Opposition Brief — Aetna Life Insurance v. Ace

‘

No. 98-230! 5 4098

: SEP Z i77V

In The

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m ee siilinetiined

SUPREME COURT OF ued sfc, STATES —

October Term, 1997

AETNA LIFE INSURANCE COMPANY,

Petitioner,

Vv.

SHERRIE ACE,

Respondent.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Ninth Circuit

BRIEF IN OPPOSITION TO

PETITION FOR A WRIT OF CERTIORARI

RICHARD H FRIEDMAN JEFFREY M. FELDMAN

JEFFREY K. RUBIN (Counsel of Record)

Friedman, Rubin & White SUSAN ORLANSKY

1227 West 9th Avenue Feldman & Orlansky

Anchorage, Alaska 99501 500 L Street, Suite 400

(907) 258-0704 Anchorage, Alaska 99501

(907) 272-3538

Counsel for Respondent

QUESTIONS PRESENTED

1. Inconcluding that the district court abused its discretion

in granting a new trial, did the Ninth Circuit Court of Appeals err

and apply a different standard of review than other Circuits apply

when reviewing a new trial order?

2. Do this Court’s due process cases concerning post-

verdict review of punitive damages awards have any bearing on this

case at this stage, since the district court has not yet conducted the

proceedings required on remand to determine the proper amount of

remittitur?

3. When the district court’s order granting a new trial

adopted without explanation the grounds asserted by the defendant

and the record does not support any of the asserted grounds, did the

appellate court err in reversing the new trial order without

remanding the case to the district court for further explication of its

decision?

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ............ Bites

SABLE. GF ALT TRD iiin 8 620% Oh aks BEERS iv

IN RAO Ne iin ited vis gvas ts shee bee 1

DEA RMMNITE GE" BRUE ROIs 6s bo ooo 6 Mase eco es oi 2

A... PRMD A 605 BO MS ow 3

B. Aetna’s Wrongful Denial Of Ace’s

PUNE TE G5 CRF 8S EO RR 4

C. District Court Proceedings ................ 7

D. The Court Of Appeals Decision ............ 8

REASONS FOR DENYING THE PETITION .......... 10

I. THERE IS NO CONFLICT AMONG THE

CIRCUITS CONCERNING THE STANDARD

FOR SETTING ASIDE A JURY VERDICT

BASED ON LEGALLY SUFFICIENT

PUMEETNER os va Aig CO ON cee e a ene eee ks 10

A. FRCP 50(c)(1) Explicitly Provides For

Appellate Review Of An Order

Conditionally Granting A New Trial ........ 10

B. All Circuits Preclude A District Court

From Casually Substituting Its View Of

The Facts For The Jury’s Verdict .......... 12

C. Gasperini Did Not Modify The Applicable

un ar nee 8 2 OUAL ei ke 18

D. Aetna’s Petition Asks This Court To Re-

Evaluate The Facts And Presents No Legal

Issue Of Nationwide Importance ........... 19

1. The appeals court applied the

correct legal standard in reviewing

an order entered with minimal

explanation or analysis .............. 19

2. The question whether a district

court abused its discretion in

granting a new trial on weight-of-

evidence grounds is an intensely

fact specific inquiry ................ 22

Il. THIS CASE DOES NOT IMPLICATE THE DUE

PROCESS CONCERNS RAISED IN CASES

INVOLVING POST-VERDICT JUDICIAL

REVIEW OF THE AMOUNT OF PUNITIVE

A Ee ee a ene 24

Il. THERE IS NO REQUIREMENT THAT AN

APPELLATE COURT REMAND A CASE TO

THE DISTRICT COURT FOR A STATEMENT

OF ITS REASONS FOR GRANTING A NEW

TRIAL WHERE THE DISTRICT COURT

STATED THAT IT ACCEPTED THE REASONS

OFFERED BY THE DEFENDANT AND NONE

OF THOSE REASONS JUSTIFY A NEW

WOM s CUS AGUA es chad eees bow oe veel 25

DOE ok yd Noa a be WSO O ON. i OS 29

TABLE OF AUTHORITIES

Cases: Page(s)

Ace v. Aetna Life Ins. Co.,

139 F.3d 1241 (9th Cir. 1998) .............. passim

Aetna Life Ins. Co. v. Orr,

16D S.W.20 G6i GArk. 1943). os. Se ee ce ae 5

Atkins v. New York City,

ge ee ee eee 13

Atlas Food Systems & Services, Inc. v.

Crane National Vendors, Inc.,

_ eo b Fe Re, | See 13, 16

Baxter Healthcare Corp. v. Spectramed, Inc.,

49 F.3d 1575 (Fed. Cir.),

cert. denied, 516 U.S. 906 (1995) .......... 14, 18, 27

Binder v. Long Island Lighting Co.,

oF i See GR PE ik ee eae Vas oho 20

BMW v. Gore,

FET IE CLES GENE 2 RR ee ae 24

Bogosian v. Mercedes-Benz,

106 POR GTACIOGE, 1997) ow ea... 13

Browning-Ferris Industries v. Kelco Disposal, Inc.,

Ae Us Bee eo ok hae wee as es 10, 17, 19, 24

Carter v. DecisionOne Corp.,

Sa Fe re Ge OD he is ok ae eee 15

Collazo-Santiago v. Toyota Motor Corp.,

__ F.3d __, 1998 WL 363856

eels Be Ss ora oS EE RS 27

Computer Systems Engineering, Inc. v. Qantel Corp.,

OOP. Fee Ae Gs BO ah RS 28

Cooter & Gell v. Hartmarx Corp.,

ree PR 55 6 85 CITES 10, 20

Donovan v. Penn Shipping Co.,

ears REID oss eek OUTS 19

Frumkin v. Mayo Clinic,

pan Fame Garrat. 198 a 27

Gasperini v. Center for Humanities, Inc.,

Pee tee OO LEP chee ae She ee 18, 19, 20

Honda Motor Co. v. Oberg,

PO AP a ROOD 6a Ned POE NGS oh FRR 24

Kelley v. Airborne Freight Corp.,

Wer ee ee CAM, IONE) a ES 18

Kirsch v. Fleet Street, Ltd.,

__ F.3d __, 1998 WL 334714

Gee ta SU ey AOE Sites EN ee A, 18

Lorba v. Aetna Life Ins. Co.,

207 So. 2d 305 (Fla. App.),

cert. denied, 212 So. 2d 876 (Fla. 1968) ............ 5

McNeal v. Hi-Lo Powered Scaffolding, Inc.,

ee wae? Gs GG SD goons ccc cb cveas 15

vi

Mears v. Nationwide Mutual Ins. Co.,

91 F.3d 1118 (8th Cir. 1996) .......-.. eee ees 14, 28

Medcom Holding Co. v. Baxter Travenol Laboratories, Inc.,

106 F.3d 1388 (7th Cir. 1997) .........20 0 eee 14, 18

Miksis v. Howard,

106 F.3d 754 (7th Cir. 1997) 2... .. cece eee 14

Neely v. Martin K. Eby Construction Co., Inc.,

SOG US. SUT CRIB wo on 6 6 6 nl FRG POS 11

Nissho-lwai Co., Ltd. v. Occidental Crude Sales, Inc.,

848 F.2d 613 (Sth Cir. 1988) .... 6... eee eee eee 28

Oiness v. Walgreen Co.,

88 F.3d 1025 (Fed. Cir. 1996),

cert. denied, 117 S. Ct. 951 (1997) .. 0... eee eens 16

Pacific Mutual Life Ins. Co. v. Haslip,

BT a Tis ns nis ov ein wre ila be 24

Portage II v. Bryant Petroleum Corp.,

Be Bas 7 Se, aaa ier 20

Powell v. Lititz Mutual Ins. Co.,

419 F.2d G2 5G Clk. 1969) 2. cece ess 27

Pryor v. Trane Co.,

138 F.3d 1024 (Sth Cir. 1998) 0... cc ec eee 14

Rosenfield v. Wellington Leisure Products, Inc.,

827 F.2d 1493 (lith Cir. 1987) ......0..6....5. 20

Santa Maria v. Metro-North Commuter Railroad,

Si F356 2 ae Gir. TD: ho sk ww es es 19

Vii

Sheridan v. E.1. DuPont de Nemours & Co.,

100 F.3d 1061 (3d Cir. 1996) (en banc),

cert. denied, 117 S. Ct. 2532 (1997) ...........

Strickland v. Owens Corning,

Se ee ee Cs ROPE) 6 OOP RINT

Tennant v. Peoria & Pekin Union Railway Co.,

SRE i CRE a ee OR OR A cca

TXO Production Corp. v. Alliance Resources Corp.,

FP RR CLP es EE 6 ORS

United States v. Tobias,

Ope Pine toro Ge Ce: IG) we.

Williamson v. Consolidated Rail Corp.,

926 F.2d 1944 (3d Cir. 1991) ................

York v. American Telephone & Telegraph Co.,

Fe Fie Pe TO ee Ee ee

Statutes and Rules:

RE ET OF BORD CS ee ee es

3 Alaska Admin. Code § 26.040(a)(3) .............

3 Alaska Admin. Code § 26.050(a) ...............

Federal Rule Civil Procedure 50. ................

Viii

Miscellaneous:

11 Charles A. Wright, Arthur R. Miller, &

Mary K. Kane, FEDERAL PRACTICE AND

PROCEDURE (2d ed. 1995)

Ds 6 6 an OWE Rw ee OSC 28

ea yo kh ch aa ee ee eee ee ee 16

Se ee es ES RE OE CARR 28

DEE a Xs cb wee eee ek eee ee By 12

12 James W. Moore,

MOORE’S FEDERAL PRACTICE

RR Eo Or ee eee eer ee 17, 18

BRIEF IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

INTRODUCTION

This case arises from an insurance bad faith suit filed in

state court in Alaska and removed to federal court based on

diversity jurisdiction. A properly instructed jury found that Aetna

Life Insurance Company acted in bad faith in denying Sherrie Ace’s

claim for long-term disability benefits and further found by ciear

and convincing evidence that Aetna’s conduct was outrageous and

deserving of punitive damages under Alaska law.

In response to post-trial motions by Aetna, the district court

upheld the jury’s finding of bad faith and its award of compensatory

damages, but granted judgment as a matter of law to Aetna on the

issue of its liability for punitive damages. The district court also

conditionally ordered a new trial on the issue of Aetna’s punitive

damages liability. The district court did not reach Aetna’s

alternative motion for a remittitur or a new trial on the amount of

punitive damages.

Both Ace and Aetna appealed. The Ninth Circuit concluded

that the district court erred in setting aside the portion of the jury’s

verdict finding Aetna liable for punitive damages. The panel

determined unanimously that the evidence in the record amply

supported the jury’s determination that Aetna acted outrageously,

with malice, bad motives, or a reckless indifference to Ace’s

interests, justifying punitive damages under Alaska law. The panel

also unanimously reversed the conditional order granting a new trial

on the question of Aetna’s liability for punitive damages. However,

the panel held that the amount of punitive damages awarded by the

jury was excessive, and remanded the case to the district court to

determine the appropriate remittitur. The Ninth Circuit rejected

Aetna’s cross-appeal arguments concerning the sufficiency of the

evidence supporting the verdict on bad faith and the jury

instructions on compensatory damages.

Aetna’s petition for issuance of a writ of certiorari asks this

Court to review three issues all ancillary tc the central issues in this

2

case. The proceedings required on remand in the district court have

not ye: been held; there is no final judgment in this case. Thus,

despite Aetna’s attempts to call attention to the amount of punitive

damages awarded by the jury, the size of the award is not an issue

before this Court. Further, in this Court, Aetna does not challenge

the appellate court’s ruling upholding the verdict that Aetna acted

in bad faith or the ruling reversing the grant of judgment as a matter

of law on the issue of Aetna’s liability for punitive damages. Thus,

at this stage Aetna is bound by the findings of the jury and the

Court of Appeals that a preponderance of evidence established that

Aetna acted in bad faith in denying Ace’s claim for long-term

disability benefits and that clear and convincing evidence established

that Aetna acted outrageously when denying Ace’s claim. Aetna

now contends only that the Ninth Circuit erred in reversing the

district court’s conditional order for a new trial on the question of

Aetna’s liability for punitive damages. Aetna seeks an order

directing a partial new trial on punitive damages liability or, in the

alternative, an order directing the Ninth Circuit to give the district

court another chance to explain its bases for granting a new trial.

Aetna’s petition for certiorari should be denied. Contrary

to Aetna’s claims, there is no inter-Circuit conflict on the standard

for when a district court may substitute its judgment for that of the

jury; the Ninth Circuit’s denial of Aetna’s request for a second trial

did not violate due process; and the Ninth Circuit’s decision to

reverse the grant of a new trial, rather than to remand for additional

explanation of the district court’s grounds, did not depart from

normal procedures, inasmuch as the record reviewed by the Ninth

Circuit established no basis at all for granting a new trial. None of

the issues raised by Aetna warrants attention by this Court.

STATEMENT OF THE CASE

Aetna’s statement of the case presents many facts in the

light most favorable to itself. In light of the jury verdict and the

portions of the decisions below that Aetna does not challenge,

Aetna’s perspective is both legally erroneous and unhelpful to this

Court. The opinion of the Ninth Circuit presents an accurate,

3

comprehensive statement of the facts surrounding Aetna’s improper

denial of Sherrie Ace’s claim for long-term disability benefits.

[App. 3a-10a]. The following paragraphs provide a short summary.

None of the facts set forth in this section was disputed at trial.

A. Ace’s Disability

Sherrie Ace was an employee of the State of Alaska. [App.

3a; 1 Tr. 170']. Her job required rigorous travel in off-road

vehicles in remote areas of the state. [App. 5a n.6; 1 Tr. 170-71;

4 Tr. 8-9]. As part of her employee benefits, Ace selected and paid

monthly premiums for the maximum possible health and disability

insurance. [App. 3a; 1 Tr. 174-76, 189-90; ER 22, 24].

In 1986, Ace broke her leg in an accident. [App. 3a; 1 Tr.

172-73}. She submitted her medical records and bills to Aetna,

which paid them. [1 Tr. 189; 2 Tr. 94-95]. From the beginning,

Ace’s doctors made clear that she had suffered a particularly bad

break that had shattered her knee; complete repair was impossible,

and it was likely that Ace's knee would cause long term problems

and could eventually require a total replacement. [App. 3a; 1 Tr.

173; ER 59-63, 65-69]. Between 1986 and 1992, Ace’s knee

deteriorated as predicted. Her doctors performed a series of

surgeries, each of which provided only temporary relief. Ace

regularly submitted her medical records and bills to Aetna. [App.

3a; 1 Tr. 178-82, 187; ER 78, 81, 148-49, 153-55].

By early 1992, Ace’s leg had become .so extraordinarily

painful that her orthopedic surgeon recommended an osteotomy, a

procedure in which the knee bones would be re-broken and re-set

in the hope of shifting her weight onto less damaged parts of her

' For the convenience of this Court, citations to the trial

court transcripts and the excerpt of record follow the same form as

in the petition. "CR" is used to denote documents docketed in the

district court file. This opposition includes citations to the record

for every point relied on in the Ninth Circuit’s opinion, to dispel

any suggestion that the appellate court misread the record.

4

knee. [App. 3a & n.2; 1 Tr. 183-84, 187; ER 92-94, 156-59]. The

osteotomy was performed in April, 1992. The surgeon issued Ace

a four-month excuse from work to cover her anticipated recovery

time. [App. 3a; ER 95-96, 104]. Under her Aetna policy, Ace was

entitled to short-term disability benefits for up to four months,

starting after she had been disabled for 30 days. Ace submitted an

application for short-term disability benefits; Aetna concurred she

was disabled and paid the benefits. [App. 3a; 1 Tr. 189-90; ER

20}.

Unfortunately for Ace, the osteotomy was not successful.

The pain in her leg increased, and Ace did not believe she was

capable of returning to work even half-time. [App. 3a; 1 Tr. 188-

91; ER 101}.

B. Aetna’s Wrongful Denial Of Ace’s Disability Claim

Ace contacted Aetna and obtained an application for long-

term disability benefits. She submitted her application in October,

1992, along with the required Attending Physician’s Statement, on

which her doctor explained that she suffered from "severe

degenerative joint disease" and experienced "frequent swelling" and

“constant pain." He classified her on Aetna’s form as between

“Class III" and "Class IV" in terms of her disability, which the form

characterized as capable of only light or sedentary work. [App. 4a;

ER 55-56]. Ace’s supervisor had earlier provided Aetna with a

detailed job description indicating that her regular duties included

travel that could not be considered "light" or "sedentary" work,

since she was required to inspect properties in rural Alaska that

could only be visited by riding small planes and "three-wheelers," _

the all-terrain vehicles used in isolated locations without maintained

roads. [App. 5a & n.6; 4 Tr. 8-9, 11-13; ER 111, 113-14).

Ace called Aetna several times to check on the status of her

claim. Aetna’s records indicated that she advised that she had no

money and urgently needed her claim approved. [App. 4a; ER 122-

23].

5

Aetna denied Ace’s long-term disability claim on November

17, 1992. The denial letter stated in part, "In order to be eligible

for Long-term Disability Benefits, you must be totally disabled to

the extent that you are unable to work at any gainful occupation due

to bodily injury or illness." The letter also stated that Aetna

considered her job duties sedentary. [App. 4a-5a; ER 57-58].

Aetna conducted no investigation before denying the claim,

although a reasonable investigation is required under Alaska law.

See Alaska Stat. 21.36.125(3); 3 Alaska Admin. Code § 26.050(a).

At trial, Aetna conceded that no one from Aetna ever contacted

Ace, her doctors, or her supervisor in order to clarify either her

medical condition or the requirements of her employment. [App.

5a; 3 Tr. 121; 7 Tr. 6; ER 139-40, 162].

The key phrase in the denial letter -- "unable to work at any

gainful occupation" -- is taken from Aetna’s policy. However,

Aetna conceded at trial that legally it could not deny benefits based

on that standard.” [App. 5a-6a; 7 Tr. 11; ER 22]. Aetna contended

it applied a different standard, but at trial Aetna’s employees could

not state consistently what standard they allegedly did apply, and

they agreed they never advised Ace what other standard she had to

meet to qualify for long-term disability benefits. [App. 5a-6a; 3 Tr.

18-19, 47-51, 90-91, 93]. Indeed, Aetna’s corporate policy

required employees to quote policyholders only the language of the

policy. [App. 6a & n.9; 3 Tr. 49-50, 64-65, 81-82; ER 120).

Ace requested reconsideration of her claim. She provided

Aetna with a long letter from her doctor, dated November 30,

which explained that her condition had continued to deteriorate and

> Courts have long held that the "unable to work at any

gainful occupation” language may not be applied literally, because

of the unfair and absurd results this would allow, such as denying

disability benefits to a physician who could no longer perform his

job duties but who could work as a custodian or sales clerk. See,

e.g., Aetna Life Ins. Co. v. Orr, 169 S.W.2d 651, 654 (Ark. 1943);

Lorba v. Aetna Life Ins. Co., 207 So. 2d 305, 308-09 (Fla. App.),

cert. denied, 212 So. 2d 876 (Fla. 1968).

6

that he now considered her to have a "Class V" disability, which

Aetna defined as “[sJevere limitation of functional capacity;

incapable of minimal (sedentary) activity." [App. 6a-7a; 1 Tr. 211-

12; ER 50, 53-54]. Aetna again denied the claim. Its letter to Ace

stated that she had provided "no objective medical evidence" to

support her disability claim. [App. 7a; ER 48]. Aetna’s employees

and expert later conceded that Ace had supplied objective medical

evidence; further, they agreed that objective medical evidence is

neither defined nor required under Ace’s policy and that a claims

handler is required to consider all available evidence, including

subjective complaints of pain. [App. 7a & n.11; 3 Tr. 68-69, 80-

81; 6 Tr. 27; ER 120}.

Ace requested reconsideration a second time. In February,

1993, she provided Aetna with a detailed letter from her doctor,

explaining that she could not walk or sit for any length of time and

reiterating that she should be considered "Class V" disabled

(incapable of even sedentary employment). [App. 9a; ER 41-42,

44-45]. Ace also provided a recent evaluation from a physical

therapist who determined, based on specific test results, that Ace

was capable of sitting, standing, or walking for less than an hour

each during the day; this physical capacities evaluation revealed that

Ace was in worse physical condition in January than when the same

tests were conducted by the same therapist six months earlier.

[App. 9a; ER 43, 97]. A cover letter from a friend advised that

Ace was in "fragile physical condition" and “emotionally and

economically fragile as well," because of living with chronic pain

aggravated by the frustration of dealing with Aetna. [App. 9a; ER

37-38]. Because she had no income, Ace was forced to sell much

of her personal property and her home; she sent her son to live with

another family and she lived in her car during six harsh weeks of

Alaska’s winter, washing herself in a gas station restroom. [App.

9a; 1 Tr. 222-27; 2 Tr. 16-20]. Aetna refused to reverse its denial

of benefits. [App. 9a-10a; 3 Tr. 163; 6 Tr. 32; ER 30-31].

In April, 1993, in accordance with the recommendation of

her doctors, who had wanted to give her knee a full year to recover

from the trauma of the osteotomy, Ace underwent another surgery.

[App. 10a; 2 Tr. 30]. This operation proved successful and Ace

7

was able to return to work, albeit with a limp and some pain, by

June 1, 1993. [App. 10a; 2 Tr. 31].

C. District Court Proceedings

In 1994, Ace filed a lawsuit in Alaska state court. [ER 1-

4]. Aetna removed the case to federal court on diversity grounds.

[CR 1]. The case was tried to a jury in May, 1996. At trial, Aetna

was far from contrite about its treatment of Ace. Instead, Aetna

persisted in denying that Ace was entitled to any long-term

disability benefits, blamed Ace for any difficulties she had

experienced, and proudly maintained that it had handled Ace’s

claim properly and in accordance with corporate policies and

procedures. Aetna contended that, if it erred in denying Ace’s

application, the error was at most negligent and not in bad faith:

and, if there was bad faith, it was not malicious or with reckless

indifference to Ace’s interests, so no punitive damages should be

awarded. [6 Tr. 187-220].

The jury rejected all of Aetna’s claims. Jurors found that

Ace was entitled to long-term disability benefits for nine months

(from September, 1992, through May, 1993); that Aetna denied

Ace’s claim in bad faith; and that there was clear and convincing

evidence that Aetna acted with malice, bad motives, or reckless

indifference to Ace’s interests, justifying punitive as well as

compensatory damages under Alaska law. [App. 2a; ER 163-64].

Applying proper deference to the jury as factfinder, the

district court denied Aetna’s post-trial motion for judgment as a

matter of law or a new trial on the bad faith claim. [App. 49a-50a,

58a-59a]. However, in reviewing the verdict on punitive damages,

the district court failed to view the evidence in the record in its

entirety and in the light most favorable to Ace; thus, the district

court erroneously set aside the jury’s determination and granted

judgment as a matter of law to Aetna on the question of whether its

conduct warranted punitive damages. [App. 59a-62a]. The district

court also granted Aetna’s subsequent conditional motion for a new

trial on this issue. [App. 49a]. The district court did not reach

Aetna’s alternative motion for a remittitur or a new trial on the

amount of punitive damages. [App. 2a n.1].

D. The Court Of Appeals Decision

The Ninth Circuit affirmed the district court’s rulings with

respect to the bad faith claim and reversed the district court’s

rulings with respect to punitive damages. [App. 20a-2la]. The

panel determined unanimously that the district court erred in not

viewing the evidence in the light most favorable to Ace and in

thereby granting judgment as a matter of law to Aetna on the

question whether its conduct could be considered "outrageous" and

in "reckless indifference to the interests of another." [App. 10a-

13a]. The appeals court listed eight different ways in which the

jury could find by clear and convincing evidence that Aetna’s

conduct warranted punitive damages under Alaska law:

(1) basing denial of the claim on an illegal standard

for benefit eligibility; (2) failing to inform the

claimant of the standard actually used by Aetna in

evaluating disability claims; (3) failing to

investigate the claim and to seek or request the

supporting information alleged to be missing;

(4) failing to assist the claimant in presenting her

disability claim; (5) relying on outdated prognoses

of the claimant’s expected recovery and

disregarding recent reports of her actual condition;

(6) denying her claim based on an undefined

“requirement” not a term of her policy and

contrary to Aetna’s internal claim adjustment

guidelines; (7) falsely advising the claimant that

Aetna had no claim adjustment guidelines; and

(8) making a last-minute demand for an IME

{independent medical evaluation] after having

denied the claim.

9

[App. 12a-13a (footnotes omitted*)].

Aetna does not now contest the Ninth Circuit’s ruling

reversing the district court’s improper grant of judgment as a matter

of law.

The Ninth Circuit also reversed the district court’s

conditional grant of a new trial on liability for punitive damages.

[App. 14a-15a]. The appellate opinion correctly characterized

much of the evidence concerning Aetna’s bad faith and liability for

punitive damages as undisputed, since the direct evidence of Aetna’s

claim handling was established by its claim file, the contents of

which were undeniable. [App. 12a; ER 28-112]. Indeed, at trial

Aetna’s representatives endorsed the manner in which the claim was

handled, saying that its adjusters processed Ace’s claim in complete

accordance with company policy. [See, e.g., 3 Tr. 31, 50; 4 Tr.

138; ER 120]. The Ninth Circuit found no legal basis for ordering

a new trial; it noted that the district court had not issued a detailed

opinion but had stated simply that "[iJn general" it accepted Aetna’s

arguments for a new trial, which did little other than repeat the

claim that the verdict was unsupported by any evidence. [App. 14a;

see App. 49a; CR 228, at 6-9]. Accordingly, the Ninth Circuit held

that the district court abused its discretion in granting a new trial on

Aetna’s punitive damages liability. [App. 14a-15a].

The appellate court briefly addressed the amount of punitive

damages, although the district court had never reached this issue.

The appeals court concluded that the award was excessive under

Alaska law and remanded the case to the district court with

instructions to determine the appropriate remittitur. [App. 15a-

* The footnotes to the court’s opinion refer to Alaska

Statutes and administrative rules establishing fair claim handling

procedures, which Aetna violated when evaluating Ace’s claim.

[App. 12a-13a nn.18-19, citing Alaska Stat. 21.36.125(1), (14); 3

Alaska Admin. Code § 26.040(a)(3)].

10

16a]. Further proceedings in the district court concerning the

allowable amount of the punitive award are pending. [CR 266].

REASONS FOR DENYING THE PETITION

I, THERE IS NO CONFLICT AMONG THE CIRCUITS

CONCERNING THE STANDARD FOR SETTING

ASIDE A JURY VERDICT BASED ON LEGALLY

SUFFICIENT EVIDENCE.

A. FRCP 50(c)(1) Explicitly Provides For Appellate

Review Of An Order Conditionally Granting A New

Trial.

Aetna opens its petition by asserting that it is “questionable

whether conditional new-trial orders based on the ‘weight’ of the

evidence are reviewable at all." Pet. 14-15. Aetna is wrong.

Aetna’s attempt to create an interesting question of federal

civil procedure relies solely on language in a 58-year-old case,

which predated the adoption of FRCP 50(c)(1).* Aetna disregards

the clear language of the federal rule, the clear language of the

Advisory Note explaining the rule, this Court’s comments on Rule

50, and commentary by respected treatise writers explaining why a

rule allowing appellate review makes good sense. Even Aetna

concedes that no Circuit now holds that a conditional uew trial

order under Rule 50(c) is unreviewable. Pet. 15.

* Further, Aetna did not argue below that appellate review

was improper. This Court ordinarily will not grant certiorari on

issues not raised and fully briefed in the lower courts. See Cooter

& Gell v. Hartmarx Corp., 496 U.S. 384, 388 n.* (1990);

Browning-Ferris Industries v. Kelco Disposal, Inc., 492 U.S. 257,

277 (1989).

11

Federal Civil Rule 50(c)(1) expressly authorizes appellate

review of a conditional new trial order. The rule states that, if the

appellate court reverses an order granting judgment as a matter of

law, the appellate court shall determine whether or not a new trial

should be held:

In case the motion for a new trial has been

conditionally granted and the judgment is reversed

on appeal, the new trial shall proceed unless the

appellate court has otherwise ordered.

FRCP 50(c)(1) (emphasis added).

The Advisory Committee Note to the 1963 Amendment to

FRCP 50, which added subdivision (c), also makes clear that the

rule contemplates appellate review of a conditional new trial order.

The Note describes the precise situation that occurred in this case:

And the appellate court, if it reverses the judgment

n.O.V., May in an appropriate case also reverse the

conditional grant of the new trial and direct that

judgment be entered on the verdict.

This Court, considering the then-new provisions in Rule 50,

observed that Rule 50(c) explicitly provides "that the appellate court

will review on appeal both the grant of judgment n.o.v. and, if

necessary, the trial court’s conditional disposition of the motion for

new trial." Neely v. Martin K. Eby Construction Co., Inc., 386

U.S. 317, 323 (1967).

Older cases, which occasionally assumed that a conditional

new trial order was not reviewable, based that erroneous view on

an overbroad interpretation of this Court’s early cases. Professors

Wright, Miller, and Kane thoughtfully distinguish the sometimes

problematic review and reversal of an order denying a new trial

(when an appellate court substitutes its view of the facts for those of

the jury and the trial judge) from the situation in the current case

where the appellate court reviews and reverses an order granting a

new trial (when the appellate court reinstates the jury’s verdict):

12

Review of an order granting a new trial because the

verdict is against the weight of the evidence is a

different matter. The older cases did not perceive

the difference and often said that neither the grant

nor denial was reviewable. There is no Seventh

Amendment problem, however, if the appellate

court reverses the trial court’s grant of a new trial.

In this instance the appellate court is not

reexamining facts found by a jury but is reinstating

the jury’s findings as against the contrary findings

of the judge. Appellate action in this context

protects the role of the jury, as envisioned by the

Seventh Amendment, rather than running contrary

to it.

11 Charles A. Wright, Arthur R. Miller, & Mary K. Kane,

FEDERAL PRACTICE AND PROCEDURE § 2819, at 205 (2d ed. 1995)

(footnotes omitted).

Appellate review of a conditional new trial order is

important to protect the right to a jury trial from infringement by a

district court too eager to substitute its views for the jury’s.

Aetna’s attempt to persuade this Court to grant certiorari because

there is something wrong or controversial about appellate review

must fail.

B. All Circuits Preclude A District Court From

Casually Substituting Its View Of The Facts For The

Jury’s Verdict.

Aetna devotes the bulk of its petition to a claim that

certiorari should be granted to resolve an alleged conflict in the

Circuits concerning when a district court may set aside a jury

verdict on the ground that the verdict is against the weight of the

evidence. Pet. 12-13, 15-19. This argument has no merit.

There is no inter-Circuit conflict. Every Circuit agrees that

the district court may not lightly substitute its view of the facts for

the jury’s verdict. Although different decisions use slightly

LR rh er CR en Mee, rer ena CM ea

13

different words, recent decisions from every Circuit articulate the

principle that the district court may not casually set aside a jury

| verdict because it views evidence in a different manner than the jury

| did. Accordingly, all Circuits apply a stringent standard and hold

| that a new trial should not be granted due to perceived weakness in

| the proof unless the verdict is seriously erroneous, a miscarriage of

| justice, or against the clear or great weight of the evidence:

Bogosian v. Mercedes-Benz, 104 F.3d 472, 482

(1st Cir. 1997): “A new trial is warranted only if

the verdict, though rationally based on the

evidence, was so clearly against the weight of the

evidence as to amount to a manifest miscarriage of

justice." (internal quotes omitted)

Atkins v. New York City, 143 F.3d 100, 102 (2d

Cir. 1998): "A motion for a new trial ordinarily

should not be granted unless the trial court is

convinced that the jury has reached a seriously

erroneous result or that the verdict is a miscarriage

of justice." (internal quotes omitted)

Sheridan v. E.1. DuPont de Nemours & Co., 100

F.3d 1061, 1076 (3d Cir. 1996) (en banc), cert.

denied, 117 S. Ct. 2532 (1997): "[A] district court

should grant a new trial on the basis that the verdict

was contrary to the weight of the evidence only

where a miscarriage of justice would result if the

verdict were to stand." (internal quotes omitted)

Atlas Food Systems & Services, Inc. v. Crane

National Vendors, Inc., 99 F.3d 587, 594 (4th Cir.

| 1996): "[I]}t is the duty of the judge to set aside the

verdict and grant a new trial, if he is of the opinion

that [1] the verdict is against the clear weight of the

evidence, or [2] is based upon evidence which is

false, or [3] will result in a miscarriage of justice .

..." (internal quotes omitted)

DES LT OT NT Ree eT ETT

14

Pryor v. Trane Co., 138 F.3d 1024, 1026 (Sth Cir.

1998): “A trial court should not grant a new trial

on evidentiary grounds unless the verdict is against

the great weight of the evidence." (internal quotes

omitted)

Strickland v. Owens Corning, 142 F.3d 353, 357

(6th Cir. 1998): "[A] new trial is warranted when

a jury has reached a seriously erroneous result as

evidenced by . . . the verdict being against the

weight of the evidence." The same paragraph

explains that:this means the judge may set aside the

verdict if it is “against the clear weight of the

evidence." (internal quotes omitted)

Miksis v. Howard, 106 F.3d 754, 757 (7th Cir.

1997): "A new trial may be granted if the verdict

is against the clear weight of the evidence . . . ."°

Mears v. Nationwide Mutual Insurance Co., 91

F.3d 1118, 1123 (8th Cir. 1996): "The district

court may order a new trial where it is convinced

that the verdict goes against the clear weight of the

evidence... ."

5 It is clear that the Seventh Circuit panel that decided

Miksis did not see itself as applying a standard different from the

standard in Medcom Holding Co. v. Baxter Travenol Laboratories,

Inc., 106 F.3d 1388 (7th Cir. 1997), the case that Aetna cites as

supposedly signaling a departure in the Seventh Circuit’s standard

of review of new trial orders. Pet. 18. The same Circuit Judge,

Eschbach, authored both opinions. Further, Medcom, although

issued for publication approximately a week after Miksis, was

circulated to all active judges in the Seventh Circuit before its

publication. 106 F.3d at 1397 n.3. At least one subsequent

decision has cited both Medcom and Miksis without suggesting that

the cases conflict. Hulbert v. Wilhelm, 120 F.3d 648, 656 (7th Cir.

1997).

15

Ace v. Aetna Life Insurance Co., 139 F.3d 1241,

1248 (9th Cir. 1998) [App. 14a]: "A district court

may order a new trial based on insufficient

evidence only if it finds that the jury’s verdict is

against the great weight of the evidence, or it is

quite clear that the jury has reached a seriously

erroneous result.” (internal quotes omitted)

York v. American Telephone & Telegraph Co., 95

F.3d 948, 958 (10th Cir. 1996): "Where a party

moves for a new trial on the ground that the jury

verdict is not supported by the evidence, the verdict

must stand unless it is clearly, decidedly or

overwhelmingly against the weight of the

evidence." (internal quotes omitted)

Carter v. DecisionOne Corp., 122 F.3d 997, 1004

(11th Cir. 1997): "A motion for new trial may

only be granted when the jury’s verdict is against

the great weight of the evidence."

| McNeal v. Hi-Lo Powered Scaffolding, Inc., 836

| F.2d 637, 646-47 (D.C. Cir. 1988): "If... anew

| trial is granted on the ground that the verdict was

| against the weight of the evidence, the [trial] judge

takes over, if he does not usurp, the prime function

of the jury as the trier of the facts. It then becomes

| the duty of the appellate tribunal to exercise a

| closer degree of scrutiny and supervision than is

| the case where a new trial is granted because of

some undesirable or pernicious influence obtruc ‘ing

into the trial. Such a close scrutiny is require:| in

order to protect the litigants’ right to jury trai."

(internal quotes omitted)®

€ See also Thompson v. International Association of

Machinists, 614 F. Supp. 1002, 1013 (D.D.C. 1985) ("Out of

(continued...)

Dee ee te ae ee Ter eee ee Te

Le ne |

16

Oiness v. Walgreen Co., 88 F.3d 1025, 1028 (Fed.

Cir. 1996), cert. denied, 117 S. Ct. 951 (1997):

"{A] trial court must review the record to

determine whether the jury’s verdict contravenes

the clear or great weight of the evidence."

(internal quotes omitted)

The supposedly conflicting authority that Aetna cites in an

effort to manufacture an inter-Circuit conflict reflects nothing more

than the different verbal formulations that courts often use to

express the same fundamental concept. Indeed, the same opinion,

even the same paragraph, may use both phrases “against the weight

of the evidence" and "against the clear weight of the evidence."

E.g., Strickland v. Owens Corning, 142 F.3d at 357; Atlas Food

Systems & Services, Inc. v. Crane National Vendors, Inc., 99 F.3d

at 594. After surveying the slightly different language employed by

various courts, one leading treatise on federal civil procedure states,

"It may be doubted whether there is any verbal formula that will be

of much use to trial courts in passing on motions of the type now

being considered." i1 FEDERAL PRACTICE AND PROCEDURE,

supra, § 2806, at 74.

Another well-regarded treatise on federal civil procedure

observes that, regardless of the language used, it is the practice of

appellate courts to review extra carefully any order by a district

court setting aside a verdict on the ground that it is against the

weight of the evidence:

[Because of the danger of having a judge substitute

his or her judgment for that of the jury, appellate

® (...continued)

respect for the function of the jury as the trier of fact, an allegation

on a motion for new trial that the verdict is against the weight of the

evidence will generally be rejected unless it is quite clear that the

jury has reached a seriously erroneous result, and the district judge

finds the verdict contrary to the great weight or clear weight of the

evidence.") (internal quotes and citations omitted).

17

courts exercise a greater degree of scrutiny to the

grant of a new trial... . The broad discretion

afforded to the trial court is tempered by the

deference due to a jury. The appellate court must

ensure that the evaluation of the credibility of

witness testimony remains the sole domain of the

jury.

12 James W. Moore, MOORE’S FEDERAL PRACTICE, § 59.54[4][a],

at 59-131 (3d ed. 1997). The most recent edition notes no conflict

among the Circuits.

This deferential view, respecting the authority of the jury to

determine the facts, derives from long-established principles

enunciated by this Court. More than half a century ago, in Tennant

v. Peoria & Pekin Union Railway Co., 321 U.S. 29, 35 (1944), this

Court wrote:

It is not the function of a court to search the record

for conflicting circumstantial evidence in order to

take the case away from the jury on a theory that

the proof gives equal support to inconsistent and

uncertain inferences. . . . Courts are not free to

reweigh the evidence and set aside the jury verdict

merely because the jury could have drawn different

inferences or conclusions or because judges feel

that other results are more reasonable.

See also Browning-Ferris Industries, 492 U.S. at 278 (reiterating

that it is not the role of the court to substitute its judgment for that

of the jury).

In short, there is no conflict among the Circuits concerning

the appellate courts’ duty to ensure that district court judges respect

the function of the jury as the primary factfinder. Aetna’s petition

for certiorari, based on an invented conflict, should be denied.

—

18

C. Gasperini Did Not Modify The Applicable Standard

of Review.

Aetna suggests that Gasperini v. Center for Humanities,

Inc., 518 U.S. 415 (1996), modified the standard that appellate

courts should use in reviewing orders granting new trials. Pet. 17-

19.

Aetna did not present this argument to the Ninth Circuit,

either in its original briefing or in its petition for rehearing and

suggestion for rehearing en banc. This Court should not grant

certiorari to review an issue that has not been fully litigated in the

lower courts. See, supra, at nn. __

Moreover, Aetna’s heavy reliance on Gasperini is

misplaced. Gasperini has little relevance to this case. Gasperini

did not address the issue on which Aetna seeks review: the

standard for appellate review of an order granting a new trial based

on the district court’s belief that the verdict on liability for punitive

damages was against the weight of the evidence. Gasperini dealt

exclusively with judicial review of the amount of damages, an area

where some courts previously believed no appellate review was

allowed at all. 518 U.S. at 434; MOORE’S FEDERAL PRACTICE,

supra, § 59.54[4][b][i], at 59-132.’ The central holding in

’ Likewise, with only one exception, the cases that Aetna

cites to suggest a change in the law or a conflict among the Circuits

all deal with appellate review of a new trial order based on the

amount of the verdict, rather than with a new trial based on the

district court’s disagreement with the jury verdict on liability. See

Kirsch v. Fleet Street, Litd., _ F.3d __, 1998 WL 334714, at **12-

14 (2d Cir. June 25, 1998) (affirming a remittitur on the amount of

compensatory damages); Kelley v. Airborne Freight Corp., 140

F.3d 335, 355-56 (ist Cir. 1998) (affirming district court decision

not to grant remittitur or new trial on amount of damages); Medcom

Holding Co. v. Baxter Travenol Laboratories, Inc., 106 F.3d at

1397 (reversing district court order granting a new trial on amount

(continued...)

19

Gasperini is that "*The proper role of the trial and appellate courts

in the federal system in reviewing the size of jury verdicts is... a

matter of federal law.’" 518 U.S. at 437, quoting Donovan v. Penn

Shipping Co., 429 U.S. 648, 649 (1977) (italics added).

In authorizing judicial review of the amount of a verdict in

order to determine whether it is excessive, Gasperini in no way

undermined or overruled Tennant or Browning-Ferris or any of the

myriad other cases by this Court that emphasize the limited

authority of the district court to substitute its view of the facts for

the verdict found by a properly instructed jury. Aetna’s suggestion

that Gasperini changed the law on reviewing jury verdicts on

punitive liability is mistaken and is not a basis for granting

certiorari.

D. Aetna’s Petition Asks This Court To Re-Evaluate

The Facts And Presents No Legal Issue Of

Nationwide Importance.

1. The appeals court applied the correct legal

standard in reviewing an order entered with

minimal explanation or analysis.

The Ninth Circuit, like every other Circuit, reviews a

district court order granting or denying a partial new trial using the

abuse-of-discretion standard. The panel applied that standard in this

case. [App. 14a]. The Ninth Circuit en banc saw no error in the

application of that standard warranting full Circuit review.

7 (...continued)

of damages).

The exception is Santa Maria v. Metro-North Commuter

Railroad, 81 F.3d 265, 273-75 (2d Cir. 1996), in which the

appellate court reversed the district court order denying a new trial

on all issues; however, the weight of the evidence was not an issue

in the new trial ruling, so Aetna’s cite to this case relies on dictum.

20

Aetna maintains that the Ninth Circuit panel paid lip service

to the proper standard but actually exercised a more intrusive

scrutiny. Pet. 19-24. There is no basis for this claim. The Ninth

Circuit applied the standard it said it applied. What Aetna really

argues is that the jury and the Ninth Circuit should have accepted

Aetna’s view of the facts. This claim is also meritless. This Court

has no reason to grant certiorari to review the facts yet again.

An appellate court’s determination that the district court

abused its discretion in substituting its view of the facts for that of

the jury is an unremarkable holding. Cases from around the

country reverse orders granting a new trial because the appeals

court concludes that the district court abused its discretion in finding

the verdict against the clear weight of the evidence.* This Court,

too, has made clear that an appellate court, applying the abuse-of-

discretion standard properly, should reverse when the district court

makes a discretionary ruling based on a clearly erroneous

assessment of the evidence. Cooter & Gell v. Hartmarx Corp., 496

U.S. 384, 405 (1990) ("A district court would necessarily abuse its

discretion if it based its ruling . . . on a clearly erroneous

assessment of the evidence."); see also Gasperini, 518 U.S. at 435

("We must give the benefit of every doubt to the judgment of the

trial judge; but surely there must be an upper limit. . . ."). Even

Aetna concedes that the abuse-of-discretion standard does not

require the appellate court to rubberstamp every discretionary

decision by the district court. Pet. 20.

Aetna contends that "[w]here the district court makes a

reasoned decision about the quantity and quality of the evidence

supporting a verdict and decides a new trial is appropriate, the court

of appeals should defer to the trial judge’s assessment of the

® E.g., Binder v. Long Island Lighting Co., 57 F.3d 193,

201-02 (2d Cir. 1995); Williamson v. Consolidated Rail Corp., 926

F.2d 1344, 1353-54 (3d Cir. 1991); Portage Il v. Bryant Petroleum

Corp., 899 F.2d 1514, 1523-26 (6th Cir. 1990); Rosenfield v.

Wellington Leisure Products, Inc., 827 F.2d 1493, 1497-98 (11th

Cir. 1987).

21

evidence ...." Pet. 20-21. Aetna is correct in the abstract, but

the abstrect does not reflect the reality of this case.

The district court in the current case offered no carefully

reasoned decision supporting a new trial. In granting a new trial on

the question of liability for punitive damages, the district court

wrote only that "[i]n general" it agreed with Aetna’s arguments for

a new trial. [App. 49a]. Those arguments emphasized Aetna’s and

the district court’s belief that the evidence did not support the

punitive damages verdict. [CR 228 at 5°]. Neither Aetna nor the

district court ever articulated an analysis of the evidence in this case

that would allow a finding that the verdict on punitive damages was

supported by clear and convincing evidence (as it must be unde1

Alaska law to survive a motion for directed verdict or judgment as

a matter of law), but was against the great weight of the evidence

(so as to justify ordering a new trial). In fact, the district court

made no explicit finding that the verdict was against the weight --

much less against the clear or great weight -- of the evidence, and

the Ninth Circuit, based on its own thoughtful review of the record,

concluded that the record could not support such a finding. [App.

15a}. In this case, the Ninth Circuit reversed the judgment as a

matter of law based on its determination that the district court had

"ignored significant and undisputed evidence" and failed to consider

the evidence as a whole; this determination also strongly supported

the appeals court’s companion conclusion that the new trial order --

which rested on the same reasoning as the judgment as a matter of

law -- was legally erroneous. [App. 13a-15a].

® Aetna’s memorandum in support of the new trial motion

incorporated its memorandum in support of the motion for judgment

as a matter of law and the district court’s order granting that

motion. Aetna wrote: "For the reasons set forth in this Court’s July

2 Order [App. 5la-62a] and in Aetna’s Rule 50 motion (Aetna

JMOL Mem. 8-44), the jury’s verdict on punitive liability under

Alaska law is -- at the very least -- against the weight of the

evidence." [CR 228 at 5 (internal quotes omitted)].

22

2. The question whether a district court abused its

discretion in granting a new trial on weight-of-

evidence grounds is an intensely fact specific

inquiry.

The question whether a district court abused its discretion

in granting a conditional new trial is intensely factbound, as is

evident from any opinion evaluating an order granting or denying

a new trial on weight-of-the-evidence grounds. In the present case,

to determine whether the district court erred, the Ninth Circuit was

obliged to review the complete trial transcript and hundreds of

pages of exhibits, including medical records and claim files, all of

which is summarized in the lengthy fact section of the appellate

opinion. [App. 3a-10a]. Based on this detailed review, the Ninth

Circuit determined that the record amply supported the jury verdicts

both on bad faith and liability for punitive damages and failed to

support a grant of judgment as a matter of law or a new trial.

[App. 3a-13a, 17a-18a].

Aetna’s petition suggests the complex factual review that

would be required by this Court if certiorari were granted.

Reviewing Aetna’s arguments would require this Court to determine

the quantity and quality of evidence supporting the jury’s

determination that Aetna acted outrageously in handling Ace’s

disability claim. Only with a full understanding of all the facts

could this Court decide whether the Court of Appeals erred in

holding that the district court erred in concluding that the verdict

was unsupported by the evidence.

Aetna challenges two of the eight bases the appeals court

listed for finding Aetna’s conduct outrageous. Pet. 22-24. In

reality, these arguments challenge the Court of Appeals’

determination concerning the motion for judgment as a matter of

law, a holding that Aetna does not ask this Court to review. Aetna

does not tie its arguments to reasons why the Court of Appeals

allegedly erred with regard to the ruling on the new trial.

In any event, Aetna’s claims that the Court of Appeals

committed reversible error are unfounded. Aetna argues, for its

23

first example, that the Ninth Circuit should have deferred to the

district court’s fincing that Aetna used a legal standard in denying

Ace’s benefits. Pet. 22-23. However, the appellate court properly

could find that the district court erred in disregarding Aetna’s

correspondence to Ace (which cited only the illegal standard) [ER

30-31, 48, 57], and in disregarding the fact that the jury did not

have to accept Aetna’s witnesses’ self-serving testimony about the

standard they claimed they applied. [See, e.g., 3 Tr. 18-20, 47-50;

6 Tr. 8-9]. Furthermore, no new trial would be warranted even if

Aetna used the legal standard, because the verdict is amply

supported by the seven other ways in which Aetna’s claim handling

practices manifested reckless indifference to Ace’s interests.

Aetna’s second example contends that the district court

appropriately found that the claim handler acted reasonably in

determining that Ace’s job was sedentary. Pet. 23-24. However,

again the appellate court properly could find that the district court

erred in disregarding evidence presented to the jury;

unquestionably, Aetna’s claim file included the detailed job

description that showed that Ace’s job required rigorous, non-

sedentary travel. [ER 111, 113-14]. Moreover, Aetna does not

explain how Ace’s disability claim properly could have been denied

after her doctor and physical therapist reported she was unable to

perform even sedentary jobs. [ER 41-45, 53-54].

Much testimony and extensive briefing were devoted to

these specific factual issues. The factual disputes that Aetna asks

this Court to review were entrusted to the jury to decide. The jury

resolved the disputes in Ace’s favor. The district court reassessed

the facts, and the appellate court thoughtfully reviewed the record

and determined that the district court abused its discretion in

substituting its view for the jury’s. A full factual review by this

Court would establish that the appellate court, and not the district

court, was correct in how it evaluated the record on each point

raised by Aetna, but deciding where the weight of the evidence lies

involves no legal matter of national significance that justifies this

Court’s review of this case.

24

Il. THIS CASE DOES NOT IMPLICATE THE DUE

PROCESS CONCERNS RAISED IN CASES

INVOLVING POST-VERDICT JUDICIAL REVIEW

OF THE AMOUNT OF PUNITIVE DAMAGES

AWARDS.

Aetna’s second asserted ground for granting certiorari is as

spurious as its first. Aetna has tried to manufacture error where

none exists by using cases concerning review of large punitive

damages awards in a situation where the size of the award is not

even an issue. Pet. 24-26.

This Court has developed a body of jurisprudence requiring

meaningful and adequate judicial review of potentially excessive

punitive damages awards. See, e.g., BMW v. Gore, 517 U.S. 559

(1996); Honda Motor Co. v. Oberg, 512 U.S. 415 (1994); TXO

Production Corp. v. Alliance Resources Corp., 509 U.S. 443

(1993); Browning-Ferris Industries v. Kelco Disposal, Inc., 492

U.S. 257 (1989); Pacific Mutual Life Ins. Co. v. Haslip, 499 U.S.

1 (1991).

All of those cases are inapposite to this case at this time.

The amount of the punitive award is not an issue before this Court.

The Ninth Circuit accepted Aetna’s argument that the jury’s

punitive damages verdict was excessive and remanded the case to

the district court to determine a remittitur. [App. 16a]. Arguments

based on any alleged failure to provide post-verdict review

consistent with due process must wait until the post-verdict review

process has been completed. From Aetna’s perspective, the

requirement of thoughtful judicial review of potentially excessive

punitive awards is working well: the law of this case is that the

jury’s award was excessive under Alaska law and a remittitur must

be granted. [App. 16a]. No due process concerns about the

adequacy of post-verdict review are implicated in this case at this

time.

None of this Court’s cases suggest that due process requires

special review of a jury’s factual determination that a defendant

acted "with reckless indifference to the rights of another” or special

25

deference to a district court’s contrary determination that punitive

damages are not warranted, and Aetna’s petition offers no rationale

for extending the cases. Whether punitive damages are legally

justified is a matter of state law; states utilize many different legal

standards. In its petition to this Court, Aetna does not challenge the

Ninth Circuit’s holding that evidence in the record was legally

sufficient to sustain the jury’s finding that Aetna’s conduct

warranted imposing punitive damages under Alaska law. [App.

10a-13a]. Any argument for extending due process concerns to

review of the verdict establishing punitive liability should await a

case where the petitioner claims before this Court that there was an

insufficient basis to award punitive damages against it.

Il. THERE IS NO REQUIREMENT THAT AN

APPELLATE COURT REMAND A CASE TO THE

DISTRICT COURT FOR A STATEMENT OF ITS

REASONS FOR GRANTING A NEW TRIAL WHERE

THE DISTRICT COURT STATED THAT IT

ACCEPTED THE REASONS OFFERED BY THE

DEFENDANT AND NONE OF THOSE REASONS

JUSTIFY A NEW TRIAL.

Aetna’s final argument for granting certiorari begins with

a misstatement of fact. Aetna asserts it offered the district court

seven independent grounds for granting a new trial; it criticizes the

Ninth Circuit for not explicitly considering each of these grounds

before reversing the order granting a new trial. Pet. 27.

Aetna in fact offered the district court just three arguments

for granting a new trial on the issue of Aetna’s liability for punitive

damages. See Pet. 9."° Aetna’s primary argument for a new trial

‘© Aetna counts seven arguments by including those that it

offered to the district court in support of its motion for a new trial

on the amount of punitive damages. [CR 228]. While the Ninth

Circuit did not address those arguments explicitly, it obviously

accepted one or more of them, because it ‘vacated the punitive

(continued. ..)

26

was that the verdict was against the weight of the evidence. The

Ninth Circuit correctly concluded that this was the main reason

relied on by the district court, and then expressly analyzed and

rejected that basis for ordering a new trial. [App. 14a]. Thus,

Aetna’s argument to this Court reduces to a claim that the Ninth

Circuit erred by not remanding to have the district court state

explicitly the extent, if at all, to which it relied on Aetna’s two

subsidiary arguments when it granted a partial new trial.

The two grounds for a new trial that the Ninth Circuit did

not explicitly address received only token attention before the lower

courts. Aetna devoted a total of three pages to both arguments in

its motion to the district court, then gave the same cursory attention

to these arguments on appeal. [CR 228 at 6-9; Aetna’s Brief as

Appellee/Cross-Appellant at 43-46]. A remand to allow the district

court to address these issues explicitly would have been pointless,

since neither of the subsidiary grounds could support a new trial.

Contrary to Aetna’s exaggerated claims, the Ninth Circuit’s

approach to Aetna’s subsidiary arguments did not depart from

established appellate procedure. There was no need for the Ninth

Circuit to remand or to draft a more detailed opinion expressly

addressing Aetna’s minor arguments. Remanding is one option

when the district court fails to offer adequate explicit grounds to

justify a ruling, but it is not the only legitimate choice. An

inflexible rule requiring an appeals court to remand whenever the

district court issues a minimally explained and unsupported order

would be inefficient and would ill serve the judiciary."

10 (...continued)

damages award, exactly as Aetna requested. [App. 15a-16a].

Aetna has no basis for complaining to this Court about the Ninth

Circuit’s response to those arguments.

'! A sampling of cases from around the country

demonstrates that appellate courts often reach a final decision on a

new trial question, even when the district court has not clearly

(continued...)

27

In the current case, no remand was required, because the

appellate court could determine from the record that the alternative

grounds presented to the district court could not possibly support an

order for a new trial, even if the trial court were persuaded by

them.

Aetna’s first alternative ground was a claim that a small

portion of testimony by Ace’s expert was unduly speculative. [CR

228 at 6-7]. The expert’s testimony largely was devoted to

explaining how Aetna acted in bad faith and breached its duties to

Ace. [3 Tr. 198-99, 202-27]. That testimony was not speculative

and Aetna lodged no objection to it. The only supposedly

speculative testimony admitted over Aetna’s objection was the

expert’s assertion that, if an insurer interprets a policy in a manner

different from its literal language, the insurer should explain this to

policyholders, because failure to do so can be confusing and

"! (...continued)

explained its bases for granting or denying a new trial. See, e.g.,

Collazo-Santiago v. Toyota Motor Corp., _ F.3d ___, 1998 WL

363856 at *5 n.6 (ist Cir. July 9, 1998) (reviewing record to

determine whether new trial would be warranted on any ground

asserted by defendant); Frumkin v. Mayo Clinic, 965 F.2d 620, 625

(8th Cir. 1992) (district court abuses its discretion if it grants a new

trial but fails to "articulate an adequate statement of reasons when

granting a new trial on weight of evidence grounds"; no remand to

give the district court a second chance to explain its decision is

required); United States v. Tobias, 899 F.2d 1375, 1381 (4th Cir.

1990) ("Because the district court has not adequately justified its

conditional grant of a new trial, and we perceive no basis to justify

it, the order granting a new trial is vacated."); Powell v. Lititz

Mutual Ins. Co., 419 F.2d 62, 65 (Sth Cir. 1969) (review is

"hampered," but not forbidden, when the district court offers no

detailed explanation of a ruling granting a new trial). See generally

Baxter Healthcare Corp. v. Spectramed, Inc., 49 F.3d 1575, 1582

(Fed. Cir.) (appellate courts review judgments, not opinions; the

appellate court is free to examine the record to determine whether

the facts support the judgment), cert. denied, 516 U.S. 906 (1995).

28

misleading and may discourage a claimant from pursuing a valid

claim."* This testimony is common sense. The jury on its own

could reach the same conclusion without expert testimony. A ruling

by the district court that the expert’s "speculative" testimony

warranted a new trial on liability for punitive damages would have

been an abuse of discretion. See, e.g., Mears v. Nationwide Mutual

Ins. Co., 91 F.3d 1118, 1123-24 (8th Cir. 1996) (district court

abused its discretion in granting a new trial based on "speculative"

testimony where there was sufficient evidence to support the verdict

without the “speculative” testimony); Williamson v. Consolidated

Rail Corp., 926 F.2d 1344, 1353-54 (3d Cir. 1991) (similar). The

Ninth Circuit’s failure to remand for further analysis or to affirm

the new trial order on this alternative ground was not error.

Aetna’s second alternative ground for a new trial was a

brief unobjected-to comment by Ace’s counsel in closing argument.

[CR 228 at 7-8]. Aetna’s failure to object during the trial waived

any claim of error. Nissho-Iwai Co., Ltd. v. Occidental Crude

Sales, Inc., 848 F.2d 613, 619 (Sth Cir. 1988); Computer Systems

Engineering, Inc. v. Qantel Corp., 740 F.2d 59, 69 (ist Cir. 1984);

FEDERAL PRACTICE AND PROCEDURE, supra, § 2805, at 57-58 &

n.13; § 2809, at 99 & n.4 (citing cases from many Circuits).

Moreover, the comment was neither improper nor prejudicial. The

alleged "misconduct" was a half-sentence that made passing mention

of two products liability cases widely covered in the media. [6 Tr.

228]. A ruling by the district court granting a new trial based on

'2 Ace’s counsel asked the expert what a reasonable

insurance executive would expect would result from a policy of

quoting claimants only the language of the policy and not explaining

how it is applied, if the practical application differs from the literal

policy language. Over objection, the expert testified, "I would

expect that claims would be abandoned, claims would be dropped,

and the insured wouldn’t know that there was another standard or

that there was any other way that they could get their claim paid, so

they’d probably give up." [3 Tr. 210-12; see also 3 Tr. 219-20

(repeating similar testimony].

29

“prejudicial misconduct" in the closing argument would have been

an abuse of discretion.

The Ninth Circuit’s failure to address explicitly either of

Aetna’s two weak alternative grounds for a new trial or to remand

to allow the district court to rule explicitly on these grounds was not

error, because neither ground would justify a new trial. This Court

should decline Aetna’s request to grant certiorari and to develop a

new, inflexible rule always requiring an appeals court to remand for

clarification when the district court does not explain whether or not

it has relied on grounds that the appeals court can determine are

meritless.

CONCLUSION

Aetna’s petition for certiorari should be denied.

RICHARD H FRIEDMAN JEFFREY M. FELDMAN

JEFFREY K. RUBIN (Counsel of Record)

Friedman, Rubin & White SUSAN ORLANSKY

1227 West 9th Avenue Feldman & Orlansky

Anchorage, Alaska 99501 500 L Street, Suite 400

(907) 258-0704 Anchorage, Alaska 99501

(907) 272-3538

Counsel for Respondent

Sherrie Ace

September 3, 1998