Reply Brief — Massachusetts Mutual Life Insurance v. Litman

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No. 87-704

milOSEPLLESPANIOL, JR,

CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1987

MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY,

Petitioner,

—_vV.—_

BERNARD LITMAN,

Respondent.

REPLY BRIEF IN SUPPORT OF PETITION

FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

JOSEPH P. KLOCK, JR.

Counsel of Record

STEEL HECTOR & DAVIS

Attorneys for Petitioner

Massachusetts Mutual Life

Insurance Company

4000 Southeast Financial Center

200 South Biscayne Boulevard

Miami, Florida 33131-2398

(305) 577-2877

JANET T. MUNN

Of Counsel

ele es

TABLE OF CONTENTS

PAGE

REPLY TO RESPONDENT’S ARGUMENT IN OPPO-

SITION TO REASONS FOR GRANTING THE

1. The Erie violation is properly before this Court. . 2

2. Under a Correct Erie Analysis, State Law Con-

trols the Availability of a Right to Retrial on the

Issue of Punitive Damages .............0.0005.

3. Under Florida Law Litman May Not Force Mass.

Mutual to Endure a Retrial on Punitive Damages 4

wy)

4. The Failure of the en banc Court of Appeals to

Adhere to Erie Principies is Not an Error Which is

BS reer ne Pee 6

ee re ee ee en eee ear 9

TABLE OF AUTHORITIES

-Cases: PAGE

Adickes v. S.H. Kress & Co., 398 U.S. 144 (1970)..... 3

Adler v. Seligman of Florida, 438 So. 2d 1063 (Fla. 4th

SM TORRE knkdss cde ken eke eee eee a 2

Arab Termite and Pest Control of Florida, Inc. v.

Jenkins, 409 So. 2d 1039 (Fla. 1982) ............... 4

Black & White Taxicab Co. v. Brown & Yellow Taxicab

Cw, Bre UB. SU ee oc od ck 0s haces fendi 7

Burlington Northern R. Company v. Woods, U.S

eee 5 te (fi ee peer ras piri mr cry 6

Byrd v. Blue Ridge Rural Electric Cooperative, 356 U.S.

EF CUO ok ccc shade piekandasisendeee awe 4

Bankers Life and Casualty Company v. Crenshaw, 483

So. 2d 254 (Miss. 1985), prob. juris. noted, ___ U.S.

» eer S. Se. FT RR aa keds nccaseas 7

Day & Zimmerman, Inc. v. Challoner, 423 U.S. 3 (1975)

| Sn rer reser ery err ese 6

Delta Airlines, Inc. v. August, 450 U.S. 345 (1981) .... 3

Erie R. Co. v. Tompkins, 304 U.S. 64 (1938)..... Re a ee

Flagship National Bank v. Gray Distribution Systems,

Inc., 485 So. 2d 1336 (Fla. 3d DCA), review denied,

ar Sk. De TOPE Gs We ks ko ce Oe ccc aeons 5

Hanna v. Plumer, 380 U.S. at 460 (1965)............. 4, 6, 8

Lehman Brothers v. Schein, 416 U.S. 386 (1974) ...... 6

St. Regis Paper Co. v. Watson, 428 So. 2d 243 (Fla.

| See Bera icat, re reir A ep Mr 3, 4, 5, 6

iil

PAGE

Stewart Organization, Inc. v. Ricoh Corp., 810 F.2d

1066 (11th Cir.) (en banc), cert. granted, _____ U.S.

ee ss SE 6, 7,8

Swift v. Tyson, 10 U.S. (16 Pet.) 1 (1842) ............ 7

Rules:

ons gbsccncvsdnsccncacecacs 6

Other Authorities:

C. Wright, The Law of Federal Courts 386 (4th ed. 1983) 8

Redish & Phillips, Erie and the Rules of Decision Act: In

Search of the Appropriate Dilemma, 91 Harv. L. Rev.

i caus awk sk db kde KO ds ao aes 8

IN THE

Supreme Court of the United States

OCTOBER TERM, 1987

No. 87-704

MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY,

Petitioner,

_vVv—

BERNARD LITMAN,

Respondeni.

REPLY BRIEF IN SUPPORT OF PETITION

FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

Petitioner, Massachusetts Mutual Life Insurance Company,

files this reply to Respondent’s Brief in Opposition to the

Petition for a Writ of Certiorari to the Court of Appeals for

the Eleventh Circuit.’

REPLY TO THE RESPONDENT’S ARGUMENT IN OP-

POSITION TO REASONS FOR GRANTING THE WRIT

Petitioner, Massachusetts Mutual Life Insurance Company

(“Mass. Mutual”), has demonstrated that the court below

seriously departed from Erie principles by mandating that

Mass. Mutual must undergo a second trial on punitive dam-

ages. Respondent, Bernard Litman (“Litman”), raises three

arguments in response: (1) he suggests that the issue of the en

banc court’s violation of Erie is not properly before this Court,

because the issue was not raised by Mass. Mutual in the first

appeal; (2) the action of the en banc court is consistent with

l In compliance with Rule 28.1 of the Supreme Court Rules, Peti-

tioner, Massachusetts Mutual Life Insurance Company, incorporates

by reference the list of subsidiaries contained in the Petition for Writ of

Certiorari.

Florida law; and (3) that Mass. Mutual has stated no basis for

certiorari review. Litman’s arguments are without foundation

in either fact or law and to the extent that he relies on Florida

law at all, he relies on a Florida case that does not reach the

issues upon which this petition is predicated.

1. The Erie Violation is Properly Before this Court

The failure to adhere to Erie R. Co. v. Tompkins, 304 U.S.

64 (1938), and to apply settled state law occurred with the en

banc court of appeals and did not, as Litman maintains, arise

in the first appeal. Litman has recharacterized both Mass.

Mutual’s position and the record below in an attempt to

manufacture an argument more to his liking. The fact remains,

however, that it was not the panel in the first appeal nor the

panel in the second appeal, but the en banc court that failed to

consider or apply settled Florida law.

Furthermore, it is absurd to suggest that a party must

anticipate that a court will fail to follow Erie and thus

extensively brief the point. The Erie doctrine has been the law

for nearly half a century. See Erie, 304 U.S. at 64.

Litman’s claim of waiver is invalid for the additional reason

that Mass. Mutual did, in fact, raise the Erie claim before the

en banc Eleventh Circuit. The issue was raised by Mass.

Mutual in its en banc brief, not in a “supplemental” brief as

characterized by Litman.’

That the Erie issue did not arise until the en banc court ruled

necessarily distinguishes the en banc decision from the cases

upon which Litman relies.

2 Mass. Mutual raised Erie by stating: “The panel majority simply

concluded as they were Erie bound todo. . . .” (pg. 19 en banc brief

of Mass. Mutual). Litman, therefore, misstates the record when he

says at page 5 of his Response to the Petition for Certiorari that “Erie

itself was never cited in the defendant's briefs.” Waiver, even if

relevant, does not turn on the number of lines in a brief which are

devoted to a point of law.

In both Adickes v. S.H. Kress & Co., 398 U.S. 144 (1970)

and Delta Airlines, Inc. v. August, 450 U.S. 345 (1981), the

alleged error occurred in the district court, was never raised

before the court of appeals and was raised for the first time

before the Supreme Court. See Adickes, 398 U.S. at 148 n.2

(“The District Court denied petitioner’s request to amend her

complaint to include a third count. . . . Although in her

certiorari petition, petitioner challenged this ruling, . . . the

record shows that petitioner never raised any issue concerning

[this] before the Court of Appeals.”); Delta Airlines, 450 U.S.

at 362 (“Although defendant’s petition for certiorari presented

the question of the District Judge’s abuse of discretion. . .

that question was not raised in the Court of Appeals and is not

properly before us.”).

There is no higher intermediate court of appeals before

whom Mass. Mutual may seek review. The failure of the en

banc court of appeals to apply binding substantive state law in

a diversity case first arose in the en banc opinion below and is

properly before this Court now for review.

2. Under a Correct Erie Analysis, State Law Controls

the Availability of a Right to Retrial on the Issue of

Punitive Damages

The right in question here is the right to a new trial on the .

issue Of punitive damages. In Florida, the plaintiff has no right

to punitive damages. In consequence, the Florida courts quite

logically have found that the plaintiff also has no right to a

new trial based on claimed insufficiency of an award alone. Sv.

Regis Paper Co. v. Watson, 428 So. 2d 243, 247 (Fla. 1983).

Proper Erie analysis requires more than the superficial

statement that because a rule of appellate “procedure” is

implicated, state law becomes moot and is not binding on a

federal diversity court. What Litman prefers to characterize as

“procedure” is viewed by the Florida Supreme Court as a

_ Substantive right. St. Regis, 428 So. 2d at 247; See also Adler

v. Seligman of Florida, 438 So. 2d 1063, 1068 (Fla. 4th DCA

1983).

Florida’s policy decision regarding punitive damages is

clearly an issue which “affects those primary decisions respect-

ing human conduct which our constitutional system leaves to

State regulation.” Hanna v. Plumer, 380 U.S. 460, 475 (1965)

(Harlan, J., concurring) (emphasis added). On the issue of

punitive damages, state law, therefore, is binding on a federal

appellate court sitting in diversity. Byrd v. Blue Ridge Rural

Electric Cooperative, 356 U.S. 525 (1958); Hanna, 380 U.S. at

460.

3. Under Florida Law Litman May Not Force Mass.

Mutual to Endure a Retriai on Punitive Damages

The Florida Supreme Court has determined that absent a

fraud on the judicial system only the defendant is entitled to a

new trial on the amount of punitive damages to be awarded.

St. Regis, 428 So. 2d at 247; Adler, 438 So. 2d at 1064. Under

Florida law the plaintiff simply “has no right to punitive

damages.” St. Regis, 428 So. 2d at 247 (emphasis in oriinal).

Since that right belongs only to the defendant,’ a plaintiff

cannot force a defendant to endure a retrial on punitive

damages solely to gain a shot at enlarging the punitive damages

award the second time around. The result of the en banc

court’s decision is to allow Litman to do exactly what he may

not under Florida substantive law based upon an untenable

“mandate rule” justification.*

3 In Florida, a defendant has “a right to be free from unreasonable

punishment inflicted by an excessive punitive damages award.” S/.

Regis, 428 So. 2d at 247 (emphasis added).

4 In Florida, a new trial on punitive damages can only be ordered

under certain limited circumstances. Under Florida law a new trial on

punitive damages is permitted only “when the manifest weight of the

evidence shows that the amount of punitive damages assessed is out of

all reasonable proportion to the malice, outrage or wantonness of

tortious conduct.” Arab Termite and Pest Control of Florida, Inc. v.

Jenkins, 409 So. 2d 1039, 1043 (Fla. 1982).

To mask the en banc court’s error, Litman relies principally

on an intermediate Florida appellate court opinion which

Litman suggests supports the en banc court’s decision. The

case, Flagship National Bank v. Gray Distribution Systems,

Inc., 485 So. 2d 1336 (Fla. 3d DCA), review denied, 497 So. 2d

1217 (Fla. 1986), does not decide or even discuss the issue

presented in the instant litigation.

Flagship does stand for the proposition that a defendant—as

opposed to a plaintiff—who prevails on appeal may be entitled

to a retrial on the issue of compensatory and punitive damages.

Nowhere, though, does the court in that case treat the question

whether a defendant on remand may choose to forego his right

to a retrial on punitive damages and accept the jury award

from the first trial. Jd. at 1341. Consequently, in citing Flag-

ship, Litman relies on a case which was in exactly the same

posture as was the instant case up through the first panel

appeal. Unlike the instant case, however, Flagship has no

subsequent reported history. In an obvious effort to evade the

real issue with which Litman apparently does not wish to deal,

he cites a case where the issue of disposition on remand was

never addressed.

In his discussion of Flagship, Litman fails to disclose that

the Flagship court cited with approval another Florida case,

Adler v. Seligman of Florida, Inc., 438 So. 2d at 1063. In

Adler, the court relied on St. Regis and repeated that in

Florida a plaintiff does not have a “right to a punitive award

even if the evidence would support such an award.” /d. at 1068

(emphasis added in part). On the basis of St. Regis, the Adler

court refused to remand with instructions that would require

the fact finder to assess punitive damages against the defen-

dant. /d.

The point is, thus, settled and unambiguous in Florida. The

plaintiff has no right to appeal on the issue of the sufficiency

of a punitive damage award. Therefore, the defendant may not

be forced on remand to suffer a second trial on this issue. S/.

Regis, 438 So. 2d at 247; Adler, 438 So. 2d at 1068. The

Florida Supreme Court’s opinion in Sr. Regis remains as the

clear and binding statement of Florida law.”

4. The Failure of the en banc Court of Appeals to Adhere

to Erie Principles is Not an Error Which is Unique to

this Case

Litman’s attempt to alter the facts in this case is apparent as

he strives to recast the case as one involving a peculiar fact

situation coupled with a misapplication of Florida law. That is

not the issue presented in this case, and despite Litman’s

efforts to have this Court believe otherwise, the facts—as

opposed to Litman’s argument—support Mass. Mutual’s posi-

tion. The record below clearly reveals that the error the en

banc court committed was not a misapplication of Florida law,

but rather where Frie is concerned, a more significant error, a

failure to consider state substantive law.

This Court has previously found the Erie doctrine to be

sufficiently important to warrant the exercise of the Court’s

discretionary jurisdiction. See, e.g., Stewart Organization, Inc.

v. Ricoh Corp., 810 F.2d 1066 (11th Cir.) (per curiam) (en

banc), cert. granted, oh , 108 S. Ct. 225 (1987);

Burlington Northern R. Company v. Woods, US. ‘

107 S. Ct. 967 (1987); Day & Zimmerman, Inc. v. Challoner,

423 U.S. 3 (1975) (per curiam); Hanna v. Plumer, 380 U.S. at

460. Moreover, Ricoh, Burlington Northern R. Co., and Chal-

loner, are all recent Erie cases arising out of either the Eleventh

Circuit or its predecessor, the old Fifth Circuit, taus suggesting

that recognition and application of Erie is far from “settled”

5 If the Eleventh Circuit had any doubt as to the Florida law with

respect to punitive damages, it should have utilized the certification

procedure available in Florida and certified the question to the Florida

Supreme Court. See Fla. R. App. P. 9.150; See also Lehman Brothers

v. Schein, 416 U.S. 386, 391 (1974) (In Schein, this Court endorsed the

certification procedure available in Florida when there is any doubt

regarding a controlling issue of Florida law.).

and continues, at least in the Eleventh Circuit, to be problem-

atic.

In particular, the Eleventh Circuit case, Stewart Organiza-

tion, Inc. v. Ricoh Corp., 810 F.2d at 1066, which this Court

will shortly consider,° underscores the continuing difficulty the

Eleventh Circuit has with Erie questions. In Ricoh, the en banc

Eleventh Circuit, after performing its Erie analysis, concluded

that federal rather than state law governs the enforceability of

a forum-selection clause in a contract between private parties

even though if the case had been brought in the courts of the

forum state the contract would nor have been enforced. /d.

In Ricoh, the dissent charges that the en banc court’s Erie

analysis is flawed because of a confusion about the real issue in

the case. Jd. at 1077 (Godbold, J., dissenting) (“This case is

not about what court is suitable. It is about an agreement to

choose between suitable courts.”) (emphasis in original).

The Eleventh Circuit’s confusion over Erie has continued

unabated and with the instant case has turned down a more

troubling path. By failing to even consider Erie (as opposed to

misapplying Erie), the Eleventh Circuit threatens a return to

the time, preceding Erie R. Co. v. Tompkins, when the federal

courts refused to acknowledge state decisions by favoring a

uniformity of federal general common law, and when the

outcome in a case was determined by the fortuitous selection

of which courthouse one chose within the same state. See, e.g.,

Swift v. Tyson, 10 U.S. (16 Pet.) 1 (1842); Black & White

Taxicab Co. v. Brown & Yellow Taxicab Co., 276 U.S. 518

(1928).

6 The court also currently has before it Bankers Life and Casualty

Company v. Crenshaw, 483 So. 2d 254 (Miss. 1985), prob. juris.

noted, U.5. , 107 S. Ct. 1367 (1987), a case which raises

the issue of the unconstitutionality of unfettered jury discretion in

punitive damages cases. That issue is highlighted here by the fact that

Mass. Mutual already having run the gauntlet once, now faces a forced

retrial on the issue of punitive damages.

The only justification offered by the Eleventh Circuit for its

intrusion into a matter rightly left to state determination is the

need to preserve the sanctity of the mandate rule.’ When

measured against the conscious policy choice of a state in an

area solely of state concern the comparative federal interest, to

the extent that it even exists, is simply too weak a ground upon

which to allow the decision to stand. See C. Wright, The Law

of Federal Courts 386 (4th ed. 1983); See also Redish &

Phillips, Erie and the Rules of Decision Act: In Search of the

Appropriate Dilemma, 91 Harv. L. Rev. 356 (1977).

Litman, therefore, is wrong when he states that the Erie

doctrine in general and the Erie question presented in this case

are unworthy of this Court’s consideration. The Erie doctrine

expresses the cardinal principles of comity and federalism. See

Hanna, 380 U.S. at 474 (Harlan, J., concurring). As in Ricoh,

the writ should issue in this case to resolve whether state law

should have been applied.

7 There is serious question about this point as well. Curiously, the

Eleventh Circuit chose to construe the lower court’s ruling as high

offense, when the trial judge, the first panel, and four judges of the

Eleventh Circuit saw a clear way of interpreting the action below in a

consistent fashion with the mandate.

Conclusion