Opposition Brief — Armstrong v. Owens-Illinois, Inc.

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No. 228 : ae

In The

Supreme Court of the WHnited States

October Term, 1992

OTHELLO ARMSTRONG, et al.

Petitioners,

VS.

OWENS-ILLINOIS, INC.,

Respondent.

Petition for Writ of Certiorari

to the Court of Appeals of Maryland

REPLY BRIEF IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

F. FORD LOKER

Counsel of Record

HARRY S. JOHNSON

GARDNER M. DUVALL

WHITEFORD, TAYLOR & PRESTON

Attomeys for Respondent

Owens-Illinois, Inc.

Seven Saint Paul Street

Suite 1400

Baltimore, Maryland 21202

(410) 347-8700

Balmar Legal Publishing Services, Washington, D.C. (202) 682-9800

LIST OF PARTIES

In conformity with Rule 29.1. of this Court, Respondent

lists the following related companies and subsidiaries.

Owens-Brockway Packaging Inc.

OI Puerto Rico STS Inc.

Owens-Illinois de Puerto Rico

OI Venezuela STS Inc.

OI Peldar STS Inc.

OI Ecuador STS Inc.

OIB Produvisa Inc.

OI Consol STS Inc.

Overseas Finance Company

SeaGate, Inc.

OI Ione STS Inc.

OCG, Inc.

OI Closure FTS Inc.

OI US Capital STS Inc.

U.S. Cap & Closure, Inc.

Owens-Illinois Closure, Inc.

OI Plastic Products FTS, Inc.

Owens-Illinois Plastic Products Inc.

Owens-Illinois Prescription Products Inc.

OI Treitler STS Inc.

Owens-Illinois Labels, Inc.

Treitler-Owens, Inc.

OI Dougherty STS Inc.

DBC, Inc.

Owens-Illinois Specialty Products Puerto Rico, Inc.

OI Libbey FTS Inc.

Libbey Glass Inc.

OI Kimbla FTS Inc.

OI Kontes STS Inc.

Kontes Glass Company

OI Schott STS Inc.

OI Enbosa STS Inc.

Kimble Glass Inc.

OI General FTS Inc.

Owens-Illinois General Inc.

Harbor Capital Advisors, Inc.

HCA Securities, Inc.

Harbor Transfer, Inc.

Owens Industries, Inc.

Owens Hotel Industry, Inc.

OI Holding Company, Inc.

Owens International, Inc.

O-I Services, Inc.

Owens-Incorporated

Pacific Coast Glass Co., Ltd.

OI Castalia STS Inc.

OI Levis Park STS Inc.

OI MVCURC STS Inc.

Maumee Valley Community Urban

Redevelopment Corporation

OI UMI STS Inc.

Universal Materials, Inc.

OI AID STS Inc.

OI Overseas Management Company Limited

Owens-Brockway Glass Container Inc.

O-I Brockway Plastics, Inc.

Brockway Research Inc.

Brockway Realty Inc.

O-I Health Care Holding Corp.

Owens Insurance, Ltd.

Cisper Industria e Comercio, S.A.

Companhia Industrial Sao Paulo e Rio

Sao Raimundo Administracao, Participacoes e

Representacoes, Limitada

Owens-Illinois Canada, Inc.

Cristaleria Peldar, S.A.

Andividrios, S.A.

Cristaleria del Ecuador, S.A.

Owens-Illinois Asia, Ltd.

ili

United Glass Group Ltd.

United Glass, Limited

Fabrica de Vidrio Los Andes, C.A.

Manufacturera de Vidrios Planos. C.A.

Owens-Illinois de Venezuela, C.A.

Owens-Illinois Ventas, S.A.

Owens-Illinois Foreign Sales Corp.

TABLE OF CONTENTS

Statement ofthe Case ................

Summary of Argument ................

REQ ee ee eee

Il.

Ii.

IV.

Petitioners waived the due process argument

raised here by failing to present it in the

Glee GUNS. 6 8 Se ee ee eee

Petitioners are barred by Maryland law from

pursuing punitive damages after obtaining

satisfaction of their compensatory damage

CE 6 ed a ee eee

Application of the Zenobia ruling to these

cases does not deny due process of

ee ree es Pere

Petitioners had any constitutionally required

notice and an opportunity to be heard on the

OW CE. ka eee

Petitioners assertion that they satisfied their

burden of proof does not raise a substantial

federal question ...............

CORGMNIOR: . is cn sb a 2 eee

> We <

eT ee hee Sa ee

Sane Ea eka Tae Rae oe RR Ce ee Oe Le

in Dl

TABLE OF AUTHORITIES

Cases

American Trucking Association, Inc. v. Smith, 496

U.S. 167, 110 S. Ct. 2323, 100 L. Ed. 2d 148

(GR xa eke Ae

Brinkerhoff - Faris Trust & Savings Co. v. Hill, 281

U.S. 673, 50 S. Ct. 451, 74 L. Ed. 1107

(1990) Sa a eee

Chevron Oil Co. v. Huson, 404, U.S. 97, 92 S. Ct.

349, 30 L. Ed. 24 296 (1971) .........

Crown Oil v. Glen, 320 Md. 546, 578 A.2d 1184

(RPP) 6k 6 8 ae ee ee ee

Eagle-Picher Ind., Inc. v. Balbos, 326 Md. 179, 604

A268 405 (Re) 6S ie eee

Eagle-Picher Ind., Inc. v. Balbos, 84 Md. App. 10,

578 A.2d 228 (1990)

Great Northern Railway Co. v. Sunburst Oil &

Refinery Co., 287 U.S. 358, 53 S. Ct. 145, 77

Ls Se. SUE CRED 5 oss <a k ws © ae

Griffith v. Kennedy, 479 U.S. 314, 107 S. Ct. 708,

93 L. Ed. 2d 649 (1987)

James B. Beam Distilling Co. v. Georgia, U.S.

, 111 S. Ct. 2439, 115 L. Ed. 2d 481

CEPR os ak oases ee

Kneas vy. Hecht Co., 257 Md. 121, 262 A.2d 518

4 a ee a eas

Owens-Illinois, Inc. v. Armstrong, 326 Md. 107,

C4 A.d0 OT FRE) 38 se oe eee

Owens-Illinois, Inc. v. Zenobia, 325 Md. 420, 601

A 2iGss (eee ee ee ee

a Tan eee ee ee ee ee ae ee te

ae ae Se ke ee en ee Ae wk

Phipps v. General Motors Corp., 278 Md. 337, 363

AAAS (IS Ne Oe eee

tro

1, 6-9

Schaeffer v. Miller, 322 Md. 297, 587 A.2d 49

Ce ter eo eee eer oe ee 5

St. Luke Church v. Smith, 318 Md. 337.

See Pu aE ng eee 5

Tidal Oil Co. v. Flanagan, 263 U.S. 444,

44S. Ct. 197, 68 L. Ed 382

Se: Sarat ears tage T a rara ee le en 9

Turner v. Washington Sanitary Comm.,

221 Md. 494, 158 A.2d 125

LR ARP Sgt ae Let ae 82 ee Ca 5

Vanderbark v. Owens-Illinois Glass Co..

311 U.S. 538, 61 S. Ct. 347,

Pee a eT AEE) se ew eS Re kK os 10

RULES AND STATUTES

Matyiane Mule i-3)l . we 10

Maryland Rule 2-626 ................. 5

Maryland Rule 8-13l(a) ......2.2.2.2.22.2.. 10

ee og es a ee ke wh ew 4

re ee 12

a7 te A eS Oo Cee Se, ee

No. 228

In The

Supreme Court of the United States

October Term, 1992

OTHELLO ARMSTRONG, et al.

Petitioners,

VS.

OWENS-ILLINOIS, INC.,

Respondent.

Petition for Writ of Certiorari to the Court of Appeals of

Maryland

REPLY BRIEF IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

STATEMENT OF THE CASE |

On January 7, 1992, the Maryland Court of Appeals heard

arguments on five cases in which verdicts for punitive damages

had been returned against the Respondent, Owens-Illinois.

These five cases had been tried in three different consolidated

trials in the Circuit Court for Baltimore City, and the Petitioners

were plaintiffs in one of those trials. Owens-Illinois, Inc. v.

Armstrong, 326 Md. 107, 604 A.2d 47 (1992). The opinions

in the other two groups of consolidated cases are reported as

Owens-Illinois, Inc. v. Zenobia, 325 Md. 420, 601 A.2d. 633

(1992), and Eagle-Picher Ind., Inc. v. Balbos, 326 Md. 179,

604 A.2d 445 (1992). Counsel of Record for Petitioners, Harry

Goldman, Jr., was also counsel for the Balbos plaintiffs. In

each case the Court of Appeals accepted review on the suf-

ficiency of the evidence in support of the punitive award against

Owens-Illinois.

Balbos was the first case briefed. On August 30, 1991,

Owens-Illinois filed a responsive brief to the assertions in

plaintiffs’ brief that the intermediate appellate court had er-

roneously reversed the verdict for punitive damages. See

Eagle-Picher v. Balbos, 84 Md. App. 10, 72-9, 578 A.2d 228,

258-62 (1990). Pages 4 through 22 of Owens-Illinois’ brief

were devoted to argument about the standard against which to

measure the evidence in support of punitive damages. App. A.

This included a footnote discussing the writ of certoriari in the

Zenobia case requiring the parties in that case to brief the same

question, references to the Maryland Rule of Civil Procedure

governing the scope of appellate review, and decisions of the

Court of Appeals generally concerning the breadth of issues

covered by its writ of certiorari. /d.,n.1, p. A2. The argument

included reference to the fact that the Maryland Court of

Special Appeals had reached opposite results when reviewing

identical evidence presented by Petitioners and the Balbos

plaintiffs. /d., p. A4-5. On September 30, 1991, the Balbos

plaintiffs filed a reply brief, through Petitioners’ Counsel of

Record, which attached the writ of certiorari from Zenobia, and

argued that the matters asserted by Owens-Illinois were not

subject to review in Balbos and should not be considered. App.

Zenobia was the second appeal briefed. The important

issues raised by the Zenobia writ elicited amicus briefs from

Maryland personal injury asbestos plaintiffs represented by

Peter G. Angelos; the Maryland Trial Lawyers’ Association;

the Maryland Association of Defense Trial Counsel; the Center

for [asbestos] Claims Resolution; Owens-Corning Fiberglas

Corporation; and, jointly from the Product Liability Advisory

Council, the Motor Vehicle Manufacturers Association, the

Chamber of Commerce of the United States, the National

Association of Manufacturers, the Business Roundtable, and

the Chemical Manufacturers Association.

In the instant cases Owens-Illinois filed its brief as appeal-

lant in the Court of Appeals on November 5, 1991. That brief

noted the identity of issues and counsel in the Armstrong and

Balbos cases, and declined to repeat the arguments about

punitive damage standards which had been presented in

Owens-Illinois’ Balbos brief. App. C. The Petitioners filed a

responsive brief on December 9, 1991, through their Counsel

of Record, which did not object in any fashion to the scope of

Owens-Illinois’ argument or the manner in which it was made.

Upon remand of this case to the trial court, petitioners

enforced their judgments for compensatory damages. App. D.

With the inclusion of the foregoing, Respondent accepts

Petitioners’ Statement of the Case, except to the extent that the

Statement argues the scope of application of Owens-Illinois v.

Zenobia, 326 Md. 107, 604 A.2d 47.

SUMMARY OF ARGUMENT

I. Petitioners were ordered by the Court of Appeals to file

a supplemental brief addressed to punitive damages practice

and procedure. Petitioners failed to assert any constitutional

violation in applying new practice or procedure to their cases,

and therefore failed to preserve the issue for review by this

Court.

II. Upon remand for a new trial on punitive damages the

petitioners executed upon the judgment for compensatory

damages. Maryland practice provides that this enforcement of

the judgment waives the right to claim other damages.

Ill. The alleged retroactive application of the common

law, including remand for a new trial, is consistent with or-

thodox judicial practice. This Court has upheld the discretion

of state courts to apply decisional law this way, provided the

decision does not impose an insuperable procedural barrier.

IV. If due process in these circumstances requires notice

to petitioners and an opportunity to be heard, the required notice

and opportunity were provided by the requirement of a sup-

plemental brief.

V. Petitioners assertion that their evidence satisfies their

burden of proof does not raise a substantial federal question.

REASONS FOR DENYING THE WRIT

PETITIONERS WAIVED THE DUE PROCESS

ARGUMENT RAISED HERE BY FAILING TO

PRESENT IT IN THE STATE COURT

A petition for certiorari from a state court decision must

demonstrate the stage of the proceeding where the federal

question presented for review was raised. Sup. Ct. R. 14.1(h).!

Petitioners make no such showing. The issues presented have

been waived below.

Upon order of the Court of Appeals, Petitioners filed a

supplemental brief advocating punitive damages standards. At

that point Petitioners surely were on notice that the court might

not apply the rule of law employed in proceedings below.?

| If review of a judgment of a state court is sought, the statement of the

case shall also specify the stage in the proceedings, both in the court of first

instance and in the appellate courts, at which the federal questions sought to

be reviewed were raised; the method or manner of raising them and the way

in which they were passed upon by those courts; and such pertinent quotation

of specific portions of the record or summary thereof, with specific reference

to the places in the record where the matter appears (e.g., ruling on exception,

portion of court’s charge and exception thereto, assignment of errors) as will

show that the federal question was timely and properly raised so as to give

this Court junsdiction to review the judgment on a writ of certiorari. When

the portions of the record relied upon under this subparagraph are

voluminous, they shall be included in the appendix referred to in sub-

paragraph .1(k) of this Rule.

Petitioners should have realized the pendency of this issue at the time

the Court of Appeals accepted review of the sufficiency of the punitive

damages evidence. Sufficiency of evidence necessarily requires considera-

Petitioners made no argument about needing more opportunity

to state their views than was provided by the briefing order.

The only issued raised of any moment to the Petition filed here

was the argument that any change in the law should not apply

to these cases because Respondent did not object to the jury

instruction given, nor “‘raise the issue on appeal.”. App. E.

PETITIONERS ARE BARRED BY MARYLAND LAW

FROM PURSUING PUNITIVE DAMAGES AFTER

OBTAINING SATISFACTION OF THEIR

COMPENSATORY DAMAGE CLAIMS

In this case, Petitioners have accepted payment in full for

their award of compensatory damages. App. D. They continue

to appeal the punitive damage determination in this case,

despite Maryland law which bars such an appeal, as well as the

enforcement of any finding made in such an appeal. Kneas v.

Hecht Co., 257 Md. 121, 262 A.2d 518 (1970) (acceptance of

compensatory payment waives right to appeal JNOV as to

punitive damages); Turner v. Washington Sanitary Comm., 221

Md. 494, 505, 158 A.2d 125, 131 (1960) (appellate righis as to

punitive damages waived where remittitur accepted).

The petitioners cannot pick and choose when and on

which parts of a judgment they will collect. Maryland Rule

2-626? accords a defendant the right to an order of satisfaction

tion of the the burden of proof. The burden of proof thus fell within the

scope of review accepted. See Crown Oil v. Glen, 320 Md. 546, 560-61,

578 A.2d 1184, 1190-91 (1990). The dissenting and concurring opinions in

two preceding punitive damages decisions by the Court of Appeals certainly

provided every reason to believe the Court was dissatisfied with punitive

damages practice in Maryland. Schaeffer v. Miller, 322 Md. 297, 587 A.2d

491 (1991); St. Luke Church v. Smith, 318 Md. 337, 568 A.2d 35 (1990).

. (a) Entry Upon Notice. - Upon being paid all amounts due on a

money judgment, the judgment creditor shall furnish to the judgment debtor

and file with the clerk a written statement that the judgment has been

where money to satisfy a claim has been collected, and no

provision for “partial satisfactions.” Therefore, the writ of

certiorari should be denied in this case because a remand from

this Court cannot result in the entry of an enforceable judgment

in favor of Peitioners.

iil

APPLICATION OF THE ZENOBIA

RULING TO THESE CASES DOES NOT

DENY DUE PROCESS OF LAW

Zenobia’s pronouncements on Maryland civil punishment

have several aspects. The Court of Appeals overruled a line of

decision controlling punitive damages in tort cases “arising out

of a contract.” Zenobia, 325 Md. at 453-55, 601 A.2d at

649-50. The Court also overruled a 1972 decision that torts

arising out of motor vehicle accidents permit punishment for

“gross negligence,” defined as wanton or reckless disregard for

human life.” 325 Md. at 456-60, 601 A.2d at 650-52. Further-

more, the Court instituted a clear and convincing burden of

proof in support of a punitive award. 325 Md. at 465-69, 601

A.2d at 655-57. Finally, the Court turned to the retroactivity

accorded to these several changes. 325 Md. at 469-73, 601

A.2d at 657-58.

The overruling of the contract/tort decisions and the

punishable driving decision was accorded full retroactive ef-

fect, though usual rules of waiver and issue preservation apply

to cases commenced before the date of the opinion. 325 Md.

at 470-72, 601 A.2d at 658. The Court further noted that it was

overruling no precedent about punishment in product liability

satisfied. Upon the filing of the statement the clerk shall enter the judgment

satisfied.

(b) Entry Upon Motion. - If the judgment creditor fails to comply with

section (a) of this Rule, the judgment debtor may file a motion for an order

declaring that the judgment has been satisfied...

’

cases, because no precedent existed. 325 Md. at 471, 601 A.2d

at 658. The consolidated Zenobia cases were remanded for a

new trial where plaintiff had the newly articulated burden of

proving “a bad faith decision by the defendant to market a

product, knowing of the defect and danger, in conscious or

deliberate disregard of the threat to the safety of the consumer.”

325 Md. at 463, 472-73, 601 A.2d at 659.

The Court instituted a somewhat different ruling regarding

application of the clear and convincing evidence burden. This

burden was applied to the appeals argued January 7, 1992, and

to all trials in process at the date of the opinion. 325 Md. at

469-70, 601 A.2d at 657-58. Petitioners wrongly suggest that

this retroactivity ruling is the only one, applying to all aspects

of Zenobia’s civil punishment ruling.

These rulings by the Court of Appeals follow established

procedures of the Court, as cited in the opinion. The rationale

of applying these procedures to the case at hand was stated as

well. Applying ordinary considerations controlling Maryland

courts, the opinion determined that,

Because the primary purpose of punitive damages is

to deter defendants rather than to benefit plaintiffs,

the purpose is served by applying today’s decision

retroactively. Furthermore, this is not a situation

where there may have been reliance on the Smith case

and the Testerman-Wedeman principle. A potential

tort plaintiff does not in advance plan for or depend

upon a particular punitive damages standard in a

possible future tort case.

325 Md. at 471, 601 A.2d at 658. The last observation is

particularly germane here because Owens-Illinois stopped

making insulation containing asbestos in 1958, whereas the

overruled decisions date from 1972 at the earliest. Petitioners

did not tolerate exposure to Owens-Illinois Kaylo in the belief

that Smith’s reckless disregard punishment standard would

result in punitive damages in the event of an injury.

Application of Zenobia’s bad faith standard for punish-

ment to Petitioners’ cases implicates no due process concerns.

The Court of Appeals conformed to its established authority

and procedures in determining what the law is and to what cases

itapplies. 325 Md., at 469-70, 601 A.2d, at 657-58. Petitioners

chose the forum of the Maryland courts, and have no ground

to complain about application of customary Maryland practice.

Generally state courts have the authority to determine the

retroactive application of state law decisions. American Truck-

ing Association, Inc. v. Smith, 496 U.S. 167, 110 S.Ct. 2323,

2330, 110 L.Ed.2d 148 (1990). The ordinary course of com-

mon law development is full retroactive application to all

parties whose claims have not been litigated to finality, except-

ing those who would unfairly lose the opportunity to obtain a

remedy by a change in the law. James B. Beam Distilling Co.

v. Georgia, ___ U.S. __, __, 111 S.Ct. 2439, 2443, 115

L.Ed.2d 481, 487-88 (1991). Justice Cardozo made clear the

scope of any federal concern in the application of state common

law changes in a prospective or retroactive fashion.

We have no occasion to consider whether this

division in time of the effects of a decision is a sound

or an unsound application of the doctrine of stare

decisis as known to the common law. Sound or

unsound, there is involved in it no denial of a right

protected by the Federal Constitution.

A state in defining the limits of adherence to prece-

dent may make a choice for itself between the prin-

ciple of forward operation and that of relation

backward.... The choice for any state may be deter-

mined by the juristic philosophy of the judges of her

courts, their conceptions of law, its origin and nature.

We review, not the wisdom of their philosophies, but

the legality of their acts.

Great Northern Railway Co. v. Sunburst Oil & Refining Co.,

287 U.S. 358, 364-65, 53 S.Ct. 145, 148-49, 77 L.Ed. 360,

366-67 (1932).

In the instant cases, the ordering of a new trial at which

Petitioners will have a full opportunity to assert their claim calls

into play this Court’s determination that the charge made here

is not a substantial federal question over which the Court has

jurisdiction. Tidal Oil Co. v. Flanagan, 263 U.S. 444, 44 S.Ct.

197, 68 L.Ed. 382 (1924). This is not a circumstance where a

retrospective determination creates an exclusive, but time-

barred, procedure for asserting a claim. See Brinkerhoff-F aris

Trust & Savings Co. v. Hill, 281 U.S. 673, 50 S.Ct. 451, 74

L.Ed. 1107 (1930); cf., Chervron Oil Co. v. Huson, 404 U.S.

97, 92 S.Ct. 349, 30 L.E.2d 296 (1971). Petitioners have a full

opportunity to push their punitive claim,* proved according to

the standard that the Court of Appeals has found appropriate

for punishment. The Court of Appeals determined in these

cases that there should be no punishment elicited except on

adequate proof of described misconduct. That determination

raises no question of federally guaranteed rights at all.

PETITIONERS HAD ANY CONSTITUTIONALLY

REQUIRED NOTICE AND AN OPPORTUNITY TO

BE HEARD ON THE NEW TRIAL RULING

Petitioners claim they were due notice that the Court of

Appeals might apply a different rule of decision than was

employed by the courts below, as guaranteed by the fourteenth

amendment. The recognized authority of that Court to adjudi-

cate the common law of Maryland,> however, is inconsistent

* Provided they have not waived the opportunity by compelling pay-

ment of the compensatory damages.

> See Owens-Illinois, Inc. v. Zenobia, 325 Md. at 469-70, 601 A.2d at

657.

with the notion that notice must be given to all potentially

affected litigants before the overruling of precedent can be

undertaken. The argument is also inconsistent with the history

of retroactive effect of changes in the common law. Retroac-

tive application of state decisions to litigants who had no

opportunity to speak to the appropriateness of the decision has

been upheld by this Court. Vandenbark v. Owens-Illinois

Glass Co., 311 U.S. 538, 61 S. Ct. 347, 85 L.Ed. 327 (1941).

The absurd breadth of the argument is shown by considering

that it would foreclose the strict liability theory Petitioners

recovered upon here because Owens-Illinois last made the

product at issue in 1958, while Maryland accepted the strict

liability theory in 1976 without any notice to Owens-Illinois.

See Phipps v. General Motors Corp., 278 Md. 337, 363 A.2d

955 (1976). Acceptance of Petitioners’ argument would im-

pose a restriction on the authority of state courts that the drafters

of the fourteenth amendment are not shown to have con-

templated.

Even assuming that the procedure employed here impacts

in any way the due process clause of the fourteenth amendment,

there was no violation. In the first instance, Petitioners had

ample reason to believe that the Court would review the ap-

propriateness of the standard employed below. See

Respondent’s Statement of the Case, and footnote 2, supra.

Petitioners could have raised the appropriateness of

® (a) Generally. The issues of jurisdiction of the trial court over the

subject matter and, unless waived under Rule 2-322, over a person may be

raised in and decided by the appellate court whether or not raised in and

decided by the mal court. Ordinarily, the appellate court will not decide any

other issue unless it plainly appears by the record to have been raised in or

decided by the trial court, but the Court may decide such an issue if necessary

or desirable to guide the trial court or to avoid the expense and delay of

another appeal.

(a) Requirement. - Every pleading and paper of a party represented

by an attorney shall be signed by at least one attomey who has been admitted

to practice law in this State and who complies with Rule 1-312...

Respondent’s argument contained in briefs directed at this issue

with a motion to strike, if they believed the issues raised there

were beyond the Court’s review. Maryland Rule 8-131(a);®

Maryland Rule 1-311.’ Finally, Petitioners submitted a sup-

plemental brief at the Court’s direction. Thus, they were heard.

Petitioners had been served with Respondent’s arguments

on punitive damages standards and burden of proof on August

30, 1991, in the Balbos brief, more than five months before

Petitioners filed their supplemental brief. Petitioners were at

that point apprised of Owens-Illinois’ position on the substan-

tive issue, and were referred to authority in support of the Court

of Appeals considering the issue as presented in Respondent’s

brief. Petitioners were on notice of Owens-Illinois’ positions,

the Court of Appeal’s interest in punitive damages law, and the

Court of Appeals authority to determine the common law of

Maryland. A finding that the Court of Appeals lacks the

authority to require a new trial in these circumstances would

substantially impair that Court’s (and many others’) ability to

adjudicate cases and controversies. See Griffith v. Kennedy,

479 U.S. 314, 329, 107 S.Ct. 708, 713, 93 L.Ed.2d 649, 662-63

(1987). Any novelty inhering in Petitioners’ arguments results

from a failure to understand the common law authority of

appellate courts.

(b) Effect of Signature. - The signature of an attomey on a pleading

Or paper consttutes a certification that the attorney has read the pleading or

paper; that to the best of the attorney’s knowledge, information, and belief

there is good ground to support it; and that it is not interposed for improper

purpose or delay.

the inadvertent omission to sign, if promptly corrected) or is signed with

intent to defeat the purpose of this Rule, it may be stricken and the action

may proceed as though the pleading had not been filed. For a wilful violation

of this Rule, an attorney is subject to appropriate disciplinary action.

litte

PETITIONERS’ ASSERTION THAT THEY SATISFIED

THEIR BURDEN OF PROOF DOES NOT RAISE A

SUBSTANTIAL FEDERAL QUESTION

Petitioners argue that their evidence satisfies all the re-

quirements for a punitive award set out in Zenobia. This

assertion fails to call upon a right or privilege established by

federal law. This Court thus lacks jurisdiction over the issue.

28 U.S.C.A. §1257(a).8

® (a) Final judgments or decrees rendered by the highest court of a State

in which a decision could be had, may be reviewed by the Supreme Court

by writ of certiorari where the validity of a statute of the United States is

drawn in question or where the validity of a statute of any State is drawn in

question on the ground of its being repugnant to the Constitution, treaties,

or laws of the United States, or where any title, right, privilege, or immunity

is specially set up or claimed under the Constitution or the treaties or statutes

of, or any commission held or authority exercised under, the United States.

CONCLUSION

For each of these reasons this Court’s writ of certiorari

should not issue.

Respectfully submitted

F. FORD LOKER

Counsel of Record

HARRY S. JOHNSON

GARDNER M. DUVALL

WHITEFORD, TAYLOR & PRESTON

Attomeys for Respondent

Owens-Illinois, Inc.

Seven Saint Paul Street

Suite 1400

Baltimore, Maryland 21202

(410) 347-8700

aga d/l

Sas er ee

APPENDIX A

Excerpts from Reply Brief of Appellant/Cross-Appellee

Owens-Illinois, Inc.

IN THE

Court of Appeals of Maryland

September Term, 1991

No. 22

EAGLE-PICHER INDUSTRIES, INC.., et. al..

Appellant,

PAUL BALBOS, PERSONAL REPRESENTATIVE OF

THE ESTATE OF LESLIE BALBOS., et al.

Appellee.

ON WRIT OF CERTIORARI TO

THE COURT OF SPECIAL APPEALS OF MARYLAND

REPLY BRIEF OF APPELLANT/CROSS-APPELLEE

OWENS-ILLINOIS, INC.

ARGUMENT

THE COURT OF SPECIAL APPEALS CORRECTLY

FOUND THAT PLAINTIFF’S EVIDENCE DID NOT

SUPPORT AN AWARD OF PUNITIVE DAMAGES

AGAINST OWENS-ILLINOIS

Plaintiff appeals the decision below that she failed to

demonstrate through direct evidence that Owens-Illinois pos-

sessed substantial knowledge of the hazard that Kaylo insula-

tion posed to the Decedent, and accordingly failed to prove a

gross indifference to that danger. Balbos, 84 Md. App. at 79.

This case seems to present the first opportunity for this Court

to address a punitive award in a product liability case. This

appeal thus raises questions both about the dimensions of

Plaintiff’s burden of proof, and her fulfillment of that burden.

An appropriate standard for punitive damages in a product

liability case presumably would derive from established

grounds for punitive damages in similar torts. But the concur-

rence in a recent decision from this Court throws into question

the requisites for a recovery of punitive damages in negligence

cases. Schaeffer v. Miller, 322 Md. 297, 311-32 (1991)

(Eldridge, J., concurring)!

A. JUDICIAL EXPERIENCE WITH PUNITIVE

DAMAGES

Any consideration of punitive damages standards should

take note of prior results which indicated pitfalls to avoid. By

any reckoning, evil motive is the key element justifying an

exemplary award. ,See e.g. GD. Searle & Co. v. superior

Court, 49 Cal. App. 3d 22, 30, 122 Cal Rptr. 218, 223 (1975).

That court found that,

The accretion of judicial definitions of malice has

pushed to the fore a number of imprecise verbal

| This Court has ordered Owens-Illinois to brief this opinion in an Order

of July 26, 1991, in Owens-Illinois, Inc., et al. v. Zenobia, et al., Petition

docket No. 140, September Term, 1991. Owens-Illinois did not request in

the instant case a jury instruction on language that precisely tracked the

standard advocated in the Schaeffer concurrence. Nonetheless, the question

of a standard for a punitive recovery is inextricably entwined with the Court

of Special Appeals’ determination that the Plainuff failed to produce

evidence sufficient to satisfy the standard, and so the matters raised in the

Schaeffer concurrence seem to be within the purview of the writ of certioran

in this case. See Crown Oil v. Glen, 320 Md. 546, 560-61 (1990). Alterna-

tively, Owens-Illinois urges the Court to exercise the discretion vested by

Md. Rule 8-131 (a) and address here questions raised in the Schaeffer

concurrence as a timely matter of great public interest and concern. See e.g.,

Squire v. State, 280 Md. 132, 134-35 (1977).

signals which - by color, nuance and suggestion -

invite the jury to punish the Defendant for violating

the jurors’ standards rather than the law’s.

49 Cal. App. 3d at 31-2, 122 Cal. Rptr. at 224.2 A number of

cases illustrate the risk of a verbal formula which essentially

provides no constraint for jurors.

Two products cases decided in the Court of Special Ap-

peals demonstrate the problem. In the first case, the jury

imposed a $125,000 punitive award based upon what the Court

described as only evidence of negligence and “inferences” of

wanton and reckless disregard. American Laundry Mach. v.

Horan, 45 Md. App. 97, 100, 117 (1980). The punitive judg-

ment was reversed, but the dearth of supporting evidence did

not dissuade the jury.

On another occasion the Court of Special Appeals had to

reverse a $1.9 million punitive award because there was no

evidence that the Defendant harbored an improper motive.

See also Henderson & Twerski, Doctrinal Collapse in Product

Liability: The Empty Shell of Failure to Warn, 65 N.Y.U. L. Rev. 265, 290

(1990) (“if the rules and standards of decision are so ambiguous that, even

upon review of the record by a judge they will support practically any jury

outcome, then the system itself permits, even if it does not explicitly invite, .

jury lawlessness.”) (footnote omitted).

Professor Ellis finds that,

The law of punitive damages is characterized by a high degree

of uncertainty that stems from the use of a multiplicity of

vague, Overlapping terms and the extraordinary deference ac-

corded to juries who receive little meaningful guidance. As a

result, the biases and inclinations toward wealth redistibrution

exhibited by triers of fact are permitted to influence decisions

on punitive damage issues. Accordingly, there is little reason

to believe that only deserving defendants are punished, or that

fair notice of punishable conduct is provided.

Ellis, Fairness and Efficiency in the Law of Punitive Damages, 56 S. Cal. L.

Rev. 1, 52-3 (1982).

Harley-Davidson v. Wisniewski, 50 Md. App. 341, 339, 345-47

(1981), cert. denied 292 Md. 596 (1982). The evidence showed

a manufacturing defect, with no evidence of the Defendant’s

awareness of the problem. /d. at 346.

The urge to punish in the absence of any evidence has been

seen in other states as well. See Acosta v. Honda Motor co.,

Ltd., 717 F.2d 828, 839-41 (3rd Cir. 1983) ($420,000 punitive

award reversed); Laney v. Coleman Co., Inc. 758 F.2d 1299,

1305 (8th cir. 1985) ($3 million punitive award reversed);

Kicklighter v. Nails by Jannee, Inc., 616 F.2d 734, 738 (Sth Cir.

1980)(punitive award 2.4 times greater than compensatories

réversed); Woelfel v. Firestone Tire & Rubber Co., 493 So.2d

472, (per curiam) Fl. App. 1986) ($6.5 million punitive award

reversed); Moore v. Remington Arms Co., Inc., 100 Ill. App. 3d

1102, 1115-16, 427 N.E.2d 608, 617-18 (1981) (punitive judg-

ment over half as large as compensatory reversed); Groppel

Co., Inc. v. U.S. Gypsum Co., 616 S.W.2d 49, 62 (Mo. App.

1981) ($800,000 punitive award reversed); Mosser v. Fruehauf

Corp., No. 90-2394, slip op. at 11-19 (4th Cir. 1991) (affirming

JNOV for Defendant on $5.5 million punitive award); Roth v.

Black & Decker, 737 F.2d 779, 782 (8th Cir. 1984) ($35,000

punitive award reversed); Jardel Co., Inc. v. Hughes, 523 A.2d

518, 531 (Del. Supr. 1987) ($250,000 punitive award reversed);

see also. Kemner v. Monsanto, 1991 Ill. App. LEXIS 1278

(App. Ct. Ili , 5th Dist. 1991) (reversing $16.5 million punitive

judgment for failure of each of 65 plaintiffs to prove any

compensatory damages. Plaintiffs also failed to prove the

product at issue was defective). All but one of these corrections

- required appellate intervention. Obviously, further miscar-

riages can only be avoided by a plain standard which cannot be

- applied in an excessively limber fashion.

Another sign of flawed punitive damage standards is

inconsistent results in the face of identical evidence. The

instant appeal is one such case, given the court of Special

Appeals affirmance of a punitive award against Owens-illinois

in Owens-Iliinois, Inc. v. Armstrong, 87 Md. App. 699 (1991).

In that case the parties agreed on appeal that the record in the

two Cases was indistinguishable, yet the Court below reached

opposite results in deciding the two cases.

A second example arises in the Appellate Court of Illinois.

Cf. Loitz v. Remington Arms Co., Inc., 177 Ill. App. 3d 1034,

532 N.E.2d 1091 (1988), rev'd 138 Ill. 2d 404, 563 N.E. 2d 397

(1990), and Moore v. Remington Arms Co., 100 Ill. App. 3d

1102, 427 N.E.2d 608 (1981). The earlier case, Moore,

reversed a punitive award flowing from the explosion of the

barrel of a Remington 1100 shotgun. In Loitz the Appellate

Court later affirmed punitive damages of $1.6 million in addi-

tion to $75,000 compensatory damages, apparently on the

ground that Remington “failed to warn” about a known defect.

177 fil. App. 3d at 1057, 532 N.E.2d 1091, 1105-06. The Loitz

Court recounted sales of over three million Model 1100 barrels

over two decades, including use by the United States armed

services after approval of the material, design, and manufactur-

ing process. 177 Ill. App. at 1041, 532 N.E.2d at 1095. Every

one of those barrels was tested according to a “universally

recognized testing method”. Jd.

The evidence as recounted by the two opinions seems

functionally indistinguishable. The Supreme Court of Illinois

reversed Loitz on appeal, with three judges dissenting. 138 Ill.

2d 404, 563 N.E.2d 397. This history of inconsistent results

and split decisions illustrates the frailty of punitive damage

standards so ephemeral that appellate judges cannot agree on

their meaning. See also Hanover's Dairy, Inc. v. Mid-America

Dairymen, Inc., 700 S.W.2d 426 (Mo. en banc 1985); Lech-

tamer v. American Motors Corp., 67 Ohio St. 2d 456, 424

N.E.2d 568 (1981).

Some of the facts in the present case illustrate the problem

of formulating a punitive damage standard. After more than

five years of study, Saranac Laboratory induced asbestosis in

laboratory animals exposed to Kaylo dust. The consultant then

advised that Owens-Illinois should treat the dust as a potentially

hazardous material. E. 6555. Plaintiff would infer from this

that Owens-Illinois understood that Kaylo was in fact a hazard

to persons in Mr. Knuckles’ position. Upon this first inference

Plaintiff would build a second, that Owens-Illinois did not

reformulate the product or issue a warning because of areckless

indifference to Mr. Knuckles well being. Of course, it is just

as plausible to infer in the first place that Owens-Illinois under-

stood that Kaylo did not pose a substantial risk to Mr. Knuckles,

regardless of the hazard confronted by rats in a dust chamber,

and by extrapolation, possibly to humans in some other settings.

The uncontradicted evidence supports the absence of a foreseen

risk to Mr. Knuckles.

B. THE RELIABILITY OF EVIDENCE

SUPPORTING PUNITIVE DAMAGES

One question in forming a punitive damage standard is

whether the existence of any permissible inference, whether

highly likely or highly unlikely, of actual or implied malice will

create a jury question. A standard which allows any inference

to go to jury would create a jury issue in all negligence cases.

Roughly speaking, a negligence case is made by the occurrence

of an avoidable injury which was foreseeably caused by the

Defendant. If the Defendant had reason to foresee the problem,

then it can always be inferred that she did foresee it. Having

then inferred that foresight, it can further be inferred that the

injury was caused either intentionally or by reckless disregard.

See Johnson v. Celotex, 899 F.2d 1281 (2nd Cir.), cert. denied,

111 S.Ct. 297 (1990) (Punitive damages affirmed against

Owens-Illinois and Celotex Corp. based on evidence of a

“probable” link between asbestos and lung cancer at time of

exposure, though unknown to Owens-Illinois, and evidence

Owens-Illinois took precautions against asbestos exposure at

its manufacturing facility. 899 F.2d at 1288. Judge Mahoney,

dissenting, stated that punitive damages “are not properly char-

geable against a Defendant who merely ‘should have known’

of the risk in question. It must be shown that the Defendant

was aware of the risk, and that he consciously disregarded it.”

Id. at 1291).

Obviously this Court and others have been unwilling to

accept blindly all such permissible inferential chains. See e.g.

Thomas v. American Cytoscope Makers, Inc., 414 F.Supp. 255

(E.D.Pa.) (“the fact that the danger should have been foreseen

does not mean, contrary to Plaintiff’ s assertion, that the risk was

fully realized, or at least, realized to the extent necessary to

show that degree of knowledge which when consciously dis-

regarded deserves the approbation of ‘recklessness.”’”) (JINOV)

for Defendant of $200,000 punitive award.) The description

and application of the limiting concepts has, however, elicited

repeated observations of the difficulty of the task. See Schaef-

fer y. Miller, 322 Md. 297 (Eldridge, J., concurring); St. Luke

Church v. Smith, 318 Md. 337, 364 (1990) (Rodowsky, J.,

- dissenting) (“I agree that the law of punitive damages is ‘broke’

and needs ‘fixing’’’); Smith v. Gray concrete Pipe Co., 267 Md.

149, 166 (1972) (“we perceive from some of the reported

decisions the danger of formulating a test which may be so

flexible that it can become virtually unlimited in application.”’)

C. ANALYSES OF PUNITIVE DAMAGES

STANDARDS

The following consideration of a standard for punitive

damages in products liability cases will consider three lines of

analysis. Owens-Illinois concludes from this analysis that the

only proper grounds for punishment in the product liability

context are proof of intent to injure, or proof of intent to

perpetrate a fraud about the safety of the product.

1. American Laundry Machine v. Horan

, The instruction in this case largely tracks American

Laundry Machine v. Horan, 45 Md. App. at 117.3 Owens-Il-

The instruction in full read:

Now, in order for there to be a right to punitive damages, in

order for the plaintiffs to have the right to recover punitive

damages, there must be conduct of an extraordinary and out-

linois did not object to this instruction, as it appeared to cor-

rectly state the controlling law. The Horan standard is work-

able if properly understood and applied, though it may be better

to restate the language. In the Horan opinion Judge Wilner

reviewed punitive damage decisions from this Court and then

articulated a standard in the product liability context of, “direct

evidence of substantial knowledge on the part of the manufac-

turer that the product is, or is likely to become, dangerous, and

a gross indifference to the danger.” 45 Md. App. at 117. While

the direct requirement may be criticized as perhaps a technical

misnomer,‘ it appears the Court was driving at the strength of

the inferences necessary to support findings of substantial

knowledge of a danger and gross indifference to the danger.°

2. Professor Owen’s Analysis

The second line of analysis sheds light on the Horan

standard. Professor David Owen is the leading scholar and

commentator on punitive damages in_ product cases. He has

expressed his thoughts principally in two articles: Problems in

Assessing Punitive Damages Against Manufacturers of Defec-

tive Products, 49 U. Chi. L. Rev. 1 (1982) (“Owen (1982)”),

rageous nature. That is, there must be wanton and reckless

conduct. Wanton and reckless conduct is more than mere

negligence. Wanton and reckless conduct requires direct

evidence of substantial knowledge on the part of the manufac-

turer that the product is or is likely to become dangerous and a

gross indifference to that danger.

E. 4959 See Eagle-Picher v. Balbos, 84 Md. App. at 72-3.

4 See Henderson v. Maryland National Bank, 278 Md. 514, 520-22

(1976); 1A Wignore, Evidence, §§24-26 (Tillers rev. 1983).

“The only evidence offered in support of appellees’ entitlement to

punitive damages in this case was that which established appellant's

negligence: failure to use the patented cut-off device and failure to warn of

the danger involved in misloading absorbent and nonabsorbent materials.

From this, appellees seek to infer the requisite wanton and reckless disregard

in [H&R Block v. Testerman, 275 Md. 36, 43 (1975)}). It will not suffice,

however.” American Laundry Machine v. Horan, 45 Md. App. at 117.

and Punitive Damages in Products Liability Litigation, 74

Mich. L. Rev. 1257 (1976) (“Owen (1976)”); see also Owen,

Crashworthiness Litigation and Punitive Damages, 4 J. Prod.

Liab. 221 (1981). The 1982 article specifically intended to

revisit the concepts of the 1976 commentary in light of judicial

developments, 49 U. Chi. L. Rev. at 2-6, and so this brief will

focus on the later article.

Owen notes several complications in applying traditional

punitive doctrine in products cases. These include the con-

fusion and boredom which technical evidence confronts.

Owen (1982) at 10. Owen also addresses the natural sympathy

for an injured person, which often coalesces with general

hostility to large institutions and big businesses. /d. at 11; see

also Ellis, Fairness and Efficiency in the Law of Punitive

Damages, 56 S. Cal. L. Rev. 1, 42 (1982). “Some jurors may

thus be tempted to resort to simplistic explanations of the issue

(such as that the Defendant callously ‘traded lives for dollars’)

that comport with their preconceived notions of manufacturers’

oppression of consumers.” Owen (1982) at 11. Owen accepts

these impediments to fair adjudication as perhaps levelling the

strengths of the parties in litigating compensatory questions,

and necessary to permit fair compensation. /d. at 11-2. On the

other hand, the cases cited at pages 6 through 8 of this brief

demonstrate the need for Owen’s call for firm judicial control

of punitive damages issues.

Beyond biases which may be harbored without perception,

punishment of manufacturers has to account for the fact that

design and marketing are intentional processes which routinely

require the conscious trading off of conceivably desirable fea-

tures in order to offer economically viable products which meet

consumer expectations of desirability, value, and safety.6 A

Virtually all important actions involve some risks to some

people, and responsible individuals and institutions give care-

ful consideration to such risks before they act. It is fundamen-

Al0

company which is vigilant concerning safety will engage in

tests and review which may later provide the “smoking gun”

when the product does not perform as expected. These

problems are complicated where a complex product requires

the involvement of numerous employees, possibly none of

whom can understand every aspect of the design and safety

considerations. Owen (1982) at 15-19, 26. “[T]he more a

manufacturer is truly concerned about its product’s safety, the

more it will encourage self-criticism and ‘negative’ analysis of

the product within the company.” /d. at 17. Punitive standards

must account for this problem, and not discourage safety inves-

tigations. /d. at 19. See also Ellis, Fairness and Efficiency, 56

S. Cal. L. Rev. at 57.

Given those considerations, Owen advocates for punitive

liability upon a showing of “flagrant indifference to the public

safety”. Owen (1982) at 20-1. this means to Owen that a

manufacturer can be “punished fairly only for knowingly leav-

ing in its products dangers that are unreasonable”. Jd. at 24

(emphasis added). The word “flagrant” is intended to denote

an extreme departure from accepted and socially acceptable

safety practices and engineering choices. Jd. Owen also offers

five factors to provide necessary precision in applying the

“flagrant disregard” standard.’

tal to life in a dynamic world with an unpredictable future that _

one must proceed to act, notwithstanding the presence of some

foreseeable risks, provided that the benefits of the con-

templated action (or inaction) appear at the time to exceed the

risks. If this basic tenet of risk-benefit analysis were not

virtually the universal rule, life would grind nearly to a halt.

Everyone employs this process hundreds of times each day,

ticking off the balance of advantages versus disadvantages

(which may affect other persons adversely) of one choice after

another, often in only fractions of a second.

Owens (1982) (footmote omitted).

, The factors are:

(1) the existence and magnitude in the product of a danger to the public;

All

Owen concludes his review of the cases which shape his

thinking by finding two categories where punishment is ap-

propriate - fraud, and the choice of profit over safety in the face

of a high risk of serious injury which the Defendant knew or

Should have known was easily avoidable by feasible and

economical cures. Owen (1982) at 27. The analysis below

shows that these two categories describe the same thing.

In spite of the dissimilarity of language, the Horan stand-

ard for punitive damages shares a philosophical affinity with

the Owen’s analysis. In fact, Professor Owen quotes approv-

ingly Horan’s operative language. Owen (1982) at 33, n. 151,

quoting 45 Md. App. at 117. Because the Horan court studious-

ly reviewed precedents from this Court, the preceding analyses

cohere with the sentiments of the concurrence in Schaeffer v.

Miller.

3. The Precedents In This Court

The Schaeffer v. Miller concurrence suggests a return to

one of two precedents in negligence actions: Smith v. Gray

Concrete Pipe Co., 267 Md. 149 (1972), or Davis v. Gordon,

183 Md. 129 (1944). The earlier case rejects implied malice as

a ground for punitive damages in a negligence action while the

later accepts that ground in auto torts.

Davis v. Gordon involved a car accident seemingly arising

from negligence, although the Defendant’s post-accident con-

duct evinced a substantial disregard for the well-being of the

injured persons. This Court reversed the punitive award based

on precedent requiring “fraud, or malice, or evil intent, or

oppression entering into and forming part of the wrongful act”.

(2) the cost and feasibility of reducing the danger to an acceptable level;

(3) the manufacturer’s awareness of the danger, of the magnitude of the

danger, and of the availability of a feasible remedy;

(4) the nature and duration of, and the reasons for, the manufacturer’s

failure to act appropriately to discover or to reduce the danger; and

(5) the extent to which the manufacturer purposefully created the danger.

Owen (1976) at 1369, quoted, Owen (1982) at 27, n. 120.

Al2

183 Md. at 133. Malice was restricted to an intent to injure. /d.

at 134. Rejecting the practice of other courts of routinely

instructing a jury on punitive damages, this Court required

proof of fraud, motive, or intent, which demonstrate actual

malice /d.

Because the process of making and marketing products is

necessarily deliberative, any punishment for the process should

focus on the Defendant’s deliberations. The Davis v. Gordon

elements which correspond to a products case are intent to

injure and fraud. Evil intent should not be part of the standard

simply because its breadth is ill-defined, possibly expanding

the intentional acts of fraud and causing harm malice beyond

their desired parameters while shedding no additional light on

those concepts. Oppression does not fit the product context, as

it essentially applies to situations giving rise to a duty of good

faith and fair dealing, like a fiduciary or commercial relation-

ship. For instance, several cases discussed in the Schaeffer v.

Miller concurrence might best be described as allowing punish-

ment because of an intentional, oppressive abuse of a contrac-

tual relationship. Henderson v. Md. National Bank, 278 Md.

514 (1976); McClung-Logan Equipment Co., Inc. v. Thomas,

226 Md. 136 (1961).

Omitting “evil intent” and oppression from the Davis v.

Gordon elements leave the actual intent to injury and fraud as

grounds for punishment. Rarely if ever will a manufacturer

intend to injure its customers, but this ground need not be

excluded in determining a punitive damage standard. Fraud is

the Davis v. Gordon element which best corresponds to the

design and marketing processes when corrupted. Owen (1982),

49 U. Chi. L. Rev. at 27.

The elements of fraud are: (1) a false representation; (2)

which the speaker either knows is false, or which is made with

such reckless indifference to its truth that it equates with actual

knowledge; (3) made for the purpose of deceiving the claimant;

(4) which the claimant justifiably and detrimentally relied

Al3

upon; and (5) which caused actual damage. See Everett vy.

Baltimore Gas & Elec., 307 Md. 286, 300 (1986). Proof of

fraud requires clear and convincing evidence. /d.

The manufacturer of a product represents at least implicit-

ly that it is safe and fit for ordinary use. Commercial Law Art.

§2-314, Md. Code Ann. (1990); See Frericks v. General Motors

Corp., 274 Md. 288, 300-01 (1975); 1 Frumer and Friedman,

Products Liability, §1.05 (rev. 1991).8 A finding of negligence

is a finding that the representation of fitness was foreseeably

untrue. So the first element of fraud, a false representation, is

a necessary element of a products liability recovery. The fourth

and fifth elements of fraud are also part of all product hability

recoveries, i.e., causation from the breach, and actual damages.

It is the second and third elements of fraud, knowing deceit

made for the purpose of deceit, which might turn a product case

into one for punitive damages.

Several product liability cases illustrate the applicability

of fraud to punishment in this context. Punishment in one

Dalkon Shield case was explicitly grounded in fraud. Tetuan

v. A.M. Robins Co., 738 P.2d 1210, 241 Kan. 441 (1987). The

Ford Pinto presents another renowned case. Grimshaw v. Ford

Motor Co., 119 Cal. App. 3d 757, 174 Cal. Rptr. 348 (1981).

Professor Owen criticizes the “conscious disregard” standard

employed in the case because product design requires the

conscious trade-off of desirable features. Owen (1982) at

21-22. Viewing the facts in view of fraud makes the result

much clearer. :

Ford knew that the Pinto’s fuel tank and rear structure

would expose consumers to serious injury or death

in a 20 to 30 mile-per-hour collision. There was

* Owens-Illinois is not asserting that Plaintiff's failure to make out her

warranty Claim defeats her punitive claim. Defendant simply observes that

the selling of products involves at least implicit representations, which

indicates that fraud is a sound analytical basis within which to consider

punishment for product liability.

Al4

evidence that Ford could have corrected the hazard-

ous design defects at minimal cost but decided to

defer correction of the shortcomings by engaging in

a cost-benefit analysis balancing human lives and

limbs against corporate profits.

119 Cal. App. 3d at 813, 174 Cal. Rptr. at 384. There was

evidence Ford knew its implied representation of reasonable

crashworthiness was untrue. There was evidence Ford in-

tended this misrepresentation to deceive purchasers to buy a

known unsafe car. While the evidence may be so strong here

that the court’s callous disregard standard presents little dif-

ficulty, the cases discyssed above show that callousness and its

synonyms engender a high rate or erroneous verdicts. Fraud

shares the malice element intended by elusive adjectives such

as “reckless” or “conscious", while offering meaningful re-

quirements of the appropriate intent elements.

It might be objected that a requirement of an intent to

deceive mandates proof of an intent to injure, but that need not

be so. A manufacture motivated solely by profitability for use,

or with a design known to pose an unreasonable and unneces-

sary risk of serious bodily harm, effectively intends to deceive

its user about the safety for use without necessarily desiring to

cause an injury.? See Grimshaw vy. Ford, 119 Cal. App. 3d at

813, 174 Cal. Rptr. at 384.

This standard is also a consistent restatement of the Circuit

Court’s instruction in this case, derived from Horan. Horan

requires “direct evidence of substantial knowledge on the part

of the manufacturer that the product is, or is likely to become,

dangerous, and a gross indifference to the danger.” 45 Md.

* In addition to fraud, Professor Owen perceives punitive damages as

appropriate where “the manufacturer chose to profit from exposing con-

sumers to a high risk of serious injury that it knew could easily be avoided

through feasible and economical curative measures”. Owen (1982), 49 U.

Chi. L. Rev. at 27 (footnote omitted). These activities essentially describe

a known deceitful representation made with an intent to deceive about the

safety of the product.

Al5

App. at 117. Gross indifference is exhibited by the failure to

adopt readily available correctiveness measures, and so this

lapse in light of substantial knowledge of a serious hazard

constitutes deception undertaken with the intent to deceive.

Fraud, then, constitutes a meaningful ground for recovery

in a products liability case consistent with this Court’s prece-

dent, and consistent with the thorough and persuasive reviews

of Professor Owen. Fraud has a prudential history which can

be drawn upon by the courts, and defined elements which must

be proven by clear and convincing evidence. Its existence does

not depend on a proliferation of adjectives like “wanton,”

“reckless,” “outrageous,” “gross,” “flagrant,” and more, the

meaning of which has been shown to disappear at times when

turned over to the discretion of a jury. Fraud cannot be proved

by heaping tenable but unlikely or unproven hypotheses one

upon another.

This analysis of product punitive damages also plainly

distinguishes the deliberative design and marketing processes

from the context of auto torts, where this Court has applied an

implied malice standard. Smith v. Gray Concrete Pipe Co., 267

Md. 149; see also Nast v. Lockett, 312 Md. 343 (1988). Driving

and analogous activities involve a level of spontaneity which

cannot be aptly compared with the lengthy process required to

take a product from the drawing board to the retain outlet and

post-marketing product development. !0 Having distinguished

the type of torts exemplified by Smith and Nast!! as inapposite

to the instant facts, it is inappropriate to further conjecture on

whether the punitive standard in those cases deserve refine-

ment.

'° Owen (1982), 49 U. Chi. L. Rev. at 15-19: Henderson & Twerski,

Doctrinal Collapse in Products Liability: The Empty Shall of Failure to

Warn, 65 N.Y.U. L. Rev. 265, 310 (1990,

In both of these auto tort cases this Court drew on Statutory provisions

for cnminal punishment of the type of tortious conduct alleged. Nesi, 312

Md. at 352-55; Smith, 267 Md. at 167-68. Plaintiff has not alleged that

Owens-Illinois violated either criminal laws or civil regulations intended for

Mr. Knuckles’ protection.

APPENDIX B

Excerpts from Reply Brief of Appellant Lucille Killian,

Personal Representative of the estate of Sutton Knuckles,

et al.

IN THE Pos

Court of Appeals of Marvland

SEPTEMBER TERM, 1991

NO. 22

LUCILLE KILLIAN, PERSONAL REPRESENTATIVE OF

THE ESTATE OF SUTTON KNUCKLES, et al.

Appellees,

ON WRIT OF CERTIORARI

TO THE COURT OF SPECIAL APPEALS

OF MARYLAND

REPLY BRIEF OF APPELLANT

LUCILLE KILLIAN, PERSONAL REPRESENTATIVE

OF THE ESTATE OF SUTTON KNUCKLES. et al.

STATEMENT OF THE CASE

Appellant, Lucille Killian, Personal Representative of the

Estate of Sutton Knuckles, hereby adopts and incorporates by

reference the Statement of The Case contained in its

Appellant’s Brief submitted on July 22, 1991.

STATEMENT OF QUESTIONS PRESENTED

1. Did the Court of Special Appeals err in reversing

Knuckles judgment for punitive damage?

2. Would the reinstatement of punitive damages violate

Owens-Illinois’ and Eagle-Picher’s nght to due process of law

by subjecting the Defendants to multiple punishments for the

same alleged wrong?

3. Would the reinstatement of punitive damages violate

Owens-Illinois’ right to due process of law because the stand-

ards for calculating the sum of the award give no guidance

regarding the appropriate amount of punishment? *

STATEMENT OF FACTS

Appellant, Lucille Killian, Personal Representative of the

Estate of Sutton Knuckles hereby adopts and incorporates by

reference the statement of facts contained in its Appellant’s

brief submitted on July 22, 1991.

ARGUMENT

I. OWENS-ILLINOIS’ ARGUMENT ON AN

APPROPRIATE STANDARD FOR PUNITIVE

DAMAGES IN THE CASE AT BAR EXCEEDS

THIS COURT’S GRANT OF CERTIORARI.

Appellee Owens-Illinois (hereinafter O-I) argues that be-

cause of the history of inconsistent results in punitive damage

awards This Court needs to correct an existing standard which

is flawed. O-I suggests that a punitive damage standard similar

to the standard set out in Schaefer v. Miller 332 Md. 297, 311-32

(1991) (Eldridge, J., concurring) should be applied to product

liability cases. In essence, O-I contends that This Court should

require proof of fraud, motive, or intent. which demonstrates

actual malice when courts instruct juries on punitive damages.

Davis v. Gordon, 183 Md. 129 (1944).

O-I, in arguing what the Maryland standard for punitive

damages should be, has exceeded This Court’s grant of cer-

tiorari. Appellee O-I contends that even though it did not

request in the case at bar a jury instruction as stated above.

matters raised in the Schaefer concurrence are within the pur-

view of the writ of certiorari in this case. (Neither did O-]

except to the Court’s charge on this issue.) This is clearly not

the case if one looks at the Order of This Court (Rep. App. 103)

granting certiorari on May 13, 1991 in the case at bar and This

Court’s order (Rep. App. 4-6) granting certiorari on July 26,

1991 in the asbestos case of MCIC, Inc. v. Zenobia, 86 Md.

App. 456, 587 A.2d 531 (1991). In Zenobia, the order specifi-

cally instructs the parties to address the issue of what the correct

standard should be under Maryland law for the allowance of

punitive damages in negligence and product liability cases in

light of Smith v. Gray Concrete Pipe Co., 267 Md. 149 (1972),

Davis v. Gordon, 183 Md. 129 (1944) and Judges Eldridge,

Chasanow and Cole concurring opinion in Schaefer v. Miller,

332 Md. 297 (1991). However, This Court’s Order in the case

at bar is devoid of such an instruction. If This Court wanted

the parties here to address a punitive damage standard in light

of the concurring opinion of Judges Eldridge, Chasanow, Cole

in Schaefer, it would have expressly stated such in its Order

granting certiorari. It is noteworthy that Schaefer was decided

prior to This Court’s grant of certiorari in the present case, yet

This Court did not see fit to have the parties address that issue

in this case.

OQ-I admits that it did not preserve this issue for review

when it failed to request a jury instruction on language advo-

cated in the Schaefer concurrence.

Furthermore Maryland Rule 8-131 states:

(a) “...Ordinarily, the appellate court will not decide

any other issue unless it plainly appears by the record

to have been raised in or decided by the trial court,...””

(b) “Unless otherwise provided by the order granting

the writ of certiorari, in reviewing a decision

rendered by the Court of Special Appeals or by a

circuit court acting in an appellate capacity, the Court

of Appeals ordinarily will consider only an issue that

has been raised in the petition for certiorari or any

cross-petition and that has been preserved for review

by the Court of Appeals...”

It is a well settled rule in Maryland that the appellate court

does not decide questions which have not been raised and

decided by the trial court. Schiller y. Lefkowitz, 242 Md. 461,

cert denied, 385 U.S. 947 (1966): Accord. Thomas v. Corso.

265 Md. 84 (1972): Young v. State 220 Md. 95 (1959), cert.

denied, 363 U.S. 853 (1960); Martel v. State.221 Md. 294, cert.

denied, 363 U.S. 849 (1960). Therefore because Appellees

brief exceeds the grant of certiorari. Appellant respectfully

requests that This court strike those portions of O-I’s brief

which discuss the punitive damage standard advanced in the

Schaefer concurrence.

Assuming that O-I’s brief does not exceed This court’s

grant of certiorari, its requested punitive damage standard in

products liability cases conflicts with a number of courts. O-]

concludes that proper grounds for punishment in product

liability cases are proof of intent to injure, or proof of intent to

perpetrate a fraud about the safety of the product. Basically, at

the root of O-I’s argument lies the proposition that in order to

recover punitive damages in products liability actions the in-

jured party must prove actual malice. However, Professor

David Owen, a leading scholar and commentator on punitive

damages in product liability cases states that “most courts.

...have eschewed the ‘flagrant indifference’ standard and have

opted instead to apply the broader, more traditional liability

standards, such as ‘willful’, ‘wanton’, ‘malicious’, ‘conscious’,

or ‘reckless’ disregard of the rights of others.! Owens,

Problems in Assessing Punitive Damages Against Manufac-

turers of Defective Products, 49 U. Chi. L. Rev. 1, 21 (1982).

See Wolf v. Goodyear Tire & Rubber Co.. 808 S.W. 2d 868, 872, 874

(Mo. Ct. App. 1991), Moran v. G. W. H. Corson, Inc., 586, A.2d 416, 422.

423 (Pa. Super. 1991(, Masaki v. General Motors Corp., 780 P.2d 566, 572

(Hawaii 1989), Keller Industries, Inc. y. Waters, 501 So.2d 125 (Fla. App.

1987), Sliman v. Aluminum Co. of America, 731 P.2d 1267, 1274 (Idaho

1986), Chrysler Corp. v. Wolmer, 499 So.2d 823, 824 (Fla. 1986), Thiry v.

Armstrong world Industries, 661 P.2d 51 5,518 (Okl. 1983), Wanger v. Ford

Motor Co., 294 N.W. 2d 437, 442 (Wis. 1980), Gryc v. Dayton-Hudson

(Indeed, even “flagrant indifference”, is a more pro-victim

standard than that advocated by O.I.) (This is the standard set

forth in M.P.J.I. 10:6, p. 232 (1984). It is noteworthy that the

M.P.J.1. author, Digges was a products liability defense lawyer,

yet conceded that implied malice was the Maryland standard

for assessing punitive damages in product liability cases.

Corp..297 N.W.2d 727,739 (Minn. 1980), cert. denied, Riegel Textile Corp.

v. Gryc, 449 U.S. 921 (1980), Dorsey v. Honda Motor Co., 655 F.2d 650,

658 (5th Cir. 1981), reh’g denied & modified 670 F.2d 21 (Sth Cir. 1982),

reh’ g denied 673 F.2d 911 (Sth Cir. 1982), cert. denied 459 U.S. 880 (1982),

Rinker v. Ford Motor Corp. 567 S.W. 2d 655, 667 (Mo. Ct. App. 1078).

APPENDIX C

Excerpts from Brief of Petitioner Owens-Illinois. Inc.

IN THE

Court of Appeals of Maryland

SEPTEMBER TERM, 1991

NO. 77

OWENS-ILLINOIS, INC.,

Petitioner,

OTHELLO ARMSTRONG. et al.

Respondents.

ON WRIT OF CERTIORARI

TO THE COURT OF SPECIAL APPEALS

OF MARYLAND

BRIEF OF PETITIONER

Owens-Illinois, Inc.

ARGUMENT

iil

IN LIGHT OF THE COURT OF SPECIAL APPEALS’

OPINION IN EAGLE-PICHER IND., INC. V. BALBOS,

THE AWARDS OF PUNITIVE DAMAGES

AGAINST OWENS-ILLINOIS, INC.

IN THIS CASE SHOULD BE REVERSED.

The Court of Special Appeals correctly determined that

the record on appeal in these cases was not different for the

purposes of punitive damages from the record before it in

Eagle-Picher Ind., Inc. v. Balbos, 84 Md. App. 10 (1990);

Armstrong, 87 Md. App. at 722-23. Nonetheless, the court

reached an opposite conclusion here and affirmed the punitive

damage judgment rather than reversing it as it did in Balbos.

Given the identity of facts and issues, Owens-Illinois will not

repeat here the arguments on punitive damages that it filed with

the Court in Balbos, No. 22, September 1991, and which will

be argued on the same day as this appeal. Rather than embark

on this rote procedure, this Defendant will restrict its arguments

here to the basis of the punitive damage decision in this case

below. !

| The same counsel appears for plaintiffs in Balbos and in this case, so

they are familiar with Owens-Illinois’ arguments in Balbos.

APPENDIX D

IN THE

Cirenit Court For Baltomore City

OTHELLO ARMSTRONG. et al.

Plaintiffs,

OWENS-ILLINOIS, INC.

Defendant.

Case Nos.: 88028502 and 87121049/CL65032

MAY, 1989 - GROUP IT

ORDER

This Order concerns the motions of defendant Owens-I]-

linois, Inc., for injunctive relief. The Court has considered the

motions and Plaintiffs’ response. Oral argument was heard on

June 12, 1992. In order to dispote of the motions, this ___ day

of June, 1992, the following is ORDERED. ADJUDGED,

AND DECREED.

(1) Each Plaintiff has an immediate right to collect on the

compensatory awards in the respective cases.

(2) Each Plaintiff has elected to immediately collect on

the compensatory awards in the respective cases.

(3) Owens-Illinois shall immediately pay the following

sums:

Armstrong v. Owens-Illinois. Inc.

Compensatory awards $486,666.67

Open court cost $80.00

Interest through 6/15/92 $140,533.30

$627,279.97

Plus an additional $133.3333 interest pay day to the date

this Order is signed.

Wood vy. Owens-Illinois, Inc.

Compensatory awards $328,500.00

Open court costs $70.00

Interest through 6/15/92 $94,860.00

$423,430.00

Plus an additional $90.00 interest per day to the date this

Order is signed.

(4) These obligations may be satisfied by payment from

Owens-Illinois and/or drafts against the letters of credit secur-

ing the defendnat’s liability in these cases. Plaintiffs shall

immediately inform the defendant the source from which all

money will be received.

(5) Upon payment of the amounts stated above, the com-

pensatory damages judgments will be satisfied and these cases

ended as to compensatory damages.

(6) Accordingly, all requested injunctive relief is

DENIED.

CLIFTON GORDY

Judge

The Judges signature appears

on the original document

APPENDIX E

IN THE

Court of Appeals of Maryland

SEPTEMBER TERM, 199]

NO. 77

OWENS-ILLINOIS. INC.,

Petitioner,

OTHELLO ARMSTRONG. et al.

Respondents.

ON WRIT OF CERTIORARI

TO THE COURT OF SPECIAL APPEALS

OF MARYLAND

SUPPLEMENTAL BRIEF OF RESPONDENTS

OTHELLO ARMSTRONG, et al.

STATEMENT OF THE CASE

Following argument of these cases on January 7, 1992, the

Court issued the following Order.

The Court having considered the briefs and oral

argument in the above captioned case, it is this 9th

day of January, 1992.

ORDERED, by the Court of Appeals of Maryland,

that the parties file supplemental briefs and address

in those briefs the following question:

In light of the concurring opinion of Judges

Eldridge, Chasanow, and Cole in Schaefer v. Miller,

322 Md. 297, 312, 587 A.2d 491 (1991), what should

be the correct standard under Maryland law for the

allowance of punitive damages in negligence and

product liability cases, i.e., gross negligence, actual

malice, or some other standard. See, e.g., Smith v.

Gray Concrete Pipe Co., 267 Md. 149, 297 A.2d 721

(1972); David v. Gordon, 183 Md. 129, 36 A.2d 699

(1944).

and it is further

ORDERED that the Petitioner’s supplemental

brief shall be filed on or before January 27, 1992 and

the Respondents’ supplemental brief shall be filed on

or before February 12, 1992.

INTRODUCTION

Petitioner Owens-Illinois, Inc., did not object to the trial

court’s instruction on the law of punitive damages and did not

raise the issue on appeal. Thus, the issue addressed in the

parties’ Supplemental Briefs should have prospective applica-

tion only.

STATEMENT OF QUESTION PRESENTED

WHAT SHOULD BE THE CORRECT STANDARD

UNDER MARYLAND LAW FOR THE ALLOWANCE

OF PUNITIVE DAMAGES IN NEGLIGENCE AND

PRODUCT LIABILITY CASES?

ARGUMENT

Product liability actions may rest on a number of legal

theories. Some theories are ex contractu in nature (such as

breach of warranty), while others are ex delicto in character,

such as traditional theories of negligence and fraud, and the

more recent principle of strict liability. Whatever the theory

plead and argued, the underlying contention in these cases is

that a defective product which was placed on the market caused

injury.

The test for punitive damages set forth in Restatement

(Second) of Torts Section 908, provides that |

“[p]unitive damages may be awarded, for conduct

that is outrageous because of the defendant’s evil |

motive or his reckless indifference to the rights of

others.”

This is essentially the standard described by the court in

Wedeman v. City Chevrolet Co., 278 Md. 524, 532, 366 A.2d

7 (1976), for tort cases generally.

“Whether stated as ‘wanton or reckless disregard for

the rights of others,’ or as ‘reckless indifference to

the rights of others,’ it is ‘we think’ the correct

standard to be applied in a product liability action.”

American Laundry Machinery Industries v. Horan, 45 Md.

App. 97, 412 A.2d 497, 418-419 (1980). Thus, in order to

sustain an award of punitive damages in a product liability case

based on negligence, it must be shown that:

“First, the manufacturer must be either aware of or

culpably indifferent to and unnecessary risks of in-

jury. Second, knowing that its product is or might be

excessively dangerous, the manufacturer must in-

transigently refuse either to determine the serious-

ness of the danger or to reduce it to an acceptable

level.” (such as by adding appropriate warnings

labels to the product) [Parenthesis added!

Harley-Davidson Motor Company, Inc. v. Wisniewski, 50 Md.

App. 339, 437 A.2d 700 (1981) cert. denied, 292 Md. 596

(1982), quoting from D.G. Owen, Punitive Damages in

Products Liability Litigation, 74 Mich. L Rev. 1256, 1362

(1976).

This Court’s decision in Nast v. Lockett, 312 Md. 343, 539

A.2d 1113 (1988), validates the decisions of the Court of

Special Appeals concerning punitive damages in product

liability cases. Recognizing that the allowance of punitive

damages rests in the sound discretion of the trier of fact, this

court held that in order for punitive damages to be awarded,

evidence must be sufficient to establish that the defendant was

grossly negligent, that is, that he had a wanton or reckless

disregard for human life. Reckless lack of concern for whether

others might be killed or seriously injured, i.e., that the defen-

dant had a wanton or reckless disregard for human life, is the

legal equivalent of intending harm and punitive damages may

be awarded. Only conduct that is of extraordinary or out-

rageous character will be sufficient to imply this state of mind

and thus suffice as implied malice - the legal equivalent of

actual malice. Nast, 539 A.2d at 1117.

Just as in Nast, the Court of Special Appeals in Exxon

Corp. v. Yarema, 69 Md. App. 124, 516 A.2d 990 (1986), cert.

denied, recognized that:

“The award of punitive damages does not hinge on

whether the tort feasor exhibited the requisite level

of malice against a particular individual, but rather

the defendant’s breach of societal obligations is so

egregious, that the imposition of monetary penalty

beyond actual compensation is necessary to punish

the wrongdoer in order to protect society through the

deterrence effect of the penalty... ‘Punitive damages

are awarded... where a wrongful act is done with bad

motive or so reckless to imply a disregard of social

obligations or where there is such willful misconduct

or entire want of care as to raise a presumption of

conscious indifference to the consequences.’ ... See

generally 22 AM. Jur.2.d Damages, Section 250

(1964).”

Exxon Corp., 516 A.2d at 1013.

The issue of what standard should apply to the award of

punitive damages in asbestos cases was addressed most recent-

ly by the Supreme Court of Virginia in Owens-Corning

Fiberglas Corporation vy. Jacqueline R. Watson, Record No.

910073, 8 VLR 1829 (1992). In Virginia, the legislature has

codified the standard for punitive damages in Section 8.01-52

of the Civil Remedies and Procedure Article of the Annotated

Code of Virginia. At Section 5, the statute provides:

“3. Punitive damages may be recorded for willful or

wanton conduct, or such recklessness as evinces

conscious disregard for the safety of others.”

Focusing on the same product as in the case at bar - Kaylo

- and on some of the same conduct - the Virginia Supreme Court

in Watson case upheld the jury’s award of punitive damages

against Owens-Corning Fiberglas (against whom the jury in the

case at bar also found the evidence sufficient for an award of

punitive damages), and in so doing, stated:

“That negligence which is so willful or wanton as to

evince a conscience disregard of the rights of others,

as well as malicious conduct, will Support an award

of punitive damages... Willful and wanton

negligence is defined as “acting consciously in dis- .

regard of another person’s rights or acting with reck-

less indifference to the consequences, with the

defendant aware, from his knowledge of existing

circumstances and conditions, that his conduct

probably would cause injury to another.”

OCF v. Watson, 8 VLR. 1829, (Vg. 1992).

Wanton or reckless conduct requires far more than mere

negligence or what may casually be inferred from negligence.

In a products’ liability case, reckless indifference to the rights

of others may be found in a manufacturer’s total failure to

comply with the affirmative obligations and duties imposed by

law not to endanger the health and safety of the users of their

products. Alternatively, substantial knowledge on the part of

the manufacturer that a product is, or is likely to become

dangerous, accompanied by a gross indifference to the danger

may also be reason enough to award punitive damages.

For the reasons set forth below, an award of punitive

damages cannot be conditioned on a showing of direct

evidence of substantial knowledge on the part of the manufac-

turer that its product is dangerous. Thus, a “fraud” standard for

punitive damages is in appropriate.

To require a showing of direct evidence of substantial

knowledge on the part of the manufacturer as prerequisite to

awarding punitive damages would encourage manufacturers

not to test their products, and not to check the medical and

scientific literature to determine the hazards or dangers as-

sociated with their products, all to avoid punitive damages.

Such arequirement would promote a state of self-imposed total

ignorance on the part of manufacturers who, by demonstrating

an absence of “substantial knowledge that the product is, or is

likely to become dangerous” could effectively avoid punitive

damages. In other words, to condition punitive damages on

evidence that the manufacturer actually had substantial

knowledge that the productis, or is likely to become dangerous,

encourages exactly that behavior which punitive damages are

designed to deter — namely, reckless indifference by the

manufacturer to the rights, safety and lies of others, all in the

name of avoiding punitive damages.

The anomaly created by a standard which demands a

showing of “direct evidence of substantial kiiowledge on the

part of the manufacturer that the product is, or is likely to

become dangerous,” is easy to see. Manufacturers who

marketed products without ever testing them, without ever

checking the medical or scientific literature to determine the

dangers associated with the products or their ingredients, and

who never did anything ai all to investigate the hazards of their

products would always escape punitive damage liability by

pointing out their total lack of knowledge (self-imposed as it

may be) that the product is, or is likely to become dangerous.

—

Thus, wanton and reckless conduct must be viewed as

highly unreasonable conduct which involves an extreme depar-

ture from ordinary care. Such wanton or reckless conduct,

when in the form of self-imposed ignorance, certainly must be

more than any mere mistake resulting from inexperience, or

confusion and more than mere thoughtlessness or inadvertence.

or simple inattention. See, Prosser & Keeton, Law of Torts,

§34, pp. 212-14 (3d Ed. 1984). It must be such conduct as

evinces a conscious disregard for the safety of others.

Finally, this Court has only limited control of the rule of

law relating to punitive damages. In Maryland courts, defen-

dant corporations domiciled in other States which adhere toa

liberal standard for imposing punitives will still be subject to

that standard, regardless of this Court’s decision, under the

decepage doctrine. See Restatement of the Conflict of Laws,

Section 145; Hunter v. Greene, 734 F.2d 896 (2nd Cir. 1984);

Reese Decepage, 73 Colum. L. Rev. 58 (1973) Five Federal

Circuit Courts have upheld this doctrine.

CONCLUSION

For the reasons herein and for those previously stated, the

punitive damages awards should be affirmed.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.