Petition for Writ of Certiorari — Ford Motor Co. v. Ramon Romo
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Supreme Court. U.S.
FILED
(4 } 021097 Jan 21 2003
OPMOE OF THE CLERK
No.
IN THE
Supreme Court of the Anited States
FORD MOTOR COMPANY,
Petitioner,
Ws
JUAN RAMON ROMO ET AL.,
Respondents.
On Petition For A Writ Of Certiorari
To The California Court Of Appeal,
Fifth Appellate District
PETITION FOR A WRIT OF CERTIORARI
JOHN M. THOMAS THEODORE J. BOUTROUS, JR.
MICHAEL J. O’ REILLY Counsel of Record
FORD MOTOR COMPANY THOMAS G. HUNGAR
Parklane Towers West MIGUEL A. ESTRADA
Three Parklane Boulevard THOMAS H. DUPREE, JR.
Suite 300 WILLIAM E. THOMSON
Dearborm, MI 48126-2568 GIBSON, DUNN & CRUTCHER LLP
(313) 337-2515 1050 Connecticut Avenue, NW
Washington, DC 20036-5306
(202) 955-8500
Counsel for Petitioner
(Additional counsel listed on inside cover)
WALTER DELLINGER
BRIAN D. BOYLE
JONATHAN D. HACKER
MATTHEW M. SHORS
O’MELVENY & MYERS LLP
555 13th Street, N.W.
Washington, D.C. 20004
(202) 383-5300
Additionai Counsel for Petitioner
QUESTIONS PRESENTED
This case involves the largest personal injury award af-
firmed on appeal in United States history: a $290 million pu-
nitive damage verdict in a product liability lawsuit that arose
from a single traffic accident, and that was based on an al-
leged defect in a vehicle designed more than a quarter-
century ago. The award is 63 times the compensatory award,
362 times the maximum available civil fine, and 29,000
times the maximum available criminal fine. The questions
presented are:
1. Whether, in reinstating a $290 million verdict to pun-
ish an automaker for a 25-year-old design feature that sur-
passed federal safety standards, comported with industry cus-
tom, and had never before been found defective, the Califor-
nia Court of Appeal improperly nullified the three eXcessive-
ness guideposts articulated in BMW vy. Gore, 517 U.S. 559
(1996), and produced an award that violates due process.
2. Whether the California Court of Appeal erred by
holding, in conflict with BMW and White vy. Ford Motor Co.,
312 F.3d 998 (9th Cir. 2002), that a single California jury
could use its verdict to deprive petitioner of its total nation-
wide profits from sales of the product at issue.
3. Whether, in applying the BMW guideposts de novo as
required by Cooper Industries, Inc. v. Leatherman Tool
Group, Inc., 532 U.S. 424 (2001), the California Court of
Appeal erred by holding, contrary to the decisions of other
courts, that reviewing courts should give conclusive weight
to all findings of fact that the jury might have made, rather
than findings the jury must have made, and by deferring to
what the court acknowledged was a “huge” and “somewhat
arbitrary” punishment.
ll
PARTIES TO THE PROCEEDINGS
AND RULE 29.6 STATEMENT
Plaintiff Juan Romo, in addition to bringing suit in his
individual capacity, is proceeding as guardian ad litem for his
sisters Evangelina and Maria Romo, and as administrator of
the Estates of Ramon, Salustia and Ramiro Romo.
Ford Motor Company has no parent corporation, and no
publicly held company owns ten percent or more of its stock.
ili
TABLE OF CONTENTS
Page
QUESTIONS PRESENTED .......ssssssssccscsssesesssssssssseseeeecececccec.. i
PARTIES TO THE PROCEEDINGS AND RULE
Gut +b hint 6 actag + ae ii
WOME Pe PRT CRON TI onan ccosensseseeseorscsscess...,.. v
OPINIONS AND ORDERS BELOW.....eeeeccccsscssssseeeeeeecccce... ]
oa EEE l
CONSTITUTIONAL PROVISIONS INV IN II ccccdicnsieccencs l
STATEMENT OF THE CASE .oeee..sccscecsccssssssssssccsesczeeecccccc.. l
REASONS FOR GRANTING THE WRIT ooeeeeccccscssseecce--.. 7
I. REVIEW IS WARRANTED TO PREVENT
NULLIFICATION OF BMW IN PRODUCT
RES aE 9
A. The Court Of Appeal’s Per Se “Gross
Reprehensibility” Rule Contradicts
BMW And Other Decisions .0.........cccccceccc--.--...., 9
B. The Court Of Appeal’s Disregard For
The Ratio Guidepost Contradicts BMF’
And Other Decisions..............0..ceccecs0e.0..--........ 16
C. The Court Of Appeal’s Holding That
The Comparable Penalties Guidepost Is
“Inapplicable” Contradicts BMW And
MPR SPOCIINOONE 5. sesscessisenssecsssscesrseeseseseces..... 17
D. The Court Of Appeal’s Use Of Ford’s
Overall “Wealth” To Trump The BMW
Guideposts Contradicts BMW And
I a 19
iv
Il. REVIEW IS WARRANTED TO CLARIFY
THE CONSTITUTIONAL LIMITS ON
ONE STATE’S POWER TO PUNISH.
BASED ON OUT-OF-STATE SALES AND
PEG Rie ncn vinetthvainieeenniiinaianynniebinndninntnnienemmnesnenentens 23
Il. REVIEW IS WARRANTED TO
DETERMINE HOW COOPER
INDUSTRIES DE NOVO STANDARD
APPLIES TO REVIEW OF A JURY’S
TABLE OF AUTHORITIES
Pages
CASES
Ace v. Aetna Life Ins. Co., 139 F.3d 1241.
GONE BOM cosesicioiieneeeeee i Ses ave oS 19
Aken v. Plains Elec. Generation & Transmission
Coop., Inc., 49 P.3d 662 (N.M. SRR Nemes 28
Alley v. Gubser Dev. Co., 785 F.2d 849
SP Ge IS aitbcieredaeeaner ee Pit 14
Ammerman v. Ford Motor Co., 705 N.E.2d 539
Oe Ras WO ace i es 20
Barber v. Nabors Drilling USA, Inc., 130 F.3d
Fae We initia es low Rae
Bielicki v. Terminix Int’l Co., 225 F.3d 1159
SIAL TM Aichi as nh ad in 18
BMW v. Gore, 517 U.S. 559 (1996) ...c.cecccseccssssosceseecoee. assim
Bowden v. Caldor, Inc., 710 A.2d 267
Oe ei lnabdensicrtiadte cut ere hs 15. ists 21
Browning-Ferris Indus. of Vermont, Inc. v.
Kelco Disposal, Inc.,-492 U.S. 257 ( Se besiciseicreses 19, 29
Campbell v. State Farm Mut. Auto. Ins. Co.,
No. 981564, 2001 WL 1246676 (Utah Oct.
19, 2001), cert. granted, 70 U.S.L.W. 3580
(U.S. June 3, 2002) (No. 01-1289) ......ececcecccscscecese. passim
Carroll v. Otis Elevator Co., 896 F.2d 210
ba LS AD. eal ny ene a eae ee ee 15
Central Bering Sea Fishermen’s Ass'n v.
Anderson, 54 P.3d 271 (Alaska 2002).......cccecssscecsescsooees 27
Clark v. Chrysler Corp., 310 F.3d 461
Ce re NE nahin is aeeticatnsaidhineapibibieciiinninnciiatiieaiaiitens 10
Continental Trend Resources, Inc. v. OXY USA,
BR BOE FPG Ce Cale BI sci cccennscsssenssscsciressoons 21
Cooper Indus., Inc. v. Leatherman Tool Group,
BUD ig, FI Seti TT TD cinerecittcenndtpnntianitneniaiiianii passim
Corrosion Proof Fittings v. E.P.A., 947 F.2d
CBOE Cae RU siihiscccclnctiainsiealttanteiscceiaiicincncibnanitaninn 14
Davis v. Rennie, 264 F.3d 86 (1st Cir. 2001),
cert. denied, 122 S. Ct. 1909 (2002) .............cseeeseeseeeeees 19
Devlin v. Kearney Mesa AMC/Jeep/Renault,
Reb. 255 Cae. Ras FE Bee Ca aiteaiieesesecciinersinnsiienic 29
Drabik v. Stanley-Bostitch, Inc., 997 F.2d 496
CINE IRE: EN acini cnstacinesaneepnssncuscaiaiiaiieiitic leiclabiatiniae 14
FDIC v. Hamilton, 122 F.3d 854
(RGR: CAE: SED tiniictckenicnesstactniceincnsonidebbiilicasiieiial ei 16
Granite Constr. Co. v. Superior Court, 149 Cal.
Sa, FIT Cee vicieaceaneinaiiiisaisnnitiastaebaiieaiiieaiicliitiaio 18
Harte-Hanks Communications, Inc. v.
Connaughton, 491 U.S. 657 (1989) .........cccesceseseeeeeeeeees 29
Hillrichs v. Avco Corp., 514 N.W.2d 94
CRIN FOOD cncicctnncieistinniectanticgieibissiedpbiniainiaiiomuiiiitcinns 12
Honda Motor Ce. v. &Serg, 512 U.S. 415
CRG) ..cxssiniscnsiasiemeticaieniidialiaeiinaiiidaiaaimagiiiiaieiaiaibeii 15, 28, 29
In re Exxon Valdez, 270 F.3d 1215
CUR CD, IE Dicsceivitetitecteelnncetlairaticaeeiaiteiiaiiatiiisiiuinliia 19, 28
In re Exxon Valdez, No. A89-0095-CV, 2002
WL 31761256 (D. Alaska Dec. 9, 2002)............ccsseeseees 18
Jenkins v. Ohio Cas. Ins. Co., 794 So. 2d 228
Vii
Johansen v. Combustion Eng’g, Inc., 170 F.3d
tg RSE eat Se ee 20
Kimzey v. Wal-Mart Stores, Inc., 107 F.3d 568
cin | ETS RO. RR ETE ee ae 19
Leatherman Tool Graup, Inc. v. Cooper Indus.,
Inc., 285 F.3d 1146 (9th Cir. 2002)........ceccececseseeeees 21, 28
Lee v. Edwards, 101 F.3d 805 (2d Cir. 1996) ....c.cceccesssssssee. 19
Letz v. Turbomeca Engine Corp., 975 S.W.2d
Par TTON Siac HUD, BED iicscbctstsnvneenecrsenednssscdssadesesnerceses 17
Memphis Cmty. Sch. Dist. v. Stachura, 477 U.S.
UE Witioiioniiteiethiniialalinda dt 16
Mosing v. Domas, 830 So. 2d 967 (La. RRS see 18
Owens-Corning Fiberglas Corp. v. Ballard, 739
So. 2d 603 (Fla. Dist. Ct. App. 1998)........cccccsccscseseeosee. 24
Owens-Corning Fiberglas Corp. v. Malone, 972
cant oe. sch, py ECR RET A 11
Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1
UTE Divssadiirinnsibnininaitiniiplilals Nadas 16, 30
Patterson v. P.H.P. Healthcare Corp., 90 F.3d
og Le S| Canes 7 Teen sili 16, 19
People v. Rowland, 4 Cal. 4th 238 EE ae, 3
Pulla v. Amoco Oil Co., 72 F.3d 648
SEER STIL Ee ol 21
Richards v. Michelin Tire Corp., 21 F.3d 1048 -
tech ase lie eset At aE CRA TIL 13
Satcher v. Honda Motor Co., 52 F.3d 1311
I 12, 14
Sheldon v. Vermonty, No. 98-2277, 2002 WL
31498908 (D. Kan. Nov. 8, 2002) .......cccccccsscscssesecsesoeeee. 25
viii
Smith v. Ford Motor Co., 83 S.W.3d 483
SI BE eleeciitnnciipasstiininataieiteenestinnirghiiiihiniatttamienin eeahed passim
Smith v. Ingersoll-Rand Co., 214 F.3d 1235
CEG Be ate cintccllenanintistincinneavinietittianmnicniniiinsens 24
Gada v. Tame, SER TEE, BP CIGES) sccssescccsicesssrssessecnecerseseeess 17
Southwestern Tel. & Tel. Co. v. Danaher,
Fe hs FN cntetcaniittnaiitlitntihenninenenhnstiinimienerivatis 13
Summers v. A.L. Gilbert Co., 69 Cal. App. 4th
Re I cesieitninentaiehschiiiecilaleatiibvinebiiniibiininianeniinttininkakeieneese 3
TXO Production Corp. v. Alliance Resources
Gig FR ee a i aaitithntitinctinicanssnhiivtninenictinmeeen 9
United States v. Bajakajian, 524 U.S. 321
a cciktibesheiitl lites diniiitnesatchtanaidaaielaiaiidiaasniesinaiiinecigggts 19
United States v. Powell, 423 U.S. 87 (1975).......cccssseeeseeeeee 13
White v. Ford Motor Co., 312 F.3d 998
RERUN passim
. Wightman v. Consolidated Rail Corp..,
op fF 8 gE Eee tee 11
Williams v. Philip Morris, Inc., 48 P.3d 824
ee Gas Aas OTE tnbeeipernnenceninnintinenicimegas 11, 20, 27
Wilson v. IBP, Inc., 558 N.W.2d 132
SUITE SUID scistlcirsccichacinmeeiaeeienciptensnsisicetsinihaiinhchiiaaintaineniattn 20
CONSTITUTIONAL PROVISIONS
re IR rs Wee os OF Mitaeccicrentncensesneccenetnscccenteceincess l
Ei, Seen, Ss Wi, UF Te OU: ot ceiensercineeninctcenhaplotendantiaealouninabdicte |
STATUTES
BO UES. © Be iciteciattenrstinitsitrisidaerestlpbannenstacisvnmeses l
SE I i taceatiidsitaennnnaiididate 18
Ck. CT SII csecescsscntsisenncenessvietenennenenunntasstero, 5, 28
OTHER AUTHORITIES
2 American Law Institute, Enterprise
Responsibility for Personal Injury:
Reporter's Staaddy (1991) ...2...r0rersersccccesererersesesseeseseeeeseeses 22
Stephen Breyer, BREAKING THE VICIOUS
CIRCLE: TOWARD EFFECTIVE RISK
RRBGULA TION (1992) ...-ccccccocecerescseccoesescsceseceses Sitakteceinobens 15
2 California Book of Approved Jury
Instructions, § 14.71 (9th ed. 2002).......cccccccsecsccecseseoeees 29
Reid Hastie et al., Looking Backward in
Punitive Judgments: 20-20 Vision? in Cass
R. Sunstein et al., PUNITIVE DAMAGES: How
"PRM IIE CII snscernsctassisensosieencecinsicancssssssese occas. 15
W. Page Keeton et al., PROSSER AND KEETON ON
THE LAW OF TORTS § 36 (Sth ed. 1984)... cceccessesssssses 13
David G. Owen, Problems In Assessing Punitive
Damages Against Manufacturers Of
Defective Products, 49 U. Cui. L. REV. 1
era ielsasicssdatcienta tps scmsiiienctraidribnecesebiceaseLosias-des css, 15
David G. Owen, Punitive Damages in Products
Liability Litigation, 74 MICH. L. REV. 1257
Ci prn eicbesbcienibinssabitbcnsiNdindabbiibetindiciiiie ei 19
RESTATEMENT (THIRD) OF TORTS: PRODUCTS
UU 14
W. Kip Viscusi, Corporate Risk Analysis: A
Reckless Act?, 52 STAN. L. REV. 547 (2000) ....cseecseessse. 15
PETITION FOR A WRIT OF CERTIORARI
Petitioner Ford Motor Company (“Ford”) respectfully
petitions this Court for a writ of certiorari to review the
judgment of the California Court of Appeal in this case.
OPINIONS AND ORDERS BELOW
The court of appeal’s June 28, 2002 opinion reinstating
the $290 million verdict (Pet. App. 1a-41a) is reported at 99
Cal. App. 4th 1115. The trial court’s new trial order setting
aside that verdict (Pet. App. 42a-46a) is unreported.
JURISDICTION
The court of appeal entered its judgment on June 28,
2002. The California Supreme Court denied Ford’s timely
petition for review on October 23, 2002. This Court has ju-
risdiction pursuant to 28 U.S.C. § 1257(a).
CONSTITUTIONAL PROVISIONS INVOLVED
The Due Process Clause provides: “No State shall ...
deprive any person of life, liberty, or property without due
process of law.” U.S. CONST., amend. XIV, § 1.
The Commerce Clause provides: “The Congress shall
have Power ... [t]o regulate Commerce ... among the sev-
eral States.” U.S. CONST., art. I, § 8, cl. 3.
STATEMENT OF THE CASE
This case, along with the petition in Ford Motor Co. v.
Smith, No. 02-_____ (“Ford’s Smith Pet.”), which is being .
filed contemporaneously, graphically illustrates how, in the
product liability context, lower courts are nullifying this
Court’s decisions in BMW and Cooper Industries.
Adopting the approach of many lower courts, the court
of appeal invoked the fact that this is a product liability case
involving personal injury to justify its evasion of all three
BMW guideposts, and it then reinstated a $290 million ver-
dict that the trial judge had overturned as “fundamentally
suspect” and tainted by juror misconduct reflecting bias and
prejudice. The court branded Ford’s conduct “grossly repre-
hensible” without regard to Ford’s good faith basis for be-
lieving its design decisions we12 lawful. Pet. App. 38a. The
court held that the BMW ratio guidepost is of “reduced ...
importance” in wrongful death cases, and pronounced the
third guidepost—comparable penalties—wholly “inapplica-
ble.” Pet. App. 39a. The court held that Ford’s “enormous
monetary resources” provided “fair notice” that such a huge
fine could be imposed (id. at 36a)—contradicting other
courts in the process—and expressly rejected Ford’s argu-
ment that it violated BMW’s ban on extraterritorial punish-
ment to premise the punitive award on Ford’s nationwide
sales and overall profits on the vehicle, Pet. App. 38a-39a &
n.3, thus creating a direct conflict with the Ninth Circuit’s
recent decision in White, 312 F.3d 998. The California Su-
preme Court denied review by a 4-3 vote. Pet. App. 47a-48a.
This Court’s ruling in State Farm Mutual Automobile In-
surance Co. v. Campbell, No. 01-1289 (argued December 11,
2002), may well address many of the issues raised by this
petition, and the Court should at the very least hold this case
pending its decision in State Farm. But this case also pre-
sents the Court with a unique opportunity to resolve impor-
tant, recurring, and distinct questions that have divided and
confused the lower courts regarding the meaning of BMW in
the product liability context, an area where juries have re-
turned a flood of massive punishments in recent years. Ple-
nary review by this Court is warranted.
1. This case arises from a single accident involving a
15-year-old used 1978 Ford Bronco. On June 20, 1993, the
Romo family had been driving all night when another vehicle
cut off their Bronco on a California highway. The Bronco’s
driver, Juan Romo, swerved to the right, then back to the left,
crossing both lanes of traffic at about 65 miles per hour and
plowing onto the dirt shoulder of the road along the median.
When he jerked the Bronco sharply to the nght at aboui 50
miles per hour, it rolled over “several times.” Pet. App. 2a.
Ramon and Salustia Romo and their son Ramiro were killed,
and Juan, Evangelina, and Maria Romo were injured.
Plaintiffs brought strict product liability and negligence
claims against Ford, alleging that the Bronco’s roof was
defectively designed and manufactured because it did not
withstand the forces generated by the rollovers. Plaintiffs
also alleged that Ford had negligently failed to warn consum-
ers of that purported defect.
It was not disputed that the 1978 Bronco’s roof—the
front third of which was made of metal, the rear two-thirds of
removable fiberglass—was comparable to the designs of
other sport utility vehicles (“SUVs”) of that era, including the
Jeep and the International Harvester Travelall. Reporter’s
Transcript (“RT”) 2517-19, 2592, 6815-16. Further, al-
though the 1978 Bronco had been designed a quarter-century
before trial, at a time when there was no federal roof strength
requirement for SUVs such as the Bronco, it was undisputed
that the 1978 Bronco’s roof was strong enough to surpass by
100 percent the federal government’s then-existing roof
strength requirements for passenger cars. RT 6864-67. In
fact, the 1978 Bronco outperformed by 30 percent today’s
roof strength standard for SUVs, which the National High-
way Traffic Safety Administration (“NHTSA”) did not
promulgate until 1994. RT 6866-67.
The trial court rejected Ford’s proposed jury instructions
that would have informed the jury of the relevance of these
and other factors to the punitive damages calculation. Pet.
App. 49a-53a; RT 9449-50. The court also denied Ford’s
motion in limine to exclude under BMW evidence of its
wealth and out-of-state sales and profits. Clerk’s Transcript
(“CT”) 177-86; RT 343-46.! As a result, plaintiffs’ counsel
was free to, and did, argue that the jury shouid inflict a pun-
ishment based on Ford’s worldwide wealth and nationwide
sales.of the Bronco, sufficient to change the behavior of Ford
and consumers throughout the Nation. F or instance, plain-
tiffs’ counsel asserted that Ford had made $160 million in
1 Under California law, Ford’s motion in limine sufficed to preserve its
objection. People v. Rowland, 4 Cal. 4th 238, 263-64 n.3 (1992); Sum-
mers v. A.L. Gilbert Co., 69 Cal. App. 4th 1155, 1184 (1999).
profits on nationwide sales of 1978-79 Broncos, and urged
jurors to award “a billion dollars in punitive damages” to
make “the front page of U.S.A. Today ... the front page of
the New York Times ... [and] the front page of the Wall
Street Journal.” RT 9585-88. He told jurors that “[y]ou’ve
got to say a number that gets on the front page of every
newspaper in the country” and “get[s] the world’s attention.”
RT 9588-89.
Even though the case involved a single accident, even
though the roof design was incozporated in 140,000 vehicles
and had never been found to have caused any other injury in
25 years,2 even though no person had ever- petitioned
NHTSA to find the design unsafe, and even though NHTSA
had been regulating roof-crush performance and evaluating
accident data for decades, plaintiffs’ counsel urged the jury to
“educate NHTSA” by returning a huge verdict against Ford.
RT 9591. Counsel insisted that “[iJt isn’t just government”
that can “change the vehicles,” and incited the California jury
to “[t]ake this car out of its existence” and “stop that mother
in Montana from putting her children in the back of the car.”
Id. at 9999-10000. He emphasized that this was “an impor-
tant verdict for .. . the whole country.” Jd. at 9473.
The jury acted accordingly. Although it rejected plain-
tiffs’ failure to warn claim, it returned a verdict for plaintiffs
on their manufacturing and design defect claims, holding
Ford 78 percent responsible for plaintiffs’ injuries (and allo-
cating 10 percent of the fault to Juan Romo, and 12 percent
to the other driver). Pet. App. 3a. It awarded $6.2 million in
compensatory damages, $4.6 million of which was assessed
against Ford. Jd. Then, by a vote of 9-3—the minimum nec-
2 Plaintiffs’ counsel admitted during closing argument that “there’s no
evidence that there’s any lawsuits with respect to 1978-79 Broncos be-
fore. .. . There’s been no evidence of that.” RT 9990.
essary for a verdict—the jury found Ford guilty of “malice”
and imposed $290 million in punitive damages. Jd.3
2. In its post-trial motions, Ford, inter alia, reiterated its
Due Process and Commerce Clause arguments, asserted that
the $290 million verdict was unconstitutionally excessive,
and moved for a new trial on juror misconduct grounds.
Supplemental CT 1-37; CT 3400-20.
The court, finding that prejudicial juror misconduct oc-
curred during deliberations, granted a new trial on punitive
damages. The court found that one juror, in violation of the
court’s admonitions, had “told other jurors of a ‘60 Minutes
I’ program which aired [during the trial] and that featured
alleged fire problems from rear-end collisions involving
older Ford Mustangs” as well as “graphic depictions of the
burn injuries suffered” by passengers. Pet. App. 44a. The
court had excluded evidence of Mustang and other rear-
impact fires as irrelevant and unduly prejudicial in this non-
fire, non-rear-impact case. RT 329-33, 6360-62, 6377-82.
The same juror also (inaccurately) told other jurors that
Lee Iacocca, who had been Ford’s president during the
Bronco’s development and had often been mentioned during
trial, had said on the show that Ford’s policy was to defend
or settle lawsuits rather than recall vehicles or correct de-
fects.4 Pet. App. 44a. This juror “actually stated that the in-
terview with Lee Iacocca showed Ford’s malice,” CT 1649,
justifying punitive damages. Pet. App. 44a.
Another juror, “after repeatedly telling the jurors that
they needed to ‘save the babies,’ . . . told the jury in great de-
tail of a morbid nightmare she supposedly had the night be-
fore in which her child and the other jurors’ children were
killed by a repeatedly rolling-over Bronco while the Ford at-
- 3 Inan unintentional tort case, California defines “malice” as “despi-
cable conduct” carried on with a “willful and conscious disregard for the
rights or safety of others.” CAL. CIVIL CODE § 3294(c).
4 As the trial court found, Iacocca made no such statement on the pro-
gram. Pet. App. 44a.
é
torneys and witnesses, armed with guns, mockingly chanted,
“Where’s the proof, where’s the proof?’” Pet. App. 44a.
This juror also repeatedly told her fellow jurors that they “did
not need to follow the law because saving babies was too im-
portant.”” Jd. (quotation marks omitted).
The trial court ruled that, in light of this misconduct,
“{flaimess dictates a new trial on the issues of malice and
punitive damages.” Pet. App. 45a. The court explained: “Ju-
ror misconduct occurred by virtue of the injection of external
evidence and influences, prejudgment of the case, and a re-
fusal to follow the law.” Jd. The court found that “the delib-
erative process on [punitive damages] was presumptively in-
fested with passion and prejudice,” rendering the verdict
“fundamentally suspect.” Jd.
3. The court of appeal reversed. The court rejected the
trial court’s conclusions regarding juror misconduct by sim-
ply “presum[ing]” that the trial court’s generic instructions
and the foreperson’s admonitions would have cured any
prejudice. Pet. App. 14a. In addition, although the court
recognized that the unprecedented amount of the award was
“somewhat arbitrary,” id. at 37a, it nevertheless reinstated the
entire $290 million penalty.
In applying BMW, the court performed what it character-
ized as a de novo review under Cooper Industries. In fact,
however, the court simply incorporated its highly deferential
“substantial evidence” review under state law, assuming that
the jury resolved every contested factual issue against Ford.
Pet. App. 20a. The court also disregarded Ford’s undisputed
compliance with federal safety standards and industry cus-
tom. Even though it could not point to any evidence that any
individual Ford employee had acted with malice or believed
that the company was “compromis[ing] consumer safety”
when designing the Bronco, id. at 32a, the court deemed
Ford’s conduct “grossly reprehensible” and “despicable” be-
cause it resulted in personal injury. Jd. at 30a, 38a.5
Although conceding that the “great disparity between the
compensatory and punitive damages award” supported an
excessiveness finding, the court deemed that great disparity
to be immaterial “because wrongful death compensatory
damages do not fully reflect the harm to the victims.” Jd. at
39a. Similarly, the court held BMW’s “comparable penal-
ties” guidepost wholly “inapplicable” because the “malicious
conduct could have resulted in substantial imprisonment if
committed by an individual rather than a corporation.” Pet.
App. 39a.
The court also rejected Ford’s argument that BMW pre-
cluded punishing Ford based on nationwide sales of the
Bronco, and punished Ford based on its “over $100 million”
in profits from such sales. Pet. App. at 36a. The court
claimed this was justified because “the interest California
_ Seeks to protect—individual human lives—is neither unique
to California nor limited to its own citizens.” Jd. at 38a-39a
& n.3.
Citing Ford’s financial status at the time of trial in 1999,
the court held that Ford “has been on notice ‘for more than a
century’ that California regards it as necessary to impose
penalties related to the wealth of the defendant,” and thus
upheld the $290 million award because Ford “is a huge com-
pany with enormous monetary resources.” Jd. at 36a, 40a.
REASONS FOR GRANTING THE WRIT
In BMW, this Court held that the Due Process Clause
forbids “grossly excessive” punitive damage awards, and that
claims of excessiveness are to be evaluated by reference to
three “guideposts”——reprehensibility, ratio, and comparable
penalties—to determine whether the defendant had “fair no-
tice” of the severity of the punishment that could be imposed.
5 The court even went so far as to deem Ford’s safety improvement to
the 1980 Bronco’s roof design further proof of Ford’s reprehensibility as
to the 1978 model. Pet. App. 35a.
517 U.S. at 574-85. Notwithstanding that clear directive, the
court below held that the three BMW guideposts are either
inapplicable or essentially meaningless in product liability
cases. With respect to the reprehensibility prong, for exam-
ple, the court held that mere awareness that a product poses a
potential risk of personal injury (no matter how small) suf-
fices to establish gross reprehensibility, notwithstanding the
defendant’s compliance with government and industry stan-
dards and its good faith belief that the risk was not unreason-
able. As shown below, that holding is irreconcilable with
BMW, and contradicts longstanding punitive damage doctrine
applied by state and federal courts around the country.
The court of appeal created a further conflict by holding
that the ratio prong has reduced significance in wrongful
death cases, and that a punitive damage award that is 63
times the very substantial compensatory award suffers from
no constitutional infirmity. In addition, the court of appeal
squarely held that the comparable penalties prong is “inappli-
cable” whenever the underlying conduct could result in im-
prisonment if committed by an individual—a holding that is
_ directly at odds with numerous decisions of other courts, in-
cluding the Ninth Circuit, the regional circuit whose jurisdic-
tion includes California. Further compounding its errors and
the conflict among lower courts, the court below concluded
that the constitutional requirement of “fair notice” was satis-
fied by Ford’s wealth, which purportedly sufficed to put Ford
on notice that it could be subjected to a massive punitive
damage award at the whim of a California jury based on con-
dvct that occurred a quarter-century ago. Moreover, the
court’s holding that a single jury could deprive Ford of its
total nationwide profits from the 1978 Bronco conflicts with
White v. Ford Motor Co., in which the Ninth Circuit rejected
such an approach as unconstitutional.
In reinstating the punishment, the court denied Ford any
meaningful appellate review. Applying California’s exceed-
ingly deferential “substantial evidence” standard, the court
characterized its skewed depiction of the “facts” hypotheti-
cally found by the jury as the de novo review mandated by
Cooper Industries, and then deferred to the arbitrary punish-
ment that the jury picked from thin air.
The court of appeal’s ruling defies the constitutional
limitations on punitive damages that this Court has repeat-
edly recognized, and creates or compounds numerous splits
among the lower courts concerning the applicability of BMW
and Cooper Industries in the context of product liability
cases. There are obvious and straightforward solutions to
these problems and conflicts, but only this Court can provide
them. Plenary review is warranted. Alternatively, the Court
should hold this case pending its decision in State Farm.
I. REVIEW IS WARRANTED TO PREVENT
NULLIFICATION OF BMW IN PRODUCT
LIABILITY CASES
The court of appeal interpreted BMW in a way that evis-
cerates all three due process guideposts in product liability
cases involving large corporate defendants. Its reasoning
typifies the approach followed by many lower courts, con-
flicts with BMW itself and other decisions, and underscores
the urgent need for guidance from this Court.
A. The Court Of Appeal’s Per Se “Gross
Reprehensibility” Rule Contradicts BMW
And Other Decisions
1. This Court’s prior decisions analyzing punitive dam-
ages for excessiveness have involved intentional torts such as
fraud and unfair competition; this case, by contrast, alleges a
negligently designed vehicle roof. As Justice Kennedy rec-
ognized in TXO Production Corp. v. Alliance Resources
Corp., punitive damages that would be appropriate in the
context of an intentional tort may not be appropriate in “a
case of negligence [or] strict liability.” 509 U.S. 443, 468
(1993) (Kennedy, J., concurring).
The court of appeal acknowledged that Ford “did not in-
tend” to cause harm, and even applying the deferential “sub-
stantial evidence” test, the court could not point to any evi-
dence that any individual Ford employee had acted with
ed
10
“malice.” Pet. App. 32a, 38a. Instead, the court held that the
jury was entitled to “infer” malice “by piecing together
knowledge and acts” of various unidentified Ford personnel
stretching back for decades. Jd. at 25a. The court recognized
that there was no evidence that the Bronco’s roof design had
ever previously been deemed defective; indeed, plaintiffs’
counsel had admitted that, despite a quarter-century’s use of
over 140,000 of these vehicles, there was no evidence of
other lawsuits even alleging this design defect. And the evi-
dence is uncontroverted that the design both comported with
industry custom and surpassed the federal standards that ex-
isted at the time of the design—and that exist today.
The court of appeal, however, rejected these facts as ir-
relevant to reprehensibility. The court instead invoked the
fact that the plaintiffs alleged personal rather than economic
injury as a basis for evading BMW, Pet. App. 38a (“the award
here cannot be compared to cases involving a business fraud
resulting only in economic harm’) (citation omitted), and it
deemed Ford’s conduct grossly reprehensible and “despica-
ble” because, for purposes of making a profit, Ford marketed
a product that “could kill people.” Jd. at 25a-26a (emphasis
added); id. at 38a (Ford’s conduct “involved mass production
and marketing” of a product “purely for defendant’s eco-
nomic betterment’’).
Other courts, like the court of appeal here, have adopted
a rule that design defects per se reflect serious reprehensibil-
ity under BMW because the manufacturers “knew” that their
products were capable of causing serious injury. See, e.g.,
Smith v. Ford Motor Co., 83 S.W.3d 483, 494 (Ky. 2002)
(finding “substantial” reprehensibility where NHTSA had
declined to find 1977 design defective and design complied
with industry standards, but personal injury resulted many
years after design); Clark v. Chrysler Corp., 310 F.3d 461,
482 (6th Cir. 2002) (finding negligent design that comported
with federal safety standards reprehensible because it “re-
sulted in the loss of life’); Williams v. Philip Morris, Inc., 48
P.3d 824, 840 (Or. Ct. App. 2002) (reprehensible to market
product “that could cause serious illness or death”) (emphasis
11
added); Owens-Corning F; iberglas Corp. v. Malone, ‘972
S.W.2d 35, 46 (Tex. 1998) (“[c]onduct that endangers a per-
son’s health or safety merits more punishment than purely
economic harm”) (emphasis added); cf. Wightman v. Con-
solidated Rail Corp., 715 N.E.2d 546, 554 (Ohio 1999) (“this
case distinguishes itself ... from BMW” because it involves
“massive property damage” and “physical injuries”).
Thus, while this Court in BMW stated that “Teprehensi-
bility” is “[p]erhaps the most important indicium” of exces-
siveness, 517 U.S. at 575, these lower courts have rendered
that factor meaningless in product liability cases. These
courts have misconstrued a passage in BMW observing that
the harm in that case was “purely economic in nature” and
that the defendant “evinced no indifference to or reckless dis-
regard for the health and safety of others” (id. at 576) to
mean that, where conduct results in personal injury, BMW
does not require meaningful, objective judicial review of rep-
rehensibility. But this approach “make[s] ‘reprehensibility’ a
concept without constraining force, i. é., [it] deprive[s] the
concept of its constraining power to protect against serious
and capricious deprivations.” BMW, 517 U.S. at 590
(Breyer, J., concurring) (discussing Alabama standard).
2. The court of appeal’s refusal to consider Ford’s rea-
sonable, good faith belief that its conduct was lawful, based
(among other things) on its compliance with federal safety
standards and industry custom, squarely conflicts with BMW.
In BMW, for example, the jury found that defendant’s policy
with respect to the disclosure of factory repairs constituted
“gross, oppressive, or malicious’ fraud” even though that
policy was consistent with statutes defining disclosure obli-
gations in about 25 States. 517 U.S. at 565. Alabama had no
such disclosure statute, and this Court “accept[ed] . . . the
jury’s finding that BMW Suppressed a material fact which
Alabama law obligated it to communicate.” 517 U.S. at 579-
80. Nevertheless, this Court recognized that BMW, in at-
tempting to determine what it was required to disclose,
“could reasonably rely on [other] state ... statutes for guid-
ance.” Jd. at 579. The Court also noted that the “diversity”
12
of state laws “demonstrates that reasonable people may dis-
agree about the value of a full disclosure requirement.” Jd. at
570. The Court concluded that a failure to disclose is “less
reprehensible . . . when there is a good faith basis for believ-
ing that no duty to disclose exists,” id. at 579-80, and when
“a corporate executive could reasonably interpret” the law to
allow nondisclosure. Jd. at 578.
This same analysis is equally applicable in product li-
ability cases like this one. Even if some amount of punitive
damages can be imposed because plaintiffs’ paid experts dis-
agree with Ford—and with Ford’s experts, the federal gov-
ernment, and the entire motor vehicle industry concerning
roof design—the existence of grounds for reasonable people
to disagree on this issue, and of strong objective indicators
that Ford’s conduct was both lawful and reasonable, surely is
relevant to the reprehensibility analysis, just as the state dis-
closure statutes were relevant to that issue in BMW. The
court of appeal, however, rejected any such inquiry here, de-
claring that “it avails [Ford] nothing that other auto manufac-
turers also used fiberglass roofs on contemporaneous fiber-
glass utility vehicles” and dismissing the fact that the 1978
Bronco surpassed 1994 federal roof strength standards by 30
percent as “merely coincidental.” Pet. App. 29a, 35a-36a.
The decision below also conflicts with the traditional
approach taken by most state and federal courts. Most courts
recognize that where there is ground for reasonable dis-
agreement about legal obligations, punitive damages are pro-
hibited. See, e.g., Satcher v. Honda Motor Co., 52 F.3d
1311, 1317 (Sth Cir. 1995) (vacating award in defective de-
sign case where “there is a genuine dispute in the scientific
community as to” the reasonableness of the design); Hillrichs
v. Avco Corp., 514 N.W.2d 94, 100 (lowa 1994) (punitive
damages inappropriate where “reasonable disagreement” ex-
ists over risks and utilities of product); Jenkins v. Ohio Cas.
Ins. Co., 794 So. 2d 228, 234 (Miss. 2001) (punitive damages
barred where insurer “had an arguable or legitimate basis for
denying the claim’). In fact, this proposition is so basic to
the law of punitive damages that the Fifth Circuit has held
13
that it is “plain error”—i.e., “an error so fundamental as to
result in a miscarriage of justice”—to permit a jury to award
punitive damages where the evidence “demonstrated a good
faith dispute” as to whether the defendant’s conduct was law-
ful. Barber v. Nabors Drilling USA, Inc., 130 F.3d 702, 710
(Sth Cir. 1997).6
Accordingly, some courts not only deem compliance
with government safety standards relevant, but hold that it is
wrongdoing that it bars the imposition of punitive damages
altogether. See, e.g., Richards v. Michelin Tire Corp., 21
F.3d 1048 (llth Cir. 1994) (punitive damages prohibited
ture); W. Page Keeton et al., PROSSER AND KEETON ON THE
LAW OF TorTs § 36, at 233 n.41 (Sth ed. 1984) (“In most
Danaher, 238 U.S. 482, 490 (1915) ($6,300 civil penalty violated due
Process where defendant was “well justified in regarding [its conduct] as
pert. Such a law would violate due process because it would be unconsti.
tutionally vague. See, €.g., United States v. Powell, 423 U.S. 87, 93
(1975) (explaining why prohibition against charging an “unreasonable”
Price for sugar was unconstitutionally vague: “Engaged in a lawful! busi-
ness which Congress had in no way sought to proscribe, [the defendant]
could not have charged any price with the confidence that it would not
later be found unreasonable.”) (emphasis omitted).
Likewise, many courts hold that “[c]ompliance with in-
dustry standard and custom serves to negate conscious disre-
gard and to show that the defendant acted with a nonculpable
state of mind.” Drabik v. Stanley-Bostitch, Inc., 997 F.2d
496, 510 (8th Cir. 1993); see also Satcher, 52 F.3d at 1316-
17 (vacating punitive damage award where defendant’s de-
sign was consistent with that of other manufacturers); Alley v.
Gubser Dev. Co., 785 F.2d 849, 856 (10th Cir. 1986) (puni-
tive damages inappropriate where defendant’s conduct was
consistent with industry practice).
The decision below thus conflicts with both BMW and
the approach followed in all of these cases, and effectively
erases the reprehensibility factor from the constitutional cal-
culus in product liability cases.’
3. Review by this Court is imperative if manufacturers
are not to be subject to huge punitive damage awards every
time a jury, in hindsight, finds a product to be defective. To
say, as the court did here, that a manufacturer, to make a
profit, marketed a product that “could kill people,” simply
begs the question as to reprehensibility. That is because all
manufacturers sell products to make a profit, a/] products can
and do cause injury, and a// design decisions reflect a balance
of risks, costs and utility. See, e.g., Corrosion Proof Fittings
v. E.P.A., 947 F.2d 1201, 1223 n.23 (Sth Cir. 1991) (“over
the next 13 years, we can expect more than a dozen deaths
from ingested toothpicks”); RESTATEMENT (THIRD) OF
TORTS: PRODUCTS LIABILITY § 2 cmt. a (1998).
Many products, like automobiles, by their very nature
pose risks of serious injury and death that cannot be materi-
ally reduced without significant cost to society in the form of
increased prices, less convenience or utility, or even less
7 The court’s misunderstanding of reprehensibility in the product li-
ability context is further demonstrated by its erroneous reliance on Ford’s
subsequent design improvement as an aggravating, rather than mitigating,
factor (Pet. App. 35a) and by its finding of gross reprehensibility absent
any evidence that any individual Ford employee even acted maliciously
(id. at 32a).
15
safety in other circumstances. See generally W. Kip Viscusi,
Corporate Risk Analysis: A Reckless Act?, 52 STAN. L. REV.
547, 550 (2000). The decision as to which design strikes the
proper balance among competing interests is often complex
and rests upon a “morass of conceptual, political and practi-
cal issues on which juries, courts, commentators and legisla-
tures strongly disagree.” David G. Owen, Problems In As-
sessing Punitive Damages Against Manufacturers Of Defec-
tive Products, 49 U. CHI. L. REV. 1, 37 (1982).
Compounding the problem, jurors are confronted with
deciding whether a product creates “too much risk” in the
context of individual cases involving tragic personal injuries,
using hindsight, on the basis of a highly technical record and
arcane and often conflicting opinion testimony from engi-
neers and scientists. Stephen Breyer, BREAKING THE VICIOUS
CIRCLE: TOWARD EFFECTIVE RISK REGULATION 59 (1992);
Carroll v. Otis Elevator Co., 896 F.2d 210, 215-16 (7th Cir.
1990) (Easterbrook, J., concurring).8 The result is that prod-
uct liability cases like this one, and like Smith, pose great
danger that juries will “use their verdicts to express biases
against big businesses,” Honda Motor Co. y. Oberg, 512 U.S.
415, 431-32 (1994), even more so than in cases involving
intentional economic torts, such as the fraud claim in BMW.
Consequently, guidance from this Court on the “Tepre-
hensibility” analysis in product liability cases is especially
necessary, because such cases pose the greatest risk that the
jury will be overcome by sympathy, bias, passion and preju-
dice and, as one of the jurors here urged, disregard the law
“because saving babies [is] too important.” Pet. App. 44a.
8 See also Viscusi, 52 STAN. L. REV. at 586-90 (noting that jurors of-
ten demonstrate bias against companies that engage in risk-safety balanc-
ing); Reid Hastie et al., Looking Backward in Punitive Judgments: 20-20
Vision?, in Cass R. Sunstein et al., PUNITIVE DAMAGES. HOw JuRIES
DECIDE 96, 108 (2002) (concluding that “hindsight bias is almost inevita-
ble when jurors make punitive damages decisions”).
16
B. The Court Of Appeal’s Disregard For The
Ratio Guidepost Contradicts BMW And
Other Decisions
The court of appeal similarly eviscerated the second
BMW guidepost—the ratio of punitive to compensatory dam-
ages—on the ground that this case involves personal injury.
The court acknowledged the “great disparity between the
compensatory and punitive damages award,” and conceded
that “this factor weighs in favor of a finding of excessive-
ness,” but asserted that ordinary ratio analysis simply did not
apply because “wrongful death compensatory damages do
not fully reflect the harm to the victims.” Pet. App. 39a.
The 63:1 ratio is unconstitutional on its face. This Court
held in BMW that “exemplary damages must bear a ‘reason-
able relationship’ to compensatory damages.” 517 U.S. at
580. Although this Court has eschewed ““‘a simple mathe-
matical formula’” governing excessiveness, it has recognized
that historical penalties typically “provided for double, treble,
or quadruple damages” and that a 4:1 ratio is “close to the
line,” 517 U.S. at 581-82 (quoting Pacific Mut. Life Ins. Co.
v. Haslip, 499 U.S. 1, 23-24 (1991)). Numerous courts of
appeals have followed this Court’s reasoning in rejecting
similar ratios. See, e.g., FDIC v. Hamilton, 122 F.3d 854,
861 (10th Cir. 1997) (holding that punitive damages gener-
ally cannot exceed a 10:1 ratio, and noting that ratios in ex-
cess of 4:1 will rarely be upheld); Patterson v. P.H.P.
Healthcare Corp., 90 F.3d 927, 943-44 (Sth Cir. 1996) (hold-
ing a 6.5:1 ratio excessive).
In fact, in product liability cases, where juries frequently
award high compensatory damages that far outstrip any
“gain” from the alleged misconduct, see infra pp. 22-23, and
where the harm caused by the defective design is readily ap-
parent and thus unlikely to escape detection, even a 1:1 ratio
will often be grossly excessive because the compensatory
award itself is sufficient to deter the misconduct. See, e.g.,
Memphis Cmty. Sch. Dist. v. siachura, 477 U.S. 299, 307
(1986) (“Deterrence ... operates through the mechanism of
17
damages that are compensatory.”) (emphasis omitted); Smith
v. Wade, 461 U.S. 30, 94 ( 1983) (O’Connor, J., dissenting)
(“awards of compensatory damages and attorney’s fees al-
ready provide significant deterrence”).
This Court recognized no “wrongful death” exception to
the ratio guidepost in BMW, and there is no basis for such an
approach. In Letz v. Turbomeca Engine Corp., 975 S.W.2d
155, 179 (Mo. Ct. App. 1998), for example, the court held
that a 27:1 1atio was unconstitutionally excessive in a design
defect/wrongful death case when compensatory damages
were “large, up to $2.5 million.” Here too, plaintiffs received
a large $4.6 million compensatory award, and BMW’s ratio
analysis is fully applicabie.
This Court recognized in BMW that “perhaps [the] most
commonly cited indicium of an unreasonable or excessive
punitive damages award is its ratio to the actual harm in-
flicted on the plaintiff.” 517 U.S. at 580. The court of ap-
peal’s approach effectively nullifies in wrongful death cases
a long-recognized, objective and readily ascertainable indica-
tor of excessiveness. This Court’s review is warranted.
C. The Court Of Appeal’s Holding That The
Comparable Penalties Guidepost Is
“Inapplicable” Contradicts BMW And
Other Decisions
The court of appeal improperly rejected the comparabie
penalties guidepost by focusing, once again, on the presence
of personal injuries. The court likened Ford’s design of the
Bronco roof to “inv: juntary manslaughter,” which in Cali-
fornia carries a maximum fine of $10,000 against a corpora-
tion, but pronounced the comparable penalties guidepost “in-
applicable” because such a comparison “is inappropriate
wien the malicious conduct could result in substantial im-
prisonment if committed by an individual instead of a corpo-
ration.” Pet. App. 39a. By declaring this guidepost simply
“inapplicable,” the court eliminated from consideration both
the most analogous penalty under state law and a directly ap-
plicable federal civil penalty that could have been imposed
18
for a design defect. Both at the time of the conduct at issue
and at the time of trial, that civil penalty was $1,000 per ve-
hicle, up to a maximum of $800,000 for a defective fleet of
vehicles. See 49 U.S.C. § 30165(a).
The court’s reasoning cannot be reconciled with BMW.
In BMW itself, the conduct in question—repainting new ve-
hicles without telling consumers—was alleged to have con-
stituted fraud, an offense for which an individual could be
sentenced to jai! Given that most torts that furnish a predi-
cate for punitive damages—e.g., fraud, battery, wrongful
death—could also theoretically subject an individual tortfea-
sor to imprisonment, the court of appeal’s holding would
render the “comparable penalties” guidepost a nullity in the
vast majority of punitive damage cases. Moreover, legisla-
tures know full well that corporations cannot be imprisoned
when they establish the maximum fines governing corporate
conduct. See Granite Constr. Co. v. Superior Court, 149
Cal. App. 3d 465 (1983) (discussing California’s involuntary
manslaughter statute).
Other courts have nonetheless taken the same approach
as the court below. For example, in Bielicki v. Terminix In-
ternational Co., the Tenth Circuit held that although a “puni-
tive damages award [may be] exceptional when compared
only to the applicable fines, the authorization of imprison-
ment in the criminal context can justify a higher award.” 225
F.3d 1159, 1166 (10th Cir. 2000); see also Mosing v. Domas,
830 So. 2d 967, 982 (La. 2002) (“While the possible criminal
monetary penalty is significantly less than the exemplary
damage award in this case, the fact that the offense carries a
term of imprisonment makes the difference in monetary pen-
alties less relevant.”); Campbell v. State Farm Mut. Auto. Ins.
Co., No. 981564, 2001 WL 1246676, at *17 (Utah Oct. 19,
2001) (“Possible imprisonment for [the challenged] conduct
is a strong indication that [it] warrants high punitive dam- ,
ages.”), cert. granted, 70 U.S.L.W. 3580 (U.S. June 3, 2002)
(No. 01-1289); In re Exxon Valdez, No. A89-0095-CV, 2002 |
WL 31761256, at *18 (D. Alaska Dec. 9, 2002). _
OR Re eg a et ee See eee
Pe ee ae Pee Se eee
——————e
19
These decisions squarely conflict with rulings from the
many courts that have looked to comparable fines even when
the challenged conduct could have resulted in imprisonment.
For example, the Ninth Circuit has held that, under BMW,
“{c]riminal fines are particularly informative because puni-
tive damages are quasi-criminal.” Jn re Exxon Valdez, 270
F.3d 1215, 1245 (9th Cir. 2001); see also Ace v. Aetna Life
Ins. Co., 139 F.3d 1241, 1248-49 & n.23 (9th Cir. 1998)
($16.5 million punitive damage award is excessive where it
“far exceeds” Alaska’s general criminal fine for “scheming to
defraud”); Lee vy. Edwards, 101 F.3d 805, 811-12 (2d Cir.
1996) (considering general criminal fine for “making of a
false statement”). Cf United States v. Bajakajian, 524 U.S.
321, 334-35 (1998) (applying “comparable penalty” analysis
under Excessive Fines Clause where conduct gave rise to im-
prisonment). The need for review is particularly compelling
here, given the conflicts between the state and federal appel-
late courts in California.9
D. The Court Of Appeal’s Use Of Ford’s
Overall “Wealth” To Trump The BMW
Guideposts Contradicts BMW And Other
Decisions
1. The relevance, if any, of a defendant’s wealth under
BMW is a question that has confused and divided the lower
9 The court of appeal also rejected the relevance of prior awards af-
firmed in California when the conduct occurred, once again contradicting
the holdings of other courts. See, e.g., Davis v. Rennie, 264 F.3d 86, 117
(1st Cir. 2001), cert. denied, 122 S. Ct. 1909 (2002); Kimzey v. Wal-Mart
Stores, Inc., 107 F.3d 568, 577 (8th Cir. 1997); Patterson, 90 F.3d at 943.
The $290 million punitive damage verdict here is /,000 times larger than
any other award in a product liability case ever affirmed in California
(and U.S.) history at the time of the Bronco’s design in the mid-1970s.
See Browning-Ferris Indus. of Vermont, Inc. v. Kelco Disposal, Inc., 492
U.S. 257, 282 (1989) (O’Connor, J., concurring in part and dissenting in
part) (“As recently as a decade ago, the largest award of punitive dam-
ages affirmed by an appellate court in a products liability case was
$250,000.”) (citing David G. Owen, Punitive Damages in Products Li-
ability Litigation, 74 MICH. L. REV. 1257, 1329-32 (1976)).
20
courts and warrants this Court’s review. In BMW, this Court
rejected the claim that a defendant’s wealth could justify a
heightened penalty: “The fact that [a defendant] is a large
corporation rather than an impecunious individual does not
diminish its entitlement to fair notice of the demands that the
several States impose on the conduct of its business. Indeed,
[a corporation’s] status as an active participant in the national
economy implicates the federal interest in preventing indi-
vidual States from imposing undue burdens on interstate
commerce.” 517 U.S. at 585.
The court of appeal, however, ultimately upheld the
award in this case not on the basis of any of the BMW guide-
posts but by reference to Ford’s overall wealth. The court
justified its disregard of the BMW guideposts by holding that
Ford’s purported wealth provided “adequate notice of the po-
tential for the punitive damages awarded in this case.” Pet.
App. 40a. According to the court, Ford “is a huge company
with enormous monetary resources” and it should have
known that “California regards it as necessary to impose
penalties related to the wealth of the defendant in order to
achieve the goals of punishment and deterrence.” Jd. at 36a,
40a. Numerous other courts follow this approach.!0
10 See, e.g., State Farm, 2001 WL 1246676, at *8 (reinstating punitive
award in part because “State Farm’s wealth is enormous” and “the jury’s
punitive damage award of $145 million is only 0.26 of one percent of
State Farm’s wealth”); Williams v. Philip Morris, Inc., 48 P.3d 824, 841
(Or. Ct. App. 2002) (holding that “the defendant’s wealth is an important
consideration” in determining excessiveness, and reinstating a $79.5 mil-
lion punitive damage award on the ground that the award “is equal to a
little more than two and a half weeks’ profit”); Johansen v. Combustion
Eng’g, Inc., 170 F.3d 1320, 1338-39 (11th Cir. 1999) (upholding award
under BMW and noting that “[defendant] is a large and extremely wealthy
international corporation”); Ammerman v. Ford Motor Co., 705 N.E.2d
539, 563 (Ind. Ct. App. 1999) (“Ford knew or should have known” of the
potential for a $13.8 million punitive damage award “given that Ford’s
economic wealth ... is a factor to be considered in assessing punitive
damages”); Wilson v. IBP, Inc., 558 N.W.2d 132, 148 (Iowa 1996) (up-
holding punitive damage award against a BMW challenge on the basis of
21
The court of appeal’s holding that Ford “has been on no-
tice since at least 1971 that a week’s profits amounting to
about 1 percent of net wealth are not excessive punitive dam-
ages,” Pet. App. 40a, directly conflicts with Continental
Trend Resources, Inc. v. OXY USA, Inc., in which the Tenth
Circuit concluded that ‘a large punitive damage award
against a large corporate defendant may not be upheld on the
basis that it is only one percent of its net worth or a week’s
corporate profits.” 101 F.3d 634, 641 (10th Cir. 1996).
Many courts have similarly held that a corporate defendant’s
wealth cannot trump the BMW standards. See, e.g., Leather-
man Tool Group, Inc. vy. Cooper Indus., Inc., 285 F.3d 1146,
1152 (9th Cir. 2002) (on remand) (holding that “in view of
the [BMW] factors, we cannot conclude that this considera-
tion [of defendant’s wealth] renders the amount awarded by
the jury constitutional”); Bowden vy. Caldor, Inc., 710 A.2d
267, 279 (Md. 1998) (“merely because a defendant may be
able to pay a very large award of punitive damages .. . does
not justify an award which is disproportionate to the hei-
nousness of the defendant’s conduct” ; see also Pulla y.
Amoco Oil Co., 72 F.3d 648, 659 n.16 (8th Cir. 1995) (retired
Justice White, sitting by designation) (“a defendant’s wealth
cannot alone justify a large punitive damage award”).
This Court should grant certiorari and reject this ap-
proach as nothing less than an end-run around BMW. The
court of appeal’s ruling demolishes the concept of due proc-
ess by automatically deeming large corporations to have had
“fair notice” of virtually any monetary punishment that a jury
conceivably could impose. The implicit premise—that if you
have money, you are deemed to be on notice that a jury could
impose a huge punishment on you—leaves wealthy defen-
dants bereft of meaningful constitutional protection. Even
accepting the court of appeal’s faulty premise that wealth is a
[Footnote continued from previous page]
the defendant’s “net sales” and “net worth,” and asserting that “{ojne of
the factors approved by the Supreme Court .. . for assessing the imposi-
tion of punitive damages is the financial Position of the defendant”).
22
proxy for notice, it is plainly incorrect to say that Ford was
on notice in the 1970s of what its net worth would be at the
turn of the century, and thus had fair notice of the penalty
that could be imposed retroactively over two decades later.
2. In analyzing the excessiveness of a punitive damage
award against a corporation, the relevant financial informa-
tion, if any, is the monetary “gain,” within the State, attribut-
able to the defendant’s wrongful conduct. Scholars uni-
formly recognize that this figure, unlike overall wealth, is
rationally related to the societal objective of deterrence where
the defendant is a corporation. See, e.g., 2 American Law
Institute, Enterprise Responsibility for Personal Injury: Re-
porter’s Study 254-55 (1991) (“In determining the size of the
award that is sufficient for [deterrence], what is relevant is
not the defendant’s overall wealth, but rather profit it realized
from the particular tortious activity in question.”). Indeed,
common sense suggests that a profit-motivated entity is not
likely to engage in conduct it knows will not be profitable.
And as long as any one State does not attempt to deprive the
defendant of gain attributable to conduct in other States, there
are no extraterritoriality concerns.!!
In Cooper Industries, the Court expressly recognized
that a punitive damages award must be tethered to the profits
generated by the misconduct at issue, not the defendant’s en-
tire profits on the sale of a product. In that case, the wrong-
ful conduct was using a photograph of a competitor’s product
to market the defendant’s similar product. The district court,
in affirming a $4.5 million punitive award, might have relied
upon the plaintiffs’ calculation that the defendant anticipated
“gross profits of approximately $3 million” from its sale of
its product in the first five years. 532 U.S. at 442. But, as
this Court recognized, that was not the proper analysis, be-
cause “it would be unrealistic to assume that all of [the de-
fendant’s] sales ... would have been attributable to its mis-
11 Due process might, however, prohibit a State from permitting multi-
ple plaintiff$ within the State to each recover all of the defendant’s state-
wide gain from the wrongful conduct.
23
conduct.” Jd. In other words, the defendant’s “wrongdoing
surely could not be treated as the principal cause of [the de-
fendant’s] entire sales volume for a 5-year period.” Jd.
Here, the court of appeal relied on Ford’s total profits on
sales of 1978-1979 Broncos, and reinstated a fine that de-
prives Ford of nearly triple that amount. Pet. App. 36a. But
there is no evidence that Ford’s allegedly defective roof de-
Sign was the principal cause of its entire sales volume of the
1978 and 1979 Broncos. Instead, the record reflects that
Ford’s total “gain” from choosing the design it did over the
alternative preferred (in hindsight) by plaintiffs’ experts
amounts to less than $1.8 million nationwide, and far less in
California. See Exh. 133.10 (Ford sold 72,700 1978 Broncos
and 75,800 1979 Broncos); RT 9532 (cost of design change
plaintiffs advocated is $10 to $12 per unit). The court of ap-
peal’s decision, by relying on Ford’s overall wealth and prof-
its, contradicts Cooper Industries and merits review.
Il. REVIEW IS WARRANTED TO CLARIFY
THE CONSTITUTIONAL LIMITS ON ONE
STATE’S POWER TO PUNISH BASED ON
OUT-OF-STATE SALES AND PROFITS
As shown above, the court of appeal’s reliance on Ford’s
overall profits is contrary to Cooper Industries. The court’s
reliance on Ford’s nationwide profits defies the federalism,
due process and Commerce Clause limits recognized in BMW
and directly conflicts with the Ninth Circuit’s recent decision
in White v. Ford Motor Co., 312 F.3d 998 (9th Cir. 2002).
In BMW, this Court explained that “each State has ample
power to protect its own consumers, [and] none may use the
punitive damages deterrent as a means of imposing its regu-
latory policies on the entire Nation.” 517 U.S. at 585. To
safeguard other States’ autonomy, a punishment therefore
“must be analyzed in the light of [in-state conduct], with con-
sideration given only to the interests of [the State’s] consum-
ers, rather than those of the entire Nation.” Jd. at 574.
24
The court of appeal held that it could impose extraterri-
torial punishment because it concluded that, “[u]nlike [the
conduct in] BMW,” Ford’s conduct was “unlawful in all
states.” Pet. App. 38a-39a & n.3. But it is wrong to assume
that product liability and punitive damage laws are uniform.
These laws vary dramatically. Cf White, 312 F.3d at 1017-
19 (noting differences in failure-to-warn and punitive dam-
age laws). Accordingly, the court lacked any basis for con-
cluding that the Bronco’s roof design would be deemed de-
fective and punishable in any other State, and in fact that de-
sign has never before been found defective since its introduc-
tion nearly a quarter-century ago.
The decision below directly conflicts with the Ninth Cir-
cuit’s recent ruling in White, creating a split between Califor-
nia’s state and federal courts, and worsening an existing con-
flict throughout the country. Some courts, like the court be-
low, have rejected the argument that BMW limits their ability
to impose punitive damages based on a defendant’s out-of-
state conduct or profits. For example, in Smith v. Ingersoll-
Rand Co., the-Tenth Circuit approved such punishment be-
cause “the manufacture of defective products is not a lawful
activity in any of the jurisdictions where the other incidents
occurred.” 214 F.3d 1235, 1253 (10th Cir. 2000); Owens-
Corning Fiberglas Corp. v. Ballard, 739 So. 2d 603, 606
(Fla. Dist. Ct. App. 1998) (“where the defendant’s conduct is
considered tortious in all 50 states ... the same due process
concerns implicated in BMW do not arise”).
The Ninth Circuit rejected this approach in White, where
the plaintiffs’ counsel made arguments identical to those ad-
vanced by plaintiffs’ counsel here. In White, the plaintiffs
alleged a design defect in a different Ford vehicle and urged
the Nevada jury to award punitive damages “that would pun-
ish Ford for its conduct toward consumers in all states.” 312
F.3d at 1015. Just as in this case, “[t]he evidence focused on
the number of vehicles Ford sold nationally.” Jd. Indeed,
“(t]he entire thrust of [the plaintiffs’] argument was that this
Nevada jury now should vindicate the interests of all Ford
truck owners everywhere with a verdict that would make the
25
front page of every newspaper in the country” (id).—
precisely the same argument plaintiffs’ counsel made here.
See RT 9589 (“You’ve got to say a number that gets on the
front page of every newspaper in the country.”),12
The Ninth Circuit, however, reversed the punitive dam-
age award in White, holding that under BMW, “we may not,
as a matter of federal law, permit one state to punish ... na-
tionwide manufacturers for their conduct—actual or hypo-
thetical—in other states.” 312 F.3d at 1014 n.62. The court
recognized that “BMW imposed a territorial limitation on pu-
nitive damages in the interest of federalism,” and stated that
allowing the jury “to measure damages by [the alleged] harm
to the whole country” was a “substantive error .. . of federal
constitutional law.” Jd. at 1013, 1015-16 & n.69. See also
Sheldon v. Vermonty, No. 98-2277, 2002 WL 31498908, at
*8 (D. Kan. Nov. 8, 2002) (out-of-state injuries irrelevant to
excessiveness analysis because “there was no testimony that
the people were either from Kansas or harmed in Kansas”).
Permitting one State to impose punishment based on
. profits from sales in other States subjects the defendant to
multiple and duplicative penalties on the basis of the same
challenged design feature, thus negating all prior and subse-
quent exonerations. Moreover, this approach invites lay ju-
nes to act as national safety regulators. Here, plaintiffs’
counsel explicitly urged the jury to “educate NHTSA,” over-
tule the conclusions of the government’s experts, and use its
punitive damage verdict to force Ford to “[t]ake this car out
12 See also RT 9588 (urging verdict that would generate headlines on
“the front page of U.S.A. Today ... the front page of the New York
Times ... the front page of the Wall Street Journal. We’ve got some-
body’s attention. We’ve got them talking about it in the boardrooms.”);
RT 9588 (“Billion dollars, why? . . . Number one, we get Ford’s atten-
tion, get the world’s attention and we get those people’s attention who are
still driving that car. There’s 50 to 70 to 80,000 1978-79 Broncos in peo-
ple’s garages with kids right now.... Someplace somewhere some
mother is taking their kid and strapping them in the back of a 1978
Bronco today.”).
26
of its existence . . . . [and] stop that mother in Montana from
putting her children in the back of that car.” RT 9591, 9999.
The Smith case also vividly illustrates the problem. In
Smith, the Kentucky courts actually permitted a Kentucky
jury to punish Ford for the sale of vehicles in other States in
which juries had rejected the very same claim of defect.
Ford’s Smith Pet. at 17. This case is different from Smith
only because Ford has had fewer opportunities to litigate the
issue, and therefore fewer opportunities for defense verdicts.
As plaintiffs’ counsel conceded in closing argument, there
was no evidence that Ford, in the quarter-century since the
1978 Bronco was introduced, had ever been sued for alleged
defects in the 1978 Bronco’s roof.
This Court’s review is necessary to make clear that the
territorial limits on punitive damage awards prevent one jury
in a single State from effectively regulating vehicle design on
a national scale and displacing and disrupting federal safety
regulation and the policies of other States.
Ill. REVIEW IS WARRANTED TO DETERMINE
HOW COOPER INDUSTRIES’ DE NOVO
STANDARD APPLIES TO REVIEW OF A
JURY’S VERDICT
In Cooper Industries, this Court held that appellate
courts must review a trial court’s ruling on a BMW exces-
siveness challenge under a de novo standard. 532 US. at
431. The Court also indicated that a reviewing court must
generally respect the jury’s “specific findings of fact,” id. at
440 n.12, but it did not elaborate on this point. Although this
Court’s decisions in BMW, Cooper Industries and other cases
implicitly reject the highly deferential approach followed by
the court here, the meaning and application of de novo re-
view has divided the lower courts and warrants review.
1. The decision below implicates a direct conflict among
the lower courts. The court first reviewed the award under
California law “in the light most favorable to the verdicts.”
Pet. App. 35a. While recognizing that the jury’s award was
27
“somewhat arbitrary” and a “huge windfall,” the court em-
phasized that (for purposes of review under California law)
the amount was “‘in the discretion of the jury” and it rein-
stated the $290 million verdict without considering whether
any lesser amount would be sufficient to vindicate Califor-
nia’s interests. Jd. at 33a, 36a-37a. The court then incorpo-
_ Tated this same standard in rejecting Ford’s BMW challenge,
Stating that “/aJs we have already discussed, defendant’s
conduct was grossly reprehensible.” Pet. App. 38a (emphasis
added). As a result, the court reviewed “the evidence in the
light most favorable to the prevailing party, giving it the
benefit of every reasonable inference and resolving all con-
flicts in its favor,” Pet. App. 20a-21a (citation Omitted), and
thus deferring to presumed factual “ dings” that the jury
never made and was not required to make.13
and reinstating $79.5 million punitive damages award on ba-
sis of what “[t]he jury could find from the evidence”).
But other courts have rejected this approach. For exam-
ple, the New Mexico Supreme Court has expressly recog-
nized—in sharp conflict with the court of appeal in this
case—that the de novo review required by Cooper Industries
is different than the substantial evidence standard typically
employed by state courts. Under the State-law standard,
“evidence is viewed in the light most favorable to the prevail-
13 For example, the court declared that Ford’s “malice” was demon-
strated by “the total absence of preproduction testing” of the Bronco. Pet.
App. 29a. Not only was this “fact” never found by the jury—which ren-
dered findings only as to the ultimate questions of defect and malice—but
it directly contradicts the record, which establishes that Ford ran its entire
“standard menu” of tests for light trucks and utility vehicles “prior to pro-
duction.” RT 6099, 6110.
28
ing party and all inferences arising from the factual findings
of a trial court are indulged in.” Aken v. Plains Elec. Gen-
eration & Transmission Coop., Inc., 49 P.3d 662, 668 (N.M.
2002). In contrast, the Aken court held, under the de novo
review required by Cooper Industries, “we are to make an
independent assessment of the record,” and “[a]nytime the
record clearly shows that the jury should not have concluded
as it did, the appellate court may, exercising its de novo
power, set aside the award.” Jd. at 668, 669; see also, e.g.,
Exxon Valdez, 270 F.3d at 1239 (“a hands-off appellate def-
erence to juries, typical of other kinds of cases and issues, is
unconstitutional for punitive damages awards”); Leatherman
Tool Group, Inc., 285 F.3d at 1150 (declining to “speculate”
as to jury’s unstated motivations and _ reviewing
reprehensibility independently). Cf Honda, 512 U.S. at 429
(review limited to a “no substantial evidence” test “provides
no assurance that those whose conduct is sanctionable by
punitive damages are not subjected to punitive damages of
arbitrary amounts’). Review by this Court is warranted to
resolve this conflict and confusion.
2. Review also is warranted because the decision below
contradicts BMW, Cooper Industries, and this Court’s deci-
sions in analogous areas applying de novo review. When this
Court reviewed the punitive damage award in BMW, it did
not, for example, simply assume (consistent with the large
punitive verdict) that the jury had found that BMW had no
reasonable basis for believing that its disclosures were ade-
quate; on the contrary, this Court reached its own independ-
ent conclusion on this issue, holding that state disclosure stat-
utes outside of Alabama gave BMW reasonable grounds for
believing that it had met its disclosure obligations in Ala-
bama. 517 U.S. at 579-80. Thus, the Court deferred only to
findings of fact that the jury must have made (i.e., that BMW
suppressed a material fact), while making its own independ-
ent determination on a critical, fact-dependent issue on which
the jury did not necessarily make any finding at all (whether
BMW had reasonable grounds to conclude its conduct was
lawful). In Cooper Industries, when the Court stated that a
a, cease
reviewing court should respect “spécific findings of fact”
made by the jury, 532 U.S. at 440 n.12, it specifically cited
these precise pages of BMW. 5 17 U.S. at 579-80,
The Court followed the Same basic approach to inde-
pendent appellate review in considering a First Amendment
challenge to a state libe] verdict in Harte-Hanks Communica-
tions, Inc. v. Connaughton, 491 U.S. 657 (1989). The Court
held that de novo review means that, “[ijn determining
whether the constitutional Standard has been Satisfied, the
reviewing court must consider the factual record in full” and
“examine for [itself] the statements in issue and the circum-
Stances under which they were made.” 491 U.S. at 688 (cita-
tion omitted). For Purposes of the constitutional determina-
tion, the Court took into account not the facts the jury “may
have” found, but only those facts the jury “must have” found,
“alongside the undisputed evidence.” Jd. at 690-91.
3. Such review is especially crucial to protect against
“lawless, biased, or arbitrary verdict[s],” Honda, 512 U.S. at
433, in a system that, like California’s, provides no meaning-
ful guidance to juries in calculating punitive damages. “Jury
instructions typically leave the jury with wide discretion in
choosing amounts.” Jd. at 432. In most States, like Califor-
nia, jurors are told “little more than . . . to do what they think
is best” and are “left largely to themselves in making this im-
portant, and potentially devastating, decision.” Browning-
Ferris Indus. of Vermont, Inc. v. Kelco Disposal, Inc., 492
U.S. 257, 281 (1989) (Brennan, J., concurring).!4 Without
defendant’s financial condition, and that there are “no fixed standards as
to the amount... . of punitive damages”). Thus, in California, as one
court has explained, “[t]he channeling of just the correct quantum of bile
to reach the correct level of Punitive damages is, to put it mildly, an un-
scientific process complicated by personality differences. . . . And, we
have concluded, that is Properly so.” Deviin y. Kearney Mesa
AMC/Jeep/Renault, Inc., 155 Cal. App. 3d 381, 388 (1984).
30
clear and objective standards restricting the jury’s discretion,
and in the absence of specific findings of fact, it is rank
speculation to assume that the jury premised its fine on cer-
tain findings. Here, Ford requested detailed instructions on
the amount of punitive damages, but they were rejected. See
Pet. App. 49a-53a (rejected instructions), 54a (actual instruc-
tions). As Justice Breyer explained in BMW, “where iegal
standards offer virtually no constraint, . . . this lack of con-
straining standards warrants this Court’s detailed examina-
tion of the award.” 517 U.S. at 596 (Breyer, J., concur-
ring).!5
This case compellingly demonstrates the need for “thor-
ough, independent review,” Cooper Indus., 532 U.S. at 441,
of punitive damage verdicts. “A verdict returned by a biased
or prejudiced jury no doubt violates due process.” Haslip,
499 US. at 41 (Kennedy, J., concurring). But here, notwith-
standing the trial court’s findings that the jury was biased and
prejudiced, the court of appeal simply assumed that that same
jury had decided every fact against Ford, and that those
imagined “findings” were written in stone. The court of ap-
peal then aggravated its error by relying on its assumption
that the-trial court “impliedly” endorsed those nonexistent
jury findings, even though that same trial court had over-
turned the jury’s verdict as “fundamentally suspect.” Pet.
App. 37a, 45a. This form of appellate review is irrational
and unconstitutional, and warrants this Court’s review.
CONCLUSION
The Court should grant certiorari and set this case for
plenary consideration or, in the alternative, hold this petition
= pending its decision in State Farm. Respectfully submitted.
15 “[Tyhe level of punitive damages is not really a ‘fact’ tried by the
jury.” Cooper Indus., 532 U.S. at 437 (quotation omitted). Thus, the
court below had no more reason to defer to the “huge” and “somewhat
arbitrary” amount chosen by the jury than to the hypothetical factual find-
ings the jury never made.
icieaanieiemiataiaiaaetaiitaaiieaaaiaitade a
JOHN M. THOMAS
MICHAEL J. O’ REILLY
FORD MOTOR COMPANY
Parklane Towers West
Three Parklane Doutavert
Suite 300
Dearbom, MI 48126-2568
(313) 337-2515
THEODORE J. BOUTROUS, JR.
Counsel of Record
THOMAS G. HUNGAR
MIGUEL A. ESTRADA
THOMAS H. DUPREE, JR.
WILLIAM E. THOMSON
GIBSON, DUNN & CRUTCHER LLP
1050 Connecticut Avenue, NW
Washington, DC 20036-5306
(202) 955-8500
WALTER DELLINGER
BRIAN D. BOYLE
JONATHAN D. HACKER
MATTHEW M. SHoRS
O’MELVENY & MYERS LIP
555 13th Street, N.W.
Washington, D.C. 20004
(202) 383-5300
Counsel for Petitioner
January 21, 2003
la
APPENDIX A
IN THE COURT OF APPEAL OF THE
STATE OF CALIFORNIA
FIFTH APPELLATE DISTRICT
JUAN RAMON ROMO,
individually and as Administrator,
etc., et al., Plaintiffs and Appellants,
¥.
FORD MOTOR COMPANY,
Defendant and Appellant.
No. F034241
(Super. Ct. No. 8231 8)
Court of Appeal, Fifth District, California
June 28, 2002
APPEAL from a judgment of the Superior Court of
Stanislaus County. Roger M. Beauchesne, J udge.
Counsel:
Law Offices of Joseph W. Carcione, Jr., Joseph W. Car-
cione, Jr., Gerald K. Okimoto and Gary W. Dolinski for
Plaintiff and Appellant Juan Ramon Romo.
Drivon & Tabak and Lawrence E. Drivon for Plaintiffs
and Appellants Maria Irene Romo and Evangelina Romo.
Snell & Willmer, Douglas W. Seitz, Richard A. Derevan,
Barry C. Toone; Gibson, Dunn & Crutcher, Theodore J.
Boutrous, Jr., Mark A. Perry, Tanya M. Acker, William E.
Thompson; Dryden, Margoles, Schimaneck, Kelly & Wait
and Frank P. Kelly III for Defendant and Appellant.
2a
VARTABEDIAN, Acting P.J.
This case involves an appeal and a cross appeal after the
trial court granted in part and denied in part defendant Ford
Motor Company’s posttrial motions. The court denied de-
fendant’s motion for new trial on liability and compensatory
damages; denied defendant’s motion to reduce punitive dam-
ages as excessive; and denied defendant’s motion for judg-
ment notwithstanding the verdict (INOV). From these orders
defendant appeals. The court granted defendant’s motion for
new trial on punitive damages grounded on juror misconduct;
from this order plaintiffs appeal.
We will affirm the judgment for compensatory damages
as modified by the trial court. We will affirm the trial court’s
denial of the JNOV motion. We will conclude the punitive
damages award was not excessive. However, we will con-
clude the trial court erred in granting the new tnal motion on
punitive damages grounded on juror misconduct.
FACTS AND PROCEDURAL HISTORY
Ramon Romo bought a used 1978 Ford Bronco in 1992.
On June 20, 1993, Ramon’s son, plaintiff Juan Ramon Romo,
was driving the Bronco; other members of the family—
Ramon, his wife, Salustia, and his children Ramiro, Evange-
lina, and Maria—were passengers. Juan and Ramon were
seated in the front, wearing seat belts. Salustia and Ramiro
were in the back seat, also belted. Evangelina and Maria
were asleep in the rear of the Bronco, unbelted.
Juan was involved in an accident and the Bronco rolled
over several times. The 1978 Bronco had a steel roof over
the front one-third of the passenger compartment. The rear
two-thirds was made of fiberglass. As the Bronco rolled, the
steel roof collapsed, killing Ramon Romo. The fiberglass
roof broke loose, striking and killing Salustia and Ramiro
Romo. Evangelina and Maria Romo-were thrown from the
car and injured. Juan remained in the car and was injured.
3a
Defendant did not request a bifurcated trial on the amount
of punitive damages. (See Civ. Code, § 3295, subd. (d).)
The unified trial lasted from March 1999 through July
1999. At the conclusion of trial, the matter was submitted to
the jury for deliberation on all issues. The jury deliberated
for a week and returned a verdict for plaintiffs and against
defendant. The jury awarded $6,226,793 in compensatory
damages and $290 million in punitive damages. In accor-
dance with the jury’s allocation of fault (the jury concluded
plaintiff Juan Romo was 10 percent at fault, defendant was
78 percent at fault, and the driver of a second vehicle was 12
percent at fault) and based on certain technical issues con-
cerning damages awarded to the estates, the court reduced the
conduct, which we will discuss in more detail] below, the
court granted defendant’s motion for new trial on the issue of
The parties filed timely notices of appeal.
DISCUSSION
I. Plaintiffs’ Cross-appeal of Juror Misconduct
Determination
Plaintiffs have appealed, primarily, from the court’s order
granting defendant’s motion for new trial on punitive dam-
ages. Second, plaintiffs contend the “jury’s punitive damage
award was not excessive as a matter of California or Federal
law.” The trial court did not grant the new trial based on ex-
cessiveness of damages; instead, it denied the new trial mo-
tion “on all other grounds specified” in defendant’s notice of
4a
motion for new trial. Plaintiffs, therefore, were the prevail-
ing parties on this issue. We address the issue of excessive-
ness of damages only in defendant’s appeal, in part II of this
opinion. In part I, we address the order for new trial on puni-
tive damages based on the trial court’s finding of juror mis-
conduct.
A. Standard of Review
As recently reiterated by the Supreme Court, an order
granting a new trial under Code of Civil Procedure 657
““must be sustained on appeal unless the opposing party
demonstrates that no reasonable finder of fact could have
found for the movant on [the trial court’s] theory.’ [Cita-
tion.]” (Lane v. Hughes Aircraft Co. (2000) 22 Cal. 4th
405, 409.) “The reason for this deference ‘is that the trial
court, in ruling on [a new trial] motion, sits ... as an inde-
pendent trier of fact.’ [Citation.] Therefore, the trial court’s
factual determinations, reflected in its decision to grant the
new trial, are entitled to the same deference that an appellate
court would ordinarily accord a jury’s factual determina-
tions.” (/d. at p. 412.)
In the context of an order granting or denying a new trial
motion on the basis the verdict is “contrary to law or evi-
dence” (Pen. Code, § 1181, subd. 6), the trial court has broad
discretion “and there is a strong presumption that it properly
exercised that discretion.” (People v. Davis (1995) 10 Cal.
4th 463, 524.)
When the trial court’s order is based on a finding of juror
misconduct, however, our deference to the trial court’s order
is more limited. “We accept the trial court’s credibility de-
terminations and findings on questions of historical fact if
supported by substantial evidence. ([Citations.] Whether
prejudice arose from juror misconduct, however, is a mixed
question of iaw and fact subject to an appellate court’s inde-
pendent determination.” (People v. Nesler (1997) 16 Cal.
4th 561, 582.)
j
;
Sa
Defendant contends the Standard of review of the order
granting a new trial is abuse of discretion. Quoting Mal-
kasian v. Irwin (1964) 61 Cal. 2d 738, 748, defendant con-
tends, “A trial court’s decision granting (as opposed to deny-
ing) a new trial on the ground of jury misconduct may be re-
versed ‘only in rare instances and on very strong grounds.’”
Reliance by defendant upon Malkasian is misplaced:
that case involved misconduct of counsel during the trial.
(Malkasian y. Irwin, supra, 61 Cal. 2d at pp. 745-747.) In
evaluating the misconduct of counsel committed in the trial
court’s presence, that court certainly is in a better position
than the appellate court to determine the net effect of such
misconduct in the overal] context of the trial. By contrast, in
the case of juror misconduct occurring outside the presence
of the trial court, the Supreme Court specifically has in-
structed that the reviewing court must independently apply an
objective standard to determine whether the misconduct was
prejudicial. (Jn re Hamilton (1999) 20 Cal. 4th 273, 296.)
Likewise, defendant’s reliance on Lane y. Hughes Air-
craft Co., supra, 22 Cal. 4th 405 is misplaced. In that case,
the court considered the Standard of review for a grant of new
trial based on excessive damages and insufficiency of the
evidence. (Id. at p. 412.) In such a case, the trial court sits as
an independent trier of fact and, as in the context of Mal-
kasian vy. Irwin, supra, 61 Cal. 2d 738, the trial court “sits
much closer to the evidence, .. . watching and hearing as the
evidence unfolds. The trial court, therefore, is in the best po- |
sition to assess the reliability of a jury’s verdict and, to this |
end, the Legislature has granted trial courts broad discretion |
to order new trials.” (Lane vy, Hughes Aircraft Co., supra,
22 Cal. 4th at p. 412.)
The abuse of discretion test is inapplicable in cases of ju-
ror misconduct and, in light of the more recent Supreme
Court statements on this point (see also People v. Cromer
(2001) 24 Cal. 4th 889, 901), we must disagree with the
statement in Bell v. State of California (1998) 63 Cal. App.
| 4th 919, 930-931, to the contrary. We now turn to the evi-
| dence upon which we exercise our independent review.
B. The Juror Declarations
1. The Television Program
Both parties submitted juror declarations in connection
with the posttrial motions. The declarations established, and
the trial court found, that one juror, Ms. S., brought to the
attention of the remaining jurors a segment of the television
program 60 Minutes IJ dealing with fires in older Ford Mus-
tangs. Uncontested portions of the declarations established
that S.’s discussion of the television program occurred during
the jury’s discussion of the issue of malice, after all issues
concerning liability and compensatory damages had been re-
solved in plaintiffs’ favor by unanimous vote of the jury.
Uncontested portions of the declarations established that
S. reported to the jury that in the course of the program for-
mer Ford president Lee Iaccoca stated that Ford had a policy
of contesting or settling lawsuits involving the Mustangs be-
cause it was less costly than recalling the vehicles and repair-
ing them. Uncontested portions of the declarations estab-
lished that S. mentioned the program on one occasion and
that her discussion of the program took less than five min-
utes. Uncontested portions of the declarations established
that the jury foreperson, Ms. B., told S. the program was not
evidence in the present case and should not be discussed fur-
ther. S. told the other jurors she agreed and the matter was
never raised again.
The trial court made no findings contrary to these undis-
puted portions of the declarations, although the trial court did
find that other persons interviewed in the 60 Minutes II
segment, and not Ford representatives, actually made the
claims concerning the decision not to recall the Mustangs.
context in which S.’s comments were made. The declara-
tions agreed the jurors were in conflict over the type of evi-
dence necessary to show malice, some contending that
documentary evidence was necessary. Most declarations
interpreted two other declarations to state that S. proffered
Iacocca’s statements as evidence of malice in the present -
case. The trial court did not resolve the conflicts in the evi-
dence, finding only that the declarations “alleged” that S. had
made the various statements attributed to her.
The declarations also established that at some point after
S. made her statements about the television program, several
jurors expressed the belief that the testimony of a particular
Ford witness (Mr. Darold) was highly relevant—and damag-
ing to defendant—on the issue of malice. The jury requested
tion and after the read-back of testimony did the jury vote,
nine to three, in favor of a finding of malice.
2. The Dream
8a
the proof?” She recounted the dream only one time, during
deliberations on the issue of malice; the dream was not dis-
cussed at any other time. Z.’s telling of the dream occurred
on the fourth day of deliberations, after the votes on liability
and compensatory damages, but before the vote on malice.
The declarations conflicted about whether Z. described
the dream as an “omen.” The trial court did not resolve the
conflict in the evidence. Although defendant asserts the trial
court “specifically credited evidence that [Juror Z.] . . . relied
(and encouraged her fellow jurors to rely) on that dream in
determining Ford’s liability for punitive damages,” the trial
court made no such finding. Rather, the court simply set
forth the evidence: “This same juror allegedly also told her
fellow jurors that her dream was an ‘omen,’ thereby suggest-
ing that it had some sort of mystical significance regarding
how to vote in the case.”
Even if we disregard the trial court’s use of the word “al-
legedly’—which is the antithesis of “specifically credit{ing]”
the evidence!—there is no statement in any of the declara-
tions that Z. claimed her dream had mystical significance.
The only statement even marginally related to such a claim
was this statement in B.’s first declaration: “In other words,
Juror [Z.] personalized her dreams to include, not only her
own children, but other jurors’ children, and as above stated,
stated that [the jury’s] job was not about following the law,
but ‘saving children.”” This statement does not constitute
substantial evidence that Z. attached mystical significance to
1 For example, in defendant’s response brief filed in the cross-appeal,
counsel write (with our italics added): “It is also undisputed that during
deliberations, Ms. [S.] misattributed the extremely prejudicial quote about
settling cases rather than recalling allegedly defective vehicles to Mr.
Iacocca.”
9a
the dream and used it as the basis—in disregard of the law
and the evidence—for her votes on punitive damages.
3. Prejudgment by a Juror
Although the declarations conflicted greatly on the de-
tails, most of the declarations agreed that Z. repeatedly said
during deliberations that the jury must “save the babies” by
finding defendant liable.
Juror declarations submitted by defendant tied this state-
ment to statements by Z. to the effect that Saving lives was
ments on the first two days of deliberations only (Juror B.).
Various of the declarations alleged and denied that 7.
Said she had made up her mind about the case during the trial
and that the jury should treat “as evidence” the Statements of
one of plaintiffs’ attorneys.
10a
The trial court did not expressly resolve the conflicts in
the evidence, although the court did state its conclusion that
“{j]uror misconduct occurred by virtue of the injection of ex-
ternal evidence and influences, prejudgment of the case and a
refusal to follow the law. The alleged misconduct occurred
on the second day of deliberations.”
C. The Trial Court’s Conclusion
In its written order granting a new trial on punitive dam.
ages, the trial court recounted in detail the contents of the
three juror declarations submitted by defendant. The court
then wrote:
“The Court finds that the counter-declarations
submitted by plaintiffs fail to rebut the pre-
sumption of prejudice in this case. Juror mis-
conduct occurred by virtue of the injection of
external evidence and influences, prejudgment
of the case and a refusal to follow the law.
The alleged misconduct occurred on the sec-
ond day of deliberations. The jury voted 12-0
on the issues of liability and compensatory
damages. However, the jury voted 9-3 on the
issues of malice and the amount of punitive
damages.
“Because there was a bare majority on the is-
sues of malice and the amount of punitive
damages and because the standard of proof as
to malice is so high, the Court finds the delib-
erative process on these two (2) issues was
presumptively infested with passion and
prejudice as to render the verdict on punitive
damages fundamentally suspect. If not singly,
then in combination, the juror misconduct de-
scribed above was presumptively prejudicial
and such presumption has not been rebutted.
|
lla
“Despite admonitions from the Court, in es-
sence, not to consider anything but the facts
and the law, and despite other jurors’ admoni-
tions not to consider the external evidence and
influences discussed above, the jury was being
told not to think of the proverbial pink ele-
phant. The damage was presumptively done.”
D. The Issue of. Presumptions
Jury deliberations are secret while they are occurring. No
verbatim transcript or other record of the deliberations nor-
mally exists. Declarations seeking to reconstruct delibera-
tions after the fact may be colored by the jurors’ natural in-
clination to protect or attack the process that resulted in the
verdict, depending on whether the juror agreed or disagreed
with the verdict. (See Weathers y. Kaiser Foundation
Hospitals (1971) 5 Cal. 3d 98, 108-109.) Yet, the parties’
right to a jury trial is one of constitutional dimension, and we
give great deference to a verdict issued by a properly in-
structed jury—in the normal case, without any inquiry what-
Soever into the processes used to reach that verdict. Even
when there are allegations of jury misconduct, evidence of
the jurors’ mental processes is, “with narrow exceptions,”
excluded from consideration of the right to a new trial. (In
re Hamilton, supra, 20 Cal. 4th at pp. 294-295.)
Common experience requires that we recognize that
while the “jury system is .. . legally fundamental .. . [it is]
also fundamentally human.” (People v. Marshall (1990) 50
Cal. 3d 907, 950.) Jurors bring to their deliberations knowl-
edge, beliefs, personalities, and intellectual Capacities, which
the judicial system must accept as both a strength and a
weakness of the jury system. (Ibid.; see also People y.
Keenan (1988) 46 Cal. 3d 478, 541.)
Faced with the twin facts that jurors are allowed great
freedom in their conduct of deliberations and that a court can
never know exactly what influences resulted in a particular
12a
verdict, our judicial system has established certain presump-
tions for reviewing allegations of juror misconduct.
Jurors ordinarily are presumed to have followed the
court’s instructions. (People v. Sanchez (2001) 26 Cal. 4th
834, 852; Craddock v. Kmart Corp. (2001) 89 Cal. App. 4th
1300, 1308.) “The California Supreme Court has consis-
tently stated that on appeal, ‘[w]e must, of course, presume
that the jury followed [the trial court’s] instructions ....’
(People v. Chavez (1958) 50 Cal. 2d 778, 790.) ... ‘In the
absence of evidence to the contrary, the presumption [that the
jury adhered to the limiting instructions] will control.’ (Peo-
ple v. Beach (1983) 147 Cal. App. 3d 612, 625.)” (People v.
Zack (1986) 184 Cal. App. 3d 409, 416.)
On the other hand, “[jJuror misconduct, such as the re-
ceipt of information about a party or the case that was not
part of the evidence received at trial, leads to a presumption
that the defendant was prejudiced thereby and may establish
juror bias.” (People v. Nesler, supra, 16 Cal. 4th at p. 578.)
“To succeed [on a claim of jury misconduct, a party] must
show misconduct on the part of a juror; if he does, prejudice
is presumed; [the opposing party] must then rebut the pre-
sumption or lose the verdict.” (People v. Marshall, supra, 50
Cal. 3d at p. 949.)
The presumption of prejudice in a civil case is rebutted if
the reviewing court reaches one of three conclusions: (1) the
record establishes the absence of prejudice; (2) a review of
the entire record shows there is no reasonable probability of
actual harm to the complaining party under the constitutional
standard of People v. Watson (1956) 46 Cal. 2d 818, 836
(see Hasson v. Ford Motor Co. (1982) 32 Cal. 3d 388, 416-
417; McDonald v. Southern Pacific Transportation Co.
(1999) 71 Cal. App. 4th 256, 265); or (3), in the case of pos-
sible “actual bias” of a juror whose vote may have been de-
terminative of the verdict, there is no substantial likelihood
that at least one juror was impermissibly influenced. (See
13a
Province v. Center for Women’s Health & Family Birth
(1993) 20 Cal. App. 4th 1673, 1679-1680, disapproved on
other grounds in Heller v. Norcal Mutual Ins. Co. (1994) 8
Cal. 4th 30, 41; see also Weathers v. Kaiser Foundation Hos-
pitals, supra, 5 Cal. 3d 98, 110.)
The interaction of the two foregoing presumptions is seen
in People v. Marshall, supra, 50 Cal. 3d 907. In that death
penalty case, during the jury’s penalty phase deliberations, a
juror claiming a law enforcement background stated to the
other jurors that the absence of a known criminal record for
the defendant was not determinative because ““‘juvenile re-
cords are automatically sealed at 18 years of age.” (Id. at p.
949.) The Supreme Court concluded that this was miscon-
duct that raised a presumption of prejudice. (Jd. at p. 951.)
However, the court then applied the presumption that the jury
would understand and follow the instructions from the court;
those instructions, in this particular case, rendered the issue
of a prior criminal record immaterial to the penalty determi-
nation. (/d. at p. 952.) Accordingly, the court held, the re-
cord established that the presumption of prejudice was rebut-
ted. (Id. at p. 951.)
E. Analysis
As noted, the trial court did not expressly resolve the
many factual conflicts presented by the various declarations.
Implicit in the court’s conclusion, however, is a finding that
the declarations submitted by plaintiffs were credible at least
to the extent they described the verbal response of other ju-
rors, the timing of the remarks by S. and Z., and the uncon-
tradicted fact that the remarks were not the subject of discus-
sion after the read-back of the testimony of the Ford em-
ployee, Darold. Thus, the court concluded: “Despite admoni-
tions from the Court, in essence, not to consider anything but
the facts and the law, and despite the other jurors’ admoni-
tions not to consider the external evidence and influences
discussed above, the jury was being told not to think of the
en re et
14a
proverbial pink elephant. The damage was presumptively
done.” The only claims that other jurors admonished Jurors
S. and Z. were contained in the declarations submitted by
plaintiffs.
Despite this finding concerning jury self-admonition, it
appears to us the trial court applied only the presumption that
jury misconduct is prejudicial and, without any evidentiary
basis for doing so, failed to consider and apply the presump-
tion that jurors have followed the instructions they were
given. In our independent review of the issues of prejudice
and rebuttal of the presumption of prejudice, we conclude the
record provides no basis to reject the normal presumption the
jury followed the instructions. Accordingly, as we explain,
we conclude the presumption of prejudice is rebutted.
The declarations establish that S. made her comments
about the 60 Minutes IJ segment on Thursday or Friday.
Also prior to the weekend, the jury asked the court for a read-
back of a portion of Darold’s testimony concerning Ford’s
state of knowledge. Over the course of the ensuing weekend,
there was substantial news coverage of a massive punitive
darnages verdict rendered in a case against General Motors
during the previous week. As a result of concern that the
jury might be influenced by the size of the General Motors
verdict, the court—without any explanation to the jury about
why it was doing so—instructed the jury prior to the com-
mencement of deliberations on the following Monday, July
12, 1999:
“Ladies and gentlemen, you’re going to resume your de-
liberations here shortly, but just a reminder to you: During
the course of the trial, the Court admonished you that you are
not to read or listen to or pay attention to any news accounts
concerning this case; that you are to decide this case based on
the law and the facts of the evidence that was presented to
you during the course of the trial. The Court wanted to re-
peat that admonition to you that again you are to decide this
15a -
case based on the law, the facts and the evidence that are pre-
sented to you during the course of the evidence in the trial.
You are not to read or listen to or consider, if you have, taken
[sic] into account any newspaper articles concerning this
Case, any radio accounts or any television or any other media
accounts concerning this case or any other case. You are to
decide this case based on the facts and the law and the evi-
dence presented during the course of this trial; okay?”
In addition, there is no conflict in the evidence showing
the foreperson of the jury admonished S. that the 60 Minutes
I segment could not be used as evidence in the present Case,
nor is there conflict in the evidence showing S. expressly
agreed with this admonition. There is no conflict in the evi-
dence showing that the 60 Minutes IT issue was never men-
tioned again after this exchange between the foreperson and
S. Because the jury is presumed to have followed the court’s
Subsequent instruction to decide the case only on the evi-
dence and law presented, and because there is no evidence to
overcome that presumption, we conclude the presumption of
prejudice from mention of the 60 Minutes IT segment is re-
butted by the record. (People v. Marshall, supra, 50 Cal. 3d
at p. 952.)
Similarly, Z.’s dream was never the subject of discussion
after the court’s admonition of Monday, July 12, 1999. We
digress to note that defendant has not cited any cases for the
Proposition that having or talking about a dream while serv-
ing on a jury constitutes misconduct. Having a dream, in it-
self, cannot be considered the receipt of extrinsic evidence by
the dreamer, since the dream is entirely an internal affair.
The report of the dream—Z.’s Statements to her fellow ju-
Tors—seems to us well within the realm of permissible rhe-
torical devices, merely another way of saying that the speaker
finds the evidence very persuasive and that she fears other
similar accidents if the product were not to be recalled by the
manufacturer. Certainly such a statement in the latter terms
Nn ee
16a
would not constitute misconduct. No reason occurs to us
why the use of the dream formulation to increase the rhetori-
cal impact of the statements would be any less permissible.
(Cf. Iwekaogwu v. City of Los Angeles (1999) 75 Cal. App.
4th 803, 819.)
To return to our main point: even assuming the dream
statements constituted misconduct, they were brief, the
dream was not claimed to be evidence, and the dream was
not discussed after the July 12, 1999, admonition. Because
the jury is presumed to have followed the instruction to de-
cide the case only on the evidence and law presented, and
because there is no evidence to overcome that presumption,
we conclude any presumption of prejudice from the dream
statements is rebutted by the record. (People v. Marshall,
supra, 50 Cal. 3d at p. 952.)
The greatest level of conflict in the declarations concerns
the claims that Z. said she had prejudged the case and said
the jury did not “need to follow the law” because of an over-
riding responsibility to “save the babies.” Those jurors who
claimed Z. voiced an intention to disregard the law all said
she made these statements on the first day or the first couple
of days of deliberations. It was during this time that the jury
deliberated the issues of liability and compensatory damages.
There is no indication in any of the declarations that Z. made
similar statements during the more contentious punitive dam-
ages deliberations. In fact, it is uncontradicted that the
statements ceased well before the court’s July 12, 1999, ad-
monition to decide the case on the evidence alone. Because
the jury is presumed to have followed the instruction to de-
cide the case only on the evidence and law presented, and
because there is no evidence to overcome that presumption,
we conclude the presumption of prejudice from Z.’s possible
expressions of prejudice and refusal to follow the law is re-
butted by the record. (People v. Marshall, supra, 50 Cal. 3d
at p. 952.)
}
}
|
ee
17a
A similar issue arose in People v. Harper (1986) 186 Cal.
App. 3d 1420. In that murder case, the jury was having trou-
ble interpreting the instructional definition of murder. A ju-
ror brought in a dictionary and read to the other members the
dictionary definition of murder. That juror “was immediately
cautioned by other members of the jury that his definition
could not be considered.” (/d. at p. 1428.) Seeking further
instruction from the trial court, the jury sent out a note that
disclosed that the juror had consulted the dictionary. (Jbid.)
The trial court then brought out the jury, explained generally
why dictionary definitions are not applicable in criminal
prosecutions, and admonished the jury to “put aside any dis-
cussion or consideration” of the dictionary definition. (Id. at
p. 1429.)
The appellate court held: “Absent evidence to the con-
trary, a jury is presumed to follow the instructions of the trial
court. Having been given a specific admonishment in light
of misconduct by one of their members, it seems probable the
jurors would more closely adhere to the instructions of the
trial court and thus reduce the chance for prejudice.” (People
v. Harper, supra, 186 Cal. App. 3d at pp. 1429-1430.)
Agreeing with the trial court’s conclusion, the reviewing
court stated: “[I]t was unnecessary to rely on a presumption
the jurors . . . followed the admonition when the declarations
[of the jurors] made clear there was no further discussion of
the dictionary definition.” (/d. at p. 1430.) The court con-
cluded the presumption of prejudice arising from the juror’s
misconduct had been rebutted. (/bid.; see also People y. Pin-
" holster (1992) 1 Cal. 4th 865, 925.)
In the present case, of course, the jury did not inform the
trial court that there had be 2n reference by a juror to a televi-
sion program and an appeal by another juror to the overriding
moral necessity of saving the lives of children. Nevertheless,
the court fortuitously instructed the jury to confine its delib-
erations and consideration of the case solely to the evidence
18a
presented at trial. The instruction did not mention the Gen-
eral Motors verdict that had caused the parties to request it;
for all the members of this jury knew, the court somehow had
ascertained that extraneous materials were being mentioned
in the jury room. In any event, the record is clear that none
of the misconduct was repeated in any manner after the
court’s admonition. As in People v. Harper, supra, 186 Cal.
App. 3d at page 1430, the record rebuts the presumption of
prejudice arising from the jury misconduct in this case.
Finally, we consider whether the evidence establishes
that, even if the record rebuts the presumption of prejudice as
to the jury as a whole, there is a substantial likelihood that a
juror necessary to the punitive damages verdict prejudged the
case. (See Province v. Center for Women’s Health & Family
Birth, supra, 20 Cal. App. 4th at pp. 1678-1679.) “For a ju-
ror to prejudge the case is serious misconduct.” (Clemens v.
Regents of University of California (1971) 20 Cal. App. 3d
356, 361.) Thus, where a juror initially failed to disclose his
prejudgment of the case during voir dire and subsequently
repeated that prejudged position throughout the trial and de-
liberations, the court found prejudicial misconduct. (See id.
at pp. 365- 366.) Similarly, where a juror prejudged the case
and coerced the rest of the jury into an immediate vote with-
out any deliberation, the court found prejudicial misconduct.
(Province v. Center for Women’s Health & Family Birth, su-
pra, 20 Cal. App. 4th at pp. 1678, 1680.)
In this case, the trial court impliedly found that Juror Z.
stated to the other jurors that she had made up her mind about
the case prior to the completion of all the testimony.
For reasons similar to those stated above, however, we
find that Z.’s initial statements concerning readiness to de-
cide the case without regard to the law does not rise to the
level of prejudicial misconduct found in the foregoing cases.
Rather, the record establishes that while early in the delibera-
tions Z. may have misunderstood the nature of the jury’s
—————— kaw
19a
function, the other jurors—particularly the foreperson, identi-
fied as a deputy district attorney—admonished her concern-
ing the necessity to follow the law as instructed by the court.
None of the juror declarations contend Z. persisted in a re-
fusal to consider the law and the evidence, and several
declarations— including Z.’s—state that she affirmatively
agreed that the jury needed to follow the law. On this record,
it is not substantially likely that Z. prejudged the case and
failed to decide the case on the law and evidence presented at
trial. (Jn re Hamilton, supra, 20 Cal. 4th at p. 296.)
F. Conclusion
Defendant urges that we adopt what amounts to a rigid
tule that prejudicial misconduct cannot be cured either by
"jury self-admonition or by admonitions from the trial court.
Such a contention ignores the very purpose of permitting and
requiring jury deliberations: through group discussion of the
law and the evidence, our common law system trusts that ju-
rors who express wrong ideas about the evidence, the law,
and their duty as jurors will be guided to a correct view of the
case. In the absence of an Opportunity for jurors to express
such wrong conceptions and thereafter change their thinking,
a jury trial might just as well conclude with the submission of
ballots from the jury box at the Close of the case.
Despite defendant’s consistent attempts to portray this as
a case of jurors run amok, the misconduct in the present case
conduct that resulted in reversal in such cases as People y.
Nesler, supra, 16 Cal. 4th 561, Province v. Center for
Women’s Health & Family Birth, supra, 20 Cal. App. 4th
1673, and Clemens y. Regents of University of California,
supra, 20 Cal. App. 3d 356. Instead, in the present case, by
all of the evidence in the record, the collective process of jury
deliberation resulted in disabusing jurors S. and Z. of any
misconceptions they may have had concerning their duty as
|
20a
jurors to follow the law and consider only the evidence at
trial. As such, the presumption of prejudice was rebutted.
Il. Defendant's Appeal
Defendant appeals from the trial court’s order denying its
motion for JNOV on the issue of punitive damages. Defen-
dant also appeals from the trial court’s denial of defendant’s
new trial motion on liability and compensatory damages.
Finally, defendant contends the punitive damages award is
the “grossly excessive product of bias, passion and preju-
dice.”
We will address these issues in the following order.
First, we will consider whether substantial evidence supports
the jury’s finding on malice, the linchpin of its punitive dam-
ages verdict. Next, we will address the issue of excessive-
ness of punitive damages. Because we have found there was
no prejudicial jury misconduct, the claim that the tal court
erred in denying a new trial on liability and compensatory
damages—a claim premised on the same allegations of jury
misconduct—is moot.
A. Substantial Evidence
Defendant contends “plaintiffs failed as a matter of law to
prove that Ford can be held liable for punitive damages.”
“This argument calls for our determining whether substaatial
evidence supported the jury’s verdict.” (Hardison v. Bush-
nell (1993) 18 Cal. App. 4th 22, 25-26.)
1. Standard of Review
“Where findings of fact are challenged on a civil appeal,
we are bound by the “elementary, but often overlooked prin-
ciple of law, that ... the power of an appellate court begins
and ends with a determination as to whether there is any sub-
stantial evidence, contradicted or uncontradicted,” to support
the findings below. (Crawford v. Southern Pacific Co.
(1935) 3 Cal. 2d 427, 429.) We must therefore view the evi-
2la
dence in the light most favorable to the prevailing party, giv-
ing it the benefit of every reasonable inference and resolving
all conflicts in its favor in accordance with the standard of
review so long adhered to by this court.’ (Jessup Farms y.
Baldwin [(1983)] 33 Cal. 3d [639,] 660.)” (7; hompson.y.
Tracor Flight Systems, Inc. (2001) 86 Cal. App. 4th 1156,
1166.)
On appeal from an order denying judgment notwithstand-
ing a jury’s verdict, we independently apply the same stan-
dard as the trial court, that is, the substantial evidence test
Stated above. (Osborn v. Irwin Memorial Blood Bank
(1992) 5 Cal. App. 4th 234, 259.) Thus, where the trier of
fact has concluded “that the Clear and convincing standard
then we must affirm.” (Mike Davidov Co. v. Issod (2000) 78
Cal. App. 4th 597, 606.)
Our standard of review is no different where, as here, the
challenge to the sufficiency of the evidence arises in the con-
text of a punitive damages verdict. Defendant seeks support
for a heightened standard of review by relying upon the
maxim that California law “disfavors punitive damages.”
That reliance is unavailing.
Defendant’s premise is correct, in a limited way: When
the issue is whether to permit administrative agencies to
award such damages in the absence of a legislative mandate
(see Dyna-Med, Inc. v. Fair Employment & Housing Com.
(1987) 43 Cal. 3d 1379, 1392) or to permit lost punitive
damages as a component of compensatory damages in legal
malpractice suits (see Piscitelli y. Friedenberg (2001) 87 Cal.
App. 4th 953, 981-982), the common law indeed disfavors
expanding the availability of punitive damages.
Where the Legislature has provided for such damages
under specified conditions, however, it is the function of the
judiciary to review a jury verdict pursuant to the law as writ-
ten—not to favor or disfavor, approve or disapprove, the
22a
Legislature’s choice in providing for such damages. “The
judiciary, in reviewing statutes enacted by the Legislature,
may not undertake to evaluate the wisdom of the policies
embodied in such legislation; absent a constitutional prohibi-
tion, the choice among competing policy considerations in
enacting laws is a legislative function.” (Superior Court v.
County of Mendocino (1996) 13 Cal. 4th 45, 53.) (We con-
sider defendant’s constitutional arguments later.)
Defendant also suggests our review of the verdict and of
the order denying the JNOV motion must be elevated beyond
ordinary substantial evidence review because the punitive
damages statute (Civ. Code, § 3294) requires proof of malice
by clear and convincing evidence. This contention is wrong
if, by it, defendant means to imply that we give less defer-
ence to the facts and inferences found by the trier of fact.
Defendant’s contention, understood in this way, ignores
the fact that courts routinely apply the substantial evidence
standard in criminal cases, where the burden of proof is be-
yond a reasonable doubt. (See, e.g., People v. Lewis (2001)
25 Cal. 4th 610, 642; People v. Marshall (1997) 15 Cal. 4th
1, 34; People v. Johnson (1980) 26 Cal. 3d 557, 578.)
We reiterate, then, that in reviewing a punitive damages
verdict, just as in reviewing a criminal verdict or an ordinary
civil verdict, we give full deference to the trier of fact. Thus,
even though the Legislature added a “clear and convincing
evidence” requirement to the punitive damages statute, it did
not alter “the standard of our review (all we are required to
find is substantial evidence to support a determination by
clear and convincing evidence [citation]) ....” (Tomaselli
v. Transamerica Ins. Co. (1994) 25 Cal. App. 4th 1269,
1287.)
2. Corporate State of Mind
Defendant contends the evidence was insufficient to
prove it acted with malice in designing and manufacturing
}
;
|
23a
the 1978 Bronco or in failing to warn consumers about the
absence of rollover protection. Underlying this argument is a
fundamental .misconception of the required proof, stated in
defendant’s reply brief as follows: “Section 3294 [authoriz-
ing punitive damages] makes absolutely clear that plaintiffs
were required to introduce clear and convincing proof that at
least one particular Ford employee, officer, director or man-
aging agent had the requisite malicious state of mind in
1978.” (Italics in original.)
Since 1980, Civil Code section 3294, subdivision (b), has
provided, in relevant part: “With respect to a corporate em-
ployer, the advance knowledge and conscious disregard, au-
thorization, ratification or act of oppression, fraud, or malice
must be on the part of an officer, director, or managing agent
of the corporation.” The purpose of the amendment was to
clarify the existing common law requirement that corporate
malice occur at the level of “employees [who] exercised sub-
stantial discretionary authority over decisions that resulted in
an ‘ad hoc formulation of policy’ ....” (White v. Ultra: if,
Inc. (1999) 21 Cal. 4th 563, 571, citation omitted.)
In adopting the amendment, the Legislature sought lan-
guage that would express the requirement that punitive dam-
ages liability for employers requires more direct involvement
by the employer than ordinary respondeat superior liability,
but also sought to make clear that such liability did not attach
only to the acts of those “employed in a managerial Capac-
ity.” (See White v. Ultramar, Inc., supra, 21 Cal. 4th at pp.
571, 576.) The adopted language reflects a legislative intent
“that principal liability for punitive damages not depend on
employees’ managerial level, but on the extent to which they
exercise substantial discretionary authority over decisions
that ultimately determine corporate policy. Thus, supervisors
who have broad discretionary powers and exercise substan-
tial discretionary authority in the corporation could be man-
aging agents.” (/d. at pp. 576-577.)
|
24a
In White v. Ultramar, Inc., supra, the Supreme Court
concluded that the present version of Civil Code section
3294, subdivision (b), sought to preserve the pragmatic
stance adopted in Egan v. Mutual of Omaha Ins. Co. (1979)
24 Cal. 3d 809, 822-823. “Egan observed that a corporate
defendant should not be able to shield itself ““from liability
by giving an employee a nonmanagerial title and relegating
to him crucial policy decisions.”” (White v. Ultramar, Inc.,
supra, 21 Cal. 4th at p. 571.) The operative inquiry is
whether the employee’s exercise of discretion results in ac-
tual, even if “ad hoc,” corporate policy. (Jbid.)
In most of the cases in which the “managing agent” issue
has resulted in reversal of a punitive damages award, initial
liability arises from a particular tortious act of an employee
of the corporation. (See, e.g., Cruz v. HomeBase (2000) 83
Cal. App. 4th 160, 167; see also White v. Ultramar, Inc., su-
pra, 21 Cal. 4th at p. 577.) Defendant has cited no case, and
our own research has failed to disclose any case, in which a
series of corporate actions and decisions, such as the design,
production, and marketing of an automobile, has been found
inadequate to support an award of punitive damages on the
basis that the multitude of employees involved in various as-
pects of the process were not high enough in the corporate
chain of command. When the entire organization is involved
in the acts that constitute malice, there is no danger a blame-
less corporation will be punished for bad acts over which it
had no control, the primary goal of the “managing agent” re-
quirement. (Cf. Grimshaw v. Ford Motor Co. (1981) 119
Cal. App. 3d 757, 814.)
There is no requirement that the evidence establish that a
particular committee or officer of the corporation acted on a
particular date with “malice.” A corporate defendant cannot
shield itself from liability through layers of management
committees and the sheer size of the management structure.
It is enough if the evidence permits a clear and convincing
eee
25a
inference that within the corporate hierarchy authorized per-
sons acted despicably in “willful and conscious disregard of
the rights or safety of others.” (See Civ. Code, § 3294, subd.
(c)(1).)
A plaintiff may satisfy the “Managing agent” requirement
of Civil Code section 3294, subdivision (b), through evi-
dence showing the information in the possession of the cor-
poration and the structure of management decisionmaking
that permits an inference that the information in fact moved
upward to a point where corporate policy was formulated.
These inferences cannot be based merely on speculation, but
they may be established by circumstantial evidence, in ac-
cordance with ordinary standards of proof.
Defendant contends, in addition, that plaintiffs failed to
prove defendant engaged in “despicable” conduct within the
meaning of Civil Code section 3294, subdivision (c)(1). This
argument focuses on individual acts and decisions of defen-
dant’s employees, while complaining that plaintiffs attempt
to “create a composite picture of alleged ‘maliciousness’ by
imputing to some fictional monolith bits and pieces of sup-
posed knowledge of many different people on many different
topics through many different decades.”
Stripped of pejorative innuendo, defendant clearly is a
“fictional monolith”: corporations are legal constructs—legal
fictions (Francis T. y. Village Green Owners Assn. (1986) 42
Cal. 3d 490, 507)—and defendant is a single such construct.
It is difficult to imagine how corporate malice could be
Shown in the case of a large corporation except by piecing
together knowledge and acts of the corporation’s multitude of
managing agents.
Defendant also asserts that plaintiffs are “unable to pre-
sent evidence of any ‘malicious or despicable’ conduct with
respect to the design and production of the 1978 Bronco.”
This ignores the fact that the design and production of the
vehicle was the despicable conduct: we think it obvious that
eae er
26a
putting on the market a motor vehicle with a known propen-
sity to roll over and, while giving the vehicle the appearance
of sturdiness, consciously deciding not to provide adequate
crush protection to properly belted passengers (in the words
of a corporate memo introduced in evidence, “penalizing”
passengers for wearing a seatbelt) constitutes despicable
conduct. Such conduct could kill people. The question is not
whether the conduct, if it occurred, was despicable, the ques-
tion is whether there is sufficient evidence from which a ra-
tional trier of fact could find that the knowing conduct oc-
curred.
Defendant’s attack on the sufficiency of the evidence in-
cludes discussions of the evidence of a manufacturing defect
and of defendant’s failure to include rollover warnings with
the 1978 Bronco. We will not examine this evidence, since
plaintiffs did not rely on it to prove malice. Instead, we will
turn directly to the third component of plaintiffs’ case, proof
of a design defect.
Attacking the sufficiency of the evidence of design de-
fect, defendant contends plaintiffs’ ow... evidence showed
“conclusively” that negligent manufacture of the Bronco, not
negligent design, caused the deaths and injuries involved in
this case. Had it not been for defective welds along the roof
pillar, “the metal portion of the roof would not have
crushed,” according to defendant; “if the roof had not
crushed in the entire Romo family ... would have ‘walked
away” from the accident.” This claim wholly ignores the re-
quirement that we view the evidence in the light most favor-
able to the verdict, as we will explain.
Plaintiffs did present evidence that the Bronco was not
only poorly designed but that it also was negligently manu-
factured. Plaintiffs presented testimony from a metal-
lurgy/materials-failure expert, Dean Jacobson, to the effect
that the front roof pillar was negligently welded. And he tes-
tified that those welds failed and caused the passenger side of
27a
the Bronco’s roof to “splay out” as it collapsed. But he also
testified that if the welds had been good, only the passenger
side of the steel roof “would have Stayed up. It would have
mitigated the amount of intrusion on the right side [of the
steel roof] and I believe basically the right side would have
Stayed up.”
Jacobson did not testify that, in the absence of faulty
welds, the entire Romo family would have walked away from
the accident. To the contrary, defendant objected to Jacob-
son’s expressing any opinions at all about the cause of the
Passengers’ injuries, since he was not a biomechanics expert.
However, Jacobson testified that the rear roof—the molded
fiberglass roof—“would have been gone” even if the welds
had been in accordance with the design specification. Of
equal importance, Jacobson testified that if defendant had
installed the type of integrated roll bar it initially planned for
the 1978 Bronco and had installed the type of steel roll bar at
the rear of the fiberglass roof that defendant did include on
the 1980 Bronco, the roof would not have crushed despite the
negligent welds. Thus, in essence, Jacobson testified that the
design defects were a sufficient independent cause of the
steel roof’s collapse during the rollover.
Defendant’s quotation from the record concerning the
“entire Romo family” walking away from the accident if the
roof did not collapse came from a different witness, plain-
tiffs’ biomedical engineering expert, Martha Bidez. Her tes-
timony had nothing to do with the causes for the collapse of
the roof. Instead, she took the sequence of events established
by the accident reconstruction expert and opined concerning
the manner in which the various victims’ injuries occurred
during the course of the accident. For example, after the wit-
ness described the mechanism by which the minor victims
Were injured, she was asked, “Why didn’t they sustain skull
fractures like other members of the family?” Bidez an-
swered, “The children in the back did not sustain skull frac-
OE ———
28a
tures because the roof did not crush in on top of them and the
roof did not strike them in the head. [§]] The roof struck their
mother and their brother, and [the girls] were able to simply
be deposited out on the highway. There was no roof crush;
that is what caused the death of their father.”
To provide a summarization of Bidez’s testimony, coun-
sel asked, “If the roof doesn’t crush in, what happens to the
members of this family?” Bidez answered, “If the roof
doesn’t crush in . . . the Romo family stays intact. Every one
of the family members . . . walk away from this collision.”
We have engaged in this rather extended exposition of
the evidence to demonstrate a point defendant repeatedly ig-
nores in its briefs: substantial evidence review requires ex-
amination of all the evidence, not just selective portions of
the evidence favorable to the appellant, and it requires
evaluation of that evidence in the light most favorable to the
verdict, not an interpretation that ignores the inferences
drawn by the trier of fact. (Jessup Farms v. Baldwin (1983)
33 Cal. 3d 639, 660.) We will not repeat the exercise of fully
demonstrating defendant’s selective use of the evidence in
each instance as we discuss its arguments; it will suffice to
say that defendant’s briefs repeatedly ignore this “elemen-
tary, but often overlooked principle” (Crawford v. Southern
Pacific Co., supra, 3 Cal. 2d 427, 4290) of appellate law.
Further attacking the sufficiency of the evidence of de-
sign defect, defendant contends the metal portion of the 1978
Bronco roof was “ahead of its time regarding roof strength.”
It contends the evidence established that there was no federal
standard for roof strength when the Bronco was manufac-
tured, but that the vehicle far exceeded the passenger car
standard that existed then and exceeded the current light
truck standard. “These facts, as a matter of law, preclude the
imposition of punitive damages,” according to defendant.
Viewing the evidence in the light most favorable to the
verdict, however, a rational trier of fact could conclude that it
29a
~
was merely coincidental that the Bronco met the later federal
standards, and that this coincidence—occurring years after
the design and production of the 1978 Bronco—did not re-
flect the corporate state of mind prevailing at. the time in
(1979) 24 Cal. 3d 890, 894); the question of such malice does
not turn on whether the relevant conduct is or is not reason-
able in light of later-developed standards of Care.
Instead, substantial evidence permits an inference that de-
fendant’s policymakers were strongly motivated to bring the
1978 Bronco to market and knew they could not do so if they
followed the routine practice of preproduction testing and
development. Substantial evidence supports an inference
that, in order to bring the product to market, defendant’s
policymakers decided to disregard established policies by
which defendant had determined that crush resistance needed
to be higher (the twice-the-curb-weight Standard) and that
fiberglass or molded plastic should not be used for compo-
nents comprising the passenger compartment unless under-
lain by a steel skeleton. Given the existence of these corpo-
rate standards and the total absence of preproduction testing,
a rational finder of fact could infer that the failure to design
and test the 1978 Bronco to meet these standards reflected “a
willful and conscious disregard of the .. . safety” (Civ. Code,
§ 3294, subd. (c)(1)) of those who would travel in the
Bronco.
In a similar manner, defendant attacks the sufficiency of
the evidence of design defect of the fiberglass portion of the
roof by pointing out plaintiffs’ expert testimony that having a
30a
removable roof on the Bronco was reasonable? and that de-
fendant’s designated “most knowledgeable” representative
testified that, like a convertible’s cloth top, the fiberglass roof
was not designed to survive a rollover accident.
However, other evidence permitted a reasonable trier of
fact to conclude that defendant’s decision to put the unrein-
forced fiberglass roof was despicable because defendant
knew that:
—unlike convertible passenger cars, the high
center of gravity of truck-based utility vehi-
cles made them more likely than passenger
cars to roll over;
—defendant’s safety engineers previously had
concluded unreinforced fiberglass should
never be used for a part of a vehicle intended
to enclose the passenger compartment and had
concluded no utility vehicle should be pro-
duced without a roll bar—and that the original
design for the 1978 Bronco, in fact, included a
roll bar as standard equipment;
—the competitor’s removable fiberglass roof
did contain metal reinforcement;
—defendant’s own testing conducted after
production and delivery of the 1978 Bronco
2 The expert did not testify that an unreinforced fiberglass roof was
reasonable. He merely testified that a removable roof was reasonable.
The earlier version of the Bronco, for example, had a removable steel
roof. He was highly critical of the use of unreinforced fiberglass, com-
bined with the absence of a roll bar, for the 1978 Bronco. In other words,
contrary to the implication of defendant’s excerpt, plaintiffs’ expert did
not express approval of the fiberglass roof on this vehicle.
3la
(testing defendant consciously decided not to
undertake in order to bring the product to
market more quickly, despite such testing as a
routine part of product development for other
vehicles) showed the roof failed to meet de-
fendant’s safety standards and led defendant
to include steel reinforcement in the 1980
Bronco.
In light of this credible evidence, it is frivolous to con-
tend, based on defendant’s excerpts from the record, that
“Ford’s decision to incorporate a fiberglass roof into certain
vehicles—even if retrospectively deemed incorrect two dec-
ades after the fact—was not, as a matter of law, a ‘vile’ or
‘loathsome’ act that can Support an award of punitive dam-
ages,” as defendant says in its opening brief.
Finally, defendant contends that the decision to use an
unreinforced fiberglass top on the 1978 Bronco was never
disclosed to “top management,” citing the testimony of a
former Ford executive who testified on behalf of plaintiff.
The testimony of the former Ford executive, Thomas Fea-
heny, was somewhat different than represented by defendant.
Feaheny testified: “The decision to put [the fiberglass top] on
that vehicle was not a top management decision. It was made
in the truck operations and the truck department. And I guess
I’m fairly confident that they never disclosed to higher man-
agement that there was this risk” that the fiberglass roof “al-
most inevitably” would fail in a rollover accident.
Nevertheless, Feaheny testified that in the ordinary
course of business, the responsible executives within the light
truck division would have known about the safety engineers’
conclusions concerning the use of unreinforced fiberglass for
passenger compartment panels. These executives Clearly had
the power within the corporation to enforce or not enforce as
company policy the safety engineers’ findings.
32a
As stated previously, the test for whether malicious con-
duct is attributable to a corporation is whether the acts were
done by a person or persons with authority to make ad hoc
policy decisions on behalf of the corporation. (White v. UI-
tramar, Inc., supra, 21 Cal. 4th at p. 577.) Defendant does
not contend, nor could it, that employees on the assembly
line decided what roof to put on the Bronco or to delete the
roll bar as standard equipment. Such decisions obviously
were made with the input of many persons, but ultimately
became policies of the corporation despite corporate knowl-
edge that the choices entailed risk of death and serious injury.
The statutory standard for corporate malice does not re-
quire, as defendant contends, that a “Ford officer, director, or
managing agent believed that the company was compromis-
ing consumer safety by reducing costs or expediting produc-
tion.” It will suffice if the evidence, in the light most favor-
able to the verdict, establishes that corporate policymakers in
fact compromised consumer safety by reducing costs or ex-
pediting production in willful and conscious disregard of
consumer safety. “[MlJalice does not require actual intent to
harm .... Conscious disregard for the safety of another may
be sufficient where the defendant is aware of the probable
dangerous consequences of his or her conduct and he or she
willfully fails to avoid such consequences.” (Angie M. v. Su-
perior Court (1995) 37 Cal. App. 4th 1217, 1228.)
In the present case, the direct and circumstantial evi-
dence, together with the inferences therefrom, is sufficient to
permit a rational trier of fact to clearly and convincingly con-
clude that defendant acted with malice in its design and in-
troduction into the market of the 1978 Bronco. _
B. Claim of Excessiveness of Punitive Damages
The trial court denied defendant’s motion for a new trial
on “all other grounds” stated in defendant’s motion, apart
from the jury misconduct basis upon which it granted the
motion. Among those grounds upon which the motion was
33a
denied was the claim that the amount of punitive damages
was excessive. On appeal, this claim has three components:
(1) The jury improperly was permitted to consider defen-
dant’s overall size and worth in Setting the amount of the
award; (2) the amount of the award is factually insupport-
able; and (3) the “unprecedented” size of the award violates
defendant’s due process right to notice of the penalty that it
might incur at the time it acts maliciously.
1. Review Under California Law
“The amount of punitive damages is determined in the
discretion of the jury. An appellate court will not reverse the
jury’s determination unless the award as a matter of law is
excessive or appears so grossly disproportionate to the rele-
vant factors that it raises a presumption it was the result of
passion or prejudice .... In reviewing the verdict the appel-
late court is guided by three main factors: the reprehensibility
of the defendant’s conduct, the actual harm suffered by the
victims, and the wealth of the defendant.” (Rufo v. Simpson
(2001) 86 Cal. App. 4th 573, 623, citing Neal v. Farmers Ins.
Exchange (1978) 21 Cal. 3d 910, 927-928; see also Zaxis
Wireless Communications, Inc. y. Motor Sound Corp. (2001)
89 Cal. App. 4th 577, 583.)
The second of the three considerations as set out in Rufo
v. Simpson, supra, 86 Cal. App. 4th at page 623, harm to the
victims, is-sometimes described instead as “the amount of
damages.” (See Lane vy. Hughes Aircraft Co., supra, 22 Cal.
4th at p. 417 (conc. opn. of Mosk, J.).) The “amount of dam-
ages” in many cases provides an adequate and convenient
measure of the harm to the victims. In some instances, how-
ever, tort law, for historical reasons, undervalues non-
economic damages and the compensatory damages award is
not a reliable measure of the injury to the victims. Wrongful
death is among such instances: “In an action by the represen-
tative of a decedent’s estate, the punitive damages must be
compared to the actual harm suffered by the decedent, not the
34a
limited economic damages recoverable by the estate.” (Rufo
v. Simpson, supra, 86 Cal. App. 4th at p. 623, fn. 15; see also
Neal v. Farmers Ins. Exchange, supra, 21 Cal. 3d at p. 929.)
Therefore, we look to the “actual harm” suffered by the vic-
tims as a result of defendant’s malicious conduct in our re-
view of the punitive damages award. (/d. at p. 928.)
While we clearly must consider the degree of injury to
the victims as part of our review of the punitive damages
award for excessiveness, neither the Legislature nor the judi-
ciary has established a fixed ratio between the compensatory
and punitive damages that provides a standard for determin-
ing excessiveness. (See Lane v. Hughes Aircraft Co., supra,
22 Cal. 4th at p. 417 (conc. opn. of Mosk, J.); id. at p. 428
(conc. opn. of Brown, J.).) Rather than focus on any one of
the three factors specified by the Supreme Court in Neal, our
task is to evaluate all three factors in light of the entire re-
cord. (Adams v. Murakami (1991) 54 Cal. 3d 105, 110.)
“(T]he key question before the reviewing court is whether the
amount of damages ‘exceeds the level necessary to properly
punish and deter.’” (/bid., quoting from Neal v. Farmers Ins.
Exchange, supra, 21 Cal. 3d at p. 928.)
We also note that the trial court, sitting as an independent
trier of fact (see Sierra Club Foundation v. Graham (1999)
72 Cal. App. 4th 1135, 1160), rejected the claim that the pu-
nitive damages were excessive. The trial court’s evaluation
of the evidence gives added weight to the jury’s determina-
tion that $290 million is an appropriate award to punish and
deter this defendant: The trial court “sits much closer to the
evidence than an appellate court. Even the most comprehen-
sive study of a trial court record cannot replace the immedi-
acy of being present at the trial, watching and hearing as the
evidence unfolds. The trial court, therefore, is in the best po-
sition to assess the reliability of a jury’s verdict and, to this
end, the Legislature has granted trial courts broad discretion”
in deciding whether to order a new trial, including a new trial
,
35a
on the excessiveness of punitive damages. (Lane vy. Hughes
Aircraft Co., supra, 22 Cal. 4th at p. 412.)
We turn now to the factors prescribed by the Supreme
Court in Neal v. Farmers Ins. Exchange, supra, 21 Cal. 3d at
page 928.
Rather incredibly, defendant contends its conduct—even
viewed in the light most favorable to the verdicts—“was at
the very lowest end of the reprehensibility spectrum.” We
disagree.
Involuntary manslaughter is the unlawful killing of a hu-
man being, inter alia, “in the commission of a lawful act
which might produce death .. . without due caution and cir-
cumspection.” (Pen. Code, § 192.) Involuntary manslaugh-
ter is a felony. As we have concluded above, the evidence
Supports the jury’s conclusion that defendant willfully and
consciously ignored the dangers to human life inherent in the
1978 Bronco as designed, resulting in the deaths of three per-
sons. Such corporate conduct can constitute involuntary
manslaughter (see Granite Construction Co. y. Superior
Court (1983) 149 Cal. App. 3d 465) and, when viewed in the
context of a mass-produced vehicle sold to the public, cer-
tainly is seriously reprehensible conduct.
Further, defendant ignored its own internal safety stan-
dards while leaving the Bronco with the appearance of incor-
porating a roll bar into the vehicle’s roof structure. Defen-
dant declined to test the strength of the Bronco’s roof before
placing the vehicle in production, and when it did test the
roof strength in conjunction with the redesign of the Bronco
for the 1980 product line, defendant concluded the roof in
fact failed to meet its own standards. Defendant modified the
roof for the 1980 Bronco, but it did nothing to remedy the
text—in contrast to the issue of defendant’s underlying neg-
ligence, not contested on this appeal—it avails defendant
36a
nothing that other auto manufacturers also used fiberglass
roofs on contemporaneous fiberglass utility vehicles.
The harm to the victims is obvious and severe. Defen-
dant does not contend otherwise.
The final issue is whether the punitive damages award is
excessive in light of defendant’s financial condition. There is
no doubt that $290 million is a lot of money. It is also true,
however, that defendant is a huge company with enormous
monetary resources. At the time of trial, defendant had daily
after-tax profits of $20 million and its net worth was $25 bil-
lion, of which $14 billion was in cash on hand. Defendant
earned well over $100 million in profit from the 1978 and
1979 Bronco. As far as the present record shows (see Ste-
vens v. Owens-Corning Fiberglas Corp. (1996) 49 Cal. App.
4th 1645, 1660-1661), defendant had enjoyed the use of that
profit for more than two decades without being penalized in
any case for punitive damages arising from the design of the
1978-1979 Bronco.
There is no doubt that $290 million would be a huge
windfall to the Romo family. (See College Hospital Inc. v.
Superior Court (1994) 8 Cal. 4th 704, 712.) The windfall to
victims of malicious torts, however, is simply a side effect of
our common law system for punishing and deterring wrong-
doers. The fact that such damages are a windfall is not ir-
relevant: it was a major consideration in the Supreme Court’s
decision to place the burden of proof for punitive damages
upon the plaintiff. (Adams v. Murakami, supra, 54 Cal. 3d at
p. 120.) The windfall nature of the damages is not, however,
a consideration in determining whether such damages are ex-
cessive as a matter of law. (Cf. Neal v. Farmers Ins. Ex-
change, supra, 21 Cal. 3d at p. 929.)
It is empirically impossible, of course, to know exactly
the level of punitive damages that would have a sufficient
punitive and deterrent effect without unduly stifling innova-
tion and competition in the marketplace. Any determination
37a
of an amount of punitive damages by a jury or by this court
On appeal is, in this sense, somewhat arbitrary. The jury and
the trial court each concluded $290 million provided suffi-
cient punishment and deterrence. That damages award is 1.2
percent of defendant’s net worth and nine days of its profits
at the time of trial. Although these amounts are slightly
higher than the award approved in Neal v. Farmers Ins. Ex-
change, supra, 21 Cal. 3d at page 929, when we consider that
defendant had the use of its 1978-1979 Bronco profits of over
$100 million for 20 years prior to the verdict, we cannot con-
clude the level of damages is excessive.
2. Review Under Federal Constitution
In the recent case of Cooper Industries, Inc. v. Leather-
man Tool Group, Inc. (2001) 532 U.S. 424, 431-433 [121 S.
Ct. 1678, 1683], the United States Supreme Court held that a
party raising due process challenges to a punitive damages
verdict is constitutionally entitled to de novo review by the
appellate court. Such review is limited to the constitutional
issues raised. Determinations of fact by the jury (and impli-
edly reaffirmed by the trial court in denying the new trial mo-
tion on excessiveness of damages) are accepted on appeal
unless not supported by substantial evidence.
This due process limitation, apparently arising from both
the excessive fines clause of the Eighth Amendment and
from the due process clause of the Fourteenth Amendment
(see Cooper Industries, Inc. v. Leatherman Tool Group, Inc.,
supra, 532 U.S. at p. 434 [121 S. Ct. at Pp. 1684]), requires a
reviewing court to determine whether the damages award is
“grossly excessive.” (Jbid.) “Only when an award can fairly
be categorized as ‘grossly excessive’ in relation to the
[state’s legitimate interests in punishment and deterrence]
does it enter the zone of arbitrariness that violates the Due
Process Clause of the Fourteenth Amendment.” (BMW of
North America, Inc. v. Gore, (1996) 517 U.S. 559, 568
[BMW}.) In order to avoid such arbitrariness, even when the
38a
state has a strong interest in preventing particular conduct,
state law must provide notice not only of “the conduct that
will subject [a defendant] to punishment, but also of the se-
verity of the penalty that a State may impose.” (Jd. at p. 574;
see also Cooper Industries, Inc. v. Leatherman Tool Group,
Inc., supra, 532 U.S. at p. 434 [121 S. Ct. at p. 1684].)
In BMW, the Supreme Court noted certain “guideposts”
to assist its determination whether the defendant had received
adequate notice of the severity of the penalty that might be
imposed on it. Those were “the degree of reprehensibility of
the [conduct]; the disparity between the harm or potential
harm suffered by [plaintiff] and his punitive damages award;
and the difference between [the punitive damages award] and
the civil penalties authorized or imposed in comparable
cases.” (BMW, supra, 517 U.S. at p. 575.) As noted, how-
ever, the ultimate question is whether the award is grossly
excessive in relation to the interests the state seeks to protect
through the award. (/d. at p. 568.)
As we have already discussed, defendant’s conduct was
grossly reprehensible. While defendant did not intend the
death to the victims, the award here cannot be compared to
cases “involving a business fraud resulting only in economic
harm.” (Rufo v. Simpson, supra, 86 Cal. App. 4th at p. 624.)
Further, the malicious conduct involved mass production and
marketing of the dangerous vehicle purely for defendant’s
economic betterment. (See Grimshaw v. Ford Motor Co.,
supra, 119 Cal. App. 3d at pp. 819-820.) Unlike BMW,
where the defendant’s conduct was not even unlawful in all
states and involved only economic consequences, the conduct
here placed tens of thousands of lives at risk and actually
claimed three such lives in the present case. The BMW court
was able to conclude: “In this case, none of the aggravating
factors associated with particularly reprehensible conduct is
present. The harm BMW inflicted on Dr. Gore was purely
economic in nature.” (BMW, supra, 517 U.S. at p. 576.) In
39a
the present case, by contrast, the reprehensibility factor
weighs heavily against a finding that the punitive damages
award is grossly excessive. :
There is a great disparity between the compensatory and
punitive damages award. While this factor weighs in favor
of a finding of excessiveness, the importance of the factor is
somewhat reduced, as we have explained above, because
wrongful death compensatory damages do not fully reflect
the harm to the victims.
Finally, the nature of the conduct involved in the present
case makes inapplicable the third BMW factor, comparison
with civil fines for similar conduct. Such a comparison is
appropriate when the conduct to be punished cannot result in
imprisonment if committed by an individual, but is inappro- -
priate when the malicious conduct cou!d result in substantial
imprisonment if committed by an individual instead of a cor-
poration. (See BMW, supra, 517 US. at pp. 583-584, distin-
guishing Pacific Mutual Life Insurance Co. v. Haslip ( 1991)
499 U.S. 1, 22.)3
3 Defendant also contends that a California plaintiff seeking a punitive
damages award based, in part, on a defendant’s financial condition must
prove the defendant’s profits from California only and in some manner
allocate the defendant’s net worth to its California operations. In BMW,
supra, 517 U.S. at page 585, the individual state’s punitive damages
award effectively sought to impose Alabama’s unique “regulatory poli-
cies on the entire Nation.” If the issue in the present case were an avto-
maker’s willful disregard of California’s unique and stringent emission
standards, there might be merit to defendant’s contention that the finan-
cial condition evidence should target only defendant’s California opera-
tions. Here, by contrast, the interest California seeks to protect—
individual human lives—is neither unique to California nor limited to its
own citizens: any 1978 Bronco operated on California highways creates
the same risks to its occupants no matter where the vehicle was sold nor
where its occupants reside.
40a
Defendant contends that no California case has awarded
anywhere near $290 million in punitive damages and, ac-
cordingly, defendant lacked notice of “the severity of the
penalty that a State may impose,” as required by BMW. (See
BMW, supra, 517 U.S. at p. 574.) The Penal Code, in lan-
guage unchanged since its initial adoption in 1872, however,
provides clear notice that killing a human being “in the
commission of a lawful act which might produce death ...
without due caution and circumspection” is manslaughter.
(Pen. Code, § 192, subd. (b).) Defendant has been on notice
“for more than a century” that California regards it as neces-
sary to impose penalties related to the wealth of the defen-
dant in order to achieve the goals of punishment and deter-
rence. (See College Hospital Inc. v. Superior Court, supra, 8
Cal. 4th 704, 712.) And defendant has been on notice since
at least 1971 that a week’s profits amounting to about 1 per-
cent of net wealth are not excessive punitive damages. (See
Neal v. Farmers Ins. Exchange, supra, 21 Cal. 3d at p. 929,
citing Wetherbee v. United Ins. Co. of America (1971) 18
Cal. App. 3d 266, 271.) Taken altogether, these factors pro-
vided defendant adequate notice of the potential for the puni-
tive damages awarded in this case.
We note that neither the United States Supreme Court nor
any California court has held that a jury’s consideration of
the size and resources of a defendant invalidates a punitive
damages award. Rather, the courts recognize that a defen-
dant’s wealth cannot be the sole criterion for the size of a pu-
nitive damages award: ability to pay an award cannot justify
an otherwise excessive punitive damages award. (See BMW,
supra, 517 U.S. at p. 585.)
Here, the punitive damages verdict was not “otherwise
excessive”; instead, consideration of the size and net worth of
a corporate defendant was necessary if the jury was to appro-
priately vindicate the state’s interest in protecting the lives of
its citizens.
4la
DISPOSITION
The order granting defendant’s motion for new trial is re-
versed. In all other respects, the judgment is affirmed. Plain-
tiffs are awarded costs on appeal.
VARTABEDIAN, Acting P. J.
WE CONCUR:
Buckley, J.
Cornell, J.
42a
APPENDIX B
STANISLAUS COUNTY SUPERIOR COURT,
STATE OF CALIFORNIA
JUAN RAMON ROMO, et al.,
vs
FORD MOTOR COMPANY
NATURE OF HEARING: LAW AND MOTION
CASE NO. 82318
JUDGE: ROGER M. BEAUCHESNE
Bailiff: L. Weaver
Clerk: P. Murray
Reporter: | None
Date: Sept. 15, 1999
MODESTO, CA
Appearances:
None
This matter came on calendar on September 10, 1999
upon defendant Ford Motor Company’s Motion for Judgment
Notwithstanding the Verdict, Motion for a New Tnal, and
Motion to Tax Costs.
Upon due consideration of the written Points and Au-
thorities submitted by counsel and the oral arguments prof-
fered on September 10, 1999, the Court renders the following
decisions on the Motion for Judgment Notwithstanding the
Verdict and Motion for a New Trial. There having been in-
sufficient time to hear the arguments on Ford’s Motion to
43a
Tax Costs, said motion is continued to October 8, 1999 at
8:30 a.m. in Department 5.
I
Motion for Judgment Notwithstanding the Verdict
The Court DENIES defendant Ford Motor Company’s
Motion for Judgment Notwithstanding the Verdict in its en-
tirety.
‘IL
Motion for New Trial
(A) The COURT GRANTS Ford Motor Company’s Mo-
tion for a New Trial on the issue of punitive damages; i.e., on
both the issue of whether Ford was guilty of malice and the
amount of punitive damages, if a subsequent jury finds mal-
ice.
(B) The COURT GRANTS Ford Motor Company’s Mo-
tion for a New Trial on the issue of compensatory damages
(economic damages) for the Estates of Ramon Romo and
Salustia Romo subject to the condition that the motion for a
new trial on this issue is DENIED if plaintiff(s) consent(s) to
a reduction to $5,000.00 as to each of the estates.
(C) The COURT DENIES Ford Motor Company’s Mo-
tion for a New Trial on all other grounds specified in its No-
tice of Motion for a New Trial.
I.
Specification of Grounds and Reasons for Granting a
New Trial On the Issue of Punitive Damages
The COURT grants Ford Motor Company’s motion for a
New Trial on the issue of malice and punitive damages based
upon misconduct of the jury. (CCP section 657(2)). Decla-
rations submitted by both plaintiffs and defendant established
that the jurors were exposed to, and injected into the jury
room, a television program regarding allegations of defective
Ford vehicles. One juror, even if not having seen the pro-
gram, told other jurors of a “60 Minutes I’ program which
aired on May 19, 1999 and that featured alleged fire prob-
lems from rear-end collisions involving older Ford Mustangs
in which drop-in fuel tanks were punctured. This juror alleg-
edly told the other jurors that Ford’s former president, Lee
Ioccoca—who headed Ford while the Bronco was being de-
veloped and whose name was mentioned frequently during
trial—said on the program that Ford had a policy to defend or
settle lawsuits rather than recalling or correcting vehicles. In
fact, the Court’s review of the exhibit (the videotape) reveals
Mr. Ioccoca made no such comment. The 60 Minutes pro-
gram also featured graphic depictions of the burn injuries
suffered by victims of Ford’s alleged misconduct.
At least two (2) juror declarations state that the juror who
mentioned the 60 Minutes program told the other jurors that
the program was evidence of Ford’s malice regarding the
1978 Bronco.
Additionally, after repeatedly telling the jurors that they
needed to “save the babies”, another juror told the jury in
great detail of a morbid nightmare she supposedly had the
night before in which her child and the other jurors’ children
were killed by a repeatedly rolling-over Bronco while the
Ford attorneys and witnesses armed with guns, mockingly
chanted, “Where’s the proof, where’s the proof?” This same
juror allegedly also told her fellow jurors that her dream was
an “omen”, thereby suggesting that it had some sort of mysti-
cal significance regarding how to vote in the case. She alleg-
edly also urged her fellow jurors that they “did not need to
follow the law because saving babies was too important.”
This same juror allegedly stated that what one of the plain-
tiffs’ attorneys said “should be considered as evidence.”
A litigant is entitled to a fair trial, not necessarily a per-
fect trial. A fair trial encompasses a fair deliberative process
by the trier of fact—in this case a jury of twelve (12) persons.
The Court finds that the counter-declarations submitted by
45a
plaintiffs fail to rebut the presumption of prejudice in this
case. Juror misconduct occurred by virtue of the injection of
external evidence and influences, prejudgment of the case
and a refusal to follow the law. The alleged misconduct oc-
curred on the second day of deliberations. The jury voted 12-
0 on the issues of liability and compensatory damages.
However, the jury voted 9-3 on the issues of malice and the
amount of punitive damages.
Because there was a bare majority on the issues of malice
and the amount of punitive damages and because the stan-
dard of proof as to malice is so high, the Court finds the de-
liberative process on these two (2) issues was presumptively
infested with passion and prejudice as to render the verdict
on punitive damages fundamentally suspect. If not singly,
then in combination, the juror misconduct described above
was presumptively prejudicial and such presumption has not
been rebutted.
Despite admonitions from the Court, in essence, not to
consider anything but the facts and the law, and despite other
jurors’ admonitions not to consider the external evidence and
influences discussed above, the jury was being told not to
think of the-proverbial pink elephant. The damage was pre-
sumptively done.
Fairness dictates a new trial on the issues of malice and
punitive damages.
IV.
Specification of Grounds and Reasons for Grantin
Conditional New Trial on the Issue of Compensato
Damages (Economic Damages) for the Estates
of Ramon Rome and Salustia Romo
The Court grants a conditional new trial on this issue on
the ground that the damages awarded were excessive. (CCP
section 657(5)). As a matter of law, the estates of Ramon
and Salustia Romo are limited to recovering damages suf-
CO —
46a
fered during the period between the accident and death.
(CCP section 377.34). Therefore, the awards of $183,988.00
and $295,645.00 in economic damages to the estates have no
legal or evidentiary foundation. They are excessive and im-
proper.
Therefore, the Court grants Ford Motor Company’s Mo-
tion for a New Trial on the issue of compensatory damages
(economic damages) for the Estates of Ramon Romo and
Salustia Romo subject to the condition that the motion for a
new trial on this issue is denied if plaintiff(s) consent(s) to a
reduction to $5,000.00 as to each of the estates (CCP section
662.5(b)).
IT IS SO ORDERED.
Date:_Sept. 15, 1999 /s/
ROGER M. BEAUCHESNE
Judge of the Superior Court
Stanislaus County
cc: Joseph W. Carcione, Jr., Esq.
Lawrence Drivon, Esq.
Douglas Seitz, Esq.
MINUTE ORDER
47a
APPENDIX C
Court of Appeal, Fifth Appellate District - No. F034241
S$108991
IN THE SUPREME COURT OF CALIFORNIA
En Banc
SUPREME COURT
FILED
OCT 23 2002
Frederick K. Ohlrieh Clerk
Deputy
JUAN RAMON ROMO et al.,
Plaintiffs and Appellants,
¥.
FORD MOTOR COMPANY,
Defendant and Appellant.
Petition for review DENIED.
Kennard, J., Baxter, J., and Brown, J., are of the opinion
the petition should be granted. ~
The requests for an order directing depublication of the
opinion are denied.
48a
/s/
Chief Justice
49a
APPENDIX D
FORD’S PROPOSED JURY INSTRUCTION NO. 75
ELA INS ERUCTION NO. 75
Requested by Plaintiff Requested by Defendant | V
Given as Requested Given as Modified
Given on Court’s Motion
Withdrawn
Refused X Judge
Punitive damages are an extraordinary remedy. They are
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