Petition for Writ of Certiorari — Ford Motor Company v. Buell-Wilson, 127 S. Ct. 2250 (2007) (No. 06-1068)

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061068 JAN 3 0 2007

No. __ OFFICE OF THE CLERK

IN THE

Supreme Court of the United States

FORD MOTOR COMPANY.

Petitioner.

Vv.

BENETTA BUELL-WILSON, ET AL.

Respondents.

On Petition For A Writ Of Certiorari

To The California Court Of Appeal

PETITION FOR A WRIT OF CERTIORARI

THEODORE B. OLSON THEODORE J. BOUTROUS., JR.

Counsel of Record WILLIAM E. THOMSON

THOMAS H. DUPREE. JR. EILEEN M. AHERN

GIBSON, DUNN & CRUTCHER LLP GIBSON, DUNN & CRUTCHER LLP

1050 Connecticut Avenue. NW 333 South Grand Avenue

Washington. DC 20036 Los Angeles, CA 90071

(202) 985-8500 (213) 229-7000

DAVID G. LEITCH JOHN M. THOMAS

ROBERT W. POWELL BRYAN CAVE LLP

MICHAEL J. OTREILLY lol N. Clark

FORD MOTOR COMPANY Chicago. IL 6060]

One American Road (312) 602-5058

Dearborn. MI 48126

(313) 322-7453

Counsel for Petitioner Ford Motor Company

QUESTIONS PRESENTED

Respondent Benetta Buell-Wilson was injured when she

lost control of her Ford Explorer and it rotted over. Although

Ford had prevailed in the previous eleven cases alleging

similar design defects in the Explorer, a California jury found

that the vehicle was defectively designed and awarded re-

spondent and her husband more than $368 million, including

$246 million in punitive damages. The California Court of

Appeal found that the jury had acted with “passion or preju-

dice,” and reduced the awards, but upheld liability for both

compensatory and punitive damages.

The questions presented are:

1. Whether California law deprives defendants of “fair

notice” and thus violates the Due Process Clause if it permits

the imposition of liability for punitive damages without re-

gard to any objective indicators of reasonable conduct—

including industry custom, governmental safety standards

and policy judgments, and the existence of a genuine debate

about what the law requires.

2. Whether, in upholding a $55 million punitive damage

award and disregarding objective indicators of reasonable-

ness and good faith in determining constitutional excessive-

ness, the court rendered the “reprehensibility guidepost” a

nullity, by depriving it of any constraining force in product

liability cases.

3. Whether the Due Process Clause prohibits using a

punitive damage award to punish a manufacturer for selling

products not at issue in the case or to third parties not before

the court.

oF gee ae et

PARTIES TO THE PROCEEDINGS

AND RULE 29.6 STATEMENT

The plaintiffs in this case are Benetta Buell-Wilson and

Barry Wilson. The defendants are Ford Motor Company and

Drew Ford.

Ford Motor Company has no parent corporation, and no

publicly held company owns ten percent or more of its stock.

ill

TABLE OF CONTENTS

Page

TRAE 5 PAO UGe PRC RIOEEN BTEED visseronscpessdcperoreentoinnnbmsanenseagenannes i

PARTIES TO THE PROCEEDINGS AND RULE

BEER EEE ciciiictinsinnticshaiciithacintanibriicicaisitiaiiiaadiaita il

FR Se FUR Tt senitnrixinctonensicinubtsinieiaebesinncanin iv

OPINIONS AND ORDERS BELOW.................ccccccssecsssseeesees l

Fe Sai eter etesiceotcireccesinadnipadlidaaaalicitisercagiisteineisiisiamaduaneaeiaads l

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED............. (iclasdsenasbbeasnetadionciuchionias |

Se PA ERIN Ce TRE CA wise scicicincsccnscvsnisssnnigencnvecsivcatonmeen l

REASONS FOR GRANTING THE WRIT ........ eee eeeeeeeeeee 9

I. REVIEW IS WARRANTED TO CLARIFY

HOW THE DUE PROCESS “FAIR

NOTICE” PRINCIPLE APPLIES TO

STANDARDS FOR DETERMINING

PUNITIVE DAMAGE LIABILITY........000 ee. 9

Il. REVIEW IS NECESSARY TO CLARIFY

THE REPREHENSIBILITY GUIDEPOST

IN PRODUCT LIABILITY AND

PERSONAL INJURY CASES. ......::t.cccssocsseoveceeeses 22

Ill. AT A MINIMUM, THIS COURT SHOULD

HOLD THIS PETITION PENDING ITS

DECISION IN PHILIP MORRIS V.

PRUEAIRONED <oceuiadscasekobertriatitaintmncictiddeapdomceibls 28

CIV BA FRRION scnenrsecrdnocerenneiecions ss ebdinesssenihcbleiatatiaondenaniaaeeind 30

TABLE OF AUTHORITIES

Pages

CASES

A.B. Small Co. v. Am. Sugar Ref. Co.,

Be Ae eT ihiiiiscisesichcceesseniaanpideicedeniiiuininiine 15

Anderson v. General Motors Corp.,

No. BC116926 (Cal. Super. Ct., Los ‘

Pit ieisciciiericcaticisiniatbcccehicninhinevotdedinacenyois 19

Anderson v. Owens-Corning Fiberglas Corp.,

Fas ET CUO ciinictics ivciacseicentanihsicaemucaaraets 12

Arthur Andersen LLP v. United States,

Ie ills Pe ID iersitisnssnciiidiiciconcseccistiedissnibioceresacunlanate 11

Bankers Life & Cas. Co. v. Crenshaw,

A Rae 2 1 RE cincedtsendtnasitaedoressteasconasiminconiivesedsiians 18

Barber v. Nabors Drilling U.S.A., Inc.,

Fe Fe I BUT Bs icivestecsivpentivaphaxnnnsrasoniosepinss 25

Barker v. Lull Eng’g Co., Inc.,

PACE. SE EES (ETS) renin conevesnpncnsnuytevsnoses Simsheiees 12,14

BMW of N. Am., Inc. v. Gore,

Fe ee ic sciiciavenee sc dacehgedebiniatnauees passim

Browning-Ferris Indus. of Vermont, Inc. v.

Kelco Disposal, Inc.,

492 U.S. 257 (1989).......... sosaseesartonnsnoninersinveerennsneies 18, 19

Carroll v. Otis Elevator Co.,

ge, A |. | SERN RIN a remy Ria Meme D 21

Champlin Ref. Co. v. Corp. Comm’n of

Oklahoma,

Pe A OE RAE F ocicvesiskeeictcdacvchdiuvseteawesosiednseninanaets iS.

City of Chicago v. Morales,

ee ee A eisisasid es ciscusinraivghsninepsiadshddemtbapibanions 11

Clark v. Chrysler Corp.,

BF ae PU, BO baci sscrcerszcenncanisterennnba passim

Connally v. Gen’l Constr. Co.,

Be is OE chiar nbscic tedacsotcconinicneeonecerisnanas passim

Cooper Indus., Inc. v. Leatherman Tool Group, Inc.,

Re ae Ee CANE DP aasavinewitapetalesdjnchabncisinxeniesiedasiiocamions 20

Corrosion Proof Fittings v. E.P.A.,

DET FD Tee CO CA, TGP) vcsccsivevasssasvscevinsctseceiernnaias 20

Davis v. Ford Motor Co.,

No. Civ. A. 302CV271LN, 2006 WL 83500

ae a I A tg I waka cctaig nts victtencriessonteumsensaaaedioban 27

Drabik v. Stanley-Bostitch, Inc.,

SPF FP Bee ee FF iss batiscvccsssiecssnistasenniosbonsonee 13

Estate of Mohr v. DaimlerChrysler Corp.,

No. CV03-2433 (Tenn. Cir. Ct. February 2005) ........... 19

Flax v. DaimlerChrysler Corp.,

2006 WL 3813655 (Tenn. Ct. App. Dec. 27,

PT ini dhaiostsiseniclasdpblslontcaaon 13

GEICO Gen. Ins. Co. v. Edo,

FR ee isin diteciccindaiacncidareeseiucésdbaicdcawicnaoeumine 15

Giaccio v. Pennsylvania,

ee Be CA isi csiishcrecccntiaseed tvesyssuncadincelasaiicags 16, 17

~Grayned v. City of Rockford

See eR og LE eo 3 SENN ee Oe MODS protec REISS 125. 11

Grimshaw v. Ford Motor Co.,

EPP GA FR, FO TOT CPR icicles 8

Hansen v. Sunnyside Prods., Inc.,

SO: PD I BI EET ia iticchcthctorcniicctipiamncrdcerans 14

Herndon v. Lowry,

IE EOE TD ceeisiiiceiesiiinevenchinienntteneicbialesniiptetaniioniedies 18

Hillrichs v. Avco Corp.,

FE Fhe Oe FCI TSF) vccccecosecesscenesonsssvvesesensessccesens 14

Honda Motor Co. v. Oberg,

Se ee UE tests dhniinnis eetaicieaihinnlceeilianactieubioueiedion 19

In re Exxon Valdez, :

472 F.36 GOO (Sth Cir, 2006)...cccscosecsssecseroroseseoenes 2, 22, 26

Interstate Southwest Ltd. v. Avco Corp.,

Tex. Dist. Ct. No. 29,385 (Grimes County)................... 19

Jaramillo v. Ford Motor Co.,

116 Fed. Appx. 76 (Sth Cir. 2004) ............ccccssccrscorssooess 27

Jimenez v. DaimlerChrysler Corp.,

74 F. Supp. 2d 548 (D.S.C. 1999), reversed,

BF EF ae CE i RE EDs iatenscvvcavicercissviccevesvievinversons 19

Kolender v. Lawson,

Se ee PAT PUEDE iinsccoresnnieatopasunigeiossiusesigusondasiaebaiyoaton 1]

Lankford v. Idaho,

Be is FB EP cach ancscincaescetcsctunntnooviaivesiaanatiinceueie’ 10

New York Times Co. v. Sullivan,

Es ee ED ssaickstaistvedanedinvnidivscheosennievnionsesansusteatienin 18

Pacific Mut. Life. Ins. Co. v. Haslip,

ne i ER be kgititedeaslyensbaivniiccinsinsonisiondicuesainicacenibans 19, 27

Philip Morris USA v. Williams,

i enethanalpti 2, 3, 28

Richards v. Michelin Tire Corp.,

ee ry Caine cvecinectneycbenecsveccintinnstcis 13

S & H Riggers & Erectors, Inc. v. Occupational

Safety & Health Review Comm'n,

ee ee Ee Cele OUD sinciniindnenscicananictinicisienbenreees 15

Vil

Safeco Ins. Co. v. Burr,

Pe OPIN siivisthccesiskicercttniniadhdsiodcneieletiateicaepaieaeaiiitepationiaeuisiale 1

San Diego Building Trades Council v. Garmon,

Fee ee TE iiiiiniiiiicceaenishenbiseiiocip thistenwlecaninaindaan 18

Satcher v. Honda Motor Co.,

ee FN Ce Gls FN Pisentivenonesnctniubintinitebncubeen 14, 25

Screws v. United States,

A Fe Ee aictdai ciancsaiicastisiidiinc reli incaiisclaibesthcaces 16

Shatz v. Ford Motor Co.,

412 F. Supp. 2d 581 (N.D. W. Va. 2006)... 27

Southwestern Tel. & Tel. Co. v. Danaher,

I isreretedisntesaaiahiinlinitaainchansieaecoiuen 15

State Farm Mut. Auto. Ins. Co. v. Campbell,

| a lie OIE IE Coles cisachintiiicsarpadindeamipipertebedes passim

TXO Prod. Corp. v. Alliance Res. Corp.,

A ie RE ee iia ctivints item stecoti obieiciataataeds 27

United States v. Capital Traction Co., ,

eI ee ee ects acisnerindenaataiochianiiabuininicee 17

United States v. Powell,

Ne SI EE Oe PE chseiscinosisnlaebidcvisianiietenas maenaculuaud ess 21

Village of Hoffman Estates v. Flipside,

Or Ee EDs hicissecitetstacenicciimcinibe ecaubaemomaidhien 17

CONSTITUTIONAL PROVISIONS

Sse CIE nn SUNN, FRI a © ccc stcacimennsenscudcoaicedninenieds passim

STATUTES

Ee ee a Ae Ne ecient caisiacaieecilidelacbibiathiesciimdocnalapilaiaeds 16

Fn een Be I richcitaasitsielina si cccscisiplicn ghee ccpeianbietibadbela least l

California Civil Code § 3294 .............cccccseseseeceseccsesoose 9, 13, 14

Vill

REGULATIONS ;

Pe Io iiriccccccesinemniiounnanay 6

52 Fed. Reg. 49033

SII SE COED Disc dasisdcnccintiniptanaendioniutcsenpseibinborbidhiioesoien 4

53 Fed. Reg. 34866

III Gi FINN T sss nicpnsesnseedeecidedtipenaniemeancetoinventicaaies 4,5

67 Fed. Reg. 62528 ,

SIE CIID dincscst snsaginipclincocceedasdanaunlemebaechisinenbidedscensunina 4

68 Fed. Reg. 59250

NE BR I ia ick ccicalst car ccebdisbinediecundpanbnanicekivecbans 4

OTHER AUTHORITIES

Alex Berenson, For Merck, Vioxx Paper Trail

Won’t Go Away,

PEE 5 oy NS og Oe hash ileotidastcenensedantctresaciasonti 19

David G. Owen, Problems In Assessing Punitive

Damages Against Manufacturers Of

Defective Products,

A Te Re stein pisiv eed ctvcdemnacseveventicrrnianie 12

Jeffrey McCracken, “Big Three Face New

Obstacles In Restructuring;

Ford’s Massive ’06 Loss, GM’s Accounting

Woes Underscore Challenges,”

re Ss Fy I Be Bg IRE ciscicsncinseccicvcneticbretviorne 25

Reid Hastie et al., Looking Backward in

Punitive Judgments: 20-20 Vision?,

in Cass R. Sunstein et al., Punitive Damages:

PM UNS CONN CE oii vcs acshncscibecsenicddccseoipasrusees 21

Restatement (Third) of Torts: Products Liability

Il a es sina edatiienn 14

Stephen Breyer, Breaking the Vicious Circle:

Toward Effective Risk Regulation (1992)... 21

W. Kip Viscusi, Corporate Risk Analysis: A

Reckless Act?,

5 Gai, 1, enh Bi I i icssdenss ccs eceescvnececcocsecessoxoe 20

W. Page Keeton, et al., Prosser and Keeton on

the Law of Torts (5th ed. 1984)

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 opinion (Petitioner’s Appendix

(“App.”) la-61a) is reported at 141 Cal. App. 4th 525 (2006).

JURISDICTION

The court of appeal entered its judgment on July 19,

2006. The California Supreme Court denied Ford’s timely

- petition for review on November 1, 2006. This Court has

jurisdiction pursuant to 28 U.S.C. § 1257(a).

CONSTITUTIONAL AND STATUTORY 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. California’s

punitive damage statute, Civil Code Section 3294, is repro-

duced in the Appendix. See App. 115a-116a.

STATEMENT OF THE CASE

This Court has never examined the constitutional limits

on punitive damages in the product design context, and this

case presents the ideal opportunity to address three important ~

and recurring questions that routinely arise in such cases.

The first question is whether a punitive damages statute

that is interpreted to permit a manufacturer to be punished

without reference to any objective indicator of reasonable

conduct is unconstitutionally vague because it fails to provide

“fair notice” as to how the manufacturer can conform its con-

duct to the law and avoid arbitrary, multimillion-dollar penal-

ties. See State Farm Mut. Auto. Ins. Co. v. Campbell, 538

U.S. 408, 417 (2003) (“‘[E]lementary notions of fairness en-

shrined in our constitutional jurisprudence dictate that a per-

son receive fair notice ... of the conduct that will subject

him to punishment.’””) (quoting BMW of N. Am., Inc. v. Gore,

517 U.S. 559, 574 (1996)). The court of appeal held that,

under California law, objective measures of reasonable con-

duct—such as compliance with industry custom and federal

safety standards and policy judgments, and a reasonable dis-

agreement within the engineering community—had no bear-

ing on its punitive damage inquiry, and allowed the jury to

impose punishment based on its retrospective determination

that Ford had miscalculated when it balanced the -risks and

benefits of the Explorer’s design. The court’s interpretation

renders California law so vague as applied to product design

cases that manufacturers have no idea what conduct in hind-

sight might be deemed “malicious” and thus subject them to

punishment. This approach not only directly conflicts with

numerous decisions of this Court and lower courts, but also

directly interferes with federal automotive safety policy.

The second question presented is how these objective

indicators and other considerations should be factored into

the reprehensibility analysis for determining the constitution-

ally permissible amount of a punitive damage award. By de-

clining to consider objective factors, the court of appeal made

reprehensibility a concept without constraining force in

product liability cases, as the factors the court did consider—

such as the fact that a consumer was physically injured and

that the product (like almost all products) posed known

risks—will be present in almost every case. The court’s ap-

proach to reprehensibility conflicts with State Farm and

Gore, as well as with the approach followed by the Sixth and

Ninth Circuits. See Clark v. Chrysler Corp., 436 F.3d 594

(6th Cir. 2006); In re Exxon Valdez, 472 F.3d 600 (9th Cir.

2006).

Finally, the third question is one that is currently before

this Court in Philip Morris USA v. Williams, No. 06-1289:

whether due process forbids punishing a defendant for al-

leged harm to third parties. Here, Ford was punished for its

sales of the Explorer—as well as the Bronco II—to third par-

ties not before the court; therefore this Court should, at a

minimum, hold this petition pending a decision in Williams.

1. In January 2002, respondent Benetta Buell-Wilson

was driving her four-door 1997 Ford Explorer at freeway

speed. App. 5a. She swerved suddenly to avoid a metal ob-

ject that flew off a motor home in front of her. /d. Her vehi-

cle rolled over 4 '4 times and came to rest upside down. /d.

She suffered a severe spinal cord injury that rendered her

paraplegic. Jd. at 6a. She and her husband sued, alleging

that their Explorer was “dangerously unstable and prone to

rollover due to its overly narrow track width and high center

of gravity” and the roof was “inadequately supported and

defectively weak.” /d. at 8a. Respondents also argued that

Ford failed to warn of the alleged defects. Jd. at 12a-14a.

Respondents’ rollover defect theory was that the 1997

Explorer was “unstable and prone to rollover” because its

“stability index”-—a number obtained by dividing the track

width of a vehicle by its center of gravity height—was too

low. App. 8a-9a. Respondents’ expert also claimed the Ex-

plorer’s stability index was even lower than that of the

Bronco II (a smaller, two-door SUV designed by Ford in

1981), and relied on a Ford document suggesting the Bron-

co Il had a “rollover rate [that was] three times higher than

the Chevy S-10 Blazer.” /d. at 10a.

While admitting evidence concerning comparative roll-

over rates of other vehicles, the trial court refused to allow

Ford to present such data as to the Explorer itself. Ford’s

analysis would have shown that the Explorer had a rollover

rate that was much better than the Bronco II, virtually identi-

cal to the Chevrolet Blazer, and, in fact, “one of the best roll-

over rates compared to other SUV’s in its class.” App. 20a.

It was not surprising to Ford that the Explorer performed

much better in the real world than simple reliance on the sta-

bility index would have predicted, because the index has long

been known to be at best an incomplete predictor of rollover

rates. This was not a conclusion Ford reached on its own. In

fact, the National Highway Traffic Safety Administration

(“NHTSA”)—the federal agency charged by Congress with

regulating motor vehicle safety—has repeatedly considered

whether imposing a minimum stability index is consistent

with national safety policy, and has repeatedly concluded that

it is not. NHTSA made this determinatic : in part because

the stability index “does not take into consideration such

chassis and suspension variables as wheelbase, kinematic and

compliance characteristics of suspensions, and spring and

shock absorber characteristics,” and in part because imposing

a minimum stability index would “severely reduce the capa-

bility of utility vehicles to perform their intended off-road

occupational and recreational functions.” 52 Fed. Reg.

49033, 49035, 49037 (Dec. 29, 1987).

Respondents’ expert agreed that design characteristics,

other than those reflected in the stability index, affect stabil-

ity. Reporter’s Transcript (“RT”) 3712-3714. As he testi-

fied, “[y]ou can’t tell until you go out and test it.” _RT3721.

But the issue of what tests to use to evaluate rollover stability

has itself been a subject of substantial debate among engi-

neers and regulators for decades. In 1988, when the Explorer

was being designed, NHTSA observed that “there is no stan-

dard, accepted test or series of test procedures and perform-

ance requirements which accurately predict a vehicle’s roll-

over propensity.” 53 Fed. Reg. 34866, 34867 (Sept. 8,

1988). Since that time, NHTSA has studied numerous pro-

posed methods of testing and evaluating vehicle handling and

stability, including, among many others, J-turn, Fishhook,

and Consumers Union (“CU”). See 67 Fed. Reg. 62528

(Oct. 7, 2002). Not until October 2003, more than eighteen

months after the accident at issue and fifteen years after the

Explorer was developed, did NHTSA finally conclude that

“(t]he J-Turn maneuver and the Fishhook maneuver . . . were

... the most objective tests of the susceptibility of vehicles to

maneuver-induced on-road rollover.” 68 Fed. Reg. 59250-

59251, 59252 (Oct. 14, 2003).

In accord with its longstanding policy, Ford required the

Explorer to pass the J-turn test——an extreme maneuver in

which the driver abruptly turns the steering wheel 360 de-

grees in one direction. RT3243, 1288. Respondents’ expert

agreed the J-turn is an appropriate test, RT3612, and con-

ceded the Explorer passed it. RT3657.

NHTSA has repeatedly considered and rejected the CU

test, the stability test (other than the stability index) most

heavily relied on by respondents. In 1988, as the Explorer

was being designed, NHTSA found that the CU test “dofes]

not have a scientific basis and cannot be linked to real-world

crash avoidance needs, or to actual crash data.” 53 Fed. Reg.

34866, 34867 (Sept. 8, 1988). Nevertheless, CU used its test

to evaluate vehicles and publish reviews based on these tests,

and Ford was concerned about unfavorable publicity in the

event the Explorer did not receive a satisfactory rating from

CU. Appellant’s Appendix (“AA”) 2482. Therefore, after

the Explorer had already passed the J-turn test and al/ of

Ford’s other internal requirements, RT3261-3262, AA2480,

Ford engineers suggested four design changes that would

maximize the chances that the Explorer would pass the CU

test. AA2478-2481. Although, like those at NHTSA, these

engineers believed that the CU test is “generally unrepresen-

tative of [the] real world,” AA2518-2519, Ford made two of

the suggested four changes. AA2502.

As a result, the production model Explorer-sold to con-

sumers passed the CU test when tested by Ford, by NHTSA,

and by CU itself. RT3232, 3636. Although respondents

cited evidence that some prototypes failed certain tests during

development, their expert admitted that when tested by

NHTSA even the /east stable production model of the Ex-

plorer passed ail four handling and stability tests that he ad-

vocated. RT3635-36.

The respondents’ Explorer had a federally-mandated

warning on the visor warning consumers that the vehicle

handled differently than passenger cars and that there was a

risk of rolling over in sudden maneuvers. RT1723-26.

Despite the fact that the Explorer conformed to industry

custom, met all federal safety standards and requirements,

passed all tests required by Ford’s internal policies, and re-

ceived modifications that permitted it also to pass the non-

mandated CU test, the trial court allowed respondents to ar-

gue that Ford had acted with “malice” in addressing Explorer

stability issues during the design process. Respondents relied

principally on_internal Ford documents in which engineers—

not surprisingly—debated the risks and benefits of the Ex-

plorer and compared it to the Bronco II. Although the jury

was not asked to and did not decide if the Bronco II was de-

fective, respondents’ counsel encouraged the jury to impose

punitive damages based on Ford’s design and marketing of

the Bronco II, RT8172-8174, as well as the Explorer. /d.

Respondents also argued that punitive damages were jus-

tified because Ford knew that the Explorer’s roof design

posed unreasonable risks and they alleged that the roof

crushed during the rollover sequence, causing Mrs. Wilson’s

injury. Ford, however, introduced evidence that the Ex-

plorer’s roof met Federal Motor Vehicle Safety Standard

216, 49 C.F.R. §571.216, the standard governing roof

strength. RT5145, 5179.! i

Ford also demonstrated that engineers have debated the

optimal level of roof strength for decades. Ford introduced

scientific studies demonstrating that increasing roof strength

does not result in a reduction of injuries, because rollover

injuries typically occur when the vehicle occupant is thrown

into the roof prior to any “crush” occurring. RT5151-5168.

2. Over Ford’s due process and state law objections,

RT8128-8136, 8433-8438, 8451-8456, 8461-8462, 8475-

8488, 8496-8500, the trial court gave California’s standard

jury instructions on punitive damages. App. 109a-114a. The

court rejected Ford’s proposed additional instructions that

would have told the jury that “[pJunitive damages generally

are not appropriate where a manufacturer has designed its

l Respondents complained about Ford’s testing procedure and attacked

the federal standard, contending that NHTSA “has blown it on 216,”

RT 2404, but their expert did not test the roof. RT2533-2534.

product to meet or exceed government safety standards,” and

that “[p]unitive damages ordinarily cannot be awarded where

the manufacturer has designed its product consistent with in-

dustry custom and practice.” App. 99a-102a. The court re-

jected Ford’s proposed instruction that punitive damages

cannot be imposed to punish objectively reasonable conduct:

“You may not award punitive damages if reasonable people

could disagree about whether Ford’s conduct was correct or

lawful.” /d. at 97a-98a. And the court refused to instruct the

jury that “[i]n determining the appropriate amount of punitive -

' damages ... you may consider only the harm to the plain-

tiffs,” and that “you may not consider Ford’s size, wealth,

[or] its overall profits and revenues.” Jd. at 103a-105a.

Before this trial, eleven Ford Explorer cases involving

similar claims had gone to judgment, and in all eleven cases

judgment was entered in favor of Ford. AA1154-1235. But

in this case, the jury found the Explorer had stability and roof

design defects, that Ford failed to warn about the roof, and

that these were substantial factors in causing Mrs. Wilson’s

injuries. App. 79a-83a. The jury awarded Mrs. Wilson

$573,348 for past economic loss, $4.032 million for future

economic loss, and $105 million for non-economic loss—

five times more than requested. /d. at 14a, 33a-34a. The jury

also awarded Mr. Wilson $13 million for loss of consortium.

Id. at 84a. The jury found by a 9-3 vote that Ford acted with

“malice” warranting punitive damages. /d.

In the trial’s second phase, respondents’ counsel empha-

sized Ford’s worldwide net worth, at the time $12.8 billion.

RT8509-8511. Counsel urged the jury to act as the “con-

science of our community,” RT8526, and exhorted the jury to

“send a direct message from society to Ford Motor Com-

pany, to Mr. Ford and to his Board of Directors and their

wall panel conference room,” a message “that gets the pub-

licity.”. RT8508-8510. He emphasized that “our community

here in California is relying on you to do the job. And that is

to assess, to send the message, to help make our community

safe.” RT8525; see also RT8156-8157 (addressing “what

has happened to Benetta Wilson, and others like her’’).

The jury then imposed $246 million in punitive dam-

ages—twice the amount respondents sought. The trial court

denied JNOV but found the damages excessive. It reduced

Mrs. Wilson’s compensatory damages award to $70 million,

Mr. Wilson’s loss of consortium award to $5 million, and the

punitive damages-to $75 million. App. 71a.

3. The California Court of Appeal affirmed the judg-

ment on liability for both compensatory and punitive dam-

ages. App. 4a. Although the court found “compelling evi-

dence” that during the phase of the trial in which the jury

held Ford liable for punitive damages, the jury was acting out

of “passion or prejudice” and was not a “fair and neutral trier

of fact,” App. 35a, the court held that these defects could be

cured by remitting the compensatory damages to $27.6 mil-

lion and the punitive damages to $55 million. App. 4a.

In upholding liability for punitive damages, the court

held that evidence that the Explorer “had one of the best roll-

over rates compared to other SUV’s in its class” was “irrele-

vant” under California law, and that “admission of such evi-

dence [would have been] reversible error.” App. 20a-22a.

The court declared that “compliance with industry standards

or custom was irrelevant not only to the issue of defect, but

also to punitive damages.” Jd. at 23a.

Nor did the court give any weight to Ford’s compliance

with the federal safety standards and the policy judgments of

NHTSA, deciding instead that “‘[g]overnmental safety stan-

dards ... have failed to provide adequate consumer protec-

tion against the manufacture and distribution of defective

products.’” /d. at 47a (quoting Grimshaw v. Ford Motor Co.,

119 Cal. App. 3d 757, 810 (1981)). The court also “re-

ject[ed] [the] contention” that the existence of a “reasonable

disagreement” among engineers and safety experts over these

technical and complex design judgments precluded an award

of punitive damages. Jd. at 43a. And the court rejected

Ford’s argument that, if punitive damages were imposed

here, then California law is unconstitutionally vague as ap-

plied because there would be no objective standards by

which a manufacturer could safely judge its design decisions

and avoid punishment. App. 50a.

Finally, the court rejected these same objective factors in

addressing Ford’s constitutional challenge to the amount of

the punitive damage award, holding that “the reprehensibility

of Ford’s conduct was high.” App. 55a. The court premised

the punishment on Ford’s sale of the Explorer, as well as the

Bronco II, to third parties not before the court. Jd. at 43a,

47a, 55a-57a; see also App. 107a-108a.

3. Ford filed a timely petition for review with the Cali-

fornia Supreme Court arguing, among other things, that “[r]e-

view is . . . needed because the Court of Appeal’s interpreta-

tion of section 3294 renders it unconstitutionally vague as

applied in this case, both because Ford did not have notice

sufficient to tailor its conduct to avoid punishment and be-

cause of the risk of arbitrary and discriminatory enforce-

ment.” Pet. for Rev. 32 n. 5. Ford further argued that the

court of appeal “misinterpreted the due-process excessive-

ness standards governing punitive damages” by refusing “to

consider key objective factors in upholding a record-setting

$55 million punishment. Instead, the court relied on factors

condemned by State Farm, such as Explorer sales to con-

sumers not before the court, even though Ford had prevailed

in the eleven prior Explorer cases.” Jd. at 5. The California

Supreme Court denied review. App. 108a.

REASONS FOR GRANTING THE WRIT

I. REVIEW IS WARRANTED TO CLARIFY

HOW THE DUE PROCESS “FAIR NOTICE”

PRINCIPLE APPLIES TO STANDARDS FOR

DETERMINING PUNITIVE DAMAGE

LIABILITY

The decision below upholding the jury’s imposition of

punitive damages flatly contravenes the Due Process

Clause’s prohibition on punishments based on standards that

are so vague that they neither meaningfully inform the de-

fendan vhat conduct is proscribed nor prevent the arbi-

trary infliction of punishment. While this Court’s prior deci-

sions have addressed the constitutional constraints on the

amount of punitive damage awards, the Court has never

granted review in a case to clarify what the due process “fair

notice” mandate requires in the context of the threshold li-

ability determination as to these punishments.

The Court should do so here. The ad hoc, arbitrary im-

position of punitive damages based on vague and subjective

standards is the root cause of the flood of huge verdicts that

prompted this Court to recognize “that there are procedural

and substantive constitutional limitations on these awards.”

State Farm, 538 U.S. at 416-417 (quotation marks omitted).

Guidance from this Court will help stem the tide of unconsti-

tutional punitive damage verdicts and reduce the need for

courts to engage in excessiveness review.

1. “‘[E]lementary notions of fairness enshrined in our

constitutional jurisprudence dictate that a person receive fair

notice ... of the conduct that will subject him to punish-

ment.” State Farm, 538 U.S. at 417 (quoting Gore, 517 U.S.

at 574): Indeed, the “concept of fair notice [is] the bedrock

of any constitutionally fair procedure.” Lankford v. Idaho,

500 U.S. 110, 121 (1991). “The Due Process Clause does

not permit a State to classify arbitrariness as a virtue,” and

“({a] State can have no legitimate interest in deliberately mak-

ing the law so arbitrary that citizens will be unable to avoid

punishment based solely upon bias or whim.” - State Farm,

538 U.S at 417 (citations omitted).

While State Farm and Gore focused on the failure to

provide fair notice of the severity of the punishment that

could be imposed, the right to fair notice of the conduct that

can give rise to punishment is even more fundamental. No

matter what one might think of the Court’s involvement in

issues concerning the amount of punitive damages, the

Court’s concern with providing fair notice and opportunity to

avoid punishment altogether has an even longer pedigree and

is even more strictly enforced. As the Court put it most re-

cently in Arthur Andersen LLP v. United States, 544 U.S.

696 (2005), “a fair warning should be given to the world in

language that the common world will understand, of what the

law intends to do if a certain line is passed.” Jd. at 703 (quo-

tation omitted).

Moreover, the Court has made clear that “because we as-

sume that man is free to steer between lawful and unlawful

conduct, we insist that laws give the person of ordinary intel-

ligence a reasonable opportunity to know what is prohibited,

so that he may act accordingly. Vague laws may trap the in-

nocent by not providing fair warning.” Grayned v. City of

Rockford, 408 U.S. 104, 108 (1972); see also City of Chicago

v. Morales, 527 U.S. 41, 56 (1999) (due process requires “the

kind of notice that will enable ordinary people to understand

what conduct [a law] prohibits”). In addition, if arbitrary and

discriminatory enforcement is to be prevented, laws must

provide explicit standards for those who apply them. “A

vague law impermissibly delegates basic policy matters to

policemen, judges, and juries for resolution on an ad hoc and

subjective basis, with the attendant dangers of arbitrary and

discriminatory application.” Grayned, 408 U.S. at 108-109;

Kolender v. Lawson, 461 U.S. 352, 357-358 (1983) (law un-

constitutionally vague if it fails to “establish minimal guide-

lines to govern law enforcement” and confers upon “police-

men, prosecutors, and juries” “a standardless sweep ... to

pursue their personal predilections”).

In short, a “statute which either forbids or requires the

doing of an act in terms so vague that men of common intel-

ligence must necessarily guess at its meaning and differ as to

its application, violates the first-essential of due process.”

Connally v. Gen’l Constr. Co., 269 U.S. 385, 391 (1926).

2. The combination of California product liability and

punitive damage law, as applied here, violates these funda-

~ mental due process principles, and conflicts with decisions of

this Court and other courts in analogous contexts.

a. California’s standards for determining strict tort li-

ability for defective product designs are exceedingly vague

and subjective, and by definition retrospective, with the jury

setting a new safety “standard” in each case and then apply-

ing that standard to the facts at hand. California’s “risk-

benefit” test, which the courts applied here, empowers a jury

to decide, “through hindsight,” if a product design is defec-

tive by weighing, “among other relevant factors, the gravity

of the danger posed by the challenged design, the likelihood

that such danger would occur, the mechanical feasibility of a

safer alternative design, the financial cost of an improved de-

sign, and the adverse consequences to the product and to the

consumer that would result from an alternative design.”

Barker v. Lull Eng’g Co., Inc., 20 Cal. 3d 413, 431 (1978).

The risk-benefit test thus “directs the jury to weigh or bal-

ance a number of factors and sets out a list of competing con-

siderations for the jury to evaluate in determining the exis-

tence of a design defect.” Anderson v. Owens-Corning Fi-

berglas Corp., 53 Cal. 3d 987, 1001 (1991) (emphasis

added). Once the plaintiff proves the design caused his or

her injuries, California law shifts the burden to the defendant

to prove that the design’s benefits outweigh its risks, Barker,

20 Cal. 3d at 432, and the plaintiff need not prove fault.

Because this test authorizes individual lay juries to make

an after-the-fact policy decision as to a complex product de-

sign, its application is necessarily unpredictable. As one

commentator has observed, “[t]he very notion of how much

design safety is enough .. . involves a morass of conceptual,

political, and practical issues on which juries, courts, com-

mentators, and legislatures strongly disagree” and “[t]here is

therefore a vast defect ‘no man’s land’ where a manufacturer

has no idea whether it is on the right or wrong side of the

law....” David G. Owen, Problems In Assessing Punitive

Damages Against Manufacturers Of Defective Products, 49

U. Chi. L. Rev. 1, 37-38 (1982).

b. Although the California punitive damage standard is

theoretically capable of rational application in many circum-

stances, the court of appeal in this case applied the standard

in a way that renders it devoid of any objective content that

might provide fair notice of when punitive damages may be

imposed against a manufacturer in the murky area of product

liability.2_ California Civil Code Section 3294 permits puni-

tive damages where “it is proven by clear and convincing

evidence that the defendant has been guilty of oppression,

fraud, or malice.” As relevant here, section 3294(c)(1) de-

fines “malice” as “despicable conduct which is carried on by

the defendant with a willful and conscious disregard of the

rights or safety of others.” But in evaluating whether Ford

acted with such malice, the court of appeal (like the trial

court) dismissed as irrelevant all objective standards, includ-

ing three that are widely recognized in product design cases

as bearing directly on punitive damages: conformance to in-

dustry custom, compliance with federal regulations and pol-

icy judgments, and the existence of an objectively reasonable

disagreement in the engineering community over the design

issues in question. See supra, at 6-9.3

2 Ford is making an as-applied challenge, and is not arguing that the

statute is unconstitutional on its face. The nature of the challenge, how-

ever, does not diminish the broad significance of the question presented,

because a decision by this Court establishing the constitutional bounda-

ries for imposition of punitive damage liability in design defect cases will

serve as a due process check on hundreds—if not thousands—of such

cases each year, as well as influence the manner is which punitive dam-

age standards are applied and reviewed in countless other cases.

3 Industry custom: See, e.g., Drabik v. Stanley-Bostitch, Inc., 997

F.2d 496, 510 (8th Cir. 1993) (“Compliance with industry standard and

custom serves to negate conscious disregard and to show that the defen-

dant acted with a nonculpable state of mind. . . .”); Flax v. DaimlerChrys-

ler Corp., 2006 WL 3813655, *27 (Tenn. Ct. App. Dec. 27, 2006) (vacat-

ing punitive damage verdict and observing that vehicle manufacturer's

adherence to “industry customs and standards” is “relevant when deter-

mining whether [its] conduct is reckless”). Federal safety standards:

See, e.g., Richards v. Michelin Tire Corp., 21 F.3d 1048, 1059 (11th Cir.

1994) (granting judgment on punitive damages where, inter alia, “the

record demonstrates that [the manufacturer] complied with all requisite

Federal Motor Vehicle Safety Standards”); Flax, 2006 WL 3813655, at

*25 (such compliance “weighs heavily . . . against a clear and convincing

finding of recklessness”); W. Page Keeton, ef al., Prosser and Keeton on

the Law of Torts § 36, at 233 n. 41 (Sth ed. 1984) (“In most contexts .. .

The court’s approach necessarily made it impossible for

Ford to determine, in advance, if its design decisions as to the

Explorer would subject it to punishment in California, and

leaves Ford with no guidance as it makes day-to-day design

decisions about what might subject it to punitive damages in

California in the future. Section 3294 does not define what

level of “safety” must be willfully and consciously disre-

garded to be deemed “despicable” and thus trigger punitive

damage liability, and California law expressly recognizes that

the design of a product inherently involves balancing safety

with other legitimate concerns and that some level of danger

will remain no matter what. See, e.g., Barker, 20 Cal. 3d at

430; Hansen v. Sunnyside Prods., Inc., 55 Cal. App. 4th

1497, 1512 (1997) (“the test is not ‘preventable danger’ but

‘excessive preventable danger’”’); see also Restatement

(Third) of Torts: Products Liability § 2, cmt a, at 16 (1998)

(“Society does not benefit from products that are excessively

safe—for example, automobiles designed with maximum

speeds of 20 miles per hour—any more than it benefits from

products that are too risky. Society benefits most when the

right, or optimal, amount of product safety is achieved.”).

If, however, no objective standards of reasonableness in-

form the California malice standard, as the court of appeal

held, then Ford and other manufacturers “must necessarily

guess at its meaning” and hope that the juries and courts will

agree with them. Connally, 269 U.S. at 391. In fact, under

the court of appeal’s ruling, Ford could be punished severely

simply because a single jury concludes that a single engineer

[Footnote continued from previous page]

compliance with a statutory standard should bar liability for punitive

damages.”). Reasonable disagreement: See, e.g., Satcher v. Honda Mo-

tor Co., 52 F.3d 1311, 1317 (Sth Cir. 1995) (vacating punitive award

when, inter alia, “there is a genuine dispute in the scientific community”

regarding reasonableness of design); Hillrichs v. Avco Corp., 514

N.W.2d 94, 100 (lowa 1994) (“an award of punitive damages is inappro-

priate when room exists for reasonable disagreement over the relative

risks and utilities of the conduct and device at issue”).

believed that the design created too much risk, even though

all of the other engineers, and company executives, other

manufacturers, the federal government and numerous other

juries and courts disagreed. This ruling “violates the first

essential of due process,” id., and conflicts with many deci-

sions of this Court and other courts.4

For example, in Southwestern Tel. & Tel. Co. v. Dana-

her, 238 U.S. 482, 490 (1915), the Court held that a $6,300

civil penalty violated due process where the defendant was

“well justified in regarding [its conduct] as reasonable and in

acting on that belief.” The Court reached this conclusion

even assuming that the defendant “should have known that

the Supreme Court of the State ... might hold the [conduct]

unreasonable.” Jd.; see also A.B. Small Co. v. Am. Sugar

Ref. Co., 267 U.S. 233, 239-240 (1925) (striking down stat-

ute prohibiting “unjust, unreasonable and excessive” sugar

prices as applied in civil suit because it provided no standard

and “there was no accepted and fairly stable commercial

standard which could be regarded as impliedly taken up and

adopted by the statute”); Champlin Ref. Co. v. Corp.

Comm’n of Oklahoma, 286 U.S. 210, 242-243 (1932) (strik-

ing down statute because its “general terms” were not well

defined by the common law or “shown to have any meaning

in the oil industry sufficiently definite to enable those famil-

iar with the operation of oil wells to apply them with any rea-

sonable degree of certainty”); S & H Riggers & Erectors, Inc.

v. Occupational Safety & Health Review Comm'n, 659 F.2d

1273, 1281 (Sth Cir. 1981) (invalidating application of regu-

lation permitting subjective evaluation of defendant’s con-

duct without incorporating industry standards or actual

knowledge requirement).

4 As the Solicitor General explains in a case pending before this Court,

it is widely accepted that “reckless disregard in the civil context is, at

bottom, an objective standard.” Brief for the United States in Nos. 06-84

& 06-100, Safeco Ins. Co. v. Burr & GEICO Gen. Ins. Co. v. Edo, at 22

(emphasis added); see also Prosser & Keeton on the Law of Torts, § 34

at 213 (“an objective standard must of necessity in practice be applied”’).

In Screws v. United States, 325 U.S. 91 (1945), this

Court interpreted the word “willful” to include an objective

component in order to avoid this precise constitutional prob-

lem. In that case, three law enforcement officers were

charged with “willfully” depriving a prisoner of his constitu-

tional rights in violation of the precursor to 18 U.S.C. § 242.

Concerned about the constitutional implications of interpret-

ing “willfully” in a way that would permit an officer to be

punished for actions that reasonable people could conclude

were lawful, the Court construed “willfully” to require proof

that the defendants had the “specific intent to deprive a per-

son of a federal right made definite by decision or other rule

of law.” 325 U.S. at 97, 103 (emphasis added). eg

Likewise, in Giaccio v. Pennsylvania, 382 U.S. 399

(1966), the Court struck down a Pennsylvania statute that had

been interpreted to authorize juries to impose costs of mis-

demeanor prosecutions on an acquitted defendant “if they

{found! that his conduct, though not unlawful, [was] ‘repre-

hensible in some respect,’ ‘improper,’ outrageous to ‘moral-

ity and justice,’ ... or that though acquitted ‘his innocence

may have been doubtful.’” /d. at 404. The Court held that,

“whether labeled ‘penal’ or not,” “a law fails to meet the re-

quirements of the Due Process Clause if it is so vague and

standardless that it leaves the public uncertain as to the con-

duct it prohibits or leaves judges and jurors free to decide,

without any legally fixed standards, what is prohibited and

what is not in each particular case.” /d. at 402-403. Because

the statute as interpreted“‘leave[s] to the jury such broad and

unlimited power in imposing costs ... that the jurors must

make determinations of the crucial issue upon their own no-

tions of what the law should be instead of what it is,” it vio-

lated due process. Jd. at 403-404.

And in Connally, the Court struck down a statute that

imposed a fine and potential imprisonment for certain em-

ployers who failed to pay employees at least “the current rate

of per diem wages in the locality where the work is per-

formed.” Jd. at 388. The Court held that a punitive statute

“must be so clearly ex »*ssed that the ordinary citizen can

choose, in advance, what course it is lawful for him to pur-

sue,” and that a “citizen cannot be held to answer charges

based upon penal statutes whose mandates are so uncertain

that they will reasonably admit of different constructions.”

269 U.S. at 392 (quoting United States v. Capital Traction

Co., 34 App. D.C. 592, 596, 598 (1910)).

The decision below cannot be reconciled with any of

these cases. Punitive damages are “quasi-criminal,” Cooper

Indus., Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424,

432 (2001), and thus are subject to the same vagueness stan-

dard that governs criminal laws. See Village of Hoffman Es-

tates v. Flipside, 455 U.S. 489, 499 (1982) (employing strict

vagueness scrutiny for statute imposing quasi-criminal penal-

ties). The court of appeal, however, interpreted California’s

malice standard to be utterly subjective and then applied it in

a substantive area—strict product liability for design de-

fect—that itself is subjective, retrospective, and unpredict-

able. Neither respondents nor the court disputed the exis-

tence of a reasonable disagreement over the design issues in

this case, and the only objective benchmarks—industry cus-

tom and federal safety standards and policy determinations—

support Ford’s side of the debate, not respondents’. Yet, in

the face of numerous decisions from other juries and courts

in favor of Ford on these precise design issues, the court of

appeal disregarded these objective standards and upheld a

massive punishment based on a single California jury’s ver-

dict that Ford’s conduct was “despicable” and in “willful and

conscious disregard.” The court’s approach leaves juries free

to impose punishment based on their own idiosyncratic “no-

tions of what the law should be instead of what it is.”

Giaccio, 382 U.S. at 403-404. The result is that:

the application of the law depends not upon a word

of fixed meaning in itself, or one made definite by

statutory or judicial definition, or by the context or

other legitimate aid to its construction, but upon the

probably varying impressions of juries .... The

constitutional guaranty of due process cannot be al-

lowed to rest upon a support so equivocal.

Connally, 269 U.S. at 395; see also Herndon v. Lowry, 301

U.S. 242, 263 (1937) (statute unconstitutionally vague where

it “licenses the jury to create its own standard in each case”).

3. This question is important and recurring and deserves

this Court’s attention. The court below expressly declared

that individual California juries are empowered, on an ad

hoc, retrospective and subjective basis, to trump national

automotive safety policy as determined by NHTSA because,

in its view, “[g]overnmental safety standards . . . have failed

to provide adequate consumer protection.” App. 47a. This is

a recipe for irrational safety regulation through arbitrary pun-

ishments that interferes with federal prerogatives. See Gore,

517 U.S. at 571 (“[O]ne State’s power to impose burdens on

the interstate market for automobiles is . . . subordinate to the

federal power over interstate commerce”); id. at 573 n. 17

(“State power may be exercised as much by a jury’s applica-

tion of a state rule of law in a civil lawsuit as by a statute.”’)

(citing New York Times Co. v. Sullivan, 376 U.S. 254, 265

(1964) (“The test is not the form in which state power has

been applied but, whatever the form, whether such power has

in fact been exercised”); San Diego Building Trades Council

v. Garmon, 359 U.S. 236, 247 (1959) (“Regulation can be as

effectively exerted through an award of damages as through

some form of preventive relief’”)).

Moreover, this Court has repeatedly “admonished that

‘punitive damages pose an acute danger of arbitrary depriva-

tion of property,’” State Farm, 538 U.S. at 417 (citation

omitted), and expressed “concerns over the imprecise manner

in which punitive damages systems are administered.” Jd.

The Court also has recognized that “[v]ague instructions . . .

do little to aid the decisionmaker in its task of assigning ap-

propriate weight to evidence that is relevant and evidence

that is tangential or only inflammatory.” /d. at 418; see also

Bankers Life & Cas. Co. v. Crenshaw, 486 U.S. 71, 88

(1988) (O’Connor, J., joined by Scalia, J., concurring in part

and concurring in the judgment) (noting that a court’s failure

to give the jury proper standards for imposing punitive dam-

ages “appears inconsistent with due process’); Browning-

Ferris Indus. of Vermont, Inc. v. Kelco Disposal, Inc., 492

U.S. 257, 281 (1989) (Brennan, J., concurring, joined by

Marshall, J.) (warning of the due process dangers that arise

when juries are told “little more than . . . to do what they

think is best” and are thus “left largely to themselves in mak-

ing this important, and potentially devastating, decision”).

Punitive damages in strict liability design defect cases

pose especially troubling due process issues.» The “advent

of product liability” has been singled out as a reason for the

“(rjecent ... explosion in the frequency and size of punitive

damages awards.” Pacific Mut. Life. Ins. Co. v. Haslip, 499

discussed above, the trial court rejected Ford’s proposed jury

-instructions, which would have provided objective criteria for

> The imposition of punitive damages in strict liability cases for sale of

a lawful product was unknown at common iaw when the Fourteenth

Amendment was ratified, and the court of appeal’s approach here, by

stripping the analysis of any objective component, is an especially radical

departure from the traditional practice. See Honda Motor Co., Ltd. v.

Oberg, 512 U.S. 415, 430 (1994) (“Oregon’s abrogation of a well-

established common-law protection against arbitrary deprivations of

property” violated the Due Process Clause); id. at 436 (Scalia, J., concur-

ring) (agreeing that by eliminating protections “traditionally accorded at

common law,” Oregon “violate[d] the Due Process Clause”).

6 See, e.g., Anderson v. General Motors Corp., No. BC116926 (Cal.

Super. Ct., Los Angeles County) (jury award of $4.8 billion in punitive

damages, subsequently reduced by trial court to $1 billion and settled on

appeal); Jimenez v. DaimlerChrysler Corp., 74 F. Supp. 2d 548 (D.S.C.

1999) ($250 million punitive damage award), reversed for insufficiency of

evidence, 269 F.3d 439 (4th Cir. 2001); Alex Berenson, For Merck, Vioxx

Paper Trail Won’t Go Away, N.Y. Times, Aug. 21, 2005, at 1 ($229 mil-

lion punitive damage award verdict (later reduced) against Merck regard-

ing the drug Vioxx); Estate of Mohr v. DaimlerChrysler Corp., No.

CV03-2433 (Tenn. Cir. Ct. February 2005), appeal pending (jury award

of $48 million in punitive damages in design defect case); see also Inter-

state Southwest Ltd. v. Avco Corp., No. 29,385 (Tex. Dist. Ct. 2005),

appeal pending (jury verdict of $86.4 million in punitive damages in case

involving commercial dispute over cause of defect in crankshafts used in

aircraft engines manufactured by the defendant).

deciding whether Ford acted with punishable malice.

Review by this Court is imperative if manufacturers are

not to be subjected to arbitrary punitive damage awards

based upon the whims of individual juries. To say, as the

court did here, that the jury could find malice because “there

is substantial evidence that Ford decision makers knew how

to make the Explorer less dangerous, but chose not to be-

cause of financial considerations,” App. 44a, is to place no

limit whatsoever on the jury’s discretion to impose punish-

ment. That is because a// 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”).

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

safety in other circumstances. See generally W. Kip Viscusi,

Corporate Risk Analysis: A Reckless Act?, 52 STAN. L. REV.

547, 548-550 (2000). The due process problems arise be-

cause once a jury concludes that the product is defective—

i.e., that, by its lights, the manufacturer struck the risk-benefit

balance in the wrong place—it is all too easy for the jury to

take the next step and conclude the manufacturer acted with

malice or conscious disregard for safety. In the absence of

any objective standards, it will always be possible for a jury

to conclude that the manufacturer “disregarded safety” by

selling a product that it knew could be made even safer if it

spent more money or sacrificed other product benefits. And

empirical research shows that juries are more likely to assess

punitive damages against manufacturers who have engaged

in risk-benefit analysis. Jd. at 550-551, 556-557, 589-590.

Deeply compounding the problem, jurors are confronted

with deciding whether a product creates “too much risk” in

the context of individual cases involving tragic personal inju-

ries, using hindsight, on the basis of a highly technical record

and arcane and often conflicting opinion testimony from en-

gineers and scientists. Stephen Breyer, BREAKING THE

VICIOUS CIRCLE: TOWARD EFFECTIVE RISK REGULATION 59

(1992); Carroll v. Otis Elevator Co., 896 F.2d 210, 215-216

(7th Cir. 1990) (Easterbrook, J., concurring) (“The ex post

perspective of litigation exerts a hydraulic force that distorts

judgment. ... [N]o matter how conscientious jurors may be,

there is a bias in the system. Ex post claims are overvalued

and technical arguments discounted in the process of litiga-

tion. And the claims of crippled neighbors receive more

weight than do potential injuries to be felt by passengers (and

stockholders) in other states.”); 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 inevi-

table when jurors make punitive damages decisions”). In-

deed, if manufacturers can be punished for selling products

that reasonable people (such as the jurors in the eleven previ-

ous Explorer rollover cases) could conclude are not defec-

tive, the only way they can modify their conduct to avoid

punishment is to stop selling all products that might be sub-

ject to criticism by a plaintiff's expert. See United States v.

Powell, 423 U.S. 87, 93 (1975) (explaining why prohibition

against charging an “unreasonable” price for sugar was un-

constitutionally vague: “Engaged in a lawful business 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).

Product design cases thus pose a particularly high risk

that juries will “use their verdicts to express biases against

big businesses.” State Farm, 538 U.S. at 417 (citation omit-

ted). In fact, the court of appeal found that the jury in this

case actually “acted out of passion or prejudice” and “was

not acting as a fair and neutral trier of fact” during the same

deliberation in which it found that Ford acted with malice

and should be punished. App. 35a. And yet the court per-

mitted that same jury’s determination of liability for punitive

damages to stand without regard to multiple objective factors

that demonstrate that Ford’s conduct was objectively reason-

able, not malicious. This Court should grant review and

make clear that due process forbids such punishment.

Il. REVIEW IS NECESSARY TO CLARIFY THE

REPREHENSIBILITY GUIDEPOST IN

PRODUCT LIABILITY AND PERSONAL

INJURY CASES

This Court also should grant review to provide guidance

on how to evaluate reprehensibility in product liability and

personal injury cases. This Court’s decisions in State Farm

and Gore were rendered in the financial tort setting and thus

the Court has not detailed the factors that should be consid-

ered in analyzing reprehensibility in product liability cases

involving personal injury, in which many of the most severe

and arbitrary punishments are imposed. The court of ap-

peal’s rulings not only contradict this Court’s decisions in

State Farm and Gore, but also conflict with the Sixth Cir-

cuit’s decision in Clark v. Chrysler Corp., 436 F.3d 594 (6th

Cir. 2006), and the Ninth Circuit’s decision in Jn re Exxon

Valdez, 472 F.3d 600 (9th Cir. 2006). If reprehensibility is

properly evaluated, the necessary conclusion # that Ford’s

conduct was not remotely reprehensible and the $55 million

punishment is grossly excessive and unconstitutional.

1. State Farm and Gore held that the due process exces-

siveness analysis should be conducted by reference to three

guideposts: the reprehensibility of the defendant’s conduct;

the ratio between punitive and actual or potential damages;

and the difference between the award and the civil penalties

authorized or imposed in comparable cases. State Farm, 538

U.S. at 418. “The[se] principles ... must be implemented

with care, to ensure both reasonableness and proportional-

ity.” Id. at 428.

In Gore, the Court stated that “[t]he most important in-

dicium of the reasonableness of a punitive damages award is

the degree of reprehensibility of the defendant’s conduct.”

517 U.S. at 575. “That conduct is sufficiently reprehensible

to give rise to tort liability, and even a modest award of ex-

empiary damages does not establish the high degree of cul-

pability that warrants a substantial punitive damages award.”

Id. at 580. The Court also made clear that, even in the face

of a finding of malicious fraud or other conduct warranting

punitive damages, the existence of “reasonable disagree-

ment” about the lawfulness of the defendant’s conduct is a

factor that reduces reprehensibility. /d. at 579-580.

In State Farm, the Court emphasized the need for “ex-

acting” de novo scrutiny of punitive damages under the Due

Process Clause. 538 U.S. at 418. The Court stated that “[i]t

should be presumed a plaintiff has been made whole for his

injuries by compensatory damages, so punitive damages

should only be awarded if the defendant’s culpability, after

having paid compensatory damages, is so reprehensible as to

warrant the imposition of further sanctions to achieve pun-

ishment or deterrence.” Jd. at 419. And the Court “in-

structed [lower] courts to determine the reprehensibility of a

defendant by considering. whether: the harm caused was

physical as opposed to economic; the tortious conduct

evinced an indifference to or a reckless disregard of the

health or safety of others; the target of the conduct had finan-

cial vulnerability; the conduct involved repeated actions or

was an isolated incident; and the harm was the result of in-

tentional malice, trickery, or deceit, or mere accident.” Jd.

2. The lower courts have divided over how these factors

apply in design defect and other cases outside the realm of

the financial torts involved in State Farm (insurance bad

faith) and Gore (consumer fraud).

The court below concluded that “the reprehensibility of

Ford’s conduct was high, given the catastrophic nature of

Mrs. Wilson’s injuries, Ford’s reckless disregard for the

safety of others, the repeated nature of Ford’s conduct, and

the fact that Ford’s acts were intentional.” App. 55a.’ But in

7 While the court purported to be applying a de novo standard in con-

ducting its due process review, App. 54a-55a, the court simply adopted

reaching this conclusion, the court gave no weight to the

many objective factors, such as industry custom, federal

regulatory judgments, and reasonable grounds for disagree-

ment, that significantly mitigate against any finding of repre-

hensibility.

This approach conflicts with the Sixth Circuit’s decision

in Clark. In Clark, the plaintiff was killed when his Dodge

Ram pickup truck collided with a police car and his door

opened during the accident and he was ejected. His estate

persuaded a federal jury in Kentucky to find that Chrysler

had acted with reckless disregard in designing the door be-

cause it did not perform certain strength tests on the door

frame recommended by plaintiff's experts—so-called “B-

pillar twist out tests.” The jury imposed $3 million in puni-

tive damages. See 436 F.3d at 596, 603.

The Sixth Circuit initially affirmed, but following a re-

mand from this Court for reconsideration in light of State

Farm, the Sixth Circuit reduced the punitive award to ap-

proximately $470,000. In its reprehensibility analysis, the

court noted that while there was evidence “sufficient to sup-

port the jury’s decision to award punitive damages,” it “dis-

agree[d] with the district court’s decision that Chrysler’s

conduct is sufficiently indifferent or reckless to support a

$3 million award.” Jd.-at 601-602.

Contrary to the court of appeal here, the C/ark court ex-

pressly relied on Chrysler’s conformance with industry cus-

tom and federal regulations and the fact that there was “a

good-faith dispute over whether such testing is necessary.”

Id. at 603. The court reasoned that, although Chrysler was

allegedly aware that General Motors had engaged in such

testing and “GM’s test may have alerted Chrysler to the defi-

[Footnote continued from previous page]

the same extraordinarily deferential view of the evidence that it used

when applying the state-law “substantial evidence” test to the jury’s find-

ing of malice. App. 56a (“As discussed ante, and as found by the

jury ....”). This form of review clearly violates State Farm.

ciencies of its B-pillar design and prevented Mr. Clark’s ac-

cident,” that did not establish high reprehensibility “because

the test was neither required by the government nor used by

other manufacturers.” /d. (citing Barber v. Nabors Drilling

U.S.A., Inc., 130 F.3d 702, 710 (Sth Cir. 1997) (reversing pu-

nitive damage award based on “good faith dispute” whether

the defendant’s conduct violated plaintiffs mghts) and

Satcher, 52 F.3d at 1317 (vacating punitive damage award

based on, inter alia, genuine dispute in scientific community

over safety feature at issue)).

The Sixth Circuit also rejected the argument that the “fi-

nancial vulnerability” factor supports a finding of high repre-

hensibility in the product design context. The court ex-

plained that, because “{iJn this case, economic injury 1s not

involved [and] no other connection between Chrysler’s fi-

nancial resources and the physical injury suffered by Mr.

Clark was established,” the financial vulnerability “factor

weighs against finding Chrysler reprehensible.” 436 F.3d

at 604. But the court in this case ruled directly to the con-

trary, declaring that “(t]he defendant’s financial condition is

an essential factor in fixing an amount,” App. 51a,° and hold-

ing that the “vulnerability” factor supported a finding of high

reprehensibility because the “target of the conduct in this

case was consumers, individuals who were vulnerable.” Jd.

at 56a. This ruling also conflicts with the Ninth Circuit’s

most recent ruling in the Exxon Valdez oil spill case. In re

Exxon Valdez, 472 F.3d at 616-617 (explaining that for this

factor to be relevant, “there must be some kind of intentional

aiming or targeting of the vulnerable” and “Exxon did not

intentionally target subsistence fisherman”).

8 The California court’s use of Ford’s wealth at the time of trial to jus-

tify the punishment is itself irrational. While Ford had a net worth of

$12.8 billion when the verdict was rendered, it Jost $12.7 billion in 2006.

See Jeffrey McCracken, “Big Three Face New Obstacles In Restructur-

ing; Ford’s Massive ’06 Loss, GM’s Accounting Woes Underscore Chal-

lenges,” Wall St. J., Jan. 26, 2007, at Al.

The court of appeal’s finding that Ford’s conduct quali-

fied as “intentional” and thus highly reprehensible conflicts

with both Clark and Exxon Valdez. The court found that

“(t]he evidence presented by the Wilsons in this case sup-

ports a finding that Ford’s actions were the result of inten-

tional conduct and deliberate decisions by Ford’s manage-

ment, knowing the unreasonable risk of harm posed to con-

sumers, as opposed to a mere accident.” App. 57a. But this

is a strict liability case, not an intentional tort case, and it is

undisputed that Ford engineers and executives did not “in-

tend” to injure the Wilsons or anyone else. The “evidence”

of intent cited by the court is nothing more than the evidence

discussed above demonstrating that Ford’s engineers debated

the pros and cons of various designs and tests in striking the

balance between risk and utility.

The Sixth Circuit, however, rejected this approach.

Even though Chrysler’s design “was substantially outdated

and had been removed from the modern state of the art and

state of the industry for over 40 years,” “B-pillar twist-out

was a known failure in the automotive industry,” and “Chrys-

ler knew that if a driver was ejected, the risk of death sub-

stantially increased,” the court rejected the argument that

Chrysler’s design decisions could be characterized as “inten-

tional.” While the court “agree[d] that Chrysler ignored po- -

tential hazards presented by a weak B-pillar,” it “disagree[d]

that this [intentional misconduct] factor weighs in favor of

finding Chrysler’s conduct reprehensible.” 436 F.3d at 601,

605. The Ninth Circuit’s approach in Exxon Valdez mirrors

that of the Sixth Circuit. The court observed that, while

Exxon’s conduct “imposing a tremendous risk on a tremen-

dous number of people” could not “be regarded as merely

accidental,” Exxon “acted with no intentional malice towards

plaintiffs .... Exxon did not spill the oil on purpose.” 472

F.3d at 618, 631 n.6. The “conduct did not result in any in-

tentional damage to anyone,” and this factor “militates

against viewing Exxon’s misconduct as highly reprehensi-

ble.” /d. at 618.

“

Finally, the California court’s holding that Ford’s con-

duct was “more reprehensible” because it was “repeated and

not an isolated incident,” App. 56a-57a, also conflicts with

Clark. While Ford won the eleven prior trials alleging the

same defects in the Explorer—and then won two victories

during the trial below and additional victories since?—the ~

court ruled that Ford’s conduct was “repeated.” /d. But the

Sixth Circuit rejected this argument: “The district court also

held that Chrysler’s conduct was not isolated because . . .

Chrysler put anyone who drove a Dodge Ram pickup truck at

risk. Because there is no evidence that Chrysler repeatedly

engaged in misconduct while knowing or suspecting that it

was unlawful, we conclude to the contrary.” 436 F.3d at 604;