Court Opinion

ID: 9782628
Source: CourtListenerOpinion
Date Created: 2023-08-30 19:00:27.592463+00
Date Added: 2024-06-11T07:35:06.703622
License: Public Domain

EDMONDS, P. J.,
concurring in part, dissenting in part.
I agree with the majority’s holdings that the trial court erred by failing to grant a motion by defendant FedEx Ground Package System, Inc. (FedEx) for a directed verdict on plaintiffs’ intentional interference with economic relations claim and that the trial court properly denied FedEx’s motion for a directed verdict on plaintiffs’ fraud claim. I also agree that the trial court erred when it declined to reduce the $7 million punitive damages award in light of FedEx’s contention that the award was grossly excessive in violation of the Due Process Clause of the Fourteenth Amendment to the United States Constitution. My disagreement is with the majority’s disposition providing that plaintiffs may file for remittitur in the amount of $1,050,000 as an alternative to a new trial on the issue of punitive damages. For the reasons that follow, the majority’s interpretation of Article VII (Amended), section 3, is erroneous, and the proper disposition is a remand for a new trial on the issue of punitive damages.1
*498Plaintiffs went to trial on claims against FedEx for breach of contract, intentional interference with economic relations, fraud, breach of the covenant of good faith and fair dealing, and promissory estoppel. The jury returned the following verdict:
“We, the jury, being first duly sworn, find:
“1. Did defendant breach its contract with plaintiffs?
“ANSWER: NO (yes or no).
“2. Did defendant breach the duty of good faith and fair dealing that defendant owed plaintiffs under its contract with plaintiffs?
“ANSWER: YES (yes or no).
“3. Did defendant commit fraud?
“ANSWER: YES (yes or no).
“4. Did defendant intentionally interfere with plaintiffs’ business relations with others?
“ANSWER: YES (yes or no).
“5. Did defendant make promises to plaintiffs, that defendant could reasonably foresee would be relied upon by the plaintiffs, and upon which plaintiffs actually relied to their detriment?
“ANSWER: YES (yes or no).
“If you answered ‘No’ to questions 1, 2, 3, 4, and 5 your verdict is for defendant. Do not answer any further questions. The presiding juror should sign the verdict form.
“If any of questions 1, 2, 3,4, and 5 were answered Yes,’ at least the same nine jurors answering Yes’ on any of questions 1 through 5 must also agree on the answers to all of the remaining questions to which you answer Yes’ or to which you answer with a number.
“6. What amount of compensatory damages are owed to plaintiffs, if any?
$350,000.00
*499“If your answer is $0, your verdict is for the defendant. Do not answer any further questions. The presiding juror should sign this verdict form.
“If your answer to question 6 is more than $0, at least the same nine jurors answering Yes’ or with a number on any of questions 1 through 6 must also agree on the answers to all of the remaining questions to which you answer Yes’ or to which you answer with a number.
“7. If questions 3 or 4 were answered Yes,’ did defendant act with malice or show a reckless and outrageous indifference to a highly unreasonable risk of harm and act with a conscious indifference to the health, safety and welfare of others?
“ANSWER: YES (yes or no).
“If your answer to question 7 is ‘No,’ do not answer any further questions. The presiding juror should sign this verdict form. If your answer to question 7 is Yes,’ proceed to question 8.
“8. What amount of punitive damages, if any, should be awarded to plaintiffs?
“$ 7,000,000.00
(Boldface in original.)
The judgment entered pursuant to the jury’s verdict provides, in part:
“The jury heard the evidence admitted at trial, and the court and the jury heard the arguments of the parties. The jury returned a verdict on April 27,2006, which included an award of compensatory and punitive damages to plaintiffs. The court received the verdict and entered it into the record.
“Pursuant to ORS 31.735, the Department of Justice of the State of Oregon is a judgment creditor as to a portion of the punitive damages award to which the Criminal Injuries Compensation Account is entitled under ORS 31.735(l)(b). This designation is subject to all statutory and constitutional objections available to plaintiffs.
“NOW, THEREFORE, IT IS HEREBY ORDERED AND ADJUDGED that the plaintiffs, Michael Wieber and *500Intrepid Corporation, have judgment against the defendant, FedEx Ground Package System, Inc., for compensatory damages in the amount of $350,000 and for punitive damages in the amount of $2,800,000;
“IT IS HEREBY FURTHER ORDERED AND ADJUDGED that the State of Oregon, by and through the Criminal Injuries Compensation Account of the Department of Justice Crime Victims’ Assistance Section, has judgment against defendant, FedEx Ground Package System, Inc., for punitive damages in the amount of $4,200,000[.]”
On appeal, FedEx makes three assignments of error: (1) the trial court erred by denying FedEx’s motion for a directed verdict on the intentional interference claim; (2) the trial court erred by denying FedEx’s motion for a directed verdict on the fraud claim; and (3) the trial court erred by denying FedEx’s motion for a new trial based on the excessiveness of the punitive damages award. With respect to the fraud claim, FedEx argues on appeal that plaintiffs alleged that FedEx misrepresented to plaintiffs that it would give plaintiffs 30 to 45 days’ notice before terminating its agreement with them. Accordingly, FedEx notes, with respect to punitive damages,
“[plaintiffs’] actual damages for fraud were, at most, the value of its routes and 45 days of lost profits. [Plaintiffs’] evidence at trial showed that [plaintiffs’] three routes had a combined value of between $150,000 and $180,000 and combined monthly profits of a little over $6000. If fraud provides the sole basis for the punitive award, the denominator of the ratio should be $190,000, not $350,000.”
Also, with respect to the punitive damages award, FedEx states in its brief, “[I]f this court does not reject the punitive award altogether, it should reverse and remand with instructions to the trial court to remit the award to $350,000 or less or, if [plaintiffs] refuse such a remittitur, to order a new trial.”
I agree with the majority that the evidence offered by plaintiffs was legally insufficient for their claim for intentional interference witb economic relations to have been submitted to the jury and that their evidence pertaining to their fraud claim is the only evidence that could legally support a *501punitive damages award. The majority errs, however, in affording plaintiffs the opportunity to file for remittitur in the amount of $1,050,000.
Under Oregon law, remittitur is available only when certain conditions are satisfied:
“So, too, if it is manifest that an excessive judgment has been rendered, which is predicated upon an erroneous verdict, and this court, from an inspection of the record, is able to segregate the excess from the amount so found by the jury, it may, on condition that the respondent remits the excess, affirm the judgment for the balance; otherwise a new trial will be ordered.”
Cochran v. Baker, 34 Or 555, 557, 52 P 520; 56 P 641 (1899), overruled in part on other grounds by Wehrung v. Denham, 42 Or 386, 71 P 133 (1903) (emphasis added); see also Daskalos v. Kell, 280 Or 531, 544-45, 571 P2d 141 (1977) (remittitur, rather than new trial, was appropriate where “[t]he extent of any possible prejudice suffered by defendants as the result of such an [instructional] error” could be easily calculated as “the difference between the amount prayed for in Count III (the sum of $11,272.50) and the amount supported by plaintiffs’ proof (the sum of $9,937), i.e., the sum of $1,335.50”); Ely v. Wilde, 62 Or 111, 117, 122 P 1122 (1912) (holding that error with respect to calculation of damages “would necessitate a reversal of the judgment but for the fact that the amount of that claim is definite and severable from the remainder of the judgment” (emphasis added)); Hagestrom v. Sweeney, 60 Or 433, 436, 119 P 725 (1912) (“As the damages are found in a separate item of the verdict, the amount erroneously found is fixed, and we may affirm the judgment on condition that plaintiffs remit from the judgment the amount of [excess] damages.”); Mackey v. Olssen, 12 Or 429, 430, 8 P 357 (1885) (holding that when the damages resulting from a trial court’s error can be segregated from the amount of the verdict based on the record before the court, the judgment will be affirmed for the balance in the event that the plaintiff is willing to remit the amount of damages attributable to the error).
In this case, we cannot determine what amount of punitive damages should have been entered as a judgment in *502the trial court as a matter of law. The amount of $1,050,000 constitutes the maximum permissible award under the Due Process Clause — i.e., a ceiling on the amount that a jury could permissibly have awarded in this case in light of the compensatory damages award. But the constitutional upper limit on what the jury could award on remand does not inform what amount the jury actually would have awarded in this case had the claim for intentional interference with economic relations and the evidence offered pursuant to that claim not been erroneously submitted to the jury as part of its consideration of the amount of punitive damages. Stated otherwise, the record in this case does not permit this court to segregate any amount attributed by the jury to FedEx’s fraudulent conduct from the $7 million punitive damage award that the jury made with respect to both the intentional inference with economic relations claim and the fraud claim. Under the above-cited precedents, a new trial on the issue of punitive damages is therefore required.
In concluding otherwise, the majority relies on Article VII (Amended), section 3, of the Oregon Constitution. According to the majority, that constitutional provision limits our review of a jury’s award “to two considerations: whether any evidence supports the jury’s finding that punitive damages should be awarded; and whether the amount of punitive damages is excessive in light of the Due Process Clause.” 231 Or App at 487-88 (emphasis in original). It follows, in the majority’s view, that “the Oregon Constitution does not provide authority for this court to further review the jury’s award of punitive damages.” Id. at 489.
The majority’s interpretation of Article VII (Amended), section 3, incorrectly conflates the standard of review imposed by the constitutional provision in regard to the adjudication of error with the authority of this court to order a new trial in the event of error. Id. at 487. The initial error committed by the trial court was when it submitted the intentional interference with economic relations claim to the jury when there was no evidence that would support a finding that FedEx was a third party to any of plaintiff s relationships with his customers. Our standard of review regarding that claim of error under Article VII (Amended), section 3, is for “any evidence.” Here, because there was no evidence that *503FedEx was a third party to any of plaintiffs relationships with his customers, our reversal on that ground does not run afoul of Article VII (Amended), section 3. As a result of that error, the jury was improperly permitted to consider a theory of liability and the evidence supporting the theory in assessing both whether to award punitive damages and if so, what amount of punitive damages to award.
The trial court also committed another error when it refused to grant a new trial after the jury returned a constitutionally excessive award under the Due Process Clause. On appeal, the review of that error could not result in the reversal of the punitive damage judgment because the amount of punitive damages is a question of fact, and Article VII (Amended), section 3, prohibits an Oregon appellate court from reviewing a question of fact tried by a jury. However, reversal of the constitutionally excessive punitive damage judgment in this case is required under the Due Process Clause of the Fourteenth Amendment to the United States Constitution. Honda Motor Co. v. Oberg, 512 US 415, 420, 114 S Ct 2331, 129 L Ed 2d 336 (1994). Consequently, under the federal Supremacy Clause, the judgment for $7 million in punitive damages must be reversed. Oberg v. Honda Motor Co., 320 Or 544, 549, 888 P2d 8 (1995).
The remaining question is the proper remedy in light of both errors committed by the trial court. If the only error was the error committed under the Due Process Clause, the proper remedy would be to grant a new trial unless the nonmoving party agrees to the entry of an amended judgment reduced to a constitutionally permissible amount of punitive damages. Parrott v. Carr Chevrolet, Inc., 331 Or 537, 559, 17 P3d 473 (2001). But this case involves two errors committed by the trial court and, because of that fact, that remedy is not available; rather, a new trial must be ordered in accordance with the rules of remittitur as referred to in the above paragraphs. Under those rules, a new trial is necessary because this court cannot determine as a matter of law what amount of punitive damages the jury would have awarded had the trial court not allowed it to consider the intentional interference with economic relations claim and the evidence admitted under that claim in assessing the amount of punitive damages.
*504Ordering a new trial under the above circumstances would not run afoul of Article VII (Amended), section 3, as the majority holds. Article VII (Amended), section 3, prohibits the reexamination of any fact tried by a jury. It does not prohibit an Oregon appellate court from reversing a trial court judgment and remanding for a new trial on the basis of an error of law. In this case, the error of law committed by the trial court was in submitting the claim for interference with economic relations and the evidence in support of the claim to the jury for its consideration regarding whether to award punitive damages, and, if so, in what amount, when there was no evidence that FedEx had any relationship with plaintiffs customers.
The cases cited by the majority in support of its holding are not to the contrary. In Honda Motor Co., the United States Supreme Court remanded to the Oregon Supreme Court after the Oregon court ruled that Article VII (Amended), section 3, prevented Oregon trial and appellate courts from reviewing punitive damage awards because the assessment of punitive damages is a question of fact. 512 US at 435. On remand, the court held, as noted above, that, under the federal Supremacy Clause, the court was bound to follow the requirements of federal due process in light of the conflict between the provisions of Article VII (Amended), section 3, and the provisions of the federal constitution. Oberg, 320 Or at 549. Nothing in the holding in Oberg restricts the authority of this court under Article VII (Amended), section 3, to grant a new trial on the issue of punitive damages when legal error infects the trial process that led to the punitive damage award.
The majority also mistakenly relies on Lakin v. Senco Products, Inc., 329 Or 62, 76, 987 P2d 463 (1999), for the proposition that Article VII (Amended), section 3, eliminated the authority of Oregon courts to grant new trials after an excessive damage verdict had been rendered by a jury. In Lakin, the plaintiffs were awarded compensatory and punitive damages. The trial court applied former ORS 18.560(1) (1987), renumbered as ORS 31.560 (2003) and entered judgment for each plaintiff for $500,000 in noneconomic damages. With respect to one plaintiff, the court reduced that amount *505by five percent based on the jury’s finding that he had contributed to his injuries. On appeal, the defendant raised claims of error regarding the trial court’s evidentiary rulings, its jury instructions, its denial of a directed verdict, and its rulings pertaining to punitive damages. The plaintiffs cross-appealed, contending that former ORS 18.560 was unconstitutional in several respects. Lakin, 329 Or at 66-67.
On appeal, the principal issue in Lakin concerned the constitutionality of former ORS 18.560(1) and whether the legislature had the authority under the constitution to enact the statute. This court decided that issue under Article VII (Amended), section 3. Lakin v. Senco Products, Inc., 144 Or App 52, 925 P2d 107 (1996). On review, the Supreme Court decided the issue under Article I, section 17, of the Oregon Constitution, which provides that, “In all civil cases the right of Trial by Jury shall remain inviolate.” Lakin, 329 Or at 82. On review, the defendant relied on dicta in Greist v. Phillips, 322 Or 281, 906 P2d 789 (1995), in support of its contention that former ORS 18.560(1) did not violate Article I, section 17. The portion of Greist on which the defendant relied provides,
“Until the adoption of Article VII (Amended), section 3, in 1910, trial courts were empowered to reduce jury awards of damages when the courts believed that those awards were excessive.”
322 Or at 295 (emphasis in original). The Lakin court responded to the defendant’s argument as follows:
“The quoted dicta requires correction. Oregon trial courts never have had the power to reduce a jury’s verdict or to enter judgment for a lesser amount of damages over the objection of the prevailing party, who always could reject a judicial remittitur and demand a new jury trial. See Adcock v. Oregon Railroad Co., 45 Or 173, 181, 77 P 78 (1904) (in an action for personal injuries, the court may order a remission of part of the damages awarded by the jury, but only as a condition of overruling a motion for a new trial).”
329 Or at 76-77.
That quotation from Lakin — which the majority offers as support for the proposition that Article VII (Amended), section 3, eliminated Oregon trial courts’ power *506to grant new trials for excessive awards — must be understood in the context in which it appears. That context has nothing to do with whether this court has the authority to order a new trial on the issue of punitive damages where the trial court committed legal error by submitting an underlying claim to the jury that should not have been submitted.
It is correct that the assessment of punitive damages is a question of fact for the jury to decide. Van Lom v. Schneiderman, 187 Or 89, 116-17, 210 P2d 461 (1949) (Rossman, J., specially concurring). But no jury in this case has (1) determined whether punitive damages should be awarded or (2) assessed the amount of punitive damages on a record that does not contain a claim for intentional interference with economics relations and the evidence admitted pursuant to that claim. It follows that the majority’s view that our review is limited to two considerations — whether any evidence supports the amount awarded and whether the amount of punitive damages is excessive in light of the Due Process Clause — is incorrect. Rather, the majority fails to take into account the error in submitting a claim to the jury that should not have been submitted. That circumstance means that the only available remedy is to remand for a new trial so that a jury can determine the issue of punitive damages on a proper evidentiary record.2
ORCP 64 B imposes an additional requirement for the grant of a new trial on the issue of punitive damages: the movant must establish that the trial court’s ruling that was “against the law” materially affects the substantial rights of the party. ORS 19.415 parallels ORCP 64 B and provides, in pertinent part:
*507“(1) Upon an appeal from a judgment in an action at law, the scope of review shall be as provided in section 3, Article VII (Amended) of the Oregon Constitution.
“(2) No judgment shall be reversed or modified except for error substantially affecting the rights of a party.”
See also Jensen v. Medley, 336 Or 222, 82 P3d 149 (2003) (applying statute); Shoup v. Wal-Mart Stores, Inc., 335 Or 164, 61 P3d 928 (2003).
In Shoup, the Supreme Court applied ORS 19.415 in the context of a jury award in which one of three specifications of negligence was erroneously submitted to the jury. In that circumstance, the court held that, in order to demonstrate that the error had substantially affected its rights, the defendant was required to show that the jury had based its verdict on the invalid specification. Because the jury had returned a general verdict, the court could not tell which of the three specifications of negligence formed the basis for the jury’s verdict, and the defendant did not identify anything in the record to demonstrate that the jury based its verdict on the erroneously submitted specification. Thus, the Shoup court held that the defendant was unable to show that the trial court’s error substantially affected its rights, thereby precluding the court from reversing the judgment.
In Jensen, the issue was whether the defendant, an international union, could be held liable for the wrongful actions of an affiliated local union. A jury determined that the defendant was vicariously liable for the local union’s violation of former ORS 659.550 (1991), renumbered as ORS 659A.230 (2001). It therefore returned a verdict for the plaintiff for noneconomic and punitive damages. On review, the Supreme Court held that the jury had been given an erroneous jury 'instruction. The plaintiff argued, however, that, even if the instruction was erroneous, the trial court had instructed the jury that it could find the defendant liable on the alternative ground that it had ratified the local union’s actions. The Supreme Court agreed that, under Shoup, the defendant could not demonstrate reversible error for purposes of ORS 19.415; the verdict form did not distinguish between the theories on which the plaintiff had prevailed, and the defendant could not demonstrate that the verdict *508was based on the erroneous instruction. Jensen, 336 Or at 240. Moreover, because the defendant did not challenge the jury’s award of noneconomic damages on appeal, the court affirmed that award.
The defendant in Jensen also argued that the trial court should have granted its motion for a directed verdict with respect to punitive damages. According to the defendant, the alternative theory of ratification did not provide a sufficient basis for an award of punitive damages. In addressing that issue, the court explained:
“Because of the conclusions that we reach above, we review the directed verdict motion by examining the record to determine only whether there is any evidence to support [the defendant’s] ratification of the willful and wanton misconduct of [the local union and its business agent], not to determine whether there is evidence related to agency that would support the jury’s decision to hold [the defendant] ‘vicariously liable’ for the misconduct of [the local union and its business agent].”
Id. at 241 (emphasis omitted). The court concluded that there was no evidence that the defendant had ratified the local union’s actions or that the defendant was aware of the material facts at the time that the purported ratification took place. Consequently, the court held that the trial court had erred in denying the defendant’s motion for a directed verdict on the claim for punitive damages and did not reach the parties’ arguments concerning the amount of punitive damages. Id. at 242-43.
Neither ORS 19.415(2), Shoup, nor Jensen concerns the subject of remittitur. Indeed, the rule of remittitur as described above is a discrete rule of law from ORS 19.415(2) and its progeny and must be applied separately. A proper application of each rule to the circumstances of this case demonstrates why the rules differ in concept and why the majority errs in permitting plaintiff to file for remittitur.
FedEx is not entitled to a new trial under ORS 19.415(2) as to the award of compensatory damages despite the trial court’s error in submitting the claim for intentional interference with economic relations to the jury. That result is required because the verdict form does not specify the *509claim on which the compensatory damages award is based. Rather, the form instructs the jury to assess the amount of compensatory damages owed to plaintiffs if any of questions 1, 2, 3, 4, or 5 is answered “yes.” Consequently, it is not possible from the verdict form to discern whether the jury awarded compensatory damages on the intentional interference with economic relations claim, the fraud claim, or both. Thus, a possible result, according to the verdict form, is that the jury intended to award the full amount of compensatory damages based on the evidence adduced pursuant to the fraud claim. Because that claim was properly submitted to the jury, FedEx is unable to demonstrate that its rights were substantially affected by the error of the trial court in submitting the intentional interference with economic relations claim to the jury. It necessarily follows that the trial court’s error regarding the failure to grant the directed verdict motion on the intentional interference with economic relations claim does not require a new trial with regard to the award of compensatory damages, because FedEx cannot demonstrate that the error substantially affected its rights.
In contrast, however, to the award of compensatory damages by the jury, the same ambiguity in the verdict form requires that the award of punitive damages be reversed and that the case be remanded for a new trial on that issue. That result is required because this court cannot segregate from the $7 million punitive damage award what amount of the punitive damages should have been awarded to plaintiffs as a matter of law, as the rule of remittitur requires. ORS 19.415(2), Shoup, and Jensen have no relevance to the issue of remittitur. Their relevance concerns whether FedEx can demonstrate that its rights were substantially affected by the error that the trial court made in refusing to vacate the constitutionally excessive punitive damage. FedEx easily satisfies the “prejudicial error” test of ORS 194.15(2) in that respect because the punitive damage award exceeds the constitutionally permissive ceiling for an award by approximately $6 million. Thus, the only issue that remains is how to apply the rule of remittitur correctly, which, for the reasons discussed above, the majority fails to accomplish.
In sum, this case must be remanded for a new trial on the issue of punitive damages because we are unable to *510segregate any properly awarded amount of punitive damages from the jury’s $7 million award.
For that reason, I dissent, in part.

 Article VII (Amended), section 3, of the Oregon Constitution provides, in part:
[N]o fact tried by a jury shall he otherwise re-examined in any court of this state, unless the court can affirmatively say there is no evidence to support the verdict.”

 The right to a new trial when legal error infects the judgment is underscored by the language in ORCP 64 B(5), which provides:
“A former judgment may be set aside and a new trial granted in an action where there has been a trial by jury of the motion of the party aggrieved for any of the following causes materially affecting the substantial rights of such party:
“B(5) Insufficiency of the evidence to justify the verdict or other decision, or that it is against the law.”