Michael Jester v. Robert Hutt

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
Nos. 18-3114 & 18-3197
___________
MICHAEL JESTER; PENN RIDGE FARMS, LLC
Appellants in No. 18-3197
v.
ROBERT HUTT; FANTASY LANE THOROUGHBRED
RACING STABLE, LLC; FANTASY LANE
THOROUGHBREDS; FANTASY LANE STABLE INC.,
Appellants in No. 18-3114
___________
On Appeal from the United States District Court
for the Middle District of Pennsylvania
(D.C. No. 1-15-cv-00205)
District Judge: Honorable Yvette Kane
___________
Argued June 13, 2019
Before: HARDIMAN, PORTER, and COWEN, Circuit
Judges.
(Opinion Filed: August 28, 2019)
Gordon A. Einhorn
Thomas Thomas & Hafer
305 North Front Street, 6th Floor
Harrisburg, PA 17101
Attorney for Appellants in No. 18-3114
Mark D. Bradshaw
Stevens & Lee
17 North Second Street, 16th Floor
Harrisburg, PA 17101
Attorney for Appellants in No. 18-3197
____________
OPINION OF THE COURT
____________
HARDIMAN, Circuit Judge.
This case comes to us following a jury verdict in favor
of Penn Ridge Farms, LLC and against Fantasy Lane
Thoroughbred Racing Stable, LLC. The jury awarded Penn
Ridge $110,000 on its contract claim, $1 in nominal damages
on its defamation claim, and $89,999 in punitive damages. The
District Court reduced the punitive damages award to $5,500.
Fantasy Lane asserted counterclaims for negligence, breach of
contract, and breach of fiduciary duty, but was unsuccessful on
each. Fantasy Lane appealed, seeking reversal of certain
adverse rulings before and after the trial. Penn Ridge
responded with a cross-appeal asking us to reinstate the full
punitive damages award.
2
I
Penn Ridge is a horse boarding and breeding facility
near Harrisburg, Pennsylvania. Penn Ridge agreed to board
several of Fantasy Lane’s horses starting in July 2012,
including its thoroughbred stallion Uptowncharlybrown. The
agreement obligated Penn Ridge to “act as Fantasy Lane’s
agent for the promotion and management of
Uptowncharlybrown’s stallion seasons, and . . . exercise its
utmost good faith to promote, manage[,] and sell
Uptowncharlybrown stallion seasons . . . .” App. 721. Penn
Ridge also agreed to keep several of its own mares at the
facility to support Uptowncharlybrown.
Beginning in August of 2013, Fantasy Lane got behind
on its payments due to Penn Ridge. And after some of its horses
became sick or injured and even died, Fantasy Lane refused to
pay Penn Ridge boarding invoices totaling $65,707. The
managing partner of Fantasy Lane, Robert Hutt, sent several
emails to others in the horse-breeding industry expressing his
dissatisfaction with Penn Ridge owner Michael Jester and the
treatment of Fantasy Lane’s horses.
In the midst of this dispute, Hutt told Dr. Jeffrey
Edelson—the veterinarian designated by Penn Ridge—that
Fantasy Lane was considering suing him for his role in treating
their horses. The two negotiated and entered into a “General
Settlement and Release Agreement.” Michael Jester & Penn
Ridge Farms, LLC v. Robert Hutt & Fantasy Lane
Thoroughbred Racing Stable, LLC, 2017 WL 1150648, at *2
(M.D. Pa. Mar. 28, 2017). The agreement released “any and all
persons, firms, or corporations liable or who might be
liable . . . [from liability] arising out of or in any way relating
to any injuries and damages of any and every kind . . . [in] the
3
care and/or treatment of any [Fantasy Lane] horses stabled at
Penn Ridge . . . .” Id. (alterations in original). The settlement
and release resolved the conflict between Dr. Edelson and
Fantasy Lane, but did nothing to dispel the acrimony between
Fantasy Lane and Penn Ridge.
Penn Ridge sued Fantasy Lane in Pennsylvania state
court for breach of contract and defamation. The contract claim
was for nonpayment for boarding and breeding services
provided to Fantasy Lane’s horses. The tort claim alleged that
Hutt sent several defamatory emails about Penn Ridge and
Jester’s competence, as well as the care given to horses stabled
there, to several individuals in the industry who had an interest
or prospective interest in Fantasy Lane. Hutt blamed Penn
Ridge for the deaths of its horses, calling the staff
“inexperienced,” and expressing that he had “no faith” in them.
App. 768. He accused Penn Ridge of trying to conceal the
problems, noting that Jester’s personality “was a cross of
President Richard Nixon, and the character[] Jack Nicholson
played in[] A Few Good Men” and that Jester was “the type of
person that would say or do anything to save his ass.” App.
786. Hutt also alleged that Jester told him “the truth” about one
of the deaths—that Jester made the decision not to seek
professional help or notify Fantasy Lane when Penn Ridge first
discovered the horse was ill. App. 787–88. He also claimed
Jester “was responsible for killing [the] horse and he
deliberately[,] like Nixon[,] was the leader of the coverup
[sic].” App. 788.
Fantasy Lane removed the case to the District Court
based on diversity of citizenship. In answering Penn Ridge’s
amended complaint, Fantasy Lane brought counterclaims,
including four negligence claims for the poor care and
4
mistreatment of its horses, a breach of contract claim for the
promotion and management of Uptowncharlybrown, and a
breach of fiduciary duty claim stemming from the stallion
season issues. Penn Ridge moved for partial summary
judgment, and the District Court granted the motion on the
negligence counterclaims, holding that the agreement between
Fantasy Lane and Dr. Edelson released all other parties who
might be liable for injuries to Fantasy Lane’s horses while
boarded at Penn Ridge.
The remaining claims (breach of contract and
defamation asserted by Penn Ridge and breach of contract and
breach of fiduciary duty asserted by Fantasy Lane) were tried
to a jury. After a three-day trial, the jury found for Penn Ridge,
awarding it $110,000 for the breach of contract damages, $1 in
nominal damages on its defamation claim, and $89,999 in
punitive damages. The jury found against Fantasy Lane on its
contract and fiduciary duty claims.
Fantasy Lane filed a motion for a new trial or remittitur
or, in the alternative, to alter or amend the judgment under
Rules 59(a) and 59(e). The motion was granted in part and
denied in part. The District Court found the punitive damages
award unconstitutionally excessive under BMW of North
America v. Gore, 517 U.S. 559 (1996), and State Farm Mutual
Automobile Insurance Co. v. Campbell, 538 U.S. 408 (2003),
and reduced it to $5,500. In the District Court’s opinion, this
amount was “reasonable and proportionate to the harm
suffered by [Penn Ridge] and conform[ed] to the requirements
of the due process clause.” Jester v. Hutt, 2018 WL 4110625,
at *7 (M.D. Pa. Aug. 29, 2018). But the Court declined to grant
Fantasy Lane a new trial or reduce the contract damages award.
Fantasy Lane appealed the Court’s partial summary judgment
and partial denial of its post-trial motion. Penn Ridge cross-
5
appealed the Court’s order reducing the punitive damages for
defamation.
II
The District Court had jurisdiction under 28 U.S.C.
§ 1332(a)(1). We have jurisdiction under 28 U.S.C. § 1291.
We exercise plenary review over a summary judgment, and we
apply the same standard as the District Court. E.g., Watson v.
Abington Twp., 478 F.3d 144, 155 (3d Cir. 2007). We review
for abuse of discretion an order denying a motion for a new
trial under Rule 59, City Select Auto Sales Inc. v. David
Randall Assocs., Inc., 885 F.3d 154, 163 (3d Cir. 2018), and a
District Court’s ruling on a motion requesting remittitur,
William A. Graham Co. v. Haughey, 646 F.3d 138, 142 (3d Cir.
2011). We review de novo “a trial court’s constitutionally
required reduction of damages.” Cortez v. Trans Union, LLC,
617 F.3d 688, 716–17 (3d Cir. 2010).
III
A
We first consider Fantasy Lane’s contention that its
negligence counterclaims were not amenable to summary
judgment. The District Court relied on the general release Hutt
signed (on behalf of Fantasy Lane) with Dr. Edelson, which
released “any and all persons, firms, or corporations liable or
who might be liable . . . [from liability] arising out of or in any
way relating to any injuries and damages of any and every
kind . . . [in] the care and/or treatment of any [Fantasy Lane]
horses stabled at Penn Ridge . . . .” Jester, 2017 WL 1150648,
at *2 (alterations in original). According to Fantasy Lane, Dr.
Edelson obtained the release by falsely representing that his
6
attorney made only technical changes to the prior draft. And in
reliance upon that representation, Hutt failed to read the
revised settlement agreement and release.
Under Pennsylvania law, “[i]t is well established that,
in the absence of fraud, the failure to read a contract before
signing it is ‘an unavailing excuse or defense and cannot justify
an avoidance, modification[,] or nullification of the contract’;
it is considered ‘supine negligence.’” Germantown Sav. Bank
v. Talacki, 657 A.2d 1285, 1289 (Pa. Super. Ct. 1995) (quoting
Standard Venetian Blind Co. v. Am. Empire Ins. Co., 469 A.2d
563, 566 & n.* (Pa. 1983)). To show fraud, one must establish
by clear and convincing evidence: “(1) a misrepresentation,
(2) a fraudulent utterance thereof, (3) an intention by the maker
that the recipient will thereby be induced to act, (4) justifiable
reliance by the recipient upon the misrepresentation, and
(5) damage to the recipient as a proximate result.” Mellon Bank
Corp. v. First Union Real Estate Equity & Mortg. Invs., 951
F.2d 1399, 1409 (3d Cir. 1991) (quoting Delahanty v. First Pa.
Bank, N.A., 464 A.2d 1243, 1252 (Pa. Super. Ct. 1983)).
Even if Dr. Edelson misrepresented the changes to
induce Hutt’s acquiescence, Hutt’s reliance on those
misrepresentations in lieu of reading the settlement agreement
and release was not justifiable. As the District Court noted,
Hutt had a chance to review the changes to the previous draft,
which increased the length of the agreement from about one to
three pages. This increase should have alerted Hutt that the
revisions were meaningful. Nothing stopped Hutt from reading
the short release, and the provision in question was not hidden
or confusing. The language appeared on the second page in the
key section discharging Dr. Edelson from liability, which was
the very purpose of the release.
7
Fantasy Lane now insists Hutt’s averment in his sworn
declaration that he lacks legal expertise creates a genuine issue
of material fact which precluded the District Court from
determining that it was unreasonable for Hutt—a “legally
sophisticated former claims manager”—to rely on Dr.
Edelson’s representation. Jester, 2017 WL 1150648, at *7. But
Hutt’s stated lack of legal expertise provides no legal excuse
for his failure to read the release. See Germantown Sav. Bank,
657 A.2d at 1289. To absolve a party from reading a settlement
agreement and release—especially a simple one spanning three
pages—would do violence to the law of contract. See Standard
Venetian Blind Co., 469 A.2d at 305–06 (explaining that
allowing a party to “avoid application of the clear and
unambiguous policy limitations” in an insurance contract
because he did not read it would “require [the court] to rewrite
the parties’ written contract”). Because Fantasy Lane has not
shown Hutt justifiably relied on Dr. Edelson’s representations
about the contract, it cannot claim fraud as an excuse for Hutt’s
failure to scrutinize the agreement. See Mellon Bank Corp.,
951 F.2d at 1409.
In sum, the clear language of the settlement agreement
and release precludes Fantasy Lane from pursuing negligence
claims related to the care of its horses. For that reason, the
District Court did not err in granting partial summary judgment
for Penn Ridge.
B
We next consider Fantasy Lane’s argument that the
District Court should have granted its motion for a new trial on
the parties’ respective contract claims.
8
To prevail, Fantasy Lane must show that “(1) the jury
reached an unreasonable result, and (2) the District Court
abused its broad discretion in not setting the verdict aside.”
Leonard v. Stemtech Int’l Inc., 834 F.3d 376, 386 (3d Cir.
2016). This is a high bar. A District Court should overturn a
jury verdict only when “the ‘great weight’ of the evidence cuts
against the verdict and ‘where a miscarriage of justice would
result if the verdict were to stand.’” Springer v. Henry, 435
F.3d 268, 274 (3d Cir. 2006) (quoting Sheridan v. E.I. DuPont
de Nemours & Co., 100 F.3d 1061, 1076 (3d Cir. 1996) (en
banc)).
Fantasy Lane contends the jury’s verdict for Penn Ridge
on the contract dispute was “against the clear weight of the
evidence.” Fantasy Lane Br. 27. The basis for this argument is
Fantasy Lane’s insistence that Penn Ridge breached the
agreement first. Fantasy Lane points to testimony from two
people who were interested in breeding their mares to
Uptowncharlybrown—one in the fall of 2012 and another in
February 2013—but were either ignored or turned away by
Penn Ridge. Because these incidents occurred before Fantasy
Lane accrued a past-due balance for boarding services in
August 2013, it claims the evidence shows Penn Ridge first
breached the contract.
We agree with the District Court that the testimony just
mentioned is insufficient to overturn the jury’s verdict. The
Court instructed the jury (as always) to evaluate the credibility
of the witnesses testifying at trial. See William A. Graham Co.,
646 F.3d at 143. The mere fact that Fantasy Lane presented
witness testimony supporting its counterclaim against Penn
Ridge sheds no light on the credibility or weight the jury
accorded such evidence. So it was no abuse of discretion to
deny Fantasy Lane’s motion for a new trial.
9
C
Fantasy Lane finally challenges as abuse of discretion
that the District Court failed to reduce the jury’s $110,000
compensatory award for contract damages.
Under Pennsylvania law, “[j]udicial reduction of a jury
award is appropriate only when the award is plainly excessive
and exorbitant.” Zaukflik v. Pennsbury Sch. Dist., 104 A.3d
1096, 1129 (Pa. 2014) (alteration in original) (quoting Haines
v. Raven Arms, 640 A.2d 367, 369 (Pa. 1994)). To make this
determination courts consider “whether the award of damages
falls within the uncertain limits of fair and reasonable
compensation or whether the verdict so shocks the sense of
justice as to suggest the jury was influenced by partiality,
prejudice, mistake, or corruption.” Id. (quoting Haines, 640
A.2d at 369). The Pennsylvania Supreme Court has instructed
that “[i]n reviewing the award of damages, the appellate courts
should give deference to the decisions of the trier of fact who
is usually in a superior position to appraise and weigh the
evidence.” Ferrer v. Trs. of Univ. of Pa., 825 A.2d 591, 611
(Pa. 2002) (quoting Delahanty, 464 A.2d at 1257).
Fantasy Lane emphasizes that “no demand had been
made or evidence presented for a figure exceeding” the total
invoice amount of $65,707 for six months of boarding fees.
Fantasy Lane Br. 28. Fantasy Lane does not dispute that
evidence at trial showed the horses stayed at Penn Ridge for
another four months after the last invoice. Rather, it contends
the damages the jury apparently awarded to remunerate Penn
Ridge for that period cannot stand because Penn Ridge neither
asked the jury to award damages for those months nor
presented evidence for “any actual charges incurred by Fantasy
Lane after the last invoice was sent.” Id.
10
Fantasy Lane claims the facts here are like those in
Steinhauer v. Wilson, 485 A.2d 477 (Pa. Super. Ct. 1984). In
that case, a Pennsylvania appellate court reduced the jury’s
compensatory award by $1,000 because the jury awarded the
plaintiff $21,000 despite expert testimony that the cost of
repairs were between $18,000 and $20,000 “without allowance
for overhead or profit.” Steinhauer, 485 A.2d at 479. Appellees
argued it was reasonable to infer the jury included the extra
$1,000 to cover additional costs. Id. The court disagreed,
explaining that appellees presented no evidence to support the
additional amount and that damages should be calculated with
“reasonable certainty” rather than conjecture. Id. (quoting
Gordon v. Trovato, 338 A.2d 653, 657 (Pa. Super. Ct. 1975)).
Fantasy Lane insists the same logic should apply here, arguing
that because the $110,000 award was based on “conjecture that
an additional amount was owed and upon [the jury’s] own
conjecture of what that amount should be,” the District Court
abused its discretion in not reducing the award. Fantasy Lane
Br. 31.
Fantasy Lane’s argument has some force because the
jury’s decision to award more than the $65,707 stated on Penn
Ridge’s invoices is unusual. But unusual is not the same thing
as excessive, and Fantasy Lane has not proved what is required
to upend the jury’s verdict. Here again, we agree with the
District Court that “the verdict is not substantially larger than
that which the evidence presented at trial could sustain.” Jester,
2018 WL 4110625, at *4. The jury’s award of $110,000 was
not, as Fantasy Lane contends, based on conjecture about the
costs of the four additional months of boarding costs. The
record supports the inference that the jury extrapolated the
monthly boarding fees (about $11,000) from the invoices in
evidence to cover the entire ten-month period at issue.
11
Nor are we persuaded by Fantasy Lane’s argument that
this case is analogous to Steinhauer. The appellees there
presented no evidence “tending to establish the [additional]
amount of profit or overhead” awarded by the jury. Steinhauer,
485 A.2d at 479. Here, the jury had six months of invoices to
extrapolate from, and it reasonably calculated the monthly
costs for the additional four months based on the $65,707 six-
month total. See App. 727–45. So we hold the District Court
did not abuse its discretion in declining to reduce Penn Ridge’s
compensatory damages award.
D
Finally, we turn to Penn Ridge’s challenge to the
District Court’s reduction of the punitive damage award for
defamation from $89,999 to $5,500. The District Court found
the award unconstitutionally excessive after evaluating it under
the two guideposts established by the Supreme Court in Gore
and reaffirmed in State Farm: “(1) the degree of
reprehensibility of the defendant’s misconduct” and “(2) the
disparity between the actual or potential harm suffered by the
plaintiff and the punitive damages award.”1 State Farm, 538
U.S. at 418 (citing Gore, 517 U.S. at 575).
The focus of this appeal is the District Court’s
application of the second guidepost. In considering State
1
The third guidepost—“the difference between the
punitive damages awarded by the jury and the civil penalties
authorized or imposed in comparable cases”—is not instructive
here for defamation, a common law tort. See CGB
Occupational Therapy, Inc. v. RHA Health Servs., Inc., 499
F.3d 184, 190 (3d Cir. 2007).
12
Farm’s ratio guidance, the District Court recognized that “few
awards exceeding a single-digit ratio between punitive and
compensatory damage, to a significant degree, will satisfy due
process.” Jester, 2018 WL 4110625, at *7 (quoting CGB
Occupational Therapy, Inc. v. RHA Health Servs., Inc., 499
F.3d 184, 192 (3d Cir. 2007)). And the Court noted that here,
“the jury awarded punitive damages in an amount
approximately 90,000 times the compensatory damage award
of $1.00.” Id. Because the Court determined in its
reprehensibility analysis that Hutt’s conduct “was not so
sufficiently egregious to warrant” a nearly $90,000 punitive
award, it concluded that an award of “$5,500.00 [was]
reasonable and proportionate to the harm suffered by Plaintiffs
and conforms to the requirements of the due process clause.”
Id. at *6, *7. So the Court reduced the punitive damage award
accordingly.
We perceive two flaws in the District Court’s analysis.
First, as Penn Ridge noted, the District Court mischaracterized
the $1 award as compensatory. The verdict form shows that
award was nominal: under the “compensatory damages” line
item (after the question on whether Penn Ridge proved “Hutt
published a defamatory statement of and concerning [Fantasy
Lane]”), the verdict form stated, “[i]f you find that Plaintiffs
are not entitled to any compensatory damages, you must award
Plaintiffs $1 in nominal damages.” App. 872. Pennsylvania law
does not, of course, treat nominal damages as synonymous
with compensatory damages. See Carter v. May Dep’t Store
Co., 853 A.2d 1037, 1041 (Pa. Super. Ct. 2004) (explaining
that under the Restatement (Second) of Torts § 907, “[n]ominal
damages are a trivial sum of money awarded to a litigant who
has established a cause of action but has not established that he
13
is entitled to compensatory damages”). So the Court’s
treatment of the $1 award as compensatory was incorrect.
The District Court also erred in comparing the $1 and
$89,999 awards under the ratio guidepost. While the Court did
not strictly follow the Supreme Court’s single-digit guidance
(which would have required a reduction of the $89,999 to $9
or less), see State Farm, 538 U.S. at 425, it cited this guidepost
in its analysis reducing the punitive damages award.
But both Gore and State Farm strongly suggest that
following this guidepost does not apply to nominal awards.
The Supreme Court explained that the ratio guidepost
compares punitive damages to the “actual harm inflicted on the
plaintiff,” Gore, 517 U.S. at 580, and that trial courts should
consider the “ratio between punitive and compensatory
damages,” State Farm, 538 U.S. at 425. In view of that
guidance, several of our sister courts have held that the single-
digit ratio analysis does not apply to punitive awards
accompanying nominal damages awards. See Arizona v.
ASARCO LLC, 773 F.3d 1050, 1058 (9th Cir. 2014); Saunders
v. Branch Banking & Tr. Co. of Va., 526 F.3d 142, 154 (4th
Cir. 2008); Patterson v. Balsamico, 440 F.3d 104, 121 n.11 (2d
Cir. 2006); Romanski v. Detroit Entm’t, LLC., 428 F.3d 629,
645 (6th Cir. 2005); Williams v. Kaufman Cty., 352 F.3d 994,
1016 & n.76 (5th Cir. 2003); cf. Bryant v. Jeffrey Sand Co.,
919 F.3d 520, 528 (8th Cir. 2019) (“As in prior cases
addressing nominal damages, we decline to place undue weight
on the mathematical ratio between compensatory and punitive
damages.”). As the Fourth Circuit explained, “when a jury only
awards nominal damages or a small amount of compensatory
damages, a punitive damages award may exceed the normal
single digit ratio because a smaller amount ‘would utterly fail
to serve the traditional purposes underlying an award of
14
punitive damages, which are to punish and deter.’” Saunders,
526 F.3d at 154 (quoting Kemp v. Am. Tel. & Tel. Co., 393 F.3d
1354, 1364 (11th Cir. 2004)).
This approach to nominal awards is consistent with the
Supreme Court’s treatment of certain modest compensatory
awards. See Romanski, 428 F.3d at 646. The Court explained
in Gore that “low 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.” Gore, 517 U.S. at 582.
And the Court noted that “[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.” Id. This further suggests the ratio guidepost is
inapt for nominal awards. See Romanski, 428 F.3d at 646. So
we join our sister courts and hold that the single-digit ratio does
not apply to nominal damage awards.
Without guidance from the ratio, how have courts
evaluated the constitutionality of punitive damage awards? For
starters, they have recognized that higher ratios between
nominal and punitive awards “are to be expected.” Romanski,
428 F.3d at 645; see also Saunders, 526 F.3d at 154; Fabri v.
United Techs. Int’l, Inc., 387 F.3d 109, 126–27 (2d Cir. 2004);
Williams, 352 F.3d at 1016. And after acknowledging that the
punitive award can exceed the single-digit ratio, courts often
“compare it to punitive awards examined by courts ‘in [similar
cases] to find limits and proportions.’” Romanski, 428 F.3d at
645 (quoting Lee v. Edwards, 101 F.3d 805, 811 (2d Cir.
1996)); see, e.g., Fabri, 387 F.3d at 126–27 (comparing the
punitive damages award to others in similar cases); Williams,
352 F.3d at 1016 n.78 (same); see also Saunders, 526 F.3d at
154 (comparing the punitive damages award “to other cases
15
involving similar claims” and assessing whether a lower award
would act as a meaningful deterrent).
This approach accords with the Supreme Court’s
characterization of the ratio guidepost as providing an
“indicium of an unreasonable or excessive punitive damages
award.” Gore, 517 U.S. at 580; see Romanski, 428 F.3d at 646(“This approach is necessarily unscientific but aids us in
identifying a ballpark within which to evaluate the [punitive
damages] award at issue here.”). In declining to adopt a
“mathematical bright line between the constitutionally
acceptable and . . . unacceptable” awards for the ratio
guidepost, Gore, 517 U.S. at 583, the Court has explained that
“a general concern of reasonableness properly enters into the
constitutional calculus,” id. (alterations omitted) (quoting TXO
Prod. Corp. v. All. Res. Corp., 509 U.S. 443, 448 (1993)).
Likewise, the Court described the reprehensibility analysis as
“the most important indicium of the reasonableness of a
punitive damages award.” Id. at 575. So the Court’s guideposts
suggest that the touchstone for constitutional scrutiny of
punitive damages awards is reasonableness. See Willow Inn,
Inc. v. Pub. Serv. Mut. Inc. Co., 399 F.3d 224, 231 (3d Cir.
2005). Because we believe that comparisons to punitive awards
in similar cases will help district courts assess the
reasonableness of a punitive award when only nominal
damages are given, we too endorse this approach.
Because the District Court mischaracterized the
nominal award as compensatory and erroneously applied the
ratio guidepost, we will vacate the Court’s order to the extent
it reduces the punitive damages. In reevaluating the award on
remand, the District Court should consider the reprehensibility
of Hutt’s conduct and compare the $89,999 award to those in
defamation or other dignitary tort cases that do not involve
16
physical harm. We also note that while courts act as
gatekeepers to review the constitutionality of punitive
damages, “we must accord ‘a measure of deference’ to the
jury’s award.” CGB, 499 F.3d at 193 (quoting Willow Inn, 399
F.3d at 231). When a court finds a jury’s punitive award
unconstitutional, it should “decrease the award to an amount
the evidence will bear, which amount must necessarily be as
high—and may well be higher—than the level the court would
have deemed appropriate if working on a clean slate.” Id.(quoting Willow Inn, 399 F.3d at 231). So if the District Court
finds that the $89,999 punitive damages award is
unconstitutionally excessive, it should explain why that
amount is not within the range of reasonable punitive damages
for this type of claim and why a lower award properly reflects
the reprehensibility of Hutt’s conduct.
* * *
For the reasons stated, we will affirm the District
Court’s order granting partial summary judgment for Penn
Ridge. We will also affirm the District Court’s post-trial order
to the extent it denies Fantasy Lane’s motions for a new trial
and reduction of the contract damages award, vacate that
order’s reduction of Penn Ridge’s punitive damages award,
and remand the case for further proceedings consistent with
this opinion.
17