NJ Supreme Court Orders New Trial on All Damages After Jury Given Erroneous Instructions

In Graphnet, Inc. v. Retarus, Inc. (A-71-20/085529) (Decided February 11, 2022), the Supreme Court of New Jersey ruled that a new trial on damages was required after the jury received confusing instructions on the purpose of nominal damages by stating in the same instructions that nominal damages compensate a plaintiff and “are not designed to compensate a plaintiff.”

Facts of Graphnet, Inc. v. Retarus, Inc.

Plaintiff Graphnet, Inc. and defendant Retarus, Inc. are competitors in the cloud-based messaging industry. In 2014, Retarus published a brochure containing allegedly defamatory statements about Graphnet. Graphnet filed a civil action against Retarus in 2016 alleging, among other causes of action, defamation.

Following trial, the court instructed the jury on damages for defamation following Model Civil Jury Charge 8.46D, which instructs a jury that it may award nominal damages “to compensate” a plaintiff for injury to reputation caused by a defendant’s defamation. The jury returned a unanimous verdict finding that Retarus defamed Graphnet. By a 5-1 vote, the jury found that Graphnet failed to show that it suffered actual damages. However, the jury awarded Graphnet $800,000 in nominal damages.

Without obtaining Graphnet’s consent, the trial court granted Retarus’s motion for remittitur and reduced the nominal damages award to $500, holding that $800,000 in nominal damages was grossly disproportionate to the purpose of nominal damages.

The Appellate Division agreed that the initial nominal damages award could not stand, but it vacated the trial court’s order and remanded for a new trial on nominal damages because, in its view, granting a defendant’s motion for remittitur without a plaintiff’s consent was improper.

NJ Supreme Court Decision in Graphnet, Inc. v. Retarus, Inc.

The New Jersey Supreme Court affirmed but modified the Appellate Division’s decision. “[W]e affirm the Appellate Division’s finding that remittitur was improper without Graphnet’s consent. However, we conclude that this matter requires a new trial on all damages in which the jury is properly instructed on actual and nominal damages,” the court wrote. “We also refer Model Civil Jury Charge 8.46D to the Committee on Model Civil Jury Charges to be amended.”

The New Jersey Supreme Court first addressed the grant of remittitur. Citing that its precedent clearly provides that “only the plaintiff — not the defendant — has the choice to accept the remitted amount or proceed to a new damages trial,” the court affirmed the Appellate Division’s decision to vacate the trial court’s order of remittitur and to remand for further proceedings.

The New Jersey Supreme Court next turned to the appropriate scope of the proceedings on remand. It ultimately concluded that a new trial was warranted on all damages.

“The contradictory instruction given on nominal damages did not ‘adequately convey[] the law.’ Instead, it opened the door for the jury to attempt to compensate Graphnet through nominal damages in a way that was either wholly impermissible under the law or a miscategorized but otherwise permissible form of compensatory damages,” the court wrote. “Viewing the record in the light most favorable to Graphnet, as is required under our standard of review, we can only conclude that there is a possibility that the compensatory damages award might have been different had the jury been properly instructed on the nature and function of nominal damages.”

According to the New Jersey Supreme Court, the model jury charge, as written, fails to instruct on the definition, scope, and purpose of nominal damages. It instructs the jury “to compensate the plaintiff,” but then contradicts itself by explaining that nominal damages “are not designed to compensate a plaintiff.” Accordingly, the court provided a charge for use on remand in the instant case and referred Model Civil Jury Charge 8.46D to the Committee on Model Civil Jury Charges to address the issues noted in its opinion.

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