1999 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

6-28-1999

Inter Med Sup Ltd v. EBI Medical Syst., et.al.

Precedential or Non-Precedential:

Docket 98-5158

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Recommended Citation

"Inter Med Sup Ltd v. EBI Medical Syst., et.al." (1999). 1999 Decisions. Paper 171.

http://digitalcommons.law.villanova.edu/thirdcircuit_1999/171
Filed 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. Orlofsky 
Argued 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 States Court of Appeals 

for the Eighth Circuit, sitting by designation. 

 2 
 Stephen 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 plaintiff 

companies on all of the breach of contract and tort claims 

submitted to it and it returned a verdict of $48 million 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 award of 

punitive damages to $50 million. Inter Med. Supplies, 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 vigorous 

critique to the sizable damages awards, primarily that for 

punitive damages. The role of gatekeeper over such punitive 

damages verdicts is one of the most challenging that has 

been placed upon appellate judges in civil cases. 

I. 

FACTS 

A. 

BACKGROUND 

Orthofix S.r.l., an Italian company, manufactures medical 

devices, including a product known as an external bone 

 3 
fixator, which is used to hold severely fractured bones in 

alignment, thereby obviating the need for repeated surgery. 

It is wholly owned by Orthofix, N.V. of the Netherlands, 

which itself owns Inter Medical Supplies, Ltd., a Cyprusbased company that is the worldwide distributor of the 

Orthofix bone fixators. These entities will be referred to 

collectively as "Orthofix." 

Biomet, Inc., an Indiana company, manufactures 

orthopedic devices and owns Electro-Biology, Inc. ElectroBiology in turn owns EBI Medical Systems, Inc., a New 

Jersey-based corporation that sells external bonefixators. 

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 served as 

the exclusive distributor in the United States, Canada, and 

the Caribbean Basin for various orthopedic devices,

principally external bone fixators, manufactured by

Orthofix. The last of these agreements went into effect on 

June 1, 1990, and expired on May 31, 1995 (the 

"Distributor Agreement"). For some eleven years, EBI and 

Orthofix shared what each agrees was a profitable business 

relationship, grossing approximately $30 million in sales 

annually and controlling one-third of the United States 

bone fixators market. 

The present dispute arises out of the 1990 Distributor 

Agreement between the parties. Under paragraph 8 of the 

Agreement, Orthofix agreed to promptly supply EBI with 

"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 quantity of 

Products reasonably necessary to meet [EBI's] resale 

requirements for at least two months." In paragraphs 6(f) 

and (g), EBI agreed to distribute and sell Orthofix's 

products in conjunction with the Orthofix trade name, but 

promised not to appropriate that name as part of its own 

corporate designation. Both parties agreed not to disclose 

proprietary information obtained from the other. 

Finally, EBI consented to restrictions on its ability to deal 

in competitive products. Specifically, in paragraph 6(d) EBI 

undertook 

 4 
 not 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 competitive 

 with the [Orthofix] Products. 

Despite the excellent results from their mutual efforts, 

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 renewal, 

the relationship collapsed due to a dispute over the division 

of sales revenues. In anticipation of the termination of the 

Agreement, each party took steps in an effort to protect its 

own long-term business interests. Orthofix sought and 

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 severance 

of its relationship with Orthofix by beginning development 

of its own external fixator, "Dynafix," with sales of that 

fixator to begin after expiration of the Distribution 

Agreement. It is EBI's conduct in anticipation of and after 

termination that led to this litigation. 

B. 

LITIGATION 

1. Complaint, Answer, Counterclaim 

In November 1995, Inter Medical Supplies sued EBI in 

the United States District Court for the District of New 

Jersey for failure to pay for several shipments of products 

sold during that year. At approximately the same time, 

Orthofix, Inc. and Orthofix S.r.l. also filed suit against EBI 

in the United States District Court for the Northern District 

of Texas, alleging breach of contract of the 1990 Distributor 

Agreement; misappropriation of trade secrets; patent 

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

Act, 15 U.S.C. SS 1114, 1125(a); unfair competition under 

Texas law, Tex. Bus. & Com. Code Ann. S 16.29; fraud 

under the New Jersey Consumer Fraud Act, N.J. Stat. Ann. 

S 56:8-2; common law unfair competition; intentional 

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 interference 

with both the 1990 Distributor Agreement and EBI's other 

customer and business relationships, fraud, defamation, 

violation of the Lanham Act, breach of the distribution 

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 paragraph 

6(d) of the Distributor Agreement, the District Court ruled 

that the language of the clause prohibited EBI from

developing during the term of the agreement any product 

competitive to those it was distributing for Orthofix. See 

Orthofix, Inc. v. EBI Med. Sys. Inc., Civ. Action No. 95-6035 

(SMO), at 14 (D.N.J. Apr. 8, 1997) (hereafter In Limine 

Ruling). 

2. Trial 

The jury trial began on April 7, 1997, and lasted two 

months. At its conclusion, the jury responded to special 

verdict questions by finding in favor of Orthofix on its 

claims for breach of contract, breach of the duty of good 

faith and fair dealing, tortious interference with prospective 

economic advantage, tortious interference with contract, 

defamation, unfair competition, and violation of the 

Lanham Act. EBI does not contend on appeal that the

evidence was insufficient for the jury to find it liable for 

breach of contract. In fact, the District Court found, 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 Orthofix 

 6 
following 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 present 

Orthofix purchasers to the new EBI fixator and to drive 

Orthofix from the North American market. EBI started the 

process of bringing its own fixators to market in July 1994, 

although it did not formally place its product on the market 

until August 1995. 

In addition to developing its new, competitive product, 

EBI ordered vast quantities of the Orthofix products and 

parts it was then distributing. From October 1994 to May 

1995, EBI began ordering Orthofix product in amounts far 

in excess of its two-month inventory needs. It eventually 

stockpiled inventory sufficient to meet its needs for sixteen 

months. There was evidence that to achieve this result, EBI 

hid its stockpiling of Orthofix products by ordering and 

paying for products through third parties. For nearly one 

year EBI also failed to provide Orthofix with a series of 

required quarterly reports of its sales and inventory 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 Orthofix 

product components through third parties. Its employees 

used reverse engineering to analyze the construction of 

these Orthofix components and then substituted EBImanufactured parts for genuine Orthofix ones. EBI never 

informed medical professionals of the substitution, in effect 

passing off EBI's own components for those of Orthofix. 

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 inaccurately 

described the fixators to purchasers as upgrades to or 

newer versions of the Orthofix products that EBI had been 

selling for years. At the suggestion of EBI's president, 

James Pastena, salespersons falsely stated that EBI elected 

to terminate the distributorship because the Orthofix 

 7 
product line was inadequate for the needs of the medical 

profession. 

On the basis of this and like evidence, the jury found 

that EBI had both breached its contract with Orthofix and 

committed various torts. The jury awarded the Orthofix 

companies $48 million in compensatory damages. The 

verdict sheet, however, did not specify what portion, if any, 

of the $48 million compensatory damages award was meant 

to compensate the tort injuries and what portion, if any, 

was meant to remedy the contractual breaches. The jury 

also awarded $100,600,000 in punitive damages, which 

contained no breakdown by defendant or count. In a 

separate determination, the jury awarded Inter Medical 

Supplies $875,399 to compensate for EBI's failure to pay 

for products delivered at EBI's request. 

In response to EBI's counterclaims, the jury concluded 

that Orthofix had engaged in tortious conduct and 

breached the Distributor Agreement. It awarded one dollar 

in damages on the contract breaches and tortious acts, as 

well as granted a one-dollar set-off for Inter Medical 

Supplies' breaches in filling and shipping EBI's orders. 

3. Post-Trial Motions 

After the verdict, EBI moved for judgment as a matter of 

law or for a new trial pursuant to Federal Rule of Civil 

Procedure 50. It also requested that the District Court 

grant a remittitur on the punitive damages assessment. EBI 

broadly attacked the trial and verdict, asserting that there 

was insufficient evidence to support a finding of liability 

under either a tort or a breach of contract theory, or to 

support the damages calculation. EBI claimed that the 

court failed to assure that the jury distinguished between 

tort and breach of contract damages. Finally, EBI alleged 

that the court failed to adequately respond to references 

Orthofix made in its closing to EBI's alleged violations of 

the Food, Drug, and Cosmetic Act ("FDCA"). 

The District Court rejected EBI's legal arguments on 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 evidence was 

sufficient to support both the jury's findings of tortious 

 8 
conduct and breach of contract and its calculation of 

compensatory damages. See id. at 686-88. In response to 

EBI's claim that Orthofix's allegations of FDCA violations 

prejudiced the jury, the court noted that it had submitted 

to the jury EBI's own proposed instruction for curing that 

error. See id. at 690-91. 

EBI also argued that because the jury failed to apportion 

the compensatory damages between the tort and breach 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 tortious 

conduct, which had not been separately assessed. The 

District Court rejected that argument, observing it had 

instructed the jury on that issue and that the jury

presumably understood the instructions. Although the New 

Jersey Punitive Damages Act, N.J. Stat. Ann. SS 2A:15-5.9 

to .17, provides that punitive damages must be apportioned 

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 jury could 

have found that EBI's tortious conduct was malicious and 

"accompanied by a willful disregard of the plaintiffs' rights," 

id. at 694, warranting punitive damages. Additionally, the 

court noted that the amount of punitive damages awarded 

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 Jersey law 

and reduced the amount of punitive damages to $50 million 

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 private 

parties was likely to recur, see id. at 700; that cases 

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 defendant has 

placed a defective product into commerce and into the 

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. 

 9 
The 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 Federal 

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 the 

litigation. We have appellate jurisdiction pursuant to 28 

U.S.C. S 1291. 

II. 

DISCUSSION 

EBI raises five claims on this appeal. Three of them are 

directed to the District Court's interpretation of the 

language of the Agreement and the effect of EBI's conduct; 

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) of the 

Distributor Agreement not to "in any way handle" 

competing products as prohibiting EBI from developing 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 good faith 

and fair dealing as they pertain to EBI's orders for fixator 

products. It also contends that the District Court erred in 

concluding that EBI's over-ordering of products constituted 

tortious interference with Orthofix's prospective economic 

advantage. As to damages, EBI argues that the jury's award 

of $48 million was speculative and lacked substantial 

evidence. Finally, EBI vigorously argues that the punitive 

damages award, even as reduced, was the product of 

prejudice, violated New Jersey law, and was excessive and 

unreasonable. We review these contentions seriatim.

 10 
A. 

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 extrinsic 

evidence on the meaning of this paragraph. After a hearing 

and thorough consideration of the parties' arguments and 

submissions, the District Court denied the motion, holding 

that the handling clause unambiguously prohibited 

development of a competitive product during the term of 

the Agreement. We must consider at the outset whether 

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 limine 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 construction 

to which it now objects, stating: 

 [T]he phrase "in any way handle" in Paragraph 6(d) of 

 the Distributor Agreement includes "a prohibition on 

 the development of a competitive product in the 

 marketplace." 

App. at 1477. Indeed, this was substantially the instruction 

given by the District Court without objection from EBI. Our 

recent precedents provide some guidance on this issue. 

In American Home Assurance Co. v. Sunshine 

Supermarket, Inc., 753 F.2d 321 (3d Cir. 1985), we 

considered whether a formal exception to the admission of 

evidence would be necessary to preserve that issue for 

appeal, if the court had already issued a definitive in limine 

ruling. There, the insurer, American Home, sought an in 

limine ruling to prevent the admission of evidence that it 

never prosecuted the arson on which it based its refusal to 

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

that American Home requested, reasoning that the evidence 

was admissible. See id. at 324. After it lost at trial, 

American Home appealed, citing as error the admission of 

such evidence. The insured asserted that American Home 

had waived the claim when it failed to raise an objection at 

trial. We rejected that argument, explaining that the reason 

we require parties to raise objections or waive them is to 

assure that the court's attention is drawn to potential 

errors before it is too late to remedy them. See , e.g., Smith 

v. Borough of Wilkinsburg, 147 F.3d 272, 276 (3d Cir. 

1998). We further held that this rationale is no longer 

applicable once a court has not only learned of the alleged 

error, but issued a definitive ruling that it is unlikely to 

reconsider in the future. American Home Assurance, 753 

F.2d at 324. We concluded that "requiring an objection 

when the evidence was introduced at trial would have been 

in the nature of a formal exception and, thus, unnecessary 

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 motion 

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, 1082-83 

(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 provision, 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 error 

because the District Court adopted, with only slight 

revision, the charge that EBI itself proffered. It may be that 

the same reasoning that supported our conclusion in

 12 
American Home Assurance and Walden that no objection 

was required when the evidence at issue was proffered also 

supports holding that EBI did not waive its objection by 

submission of its proposed charge. 

One could reasonably argue that the purpose underlying 

Federal Rule of Civil Procedure 51, which governs 

objections to jury instructions, would not be advanced by 

requiring a party to submit an instruction that contradicts 

a definitive in limine ruling or to object to a proposed 

instruction that incorporates that ruling. Cf. Smith, 147 

F.3d at 277. Under that theory, the initial definitive 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 litigant's 

attempt to revisit that ruling at the time of the jury 

instructions would use the court's time and resources 

inefficiently. 

We need not decide that issue here. Although in many 

cases the difference between plenary review and plain error 

review would be dispositive, in this case it is not, as the 

conclusion we reach using plenary review, which ordinarily 

applies when we review the District Court's interpretation of 

the contract, see Williams v. Metzler, 132 F.3d 937, 946 (3d 

Cir. 1997), would necessarily be the same were we to apply 

the more restrictive plain error review. 

We now turn to consider EBI's objection to the District 

Court's in limine ruling. The gist of the dispute between the 

parties is whether to define the word "handle" broadly or 

narrowly, particularly in light of the prefatory phrase "in 

any way." Both parties contended in connection with the in 

limine ruling that the "in any way handle" clause was 

unambiguous, although they disagreed on its meaning. 

Here, EBI renews its argument that the clause is 

unambiguous. It then proceeds, relying on United States 

principles of contract interpretation, such as ejusdem 

generis, to argue that the language should be interpreted 

narrowly. Under the interpretation EBI proffers, the clause 

precluded it from distributing, selling, or marketing 

competing products, but not from developing such 

products. 

 13 
It 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 already are 

listed in the contract, and that it also encompasses 

prohibition of any development by EBI of competing 

products. It notes that the dictionary also includes the 

following listings for handle: "2(b): to conduct oneself 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 House 

Dictionary of the English Language 866 (listing"11. to 

manage, deal with, or be responsible for" and"13. to 

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 governed by 

the laws of the Republic of Italy." The parties introduced 

affidavits from experts in Italian law at the in limine 

hearing. According to the District court these experts 

effectively agreed that "because the Distributor Agreement 

was drafted in English, the terms of that agreement should 

be given their natural meaning in English." In Limine 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 lifetime 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 District Court 

was "not convinced that ejusdem generis is a canon of 

construction known to Italian law." In Limine Ruling at 10. 

Neither party has directed our attention to case law that 

 14 
supports its expert's position, and apparently neither party 

provided the District Court with any such authority. 

Thus, there is no support for the contention that Italian 

law would permit courts of the United States to apply 

United States interpretive rules to a contract invoking 

Italian law. Even if it were appropriate to use such rules, 

we agree with the District Court that they could not be 

applied to restrict the meaning of the term "handle" 

because that term is immediately preceded by the phrase 

"in any way." Therefore, we conclude that the District Court 

did not err when it approached the question as one of plain 

meaning and relied on the ordinary dictionary definition 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 Orthofix urges 

us to adopt. We thus conclude that the Agreement 

prohibited EBI from researching and developing a 

competing product during the tenure of that contract. 

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 contract's 

language is ambiguous, we are satisfied that the District 

Court did not err in its analysis under that approach. "[A] 

contract is unambiguous if it is reasonably capable of only 

one construction." Tamarind Resort Assocs. v. Government 

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 ambiguous, 

we do not simply determine whether, from our point of 

view, the language is clear. . . . Before making afinding 

concerning the existence or absence of ambiguity, we 

consider the contract language, the meanings suggested by 

counsel, and the extrinsic evidence offered in support of 

each interpretation." Teamsters Indus. Employees Welfare 

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 required 

 15 
steps in identifying ambiguity. The court considered 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 assigned 

to the phrase by counsel and explained that, in context, 

only one of these interpretations was reasonable. Finally, 

the court found that its construction of the handling clause 

was supported by extrinsic evidence regarding what 

Orthofix intended in insisting that the handling clause 

remain in the agreement. 

EBI argues that the District Court exceeded its authority 

in considering extrinsic evidence in support of Orthofix's 

interpretation of the contract. That extrinsic evidence 

included an internal memorandum dated June 6, 1990,

from Robert Gaines-Cooper, group chairman of Orthofix, to 

Orthofix counsel Daniel Gilioli, which memorialized certain 

aspects of the negotiation of the Distributor Agreement then 

underway between Orthofix and EBI. In the memorandum, 

Gaines-Cooper wrote that he had rejected EBI's request to 

remove the phrase "in any way handle" from the Distributor 

Agreement so that EBI could develop a competing product 

during the final year of the Agreement. The court also 

considered a draft of the Distributor Agreement obtained 

from EBI files in which the words "in any way handle" 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 wanted 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 evidence, 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 extrinsic 

evidence was misplaced, EBI ignores our precedent."Before 

making a finding concerning the existence or absence of 

ambiguity, we consider . . . the extrinsic evidence offered in 

support of each interpretation." Teamsters Indus. 

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

there, "Extrinsic evidence may include the structure of the 

contract, the bargaining history, and the conduct of the 

parties that reflects their understanding of the contract'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 clause is 

"reasonably capable of only one construction." Tamarind 

Resort Assocs., 138 F.3d at 110-11. Thus, the District 

Court did not err in holding that the contract was not 

ambiguous and in concluding that the Agreement's "in any 

way handle" clause prohibited EBI from developing a

competing bone fixator product during the term of the 

agreement. Therefore, it did not err in so instructing the 

jury. 

B. 

IMPLIED CONTRACTUAL DUTY NOT TO OVER-ORDER 

EBI next takes issue with the decision that it breached 

the contract by over-ordering Orthofix products. It argues 

that the District Court erred in concluding that the contract 

contained an implied duty of good faith and fair dealing not 

to over-order. EBI further contends that there is insufficient 

evidence of the damages, if any, the alleged over-ordering 

caused and concludes that the entire compensatory award 

must therefore be overturned.1 

The parties agree that there is no express provision in the 

Agreement that prohibits EBI from ordering as much as it 

_________________________________________________________________ 

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

limited to the claim that Orthofix could not recover damages for alleged 

excess orders, assuming that those orders did breach EBI's implied duty 

of good faith, and, consequently, that EBI cannot now appeal on the 

claim that there was no implied duty. We reject Orthofix's claim, because 

EBI argued in its motion that it was entitled to order and sell as much 

Orthofix product as it wanted under the contract, see App. at 1386, 

1440, an argument that assumes the absence of an implied duty of good 

faith. 

 17 
could 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 207, and 

that paragraph 6(k) required EBI to maintain an inventory 

level covering at least two months requirements, see App. 

at 206. Thus, EBI concludes, the contract specifically 

addresses what amount it could order, setting a minimum 

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 contract 

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, whereas, 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 duty would 

include the obligation not to over-order. 

We engage in plenary review of a question of foreign law. 

See Grupo Protexa, S.A. v. All American Marine Slip, 20 F.3d 

1224, 1239 (3d Cir. 1994). "[E]xpert testimony is the most 

common way to determine foreign law. . . ." In the Matter of 

the Arbitration Between: Trans Chem. Ltd. & China Nat'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 own expert. 

These experts reviewed the Agreement to determine whether 

it included an implied duty of good faith. They agreed that, 

under Italian law, it did. They disagreed, however, as to the 

content of the implied duty in this context, and hence as to 

the permissible level of EBI orders under Italian law. 

Orthofix's expert, Professor Piero Bernardini, working 

from the assumption that EBI purchased fixators"in excess 

of its actual requirements for the purpose of resale after the 

expiration of the Agreement," App. at 1334, described such 

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

the contractual performance." App. at 1343. He concluded 

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 provides: 

 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 from 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 shipments are 

 intended. Such forecasts shall not be binding on either 

 party. 

App. at 203. 

In contrast, EBI's expert, Professor Fabio Emilio Ziccardi, 

interpreted the Agreement as a requirements contract 

under Italian civil law, and stated that, because the 

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 that 

order. App. at 240-42. 

In the face of disagreement between experts on such

matters, we may adopt any position that is supported by 

reasonable inferences either from the respective country's 

law or "from the implications of a legal concept such as a 

contract or testament or juristic personality." Merinos 

Viesca y Compania, Inc. v. Pan American Petroleum & Trans. 

Co., 83 F.2d 240, 242 (2d Cir. 1936); cf. Mobile Marine 

Sales, Ltd. v. M/V Prodromos, 776 F.2d 85, 89-90 (3d Cir. 

1985) (rejecting Panamanian official's certification of due 

registration in favor of court's own reading of Panamanian 

law); In the Matter of Arbitration Between: Trans Chem. Ltd. 

& China Nat'l Mach. Import & Export Corp., 978 F. Supp. at 

275 ("[F]ederal judges may reject even the uncontradicted 

conclusions of an expert witness and reach their own 

decisions on the basis of independent examination of 

foreign legal authorities." (citation omitted)). 

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

Agreement is more reasonable because it relied on the 

language in the Agreement, particularly that in paragraph 

3 obliging EBI to provide Orthofix with a forecast of its 

expected requirements for the three months after the twomonth order period. EBI's expert, on the other hand, relied 

more heavily on the absence of language. The contractual 

obligation that EBI provide Orthofix with a forecast of its 

need for the three months after its current inventory was 

likely to be exhausted, although not binding on either 

party, certainly suggested both that Orthofix expected EBI 

to keep its inventory fairly current and that there was a 

relationship between EBI's immediate inventory needs and 

its orders. There would be no need for such a provision if 

the parties intended to allow EBI to accumulate, without 

notice, inventory for sixteen months. Bernardini's 

interpretation also more effectively integrates paragraph 3, 

on which he relied, with three other paragraphs: paragraph 

6(e) (requiring EBI to forward to Orthofix, inter alia, 

monthly sales reports and "quarterly reports indicating the 

quantity of Products comprising EBI's inventory"), App. at 

205; paragraph 6(k) (requiring EBI to maintain inventory 

"reasonably necessary to meet its resale requirements for at 

least two (2) months"), App. at 206; and paragraph 11.1 

(requiring Orthofix to fill any order it accepted before 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 Italian law 

expert that EBI had an implied duty of good faith and fair 

dealing not to over-order Orthofix products. 

Moreover, even if this were a question of United States 

contract law, subject to plenary review, see Williams, 132 

F.3d at 946, we would find against EBI. As noted above, 

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 is 

paragraph 8, which covers Orthofix's obligation to fill EBI's 

orders. Even EBI's own Italian expert rejected that

 20 
construction, opining that the Distribution Agreement only 

specifies a minimum, App. at 241, and "clearly has no 

provision at all concerning the purchases `in excess,' " 

Supp. Affidavit S 4.4. In the absence of any provision that 

"specifically covers" the matter, we reject EBI's contention 

that United States contract law bars the covenant implied 

here by the Agreement. 

There was evidence to support the jury's finding that EBI 

over-ordered and stockpiled Orthofix products while

actively misleading Orthofix about its need for additional 

product, thereby breaching the duty of good faith and fair 

dealing. Examining this evidence in the light most favorable 

to Orthofix, we conclude that the District Court properly 

denied EBI's motion for judgment as a matter of law. 

EBI nonetheless contends that Orthofix failed to present 

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 impermissible, the 

jury's finding of liability on a separate theory in a special 

verdict can sustain the award of damages. See Bonjorno v. 

Kaiser Aluminum & Chem. Corp., 752 F.2d 802, 806 (3d 

Cir. 1984); see also Loughman v. Consol-Pennsylvania Coal 

Co., 6 F.3d 88, 100 (3d Cir. 1993). It follows that even if 

Orthofix failed to identify the damages caused by the sale 

of the over-ordered product, that would not negate the 

jury's liability verdicts on the three other contract breaches 

and the eight torts. Moreover, the case was not presented 

as a series of separate breaches of contract and tort, each 

of which caused separate defined damages. Thus, there is 

no basis to overturn the entire compensatory damages 

award. 

C. 

TORTIOUS INTERFERENCE 

In a related claim, EBI contends that the District Court 

erred in denying its motion for judgment as a matter of law 

on the jury's verdict that held it liable for the tort of 

 21 
interference 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 contract, 

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 constituted a 

tort. Rather, it contended at trial that EBI improperly 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 concluded 

that there was evidence that EBI used fraudulent and 

unlawful means to obtain the fixators and, just as 

important, that EBI then sold the fixators in direct 

competition with Orthofix. The court held that, from this 

evidence, the jury could have concluded that EBI engaged 

in tortious interference by over-ordering, regardless of 

whether the act of over-ordering breached the contract. 

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 claim, it also 

emphasizes that EBI tortiously interfered by selling those 

_________________________________________________________________ 

2. This tort requires proof of five elements: (1) plaintiff '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 plaintiff in the absence of 

that 

wrongful interference; and (5) damages. See Lightning Lube, Inc. v. Witco 

Corp., 4 F.3d 1153, 1167 (3d Cir. 1993). EBI's appeal contends that 

there was a failure of proof on element (3). 

3. Orthofix again contends that EBI waived its appeal for this position, 

because EBI moved exclusively on the grounds of sufficiency of the 

evidence, not whether the conduct would amount to tortious 

interference. However, EBI did raise the claim that the conduct 

amounted only to breach of contract and not tortious interference in its 

Rule 50(b) motion. Thus, we reject Orthofix's argument. 

 22 
products to the very customers that otherwise would have 

been purchasing from Orthofix. 

Moreover, the jury was entitled to conclude that EBI's 

proffered justification for its conduct did not completely 

explain its actions. EBI argued that the actions it took were 

defensive, designed to protect itself against the coming loss 

in business expected to result from the termination of its 

Orthofix distributorship. However, Orthofix introduced 

evidence that EBI's president described his company's postAgreement relationship with Orthofix as a "war," and his 

objective as being to "destroy Orthofix." App. at 507. With 

this evidence, the jury was entitled to conclude that EBI's 

explanation for acquiring and selling the fixators was 

inadequate to explain its decision to compete in the market 

when and how it did, and that its conduct was tortious 

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 law 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 damages 

because the amount of such damages was speculative. In 

doing so, EBI expands on its argument that the District 

Court erred in denying the motion for judgment as a matter 

of law on the breach of contract and tortious interference 

counts because Orthofix failed to establish specific damages 

associated with each cause of action. Relying on our 

statement in Coleman Motor Co. v. Chrysler Corp., 525 F.2d 

1338, 1353 (3d Cir. 1975) --"we cannot permit a jury to 

speculate concerning the amount of losses resulting from 

unlawful, as opposed to lawful, competition"-- EBI 

contends that the jury's award here was impermissible 

speculation. 

 23 
Although the award appears large, we review it keeping in 

mind the following observation by the District Court, which 

was intimately familiar with the case and the evidence: 

 In an effort to maintain their commanding position as 

 the leading United States marketer of external bone 

 fixators until such time as their own products could be 

 successfully launched, defendants attempted to secure 

 a large inventory of Orthofix products. That plan was 

 largely successful, and Orthofix is no longer a major 

 force in the United States market for external bone 

 fixation devices. 

Inter Med. Supplies, 975 F. Supp. at 685. EBI's actions thus 

secured for it the market that had previously been 

Orthofix's, an injury from which Orthofix has not recovered. 

EBI makes essentially three arguments against the award 

of compensatory damages: First, that Orthofix's consultant 

created flawed market projections, and that Creighton 

Hoffman, the Orthofix expert who ultimately testified, 

prepared damage estimates in reliance on these projections; 

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 projections 

made by Orthofix's executives; and third, that Hoffman 

improperly inflated his damage estimates by taking sales 

growth data prepared by EBI's own damage experts out of 

context and applying it to a situation that did not reflect 

actual market conditions. 

These arguments echo those EBI presented to the District 

Court in a motion in limine and in motions for judgment as 

a matter of law. The court rejected EBI's arguments, 

focusing first on Hoffman's testimony and then emphasizing 

that "while [the analysis] certainly yielded a large number, 

[it] was not flawed as a matter of law. The jury could 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 the time 

and effort to consider carefully the damages evidence each 

side presented. Id. 

The disputed calculation proposed lost profits not 

exceeding $95 million and actual damages not in excess of 

 24 
that number. The District Court rejected EBI's complaint 

that the damages were "undifferentiated," noting that 

"[p]laintiffs tried this case on numerous alternative theories 

of liability each of which would support an award of`lost 

profits.' To the extent the plaintiffs prevailed on any theory 

which was supported by sufficient evidence, they are 

entitled to the full measure of compensatory damages, and 

no more." Id. Referring to Orthofix's expert's testimony, the 

District Court rejected EBI's complaint that Orthofix failed 

to present testimony separating the damages by entity and 

by claim. The court suggested that such specificity would 

have created jury confusion, as well as a strong potential 

for duplicative or excessive damages. Id. The court

explained: 

 Because all of the claims upon which plaintiffs 

 prevailed arose from the same set of facts surrounding 

 the defendants' plan to convert the Orthofix external 

 fixator market to the purchase of Dynafix, and because 

 that plan succeeded, plaintiffs' lost profits need not be 

 assigned to a given legal theory. Damages ordinarily 

 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 abuse of 

discretion. See Gasperini v. Center for Humanities, Inc., 518 

U.S. 415, 437 (1996); American Nat'l Bank & Trust Co. v. 

Regional Transp. Auth., 125 F.3d 420, 437 (7th Cir. 1997). 

Although New Jersey law requires a "reasonably accurate 

and fair basis for the computation of alleged lost profits," 

J.L. Davis & Assocs. v. Heidler, 263 N.J. Super. 264, 276, 

622 A.2d 923, 929 (Sup. Ct. App. Div. 1993) (citation 

omitted), the fact that a plaintiff may not be able to fix its 

damages with precision will not preclude recovery of 

damages. See American Sanitary Sales Co. v. New Jersey, 

178 N.J. Super. 429, 435, 429 A.2d 403, 406 (Sup. Ct. 

App. Div. 1981). EBI's arguments addressing the reliability 

and source of Hoffman's data presumably were made with 

equal force to the jury. Hoffman was cross-examined at 

length, and EBI presented its own damages expert who 

painted a more conservative view of Orthofix's economic 

 25 
prospects. The District Court properly held that the 

credibility of the experts was for the jury to determine, and 

we see no reason for concluding that there was an abuse of 

discretion. 

E. 

PUNITIVE DAMAGES 

The most troublesome issue on appeal is that presented 

by the jury's award of punitive damages in the amount 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 contract 

damages, leaves us no basis to apply the New Jersey Act, 

which limits a plaintiff 's punitive damages to either 

$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 available for 

breach of contract, this court cannot determine whether the 

strictures of the New Jersey Act are met without 

determining what portion of the $48 million compensates 

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 trial 

counsel did not object on the ground now pressed, either 

when the instructions and verdict sheet were given to the 

jury or when the jury returned.4 We believe, in line with 

other circuits, that EBI's failure to object at the time the 

jury received the proposed verdict sheet when the jury 

returned constitutes a waiver of this objection. See AustinWestshore Constr. Co. v. Federated Dep't Stores, Inc., 934 

_________________________________________________________________ 

4. The District Court did address EBI's argument that the verdict sheet 

failed to distinguish among the various defendants, but found that the 

verdict was consistent with the defendants' own requested charge, which 

did not require the jury to list each award separately. Inter Med. 

Supplies, 975 F.2d at 697. EBI has not raised this issue on appeal. 

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

any inconsistency in jury response to special interrogatories 

by failing to raise issue before jury was excused); White v. 

Celotex Corp., 878 F.2d 144, 146 (4th Cir. 1989) (same) 

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 conduct. 

We turn then to EBI's challenge to the punitive damages 

award. EBI claims that the award, even as remitted by the 

District Court, is inconsistent with both the New Jersey 

Punitive Damages Act, N.J. Stat. Ann. S 2A:15-5.9 et seq., 

and the Due Process Clause of the Fourteenth Amendment.5 

It argues that the jury awarded punitive damages from 

passion and prejudice, that Orthofix failed to produce 

evidence of some defendants' financial condition as required 

by the New Jersey Act, and that even the $50 million 

punitive damages award is excessive. 

The standard of review that we apply depends upon the 

particular challenge asserted. To the extent that EBI 

complains about the admission of certain evidence, we 

review the District Court's ruling under an abuse of 

discretion standard. See Grizzle v. Travelers Health 

Network, Inc., 14 F.3d 261, 270-71 (5th Cir. 1994). To the 

extent that the issues EBI raises have a legal component, 

our review is plenary. See Johansen v. Combustion Eng'g, 

Inc., 170 F.3d 1320, 1334 (11th Cir. 1999). The Supreme 

_________________________________________________________________ 

5. There are no reported New Jersey Supreme Court opinions 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 jurisdiction, 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 court judge to "ascertain 

that the award is reasonable in its amount and justified 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 argued that this act 

expands protection against excessive punitive damages awards beyond 

the minimum guarantees of the Due Process Clause of the Fourteenth 

Amendment. 

 27 
Court has stated that state law governs the propriety of 

awarding punitive damages and the factors to be 

considered in determining the amount, but that federal law 

controls "those issues involving the proper review of the 

jury award by a federal district court." Browning-Ferris 

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 from 

passion or prejudice, a new trial is the proper remedy. 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 Orthofix 

concerning EBI's counsel and EBI's alleged violations of the 

FDCA inflamed the jury and contributed to the prejudice, 

warranting reversal. The District Court rejected this 

argument, noting that EBI requested and received its own 

curative instruction. Inter Med. Supplies, 975 F. Supp. at 

690 ("[T]o the extent there may have been any prejudice, 

defendants sought and obtained a curative jury instruction, 

[and] the present assertion of prejudice is without merit.") 

Indeed, EBI represented to the District Court that the 

instruction given "perfectly addresse[d] the concern with 

FDA." Id. (citation omitted). 

We have reviewed the closing argument, the objections 

raised in the District Court, and the curative instruction. 

We do not find sufficient support for EBI's allegation 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 instruction 

it requested and did not object to any improper references 

to counsel during the closing argument. We conclude, 

therefore, that the District Court did not err in rejecting 

EBI's arguments that the verdict was the product of

passion or prejudice. 

 28 
2. Evidence of Defendants' Financial Condition 

EBI also challenges the award on the ground that 

Orthofix failed to provide evidence of some defendants' net 

worth. Under the New Jersey Act, a trier of fact assessing 

the award of punitive damages "shall consider . .. [t]he 

financial condition of the defendant," N.J. Stat. Ann. 2A:15- 

5.12(c), in order to formulate an award which is "specific as 

to [each] defendant," N.J. Stat. Ann. 2A:15-5.13. EBI 

argues that Orthofix failed to establish an essential element 

of punitive damages under New Jersey law by not 

producing evidence concerning the financial condition of 

two of the corporate defendants, Electro-Biology and EBI 

Medical Systems. 

There is some question whether this issue has been 

waived because it was not raised before the District Court. 

In any event, the record establishes that Orthofix did 

introduce evidence of both EBI Medical Systems' sales and 

revenues and Biomet's net worth. Arguably, these are an 

imperfect measure of the financial condition of ElectroBiology itself, but the corporate and accounting structures 

of these companies make this evidence adequate to meet 

the requirements of the New Jersey Act. EBI Medical

Systems is the sales and marketing subsidiary of ElectroBiology, a company that has no sales of its own. Moreover, 

Biomet did not maintain separate balance sheets that 

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 punitive 

damages award is excessive. EBI not surprisingly relies on 

BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996), 

the case in which the Supreme Court first struck an award 

of punitive damages as excessive under the Due Process 

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 BMW's 

policy, it sold unused but repaired cars as new unless the 

cost of the repair exceeded three percent of the car's 

 29 
suggested retail price. It gave the purchasers, including 

plaintiff, no notification of the repainting because the cost 

of that repair did not meet the policy's minimum. The 

plaintiff claimed that the repainting impaired the car's 

value by approximately ten percent of the $40,000 price, or 

$4000 in actual damages, and introduced evidence that 

BMW had sold nearly one thousand repainted cars. The 

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 that 

BMW's nondisclosure policy constituted such fraud, and 

awarded both the requested actual damages and the $4 

million in punitive damages. Id. The Alabama Supreme 

Court reduced the award to $2 million because the jury'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 the 

states' traditional authority to punish and deter wrongdoers 

for acts committed within the jurisdiction, and noted that 

states have "considerable flexibility" in achieving those 

goals. Id. at 568. However, it cautioned that a state must 

avoid "grossly excessive" awards that "enter the zone of 

arbitrariness that violates the Due Process Clause of the 

Fourteenth Amendment." Id. Observing that"[e]lementary 

notions of fairness" require "fair notice" to a defendant of 

both the conduct punishable and the severity of the

potential penalty, the Court identified three "guideposts" as 

indicia of the reasonableness of a punitive damages award: 

"the degree of reprehensibility of the [conduct]; the disparity 

between the harm or potential harm suffered . . . and [the] 

punitive damages award; and the difference between this 

[punitive] remedy and the civil penalties authorized 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 deceit' . . . 

are more reprehensible than negligence." Id. at 575-76. It 

 30 
concluded 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 economic 

misconduct warrants punishment, particularly if inflicted 

on a financially weak and vulnerable entity, "this 

observation does not convert all acts that cause economic 

harm into torts that are sufficiently reprehensible to justify 

a significant sanction in addition to compensatory 

damages." Id. Although punitive damages were warranted 

because BMW had intentionally omitted a material fact, the 

fact that the company also could have believed that it had 

no disclosure duty mitigated the egregiousness of the 

conduct. 

"The second . . . indicium of an unreasonable or 

excessive punitive damages award is its ratio to the actual 

harm inflicted on the plaintiff." Id. at 580. The Court 

observed that it had looked to the ratio between the 

punitive and compensatory damages on other occasions. 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 impropriety," and in 

TXO Production Corp. v. Alliance Resources, Corp., 509 U.S. 

443, 460 (1996), it had held permissible a ratio that did not 

exceed ten to one once the potential harm to that plaintiff 

was taken into account. In considering the ratio guidepost, 

the Court observed that: 

 [L]ow awards of compensatory damages may properly 

 support a higher ratio than high compensatory awards, 

 if, for example, a particularly egregious act has 

 resulted in only a small amount of economic damages. 

 A higher ratio may also be justified in cases in which 

 the injury is hard to detect or the monetary value of 

 noneconomic harm might have been difficult to 

 determine. 

BMW, 517 U.S. at 582. 

In BMW, the Court followed its practice of declining to 

"draw a mathematical bright line between the 

constitutionally acceptable and the constitutionally 

unacceptable that would fit every case." Id. at 583 (citation 

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

reasonableness. Id. In the case of the plaintiff purchaser of 

the BMW, the $2 million punitive damages award produced 

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 total 

damages of all fourteen Alabama purchasers, id. at 582 

n.35. 

Finally, in discussing the third indicium of excessiveness, 

a comparison of the punitive damages and the potential 

civil or criminal penalties for comparable misconduct, the 

Court reiterated its deference to legislative judgments 

regarding appropriate sanctions. Id. at 583 (citing

approvingly Browning-Ferris Indus., Inc. v. Kelco Disposal, 

Inc., 492 U.S. 257, 301 (1989) (O'Connor, J., concurring in 

part and dissenting in part)). The appropriate comparison, 

the Court suggested, is between the statutorily authorized 

financial penalty (when there is no imprisonment) and the 

punitive damages award. 

In explaining its decision to reverse the judgment on 

punitive damages and remand, the Court noted that BMW 

lacked any notice that its conduct, which would have given 

rise to a $2000 fine under the state's Deceptive Trade 

Practices Act, Ala. Code S 8-19-11(b) (1993), could result in 

a multimillion dollar penalty, and that there was no 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 damages 

award," the Court was convinced that the award in BMW 

was "grossly excessive." Id. at 585. 

The Supreme Court's decision in BMW provides us with 

an analytic framework to consider whether the now reduced 

$50 million punitive damages award remains excessive. In 

two recent cases, the Court of Appeals for the Tenth Circuit 

has applied the BMW criteria, concluding in both that the 

punitive damages awards were excessive even though not 

all three of the indicia of excessiveness identified by the 

Supreme Court were present. In Continental Trend 

Resources, Inc. v. OXY USA, Inc., 101 F.3d 634 (10th Cir. 

1996), the jury awarded actual damages of $269,000 and 

 32 
punitive damages of $30 million on claims of tortious 

interference with both prospective business advantage and 

contract. See id. at 635. Although the defendant was aware 

of the possibility of such a large award (one of the 

"guideposts"), the court of appeals directed a remittitur to 

$6 million because the harm inflicted by the defendant 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 reprehensibility of 

a defendant's conduct is useful: whether it "cause[d] 

economic rather than physical harm; would be considered 

unlawful in all states; involves repeated acts rather than a 

single one; is intentional; involves deliberate false 

statements rather than omissions; and is aimed at a

vulnerable target." Continental Trend Resources, 101 F.3d 

at 638; accord Hamilton, 122 F.3d at 861; see also Lee v. 

Edwards, 101 F.3d 805 (2d Cir. 1996) (identifying presence 

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 hence 

"less worthy of large punitive damages awards than torts 

inflicting injuries to health or safety." Continental Trend 

Resources, 101 F.3d at 638. It has been suggested that, 

"[w]hen the injury is economic, and particularly when 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 breach, the 

permissible ratio of punitive damages to actual damages 

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 mitigate the 

need for a high punitive damages award is the jury'sfinding 

that Orthofix itself breached the distributor agreement, 

failed to fill and ship EBI's legitimate orders, and engaged 

in tortious acts. 

 33 
We recognize that the jury found, as instructed under 

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. Ann. 

S 2A:15-5.12(b). 

Nonetheless, balancing these facts with respect to 

reprehensibility, we conclude that EBI's conduct, which 

inflicted only economic harm for which large compensatory 

damages have been awarded, was not sufficiently egregious 

to warrant a punitive damages award of $50 million. In this 

connection, we take into consideration that high, easily 

calculable compensatory damages may more appropriately 

be accompanied by a lower punitive damages ratio. See 

BMW, 517 U.S. at 582. 

Finally, we find reference to the sanctions for comparable 

misconduct (the third guidepost) unhelpful here, as there is 

no clearly applicable reference point. EBI offers two 

potential comparisons. First, it suggests that the $50 

million award here is higher even than the $30.5 million 

fine imposed for shipping adulterated medical devices 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 wrongdoing would 

be only $500,000, which is 1/100 of the punitive damages 

award here. See U.S.S.G. SS 8C2.4(a), 8A1.2, comment 

(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 trade 

practices). However, even trebling $500,000 would 

significantly reduce the punitive damages award from the 

$50 million figure. 

 34 
Because we have concluded that the punitive damages

award should be reduced in light of the first guidepost, we 

need not decide between these competing statutory 

comparisons. We agree with the Tenth Circuit's observation 

that "a violation of common law tort duties [may] not lend 

[itself] to a comparison with statutory penalties. The 

fundamental question is whether [the defendant] had

reasonable notice that its tortious interference with 

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 claims). 

Once we have determined that a punitive damages award 

as high as that set here does not accord with the analysis 

recommended by the Supreme Court in BMW, we are left to 

fulfill our role as gatekeeper in reviewing an award of 

punitive damages. See Dunn, 1 F.3d at 1382. It is not 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 nothing 

concrete as to the amount. Justice Kennedy's comments 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 punitive damages 

 is grossly excessive begs the question: excessive in 

 relation to what? The answer excessive in relation to 

 the conduct of the tortfeasor may be correct, but it is 

 unhelpful, for we are still bereft of any standard by 

 which to compare the punishment to the malefaction 

 that gave rise to it. A reviewing court employing this 

 formulation comes close to relying upon nothing more 

 than its own subjective reaction to a particular punitive 

 damages award in deciding whether the award violates 

 the Constitution. This type of review, far from imposing 

 meaningful, law-like restraints on jury excess, could 

 become as fickle as the process it is designed to 

 superintend. 

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

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

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

its combined experience and judgment. When different 

members reach different figures, they must seek an 

accommodation among their views, a process that recurs 

throughout appellate decision making. After reviewing 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 review 

applicable to a district court's ruling on punitive damages, 

which he asserts must be accorded "heightened deference," 

particularly if the district court has previously granted a 

remittitur. The brief passage in our 1992 opinion in Keenan 

v. City of Philadelphia, 983 F.2d 459 (3d Cir. 1992), to 

which he alludes, is not this court's latest writing on that 

issue. Instead, this court's 1993 opinion in Dunn, where we 

spoke en banc, represents our most recent and considered 

opinion on the issue of punitive damages, and particularly 

on punitive damages following a District Court remittitur. 

See Dunn, 1 F.3d at 1382-91. 

In Dunn, we did not enunciate any rule of extraordinary 

deference to the district court's decision, as Judge 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 considerably larger 

percentage reduction than that ordered by the District 

Court here), we nonetheless decided that an additional 

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 punitive 

damages award because we believed that the "district court 

gave insufficient consideration to the effect of successive 

punitive awards in asbestos litigation." Id. 

We discussed at great length this court's role in the 

assessment of punitive damages. Contrary to Judge Garth's 

_________________________________________________________________ 

6. Because of the extent to which we have reduced the 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. 

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

amount of punitive damages solely to the trial court 

because it is evident to us that the Supreme Court in 

Haslip approved review by an appellate court to `determin[e] 

whether a particular award is greater than reasonably 

necessary to punish and deter.' " Dunn, 1 F.3d at 1385 

(alterations in original). 

Thus, notwithstanding the deference which we accord the 

trial court in such matters, and notwithstanding our 

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 damages 

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 insistence that 

Dunn is not relevant to the standard of review when a 

district court orders a remittitur is surprising. The dissent's 

attempt to confine Dunn to product liability cases is 

unpersuasive. Haslip, on which we relied in Dunn, was not 

a products liability case. This court's recent opinion, 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 our preDunn opinion in Keenan. The dissent fails to point out that 

notwithstanding the "super-deference" to the district 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. Moreover, 

Keenan itself undermines the dissent's attempt to cabin 

damages in products liability cases in a separate category. 

Keenan relied for the standard of review for excessiveness 

on an earlier Third Circuit case, Gumbs v. Pueblo 

International, Inc., 823 F.2d 768 (3d Cir. 1987), where, 

again notwithstanding the deference owed to the district 

court since it granted a remittitur, we reversed the 

imposition of compensatory damages as excessive. The 

Gumbs court in discussing the standard of review, relied on 

an earlier Third Circuit decision, Murray v. Fairbanks 

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

liability case. See Gumbs, 823 F.2d at 771. It is thus 

evident that there is no basis to consider damages in 

products liability cases as a separate category, and we 

certainly did not so suggest in Dunn. 

The dissent gives short shrift to Haslip, despite the 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 appellate 

judges in reviewing damages awards, whether or not there 

has been a remittitur, would be facilitated if there were a 

formula, but not all of our review function can be 

compressed into a formula, and the guideposts provided 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 Insurance 

Cos., 88 F.3d 192 (3d Cir. 1996); Starceski v. Westinghouse 

Electric Corp., 54 F.3d 1089 (3d Cir. 1995); and Gumbs v. 

Pueblo International, Inc., 823 F.2d 768, 771-72 (3d Cir. 

1987) -- were all compensatory damages cases and not 

punitive damages cases. In punitive damages cases we 

must be informed by the Supreme Court's jurisprudence 

and, as noted above, that jurisprudence counsels intensive 

review. 

As we noted above, our decision in this case to reduce 

the punitive damages award even further is based upon the 

guideposts established by the Supreme Court. And, in the 

last analysis, we conclude that an award greater than $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 

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

million. 

 39 
GARTH, Circuit Judge, dissenting: 

While I join the Court in its holdings on all of the 

substantive issues discussed in sections II.A through II.D of 

its opinion (with but one caveat stated in the margin),1 I am 

_________________________________________________________________ 

1. Each of the issues raised by EBI has been more than adequately 

explained and rejected by the majority opinion. However, I note that in 

one area, while I agree with the conclusion that the District Court's 

interpretation of Paragraph 6(d) of the parties' Distributor Agreement, 

containing the "in any way handle" clause precluded EBI from 

manufacturing or producing its own bone fixators during the course of 

the Agreement, I question whether the breadth of the majority's holding 

with respect to the District Court's charge truly represents the 

jurisprudence of this Circuit. 

It must be remembered that the District Court had ruled, 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 submitted 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 Paragraph 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 incorporated 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") the District Court's 

ruling, 

that EBI could thereafter raise the issue on appeal, claiming that it had 

preserved the issue, especially when the District Court essentially 

adopted EBI's proposed charge. 

I know of no case in our Circuit where the submission of a requested 

charge which was then adopted by the District Court would not foreclose 

the party requesting the charge from thereafter being bound by it. 

Hence, although it does not disturb the disposition reached by the 

majority affirming the District Court's interpretation of Paragraph 6(d) -

- 

a disposition in which I join -- I do raise a question as to the 

expansiveness of the doctrine arguably embraced by the majority. It 

seems to me that our opinion would be far more in tune with our prior 

precedents were we to restrict ourselves to approving preservation of an 

issue only when the affected party had not in effect estopped itself by 

submitting a requested charge which affirmatively incorporated an 

adverse ruling. 
 40 
obliged to write separately in dissent on the issue of 

punitive damages.2 

I. 

I am compelled to disagree with the majority's reduction 

of the punitive damages assessed against EBI not only 

because that monetary reduction has no principled basis, 

but also because the standard of review that this Court has 

previously established and announced has been totally 

ignored. See Keenan v. City of Philadelphia, 983 F.2d 459 

(3d Cir. 1992). While Dunn v. HOVIC, 1 F.3d 1371 (3d Cir. 

1993) (en banc), to which the majority refers, see Maj. Op. 

at 36, dealt with punitive damages but only in a product 

liability context, i.e., asbestos damage awards, Dunn 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, explained 

its result only in terms of successive and multiple damage 

awards which asbestos product liability cases might

generate, a situation that obviously is not relevant in the 

present case. Neither Dunn nor Pacific Mutual Life 

Insurance Co. v. Haslip, 499 U.S. 1 (1991), on which the 

majority relies in Dunn and which I discuss in Section III, 

infra, bear on the standard of review. Instead, the majority 

here has substituted its own discretion and judgment (see 

Maj. Op. at 35-36) -- without warrant from precedent or 

statutory authority -- for our announced standard of 

review, and for that of the District Court, to whose 

discretion and judgment we are bound to give a "super-" 

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"shock 

to conscience" to warrant reversal); Hiltgen v. Sumrall, 47 

F.3d 695 (5th Cir. 1995) (reviewing remittitur under 

"considerable deference" standard). 

_________________________________________________________________ 

2. Punitive damages are discussed by the majority in Section II.E of its 

opinion. 

 41 
Struggle as it might, the majority opinion still cannot 

explain why it fails to follow the controlling standard of 

review set forth in Keenan. See Maj. Op. at 37. The majority 

has sought to gloss over the significant differences between 

product liability cases, whose reductions of punitive 

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 which it 

relies are fundamentally different from this case, in that 

those cases, such as Haslip and Dunn, were not concerned, 

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 standard of 

review did not uphold the district court's remittiturs. 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 evidence 

and the jury's 22 special verdict findings, more than 

satisfied that standard. Ergo, our decision should have 

been to affirm rather than to try to explain away what 

cannot be explained. 

I recognize that the amounts of money involved are 

extremely substantial, and that even the least of those 

amounts is very significant. A reduction from $100,600,000 

jury verdict to a $50,000,000 remittitur award to the 

$1,000,000 majority award (without principled explanation 

or analysis) is eyebrow-raising. Even if I, like the majority, 

wanted to reduce the jury's award or Judge Orlofsky's 

remittitur because of their respective sizes, I could not 

bring myself to do so because no principled basis exists for 

such a dramatic reduction. I note also that it was because 

of the amount of punitive damages as well as our own 

desire to arrive at a principled formula for their 

_________________________________________________________________ 

3. Of course, insofar as Gumbs was decided before Keenan, it did not 

have the benefit of the fully-enunciated and controlling standard 

established by Keenan, which in turn relied in part, and expanded upon 

Gumbs. 

 42 
ascertainment -- a task at which the majority has not 

succeeded -- that we devoted most of the time allotted at 

oral argument to that subject. 

However, we should not and cannot be swayed by the 

dollar amount of the damages if the ultimate decision at 

which we arrive is a principled decision that respects 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 judicial 

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 Court. 

Thus, my primary focus in this dissent deals with the 

standard by which we must review the District Court's 

remittitur order. It is that standard which dictates the 

result I have reached and which gives rise to theflawed 

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 disposition on 

all other issues, I respectfully dissent from the majority 

opinion as to the amount of punitive damages to which 

Orthofix is entitled. Rather, pursuant to our standard of 

review, I would affirm the District Court's remittitur 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 the 

excessiveness of a punitive damages award, our review "is 

[1] severely limited: [2] we may . . . reverse and grant a new 

trial only if the verdict is so grossly excessive as to shock 

the judicial conscience. [3] Where the district judge grants a 

remittitur, deference to the trial court is heightened. Our 

review requires additional deference to the district court 

since it already granted a remittitur." Keenan, 983 F.2d at 

 43 
472 (internal quotations and citations omitted, and

brackets and emphasis added). Dunn is not to the contrary, 

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 the trial 

judge is in the best position to oversee whether the jury 

verdict is rationally based, when the trial judge grants a 

remittitur this Court will not reverse unless wefind the 

District Court abused its discretion when measured against 

our standard of "heightened deference." Gumbs v. Pueblo 

Int'l, Inc., 823 F.2d 768, 771-72 (3d Cir. 1987). See 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 punitive 

damages, a figure it evidently derived from evidence in the 

record indicating that Biomet's cash on hand for the 1996 

fiscal year was approximately $100,600,000. The District 

Court reduced this amount to $50,000,000 in its remittitur 

order, apparently to bring the award in line with the 

compensatory damages of $48,000,000 proven at trial and 

found by the jury. The District Court, which, as the 

majority notes, was "intimately familiar with the case and 

the evidence," Maj. Op. at 24, had been involved with the 

litigation for over three years (including a two month trial) 

and in its discretion had equated the punitive damages to 

the compensatory damages on a 1:1 ratio. 

Despite this exercise of the District Court's discretion, 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 no 

reference to the record, and in utter disregard of our 

standard of review, the majority has further reduced the 

punitive damages from $50,000,000 to $1,000,000. Nor has 

the majority made any reference in its opinion to the 

"heightened deference" that we owe to the District Court 

when it has granted a remittitur. 

The analysis provided by the majority to support its 

peremptory reduction of 98% (based on a reduction to 

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

unprecedented in this Circuit. While the majority was 

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 reduced the 

punitive damages award based only upon its interpretation 

of the "guideposts" found in BMW of North America v. Gore, 

517 U.S. 559 (1996), and two Tenth Circuit cases that have 

sought to explain them, FDIC v. Hamilton, 122 F.3d 854 

(10th Cir. 1997) and Continental Trend Resources, Inc. 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 upon 

factors mentioned in those cases, "EBI's conduct, which 

inflicted only economic harm for which large compensatory 

damages have been awarded, was not sufficiently egregious 

to warrant a punitive damages award of $50 million." Maj. 

Op. at 34. I am hard pressed to understand that conclusion 

in light of the jury findings of egregious, intentional and 

deceitful behavior by EBI, and by the lack of record 

evidence in the majority opinion which could shore up such 

a reduced award. 

The jury, in its responses on the special verdict sheet, 

answered that it had found by a preponderance of the 

evidence: that EBI intentionally and improperly interfered 

with Orthofix's reasonable expectations of economic

advantage; that EBI wrongfully and intentionally interfered 

in the contractual relations between Orthofix and Inter 

Medical; that EBI made false statements either knowingly, 

recklessly or negligently that injured Orthofix; that EBI's 

conduct in "passing off " its own products as those of 

Orthofix was likely to cause confusion as to the source 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 of the 

_________________________________________________________________ 

4. As I have earlier indicated, I believe the majority's reference to and 

reliance on Dunn is inapposite, as Dunn did not disturb our standard of 

review of remitted punitive damage awards in a non-due process/nonproduct liability context. 

 45 
Lanham Act; and that EBI competed unfairly in violation of 

New Jersey statutory and common law. The jury further 

found by clear and convincing evidence that Orthofix 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 those 

who foreseeably would be harmed by its conduct. 

Yet, despite these extraordinary findings, and despite the 

lack of evidentiary support, the majority relies on only one 

aspect of the element of "reprehensibility" 5 in deciding to 

reduce the District Court's remittitur: its conclusion that 

the damages inflicted by EBI were economic in nature. Maj. 

Op. at 33-34. I discuss this aspect of the majority opinion 

in section IV of this dissent, after noting the majority's 

failure to recognize and apply the Third Circuit standard 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 neglected 

either to state or to apply the standard of review relating to 

punitive damages. See Keenan, 983 F.2d at 472. I have 

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 "heightened 

deference" when a remittitur has been granted, as there 

was here. 

The majority opinion, in referring to our en banc decision 

in Dunn, which involved the due process impact of multiple 

and successive awards of punitive damages in asbestos- 

_________________________________________________________________ 

5. Although BMW is not on point with this case and is therefore 

distinguishable, it nonetheless specifies three guideposts for courts to 

consider in the punitive damages area. First and foremost is the 

egregiousness of the defendant's conduct, i.e., deceit, fraud, etc., 

labeled 

"the degree of reprehensibility." BMW, 517 U.S. at 575. Second, is the 

ratio of punitive damages to "the actual harm inflicted on the plaintiff." 

Id. at 580. The third and final guidepost is a comparison 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. 

 46 
related 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 reference to 

the Supreme Court's decision in Haslip, 499 U.S. 1 (1991). 

Haslip stated that an appellate court should determine 

whether a particular award is "greater than reasonably 

necessary to punish and deter" -- hardly a formulaic 

standard of review. See Dunn, 1 F.3d at 1385 (quoting 

Haslip, 499 U.S. at 19). That same rubric is repeated 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 and wisdom 

when it concludes (in citing Haslip) that any award larger 

than $1,000,000 is not "reasonably necessary to punish 

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 review after 

a remittitur has been ordered. This is particularly so, since 

there has been no endeavor on the part of the majority even 

to acknowledge the specific findings made by the jury and 

to analyze the District Court's opinion. That opinion 

discussed at length the factors to be given consideration 

under the New Jersey Punitive Damages Act.7 

_________________________________________________________________ 

6. Dunn, of course, involved Virgin Islands common law, whereas the 

instant appeal is rooted in New Jersey statutory law, 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 compensatory 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 punitive damage award. It 

requires that the plaintiff prove, by clear and convincing evidence, that 

the harms alleged were caused by the defendant's acts or omissions, and 

that these acts or omissions were "actuated by actual 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 jury'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 punitive damage, fully 

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

 47 
Nor does the majority acknowledge that Haslip obviously 

informed this court's decision in Keenan. Haslip was 

decided in 1991. Keenan was decided a year later, in 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 review 

has obviously survived even in light of Dunn because as 

mentioned Dunn has no relevance to the instant appeal. As 

noted, Dunn was a product liability case concerned with the 

implications of multiple and successive punitive damage 

awards as they are affected by principles of due process, 

which explains Dunn's reliance on Haslip . Haslip also 

concerned the due process implications of punitive damage 

awards. 499 U.S. at 18. 

A more pertinent precedent -- cited in passing by the 

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 and a 

compensatory award of $51,146, a ratio of approximately 

12:1. In so holding, the Supreme Court prescribed that in 

reviewing a district court's decision whether to order a new 

trial on the issue of punitive damages, an appellate court 

has a "limited function" and affirmed the principle that 

appellate court should "continue to accord considerable 

deference" to the district courts. 257 U.S. at 279.

Undoubtedly, this prescription underlay the adoption by 

our court of the Keenan standard of review. 

One appellate court has characterized a jury verdict that 

would "shock the conscience" as one that was so large as 

to be contrary to reason, or so exaggerated as to 

demonstrate the existence of bias or some other improper 

motive. Caldarera v. Eastern Airlines, Inc., 705 F.2d 778, 

784 (5th Cir. 1983). Here, however, the majority does not 

hold that either the original jury award or the remitted 

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 majority 

explicitly holds that prejudice or bias was not a factor in 

the award. Maj. Op. at 28. Nor has the majority held (as I 

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

Court abused its discretion. Indeed, in its remittitur 

opinion, dated August 28, 1997, the District Court 

identified and discussed at length the seven factors 

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 review, at no 

point does the majority opinion even discuss this analysis 

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 award 

"shocked the judicial conscience," and having failed 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 established 

standard of review, and has consequently erred in its 

decision. 

IV. 

The majority's arbitrary reduction in punitive damages 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 guidance, 

argue instead for affirming the District Court's remittitur. 

Indeed, no case cited by the majority has held definitively 

that cases involving only economic controversies warrant a 

lower punitive damages award than those involving noneconomic 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 only one 

element of the "reprehensibility" analysis. See Continental 

_________________________________________________________________ 

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

serious 

harm resulting from EBI's misconduct; 2) EBI's awareness 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'sfinancial condition. 

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

F.3d 805 (2d Cir. 1996) (listing other elements). The other 

elements which must be taken into account, such as 

intentionality, repetitive conduct, and conduct involving 

deliberate false statements, etc., were all found by the jury 

to have occurred in this case. 

However, evidence produced at trial, but not mentioned 

in the majority opinion, indicated that EBI's conduct could 

involve potential physical harm to the wider community as 

well as economic harm. EBI was found liable for passing off 

its own products as those of Orthofix, a recognized and 

respected manufacturer of bone fixators. There is evidence 

in the record that on at least one occasion, the deceptive 

substitution of EBI bone screws and ankle clamps for use 

in conjunction with Orthofix fixators could have injured 

patients. Therefore, the jury could well have concluded that 

the deceptive practices engaged in by EBI not only caused 

economic damage to Orthofix, but also exposed orthopedic 

patients to increased harm, to say nothing of the liability of 

hospitals when they unknowingly used EBI's bone screws 

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 only on the 

economic aspects of the damages caused by EBI, this Court 

must still affirm by deferring to the District Court's 

remittitur. 

As mentioned, EBI was found to have engaged in a series 

of continuous and intentional deceptive acts in order to 

steal a market from Orthofix worth approximately $95 

million. This evidence, which the majority credits, Maj. Op. 

at 33-34, is more than sufficient to justify the jury's finding 

of reprehensible conduct, which is the "most important 

indicium" among the guideposts.9 BMW, 517 U.S. at 575. 

See also note 5, supra. That finding distinguishes this case 

from BMW in which the Supreme Court found "none of the 

_________________________________________________________________ 

9. Indeed, the majority concedes that the full award 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 attributable to the 

tortious conduct." Maj. Op. at 27. 

 50 
aggravating factors" associated with reprehensible conduct. 

517 U.S. at 576. Indeed, the Supreme Court in BMW 

indicated that cases involving such deceptive conduct 

would justify a high punitive award. 517 U.S. at 576 

("[I]nfliction of economic injury, especially when done 

intentionally through affirmative acts of misconduct . . . 

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 of trust 

beyond the contractual breach"), certif. granted, 719 A.2d 

1023 (N.J. 1998). 

The specific cases relied upon by the majority do not 

support its holding that economic damages alone justify a 

lowering of a punitive damages award. While the Tenth 

Circuit in Continental Trend Resources and Hamilton did 

discuss the economic nature of the damages, the holdings 

of those cases were far more concerned with the 

constitutionality of the ratio of punitive damages to 

compensatory damages -- another of BMW's "guideposts." 

See BMW, 517 U.S. at 580. 

The majority understandably does not dwell on the ratio 

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 cases 

cited, the punitive damages were far greater than the 

compensatory damages. BMW, which focussed on the ratio 

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 that 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 District 

Court's remittitur ratio is also a far more acceptable 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 Resources, 

101 F.3d at 643. Indeed, the Supreme Court has intimated 

 51 
that 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 egregious 

conduct. BMW, 517 U.S. at 581 (approving a 10:1 ratio in 

TXO Production Corp. v. Alliance Resources Corp., 509 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-Ferris, 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 which the 

majority measured its award of punitive damages. The 

majority standard, rather than relying on our standard of 

review, alarmingly requires instead that an appellate 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 standard 

and with reference only to its own judgment, holds, in 

conclusory fashion, that "[a]fter reviewing the record and 

the arguments in this case, we conclude that the proper, 

reasonable punitive damages award is no more than $1 

million." Maj. Op. at 36. Any amount greater than that, the 

majority concludes, would not be "reasonably necessary to 

punish and deter." Maj. Op. at 38. As I have indicated, no 

analysis accompanies this ipse dixit conclusion. 

Not only does this mysterious and unauthorized standard 

provide no instruction to the trial courts or litigants, but, 

as I have discussed above, it totally ignores our 

precedential standard of review, announced in Keenan, 983 

F.2d 459, under which we are obligated to give additional 

deference to the district court's experience and judgment 

except where the award shocks the conscience or when 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 punitive 

damages, rather than confining itself to "the limits that 

 52 
bind 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. See Milo 

Geyelin, Philip Morris Hit with Record Damages , WALL ST. 

J., March 31, 1999, at A3 (reporting punitive damage award 

of $80.3 million); Milo Geyelin, Jury Awards $50 Million 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-nilly," in 

an effort to reach what it considers to be the "right figure," 

arbitrarily pull a punitive damage award from the air as if 

it were a lottery number and announce "in our judgment," 

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 of 

correct judicial behavior by adhering to announced 

principles of jurisprudence. To do so, it must remain 

"within the limits that bind judges in their judicial 

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, excellent in 

all other respects, has failed to adhere to its proper judicial 

function when speaking to the issue of punitive damages. It 

has failed to recognize what the court must regard as our 

declared standard of review -- see Keenan, Gumbs, Delli 

Santi, Starceski, supra, etc. At the very least, the majority 

opinion has now added confusion to this court's standard 

_________________________________________________________________ 

10. In an effort to alleviate this problem, New Jersey, and recently 

Alabama, have joined a growing number of states which have responded 

with legislation governing the award of punitive damages. See BMW, 517 

U.S. at 614-16 (Ginsburg, J., dissenting) (listing in appendix state 

statutes governing punitive damage awards). 

 53 
by referring to a "standard" derived from inapposite cases 

which pre-existed Keenan. It has substituted its personal 

judgment for a principled review function over a District 

Court's discretion; and without relying on record evidence, 

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 jurisprudence 

nor is it Third Circuit jurisprudence. If the majority now 

holds that, in light of the sequence of cases -- Haslip in 

1991, Keenan in 1992, and Dunn in 1993 -- and in light of 

the materially different contexts of these cases, that our 

remittitur standard of review has now been whittled down 

so that no analysis aside from an ad hoc panel's "combined 

experience and judgment" is required in reviewing a district 

court's remittitur, then all the more reason why this court 

must address and resolve this confusion by establishing 

firm guidelines. 

Accordingly, I respectfully dissent from the standard of 

review and the resulting punitive damage award announced 

by the majority. Instead, I would affirm the District Court's 

remittitur of $50,000,000. 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

 54