question); New York Univ. v. Continental Ins. Co., 87 N.Y.2d 308, 315-16, 639 N.Y.S.2d 283, 287, 662 N.E.2d 763 (Ct. App. 1995) (discussing punitive damages substantive standard of "gross" and "morally reprehensible behavior" without mentioning evidentiary standard); Rocanova v. Equitable Life Assurance Soc'y of the United States, 83 N.Y.2d 603, 613, 612 N.Y.S.2d 339, 342-43, 634 N.E.2d 940 (Ct. App. 1994) (characterizing substantive standard for punitive damages in breach of contract case as "strict" but not discussing evidentiary standard); Home Ins. Co. v. American Home Prods. Corp., 75 N.Y.2d 196, 201, 551 N.Y.S.2d 481, 484, 550 N.E.2d 930 (Ct. App. 1990) (discussing substantive standard for punitive damages in product liability case, but not providing burden of proof required for punitive damages); Mulder v. Donaldson, Lufkin & Jenrette, 208 A.D.2d 301, 308-09, 623 N.Y.S.2d 560, 564-65 (1st Dept. 1995) (discussing substantive standard of conduct warranting punitive damage without mention of evidentiary standard).
Adding to the confusion, the Second Circuit has tacitly endorsed both instructions that charge juries with preponderance of the evidence, see, e.g., Denny v. Ford Motor Co., 42 F.3d 106, 110 (2d Cir. 1994) (quoting, without discussion, district court's verdict form that applied preponderance standard); Vasbinder v. Ambach, 926 F.2d 1333 (2d Cir. 1990) (quoting, without discussion, jury instruction which provided that in order to recover punitive damages "plaintiff has the burden of proving by a fair preponderance of the credible evidence that a defendant acted maliciously or wantonly with regard to his rights."), and instructions that charge juries with the clear and convincing standard. See, e.g., Racich v. Celotex Corp., 887 F.2d 393, 397 (2d Cir. 1989) (quoting, without discussion, district court's jury instruction that punitive damages be "clearly established"); Brink's, Inc. v. City of New York, 717 F.2d 700, 706 n.4 (2d Cir. 1983) (quoting, in a footnote and without discussion, jury instruction that conduct "tantamount to 'willful, wanton and reckless' conduct" had to be found by "clear and convincing evidence").
Where the cases do specify a particular burden of proof with respect to punitive damages -- as opposed to merely quoting trial court jury instructions that charge either standard -- the authorities are also in conflict. Some cases call for application of the preponderance standard. See Simpson v. Pittsburgh Corning Corp., 901 F.2d 277, 282-283 (2d Cir.) (rejecting a due process claim that clear and convincing evidence standard must be applied to punitive damages and noting that "appellant acknowledges that the burden of proof under New York law for punitive damages in product liability cases is 'preponderance of the evidence.'"), cert. dismissed, 497 U.S. 1057 (1990); United States v. Hooker Chemicals & Plastics Corp., 850 F. Supp. 993, 1003 (W.D.N.Y. 1994) ("The applicable standard of proof for punitive damages is preponderance of the evidence, which the Supreme Court held suffices even in civil suits involving 'proof of acts that expose a party to criminal prosecution.'"); Lawrence v. Cade & Saunders, 149 F.R.D. 14, 17 (N.D.N.Y. 1993) (providing that "the plaintiff has the burden of proving by a fair preponderance of the credible evidence that defendants acted maliciously or wantonly."); Corrigan v. Bobbs-Merrill Co., 228 N.Y. 58, 66-67, 126 N.E. 260, 264 (1920) (libel case providing that "in order to recover punitive damages, plaintiff was bound to satisfy the jury by a fair preponderance of evidence" that defendant had ill will toward him and that defendant did not publish book in good faith and honest belief that it was fiction); In re Seventh Judicial District Asbestos Litig., 190 A.D.2d 1068, 1069, 593 N.Y.S.2d 685, 687 (4th Dept. 1993) (providing that "the trial court properly instructed the jury that the evidentiary standard for proving entitlement to punitive damages is preponderance of the evidence, not clear and convincing evidence") (citing cases and contrary authority in Camillo); Frechette v. Special Magazines, Inc., 285 A.D. 174, 176, 136 N.Y.S.2d 448, 451 (3rd Dept. 1954) (libel case noting trial court's jury instructions which provided that "plaintiff must establish" punitive damages "by a fair preponderance of the evidence.").
Other courts have applied a clear and convincing evidence standard for punitive damages under New York law. See Roginsky v. Richardson-Merrell, Inc., 378 F.2d 832, 850-51 (2d Cir. 1967) ("New York demands, as is might have to before punishing a defendant with fines similar to those imposed on a criminal charge, that the quality of conduct necessary to justify punitive damages must be 'clearly established.'") (citing Cleghorn v. New York Cent. & H.R.R.R., 56 N.Y. 44, 48 (1874)); West v. The Goodyear Tire & Rubber Co., 973 F. Supp. 385, 1997 WL 411929, *5 (S.D.N.Y. 1997) (citing Camillo v. Geer, 185 A.D.2d 192, 587 N.Y.S.2d 306, 309 (1st Dept. 1992) for the proposition that under New York law "an award for punitive damages 'must be supported by clear, unequivocal, and convincing evidence.'"); Schlaifer Nance & Co. v. Estate of Andy Warhol, 927 F. Supp. 650, 664 (S.D.N.Y. 1996) (noting in fraud case that plaintiff conceded that "it had to prove its entitlement to punitive damages by clear and convincing evidence."), aff'd 119 F.3d 91 (2d Cir. 1997); Sladick v. Hudson General Corp., 226 A.D.2d 263, 264, 641 N.Y.S.2d 270, 271 (1st Dept. 1996) (holding that "plaintiff failed to demonstrate by clear, unequivocal and convincing evidence that defendants' conduct was so wanton or reckless as to justify an award of punitive damages") (citing Camillo v. Geer, 185 A.D.2d 192, 193-94, 587 N.Y.S.2d 306 and Home Ins. Co. v. American Home Prods. Corp., 75 N.Y.2d 196, 201, 202-204, 551 N.Y.S.2d 481, 550 N.E.2d 930); Camillo v. Geer, 185 A.D.2d 192, 587 N.Y.S.2d 306 (1st Dept. 1992) (providing that "an award for punitive damages must be supported by 'clear, unequivocal, and convincing evidence.") (citing Cleghorn v. New York Cent. & Hudson River R.R., 56 N.Y. 44, 48 (1874)).
This lack of a clear and consistent articulation of the appropriate evidentiary standard with respect to punitive damages impels this Court to discuss and determine the appropriate burden of proof on this question as a matter of first impression in this district. Cf. West v. The Goodyear Tire & Rubber Co., 973 F. Supp. 385, 1997 WL 411929, *2, *5 (S.D.N.Y. 1997) (citing, without discussion, Cleghorn v. New York Cent. & H.R.R.R., 56 N.Y. 44, 48 (1874) and Camillo v. Geer, 185 A.D.2d 192, 587 N.Y.S.2d 306, 309 (1st Dept. 1992) for the proposition that clear and convincing evidence is appropriate standard of proof for punitive damages); Geressy, 950 F. Supp. at 522 (Eastern district case suggesting that preponderance of the evidence is appropriate standard, but noting that issue was moot because jury found that punitive damages were not warranted under either standard).
1. New York Court of Appeals Precedent
On questions of state law, federal courts are obliged to look first to the opinions of the state's highest court in attempting to predict how that court would rule on a particular question. See, e.g., In re Eastern & Southern Dist. Asbestos Litig., 772 F. Supp. 1380, 1389 (E. & S.D.N.Y. 1991) (providing that a court "must carefully review available resources to predict how the New York Court of Appeals would resolve the questions at bar."), aff'd in part, rev'd in part, 971 F.2d 831 (2d Cir. 1992). Contending that the clear and convincing standard is the appropriate standard for punitive damages under New York law, the defendant rests its conclusion upon a New York Court of Appeals Case from 1874, Cleghorn v. New York Cent. & H.R.R.R., 56 N.Y. 44, 48 (1874).
Cleghorn involved a claim brought by a person injured by a railman's negligence. On the question of whether the jury was appropriately charged on the question of exemplary damages, the Court concluded that the error was clearly erroneous to the extent that it provided no guidelines by which the jury could make such a determination. In explaining when a master could be liable in punitive damages for the negligence of his servants, the Court stated that:
For injuries by the negligence of a servant while engaged in the business of the master, within the scope of his employment, the latter is liable for compensatory damages; but for such negligence, however gross or culpable, he is not liable to be punished in punitive damages unless he is also charged with gross misconduct. Such misconduct may be established by showing that the act of the servant was authorized or ratified or that the master employed or retained the servant, knowing that he was incompetent, or, from bad habits, unfit for the position he occupied. Something more than ordinary negligence is requisite; it must be reckless and of a criminal nature, and clearly established. . . . I am not award of any principle which permits a jury to award exemplary damages in a cases which does not come up to this standard, or to graduate the amount of such damages by their views of the propriety of the conduct of the defendant, unless such conduct is of the character before specified.