Federal diversity jurisdiction provides an alternative forum for the adjudication of state-created rights, but it does not carry with it generation of rules of substantive law. Except in matters governed by the Federal Constitution or by acts of congress, the law to be applied in any case is the law of the state. Under the Erie doctrine, federal courts sitting in diversity apply state substantive law and federal procedural law.
Petitioner journalist was awarded $ 450,000 in compensatory damages by a federal court jury for the loss of 300 slide transparencies. Respondent's motion for a new trial was denied. The appellate court set aside the verdict as excessive, relying on N.Y. C.P.L.R. § 5501(c)(McKinney 1995) which empowered New York appellate courts to review the size of jury verdicts and to order new trials when the award was unreasonable.
May an excessive jury verdict in a federal court exercising its diversity jurisdiction be set aside under the Erie doctrine where state law allows such procedure?
New York's law controlling compensation awards for excessiveness or inadequacy can be given effect, without detriment to the Seventh Amendment, if the review standard set out in CPLR § 5501(c) is applied by the federal trial court judge, with appellate control of the trial court's ruling confined to "abuse of discretion."