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. e du/thir dc ir c uit_1999/171Filed June 28, 1999

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 98-5158

INTER MEDICAL SUPPLIES, LTD.

v.

EBI MEDICAL SYSTEMS, INC.; ELECTRO-BIOLOGY, INC.;

BIOMET, INC.

v.

ORTHOFIX, LTD. ORTHOFIX INTERNATIONAL, N.V.

(D.C. Civil No. 95-06035)

ORTHOFIX, INC.;

ORTHOFIX S.R.L.

v.

EBI MEDICAL SYSTEMS, INC.; ELECTRO-BIOLOGY, INC.;

BIOMET, INC.

(D.C. Civil No. 96-01047)

EBI MEDICAL SYSTEMS, INC.; ELECTRO-BIOLOGY, INC.; BIOMET, INC., Appellants

On Appeal from the United States District Court for the District of New Jersey (D.C. Civil No. 95-cv-06035) District Court Judge: Stephen M. OrlofskyArgued October 29, 1998

Before: SLOVITER, GARTH, and MAGILL,* Circuit Judges

(Filed June 28, 1999)

Donald R. Dunner Griffith B. Price, Jr. Don O. Burley Jeffrey B. Chasnow

Howard A. Kwon Richard L. Rainey Finnegan, Henderson, Farabow,

Garrett & Dunner Washington, D.C. 20005

John J. Gibbons (Argued)

David Fernandez Paul M. Hauge Gibbons, Del Deo, Dolan, Griffinger

& Vecchione Newark, N.J. 07102

Arthur P. Kalleres

Thomas E. Hixdorf Ice Miller Donadio & Ryan Indianapolis, Ind. 46282

Attorneys for Appellants

Joel Schneider

Archer & Greiner Haddonfield, N.J. 08033

Dennis P. Orr

Scott Mortman Mayer, Brown & Platt New York, N.Y. 10019

___________________________________________________ ______________

* The Honorable Frank J. Magill, of the United Stat es Court of Appeals for the Eighth Circuit, sitting by designation.

2Stephen J. Marzen (Argued)

Wendy E. Ackerman Reginald R. Goeke Meredith Kolsky Lewis Roopal R. Shah Shearman & Sterling Washington, D.C. 20004

Attorneys for Appellee

OPINION OF THE COURT

SLOVITER, Circuit Judge.

Following a lengthy trial, a jury found for plainti ff companies on all of the breach of contract and tort claims submitted to it and it returned a verdict of $48 mi llion in compensatory damages and more than $100 million in punitive damages. The District Court denied the defendants' motions for judgment as a matter of law or for a new trial but granted a remittitur reducing the a ward of punitive damages to $50 million. Inter Med. Supplie s, Ltd. v. EBI Med. Sys., Inc., 975 F. Supp. 681, 685 (D.N.J. 1997). On appeal, defendants focus on certain of the bases for recovery, but, understandably, direct their most vi gorous critique to the sizable damages awards, primarily t hat for punitive damages. The role of gatekeeper over such punitive damages verdicts is one of the most challenging tha t has been placed upon appellate judges in civil cases.

I.

FACTS

A.

BACKGROUND

Orthofix S.r.l., an Italian company, manufactures m edical devices, including a product known as an external b one

3fixator, which is used to hold severely fractured b ones in

alignment, thereby obviating the need for repeated surgery. It is wholly owned by Orthofix, N.V. of the Netherl ands, which itself owns Inter Medical Supplies, Ltd., a C yprusbased company that is the worldwide distributor of the

Orthofix bone fixators. These entities will be refe rred to collectively as "Orthofix."

Biomet, Inc., an Indiana company, manufactures orthopedic devices and owns Electro-Biology, Inc. E lectroBiology in turn owns EBI Medical Systems, Inc., a N ew Jersey-based corporation that sells external bonefi xators. These entities will be referred to collectively as "EBI."

Beginning in 1983, EBI and Orthofix entered into a series of distributor agreements pursuant to which EBI ser ved as the exclusive distributor in the United States, Can ada, and the Caribbean Basin for various orthopedic devices, principally external bone fixators, manufactured by Orthofix. The last of these agreements went into ef fect on June 1, 1990, and expired on May 31, 1995 (the "Distributor Agreement"). For some eleven years, EB I and Orthofix shared what each agrees was a profitable b usiness relationship, grossing approximately $30 million in sales annually and controlling one-third of the United St ates

bone fixators market.

The present dispute arises out of the 1990 Distribu tor Agreement between the parties. Under paragraph 8 of the Agreement, Orthofix agreed to promptly supply EBI w ith "such quantities of the products as [were] ordered from time to time." In turn, EBI agreed under paragraph 6(k) to "maintain in its inventory, at all times, a quantit y of Products reasonably necessary to meet [EBI's] resal e requirements for at least two months." In paragraph s 6(f) and (g), EBI agreed to distribute and sell Orthofix 's products in conjunction with the Orthofix trade nam e, but promised not to appropriate that name as part of it s own corporate designation. Both parties agreed not to d isclose proprietary information obtained from the other.

Finally, EBI consented to restrictions on its abili ty to deal in competitive products. Specifically, in paragraph 6(d) EBI

undertook

4not to distribute, sell, promote the sale of , or in any

way handle during the term of this Agreement and for one (1) year after its early termination by EBI any product which could reasonably be deemed com petitive with the [Orthofix] Products.

Despite the excellent results from their mutual eff orts, the business relationship between EBI and Orthofix deteriorated during the last year of the June 1990 Distributor Agreement. When EBI and Orthofix representatives met in June 1994 to negotiate a ren ewal, the relationship collapsed due to a dispute over th e division of sales revenues. In anticipation of the terminati on of the Agreement, each party took steps in an effort to pr otect its own long-term business interests. Orthofix sought a nd located a new distributor, and on May 8, 1995, it announced that it had acquired American Medical Electronics, which became Orthofix, Inc. Upon the expiration of the Agreement with EBI in June 1995, Orthofix, Inc. became the exclusive United States

distributor of the Orthofix fixator.

For its part, EBI responded to the impending severa nce of its relationship with Orthofix by beginning deve lopment of its own external fixator, "Dynafix," with sales of that fixator to begin after expiration of the Distributi on Agreement. It is EBI's conduct in anticipation of a nd after termination that led to this litigation.

B.

LITIGATION

1. Complaint, Answer, Counterclaim

In November 1995, Inter Medical Supplies sued EBI i n the United States District Court for the District o f New Jersey for failure to pay for several shipments of products sold during that year. At approximately the same ti me, Orthofix, Inc. and Orthofix S.r.l. also filed suit against EBI

in the United States District Court for the Norther n District of Texas, alleging breach of contract of the 1990 D istributor Agreement; misappropriation of trade secrets; paten t

5infringement, 35 U.S.C. S 271; violations of the La nham

Act, 15 U.S.C. SS 1114, 1125(a); unfair competition under Texas law, Tex. Bus. & Com. Code Ann. S 16.29; frau d under the New Jersey Consumer Fraud Act, N.J. Stat. Ann. S 56:8-2; common law unfair competition; intentiona l interference with prospective contractual relations ; defamation and trade libel; and injurious falsehood and product disparagement.

On EBI's motion, the Texas case was transferred to the New Jersey District Court. EBI then answered and counterclaimed for breach of contract, tortious int erference with both the 1990 Distributor Agreement and EBI's other customer and business relationships, fraud, defamat ion, violation of the Lanham Act, breach of the distribu tion franchise on New Jersey statutory and common law grounds, and other breaches and torts arising from the parties' contractual relationship.

The parties proceeded with discovery and pretrial. In one significant in limine ruling on a key clause in par agraph 6(d) of the Distributor Agreement, the District Cou rt ruled that the language of the clause prohibited EBI from developing during the term of the agreement any pro duct competitive to those it was distributing for Orthof ix. See Orthofix, Inc. v. EBI Med. Sys. Inc., Civ. Action N o. 95-6035 (SMO), at 14 (D.N.J. Apr. 8, 1997) (hereafter In Li mine Ruling).

2. Trial

The jury trial began on April 7, 1997, and lasted t wo months. At its conclusion, the jury responded to sp ecial verdict questions by finding in favor of Orthofix o n its claims for breach of contract, breach of the duty o f good faith and fair dealing, tortious interference with prospective economic advantage, tortious interference with cont ract, defamation, unfair competition, and violation of th e Lanham Act. EBI does not contend on appeal that the evidence was insufficient for the jury to find it l iable for breach of contract. In fact, the District Court fou nd, and we agree, that the jury could have concluded that EBI' s plan involved the development and production of its own external bone fixator to compete directly with Orth ofix

6following the end of the distributorship. Inter Med . Supplies,

975 F.Supp. at 685. Other evidence supported the conclusion that EBI's strategy was to convert prese nt Orthofix purchasers to the new EBI fixator and to d rive

Orthofix from the North American market. EBI starte d the process of bringing its own fixators to market in J uly 1994, although it did not formally place its product on t he market until August 1995.

In addition to developing its new, competitive prod uct, EBI ordered vast quantities of the Orthofix product s and parts it was then distributing. From October 1994 t o May 1995, EBI began ordering Orthofix product in amount s far in excess of its two-month inventory needs. It even tually stockpiled inventory sufficient to meet its needs f or sixteen

months. There was evidence that to achieve this res ult, EBI hid its stockpiling of Orthofix products by orderin g and paying for products through third parties. For near ly one year EBI also failed to provide Orthofix with a ser ies of required quarterly reports of its sales and invento ry levels, further preventing Orthofix from promptly learning of EBI's excessive ordering.

Once the final Distributor Agreement terminated at the end of May 1995, EBI began to take advantage of the market it had earlier created for Orthofix products . There

was evidence that in order to continue to have such Orthofix products available to it, EBI acquired Ort hofix product components through third parties. Its emplo yees used reverse engineering to analyze the constructio n ofthese Orthofix components and then substituted EBImanufactured parts for genuine Orthofix ones. EBI n ever informed medical professionals of the substitution, in effect passing off EBI's own components for those of Ortho fix.

When the new EBI bone fixators ultimately appeared on the market, EBI promoted them through practices the jury could have found deceptive. The sales force inaccur ately described the fixators to purchasers as upgrades to or newer versions of the Orthofix products that EBI ha d been selling for years. At the suggestion of EBI's presi dent, James Pastena, salespersons falsely stated that EBI elected to terminate the distributorship because the Orthof ix

7product line was inadequate for the needs of the me dical

profession.

On the basis of this and like evidence, the jury fo und

that EBI had both breached its contract with Orthof ix and committed various torts. The jury awarded the Ortho fix companies $48 million in compensatory damages. The verdict sheet, however, did not specify what portio n, if any, of the $48 million compensatory damages award was m eant to compensate the tort injuries and what portion, i f any, was meant to remedy the contractual breaches. The j ury also awarded $100,600,000 in punitive damages, whic h contained no breakdown by defendant or count. In a separate determination, the jury awarded Inter Medi cal Supplies $875,399 to compensate for EBI's failure t o pay for products delivered at EBI's request.

In response to EBI's counterclaims, the jury conclu ded that Orthofix had engaged in tortious conduct and breached the Distributor Agreement. It awarded one dollar in damages on the contract breaches and tortious ac ts, as well as granted a one-dollar set-off for Inter Medi cal Supplies' breaches in filling and shipping EBI's or ders.

3. Post-Trial Motions

After the verdict, EBI moved for judgment as a matt er of law or for a new trial pursuant to Federal Rule of Civil Procedure 50. It also requested that the District C ourt grant a remittitur on the punitive damages assessme nt. EBI broadly attacked the trial and verdict, asserting t hat there was insufficient evidence to support a finding of l iability under either a tort or a breach of contract theory, or to support the damages calculation. EBI claimed that t he court failed to assure that the jury distinguished between tort and breach of contract damages. Finally, EBI a lleged that the court failed to adequately respond to refe rences Orthofix made in its closing to EBI's alleged viola tions of the Food, Drug, and Cosmetic Act ("FDCA").

The District Court rejected EBI's legal arguments o n all issues except the punitive damages remittitur. See Inter Med. Supplies, 975 F. Supp. at 702-03. Deferring in great part to the jury, the court concluded that the evid ence was sufficient to support both the jury's findings of t ortious

8conduct and breach of contract and its calculation of

compensatory damages. See id. at 686-88. In respons e to EBI's claim that Orthofix's allegations of FDCA vio lations prejudiced the jury, the court noted that it had su bmitted to the jury EBI's own proposed instruction for curi ng that

error. See id. at 690-91.

EBI also argued that because the jury failed to app ortion the compensatory damages between the tort and breac h of contract claims, instead awarding all such damages in a single sum, the punitive damages award could not be sustained because it could be applied only for tort ious conduct, which had not been separately assessed. Th e District Court rejected that argument, observing it had instructed the jury on that issue and that the jury presumably understood the instructions. Although th e New Jersey Punitive Damages Act, N.J. Stat. Ann. SS 2A: 15-5.9 to .17, provides that punitive damages must be appo rtioned among defendants, EBI had not objected to the jury' s failure to allocate, and the District Court found a waiver. See id. at 696-98. The court concluded that the jur y could

have found that EBI's tortious conduct was maliciou s and "accompanied by a willful disregard of the plaintif fs' rights," id. at 694, warranting punitive damages. Additional ly, the court noted that the amount of punitive damages awa rded fell within the range permitted by the Constitution and the New Jersey Act.

However, the District Court exercised its authority to

review the award for reasonableness under New Jerse y law and reduced the amount of punitive damages to $50 m illion under the New Jersey Act. See Inter Med. Supplies, 975 F. Supp. at 698-702. The court concluded that the jury could not have found that the conduct between these priva te parties was likely to recur, see id. at 700; that c ases involving purely economic harm and the enforcement of private rights, such as this one, warrant different treatment than do suits involving a "serious threat to public health," such as products liability suits, in which a defend ant has placed a defective product into commerce and into t he hands of unsuspecting consumers, id. at 700-01; and that the amount the jury awarded was unreasonable given the other factors in the case, see id. at 701-02.

9The District Court issued its opinion and order on August

28, 1997, and an amended judgment on September 2, 1997. On September 26, 1997, EBI filed a notice of appeal with the United States Court of Appeals for the Fed eral Circuit, presumably because, at one point, Orthofix 's complaint included a patent infringement count. On Orthofix's motion, the Federal Circuit transferred the appeal to this court pursuant to 28 U.S.C. S 1631, because Orthofix had abandoned the patent claim early in th e litigation. We have appellate jurisdiction pursuant to 28

U.S.C. S 1291.

II.

DISCUSSION

EBI raises five claims on this appeal. Three of the m are directed to the District Court's interpretation of the language of the Agreement and the effect of EBI's c onduct; the latter two are directed to the damages awards. As to the Agreement, EBI claims that the District Court erred when it interpreted EBI's promise under paragraph 6(d) o f the Distributor Agreement not to "in any way handle" competing products as prohibiting EBI from developi ng a competing bone fixator product while the agreement was in

existence. EBI next asserts that the District Court erred in interpreting the Agreement as including duties of g ood faith and fair dealing as they pertain to EBI's orders fo r fixator products. It also contends that the District Court erred in concluding that EBI's over-ordering of products con stituted tortious interference with Orthofix's prospective e conomic advantage. As to damages, EBI argues that the jury' s award of $48 million was speculative and lacked substanti al evidence. Finally, EBI vigorously argues that the p unitive damages award, even as reduced, was the product of prejudice, violated New Jersey law, and was excessi ve and

unreasonable. We review these contentions seriatim.

10A.

INTERPRETATION OF PARAGRAPH 6(d)

In paragraph 6(d) EBI undertook "not to distribute, sell, promote the sale of, or in any way handle . . . any product which could reasonably be deemed competitive" with Orthofix's products. Before trial, EBI moved for an in limine ruling to preclude Orthofix's introduction of extri nsic evidence on the meaning of this paragraph. After a hearing and thorough consideration of the parties' argument s and submissions, the District Court denied the motion, holding that the handling clause unambiguously prohibited development of a competitive product during the ter m of the Agreement. We must consider at the outset wheth er EBI preserved this issue for appeal.

Orthofix argues that EBI waived any objections that it might have had to either the District Court's in li mine ruling or the court's subsequent jury instruction because EBI did not object to the District Court's construction of the "handle" clause at any time after resolution of the motion in limine. The issue was not raised during the course of formulating or giving jury instructions. And, EBI's own proposed instruction largely incorporated the const ruction to which it now objects, stating:

[T]he phrase "in any way handle" in Paragrap h 6(d) of the Distributor Agreement includes "a prohib ition on the development of a competitive product in the marketplace."

App. at 1477. Indeed, this was substantially the in struction given by the District Court without objection from EBI. Our recent precedents provide some guidance on this iss ue.

In American Home Assurance Co. v. Sunshine Supermarket, Inc., 753 F.2d 321 (3d Cir. 1985), we considered whether a formal exception to the admiss ion of evidence would be necessary to preserve that issue for appeal, if the court had already issued a definitiv e in limine ruling. There, the insurer, American Home, sought a n in limine ruling to prevent the admission of evidence that it never prosecuted the arson on which it based its re fusal to

11pay the policyholder. The court refused to give the ruling

that American Home requested, reasoning that the ev idence

was admissible. See id. at 324. After it lost at tr ial, American Home appealed, citing as error the admissi on of

such evidence. The insured asserted that American H ome had waived the claim when it failed to raise an obj ection at trial. We rejected that argument, explaining that t he reason we require parties to raise objections or waive the m is to assure that the court's attention is drawn to poten tial errors before it is too late to remedy them. See , e.g., Smith v. Borough of Wilkinsburg, 147 F.3d 272, 276 (3d Ci r. 1998). We further held that this rationale is no lo nger applicable once a court has not only learned of the alleged error, but issued a definitive ruling that it is un likely to reconsider in the future. American Home Assurance, 753 F.2d at 324. We concluded that "requiring an object ion

when the evidence was introduced at trial would hav e been in the nature of a formal exception and, thus, unne cessary under [Federal Rule of Civil Procedure] 46." Id. at 325.

In our recent decision in Walden v. Georgia-Pacific Corp., 126 F.3d 506 (3d Cir. 1997), we relied on American Home Assurance, articulating the applicable principle as providing that a party can preserve an evidentiary issue for appeal by, first, providing the court with a written motio n including reasons and case authority, and second, obtaining a definitive ruling that does not suggest the

matter will be reconsidered later at trial. Id. at 518. But see Simmons v. City of Philadelphia, 947 F.2d 1042, 108 2-83 (3d Cir. 1991) (Becker, J., announcing judgment of court) (discussing concerns raised where party's continued adherence to objection is unclear).

The reasoning of American Home Assurance and Walden is persuasive here. Once EBI obtained a definitive ruling after full briefing on the disputed contract provis ion, there was little purpose in repeatedly raising the issue at trial

because there was little likelihood that the court would revisit its decision. Nevertheless, Orthofix argues that we must review the jury instruction only for plain err or because the District Court adopted, with only sligh t revision, the charge that EBI itself proffered. It may be that the same reasoning that supported our conclusion in

12American Home Assurance and Walden that no objectio n

was required when the evidence at issue was proffer ed also supports holding that EBI did not waive its objecti on by submission of its proposed charge.

One could reasonably argue that the purpose underly ing Federal Rule of Civil Procedure 51, which governs objections to jury instructions, would not be advan ced by requiring a party to submit an instruction that con tradicts a definitive in limine ruling or to object to a pro posed instruction that incorporates that ruling. Cf. Smit h, 147 F.3d at 277. Under that theory, the initial definit ive ruling decides the question for the case and satisfies the requirement of Rule 51 that the record contain "the matter objected to and the grounds of the objection." A li tigant's attempt to revisit that ruling at the time of the j ury instructions would use the court's time and resourc es inefficiently.

We need not decide that issue here. Although in man y cases the difference between plenary review and pla in error review would be dispositive, in this case it is not , as the conclusion we reach using plenary review, which ord inarily applies when we review the District Court's interpr etation of the contract, see Williams v. Metzler, 132 F.3d 937 , 946 (3d Cir. 1997), would necessarily be the same were we t o apply the more restrictive plain error review.

We now turn to consider EBI's objection to the Dist rict Court's in limine ruling. The gist of the dispute b etween the parties is whether to define the word "handle" broa dly or narrowly, particularly in light of the prefatory ph rase "in any way." Both parties contended in connection with the in limine ruling that the "in any way handle" clause w as unambiguous, although they disagreed on its meaning

. Here, EBI renews its argument that the clause is unambiguous. It then proceeds, relying on United St ates principles of contract interpretation, such as ejus dem generis, to argue that the language should be inter preted narrowly. Under the interpretation EBI proffers, th e clause precluded it from distributing, selling, or marketi ng competing products, but not from developing such products.

13It finds support for this definition from Webster's Third

New International Dictionary 1027 (1961) (defining "handle" as, inter alia, "to trade in: engage in the buying, selling, or distributing of ") and from Random House Dictionary of the English Language 866 (2d ed. 1987) (defining"handle " as, inter alia, "to deal or trade in").

Orthofix responds that the meaning of the "handle" clause is broad enough to include more than selling

, distributing, and promoting, which activities alrea dy are listed in the contract, and that it also encompasse s prohibition of any development by EBI of competing products. It notes that the dictionary also include s the following listings for handle: "2(b): to conduct on eself in relation to, assume an attitude"; "2(c)(1): manage, control, direct"; and "2(e): deal with, act upon, dispose of , perform some function with regard to." Webster's Third New International Dictionary 1027; see also Random Hous e Dictionary of the English Language 866 (listing"11. to manage, deal with, or be responsible for" and"13. t o manage, direct, train, or control"). Additionally, Orthofix denies that ejusdem generis has any application in this

context.

We observe that paragraph 15 of the Distributor Agreement provides: "This agreement shall be govern ed by the laws of the Republic of Italy." The parties int roduced affidavits from experts in Italian law at the in li mine hearing. According to the District court these expe rts effectively agreed that "because the Distributor Ag reement was drafted in English, the terms of that agreement should be given their natural meaning in English." In Limi ne Ruling

at 8.

The District Court relied heavily on the dictionary definition of "handle," from which it construed the word to prohibit development of a product during the lifeti me of the agreement. It explained that it construed the word expansively because of the prefatory words "in any way." See In Limine Ruling at 9. Additionally, the Distri ct Court was "not convinced that ejusdem generis is a canon of

construction known to Italian law." In Limine Rulin g at 10. Neither party has directed our attention to case la w that

14supports its expert's position, and apparently neit her party

provided the District Court with any such authority

.

Thus, there is no support for the contention that I talian law would permit courts of the United States to app ly United States interpretive rules to a contract invo king Italian law. Even if it were appropriate to use suc h rules, we agree with the District Court that they could no t be applied to restrict the meaning of the term "handle " because that term is immediately preceded by the ph rase "in any way." Therefore, we conclude that the Distr ict Court did not err when it approached the question as one of plain meaning and relied on the ordinary dictionary defin ition of the words "in any way handle."

We agree with the District Court that the inclusion of the phrase "in any way" suggests a broad interpretation of the term "handle" and supports the reading that Orthofi x urges us to adopt. We thus conclude that the Agreement prohibited EBI from researching and developing a competing product during the tenure of that contrac t.

As an alternative, EBI argues that if the clause is ambiguous, the District Court should have left the issue for the jury rather than relying on extrinsic evidence. But even if we were to engage in an inquiry whether the cont ract's language is ambiguous, we are satisfied that the Di strict Court did not err in its analysis under that approa ch. "[A] contract is unambiguous if it is reasonably capable of only

one construction." Tamarind Resort Assocs. v. Gover nment of the Virgin Islands, 138 F.3d 107, 110-11 (3d Cir . 1998). Our case law sets forth the steps to be taken in establishing whether or not contract language is ambiguous. "To decide whether a contract is ambiguo us, we do not simply determine whether, from our point of view, the language is clear. . . . Before making af inding concerning the existence or absence of ambiguity, w e consider the contract language, the meanings sugges ted by counsel, and the extrinsic evidence offered in supp ort of each interpretation." Teamsters Indus. Employees We lfare Fund v. Rolls-Royce Motor Cars, Inc., 989 F.2d 132, 135 (3d Cir. 1993).

Review of the District Court's disposition of EBI's motion

in limine establishes that the court followed the r equired

15steps in identifying ambiguity. The court considere d the

handling clause language, the dictionary definition of the phrase "to handle," and the context of the phrase. It analyzed and discussed the alternative meanings ass igned to the phrase by counsel and explained that, in con text, only one of these interpretations was reasonable. F inally,

the court found that its construction of the handli ng clause was supported by extrinsic evidence regarding what Orthofix intended in insisting that the handling cl ause remain in the agreement.

EBI argues that the District Court exceeded its aut hority in considering extrinsic evidence in support of Ort hofix's interpretation of the contract. That extrinsic evid ence included an internal memorandum dated June 6, 1990, from Robert Gaines-Cooper, group chairman of Orthof ix, to Orthofix counsel Daniel Gilioli, which memorialized certain aspects of the negotiation of the Distributor Agree ment then underway between Orthofix and EBI. In the memorandu m, Gaines-Cooper wrote that he had rejected EBI's requ est to remove the phrase "in any way handle" from the Dist ributor Agreement so that EBI could develop a competing pro duct during the final year of the Agreement. The court a lso considered a draft of the Distributor Agreement obt ained from EBI files in which the words "in any way handl e" were

crossed out.

Finally, the District Court held a hearing pursuant to Federal Rule of Evidence 104 at which Gaines-Cooper testified that it was his understanding that EBI wa nted to develop a competing product and that he refused to remove the phrase "in any way handle" from the Distributor Agreement in order to prevent such development. Thereafter, the District Court engaged counsel in a lengthy discussion about the reliability of Orthofix's evid ence, and

concluded that there was "no extrinsic evidence to contradict the testimony of Mr. Gaines-Cooper or to impeach . . . the memorandum to [his counsel]." In Limine Ruling at 14. In arguing that this reliance on extr insic evidence was misplaced, EBI ignores our precedent." Before making a finding concerning the existence or absenc e of ambiguity, we consider . . . the extrinsic evidence offered in support of each interpretation." Teamsters Indus.

16Employees Welfare Fund, 989 F.2d at 135. As we stat ed

there, "Extrinsic evidence may include the structur e of the contract, the bargaining history, and the conduct o f the parties that reflects their understanding of the co ntract's meaning." Id.

We conclude that the District Court did not err in relying on extrinsic evidence and that, in light of all of the relevant factors cited by the District Court, the handling c lause is "reasonably capable of only one construction." Tama rind Resort Assocs., 138 F.3d at 110-11. Thus, the Distr ict Court did not err in holding that the contract was not ambiguous and in concluding that the Agreement's "i n any way handle" clause prohibited EBI from developing a competing bone fixator product during the term of t he agreement. Therefore, it did not err in so instruct ing the jury.

B.

IMPLIED CONTRACTUAL DUTY NOT TO OVER-ORDER

EBI next takes issue with the decision that it brea ched the contract by over-ordering Orthofix products. It argues that the District Court erred in concluding that th e contract contained an implied duty of good faith and fair de aling not

to over-order. EBI further contends that there is i nsufficient evidence of the damages, if any, the alleged over-o rdering caused and concludes that the entire compensatory a ward

must therefore be overturned.1

The parties agree that there is no express provisio n in the Agreement that prohibits EBI from ordering as much as it

___________________________________________________ ______________

1. Orthofix argues that EBI's motion for judgment a s a matter of law was

limited to the claim that Orthofix could not recove r damages for alleged excess orders, assuming that those orders did breac h EBI's implied duty of good faith, and, consequently, that EBI cannot n ow appeal on the claim that there was no implied duty. We reject Ort hofix's claim, because EBI argued in its motion that it was entitled to or der and sell as much Orthofix product as it wanted under the contract, s ee App. at 1386, 1440, an argument that assumes the absence of an im plied duty of good

faith.

17could purchase. EBI notes that paragraph 8 of the

Agreement obligated Orthofix to "promptly supply. . . such quantities . . . as are ordered from time to time," without limiting that obligation in any way, see App. at 20 7, and that paragraph 6(k) required EBI to maintain an inv entory level covering at least two months requirements, se e App. at 206. Thus, EBI concludes, the contract specifica lly addresses what amount it could order, setting a min imum but no maximum. It then points out that under our decision in USX Corp. v. Prime Leasing Inc., 988 F. 2d 433 (3d Cir. 1993), "[t]here can be no implied covenant as to any matter specifically covered by the written cont ract between the parties." Id. at 439 (citation omitted)

.

We need not decide whether EBI's argument would be persuasive under other circumstances because it is based on principles of United States contract law, wherea s, as discussed above, the Agreement, by its terms, must be

construed in accordance with Italian law. Therefore , we must attempt to ascertain whether Italian law would infer a duty of good faith and, if so, whether such a dut y would include the obligation not to over-order.

We engage in plenary review of a question of foreig n law. See Grupo Protexa, S.A. v. All American Marine Slip , 20 F.3d 1224, 1239 (3d Cir. 1994). "[E]xpert testimony is t he most common way to determine foreign law. . . ." In the Matter of

the Arbitration Between: Trans Chem. Ltd. & China N at'l Mach. Import & Export Corp., 978 F. Supp. 266, 275 (S.D. Tex. 1997), aff'd and op. adopted in relevant part, Trans Chem. Ltd. v. China National Mach. Import & Export Corp., 161 F.3d 314, 319 (5th Cir. 1998) (per curiam).

Here, each party relied on the affidavits of its ow n expert. These experts reviewed the Agreement to determine w hether it included an implied duty of good faith. They agr eed that, under Italian law, it did. They disagreed, however, as to the content of the implied duty in this context, and he nce as to the permissible level of EBI orders under Italian l aw.

Orthofix's expert, Professor Piero Bernardini, work ing from the assumption that EBI purchased fixators"in excess of its actual requirements for the purpose of resal e after the expiration of the Agreement," App. at 1334, describ ed such

18conduct as "manifestly in breach of the good faith duty in

the contractual performance." App. at 1343. He conc luded that although there was no language referring to a duty not to order excessively, the Agreement did link orders to EBI's "expected requirements." See App. at 1343. He found that linkage in paragraph 3 of the Agreement, which prov ides:

Firm orders for the products shall be placed with Orthofix within the first fifteen (15) days of a given month for shipment at least two (2) months f rom the

date of the order. With each of said orders EBI shall provide Orthofix with a written forecast of its expected requirements of the product for the three (3 ) subsequent months commencing from the end of the two (2) months period for which the said shi pments are

intended. Such forecasts shall not be bindin g on either

party.

App. at 203.

In contrast, EBI's expert, Professor Fabio Emilio Z iccardi, interpreted the Agreement as a requirements contrac t under Italian civil law, and stated that, because t he contract specified a minimum but no maximum amount of product, EBI was free to order any amount above the minimum, subject only to Orthofix's acceptance of t hat order. App. at 240-42.

In the face of disagreement between experts on such matters, we may adopt any position that is supporte d by reasonable inferences either from the respective co untry's law or "from the implications of a legal concept su ch as a contract or testament or juristic personality." Mer inos Viesca y Compania, Inc. v. Pan American Petroleum & Trans. Co., 83 F.2d 240, 242 (2d Cir. 1936); cf. Mobile Ma rine Sales, Ltd. v. M/V Prodromos, 776 F.2d 85, 89-90 (3 d Cir. 1985) (rejecting Panamanian official's certificatio n of due registration in favor of court's own reading of Pan amanian law); In the Matter of Arbitration Between: Trans C hem. Ltd. & China Nat'l Mach. Import & Export Corp., 978 F. S upp. at 275 ("[F]ederal judges may reject even the uncontra dicted conclusions of an expert witness and reach their ow n decisions on the basis of independent examination o f foreign legal authorities." (citation omitted)).

19We conclude that Orthofix's expert's interpretation of the

Agreement is more reasonable because it relied on t he language in the Agreement, particularly that in par agraph 3 obliging EBI to provide Orthofix with a forecast of its expected requirements for the three months after th e twomonth order period. EBI's expert, on the other hand , relied more heavily on the absence of language. The contra ctual obligation that EBI provide Orthofix with a forecas t of its

need for the three months after its current invento ry was likely to be exhausted, although not binding on eit her party, certainly suggested both that Orthofix expec ted EBI to keep its inventory fairly current and that there was a relationship between EBI's immediate inventory need s and its orders. There would be no need for such a provi sion if the parties intended to allow EBI to accumulate, wi thout notice, inventory for sixteen months. Bernardini's interpretation also more effectively integrates par agraph 3, on which he relied, with three other paragraphs: pa ragraph 6(e) (requiring EBI to forward to Orthofix, inter a lia, monthly sales reports and "quarterly reports indica ting the quantity of Products comprising EBI's inventory"), App. at 205; paragraph 6(k) (requiring EBI to maintain inve ntory "reasonably necessary to meet its resale requiremen ts for at least two (2) months"), App. at 206; and paragraph 11.1 (requiring Orthofix to fill any order it accepted b efore the expiration of the Agreement), App. at 207.

In light of these provisions, we are persuaded that Italian law would not give EBI free reign to order whatever it wanted so long as Orthofix accepted the orders and made some attempt to fill them. Thus, the District Court did not err when it accepted the position of Orthofix's Ita lian law expert that EBI had an implied duty of good faith a nd fair dealing not to over-order Orthofix products.

Moreover, even if this were a question of United St ates contract law, subject to plenary review, see Willia ms, 132 F.3d at 946, we would find against EBI. As noted ab ove, EBI's argument is that there can be no implied duty not to over-order because the contract specifically covers the issue. The principal provision to which it refers i s paragraph 8, which covers Orthofix's obligation to fill EBI's orders. Even EBI's own Italian expert rejected that

20construction, opining that the Distribution Agreeme nt only

specifies a minimum, App. at 241, and "clearly has no provision at all concerning the purchases `in exces s,' " Supp. Affidavit S 4.4. In the absence of any provis ion that "specifically covers" the matter, we reject EBI's c ontention

that United States contract law bars the covenant i mplied here by the Agreement.

There was evidence to support the jury's finding th at EBI over-ordered and stockpiled Orthofix products while actively misleading Orthofix about its need for add itional product, thereby breaching the duty of good faith a nd fair dealing. Examining this evidence in the light most favorable to Orthofix, we conclude that the District Court pr operly denied EBI's motion for judgment as a matter of law

.

EBI nonetheless contends that Orthofix failed to pr esent evidence of the damages it claims to have suffered from EBI's sale of the excess products, and argues that therefore the entire damages award should be reversed. As we have previously observed, even when an entire theory of liability relied on at trial is subsequently held impermissib le, the jury's finding of liability on a separate theory in a special verdict can sustain the award of damages. See Bonjo rno v. Kaiser Aluminum & Chem. Corp., 752 F.2d 802, 806 (3 d Cir. 1984); see also Loughman v. Consol-Pennsylvani a Coal Co., 6 F.3d 88, 100 (3d Cir. 1993). It follows that even if Orthofix failed to identify the damages caused by t he sale of the over-ordered product, that would not negate the jury's liability verdicts on the three other contra ct breaches and the eight torts. Moreover, the case was not pre sented as a series of separate breaches of contract and to rt, each of which caused separate defined damages. Thus, the re is no basis to overturn the entire compensatory damage s award.

C.

TORTIOUS INTERFERENCE

In a related claim, EBI contends that the District Court erred in denying its motion for judgment as a matte r of law on the jury's verdict that held it liable for the t ort of

21interference with prospective economic advantage on the

basis of its conduct in over-ordering bone fixators . EBI argues that the evidence did not establish that it lacked justification or excuse for its conduct, one of the required elements for the tort,2 and that "[b]reach of contr act, without more, is not a tort." Appellants' Br. at 33 (quoting Windsor Sec., Inc. v. Hartford Life Ins. Co., 986 F .2d 655, 664 (3d Cir. 1993)).3

EBI mischaracterizes Orthofix's position. Orthofix never argued that EBI's breach of the Agreement constitut ed a tort. Rather, it contended at trial that EBI improp erly sold the fixators and, thereby, interfered with Orthofix 's economic relationships.

In denying EBI's post-trial motion for judgment as a matter of law on this issue, the District Court con cluded

that there was evidence that EBI used fraudulent an d unlawful means to obtain the fixators and, just as important, that EBI then sold the fixators in direc t competition with Orthofix. The court held that, fro m this evidence, the jury could have concluded that EBI en gaged in tortious interference by over-ordering, regardle ss of whether the act of over-ordering breached the contr act. Inter Med. Supplies, 975 F. Supp. at 687.

We agree. Although Orthofix does suggest that some of EBI's conduct in obtaining the excessive quantities of

fixators contributes to its tortious interference c laim, it also emphasizes that EBI tortiously interfered by sellin g those

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2. This tort requires proof of five elements: (1) p laintiff 's expectation

of economic benefit; (2) defendant's knowledge of that expectation; (3) defendant's wrongful, intentional interference with that expectancy; (4) the reasonable probability of benefit to the plaint iff in the absence of

that wrongful interference; and (5) damages. See Lightni ng Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1167 (3d Cir. 1993). EBI's appe al contends that there was a failure of proof on element (3).

3. Orthofix again contends that EBI waived its appe al for this position, because EBI moved exclusively on the grounds of suf ficiency of the evidence, not whether the conduct would amount to t ortious interference. However, EBI did raise the claim that the conduct amounted only to breach of contract and not tortiou s interference in its Rule 50(b) motion. Thus, we reject Orthofix's argum ent.

22products to the very customers that otherwise would have

been purchasing from Orthofix.

Moreover, the jury was entitled to conclude that EB I's proffered justification for its conduct did not com pletely explain its actions. EBI argued that the actions it took were defensive, designed to protect itself against the c oming loss in business expected to result from the termination of its Orthofix distributorship. However, Orthofix introdu ced evidence that EBI's president described his company 's postAgreement relationship with Orthofix as a "war," an d his objective as being to "destroy Orthofix." App. at 5 07. With this evidence, the jury was entitled to conclude th at EBI's explanation for acquiring and selling the fixators was inadequate to explain its decision to compete in th e market when and how it did, and that its conduct was torti ous interference with Orthofix's prospective economic advantage.

We conclude that the District Court did not err in denying EBI's motion for judgment as a matter of la w on this ground.

D.

COMPENSATORY DAMAGES

EBI next challenges the $48 million compensatory damages award, and asserts that the District Court erred in permitting Orthofix to recover any compensatory dam ages because the amount of such damages was speculative. In doing so, EBI expands on its argument that the Dist rict Court erred in denying the motion for judgment as a matter

of law on the breach of contract and tortious inter ference counts because Orthofix failed to establish specifi c damages associated with each cause of action. Relying on ou r statement in Coleman Motor Co. v. Chrysler Corp., 5 25 F.2d 1338, 1353 (3d Cir. 1975) --"we cannot permit a jur y to speculate concerning the amount of losses resulting from unlawful, as opposed to lawful, competition"-- EBI contends that the jury's award here was impermissib le speculation.

23Although the award appears large, we review it keep ing in

mind the following observation by the District Cour t, which was intimately familiar with the case and the evide nce:

In an effort to maintain their commanding po sition as the leading United States marketer of extern al bone fixators until such time as their own produc ts could be successfully launched, defendants attempted to secure a large inventory of Orthofix products. That plan was largely successful, and Orthofix is no longe r a major

force in the United States market for extern al bone

fixation devices.

Inter Med. Supplies, 975 F. Supp. at 685. EBI's act ions thus secured for it the market that had previously been Orthofix's, an injury from which Orthofix has not r ecovered.

EBI makes essentially three arguments against the a ward of compensatory damages: First, that Orthofix's con sultant created flawed market projections, and that Creight on Hoffman, the Orthofix expert who ultimately testifi ed, prepared damage estimates in reliance on these proj ections; second, that Hoffman's testimony departed from the consultant's analysis with respect to the recapture of profit and relied instead on inflated market share project ions made by Orthofix's executives; and third, that Hoff man improperly inflated his damage estimates by taking sales growth data prepared by EBI's own damage experts ou t of context and applying it to a situation that did not reflect

actual market conditions.

These arguments echo those EBI presented to the Dis trict Court in a motion in limine and in motions for judg ment as a matter of law. The court rejected EBI's arguments

, focusing first on Hoffman's testimony and then emph asizing that "while [the analysis] certainly yielded a larg e number, [it] was not flawed as a matter of law. The jury co uld have rejected that testimony in its entirety. It did not ." Id. at

691. The court further observed that EBI's economic expert also testified and that the jury presumably took th e time and effort to consider carefully the damages eviden ce each side presented. Id.

The disputed calculation proposed lost profits not exceeding $95 million and actual damages not in exc ess of

24that number. The District Court rejected EBI's comp laint

that the damages were "undifferentiated," noting th at "[p]laintiffs tried this case on numerous alternati ve theories of liability each of which would support an award o f`lost profits.' To the extent the plaintiffs prevailed on any theory which was supported by sufficient evidence, they ar e entitled to the full measure of compensatory damage s, and no more." Id. Referring to Orthofix's expert's test imony, the District Court rejected EBI's complaint that Orthof ix failed to present testimony separating the damages by enti ty and by claim. The court suggested that such specificity would have created jury confusion, as well as a strong po tential for duplicative or excessive damages. Id. The court explained:

Because all of the claims upon which plainti ffs prevailed arose from the same set of facts s urrounding the defendants' plan to convert the Orthofix external fixator market to the purchase of Dynafix, a nd because that plan succeeded, plaintiffs' lost profit s need not be assigned to a given legal theory. Damages or dinarily flow from conduct, not from legal theories.

Id.

We review the District Court's denial of post-trial motions regarding that compensatory damages verdict for abu se of discretion. See Gasperini v. Center for Humanities, Inc., 518 U.S. 415, 437 (1996); American Nat'l Bank & Trust C o. v. Regional Transp. Auth., 125 F.3d 420, 437 (7th Cir. 1997).

Although New Jersey law requires a "reasonably accu rate and fair basis for the computation of alleged lost profits," J.L. Davis & Assocs. v. Heidler, 263 N.J. Super. 26 4, 276, 622 A.2d 923, 929 (Sup. Ct. App. Div. 1993) (citati on omitted), the fact that a plaintiff may not be able to fix its damages with precision will not preclude recovery o f damages. See American Sanitary Sales Co. v. New Jer sey, 178 N.J. Super. 429, 435, 429 A.2d 403, 406 (Sup. C t. App. Div. 1981). EBI's arguments addressing the rel iability and source of Hoffman's data presumably were made w ith equal force to the jury. Hoffman was cross-examined at length, and EBI presented its own damages expert wh o painted a more conservative view of Orthofix's econ omic

25prospects. The District Court properly held that th e

credibility of the experts was for the jury to dete rmine, and we see no reason for concluding that there was an a buse of

discretion.

E.

PUNITIVE DAMAGES

The most troublesome issue on appeal is that presen ted by the jury's award of punitive damages in the amou nt of $100,600,000 remitted by the District Court to $50,000,000.

EBI argues at the outset that we must reverse the punitive damages award because the jury's verdict, which does not distinguish between tort and breach of con tract damages, leaves us no basis to apply the New Jersey Act, which limits a plaintiff 's punitive damages to eit her $350,000, or five times the compensatory damages, whichever is greater. N.J. Stat. Ann. S 2A:15-5.14. It reasons that because punitive damages are not avail able for breach of contract, this court cannot determine whe ther the strictures of the New Jersey Act are met without determining what portion of the $48 million compens ates

for tort violations in this case.

Orthofix responds that EBI waived this argument by failing to object to the jury instructions and the verdict sheet when they were presented. We agree. EBI's tri al counsel did not object on the ground now pressed, e ither when the instructions and verdict sheet were given to the jury or when the jury returned.4 We believe, in lin e with other circuits, that EBI's failure to object at the time the jury received the proposed verdict sheet when the j ury returned constitutes a waiver of this objection. Se e AustinWestshore Constr. Co. v. Federated Dep't Stores, In c., 934

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4. The District Court did address EBI's argument th at the verdict sheet failed to distinguish among the various defendants, but found that the verdict was consistent with the defendants' own req uested charge, which did not require the jury to list each award separat ely. Inter Med. Supplies, 975 F.2d at 697. EBI has not raised this issue on appeal.

26F.2d 1217, 1226 (11th Cir. 1991) (party waived obje ction to

any inconsistency in jury response to special inter rogatories by failing to raise issue before jury was excused); White v. Celotex Corp., 878 F.2d 144, 146 (4th Cir. 1989) (s ame) Stancill v. McKenzie Tank Lines, Inc., 497 F.2d 529 (5th Cir. 1974) (same). Even if this argument were not waived , the

breaches of contract here were so intertwined with the

tortious scheme to steal Orthofix's market that the full award is properly attributable to the tortious cond uct.

We turn then to EBI's challenge to the punitive dam ages award. EBI claims that the award, even as remitted by the District Court, is inconsistent with both the New J ersey Punitive Damages Act, N.J. Stat. Ann. S 2A:15-5.9 e t seq.,

and the Due Process Clause of the Fourteenth Amendm ent.5 It argues that the jury awarded punitive damages fr om passion and prejudice, that Orthofix failed to prod uce evidence of some defendants' financial condition as required by the New Jersey Act, and that even the $50 millio n punitive damages award is excessive.

The standard of review that we apply depends upon t he particular challenge asserted. To the extent that E BI complains about the admission of certain evidence, we review the District Court's ruling under an abuse o f

discretion standard. See Grizzle v. Travelers Healt h Network, Inc., 14 F.3d 261, 270-71 (5th Cir. 1994). To the extent that the issues EBI raises have a legal comp onent, our review is plenary. See Johansen v. Combustion E ng'g, Inc., 170 F.3d 1320, 1334 (11th Cir. 1999). The Sup reme

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5. There are no reported New Jersey Supreme Court o pinions that the parties have cited or we have found which interpret the Act. See Orson, Inc. v. Miramax Film Corp., 79 F.3d 1358, 1373 n.15 (3d Cir. 1996) ("When a federal court exercises diversity jurisdic tion, it must apply the substantive law as decided by the highest court of the state whose law governs the action."). The Act requires a trial cou rt judge to "ascertain that the award is reasonable in its amount and just ified in the circumstances of the case, in light of the purpose to punish the defendant and to deter the defendant from repeating such conduct." N.J. Stat. Ann. 2A:15-5.14(a). The parties have not argu ed that this act expands protection against excessive punitive damag es awards beyond the minimum guarantees of the Due Process Clause of the Fourteenth

Amendment.

27Court has stated that state law governs the proprie ty of

awarding punitive damages and the factors to be considered in determining the amount, but that fede ral law controls "those issues involving the proper review of the jury award by a federal district court." Browning-F erris Indus., Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 279 (1989).

1. Passion and Prejudice

If it can be shown that a jury verdict resulted fro m passion or prejudice, a new trial is the proper rem edy. See Dunn v. Hovic, 1 F.3d 1362,1383 (3d Cir. 1993) (en banc). EBI argues that the sheer size of the award here demonstrates that the jury's decision was a product of passion and prejudice. However, in Dunn we declined to

find that there is "some level of award that would in itself evidence prejudice and passion," and held that even if there were such a level, the award in Dunn, $25,000,000, would

not have reached it. Id.

EBI also argues that several statements made by Ort hofix concerning EBI's counsel and EBI's alleged violatio ns of the FDCA inflamed the jury and contributed to the preju dice, warranting reversal. The District Court rejected th is argument, noting that EBI requested and received it s own curative instruction. Inter Med. Supplies, 975 F. S upp. at 690 ("[T]o the extent there may have been any preju dice, defendants sought and obtained a curative jury inst ruction, [and] the present assertion of prejudice is without merit.") Indeed, EBI represented to the District Court that the instruction given "perfectly addresse[d] the concer n with FDA." Id. (citation omitted).

We have reviewed the closing argument, the objectio ns raised in the District Court, and the curative inst ruction. We do not find sufficient support for EBI's allegat ion of a connection between counsel's remarks in closing and the size of the verdict to warrant granting a new trial . This is especially true where EBI received the curative ins truction it requested and did not object to any improper ref erences to counsel during the closing argument. We conclude

, therefore, that the District Court did not err in r ejecting EBI's arguments that the verdict was the product of passion or prejudice.

282. Evidence of Defendants' Financial Condition

EBI also challenges the award on the ground that Orthofix failed to provide evidence of some defenda nts' net worth. Under the New Jersey Act, a trier of fact as sessing the award of punitive damages "shall consider . .. [t]he financial condition of the defendant," N.J. Stat. A nn. 2A:15- 5.12(c), in order to formulate an award which is "s pecific as to [each] defendant," N.J. Stat. Ann. 2A:15-5.13. E BI argues that Orthofix failed to establish an essenti al element of punitive damages under New Jersey law by not producing evidence concerning the financial conditi on of two of the corporate defendants, Electro-Biology an d EBI Medical Systems.

There is some question whether this issue has been

waived because it was not raised before the Distric t Court. In any event, the record establishes that Orthofix did introduce evidence of both EBI Medical Systems' sal es and revenues and Biomet's net worth. Arguably, these ar e an imperfect measure of the financial condition of Ele ctroBiology itself, but the corporate and accounting st ructures of these companies make this evidence adequate to m eet the requirements of the New Jersey Act. EBI Medical Systems is the sales and marketing subsidiary of El ectroBiology, a company that has no sales of its own. Mo reover, Biomet did not maintain separate balance sheets tha t would document separate net worth calculations for its subsidiaries. Thus, the District Court did not err in permitting an award of punitive damages.

3. Excessive Damages

Finally, we consider EBI's contention that the puni tive damages award is excessive. EBI not surprisingly re lies on BMW of North America, Inc. v. Gore, 517 U.S. 559 (1 996), the case in which the Supreme Court first struck an award of punitive damages as excessive under the Due Proc ess Clause of the Fourteenth Amendment.

In that case, an Alabama purchaser of a new BMW

automobile sued the manufacturer for its failure to notify him that his automobile had been repainted. Under B MW's policy, it sold unused but repaired cars as new unl ess the cost of the repair exceeded three percent of the ca r's

29suggested retail price. It gave the purchasers, inc luding

plaintiff, no notification of the repainting becaus e the cost of that repair did not meet the policy's minimum. T he plaintiff claimed that the repainting impaired the car's value by approximately ten percent of the $40,000 p rice, or $4000 in actual damages, and introduced evidence th at BMW had sold nearly one thousand repainted cars. Th e plaintiff argued that the appropriate penalty was $ 4 million.

Id. at 563-64.

Alabama law permitted an award of punitive damages when a defendant engaged in "gross, oppressive or malicious fraud." Id. at 565. The jury concluded th at BMW's nondisclosure policy constituted such fraud, and awarded both the requested actual damages and the $ 4 million in punitive damages. Id. The Alabama Suprem e Court reduced the award to $2 million because the j ury's calculation included sales in other jurisdictions; it upheld the award in all other respects. Id. at 566-67.

The Supreme Court reversed. The Court reaffirmed th e states' traditional authority to punish and deter w rongdoers for acts committed within the jurisdiction, and not ed that states have "considerable flexibility" in achieving those goals. Id. at 568. However, it cautioned that a sta te must avoid "grossly excessive" awards that "enter the zo ne of

arbitrariness that violates the Due Process Clause of the Fourteenth Amendment." Id. Observing that"[e]lement ary notions of fairness" require "fair notice" to a def endant of both the conduct punishable and the severity of the potential penalty, the Court identified three "guid eposts" as indicia of the reasonableness of a punitive damages award: "the degree of reprehensibility of the [conduct]; t he disparity between the harm or potential harm suffered . . . a nd [the] punitive damages award; and the difference between this [punitive] remedy and the civil penalties authorize d or imposed in comparable cases." Id. at 574-75.

The Court considered the degree of reprehensibility to be "[p]erhaps the most important indicium of the reasonableness of a punitive damages award." Id. at 575. The Court observed that "some wrongs are more blameworthy than others" so that " `trickery and de ceit' . . . are more reprehensible than negligence." Id. at 575 -76. It

30concluded that none of the aggravating factors were

associated with BMW's conduct and observed that the plaintiff's injury was "purely economic in nature." Id. at 576. The Court stated that although intentional eco nomic misconduct warrants punishment, particularly if inf licted on a financially weak and vulnerable entity, "this

observation does not convert all acts that cause ec onomic harm into torts that are sufficiently reprehensible to justify a significant sanction in addition to compensatory damages." Id. Although punitive damages were warran ted because BMW had intentionally omitted a material fa ct, the fact that the company also could have believed that it had no disclosure duty mitigated the egregiousness of t he

conduct.

"The second . . . indicium of an unreasonable or excessive punitive damages award is its ratio to th e actual harm inflicted on the plaintiff." Id. at 580. The C ourt

observed that it had looked to the ratio between th e punitive and compensatory damages on other occasion s. In Pacific Mutual Life Insurance Co. v. Haslip, 499 U. S. 1, 23- 24 (1991), it had held that a four-to-one ratio did not "cross the line into the area of constitutional impropriet y," and in TXO Production Corp. v. Alliance Resources, Corp., 509 U.S. 443, 460 (1996), it had held permissible a ratio th at did not exceed ten to one once the potential harm to that p laintiff was taken into account. In considering the ratio gu idepost,

the Court observed that:

[L]ow awards of compensatory damages may pro perly support a higher ratio than high compensator y awards, if, for example, a particularly egregious ac t has resulted in only a small amount of economic damages. A higher ratio may also be justified in case s in which the injury is hard to detect or the monetary value of noneconomic harm might have been difficult t o determine.

BMW, 517 U.S. at 582.

In BMW, the Court followed its practice of declinin g to "draw a mathematical bright line between the constitutionally acceptable and the constitutionall y unacceptable that would fit every case." Id. at 583 (citation

31omitted). Rather, it stated that the concern should be for

reasonableness. Id. In the case of the plaintiff pu rchaser of the BMW, the $2 million punitive damages award prod uced what the Court described as "a breathtaking 500 to 1" ratio between the penalty and plaintiff's actual damages, id. at 583, and was thirty-five times greater than the tot al damages of all fourteen Alabama purchasers, id. at 582

n.35.

Finally, in discussing the third indicium of excess iveness, a comparison of the punitive damages and the potent ial civil or criminal penalties for comparable miscondu ct, the Court reiterated its deference to legislative judgm ents regarding appropriate sanctions. Id. at 583 (citing approvingly Browning-Ferris Indus., Inc. v. Kelco D isposal, Inc., 492 U.S. 257, 301 (1989) (O'Connor, J., concu rring in part and dissenting in part)). The appropriate comp arison, the Court suggested, is between the statutorily aut horized financial penalty (when there is no imprisonment) a nd the punitive damages award.

In explaining its decision to reverse the judgment on punitive damages and remand, the Court noted that B MW lacked any notice that its conduct, which would hav e given rise to a $2000 fine under the state's Deceptive Tr ade Practices Act, Ala. Code S 8-19-11(b) (1993), could result in a multimillion dollar penalty, and that there was n o basis for assuming that BMW, which did change its policy, would not have done so after receiving a lesser sanction. Id. at 584-85. Even without drawing "a bright line marking the limits of a constitutionally acceptable punitive da mages award," the Court was convinced that the award in B MW was "grossly excessive." Id. at 585.

The Supreme Court's decision in BMW provides us wit h an analytic framework to consider whether the now r educed $50 million punitive damages award remains excessiv e. In two recent cases, the Court of Appeals for the Tent h Circuit has applied the BMW criteria, concluding in both th at the punitive damages awards were excessive even though not

all three of the indicia of excessiveness identifie d by the Supreme Court were present. In Continental Trend Resources, Inc. v. OXY USA, Inc., 101 F.3d 634 (10t h Cir. 1996), the jury awarded actual damages of $269,000 and

32punitive damages of $30 million on claims of tortio us

interference with both prospective business advanta ge and contract. See id. at 635. Although the defendant wa s aware of the possibility of such a large award (one of th e "guideposts"), the court of appeals directed a remi ttitur to $6 million because the harm inflicted by the defend ant was purely economic in nature and the ratio between the compensatory and punitive damages was too high. Id. at 640-42. In FDIC v. Hamilton, 122 F.3d 854 (10th Cir . 1997), the court directed a reduction of punitive damages award from $1.2 million to $264,000 for similar reasons.

The Tenth Circuit's summary of the factors to be considered in determining the degree of reprehensib ility of a defendant's conduct is useful: whether it "cause[ d] economic rather than physical harm; would be consid ered unlawful in all states; involves repeated acts rath er than a single one; is intentional; involves deliberate fal se statements rather than omissions; and is aimed at a vulnerable target." Continental Trend Resources, 10 1 F.3d at 638; accord Hamilton, 122 F.3d at 861; see also Lee v. Edwards, 101 F.3d 805 (2d Cir. 1996) (identifying p resence of violence, deceit or malice and the repetition of conduct as aggravating factors in determining degree of reprehensibility).

Applying those factors, we note the harm inflicted on Orthofix was economic, rather than physical, and he nce "less worthy of large punitive damages awards than torts inflicting injuries to health or safety." Continent al Trend Resources, 101 F.3d at 638. It has been suggested t hat, "[w]hen the injury is economic, and particularly wh en it arises out of a contractual relationship where the parties can and should contractually protect themselves by providing for explicit remedies in the event of bre ach, the permissible ratio of punitive damages to actual dam ages should be relatively modest." Hamilton, 122 F.3d at 862. Relevant also is that Orthofix is not a financially weak or vulnerable target. Another factor that tends to mit igate the need for a high punitive damages award is the jury' sfinding that Orthofix itself breached the distributor agree ment, failed to fill and ship EBI's legitimate orders, an d engaged

in tortious acts.

33We recognize that the jury found, as instructed und er

New Jersey law, that EBI acted with either "actual malice" or "a wanton and willful disregard of persons who forseeably might be harmed," N.J. Stat. Ann. 2A:15- 5.12(a), that EBI's plan "involved acts of deception and, at least, reckless disregard of the consequences to Orthofix, " Inter Med. Supplies, 875 F. Supp. at 700, and that those acts continued over an extended period of time with full awareness of the harm to Orthofix, see N.J. Stat. A nn. S 2A:15-5.12(b).

Nonetheless, balancing these facts with respect to reprehensibility, we conclude that EBI's conduct, w hich inflicted only economic harm for which large compen satory damages have been awarded, was not sufficiently egr egious to warrant a punitive damages award of $50 million. In this connection, we take into consideration that high, e asily calculable compensatory damages may more appropriat ely be accompanied by a lower punitive damages ratio. S ee BMW, 517 U.S. at 582.

Finally, we find reference to the sanctions for com parable misconduct (the third guidepost) unhelpful here, as there is no clearly applicable reference point. EBI offers t wo potential comparisons. First, it suggests that the $50 million award here is higher even than the $30.5 mi llion fine imposed for shipping adulterated medical devic es that caused deaths, see United States v. C.R. Bard, Inc. , 848 F. Supp. 287, 290 (D. Mass 1994), conduct far more egregious. Second, EBI notes that the potentialfine under the United States Sentencing Guidelines calculation to deprive a defendant of the profit from his wrongdoi ng would be only $500,000, which is 1/100 of the punitive da mages award here. See U.S.S.G. SS 8C2.4(a), 8A1.2, commen t (n.3(h)). Orthofix counters that federal and state laws contain numerous authorizations for treble damages when a defendant engages in unfair business conduct and competition. See, e.g., 15 U.S.C. S 15 (antitrust); 18 U.S.C. S 1964 (RICO); N.J. Stat. Ann. S 56:4-2 (unfair tra de practices). However, even trebling $500,000 would significantly reduce the punitive damages award fro m the $50 million figure.

34Because we have concluded that the punitive damages

award should be reduced in light of the first guide post, we need not decide between these competing statutory comparisons. We agree with the Tenth Circuit's obse rvation that "a violation of common law tort duties [may] n ot lend [itself] to a comparison with statutory penalties. The fundamental question is whether [the defendant] had

reasonable notice that its tortious interference wi th contracts and prospective business advantage could result in such a large punitive award." Continental Trend Resources, 101 F.3d at 641 (citing cases involving high punitive damages awards for tortious interference c laims).

Once we have determined that a punitive damages awa rd as high as that set here does not accord with the a nalysis recommended by the Supreme Court in BMW, we are lef t to fulfill our role as gatekeeper in reviewing an awar d of punitive damages. See Dunn, 1 F.3d at 1382. It is n ot an enviable task. We have searched vainly in the case law for a formula that would regularize this role, but have not found one. As we noted above, the Supreme Court has instructed as to the analysis but has provided noth ing concrete as to the amount. Justice Kennedy's commen ts in his separate opinion in TXO reflect the frustration of many judges faced with the need to set a figure.

To ask whether a particular award of punitiv e damages is grossly excessive begs the question: exce ssive in

relation to what? The answer excessive in re lation to the conduct of the tortfeasor may be correct , but it is unhelpful, for we are still bereft of any st andard by which to compare the punishment to the malef action that gave rise to it. A reviewing court empl oying this formulation comes close to relying upon noth ing more than its own subjective reaction to a partic ular punitive damages award in deciding whether the award violates the Constitution. This type of review, far f rom imposing meaningful, law-like restraints on jury exce ss, could become as fickle as the process it is design ed to superintend.

TXO, 509 U.S. at 466-67 (Kennedy, J. concurring).

In the last analysis, an appellate panel, convinced that it

35must reduce an award of punitive damages, must rely on

its combined experience and judgment. When differen t members reach different figures, they must seek an accommodation among their views, a process that rec urs throughout appellate decision making. After reviewi ng the record and the arguments in this case, we conclude that the proper, reasonable punitive damages award is no more than $1 million.6

In his passionate dissent, Judge Garth argues that we have ignored our precedent as to the standard of re view applicable to a district court's ruling on punitive damages, which he asserts must be accorded "heightened defer ence," particularly if the district court has previously g ranted a remittitur. The brief passage in our 1992 opinion i n Keenan v. City of Philadelphia, 983 F.2d 459 (3d Cir. 1992 ), to which he alludes, is not this court's latest writin g on that issue. Instead, this court's 1993 opinion in Dunn, where we spoke en banc, represents our most recent and consi dered opinion on the issue of punitive damages, and parti cularly on punitive damages following a District Court remi ttitur. See Dunn, 1 F.3d at 1382-91.

In Dunn, we did not enunciate any rule of extraordi nary deference to the district court's decision, as Judg e Garth would have us adopt. Instead, although the district court there had reduced by remittitur the jury's punitive damages award from $25 million to $2 million (a considerabl y larger percentage reduction than that ordered by the Distr ict Court here), we nonetheless decided that an additio nal reduction was appropriate and reduced the already remitted damages from $2 million to $1 million. Id. at 1391. We stated that we were further reducing the punitiv e damages award because we believed that the "distric t court gave insufficient consideration to the effect of su ccessive punitive awards in asbestos litigation." Id.

We discussed at great length this court's role in t he assessment of punitive damages. Contrary to Judge G arth's

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6. Because of the extent to which we have reduced t he punitive damages verdict, we need not address EBI's contention that the $50 million award is excessive because it constitutes 3.3 percent of Biomet's net worth, far above the one percent we allowed in Dunn, 1 F.3d at 1383.

36position, the en banc court stated: "We cannot leav e the

amount of punitive damages solely to the trial cour t because it is evident to us that the Supreme Court in Haslip approved review by an appellate court to `de termin[e] whether a particular award is greater than reasonab ly necessary to punish and deter.' " Dunn, 1 F.3d at 1 385 (alterations in original).

Thus, notwithstanding the deference which we accord the trial court in such matters, and notwithstanding ou r commendation of "the district court's discipline in reducing the punitive damages from $25 million to $2 million ," id. at 1391, we undertook to further reduce the punitive d amages upon our determination "that further remittitur of the punitive damage award in this case is appropriate," id. In light of that further reduction, the dissent's insi stence that

Dunn is not relevant to the standard of review when a district court orders a remittitur is surprising. T he dissent's attempt to confine Dunn to product liability cases is unpersuasive. Haslip, on which we relied in Dunn, w as not a products liability case. This court's recent opin ion, Hurley v. Atlantic City Police Dep't, 174 F.3d 95 (3d Cir. 1999), that was also not a products liability case, cited Dunn for its discussion and holding regarding punitive damages. Id. at

114.

The centerpiece of the dissent is its reliance on o ur preDunn opinion in Keenan. The dissent fails to point out that notwithstanding the "super-deference" to the distri ct court, which the dissent claims Keenan requires, in Keenan we reversed the punitive damages assessed against one of the defendants after finding that there was inadequate evidence to support their imposition. 983 F.2d at 471. Moreo ver, Keenan itself undermines the dissent's attempt to c abin damages in products liability cases in a separate c ategory.

Keenan relied for the standard of review for excess iveness on an earlier Third Circuit case, Gumbs v. Pueblo International, Inc., 823 F.2d 768 (3d Cir. 1987), w here, again notwithstanding the deference owed to the dis trict court since it granted a remittitur, we reversed th e imposition of compensatory damages as excessive. Th e Gumbs court in discussing the standard of review, r elied on an earlier Third Circuit decision, Murray v. Fairba nks

37Morse, 610 F.2d 149 (3d Cir. 1979), which was a pro ducts

liability case. See Gumbs, 823 F.2d at 771. It is t hus evident that there is no basis to consider damages in products liability cases as a separate category, an d we certainly did not so suggest in Dunn.

The dissent gives short shrift to Haslip, despite t he fact that Haslip issued from the Supreme Court, because that opinion failed to satisfy Judge Garth's need for "a formulaic standard of review." I agree that our task as appel late judges in reviewing damages awards, whether or not there has been a remittitur, would be facilitated if ther e were a formula, but not all of our review function can be compressed into a formula, and the guideposts provi ded by the BMW opinion adequately serve that function.

The cases cited by Judge Garth and those that were relied upon in our earlier decision in Keenan for the proposition that we owe heightened deference to the district

court's remittitur decision -- Delli Santi v. CNA I nsurance Cos., 88 F.3d 192 (3d Cir. 1996); Starceski v. West inghouse Electric Corp., 54 F.3d 1089 (3d Cir. 1995); and Gu mbs v. Pueblo International, Inc., 823 F.2d 768, 771-72 (3 d Cir. 1987) -- were all compensatory damages cases and no t punitive damages cases. In punitive damages cases w e must be informed by the Supreme Court's jurispruden ce and, as noted above, that jurisprudence counsels in tensive

review.

As we noted above, our decision in this case to red uce the punitive damages award even further is based up on the guideposts established by the Supreme Court. And, i n the last analysis, we conclude that an award greater th an $1 million is not "reasonably necessary to punish and deter." Haslip, 499 U.S. at 22.

III.

CONCLUSION

In conclusion, we will affirm the District Court's decision on all grounds raised in this appeal other than the punitive damages and will remand so that the District Court can

38enter a judgment for punitive damages in the amount of $1

million.

39GARTH, Circuit Judge, dissenting:

While I join the Court in its holdings on all of th e substantive issues discussed in sections II.A throu gh II.D of its opinion (with but one caveat stated in the marg in),1 I am

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1. Each of the issues raised by EBI has been more t han adequately explained and rejected by the majority opinion. How ever, I note that in one area, while I agree with the conclusion that th e District Court's interpretation of Paragraph 6(d) of the parties' Di stributor Agreement, containing the "in any way handle" clause precluded EBI from manufacturing or producing its own bone fixators du ring the course of the Agreement, I question whether the breadth of th e majority's holding with respect to the District Court's charge truly r epresents the jurisprudence of this Circuit.

It must be remembered that the District Court had r uled, over EBI's objection, in an in limine proceeding that Orthofix 's interpretation of

the "in any way handle" clause was correct, which then became the law of the case. At the conclusion of the trial, EBI submi tted a proposed charge that affirmatively incorporated the District Court' s interpretation of Paragraph 6(d), which the District Court adopted in all respects pertinent to this appeal. Once EBI had objected and presented arguments in support of its interpretation of Parag raph 6(d) at the in limine proceeding, I agree that thereafter EBI was not obliged to object

to the charge of the District Court, which incorporate d its in limine ruling, in order to preserve the issue on appeal. See , e.g ., Smith v. Borough of Wilkinsburg, 147 F.3d 272 (3d Cir. 1998). However, I cannot agree that when EBI submitted its own charge that parroted in essential respects (i.e., the interpretation of "in any way handle") t he District Court's ruling, that EBI could thereafter raise the issue on appeal , claiming that it had preserved the issue, especially when the District C ourt essentially adopted EBI's proposed charge.

I know of no case in our Circuit where the submissi on of a requested charge which was then adopted by the District Court would not foreclose the party requesting the charge from thereafter bei ng bound by it. Hence, although it does not disturb the disposition reached by the majority affirming the District Court's interpretat ion of Paragraph 6(d) -

- a disposition in which I join -- I do raise a quest ion as to the expansiveness of the doctrine arguably embraced by the majority. It seems to me that our opinion would be far more in t une with our prior precedents were we to restrict ourselves to approvi ng preservation of an issue only when the affected party had not in effec t estopped itself by submitting a requested charge which affirmatively i ncorporated an adverse ruling.40obliged to write separately in dissent on the issue of

punitive damages.2

I.

I am compelled to disagree with the majority's redu ction of the punitive damages assessed against EBI not on ly because that monetary reduction has no principled b asis,

but also because the standard of review that this C ourt has previously established and announced has been total ly ignored. See Keenan v. City of Philadelphia, 983 F. 2d 459 (3d Cir. 1992). While Dunn v. HOVIC, 1 F.3d 1371 (3 d Cir. 1993) (en banc), to which the majority refers, see Maj. Op. at 36, dealt with punitive damages but only in a pr oduct liability context, i.e., asbestos damage awards, Du nn did not provide nor attempt to provide a standard of review that contradicted or overruled Keenan. Indeed, Dunn did not even cite to Keenan and the Dunn court, which was concerned solely with due process considerations, e xplained its result only in terms of successive and multiple damage awards which asbestos product liability cases might generate, a situation that obviously is not relevan t in the present case. Neither Dunn nor Pacific Mutual Life Insurance Co. v. Haslip, 499 U.S. 1 (1991), on whic h the majority relies in Dunn and which I discuss in Sect ion III, infra, bear on the standard of review. Instead, the majority here has substituted its own discretion and judgmen t (see Maj. Op. at 35-36) -- without warrant from preceden t or statutory authority -- for our announced standard o f review, and for that of the District Court, to whos e discretion and judgment we are bound to give a "sup er-" deference, especially after a grant of remittitur. See also Tingley Sys., Inc. v. Norse Sys., Inc., 49 F.3d 93 (2d Cir. 1995) (reviewing decision to remit punitive damages under abuse of discretion standard; punitive award must"s hock to conscience" to warrant reversal); Hiltgen v. Sum rall, 47 F.3d 695 (5th Cir. 1995) (reviewing remittitur unde r "considerable deference" standard).

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2. Punitive damages are discussed by the majority i n Section II.E of its opinion.

41Struggle as it might, the majority opinion still ca nnot

explain why it fails to follow the controlling stan dard of review set forth in Keenan. See Maj. Op. at 37. The majority has sought to gloss over the significant difference s between product liability cases, whose reductions of puniti ve damages awards stem from the fear of multiple and successive punitive awards, and cases such as this one where no such circumstances obtain. Moreover, the majority has not acknowledged that the cases on whi ch it relies are fundamentally different from this case, in that those cases, such as Haslip and Dunn, were not conc erned, as we are, with the standard of review, but rather were focussed on due process considerations.

Nor is the majority on sound ground when it points out that those cases that relied upon our Keenan standa rd of review did not uphold the district court's remittit urs. All that argument demonstrates is that the evidence in those cases -- Gumbs and Keenan -- did not satisfy our heightened standard of review.3 In this case, Judge Orlofsky's discretion, based on the overwhelming ev idence and the jury's 22 special verdict findings, more th an satisfied that standard. Ergo, our decision should have been to affirm rather than to try to explain away w hat cannot be explained.

I recognize that the amounts of money involved are extremely substantial, and that even the least of t hose amounts is very significant. A reduction from $100, 600,000 jury verdict to a $50,000,000 remittitur award to t he $1,000,000 majority award (without principled expla nation or analysis) is eyebrow-raising. Even if I, like th e majority, wanted to reduce the jury's award or Judge Orlofsky 's remittitur because of their respective sizes, I cou ld not bring myself to do so because no principled basis e xists for

such a dramatic reduction. I note also that it was because of the amount of punitive damages as well as our ow n desire to arrive at a principled formula for their

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3. Of course, insofar as Gumbs was decided before K eenan, it did not have the benefit of the fully-enunciated and contro lling standard established by Keenan, which in turn relied in part , and expanded upon

Gumbs.

42ascertainment -- a task at which the majority has n ot

succeeded -- that we devoted most of the time allot ted at oral argument to that subject.

However, we should not and cannot be swayed by the dollar amount of the damages if the ultimate decisi on at which we arrive is a principled decision that respe cts the standard of review by which we are bound. Justice Frankfurter in Rochin v. California, 342 U.S. 165, 170 (1952) expressed it succinctly when he stated: "We may not draw on our merely personal and private notions and disregard the limits that bind judges in their judi cial function." Our judicial function, as I perceive it, is to

adhere to our announced standard of review until it is overturned by our entire Court or by the Supreme Co urt.

Thus, my primary focus in this dissent deals with t he standard by which we must review the District Court 's

remittitur order. It is that standard which dictate s the result I have reached and which gives rise to thefl awed majority opinion respecting punitive damages. My secondary focus centers on the manner by which the majority has reduced Judge Orlofsky's remittitur in derogation of precedent and our standard of review.

Therefore, while I agree with the majority's dispos ition on all other issues, I respectfully dissent from the m ajority opinion as to the amount of punitive damages to whi ch Orthofix is entitled. Rather, pursuant to our stand ard of review, I would affirm the District Court's remitti tur of $50,000,000.

II.

This Court's review of a District Court's punitive damage remittitur is remarkably circumscribed and consists of three elements. We have held that when examining th e excessiveness of a punitive damages award, our revi ew "is [1] severely limited: [2] we may . . . reverse and grant a new trial only if the verdict is so grossly excessive a s to shock the judicial conscience. [3] Where the district jud ge grants a remittitur, deference to the trial court is heighte ned. Our review requires additional deference to the distric t court since it already granted a remittitur." Keenan, 983 F.2d at

43472 (internal quotations and citations omitted, and

brackets and emphasis added). Dunn is not to the co ntrary, because as I have pointed out, Dunn is a due process/product liability case and it leaves intact the

standard of review which Keenan announced when a district court orders a remittitur. Thus, because t he trial judge is in the best position to oversee whether th e jury verdict is rationally based, when the trial judge g rants a

remittitur this Court will not reverse unless wefin d the

District Court abused its discretion when measured against our standard of "heightened deference." Gumbs v. Pu eblo Int'l, Inc., 823 F.2d 768, 771-72 (3d Cir. 1987). S ee also Kazan v. Wolinski, 721 F.2d 911 (3d Cir. 1983). Cf. Delli Santi v. CNA Ins. Cos., 88 F.3d 192 (3d Cir. 1996); Starceski v. Westinghouse Elec. Corp., 54 F.3d 1089 (3d Cir. 1995).

Here, the jury awarded Orthofix $100,600,000 in pun itive damages, a figure it evidently derived from evidenc e in the record indicating that Biomet's cash on hand for th e 1996 fiscal year was approximately $100,600,000. The Dis trict Court reduced this amount to $50,000,000 in its rem ittitur order, apparently to bring the award in line with t he compensatory damages of $48,000,000 proven at trial and found by the jury. The District Court, which, as th e majority notes, was "intimately familiar with the c ase and the evidence," Maj. Op. at 24, had been involved wi th the litigation for over three years (including a two mo nth trial) and in its discretion had equated the punitive dama ges to the compensatory damages on a 1:1 ratio.

Despite this exercise of the District Court's discr etion, a discretion that the majority has found not to have been abused or to have "shocked the judicial conscience" -- indeed, without any principled basis at all, with n o reference to the record, and in utter disregard of our standard of review, the majority has further reduce d the punitive damages from $50,000,000 to $1,000,000. No r has the majority made any reference in its opinion to t he "heightened deference" that we owe to the District Court when it has granted a remittitur.

The analysis provided by the majority to support it s peremptory reduction of 98% (based on a reduction t o

44$1,000,000) of the remitted punitive damages award is

unprecedented in this Circuit. While the majority w as correct in rejecting EBI's arguments for reduction based upon the "alleged passion or prejudice" of the jury , Maj. Op. at 28, the majority nonetheless has arbitrarily red uced the punitive damages award based only upon its interpre tation of the "guideposts" found in BMW of North America v . Gore, 517 U.S. 559 (1996), and two Tenth Circuit cases th at have sought to explain them, FDIC v. Hamilton, 122 F.3d 854 (10th Cir. 1997) and Continental Trend Resources, I nc. v. OXY USA, Inc., 101 F.3d 634 (10th Cir. 1996), cert. denied, 520 U.S. 1241 (1997), as well as Dunn, 1 F.3d 1371. 4

Specifically, the majority concludes that, based up on factors mentioned in those cases, "EBI's conduct, w hich inflicted only economic harm for which large compen satory damages have been awarded, was not sufficiently egr egious to warrant a punitive damages award of $50 million. " Maj. Op. at 34. I am hard pressed to understand that con clusion in light of the jury findings of egregious, intenti onal and deceitful behavior by EBI, and by the lack of recor d evidence in the majority opinion which could shore up such

a reduced award.

The jury, in its responses on the special verdict s heet, answered that it had found by a preponderance of th e evidence: that EBI intentionally and improperly int erfered with Orthofix's reasonable expectations of economic advantage; that EBI wrongfully and intentionally in terfered

in the contractual relations between Orthofix and I nter Medical; that EBI made false statements either know ingly, recklessly or negligently that injured Orthofix; th at EBI's conduct in "passing off " its own products as those of Orthofix was likely to cause confusion as to the so urce of those products; that EBI made false statements that deceived or were likely to deceive, in violation of the Lanham Act and to the likely detriment to Orthofix; that EBI had uttered injurious falsehoods in violation o f the

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4. As I have earlier indicated, I believe the major ity's reference to and reliance on Dunn is inapposite, as Dunn did not dis turb our standard of review of remitted punitive damage awards in a non- due process/nonproduct liability context.

45Lanham Act; and that EBI competed unfairly in viola tion of

New Jersey statutory and common law. The jury furth er found by clear and convincing evidence that Orthofi x had

suffered harm as a result of EBI's actions and that EBI's conduct was actuated by "actual malice or were accompanied by a wanton and willful disregard" of t hose who foreseeably would be harmed by its conduct.

Yet, despite these extraordinary findings, and desp ite the lack of evidentiary support, the majority relies on only one aspect of the element of "reprehensibility" 5 in de ciding to

reduce the District Court's remittitur: its conclus ion that the damages inflicted by EBI were economic in natur e. Maj. Op. at 33-34. I discuss this aspect of the majority opinion in section IV of this dissent, after noting the maj ority's failure to recognize and apply the Third Circuit st andard of review pertaining to a punitive damages remittitur.

III.

I find fault with the majority opinion because, as I have already pointed out, the majority opinion has negle cted either to state or to apply the standard of review relating to punitive damages. See Keenan, 983 F.2d at 472. I ha ve recited our standard in the earlier portion of this dissent as review that is: 1) extremely limited with reference to the District Court's discretion; 2) subject to a "shock the conscience" scrutiny; and 3) characterized by a "he ightened deference" when a remittitur has been granted, as t here

was here.

The majority opinion, in referring to our en banc d ecision in Dunn, which involved the due process impact of m ultiple and successive awards of punitive damages in asbest os-

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5. Although BMW is not on point with this case and is therefore distinguishable, it nonetheless specifies three gui deposts for courts to consider in the punitive damages area. First and fo remost is the egregiousness of the defendant's conduct, i.e., dec eit, fraud, etc.,

labeled "the degree of reprehensibility." BMW, 517 U.S. at 575. Second, is the ratio of punitive damages to "the actual harm infli cted on the plaintiff." Id. at 580. The third and final guidepost is a comp arison to sanctions for comparable misconduct. Id. at 583. I agree with the majority that his third guidepost is not relevant to this appeal. Maj . Op. at 34.

46related injury cases, did not specify the standard of our

review of a District Court's judgment. The nearest Dunn came to enunciating such a standard was its referen ce to the Supreme Court's decision in Haslip, 499 U.S. 1 (1991). Haslip stated that an appellate court should determ ine whether a particular award is "greater than reasona bly necessary to punish and deter" -- hardly a formulai c standard of review. See Dunn, 1 F.3d at 1385 (quoti ng Haslip, 499 U.S. at 19). That same rubric is repeat ed by the majority in this case. See Maj. Op. at 37 & 38. Significantly, however, just as Haslip provides no analysis to determine whether a particular award is "greater than reasonably necessary to punish and deter," neither does the majority here give us the benefit of its analysis a nd wisdom when it concludes (in citing Haslip) that any award larger than $1,000,000 is not "reasonably necessary to pun ish and deter." Maj. Op. at 38 (citing Haslip, 499 U.S. at 19)).

Hence, I emphasize and maintain that neither Haslip nor Dunn6 has superseded this court's prescription held in Keenan, providing the appropriate standard of revie w after a remittitur has been ordered. This is particularly so, since there has been no endeavor on the part of the major ity even to acknowledge the specific findings made by the ju ry and to analyze the District Court's opinion. That opini on discussed at length the factors to be given conside ration under the New Jersey Punitive Damages Act.7

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6. Dunn, of course, involved Virgin Islands common law, whereas the instant appeal is rooted in New Jersey statutory la w, which governs the ultimate punitive damages award.

7. The New Jersey Punitive Damages Act, among other provisions, provides that a jury may award up to 5 times the co mpensatory damages or $350,000, whichever is greater. N.J.S.A. 2A:15-5 .14b. The Act is careful to circumscribe the essentials for a puniti ve damage award. It requires that the plaintiff prove, by clear and con vincing evidence, that the harms alleged were caused by the defendant's ac ts or omissions, and that these acts or omissions were "actuated by actu al malice or accompanied by a wanton and willful disregard" for those who might be harmed. N.J.S.A. 2A:15-5.12a. In this case, the jur y's special verdict findings met each and every requirement of the Act. Hence, the jury's punitive damage award could have exceeded even its $100,600,000 punitive damages award if it had multiplied the $48 ,000,000 compensatory damages award by 5. As we note in text , infra, and note 8, infra, the District Court, in reducing the punit ive damage, fully

addressed all elements of the Act. See N.J.S.A. 2A: 15-5.12b.

47Nor does the majority acknowledge that Haslip obvi ously

informed this court's decision in Keenan. Haslip wa s decided in 1991. Keenan was decided a year later, i n 1992, and Haslip was the subject of discussion in Judge Higginbotham's separate opinion. Accordingly, the majority's reliance on Haslip has little to do with its lack of reliance on Keenan. Further, Keenan's standard of r eview has obviously survived even in light of Dunn becaus e as mentioned Dunn has no relevance to the instant appe al. As noted, Dunn was a product liability case concerned with the implications of multiple and successive punitive da mage awards as they are affected by principles of due pr ocess, which explains Dunn's reliance on Haslip . Haslip a lso concerned the due process implications of punitive damage

awards. 499 U.S. at 18.

A more pertinent precedent -- cited in passing by t he majority, see Maj. Op. at 28 -- is Browning-Ferris Industries of Vermont, Inc. v. Kelco Disposal, Inc., 492 U.S. 257 (1989), which affirmed a punitive award of $6,066,082.74 an d a compensatory award of $51,146, a ratio of approxima tely 12:1. In so holding, the Supreme Court prescribed t hat in reviewing a district court's decision whether to or der a new trial on the issue of punitive damages, an appellat e court has a "limited function" and affirmed the principle that appellate court should "continue to accord consider able

deference" to the district courts. 257 U.S. at 279. Undoubtedly, this prescription underlay the adoptio n by

our court of the Keenan standard of review.

One appellate court has characterized a jury verdic t that

would "shock the conscience" as one that was so lar ge as to be contrary to reason, or so exaggerated as to demonstrate the existence of bias or some other imp roper motive. Caldarera v. Eastern Airlines, Inc., 705 F. 2d 778, 784 (5th Cir. 1983). Here, however, the majority do es not hold that either the original jury award or the rem itted award was so large as to be contrary to reason, nor could it. The defendants collectively are entities worth over $1 billion dollars, and a $50 million punitive damages award cannot be deemed unreasonable. Moreover, the majori ty explicitly holds that prejudice or bias was not a f actor in the award. Maj. Op. at 28. Nor has the majority hel d (as I

48suggest it cannot in light of the record) that the District

Court abused its discretion. Indeed, in its remitti tur opinion, dated August 28, 1997, the District Court identified and discussed at length the seven factor s required by New Jersey law in assessing whether the amount of a punitive damage award was reasonable. 8 Despite the dictates of our limited standard of rev iew, at no point does the majority opinion even discuss this a nalysis by the District Court, nor explain how it believes the

District Court abused its discretion.

Having failed to explain and having failed to hold that the District Court abused its discretion, or that the a ward "shocked the judicial conscience," and having faile d to give any deference, let alone "heightened deference" to the District Court's remittitur, it is evident that the majority

has also failed to adhere to this Court's establish ed standard of review, and has consequently erred in i ts

decision.

IV.

The majority's arbitrary reduction in punitive dama ges to $1,000,000 is not justified by the evidence and is without any basis in principle or precedent. Moreover, the authorities to which the majority has looked for gu idance, argue instead for affirming the District Court's re mittitur. Indeed, no case cited by the majority has held defi nitively that cases involving only economic controversies wa rrant a lower punitive damages award than those involving n oneconomic damages such as threats to public health.

While the BMW Court suggested that economic harm alone is not normally associated with "particularly reprehensible conduct," 517 U.S. at 576, that is on ly one element of the "reprehensibility" analysis. See Con tinental

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8. The District Court considered the following: 1) the likelihood of

serious harm resulting from EBI's misconduct; 2) EBI's awar eness or reckless disregard of that likelihood; 3) EBI's conduct upon learning that their initial misconduct would likely cause harm; 4) the duration or any concealment of the misconduct; 5) the profitability of the misconduct; 6) when the misconduct was terminated; and 7) EBI'sfin ancial condition.

49Trend Resources, 101 F.3d at 638; Lee v. Edwards, 1 01

F.3d 805 (2d Cir. 1996) (listing other elements). T he other elements which must be taken into account, such as intentionality, repetitive conduct, and conduct inv olving deliberate false statements, etc., were all found b y the jury

to have occurred in this case.

However, evidence produced at trial, but not mentio ned in the majority opinion, indicated that EBI's condu ct could involve potential physical harm to the wider commun ity as well as economic harm. EBI was found liable for pas sing off its own products as those of Orthofix, a recognized and respected manufacturer of bone fixators. There is e vidence in the record that on at least one occasion, the de ceptive substitution of EBI bone screws and ankle clamps fo r use in conjunction with Orthofix fixators could have in jured patients. Therefore, the jury could well have concl uded that the deceptive practices engaged in by EBI not only caused economic damage to Orthofix, but also exposed ortho pedic patients to increased harm, to say nothing of the l iability of hospitals when they unknowingly used EBI's bone scr ews and clamps believing them to have been manufactured by Orthofix. Even if this evidence is disregarded-- as the majority disregards it -- and even if one focuses o nly on the economic aspects of the damages caused by EBI, this Court must still affirm by deferring to the District Cour t's

remittitur.

As mentioned, EBI was found to have engaged in a se ries of continuous and intentional deceptive acts in ord er to steal a market from Orthofix worth approximately $9 5 million. This evidence, which the majority credits, Maj. Op. at 33-34, is more than sufficient to justify the ju ry's finding of reprehensible conduct, which is the "most import ant indicium" among the guideposts.9 BMW, 517 U.S. at 5 75. See also note 5, supra. That finding distinguishes this case from BMW in which the Supreme Court found "none of the

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9. Indeed, the majority concedes that the full awar d of compensatory damages can be credited to EBI's tortious conduct: "[t]he breaches of

contract here were so intertwined with the tortious scheme to steal Orthofix's market that the full award is properly a ttributable to the tortious conduct." Maj. Op. at 27.

50aggravating factors" associated with reprehensible conduct.

517 U.S. at 576. Indeed, the Supreme Court in BMW indicated that cases involving such deceptive condu ct would justify a high punitive award. 517 U.S. at 57 6 ("[I]nfliction of economic injury, especially when done intentionally through affirmative acts of misconduc t . . . can warrant a substantial penalty"). Cf. Balsamides v. Perle, 712 A.2d 673, 685 (N.J. App. Div.) (stating punitive damages can be awarded for breach of contract in commercial dispute where there has been a "breach o f trust beyond the contractual breach"), certif. granted, 7 19 A.2d 1023 (N.J. 1998).

The specific cases relied upon by the majority do n ot support its holding that economic damages alone jus tify a lowering of a punitive damages award. While the Ten th

Circuit in Continental Trend Resources and Hamilton did discuss the economic nature of the damages, the hol dings

of those cases were far more concerned with the constitutionality of the ratio of punitive damages to compensatory damages -- another of BMW's "guidepost s." See BMW, 517 U.S. at 580.

The majority understandably does not dwell on the r atio of the jury's compensatory damages award of $48,000 ,000 to its proposed punitive damage award of $1,000,000 . It makes no such comparison because in each of the cas es cited, the punitive damages were far greater than t he compensatory damages. BMW, which focussed on the ra tio between punitive damages and compensatory damages, implicitly assumed the former would be higher than the

latter in most cases. 517 U.S. at 580-82. Under the majority's approach here, the opposite is true and the majority's reliance upon BMW suffers because of tha t fact.

On the other hand, Judge Orlofsky's remittitur of $50,000,000, which I would affirm, when compared to the compensatory damages of $48,000,000, is essentially a 1:1 ratio, and well within the guidepost of BMW. The Di strict Court's remittitur ratio is also a far more accepta ble ratio than even the 6:1 ratio found to be permissible by the Tenth Circuit, or the 4:1 ratio affirmed in Haslip. See Hamilton, 122 F.3d at 862; Continental Trend Resour ces, 101 F.3d at 643. Indeed, the Supreme Court has inti mated

51that the ratio of punitive damages to compensatory

damages could be even higher than 6:1 in economic damages cases taking into account the damages that would have accrued had the defendant succeeded in its egr egious conduct. BMW, 517 U.S. at 581 (approving a 10:1 rat io in TXO Production Corp. v. Alliance Resources Corp., 5 09 U.S. 443 (1993) and stating that punitive damages should be assessed in the context of harm that was likely to occur as well as harm that did occur)). See also Browning-Fe rris, 492 U.S. 257 (12:1); Watkins v. Lundell, 169 F.3d 540 ( 8th Cir. 1999) (4:1 ratio); Neibel v. Trans World Assurance Co., 108 F.3d 1123 (9th Cir. 1997) (6:1 ratio).

V.

Finally, I take issue with the standard against whi ch the majority measured its award of punitive damages. Th e majority standard, rather than relying on our stand ard of review, alarmingly requires instead that an appella te panel "must rely on its combined experience and judgment" when reducing a remittitur. Maj. Op. at 36. The majority therefore, consonant only with its own devised stan dard and with reference only to its own judgment, holds, in conclusory fashion, that "[a]fter reviewing the rec ord and the arguments in this case, we conclude that the pr oper, reasonable punitive damages award is no more than $ 1 million." Maj. Op. at 36. Any amount greater than t hat, the majority concludes, would not be "reasonably necess ary to punish and deter." Maj. Op. at 38. As I have indica ted, no analysis accompanies this ipse dixit conclusion.

Not only does this mysterious and unauthorized stan dard provide no instruction to the trial courts or litig ants, but, as I have discussed above, it totally ignores our precedential standard of review, announced in Keena n, 983 F.2d 459, under which we are obligated to give addi tional deference to the district court's experience and ju dgment except where the award shocks the conscience or whe n the district court has abused its discretion. Here, the majority has followed its own "merely personal and private judgment" in arriving at a proper amount of punitiv e damages, rather than confining itself to "the limit s that

52bind judges in their judicial function." See Rochin , 342 U.S.

at 170.

VI.

I acknowledge that punitive damages continue to be a problem vexing both the state and federal courts. S ee Milo Geyelin, Philip Morris Hit with Record Damages , WA LL ST. J., March 31, 1999, at A3 (reporting punitive damag e award of $80.3 million); Milo Geyelin, Jury Awards $50 Mi llion to Ex-Smoker, WALL ST. J., Feb. 11, 1999, at A3 ($51.5 million). Yet, neither the state nor federal courts have fashioned a sure-fire recipe to solve the question of "how much,"10 even though we have prescribed a formula - - our standard of review -- to be employed.

Nevertheless, a Court of Appeals cannot "willy-nill y," in an effort to reach what it considers to be the "rig ht figure," arbitrarily pull a punitive damage award from the a ir as if it were a lottery number and announce "in our judgm ent," this is it! I feel strongly that a court of review, such as we are, must not only furnish guidelines to the bench and bar, but even more importantly, it must set an example o f correct judicial behavior by adhering to announced principles of jurisprudence. To do so, it must rema in "within the limits that bind judges in their judici al function." See Rochin, 342 U.S. at 170. Failure to do so can lead only to arbitrary, capricious and/or emotional judgments beyond the realm of principle.

In this case, I believe the majority's decision, ex cellent in all other respects, has failed to adhere to its pro per judicial function when speaking to the issue of punitive dam ages. It has failed to recognize what the court must regard as our declared standard of review -- see Keenan, Gumbs, D elli Santi, Starceski, supra, etc. At the very least, th e majority opinion has now added confusion to this court's sta ndard

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10. In an effort to alleviate this problem, New Jer sey, and recently Alabama, have joined a growing number of states whi ch have responded with legislation governing the award of punitive da mages. See BMW, 517 U.S. at 614-16 (Ginsburg, J., dissenting) (listing in appendix state statutes governing punitive damage awards).

53by referring to a "standard" derived from inapposit e cases

which pre-existed Keenan. It has substituted its pe rsonal judgment for a principled review function over a Di strict Court's discretion; and without relying on record e vidence, it has reached a bottom line "lottery" figure of $1 ,000,000 relying only on its own "experience and judgment." Maj. Op. at 36. Such a practice is neither principled jurisp rudence nor is it Third Circuit jurisprudence. If the major ity now holds that, in light of the sequence of cases -- Ha slip in 1991, Keenan in 1992, and Dunn in 1993 -- and in li ght of the materially different contexts of these cases, t hat our

remittitur standard of review has now been whittled down so that no analysis aside from an ad hoc panel's "c ombined experience and judgment" is required in reviewing a district court's remittitur, then all the more reason why th is court must address and resolve this confusion by establis hing firm guidelines.

Accordingly, I respectfully dissent from the standa rd of review and the resulting punitive damage award anno unced by the majority. Instead, I would affirm the Distri ct Court's remittitur of $50,000,000.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

54