Addressing whether, in the Sixth Circuit, the standard for prejudice under Federal Rule of Civil Procedure 60(b)(3) is different from the standard for prejudice under Rule 60(b)(2), the U.S. Court of Appeals for the Federal Circuit held that the standard for prejudice under the two subsections is "indeed different" in the Sixth Circuit and remanded the case for adjudication under the proper legal standard. Venture Industries Corp., et. al. v. Autoliv ASP, Inc., et. al., Case No. 05-1537 (Fed. Cir. Aug. 7, 2006) (Dyk J.).
This case, which included claims under the patent laws, was initially appealed to the Sixth Circuit. The Sixth Circuit transferred the appeal to the Federal Circuit. The Federal Circuit stayed the appeal to allow Autoliv to move for a new trial under Rule 60(b)(2) and (3) based on Venture Industries’ use at trial of falsified financial statements. The district court denied appellant's Rule 60(b) motion and Autoliv appealed to the Federal Circuit.
On appeal, Autoliv argued that the use of falsified information affected the outcome of the trial under Rule 60(b)(2) and constituted fraud during discovery and at trial under Rule 60(b)(3). The Federal Circuit upheld the district court’s finding that Autoliv failed to establish prejudice under Rule 60(b)(2) and upheld its finding that Venture Industries did not commit discovery misconduct under Rule 60(b)(3). The district did not address Autoliv’s claim of fraud at trial under Rule 60(b)(3).
The Federal Circuit held that the district court’s failure to address Autoliv’s Rule 60(b)(3) claim of fraud at trial constituted harmful error if the standard for prejudice under Rule 60(b)(2) is different from the standard for prejudice under Rule 60(b)(3).
In the Sixth Circuit, the moving party must show prejudice under Rule 60(b)(2), while under Rule 60(b)(3) an unpublished case held that, once the moving party has shown evidence of misbehavior, the burden shifts to the non-moving party to show that the misbehavior had no prejudicial effect on the outcome of the case. In the Sixth Circuit, "unpublished cases may be persuasive authority depending on their pertinence and depth of reasoning."
Under the circumstances, the Federal Circuit held that relying on the unpublished case was appropriate. Thus, the Court concluded that "the standard for prejudice is indeed different under the two rules" and remanded the case to the district court for adjudication using the proper legal standard in the Sixth Circuit.
Practice Note
There is a general misconception about the use, or non-use, of unpublished cases in legal documents. As this case illustrates, it wise to both review unpublished cases and to understand the rules regarding unpublished cases in your jurisdiction.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.