In the case of William Gasperini v. Center for Humanities, Inc., freelance photographer William Gasperini sued the Center for Humanities, a non-profit educational organization, after it lost 300 of his slides that were loaned to them. The jury awarded him $450,000 in damages based on New York's law which allows juries to review damage awards for excessiveness or inadequacy. However, the U.S Court of Appeals reversed this decision stating that federal courts should apply a federal standard when reviewing verdicts for excessiveness under the Seventh Amendment and reduced his award to $100,000. The Supreme Court then reviewed whether state law or federal common law governs judicial review of size of jury awards in diversity cases and if applying New York's standard would violate Seventh Amendment right to trial by jury. In a 5-4 decision led by Justice Ginsburg in 1996 , they held that while Federal Rule Civil Procedure does not alter substantive rights but only procedural practices; here it was altering substantive right hence cannot be applied . They also concluded application of NY’s rule did not infringe upon Seventh amendment as long as court doesn’t reexamine facts tried by Jury.

In the dissenting opinion for Gasperini v. Center for Humanities, Inc., Justice Scalia argued that the majority's decision violated principles of federalism and judicial restraint by allowing federal courts to apply a state law standard of review in civil cases involving damages awards. He contended that this was an inappropriate extension of Erie Railroad Co. v Tompkins (1938), which held that federal courts should apply state substantive law in diversity cases, but not procedural rules or standards of review. According to Scalia, it is up to Congress - not the judiciary - to decide whether there should be uniformity among states regarding damage award reviews in such cases. The majority’s ruling would lead to confusion and inconsistency as different judges could interpret "deviates materially" differently when reviewing jury verdicts under New York's law.