Appeal from the United States District Court for the Eastern District of Pennsylvania D.C. Civ. No. 83-4208.
Before: HIGGINBOTHAM, HUNTER, Circuit Judges, and RE, Judge.*fn*
1. This appeal presents the question whether, under New Jersey law, punitive damages and damages for loss of consortium may be awarded in a strict products liability action in which the jury awarded no compensatory damages. The Supreme Court of New Jersey has not addressed this issue. The district court predicted that an award of damages under these circumstances would be proper under New Jersey law. We reverse.
2. Everett and Mildred Oliver filed suit in the district court for the Eastern District of Pennsylvania in August, 1983 alleging personal injuries arising out of Everett Oliver's exposure to asbestos products manufactured by seventeen corporate defendants. Oliver allegedly came in contact with these products from 1941 to 1943 and from 1946 to 1983 in the course of his employment with Mobil Oil in New Jersey. Oliver brought suit in negligence and strict products liability and sought compensatory, punitive and loss of consortium damages. By trial, all defendants except GAF Corporation had settled or been dismissed voluntarily. At the close of trial, GAF moved for directed verdict on punitive damages; this motion was denied by the district court. The jury in answer to special interrogatories awarded no compensatory damages to Everett Oliver, but awarded $18,234 to Mildred Oliver for loss of consortium, and awarded $500,000 in punitive damages.
3. On the basis of this verdict, the district court entered judgment against GAF for $518,234. GAF timely moved for judgment n.o.v., a new trial or remittitur (on punitive and loss of consortium damages). On the basis of its prediction of New Jersey law, the district court denied these motions. GAF filed this appeal.
4. Because the Supreme Court of New Jersey has not decided whether punitive and loss of consortium damages may be recovered under the circumstances here, "the task of a federal tribunal is to predict how that court would rule." Pennsylvania Glass Sand Corp. v. Caterpillar Tractor Co., 652 F.2d 1165, 1167 (3d Cir. 1981). On appeal, the standard of review of the district court's prediction of state law is plenary. Compagnie des Bauxites de Guinee v. Insurance Company of North America, 724 F.2d 369, 371-72 (3d Cir. 1983).
5. In Nappe v. Anschelewitz, Barr, Ansell & Bonello, 97 N.J. 37, 45-58, 477 A.2d 1224, 1228-29 (1984), the New Jersey Supreme Court ruled that the absence of compensatory damages does not preclude recovery of punitive damages in intentional tort actions. The district court, relying on Nappe, determined that punitive damages were recoverable under Oliver's strict products liability cause of action.*fn1
6. A recent decision from the New Jersey Supreme Court appears to support the district court's implicit assumption that punitive damages may be recovered in strict products liability actions. Fischer v. Johns-Manville Corp., 103 N.J. 643, 512 A.2d 466 (N.J. Sup. Ct. 1986). The district court's conclusion that punitive damages were recoverable notwithstanding the jury's zero verdict on compensatory damages, however, was based almost entirely on its interpretation of Nappe. In Nappe, the New Jersey Supreme court was presented with the question whether punitive damages could be awarded in a civil action for fraud in the absence of an award of compensatory damages. The court noted that punitive damages may lie only where "there is a valid underlying cause of action," and that "[c]ompensatory damages historically have been considered an essential element of some torts, but not others." Nappe, 97 N.J. at 45, 477 A.2d at 1228. To determine whether punitive damages are recoverable in the absence of compensatory damages, therefore,
[t]he initial question to be considered is whether compensatory damages are an essential element of [the claim]. If compensatory damages are an essential element of the cause of action, the claim must be dismissed despite the fact that the plaintiff has proved all the other elements. On the other hand, if the cause of action is deemed effective even though the plaintiff had not proved his entitlement to compensatory damages, the viability of the cause of action may be the basis of an award of punitive damages.
Id., 477 A.2d at 1228. The court distinguished negligence, in which a finding of damages is required, from an intentional tort such as fraud, in which "compensatory damages are not an essential element". Id. at 48, 477 A.2d at 1229. Because compensatory damages are not an element of an intentional tort, "punitive damages may be assessed in an action for an intentional tort involving ...