Filed: Apr. 01, 1999
Latest Update: Feb. 21, 2020
Summary: [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT FILED U.S. COURT OF APPEALS ELEVENTH CIRCUIT No. 97-8726 04/01/99 THOMAS K. KAHN CLERK D. C. Docket No. CV 191-178 CHERYL MALOOF JOHANSEN, MILDRED D. GOLDMAN, et al., Plaintiffs-Appellees, Cross-Appellants, AUBREY G. McGILL, WILLIAM E. JONES, RAYMOND H. JONES, MARTHA JONES LONG, et al. Plaintiffs, versus COMBUSTION ENGINEERING, INC., Defendant-Appellant, Cross-Appellee. Appeals from the United States District Court for the
Summary: [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT FILED U.S. COURT OF APPEALS ELEVENTH CIRCUIT No. 97-8726 04/01/99 THOMAS K. KAHN CLERK D. C. Docket No. CV 191-178 CHERYL MALOOF JOHANSEN, MILDRED D. GOLDMAN, et al., Plaintiffs-Appellees, Cross-Appellants, AUBREY G. McGILL, WILLIAM E. JONES, RAYMOND H. JONES, MARTHA JONES LONG, et al. Plaintiffs, versus COMBUSTION ENGINEERING, INC., Defendant-Appellant, Cross-Appellee. Appeals from the United States District Court for the S..
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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
FILED
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 97-8726 04/01/99
THOMAS K. KAHN
CLERK
D. C. Docket No. CV 191-178
CHERYL MALOOF JOHANSEN, MILDRED D.
GOLDMAN, et al.,
Plaintiffs-Appellees,
Cross-Appellants,
AUBREY G. McGILL, WILLIAM E. JONES,
RAYMOND H. JONES, MARTHA JONES LONG, et al.
Plaintiffs,
versus
COMBUSTION ENGINEERING, INC.,
Defendant-Appellant,
Cross-Appellee.
Appeals from the United States District Court
for the Southern District of Georgia
(April 1, 1999)
Before ANDERSON and BARKETT, Circuit Judges, and HILL, Senior Circuit Judge.
HILL, Senior Circuit Judge:
Property owners brought a nuisance and trespass action against the present
owner of a former mining site, Combustion Engineering, Inc. ("CE"), alleging that
acidic water had escaped from the site, damaging streams that run through their
properties. The jury awarded the owners an aggregate of $47,000 in compensatory
damages and $45 million in punitive damages which the district court reduced to
$4.35 million. All parties have appealed.
I.
In the 1920's, a company named Tiffany's mined a site in Lincoln County,
Georgia for rutile, a substance used for polishing diamonds. At some point
thereafter, Aluminum Silicates, Inc. began mining the site for kyanite, a mineral
used to make heat-resistant products. In the mid-1960's, CE purchased the site and
began mining kyanite.1 It conducted these mining operations until 1984, when it
sold the property to Pasco Mining Company (“Pasco”). Pasco operated the mine
site until November 1, 1986, at which time Pasco defaulted on its obligations and
the facility and all environmental responsibilities for the property reverted to CE
pursuant to the parties' 1984 contract. CE never resumed mining operations.
1
Actually, a company named Combustion Chemical, Inc. was formed to purchase the site and
do the mining, but this company was at all times a wholly-owned subsidiary of CE.
2
At the time the mining originally began, Graves Mountain was essentially a
big, solid rock. The mine operator would remove, crush, and process the rock in
order to extract the kyanite. After the removal of the kyanite, the remaining
crushed rock, or “tailings,” would be deposited into containment areas, known as
“tailings ponds.” One of the minerals in the tailings was pyrite. When rainwater
falls on pyrite that has been exposed to oxygen, a chemical reaction takes place that
renders the water more acidic. Periodically, acidic water from the mining site
seeped into streams that flowed through CE’s property affecting their quality as
they ran through the properties downstream.
In August of 1991, several individuals who owned a total of sixteen tracts
downstream from the mine site sued CE claiming damages for trespass and
nuisance. Several other property owners filed suit in May of 1992, and the two
suits were consolidated. Property owners' claim was that the streams looked and
smelled bad, that the streams no longer contained fish, and that cows would not
drink from the streams. They did not allege any personal injuries, risk to human
health, diminution in property value, damage to crops or animals, or any other
economic loss.2
2
Few of these individuals live on their property. Some do not use their property at all, and
several others have been to their property (or the streams on it) only rarely if at all over the past
several years. The plaintiffs who do use their property, do so for raising cattle, storing junked
cars, hunting, timbering, or growing hay.
3
The case was tried to a jury in a two-phase trial in which issues relating to
punitive damages were decided separately from liability for the underlying torts
and compensatory damages. The jury was instructed that the relevant time frame
for damages purposes was the four-year period prior to the commencement of the
property owners’ suit.3
In the first phase of the trial, the jury returned a total of thirteen verdicts for
compensatory damages in favor of the various property owners in an aggregate
amount of $47,000. The thirteen verdicts ranged from $1000 to $10,000. The jury
also awarded property owners litigation costs in the amount of $227,000.
In the punitive damages phase of the trial, property owners were required as
a matter of Georgia law to prove by clear and convincing evidence that CE’s
actions “showed willful misconduct, malice, fraud, wantonness, oppression, or that
entire want of care which would raise the presumption of conscious indifference to
consequences.” O.C.G.A. § 51-12-5(b). To recover more than $250,000 each,
property owners were required to demonstrate, again by clear and convincing
evidence, that CE acted “with the specific intent to cause harm.” Id. at § 51-
12.5.1(f). The jury awarded $3 million in punitive damages to each of the fifteen
3
Georgia has a four-year statute of limitations for trespass and nuisance.
4
property owners who owned the sixteen parcels of land at issue, for a total of $45
million.
The district court found this amount "shocking," which if allowed to stand
would "give[ ] the system a black eye." The court entered an order granting CE's
motion for a new trial unless property owners agreed to remit all punitive damages
over $15 million. Property owners agreed to do so and the court entered separate
judgments totaling $15 million in punitive damages.
CE appealed to this court. During the pendency of the appeal, CE settled
with three property owners, leaving an aggregate of $43,500 in compensatory
damages and $12 million in punitive damages at issue in the appeal. After oral
argument, we affirmed those judgments without opinion. Johansen v. Combustion
Engineering, Inc., 67 F.3d 314 (11th Cir. 1995).
CE petitioned the Supreme Court for certiorari, contending that the punitive
damage award was still excessive. The Supreme Court deferred ruling on CE’s
petition pending its resolution of BMW of North America, Inc. v. Gore, 517 U.S.
559 (1996). After it ruled that the Constitution does not permit “excessive”
punitive damage awards, the Court granted CE's petition, vacated this court's
judgment, and remanded the case to us for further consideration in light of BMW.
5
We remanded the case to the district court. The district court reexamined the
punitive award under BMW, and concluded that the Constitution would permit
punitive damages in an amount no more than 100 times each plaintiff’s
compensatory award. Therefore, he ordered the entry of judgment for each of the
remaining plaintiffs in an amount equal to the jury’s compensatory award plus 100
times that amount as punitive damages. This resulted in an aggregate punitive
damage award of $4.35 million. The district court did not afford property owners
the opportunity to elect a new trial.
CE appealed, arguing that even $4.35 million in punitive damages is
unconstitutionally excessive on the facts of this case. CE also contends that the
district court erred in not offsetting the punitive damage award by the amounts it
had already paid some of the property owners in settlement.
Property owners cross-appealed arguing that the district court erred in
holding that the $15 million punitive damages award was unconstitutionally
excessive. They seek restitution of the district court’s remittitur of $15 million
which they accepted in lieu of a new trial. They also argue that the district court
erred in ordering post-judgment interest to run from the date of the second rather
than the first judgment.
6
Finally, property owners claim that the district court committed
constitutional error when it reduced the jury’s punitive damage verdicts to $4.35
million and unilaterally entered judgments totaling that amount. Although they do
not analyze it as such, this claim raises a jurisdictional issue of first impression
which we must resolve prior to proceeding to the merits of this appeal.4
II.
A federal court has no general authority to reduce the amount of a jury’s
verdict. Kennon v. Gilmer, 131 U.S. 22, 29 (1889). The Seventh Amendment
prohibits re-examination of a jury’s determination of the facts, which includes its
assessment of the extent of plaintiff’s injury.
Id. A federal court may not,
therefore, “according to its own estimate of the amount of damages which the
plaintiff ought to have recovered, . . . enter an absolute judgment for any other
4
A federal court not only has the power but also the obligation at any time to inquire into
jurisdiction whenever the possibility that jurisdiction does not exist arises. Philbrook v.
Glodgett, 421 U.S. 707 (1975); Blue Cross & Blue Shield v. Sanders,
138 F.3d 1347, 1351 (11th
Cir. 1998). “We always must investigate questions of subject matter jurisdiction, whether or not
they are raised by the parties to the case.” Reagard v, Lee County, 978 F.2d 1212,1213 (11th
Cir. 1992) (quoting Fitzgerald v. Seaboard System R.R.,
760 F.2d 1249, 1251 (11th Cir. 1985).
See also Rule 12(h)(3), Fed. R. Civ. P., (“Whenever it appears by suggestion of the parties or
otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the
action.”).
7
sum than that assessed by the jury.” Id. at 30.5 To do so would deprive the parties
of their constitutional right to a jury.
Id.
A district court may, however, order a new trial.6 The authority to do this is
located in the common-law principle, later codified in the Judiciary Act of 1789,
that “[t]rials by jury in civil causes could not subsist now without a power,
somewhere, to grant new trial. . . . It is absolutely necessary to justice, that there
should, upon many occasions, be opportunities of reconsidering the cause by a new
trial.” Bright v. Eynon, 1 Burr. 390, 393 (K.B. 1757 (Lord Mansfield) (quoted by
Judge John J. Parker in Aetna Cas. & Sur. Company v. Yeatts,
122 F.2d 350, 353-
54 (4th Cir. 1941)).7 Therefore, when a court finds that a jury’s award of damages
is excessive, it may grant the defendant a new trial.8 Gasprini v. Center for
Humanities, Inc.,
518 U.S. 415, 433 (1996).
5
The Seventh Amendment applies only to the federal courts. Minneapolis & St. L.R.R. v.
Bombolis,
241 U.S. 211, 217 (1916); Woods v. Holy Cross Hosp.,
591 F.2d 1164, 1172 (5th Cir.
1979).
6
A court may also order a new trial limited to the issue of damages. Kemp v. Balboa,
23 F.3d
211 (8th Cir. 1994); Mason v. Texaco, Inc.,
948 F.2d 1546, 1552 (10th Cir. 1991).
7
The court’s power to order a new trial is recognized in Rule 59 (a), Fed. R. Civ. P.:
A court may grant a new trial for any of the reasons for which new trials have
heretofore been granted in actions at law in the courts of the United States.
8
This is merely a special application of the general power of the trial court to set aside a
verdict that is against the weight of the evidence. Greyhound Corp. v. Dewey, 240 F.2d 899 (5th
Cir. 1957).
8
A federal court’s power to “order” a remittitur grew out of this authority to
grant a new trial. A court which believes the jury’s verdict is excessive may order
a new trial unless the plaintiff agrees to remit a portion of the jury’s award. Dimick
v. Schiedt, 293 U.S. 474, 486-87 (1935). This practice dates from Justice Story’s
opinion in Blunt v. Little,
3 F. Cas. 760, 761-62 (No. 1578) (C.C. Mass. 1822)
(Story, J.), in which he announced that, because the verdict was not supported by
the evidence, unless the plaintiff was willing to remit $500 of his damages, the
cause would be submitted to another jury. Although Justice Story cited no
authority whatever, the Supreme Court has “never expressed doubt with respect to
this rule.”
Dimick, 293 U.S. at 486. See e.g., Linn v. United Plant Guard Workers
of America, Local 114,
383 U.S. 53 (1966); Arkansas Valley Land & Cattle Co. v.
Mann,
130 U.S. 69 (1889); Northern Pac. R. Co. V. Herbert,
116 U.S. 642, 646-47
(1886).
The Seventh Amendment requires, however, that the plaintiff be given the
option of a new trial in lieu of remitting a portion of the jury’s award. Hetzel v.
Prince William County, Va., 523 U.S. 208, 1211 (1998). In Hetzel, the Supreme
Court reversed the Fourth Circuit’s mandamus to the district court to enter
judgment for a remittitur without affording the plaintiff the option of electing a
new trial. The Court expressly held that no judgment for a remittitur may be
9
entered without the plaintiff’s consent because the Seventh Amendment prohibits
the court from substituting its judgment for that of the jury’s regarding any issue of
fact. Id. at 1212. See also
Dimick, 293 U.S. at 474;
Gasperini, 518 U.S. at 433. If
the plaintiff does not consent to the remittitur, the court has no alternative but to
order a new trial.
Id.
In this case, however, that did not happen. This reduction was neither
consented to nor rejected in favor of a new trial. Rather, the district court entered
reduced judgments totaling $4.35 million in punitive damages, without seeking
property owners’ consent nor affording them the option of electing a new trial.
Although they now claim the district court abridged their Seventh
Amendment right to a jury, property owners did not bring this “error” to the district
court’s attention. Instead, they filed a notice of appeal of the reduced judgments.
In their initial briefs, each claims the right to elect a new trial, should they so
desire, after we decide this appeal.9 This possibility caused us to reflect on the
procedural posture of this case.
Prior to BMW, if a district court ordered a remittitur, a plaintiff had two
choices. He could invoke his Seventh Amendment right to reject the district
9
Both parties assume that property owners had a constitutional right to elect a new trial after
the second “remittitur.” Defendants concede this point, however, only if property owners must
make that election prior to our resolution of this appeal.
10
court’s reexamination of the jury’s verdict (the remittitur) and elect a new trial, or
he could consent to the remittitur. Neither of these two choices, however, was
appealable.
A district court’s grant of a new trial is not appealable.10 Allied Chemical
Corp. v. Daiflon, Inc., 449 U.S. 33 (1980). Such an order is merely interlocutory
and is not appealable under the final judgment statute invoked by property owners
as the basis for this appeal.
Id. See also 28 U.S.C. § 1291. Therefore, if property
owners had been afforded the opportunity to reject the reduced awards and had
elected a new trial, the district court would have granted CE’s motion for a new
trial and this order would not have been appealable.11 Seltzner v. RDK Corp.,
756
F.2d 51 (7th Cir. 1985); Continental Trend Resources, Inc. v. Oxy USA, Inc., 810 F.
Supp. 1520, 1523 (W.D. Okla. 1992).
Neither could property owners have appealed if they had accepted the
reductions.12 Donovan v. Penn Shipping Co., Inc., 429 U.S. 648, 649 (1977).
10
The only exception would be where the district court was without the power to grant the
motion, as, for example, where the motion was untimely. See Phillips v. Negley, 117 U.S. 665
(1886).
11
It is reviewable, however, on appeal of the final judgment entered after the second trial. If
the appellate court agrees, it will reinstate the verdict reached at the first trial. Conway v.
Chemical Leaman Tank Lines, Inc., 610 F.2d 360 (5th Cir. 1980).
12
If property owners had consented to the reduced awards, the district court would have
denied the motion for a new trial. Defendants may not appeal this denial. State Nat. Bank of El
Paso v. United States, 488 F.2d 890, 893 (5th Cir. 1974). It merges into the final judgment,
11
Although for some years there was authority, especially in the Fifth Circuit, that a
plaintiff who consents to a remittitur “under protest” may challenge on appeal of
the final judgment the correctness of the remittitur order, United States v. 1160.96
Acres of Land, 432 F.2d 910 (5th Cir. 1970), in Donovan, the Supreme Court made
clear that a plaintiff who has accepted a remitted award may not appeal that
award.
429 U.S. at 649.
In sum, we have for review an “order of remittitur” which has neither been
consented to nor rejected by property owners. In fact, if either of these two events
had occurred, this case would not now be before us as there would be no
appealable order.13 It appears that property owners hoped to avoid a new trial and
proceed to immediate appellate review of the reduction in punitive damages by
failing to object to the district court’s entry of judgment.
Jurisdiction in this court, however, may not be conferred by a party’s
silence. Fitzgerald v. Seaboard System R.R., 760 F.2d 1249, 1251 (11th Cir. 1985)
(“Therefore, lack of jurisdiction cannot be conferred upon a federal court by
consent, inaction or stipulation . . . .” ). If the Seventh Amendment continues to
however, which, of course, is appealable. Thus, the denial of a motion for new trial is
reviewable on appeal of the final judgment. Montgomery Ward & Co. V. Duncan,
311 U.S. 243
(1940); Lloyd v. Gill,
406 F.2d 585 (5th Cir. 1969).
13
Defendants, of course, could appeal the remitted amount as still excessive, but only after
plaintiffs had consented to the remittitur and it became an appealable final judgment.
12
prohibit a federal court from “enter[ing] an absolute judgment for any other sum
than that assessed by the jury,” Kennon, 131 U.S. at 30, then the entry of judgment
without property owners’ consent was error and this case is due to be dismissed for
lack of jurisdiction. Alternatively, if the reexamination clause is not implicated by
the district court’s entry of judgment in this case, the court was entitled to enter the
judgment and we have jurisdiction over this appeal. Since the district court entered
judgment under the authority of BMW, the resolution of this issue must lie in the
interplay between BMW and the Seventh Amendment.
III.
At common law, no review of jury verdicts was permitted except upon writs
of error, which were limited to questions of law. Gasperini, 518 U.S. at 452 (citing
3 W. Blackstone, Commentaries on the Laws of England 405 (1768)). The
Seventh Amendment incorporated this principle, forbidding any reexamination of a
jury’s determination of the facts.
Gasperini, 518 U.S. at 452. Neither common
law nor the Seventh Amendment, however, prohibits reexamination of the verdict
for legal error.14
Id. Therefore, if legal error is detected, the federal courts have
14
The Judiciary Act of 1789, 1 Stat. 73, also provides for “reexamin[ation]” of civil judgments
upon a writ of error.
13
the obligation and the power to correct the error by vacating or reversing the jury’s
verdict. Id.
Similarly, where a portion of a verdict is for an identifiable amount that is
not permitted by law, the court may simply modify the jury’s verdict to that extent
and enter judgment for the correct amount. New York, L.E. & W.R. Co. v. Estill,
13
S. Ct. 444, 454 (1893). In Estill, the Supreme Court determined that interest had
been improperly awarded by the jury. The Court affirmed the jury’s verdict as to
the damages, but wrote that “it is not affirmed as to the amount of interest, or any
part thereof, awarded by the verdict or judgment. That judgment is modified as to
such interest, and the case is remanded to the court below, with a direction to enter
a judgment for the plaintiffs for the [damages] . . . .”
Id. The Seventh
Amendment is not offended by this reduction because the issue is one of law and
not fact. In TXO Production Corp. v. Alliance Resources Corp,
509 U.S. 443,
454 (1993), the Supreme Court held that the due process clause prohibits a state
from imposing a “grossly excessive” punishment on a tortfeasor. Three years later,
in BMW, the Court reversed a punitive damage award because it was
unconstitutionally
excessive. 517 U.S. at 562. The Court held that the
Constitution provides an upper limit on punitive damage awards so that a person
14
has “fair notice not only of the conduct that will subject him to punishment but also
of the severity of the penalty that a State may impose.” Id. at 574.
No one would dispute that the court, not the jury, has the responsibility for
determining this constitutional limit. Courts decide questions of law, not juries.
The real issue, therefore, is whether the court may enter judgment for a
constitutionally reduced award without plaintiff’s consent. So put, the question
answers itself. Plaintiff’s consent is irrelevant if the Constitution requires the
reduction.
A constitutionally reduced verdict, therefore, is really not a remittitur at all.15
A remittitur is a substitution of the court’s judgment for that of the jury regarding
the appropriate award of damages. The court orders a remittitur when it believes
the jury’s award is unreasonable on the facts. A constitutional reduction, on the
other hand, is a determination that the law does not permit the award. Unlike a
remittitur, which is discretionary with the court and which we review for an abuse
of discretion, Gasperpini, 518 U.S. at 435, a court has a mandatory duty to correct
15
We find support for this view in the Supreme Court’s failure to use the term remittitur in
BMW to characterize a constitutionally required reduction in a verdict. Nowhere does the Court
characterize such a reduction as a remittitur. On the other hand, the Court did specifically refer
to the Fourth Circuit’s reduction of the jury’s verdict in Hetzel as a remittitur. While we do not
imply that the characterization of a reduction is controlling as to the Seventh Amendment issue,
we conclude that the nature of the reduction by the court does.
15
an unconstitutionally excessive verdict so that it conforms to the requirements of
the due process clause. BMW, 517 U.S. at 585.
We conclude that, upon determination of the constitutional limit on a
particular award, the district court may enter a judgment for that amount as a
matter of law. Just as the Supreme Court struck the unlawful interest from the
jury’s verdict in Estill and ordered judgment entered for the remainder, so may the
district court strike the unconstitutional excess from a jury’s punitive damage
award and enter judgment for that amount. As in Estill, the power to do so is
located in the court’s authority to enter judgment as a matter of law. Thus, a court
proceeds under Rule 50, not Rule 59, in the entry of judgment for a constitutionally
reduced award and the Seventh Amendment is not implicated in this legal
exercise.16
We do not think Hetzel is to the contrary. In Hetzel, the Supreme Court
reversed the Fourth Circuit’s writ of mandamus directing the district court to enter
judgment for a remittitur without affording the plaintiff the option of a new trial.
16
The court may enter judgment only if it reduces the jury’s verdict to the maximum permitted
by the Constitution in that particular case, as any smaller amount would invade the province of
the jury. See Dimick, 293 U.S. at 486 (“Where the verdict is excessive, the practice of
substituting a remission of the excess for a new trial is not without plausible support in the view
that what remains is included in the verdict along with the unlawful excess – in the sense that it
has been found by the jury – and that the remittitur has the effect of merely lopping off an
excrescence.”).
16
118 S. Ct. at 1211. It is clear that the Supreme Court viewed the reduction of the
verdict in Hetzel as a traditional remittitur: “In determining that the evidence did
not support the jury’s general damages award and in ordering the District Court to
recalculate the damages, the Court of Appeals in this case imposed a
remittitur.”
118 S. Ct. at 1211. There was no claim in the case that the Constitution required
the reduction. Therefore, the reduction must have been an exercise of the court’s
discretion. As we have seen, the exercise of a court’s discretion, under the
authority of Rule 59, to propose a remittitur must afford the plaintiff the option to
elect a new trial.17
We have concluded, however, that a constitutionally reduced award is not a
traditional remittitur at all. It is not discretionary, and the court’s authority to do so
17
On remand of Hetzel, the Fourth Circuit explained that it had believed that after Gasperini
and BMW “a substantial constitutional question had emerged as to whether the Court’s decision
in Kennon could be understood as controlling the disposition of the Seventh Amendment issue.”
In re Bd. of County Sup’rs of Prince William County, Va., 143 F.3d 835, 840 (4th Cir. 1998).
The court read BMW to mean that the Seventh Amendment right to a jury would not be offended
by the entry of judgment for a reduced verdict required by law – by any law, including state law.
Id.
We agree with the Fourth Circuit that this issue is clouded by the statement in Gasperini
that appellate review of a remittitur is permitted because a jury’s verdict has an “upper limit
[under state law], and whether that limit has been surpassed is not a question of fact with respect
to which reasonable men may differ, but a question of
law.” 518 U.S. at 435 (quoting Dagnello
v. Long Island R. Co.,
289 F.2d 797, 806 (2d Cir. 1961)). This language implies that even a
traditional remittitur is a matter of law, not discretion. Whether state law remittiturs might
ultimately be treated similarly to the constitutionally reduced verdict in our case, as the Fourth
Circuit suggests, is a question that will, no doubt, be resolved as time goes by. We do not
address it because we have concluded that it is not raised by the constitutional reduction in our
case.
17
does not lie in Rule 59. Therefore, a constitutional reduction is not controlled by
Hetzel.
It appears that the Tenth and the Second Circuits may not agree. Continental
Resources, Inc. v. OXY USA, Inc., 101 F.3d 634 (10th Cir. 1996); Lee v. Edwards,
101 F.3d 805, 813 (2d Cir. 1996). These courts have recently decided to continue
to offer the plaintiff, whose verdict has been found to be constitutionally
excessive,18 a choice between a reduced verdict and a new trial to “avoid any
conflict with the Seventh Amendment.” See OXY USA,
Inc., 101 F.3d at 643.
Some district courts, applying BMW have also permitted the plaintiff to elect a new
trial. See Mahoney v. Canada Dry Bottling Co., No. 94-CV-2924 (E.D.N.Y. May
7, 1998); Leab v. Cincinnatti Ins. Co., No. Civ. A. 95-5690 (E.D. Pa. June 26,
1997); Kim v. Dial Service Intern., Inc., No. 96 Civ. 3327 (S.D.N.Y. Aug. 11,
1997).
While the Constitution does not prohibit this cautious approach, neither does
it require that we tread in the Tenth Circuit’s footsteps.19 When we hold a jury’s
18
It is not totally clear that the Second Circuit held the jury’s verdict unconstitutionally
excessive in Lee. See Punitive Damages – Constitutional Excessiveness, 12 No. 3 Fed. Litigator
84 (March 1997). If not, then the Second Circuit followed Hetzel in affording the plaintiff the
opportunity to elect a new trial instead of consenting to a remittitur.
19
Giving a plaintiff the option of a new trial rather than accepting the constitutional maximum
for this case would be of no value. If, on a new trial, the plaintiff was awarded punitive damages
less than the constitutional maximum, he would have lost. If the plaintiff obtained more than the
constitutional maximum, the award could not be sustained. Thus, a new trial provides only a
18
verdict to be unconstitutionally excessive, we do not reexamine any facts; we
merely adjust the verdict to the maximum the Constitution allows in that case.20
No new trial need be offered as the Supreme Court itself recognized in BMW when
it remanded the case to the Alabama Supreme Court to determine “[w]hether the
appropriate remedy requires a new trial or merely an independent determination by
the Alabama Supreme Court of the award necessary to vindicate the economic
interests of Alabama consumers . . . .” 517 U.S. at 586.21
In this case, the district court held that the $15 million punitive damage
award was unconstitutionally excessive and entered judgments totaling $4.35
million. In effect, the court held the greater amount illegal and amended the jury’s
verdicts to conform to the law. We conclude, therefore, that the reexamination
“heads the defendant wins; tails the plaintiff loses” option.
20
Of course, if the district court exercises its discretion to reduce the verdict lower than the
constitutional maximum for that case, the verdict has been “reexamined” and the plaintiff must
be afforded the option to elect a new trial.
21
It is unclear to us whether BMW allows an appellate court to determine the “upper limit” the
constitution permits, or requires remand to the district court where the record is not so “cold.” In
the case of a remittitur under state law, a good argument can be made that Gasperini requires
remand so that the district court can initially determine the appropriate award. 518 U.S. at 438
(“Within the federal system, practical reasons combine with Seventh Amendment constraints to
lodge in the district court, not the court of appeals, primary responsibility for application of [state
law] check[s] on punitive damages”)(emphasis added).
Such considerations are also present in the case of a constitutionally reviewed verdict.
Indeed, the Supreme Court remanded both the Gasperini (excessive under state law) and the
BMW (excessive under Constitution) verdicts to the lower courts for their redetermination of the
damages. Gasperini, 518 U.S. at 439;
BMW, 517 U.S. at 586.
19
clause did not prohibit the district court from entering judgments for the amount of
punitive damages it found to be constitutionally permitted without affording
property owners an opportunity to elect a new trial. Accordingly, we hold that the
district court correctly entered judgments in this case and that these judgments are
properly before us for review.
IV.
Next, we consider whether the district court correctly determined the
punitive damages permitted by the Constitution in this case.22 Unless its award is
at this constitutional “upper limit,” it must be vacated.23
1. The Constitutional Analysis
In BMW, the Supreme Court held that punitive damages may be so excessive
as to be unconstitutional. The Court outlined a two-step process for determining
when this has occurred. The first step is to marshal the facts which will inform our
22
We are mindful of the difficulty of our task. See Justice Scalia’s complaint that “[t]he Court
has constructed a framework that does not genuinely constrain, that does not inform state
legislature and lower courts – that does nothing at all except confer an artificial air of doctrinal
analysis upon its essentially ad hoc determination that this particular award of punitive damages
was not ‘fair.’” BMW, 517 U.S. at 606 (Scalia, J. dissenting). Nevertheless, BMW requires that
we search for this “constitutional upper limit” when we review a due process challenge to a
punitive damage award.
23
Depending on the outcome of our inquiry, we would instruct the district court that on
remand it must further reduce the award to the constitutional maximum for that case, or, if the
present amount is below the constitutional limit, consider it a traditional remittitur and offer the
plaintiff the option to elect a new trial.
20
ultimate judgment regarding the constitutionality of the punitive damage award.
Then, based upon these constitutionally relevant facts, we draw a legal conclusion
as to whether the punitive damages awarded in the case are excessive.
The first step, then, is to identify the constitutionally relevant facts. The
Supreme Court has instructed that punitive damages must be based upon conduct
in a single state – the state where the tortious conduct occurred – and reflect a
legitimate state interest in punishing and deterring that conduct. The Constitution
also requires that the defendant had fair notice that its conduct could result in
punitive damages and in the severity of the potential damages. BMW establishes
three “guideposts” for determining whether the defendant had fair notice:
1) the degree of reprehensibility of the defendant's conduct;
2) the ratio of punitive damages to the actual harm
inflicted on plaintiffs; and
3) the comparison between punitive damages and
potential civil or criminal penalties for defendant’s
conduct.
Id. at 575.
The district court in this case found that the conduct punished did occur in a
single state and that this state -- Georgia -- has expressed a strong interest in
deterring environmental pollution24 and in protecting the rights of property owners
24
This interest is evidenced by Georgia’s statutory scheme which provides that pollution of a
stream is a trespass, O.C.G.A. § 51-9-7, and for civil penalties. O.C.G.A. § 12-5-52 (providing
fines of up to $100,00 per day for violators of the Georgia Water Quality Control Act, O.C.G.A.
21
“to have water flow upon [their] land in its natural state free from adulteration.”
Kingsley Mill Corp. v. Edmonds, 67 S.E.2d 111, 112 (Ga. 1951). The court further
found that:
1) “it is absolutely clear . . . that the degree of reprehensibility [of CE’s
conduct] is not very severe;”
2) the ratio of the punitive ($15 million) to the actual damages ($47,000)
was 320:1; and
3) the ratio of the $15 million award to the administrative penalty
imposed upon CE ($10,000) was 1500:1.
The district court concluded that an award of $15 million was “grossly
disproportionate” to both the actual damages and the administrative penalty. Since
CE’s conduct was “not very severe,” the district court held that CE had no notice
that such a disproportional amount might be awarded and, therefore, the punitive
damage award was unconstitutionally excessive. The court reduced the punitive
damages awarded to $4.35 million, the maximum it believed the Constitution
permits in this case.25
The parties disagree on the proper standard of review of this judgment under
BMW. Property owners argue that BMW requires a completely de novo review
§§ 12-5-20 - 12-5-53).
25
The district court found that, under BMW, $4.35 million was the “appropriate assessment”
of the punitive damages. We interpret this language to mean the constitutional maximum.
Otherwise, the district court would have invaded the province of the jury by passing judgment
not on the constitutionality of the award, but on its reasonableness.
22
with absolutely no deference to any of the district court’s findings. CE correctly
points out that a district court order granting or denying a remittitur under state law
is reviewed for abuse of discretion, but acknowledges that “neither this Circuit nor
any other federal court of appeals has articulated the standard for reviewing a
punitive award under BMW.” The appropriate standard of review, therefore, is
another issue of first impression for our consideration.
2. The Standard of Review
Although the Seventh Amendment limits appellate review of state-law
remittiturs to an abuse of discretion standard, Gasperini, 518 U.S. at 435,26 BMW
makes clear that there is a constitutional limit on a punitive damage award beyond
which neither the jury nor the court has any discretion to venture. The abuse of
discretion standard is inapplicable where no discretion may be exercised.27
The ultimate question whether a punitive damage award is constitutionally
excessive is, of course, a legal issue. We review questions of law de novo.
Therefore, whenever an award of punitive damages is asserted to have entered that
26
Gasperini was the first instance in which the Supreme Court approved the appellate review
of a district court’s denial of a motion to set aside the verdict as excessive. 518 U.S. at 434. (As
we have seen, the grant of such a motion results in a non-appealable order.) The Supreme Court
held that the Seventh Amendment limits the review to an abuse of discretion standard.
27
As noted above, however, if the district court exercises its discretion to reduce a jury’s
verdict below the constitutional maximum, the plaintiff has a Seventh Amendment right to elect
a new trial, and appellate review of that remittitur(after the second trial) must be for an abuse of
discretion.
23
“zone of arbitrariness that violates the Due Process Clause of the Fourteenth
Amendment,” BMW, 517 U.S. at 568, we review the award de novo under federal
constitutional standards.28
In performing this review, however, we shall accept the district court’s
findings of fact unless they are clearly erroneous. Rule 52(a), Fed. R. Civ. P. Cf.
United States v. Bajakajian, 118 S. Ct. 2028, 2037 n. 10 (1998) (“The factual
findings made by the district courts in conducting the excessive[ ] [fines] inquiry,
of course, must be accepted unless clearly erroneous.”). For example, the ratio of
the actual to the punitive damages is an historical fact. We accept that finding
unless it is clearly erroneous.
As to the comparison between the punitive award and other civil or criminal
sanctions that could have been awarded, the selection of the most appropriate point
of comparison -- actual fine imposed, the maximum possible penalty or penalties in
similar cases -- is an issue of law. We, therefore, review the district court’s
determination of the appropriate comparison de novo. However, the district court’s
finding regarding this comparison, i.e., the disparity between the amount of the
28
On the contrary, if no constitutional challenge is mounted, then we review the district
court’s determination of whether an award is “within the confines set by state law” for an abuse
of discretion. Gasperini, 518 U.S. at 435.
24
punitive damages award and the amount of the other civil or criminal sanctions, is
an historical fact which we review for clear error.
Finally, the district court’s determination of the reprehensibility of the CE’s
conduct is also ultimately factual. Although this determination must begin with the
identification of the state’s interest and an assessment of the strength of that
interest – both legal questions requiring an interpretation of state law – the
application of this legal standard to the facts of a particular case results in a finding
of fact which we review for clear error.29
Although the “proper characterization of a question as one of fact or law is
sometimes slippery,” see Thompson v. Keohane, 516 U.S. 99, 110-11 (1995), the
degree of reprehensibility of the defendant’s conduct is essentially a judgment
about facts. Such judgments are properly the role of the district court and we will
not second guess the judge who sat through the trial, heard the testimony, observed
the witnesses and had the “unique opportunity to consider the evidence in the
29
Similarly, a finding of negligence or gross negligence, each of which involves the
application of a specific legal standard to a particular set of facts, has traditionally been deemed
to be a finding of fact reviewed for clear error. See Hale Container Line, Inc. v. Houston Sea
Packing, 137 F.3d 1455, 1471 (11th Cir. 1998). See also Anderson v. City of Bessemer City,
N.C.,
470 U.S. 564, 573 (1985) (“Because a finding of intentional discrimination is a finding of
fact, the standard governing appellate review of a district court’s finding of discrimination is
[clearly erroneous].”).
25
living courtroom context” while we have only the “cold paper record.” See
Gasperini, 518 U.S. at 437. When findings of fact are based on determinations
about witnesses’ credibility, the deference accorded the trial judge is even more
significant “for only the trial judge can be aware of the variations in demeanor and
tone of voice that bear so heavily on the listener’s understanding of and belief in
what is said.” Anderson v. City of Bessemer City, N.C.,
470 U.S. 564, 575 (1985).
This does not mean that we are without the power to reverse such judgments.
If a district court’s finding regarding the defendant’s degree of reprehensibility is
not supported by the record or is contrary to the evidence, it is “clearly erroneous.”
See Anderson, 470 U.S. at 573. BMW instructs that there are several indicia of
reprehensibility: deliberate false statements, acts of affirmative misconduct or
concealment of evidence of improper motive, and repetition of tortious
conduct.
517 U.S. at 576. Thus, where a district court finds deliberate false statements, acts
of affirmative misconduct or concealment of evidence of improper motive, and
repetition of tortious conduct, but concludes, nonetheless, that the defendant’s
conduct was “not very reprehensible,” a reviewing court would have ample
authority to “set aside” this finding. Fed. R. Civ. P. 52(a). United States v. United
States Gypsum Co.,
333 U.S. 364, 395 (1948) ( “A finding is ‘clearly erroneous’
when although there is evidence to support it, the reviewing court on the entire
26
evidence is left with the definite and firm conviction that a mistake has been
committed.”).30
Review of a punitive damage award for constitutional error, therefore,
requires first that we identify the state’s interest in deterring the relevant conduct
and the strength of that interest. Next, we review the district court’s findings
regarding the three BMW guideposts. To the extent that these are findings of fact,
we review them for clear error. Finally, we determine de novo whether the
punitive damage award is constitutionally excessive when measured by these
guideposts.
In performing the latter assessment, the essential legal issue is whether the
relevant facts of this case, as indicated by the various BMW factors,
constitutionally support the punitive damage award, i.e., do these facts indicate that
CE had adequate notice that its conduct might subject it to this punitive damage
award. We will measure the adequacy of this notice by the degree of
reprehensibility of CE’s conduct, and the disparities between the actual damage it
30
On the other hand, “[i]f the district court’s account of the evidence is plausible in light of
the record viewed in its entirety, the court of appeals may not reverse it even though convinced
that had it been sitting as the trier of fact, it would have weighed the evidence differently. Where
there are two permissible views of the evidence, the fact finder’s choice between them cannot be
clearly erroneous.” Anderson, 470 U.S. at 574 (citing United States v. Yellow Cab Co.,
338 U.S.
338, 342 (1949).
27
caused and the other available sanctions and the punitive damages that were
ultimately awarded. In determining whether these disparities are constitutionally
excessive, we will be informed by the strength of the state’s interest in deterring
CE ’s conduct.
V.
First, we find no error in the district court’s findings that the conduct
punished here occurred in a single state and that the Georgia statutes express a
strong interest in deterring environmental pollution. This interest would support a
substantial punitive award. To determine the maximum punitive award permitted
by the Constitution in this case, we turn now to the district court’s findings on the
notice CE had regarding its potential liability.
1. Reprehensibility of CE’s Conduct
The most important indicum of the reasonableness of a punitive damages
award may be the degree of reprehensibility of the defendant’s conduct. BMW,
517 U.S. at 575. The relevant conduct of CE in this case involves only the four
years preceding the filing of the property owners’ complaint in August of 1992.31
The evidence was that, during that time, the mining site was not operated by CE.
31
Where a trespass or nuisance is continuing in nature, an action may be maintained for all
damages accruing during the four-year period preceding the filing of an action. O.C.G.A. S 9-3-
30; Tucker v. Southern Wood Piedmont Co., 28 F.3d 1089, 1091 (11th Cir. 1994)(citation
omitted).
28
CE reacquired the property in 1986 from Pasco, but never resumed mining
operations.32
During the four years at issue, the district court found that CE put into effect
a land reclamation plan, which was approved by the Georgia Environmental
Protection Division, and which was designed to restore the property and prevent
the problem of acidic rain water entering the streams flowing through its property.
CE also cooperated with the Environmental Protection Division. Although its
efforts were not entirely successful, the district court concluded that CE’s “most
egregious conduct was the failure to do more to prevent the acidic water problem.”
The district court concluded that the degree of CE’s reprehensibility was not
great. Given the “developing” science of land reclamation which characterized the
late 1980's, and CE’s significant efforts in that regard, the district court held that
there was not evidence in this case of “that high degree of culpability that warrants
a substantial punitive damages award.” BMW, 517 U.S. at 580.
Although, under Georgia law, the jury must have found "specific intent to
cause harm" to award punitive damages of this amount, the district court found that
32
CE had mined the property prior to selling the property to Pasco which, in 1986, defaulted
on its obligation to CE.
29
there was no direct evidence of such intent. The court concluded that the jury must
have determined that CE’s conduct exhibited a want of care rising to the level of
conscious or deliberate indifference to the consequences of its actions. Specific
intent to cause harm may properly be inferred from deliberate indifference, but the
court concluded that CE’s “deliberate indifference” did not constitute severe
“reprehensibility” under BMW.
Furthermore, the district court found that none of the “aggravating factors
associated with particularly reprehensible conduct,” BMW, 518 U.S. at 576, was
present in this case. The district court found that:
The evidence does not suggest that [CE] affirmatively
engaged in prohibited conduct of any kind after it
reacquired the property. It did not commit illegal acts,
knowing or suspecting that the acts were illegal. In fact,
[CE] responded to any criticisms or penalties levied
against it by the Environmental Protection Division in a
positive, more aggressive manner. Hence, there is no
evidence that [CE] is a recidivist that continually repeats
certain misconduct.
As there was ample evidence to support the district court’s view of the
evidence, we hold that its finding that CE’s conduct was not highly reprehensible
is not clearly erroneous.
2. Ratio of Actual to Punitive Damages
30
Punitive damages must bear a “reasonable relationship” to actual damages.
BMW, 517 U.S. at 580 (collecting cases). If the ratio of actual to punitive damages
is too great, it is an indication that the defendant did not have adequate notice that
its conduct might subject it to an award of this size.
Id. at 574 (“Elementary
notions of fairness enshrined in our constitutional jurisprudence dictate that a
person receive fair notice not only of the conduct that will subject him to
punishment but also of the severity of the penalty that a State may impose.”).
In this case, property owners were awarded an aggregate of $47,000 in
actual damages. The aggregate $15 million punitive award, therefore, was almost
320 times the amount of actual damage. The district court concluded such a ratio
was constitutionally excessive because it approached the 500:1 ratio found
“breathtaking” by the Court in BMW. 517 U.S. at 583. The district court’s
reduction to an aggregate of $4.35 million represents a ratio of 100:1.
3. Civil or Criminal Sanctions for the Misconduct
There may also be a lack of adequate notice if the difference between the
civil or criminal penalties that were or could have been imposed and the punitive
damage award is too great. BMW, 517 U.S. at 584. In this case, Georgia law
provides for civil fines of up to $100,000 per day for pollution of its streams.
O.C.G.A. §§ 12-5-20 - 12-5-53. The statute is administered by the Georgia
31
Environmental Protection Division. The only fine it actually imposed on CE for
the conduct at issue in this case was $10,000.
The district court selected the $10,000 actual fine imposed as the most
relevant “other sanction” for comparison with the punitive damage award as
required by BMW’s third guidepost. We agree.
Whether a defendant had constitutionally adequate notice that his conduct
might result in a particular damage award depends in large part upon the available
civil and criminal penalties the state provides for such conduct. In BMW, the Court
clearly stated that “a reviewing court engaged in determining whether an award of
punitive damages is excessive should ‘accord substantial deference’ to legislative
judgments concerning appropriate sanctions for the conduct at issue.” 517 U.S. at
583 (citations omitted).
If a statute provides for a range of penalties depending on the severity of the
violation, however, it cannot be presumed that the defendant had notice that the
state’s interest in the specific conduct at issue in the case is represented by the
maximum fine provided by the statute.33 On the contrary, the extent of the
defendant’s statutory notice is related to the degree of reprehensibility of his
33
For example, the Court held in BMW that none of the statutes covering the relevant conduct
in that case would have provided “fair notice [to BMW] that the first violation – or, indeed the
first 14 violations – of its provisions might subject an offender to multimillion dollar penalty.”
517 U.S. at 584.
32
conduct. For example, if the defendant had emptied a bottle of soda pop into a
Georgia stream, it cannot reasonably be said that he was on notice he could be
fined $100,000. Similarly, constitutionally adequate notice of potential punitive
damage liability in a particular case depends upon whether this defendant had
reason to believe that his specific conduct could result in a particular damage
award.
The district court found that the degree of reprehensibility of CE’s conduct
was not severe. Furthermore, Georgia fined CE’s conduct an amount far below the
maximum permitted under its statute. The record reveals no indication that the
$10,000 fine did not represent the strength of Georgia’s interest in CE’s conduct.
Under these circumstances, the most relevant comparison under the third BMW
guidepost is between the actual fine imposed and the punitive damage award.
Where the state has actually imposed a penalty for the conduct at issue, the district
court may choose to look to that penalty as an indication of the “legislative
judgment” as to the “appropriate sanctions for the conduct at issue.” BMW, 517
U.S. at 583.34
34
This is not to say that there may not be a case where the record reveals that the actual civil
penalty imposed does not adequately reflect the state’s interest in the specific conduct at issue in
the case. In such a case, the court will have to decide whether to look at the maximum penalty
permitted by state law or past penalties for similar conduct.
33
The remitted punitive award of $15 million was 1500 times the amount of
the $10,000 Georgia fine. The district court concluded that $15 million
was“grossly disproportionate to the penalties that [CE] has suffered or has come to
expect” and “would not comport with the fair notice requirements of the
Constitution.” The court’s reduction of the punitive damages to $4.35 million
represents an award 400 times greater than the actual civil sanction.
In sum, the district court found CE’s conduct not very reprehensible, with no
aggravating factors present. It found the $15 million punitive damage award to be
1500 times the administrative sanction imposed and 320 times the actual damages
found by the jury. The district court reduced the $15 million to an aggregate of
$4.35 million, thereby reducing the relevant ratios to 400:1 and 100:1. We
consider now whether the district court erred in holding that $4.35 million is the
maximum amount of punitive damages the Constitution permits in this case.
VI.
A punitive damage award may not be “grossly out of proportion to the
severity of the offense.” BMW, 517 U.S. at 434. We agree with the district court
that the initial disparities in the relevant ratios were genuinely “shocking,” and that
$15 million in punitive damages was grossly excessive.
34
The reduction to $4.35 million also produced ratios which were gross
enough to “raise a suspicious judicial eyebrow.” Id. (quoting TXO Production
Corp. v. Alliance Resources Corp.,
509 U.S. 443 482 (1993)). There is, however,
no “mathematical bright line between the constitutionally acceptable and the
constitutionally unacceptable that would fit every case.”
Id. (quoting Pacific Mut.
Life Ins. Co. v. Haslip,
499 U.S. 1, 18 (1991). In examining the ratio between the
actual damages and the punitive award in a given case, a “general concern of
reasonableness . . . properly enter[s] into the constitutional calculus.”
Id.
The Supreme Court recognized in BMW that there would be times when a
substantial disparity between actual damages and the punitive award would be
expected and, therefore, not constitutionally excessive:
Indeed, low awards of compensatory damages may properly support a
higher ratio than high compensatory awards, if, for example, a
particularly egregious act has resulted in only a small amount of
economic damages. A higher ratio may also be justified in cases in
which the injury is hard to detect or the monetary value of
noneconomic harm might have been difficult to determine.
517 U.S. at 582.
This is such a case. The actual damages awarded were relatively small; yet
the state’s interest in deterring the conduct – environmental pollution – is strong.
In order to achieve this goal, ratios higher than might otherwise be acceptable are
justified. As Chief Judge Posner has noted:
35
[a] mechanical ratio, such as two to one or three to one or four to one
or even ten to one, would not make good sense. The smaller the
compensatory damages, the higher the ratio of punitive to
compensatory damages has to be in order to fulfill the objectives of
awarding punitive damages.
Cooper v. Casey, 97 F.3d 914, 919 (7th Cir. 1996).35
Furthermore, in promoting deterrence, the economic wealth of a tortfeasor
may be considered. TXO Production Corp. v. Alliances Resources Corp., 509 U.S.
443, 462 n. 28 (1993). A bigger award is needed to “attract the . . . attention” of a
large corporation. OXY USA,
Inc., 101 F.3d at 641. CE is a large and extremely
wealthy international corporation. It is not unlikely that having to pay $4.35
million in punitive damages would not make the company newsletter.36 It should,
however, attract the attention of whomever is in charge of the corporation’s daily
decisions regarding environmental protection, and would, no doubt, bear heavily
upon regional or local managers where failures to regard consequences would be
35
Another reason for a somewhat higher than normal ratio in this case is that, under Georgia
law, property owners were forced to waive their claim for loss of market value in order to
preserve their right to injunctive relief.
36
Such a ratio might not be a direct deterrence to stockholders; it may not attract the attention
of the board of directors. But it is not the act or omission of stockholders or directors that
pollutes. The decision-maker on the scene whose conduct subjects the company to $4.5 million
in damages is acutely aware that this loss affects the year-end reports of the department or
division within which he works. An award sufficient to attract the attention of the department
head in charge of the local decision-maker can be instrumental in deterring local disregard of the
rights of others. In that sense, vast international corporations are made up of many smaller
enterprises and deterrence of the small may be sufficient.
36
expected to subject their employer to loss. The $4.35 million award is not so large,
however, as to “implicate[ ] the federal interest in preventing individual States
from imposing undue burdens on interstate commerce.” BMW, 517 U.S. at 585.
We conclude therefore, that substantial punitive damages are warranted for
deterrence and, since the actual damages are quite small, must be somewhat
disproportional to the actual damage award. The ratio of the district court’s
reduced award of $4.35 million to the administrative fine of $10,000 is significant,
but the Georgia statutes provided fair notice to CE that it might be subject to a
substantial penalty for pollution of the streams running though its property. The
100:1 ratio of the punitive to the actual damages is at the upper limits of the
Constitution, but is justified by the need to deter this and other large organizations
from a “pollute and pay” environmental policy. Under the circumstances of this
case, then, $4.35 million in punitive damages is not so disproportional as to offend
the "[e]lementary notions of fairness enshrined in our constitutional
jurisprudence.” BMW, 517 U.S. at 574.
We hold, therefore, that $15 million was a constitutionally excessive
punitive damage award in this case, and the district court correctly reduced it to
$4.35 million, the maximum the Constitution permits in this case.
VII.
37
Two issues remain for our review. First, are property owners entitled to
post-judgment interest on the original punitive damage judgments? Second, is CE
entitled to a set-off of the amounts paid by it in settlement of some of the property
owners’ claims?
1. Post-Judgment Interest
The district court ordered interest on the punitive damages to run from June
9, 1997, the date it entered the reduced judgments totaling $4.35 million, rather
than from June 16, 1994, the date of the original (remitted) judgments totaling $15
million. Plaintiffs assert that the district court erred in so doing.37
The determination of when interest begins to accrue on a money judgment is
based on 28 U.S.C. § 1961 which provides:
Interest shall be allowed on any money judgment in a civil case
recovered in a district court . . . . Such interest shall be calculated
from the date of the entry of the judgment . . . .
The question in this case is when “the judgments” as to punitive damages
were “entered”. Was it on June 16, 1994, when the initial judgment of $15 million
37
CE argues that property owners waived this argument by not presenting it to the district
court. This argument is without merit because “interest accrues from the date of a judgment
whether or not the judgment expressly includes it, because ‘such interest follows as a legal
incident from the statute providing for it.” Tinsley v. Sea-Land Corp., 979 F.2d 1382, 1383 (9th
Cir. 1992) (citations omitted).
38
was entered, or was it on June 9, 1997 when the district court entered the reduced
judgment of $4.35 million?
The law on this issue is clear. The Supreme Court has held that post-
judgment interest compensates the successful plaintiff for being deprived of
compensation for the loss from the time between the “ascertainment of the
damage” and the payment by the defendant. Kaiser Aluminum & Chemical Corp.
v. Bonjorno, 494 U.S. 827, 835-36 (1990) (citing Poleto v. Consolidated Rail
Corp.,
826 F.2d 1270, 1280 (3d Cir. 1987)). Where the judgment is not supported
by the evidence and is vacated and damages are determined by a new trial, the
damages were not “ascertained” in any meaningful way until the entry of the
second judgment.
Id.
When an original judgment is not completely vacated, the date from which
post-judgment interest runs turns on the degree to which the original judgment is
upheld or invalidated. Loughman v. Consol-Pennsylvania Coal Co.,
6 F.3d 88, 98
(3d Cir. 1993). Where the initial judgment is supported by the evidence and the
later judgment merely reflects a remittitur of a certain portion of that judgment as
excessive, the courts of appeals have routinely decided that damages were
sufficiently “ascertained” at the time of the first judgment and that post-judgment
interest should run from the date of the original judgment. Dunn v. HOVIC, 13
39
F.3d 58, 61 (3d Cir. 1993); Coal Resources v. Gulf & Western Industries,
954 F.2d
1263, 1274-75 (6th Cir. 1992); Tinsley v. Sea-Land Corp.,
979 F.2d 1382, 1383 (9th
Cir. 1992); Masinter v. Tenneco Oil Co.,
934 F.2d 67, 68 (5th Cir. 1991); and
Affiliated Capital Corp. v. Houston,
793 F.2d 706, 709 (5th Cir. 1986).
These courts have reasoned that a remittitur merely reduces the damages by
a distinct amount easily determined from the facts of the case. Coal Resources,
954 F.2d at 1275. The initial judgment is viewed as correct to the extent it is
permitted to stand, and interest on a judgment partially affirmed should be
computed from the date of its initial entry.
Tinsley, 979 F.2d at 1383.
We think this reasoning is especially applicable in the context of a
constitutionally excessive verdict. The jury’s punitive damage awards were correct
to the extent of $4.35 million. The clearly identifiable excessive portion has been
stricken, but the remaining portion is just as clearly identifiable. Accordingly, this
case is governed by the rule that post-judgment interest runs from the date that
damages are clearly ascertained, which, to the extent of the $4.35 million we affirm
today, was the date of entry of the initial judgment – June 16, 1994.38
38
We also reject CE’s argument that the district judge took into account his intention not to
permit interest to date back to 1994 in determining the maximum constitutionally permissible
punitive damages in this case. Even if he did, we do not believe that the statute permits the
discretion to start the accrual of interest at some time other than when damages are
“ascertained.”
40
2. Set-off
Finally, with respect to CE’s claim to a right of set-off with regard to the
amount paid by it in settlement of three of the plaintiffs’ claims, CE cites no
supporting authority and we can find none. Furthermore, the settlement
agreements recite that “no part of the settlement amounts” be considered punitive
damages. Having determined that punitive damages totaling $4.35 million do not
offend the Constitution, we find no reason to set off any amounts CE has already
paid in settlement.39
VIII.
We hold that the Constitution permits punitive damages in this case totaling
$4.35 million. Post-judgment interest on the punitive damages accrues from the
date these damages were ascertained, which, on the amounts we affirm today, was
on June 16, 1994. CE enjoys no right to a set off of amounts paid by it in
settlement of property owners’ judgments.
39
The court has received some correspondence indicating that a settlement may have been
reached with some of the remaining ten plaintiffs (or groups of plaintiffs). Any further
settlements and dismissals of individual plaintiffs would, of course, result in the removal of that
judgment from the case. As the district court applied a multiplier of 100 to each plaintiff’s
compensatory award to arrive at his constitutionally appropriate punitive award, resulting in the
aggregate award of $4.35 million, the elimination of that plaintiff’s individual judgment would
result in a proportional reduction of the aggregate punitive damages awarded and, therefore, in a
corresponding reduction in the relevant ratios. Thus, our holding today would also remain
applicable.
41
Accordingly, the district court’s judgment in each case is AFFIRMED;
VACATED as to the date of accrual of post-judgment interest which shall run from
June 16, 1994; and REMANDED.
42
