Eleventh Circuit limits punitive damages awards.

In a move it called a "constitutional reduction," a three-judge panel of the Eleventh Circuit Court of Appeals shunned the remittitur and cut a punitive damages award without granting the plaintiffs the choice of a new trial. (Johansen v. Combustion Engineering, Inc., No. 97-8726, 1999 WL 178538 (11th Cir. Apr. 1, 1999).)

"A remittitur is a substitution of the court's judgment for that of the jury regarding the appropriate award of damages. The court orders a remittitur when it believes the jury's award is unreasonable on the facts," Senior Judge James Hill wrote for the panel. "A constitutional reduction, on the other hand, is a determination that the law does not permit the award.... A court has a mandatory duty to correct an unconstitutionally excessive verdict so that it conforms to the requirements of the Due Process Clause."

The suit involved the owners of 16 parcels of land in Lincoln County, Georgia, who filed a nuisance and trespass claim against a mining company. The plaintiffs claimed that acidic water from an abandoned mine site owned by Combustion Engineering, Inc., polluted streams that run through the plaintiffs' property. They did not claim any personal injuries, reduced property value, damage to crops, or any other economic loss.

The jury awarded the landowners $47,000 for damage to the streams and $227,000 in litigation costs. The jury also slapped Combustion Engineering with $45 million in punitive damages.

Finding the punitive damages award "shocking," U.S. District Court Judge Dudley Bowen Jr. used the remittitur procedure to grant the company a new trial unless the property owners remitted all punitive damages over $15 million. The owners opted for the reduced award, and the court entered separate judgments totaling $15 million in punitive damages.

Combustion Engineering appealed the judgment, but the Eleventh Circuit affirmed without comment. The defense then went to the U.S. Supreme Court, which vacated the Eleventh Circuit's judgment based on its punitive damages ruling in BMW of North America, Inc. v. Gore. (517 U.S. 559 (1996).) The Court remanded the case to the Eleventh Circuit, which turned the case back to the district court.

The district court reduced the punitive damages award to $4.35 million without giving the property owners the option of retrying the case.

Combustion Engineering appealed again, claiming that $4.35 million was still unconstitutionally excessive. The owners cross-appealed, arguing the court erred in reducing the punitive damages without giving them the option of a new trial.

The Eleventh Circuit panel ruled that trial judges may reduce punitive damages awards they find "unconstitutionally excessive" without offering plaintiffs a new trial.

"No one would dispute that the court, not the jury, has the responsibility for determining this constitutional limit. Courts decide questions of law, not juries. The real issue, therefore, is whether the court may enter judgment for a constitutionally reduced award without plaintiff's consent. So put, the question answers itself. Plaintiff's consent is irrelevant if the Constitution requires the reduction," Hill wrote.

In this ruling, the Eleventh Circuit strayed from the Second and Tenth circuits, which have held that the Seventh Amendment requires that courts offer plaintiffs whose verdicts have been found to be unconstitutionally excessive the choice of a reduced verdict or a new trial.

The company, which still finds the $4.35 million award excessive, has appealed the decision to the full Eleventh Circuit.

"The Eleventh Circuit has misconstrued the judicial role in this case," said ATLA Legal Affairs Senior Director Robert Peck. "The Supreme Court has acknowledged the primacy of the jury in setting punitive damages since 1852. Just last year, the Court reaffirmed that the Seventh Amendment requires the offer of a new jury trial any time a court reduces a jury award. The Johansen decision cannot be reconciled with these Supreme Court teachings."