Court Opinion

ID: 8407778
Source: CourtListenerOpinion
Date Created: 2022-11-02 16:34:13.601165+00
Date Added: 2024-06-11T16:47:30.291971
License: Public Domain

GOULD, Circuit Judge,
dissenting in part:
“[A] primary interest that must be protected is the public interest in punitive damage awards in appropriate amounts. We cannot allow the public interest to be thwarted by a defendant’s oversight or trial tactics.” Adams v. Murakami, 54 Cal.3d 105, 284 Cal.Rptr. 318, 813 P.2d 1348, 1354 n. 5 (1991) (emphasis in the original).
“A decision to punish a tortfeasor by means of an exaction of exemplary damages is an exercise of state power that must comply with the Due Process Clause of the Fourteenth Amendment. The commonlaw practice, ... the strong presumption favoring judicial review that we have applied in other areas of the law, and elementary justice all support the conclusion that such a decision should not be committed to the unre-viewable discretion of the jury.” Honda v. Oberg, 512 U.S. 415, 434-35, 114 S.Ct. 2331, 129 L.Ed.2d 336 (1994).
The majority reinstates Freund’s punitive damages, which had been struck by the district court on post-verdict motion because of lack of evidence of malice. The majority’s decision is based on the requirement of Rule 50(b) of the Federal Rules of Civil Procedure that a motion for post-trial relief must state the same *1083grounds for relief as the litigant’s Fed. R.Civ.P. 50(a) directed verdict motion.1 In so doing, my colleagues expand the scope of a federal court’s power in a diversity action beyond permissible bounds, produce a result that is contrary to both Adams and the Due Process Clause of the Fourteenth Amendment, and create a circuit split in the process. See Simmons v. City of Philadelphia, 947 F.2d 1042, 1085-1087 (3d Cir.1991) (Becker, J.) (applying Pennsylvania substantive rule preventing waiver of municipalities’ sovereign immunity and allowing municipality to raise sovereign immunity in 50(b) motion notwithstanding failure of municipality to raise immunity in 50(a) motion).
I agree with the majority that Freund’s compensatory damage award against Ny-comed Amersham (“Nycomed”) should be upheld. I also agree with the majority that federal waiver precepts under the literal terms of Rule 50 conflict with California law, preventing waiver of post-verdict judicial review of punitive damages. However, I respectfully dissent from the majority’s apparent view that California’s rule preventing waiver of post-verdict judicial review of punitive damages, and the Fourteenth Amendment’s Due Process protection requiring meaningful post-verdict judicial review of punitive damage awards, succumb to Rule 50’s waiver requirement. In rfty view, the substantive interests of California and the protections of Due Process require that we sustain the district court’s post-verdict rejection of punitive damages that were inconsistent with California law, despite the apparent conflict with Rule 50, because there is no evidence that Nycomed acted with malice.
I
The complexities of choice-of-law rules in Federal diversity actions took an important turn in Erie R.R. v. Tompkins, which overturned Swift v. Tyson, 41 U.S. (16 Pet.) 1, 10 L.Ed. 865 (1842), and held that federal courts sitting in diversity must apply state law to resolve substantive issues, but apply federal law to resolve procedural issues. Erie R.R. v. Tompkins, 304 U.S. 64 (1938).
Erie established the basis for the result in Ragan v. Merck Transfer & Warehouse Co. 337 U.S. 530, 69 S.Ct. 1233, 93 L.Ed. 1520 (1949), a case applying the Erie doctrine to the Federal Rules of Civil Procedure. In Ragan, the plaintiff filed a complaint in federal court on September 4, 1945, arising from an accident that occurred on October 1, 1943, and served the defendant on December 28, 1945, notwithstanding a Kansas statute which provided:
“An action shall be deemed commenced within the meaning of [the statute of limitations], as to each defendant, at the date of the summons which is served on him_An attempt to commence an action shall be deemed equivalent to the commencement thereof within the meaning of this article when the party faithfully, properly and diligently endeavors to procure a service; but such attempt must be followed by the first publication or service of the summons within sixty days.” Ragan, 337 U.S. at 531 n. 4, 69 S.Ct. 1233 (quoting Kan. Gen.Stat. § 60-308 (1935)).
The defendant moved for summary judgment on the ground that service had *1084not been made within either the 2-year limitations period2 or the 60-day period for service after filing required by Kansas law. Id. at 581, 69 S.Ct. 1238. The plaintiff defended on the ground that Rule 3 of the Federal Rules of Civil Procedure provided that an action in federal court commenced upon the filing of the complaint in federal court. Id. at 531, 69 S.Ct. 1233. Despite Rule 3, the Supreme Court dismissed the action, relying on the Erie doctrine and concluding that a cause of action could not have a “longer life in the federal court than it would have had in the state court,” and that the state service of summons statute controlled because it was an integral part of the state statute of limitations. Id. at 533-34, 69 S.Ct. 1233.
Ragan was not the last word on the interplay between the Federal Rules of Civil Procedure and state law in diversity actions. In Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965), the Supreme Court clarified the Erie doctrine’s application to the Federal Rules of Civil Procedure. The Supreme Court held that the first inquiry was whether the Federal Rule of Civil Procedure is “sufficiently broad” that it creates a “direct collision” with state law, thereby leaving no room for the operation of that law. Hanna, 380 U.S. at 471 472, 85 S.Ct. 1136; see also Burlington N. R.R. Co. v. Woods, 480 U.S. 1, 5, 107 S.Ct. 967, 94 L.Ed.2d 1 (1987) (explaining Hanna). If the Federal Rule of Civil Procedure is applicable, then it applies regardless of any contravening state law, so long as the Federal Rule complies with the requirements of both the Rules Enabling Act and the Constitution. Hanna, 380 U.S. at 471, 85 S.Ct. 1136 (“[T]he court has been instructed to apply the Federal Rule, and can refuse to do so only if the Advisory Committee, this Court, and Congress erred in their prima facie judgment that the Rule in question transgresses neither the terms of the Enabling Act nor constitutional restrictions.”); see also Gasperini v. Ctr. for the Humanities, 518 U.S. 415, 428 n. 7, 116 S.Ct. 2211, 135 L.Ed.2d 659 (1996) (“Concerning matters covered by the Federal Rules of Civil Procedure, the characterization question is usually unproblematic: It is settled that if the Rule in point is consonant with the Rules Enabling Act, 28 U.S.C. § 2702, and the Constitution, the Federal Rule applies regardless of contrary state law.”); Vess v. Ciba-Geigy Corp. USA 317 F.3d 1097, 1103 (9th Cir.2003) (“In other words, if a Federal Rule of Civil Procedure is valid under the Constitution and the Enabling Act, it applies according to its terms in all civil cases in federal district court”).
Because the application of Rule 50 here to deny a defendant post-verdict judicial review of a punitive damages award would exceed the scope of the authority granted to the courts under the Rules Enabling Act and would be contrary to the Constitution, I conclude that we must allow post-verdict judicial review of punitive damages.
II
Although as yet no Federal Rule of Civil Procedure has been wholly invalidated because of the Enabling Act or the Constitution,3 rules including Rule 50 have been narrowed by federal courts to avoid abridging substantive rights. See Ragan, *1085337 U.S. at 533, 69 S.Ct. 1233 (narrowing Rule 3); Walker v. Armco Steel Corp., 446 U.S. 740, 750-51, 100 S.Ct. 1978, 64 L.Ed.2d 659 (1980) (narrowing Rule 3); Simmons, 947 F.2d at 1085-86 (narrowing Rule 50 to avoid abridging state rule against waiver of governmental immunity).4 Here, if Rule 50 is to be limited to its intended procedural scope, and not to supplant substantive California Law and Constitutional protection under the Due Process Clause, it must be narrowed.
A
The Rules Enabling Act authorizes the adoption of the Federal Rules of Civil Procedure, but provides that “[s]uch rules shall not abridge, enlarge or modify any substantive right.” 28 U.S.C. § 2702(b). The majority’s application of Rule 50 frustrates a substantive right granted by California law because it permits punitive damages to stand without post-verdict judicial review of the validity of the punitive damages award. Rule 50’s application in this case must be restricted to comply with the California Supreme Court’s rule in Adams v. Murakami (“Adams rule”).
In my view, the Adams rule reflects a substantive policy decision of California to require meaningful judicial review before a defendant is subjected to punitive damages. Under California substantive law governing punitive damages, the public interest must be recognized and assessed before California courts may permit an award punitive damages to stand. Stated another way, California does not allow punitive damages except when and to the extent that the punitive damage award promotes the public interest. Viewed in this light, the Adams rule is not a mere rule of procedure, as the majority incorrectly characterizes it. The Adams rule does not make the litigation process more efficient, more accurate, or serve any procedural function that would favor applying Rule 50 in place of the Adams rule.5 As the California Supreme Court in Adams made clear, the reasoning for the rule is based upon the “public interest in punitive damage awards in appropriate amounts.” Adams, 284 Cal.Rptr. 318, 813 P.2d at 1354 n. 5. The Adams rule gives defendants a non-waivable right to judicial review of a punitive damages award post-verdict.
The majority’s view of Rule 50 abridges this California substantive right because it precludes defendants from obtaining judicial review of a punitive damages award if they do not anticipate an improper punitive damages award pre-verdict and raise the objection by a Rule 50(a) motion. The majority’s decision to adhere to Rule 50 violates fundamental limitations of the Supreme Court’s rulemaking power as delineated by the Rules Enabling Act because the majority abridges a substantive right of a defendant to be protected against an improper punitive damages award. In en*1086acting the Rules Enabling Act, Congress made clear that it did not authorize the Supreme Court to modify substantive policies such as the California substantive policy that punitive damages be permitted only when they serve the public interest. Because application of Rule 50 would transgress the authority granted by Congress under the Rules Enabling Act, I would apply the Adams rule requiring post-verdict judicial review of a punitive damages award.
B
The Due Process Clause of the Fourteenth Amendment, which requires meaningful post-verdict judicial review of punitive damage awards fashioned by a jury, also dictates against applying the terms of Rule 50 in this case. Honda, 512 U.S. at 434-35, 114 S.Ct. 2331.6 The wise principle that courts should not allow the imposition of excessive or arbitrary exemplary damage awards is long established; this principle predated our Constitution and still recurs in current times. Fabrigas v. Mostyn, 2 Bl.W. 928, 96 Eng. Rep. 549 (K.B.1774) (“Some [awards] may be so monstrous and excessive, as to be in themselves an evidence of passion or partiality in the jury”); Day v. Woodworth, 54 U.S. (13 How.) 363, 371, 14 L.Ed. 181 (1851) *1087(exemplary, punitive or vindictive damages should reflect the “enormity of [the] of-fence”); Browning-Ferris Indus. of Vermont, Inc. v. Kelco Disposal Inc. 492 U.S. 257, 293, 109 S.Ct. 2909, 106 L.Ed.2d 219 (1989) (O’Connor, J., concurring in part and dissenting in part) (“Chapter 20 of Magna Carta, 9 Hen. III, ch. 14 (1225), prohibited amercements that were disproportionate to the offense or that would deprive the wrongdoer of his means of livelihood: ‘A Free-man shall not be amerced for a small fault, but after the manner of the fault; and for a great fault after the greatness thereof.’ ”); Honda, 512 U.S. 415, 114 S.Ct. 2331 (due process dictates that a defendant cannot be subjected to exemplary damages absent post-verdict judicial review); BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 587, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996) (Breyer, J., concurring) (“This constitutional concern, itself harkening back to the Magna Carta, arises out of the basic unfairness of depriving citizens of life, liberty, or property, through the application, not of law and legal process, but of arbitrary coercion.”); Ciraolo v. City of New York, 216 F.3d 236, 245 (2d Cir.2000) (Calabresi, J., concurring) (“Although widely accepted by economists and acknowledged by some courts, the multiplier function of punitive damages has nonetheless been applied haphazardly at best. One reason this is so is that the twin goals of deterrence and retribution are often conflated, rather than recognized as analytically distinct objectives.”); State Farm Mutual Automobile Ins. Co. v. Campbell, — U.S. -, 123 S.Ct. 1513 (April 7th, 2003) (“The Due Process Clause of the Fourteenth Amendment prohibits the imposition of grossly excessive or arbitrary punishments on a tortfeasor.”) (emphasis added). Though each of these cases might be distinguished in some way, a general principle favoring judicial review of punitive damages runs through these cases and should illuminate our judgment.7
As Adams recognized, based on the Supreme Court’s reasoning in Pac. Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 111 S.Ct. 1032, 113 L.Ed.2d 1 (1991), there is “a constitutional mandate for meaningful judicial scrutiny of punitive damages awards.” Adams, 284 Cal.Rptr. 318, 813 P.2d at 1356. In Haslip, the Court held that Alabama’s system of jury instructions and judicial review that governed an award of punitive damages protected a civil defendant’s due process interests. Id. at 20-24, 111 S.Ct. 1032. The Supreme Court also made it clear that Alabama’s system for reviewing punitive damage awards satisfied due process because it provided a “definite and meaningful constraint” on a jury’s discretion to award punitive damages by allowing post-verdict review procedures. Id. at 22, 111 S.Ct. 1032. This constitutional mandate requiring meaningful judicial scrutiny of punitive damages post jury-verdict was further clarified in Honda Motor Co. v. Oberg. In Honda, the Supreme Court specifically held that Oregon’s system for awarding punitive damages violated procedural Due Process because it did not permit meaningful post-verdict review of jury verdicts that included punitive damages. 512 U.S. at 434-35, 114 S.Ct. 2331. More importantly, the Court made clear that post-verdict review of punitive damage awards is the most important procedural safeguard on punitive damage awards and held that the lack of meaningful review of jury verdicts violates the Due Process Clause of the Four*1088teenth Amendment. Id. at 435, 114 S.Ct. 2331; see also White v. Ford Motor Co., 312 F.3d 998, 1025 (9th Cir.2002) (“Read together Haslip and Honda teach that ... it is the availability of post-verdict review of punitive damages that provides the most substantial procedural check on punitive damages.”) (Graber, J., concurring in part and dissenting in part). The Due Process guarantee mandating post-verdict judicial review of punitive damages provides an additional reason against the application of Rule 50 in this case.
Ill
The Supreme Court made clear in Hanna that its decision did not purport to abridge either the Rules Enabling Act or the guarantees of the Constitution. Hanna, 380 U.S. at 473-74, 85 S.Ct. 1136. Notwithstanding the explicit language of Hanna, the majority concludes that what I consider to be a substantive right in California and a federal constitutional guarantee relating to a court’s ability to check punitive damage awards of the jury post-verdict cannot even be considered because of Rule 50, on the theory that the Rule “affects only the process of enforcing litigants’ rights and not the rights themselves.” Ibid, at 1078 (internal quotation marks omitted). This incorrect majority view of Rule 50 jettisons the California substantive law requirement that punitive damages must advance public interest and violates the related federal Due Process requirement that courts must be permitted to conduct post-verdict review of punitive damages awards. The procedural nature of Rule 50 is inadequate support for this transgression of state substantive law and federal Due Process. It is untenable to conclude that established California precedent and a Fourteenth Amendment Due Process right allowing judicial review of punitive damage awards following a jury verdict must be subordinate to Rule 50.
I respectfully dissent.

. As the majority correctly states: “Federal Rule of Civil Procedure 50(a) permits a party to move for judgment as a matter of law after the opposing party has been fully heard and prior to the submission of the case to the jury. Fed.R.Civ.P. 50(a). If such a motion made at the close of all the evidence is denied, Rule 50(b) allows the moving party to 'renew’ its motion within ten days after the court's entry of final judgment in the case. Fed.R.Civ.P. 50(b).” Ibid, at 1077-1078, 93 Cal.Rptr.2d 425.

. Kansas had a two-year statute of limitations for the tort claims at issue in Ragan. Ragan, 337 U.S. at 531, 69 S.Ct. 1233 (citing Kan. Gen. Stats., § 60-306 (1935)).

. That is not surprising because careful effort goes into the preparation and vetting of the Federal Rules, including review by the Judicial Conference and the United States Supreme Court, before they are enacted. See 28 U.S.C. § 2072, 2073.

. Rule 3 has been criticized for its differing application in the state and federal context. See Vess at 317 F.3d at 1103 ("The [Supreme] Court's different reading of Rule 3, depending on whether federal or state law is involved, has been heavily criticized"). This criticism is not relevant here because Rule 50 cannot be applied in either the state or federal context when it serves to deprive a defendant of their Fourteenth Amendment Right to post-verdict judicial review of a jury’s punitive damages award. See Honda, 512 U.S. at 434, 114 S.Ct. 2331 (decision to punish tortfeasor by an "exaction of exemplary damages” violated Due Process Clause of Fourteenth Amendment when committed to the unre-viewable discretion of a jury).

. The majority should take pause from the fact that the Adams rule has far less of a procedural connection than the Kansas service of summons statute that conflicted with Rule 3 in Ragan.

. The majority appears to conclude in error that we may here consider only if punitive damages were excessive in amount, and not if they were entirely improper. The majority explains that it conducts its limited review of "excessiveness” based on the parties’ "concession” that Rule 50 does not bar an exces-siveness claim. Ibid. atn. 10. But the majority’s limited review on this issue is not wholly reconciled with its theory and interpretation of Rule 50, for the majority's reasoning would preclude even the excessiveness review that the majority permits based on “concession." Perhaps the concession should warn the majority that its Rule 50 theory is inadequate. But more importantly, the majority fails to recognize that in a sense any award of punitive damages is "excessive” when, as here, the record shows no malice or inadequate evidence of malice, to support punitive damages. And nothing could be more "arbitrary” than to permit punitive damages in any amount to stand absent evidence of malice that is required by state law for imposition of punitive damages. A defendant such as Ny-comed, who acted without malice and who should not receive a punitive fine, must not be treated worse than a defendant who acted with malice and who deserves some punitive fine but in lesser amount.
This position is supported by the Supreme Court's precedent. In its recent decision in State Farm Mutual Automobile Ins. Co. v. Campbell, - U.S. -, 123 S.Ct. 1513 (April 7, 2003), the Supreme Court explicitly held and explained:
”[T]he most important indicium of the reasonableness of a punitive damages award is the degree of reprehensibility of the defendant's conduct. We have instructed courts to determine the reprehensibility of a defendant by considering whether: the harm caused was physical as opposed to economic; the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others; the target of the conduct had financial vulnerability; the conduct involved repeated actions or was an isolated incident; and the harm was the result of intentional malice, trickery, or deceit, or mere accident. The existence of any one of these factors weighing in favor of a plaintiff may not be sufficient to sustain a punitive damages award; and the absence of all of them renders any award suspect. It should be presumed a plaintiff has been made whole for his injuries by compensatory damages, so punitive damages should only be awarded if the defendant's culpability, after having paid compensatory damages, is so reprehensible as to warrant the imposition of further sanctions to achieve punishment or deterrence.” (internal quotation marks and citations omitted)
Although BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996), and Campbell were focused on Due Process problems involving excessive punitive damages when malice existed, the above language indicates that the same Due Process problems exist in a case, such as this one, where punitive damages are imposed on a defendant who did not act reprehensibly.

. One is reminded of Lord Mansfield’s observation: "The law does not consist in particular cases, but in general principles, which run through the cases, and govern the decision of them.” Rust v. Cooper 2 Cowp. 629, 632, 98 Eng. Rep. 1277, 1279 (K.B.1777) (Mansfield, J.).