Are the appellate courts deviating from the "deviates materially" standard of review?

• Author: Montes, Richard J.
• Position: New York

Efforts at tort reform have taken many forms over the years. One area that has received considerable attention is the size of pain and suffering awards. While some states have adopted caps on pain and suffering awards, New York has not enacted such laws. (1) Instead, in 1986 New York changed its standard of judicial review of jury awards. (2) It moved from a more liberal "shocks the conscience" standard to a more scrutinizing "deviates materially from reasonable compensation" standard. (3) The purpose of this change was to tighten the range of tolerable awards by requiring courts to compare the jury's awards with jury awards for similarly situated plaintiffs and defendants. (4)

This article reviews how the courts have been applying the "deviates materially" standard and whether their application of the standard has succeeded in tightening the range of tolerable awards. Part I of this article discusses the Legislature's adoption of the "deviates materially" standard. (5) Part II discusses some basic principles the courts have adopted with respect to how the standard should be applied. (6) Part III explores whether our appellate courts have been consistently adhering to those standards and fulfilling the purpose of the statute. (7) Part IV offers some reasons why the standard has not been applied consistently. (8) Finally, Part V proposes a method of applying the "deviates materially" standard so as to more closely fulfill the Legislature's intent. (9)

1. NEW YORK ADOPTS A "DEVIATES MATERIALLY" STANDARD OF APPELLATE REVIEW

   Like many states today, prior to 1986 New York applied the "shocks the conscience" standard of review to damages awards. (10) Under that standard, a trial judge would initially determine whether an award "was so exorbitant that it 'shocked the conscience of the court.'" (11) Appellate courts would review that determination. (12) It was a strict standard that required the courts to give considerable deference to the jury. (13)

   By the mid-1980s, however, as jury awards were spiraling to even greater heights, it became apparent that the "shocks the conscience" standard of review was not controlling excessively large jury verdicts in New York. (14) As one example, a publicized 1986 medical malpractice action tried in Bronx County resulted in a $65 million dollar jury award, including $58 million dollars for pain and suffering alone. (15) The First Department reviewed the case, but issued an affirmance with no opinion. (16) To better understand the size of that award today, when adjusted for inflation to 2013 dollars using the Consumer Price Index, (17) the award would be roughly equivalent today to an award of almost $130 million for pain and suffering alone. (18) Given spiraling awards and a mounting insurance crisis, New York's then-Governor Mario Cuomo created a special panel called the Jones Commission to review proposals for reform. (19)

   The Jones Commission focused in particular "on pain and suffering awards as a driving force behind the 'cost surge' which threatened the ability to obtain insurance coverage and posed a threat to self-insured municipal corporations." (20) As found by the Commission:

   All of us are moved by the pain and anxiety that most people who suffer more than minor injuries go through. Our natural tendency is to want to help. Inasmuch as there is no objective way to value these harms, our inclination is to err on the high side. Over time, this tendency gathers its own momentum, a momentum which has no natural curbing force. Particularly in an era where the existence of insurance is commonly assumed, so that the defendant is not expected to bear most of the loss, the urge to provide the most assistance possible becomes nearly irresistible. (21) While the Jones Commission proposed a cap on pain and suffering awards to address the lack of a "natural curbing force," the Legislature rejected that proposal. (22) Instead, the New York State Legislature enacted CPLR section 5501(c), which replaced the more elastic "shocks the conscience" standard for reviewing jury verdicts with the "deviates materially standard." (23) Section 5501(c) states:

   In reviewing a money judgment in an action in which an itemized verdict is required by rule forty-one hundred eleven of this chapter in which it is contended that the award is excessive or inadequate and that a new trial should have been granted unless a stipulation is entered to a different award, the appellate division shall determine that an award is excessive or inadequate if it deviates materially from what would be reasonable compensation. (24) "As stated in Legislative Findings and Declarations accompanying New York's adoption of the 'deviates materially' formulation, the lawmakers found the 'shock the conscience' test an insufficient check on damage awards; the Legislature therefore installed a standard 'inviting more careful appellate scrutiny.'" (25) By ratcheting up the standard of review, the goal was to "influence[] outcomes by tightening the range of tolerable awards." (26) The goal also was to promote "greater fairness for similarly situated defendants throughout the State." (27) Thus, to determine whether an award "materially deviates from what [would be] reasonable compensation," New York courts must look to awards approved in similar cases. (28) Indeed, the necessity of comparing cases was recognized by the U.S. Supreme Court in Gasperini u. Center for Humanities, Inc. (29)

   In Gasperini, the defendant moved for a new trial, arguing that the jury award of $450,000 was excessive. (30) The district court denied the motion without comment, but on appeal, the Second Circuit Court of Appeals reviewed the award in light of New York's "deviates materially" standard. (31) After review, the Second Circuit ordered a remittitur, vacating the jury verdict and granting a new trial unless the plaintiff agreed to a reduced sum of $100,000. (32) The plaintiff contended that federal appellate review under CPLR section 5501(c) violated the Seventh Amendment's Re-examination Clause. (33) The Supreme Court held that the "deviates materially" standard did not violate the Seventh Amendment and that federal appellate courts could review a trial judge's determination on a motion to set aside a jury verdict as excessive. (34) In doing so, the Court reviewed the purpose of CPLR section 5501(c) and its intended application. (35) The Supreme Court specifically addressed the importance of comparing other cases when determining whether an award deviates materially. (36) It further recognized that the maximum allowed is set by case law, and whether that limit is exceeded is not a question of fact where reasonable men may differ, but a question of law. (37)

   In 1988, the New York Legislature also amended CPLR 5522 to add subsection (b). (38) The amendment requires the appellate division, when it alters a jury's verdict under section 5501(c), to recite its reasons for that alteration, including the factors it considered when determining the excessiveness or inadequacy of an award. (39) This provision has been explicitly acknowledged as creating an affirmative obligation on an appellate court to "identify the reasons for [its] decision." (40) As will be shown below, however, in practice the Appellate Division often does not meet this statutory obligation. (41)

2. BASIC PRINCIPLES USED TO APPLY THE "DEVIATES MATERIALLY" STANDARD OF REVIEW

   Since the enactment of CPLR section 5501(c), there are certain basic principles regarding the application of the "deviates materially" standard that appear to have been well accepted.

   1. Courts Must Compare Cases

      One of the principles previously mentioned is the necessity of comparing cases. Thus, for more than two decades, appellate review under section 5501(c) "has been performed by analogizing an appealed case with relevant precedent and 'tightening the range' to accomplish the purposes of the 1986 reform." (42) Importantly, comparing "appealed verdicts using CPLR 5501(c) is not optional but a legislative mandate." (43) In determining whether an award of damages "deviates materially from what would be reasonable compensation," a court is obliged to look to awards approved in cases involving similar injuries. (44) This standard governs trial judges as well. (45) As the Second Department has stated:

      A long course of practice, numerous verdicts rendered year after year, orders made by trial justices approving or disapproving them, decisions on the subject by appellate courts, furnish to the judicial mind some indication of the consensus of opinion of jurors and courts as to the proper relation between the character of the injury and the amount of compensation awarded. (46) A comparison with cases involving similar injuries or worse injuries is particularly crucial with respect to awards for pain and suffering. (47) "Because personal injury awards, especially those for pain and suffering, are not subject to precise quantification ... [courts] look to comparable cases to determine at what point an award 'deviates materially' from what is considered reasonable compensation." (48) To determine whether cases are comparable, courts will look at certain factors, including the nature and type of injury, severity of subjective pain, permanency of the injury, age of the plaintiff, prior health status, need for future surgery, ability to return to work, and impact on daily living. (49) Of course, courts cannot expect or require a perfect factual identity. (50) Courts, however, can fulfill their statutory obligation by determining what awards have been approved on appellate review in analogous cases and whether the award falls within those boundaries. (51)

   2. Setting the Boundaries of Reasonable Compensation

      The range of acceptable awards is set by appellate precedent. (52) In that regard, conditional increases and reductions (additurs and remittiturs) establish the outer boundaries of what awards have been deemed to be fair...