Amicus News

No. 7. June 25, 1996

SUPREME COURT LIMITS REMITTITURS IN FEDERAL APPELLATE COURTS

The U.S. Supreme Court vacated a Second Circuit decision that ordered a remittitur of damages in a diversity case. The Court held that state law aimed at controlling jury awards was applicable in diversity cases, but must be applied at the trial l evel. The authority of the federal appellate courts is limited to review of the trial judge's decision for abuse of discretion. Gasperini v. The Center for the Humanities, No. 95-719 (decided June 24, 1996).

The Center had lost 300 photographic transparencies belonging to journalist Gasperini. Based on the testimony of an expert, a federal jury in New York determined that the lost transparencies were worth $450,000, and the judge denied defendant's motion for a new trial. The federal court of appeals, however, reduced the award to $100,000. It did so, based on a tort reform measure requiring state appellate courts to reduce awards that are out of line with other awards in similar cases.

Justice Ginsburg, writing for a 5-4 majority, vacated the appellate decision. Although federal courts may not ignore New York's damage-controlling rule, she stated, the Second Circuit failed to take into account the "essential characteristic" of federal courts, which are bound by the Seventh Amendment, which assigns factual questions to the jury.

Prior to this decision, the Court had not defined the authority of federal appellate courts to review a jury verdict for excessiveness. In recent decades, an increasing number of federal courts of appeal not only assumed the authority to set aside a j ury award, but also to order a remittitur of damages as a condition to denial of a new trial. In Gasperini, the majority makes it clear that appellate courts do not have that authority.

In the federal system, Justice Ginsburg wrote, it is trial judges who have the discretion to overturn verdicts for excessiveness and order new trials. The authority of appellate courts is limited to finding whether the trial judge abused that discretio n. Under that standard, appellate courts "give the benefit of every doubt to the judgment of the trial judge" to determine if the award surpasses an "upper limit" with respect to which reasonable men may not differ.
The case is complicated by Second Circuit's reliance on New York's statute which gives appellate courts greater control over jury verdicts than the common law "shock the conscience" standard. (Enacted in 1986 as a tort reform measure, the rule wa s clearly an attempt by tort reform interests to give appellate courts a veto over jury verdicts.) Undertaking an Erie analysis, Justice Ginsburg concluded that the rule is outcome-determinative and therefore must be applied by federal courts in diversity cases. However, in view of the Seventh Amendment, the Court stated that the state standard is to be applied by the trial judge; appellate court is limited to abuse of discretion review.

In essence, the Court appears to have struck a compromise to accommodate both federal and state interests. Although federal appellate courts may not engage in the type of review called for in the New York statute, federal trial courts must be guided b y the state standard.

In reaching this compromise position, the Supreme Court missed an opportunity to bolster the Seventh Amendment right, which has come under increasing attack and "jury bashing" by special interest groups. As Justice Scalia emphasizes in his dissen t, joined by Chief Justice Rehnquist and Justice Thomas, the Founders included the Seventh Amendment in the Bill of Rights specifically to prevent federal judges from intruding into the role of the jury.

Requiring federal judges to apply the New York rule seems questionable. As Justice Ginsburg acknowledges, the New York rule "requires closer court review than the common law" standard. The Seventh Amendment prohibits reexamination of jury verdict s, other "than according to the rules of the common law." While trial judges are closer to the evidence than the appellate court, which must rely on a cold record, the opinion does not satisfactorily explain how this distinction can be reconciled with the Seventh Amendment, which applies to "any Court of the United States," both appellate and trial courts.


AAJs amicus brief and the text of the courts opinion can be downloaded from AAJ Online in the Courts section. For further information, please contact Jeffrey White.

Phone: 202-965-3500 x310
FAX: 202-955-0920
E-Mail: jeffrey.white@justice.org