8. May the federal district court order a new trial?

The jurisdiction of federal courts is concurrent with state courts. This means that a particular controversy that is litigable in federal court may also be brought in state court. Where jurisdiction is concurrent, the plaintiff makes the initial decision whether to use state or federal court by filing his case. The defendant may then choose to remove or remain under the state court's jurisdiction.

When determining whether to do an Erie analysis, the threshold question is whether there is a controlling Federal Rule or federal statute. If any federal law controls (is «on point»), there is no Erie problem. However, in the absence of a controlling federal statute or Rule, the question becomes whether the issue at hand is substantive or procedural.

Exam tip: When a potential Erie analysis arises on the MBE, pay close attention to the facts. If the court is not sitting in diversity and is exercising federal question jurisdiction, federal law will apply and there is no need to examine applicable state law.

A motion for a new trial may be filed based on numerous grounds, including that the verdict is either excessive or inadequate. If a federal judge believes the jury's damages award is too high (excessive) such that it «shocks the conscience,» or, in a diversity case, if the award meets the applicable state standard for excessiveness, the judge may order a new trial or offer the alternative of a reduction in damages («remittitur»). See Gasperini v. Center, 518 U.S. 415 (1996) (requiring federal trial courts to apply a state standard when considering a motion for a new trial based on excessiveness of the verdict).

When a plaintiff is offered remittitur, he may choose between accepting an award less than given by the jury or submitting to a new trial. The court may not simply lower the award given by the jury, it must offer the plaintiff the alternative option of receiving a lower award or a new trial. Hetzel v. Prince Williams County, 523 U.S. 208 (1998).

If the trial judge believes that the jury's compensatory damages are too low (inadequate), he may NOT offer the defendant the choice of accepting a higher award («additur») or submitting to a new trial. «Additur» is not allowed in federal cases because it violates the Seventh Amendment. However, additur is permissible in many state cases because the Seventh Amendment does not apply. In federal court, if the judge believes damages are too low, the court may grant a new trial.

B is correct. Because this lawsuit is based on diversity jurisdiction, Erie requires an initial determination of whether there is a controlling federal law, and if not, the state substantive law of the state in which the court sits applies. There is no controlling federal Rule or statute here, only a federal standard that judges may use when it is applicable (the «shocks the conscience» standard). Therefore, the court may order a new trial based on the jury's $2.5 million damages award, but it must follow State A's tort reform statute and apply the state standard of «excessive damages.»

A is incorrect. This answer choice states the correct conclusion with the incorrect legal reasoning. The court may order a new trial, but it may not use this standard. The «shocks the conscience» standard is a federal standard for evaluating damages. Here, because the federal court is sitting in diversity and there is no controlling federal rule, the state substantive law must apply, which is State A's tort reform law containing the excessiveness standard.

C is incorrect. The Seventh Amendment does not bar the court from ordering a new trial here. This choice may be confused with the prohibition of additur in federal court, which was found unconstitutional under the Seventh Amendment by the U.S. Supreme Court. However, the call asks whether the court may order a new trial, so additur is not at issue. Moreover, additur is invoked when damages are too low, not too high.

D is incorrect. This choice invokes an inapplicable legal doctrine. Federal additur is not allowed, but additur has nothing to do with these facts. Additur allows a judge to increase damages awarded by the jury when they are too low. Here, not only are the damages not considered insufficient, the call asks whether the court may order a new trial, not change the damages award.