June 13, 2019
Appeal from the United States District Court for the Middle
District of Pennsylvania (D.C. No. 1-15-cv-00205) District
Judge: Honorable Yvette Kane
A. Einhorn Thomas Thomas & Hafer Attorney for Appellants
in No. 18-3114
D. Bradshaw Stevens & Lee Attorney for Appellants in No.
Before: HARDIMAN, PORTER, and COWEN, Circuit Judges.
HARDIMAN, CIRCUIT JUDGE.
case comes to us following a jury verdict in favor of Penn
Ridge Farms, LLC and against Fantasy Lane Thoroughbred Racing
Stable, LLC. The jury awarded Penn Ridge $110, 000 on its
contract claim, $1 in nominal damages on its defamation
claim, and $89, 999 in punitive damages. The District Court
reduced the punitive damages award to $5, 500. Fantasy Lane
asserted counterclaims for negligence, breach of contract,
and breach of fiduciary duty, but was unsuccessful on each.
Fantasy Lane appealed, seeking reversal of certain adverse
rulings before and after the trial. Penn Ridge responded with
a cross-appeal asking us to reinstate the full punitive
Ridge is a horse boarding and breeding facility near
Harrisburg, Pennsylvania. Penn Ridge agreed to board several
of Fantasy Lane's horses starting in July 2012, including
its thoroughbred stallion Uptowncharlybrown. The agreement
obligated Penn Ridge to "act as Fantasy Lane's agent
for the promotion and management of Uptowncharlybrown's
stallion seasons, and . . . exercise its utmost good faith to
promote, manage[, ] and sell Uptowncharlybrown stallion
seasons . . . ." App. 721. Penn Ridge also agreed to
keep several of its own mares at the facility to support
in August of 2013, Fantasy Lane got behind on its payments
due to Penn Ridge. And after some of its horses became sick
or injured and even died, Fantasy Lane refused to pay Penn
Ridge boarding invoices totaling $65, 707. The managing
partner of Fantasy Lane, Robert Hutt, sent several emails to
others in the horse-breeding industry expressing his
dissatisfaction with Penn Ridge owner Michael Jester and the
treatment of Fantasy Lane's horses.
midst of this dispute, Hutt told Dr. Jeffrey Edelson-the
veterinarian designated by Penn Ridge-that Fantasy Lane was
considering suing him for his role in treating their horses.
The two negotiated and entered into a "General
Settlement and Release Agreement." Michael Jester
& Penn Ridge Farms, LLC v. Robert Hutt & Fantasy Lane
Thoroughbred Racing Stable, LLC, 2017 WL 1150648, at *2
(M.D. Pa. Mar. 28, 2017). The agreement released "any
and all persons, firms, or corporations liable or who might
be liable . . . [from liability] arising out of or in any way
relating to any injuries and damages of any and every kind .
. . [in] the care and/or treatment of any [Fantasy Lane]
horses stabled at Penn Ridge . . . ." Id.
(alterations in original). The settlement and release
resolved the conflict between Dr. Edelson and Fantasy Lane,
but did nothing to dispel the acrimony between Fantasy Lane
and Penn Ridge.
Ridge sued Fantasy Lane in Pennsylvania state court for
breach of contract and defamation. The contract claim was for
nonpayment for boarding and breeding services provided to
Fantasy Lane's horses. The tort claim alleged that Hutt
sent several defamatory emails about Penn Ridge and
Jester's competence, as well as the care given to horses
stabled there, to several individuals in the industry who had
an interest or prospective interest in Fantasy Lane. Hutt
blamed Penn Ridge for the deaths of its horses, calling the
staff "inexperienced," and expressing that he had
"no faith" in them. App. 768. He accused Penn Ridge
of trying to conceal the problems, noting that Jester's
personality "was a cross of President Richard Nixon, and
the character Jack Nicholson played in A Few Good
Men" and that Jester was "the type of person that
would say or do anything to save his ass." App. 786.
Hutt also alleged that Jester told him "the truth"
about one of the deaths-that Jester made the decision not to
seek professional help or notify Fantasy Lane when Penn Ridge
first discovered the horse was ill. App. 787-88. He also
claimed Jester "was responsible for killing [the] horse
and he deliberately[, ] like Nixon[, ] was the leader of the
coverup [sic]." App. 788.
Lane removed the case to the District Court based on
diversity of citizenship. In answering Penn Ridge's
amended complaint, Fantasy Lane brought counterclaims,
including four negligence claims for the poor care and
mistreatment of its horses, a breach of contract claim for
the promotion and management of Uptowncharlybrown, and a
breach of fiduciary duty claim stemming from the stallion
season issues. Penn Ridge moved for partial summary judgment,
and the District Court granted the motion on the negligence
counterclaims, holding that the agreement between Fantasy
Lane and Dr. Edelson released all other parties who might be
liable for injuries to Fantasy Lane's horses while
boarded at Penn Ridge.
remaining claims (breach of contract and defamation asserted
by Penn Ridge and breach of contract and breach of fiduciary
duty asserted by Fantasy Lane) were tried to a jury. After a
three-day trial, the jury found for Penn Ridge, awarding it
$110, 000 for the breach of contract damages, $1 in nominal
damages on its defamation claim, and $89, 999 in punitive
damages. The jury found against Fantasy Lane on its contract
and fiduciary duty claims.
Lane filed a motion for a new trial or remittitur or, in the
alternative, to alter or amend the judgment under Rules 59(a)
and 59(e). The motion was granted in part and denied in part.
The District Court found the punitive damages award
unconstitutionally excessive under BMW of North America
v. Gore, 517 U.S. 559 (1996), and State Farm Mutual
Automobile Insurance Co. v. Campbell, 538 U.S. 408
(2003), and reduced it to $5, 500. In the District
Court's opinion, this amount was "reasonable and
proportionate to the harm suffered by [Penn Ridge] and
conform[ed] to the requirements of the due process
clause." Jester v. Hutt, 2018 WL 4110625, at *7
(M.D. Pa. Aug. 29, 2018). But the Court declined to grant
Fantasy Lane a new trial or reduce the contract damages