Brief for the Respondent in Opposition — Rockwell-Standard Corp. v. Scaife Co.

IN THE

Supreme Court of the United States

October Term, 1972.

No. 71-1367.

ROCKWELL- STANDARD CORPORATION,

Petitioner,

Vv.

2

SCAIFE COMPANY,

On Petition for Writ of Certiorari to the Supreme Court

of the Commonwealth of Pennsylvania.

‘BRIEF FOR RESPONDENT IN OPPOSITION

3 AND APPENDIX.

Pair H. Strusine,

Epitu G. Laver, ‘

Preprer, Hamitton & Scneerz,

123 South Broad Street,

Philadelphia, Pa. 19109

Morris M. Bercer, -

C. Wituram ‘Bercer,

Bercer & Kapetan,

,508 Law & Finance Building,

Pittsburgh, Pa. 15219

MicuaEL Hanatyak,.

403 Commonwealth Building,

Pittsburgh, Pa. 15222

Attorneys for Respondent,

Scaife Company.

International, 711 So. 50th St., Phila., Pa. 19143—Tel. SA 7-8711 Area Code 215

Respondent.

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2. The Question Was Not Timely Raised Below ......

3. The Decision Below Is Clearly Correct ............

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Aprexpix—- Pages 34-39 of Scaife Company's Brief as Appe!-

lant in the Supreme Court of Pennsylvania .........

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TABLE OF CASES AND

OTHER AUTHORITIES CITED.

Cases:

American Surety Co. v. Baldwin, 287 U.S. 156 (1932) .....

Beal v. Reading Company, 370 Pa. 45 (1952) ....-.

‘ Bowe v. Scott, 233 U.S. G38 (1914) _...........

Brotherhood of Locomotive Engineers v. Chicago, Rock Island

& Pacific Railroad Co.. 382 US. 423 (1966) .........

coy oe A RE a

ee ‘Merk Island & Pacific Kaiway Company v. Cole, 251

I ie fag wa os bbs d buena coe one. a

Pian v. United States. 344 LS. 350 (1960)...

Craig v. Kline, 65 Pa. 399 (1870; _.... Sn Si Daten

Hanson v. Denckla, 357 U.S. 235 (1958)...

Herndon v. Georgia, 295 U.S. 441 +1935) ay eee

Herron v. Southern Pacific Company, 283 U.S. 91 (1931) ..

Hilliard v. Anderson, 440 Pa 625 (1970) ........

National Labor Relations Board \ Metropoljtan Life Insurance

Ce. 30 U.S. 438 (1965) ...............:..........

Radio Station WOW, Inc. v. Johnsan, 326 U.S. 120 (1945)

Secretary of Agriculture y United States, 347 U.S. 645 (1954)

Spangler v. Helm’s New York-Pittsturgh Motor Express.

396 Pa. 482 (1959,

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Constitutions:

United States Constitution, Amendment XIV. Section 1 _...

Pennsylvania Constitution, Article I, Section 9.0

Rules:

Rule 19% 1) (4) of the Supreme Court Rules

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OPINION BELOW.

The Opinion of the Supreme Court of Pennsylvania is

reported at 446 Pa. 280,285 A. 2d 451.

JURISDICTION.

The jurisdictional requisites are adequately set forth

in the Petition.

QUESTION PRESENTED.

When, pursuant to its long-standing and well-known

procedure for review of a trial court’s ruling that a jury’s

verdict is excessive, the highest court of a State determines,

after review of the record, that the jury’s verdict was

supported by the evidence and orders reinstatement of that

verdict, has the defendant been denied due process of law?

STATUTE INVOLVED.

The pertinent provision of the United States Constitu-

tion is set forth in the Petition.

1 Brief for Respondent in Opposition

STATEMENT OF THE CASE.

The procedural history of Scaife Company's appeal is

adequately set forth in the Petition. Response to peti-

lioner’s argumentative characterization, at page 5 of the

Petition, of the Pennsylvania Supreme Court’s decision

appears at Sections 1 and 3, infra. Response to petitioner's

contention at page 5 of the Petition that its federal due.

process claim was timely raised below appears at Section 2,

infra, .

Brief for Respondent in Opposition 3

REASONS FOR DENYING THE WRIT.

1. There Are No Special or Important Reasons for Granting

the Writ. ;

A properly instructed jury, which had ample oppor-

tunity to assess the-credibility of eve ‘ry witness whose tes-

timony related to damages, found that petitioner’s frau-

dulent misrepresentations in the course of selling a busi-

ness to respondent caused economic damage to respondent

in the amount of $1,200,000.28. Afier concluding without

explanation that the damages found by the jury were

excessive, the trial court ex banc ordered a new trial on

damages unless respondent accepted a substantial redue-

tion in the damages found by the jury.

When respondent appealed froni that order, the Penn-

sylvania Supreme Court was forced to review the entire

record because the lower court had not elaborated its rea-

sons for concluding that the jury’s findings were wrong.

The Pennsylvania Supreme Court did so, and held:

‘*It is our opinion that the jury’s verdict is fully sup-

ported by the evidence and should be reinstated.”

(App., Petition. p. 45a).

In order to avoid the necessity of reviewing an entire ree-

ord in future cases, the Court also instructed lower courts

that in the future they should explain fully why they be-

lieve a jury’s verdict is excessive (App., Petition, pp. 42a-

43a). ;

Petitioner now contends that the Pennsylvania Su-

preme Court denied it due process because it did not re-

mand the instant case to the lower court for such an ex-

planation. But the Pennsylvania Supreme Court is the

final judge of the sufficiency of evidence pertaining to dam-

ages. It has already reviewed the record and found that

the evidence fully supported the jury’s verdict. To require

4 Brief for Respondent in Opposition

that this case be remanded to the court ex banc for an

explanation, and that the record then be returned to the

Pennsylvania Supreme Court for another review of the

record, would sanction an exercise in futility not required

by the principles of due process.

Furthermore, the Pennsylvania Supreme Court’s deci-

‘sion Was made in an action which involves only the deter-

mination of the instant parties’ rights under Pennsylvania

common law principles governing a defendant's liability

for fraudulent imisrepresentations made in the sale of a

business. The order requiring reinstatement of the verdict

Was one of a number of similar orders by which the Penn-

<Vivania Supreme Court has enforced Pennsylvania rules

setting forth the proper roles of judge and jury in trials in

‘its courts. E.g., Spangler v. Helm’s New York-Pittsburgh

Motor Express, 396 Pa. 482 (1959).

The Pennsylvania Supreme Court’s decision rested.

solely on matters of state law. That Court construed no

federal statute and ruled on no other federal claims. In

short, there is no special and important reason that that

Court’s decision should be reviewed by this Court, and the

Writ should therefore be denicd. See, e.g., Rule 19(1)(a)

of the Supreme Court Rules,

2. The Question Was Not Timely Raised Below.

In its appeal from the trial court’s determination that

the jury’s verdict was excessive and from its award of a

new trial on the question of damages, Scaife Company

clearly and unequivocally requested the Pennsylvania

Supreme Court ‘‘to reinstate the verdict of the jury’,

and cited in its Brief as -Appellant the Pennsylvania

authorities im support of that relief. (App., Brief in

Opposition, la-Ga.) The question whether such relief would

violate the principles of due process thus became an issue

Brief for Respondent in Opposition 5)

at the outset of the proceedings on Scaife Company’s

appeal.

Furthermore, the relief requested was not novel:

Seaife Company simply asked the Pennsylvania Supreme

Court to follow its standard procedure for correcting a

trial court’s erroneous cancellation of 2 jury’s ¥erdict on

the ground that it is excessive.

Petitioner thus had ample warning that if the Penn-

sylvania Supreme Court decided that the trial court had

erred in finding the jury’s verdict excessive, the apropriate

relief would be to order reinstatement of the jury’s verdict.

It had ample opportunity to raise its claim that such relief

would violate due process in the Briefs and Oral Argument

it submitted to the Pennsylvania Supreme Court as Appel-

lee. Nonetheless, petitioner did not raise its due process

claim until after the Pennsylvania Supreme Court -had

granted Scaife Company the relief requested.

By virtue of its decision to defer presenting its due

process claim until after the Pennsylvania Supreme Court

had decided Scaife Company’s appeal, petitioner failed to

preserve that point for review by this Court, and the Writ

should be denied. /lanson v. Denckla, 357 U. S. 235, 243-

244 (1958); Radio Station WOW, Inc. v. Johnson, 326 U. S.

120, 128 (1945) ; Herndon v. Georgia, 295 U.S. 441 (1935) ;

American Surety Co. v. Baldwin, 287 U. S. 156, 162-164

(1937). |

Moreover, in its Petition for Reargument to the Penn-

sylvania Supreme Court petitioner merely asserted that

reinstatement of the jury’s verdict by that Court ‘‘must

be considered violative of the Due Process Clause’’ (App.,

Petition, p. 52a). By failing to specify whether its claim

was based on the Due Process Clause of the Fourteenth

Amendment to the United States Constitution or on the

Due Process Clause of the Constitution of the Common-

wealth of Pennsylvania (Art. I, Section 9, Pennsylvania

0) Brief for Respondent in Opposition

Constitution), petitioner failed to present adequately to the

Pennsylvania Supreme Court the federal due process claim

it attempts to raise now. For this reason alone the Writ

should be denied. Bowe «. Scott, 285 U.S. 658, 664-665

(1914).

3. The Decision Below Is Clearly Correct.

It is true, as petitioner urges, that in common with the

federal system Pennsylvania law grants its trial judges

‘the power to set aside or reduce a jury's verdict on grounds

that it is exeessive. But it has long been clear that in civil

actions to enforee claims arising solely under state law,

the United States Constitution permits a state to limit or

even to eliminate altogether its trial Judges’ powers over

a jury’s decision. F.g., Chicago, Rock Island & Pacific Rail-

way Company v. Cole, 251 U. S. 54 (1919). See, eg,

Herron v. Southern Pacific Company, 283 U.S. 91, 98

(1931).* .

In Pennsylvania, the circumstances under which a trial

judge may set aside or reduce a jury's verdict are narrowly

circumseribed. And when the trial court interferes with

a jury's verdict in the absence of those circumstances, his

decision is subject to review and correction by the Pennsyl-

vania Supreme Court. we, Beal vr. Reading Company, 370

Pa. 45. 49 (1952). In the instant case the Pennsstvanuia

Supreme Court, after reviewing the record, found that the

jury’s verdict was fully supported by the evidence, and

that none of the conditions whieh under Pennsylvania law

1. See, Craig v. Kline, 65 Pa. 399, 413 C1870).

2. For this reason, none of the cases cited by petitioner m See-

tion 1 of its Petition support granting the Writ. In each of the cases

cited by petitioner this Court was cither discussing the powers of

federal judges over a jury’s decision or determining the appropricte

role of state judges in actions to enforce claim- arising under tederal

statutes?

Brief for Respondent in Opposition 7

authorize interference with a jiry’s verdict were present.

Accordingly, it ordered reinstatement of the verdict. In so

doing it simply followed its well known procedure for dis-

posing of such a case. .

As had been stated by the Pennsylvania Supreme Court

many times prior to its decision in the instant case, when

the trial court’s cancellation of a jury’s verdict is chal-

lenged on appeal, the Pennsylvania Supreme Court must

‘*review the record to determine whether the cancellation

of a jury’s verdict is warranted under all the circumstances

of the ease.’ Spangler v. Helm’s New York-Pitts-

burgh Motor Express, 396 Pa. 482, 488 (1959). After such

review, if the Supreme Court determines that cancellation

of the jury’s verdict was unwarranted, the appropriate dis-

position is to remand with imstructions to reinstate the

jury’s verdict. E.g., Spangler v. Helm’s New York-Pitts-

burgh Motor Express, supra; Hilliard v. Anderson, 440 Pa.

625 (1970).

In the present case the Pennsylvania Supreme Court,

after review of the reeord, determined that the jury’s

verdict was well within the amount of damages established

by evidence of the economic effects of the petitioner's fraud.

This was obviously a décision within the competence and

power of that Court. That Court's order requiring rein-

3. Every case on Which petitioner bases its assertion to the con-

trary arose in circumstances far different than those presented here.

The Pennsylvania Supreme Court was not. ior example reviewing

the unexplained decision of a Federal Administrative agency charged

with the interpretation and application of a Federal Statute. Nor

was it reviewing the decision of a lower Federal Court applying a

Federal Statute in which the stated ground for decision was held by

- the United States Supreme Court to be-an erroneous application of

the statute. Under such circumstances, as the cases on which Peti-

tioner relies make clear, this Court will frequently remand such a

decision to the pertanent Federal agency for explanation of its chal-

lenged decision. Secretary of Agriculture v. United States, 347

U.S. 645 (1954); National Labor Relations Board v. Metropolitan

Life Insurance Co., 380 U.S. 438 (1905): Burlington Truck Lines,

Inc. v. United States. 371 U.S. 156 (1962). Or it will remand to

the’lower Court for further proceedings applying the statute as inter-

S Brief for Respondent in Opposition

statement of the verdict, returned by’a properly instructed

jury which had ample opportunity to weigh any credibility

problems even arguably presented by the evidence pertain-

ing to damages, in no way Violates the principles. of the

Due Process Clause of the Federal Constitution.

CONCLUSION.

For the foregoing reasons respondent, Seaife Com-

pany, respectfully requests that the Petition for Writ of;

Certiorari to the Supreme Court of the Commonwealth of

Pennsylvania be denied.

Respéetfully submitted,

Puitie H. SrruBinc,

Epirn Laver, |

Pepper, Hamitton & SCHEETZ,

128 South Broad Street,

Philadelphia, Pa. 19109

Morris M. Brercer,

(', Witt1amM BERGER,

Bercer & KapetAnN,

508 Law & Finance Building,

Pittsburgh, Pa. 15219

MicuarL HAHALYAK,

408 Commonwealth Building, .

Pittsburgh, Pa. 15222

Attorneys for Respondent,

Scaife Company.

3. (Cont'd. )

preted by this Court. Chaunt v. United States, 304 US. 350

(1960); Brotherhood of Locomotive Engineers «7. Chicago, Rock

Island & Pacific Railroad Co., 382 U. S. 423 (1906). Actually,

these decisions are not based on the requirements of the Due Process

Clause of the United States Constitution. They are, tastead, based

on this Court’s role in enforcing the administrative and judicial pro-

cedures established by Congress for the application of federal statu-

tory policies.

Brief for Respondent in Opposition — 9

Certificate of Service.

I hereby certify that on this 25th day of May, 1972,

three copies of the Brief of Respondent in Opposition and

Appendix were mailed, postage prepaid, to Gilbert J.

Helwig, Reed, Smith, Shaw & McClay, Union Trust Build-

ing, Pittsburgh, Pennsylvania 15230, Counsel for Petitioner.

I further certify that all parties required to be served have

been served.

/s/ Puitie H. Strusine,

Pepper, Hamitton & ScHEETz,

123 South Broad Street,

Philadelphia, Pa. 19109

May 25, 1972

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Appendix.

EXCERPT FROM BRIEF OF APPELLANT,

SCAIFE COMPANY, IN THE SUPREME

COURT OF PENNSYLVANIA.

C. The Lower Court's Substitution of Its Opinion

‘of the Damage Suffered by Scaife for That of

the Jury Without Any Explanation and Its

Order That the Plaintiff Re-litigate the Ques.

tion of Damages Unless Plaintiff Accept a

Reduction of That Verdict Was Arbitrary and

a Clear Abuse of Discretion.

The court en bow after a careful analysi-

trial padge’s charge ruled that he correctly inst:

the gary about every element of damages recov

by Seaife (11Ma- 1508, Opimion). The court rake

ther that the formula the jury was instructed to

was 4 correct statement of the damawe« recovers

a victim of fraud. Included in the trial judwe

nitha, and expressly approved Vn the lower eourt,

(1) the amount paid for equipment and in

transferred le«« actual value; (19080. Opinion)

lox~ cats] inn the effert of the defertive wax f

on the reputation and «<ale« of the Timken Silent

matic product lime: (150fia, Oprwiow) (2) the ar

expended by Seaife in it< effert« te correct th

and te reluee or reverse the low<e< can<cd bys

feet: (100%7a. Opinion) (4) orterest tyeon such

thy claim a= the jury found was certain, to be

lated from the time the amount awandead wa.

by the jury to have been a sum certain

Opinion).

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2a Appendix

The lower court further acknowledged that be-

cause the amount of damages were not capable of de-

termination with **mathematiceal exactness**, the final

decision on these elements was a matter for the jury

(1506a-1507Ta, Opinion). VParenthetically, it is. impor-

tant to note that in this case the jary was given precise

figures setting out clearly the outer limits of damage~

flowing from Rockwell's fraud. The jury was not re-

quired to construct from whole cloth a value for such

intangible damage te a plaintiff a< ‘pain and <uffer-

img." The jory here was giten beth dollar amounts

and testimony and deeumentary evidence establishing

the hasi< on whieh the jury could determine that some,

and even all, the dellar< lost were the direet result of

Rockwell’« fraud. That the jury conscientiou-ly (and

conservatively) applied the formula given by the judge

te the evidence submitted te it ix apparent. It< dam-

ages verdict, SS10,.811.00, i< well within the maxinium

amount of lex«< proved by plaintiff: #1.798.208,00. That

was the amount of the eperating low<e« <affered by

plaintiff in operating the Divi<ien during the period it

wax attempting to market the Divi<ien"< product line

amd te correct the defective gas furnace-.

Against thix background, the action of the lower

court in setting aside the jury's verdict and requiring

relitication of damage= cannot be <ustained. The court

did not explain in what re<peet it felt the jury’. ver-

diet was defective. While trial courts are allowed sig-

nifieant powers and dixeretion by thix court, their di--

eretion is net unlimited. The lower court's failure to

explain th what way or ways it felt the jury’< verdict

to be unsati«<factory alone violated the clear mandate

of this court. Bellettiere +. Philadelphia. 267 Pa. 638,

Appendix 3a

644 (1951); Beal +. Reading Company, 370 Pa. 45, 49

(1952). The lower court’s failure to specify how the

jury’s verdict was wrong imposes on this court the

duty ‘*to review the record to determine whether the

cancellation of a jury’s verdict is warranted under all

the circumstances of this case.’’ Spangler v. Helms

New York—Pittshurgh Motor Express, 396 Pa. 482,

487-488 (1959). in Spangter, this Court reversed the

trial court’s grant of a new trial because of an exces-

sive verdict and ruled that the jury's verdict was not,

in fact, excessive,

Having ruled that no error was made in the admis-

sion of evidence justifying an award of $1,738,203,

there was no basis for the courts statement that ‘‘it is

conceivable that plaintiff suffered -a legally compen-

sable harm in excess of the verdict but it has failed to

produce competent evidence to prove this.’ (1508a

Opmon) The court’s subsequent statement that

“*[bjased on the record which we have before us we

are of the opinion that the jury's verdict is excessive’

(150Sa, Opinion), is not explained by it, and finds no

support from the record.

By overturning the jury ‘s verdict without explana-

tion the court in effeet was acting as a jury. In so

doing, it plainly abused its powers as a court en banc.

whose function is to correct errors in the conduct of a

trial. This court’s recent analysis of its rele on review

is equally applicable to the role of the trial court:

“It is net the function of an appellate court to

pass upon the credibility of witnesses or to act as

the trier of facts, and we will not substitute our

judgment for that of the fact-finding jury, if there

ta Appendix

is sufficient evidence of record to support the

jury’s findings of facet [Citations]. Even though

we might be of the opinion that had we been the

trier of fact we would have reached a contrary re-

sult, nevertheless, we will not set aside the findings

of fact of a jury implicit in its verdict which are

evidentiarily supported of record and where there

Was no abuse of discretion and where no error of

law has been committed [Citations]... Burbage r.

Boiler Engineering d& Supply Company, Tuc., 433

Pa, 319, 323-324 11965) | Affirming denial of new

trial. ]

Of course, a trial court has both the power and the

duty to revise verdicts so clearly excessive that the

jury must have been swayed by ** passion, partiality,

prejudice or corruption.“" See, ¢.g.. dmey vr. Erb, 296

Pa. 561, 567 (1929). But in the instant cease, the lower

court did not and could not tind such a basis for the

jury's verdict. The wrong done Seaife was an eco-

nomic wrong, the damages measurable by non-emotive

economic effects proved by substantial competent evi-

dence.

A trial court also must correet verdicts excessive

because the jury was improperly instructed as to the

— measure of damages and may effect such correction by

reducing the verdict by the excess awarded pursuant

to the erroneous portion of the charge: Skoda vr. West

Penn Power Compang, 411 Pa. 323, 333-338 ( 1963). Or

it may, on this ground, require re-litigation of the

question of damages. Tilghman +. Dollenberg, 418 Va.

604 (1965) | Clain based on fraud, affirming award of

a new trial on damages because of improper jury

charge on the measuring of damages]; Mahkn vr. An.

A ppendis . Da

drews, 182 Pa. Super. 338 (1956) | Breach of contract,

ordering re-litigation of damages question because

trial court erroneously excluded evidence relating to

lost profits.]. But the lower court expressly did not_

‘ind indeed, could not base its decision on this ground.

It is also clear that when the measure of damages

can be stated with precision to the jury and when the

evidence clearly establishes the maximum amount

which plaintiff can be entitled to recover, the trial

court may revise a verdict obviously in excess of the

maximum so established, and for that reason mani-

festly against the weight of the evidence. Swart: r:

Smokowit:, 400 Pa. 109, 112 (1960) [Affirming new

trial on damages in wrongful death and survival aec-

tion] ; See, Eisert r. Jones, 408 Pa. 3. 78 (1962) [Denial

of new trial affirmed because, inter alia. record did not

disclose ‘‘capricious disregard by the jury of persua-

sive testimony.**]. But this power is necessarily very

narrowly ¢ireumseribed and cannot be exercised unless

the verdict ix so out of proportion to the amount

proved that it is apparent that the jury miseonceived

the law or the evidence. Spangler +. Helm'’s New

York-Pittshurah Motor Express, 396 Pa. 482 (1959)

[| Reversing grant of new trial based on execessiveness

of the verdict. |

Since none of the conditions authorizing a court to

revise a jury’s verdict and to require re-litigation of

damages have been met in the instant case, the lower

court's award of a new trial on damages was erroneous

and must -be reversed.

Ha A ppendix

VI. CONCLUSION.

For the foregoing reasons, Scaife Company re-

spectfully requests this Honorable Court to reverse

the Lower Court’s grant of a new trial on the question

of damages and to reinstate the verdict of the jury.

Respectfully submitted,

Pimp H. Srrusine,

Evitu G. Laver,

Peprer, Hamitton & Scueerz,

125 South Broad Street,

Philadelphia, Penn. 19109,

Morris M. Bercer,

C, Winuiam BERGER,

Bercer & Kaperan,

508 Law & Finance Building,

Pittsburgh, Penn. 15219,

Micnakn. Hanatyak,

403 Commonwealth Building,

Pittsburgh, Penn, 15222,

Attorneys for Appellant,

Scaife Company.