Petitioner sued Respondent for losing 300 of the transparencies of his photographs.
In cases of diversity jurisdiction and consistent with the Seventh Amendment, when a federal district court uses New York’s CPLR § 5501(c) to determine excessiveness of a jury award, the appellate court reviews the decision for abuse of discretion.
Photographer William Gasperini (Petitioner) sued The Center for Humanities, Inc. (Respondent) in the United States District Court for the Southern District of New York, under diversity jurisdiction, after Respondent lost 300 of his original transparencies. Under New York state law, he sought compensatory damages for breach of contract, conversion, and negligence.
May a federal appellate court, acting under diversity jurisdiction, review the size of the jury’s awards under New York’s law CPLR § 5501(c)?
No, the federal appellate court must review the district court’s determination of the award under the abuse of discretion standard of review. The Court of Appeals’ decision is vacated and the case remanded to the District Court to the trial judge can apply CPLR § 5501(c).
Justice Stevens disagreed with the outcome of the case, stating that the Court of Appeals was correct in ordering a new trial and that the Seventh Amendment did not limit the appellate courts in reviewing jury awards for excessiveness.
Justice Scalia argued that the Court of Appeals decision should have been reversed based on the fact that appellate courts are not permitted to reexamine the facts of the case. He disagreed with the Court’s analysis of CPLR § 5501(c) as substantive and outcome determinative, and argued that the Court should not have conducted an analysis under Erie Railroad Co. v. Tompkins but instead looked to Rule 59.
Following Erie Railroad v. Tompkins, the Court first concluded that CPLR § 5501(c) was mainly a substantive law. Applying Guaranty Trust Co. v. York’s “outcome determinative” test, the Court then determined that it was likely the jury award would be different when scrutinized under CPLR § 5501(c)‘s “deviates materially” test instead of the federal “shocks the conscious” test. For this reason, it was appropriate for the trial court to apply CPLR § 5501(c). However, under Byrd v. Blue Ridge Rural Electric Cooperative, Inc., applying CPLR § 5501(c) at the appellate level would disturb the essential federal policy of reviewing these decisions for abuse of discretion.