Geressy v. Digital Equipment Corp.

• Decision Date: 13 January 1997
• Docket Number: No. 94-CV-1427 (JBW).,94-CV-1427 (JBW).
• Citation: 950 F.Supp. 519
• Parties: Patricia GERESSY and Patricia Geressy as Administratrix of the Estate of Thomas Geressy, Jeannette Rotolo and John William Rotolo, and Jill M. Jackson and Thomas M. Farrell, Plaintiffs, v. DIGITAL EQUIPMENT CORPORATION, Defendant.
• Court: U.S. District Court — Eastern District of New York

950 F.Supp. 519

Patricia GERESSY and Patricia Geressy as Administratrix of the Estate of Thomas Geressy, Jeannette Rotolo and John William Rotolo, and Jill M. Jackson and Thomas M. Farrell, Plaintiffs, v. DIGITAL EQUIPMENT CORPORATION, Defendant.

No. 94-CV-1427 (JBW).

United States District Court, E.D. New York.

January 13, 1997.

Kenneth J. King, Craig M. Deitelzweig, Beatie, King & Abate, New York City, for Defendant.

Steven Phillips, Stephenie Lannigan, Levy Phillips & Konigsberg, New York City, for Plaintiffs.

MEMORANDUM ON THE JURY CHARGE ON PUNITIVE DAMAGES

WEINSTEIN, Senior District Judge:

I. INTRODUCTION

Both defendant and plaintiffs seek post-verdict relief. In this memorandum, only the punitive damage issue is addressed. Over the course of almost four weeks, a jury heard evidence and arguments in a case involving three plaintiffs who had allegedly suffered from repetitive stress injuries as a result of using defendant's computer equipment. Defective design and failure to warn were the bases for the suit. Their spouses filed independent loss of consortium claims.

The case was divided into two independent phases, before the same jury, one for compensatory damages and one for punitive damages.

The jury returned substantial compensatory verdicts for plaintiffs on the failure to warn and loss of consortium claims. The second phase began at once with brief evidence presented on defendant's value and business losses. A short argument and charge followed.

Recent developments in the law of damages and a lack of clarity as to the appropriate standard of proof in New York for punitive damages required a modification of the New York punitive damage charge, New York Pattern Jury Instruction 2:275. See Appendix for the punitive damage charge used.

II. BMW OF NORTH AMERICA v. GORE

Interpreting federal constitutional limitations on state punitive damage awards, the Supreme Court in BMW of North America v. Gore, ___ U.S. ___, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996), set out three factors for determining whether a punitive damage award violates "[e]lementary notions of fairness enshrined in our constitutional jurisprudence," Gore, supra, ___ U.S. ___, ___, 116 S.Ct. 1589, 1598:

Three guideposts ... [are used to determine whether a punitive damage award] is grossly excessive: the degree of reprehensibility of the nondisclosure; the disparity between the harm or potential harm suffered by [the plaintiff] and his punitive damages award; and the difference between this remedy and the civil penalties authorized or imposed in comparable cases.

Gore, supra, ___ U.S. ___, ___, 116 S.Ct. 1589, 1598. These three Gore factors — reprehensibility, disparity between harm and the punitive damage award, and civil and criminal remedies available for similar actions — are now the touchstone in evaluating a punitive damage award under the Constitution.

An additional independent limitation on punitive damage awards flows from a principle of our federal system that state legislation, state policy, and judicial development of state law can only be directed at activity within the state. A "State may not impose economic sanctions on violators of its laws with the intent of changing the tortfeasers' lawful conduct in other states." Gore, supra, ___ U.S. ___, ___ - ___, 116 S.Ct. 1589, 1596-97 (citations omitted). Thus punitive damage can not be awarded to punish or deter acts in other states which do not affect the forum state.

In developing a charge a primary question is whether to present the Gore factors to jurors to guide them, or to use Gore only to review a jury punitive damage award, if any, after the fact. In Lee v. Edwards, 101 F.3d 805 (2nd Cir.1996), the Second Circuit, relying both on Gore, and Gasperini v. Center for Humanities, Inc., ___ U.S. ___, 116 S.Ct. 2211, 135 L.Ed.2d 659 (1996), implied that whether or not a punitive damage award is excessive is a question of law for the courts. Quoting Gasperini, the Second Circuit noted that,

`[S]urely there must be an upper limit [to punitive damage awards], and whether that has been surpassed is not a question of fact with respect to which reasonable men may differ, but a question of law.'

Lee, supra, 101 F.3d 805, 808-09 (quoting Gasperini v. Center for Humanities, Inc., ___ U.S. ___, ___ - ___, 116 S.Ct. 2211, 2223-24, 135 L.Ed.2d 659 (1996), quoting Dagnello v. Long Island R.R. Co., 289 F.2d 797, 806 (2d Cir.1961)) (emphasis added). The Second Circuit went on to explain that the "three [Gore] guideposts ... should assist us in application of our standard by which we deem excessive a punitive damage award ... `shocks our judicial conscience.'" Lee, supra, 101 F.3d 805, 808-09 (citations omitted).

The Second Circuit's approach to the Gore factors, as well as its conclusion that whether a punitive damage award is excessive is "a question of law," does not require district courts to ignore the Gore factors in charging the jury. If the jury is to accomplish its task under the Seventh Amendment, it is entitled to be informed of its role.

The charge should therefore, arguably, include all three Gore factors (reprehensibility; disparity between harm and the punitive damage award; and civil and criminal remedies available for similar actions). Nevertheless there are too many complicating and prejudicial factors in asking a lay jury to consider the third element, potential legal penalties in other civil and criminal actions. Reference to possible criminal (and even administrative penalties such as those of the Occupational Safety and Health Act (OSHA) of which the jury was aware) and to other civil awards, were therefore omitted from the Gore portion of the charge. On this point it was simplified to read:

In fixing the amount, if any, you may consider the assets of defendant, what is reasonably required to vindicate New York State's legitimate interests in punishment and deterrence, if any, above the amount of civil damages awarded, the degree of reprehensibility, if any, the disparity between the harm or potential harm suffered by plaintiffs and the difference between punitive damages and the civil awards in this case, and how egregious the conduct of defendant was compared to that of others in its position.

This language adequately expresses the law as set out in BMW of North America v. Gore, ___ U.S. ___, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996), without requiring the jury to make complex determinations and calculations involving civil and criminal law.

At the request of defense counsel, and in light of the Gore Court's discussion of the importance of concerns of state sovereignty (BMW of North America v. Gore, ___ U.S ___, ___ - ___, 116 S.Ct. 1589, 1596-97, 134 L.Ed.2d 809 (1989)), the court told the jury that punitive damages could only be awarded to further the interests of people within the state of New York. Immediately following the passage from the jury charge quoted above, the court instructed the jury that it was "not authorized to impose punitive damages to protect people outside of the State of New York."

III. NEW YORK LAW

In this diversity action, New York substantive law controlled. The Gore factors were therefore melded into the standard New York punitive damage jury charge set out in the New York Pattern Jury Instruction 2:275, based on New York's substantive law.

A. Burden of Proof

New York law on burden of proof in deciding punitive damages is unclear. Many New York courts have described the conduct that merits the imposition of punitive damages without deciding what is the necessary burden of proof for determining whether such conduct existed. In Home Insurance Company v. American Home Products Corp., 75 N.Y.2d 196, 550 N.E.2d 930, 551 N.Y.S.2d 481 (1990), for example, the court described "the conduct which justifies an award of punitive damages" as "conduct having a high degree of moral culpability which manifests a `conscious disregard for the rights of others or conduct so reckless as to amount to such disregard,'" Home Insurance, supra, 75 N.Y.2d 196, 203, 550 N.E.2d 930, 933, 551 N.Y.S.2d 481, 485 (1990) (citations omitted); see also Kramer v. Showa Denko K.K., 929 F.Supp. 733, 742 (S.D.N.Y.1996) (quoting the same passage). Such language suggests a relatively high substantive standard, but does not determine the level of burden of proof.

Courts that have addressed the burden of proof question directly have tended to support a preponderance standard. The Second Circuit has written that,

though we have not explicitly ruled in the past that a "preponderance" burden of proof satisfies due process, we believe that our toleration of that burden in numerous punitive damages cases makes it inappropriate for us to discard it now on constitutional grounds, just as we declined to abandon traditional formulations of the standards governing punitive damage awards in Racich.

Simpson v. Pittsburgh Corning Corp., 901 F.2d 277, 282-283 (2nd Cir.1990) (citations omitted). See also United States of America v. Hooker Chem. & Plastics, 850 F.Supp. 993, 1003 (W.D.N.Y.1994); In re Seventh Judicial District Asbestos Litigation, 190 A.D.2d 1068, 1068, 593 N.Y.S.2d 685, 686 (4th Dept 1993).

This preponderance standard is appropriate since the substantive standard for punitive damages is already so high. Placing a higher than preponderance standard on a rule already heavily balanced against such damages would be analogous to wearing both suspenders and a belt — not necessarily a bad idea even if it is less than sartorially or legally elegant. In addition, since the jury has already been instructed on the preponderance standard in the compensation phase of the trial, it is less likely to be confused about the applicable burden.

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