132:20-1133:19, 1143, 1270:16-20, 1303.) Plaintiffs cite to some of these reports in their opening brief without acknowledging that the district court excluded them from evidence, and without arguing that those rulings were erroneous. (AOB 46 & n.84, 47-48 & nn.90-92.) This Court should therefore disregard these citations.


37

C. The district court properly excluded Parent’s other causation opinions as unreliable.

1. Parent disavowed the anoxia/hypoxia theory, which was unsupported by evidence and incapable of explaining how R.M. could have suffered permanent brain injury.

Parent disavowed the anoxia/hypoxia theory at his deposition.

Supra p. 15. When Plaintiffs’ counsel later sought to revive the theory, the

district court excluded it as unreliable, both because it lacked evidentiary

support, and because Parent could not show that GHB is capable of

causing an anoxic/hypoxic reaction and permanent brain injury (i.e.,

general causation). (1 ER 8:23-9:17.) The district court was correct on

both counts.

Rule 702(b) requires an opinion to be “based on sufficient facts or

data.” An opinion bereft of such support is simply unreliable. Joiner, 522

U.S. at 146 (“[N]othing in either Daubert or the Federal Rules of Evidence

requires a district court to admit opinion evidence that is connected to

existing data only by the ipse dixit of the expert.”).

Plaintiffs argue (AOB 48-50) that Parent never disavowed his

anoxia/hypoxia theory, but the record decisively refutes this argument

(6 SER 1319:3-1320:25, 1322:3-1323:21, 1327:4-9). Parent repeatedly

admitted in his deposition that there was no evidence R.M. suffered a lack


38

of oxygen, and Parent never attempted to explain how his anoxia/hypoxia

theory could make sense absent such evidence. Supra p. 15.

Moreover, Parent did not offer an opinion on general causation via

anoxia/hypoxia. Parent specifically admitted that he was not opining on

general causation, and he conceded that an expert cannot opine on specific

causation (whether 1,4-butanediol/GHB in Aqua Dots actually caused R.M.

permanent brain damage) without first establishing general causation.

(6 SER 1325:11-1326:14, 1328:5-1329:11.) Parent’s concession was

well-taken: without evidence of general causation, he could not reliably

opine that 1,4-butanediol/GHB in Aqua Dots caused R.M. permanent brain

injury. See Avila v. Willits Envtl. Remediation Tr., 633 F.3d 828, 836

(9th Cir. 2011) (expert in toxic exposure case may not opine on specific

causation unless general causation has been established); Golden v. CH2M

Hill Hanford Grp., Inc., 528 F.3d 681, 683 (9th Cir. 2008) (same); In re

Hanford Nuclear Reservation Litig., 292 F.3d 1124, 1133-34 (9th Cir. 2002)

(Hanford) (same); Claar v. Burlington N. R.R. Co., 29 F.3d 499, 502

(9th Cir. 1994) (same). Parent’s admitted failure to offer a general

causation opinion vitiates the reliability of his anoxia/hypoxia theory.


39

2. Parent’s neurotoxin theory was unreliable.

When Plaintiffs’ counsel sought to recharacterize Parent’s neurotoxin

theory, supra pages 15-17, 25, the district court excluded it as unreliable

for several reasons (1 ER 10:19-11:18; 5 SER 1184:1-14), all of which were

well within the court’s discretion under Rule 702 and Daubert.

First, the court properly excluded this theory because Parent

admitted he could not offer a general causation opinion. (1 ER 10:19-11:5.)

As just explained, an expert may not reliably offer an opinion on specific

causation absent a basis for establishing general causation. With respect

to his neurotoxin theory, Parent’s failure to address general causation is

particularly acute. Parent did not analyze numerous Hill factors (6 SER

1326:15-23, 1330:14-23, 1331:11-1333:4), which toxicologists commonly

employ to establish general causation, see Restatement (Third) of Torts:

Liability for Physical and Emotional Harm § 28(a), cmt. c(3), at 406-07 &

Reporters’ Note, cmt. c(3) at 440-42 (Am. Law Inst. 2005) (“Restatement

(Third)”). Thus, the district court’s exclusion of Parent’s neurotoxin theory

was appropriate. See Kumho Tire, 526 U.S. at 154-55 (district court did

not abuse its discretion in excluding expert’s opinion because his

deposition responses undermined reliability of his method); Daubert II,


40

43 F.3d at 1319 (excluding as unreliable an expert opinion that failed to

address general causation).

Second, the district court excluded Parent’s neurotoxin theory

because it lacked support in peer-reviewed publications, including those on

which Parent purported to rely. (1 ER 11:5-18.) This Court has

emphasized the importance of identifying support in peer-reviewed

publications in assessing the reliability of expert opinions. See Daubert II,

43 F.3d at 1318-19. Parent mentioned several publications in his

deposition, but they were not directly relevant because they addressed the

effects of anesthesia (not GHB) on children’s brain development. (4 SER

904:3-20, 907:1-908:25, 909:3-22, 911:4-912:10.) In any event, these

articles discounted any link between a single exposure to anesthesia (the

equivalent under Parent’s theory of R.M.’s brief spell of altered

consciousness after ingesting Aqua Dots) and permanent brain damage,

with some articles advising practitioners not to alter anesthesia practices

during children’s surgery because of the lack of evidence. (4 SER 914, 919,

923, 930, 936-37, 943-44, 952, 962, 973, 977-78, 980, 994, 1000.) One study

even found no developmental difference between twins where one twin had

anesthesia in childhood and the other did not. (4 SER 925, 998.)


41

Moreover, the analogies Parent sought to draw from these

publications were scientifically unfounded. Much of their data came from

experiments on laboratory rats, and the articles explain that it is difficult

to extrapolate those results to humans because of the developmental

differences between human and rat brains. (4 SER 944.) Furthermore,

epidemiological studies of anesthesia’s effects on young children cannot

eliminate the influence of confounding factors—such as the selection bias

of the group requiring surgery and the effect of surgery itself—in

obscuring any causal link between anesthesia and developmental delays in

young brains. (4 SER 1010.)

Marshalled against the inconclusive and inapposite studies Parent

cited (dealing with anesthesia generally), Spin Master’s expert Julie

Goodman comprehensively reviewed numerous studies showing no long-

term effects on brain development from exposure to GHB.3 (1 SER 74-82.)

Parent ignored these studies, and the district court noticed. (1 ER 11:5-14;

5 SER 1184:3-14.) 3 Plaintiffs state that Goodman admitted that R.M. experienced a brain injury (AOB 30-31 & n.59), but that is false. Goodman stated in her report that “neither [R.M.]’s ingestion of Aqua Dots containing 1,4-[butanediol] or his experiencing coma-like symptoms resulted in brain injury.” (1 SER 71.)


42

When a scientist claims to rely on a method practiced by most scientists, yet presents conclusions that are shared by no other scientist, the district court should be wary that the method has not been faithfully applied. . . . [T]he district court can exclude the opinion if the expert fails to identify and defend the reasons that his conclusions are anomalous.

Lust, 89 F.3d at 598; see also Domingo, 289 F.3d at 606-07 (same);

Daubert II, 43 F.3d at 1318-19 (same). Indeed, other courts have excluded

Parent’s opinions as unreliable on precisely this basis. See, e.g., In re

Welding Fume Prods. Liab. Litig., No. 1:03-CV-17000 MDL 1535, 2005 WL

1868046, at *12 & n.21 (N.D. Ohio Aug. 8, 2005).4

Finally, Plaintiffs argue that Parent’s neurotoxin theory was reliable

because he believed the evidence supporting his view was “solid.” (AOB

50-51.) Because Plaintiffs provide no explanation why that is so, their

position reduces to the assertion that this Court should simply trust

4 Plaintiffs argue that Dr. Beljan opined that R.M. suffered a brain injury caused by his ingestion of Aqua Dots. (AOB 46 & nn. 83-84.) The record shows otherwise. In his deposition, Dr. Beljan admitted that he is not a toxicologist and specifically disclaimed offering any opinion on causation in this case. (1 SER 213D:3-7, 213E:2-3, 213F:9-19, 213G:10-17.) Moreover, plaintiffs’ counsel stated in open court that “I agree Dr. Beljan is not going to say that Aqua Dots caused [R.M.]’s brain injury.” (5 SER 1130:19-20.) And the district court expressly precluded Dr. Beljan from testifying as to causation or even that R.M. in fact has a brain injury (5 SER 1132:20-23)—a ruling Plaintiffs do not challenge on appeal.


43

Parent. The Rule 702 and Daubert inquiry exists precisely to weed out

such “trust me” opinions. See Joiner, 522 U.S. at 146; Domingo, 289 F.3d

at 606-07; Daubert II, 43 F.3d at 1318-19.

D. Plaintiffs’ attempt to eliminate the general causation requirement fails.

Plaintiffs try to evade the consequences of Parent’s failure to opine

on general causation by arguing that they are not required to show general

causation because this case does not involve a mass-exposure toxic tort.

(AOB 57-65.) But Plaintiffs fundamentally misunderstand causation

principles and how they interact with Daubert gatekeeping.

In every case involving physical injuries purportedly due to exposure

to a toxic substance—whether there is 1 plaintiff or 1,000 plaintiffs—

anyone seeking relief must establish both general and specific causation.

This Court has made that clear repeatedly and unequivocally. Compare

Golden, 528 F.3d at 682-83 (requiring showing of general causation in case

involving one person exposed to toxic substance), and Claar, 29 F.3d at 502

(same, in case involving six people exposed to toxic substance), with Avila,

633 F.3d at 836 (same, in case involving numerous exposures to toxic

substance), and Hanford, 292 F.3d at 1133-34 (same, for class of exposed


44

persons). The requirement of proving general causation makes sense:

before recovery is allowed for exposure to a chemical substance, a plaintiff

must show that the chemical is capable of causing the injury suffered. See

Restatement (Third) § 28(a) Reporters’ Note, cmt. c(3) at 440. There is

no need for a factfinder to consider whether a substance actually caused a

particular plaintiff’s injury if, as a threshold matter, it emerges that the

substance does not cause the type of injury suffered.

Not every tort case requires a separate showing of general causation,

to be sure. The Third Restatement contrasts toxic exposure cases with car

accidents, in which it is obvious that the traumatic impact of the vehicle

caused the plaintiff’s injuries. Restatement (Third) § 28(a), cmt. c(1) at

402. Toxic exposure cases are different (and require a showing of general

causation) because it is not obvious what caused the plaintiff’s injury.

Cases involving exposure to a substance with a latency period (after which

adverse long-term health effects allegedly develop), and an uncertain

etiology for those symptoms—like this case—are quintessential examples

of why proof of general causation is required to avoid unfounded liability.

Ultimately, to return to Plaintiffs’ point, what matters is not how many

injured persons there are, but whether the etiology of the injury is unclear;


45

if the etiology is not obvious, then a plaintiff must demonstrate that the

substance at issue is capable of causing the injury suffered. McClain v.

Metabolife Int’l, Inc., 401 F.3d 1233, 1239 (11th Cir. 2005) (explaining this

distinction); cf. Kumho Tire, 526 U.S. at 152 (urging courts to “avoid

unnecessary ‘reliability’ proceedings in ordinary cases where the reliability

of an expert’s methods is properly taken for granted, and to require

appropriate proceedings in the less usual or more complex cases where

cause for questioning the expert’s reliability arises”).

Plaintiffs argue for a different rule. They say they need not show

that GHB can cause permanent brain injury because the issue here “is

whether a particular admittedly toxic substance caused a particular

individual’s particular permanent neurological injury.” (AOB 64.) This

puts the cart before the horse. Plaintiffs assume it is already established

that GHB causes long-term brain injury, but in fact all that science has

shown is that GHB causes short-term, temporary effects on brain function.

(1 SER 74-82.) The fact that a substance is understood to cause one type

of injury does not allow a court to assume that it causes a different type of

injury. Lust, 89 F.3d at 597-98; Domingo, 289 F.3d at 606. Parent was

required to supply a reliable opinion showing general causation of


46

permanent brain injury, since that was the injury for which Plaintiffs

sought compensation. His failure to do so amply justified the district

court’s exclusion order.

In a similar vein, Plaintiffs argue that the district court placed too

much emphasis on Parent’s failure to analyze most of the Hill factors.

(AOB 65-66.) This is essentially a rehash of Plaintiffs’ attempt to avoid

having to show general causation. While the Hill factors are not

talismanic, and general causation might be shown in other ways, the Hill

factors are useful tools to determine whether an association suggested by

epidemiological data is causal or spurious. Restatement (Third) § 28(a),

cmt. c(3) at 406-07 & Reporters’ Note, cmt. c(3) at 440-42. Even Parent

admitted that an expert toxicologist examining only epidemiological

studies cannot reliably opine on general causation without analyzing the

Hill factors. (6 SER 1330:14-23, 1331:11-1333:4.) Plaintiffs’ contention

that the Hill factors are irrelevant boils down to the same (unpersuasive)

point Plaintiffs have already made: that they need not show general

causation because this is a single-plaintiff case.


47

Because Parent largely ignored the Hill factors, his neurotoxin

opinion rests on a single proposition—that the temporal proximity of

R.M.’s ingestion of Aqua Dots to the onset of alleged developmental issues

shows that one caused the other. Yet this Court has held that a temporal

connection alone is insufficient to demonstrate the reliability required for

admissibility of an expert opinion under Rule 702. Daubert II, 43 F.3d at

1319. Plaintiffs’ argument for discounting the Hill factors would require

this Court to disavow its prior precedent and is therefore baseless.

E. Plaintiffs’ argument that Arizona causation law requires a different result is incorrect.

Plaintiffs engage in an extended exposition of Arizona causation law

in an attempt to show that the district court wrongly excluded Parent’s

causation opinions. (AOB 51-57.) The attempt fails.

Plaintiffs are correct that Arizona law governs what must be shown

to prove causation. (AOB 53.) But how that is shown is a question of

evidentiary admissibility. In diversity cases, like this one, the

admissibility of an expert opinion is governed by Rule 702 and is

analytically distinct from the substantive state-law issue. Primiano v.

Cook, 598 F.3d 558, 563 (9th Cir. 2010); Claar, 29 F.3d at 503. Thus, any


48

suggestion by Plaintiffs that the admissibility of Parent’s opinions should

be determined by resort to Arizona causation law is unfounded.

Plaintiffs further argue that Arizona allows a jury to impose liability

if a defendant’s conduct contributes “only a little” to a plaintiff’s injuries,

so that the jury here should have been allowed to infer causation from

Parent’s opinions that GHB contributed “in some way” to R.M.’s alleged

developmental problems. (AOB 53-55.) This Court rejected a nearly

identical argument in Claar. In that case, the plaintiffs argued that the

Federal Employees Liability Act’s (FELA) forgiving causation standard

meant that the Daubert analysis of their causation experts’ opinions

should be relaxed. Claar, 29 F.3d at 503. This Court repudiated the

argument, holding that FELA’s lower causation standard “does not

mean . . . that FELA plaintiffs need make no showing of causation. Nor

does it mean that in FELA cases courts must allow expert testimony that

in other contexts would be inadmissible. . . . FELA plaintiffs still must

demonstrate some causal connection between a defendant’s negligence and

their injuries.” Id.


49

The Daubert reliability inquiry thus applies with full force here.

Regardless of whether Plaintiffs’ burden to show causation under Arizona

law is lower than in other jurisdictions, Plaintiffs must still demonstrate

some causal connection via expert opinion between 1,4-butanediol/GHB

and permanent brain injury. Id. at 503-04; supra pp. 38-39, 43-47. The

district court properly determined that Parent’s opinions could not show

any such connection, so the court excluded them. That determination left

Plaintiffs with no evidence to prove causation, and the district court was

therefore correct to grant partial summary judgment as to causation of

permanent brain damage. (1 ER 11:20-12:22.)

II. THE DISTRICT COURT CORRECTLY GRANTED SUMMARY JUDGMENT ON PUNITIVE DAMAGES.

A. To obtain punitive damages under Arizona law, Plaintiffs must show (by clear and convincing evidence) that Defendants acted with an evil mind.

Under Arizona law, a plaintiff seeking punitive damages “must prove

that defendant’s evil hand was guided by an evil mind.” Rawlings v.

Apodaca, 726 P.2d 565, 578 (Ariz. 1986).

The evil mind which will justify the imposition of punitive damages may be manifested in either of two ways. It may be found where defendant intended to injure the plaintiff. It may


50

also be found where, although not intending to cause injury, defendant consciously pursued a course of conduct knowing that it created a substantial risk of significant harm to others.

Id. “In whatever way the requisite mental state is expressed, the conduct

must also be aggravated and outrageous.” Linthicum v. Nationwide Life

Ins. Co., 723 P.2d 675, 680 (Ariz. 1986). “While the necessary ‘evil mind’

may be inferred, it is still this ‘evil mind’ in addition to outwardly

aggravated, outrageous, malicious, or fraudulent conduct which is required

for punitive damages.” Id. The plaintiff must demonstrate the defendant’s

evil mind by clear and convincing evidence. Id. at 681. That this standard

is exceedingly difficult to satisfy reflects Arizona’s judgment that “punitive

damages should rarely be awarded.” Medasys Acquisition Corp. v. SDMS,

P.C., 55 P.3d 763, 767 (Ariz. 2002).

“[C]ontinu[ing] to market a product is not in itself enough to show

the evil mind necessary for punitive damages.” Volz v. Coleman Co., 748

P.2d 1191, 1194 (Ariz. 1987) (manufacturer did not act with evil mind by

continuing to market product without warning of defect of which

manufacturer was aware for more than twenty years before plaintiff’s

accident); see Piper v. Bear Med. Sys., Inc., 883 P.2d 407, 417 (Ariz. Ct.

App. 1993) (manufacturer did not act with evil mind by continuing to


51

market product without warnings even though it was aware of prior

accidents involving product for three-year period before plaintiff’s

accident). In addition, because “the conduct giving rise to punitive

damages must be a proximate cause of the harm inflicted,” conduct

postdating the event that caused the plaintiff’s injury is generally

irrelevant. Saucedo ex rel. Sinaloa v. Salvation Army, 24 P.3d 1274, 1279

(Ariz. Ct. App. 2001).

B. The district court correctly concluded that no reasonable jury could find that Spin Master acted with an evil mind.

Under these exacting standards, the district court properly ruled

that Plaintiffs failed to raise a triable issue of fact regarding punitive

damages. (1 ER 19-22.) None of Plaintiffs’ evidence involved anything

worse than Spin Master’s continued importation and distribution of a

children’s toy that, unbeknownst to Spin Master, contained a substance

that was toxic when ingested in sufficient quantities. (1 ER 21-22.) As the

district court recognized, Volz and Piper preclude punitive damages in

such circumstances. Supra pp. 20-21, 49-51.


52

No juror could have found that Spin Master acted with an evil mind

because it took affirmative steps to prevent the incident that happened.

Spin Master did not know that Aqua Dots contained 1,4-butanediol, but it

sought to eliminate any risk to consumers by engaging reputable,

independent testing agencies to conduct numerous safety tests on Aqua

Dots in accordance with CPSC and ASTM standards, both before and

during its distribution. Supra pp. 6-8. Spin Master even had an oral

toxicity test performed on Aqua Dots using live animals, and the test

results showed that Aqua Dots posed no toxicity hazards. Supra pp. 7-8.

Spin Master also ordered toxicological risk assessments and production

audits throughout the distribution run, at a frequency of more than once

per week—much more frequently than the CPSC requires. Supra p. 7.

Spin Master received only one report involving ingestion of Aqua Dots

prior to R.M.’s incident, and that report gave no indication that a toxic

reaction was involved. Supra pp. 8-9.

These undisputed facts eliminate any inference that Spin Master

intended to injure R.M. (or any consumer), or that it consciously pursued a

course of conduct knowing that it created a substantial risk of significant

harm. See Rawlings, 726 P.2d at 578. These facts do not come close to


53

showing an evil mind by clear and convincing evidence. See Linthicum,

723 P.2d at 681. The only reasonable view of this evidence is that Spin

Master did its due diligence before introducing Aqua Dots into the

American market, and that it continued to do so until it recalled the

product in November 2007. Regardless of whether Spin Master could or

should have done anything more, its conduct was nothing close to the evil

mind Arizona law requires for punitive damages.

C. Plaintiffs’ six arguments for punitive damages are meritless.

Plaintiffs isolate six points that, in their view, show Spin Master

acted with an evil mind (AOB 33-36), but they either misconstrue the

evidence or they ignore other evidence supplying vital context. And they

do not contest the most important fact: Spin Master did not know of the

presence of 1,4-butanediol in Aqua Dots before R.M. ingested them.

(AOB 36 (conceding this fact).) We address each of Plaintiffs’ points below.

1. Plaintiffs argue that Spin Master did not attempt to discover

the composition of Aqua Dots before distributing them, that Spin Master

had enough information to suspect that Aqua Dots were toxic, and that

Spin Master never identified product hazards or monitored the safety

performance of Aqua Dots. (AOB 34-35.) These allegations are irrelevant


54

to the punitive damages analysis. In Volz and Piper, manufacturers had

ample notice of product defects and safety hazards, but did nothing to

remedy or warn of them; Arizona courts held that evidence legally

insufficient to show an evil mind. Volz, 748 P.2d at 1193-95; Piper,

883 P.2d at 417. Furthermore, Plaintiffs’ conclusory allegations are

wrong. They do not account for Defendants’ undisputed evidence that Spin

Master ordered extensive safety testing on Aqua Dots, none of which

revealed any safety concern or product hazard. Supra pp. 6-8, 52.

2. Plaintiffs contend Spin Master failed to issue a warning, or to

recall Aqua Dots, in May and June 2007 in response to reports of

children’s Aqua Dots ingestion, and that this shows conscious disregard of

a substantial risk of causing significant harm. (AOB 35-38.) As explained

supra pages 8-9, 50-53, Spin Master had no knowledge of all but one of

those reports until well after R.M.’s incident, which means that those

reports are legally irrelevant in applying the evil mind standard. See

Saucedo, 24 P.3d at 1278-79. The sole incident reported to Spin Master

involved a few beads and no injuries (4 SER 837), and thus provided no

notice that Aqua Dots were toxic if ingested in larger quantities. Because

Spin Master had no knowledge of the potential for harm from GHB


55

intoxication when R.M. ingested Aqua Dots, it could not have acted with

an evil mind in distributing the product up to that point. In any case, even

if Spin Master had been on notice as to all of these ingestion incidents, it

still could not be liable for punitive damages. See Volz, 748 P.2d at 1194-

95; Piper, 883 P.2d at 417.

3. Plaintiffs also argue Spin Master should have known Aqua

Dots were an ingestion hazard for children because they were small and

colorful. (AOB 35.) This argument fails to take into account that Spin

Master placed warnings on Aqua Dots packaging stating “CHOKING

HAZARD,” “DO NOT EAT,” and “‘for ages 4+.’” (2 SER 382-88, 431:10-15;

4 SER 811.) This shows Spin Master’s good faith efforts to ensure that

parents would not allow their young children to ingest the beads.

Applying those labels reveals the opposite of the evil mind required for

punitive damages. No reasonable juror could find—by clear and

convincing evidence—that a distributor acted maliciously because of a

product manufacturer’s choice of color and size.

4. Plaintiffs next accuse Spin Master of committing a crime by

importing Aqua Dots and distributing them in the United States while

they allegedly contained a “banned hazardous substance” under the FHSA.


56

(AOB 21-22, 35-36.) What Plaintiffs’ inflammatory accusation ignores

(once again) is that Spin Master had no knowledge—despite good-faith

efforts and due diligence to ensure product safety—that Aqua Dots

contained 1,4-butanediol until after R.M. ingested the beads. Supra pp. 6-

8, 53. The CPSC itself did not determine that Spin Master knowingly

violated the FHSA. (2 ER 217 (¶ 35).) Moreover, Defendants’ product

safety expert Tim Pine testified that (1) federal regulations did not require

Spin Master to test Aqua Dots before distributing them in the United

States; (2) Spin Master nevertheless voluntarily subjected Aqua Dots to

safety and toxicity testing before distributing the product; and (3) Spin

Master did not violate the FHSA. (6 SER 1547-58.) None of these

circumstances could justify a finding that Spin Master committed a crime,

nor do they supply clear and convincing evidence that it acted with an evil

mind.

5. Plaintiffs turn next to a set of “reprehensibility” factors.

(AOB 39.) But there are two different sets of reprehensibility factors, and

Plaintiffs discuss the wrong set. Plaintiffs’ discussion addresses the

factors used to determine whether the amount of a punitive damages

award is unconstitutionally excessive. (AOB 39-40, citing Arellano v.


57

Primerica Life Ins. Co., 332 P.3d 597, 605 (Ariz. Ct. App. 2014), in turn

citing State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003) and

BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996).) Arizona courts have

collected a different set of reprehensibility factors to determine whether a

plaintiff is eligible to recover punitive damages (the issue here).

The proper factors for assessing an evil mind under Arizona law are

the nature of the defendant’s conduct, including the reprehensibility of the conduct and the severity of the harm likely to result, as well as the harm that has occurred[,] . . . [t]he duration of the misconduct, the degree of defendant’s awareness of the harm or risk of harm, and any concealment of it.

Thompson v. Better-Bilt Aluminum Prods. Co., 832 P.2d 203, 209 (Ariz.

1992) (quotation marks and citation omitted). Every factor weighs against

a finding of an evil mind in this case. Spin Master acted in good faith and

with due diligence to ensure Aqua Dots were safe for children; it had no

knowledge of JSSY’s chemical switch until well after R.M.’s ingestion.

Supra pp. 6-8, 52-53. Nor did Spin Master attempt to conceal the presence

of 1,4-butanediol in Aqua Dots once it learned of the switch in October

2007. Supra p. 11. To the contrary, Spin Master promptly removed the

product from the market. While the harm to R.M. was not trivial, he


58

recovered. In any case, there is no clear and convincing evidence that the

harm to R.M. was caused by any intentional act or conscious disregard on

Spin Master’s part.

While this Court need not consider the wrong set of factors identified

by Plaintiffs, we note briefly that (a) the financial vulnerability factor is

irrelevant, (b) while Spin Master’s actions were “repeated” conduct, they

were done without knowledge or reason to know of the harm that could

result, (c) Spin Master’s conduct did not evince indifference to or reckless

disregard for the health or safety of others, and (d) R.M.’s injuries were

accidental. Plaintiffs argue that Spin Master deceived consumers by

assuring them Aqua Dots were safe without any reason to know that.

(AOB 40-41.) But Volz and Piper clearly hold that such conduct is

categorically insufficient to satisfy the evil mind standard. Supra pp. 50-

51, 53-54. And in any case, Spin Master deceived no one. It believed in

good faith, based on thorough safety testing by CPSC-approved

independent testing agencies, that Aqua Dots were safe and non-toxic.

Supra pp. 6-8, 52-53. Spin Master had no notice of any toxicity hazard

before R.M. ingested Aqua Dots. Supra pp. 6-9, 11, 52-55. None of this,


59

alone or in combination, is remotely sufficient to show by clear and

convincing evidence that Spin Master acted with an evil mind.

6. In a final, rhetorical argument, Plaintiffs assert punitive

damages are necessary to punish Spin Master and deter similar conduct.

(AOB 41-44.) Not so. As Plaintiffs concede (AOB 42-43), the adverse

publicity concerning Aqua Dots has already imposed a large measure of

deterrence and retribution on Spin Master, despite its lack of malice or

conscious disregard. In any case, punitive damages under Arizona law

may be imposed only if the evidence satisfies the demanding legal

standard under a heightened burden of proof. Plaintiffs’ evidence falls

well short here, and that should be the end of the matter.

III. THE DISTRICT COURT CORRECTLY ESTOPPED MARK MONJE FROM PURSUING HIS DERIVATIVE CLAIMS.

A. Legal standard and standard of review.

Judicial estoppel is an equitable doctrine that prevents parties from

gaining an unfair advantage by asserting and prevailing on inconsistent

positions in court. New Hampshire v. Maine, 532 U.S. 742, 749-51 (2001).

The doctrine exists because of “‘general consideration[s] of the orderly

administration of justice and regard for the dignity of judicial proceedings,’


60

and to ‘protect against a litigant playing fast and loose with the courts.’”

Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778, 782 (9th Cir. 2001)

(citation omitted). Courts generally consider three factors: (1) whether a

party’s earlier position is clearly inconsistent with his later position;

(2) whether a court accepted the earlier position; and (3) whether the party

would gain an unfair advantage if not estopped from taking the later

position. New Hampshire, 532 U.S. at 750-51; Hamilton, 270 F.3d at 782-

83.

“In the bankruptcy context, a party is judicially estopped from

asserting a cause of action not raised in a reorganization plan or otherwise

mentioned in the debtor’s schedules or disclosure statements.” Hamilton,

270 F.3d at 783; see Hay v. First Interstate Bank of Kalispell, N.A., 978

F.2d 555, 557 (9th Cir. 1992). This ensures that debtors fully disclose all

of their assets on bankruptcy disclosure schedules, on which creditors,

bankruptcy trustees, and bankruptcy courts rely in administering the

estate and making litigation decisions. Hamilton, 270 F.3d at 785.

A district court’s ruling applying judicial estoppel in a particular case

is reviewed only for an abuse of discretion. Id. at 782.


61

B. Mr. Monje failed to disclose his derivative claims on his bankruptcy schedules, then sought to pursue those claims in this action.

Mr. Monje obtained relief in bankruptcy by representing on his asset

disclosure schedules that he had no “contingent and unliquidated claims”

(2 SER 334, 362), but then proceeded to assert just such claims in this

lawsuit (1 SER 7-29). Mr. Monje thereby deceived his creditors, the

trustee, and the bankruptcy court; for that reason, the district court found

the elements of judicial estoppel satisfied and granted partial summary

judgment on Mr. Monje’s derivative claims. (1 ER 29-32.) The district

court found particularly compelling that Mr. Monje asserted derivative

claims in this lawsuit three weeks before the bankruptcy court granted his

discharge based on the inaccurate asset disclosure schedules. (1 ER 31-

32.) Mr. Monje admitted that he was made aware of the derivative claims

three weeks before his August 2009 discharge. (5 SER 1248 (¶ 5).) In

light of these damning facts, the district court properly exercised its

discretion in applying judicial estoppel to bar Mr. Monje’s derivative

claims.


62

Plaintiffs argue that the district court abused its discretion, but they

point to events that occurred six months after the district court issued its

summary judgment ruling on judicial estoppel. (AOB 66-69.) Plaintiffs do

not take issue with the district court’s ruling based on the state of facts as

they existed when it ruled in November 2014, so there is no basis for

disturbing that ruling. See Rodriguez v. Robbins, 803 F.3d 502, 503

(9th Cir. 2015) (the Court is “limited to considering evidence that was

before the district court when it issued its ruling” on summary judgment).

Rather, Plaintiffs argue that the district court was wrong to deny the

bankruptcy trustee leave to intervene and substitute himself in place of

Mr. Monje in late May 2015—eleven days before the trial of a six-year-old

case. (AOB 67-69; see 6 SER 1411:18-1412:17, 1498.) Plaintiffs contend

that allowing the bankruptcy trustee to intervene would have protected

Mr. Monje’s creditors, who (in his view) are the parties harmed by judicial

estoppel. (AOB 67-69.)

There is a threshold problem with this argument: Mr. Monje lacks

standing to seek review of the order denying intervention because he is not

aggrieved by it. Only persons directly and adversely affected by a lower

court order may seek review. Fondiller v. Robertson (In re Fondiller),


63

707 F.2d 441, 442 (9th Cir. 1983). Mr. Monje did not file the motion to

intervene, and he had no stake in seeing that it was granted. He could

only have lost rights if the motion were granted. Of course, the trustee

could have appealed the denial, but he declined to do so. United States v.

City of Oakland, 958 F.2d 300, 302 (9th Cir. 1992).

In any case, Plaintiffs’ argument fails on the merits. Plaintiffs

contend that Mr. Monje’s creditors would have been protected had the

district court allowed the trustee to intervene on the eve of trial. But

judicial estoppel serves purposes greater than preventing one party from

gaining an unfair advantage. The doctrine also protects the integrity of

the judicial process by preventing parties from misleading courts, as

Mr. Monje did. Even if creditors could have benefited from allowing the

trustee to intervene on the eve of trial, but see infra pages 64-65

(explaining the defects in the derivative claims), the district court properly

vindicated the interests of court integrity and the need to move cases to

trial without delay in estopping Mr. Monje’s derivative claims.

Indeed, this Court has twice rejected similar arguments. In

Hamilton, after the plaintiff received his bankruptcy discharge, the trustee

discovered the plaintiff’s deception and successfully moved to vacate the


64

discharge and dismiss the bankruptcy case. 270 F.3d at 781. The plaintiff

argued that judicial estoppel did not apply because the vacatur nullified

any unfair advantage he might otherwise have secured by his

nondisclosure, but this Court rejected that position, holding that judicial

estoppel was necessary to uphold the integrity of the judicial process and

deter future debtors from misleading courts. Id. at 784-85. Similarly, in

Hay, the plaintiff-debtor argued that judicial estoppel should not apply

because “the equities favor its proceeding for the benefit of creditors whose

shares of the estate may thereby be enhanced.” 978 F.2d at 556. This

Court rejected that argument. Id.

C. Alternatively, this Court should affirm in full the summary judgment on the derivative claims because they lack merit.

1. Loss of consortium. Under Arizona law, parents may claim loss

of consortium for injury to their child only where the child suffers a

“permanent[ ] and disabling injury.” Pierce v. Casas Adobes Baptist

Church, 782 P.2d 1162, 1165 (Ariz. 1989). Here, as Plaintiffs concede

(6 SER 1499 n.1, 1544:23-24), given the district court’s ruling that

Plaintiffs failed to establish causation of R.M.’s alleged permanent brain

injury, Mr. Monje cannot assert a loss of consortium claim.


65

2. NIED. Arizona law requires a parent to be with his child

“within the zone of danger” created by a defendant’s conduct. Pierce,

782 P.2d at 1165. As the district court concluded here, there is no rational

argument that Mr. or Mrs. Monje could have been in any “zone of

danger”—there was never any risk either parent would ingest Aqua Dots.

(6 SER 1501-02, 1509:1-8.) Thus, Mr. Monje has no viable NIED claim.

3. R.M.’s past and future medical expenses. Finally, Mr. Monje

cannot proceed on any claim for R.M.’s medical expenses. Plaintiffs have

already been compensated for R.M.’s past medical expenses through the

verdict and judgment. (1 ER 2-6; 6 SER 1579 (Jury Instr. No. 19),

1582 (Jury Instr. No. 22).) And Plaintiffs cannot recover for any future

medical expenses R.M. might incur (attributable to permanent brain

injury) because the district court ruled that Defendants did not cause

R.M.’s alleged permanent brain injury.

IV. THIS COURT SHOULD AFFIRM THE JUDGMENT IN FAVOR OF TRU.

In allocating fault, the jury found that TRU bore zero responsibility

for R.M.’s injuries. (1 ER 6.) Plaintiffs have not challenged this allocation

in their opening brief, nor have they argued that TRU was in any way


66

responsible for R.M.’s harm. Indeed, they do not even mention TRU as an

appellee in their summary of argument. (AOB 13.) They have therefore

forfeited any argument against the judgment entered in favor of TRU. See

Smith, 194 F.3d at 1052.

That is the end of the matter as to TRU, even if this Court were

inclined to grant a new trial. That is because the issues in a new trial

would not require allocation of fault to be litigated afresh.

“[W]here the requirement of a jury trial has been satisfied by a

verdict according to law upon one issue of fact, that requirement does

not compel a new trial of that issue even though another and separable

issue must be tried again.” Gasoline Prods. Co. v. Champlin Ref. Co.,

283 U.S. 494, 499 (1931). Even if a new trial were required here, and even

if it would require presentation of evidence regarding whether GHB in

Aqua Dots caused R.M.’s alleged permanent brain damage, whether Spin

Master or Moose acted with an evil mind in developing and distributing

Aqua Dots, or any issue related to Mr. Monje’s derivative claims, none of

those issues intersects factually or legally with the jury’s determination

that TRU was not at fault. See Lies v. Farrell Lines, Inc., 641 F.2d 765,

774 (9th Cir. 1981) (reversal and remand for a new trial does not require


67

reconsideration of pretrial rulings separable from remainder of case).

Plaintiffs do not argue otherwise in their opening brief, so there is no need

to belabor the point.

CONCLUSION

The district court’s judgment should be affirmed. Even if this Court

reverses and remands for a new trial, it should affirm the judgment as to

TRU, whom the jury found faultless.

June 13, 2016 HORVITZ & LEVY LLP PEDER K. BATALDEN JOHN F. QUERIO

THE CAVANAGH LAW FIRM RICHARD J. WOODS RICHARD W. MEAR

By: s/ John F. Querio Attorneys for Defendants—Appellees

SPIN MASTER, INC., SPIN MASTER, LTD., and TOYS “Я” US, INC.


68

STATEMENT OF RELATED CASES

Pursuant to Ninth Circuit Rule 28-2.6, appellees are unaware of any

related case pending in this Court.


69

CERTIFICATION OF COMPLIANCE WITH TYPE-VOLUME LIMITATION, TYPEFACE REQUIREMENTS,

AND TYPE STYLE REQUIREMENTS [FED R. APP. P. 32(a)(7)(C)]

1. This brief complies with the type-volume limitation of Fed. R. App. P. 32(a)(7)(B) because:

this brief contains 13,136 words, excluding the parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii), or

this brief uses monospaced typeface and contains [state the number of] lines of text, excluding the parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii).

2. This brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because:

this brief has been prepared in a proportionally spaced typeface using MS-Word in 14-point Century Schoolbook font type, or

this brief has been prepared in a monospaced typeface using [state name and version of word processing program] with [state number of characters per inch and name of type style].

June 13, 2016

s/ John F. Querio Date


CERTIFICATE OF SERVICE

I hereby certify that on June 13, 2016, I electronically filed the foregoing with the Clerk of the Court for the United States Court of Appeals for the Ninth Circuit by using the appellate CM/ECF system.

Participants in the case who are registered CM/ECF users will be served by the appellate CM/ECF system.

Signature: s/ Jo-Anne Novik


no. 15-16480 k roberts p.c. - university of arizona · pdf filecertificate of compliance with...

Documents