Opinion ID: 613803
Heading Depth: 1
Heading Rank: 11

Heading: The District Court Erred by Unnecessarily Reaching and Deciding the Question of Whether the Jury's Award Was Unconstitutionally Excessive

Text: The principle of constitutional avoidance, rooted in Article III as well as in principles of judicial restraint, and in this case implicating the Due Process Clause and the Seventh Amendment right to jury trial, governs both this court and the district court and requires that we vacate and remand. It is bedrock that the long-standing principle of judicial restraint requires that courts avoid reaching constitutional questions in advance of the necessity of deciding them. Lyng v. Nw. Indian Cemetery Protective Ass'n, 485 U.S. 439, 445, 108 S.Ct. 1319, 99 L.Ed.2d 534 (1988); see also Camreta v. Greene, ___ U.S. ___, 131 S.Ct. 2020, 2031, 179 L.Ed.2d 1118 (2011) (noting rule that courts must avoid resolving constitutional questions unnecessarily). [P]rior to reaching any constitutional questions, federal courts must consider nonconstitutional grounds for decision. Buchanan v. Maine, 469 F.3d 158, 172 (1st Cir.2006) (quoting Gulf Oil Co. v. Bernard, 452 U.S. 89, 99, 101 S.Ct. 2193, 68 L.Ed.2d 693 (1981)) (internal quotation marks omitted). No valid reason justified abandonment of this doctrine in this case. The abandonment of the rule instead thrust the case into a thicket of constitutional issues it was not necessary to enter. It was not necessary for the district court to reach the constitutional question of whether the jury's award of $22,500 per infringement was so excessive as to violate due process. If the district court had ordered remittitur, there would have been a number of possible outcomes that would have eliminated the constitutional due process issue altogether, or at the very least materially reshaped that issue. The issue of whether the award violated due process and the Seventh Amendment issue would both have been eliminated if remittitur had been ordered and Sony had accepted the remitted award. Alternatively, if remittitur had been ordered but Sony had declined the remitted award, a new trial would have ensued. The jury could have issued an award that would not have led Tenenbaum to again seek a reduction on either common law remittitur or due process grounds. Even if Sony had declined any remitted award given and opted for a new trial, even if a different jury issued a comparable award, and even if Tenenbaum once again moved to reduce the award on constitutional grounds, it was still premature for the court to reach the constitutional question before that process had been carried out. A new trial could have materially reshaped the nature of the constitutional issue by altering the amount of the award at issue or even the evidence on which to evaluate whether a particular award was excessive. In this way, reaching the constitutional question before ordering remittitur not only contravened the doctrine of constitutional avoidance, it also led the court to address questions that had not yet been fully developed. Federal courts do not answer such hypothetical questions. See Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 241, 57 S.Ct. 461, 81 L.Ed. 617 (1937) (Under Article III, judicial power is constrained to real and substantial controvers[ies] admitting of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts); see also Bisbal-Ramos v. City of Mayaguez, 467 F.3d 16, 27 (1st Cir.2006) (vacating district court's reduction of compensatory damages, remanding so that court may issue remittitur, and refusing to address constitutionality of punitive damage award because, upon remand, plaintiff might opt for a new trial and it would be premature ... to approve a punitive damages award based on the compensatory award from the first trial). The path the court chose unnecessarily embroiled it in several issues of a constitutional dimension. The first was whether the due process standard for statutory damage awards articulated by the Supreme Court in Williams was applicable. The next was whether, if there was leeway and reason to bypass the Williams standard, the Gore standard, some combination of Williams and Gore, or some other standard should be used to evaluate whether the statutory damage award violated due process. We briefly describe the two due process standards to demonstrate the nature of the question to be avoided. In Williams, the Supreme Court considered a challenge to an Arkansas statute that subjected railroads to penalties of not less than fifty dollars, nor more than three hundred dollars and costs of suit, for each offense of charging passengers fares that exceeded legal limits. See Williams, 251 U.S. at 64, 40 S.Ct. 71 (quoting Act April 4, 1887 (Laws 1887, p. 227; Kirby's Digest, 1904, § 6620); Act March 4, 1915 (Laws 1915, p. 365; Kirby & Castle's Digest, 1916, § 8094)) (internal quotation marks omitted). After the St. Louis, I.M. & S. Railroad collected a fare from two passengers of 66 cents more than the law allowed, the passengers brought suit pursuant to the statute. Id. at 63, 40 S.Ct. 71. Each passenger obtained a judgment of 75 dollars plus feesan award, like the jury's award at issue here, well within the statutory range. Id. The railroad challenged the statutory award as unconstitutionally excessive under the Due Process Clause. Id. The Court acknowledged that the Due Process Clause places a limitation upon the power of the states to prescribe penalties for violations of their laws, but noted that States still possess a wide latitude of discretion in the matter. Id. at 66, 40 S.Ct. 71. This is so, the court reasoned, because the power of the State to impose fines and penalties for a violation of its statutory requirements is coeval with government; and the mode in which they shall be enforced, whether at the suit of a private party, or at the suit of the public, and what disposition shall be made of the amounts collected, are merely matters of legislative discretion. Id. (quoting Mo. Pac. Ry. Co. v. Humes, 115 U.S. 512, 523, 6 S.Ct. 110, 29 L.Ed. 463 (1885)) (internal quotation marks omitted). Given the latitude conferred upon legislatures to impose statutory penalties, the Court rejected the railroad's due process argument. The Court articulated that a statutory damage award violates due process only where the penalty prescribed is so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable. Id. at 66-67, 40 S.Ct. 71. Gore and its progeny address the related but distinct issue of when a jury's punitive damage award is so excessive as to violate due process. See Gore, 517 U.S. at 574, 116 S.Ct. 1589. The Court, animated by the principle that due process requires that civil defendants receive fair notice of the severity of the penalties their conduct might subject them to, id., identified three factors to guide a court's consideration of whether a punitive damage award is so excessive as to deprive a defendant of due process: (1) the degree of reprehensibility of the defendant's conduct, id. at 575-80, 116 S.Ct. 1589, (2) the ratio of the punitive award to the actual or potential harm suffered by the plaintiff, id. at 580-83, 116 S.Ct. 1589, and (3) the disparity between the punitive award issued by the jury and the civil or criminal penalties authorized in comparable cases, id. at 583-85, 116 S.Ct. 1589. In Copyright Act award cases, there are many questions regarding the relationship between Gore 's guideposts for reviewing punitive damage awards and the Williams standard for reviewing statutory damage awards. One is the relationship between the purposes of statutory damages under the Copyright Act as opposed to the purpose of punitive damages. Another concerns the limits or contours of possible ranges of awards under the different standards. Further, both Williams and Gore concerned limitations on state-authorized awards of damages, and did not concern Congressionally set awards of damages, which Congress is authorized to do under its Article I powers. This fact in turn raises concerns about intrusion into Congress's power under Article 1, Section 8 of the Constitution. We note that in Gore, the Supreme Court did not overrule Williams. See Rivers v. Roadway Express, Inc., 511 U.S. 298, 312, 114 S.Ct. 1510, 128 L.Ed.2d 274 (1994) (hierarchical relationship of Supreme Court to lower courts mandates that where the Court has spoken, it is the duty of other courts to respect that understanding of the governing rule of law). Nor has the Supreme Court to date suggested that the Gore guideposts should extend to constitutional review of statutory damage awards. The concerns regarding fair notice to the parties of the range of possible punitive damage awards present in Gore are simply not present in a statutory damages case where the statute itself provides notice of the scope of the potential award. And the only circuit court of which we are aware to directly address the issue declined to apply Gore in this context and instead applied the Williams test. See Zomba Enters., Inc. v. Panorama Records, Inc., 491 F.3d 574, 587 (6th Cir.2007). Cf. Parker v. Time Warner Entm't Co., 331 F.3d 13, 22 (2d Cir.2003) (suggesting, in dicta, that Gore might govern due process review of statutory damage awards). Had the district court ordered remittitur and not reached the constitutional question, it would not have needed to consider these issues or determine the relevant standard for assessing the constitutionality of a Copyright Act statutory damage award. A decision based on remittitur, under which a new trial must be granted if plaintiffs do not accept the remitted award, also would have avoided another complicated constitutional question, which we describe briefly. That issue arises under the Seventh Amendment, and is whether a statutory damage award under the Copyright Act may be reduced without offering the plaintiffs a new trial. [25] Neither this court nor the Supreme Court has directly addressed the issue, but the Court's Feltner decision must be taken into account. The usual rule for a general damage award is that a court may not reduce a jury's verdict and effectively impose a remittitur without affording a plaintiff the option of a new trial when it enter[s] judgment for the reduced damages. Hetzel v. Prince William Cnty., 523 U.S. 208, 211, 118 S.Ct. 1210, 140 L.Ed.2d 336 (1998); see also Dimick v. Schiedt, 293 U.S. 474, 486-87, 55 S.Ct. 296, 79 L.Ed. 603 (1935) (affirming remittitur power of courts but noting that where a verdict is set aside, the parties retain their right to have a jury determine the measure of damages); Kennon v. Gilmer, 131 U.S. 22, 29, 9 S.Ct. 696, 33 L.Ed. 110 (1889) (finding that under the Seventh Amendment a court has no authority to reexamine facts determined by a jury, or to enter according to its own estimate of the amount of damages which the plaintiff ought to have recovered ... an absolute judgment for any other sum than that assessed by the jury). Citing Hetzel, we have held a trial court's reduction in compensatory damages must, to avoid Seventh Amendment error, allow the plaintiff a new trial. Bisbal-Ramos, 467 F.3d at 26 (reversing and remanding for consideration of remittitur where trial court had reduced compensatory damages without offering plaintiffs new trial). By contrast, there is law indicating that a punitive damage award may be reduced on due process grounds (without offering plaintiffs a new trial) without running afoul of the Seventh Amendment. The Supreme Court's punitive damages jurisprudence suggests as much, but the question has not been directly addressed by the Court. See State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003) (finding punitive damage award violated due process); Gore, 517 U.S. 559, 116 S.Ct. 1589 (same). Some circuits, including our own, have found that a court may reduce an excessive award of punitive damages without giving the plaintiff the option of a new trial. Bisbal-Ramos, 467 F.3d at 27 (collecting cases); see also Mendez-Matos v. Municipality of Guaynabo, 557 F.3d 36, 52 (1st Cir.2009) (If we find an award `grossly excessive,' we may ascertain the amount of punitive award that is appropriate and order the district court to enter judgment in such amount.). But neither Bisbal-Ramos nor Mendez-Matos decided the question as to a statutory damages award. [26] In bypassing remittitur and reducing the jury's award without offering Sony a new trial, the district court assumed that statutory damage awards should be treated largely as punitive, not compensatory, awards for Seventh Amendment purposes. But statutory damages, unlike punitive damages, have both a compensatory and punitive element. See 17 U.S.C. § 504(c); Feltner, 523 U.S. at 352, 118 S.Ct. 1279 ([A]n award of statutory damages [under § 504(c)] may serve purposes traditionally associated with legal relief, such as compensation and punishment.); F.W. Woolworth Co., 344 U.S. at 233, 73 S.Ct. 222 (The statutory rule, formulated after long experience, not merely compels restitution of profit and reparation for injury but also is designed to discourage wrongful conduct.). Further, the Supreme Court's analysis of a different Seventh Amendment issue in Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 437, 121 S.Ct. 1678, 149 L.Ed.2d 674 (2001) suggests that punitive damage awards do not implicate the Seventh Amendment for reasons that do not apply to statutory damage awards. In Cooper, the Court observed that the Seventh Amendment provides only that no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law, U.S. Const. amend. VII (emphasis added), and reasoned that the level of punitive damages is not really a `fact' `tried' by the jury, Cooper Indus., 532 U.S. at 437, 121 S.Ct. 1678 (quoting Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 459, 116 S.Ct. 2211, 135 L.Ed.2d 659 (1996) (Scalia, J., dissenting)) (internal quotation mark omitted). But statutory damage awards are different. In Feltner, the Supreme Court determined that the Seventh Amendment provides a right to a jury trial on all issues pertinent to an award of statutory damages under § 504(c) of the Copyright Act, including the amount itself. Feltner, 523 U.S. at 355, 118 S.Ct. 1279. The point here is not for us to decide these issues, but merely to describe them to show the importance of adherence to the doctrine of constitutional avoidance. The courts of appeals are likewise bound by that doctrine, and we are required to apply it here. [27]