Litigation Financing No Basis To Impeach

In Carroll v. Trump, the United States Court of Appeals for the Second Circuit held, inter alia, that evidence of the plaintiff’s litigation financing was properly excluded

First, district courts regularly exclude evidence of litigation financing under Rule 401, finding it “irrelevant to credibility” and that it “does not assist the factfinder in determining whether or not the witness is telling the truth.” Benitez v. Lopez, No. 17-cv-3827, 2019 WL 1578167, at *1 (E.D.N.Y. Mar. 14, 2019); see also id. at *2 (reviewing cases and noting that “[n]o case” of which the court was aware supports the claimed proposition that “litigation financing documents are generally probative of a plaintiff’s credibility”); In re Valsartan N-Nitrosodimethylamine (NDMA) Contamination Prods. Liab. Litig., 405 F. Supp. 3d 612, 615 (D.N.J. 2019) (collecting cases); cf. Kaplan v. S.A.C. Cap. Advisors, L.P., No. 12-cv-9350, 2015 WL 5730101, at *5 (S.D.N.Y. Sept. 10, 2015) (in class action context, denying defendants’ request for production of documents relating to plaintiffs’ litigation funding on ground that defendants failed to “show that the requested documents are relevant to any party’s claim or defense”).

Second, the district court did not abuse its discretion in precluding cross-examination on this point because, as the district court found, Ms. Carroll’s prior statement on the litigation funding was not sufficiently probative of her credibility. Ms. Carroll plausibly represented that she had forgotten about the limited outside funding counsel obtained in September 2020 when this question was first posed to her in 2022, and the additional discovery did not indicate otherwise. Rather, it showed that Ms. Carroll simply was not involved in the matter of who was or was not funding her litigation costs. Ms. Carroll testified that, after her counsel informed her in September 2020 that they had received some outside funding, she did not speak with her counsel about this topic again until the spring of 2023 and did not even know the funder’s political position or why they were partially funding her lawsuit. Therefore, by the time of her deposition in October 2022, Ms. Carroll had not spoken with her counsel about the matter of outside funding for over two years. It was not an abuse of the district court’s discretion to conclude that the available litigation-funding evidence would have little probative value compared to its potential for unfair prejudice.

The per curiam decision was issued by a panel consisting of CHIN, CARNEY, and PÉREZ, Circuit Judges.  (Mike Frisch)