518 U.S. 415 (1996)
William Gasperini, a journalist and photographer who had taken over 5,000 slide transparencies while reporting in Central America, agreed in 1990 to supply 300 of his original color transparencies to The Center for Humanities, Inc., for use in an educational videotape titled Conflict in Central America.1 After the project concluded, the Center could not locate or return the transparencies, prompting Gasperini to pursue legal remedies for their loss.2
Gasperini, a California citizen, sued the Center, a New York corporation with its principal place of business in New York, in the United States District Court for the Southern District of New York.3 He invoked diversity jurisdiction under 28 U.S.C. § 1332 and alleged state-law claims for breach of contract, conversion, and negligence.4 The Center conceded liability, so the case proceeded to trial solely on damages.5
At the three-day jury trial, Gasperini's expert testified that the industry standard valued each lost transparency at $1,500 as the average license fee over the photographer's copyright term.6 Gasperini testified that his photography earnings from 1984 through 1993 totaled just over $10,000 and that he planned to publish a book of his best Central American photographs.7 The jury returned a verdict of $450,000, or $1,500 for each of the 300 slides.8
The Center moved for a new trial under Federal Rule of Civil Procedure 59, invoking both the federal standard and New York Civil Practice Law and Rules § 5501(c).9 The District Court denied the motion without comment.10 The Court of Appeals for the Second Circuit vacated the judgment after applying the New York deviates-materially standard itself.11
The Second Circuit surveyed Appellate Division decisions on similar awards and concluded that the verdict materially deviated from reasonable compensation because many slides were generic and Gasperini had limited earnings.12 It ordered a new trial unless Gasperini accepted a reduction to $100,000.13 The Supreme Court granted certiorari to resolve the conflict over the proper standard.14
Whether a federal court sitting in diversity must apply New York's CPLR § 5501(c) 'deviates materially' standard rather than the federal 'shocks the conscience' standard when reviewing the excessiveness of a jury verdict?15
Yes. The District Court erred by applying the federal shocks-the-conscience test instead of New York's deviates-materially standard when the Center moved for a new trial under Rule 59 after the jury awarded Gasperini $450,000 based solely on industry-standard testimony of $1,500 per transparency despite his limited earnings of just over $10,000 from 1984 through 1993 and the presence of many generic slides among the 300 lost transparencies.18
A federal court sitting in diversity must apply New York's CPLR § 5501(c) deviates-materially standard when reviewing the excessiveness of a jury verdict.19
Related opinions on this issue
Justice Stevens concurs that the deviates-materially standard is substantive and must be applied in federal diversity cases.20 He emphasizes that the Seventh Amendment does not bar its use because it does not impair the jury's factfinding function but instead supplies a state-created limit on allowable damages.21 The standard for excessiveness is a matter of substantive law that does not impair the jury's factfinding function.22
The Amendment is not violated when a federal court applies a state substantive standard in reviewing a jury verdict in a diversity case.23
Whether the task of applying the New York excessiveness standard is allocated to the federal district court in the first instance, with appellate review limited to abuse of discretion?24
The allocation of functions between trial and appellate courts is a matter of federal procedural law.25 The district court, having seen the witnesses and heard the testimony, is best positioned to apply the state excessiveness standard in the first instance.26 The court of appeals reviews that application only for abuse of discretion under federal standards such as Rule 59 and 28 U.S.C. § 1291.27
Yes. The District Court, which presided over the three-day trial and observed the evidence of Gasperini's photography earnings and the uniqueness of the combat slides, should have applied the deviates-materially standard initially.28 The Second Circuit therefore should have reviewed the denial of the new-trial motion for abuse of discretion rather than applying the New York standard itself and ordering a remittitur to $100,000.29
The task of applying the New York excessiveness standard is allocated to the federal district court in the first instance, with appellate review limited to abuse of discretion.30
Related opinions on this issue
Joined by Rehnquist, C. J., And Thomas, J.
Justice Scalia dissents from the majority's allocation of the excessiveness review to the district court in the first instance.31 He contends that the court of appeals must itself apply the deviates-materially standard de novo because the New York statute assigns that task to appellate courts.32 The Seventh Amendment requires that the jury's verdict be subject to appellate review under the same standard that would apply in state court.33
Allowing district courts to apply a more lenient shocks-the-conscience test first would undermine the substantive protection New York law affords defendants against excessive awards. He would therefore affirm the Second Circuit's direct application of the state standard.
Justice Thomas joins Justice Scalia's dissent on the allocation of review functions.34 He argues that the Seventh Amendment limits the power of federal judges to overturn jury verdicts and that the court of appeals should apply the New York standard directly rather than deferring to a district court's more lenient review.35 The Court's decision today undermines that guarantee by allowing federal district judges to apply a more deferential standard than would apply in state court.
He would require the court of appeals to apply the New York standard directly.
Whether the Seventh Amendment's Reexamination Clause permits federal appellate review of a district court's denial of a motion to set aside a jury verdict as excessive under a state substantive standard?36
The Reexamination Clause permits appellate review of a district court's denial of a new-trial motion for excessiveness when conducted under an abuse-of-discretion standard.37
Yes. The Second Circuit's review of the District Court's denial of the Center's Rule 59 motion, which rested on the $450,000 verdict for 300 transparencies, is permissible under the Reexamination Clause when limited to abuse-of-discretion review that respects the state substantive standard without reexamining facts found by the jury.38
The Seventh Amendment's Reexamination Clause permits federal appellate review of a district court's denial of a motion to set aside a jury verdict as excessive under a state substantive standard.39
Related opinions on this issue
Justice Stevens concurs that the Reexamination Clause does not bar federal appellate courts from reviewing jury awards for excessiveness.40 He explains that a verdict may be insupportable as a matter of law if the award exceeds what state law permits, imposing a duty on the trial judge to set it aside, and that appellate courts may correct such legal errors.41 The common-law practice permitted the court above to grant new trials for excessive awards, and the procedure here aligns with those rules.42
Even if review by the Court of Appeals implicates the Reexamination Clause, it was according to the rules of the common law.43
Joined by Rehnquist, C. J., And Thomas, J.
Justice Scalia dissents from the majority's approval of appellate review.44 He maintains that the Reexamination Clause prohibits federal appellate courts from reviewing refusals to set aside jury awards as contrary to the weight of the evidence.45 At common law such review was confined to the trial court and writs of error reached only questions of law.46
That principle was expressly acknowledged by this Court as governing federal practice in Parsons v. Bedford. He would reverse the judgment of the Court of Appeals.
Justice Thomas joins Justice Scalia's dissent on the Reexamination Clause issue.47 He asserts that the Seventh Amendment guarantees the right to a jury trial and limits the power of federal judges to overturn jury verdicts.48 The court of appeals should apply the New York standard directly rather than permitting deferential district-court review.
The Court's decision today undermines that guarantee by allowing federal district judges to apply a more deferential standard than would apply in state court. He would require the court of appeals to apply the New York standard directly.