# Petition for Writ of Certiorari — Ford Motor Co. v. Ramon Romo > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386015_1052%3A01 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 2003 - **Citation:** 538 U.S. 1028 ## Text 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 f [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386015_1052%3A01. Public record. Not legal advice.