Johansen v. Combustion Engineering, Inc.

• Decision Date: 01 April 1999
• Docket Number: No. 97-8726,97-8726
• Citation: 170 F.3d 1320
• Parties: , 12 Fla. L. Weekly Fed. C 651 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, v. COMBUSTION ENGINEERING, INC., Defendant-Appellant, Cross-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1320

170 F.3d 1320

48 ERC 1703, 12 Fla. L. Weekly Fed. C 651

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, v. COMBUSTION ENGINEERING, INC., Defendant-Appellant, Cross-Appellee.

No. 97-8726.

United States Court of Appeals, Eleventh Circuit.

April 1, 1999.

James J. Brissette, Atlanta, GA, Andrew L. Frey, Mayer Brown, Evan M. Tager, Washington, DC, for Appellants.

John M.B. Lewis, IV, Huguenin, Annis & Lewis, John C. Bell, Jr., Bell & James, Augusta, GA, William A. Pannell, Alpharetta, GA, Kenneth J. Chesebro, Cambridge, MA, for Appellees.

Appeals from the United States District Court for the Southern District of Georgia.

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.

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

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 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, 116 S.Ct. 1589, 134 L.Ed.2d 809 (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.

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.

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, 9 S.Ct. 696, 33 L.Ed. 110 (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 sum than that assessed by the jury." Id. at 30, 9 S.Ct. 696. 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 Gasperini v. Center for Humanities, Inc., 518 U.S. 415, 433, 116 S.Ct. 2211, 135 L.Ed.2d 659 (1996).

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, 55 S.Ct. 296, 79 L.Ed. 603 (1935). This practice dates from Justice Story's opinion in Blunt v. Little, 3 F.Cas. 760, 761-62 (No. 1578) (C.C.D.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, 55 S.Ct. 296. See e.g., Linn v. United Plant Guard Workers of America, Local 114, 383 U.S. 53, 86 S.Ct. 657, 15 L.Ed.2d 582 (1966); Arkansas Valley Land & Cattle...