Jung Ja Malandris v. Merrill Lynch, Pierce, Fenner & Smith Incorporated

SEYMOUR, Circuit Judge, with whom McKAY, Circuit Judge,

joins, concurring and dissenting.

The only point of disagreement between the majority panel opinion and the dissent is whether the jury’s determination of liability was tainted by passion and prejudice, thus requiring a new trial. The dissent concludes that passion and prejudice did *1184 infect the jury’s determination of liability and that a new trial is required. The dissent bases that conclusion on what is perceived to be an excessive award of both actual and punitive damages, as well as the occurrence of emotional incidents during trial that the dissent believes inflamed the jury. The majority, on the other hand, concludes that passion and prejudice did not affect the finding of liability and that a new trial is therefore not mandated. With respect to the award of damages, the majority finds the actual damages not excessive; however, it finds the punitive damages so excessive that a remittitur is in order.

I agree with the majority opinion in all respects except in its conclusion that a portion of the punitive damages must be remitted. After reviewing the law and the record in this case, I am convinced the entire award should stand.

The district court concluded that passion and prejudice did not affect the jury’s determination of liability:

“Considering the evidence as a whole, in my judgment, this jury verdict was produced not by any passion, prejudice or sympathy generated by the plaintiff’s conduct or that of her husband; it was, rather, the product of a sense of outrage and indignation about the callous and cavalier conduct of the defendant’s agent acting in complete disregard of the rights and sensitivities of the plaintiff whose emotional and economic security was in his hands.”

Malandris v. Merrill Lynch, Pierce, Fenner & Smith, 447 F.Supp. 543, 547 (D.Colo.1977). This decision must be accorded great deference. 1 In my judgment the record supports the determination in this case.

Inferring passion and prejudice solely from the size of the verdict is unwarranted. Here, the dissent bases its conclusion both on the size of the verdict and on the oecurrence of several emotional outbursts by Mrs. Malandris and her husband during the trial. However, I do not agree that these outbursts support the dissent’s conclusion. The record contains abundant evidence of an outrageous course of conduct by defendant’s broker. The district judge who heard the spontaneous outbursts, which were made in response to the broker’s testimony portraying Mr. Malandris as a liar, viewed them as “genuine human responses to testimony which was not credible,” Id. at 547 . In addition, the judge considered Mrs. Malandris’ reaction as a demonstration of the extent of her mental and emotional damage, creating no greater prejudice to the defendant than when a plaintiff who suffers physical injuries from the tort of another displays those injuries to the jury by appearing in the courtroom. Id. Viewing the incidents in the context of the trial, I am not led to an irresistible inference that the verdict on liability was the result of the outbursts rather than the jury’s extreme indignation over the broker’s activities.

I also agree with the panel majority that the amount of compensatory damages awarded Mrs. Malandris is not excessive. The record establishes that the jury was not considering minor emotional distress when it computed the damages but had before it evidence showing that Mrs. Malandris incurred extensive, possibly permanent, emotional injury that had destroyed her ability to function normally. Under these circumstances, the award of $1,000,000 does not shock my judicial conscience.

Notwithstanding my agreement with the panel majority thus far, I cannot concur in the remittitur ordered as to the punitive damages. I recognize that in some cases the award of punitive damages may be so excessive that it shocks the judicial conscience, even though the jury’s resolution of the issue of liability is free from passion and prejudice. See, e.g., Holmes v. Wack, 464 F.2d 86 , 89 & n. 3 (10th Cir.1972); 6A J. *1185 Moore, Moore’s Federal Practice K 59.05[3] at 59-67 to 68 (1982); 11 C. Wright & A. Miller, Federal Practice and Procedure § 2820 at 133-35 (1973). In such cases, remittitur furthers both justice and judicial economy. However, after reviewing the record in this case, and considering the size of the corporate defendant and the reprehensible nature of the conduct giving rise to the injury, the amount of punitive damages assessed against Merrill Lynch does not shock my judicial conscience.

Ordering a remittitur in this case is particularly troublesome because no independent basis exists to support it apart from the size of the verdict. As the majority recognizes, the three to one ratio of punitive damages to actual damages is well within the range approved by Colorado law. Moreover, the assets of the defendant are vast and the conduct of its broker deplorable. Under these circumstances, an appellate court should be particularly reluctant to order a remittitur, especially when the jury’s award has been upheld by the trial court on a motion for new trial. See Hedrick v. Hercules Inc., 658 F.2d 1088, 1095 (5th Cir.1981); Transok Pipeline Co. v. Darks, 565 F.2d 1150, 1156 (10th Cir.1977), cert. denied, 435 U.S. 1006 , 98 S.Ct. 1876 , 56 L.Ed.2d 388 (1978); 11 C. Wright & A. Miller § 2820 at 135 (quoting Taylor v. Washington Terminal Co., 409 F.2d 145, 148 (D.C.Cir.), cert. denied, 396 U.S. 835 , 90 S.Ct. 93 , 24 L.Ed.2d 85 (1969)).

An amount which one judicial conscience finds shocking may be entirely palatable to another, as is shown by the diverse reactions of the members of this court to the size of the verdict in this case. This state of affairs reveals the pitfalls inherent in judicial tinkering with the jury’s determination of the amount of exemplary damages necessary to punish outrageous behavior and prevent its recurrence.

In sum, I agree with the dissent that the personal reactions of appellate judges standing alone are poorly suited to govern the modification of a punitive damage award. We are undeniably substituting our judgment for that of the jury and, in my view, encroaching upon its function. For these reasons, and because I conclude that the determination of liability is not the result of passion and prejudice and the award of compensatory damages does not shock my judicial conscience, I would affirm the award in its entirety.

. One authority states that “[t]he trial court’s determination as to whether the verdict is the result of the passion or prejudice will not be disturbed on appeal, unless the determination is clearly erroneous.” 6A J. Moore, Moore’s Federal Practice j] 59.05[3] at 59-59 (1982). The trial court’s denial of a motion for new trial will be reversed only upon a finding of a gross abuse of discretion. Holmes v. Wack, 464 F.2d 86, 89 (10th Cir.1972).