Instruction on Nominal Damages Was Anything but Instructive as Jury Returns $800,000 “Nominal” Damage Award

In its recent opinion in Graphnet, Inc. v. Retarus, Inc., the New Jersey Supreme Court revisited the role of nominal damages in the defamation context. This time, the issue arose after trial in connection with a jury instruction that advised the jury, in part, that it may award nominal damages to compensate a plaintiff for injury to reputation caused by a defendant’s defamation.

In 2014 defendant Retarus published a brochure that contained allegedly defamatory statements about one of its competitors, plaintiff Graphnet. The jury found that Retarus did defame Graphnet but that Graphnet had not shown any actual loss. The jury, nonetheless, awarded Graphnet $800,000 in nominal damages. This exorbitant nominal damage award was, at least in part, the result of a confusing and contradictory jury instruction, which advised the jury both that it was “permitted to award nominal damages to compensate the plaintiff” and that “[n]ominal damages…are not designed to compensate a plaintiff.”

Only the latter part of that instruction is correct. Nominal damages, as distinct from compensatory or actual damages, are not meant to compensate the plaintiff for actual loss. Rather, they serve the purpose of vindicating the character of a plaintiff who has not proved a compensable loss. Nuwave Inv. Corp. v. Hyman Beck & Co., Inc., 221 N.J. 495, 499 (2015). In fact, according to New Jersey’s Punitive Damages Act, N.J.S.A. 2A:15-5.10, “‘nominal damages’ are damages that are not designed to compensate a plaintiff and are less than $500.” As the Supreme Court found in Graphnet, “nominal damages, under New Jersey law, can best be defined as ‘a token amount of not more than $500.'”

After receiving the jury’s verdict, and without Graphnet’s consent, the trial court granted Retarus’s motion for remittitur and reduced the $800,000 nominal damages award to $500. The Appellate Division agreed that the initial nominal damages award could not stand but remanded the case for a new trial on nominal damages because granting the remittitur without the plaintiff’s consent was improper. The Supreme Court affirmed the Appellate Division but concluded that the matter required a new trial on all damages, with proper instructions on actual and nominal damages. The court also referred the problematic jury charge to the Committee on Model Civil Jury Charges to be amended.

As an aside, it is curious that neither party objected to the jury instruction on nominal damages, even after the jury apparently inquired as to whether the verdict sheet contained a typo in a question that characterized nominal damages as serving to compensate Graphnet. It is also curious that this case ever made it to trial in the first place, given the fact that a lawsuit filed in 2016, based on a 2014 publication, presumably would be barred by the one-year statute of limitations for defamation claims in New Jersey.

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