## Facts

- Vernon and Michelle Pelster sought a dependable, low-mileage used family car and bought a 1986 Oldsmobile Cutlass Ciera from a Missouri dealer for $7,400 plus additional charges.
- The odometer showed 37,344 miles, and the vehicle appeared clean and low-mileage at purchase.
- The vehicle had previously been a high-mileage lease car and moved through multiple owners and wholesalers before reaching the dealer through South Central Auto Auction, operated by Earl Wayne Morton and Joyce Morton.
- The Pelsters later discovered the odometer reading was inaccurate due to a rollback.
- The Pelsters’ principal trial witness, Tom Ley, investigated the vehicle’s chain of title and mileage history using records and interviews with third parties and opined the rollback occurred while the car was with U.S. Wholesales (Gary Ray and Cletus Dwight Grace).
- Ley also testified broadly that hundreds of vehicles auctioned through South Central had rollbacks, attributing a large portion to U.S. Wholesales.

## Issues

1. Whether the trial court improperly allowed the plaintiffs’ expert to present extensive hearsay-based information and records to the jury under Federal Rule of Evidence 703.
2. Whether admitting large-scale “pattern” evidence of rollbacks involving many other vehicles was unfairly prejudicial under Rules 403 and 404(b).
3. Whether the evidentiary errors were prejudicial and required a new trial as to the auction defendants.

## Decision

- The Eighth Circuit reversed the judgment against Earl Wayne Morton and Joyce Morton and remanded for a new trial.
- The court held that prejudicial trial errors occurred in admitting and using Tom Ley’s testimony and related broad pattern evidence.
- Because the improper evidence went to central liability themes and likely influenced the verdict (including punitive damages), the errors were not harmless.

## Legal Principles

- Under Rule 703, an expert may rely on otherwise inadmissible information if it is reasonably relied on in the field, but the expert may not be used to place large amounts of inadmissible hearsay before the jury without adequate control.
- Evidence of other acts offered to show knowledge, intent, or absence of mistake must be tightly limited; expansive “pattern” evidence risks improper propensity reasoning and may be excluded under Rules 403 and 404(b).
- When improperly admitted evidence permeates a party’s theory of liability and materially affects substantial rights, reversal and a new trial are required rather than affirmance under harmless-error review.

## Conclusion

The court ordered a new trial for the auction defendants because the jury heard sweeping, highly prejudicial expert and pattern testimony about alleged odometer fraud across hundreds of vehicles, exceeding permissible evidentiary limits and undermining trial fairness.


Pelster v. Ray, 987 F.2d 514 (8th Cir. 1993)