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Adeli v. Silverstar Automotive, Inc.

United States District Court, W.D. Arkansas, Fayetteville Division

February 7, 2019

HAMID ADELI PLAINTIFF
v.
SILVERSTAR AUTOMOTIVE, INC. d/b/a Mercedes-Benz of Northwest Arkansas DEFENDANT

          OPINION AND ORDER

          P.K. HOLMES, III CHIEF U.S. DISTRICT JUDGE

         Before the Court is Defendant Silverstar Automotive, Inc.'s (“Silverstar”) motion (Doc. 65) to alter or amend the judgment and brief (Doc. 66) in support. Plaintiff Hamid Adeli (“Adeli”) filed a response (Doc. 74), Silverstar filed a reply (Doc. 77), and Adeli filed a surreply (Doc. 81) with leave of Court. Silverstar contends that the punitive damages amount must be reduced because the amount violates its due process rights under the Fourteenth Amendment. Silverstar also seeks a remittitur on the incidental damages amount. For the reasons stated below, Silverstar's motion will be granted in part and denied in part.

         I. Background

         This case arises from the sale of a used Ferrari F430. The relevant facts leading up to the sale are outlined in the Court's order (Doc. 49) on summary judgment entered on September 13, 2018. The case proceeded to trial and the jury returned a unanimous verdict for Adeli on his claims for breach of contract, fraud, and deceptive trade practices. (Doc. 59). On September 27, 2018, the Court entered judgment in favor of Adeli in the amount of $6, 835 in compensatory damages, $13, 366 in incidental damages, and $5, 800, 000 in punitive damages. (Doc. 62). Silverstar filed a post trial motion for judgment as a matter of law[1] and this post trial motion to alter or amend the judgment. Silverstar contends that the punitive damages award is unconstitutionally excessive and should be reduced to $28, 000. Silverstar further argues that the incidental damages should be reduced to $1, 575.

         II. Analysis

         Because Silverstar's punitive damages argument is premised on the appropriate ratio of punitive damages to compensatory damages, the Court's decision on the incidental damages award may impact the Court's analysis on the proper punitive damages amount. The Court will therefore address Silverstar's request for a remittitur as to the incidental damages first and then turn to punitive damages.

         A. Incidental Damages

         Silverstar seeks a remittitur on the incidental damages award, arguing the amount of damages the jury awarded lacked evidentiary support and was the result of passion and prejudice. The Court may order a remittitur “when it believes the jury's award is unreasonable on the facts.” Ross v. Kansas City Power & Light Co., 293 F.3d 1041, 1049 (8th Cir. 2002) (citation omitted). “A trial court is within its discretion in remitting a verdict only when, after reviewing all the evidence in the light most favorable to the awardee, it is convinced that the verdict is clearly excessive, resulted from passion, bias, or prejudice, or is so excessive . . . as to shock the judicial conscience of the court.” Wallace v. FedEx Corp., 764 F.3d 571, 593 (6th Cir. 2014); see also 11 Charles A. Wright et al., Federal Practice & Procedure, § 2815 (3d ed. 2018).

         The Court issued the following instruction for incidental damages:

The elements of incidental damages that Adeli claims are expenses reasonably incurred in the inspection, receipt, transportation of the Ferrari, and any other reasonable expenses incident to the breach of warranty. Whether this element of damages has been proved by the evidence is for you to determine.

(Doc. 74-1, p. 337). The jury returned an incidental damages award of $13, 366. The Arkansas model instruction provides the jury with discretion in deciding what “other reasonable expense[s]” are incident to the breach. AMI Civ. 2521 (2017). Based on the evidence presented at trial, the figure does not appear to be so excessive as to shock the conscience. Nor is the amount so large as to indicate the jury acted with bias or prejudice. Adeli presented a clear, detailed summary of the expenses he incurred in the months after purchasing the car. The instructions properly instructed the jury of the costs which it could consider as incidental, as well as its role in assessing the amount of damages. The incidental damages awarded were not untethered from Adeli's evidence. It is not the Court's task to decide whether the amount of damages returned is correct, but only whether it is reasonable. See Wallace, 764 F.3d at 593-94. The incidental damages award will stand.

         B. Punitive Damages

         Silverstar next argues that the punitive damages award is unconstitutionally excessive and violates its due process rights. Juries maintain flexibility in determining the amount of punitive damages, but “the Due Process Clause of the Fourteenth Amendment prohibits the imposition of grossly excessive or arbitrary punishments.” State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 416 (2003). When analyzing whether a punitive damages award is grossly excessive, “the relevant constitutional line is inherently imprecise.” Cooper Indus., Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 434-35 (2001). However, the Supreme Court identified three “guideposts” a reviewing court should focus on: (1) the degree of reprehensibility of the defendant's conduct; (2) the disparity between actual or potential harm suffered and the punitive damages award; and (3) the difference between the punitive damages awarded and the civil penalties that could be imposed in comparable cases. See BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 574-75 (1996).

         The first guidepost, the degree of reprehensibility of the defendant's conduct, is often considered the most important indicator of the reasonableness of a punitive damages award. Campbell, 538 U.S. at 419 (citing Gore, 517 U.S. at 575). The Supreme Court has directed courts ...


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