Opinion ID: 624286
Heading Depth: 1
Heading Rank: 2

Heading: The Kansas Statute Is Procedural

Text: Although I believe that there was insufficient evidence to support the award of punitive damages and that it is therefore unnecessary to reach the other punitive-damages issues raised in this case, I will address one of the issues briefed by UPS because it has divided the very capable district judges in Kansas and additional analysis may be helpful. In my view, the Kansas statute that delegates to the judge, rather than the jury, the assessment of the amount of punitive damages is a procedural rule, not a substantive one, for purposes of the Erie doctrine, and therefore must yield to a contrary federal rule in federal-court trials. In Schriro the Supreme Court considered the retroactivity of its decision in Ring v. Arizona, 536 U.S. 584, 122 S.Ct. 2428, 153 L.Ed.2d 556 (2002), which had held that in a death-penalty proceeding the existence of an aggravating factor must be proved to a jury, rather than the judge. The Court held that Ring did not apply retroactively because it was procedural (and was not a watershed procedural rule entitled to retroactive effect). In support, it said that under the Erie doctrine it had ruled that allocation of decisionmaking authority is a procedural matter. The Court wrote: Ring altered the range of permissible methods for determining whether a defendant's conduct is punishable by death, requiring that a jury rather than the judge find the essential facts bearing on punishment. Rules that allocate decisionmaking authority in this fashion are prototypical procedural rules, a conclusion we have reached in numerous other contexts. See Gasperini v. Center for Humanities, Inc., 518 U.S. 415, 426 [116 S.Ct. 2211, 135 L.Ed.2d 659] (1996) ( Erie doctrine).... 542 U.S. at 353, 124 S.Ct. 2519 (emphasis added). The Erie -doctrine opinion cited by the Court Gasperini is a complicated one. But it is worth summarizing to show its relevance here. Gasperini was a diversity case in which the plaintiff sought damages for the loss of some photographic transparencies. The New York statute at issue empowered the New York Appellate Division to review the size of jury verdicts and to order new trials when the jury's award deviates materially from what would be reasonable compensation. Gasperini, 518 U.S. at 418, 116 S.Ct. 2211 (internal quotation marks omitted). The question was whether the state statute should apply in whole or in part in federal court. The Supreme Court analyzed the statute as containing two components. First, the statute set a limit on punitive-damages awardsan award could not depart too far from reasonable compensation. The Court considered this component of the law to be the functional equivalent of a statutory cap on damages, differ[ing] from a statutory cap principally in that the maximum amount recoverable is not set forth by statute, but rather is determined by state law. Id. at 429, 116 S.Ct. 2211 (internal quotation marks omitted). The second component of the law assigned the task of applying that limit to the state intermediate appellate court. Thus, on the page of Gasperini cited by Schriro, the Court wrote that the New York statute: appraised under [ Erie ] and decisions in Erie 's path, is both `substantive' and `procedural': `substantive' in that [the statute's] `deviates materially' standard controls how much a plaintiff can be awarded; `procedural' in that [the statute] assigns decisionmaking authority to New York's Appellate Division.... The dispositive question ... is whether federal courts can give effect to the substantive thrust of [the statute] without untoward alteration of the federal scheme for the trial and decision of civil cases. Id. at 426, 116 S.Ct. 2211. The Court's holding in Gasperini was twofold: It upheld the application in federal court of the substantive componentthe cap on punitive damages; but it refused to uphold the application of the procedural componentthe assignment to the appellate court of determining whether the award deviated materially from reasonable compensation. Under federal law, it said, the role of the federal appellate court was limited to determining whether the district court's decision, either to uphold the jury award or to set it aside and require a new trial (because the award deviated materially), was an abuse of discretion. See id. at 437-39, 116 S.Ct. 2211. To comply with federal procedural law, the federal district court would make the deviated-materially determination, and the circuit court would decide only whether that determination was an abuse of discretion. Thus, as noted in Schriro, Gasperini held that federal law governed the allocation of decision-making authority between the trial and appellate courts because such allocation rules are procedural. Applying Gasperini to this case, it is clear that what we have is a question of the allocation of decision-making authoritywhether the court or the jury determines the amount of punitive damageswhich is a procedural matter governed by federal law. The Kansas statute does not impose a cap on punitive damages or its functional equivalent, so Gasperini 's holding on the substantive component of the New York statute is irrelevant. UPS invokes the outcome-determination test of Guaranty Trust Co. of New York v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945), which is generally applied to determine, for Erie purposes, whether a state law is substantive or procedural. But that test is not always the applicable one. As the Gasperini opinion reminds us, the Supreme Court decision in Byrd v. Blue Ridge Rural Electric Cooperative, Inc., 356 U.S. 525, 537, 78 S.Ct. 893, 2 L.Ed.2d 953 (1958), said that the Guaranty Trust `outcome-determination' test was an insufficient guide in cases presenting countervailing federal interests. Gasperini, 518 U.S. at 432, 116 S.Ct. 2211. Gasperini went on to quote the following passage from Byrd as describing the countervailing interest in that case, which concerned whether the federal court sitting in diversity should follow a state-law rule requiring that the issue be tried to the court: The federal system is an independent system for administering justice to litigants who properly invoke its jurisdiction. An essential characteristic of that system is the manner in which, in civil common-law actions, it distributes trial functions between judge and jury and, under the influenceif not the commandof the Seventh Amendment, assigns the decisions of disputed questions of fact to the jury. Id. (quoting Byrd, 356 U.S. at 537, 78 S.Ct. 893 (footnote omitted)). Byrd therefore held that, despite state law to the contrary, in federal court the issue must be tried to the jury. I recognize that very recently Justice Scalia, writing for himself and three other members of the Court, said that in the Erie ... context, it ma[kes] no difference whether the rule [is] technically one of substance or procedure; the touchstone [is] whether it significantly affects the result of a litigation. Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., ___ U.S. ___, 130 S.Ct. 1431, 1442, 176 L.Ed.2d 311 (2010) (alteration and internal quotation marks omitted). But the sentence was dictum whose purpose was only to distinguish Erie -doctrine cases from the case before the Court, which addressed the Rules Enabling Act and the applicability of a federal rule of civil procedure in a diversity case. The sentence was not intended to capture all the subtleties of the Erie doctrine; elaboration was unnecessary because the Erie doctrine was not the issue. In particular, nothing in Shady Grove involved the allocation of decision-making authority between judge and jury, so the specifics of the Erie doctrine in that context were hardly relevant. There is no reason to think that Justice Scalia's single sentence in Shady Grove signaled the repudiation of what he had written in his Gasperini dissent, where he considered specifically the allocation of authority between judge and jury: Outcome determination was never intended to serve as a talisman, and does not have the power to convert the most classic elements of the process of assuring that the law is observed into the substantive law itself. The right to have a jury make the findings of fact, for example, is generally thought to favor plaintiffs, and that advantage is often thought significant enough to be the basis for forum selection. But no one would argue that Erie confers a right to a jury in federal court wherever state courts would provide it; or that, were it not for the Seventh Amendment, Erie would require federal courts to dispense with the jury whenever state courts do so. 518 U.S. at 465, 116 S.Ct. 2211 (citation and internal quotation marks omitted). The majority opinion in Gasperini said nothing to the contrary. Returning to the language in Schriro that I find controlling, I would take it seriously when that opinion states that [r]ules that allocate decisionmaking authority in this fashion [by requiring fact-finding by a jury rather than a judge] are prototypical procedural rules, a conclusion we have reached in numerous other contexts, and then cites  Erie doctrine as the first other context. 542 U.S. at 353, 124 S.Ct. 2519. Until instructed otherwise by the Supreme Court, I would read its opinions as stating that the allocation of authority between a judge and a jury in diversity cases is a matter of federal law. See 8 James Wm. Moore et al., Moore's Federal Practice § 38.14[1] (3d ed. 2011) (The right to a jury trial in the federal courts is to be determined as a matter of federal law in diversity as well as other actions.); 9 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2303 (3d ed. 2008) ([T]he Byrd decision establishes the proposition that federal practice controls the scope and incidence of jury trial, even when federal practice is not constitutionally required.).