## Facts

- John McShain, Inc. bought a Cessna aircraft for $282,136 in May 1969.
- After several hundred landings and 147 flight hours, the main landing gear collapsed on landing in December 1969.
- McShain had the aircraft repaired by Butler Aviation–Friendship, Inc. at a cost of $11,734; Cessna representatives visited during the overhaul.
- After about five additional flight hours, the landing gear again failed on touchdown; the second repair cost $24,681, and McShain stopped flying the aircraft.
- McShain sued Cessna in federal court, alleging defective landing-gear design and failure to correct a known defect; it sought repair costs, consequential damages, and punitive damages.
- Cessna impleaded Butler, asserting the second failure resulted from negligent repairs.
- Before the case ended, Cessna accepted liability for the first collapse based on an understrength bolt as its cause.
- After an 18-day jury trial, the jury awarded McShain $11,734 (first repair cost) and found by special verdict that the landing gear was not defectively designed.
- The district court denied McShain’s motion for a new trial based on asserted evidentiary errors; McShain appealed.

## Issues

1. Whether a settlement/release between McShain and Butler was admissible under Federal Rule of Evidence 408 when used to impeach McShain’s expert for bias rather than to prove liability or damages.
2. Whether NTSB accident reports and files concerning similar incidents were properly excluded as hearsay and under the trial court’s discretion to control delay and jury confusion.
3. Whether any challenged evidentiary rulings, individually or cumulatively, warranted a new trial.

## Decision

- The Third Circuit affirmed the judgment and the denial of a new trial.
- The settlement/release was properly admitted for the limited purpose of showing possible bias of McShain’s expert witness.
- The NTSB files were properly excluded as hearsay; their exclusion was also justified by the time required to separate admissible from inadmissible material.
- Any remaining alleged evidentiary errors did not amount to reversible error given the jury’s express finding of no design defect.

## Legal Principles

- Evidence of compromise or settlement is inadmissible to prove liability or the amount of a claim, but it may be admitted for another purpose, including showing a witness’s bias or prejudice. (Fed. R. Evid. 408)
- Trial courts have broad discretion over evidentiary rulings, including limiting evidence whose probative value is outweighed by risks such as unfair prejudice, confusion, undue delay, or waste of time.
- Investigative files and reports offered for their truth are generally inadmissible absent an applicable hearsay exception; exclusion is less likely to be reversible where the verdict resolves the central factual issue against the proponent.
- Appellate review of evidentiary rulings is deferential; reversal requires an abuse of discretion that affects substantial rights.

## Conclusion

The Third Circuit upheld the verdict and denial of a new trial, holding that admitting a settlement/release to show expert-witness bias fell within Rule 408’s permitted uses and that excluding NTSB accident files as hearsay and as a trial-management matter was within the district court’s discretion, with no prejudicial effect given the jury’s finding of no design defect.


John McShain, Inc. v. Cessna Aircraft Co., 563 F.2d 632 (3d Cir. 1977)