Court Opinion

ID: 2966526
Source: CourtListenerOpinion
Date Created: 2015-09-22 00:44:25.288769+00
Date Added: 2024-06-11T13:13:52.553200
License: Public Domain

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

ATLAS FOOD SYSTEMS AND SERVICES,
INCORPORATED,
Plaintiff-Appellant,

v.

CRANE NATIONAL VENDORS,
INCORPORATED; RICHARD RICCI;
                                                     No. 95-1717
STEVEN FREEDMAN,
Defendants-Appellees,

and

MARS ELECTRONICS, INCORPORATED;
FRANK HARTMANN,
Defendants.

ATLAS FOOD SYSTEMS AND SERVICES,
INCORPORATED,
Plaintiff-Appellee,

v.

CRANE NATIONAL VENDORS,
INCORPORATED; RICHARD RICCI;
                                                     No. 95-1718
STEVEN FREEDMAN,
Defendants-Appellants,

and

MARS ELECTRONICS, INCORPORATED;
FRANK HARTMANN,
Defendants.

Appeals from the United States District Court
for the District of South Carolina, at Greenville.
Henry M. Herlong, Jr., District Judge.
(CA-92-2095-6-20)
Argued: April 5, 1996

Decided: October 30, 1996

Before HALL, NIEMEYER, and HAMILTON, Circuit Judges.

_________________________________________________________________

Affirmed by published opinion. Judge Niemeyer wrote the opinion,
in which Judge Hall and Judge Hamilton joined.

_________________________________________________________________

COUNSEL

ARGUED: Thomas W. Traxler, CARTER, SMITH, MIRRIAM,
ROGERS & TRAXLER, Greenville, South Carolina, for Appellant.
George Kermit Lyall, NELSON, MULLINS, RILEY & SCARBOR-
OUGH, L.L.P., Greenville, South Carolina, for Appellees. ON
BRIEF: T. S. Stern, Jr., GRANT, LEATHERWOOD & STERN,
Greenville, South Carolina, for Appellant. A. M. Quattlebaum, Jr.,
William S. Brown, NELSON, MULLINS, RILEY & SCARBOR-
OUGH, L.L.P., Greenville, South Carolina, for Appellees.

_________________________________________________________________

OPINION

NIEMEYER, Circuit Judge:

The principal issue presented in this appeal is whether the district
court abused its discretion in ordering a new trial unless the plaintiff
agree to a remittitur of a $3-million punitive damage award and, after
the plaintiff's rejection of the remittitur and retrial, another new trial
unless the plaintiff agree to a remittitur of a $4-million punitive dam-
age award. This issue raises important questions about the scope of
the district court's authority, through the grant of new trials under
Federal Rule of Civil Procedure 59(a), to review jury awards of puni-
tive damages.

                     2
Atlas Food System and Services, Inc., ("Atlas") sued Crane
National Vendors Division of Unidynamics Corporation ("National
Vendors") and two of its officers in federal court under diversity juris-
diction, demanding compensatory and punitive damages in connec-
tion with its purchase of defective vending machines. In its complaint,
Atlas alleged breach of contract, breach of express and implied war-
ranties, fraud, and deceptive and unfair trade practices under South
Carolina law.1 The jury returned a verdict against National Vendors
in the amount of $1.32 million in compensatory damages and $3 mil-
lion in punitive damages and against its officers in the amount of
$120,000 in compensatory damages and $100,000 in punitive dam-
ages. Following post-trial motions, the district court reduced the com-
pensatory damage award against National Vendors and found the $3-
million punitive damage award excessive, granting National Vendors
a new trial on punitive damages unless Atlas agree to a punitive dam-
age award of $1 million. When Atlas refused the remittitur, the dis-
trict court ordered a new trial on punitive damages.

After hearing substantially the same evidence, a second jury
awarded Atlas $4 million in punitive damages. Again, on National
Vendors' post-trial motion, the district court found the award exces-
sive and ordered a third trial unless Atlas agreed to a $1 million puni-
tive damage award. While Atlas did not agree to the remittitur of the
second punitive damage award, it agreed not to demand a third trial
and to accept the amount left standing following an appeal on the
damage questions. Accordingly, the district court certified the case for
immediate appeal pursuant to 28 U.S.C. § 1292(b), and we agreed to
hear the case.

On appeal, Atlas contends that the district court abused its discre-
tion in granting National Vendors' motions for a new trial unless
Atlas agree to a remittitur and clearly erred in reducing the first jury's
compensatory damage award by an amount described in Atlas' settle-
ment agreement with Mars Electronics as consideration for a confi-
dentiality provision. On cross-appeal, National Vendors contends that
the district court erred in denying its motion for judgment as a matter
_________________________________________________________________
1 Atlas also sued Mars Electronics International, Inc., but it settled its
claims against Mars before trial, and the trials in this case proceeded only
against National Vendors and its officers.

                    3
of law on punitive damages after each trial and in limiting the scope
of the second trial to punitive damages. The National Vendors offi-
cers joined the cross-appeal only in connection with the district
court's denial of their motion for judgment as a matter of law on puni-
tive damages.

Finding no reversible error, we affirm the rulings of the district
court.

I

National Vendors had for a long time been the supplier of vending
machines to Atlas, a South Carolina corporation engaged in the busi-
ness of selling food to the public through vending machines. From
about December 1989 through October 1991, however, National Ven-
dors sold Atlas 340 defective machines. The defects rendered the
machines susceptible to "yank-cheating," a practice by which a cus-
tomer pulls his dollar bill out of a vending machine after the machine
has validated the bill, thereby retaining his dollar and stealing food
from the machine.

Two separate defects in National Vendors machines allowed the
yank-cheating. The first defect existed in the bill validator, the com-
ponent that takes in a customer's bill, validates it, and stores it in the
vending machine. In February 1990, National Vendors had agreed,
without Atlas' knowledge, to increase dramatically its purchase of bill
validators from its secondary component supplier, Mars Electronics.
Although National Vendors never informed Atlas of its commitment
to buy Mars validators, it began a concerted effort in April 1990 to
switch Atlas to Mars by misrepresenting that Atlas would not encoun-
ter cash shortages with Mars validators. The Mars validators, how-
ever, were defective, and some evidence indicated that National
Vendors may have been aware of that problem beginning in 1991.

The second defect that permitted yank-cheating appeared in the
erasable programmable output memory chips, or "Eproms" ("electron-
ically programmable read only memory"), that created the electronic
interface between the vending machine and its bill validator. National
Vendors supplied the Eproms for its own machines, and the interface

                     4
problems Atlas experienced were attributable to National Vendors'
misinterpretation of Mars Electronics' engineering specifications.

After providing National Vendors several opportunities to remedy
the problems with its vending machines, Atlas revoked its acceptance
of the machines in July 1992. And when National Vendors refused to
refund Atlas' money, Atlas brought this diversity action against
National Vendors, alleging counts for (1) revocation of acceptance,
(2) breach of contract accompanied by a fraudulent act, (3) fraud, (4)
constructive fraud, and (5) unfair trade practices. Atlas also named
National Vendors officers, Richard Ricci and Steven Freedman, as
defendants in its constructive fraud count.

After a week-long trial, the jury returned a verdict for Atlas on all
claims, awarding it $1,317,822 in compensatory damages; finding
that Atlas was entitled to punitive damages from each of the defen-
dants; and finding that National Vendors' unfair trade practices had
not been "willful or knowing." After the jury returned that verdict, the
parties presented argument to the jury on the amount of punitive dam-
ages. Following argument, the court instructed the jury under South
Carolina law that it could grant punitive damages if it found by clear
and convincing evidence that one or more of the defendants' conduct
was "outrageous and extraordinary" or evinced"a reckless or callous
disregard of or indifference to the rights of others." Following further
deliberation, the jury awarded Atlas $3 million in punitive damages
from National Vendors, $60,000 from Ricci, and $40,000 from Freed-
man.

All three defendants filed post-trial motions for judgment in their
favor as a matter of law, which the district court denied. The court
did, however, reduce the compensatory damage verdict against
National Vendors and add prejudgment interest, yielding a
$986,510.90 compensatory damage award. Part of the court's reduc-
tion resulted from a $316,688.25 setoff to which the court found
National Vendors entitled because of an earlier settlement agreement
between Atlas and Mars Electronics. Although the Atlas-Mars settle-
ment had attributed $306,668.25 as consideration for a confidentiality
provision and only $10,000 as consideration for Mars' release of
Atlas' claim against it for the defective bill validators, the district
court concluded that the entire $316,688 sum represented payment for

                    5
the injury covered by Atlas' compensatory damage award from
National Vendors. The court also denied the defendants' post-trial
motion for judgment as a matter of law on punitive damages but
granted National Vendors' motion for new trial unless Atlas agreed
to reduce its punitive damage award from $3 million to $1 million.
Even though the district court found that National Vendors' conduct
"[a]t times . . . could be viewed as rising to the level of reckless disre-
gard of Atlas' rights," it reasoned that the evidence did not warrant
the jury's $3 million award because it showed "[a]t worst . . . mis-
communication, delay, evasion of responsibility, and poor business
practices on the part of National."

Atlas rejected the district court's $2 million remittitur, opting for
a new trial, and the district court ordered a new trial only on punitive
damages.

At the second trial, the district court advised the jury, over National
Vendors' objection, about the first jury's findings and similarly per-
mitted Atlas' counsel to make reference to those findings. The second
jury returned another verdict for Atlas, this time awarding Atlas $4
million in punitive damages. The district court again denied National
Vendors' post-trial motion for judgment as a matter of law on puni-
tive damages. But the court did, once again, grant National Vendors'
motion for a new trial unless Atlas agreed to reduce its punitive dam-
age award to $1 million. In doing so the court explained that, "my rul-
ing is identical to my previous ruling that unless the plaintiff remit[ ]
all but $1 million then there will be a new trial." "If they want to keep
going for more, they can do that. And if they don't produce any more
different testimony, I guess this court will be required to continue to
rule as it sees the facts and the law."

This appeal followed.

II

As its principal argument on appeal, Atlas contends that the district
court abused its discretion in granting National Vendors' successive
motions for new trials nisi remittitur after two juries awarded Atlas
punitive damages of $3 million and $4 million, respectively. While
acknowledging the authority of district courts to set aside juries' puni-

                     6
tive damage awards in exceptional cases, Atlas maintains that this is
not such a case and, therefore, that the district court merely substi-
tuted its own judgment on punitive damages for that of the jury.
Moreover, Atlas claims entitlement to the second jury's $4 million
award because National Vendors opted to "roll the dice" by filing a
motion for a new trial after the first trial, thereby relinquishing the
benefit of the lower punitive damage award.

At the outset, we note that a remittitur, used in connection with
Federal Rule of Civil Procedure 59(a), is the established method by
which a trial judge can review a jury award for excessiveness. Remit-
titur is a process, dating back to 1822, by which the trial court orders
a new trial unless the plaintiff accept a reduction in an excessive jury
award. See Blunt v. Little, 3 F. Cas. 760 (C.C.D. Mass. 1822) (No.
1578) (Story, J.). And the permissibility of remittiturs is now settled.
See 11 Charles Alan Wright, Arthur R. Miller, & Mary Kay Kane,
Federal Practice and Procedure, § 2815, at 163 (1995). Indeed, if a
court finds that a jury award is excessive, it is the court's duty to
require a remittitur or order a new trial. See Linn v. United Plant
Guard Workers, Local 114, 383 U.S. 53, 65-66 (1966).

Absent any constitutional challenge to the amount of a jury's puni-
tive damage award, see BMW of North America v. Gore, 116 S. Ct.
1589 (1996) (holding "grossly excessive" punitive damage award vio-
lates the Fourteenth Amendment's Due Process Clause), a federal dis-
trict court reviews such an award by applying the state's substantive
law of punitive damages under standards imposed by federal proce-
dural law.2 Thus, the district court is "to determine whether the jury's
_________________________________________________________________
2 South Carolina substantive law directs that a jury deciding the amount
of punitive damages to be awarded consider several factors: (1) the
defendant's degree of culpability; (2) the duration of the defendant's con-
duct; (3) the defendant's awareness or concealment of its conduct; (4) the
existence of similar past conduct by the defendant; (5) the likelihood that
the jury's punitive damage award will deter the defendant or others from
like conduct; (6) whether the award is reasonably related to the harm
likely to result from such conduct; (7) the defendant's ability to pay; and
(8) any "other factors" deemed appropriate. See Gamble v. Stevenson,
406 S.E.2d 350, 354 (S.C. 1991) (establishing factors for post-trial state
court review of jury verdicts); Orangeburg Sausage Co. v. Cincinnati
Ins. Co., 450 S.E.2d 66, 73 (S.C. Ct. App. 1994) (requiring Gamble fac-
tors to be considered by the jury), cert. denied, 116 S. Ct. 331 (1995);
see also Mattison v. Dallas Carrier Corp., 947 F.2d 95, 109-10 (4th Cir.
1991) (same).

                     7
verdict is within the confines set by state law, and to determine, by
reference to federal standards developed under Rule 59, whether a
new trial or remittitur should be ordered." Browning-Ferris Indus. of
Vermont, Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 279 (1989); see
also Defender Indus., Inc. v. Northwestern Mut. Life Ins. Co., 938
F.2d 502, 504-05 (4th Cir. 1991) (en banc). Those Rule 59 standards
are well established in the Fourth Circuit:

          On such a motion it is the duty of the judge to set aside the
          verdict and grant a new trial, if he is of the opinion that [1]
          the verdict is against the clear weight of the evidence, or [2]
          is based upon evidence which is false, or [3] will result in
          a miscarriage of justice, even though there may be substan-
          tial evidence which would prevent the direction of a verdict.

Aetna Casualty & Sur. Co. v. Yeatts, 122 F.2d 350, 352-53 (4th Cir.
1941) (numerals added); see also Mattison v. Dallas Carrier Corp.,
947 F.2d 95, 108 (4th Cir. 1991); Defender Indus., 938 F.2d at 507;
Johnson v. Parrish, 827 F.2d 988, 991 (4th Cir. 1987). Appellate
review of a district court's ruling under Rule 59 is for abuse of discre-
tion. Browning-Ferris, 492 U.S. at 279.

To determine in this case whether the district court abused its dis-
cretion in granting either or both of National Vendors' new trial
motions, we must examine more closely our three-pronged Rule 59
standard and the role served by each prong. The first two prongs of
our review standard require a district court to determine purely factual
questions: whether the jury's damages award is (1)"against the
weight of the evidence" or (2) "based upon evidence which is false."
Johnson, 827 F.2d at 991; Aetna Casualty , 122 F.2d at 352. This
review encompasses a comparison of the factual record and the ver-
dict to determine their compatibility. Consequently, jury determina-
tions of factual matters such as liability on a cause of action, liability
for compensatory and punitive damages, and the amount of compen-
satory damages will be reviewed by determining whether the jury's
verdict is against the weight of the evidence or based on evidence
which is false. The jury's determination of the amount of punitive
damages, however, is not a factual determination about the degree of
injury but is, rather, an almost unconstrained judgment or policy
choice about the severity of the penalty to be imposed, given the

                     8
jury's underlying factual determinations about the defendant's con-
duct. Because the factual record provides no direct foundation for the
amount of punitive damages, a review of the size of the jury's award
best utilizes the third prong of the Rule 59 review standard --
whether the jury's award will result in a miscarriage of justice. See
Defender Indus., 938 F.3d at 507.

The miscarriage-of-justice standard recognizes the hybrid nature of
punitive damage awards. As South Carolina's punitive damages test
illustrates, some considerations underlying the amount of a punitive
damage award may be factual -- e.g., the defendant's ability to pay
-- and, therefore, would be well suited to the jury's role of finding
facts. But other policy-related elements -- e.g., the likelihood that an
award will deter the defendant or others from engaging in similar con-
duct -- are not factual questions and, therefore, are more appropri-
ately decided by the trial judge. The judge's unique vantage point and
day-to-day experience with such matters lend expertise and consis-
tency.

Therefore, when reviewing the amount of a jury's punitive damage
award under Federal Rule of Civil Procedure 59, the district court has
a participatory decisionmaking role that it does not have when
reviewing a jury's findings based solely on facts. Because the jury's
determination of the amount of such an award is almost entirely
ungrounded in the factual record, a court cannot generally test the
amount of a punitive damage award against record facts to conclude
whether, for example, a jury's $10 million award or $1 million award
is the correct one. And a jury, which is called upon to make that "sen-
tencing" type of judgment only in the single case before it, is rela-
tively ill-equipped to do so. On the other hand, the district courts not
only see punitive damage awards daily, but themselves are required
frequently to impose penalties for punishment and deterrence in a
wide array of circumstances, both in civil and in criminal contexts.
Indeed, in criminal cases, our system gives juries virtually no input,
except in capital cases, to determine the amount of penalties. That
division of responsibility in criminal cases influences our conclusion
that in civil cases, judges should at least participate through their
review responsibility in establishing a penalty amount. Cf. BMW, 116
S. Ct. at 1603 & 1603 n.38 (linking the analysis of constitutionally

                    9
excessive punitive damage awards to amounts of criminal statutory
fines prescribed for similar conduct).

Thus, we conclude that punitive damage determinations involve a
partnership between a jury and trial judge, each with a comparative
institutional advantage, in which the judge inevitably enjoys the final
word. While a district court must give due respect to a jury's compar-
ative advantages in initially deciding upon the amount of punitive
damages to award, the court may depart from that award to the extent
that it concludes that its own comparative advantages warrant such a
departure. Accordingly, we conclude that while a jury is authorized
to award punitive damages on a framework of liability and the factors
supplied by state law, the judgment a jury makes as to the amount is
reviewable by federal trial courts under Federal Rule of Civil Proce-
dure 59 less deferentially than are factual findings which may be mea-
sured against the factual record. The court's review of the amount of
a punitive damages award should involve comparison of the court's
independent judgment on the appropriate amount with the jury's
award to determine whether the jury's award is so excessive as to
work an injustice.

Even though, in this case, National Vendors has asserted no consti-
tutional challenge to the amount of the punitive damage awards, we
nevertheless must determine whether the Seventh Amendment con-
strains judicial review of the amount of a jury's punitive damage
award. In Defender Industries, we held that"the seventh amendment
guarantees the right to a jury determination of the amount of punitive
damages" because "[a]n assessment by a jury of the amount of puni-
tive damages is an inherent and fundamental element of the common-
law right to trial by jury." 938 F.2d at 507. But Defender Industries
in no way suggested that the jury's authority to award punitive dam-
ages is absolute or that the trial judge cannot, consistently with the
Constitution, play a meaningful role in punitive damage determina-
tion. To the contrary, in Defender Industries we affirmed the district
court's decision to set aside the jury's punitive damages award on the
ground that the award "was so excessive as to constitute a miscarriage
of justice." 938 F.2d at 507.

Yet more instructive is the holding in Tull v. United States, 481
U.S. 412 (1987), where the Supreme Court considered whether the

                    10
Seventh Amendment guaranteed a right to trial by jury on both the
liability for and the amount of a statutory penalty. The Court held that
while the Seventh Amendment requires that the jury determine
liability for a penalty, it does not require that a jury determine its
amount. Id. at 427. It explained, "highly discretionary calculations
that take into account multiple factors," such as are necessary in
determining a penalty, are "traditionally performed by judges." Id.
Accordingly, we conclude that the Seventh Amendment imposes no
barrier to the trial judge's participation in determining the amount of
a punitive damages award through the review mechanism provided by
remittitur and Rule 59(a).

Applying the foregoing principles to the district court's orders in
this case, we cannot conclude that the district court abused its discre-
tion in ordering successive new trials nisi remittitur. The district court
reasoned that the $263,538 amount of Atlas' loss"was not terribly
egregious." Moreover, because Atlas' "losses were caused by third
parties who cheated the machines," National Vendors' "fraud appear-
[ed] to have been based more upon sins of omission than commis-
sion." Relying on a comparison to Defender Industries, the court
concluded that the relationship of National Vendors' conduct and the
harm it caused was not sufficiently substantial to justify either jury's
punitive damage award and warned that unless Atlas produced differ-
ent testimony in future trials, it would continue"to rule as it sees the
facts and the law." These conclusions fell well within the scope of the
district court's authority under Rule 59(a).

III

Atlas also challenges the district court's order reducing the jury's
compensatory damage award by the amount received in settlement
from Mars Electronics, the manufacturer of the defective bill validator
component. Mars had originally been named a defendant in this
action, but after the complaint was filed and before trial, Atlas entered
into a settlement agreement with Mars. In the settlement agreement,
Atlas and Mars expressly allocated their $317,000 settlement amount,
attributing $10,000 to Atlas' claim against Mars for the defective
components and $307,000 for Atlas' agreement to keep the settlement
confidential. The district court found, however, that the entire
$317,000 represented consideration for the same injury covered by

                     11
the jury's compensatory damage award in this case. Atlas contends
that the district court, in so ruling, erroneously rewrote "the contract
between Atlas and Mars . . . effectively depriv[ing] Atlas of any con-
sideration that it [received] in exchange for keeping the settlement
terms confidential."

To resolve the substantive question of whether National Vendors
is entitled to a setoff for the Atlas-Mars settlement, we apply South
Carolina law. See Hines v. IBG Int'l, Inc., 813 F.2d 1331, 1334-355
(4th Cir. 1987); Garner v. Wyeth Lab., Inc., 585 F. Supp. 189, 191
(D.S.C. 1984). Under South Carolina law, a non-settling defendant is
entitled to a pro tanto reduction of a judgment in the same cause of
action. Powers v. Temple, 156 S.E.2d 759, 761 (S.C. 1967); Ward v.
Epting, 351 S.E.2d 867, 875 (S.C. Ct. App. 1986). South Carolina's
setoff rule rests on the "almost universally held[principle] that there
can be only one satisfaction for an injury or wrong." Truesdale v.
South Carolina Highway Dep't, 213 S.E.2d 740, 746 (S.C. 1975).

While state law governs the substantive right to setoff, federal law
dictates our standard of review. And, under federal law, a district
court's decision to set off a damage award is reviewed for clear error.
See Fed. R. Civ. P. 52(a); Norfolk Shipbuilding & Drydock Corp. v.
The M/Y La Belle Simone, 537 F.2d 1201, 1203 (4th Cir. 1976); see
also Reilly v. United States, 863 F.2d 149, 163 (1st Cir. 1988); Cole
v. United States, 861 F.2d 1261, 1263 (11th Cir. 1988). We find clear
error only if, after reviewing all the evidence, we are "left with the
definite and firm conviction that a mistake has been committed."
United States v. United States Gypsum Co., 333 U.S. 364, 395 (1948).

At the hearing on whether to reduce Atlas' compensatory damage
award because of its settlement with Mars, the district court inquired
into the true nature of the Mars-Atlas settlement agreement, providing
Atlas the opportunity to explain what consideration it had given for
Mars' payment. But Atlas' counsel "was unable to name anything of
value -- other than the claims against Mars -- that Atlas gave up for
the payment." Concluding that the Mars-Atlas settlement was there-
fore "not, in fact, a bargained-for-exchange," the court "look[ed]
beyond appearances and disregard[ed] [the] allocation of [the] settle-
ment." Given the comparatively enormous amount that the settlement
agreement had allocated to a confidentiality agreement and Atlas'

                     12
failure to account for it, we cannot conclude that the district court
committed clear error in treating the entire $317,000 as de facto con-
sideration for a settlement of Atlas' legal claims against Mars. Were
we to indulge the parties' manipulative attribution of settlement
amounts, we would compromise South Carolina's policy of permit-
ting setoffs to ensure against multiple recovery for the same injury.

Atlas argues that by reducing the compensatory damage award by
the amount of consideration given for the confidentiality of its settle-
ment with Mars, the court rewrote the contract in violation of the
holding in Ward v. Epting, 351 S.E.2d 867 (S.C. Ct. App. 1986). In
Ward, the settling parties allocated $29,500 to plaintiff's pain and suf-
fering and $500 to his wrongful death claim. In setting off only $500
on plaintiff's claim against a non-settling co-defendant on the wrong-
ful death claim, the South Carolina court explained,"[T]here was suf-
ficient evidence to present a jury question on [the plaintiff's] . . . pain
and suffering" claim against the settling defendant. 351 S.E.2d at 875.
Thus, unlike in this case, the court in Ward enforced the terms of the
settlement agreement because it found that real value had been given
for each portion of that agreement and, therefore, that the agreement's
form conveyed its substance.

IV

On its cross-appeal, National Vendors asks us to go further than
affirm the district court's remittitur; it contends that the district court
erred in denying its motion for judgment as a matter of law concern-
ing punitive damages. It argues that Atlas' evidence established, at
worst, that National Vendors' employees had exhibited "sloppy com-
munication with each other, with Mars Electronics, and with Atlas."
National Vendors' officers join National Vendors on this issue, but
only with respect to the district court's denial of their motion follow-
ing the first trial.

Under South Carolina law, punitive damages may be awarded to
punish a tortfeasor for willful, wanton, or reckless behavior. See
Gilbert v. Duke Power Co., 179 S.E.2d 720, 723 (S.C. 1971); Rogers
v. Florence Printing Co., 106 S.E.2d 258, 261 (S.C. 1958); see also
Defender Indus., 938 F.2d at 505. And under federal law, a district
court should not grant a judgment notwithstanding the verdict unless

                      13
there was no evidence presented in the case that would authorize the
jury's verdict. See id. On appeal, we review the district court's refusal
to grant a judgment notwithstanding the verdict only"to determine if,
viewing the evidence in the light most favorable to the party [who]
oppos[ed] the motion, [the] jury could reasonably find in favor of that
party." Id.

Following both trials, the district court found that sufficient evi-
dence was presented to support the jury's decision to award punitive
damages, explaining that the defendant's conduct"at times . . . could
be viewed as rising to the level of reckless disregard of Atlas' rights."
And, upon our independent review of the record, we agree. It bears
noting from the outset that none of the defendants now contests the
first jury's findings that National Vendors had committed fraud, con-
structive fraud, breach of contract accompanied by a fraudulent act,
and unfair trade practices and that National Vendors' two officers had
committed constructive fraud.

Atlas presented sufficient evidence at both trials to create a jury
question concerning whether National Vendors had acted at least
recklessly in concealing the problems with its machines from Atlas.
Employee memoranda and testimony established that National Ven-
dors had known about the defects in its Eproms by 1990 and in Mars'
validators by early 1991. Nevertheless, from the spring of 1990
through 1992, National Vendors responded to Atlas' complaints about
cash shortages by denying that its machines were susceptible to yank-
cheating, pleading ignorance about the source of Atlas' problems, and
persuading Atlas to spend $30,000 on a different type of coin rejecter
for its machines. Moreover, although testimony at both trials indi-
cated that National Vendors had received similar complaints about
cash shortages from other customers, National Vendors told Atlas that
it was its only customer experiencing such problems. Indeed, National
Vendors personnel testified that it was company policy not to inform
customers of any problems with National Vendors machines unless
absolutely necessary, and National Vendors' own expert witness on
the vending machine industry admitted that National Vendors had
never revealed to him the cause of the problems with the machines.
Although National Vendors insisted at both trials that it had con-
fronted Mars when it discovered its machines were vulnerable to
yank-cheating and that Mars had assured it a newly developed valida-

                     14
tor would solve the problem, Atlas' early 1992 inventory of its
National Vendors machines revealed that National Vendors had sold
Atlas most of its defective machines after learning of their susceptibil-
ity to yank-cheating.

Atlas also adduced sufficient evidence before both juries to prove
that National Vendors had committed "economic blackmail" by refus-
ing to ship it vending machines in May 1992. In an attempt to force
National Vendors to resolve the problems with its machines, Atlas
began in early 1992 to place in an interest bearing escrow account
payments due to National Vendors for machines Atlas had already
purchased. In response, National Vendors informed Atlas' chairman
that it wanted Atlas to bring its account current and, on April 6, 1992,
placed Atlas on a "cash terms" basis only. Needing to fill its equip-
ment commitments and believing that "cash terms" meant C.O.D.
only, Atlas ordered 24 more vending machines from National Ven-
dors, C.O.D., in late April. National Vendors accepted the order and
promised shipment by May 14, 1992. Although it had decided by
May 1, 1992, not to ship the machines unless Atlas released the
money it had placed in escrow, National Vendors waited until May
14, 1992, to inform Atlas of its decision. We share the district court's
view that "National's explanation that `cash basis' meant that all sums
on account were due before the machines would be delivered, rather
than simply meaning that Atlas had to pay cash for them, was less
than convincing." Furthermore, Steven Freedman admitted in his tes-
timony that National Vendors' failure to notify Atlas before May 14
resulted from "a business decision."

Finally, the evidence at both trials showed that Freedman had
accepted Atlas' April 1992 order for the additional vending machines
and that both he and Richard Ricci had participated in the decision not
to ship those machines to Atlas. Accordingly, we agree with the dis-
trict court that both National Vendors officers were"intimately
involved" in the actions underlying National Vendors' liability for
constructive fraud and conclude that there was sufficient evidence to
sustain the jury's decision to hold them, along with their employer,
liable to Atlas for punitive damages.

Under the circumstances, we believe this case is easily distin-
guished from Mosser v. Fruehauf Corp., 940 F.2d 77 (4th Cir. 1991),

                     15
upon which National Vendors so heavily relies. In Mosser, we
affirmed the district court's decision to set aside a punitive damages
award in a wrongful death action against the manufacturer of an alleg-
edly defective flatbed trailer where the plaintiff had failed to adduce
any proof that the defendant had any prior notice of the danger pres-
ented by its aluminum side rail assembly system. While acknowledg-
ing that the defendant's internal breakdown of communications,
which prevented the company from discovering the potential danger
posed, may have been negligent, we found no record evidence reveal-
ing a "deliberate blind eye to danger." Id . at 86. Accordingly, we con-
cluded that the "district court properly refused to inflate a case of
carelessness into one of wanton disregard." Id. at 83-84.

We recognized in Mosser that while "[t]he difference between
reckless misconduct and [negligence] is a difference in the degree of
the risk" presented, the difference "is so marked as to amount substan-
tially to a difference in kind." Id. at 85 (quoting Restatement (Second)
of Torts § 500, cmt. g (1965) (omission in original)). Far from demon-
strating that National Vendors, Ricci, and Freeman had merely acted
negligently, Atlas' evidence created jury questions on whether the
defendants had recklessly, knowingly, or intentionally misled Atlas
by concealing problems with their vending machines and refused to
ship machines that Atlas had ordered to pressure it into paying its out-
standing debt. The juries concluded that they had. And we are con-
vinced that the "difference in the degree" of the risk to which the
defendants subjected Atlas makes this case different"in kind" from
Mosser.

National Vendors also contends that the first jury's specific finding
that the defendants' unfair trade practices were not"wilful or wanton"
necessarily rendered the first punitive damages award "erroneous as
a matter of law" because "[t]he conduct alleged to be the unfair trade
practices was the same conduct which was alleged in support of
[Atlas'] fraud claims." Even if we assume that National Vendors did
not waive its inconsistent verdict argument by failing to raise it before
the first jury was discharged, the argument is still not persuasive. Not
only is the proper remedy for an inconsistent verdict a new trial, not
judgment as a matter of law, see Griffin v. Matherne, 471 F.2d 911,
915 (5th Cir. 1973), but, more importantly, the first jury's findings are
reconcilable.

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An appeals court is "abjured to determine whether a jury verdict
can be sustained, on any reasonable theory." Richardson v. Suzuki
Motor Co., 868 F.2d 1226, 1246 (Fed. Cir. 1989); see also Hines v.
IBG Int'l, Inc., 813 F.2d 1331, 1334 (4th Cir. 1987). And it must,
therefore, harmonize seemingly inconsistent verdicts if there is any
reasonable way to do so. See Gallick v. Baltimore & Ohio R.R. Co.,
372 U.S. 108, 119 (1963). As the district court explained, because
South Carolina authorizes a jury to award punitive damages "even
when the wrongdoer does not actually realize that he is invading the
rights of another, provided the act is committed in such a manner that
a person of ordinary prudence would say that it was a reckless disre-
gard of another's rights . . . the jury may well have found that,
although National did not realize that it was engaging in unfair meth-
ods of competition or trade, its actions . . . displayed a reckless disre-
gard to Atlas' rights." (Citations and internal quotations omitted).

V

Finally, we address National Vendors' assignments of error in con-
nection with the second trial which was limited to the issue of puni-
tive damages. While National Vendors accepts as a fall-back position
the district court's reduction of compensatory damages and remittitur
of the punitive damage award, it urges that the district court should
have ordered a completely new trial on all issues. We disagree.

A

First, National Vendors contends that the district court abused its
discretion in limiting the scope of the second trial to punitive damage
issues because the same jury "passion, caprice or prejudice" that
caused the court to order a remittitur "may have infected the jury's
determination of liability as well as damages." Moreover, according
to National Vendors, "the issue of punitive damages [was] so inter-
twined with the threshold issue of liability that a partial new trial on
damages alone . . . create[d] jury confusion and uncertainty."

A district court's decision to order a new trial falls within the dis-
trict court's discretion, and the propriety of granting a new trial on
fewer than all of the issues in a case hinges on whether the issues to
be retried are sufficiently "distinct and separable from the others that

                     17
a trial of [those issues] alone may be had without injustice." Gasoline
Products Co. v. Champlin Refining Co., 283 U.S. 494, 500 (1931).
Considerations of economy, fairness, and repose may provide justifi-
cation for preserving a jury's liability determination that has been
fairly and fully made and ordering only a new trial on damages
"where there is no substantial indication that the liability and damage
issues are inextricably interwoven, or that the first jury verdict was
the result of a compromise of the liability and damage questions."
Great Coastal Express, Inc. v. International Brotherhood of
Teamsters, 511 F.2d 839, 846-47 (4th Cir. 1975). We review a district
court's decision to grant a partial new trial for abuse of discretion. See
Swentek v. USAir, Inc., 830 F.2d 552, 560 (4th Cir. 1987); Great
Coastal Express, 511 F.2d at 847.

In this case, we find no indication in the record to support National
Vendors' suggestion that the district court's decision to set aside the
first jury's punitive damage award necessitated a full retrial on all
issues because the jury's "prejudice" may have infected its rulings on
Atlas' substantive claims. A jury's reasonable findings of liability and
compensatory damages are not rendered unreasonable simply on the
basis that it awarded an excessive amount of punitive damages. More-
over, in this case, the district court concluded that there was sufficient
evidence to support the jury's liability and compensatory damage
findings, and National Vendors has not appealed any of those rulings.

We also conclude that the district court's decision to limit the sec-
ond trial to punitive damage issues was not an abuse of discretion
based on the interrelationship of punitive damage issues with other
issues in the case. All of the evidence relating to National Vendors'
willful or wanton conduct was before the second jury, enabling it to
render a proper verdict on both the liability for and amount of puni-
tive damages.

B

For similar reasons, we also reject National Vendors' contention
that the district court erred in commenting to the second jury about
the findings made by the first jury and in allowing counsel for Atlas
to comment similarly. A finding of liability and compensatory dam-
age is not only a prerequisite to finding punitive damages, it provided

                     18
the jury with important background information. From our review of
the record in the second trial we find nothing in the references to the
first jury verdict that was capable of "incit[ing] the prejudice and pas-
sion of the jury."

C

Finally, National Vendors contends that the district court abused its
discretion in admitting rebuttal testimony from Ellen Stoudemire dur-
ing Atlas' rebuttal of National Vendors' case. Stoudemire, the former
owner of Seacoast Vending Services, Inc. and the only National Ven-
dors customer presented by Atlas at the second trial, testified that Sea-
coast Vending, like Atlas, had experienced cash shortage problems
with National Vendors machines and that Stoudemire had reported
those problems to a National Vendors sales representative in the
spring of 1991. According to National Vendors, Stoudemire's testi-
mony "in no way rebutted any matters raised in defendant's case," but
was merely used to support Atlas' case-in-chief.

While it appears that Stoudemire's testimony was offered to rebut
Glenn Peters' testimony that he could not remember discussing cash
shortages with her, even if we assume that Stoudemire's testimony
was not true rebuttal testimony, we cannot agree that the court abused
its discretion in altering the order of proof or that the alteration in the
order of proof significantly prejudiced National Vendors. If National
Vendors was surprised or prejudiced by the testimony, it could have
requested surrebuttal, which it did not do.

For the foregoing reasons, we affirm the district court's rulings on
all points challenged in this appeal.

AFFIRMED

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