Amicus Curiae Brief — DaimlerChrysler Chrysler Corp. v. Flax (No. 08-1010)

FILED

MAR i § 2029

OFFICF O= THE CLERK

| SUPREME OC OAT, US.

No. 08-1010

IN THE

Supreme Court of the Anited States

DAIMLERCHRYSLER CORPORATION,

Petitioner,

Vv.

JEREMY FLAX, ET AL.,

Respondents.

On Petition for Writ of Certiorari to the

Supreme Court of Tennessee

BRIEF OF THE PRODUCT LIABILITY ADVISORY

COUNSEL, INC. AS AMICUS CURIAE

IN SUPPORT OF PETITIONER

HUGH F. YOUNG, JR. JONATHAN M. HOFFMAN

Product Liability Counsel of Record

Advisory Council, Inc. JOAN L. VOLPERT

1850 Centennial Park Dr. Martin Bischoff Templeton

Suite 510 Langslet & Hoffman LLP

Reston, VA 20191-1517 888 SW 5t» Ave, Suite 900

(703) 264-5300 Portland, OR 97204

(503) 224-3113

Counsel for Amicus Curiae

Product Liability Advisory Council, Inc.

TABLE OF CONTENTS

Page(s)

pV ORO) a hy yy y | ON il

INTEREST OF THE AMICUS CURIAE................ 1

INTRODUCTION AND SUMMARY OF

ia seca tans stad duhsolicinadasessumniervesseeenies 2

carts coi ch secre Vacghddandoecuiedsasvsvhusarnewnsessos 5

I. Identifying the Due Process

Constraints On An Award of Punitive

Damages Is an Issue of Great

Significance Because of the Quasi-

Criminal Nature of Punitive Damages

I ae Faerie ava ec cidcle ed da aks dikaxevnensvicss

Ii. The Court Shou!d Grant Review to

Make Clear That the Due Process

Clause Requires Objective Criteria for

the Imposition of Punitive Damages.........

III. Product Liability Lawsuits Pose a

Significant and Persistent Risk of

Arbitrary and Standardless

Imposition of Punitive Damages... ...........

EN tia csk sisal coed neenemadenwash idaiiersenepenens

APPENDIX

Corporate Members of the Product

SERS RR Sn St

17

99

ar

TABLE OF AUTHORITIES

Page(s)

CASES

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

yn SMR 8

Anderson v. Creighton,

SSS VF Beavis ccs cccseeeseccecese. 12

Bankers Life and Cas. Co. v. Crenshaw,

GEG F5Be, Fa ooo occsencs......22....... 9

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

517 U.S. Be ee ies h kaeaeasss. 3, 8, 13, 14, 16

Bouie v. City of Columbia,

STS Fi uci censsceses00.0.000. 8,9

Cerroll v. Otis Elevator Co.,

SOG F.2d Zi Cian Ge, BD cence cscs cc ccsccscccccccese. 21

Champlin Ref. Co. v. Corp. Comm’n,

SE UF Be ee aa crksscccncessscecccccccesss &

Colautti v. Franklin,

PR Se 10

Connally v. General Constr. Co..,

269 U.S. 386 (2926) .................... SD 9,11

MI

Cooper Industries, Inc. v. Leatherman Tool

Group, Inc.,

Be ys RO CID in ihisicce tse yerescecsvcencesisvnccrensetly, RO

Giaccto uv. State of Pennsylvania,

ee ie Ne ek IE eo iid reriewn setcensstessnvecetieenenmiies 8

Honda Motor Co. v. Oberg,

NE BS OF 3) Fa, | ° SARIN ea neem un rerenesmare NTC R sree 5

Hunter v. Bryant,

Ce Sh cts A CRIP ED ness nascdivesocusienaermerxeatinecapherens 12

Malley v. Briggs,

ETD GP es ee 6 6 esis cdi vaso cer corinne 12

Masaki v. General Motors Corp.,

FRE 2 TG CREW, FG vc ccncnvscccsncsocssisccsncesssnees 6

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

BOOTS. 1 LOGI coseccccoceccoossssecccoessocses0.08, & B ©

Philip Morris USA v. Williams,

BO EF Te, DO Be vi vant veers venisnacvnsernssacceses 7, 9, 22

Rogers v. Tennessee, 1

ee rates aa ER ovdenvccnacievisenssesierccncrivdeicceusvtel 9

S.W. Tel. & Tel. Co. v. Danaher,

De ES Te BE CIE a cvccivsstesnssviniasvovenvacvoues 8,9, 11

Safeco Ins. Co. of America v. Burr,

LOT De Ge. Be ke icis sits vena vasesandiesssesecenss 15, 16

1V

Sorich v. United States,

555 U.S. ---, No. 08-410, 2009 WL

426807, 77 USLW 3228 (2009) .......ccccccssesccrsenees 8

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

538 1).5. 408, 418 (2005) ..........:6.:..8, &, & 11, 12

Stone Man, Inc. v. Green,

263 Ga. 470, 435 S.E. 2d 205 (1993)................. 14

United States v. Capitol Traction Co.,

ie Mas. TA. BOE IO ioe skh cee G

United States v. L. Cohen Grocery Co.,

250: U.S. BE, 4E BA, FOO CIE) a oiiiicereccveseastcseces 10

United States v. Lanier,

Be ae EE veces dkcke\kccvndsenscoscecbesmes 11; i¢

Village of Hoffman Estates v. Flipside

Hoffman Estates, Inc.,

AGB U.S. SEG CGB) ccccavssecccecsss vee Ram CELN ON Wey heat Leb e 8

STATUTES, RULES AND REGULATIONS

Be rc ee av icaes nccusacacer eas ieeaseveestotes 15

ee ec ee ee I, eds kta hdc psknaeardnvsesesaressoianens 16

Pee On ee a. yh a: ; re ee

OTHER AUTHORITIES

Richard C. Ausness, /etribution and

Deterrence: The Role of

Punitive Damages tn Products Liability

Litigation, 74 Ky. L.J. 1 (Y985)...............000 18, 19

Steven Garber, Punitive Damages and

Deterrence of Efficiency-Promoting

Analysis: A Problem Without a Solution?,

62 Stan. L. Rev. 1500 GeO )....sc..ccc.cccsevcccscsess 19, 20

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

the Law of Torts, § 36 n. 41 at 233 (5th

Pe” ARAM eR -AOEE Er BRED” San SNP mE Oe 14

David G. Owen, Problems in Assessing

Punitive Damages Against

Manufacturers of Defective Products,

490). Chi. L Rev. 1 CABBZ)......ccci. esc .cces: 19, 21, 22

Restatement (Third) of Torts, Products

ISD, RES EE SERRE ae Se ae TE ...19

Restatement (Third) of Torts, Products

Be RMR Si ES eee ER ae RETO RE Byte 2

Aaron D. Twerski, Punitive Damages:

Through the Five Prisms,

39 VILL. L. REV. 353, 356 (1994).................. 18

W. Kip Viscusi, Corporate Risk Analysis:

A Reckless Act?, 52 STAN. L. REV. at 550....19, 20

Vi

W. Kip Viscusi, Jurors, Judges, and the

Mistreatment of Risk by the Courts, 30

DF, EMBAE UG. LOT (ZG) on. ccccccricvssccorscscosssecessse 21

W. Kip Viscusi, 7he Social Costs of Punitive

Damages Against Corporations in

Environmental and Safety Torts, 87

Sy Bie Be CIs. By onccecerocerercntocseercsssosisovnesses 19

Malcolm E. Wheeler, The Constitutional

Case for Reforming Punitive Damages

Procedures, 69 VA. L. REV. 269 (1983) ................ 6

BRIEF OF THE PRODUCT LIABILITY

ADVISORY COUNCIL, INC. AS AMICUS

CURIAE IN SUPPORT OF PETITIONER

INTEREST OF THE AMICUS CURIAE

The Product Liability Advisory Council, Inc.

(PLAC) is a non-profit association with 108 corporate

members representing a broad cross-section of

American and international product manufacturers.

These companies seek to contribute to the

improvement and reform of law in the United States

and elsewhere, with emphasis on the law governing

the liability of product manufacturers. PLAC’s

perspective is derived from the experiences of a

corporate membership that spans a diverse group of

industries in every major facet of the manufacturing

sector. In addition, several hundred of the leading

product liability defense attorneys in the country are

sustaining (non-voting) members of PLAC. Since

19838, PLAC has filed over 850 briefs as amicus

curiae, in this Court and the state and federal courts,

presenting the broad _ perspective of product

manufacturers seeking fairness and balance in the

application and development of the law as it affects

product liability. A list of PLAC’s corporate

members is attached as an Appendix. !

As part of the regular product-design process,

PLAC’s corporate members must routinely analyze

Pursuant t' S. Ct. R. 37.6, amicus affirms that no

counsel for a party authored this brief in whole or in part and

that no person other than amicus and its counsel made a

monetary contribution to its preparation or submission. The

parties’ letters consenting to the filing of this brief have been

filed with the Clerk’s Office.

2

and resolve questions about safety. PLAC members

who manufacture products with potential risks of

significant physical injury — including pharma-

ceuticals, medical devices, pesticides, foodstuffs,

chemicals, appliances, power tools, and automo-

biles — have a particular interest in the legal

ramifications of product design decisions.

It is therefore particularly important to

PLAC’s members that the law provide clear guidance

on how manufacturers can avoid the imposition of

punitive liability.

INTRODUCTION AND

SUMMARY OF ARGUMENT

When designing a product, manufacturers are

expected to weigh the utility of a product’s design

features against the risk,’ but a manufacturer whose

design process includes such a calculus can later be

charged with punitive damages for “knowingly”

designing a product that poses grave risks to

consumers. The more transparent and compre-

hensive that manufacturer's design analysis is, the

more the manufacturer opens itself up to such a

charge. When the product being manufactured

carries inherent risks, such as the automobile at

issue in this case, experts will invariably debate the

relative benefits and risks of the proposed features.

Manufacturers are routinely forced to make decisions

in the face of imperfect information and conflicting

predictions. When a manufacturer’s “knowledge”

that its product poses known risks to consumers is

deemed sufficient to sustain a punitive award, the

Restatement (Third) of Torts, Product Liability § 2(b)

(1998).

3

common law gives no guidance as to how a

manufacturer can avoid the risk of punitive liability.

Absent objective indicators of reasonableness,

responsible manufacturers can never know in

advance whether their design decisions will subject

them to punishment and post hoc second guessing.

Under state law, as applied in this case, the

manufacturer was subjected to punishment despite

the fact that its conduct conformed with all objective

benchmarks of proper and lawful design. Its design

exceeded the specific and detailed regulatory

requirements governing seat strength (49 C.F.R.

§ 571.207) and conformed with all industry

standards. App. 18a. Even further, the manufacturer

presented evidence at trial that the alternative

design proposed by the Plaintiffs would provide less

protection to occupants in other types of accidents.

App. 26a. Thus, if the manufacturer had used that

alternative design, it would have “knowingly” caused

injuries in other types of accidents and — under the

theory advanced by the Plaintiffs here — would have

been subject to punitive damages in cases arising

from other accidents.

At most, Petitioner’s design was subject to

reasonable debate or disagreement. That a plaintiff

can find an expert to attack the design long after the

fact does not give the manufacturer “fair notice * * *

of the conduct that will subject [it] to punishment.”

BMW of North America, Inc. v. Gore, 517 U.S. 559,

574 (1996). Rather, the imposition of punitive

damages in such a case “mak[es] the law so arbitrary

that [manufacturers] will be unable to = avoid

punishment based solely upon bias or whim.” State

Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408,

418 (2003) (quoting Pacific Mut. Life Ins. Co. v.

4

Haslip, 499 U.S. 1, 59 (1991) (O’Connor, J.,

dissenting)).

In recent years, this Court has placed much-

needed constraints on excessive common-law

punitive damages awards. However, it has not

articulated the precise constraints that due process

imposes on punitive liability.

The arbitrary and standardless imposition of

punitive damages is far too common in product

liability cases. By their very nature, such cases pose

a great risk of hindsight bias, jury sympathy for

seriously injured plaintiffs, and of juror bias against

large corporations. A manufacturer’s intention to

design a product that has inherent risks can easily

be confused with intent to cause harm.

Manufacturers who make good faith design decisions

that balance the risks of injury inherent in myriad

circumstances, and whose products comply with

detailed regulatory standards and mect and even

exceed all other published safety standards, should

not be stigmatized by the quasi-criminal imposition

of punitive damages. Infliction of punishment in

such circumstances deprives the manufacturer of due

process because the manufacturer dees not have the

fair notice required by due process —1.e., notice

sufficient to permit it to tailor its conduct to comply

with the law and thereby aveid punishment

altogether.

5

ARGUMENT

I. Identifying the Due Process Constraints

On An Award of Punitive Damages Is An

Issue of Great Significance Because of

the Quasi-Criminal Nature of Punitive

Damages Awards.

It is vitally important for this Court to clarify

the threshold for the imposition of punitive damages

under the Due Process Clause. The Due Process

Clause prohibits the imposition of grossly excessive

or arbitrary punishments on a tortfeasor. Stale

Farm, 538 U.S. at 416; Cooper Industries, Inc. v.

Leatherman Tool Group, Inc., 532 U.S. 424, 433

(2001). Punitive damages awards “serve the same

purpose as criminal penalties.” State Farm, 538 U.S.

at 417. However, because civil defendants are not

accorded the protections afforded criminal

defendants, “punitive damages pose an acute danger

of arbitrary deprivation of property.” Jd. (quoting

Honda Motor Co. v. Oberg, 512 U.S. 415, 432 (1994)).

Much of the recent constitutional juris-

prudence has focused on the amount of such awards.

This case provides an opportunity to clarify the due

process standards applicable to the imposition of

punitive damages in the first place. Due process

constraints apply both to the imposition of

punishment and its excessiveness. Indeed, it is no

less important that citizens have fair notice of the

conduct that will expose them to punishment than it

is that they krow how harsh the punishment may be.

See Haslip, 499 U.S. at 24 n. 12 (rejecting vagueness

challenge to standards for determining amount of

punitive damages because “|djecisions about the

6

appropriate consequences of violating a law are

significantly different from decisions as to whether a

violation has occurred”).

The indiscriminate imposition of punitive

damages has “a devastating potential for harm.”

State Farm, 538 U.S. at 417 (quoting Haslip, 499

U.S. at 42 (O'Connor, J., dissenting)). A verdict or

judgment of malice, intentional misconduct, or

reckiessness carries a stigma qualitatively greater

than, and legally distinct from, a judgment for

compensatory damages based ow strict liability or

even negligence. “[T]here is a stigma attached to an

award of punitive damages that does not accompany

a purely compensatory award. The _ punitive

character of punitive damages means that there is

more than just money at stake. This factor militates

in favor of strong procedural safeguards.” Haslip,

499 U.S. at 54 (O'Connor, J., dissenting); see also

Masaki v. General Motors Corp., 71 Haw. 1, 16, 780

P.2d 566, 575 (1989) (punitive damages “can

stigmatize the defendant in much the same way as a

criminal conviction” and therefore “can be onerous

when loosely assessed”); Malcolm E. Wheeler, The

Constitutional Case for Reforming Punitive Damages

Procedures, 69 VA. L. REV. 269, 280-281 (1983).

The consequences to a manufacturer from a

million-dollar verdict for punitive damages are

qualitatively different from the consequences of a

compensatory award for the same amount. In the

product-liability context. an award of punitive

damages can give rise to “publicity about litigation

that may damage the company’s reputation or

trigger additional lawsuits, reactions of consumers

that could reduce product demand, and reactions of

safety regulators such as investigations, product

7

recalls, or stricter regulations.” Steven Garber,

Punitive Damages and WDeterrence of Efficiency-

Promoting Analysis: A Problem Without a Solution?,

52 STAN. L. REV. 1809, 1814 (2000).

Such consequences would be serious enough

even if the standard for punitive liability were clear

and unambiguous. However, given the absence of

clear and objective standards under which such

damages are imposed (see Section II, infra), and the

inability to avoid the risk of arbitrary imposition of

such hability even if a manufacturer employs a

conscientious and responsible design process (see

Section III, infra), it is crucial that this Court

provide guidance to the lower courts in order to

“cabin the jury’s discretionary authority” and thereby

to limit the imposition of “arbitrary punishments” on

product manufacturers. Philip Morris USA v.

Williams, 549 U.S. 346, 352 (2007).

II. The Court Should Grant Review to Make

Clear That the Due Process Clause

Requires Objective Criteria for the

Imposition of Punitive Damages.

“Unless a State insists upon proper standards

that will cabin the jury's discretionary authority, its

punitive damages system may deprive a defendant of

‘fair notice * * * of the severity of the penalty that a

State may impose” and “threaten ‘arbitrary

punishments,’ l.e., punishments that reflect not an

‘application of law’ but ‘a decision maker’s caprice.”’

Philip Morris, 549 U.S. at 352 (citations omitted).

Therefore, “the Constitution imposes certain limits,

in respect both to procedures for awarding punitive

damages and to amounts forbidden as ‘grossly

excessive.” Id. at 353 (citations omitted, emphasis

supplied).

A defendant’s due process rights are violated

by the imposition of punishment without adequate

notice of the prohibited conduct, just as they would

be violated by the imposition of an excessive punitive

award. Gore, 517 U.S. at 574 (“{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

punishment’); Giaccio v. State of Pennsylvania, 382

U.S. 399, 402-403 (1966) (‘a law fails to meet the

requirements of the Due Process Clause if it is so

vague and standardless that it leaves the public

uncertain as to the conduct it prohibits”); see also

Sorich v. United States, 555 U.S. ---, No. 08-410,

2009 WL 425807 at *3, 77 USLW 3228 (Feb. 23,

2009) (Scalia, J., dissenting from denial of cert.)

(“this Court has long recognized the ‘basic principle

that a criminal statute must give fair warning of the

conduct that makes it a crime.’ * * * It is simply not

fair to prosecute someone for a crime that has not

been defined until the judicial decision that sends

him to jail” (citing Bouie v. City of Columbia, 378

U.S. 347, 350 (1964)).

These principles also apply to laws imposing

civil liability which are punitive in nature. See, e.g.,

Village of Hoffman Estates v. Flipside Hoffman

Estates, Inc., 455 U.S. 489, 499 (1982) (strict scrutiny

for statute that imposed quasi-criminal penalties);

Champlin Ref. Co. v. Corp. Comm'n, 286 U.S. 210,

241 (19382) (penalty statute unconstitutionally vague

where it was designed not to remedy a violation but

“to inflict punishment”); A.B. Small Co. v. American

Sugar Ref. Co., 267 U.S. 233 (1925) (statute

unconstitutionally vague in civil case); S.W. Tel. &

9

Tel. Co. v. Danaher, 238 U.S. 482 (1915) ($6,300 civil

penalty violated due process).

The Due Process Clause requires clear,

ascertainable standards for all essential steps

leading to the imposition of punitive damages. See

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

88 (1988) (“|the Mississippi Supreme Court’s] grant

of wholly standardless discretion to determine the

severity of punishment appears inconsistent with

due process.”) (O’Connor, J., concurring); see also

Philip Morris, 549 U.S. at 354 (“to permit

punishment for injuring a nonparty victim would add

a near standardless dimension to the punitive

damages equation”).

“(Tlhis Court has often recognized ‘the basic

principle that a criminal statute must give fair

warning of the conduct that makes it a crime.”

Rogers v. Tennessee, 532 U.S. 451, 457 (2001),

quoting Boute, 378 U.S. at 350; See also, Connally v.

General Constr. Co., 269 U.S. 385 (1926) (penal

statute creating an eight-hour day for state workers

and providing for wages “not less that the current

rate of per diem in the locality where the work is

performed” is vague for uncertainty); U.S. v. Capitol

Traction Co., 34 App. D.C. 592 (1910) (penal statute

making it an offense for a street railway company to

run insufficient cares to accommodate passengers

“without overcrowding” is void for uncertainty).

It follows that due process requires fair notice

to defendants sufficient to enable them to avoid

conduct that will expose them to any punishment. It

is not enough that a defendant is found to be

“reckless” under a “standard” formulated and applied

only after the fact by a jury convened solely for a

single case. Rather, due process requires that

10

“recklessness” for purposes of imposing punitive

damage liability must be tethered to concrete,

knowable standards, not ad hoc and retrospective

balancing.

The Due Process Clause forbids criminal

convictions for conduct that is not defined with

sufficient specificity to permit a defendant to know

what conduct is prohibited. For example, in United

States v. L. Cohen Grocery Co., 255 U.S. 81, 89

(1921), this Court reviewed a federal anti-

profiteering statute enacted as part of the price-

control system established during World War I| that

made it “unlawful for any person willfully * * * to

make any unjust or unreasonable rate or “harge in

handling or dealing in or with any necessaries.” This

Court held that the Fifth and Sixth Amendments

require an ascertainable standard of guilt that is

adequate to inform those accused of the nature and

cause of the accusation against them. /d. This Court

further held that the statute in question “forbids no

specific or definite act,” and therefore impermissibly

left it to the judge and jury to decide what was

prohibited. Jd. L. Cohen Grocery thus stands for the -

proposition that it is not enough that a defendant is

found to be “reckless” for purposes of imposing

punitive damages—it is necessary that the

defendant recklessly engaged in a defined, prohibited

act.

Due process likewise precludes the imposition

of punishment whenever the defendant reasonably

could have concluded that its conduct was lawful.

See generally Colautti v. Franklin, 439 U.S. 379

(1979) (statute that predicated criminal

responsibility on a “complex medical judgment about

which experts can—and do—disagree” was

I |

unconstitutionally vague); Connally, 269 U.S. at 392

(law imposing criminal penalties “should not admit

of such a double meaning that the citizen may act

upon the one conception of its requirements and the

courts upon another”) (citation omitted); S.W. Tel. &

Tel. Co. v. Danaher, 238 U.S. 482, 490 (1915). The

same principles apply to punishment meted out in a

civil proceeding. The fact that punitive damages are

“quasi-criminal” underscores the need for due

process protection against their arbitrary and

standardless imposition. Cooper Industries, 532 U.S.

at 432-433 (“Despite the broad discretion that States

possess with respect to the imposition of criminal

penalties and punitive damages, the Due Process

Clause of the Fourteenth Amzndment to the Federal

Constitution imposes substantive limits on that

discretion’). Although punitive damages awards

“serve the same purposes as criminal penalties,

defendants subjected to punitive damages in civil

cases have not been accorded the _ protections

applicable in a criminal pr -eeding. This increases

our concerns over the in.p.-cise manner in which

punitive damages systems are administered.” State

Farm, 538 U.S. at 417.

The due process standard, which protects all

citizens from punishment based on vaguely defined

offenses, is functionally identical to the qualified

immunity standard, which protects public officials

from civil liability based on legal obligations that are

not “clearly established.” United States v. Lanier, 520

U.S. 259, 270-271 (1997). The qualified immunity

test for public officers is “simply the adaptation of

the fair warning standard to give officials (and,

ultimately, governments) the same protection from

civil liability and its consequences that individuals

12

have traditionally possessed in the face of vague

criminal statutes.” Jd. Officials are entitled to

qualified immunity as long as their conduct is

“objectively reasonable,” t.e., as long as reasonable

officials could conclude that the conduct at issue was

lawful. Malley v. Briggs, 475 U.S. 335, 341 (1986)

(immunity available if officers act in an “objectively

reasonable manner;” defendants “will not be immune

if, on an objective basis, it is obvious that no

reasonably competent officer would have concluded

that the conduct was lawful’); accord, e.g., Hunter v.

Bryant, 502 U.S. 224, 227 (1991) (under “settled

law,” officers are entitled to immunity “if a

reasonable officer could have believed” that his or

her conduct was lawful); Anderson v. Creighton, 483

U.S. 635, 641 (1987) (“The relevant question in this

case, for example, is the objective (albeit fact-specific)

question whether a reasonable officer could have

beheved Anderson’s |conduct] to be lawful”).

Accordingly, “if officers of reasonable competence

could disagree on [the matter at] issue, immunity

should be recognized.” Malley, 475 U.S. at 341; see

also Anderson, 483 U.S. at 641 (due process

vagueness test is equivalent to the test for qualified

immunity, and public officials are entitled to

qualified immunity if “a reasonable officer could have

beheved the [conduct] to be lawful’).

“(T]he point of due process — of the law in

genera] — is to allow citizens to order their behavior.

A State can have no _ legitimate interest in

deliberately making the law so arbitrary that

citizens will be unable to avoid punishment based

solely upon bias or whim.” Siate Farm, 538 U.S. at

418.

13

This case exemplifies the need for this Court

to clarify the constitutional threshold that state law

must meet before imposing punitive damages upon a

manufacturer. After all, what could any

conscientious automobile manufacturer have done in

order to avoid the risk of punitive damages in the

situation that existed for Petitioner in this case? It

could look to the applicable Federal Motor Vehicle

Safety Standard in effect at the time of manufacture,

but Petitioner’s design already exceeded _ that

standard. It could look to industry standards and

practices, but its design already conformed to such

practices. It could make the seats even less likely to

yleld than those of other manufacturers, but

increasing the seat’s stiffness and strength would

increase the frequency and severity of injuries in

other types of collisions, thereby trading the

potential injuries of one class of accident victims for

those of others. In short, no objective criterion to

which the Petitioner could have turned would avoid

exposure to punitive lability under the Tennessee

punitive damages regime.

Punitive damages may properly be imposed to

further a State’s legitimate interests in punishing

unlawful conduct and deterring its repetition. Gore,

517 U.S. at 568. But just as one state “may not

impose economic sanctions on violators of its laws

with the intent of changing the tortfeasors’ lawful

conduct in other States,” punitive liability should not

be imposed on a defendant whose conduct was

lawfully in compliance with a detailed, applicable

federal regulation. Jd. at 572-573 (“Alabama does

not have the power, however, to punish BMW for

conduct that was lawful where it occurred and that

had no impact on Alabama or its residents. Nor may

14

Alabama impose sanctions on BMW in order to deter

conduct that is lawful in other jurisdictions”)

(citations and footnote omitted).’

The lower court also ignored the_ third

guidepost identified in Gore for judging the

excessiveness of a punitive damages award. The

third guidepost is the legislative sanction for the

conduct for which punitive damages are awarded.

Gore requires that the reviewing court give

“substantial deference” to this sanction. 517 U.S. at

583. Because Petitioner’s seat design complied with

and substantially exceeded the federal regulatory

standard for seat back strength, the largest

permissible penalty that could have been imposed for

such conduct was “zero.” The lower court should

have considered the lack of legislative’ or

administrative sanctions as an important reason to

reject punitive damages altogether. Instead, the

lower court noted that courts have experienced

frustration in applying the three guideposts when

the results the guideposts suggest are not aligned

and, in effect, ignored this guidepost altogether. App.

35a.

Moreover, even had_ Petitioner’s conduct

ultimately been found unlawful, punishment should

not have been imposed if its conduct was not

See, e.g., W. Page Keeton et al., Prosser and Keeton on

the Law of Torts, § 36 n. 41 at 233 (5th ed. 1984) (“[1]n most

contexts. . .complhance with a statutory standard should bar

liability for punitive damages”); Stone Man, Inc. v. Green, 263

Ga. 470, 471-472, 435 S.E. 2d 205, 206 (1993) (“such [statutory]

compliance docs tend to show that there is no clear and

convincing evidence of willful misconduct, malice, fraud,

wantonness, oppression, or that entire want of care which

would raise the presumption of a conscious indifference to

consequences.” (citation omitted)).

15

objectively unreasonable. Safeco Ins. Co. of America

v. Burr, 127 S. Ct. 2201, 2215 (2007). Safeco

involved the Fair Credit Reporting Act (15 U.S.C.

§ 1681a et seq. (FCRA)), which provides, among other

things, that “willful” failures to comply with the

statute may result in an award of punitive damages.

The term “willful” encompasses not only “knowing”

violations but also “reckless disregard of statutory

duty.” Safeco, 127 S. Ct. at 2208. The long-

established, common law meaning of the term

“recklessness” necessarily requires reference to

objective standards: “[w]hile ‘the term recklessness

is not self-defining, the common law has generally

understood it in the sphere of civil lability as

conduct violating an objective standard: action

entailing ‘an unjustifiably high risk of harm that is

either known or so obutous that it should be known.”

Id. at 2215 (emphasis added; citation and footnote

omitted.)

While the defendant in_ Safeco’ acted

intentionally in violating the FCRA, the defendant

had a “foundation in the statutory text” for its belief

that its conduct was lawful which, aithough

erroneous “was not objectively unreasonable” so that

the defendant did not act “willfully” or with “reckless

disregard.” ld. at 2215-22. “Where *** the

statutory text and relevant court and agency

guidance allow for more than one reasonable

interpretation, it would defy history and current

thinking to treat a defendant who merely adopts one

such interpretation as a knowing or reckless

violator.” Jd. at 2216 n. 20. By analogy to the cases

establishing qualified immunity, the Court

considered whether the defendant’s action was

reasonable in light of legal rules that were “clearly

16

established” at the time. Jd. at 2216. In the absence

of authoritative guidance from the governing agency

{the FTC) and no decision from the court of appeals,

the Court held that Safeco’s decision was not

objectively unreasonable.

This Court has invalidated civil sanctions, as

a matter of procedural due process, when state

legislations “imposed a significant penalty on a

common carrier which lacked the means. of

determining the legality of its actions before the

penalty was imposed.” Gore, 517 U.S. at 601 (citing

Danaher, 238 U.S. at 489-491). Similarly the

reasoning in Safeco is constitutionally based.

Safeco’s violation of FCRA could not support

the imposition of punitive damages because its

actions were based on a reasonable but erroneous

interpretation of the statute. In the present case,

Petitioner’s design did not violate the applicable

regulation at all; its actions were held punishable

even though Petitioner exceeded the applicable

Federal Motor Vehicle Safety Standard,

promulgated pursuant to 49 U.S.C. §§ 30301 et seq.;'

even though it complied with industry custom and

relied on expert opinion; and even though it would

increase the risk of injury in other kinds of collisions

if it made the seats less likely to yield.

In short, there was no evidence that Petitioner

violated any objective standard concerning how seats

should be designed. The extent by which a manu-

facturer ought to exceed the regulatory standard to

achieve optimum safety appears to have’ been

asubject on which design engineers’ acting

‘ Federal Motor Vehicle Safety Standard (FMVSS) 207,

49 C.F.R. § 571.207. See App. 18a.

17

in good faith would — and did—disagree. Conse-

quently, Petitioner had no advance notice of the

conduct that would expose it to punishment. Absent

violation of a clearly established and _ objective

standard, the Due Process Clause decisions forbid

hindsight punishment. Moreover, the imposition of

punitive damages on a manufacturer under these

circumstances has no salutary, deterrent effect

because the manufacturer is unable to determine

what it must do to avoid the punishment

prospectively.

However a manufacturer’s choice may be

judged for purposes of compensatory damages, it

should not give rise to punitive damages when

neither expert engineers, nor designers, nor federal

regulators at the time had reached a_ general

consensus on a different course than that which the

manufacturer took. In this situation, Petitioner

could reasonably believe that its conduct was lawful,

and Petitioners “wrong” was not “clearly

established” before punishment. See Lanier, 520

U.S. at 270-271.

Ill. Product Liability Lawsuits Pose a

Significant and Persistent Risk of

Arbitrary and Standardless Imposition of

Punitive Damages.

Product liability cases pose _ particularly

significant and persistent risks of the arbitrary

imposition of punitive damages. There are a variety

of reasons for this. First, such cases frequently

involve catastrophic injury or death. Second, many

products, no matter how well designed, carry

unavoidable risks. Third, the design process

necessarily involves attempts to identify risks and

18

balance them against other risks and against the

utility of the product. ‘These unique aspects of

product liability cases make manufacturers

particularly susceptible to punitive lability by juries

that are exhorted to conflate intent to design a

product in a particular way with intent to injure.

The risk of physical injury is inherent in the

manufacture, sale and use of many _ products.

Because of their size and mobility, motor vehicles

are, by their very nature, capable of cothding

violently with other vehicles, objects, and

pedestrians. A life-saving vaccine may protect

millions of people yet pose a risk of known, serious

side effects to a few. Butter may make popcorn and

toast delicious but increase the levels of cholesterol

and even the risk of death. For many kinds of

products, some injuries are certain to occur, no

matter how well the product is designed and

manufactured.

In essence, products are frequently designed

— carefully but intentionally — with known risks

to consumers. Design defect cases inevitably raise

“conscious design choice[s]’ * * * implicatling] a

manufacturer's decisionmaking process concerning

risk-utility”; “|u]nlike the standard negligence case of

yesteryear, the modern products liability case comes

with ‘intent’ built in.’ Aaron D. Twerski, Punitive

Damages: Through the Five Prisms, 39 VILL. L. REV.

353, 356 (1994). The task of a conscientious

manufacturer is to strike a reasonable balance

between safety and a host of other considerations,

including “marketability, appearance, ease _ of

operation, durability, freedom from maintenance or

repair, ease of manufacture, and economics of

materials and _ labor.” Richard C. Ausness,

19

Retribution and Deterrence: The Role of Punitive

Damages in Products Liability Litigation, 74 KY. Lud.

1, 88-89 (1985). See also David G. Owen, Problems in

Assessing Punitive Damages Against Manufacturers

of Defective Products, 49 U. CHI. L. REV. 1, 22-26

(1982).

A. manufacturer's weighing of uncertain risks

against uncertain benefits requires it to decide

prospectively. A jury, by contrast, decides after the

fact, with full knowledge of the outcome, and with

the victim, or the victim’s family, in the courtroom.

The manufacturer (and the government regulator)

must corsider the overall safety and utility of the

product for a// users, whereas the plaintiff asks the

jury to focus on the specific feature or condition that

gives rise to a specific plaintiffs injury.®

Tort law requires manufacturers to make

difficult choices in balancing these factors in making

design and warnings decisions.®© When this “built in”

intentionality is imported into a punitive damages

analysis, however, it creates the risk that any

attempt by the manufacturer to “think about risks in

5 Comments from the Third Restatement may be instructive

on this point. See, e.g., Restatement (Third) of Torts, Products

Liability § 2 cmt. f (“When evaluating the reasonableness of a

design alternative, the overall safety of the product must be

considered. It is not sufficient that the alternative design

would have reduced or prevented the harm suffered by the

plaintiff if it would also have introduced into the product

dangers of equal or greater magnitude”).

6 See W. Kip Viscusi, The Social Costs of Punitive

Damages Against Corporations in Environmental and Safety

Torts, 87 GEO. L.J. 286, 299-310 (1998), for a discussion of the

complexities affecting corporate decisionmaking as to uncertain

safety risks, together with specific examples of situations in

which such decisions may be made.

20

a systematic manner and to undertake [cost-benefit]

salculations to ensure that there is appropriate risk

balancing that is sufficiently protective” of all

interests will be seen, not as a socially responsible

aspect of product design, but as egregious misconduct

justifying severe punishment. W. Kip Viscusi,

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

REV. 547, 550 (2000).

Far from encouraging an open and thorough

consideration of product safety, the resulting

punitive awards will deter such socially responsible

behavior or, at least, deter manufacturers from

conducting full-fledged and transparent cost-benefit

analyses. See, e.g., Garber, Punitive Damages and

Deterrence of Effictency-Promoting Analysis, 52 STAN,

I.. Rev. at 1814 (“[T]he perceived lhkelihood and

potential costs associated with punitive damages for

performing risk or benefit-cost analyses can be large

enough to attract attention by corporate decision

makers and deter them from doing such analyses.”).

In the present case, for example, the evidence that

Petitioner believed that the applicable Federal Motor

Vehicle Safety Standard was inadequate — and its

consequent decision to design a seat that “drastically

exceeded” that standard — is indicative of a respon-

sible design process, not one that deserves

punishment.

Moreover, product liability cases inescapably

present the facts through the lens of hindsight, with

a tragically injured plaintiff on the one hand, and a

manufacturer, lhkely a large corporation, on the

other. The jury can easily be provoked to a state of

outrage that leads it to award punitive damages

regardless of the actual culpability of the

manufacturer's conduct or the actual need for

2)

punishment and deterrence. As Judge Easterbrook

has explained:

The ex post perspective of litigation

exerts a hydraulic force that distorts

judgment. Engineers design [complex

products] to minimize the sum of

construction, operation, and= injury

costs. * * *

Come the lawsuit, however, the

{plaintiff} injured by [the product]

presents himself as a person, not a

probability. Jurors see today’s injury;

persons who would be injured |by an

alternative design] are invisible.

Although witnesses may talk about

them, they are_ spectral figures,

insubstantial compared to the injured

plaintiff, who appears in the flesh. * * *

[NJo 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 litigation. And the claims of

crippled neighbors receive more weight

than do potential injuries to be felt by

[consumers] (and stockholders) in other

states.

Carroll v. Otis Elevator Co., 896 F.2d 210, 216 (7th

Cir. 1990) (Easterbrook, J., concurring) (citation

omitted); see also W. Kip Viscusi, Jurors, Judges,

and the Mistreatment of Risk by the Courts, 30 J.

LEGAL STuD. 107, 116 (2001) (in the jury‘s mind, a

manufacturer’s “superior ex ante risk judgments may

be outweighed by the ex post reality of the accident

victim”); Owen, Problems in Assessing Punitive

22

Damages Against Manufacturers of Defective

Products, 49 U. CHI. L. REV. at 25 (adequate

standards for punitive liability necessary to “ensure

that the necessarily deliberate nature of a

manufacturer's decision making will not be twisted

artfully and unfairly into an appearance of conscious

wrongdoing’).

The lower courts therefore need guidance to

ensure that state law requires “proper standards

that will cabin the jury’s discretionary authority” and

to afford the defendant fair notice of the conduct that

may subject it to punishment. Philip Morris, supra,

549 U.S. at 352. As it presently stands, the

common-law punitive damages formulation, as

illustrated by the Tennessee Supreme Court’s

decision in this case, cannot provide fair notice of the

conduct which will subject a manufacturer to

punishment.

CONCLUSION

For the reasons set forth above, amicus curiae

PLAC respectfully requests that the Court grant a

writ of certiorari to identify and apply the

appropriate constraints that due process requires.

Respectfully submitted,

Hugh F. Young, Jr. Jonathan M. Hoffman

Product Liability Advisory Counsel of Record

Council, Inc. Joan L. Volpert

Suite 510 Martin, Bischoff, et al.

1850 Centennial Park Dr 888 SW 5th Ave, Ste 900

Reston, VA 20191-1517 Portland, OR 97204

703-264-5300 (phone) 503-224-3113 (phone)

703-264-5301 (fax) 503-224-9471 (fax)

March 16, 2009

la

APPENDIX

Corporate Members of the

Product Liability Advisory Council

as of 3/6/2009

‘Total: i08

3M

A.O. Smith Corporation

ACCO Brands Corporation

Altec Industries

Altria Client Services Inc.

American Suzuki Motor Corporation

Andersen Corporation

Anheuser-Busch Companies

Arai Helmet, Ltd.

Astec Industries

BASF Corporation

Bayer Corporation

Beretta U.S.A. Corp.

BIC Corporation

Biro Manufacturing Company, Inc.

BMW of North America, LLC

Boeing Company

Bombardier Recreational Products

BP America Inc.

Bridgestone Americas Holding, Inc.

Briggs & Stratton Corporation

Brown-Forman Corporation

Caterpillar Inc.

Chrysler LLC

Continental Tire North America, Inc.

Cooper Tire and Rubber Company

Crown Equipment Corporation

2a

Daimler Trucks North America LLC

E.1. DuPont De Nemours and Company

Eh Lilly and Company

Emerson Electric Co.

Engineered Controls International, Inc.

Estee Lauder Companies

Exxon Mobil Corporation

Ford Motor Company

Genentech, Inc.

General Electric Company

GlaxoSmithKline

Great Dane Limited Partnership

Harley-Davidson Motor Company

Hawker Beechcraft Corporation

Honda North America, Inc.

Hyundai Motor America

Illinois Tool Works, Inc.

Intemational Truck and Engine Corporation

Isuzu Motors America, Inc.

Jarden Corporation

Johnson & Johnson

Joy Global Inc.

Joy Mining Machinery

Kawasaki Motors Corp., U.S.A.

Kia Motors America, Inc.

Koch Industries

Kolcraft Enterprises, Inc.

Komatsu America Corp.

Kraft Foods North America, Inc.

Leviton Manufacturing Co., Inc.

Lincoln Electric Company

Magna International Inc.

Mazda (North America), Inc.

Medtronic, Inc.

Merck & Co., Inc.

3a

Microsoft Corporation

Mitsubishi Motors North America, Inc.

Mueller Water Products

Newell Rubbermaid Inc.

Nintendo of America, Inc.

Niro Inc.

Nissan North America, Inc.

Nokia Inc.

Novartis Pharmaceuticals Corporation

PACCAR Inc.

Panasonic

Pfizer Inc.

Porsche Cars North America, Inc.

PPG Industries, Inc.

Purdue Pharma L.P.

Remington Arms Company, Inc.

Rheem Manufacturing

RJ Reynolds Tobacco Company

Schindler Elevator Corporation

SCM Group USA Inc.

Shell Oil Company

Smith & Nephew, Inc.

St. Jude Medical. "nc.

Subaru of America, Inc.

Synthes (U.S.A.)

Terex Corporation

Textron, Inc.

The Dow Chemical Company

The Goodyear Tire & Rubber Company

The Heil Company

The Sherwin-Williams Company

The Toro Company

The Viking Corporation

TK Holdings Inc.

Toshiba America Incorporated

4a

Toyota Motor Sales, USA, Inc.

TRW Automotive

Vermeer Manufacturing Company

Volkswagen of America, Inc.

Volvo Cars of North America, Inc.

Vulcan Materials Company

Watts Water Technologies, Inc.

Whirlpool Corporation

Wyeth

Yamaha Motor Corporation, U.S.A.

Yokohama Tire Corporation

Zimmer, Inc.