Court Opinion

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Opinions of the United
1999 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

6-28-1999

Inter Med Sup Ltd v. EBI Medical Syst., et.al.
Precedential or Non-Precedential:

Docket 98-5158

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Recommended Citation
"Inter Med Sup Ltd v. EBI Medical Syst., et.al." (1999). 1999 Decisions. Paper 171.
http://digitalcommons.law.villanova.edu/thirdcircuit_1999/171

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Filed June 28, 1999

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 98-5158

INTER MEDICAL SUPPLIES, LTD.

v.

EBI MEDICAL SYSTEMS, INC.;
ELECTRO-BIOLOGY, INC.;
BIOMET, INC.

v.

ORTHOFIX, LTD.
ORTHOFIX INTERNATIONAL, N.V.

(D.C. Civil No. 95-06035)

ORTHOFIX, INC.;
ORTHOFIX S.R.L.

v.

EBI MEDICAL SYSTEMS, INC.;
ELECTRO-BIOLOGY, INC.;
BIOMET, INC.

(D.C. Civil No. 96-01047)

EBI MEDICAL SYSTEMS, INC.;
ELECTRO-BIOLOGY, INC.;
BIOMET, INC.,
       Appellants

On Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil No. 95-cv-06035)
District Court Judge: Stephen M. Orlofsky
Argued October 29, 1998

Before: SLOVITER, GARTH, and MAGILL,*
Circuit Judges

(Filed June 28, 1999)

       Donald R. Dunner
       Griffith B. Price, Jr.
       Don O. Burley
       Jeffrey B. Chasnow
       Howard A. Kwon
       Richard L. Rainey
       Finnegan, Henderson, Farabow,
        Garrett & Dunner
       Washington, D.C. 20005

       John J. Gibbons (Argued)
       David Fernandez
       Paul M. Hauge
       Gibbons, Del Deo, Dolan, Griffinger
        & Vecchione
       Newark, N.J. 07102

       Arthur P. Kalleres
       Thomas E. Hixdorf
       Ice Miller Donadio & Ryan
       Indianapolis, Ind. 46282

        Attorneys for Appellants

       Joel Schneider
       Archer & Greiner
       Haddonfield, N.J. 08033

       Dennis P. Orr
       Scott Mortman
       Mayer, Brown & Platt
       New York, N.Y. 10019
_________________________________________________________________

* The Honorable Frank J. Magill, of the United States Court of Appeals
for the Eighth Circuit, sitting by designation.

                                 2
        Stephen J. Marzen (Argued)
        Wendy E. Ackerman
        Reginald R. Goeke
        Meredith Kolsky Lewis
        Roopal R. Shah
        Shearman & Sterling
        Washington, D.C. 20004

         Attorneys for Appellee

OPINION OF THE COURT

SLOVITER, Circuit Judge.

Following a lengthy trial, a jury found for plaintiff
companies on all of the breach of contract and tort claims
submitted to it and it returned a verdict of $48 million in
compensatory damages and more than $100 million in
punitive damages. The District Court denied the
defendants' motions for judgment as a matter of law or for
a new trial but granted a remittitur reducing the award of
punitive damages to $50 million. Inter Med. Supplies, Ltd. v.
EBI Med. Sys., Inc., 975 F. Supp. 681, 685 (D.N.J. 1997).
On appeal, defendants focus on certain of the bases for
recovery, but, understandably, direct their most vigorous
critique to the sizable damages awards, primarily that for
punitive damages. The role of gatekeeper over such punitive
damages verdicts is one of the most challenging that has
been placed upon appellate judges in civil cases.

I.

FACTS

A.

BACKGROUND

Orthofix S.r.l., an Italian company, manufactures medical
devices, including a product known as an external bone

                                  3
fixator, which is used to hold severely fractured bones in
alignment, thereby obviating the need for repeated surgery.
It is wholly owned by Orthofix, N.V. of the Netherlands,
which itself owns Inter Medical Supplies, Ltd., a Cyprus-
based company that is the worldwide distributor of the
Orthofix bone fixators. These entities will be referred to
collectively as "Orthofix."

Biomet, Inc., an Indiana company, manufactures
orthopedic devices and owns Electro-Biology, Inc. Electro-
Biology in turn owns EBI Medical Systems, Inc., a New
Jersey-based corporation that sells external bonefixators.
These entities will be referred to collectively as "EBI."

Beginning in 1983, EBI and Orthofix entered into a series
of distributor agreements pursuant to which EBI served as
the exclusive distributor in the United States, Canada, and
the Caribbean Basin for various orthopedic devices,
principally external bone fixators, manufactured by
Orthofix. The last of these agreements went into effect on
June 1, 1990, and expired on May 31, 1995 (the
"Distributor Agreement"). For some eleven years, EBI and
Orthofix shared what each agrees was a profitable business
relationship, grossing approximately $30 million in sales
annually and controlling one-third of the United States
bone fixators market.

The present dispute arises out of the 1990 Distributor
Agreement between the parties. Under paragraph 8 of the
Agreement, Orthofix agreed to promptly supply EBI with
"such quantities of the products as [were] ordered from
time to time." In turn, EBI agreed under paragraph 6(k) to
"maintain in its inventory, at all times, a quantity of
Products reasonably necessary to meet [EBI's] resale
requirements for at least two months." In paragraphs 6(f)
and (g), EBI agreed to distribute and sell Orthofix's
products in conjunction with the Orthofix trade name, but
promised not to appropriate that name as part of its own
corporate designation. Both parties agreed not to disclose
proprietary information obtained from the other.

Finally, EBI consented to restrictions on its ability to deal
in competitive products. Specifically, in paragraph 6(d) EBI
undertook

                                4
       not to distribute, sell, promote the sale of, or in any
       way handle during the term of this Agreement and for
       one (1) year after its early termination by EBI any
       product which could reasonably be deemed competitive
       with the [Orthofix] Products.

Despite the excellent results from their mutual efforts,
the business relationship between EBI and Orthofix
deteriorated during the last year of the June 1990
Distributor Agreement. When EBI and Orthofix
representatives met in June 1994 to negotiate a renewal,
the relationship collapsed due to a dispute over the division
of sales revenues. In anticipation of the termination of the
Agreement, each party took steps in an effort to protect its
own long-term business interests. Orthofix sought and
located a new distributor, and on May 8, 1995, it
announced that it had acquired American Medical
Electronics, which became Orthofix, Inc. Upon the
expiration of the Agreement with EBI in June 1995,
Orthofix, Inc. became the exclusive United States
distributor of the Orthofix fixator.

For its part, EBI responded to the impending severance
of its relationship with Orthofix by beginning development
of its own external fixator, "Dynafix," with sales of that
fixator to begin after expiration of the Distribution
Agreement. It is EBI's conduct in anticipation of and after
termination that led to this litigation.

B.

LITIGATION

1. Complaint, Answer, Counterclaim

In November 1995, Inter Medical Supplies sued EBI in
the United States District Court for the District of New
Jersey for failure to pay for several shipments of products
sold during that year. At approximately the same time,
Orthofix, Inc. and Orthofix S.r.l. also filed suit against EBI
in the United States District Court for the Northern District
of Texas, alleging breach of contract of the 1990 Distributor
Agreement; misappropriation of trade secrets; patent

                               5
infringement, 35 U.S.C. S 271; violations of the Lanham
Act, 15 U.S.C. SS 1114, 1125(a); unfair competition under
Texas law, Tex. Bus. & Com. Code Ann. S 16.29; fraud
under the New Jersey Consumer Fraud Act, N.J. Stat. Ann.
S 56:8-2; common law unfair competition; intentional
interference with prospective contractual relations;
defamation and trade libel; and injurious falsehood and
product disparagement.

On EBI's motion, the Texas case was transferred to the
New Jersey District Court. EBI then answered and
counterclaimed for breach of contract, tortious interference
with both the 1990 Distributor Agreement and EBI's other
customer and business relationships, fraud, defamation,
violation of the Lanham Act, breach of the distribution
franchise on New Jersey statutory and common law
grounds, and other breaches and torts arising from the
parties' contractual relationship.

The parties proceeded with discovery and pretrial. In one
significant in limine ruling on a key clause in paragraph
6(d) of the Distributor Agreement, the District Court ruled
that the language of the clause prohibited EBI from
developing during the term of the agreement any product
competitive to those it was distributing for Orthofix. See
Orthofix, Inc. v. EBI Med. Sys. Inc., Civ. Action No. 95-6035
(SMO), at 14 (D.N.J. Apr. 8, 1997) (hereafter In Limine
Ruling).

2. Trial

The jury trial began on April 7, 1997, and lasted two
months. At its conclusion, the jury responded to special
verdict questions by finding in favor of Orthofix on its
claims for breach of contract, breach of the duty of good
faith and fair dealing, tortious interference with prospective
economic advantage, tortious interference with contract,
defamation, unfair competition, and violation of the
Lanham Act. EBI does not contend on appeal that the
evidence was insufficient for the jury to find it liable for
breach of contract. In fact, the District Court found, and we
agree, that the jury could have concluded that EBI's plan
involved the development and production of its own
external bone fixator to compete directly with Orthofix

                               6
following the end of the distributorship. Inter Med. Supplies,
975 F. Supp. at 685. Other evidence supported the
conclusion that EBI's strategy was to convert present
Orthofix purchasers to the new EBI fixator and to drive
Orthofix from the North American market. EBI started the
process of bringing its own fixators to market in July 1994,
although it did not formally place its product on the market
until August 1995.

In addition to developing its new, competitive product,
EBI ordered vast quantities of the Orthofix products and
parts it was then distributing. From October 1994 to May
1995, EBI began ordering Orthofix product in amounts far
in excess of its two-month inventory needs. It eventually
stockpiled inventory sufficient to meet its needs for sixteen
months. There was evidence that to achieve this result, EBI
hid its stockpiling of Orthofix products by ordering and
paying for products through third parties. For nearly one
year EBI also failed to provide Orthofix with a series of
required quarterly reports of its sales and inventory levels,
further preventing Orthofix from promptly learning of EBI's
excessive ordering.

Once the final Distributor Agreement terminated at the
end of May 1995, EBI began to take advantage of the
market it had earlier created for Orthofix products. There
was evidence that in order to continue to have such
Orthofix products available to it, EBI acquired Orthofix
product components through third parties. Its employees
used reverse engineering to analyze the construction of
these Orthofix components and then substituted EBI-
manufactured parts for genuine Orthofix ones. EBI never
informed medical professionals of the substitution, in effect
passing off EBI's own components for those of Orthofix.

When the new EBI bone fixators ultimately appeared on
the market, EBI promoted them through practices the jury
could have found deceptive. The sales force inaccurately
described the fixators to purchasers as upgrades to or
newer versions of the Orthofix products that EBI had been
selling for years. At the suggestion of EBI's president,
James Pastena, salespersons falsely stated that EBI elected
to terminate the distributorship because the Orthofix

                               7
product line was inadequate for the needs of the medical
profession.

On the basis of this and like evidence, the jury found
that EBI had both breached its contract with Orthofix and
committed various torts. The jury awarded the Orthofix
companies $48 million in compensatory damages. The
verdict sheet, however, did not specify what portion, if any,
of the $48 million compensatory damages award was meant
to compensate the tort injuries and what portion, if any,
was meant to remedy the contractual breaches. The jury
also awarded $100,600,000 in punitive damages, which
contained no breakdown by defendant or count. In a
separate determination, the jury awarded Inter Medical
Supplies $875,399 to compensate for EBI's failure to pay
for products delivered at EBI's request.

In response to EBI's counterclaims, the jury concluded
that Orthofix had engaged in tortious conduct and
breached the Distributor Agreement. It awarded one dollar
in damages on the contract breaches and tortious acts, as
well as granted a one-dollar set-off for Inter Medical
Supplies' breaches in filling and shipping EBI's orders.

3. Post-Trial Motions

After the verdict, EBI moved for judgment as a matter of
law or for a new trial pursuant to Federal Rule of Civil
Procedure 50. It also requested that the District Court
grant a remittitur on the punitive damages assessment. EBI
broadly attacked the trial and verdict, asserting that there
was insufficient evidence to support a finding of liability
under either a tort or a breach of contract theory, or to
support the damages calculation. EBI claimed that the
court failed to assure that the jury distinguished between
tort and breach of contract damages. Finally, EBI alleged
that the court failed to adequately respond to references
Orthofix made in its closing to EBI's alleged violations of
the Food, Drug, and Cosmetic Act ("FDCA").

The District Court rejected EBI's legal arguments on all
issues except the punitive damages remittitur. See Inter
Med. Supplies, 975 F. Supp. at 702-03. Deferring in great
part to the jury, the court concluded that the evidence was
sufficient to support both the jury's findings of tortious

                               8
conduct and breach of contract and its calculation of
compensatory damages. See id. at 686-88. In response to
EBI's claim that Orthofix's allegations of FDCA violations
prejudiced the jury, the court noted that it had submitted
to the jury EBI's own proposed instruction for curing that
error. See id. at 690-91.

EBI also argued that because the jury failed to apportion
the compensatory damages between the tort and breach of
contract claims, instead awarding all such damages in a
single sum, the punitive damages award could not be
sustained because it could be applied only for tortious
conduct, which had not been separately assessed. The
District Court rejected that argument, observing it had
instructed the jury on that issue and that the jury
presumably understood the instructions. Although the New
Jersey Punitive Damages Act, N.J. Stat. Ann. SS 2A:15-5.9
to .17, provides that punitive damages must be apportioned
among defendants, EBI had not objected to the jury's
failure to allocate, and the District Court found a waiver.
See id. at 696-98. The court concluded that the jury could
have found that EBI's tortious conduct was malicious and
"accompanied by a willful disregard of the plaintiffs' rights,"
id. at 694, warranting punitive damages. Additionally, the
court noted that the amount of punitive damages awarded
fell within the range permitted by the Constitution and the
New Jersey Act.

However, the District Court exercised its authority to
review the award for reasonableness under New Jersey law
and reduced the amount of punitive damages to $50 million
under the New Jersey Act. See Inter Med. Supplies, 975 F.
Supp. at 698-702. The court concluded that the jury could
not have found that the conduct between these private
parties was likely to recur, see id. at 700; that cases
involving purely economic harm and the enforcement of
private rights, such as this one, warrant different treatment
than do suits involving a "serious threat to public health,"
such as products liability suits, in which a defendant has
placed a defective product into commerce and into the
hands of unsuspecting consumers, id. at 700-01; and that
the amount the jury awarded was unreasonable given the
other factors in the case, see id. at 701-02.

                                9
The District Court issued its opinion and order on August
28, 1997, and an amended judgment on September 2,
1997. On September 26, 1997, EBI filed a notice of appeal
with the United States Court of Appeals for the Federal
Circuit, presumably because, at one point, Orthofix's
complaint included a patent infringement count. On
Orthofix's motion, the Federal Circuit transferred the
appeal to this court pursuant to 28 U.S.C. S 1631, because
Orthofix had abandoned the patent claim early in the
litigation. We have appellate jurisdiction pursuant to 28
U.S.C. S 1291.

II.

DISCUSSION

EBI raises five claims on this appeal. Three of them are
directed to the District Court's interpretation of the
language of the Agreement and the effect of EBI's conduct;
the latter two are directed to the damages awards. As to the
Agreement, EBI claims that the District Court erred when
it interpreted EBI's promise under paragraph 6(d) of the
Distributor Agreement not to "in any way handle"
competing products as prohibiting EBI from developing a
competing bone fixator product while the agreement was in
existence. EBI next asserts that the District Court erred in
interpreting the Agreement as including duties of good faith
and fair dealing as they pertain to EBI's orders for fixator
products. It also contends that the District Court erred in
concluding that EBI's over-ordering of products constituted
tortious interference with Orthofix's prospective economic
advantage. As to damages, EBI argues that the jury's award
of $48 million was speculative and lacked substantial
evidence. Finally, EBI vigorously argues that the punitive
damages award, even as reduced, was the product of
prejudice, violated New Jersey law, and was excessive and
unreasonable. We review these contentions seriatim.

                                10
A.

INTERPRETATION OF PARAGRAPH 6(d)

In paragraph 6(d) EBI undertook "not to distribute, sell,
promote the sale of, or in any way handle . . . any product
which could reasonably be deemed competitive" with
Orthofix's products. Before trial, EBI moved for an in limine
ruling to preclude Orthofix's introduction of extrinsic
evidence on the meaning of this paragraph. After a hearing
and thorough consideration of the parties' arguments and
submissions, the District Court denied the motion, holding
that the handling clause unambiguously prohibited
development of a competitive product during the term of
the Agreement. We must consider at the outset whether
EBI preserved this issue for appeal.

Orthofix argues that EBI waived any objections that it
might have had to either the District Court's in limine ruling
or the court's subsequent jury instruction because EBI did
not object to the District Court's construction of the
"handle" clause at any time after resolution of the motion in
limine. The issue was not raised during the course of
formulating or giving jury instructions. And, EBI's own
proposed instruction largely incorporated the construction
to which it now objects, stating:

       [T]he phrase "in any way handle" in Paragraph 6(d) of
       the Distributor Agreement includes "a prohibition on
       the development of a competitive product in the
       marketplace."

App. at 1477. Indeed, this was substantially the instruction
given by the District Court without objection from EBI. Our
recent precedents provide some guidance on this issue.

In American Home Assurance Co. v. Sunshine
Supermarket, Inc., 753 F.2d 321 (3d Cir. 1985), we
considered whether a formal exception to the admission of
evidence would be necessary to preserve that issue for
appeal, if the court had already issued a definitive in limine
ruling. There, the insurer, American Home, sought an in
limine ruling to prevent the admission of evidence that it
never prosecuted the arson on which it based its refusal to

                               11
pay the policyholder. The court refused to give the ruling
that American Home requested, reasoning that the evidence
was admissible. See id. at 324. After it lost at trial,
American Home appealed, citing as error the admission of
such evidence. The insured asserted that American Home
had waived the claim when it failed to raise an objection at
trial. We rejected that argument, explaining that the reason
we require parties to raise objections or waive them is to
assure that the court's attention is drawn to potential
errors before it is too late to remedy them. See , e.g., Smith
v. Borough of Wilkinsburg, 147 F.3d 272, 276 (3d Cir.
1998). We further held that this rationale is no longer
applicable once a court has not only learned of the alleged
error, but issued a definitive ruling that it is unlikely to
reconsider in the future. American Home Assurance, 753
F.2d at 324. We concluded that "requiring an objection
when the evidence was introduced at trial would have been
in the nature of a formal exception and, thus, unnecessary
under [Federal Rule of Civil Procedure] 46." Id. at 325.

In our recent decision in Walden v. Georgia-Pacific Corp.,
126 F.3d 506 (3d Cir. 1997), we relied on American Home
Assurance, articulating the applicable principle as providing
that a party can preserve an evidentiary issue for appeal
by, first, providing the court with a written motion
including reasons and case authority, and second,
obtaining a definitive ruling that does not suggest the
matter will be reconsidered later at trial. Id. at 518. But see
Simmons v. City of Philadelphia, 947 F.2d 1042, 1082-83
(3d Cir. 1991) (Becker, J., announcing judgment of court)
(discussing concerns raised where party's continued
adherence to objection is unclear).

The reasoning of American Home Assurance and Walden
is persuasive here. Once EBI obtained a definitive ruling
after full briefing on the disputed contract provision, there
was little purpose in repeatedly raising the issue at trial
because there was little likelihood that the court would
revisit its decision. Nevertheless, Orthofix argues that we
must review the jury instruction only for plain error
because the District Court adopted, with only slight
revision, the charge that EBI itself proffered. It may be that
the same reasoning that supported our conclusion in

                               12
American Home Assurance and Walden that no objection
was required when the evidence at issue was proffered also
supports holding that EBI did not waive its objection by
submission of its proposed charge.

One could reasonably argue that the purpose underlying
Federal Rule of Civil Procedure 51, which governs
objections to jury instructions, would not be advanced by
requiring a party to submit an instruction that contradicts
a definitive in limine ruling or to object to a proposed
instruction that incorporates that ruling. Cf. Smith, 147
F.3d at 277. Under that theory, the initial definitive ruling
decides the question for the case and satisfies the
requirement of Rule 51 that the record contain "the matter
objected to and the grounds of the objection." A litigant's
attempt to revisit that ruling at the time of the jury
instructions would use the court's time and resources
inefficiently.

We need not decide that issue here. Although in many
cases the difference between plenary review and plain error
review would be dispositive, in this case it is not, as the
conclusion we reach using plenary review, which ordinarily
applies when we review the District Court's interpretation of
the contract, see Williams v. Metzler, 132 F.3d 937, 946 (3d
Cir. 1997), would necessarily be the same were we to apply
the more restrictive plain error review.

We now turn to consider EBI's objection to the District
Court's in limine ruling. The gist of the dispute between the
parties is whether to define the word "handle" broadly or
narrowly, particularly in light of the prefatory phrase "in
any way." Both parties contended in connection with the in
limine ruling that the "in any way handle" clause was
unambiguous, although they disagreed on its meaning.
Here, EBI renews its argument that the clause is
unambiguous. It then proceeds, relying on United States
principles of contract interpretation, such as ejusdem
generis, to argue that the language should be interpreted
narrowly. Under the interpretation EBI proffers, the clause
precluded it from distributing, selling, or marketing
competing products, but not from developing such
products.

                                13
It finds support for this definition from Webster's Third
New International Dictionary 1027 (1961) (defining "handle"
as, inter alia, "to trade in: engage in the buying, selling, or
distributing of ") and from Random House Dictionary of the
English Language 866 (2d ed. 1987) (defining"handle" as,
inter alia, "to deal or trade in").

Orthofix responds that the meaning of the "handle"
clause is broad enough to include more than selling,
distributing, and promoting, which activities already are
listed in the contract, and that it also encompasses
prohibition of any development by EBI of competing
products. It notes that the dictionary also includes the
following listings for handle: "2(b): to conduct oneself in
relation to, assume an attitude"; "2(c)(1): manage, control,
direct"; and "2(e): deal with, act upon, dispose of, perform
some function with regard to." Webster's Third New
International Dictionary 1027; see also Random House
Dictionary of the English Language 866 (listing"11. to
manage, deal with, or be responsible for" and"13. to
manage, direct, train, or control"). Additionally, Orthofix
denies that ejusdem generis has any application in this
context.

We observe that paragraph 15 of the Distributor
Agreement provides: "This agreement shall be governed by
the laws of the Republic of Italy." The parties introduced
affidavits from experts in Italian law at the in limine
hearing. According to the District court these experts
effectively agreed that "because the Distributor Agreement
was drafted in English, the terms of that agreement should
be given their natural meaning in English." In Limine Ruling
at 8.

The District Court relied heavily on the dictionary
definition of "handle," from which it construed the word to
prohibit development of a product during the lifetime of the
agreement. It explained that it construed the word
expansively because of the prefatory words "in any way."
See In Limine Ruling at 9. Additionally, the District Court
was "not convinced that ejusdem generis is a canon of
construction known to Italian law." In Limine Ruling at 10.
Neither party has directed our attention to case law that

                               14
supports its expert's position, and apparently neither party
provided the District Court with any such authority.

Thus, there is no support for the contention that Italian
law would permit courts of the United States to apply
United States interpretive rules to a contract invoking
Italian law. Even if it were appropriate to use such rules,
we agree with the District Court that they could not be
applied to restrict the meaning of the term "handle"
because that term is immediately preceded by the phrase
"in any way." Therefore, we conclude that the District Court
did not err when it approached the question as one of plain
meaning and relied on the ordinary dictionary definition of
the words "in any way handle."

We agree with the District Court that the inclusion of the
phrase "in any way" suggests a broad interpretation of the
term "handle" and supports the reading that Orthofix urges
us to adopt. We thus conclude that the Agreement
prohibited EBI from researching and developing a
competing product during the tenure of that contract.

As an alternative, EBI argues that if the clause is
ambiguous, the District Court should have left the issue for
the jury rather than relying on extrinsic evidence. But even
if we were to engage in an inquiry whether the contract's
language is ambiguous, we are satisfied that the District
Court did not err in its analysis under that approach. "[A]
contract is unambiguous if it is reasonably capable of only
one construction." Tamarind Resort Assocs. v. Government
of the Virgin Islands, 138 F.3d 107, 110-11 (3d Cir. 1998).
Our case law sets forth the steps to be taken in
establishing whether or not contract language is
ambiguous. "To decide whether a contract is ambiguous,
we do not simply determine whether, from our point of
view, the language is clear. . . . Before making afinding
concerning the existence or absence of ambiguity, we
consider the contract language, the meanings suggested by
counsel, and the extrinsic evidence offered in support of
each interpretation." Teamsters Indus. Employees Welfare
Fund v. Rolls-Royce Motor Cars, Inc., 989 F.2d 132, 135 (3d
Cir. 1993).

Review of the District Court's disposition of EBI's motion
in limine establishes that the court followed the required

                               15
steps in identifying ambiguity. The court considered the
handling clause language, the dictionary definition of the
phrase "to handle," and the context of the phrase. It
analyzed and discussed the alternative meanings assigned
to the phrase by counsel and explained that, in context,
only one of these interpretations was reasonable. Finally,
the court found that its construction of the handling clause
was supported by extrinsic evidence regarding what
Orthofix intended in insisting that the handling clause
remain in the agreement.

EBI argues that the District Court exceeded its authority
in considering extrinsic evidence in support of Orthofix's
interpretation of the contract. That extrinsic evidence
included an internal memorandum dated June 6, 1990,
from Robert Gaines-Cooper, group chairman of Orthofix, to
Orthofix counsel Daniel Gilioli, which memorialized certain
aspects of the negotiation of the Distributor Agreement then
underway between Orthofix and EBI. In the memorandum,
Gaines-Cooper wrote that he had rejected EBI's request to
remove the phrase "in any way handle" from the Distributor
Agreement so that EBI could develop a competing product
during the final year of the Agreement. The court also
considered a draft of the Distributor Agreement obtained
from EBI files in which the words "in any way handle" were
crossed out.

Finally, the District Court held a hearing pursuant to
Federal Rule of Evidence 104 at which Gaines-Cooper
testified that it was his understanding that EBI wanted to
develop a competing product and that he refused to remove
the phrase "in any way handle" from the Distributor
Agreement in order to prevent such development.
Thereafter, the District Court engaged counsel in a lengthy
discussion about the reliability of Orthofix's evidence, and
concluded that there was "no extrinsic evidence to
contradict the testimony of Mr. Gaines-Cooper or to
impeach . . . the memorandum to [his counsel]." In Limine
Ruling at 14. In arguing that this reliance on extrinsic
evidence was misplaced, EBI ignores our precedent."Before
making a finding concerning the existence or absence of
ambiguity, we consider . . . the extrinsic evidence offered in
support of each interpretation." Teamsters Indus.

                               16
Employees Welfare Fund, 989 F.2d at 135. As we stated
there, "Extrinsic evidence may include the structure of the
contract, the bargaining history, and the conduct of the
parties that reflects their understanding of the contract's
meaning." Id.

We conclude that the District Court did not err in relying
on extrinsic evidence and that, in light of all of the relevant
factors cited by the District Court, the handling clause is
"reasonably capable of only one construction." Tamarind
Resort Assocs., 138 F.3d at 110-11. Thus, the District
Court did not err in holding that the contract was not
ambiguous and in concluding that the Agreement's "in any
way handle" clause prohibited EBI from developing a
competing bone fixator product during the term of the
agreement. Therefore, it did not err in so instructing the
jury.

B.

IMPLIED CONTRACTUAL DUTY NOT TO OVER-ORDER

EBI next takes issue with the decision that it breached
the contract by over-ordering Orthofix products. It argues
that the District Court erred in concluding that the contract
contained an implied duty of good faith and fair dealing not
to over-order. EBI further contends that there is insufficient
evidence of the damages, if any, the alleged over-ordering
caused and concludes that the entire compensatory award
must therefore be overturned.1

The parties agree that there is no express provision in the
Agreement that prohibits EBI from ordering as much as it
_________________________________________________________________

1. Orthofix argues that EBI's motion for judgment as a matter of law was
limited to the claim that Orthofix could not recover damages for alleged
excess orders, assuming that those orders did breach EBI's implied duty
of good faith, and, consequently, that EBI cannot now appeal on the
claim that there was no implied duty. We reject Orthofix's claim, because
EBI argued in its motion that it was entitled to order and sell as much
Orthofix product as it wanted under the contract, see App. at 1386,
1440, an argument that assumes the absence of an implied duty of good
faith.

                               17
could purchase. EBI notes that paragraph 8 of the
Agreement obligated Orthofix to "promptly supply. . . such
quantities . . . as are ordered from time to time," without
limiting that obligation in any way, see App. at 207, and
that paragraph 6(k) required EBI to maintain an inventory
level covering at least two months requirements, see App.
at 206. Thus, EBI concludes, the contract specifically
addresses what amount it could order, setting a minimum
but no maximum. It then points out that under our
decision in USX Corp. v. Prime Leasing Inc., 988 F.2d 433
(3d Cir. 1993), "[t]here can be no implied covenant as to
any matter specifically covered by the written contract
between the parties." Id. at 439 (citation omitted).

We need not decide whether EBI's argument would be
persuasive under other circumstances because it is based
on principles of United States contract law, whereas, as
discussed above, the Agreement, by its terms, must be
construed in accordance with Italian law. Therefore, we
must attempt to ascertain whether Italian law would infer
a duty of good faith and, if so, whether such a duty would
include the obligation not to over-order.

We engage in plenary review of a question of foreign law.
See Grupo Protexa, S.A. v. All American Marine Slip, 20 F.3d
1224, 1239 (3d Cir. 1994). "[E]xpert testimony is the most
common way to determine foreign law. . . ." In the Matter of
the Arbitration Between: Trans Chem. Ltd. & China Nat'l
Mach. Import & Export Corp., 978 F. Supp. 266, 275 (S.D.
Tex. 1997), aff'd and op. adopted in relevant part, Trans
Chem. Ltd. v. China National Mach. Import & Export Corp.,
161 F.3d 314, 319 (5th Cir. 1998) (per curiam).

Here, each party relied on the affidavits of its own expert.
These experts reviewed the Agreement to determine whether
it included an implied duty of good faith. They agreed that,
under Italian law, it did. They disagreed, however, as to the
content of the implied duty in this context, and hence as to
the permissible level of EBI orders under Italian law.

Orthofix's expert, Professor Piero Bernardini, working
from the assumption that EBI purchased fixators"in excess
of its actual requirements for the purpose of resale after the
expiration of the Agreement," App. at 1334, described such

                                18
conduct as "manifestly in breach of the good faith duty in
the contractual performance." App. at 1343. He concluded
that although there was no language referring to a duty not
to order excessively, the Agreement did link orders to EBI's
"expected requirements." See App. at 1343. He found that
linkage in paragraph 3 of the Agreement, which provides:

       Firm orders for the products shall be placed with
       Orthofix within the first fifteen (15) days of a given
       month for shipment at least two (2) months from the
       date of the order. With each of said orders EBI shall
       provide Orthofix with a written forecast of its expected
       requirements of the product for the three (3)
       subsequent months commencing from the end of the
       two (2) months period for which the said shipments are
       intended. Such forecasts shall not be binding on either
       party.

App. at 203.

In contrast, EBI's expert, Professor Fabio Emilio Ziccardi,
interpreted the Agreement as a requirements contract
under Italian civil law, and stated that, because the
contract specified a minimum but no maximum amount of
product, EBI was free to order any amount above the
minimum, subject only to Orthofix's acceptance of that
order. App. at 240-42.

In the face of disagreement between experts on such
matters, we may adopt any position that is supported by
reasonable inferences either from the respective country's
law or "from the implications of a legal concept such as a
contract or testament or juristic personality." Merinos
Viesca y Compania, Inc. v. Pan American Petroleum & Trans.
Co., 83 F.2d 240, 242 (2d Cir. 1936); cf. Mobile Marine
Sales, Ltd. v. M/V Prodromos, 776 F.2d 85, 89-90 (3d Cir.
1985) (rejecting Panamanian official's certification of due
registration in favor of court's own reading of Panamanian
law); In the Matter of Arbitration Between: Trans Chem. Ltd.
& China Nat'l Mach. Import & Export Corp., 978 F. Supp. at
275 ("[F]ederal judges may reject even the uncontradicted
conclusions of an expert witness and reach their own
decisions on the basis of independent examination of
foreign legal authorities." (citation omitted)).

                               19
We conclude that Orthofix's expert's interpretation of the
Agreement is more reasonable because it relied on the
language in the Agreement, particularly that in paragraph
3 obliging EBI to provide Orthofix with a forecast of its
expected requirements for the three months after the two-
month order period. EBI's expert, on the other hand, relied
more heavily on the absence of language. The contractual
obligation that EBI provide Orthofix with a forecast of its
need for the three months after its current inventory was
likely to be exhausted, although not binding on either
party, certainly suggested both that Orthofix expected EBI
to keep its inventory fairly current and that there was a
relationship between EBI's immediate inventory needs and
its orders. There would be no need for such a provision if
the parties intended to allow EBI to accumulate, without
notice, inventory for sixteen months. Bernardini's
interpretation also more effectively integrates paragraph 3,
on which he relied, with three other paragraphs: paragraph
6(e) (requiring EBI to forward to Orthofix, inter alia,
monthly sales reports and "quarterly reports indicating the
quantity of Products comprising EBI's inventory"), App. at
205; paragraph 6(k) (requiring EBI to maintain inventory
"reasonably necessary to meet its resale requirements for at
least two (2) months"), App. at 206; and paragraph 11.1
(requiring Orthofix to fill any order it accepted before the
expiration of the Agreement), App. at 207.

In light of these provisions, we are persuaded that Italian
law would not give EBI free reign to order whatever it
wanted so long as Orthofix accepted the orders and made
some attempt to fill them. Thus, the District Court did not
err when it accepted the position of Orthofix's Italian law
expert that EBI had an implied duty of good faith and fair
dealing not to over-order Orthofix products.

Moreover, even if this were a question of United States
contract law, subject to plenary review, see Williams, 132
F.3d at 946, we would find against EBI. As noted above,
EBI's argument is that there can be no implied duty not to
over-order because the contract specifically covers the
issue. The principal provision to which it refers is
paragraph 8, which covers Orthofix's obligation to fill EBI's
orders. Even EBI's own Italian expert rejected that

                               20
construction, opining that the Distribution Agreement only
specifies a minimum, App. at 241, and "clearly has no
provision at all concerning the purchases `in excess,' "
Supp. Affidavit S 4.4. In the absence of any provision that
"specifically covers" the matter, we reject EBI's contention
that United States contract law bars the covenant implied
here by the Agreement.

There was evidence to support the jury's finding that EBI
over-ordered and stockpiled Orthofix products while
actively misleading Orthofix about its need for additional
product, thereby breaching the duty of good faith and fair
dealing. Examining this evidence in the light most favorable
to Orthofix, we conclude that the District Court properly
denied EBI's motion for judgment as a matter of law.

EBI nonetheless contends that Orthofix failed to present
evidence of the damages it claims to have suffered from
EBI's sale of the excess products, and argues that therefore
the entire damages award should be reversed. As we have
previously observed, even when an entire theory of liability
relied on at trial is subsequently held impermissible, the
jury's finding of liability on a separate theory in a special
verdict can sustain the award of damages. See Bonjorno v.
Kaiser Aluminum & Chem. Corp., 752 F.2d 802, 806 (3d
Cir. 1984); see also Loughman v. Consol-Pennsylvania Coal
Co., 6 F.3d 88, 100 (3d Cir. 1993). It follows that even if
Orthofix failed to identify the damages caused by the sale
of the over-ordered product, that would not negate the
jury's liability verdicts on the three other contract breaches
and the eight torts. Moreover, the case was not presented
as a series of separate breaches of contract and tort, each
of which caused separate defined damages. Thus, there is
no basis to overturn the entire compensatory damages
award.

C.

TORTIOUS INTERFERENCE

In a related claim, EBI contends that the District Court
erred in denying its motion for judgment as a matter of law
on the jury's verdict that held it liable for the tort of

                               21
interference with prospective economic advantage on the
basis of its conduct in over-ordering bone fixators. EBI
argues that the evidence did not establish that it lacked
justification or excuse for its conduct, one of the required
elements for the tort,2 and that "[b]reach of contract,
without more, is not a tort." Appellants' Br. at 33 (quoting
Windsor Sec., Inc. v. Hartford Life Ins. Co., 986 F.2d 655,
664 (3d Cir. 1993)).3

EBI mischaracterizes Orthofix's position. Orthofix never
argued that EBI's breach of the Agreement constituted a
tort. Rather, it contended at trial that EBI improperly sold
the fixators and, thereby, interfered with Orthofix's
economic relationships.

In denying EBI's post-trial motion for judgment as a
matter of law on this issue, the District Court concluded
that there was evidence that EBI used fraudulent and
unlawful means to obtain the fixators and, just as
important, that EBI then sold the fixators in direct
competition with Orthofix. The court held that, from this
evidence, the jury could have concluded that EBI engaged
in tortious interference by over-ordering, regardless of
whether the act of over-ordering breached the contract.
Inter Med. Supplies, 975 F. Supp. at 687.

We agree. Although Orthofix does suggest that some of
EBI's conduct in obtaining the excessive quantities of
fixators contributes to its tortious interference claim, it also
emphasizes that EBI tortiously interfered by selling those
_________________________________________________________________

2. This tort requires proof of five elements: (1) plaintiff 's expectation
of
economic benefit; (2) defendant's knowledge of that expectation; (3)
defendant's wrongful, intentional interference with that expectancy; (4)
the reasonable probability of benefit to the plaintiff in the absence of
that
wrongful interference; and (5) damages. See Lightning Lube, Inc. v. Witco
Corp., 4 F.3d 1153, 1167 (3d Cir. 1993). EBI's appeal contends that
there was a failure of proof on element (3).

3. Orthofix again contends that EBI waived its appeal for this position,
because EBI moved exclusively on the grounds of sufficiency of the
evidence, not whether the conduct would amount to tortious
interference. However, EBI did raise the claim that the conduct
amounted only to breach of contract and not tortious interference in its
Rule 50(b) motion. Thus, we reject Orthofix's argument.

                               22
products to the very customers that otherwise would have
been purchasing from Orthofix.

Moreover, the jury was entitled to conclude that EBI's
proffered justification for its conduct did not completely
explain its actions. EBI argued that the actions it took were
defensive, designed to protect itself against the coming loss
in business expected to result from the termination of its
Orthofix distributorship. However, Orthofix introduced
evidence that EBI's president described his company's post-
Agreement relationship with Orthofix as a "war," and his
objective as being to "destroy Orthofix." App. at 507. With
this evidence, the jury was entitled to conclude that EBI's
explanation for acquiring and selling the fixators was
inadequate to explain its decision to compete in the market
when and how it did, and that its conduct was tortious
interference with Orthofix's prospective economic
advantage.

We conclude that the District Court did not err in
denying EBI's motion for judgment as a matter of law on
this ground.

D.

COMPENSATORY DAMAGES

EBI next challenges the $48 million compensatory
damages award, and asserts that the District Court erred in
permitting Orthofix to recover any compensatory damages
because the amount of such damages was speculative. In
doing so, EBI expands on its argument that the District
Court erred in denying the motion for judgment as a matter
of law on the breach of contract and tortious interference
counts because Orthofix failed to establish specific damages
associated with each cause of action. Relying on our
statement in Coleman Motor Co. v. Chrysler Corp., 525 F.2d
1338, 1353 (3d Cir. 1975) --"we cannot permit a jury to
speculate concerning the amount of losses resulting from
unlawful, as opposed to lawful, competition"-- EBI
contends that the jury's award here was impermissible
speculation.

                               23
Although the award appears large, we review it keeping in
mind the following observation by the District Court, which
was intimately familiar with the case and the evidence:

       In an effort to maintain their commanding position as
       the leading United States marketer of external bone
       fixators until such time as their own products could be
       successfully launched, defendants attempted to secure
       a large inventory of Orthofix products. That plan was
       largely successful, and Orthofix is no longer a major
       force in the United States market for external bone
       fixation devices.

Inter Med. Supplies, 975 F. Supp. at 685. EBI's actions thus
secured for it the market that had previously been
Orthofix's, an injury from which Orthofix has not recovered.

EBI makes essentially three arguments against the award
of compensatory damages: First, that Orthofix's consultant
created flawed market projections, and that Creighton
Hoffman, the Orthofix expert who ultimately testified,
prepared damage estimates in reliance on these projections;
second, that Hoffman's testimony departed from the
consultant's analysis with respect to the recapture of profit
and relied instead on inflated market share projections
made by Orthofix's executives; and third, that Hoffman
improperly inflated his damage estimates by taking sales
growth data prepared by EBI's own damage experts out of
context and applying it to a situation that did not reflect
actual market conditions.

These arguments echo those EBI presented to the District
Court in a motion in limine and in motions for judgment as
a matter of law. The court rejected EBI's arguments,
focusing first on Hoffman's testimony and then emphasizing
that "while [the analysis] certainly yielded a large number,
[it] was not flawed as a matter of law. The jury could have
rejected that testimony in its entirety. It did not." Id. at
691. The court further observed that EBI's economic expert
also testified and that the jury presumably took the time
and effort to consider carefully the damages evidence each
side presented. Id.

The disputed calculation proposed lost profits not
exceeding $95 million and actual damages not in excess of

                               24
that number. The District Court rejected EBI's complaint
that the damages were "undifferentiated," noting that
"[p]laintiffs tried this case on numerous alternative theories
of liability each of which would support an award of`lost
profits.' To the extent the plaintiffs prevailed on any theory
which was supported by sufficient evidence, they are
entitled to the full measure of compensatory damages, and
no more." Id. Referring to Orthofix's expert's testimony, the
District Court rejected EBI's complaint that Orthofix failed
to present testimony separating the damages by entity and
by claim. The court suggested that such specificity would
have created jury confusion, as well as a strong potential
for duplicative or excessive damages. Id. The court
explained:

       Because all of the claims upon which plaintiffs
       prevailed arose from the same set of facts surrounding
       the defendants' plan to convert the Orthofix external
       fixator market to the purchase of Dynafix, and because
       that plan succeeded, plaintiffs' lost profits need not be
       assigned to a given legal theory. Damages ordinarily
       flow from conduct, not from legal theories.

Id.

We review the District Court's denial of post-trial motions
regarding that compensatory damages verdict for abuse of
discretion. See Gasperini v. Center for Humanities, Inc., 518
U.S. 415, 437 (1996); American Nat'l Bank & Trust Co. v.
Regional Transp. Auth., 125 F.3d 420, 437 (7th Cir. 1997).

Although New Jersey law requires a "reasonably accurate
and fair basis for the computation of alleged lost profits,"
J.L. Davis & Assocs. v. Heidler, 263 N.J. Super. 264, 276,
622 A.2d 923, 929 (Sup. Ct. App. Div. 1993) (citation
omitted), the fact that a plaintiff may not be able to fix its
damages with precision will not preclude recovery of
damages. See American Sanitary Sales Co. v. New Jersey,
178 N.J. Super. 429, 435, 429 A.2d 403, 406 (Sup. Ct.
App. Div. 1981). EBI's arguments addressing the reliability
and source of Hoffman's data presumably were made with
equal force to the jury. Hoffman was cross-examined at
length, and EBI presented its own damages expert who
painted a more conservative view of Orthofix's economic

                               25
prospects. The District Court properly held that the
credibility of the experts was for the jury to determine, and
we see no reason for concluding that there was an abuse of
discretion.

E.

PUNITIVE DAMAGES

The most troublesome issue on appeal is that presented
by the jury's award of punitive damages in the amount of
$100,600,000 remitted by the District Court to
$50,000,000.

EBI argues at the outset that we must reverse the
punitive damages award because the jury's verdict, which
does not distinguish between tort and breach of contract
damages, leaves us no basis to apply the New Jersey Act,
which limits a plaintiff 's punitive damages to either
$350,000, or five times the compensatory damages,
whichever is greater. N.J. Stat. Ann. S 2A:15-5.14. It
reasons that because punitive damages are not available for
breach of contract, this court cannot determine whether the
strictures of the New Jersey Act are met without
determining what portion of the $48 million compensates
for tort violations in this case.

Orthofix responds that EBI waived this argument by
failing to object to the jury instructions and the verdict
sheet when they were presented. We agree. EBI's trial
counsel did not object on the ground now pressed, either
when the instructions and verdict sheet were given to the
jury or when the jury returned.4 We believe, in line with
other circuits, that EBI's failure to object at the time the
jury received the proposed verdict sheet when the jury
returned constitutes a waiver of this objection. See Austin-
Westshore Constr. Co. v. Federated Dep't Stores, Inc., 934
_________________________________________________________________

4. The District Court did address EBI's argument that the verdict sheet
failed to distinguish among the various defendants, but found that the
verdict was consistent with the defendants' own requested charge, which
did not require the jury to list each award separately. Inter Med.
Supplies, 975 F.2d at 697. EBI has not raised this issue on appeal.

                               26
F.2d 1217, 1226 (11th Cir. 1991) (party waived objection to
any inconsistency in jury response to special interrogatories
by failing to raise issue before jury was excused); White v.
Celotex Corp., 878 F.2d 144, 146 (4th Cir. 1989) (same)
Stancill v. McKenzie Tank Lines, Inc., 497 F.2d 529 (5th Cir.
1974) (same). Even if this argument were not waived, the
breaches of contract here were so intertwined with the
tortious scheme to steal Orthofix's market that the full
award is properly attributable to the tortious conduct.

We turn then to EBI's challenge to the punitive damages
award. EBI claims that the award, even as remitted by the
District Court, is inconsistent with both the New Jersey
Punitive Damages Act, N.J. Stat. Ann. S 2A:15-5.9 et seq.,
and the Due Process Clause of the Fourteenth Amendment.5
It argues that the jury awarded punitive damages from
passion and prejudice, that Orthofix failed to produce
evidence of some defendants' financial condition as required
by the New Jersey Act, and that even the $50 million
punitive damages award is excessive.

The standard of review that we apply depends upon the
particular challenge asserted. To the extent that EBI
complains about the admission of certain evidence, we
review the District Court's ruling under an abuse of
discretion standard. See Grizzle v. Travelers Health
Network, Inc., 14 F.3d 261, 270-71 (5th Cir. 1994). To the
extent that the issues EBI raises have a legal component,
our review is plenary. See Johansen v. Combustion Eng'g,
Inc., 170 F.3d 1320, 1334 (11th Cir. 1999). The Supreme
_________________________________________________________________

5. There are no reported New Jersey Supreme Court opinions that the
parties have cited or we have found which interpret the Act. See Orson,
Inc. v. Miramax Film Corp., 79 F.3d 1358, 1373 n.15 (3d Cir. 1996)
("When a federal court exercises diversity jurisdiction, it must apply the
substantive law as decided by the highest court of the state whose law
governs the action."). The Act requires a trial court judge to "ascertain
that the award is reasonable in its amount and justified in the
circumstances of the case, in light of the purpose to punish the
defendant and to deter the defendant from repeating such conduct." N.J.
Stat. Ann. 2A:15-5.14(a). The parties have not argued that this act
expands protection against excessive punitive damages awards beyond
the minimum guarantees of the Due Process Clause of the Fourteenth
Amendment.

                               27
Court has stated that state law governs the propriety of
awarding punitive damages and the factors to be
considered in determining the amount, but that federal law
controls "those issues involving the proper review of the
jury award by a federal district court." Browning-Ferris
Indus., Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 279
(1989).

1. Passion and Prejudice

If it can be shown that a jury verdict resulted from
passion or prejudice, a new trial is the proper remedy. See
Dunn v. Hovic, 1 F.3d 1362,1383 (3d Cir. 1993) (en banc).
EBI argues that the sheer size of the award here
demonstrates that the jury's decision was a product of
passion and prejudice. However, in Dunn we declined to
find that there is "some level of award that would in itself
evidence prejudice and passion," and held that even if there
were such a level, the award in Dunn, $25,000,000, would
not have reached it. Id.

EBI also argues that several statements made by Orthofix
concerning EBI's counsel and EBI's alleged violations of the
FDCA inflamed the jury and contributed to the prejudice,
warranting reversal. The District Court rejected this
argument, noting that EBI requested and received its own
curative instruction. Inter Med. Supplies, 975 F. Supp. at
690 ("[T]o the extent there may have been any prejudice,
defendants sought and obtained a curative jury instruction,
[and] the present assertion of prejudice is without merit.")
Indeed, EBI represented to the District Court that the
instruction given "perfectly addresse[d] the concern with
FDA." Id. (citation omitted).

We have reviewed the closing argument, the objections
raised in the District Court, and the curative instruction.
We do not find sufficient support for EBI's allegation of a
connection between counsel's remarks in closing and the
size of the verdict to warrant granting a new trial. This is
especially true where EBI received the curative instruction
it requested and did not object to any improper references
to counsel during the closing argument. We conclude,
therefore, that the District Court did not err in rejecting
EBI's arguments that the verdict was the product of
passion or prejudice.

                                28
2. Evidence of Defendants' Financial Condition

EBI also challenges the award on the ground that
Orthofix failed to provide evidence of some defendants' net
worth. Under the New Jersey Act, a trier of fact assessing
the award of punitive damages "shall consider . .. [t]he
financial condition of the defendant," N.J. Stat. Ann. 2A:15-
5.12(c), in order to formulate an award which is "specific as
to [each] defendant," N.J. Stat. Ann. 2A:15-5.13. EBI
argues that Orthofix failed to establish an essential element
of punitive damages under New Jersey law by not
producing evidence concerning the financial condition of
two of the corporate defendants, Electro-Biology and EBI
Medical Systems.

There is some question whether this issue has been
waived because it was not raised before the District Court.
In any event, the record establishes that Orthofix did
introduce evidence of both EBI Medical Systems' sales and
revenues and Biomet's net worth. Arguably, these are an
imperfect measure of the financial condition of Electro-
Biology itself, but the corporate and accounting structures
of these companies make this evidence adequate to meet
the requirements of the New Jersey Act. EBI Medical
Systems is the sales and marketing subsidiary of Electro-
Biology, a company that has no sales of its own. Moreover,
Biomet did not maintain separate balance sheets that
would document separate net worth calculations for its
subsidiaries. Thus, the District Court did not err in
permitting an award of punitive damages.

3. Excessive Damages

Finally, we consider EBI's contention that the punitive
damages award is excessive. EBI not surprisingly relies on
BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996),
the case in which the Supreme Court first struck an award
of punitive damages as excessive under the Due Process
Clause of the Fourteenth Amendment.

In that case, an Alabama purchaser of a new BMW
automobile sued the manufacturer for its failure to notify
him that his automobile had been repainted. Under BMW's
policy, it sold unused but repaired cars as new unless the
cost of the repair exceeded three percent of the car's

                                29
suggested retail price. It gave the purchasers, including
plaintiff, no notification of the repainting because the cost
of that repair did not meet the policy's minimum. The
plaintiff claimed that the repainting impaired the car's
value by approximately ten percent of the $40,000 price, or
$4000 in actual damages, and introduced evidence that
BMW had sold nearly one thousand repainted cars. The
plaintiff argued that the appropriate penalty was $4 million.
Id. at 563-64.

Alabama law permitted an award of punitive damages
when a defendant engaged in "gross, oppressive or
malicious fraud." Id. at 565. The jury concluded that
BMW's nondisclosure policy constituted such fraud, and
awarded both the requested actual damages and the $4
million in punitive damages. Id. The Alabama Supreme
Court reduced the award to $2 million because the jury's
calculation included sales in other jurisdictions; it upheld
the award in all other respects. Id. at 566-67.

The Supreme Court reversed. The Court reaffirmed the
states' traditional authority to punish and deter wrongdoers
for acts committed within the jurisdiction, and noted that
states have "considerable flexibility" in achieving those
goals. Id. at 568. However, it cautioned that a state must
avoid "grossly excessive" awards that "enter the zone of
arbitrariness that violates the Due Process Clause of the
Fourteenth Amendment." Id. Observing that"[e]lementary
notions of fairness" require "fair notice" to a defendant of
both the conduct punishable and the severity of the
potential penalty, the Court identified three "guideposts" as
indicia of the reasonableness of a punitive damages award:
"the degree of reprehensibility of the [conduct]; the disparity
between the harm or potential harm suffered . . . and [the]
punitive damages award; and the difference between this
[punitive] remedy and the civil penalties authorized or
imposed in comparable cases." Id. at 574-75.

The Court considered the degree of reprehensibility to be
"[p]erhaps the most important indicium of the
reasonableness of a punitive damages award." Id. at 575.
The Court observed that "some wrongs are more
blameworthy than others" so that " `trickery and deceit' . . .
are more reprehensible than negligence." Id. at 575-76. It

                               30
concluded that none of the aggravating factors were
associated with BMW's conduct and observed that the
plaintiff's injury was "purely economic in nature." Id. at
576. The Court stated that although intentional economic
misconduct warrants punishment, particularly if inflicted
on a financially weak and vulnerable entity, "this
observation does not convert all acts that cause economic
harm into torts that are sufficiently reprehensible to justify
a significant sanction in addition to compensatory
damages." Id. Although punitive damages were warranted
because BMW had intentionally omitted a material fact, the
fact that the company also could have believed that it had
no disclosure duty mitigated the egregiousness of the
conduct.

"The second . . . indicium of an unreasonable or
excessive punitive damages award is its ratio to the actual
harm inflicted on the plaintiff." Id. at 580. The Court
observed that it had looked to the ratio between the
punitive and compensatory damages on other occasions. In
Pacific Mutual Life Insurance Co. v. Haslip, 499 U.S. 1, 23-
24 (1991), it had held that a four-to-one ratio did not "cross
the line into the area of constitutional impropriety," and in
TXO Production Corp. v. Alliance Resources, Corp., 509 U.S.
443, 460 (1996), it had held permissible a ratio that did not
exceed ten to one once the potential harm to that plaintiff
was taken into account. In considering the ratio guidepost,
the Court observed that:

       [L]ow awards of compensatory damages may properly
       support a higher ratio than high compensatory awards,
       if, for example, a particularly egregious act has
       resulted in only a small amount of economic damages.
       A higher ratio may also be justified in cases in which
       the injury is hard to detect or the monetary value of
       noneconomic harm might have been difficult to
       determine.

BMW, 517 U.S. at 582.

In BMW, the Court followed its practice of declining to
"draw a mathematical bright line between the
constitutionally acceptable and the constitutionally
unacceptable that would fit every case." Id. at 583 (citation

                               31
omitted). Rather, it stated that the concern should be for
reasonableness. Id. In the case of the plaintiff purchaser of
the BMW, the $2 million punitive damages award produced
what the Court described as "a breathtaking 500 to 1" ratio
between the penalty and plaintiff's actual damages, id. at
583, and was thirty-five times greater than the total
damages of all fourteen Alabama purchasers, id. at 582
n.35.

Finally, in discussing the third indicium of excessiveness,
a comparison of the punitive damages and the potential
civil or criminal penalties for comparable misconduct, the
Court reiterated its deference to legislative judgments
regarding appropriate sanctions. Id. at 583 (citing
approvingly Browning-Ferris Indus., Inc. v. Kelco Disposal,
Inc., 492 U.S. 257, 301 (1989) (O'Connor, J., concurring in
part and dissenting in part)). The appropriate comparison,
the Court suggested, is between the statutorily authorized
financial penalty (when there is no imprisonment) and the
punitive damages award.

In explaining its decision to reverse the judgment on
punitive damages and remand, the Court noted that BMW
lacked any notice that its conduct, which would have given
rise to a $2000 fine under the state's Deceptive Trade
Practices Act, Ala. Code S 8-19-11(b) (1993), could result in
a multimillion dollar penalty, and that there was no basis
for assuming that BMW, which did change its policy, would
not have done so after receiving a lesser sanction. Id. at
584-85. Even without drawing "a bright line marking the
limits of a constitutionally acceptable punitive damages
award," the Court was convinced that the award in BMW
was "grossly excessive." Id. at 585.

The Supreme Court's decision in BMW provides us with
an analytic framework to consider whether the now reduced
$50 million punitive damages award remains excessive. In
two recent cases, the Court of Appeals for the Tenth Circuit
has applied the BMW criteria, concluding in both that the
punitive damages awards were excessive even though not
all three of the indicia of excessiveness identified by the
Supreme Court were present. In Continental Trend
Resources, Inc. v. OXY USA, Inc., 101 F.3d 634 (10th Cir.
1996), the jury awarded actual damages of $269,000 and

                               32
punitive damages of $30 million on claims of tortious
interference with both prospective business advantage and
contract. See id. at 635. Although the defendant was aware
of the possibility of such a large award (one of the
"guideposts"), the court of appeals directed a remittitur to
$6 million because the harm inflicted by the defendant was
purely economic in nature and the ratio between the
compensatory and punitive damages was too high. Id. at
640-42. In FDIC v. Hamilton, 122 F.3d 854 (10th Cir. 1997),
the court directed a reduction of punitive damages award
from $1.2 million to $264,000 for similar reasons.

The Tenth Circuit's summary of the factors to be
considered in determining the degree of reprehensibility of
a defendant's conduct is useful: whether it "cause[d]
economic rather than physical harm; would be considered
unlawful in all states; involves repeated acts rather than a
single one; is intentional; involves deliberate false
statements rather than omissions; and is aimed at a
vulnerable target." Continental Trend Resources, 101 F.3d
at 638; accord Hamilton, 122 F.3d at 861; see also Lee v.
Edwards, 101 F.3d 805 (2d Cir. 1996) (identifying presence
of violence, deceit or malice and the repetition of conduct
as aggravating factors in determining degree of
reprehensibility).

Applying those factors, we note the harm inflicted on
Orthofix was economic, rather than physical, and hence
"less worthy of large punitive damages awards than torts
inflicting injuries to health or safety." Continental Trend
Resources, 101 F.3d at 638. It has been suggested that,
"[w]hen the injury is economic, and particularly when it
arises out of a contractual relationship where the parties
can and should contractually protect themselves by
providing for explicit remedies in the event of breach, the
permissible ratio of punitive damages to actual damages
should be relatively modest." Hamilton, 122 F.3d at 862.
Relevant also is that Orthofix is not a financially weak or
vulnerable target. Another factor that tends to mitigate the
need for a high punitive damages award is the jury'sfinding
that Orthofix itself breached the distributor agreement,
failed to fill and ship EBI's legitimate orders, and engaged
in tortious acts.

                               33
We recognize that the jury found, as instructed under
New Jersey law, that EBI acted with either "actual malice"
or "a wanton and willful disregard of persons who
forseeably might be harmed," N.J. Stat. Ann. 2A:15-5.12(a),
that EBI's plan "involved acts of deception and, at least,
reckless disregard of the consequences to Orthofix," Inter
Med. Supplies, 875 F. Supp. at 700, and that those acts
continued over an extended period of time with full
awareness of the harm to Orthofix, see N.J. Stat. Ann.
S 2A:15-5.12(b).

Nonetheless, balancing these facts with respect to
reprehensibility, we conclude that EBI's conduct, which
inflicted only economic harm for which large compensatory
damages have been awarded, was not sufficiently egregious
to warrant a punitive damages award of $50 million. In this
connection, we take into consideration that high, easily
calculable compensatory damages may more appropriately
be accompanied by a lower punitive damages ratio. See
BMW, 517 U.S. at 582.

Finally, we find reference to the sanctions for comparable
misconduct (the third guidepost) unhelpful here, as there is
no clearly applicable reference point. EBI offers two
potential comparisons. First, it suggests that the $50
million award here is higher even than the $30.5 million
fine imposed for shipping adulterated medical devices that
caused deaths, see United States v. C.R. Bard, Inc., 848 F.
Supp. 287, 290 (D. Mass 1994), conduct far more
egregious. Second, EBI notes that the potentialfine under
the United States Sentencing Guidelines calculation to
deprive a defendant of the profit from his wrongdoing would
be only $500,000, which is 1/100 of the punitive damages
award here. See U.S.S.G. SS 8C2.4(a), 8A1.2, comment
(n.3(h)). Orthofix counters that federal and state laws
contain numerous authorizations for treble damages when
a defendant engages in unfair business conduct and
competition. See, e.g., 15 U.S.C. S 15 (antitrust); 18 U.S.C.
S 1964 (RICO); N.J. Stat. Ann. S 56:4-2 (unfair trade
practices). However, even trebling $500,000 would
significantly reduce the punitive damages award from the
$50 million figure.

                               34
Because we have concluded that the punitive damages
award should be reduced in light of the first guidepost, we
need not decide between these competing statutory
comparisons. We agree with the Tenth Circuit's observation
that "a violation of common law tort duties [may] not lend
[itself] to a comparison with statutory penalties. The
fundamental question is whether [the defendant] had
reasonable notice that its tortious interference with
contracts and prospective business advantage could result
in such a large punitive award." Continental Trend
Resources, 101 F.3d at 641 (citing cases involving high
punitive damages awards for tortious interference claims).

Once we have determined that a punitive damages award
as high as that set here does not accord with the analysis
recommended by the Supreme Court in BMW, we are left to
fulfill our role as gatekeeper in reviewing an award of
punitive damages. See Dunn, 1 F.3d at 1382. It is not an
enviable task. We have searched vainly in the case law for
a formula that would regularize this role, but have not
found one. As we noted above, the Supreme Court has
instructed as to the analysis but has provided nothing
concrete as to the amount. Justice Kennedy's comments in
his separate opinion in TXO reflect the frustration of many
judges faced with the need to set a figure.

       To ask whether a particular award of punitive damages
       is grossly excessive begs the question: excessive in
       relation to what? The answer excessive in relation to
       the conduct of the tortfeasor may be correct, but it is
       unhelpful, for we are still bereft of any standard by
       which to compare the punishment to the malefaction
       that gave rise to it. A reviewing court employing this
       formulation comes close to relying upon nothing more
       than its own subjective reaction to a particular punitive
       damages award in deciding whether the award violates
       the Constitution. This type of review, far from imposing
       meaningful, law-like restraints on jury excess, could
       become as fickle as the process it is designed to
       superintend.

TXO, 509 U.S. at 466-67 (Kennedy, J. concurring).

In the last analysis, an appellate panel, convinced that it

                               35
must reduce an award of punitive damages, must rely on
its combined experience and judgment. When different
members reach different figures, they must seek an
accommodation among their views, a process that recurs
throughout appellate decision making. After reviewing the
record and the arguments in this case, we conclude that
the proper, reasonable punitive damages award is no more
than $1 million.6

In his passionate dissent, Judge Garth argues that we
have ignored our precedent as to the standard of review
applicable to a district court's ruling on punitive damages,
which he asserts must be accorded "heightened deference,"
particularly if the district court has previously granted a
remittitur. The brief passage in our 1992 opinion in Keenan
v. City of Philadelphia, 983 F.2d 459 (3d Cir. 1992), to
which he alludes, is not this court's latest writing on that
issue. Instead, this court's 1993 opinion in Dunn, where we
spoke en banc, represents our most recent and considered
opinion on the issue of punitive damages, and particularly
on punitive damages following a District Court remittitur.
See Dunn, 1 F.3d at 1382-91.

In Dunn, we did not enunciate any rule of extraordinary
deference to the district court's decision, as Judge Garth
would have us adopt. Instead, although the district court
there had reduced by remittitur the jury's punitive damages
award from $25 million to $2 million (a considerably larger
percentage reduction than that ordered by the District
Court here), we nonetheless decided that an additional
reduction was appropriate and reduced the already
remitted damages from $2 million to $1 million. Id. at 1391.
We stated that we were further reducing the punitive
damages award because we believed that the "district court
gave insufficient consideration to the effect of successive
punitive awards in asbestos litigation." Id.

We discussed at great length this court's role in the
assessment of punitive damages. Contrary to Judge Garth's
_________________________________________________________________

6. Because of the extent to which we have reduced the punitive damages
verdict, we need not address EBI's contention that the $50 million award
is excessive because it constitutes 3.3 percent of Biomet's net worth, far
above the one percent we allowed in Dunn, 1 F.3d at 1383.

                               36
position, the en banc court stated: "We cannot leave the
amount of punitive damages solely to the trial court
because it is evident to us that the Supreme Court in
Haslip approved review by an appellate court to `determin[e]
whether a particular award is greater than reasonably
necessary to punish and deter.' " Dunn, 1 F.3d at 1385
(alterations in original).

Thus, notwithstanding the deference which we accord the
trial court in such matters, and notwithstanding our
commendation of "the district court's discipline in reducing
the punitive damages from $25 million to $2 million," id. at
1391, we undertook to further reduce the punitive damages
upon our determination "that further remittitur of the
punitive damage award in this case is appropriate," id. In
light of that further reduction, the dissent's insistence that
Dunn is not relevant to the standard of review when a
district court orders a remittitur is surprising. The dissent's
attempt to confine Dunn to product liability cases is
unpersuasive. Haslip, on which we relied in Dunn, was not
a products liability case. This court's recent opinion, Hurley
v. Atlantic City Police Dep't, 174 F.3d 95 (3d Cir. 1999), that
was also not a products liability case, cited Dunn for its
discussion and holding regarding punitive damages. Id. at
114.

The centerpiece of the dissent is its reliance on our pre-
Dunn opinion in Keenan. The dissent fails to point out that
notwithstanding the "super-deference" to the district court,
which the dissent claims Keenan requires, in Keenan we
reversed the punitive damages assessed against one of the
defendants after finding that there was inadequate evidence
to support their imposition. 983 F.2d at 471. Moreover,
Keenan itself undermines the dissent's attempt to cabin
damages in products liability cases in a separate category.
Keenan relied for the standard of review for excessiveness
on an earlier Third Circuit case, Gumbs v. Pueblo
International, Inc., 823 F.2d 768 (3d Cir. 1987), where,
again notwithstanding the deference owed to the district
court since it granted a remittitur, we reversed the
imposition of compensatory damages as excessive. The
Gumbs court in discussing the standard of review, relied on
an earlier Third Circuit decision, Murray v. Fairbanks

                               37
Morse, 610 F.2d 149 (3d Cir. 1979), which was a products
liability case. See Gumbs, 823 F.2d at 771. It is thus
evident that there is no basis to consider damages in
products liability cases as a separate category, and we
certainly did not so suggest in Dunn.

The dissent gives short shrift to Haslip, despite the fact
that Haslip issued from the Supreme Court, because that
opinion failed to satisfy Judge Garth's need for "a formulaic
standard of review." I agree that our task as appellate
judges in reviewing damages awards, whether or not there
has been a remittitur, would be facilitated if there were a
formula, but not all of our review function can be
compressed into a formula, and the guideposts provided by
the BMW opinion adequately serve that function.

The cases cited by Judge Garth and those that were
relied upon in our earlier decision in Keenan for the
proposition that we owe heightened deference to the district
court's remittitur decision -- Delli Santi v. CNA Insurance
Cos., 88 F.3d 192 (3d Cir. 1996); Starceski v. Westinghouse
Electric Corp., 54 F.3d 1089 (3d Cir. 1995); and Gumbs v.
Pueblo International, Inc., 823 F.2d 768, 771-72 (3d Cir.
1987) -- were all compensatory damages cases and not
punitive damages cases. In punitive damages cases we
must be informed by the Supreme Court's jurisprudence
and, as noted above, that jurisprudence counsels intensive
review.

As we noted above, our decision in this case to reduce
the punitive damages award even further is based upon the
guideposts established by the Supreme Court. And, in the
last analysis, we conclude that an award greater than $1
million is not "reasonably necessary to punish and deter."
Haslip, 499 U.S. at 22.

III.

CONCLUSION

In conclusion, we will affirm the District Court's decision
on all grounds raised in this appeal other than the punitive
damages and will remand so that the District Court can

                                38
enter a judgment for punitive damages in the amount of $1
million.

                               39
GARTH, Circuit Judge, dissenting:

While I join the Court in its holdings on all of the
substantive issues discussed in sections II.A through II.D of
its opinion (with but one caveat stated in the margin),1 I am
_________________________________________________________________

1. Each of the issues raised by EBI has been more than adequately
explained and rejected by the majority opinion. However, I note that in
one area, while I agree with the conclusion that the District Court's
interpretation of Paragraph 6(d) of the parties' Distributor Agreement,
containing the "in any way handle" clause precluded EBI from
manufacturing or producing its own bone fixators during the course of
the Agreement, I question whether the breadth of the majority's holding
with respect to the District Court's charge truly represents the
jurisprudence of this Circuit.

It must be remembered that the District Court had ruled, over EBI's
objection, in an in limine proceeding that Orthofix's interpretation of
the
"in any way handle" clause was correct, which then became the law of
the case. At the conclusion of the trial, EBI submitted a proposed charge
that affirmatively incorporated the District Court's interpretation of
Paragraph 6(d), which the District Court adopted in all respects
pertinent to this appeal. Once EBI had objected and presented
arguments in support of its interpretation of Paragraph 6(d) at the in
limine proceeding, I agree that thereafter EBI was not obliged to object
to
the charge of the District Court, which incorporated its in limine ruling,
in order to preserve the issue on appeal. See , e.g., Smith v. Borough of
Wilkinsburg, 147 F.3d 272 (3d Cir. 1998). However, I cannot agree that
when EBI submitted its own charge that parroted in essential respects
(i.e., the interpretation of "in any way handle") the District Court's
ruling,
that EBI could thereafter raise the issue on appeal, claiming that it had
preserved the issue, especially when the District Court essentially
adopted EBI's proposed charge.

I know of no case in our Circuit where the submission of a requested
charge which was then adopted by the District Court would not foreclose
the party requesting the charge from thereafter being bound by it.
Hence, although it does not disturb the disposition reached by the
majority affirming the District Court's interpretation of Paragraph 6(d) -
-
a disposition in which I join -- I do raise a question as to the
expansiveness of the doctrine arguably embraced by the majority. It
seems to me that our opinion would be far more in tune with our prior
precedents were we to restrict ourselves to approving preservation of an
issue only when the affected party had not in effect estopped itself by
submitting a requested charge which affirmatively incorporated an
adverse ruling.
40
obliged to write separately in dissent on the issue of
punitive damages.2

I.

I am compelled to disagree with the majority's reduction
of the punitive damages assessed against EBI not only
because that monetary reduction has no principled basis,
but also because the standard of review that this Court has
previously established and announced has been totally
ignored. See Keenan v. City of Philadelphia, 983 F.2d 459
(3d Cir. 1992). While Dunn v. HOVIC, 1 F.3d 1371 (3d Cir.
1993) (en banc), to which the majority refers, see Maj. Op.
at 36, dealt with punitive damages but only in a product
liability context, i.e., asbestos damage awards, Dunn did not
provide nor attempt to provide a standard of review that
contradicted or overruled Keenan. Indeed, Dunn did not
even cite to Keenan and the Dunn court, which was
concerned solely with due process considerations, explained
its result only in terms of successive and multiple damage
awards which asbestos product liability cases might
generate, a situation that obviously is not relevant in the
present case. Neither Dunn nor Pacific Mutual Life
Insurance Co. v. Haslip, 499 U.S. 1 (1991), on which the
majority relies in Dunn and which I discuss in Section III,
infra, bear on the standard of review. Instead, the majority
here has substituted its own discretion and judgment (see
Maj. Op. at 35-36) -- without warrant from precedent or
statutory authority -- for our announced standard of
review, and for that of the District Court, to whose
discretion and judgment we are bound to give a "super-"
deference, especially after a grant of remittitur. See also
Tingley Sys., Inc. v. Norse Sys., Inc., 49 F.3d 93 (2d Cir.
1995) (reviewing decision to remit punitive damages under
abuse of discretion standard; punitive award must"shock
to conscience" to warrant reversal); Hiltgen v. Sumrall, 47
F.3d 695 (5th Cir. 1995) (reviewing remittitur under
"considerable deference" standard).
_________________________________________________________________

2. Punitive damages are discussed by the majority in Section II.E of its
opinion.

                               41
Struggle as it might, the majority opinion still cannot
explain why it fails to follow the controlling standard of
review set forth in Keenan. See Maj. Op. at 37. The majority
has sought to gloss over the significant differences between
product liability cases, whose reductions of punitive
damages awards stem from the fear of multiple and
successive punitive awards, and cases such as this one
where no such circumstances obtain. Moreover, the
majority has not acknowledged that the cases on which it
relies are fundamentally different from this case, in that
those cases, such as Haslip and Dunn, were not concerned,
as we are, with the standard of review, but rather were
focussed on due process considerations.

Nor is the majority on sound ground when it points out
that those cases that relied upon our Keenan standard of
review did not uphold the district court's remittiturs. All
that argument demonstrates is that the evidence in those
cases -- Gumbs and Keenan -- did not satisfy our
heightened standard of review.3 In this case, Judge
Orlofsky's discretion, based on the overwhelming evidence
and the jury's 22 special verdict findings, more than
satisfied that standard. Ergo, our decision should have
been to affirm rather than to try to explain away what
cannot be explained.

I recognize that the amounts of money involved are
extremely substantial, and that even the least of those
amounts is very significant. A reduction from $100,600,000
jury verdict to a $50,000,000 remittitur award to the
$1,000,000 majority award (without principled explanation
or analysis) is eyebrow-raising. Even if I, like the majority,
wanted to reduce the jury's award or Judge Orlofsky's
remittitur because of their respective sizes, I could not
bring myself to do so because no principled basis exists for
such a dramatic reduction. I note also that it was because
of the amount of punitive damages as well as our own
desire to arrive at a principled formula for their
_________________________________________________________________

3. Of course, insofar as Gumbs was decided before Keenan, it did not
have the benefit of the fully-enunciated and controlling standard
established by Keenan, which in turn relied in part, and expanded upon
Gumbs.

                               42
ascertainment -- a task at which the majority has not
succeeded -- that we devoted most of the time allotted at
oral argument to that subject.

However, we should not and cannot be swayed by the
dollar amount of the damages if the ultimate decision at
which we arrive is a principled decision that respects the
standard of review by which we are bound. Justice
Frankfurter in Rochin v. California, 342 U.S. 165, 170
(1952) expressed it succinctly when he stated: "We may not
draw on our merely personal and private notions and
disregard the limits that bind judges in their judicial
function." Our judicial function, as I perceive it, is to
adhere to our announced standard of review until it is
overturned by our entire Court or by the Supreme Court.

Thus, my primary focus in this dissent deals with the
standard by which we must review the District Court's
remittitur order. It is that standard which dictates the
result I have reached and which gives rise to theflawed
majority opinion respecting punitive damages. My
secondary focus centers on the manner by which the
majority has reduced Judge Orlofsky's remittitur in
derogation of precedent and our standard of review.

Therefore, while I agree with the majority's disposition on
all other issues, I respectfully dissent from the majority
opinion as to the amount of punitive damages to which
Orthofix is entitled. Rather, pursuant to our standard of
review, I would affirm the District Court's remittitur of
$50,000,000.

II.

This Court's review of a District Court's punitive damage
remittitur is remarkably circumscribed and consists of
three elements. We have held that when examining the
excessiveness of a punitive damages award, our review "is
[1] severely limited: [2] we may . . . reverse and grant a new
trial only if the verdict is so grossly excessive as to shock
the judicial conscience. [3] Where the district judge grants a
remittitur, deference to the trial court is heightened. Our
review requires additional deference to the district court
since it already granted a remittitur." Keenan, 983 F.2d at

                                43
472 (internal quotations and citations omitted, and
brackets and emphasis added). Dunn is not to the contrary,
because as I have pointed out, Dunn is a due
process/product liability case and it leaves intact the
standard of review which Keenan announced when a
district court orders a remittitur. Thus, because the trial
judge is in the best position to oversee whether the jury
verdict is rationally based, when the trial judge grants a
remittitur this Court will not reverse unless wefind the
District Court abused its discretion when measured against
our standard of "heightened deference." Gumbs v. Pueblo
Int'l, Inc., 823 F.2d 768, 771-72 (3d Cir. 1987). See also
Kazan v. Wolinski, 721 F.2d 911 (3d Cir. 1983). Cf. Delli
Santi v. CNA Ins. Cos., 88 F.3d 192 (3d Cir. 1996);
Starceski v. Westinghouse Elec. Corp., 54 F.3d 1089 (3d Cir.
1995).

Here, the jury awarded Orthofix $100,600,000 in punitive
damages, a figure it evidently derived from evidence in the
record indicating that Biomet's cash on hand for the 1996
fiscal year was approximately $100,600,000. The District
Court reduced this amount to $50,000,000 in its remittitur
order, apparently to bring the award in line with the
compensatory damages of $48,000,000 proven at trial and
found by the jury. The District Court, which, as the
majority notes, was "intimately familiar with the case and
the evidence," Maj. Op. at 24, had been involved with the
litigation for over three years (including a two month trial)
and in its discretion had equated the punitive damages to
the compensatory damages on a 1:1 ratio.

Despite this exercise of the District Court's discretion, a
discretion that the majority has found not to have been
abused or to have "shocked the judicial conscience" --
indeed, without any principled basis at all, with no
reference to the record, and in utter disregard of our
standard of review, the majority has further reduced the
punitive damages from $50,000,000 to $1,000,000. Nor has
the majority made any reference in its opinion to the
"heightened deference" that we owe to the District Court
when it has granted a remittitur.

The analysis provided by the majority to support its
peremptory reduction of 98% (based on a reduction to

                               44
$1,000,000) of the remitted punitive damages award is
unprecedented in this Circuit. While the majority was
correct in rejecting EBI's arguments for reduction based
upon the "alleged passion or prejudice" of the jury, Maj. Op.
at 28, the majority nonetheless has arbitrarily reduced the
punitive damages award based only upon its interpretation
of the "guideposts" found in BMW of North America v. Gore,
517 U.S. 559 (1996), and two Tenth Circuit cases that have
sought to explain them, FDIC v. Hamilton, 122 F.3d 854
(10th Cir. 1997) and Continental Trend Resources, Inc. v.
OXY USA, Inc., 101 F.3d 634 (10th Cir. 1996), cert. denied,
520 U.S. 1241 (1997), as well as Dunn, 1 F.3d 1371.4

Specifically, the majority concludes that, based upon
factors mentioned in those cases, "EBI's conduct, which
inflicted only economic harm for which large compensatory
damages have been awarded, was not sufficiently egregious
to warrant a punitive damages award of $50 million." Maj.
Op. at 34. I am hard pressed to understand that conclusion
in light of the jury findings of egregious, intentional and
deceitful behavior by EBI, and by the lack of record
evidence in the majority opinion which could shore up such
a reduced award.

The jury, in its responses on the special verdict sheet,
answered that it had found by a preponderance of the
evidence: that EBI intentionally and improperly interfered
with Orthofix's reasonable expectations of economic
advantage; that EBI wrongfully and intentionally interfered
in the contractual relations between Orthofix and Inter
Medical; that EBI made false statements either knowingly,
recklessly or negligently that injured Orthofix; that EBI's
conduct in "passing off " its own products as those of
Orthofix was likely to cause confusion as to the source of
those products; that EBI made false statements that
deceived or were likely to deceive, in violation of the
Lanham Act and to the likely detriment to Orthofix; that
EBI had uttered injurious falsehoods in violation of the
_________________________________________________________________

4. As I have earlier indicated, I believe the majority's reference to and
reliance on Dunn is inapposite, as Dunn did not disturb our standard of
review of remitted punitive damage awards in a non-due process/non-
product liability context.

                               45
Lanham Act; and that EBI competed unfairly in violation of
New Jersey statutory and common law. The jury further
found by clear and convincing evidence that Orthofix had
suffered harm as a result of EBI's actions and that EBI's
conduct was actuated by "actual malice or were
accompanied by a wanton and willful disregard" of those
who foreseeably would be harmed by its conduct.

Yet, despite these extraordinary findings, and despite the
lack of evidentiary support, the majority relies on only one
aspect of the element of "reprehensibility" 5 in deciding to
reduce the District Court's remittitur: its conclusion that
the damages inflicted by EBI were economic in nature. Maj.
Op. at 33-34. I discuss this aspect of the majority opinion
in section IV of this dissent, after noting the majority's
failure to recognize and apply the Third Circuit standard of
review pertaining to a punitive damages remittitur.

III.

I find fault with the majority opinion because, as I have
already pointed out, the majority opinion has neglected
either to state or to apply the standard of review relating to
punitive damages. See Keenan, 983 F.2d at 472. I have
recited our standard in the earlier portion of this dissent as
review that is: 1) extremely limited with reference to the
District Court's discretion; 2) subject to a "shock the
conscience" scrutiny; and 3) characterized by a "heightened
deference" when a remittitur has been granted, as there
was here.

The majority opinion, in referring to our en banc decision
in Dunn, which involved the due process impact of multiple
and successive awards of punitive damages in asbestos-
_________________________________________________________________

5. Although BMW is not on point with this case and is therefore
distinguishable, it nonetheless specifies three guideposts for courts to
consider in the punitive damages area. First and foremost is the
egregiousness of the defendant's conduct, i.e., deceit, fraud, etc.,
labeled
"the degree of reprehensibility." BMW, 517 U.S. at 575. Second, is the
ratio of punitive damages to "the actual harm inflicted on the plaintiff."
Id. at 580. The third and final guidepost is a comparison to sanctions for
comparable misconduct. Id. at 583. I agree with the majority that his
third guidepost is not relevant to this appeal. Maj. Op. at 34.

                                46
related injury cases, did not specify the standard of our
review of a District Court's judgment. The nearest Dunn
came to enunciating such a standard was its reference to
the Supreme Court's decision in Haslip, 499 U.S. 1 (1991).
Haslip stated that an appellate court should determine
whether a particular award is "greater than reasonably
necessary to punish and deter" -- hardly a formulaic
standard of review. See Dunn, 1 F.3d at 1385 (quoting
Haslip, 499 U.S. at 19). That same rubric is repeated by the
majority in this case. See Maj. Op. at 37 & 38.
Significantly, however, just as Haslip provides no analysis
to determine whether a particular award is "greater than
reasonably necessary to punish and deter," neither does the
majority here give us the benefit of its analysis and wisdom
when it concludes (in citing Haslip) that any award larger
than $1,000,000 is not "reasonably necessary to punish
and deter." Maj. Op. at 38 (citing Haslip, 499 U.S. at 19)).

Hence, I emphasize and maintain that neither Haslip nor
Dunn6 has superseded this court's prescription held in
Keenan, providing the appropriate standard of review after
a remittitur has been ordered. This is particularly so, since
there has been no endeavor on the part of the majority even
to acknowledge the specific findings made by the jury and
to analyze the District Court's opinion. That opinion
discussed at length the factors to be given consideration
under the New Jersey Punitive Damages Act.7
_________________________________________________________________

6. Dunn, of course, involved Virgin Islands common law, whereas the
instant appeal is rooted in New Jersey statutory law, which governs the
ultimate punitive damages award.

7. The New Jersey Punitive Damages Act, among other provisions,
provides that a jury may award up to 5 times the compensatory damages
or $350,000, whichever is greater. N.J.S.A. 2A:15-5.14b. The Act is
careful to circumscribe the essentials for a punitive damage award. It
requires that the plaintiff prove, by clear and convincing evidence, that
the harms alleged were caused by the defendant's acts or omissions, and
that these acts or omissions were "actuated by actual malice or
accompanied by a wanton and willful disregard" for those who might be
harmed. N.J.S.A. 2A:15-5.12a. In this case, the jury's special verdict
findings met each and every requirement of the Act. Hence, the jury's
punitive damage award could have exceeded even its $100,600,000
punitive damages award if it had multiplied the $48,000,000
compensatory damages award by 5. As we note in text, infra, and note
8, infra, the District Court, in reducing the punitive damage, fully
addressed all elements of the Act. See N.J.S.A. 2A:15-5.12b.

                               47
Nor does the majority acknowledge that Haslip obviously
informed this court's decision in Keenan. Haslip was
decided in 1991. Keenan was decided a year later, in 1992,
and Haslip was the subject of discussion in Judge
Higginbotham's separate opinion. Accordingly, the
majority's reliance on Haslip has little to do with its lack of
reliance on Keenan. Further, Keenan's standard of review
has obviously survived even in light of Dunn because as
mentioned Dunn has no relevance to the instant appeal. As
noted, Dunn was a product liability case concerned with the
implications of multiple and successive punitive damage
awards as they are affected by principles of due process,
which explains Dunn's reliance on Haslip . Haslip also
concerned the due process implications of punitive damage
awards. 499 U.S. at 18.

A more pertinent precedent -- cited in passing by the
majority, see Maj. Op. at 28 -- is Browning-Ferris Industries
of Vermont, Inc. v. Kelco Disposal, Inc., 492 U.S. 257 (1989),
which affirmed a punitive award of $6,066,082.74 and a
compensatory award of $51,146, a ratio of approximately
12:1. In so holding, the Supreme Court prescribed that in
reviewing a district court's decision whether to order a new
trial on the issue of punitive damages, an appellate court
has a "limited function" and affirmed the principle that
appellate court should "continue to accord considerable
deference" to the district courts. 257 U.S. at 279.
Undoubtedly, this prescription underlay the adoption by
our court of the Keenan standard of review.

One appellate court has characterized a jury verdict that
would "shock the conscience" as one that was so large as
to be contrary to reason, or so exaggerated as to
demonstrate the existence of bias or some other improper
motive. Caldarera v. Eastern Airlines, Inc., 705 F.2d 778,
784 (5th Cir. 1983). Here, however, the majority does not
hold that either the original jury award or the remitted
award was so large as to be contrary to reason, nor could
it. The defendants collectively are entities worth over $1
billion dollars, and a $50 million punitive damages award
cannot be deemed unreasonable. Moreover, the majority
explicitly holds that prejudice or bias was not a factor in
the award. Maj. Op. at 28. Nor has the majority held (as I

                               48
suggest it cannot in light of the record) that the District
Court abused its discretion. Indeed, in its remittitur
opinion, dated August 28, 1997, the District Court
identified and discussed at length the seven factors
required by New Jersey law in assessing whether the
amount of a punitive damage award was reasonable. 8
Despite the dictates of our limited standard of review, at no
point does the majority opinion even discuss this analysis
by the District Court, nor explain how it believes the
District Court abused its discretion.

Having failed to explain and having failed to hold that the
District Court abused its discretion, or that the award
"shocked the judicial conscience," and having failed to give
any deference, let alone "heightened deference" to the
District Court's remittitur, it is evident that the majority
has also failed to adhere to this Court's established
standard of review, and has consequently erred in its
decision.

IV.

The majority's arbitrary reduction in punitive damages to
$1,000,000 is not justified by the evidence and is without
any basis in principle or precedent. Moreover, the
authorities to which the majority has looked for guidance,
argue instead for affirming the District Court's remittitur.
Indeed, no case cited by the majority has held definitively
that cases involving only economic controversies warrant a
lower punitive damages award than those involving non-
economic damages such as threats to public health.

While the BMW Court suggested that economic harm
alone is not normally associated with "particularly
reprehensible conduct," 517 U.S. at 576, that is only one
element of the "reprehensibility" analysis. See Continental
_________________________________________________________________

8. The District Court considered the following: 1) the likelihood of
serious
harm resulting from EBI's misconduct; 2) EBI's awareness or reckless
disregard of that likelihood; 3) EBI's conduct upon learning that their
initial misconduct would likely cause harm; 4) the duration or any
concealment of the misconduct; 5) the profitability of the misconduct; 6)
when the misconduct was terminated; and 7) EBI'sfinancial condition.

                               49
Trend Resources, 101 F.3d at 638; Lee v. Edwards, 101
F.3d 805 (2d Cir. 1996) (listing other elements). The other
elements which must be taken into account, such as
intentionality, repetitive conduct, and conduct involving
deliberate false statements, etc., were all found by the jury
to have occurred in this case.

However, evidence produced at trial, but not mentioned
in the majority opinion, indicated that EBI's conduct could
involve potential physical harm to the wider community as
well as economic harm. EBI was found liable for passing off
its own products as those of Orthofix, a recognized and
respected manufacturer of bone fixators. There is evidence
in the record that on at least one occasion, the deceptive
substitution of EBI bone screws and ankle clamps for use
in conjunction with Orthofix fixators could have injured
patients. Therefore, the jury could well have concluded that
the deceptive practices engaged in by EBI not only caused
economic damage to Orthofix, but also exposed orthopedic
patients to increased harm, to say nothing of the liability of
hospitals when they unknowingly used EBI's bone screws
and clamps believing them to have been manufactured by
Orthofix. Even if this evidence is disregarded-- as the
majority disregards it -- and even if one focuses only on the
economic aspects of the damages caused by EBI, this Court
must still affirm by deferring to the District Court's
remittitur.

As mentioned, EBI was found to have engaged in a series
of continuous and intentional deceptive acts in order to
steal a market from Orthofix worth approximately $95
million. This evidence, which the majority credits, Maj. Op.
at 33-34, is more than sufficient to justify the jury's finding
of reprehensible conduct, which is the "most important
indicium" among the guideposts.9 BMW, 517 U.S. at 575.
See also note 5, supra. That finding distinguishes this case
from BMW in which the Supreme Court found "none of the
_________________________________________________________________

9. Indeed, the majority concedes that the full award of compensatory
damages can be credited to EBI's tortious conduct: "[t]he breaches of
contract here were so intertwined with the tortious scheme to steal
Orthofix's market that the full award is properly attributable to the
tortious conduct." Maj. Op. at 27.

                               50
aggravating factors" associated with reprehensible conduct.
517 U.S. at 576. Indeed, the Supreme Court in BMW
indicated that cases involving such deceptive conduct
would justify a high punitive award. 517 U.S. at 576
("[I]nfliction of economic injury, especially when done
intentionally through affirmative acts of misconduct . . .
can warrant a substantial penalty"). Cf. Balsamides v.
Perle, 712 A.2d 673, 685 (N.J. App. Div.) (stating punitive
damages can be awarded for breach of contract in
commercial dispute where there has been a "breach of trust
beyond the contractual breach"), certif. granted, 719 A.2d
1023 (N.J. 1998).

The specific cases relied upon by the majority do not
support its holding that economic damages alone justify a
lowering of a punitive damages award. While the Tenth
Circuit in Continental Trend Resources and Hamilton did
discuss the economic nature of the damages, the holdings
of those cases were far more concerned with the
constitutionality of the ratio of punitive damages to
compensatory damages -- another of BMW's "guideposts."
See BMW, 517 U.S. at 580.

The majority understandably does not dwell on the ratio
of the jury's compensatory damages award of $48,000,000
to its proposed punitive damage award of $1,000,000. It
makes no such comparison because in each of the cases
cited, the punitive damages were far greater than the
compensatory damages. BMW, which focussed on the ratio
between punitive damages and compensatory damages,
implicitly assumed the former would be higher than the
latter in most cases. 517 U.S. at 580-82. Under the
majority's approach here, the opposite is true and the
majority's reliance upon BMW suffers because of that fact.

On the other hand, Judge Orlofsky's remittitur of
$50,000,000, which I would affirm, when compared to the
compensatory damages of $48,000,000, is essentially a 1:1
ratio, and well within the guidepost of BMW. The District
Court's remittitur ratio is also a far more acceptable ratio
than even the 6:1 ratio found to be permissible by the
Tenth Circuit, or the 4:1 ratio affirmed in Haslip. See
Hamilton, 122 F.3d at 862; Continental Trend Resources,
101 F.3d at 643. Indeed, the Supreme Court has intimated

                                51
that the ratio of punitive damages to compensatory
damages could be even higher than 6:1 in economic
damages cases taking into account the damages that would
have accrued had the defendant succeeded in its egregious
conduct. BMW, 517 U.S. at 581 (approving a 10:1 ratio in
TXO Production Corp. v. Alliance Resources Corp., 509 U.S.
443 (1993) and stating that punitive damages should be
assessed in the context of harm that was likely to occur as
well as harm that did occur)). See also Browning-Ferris, 492
U.S. 257 (12:1); Watkins v. Lundell, 169 F.3d 540 (8th Cir.
1999) (4:1 ratio); Neibel v. Trans World Assurance Co., 108
F.3d 1123 (9th Cir. 1997) (6:1 ratio).

V.

Finally, I take issue with the standard against which the
majority measured its award of punitive damages. The
majority standard, rather than relying on our standard of
review, alarmingly requires instead that an appellate panel
"must rely on its combined experience and judgment" when
reducing a remittitur. Maj. Op. at 36. The majority
therefore, consonant only with its own devised standard
and with reference only to its own judgment, holds, in
conclusory fashion, that "[a]fter reviewing the record and
the arguments in this case, we conclude that the proper,
reasonable punitive damages award is no more than $1
million." Maj. Op. at 36. Any amount greater than that, the
majority concludes, would not be "reasonably necessary to
punish and deter." Maj. Op. at 38. As I have indicated, no
analysis accompanies this ipse dixit conclusion.

Not only does this mysterious and unauthorized standard
provide no instruction to the trial courts or litigants, but,
as I have discussed above, it totally ignores our
precedential standard of review, announced in Keenan, 983
F.2d 459, under which we are obligated to give additional
deference to the district court's experience and judgment
except where the award shocks the conscience or when the
district court has abused its discretion. Here, the majority
has followed its own "merely personal and private
judgment" in arriving at a proper amount of punitive
damages, rather than confining itself to "the limits that

                               52
bind judges in their judicial function." See Rochin, 342 U.S.
at 170.

VI.

I acknowledge that punitive damages continue to be a
problem vexing both the state and federal courts. See Milo
Geyelin, Philip Morris Hit with Record Damages , WALL ST.
J., March 31, 1999, at A3 (reporting punitive damage award
of $80.3 million); Milo Geyelin, Jury Awards $50 Million to
Ex-Smoker, WALL ST. J., Feb. 11, 1999, at A3 ($51.5
million). Yet, neither the state nor federal courts have
fashioned a sure-fire recipe to solve the question of "how
much,"10 even though we have prescribed a formula -- our
standard of review -- to be employed.

Nevertheless, a Court of Appeals cannot "willy-nilly," in
an effort to reach what it considers to be the "right figure,"
arbitrarily pull a punitive damage award from the air as if
it were a lottery number and announce "in our judgment,"
this is it! I feel strongly that a court of review, such as we
are, must not only furnish guidelines to the bench and bar,
but even more importantly, it must set an example of
correct judicial behavior by adhering to announced
principles of jurisprudence. To do so, it must remain
"within the limits that bind judges in their judicial
function." See Rochin, 342 U.S. at 170. Failure to do so can
lead only to arbitrary, capricious and/or emotional
judgments beyond the realm of principle.

In this case, I believe the majority's decision, excellent in
all other respects, has failed to adhere to its proper judicial
function when speaking to the issue of punitive damages. It
has failed to recognize what the court must regard as our
declared standard of review -- see Keenan, Gumbs, Delli
Santi, Starceski, supra, etc. At the very least, the majority
opinion has now added confusion to this court's standard
_________________________________________________________________

10. In an effort to alleviate this problem, New Jersey, and recently
Alabama, have joined a growing number of states which have responded
with legislation governing the award of punitive damages. See BMW, 517
U.S. at 614-16 (Ginsburg, J., dissenting) (listing in appendix state
statutes governing punitive damage awards).

                               53
by referring to a "standard" derived from inapposite cases
which pre-existed Keenan. It has substituted its personal
judgment for a principled review function over a District
Court's discretion; and without relying on record evidence,
it has reached a bottom line "lottery" figure of $1,000,000
relying only on its own "experience and judgment." Maj. Op.
at 36. Such a practice is neither principled jurisprudence
nor is it Third Circuit jurisprudence. If the majority now
holds that, in light of the sequence of cases -- Haslip in
1991, Keenan in 1992, and Dunn in 1993 -- and in light of
the materially different contexts of these cases, that our
remittitur standard of review has now been whittled down
so that no analysis aside from an ad hoc panel's "combined
experience and judgment" is required in reviewing a district
court's remittitur, then all the more reason why this court
must address and resolve this confusion by establishing
firm guidelines.

Accordingly, I respectfully dissent from the standard of
review and the resulting punitive damage award announced
by the majority. Instead, I would affirm the District Court's
remittitur of $50,000,000.

A True Copy:
Teste:

       Clerk of the United States Court of Appeals
       for the Third Circuit

                               54