Amicus Curiae Brief — Ford Motor Motor Co. v. Buell-Wilson (No. 09-297)

Supfeme Court, U.S.

so

WZ OCT 8 - 2009

OFFICE OF THE CLERK

No. 09-297

IN THE

Supreme Court of the United States

FORD MOTOR COMPANY,

Petitioner,

vs

BENETTA BUELL-WILSON, ef al.,

Respondents.

On Petition for Writ of Certiorari to the

California Court of Appeal

BRIEF OF THE ALLIANCE OF AUTOMOBILE

MANUFACTURERS AS AMICUS CURIAE

IN SUPPORT OF PETITIONER

JOHN T. WHATLEY MATTHEW M. SHORS

ALLIANCE OF AUTOMOBILE Counsel of Record

MANUFACTURERS IRVING L. GORNSTEIN

1401 Eye Street, N.W. JUSTIN FLORENCE

Washington, D.C. 20005 O’MELVENY & MYERS LLP

1625 Eye Strect, N.W.

Washington, D.C. 20006

(202) 383-5300

__ Attorneys for Amicus Curiae

ittorneys jor Amicus Curiae _

1

TABLE OF CONTENTS

TABLE OF AUTHORITIES

INTEREST OF AMICUS CURIAE

INTRODUCTION AND SUMMARY

Pr RE ys sigtenctipiencndsi tana }

A. THE DECISION BELOW AL-

LOWS JURIES TO IMPOSE

PUNITIVE DAMAGES FOR

VIRTUALLY ANY DESIGN

CHOICE, AND THUS DE-

PRIVES MANUFACTURERS OF

THE FAIR NOTICE REQUIRED

BY FEDERAL DUE PROCESS

THIS COURT'S CRIMINAL

CASES SHOW WHY DUE

PROCESS LIMITS THE

THRESHOLD IMPOSITION OF

PUNITIVE DAMAGES

THIS COURT SHOULD HOLD

THAT OBJECTIVELY REA-

SONABLE CONDUCT IS NOT

SUBJECT TO PUNITIVE DAM-

1]

TABLE OF AUTHORITIES

Page(s)

Cases

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

DCT U.S. 233 (1925) oeccccecccscccocssssescocscecccecssveseserscerseeeees 16

Anderson v. Creighton,

Nee... sssesnosecsseesncencssssecseseess 17

Apprendi v. New Jersey,

530 U.S. 466 (2000) ...................... on Ce 13,14

BMW of N. Am. v. Gore,

I i cccoccaccessssseceseccesseneees i2,15, 18

Boute v. City of Columbia,

nn. cesesecacessrsansscoseesesssssercess 14

Boyette v. L.W. Looney & Son,

932 F. Supp. 1344 (D. Utah 1996)... 18

Browning-Ferris Indus. v. Kelco Disposal, Inc.,

ee 13

Carroll v. Otis Elevator Co.,

BE UP PEON EEE, BODU)..........0cccccccssscsesccrscssessereess 9

Champlin Ref. Co. v. Corp. Comm'n,

i ccancossonsacensscesccesersserescescenseees 16

City of Chicago v. Morales,

527 U.S. 41 (1999)........ Se 16

Colautti v. Franklin,

BBS U.S. 379 (1979) ..cnccsccecccsccccsccecseccescosecoscsescessceeseees 16

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

532 U.S. 424 (2001)

13

ll

TABLE OF AUTHORITIES

(continued)

Page(s)

Drabik v. Stanley-Bostitch,

O97 F.2d 406 Ath Cir. BOOS)...........ceccsserscrvsesoseoeseess 19

Exxon Shipping Co. v. Baker,

Re a seid siseieecescenssicis cera 7, 43

Ford Motor Co. v. Buell-Wilson,

a ines scot cciispipsevasactopucineanaree 2

Giaccio v. Pennsylvania,

Pe Fre. TE ba vosininvanwsccseeicccsctsnexntericcsetecties 12, 16

Grayned v. City of Rockford,

Be Ore We iiss chess sna cacingacr neon 3

Hillrichs v. Avco Corp.,

514 N.W.2d 94 (Towa 1994)...........00::cccccessesersseees a

Hoffman Estates v. Flipside, Hoffman Estates, Inc.,

Oe ree ee OR sisi ice tte aed 12

Hunter v. Bryant,

eee i Se in cvaciccdcsecaentiarmeaainsbnxccananced 17

Kolender v. Lawson,

OY Te. Bee Ce cknaricsstestctn ites 10

Malley v. Briggs,

MTG US. BBG CPG) occ cnsesecssssscosssisucstacssoveovosannececosts 17

McMillan v. Pennsylvania,

ATT U.S. 79 (1986) -cccecccssssessssescssecssseserecsssessreenseceee 14,15

Miller v. Florida,

Ue Fes re EE a eccrine cnc i acsee 14

1V

TABLE OF AUTHORITIES

(continued)

Page(s)

Mraz v. DaimlerChrysler,

No. BC-332487, (Cal. Super. Ct., L.A. County

Ne Se oo ee occas desnauseeboineuds ;

Mundy v. Ford Motor Co.,

No. 07-A-74503-2 (Ga. Super. Ct., DeKalb County,

PR I oie sa hi hs awh cannes ncrmeccnswemsansieessas )

Nigro v. Remington Arms Co.,

637 A.2d 983 (Pa. Super. Ct. 1993)............c2sscccseee 19

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

WOO U.S, 1 CAGOTY oacscsccceccscesscccossssccsssonvscsosscansconses 10, 13

Palmer v. A.H. Robins,

Be Bs os |” | eee nD ere ane 7

Philip Morris USA v. Williams,

549 U.S. 346 (2007)............... Se a eae gies actgataal 3,13

Richards v. Michelin Tire Corp.,

21 F.3d 1048 (11th Cir, 1994) ooo ccccccccccsesecteesees 18

Satcher v. Honda Motor Co.,

ee RL Ee Oe |.) ree 19, 20

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

ee ee NN idee asses eesasaverenvacerrtocreens 12, 15

Stoner v. Nash Finch, Inc.,

446 N.W.2d 747 (N.D. 1989)...ccccccccce- BA eae 7

Sturm, Ruger & Co. v. Day,

BE Fe Be Ce FIO oa ocencicsnisicssnesovccscessencsctscasens 7

Sw. Tel. & Tel. Co. v. Danaher,

eee ee ee ns cde essuanvmcanevasvensbecdyelnene 16

Vv

TABLE OF AUTHORITIES

(continued)

Page(s)

United States v. Booker,

Be rs te IE og eskcscs sv cncoksnoncicenscavensscesosscnsoneussecans 14

United States v. Lanier,

Be GD aves ciescaxaessierscnsseescousoessassisnns 16, 17

Welch v. Gen. Motors Corp.,

949 F. Supp. 843 (N.D. Ga. 1996).............. cc eecceeeeees 18

Williams v. New York,

ts I oc coessessvensvusensenadonensvanerecesnneeasis 15

Other Authorities

Richard C. Ausness,

Retribution and Deterrence: The Role of Punitive

Damages tn Product Liability Litigation, 74 Ky.

OR Se Nie ie ee EPA SPR TTS a

Stephen Breyer,

Breaking the Vicious Circle: Toward Effective Risk

RE oo sd eves atcavanersancipmeavaneanaeueds 8

Andrew C. Clausen & Annette M. Carwie,

Problems Applying the Life of Georgia v. Johnson

Case in the Liability Setting: Where Do We Go

With Punitive Damages After BMW v. Gore?, 58

DP ss oc cascavaskouei vei udecedanscauscucveness 8

Steven Garber,

Product Liability, Punitiue Damages, Business

Decisions and Economic Outcomes, 1998 Wis. L.

W. Page Keeton, Prosser & Keeton on the Law of

ee Wh RE vvivrcisdes ocaiscassovers snc eee 18

vl

TABLE OF AUTHORITIES

(continued)

Page(s)

A. Mitchell Polinsky & Steven Shavell,

Punitive Damages: An Economic Analysis,

EEE PREV. Ls FHOV. BO CE iccvissnesccsvccssccssscsineseanscess 12

Catherine M. Sharkey,

Punitive Damages as Societal Damages, 113 Yale

isis. vesulahakercipuctoiaseivesdeneesiaiecns 7

Aaron D. Twerski,

Punitive Damages: Through the Five Prisms, 39

Wes Bae HOM, BG, BO CIB) va sns esc sissesesccenecanenesisornisenes 8

W. Kip Viscusi,

Corporate Risk Analysis: A Reckless Act?, 52 Stan.

L. Rev. 547 (2000) ...-cccccccccsccsecsesssceseeseseseeseesesveneee 10, 11

W. Kip Viscusi,

Jurors, Judges, and the Mistreatment of Risk by

the Courts, 30 J. Legal Stud. 107 (2001).................. 6

BRIEF FOR THE ALLIANCE OF

AUTOMOBILE MANUFACTURERS AS

AMICUS CURIAE IN SUPPORT OF

PETITIONER

Amicus curiae respectfully submits this brief in

support of the petition for a writ of certiorari.!

INTEREST OF AMICUS CURIAE

The Alliance of Automobile Manufacturers, Inc.

(“the Alliance”) is a nonprofit trade association

formed in 1999 and incorporated in Delaware. The

Alliance has eleven members: BMW Group, Chrysler

Group LLC, Ford Motor Company (“Ford”), General

Motors, Jaguar Land Rover, Mazda, Mercedes-Benz

USA, Mitsubishi Motors, Porsche, Toyota, and

Volkswagen Group of America. Alliance members

are responsible for 77% of all car and light truck

sales in the United States.

The Alliance’s mission is to improve the environ-

ment and motor vehicle safety through the develop-

ment of global standards and the establishment of

market-based, cost-effective solutions to emerging

challenges associated with the manufacture of new

automobiles. The Ailiance files amicus curiae briefs

in cases lke this that are important to the automo-

! Pursuant to Rule 37.6, counsel for amicus curiae states

that no counsel for a party authored this brief in whole or in

part, and no counsel o; party made a monetary contribution

intended to fund the preparation or submission of this brief.

No person other than amicus curiae, its members, or its counsel

made a monetary contribution to its preparation or submission.

The parties received timely notice of umicus’s intent to file this

brief. Ali parties have consented to its filing, and letters re-

flecting their consent have been filed with the Clerk.

2

bile industry. The Alliance has previously filed

amicus briefs in this very case, including a brief in

support of an earlier petition. See, e.g., Br. for the

Alliance of Automobile Manufacturers and the Na-

tional Association of Manufacturers as Amici Curiae

in Support of Petitioner, Ford Motor Co. v. Buell-

Wilson (No. 06-1068). As indicated in the present

petition, this Court granted the earlier petition, va-

cated the judgment, and remanded for further con-

sideration. See 550 U.S. 931 (2007) (GVR order).

The Alliance’s members are deeply concerned

about the effects of punitive damages awards on the

automobile manufacturing industry. Accidents in-

volving automobiles often result in serious injury or

death, even when the automobile manufacturer has

complied with all applicable safety statutes and

regulations, the automobile includes’ up-to-date

safety features, and the manufacturer took great

care in the vehicle’s design. In designing an auto-

mobile, a manufacturer must necessarily make

tradeoffs between product performance and safety,

taking into account engineering limitations and cost

constraints. But under many state products liability

laws, juries are permitted to impose punitive dam-

ages based on post hoc findings that the manufac-

turer chose wrongly in making those tradeoffs—uviz.,

that in the jury’s view, the risks of the product out-

weigh its benefits. And, juries often award massive

punitive damages when they believe the manufac-

turer made the wrong choice, even when, as here,

the manufacturer’s good-faith design choice was con-

sistent with industry standards and federal regula-

tions and therefore objectively reasonable. As a re-

sult, manufacturers often have no way of knowing

3

whether their reasonable design decisions may later

be subject to punishment, and thus no ability to

structure their conduct in order to avoid such pun-

ishment. The Alliance believes that this Court’s in-

tervention is needed to ensure that manufacturers

are not punished without fair notice that their con-

duct is unlawful.

INTRODUCTION AND SUMMARY

This Court should grant the petition to address

the important question whether the Constitution

permits punitive damages to be imposed for conduct

that objectively reasonable persons could have con-

cluded was lawful. It is a bedrock principle of proce-

dural due process that a person may not be punished

without sufficient notice to allow a “person of ordi-

nary intelligence a reasonable opportunity to know

what is prohibited” and “act accordingly.” Grayned

v. City of Rockford, 408 U.S. 104, 108 (1972). This

Court has also repeatedly expressed that “concern

for adequate notice” in the punitive damages con-

text. See, e.g., Philip Morris USA v. Williams, 549

U.S. 346, 353-55 (2007). But thus far, the Court has

only addressed the notice required to ensure that the

severity of punitive damages comports with due

process. The Court has not yet squarely resolved the

notice required before a defendant's conduct can be

subjected to punishment in the first place. It should

do so here.

Although we agree with the arguments made in

the petition, we write separately to identify three

additional reasons why the Court should grant re-

view.

4

First, the law of California, like the law of many

jurisdictions, allows juries to impose punitive dam-

ages for almost any product design decision. In mak-

ing design decisions, manufacturers must necessar-

ily balance the costs and benefits of particular design

features. Yet the law of many jurisdictions allows

juries to use this inescapable balancing process as

the basis for imposing punitive damages. Under the

California Court of Appeal’s approach, for example,

so long as a jury is properly instructed on the state-

law elements of punitive damages, that jury has un-

bounded discretion to award punitive damages in

product liability cases, no matter how objectively

reasonable the manufacturer was in concluding that

its design choice was lawful. That approach deprives

manufacturers of fair notice of when they will be

subject to punishment, and makes it impossible for

manufacturers to structure their conduct in a way

that avoids such punishment.

Second, this Court’s seminal criminal procedural

decisions support applying due process principles not

only to the question whether punitive damages are

excessive, but also to the antecedent question

whether punishment may be imposed in the first

place. As this Court has repeatedly observed, puni-

tive damages share the twin goals of criminal law—

deterrence and retribution. In the criminal context,

due process affords a defendant greater protections

with respect to the threshold decision to impose pun-

ishment (the guilt stage) than the determination of

the severity of that punishment (the sentencing

stage). It follows in the punitive damages context

that a defendant is due at least as much process in

determining whether its conduct triggers punish-

5

ment at all as in evaluating the permissible degree

of that punishment. This Court should grant review

and so hold.

Third, this Court’s precedents also provide a

straightforward rule for evaluating challenges to the

application of a punitive damages statute to particu-

lar conduct. A statute fails to provide fair notice,

and is thus void for vagueness as applied, when it

permits punishment for conduct that reasonable

people could conclude was lawful. Without that no-

tice, a defendant cannot conform its conduct to the

law in order to avoid punishment. It is clear that the

product design at issue here was objectively reason-

able: it met the strictest applicable federal regula-

tion, comported with industry standards, was

reached after considerable study, and was deemed

non-defective by fact-finders eleven times prior to

this case. Nonetheless, the California Court of Ap-

peal approved $55 million in punitive damages be-

cause a twelfth jury determined not only that the de-

sign was defective, but that Ford acted with malice

in selecting that design. It is one thing for a jury to

decide that the design at issue was defective for pur-

poses of liability and compensation; it is quite an-

other, against these undisputed background facts, to

hold that punishment could possibly be justified

here.

This Court should reject the approach of the Cali-

fornia courts and others, under which, so long as a

jury is properly instructed on malice, the U.S. Con-

stitution’s guarantee of due process places no limits

on the jury’s decision to impose punitive damages.

Instead, it shculd reaffirm that manufacturers are

due fair notice of when they will be subject to pun-

6

ishment, and that notice is lacking as a matter of

law when a manufacturer could have reasonably be-

lieved that its conduct was lawful. Only such an ob-

jective standard can ensure that manufacturers will

be able to structure their conduct to avoid punish-

ment.

ARGUMENT

A. THE DECISION BELOW ALLOWS JU-

RIES TO IMPOSE PUNITIVE DAMAGES

FOR VIRTUALLY ANY DESIGN CHOICE,

AND THUS DEPRIVES MANUFACTUR-

ERS OF THE FAIR NOTICE REQUIRED

BY FEDERAL DUE PROCESS

1. The decision below allows juries to impose pu-

nitive damages for almost any product design deci-

sion, no matter how objectively reasonable. It is now

well understood that massive punitive damages

awards have become commonplace in product liabil-

ity cases. Unlike other kinds of torts, product habil-

ity claims (and perhaps, most obviously, automobile

defect claims) involve both (i) non-intentional con-

duct by the defendant and (ii) serious physical injury

or death suffered by the plaintiff. In these cases, ju-

ries are faced with sympathetic, seriously injured

plaintiffs (or their families) and routinely told that

their injuries could have been prevented if only the

manufacturer had spent more money in designing

the product. See W. Kip Viscusi, Jurors, Judges, and

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

Stud. 107, 116 (2001) (describing the risk that a

manufacturer's “superior ex ante risk judgments may

be outweighed by the ex post reality of the accident

victim”). This results in “the stark unpredictability

7

of punitive awards.” Exxon Shipping Co. v. Baker,

128 S. Ct. 2605, 2625 (2008); id. at 2623 (“[PJunitive

damages overall are higher and more frequent in the

United States than they are anywhere else.”).

The California Court of Appeal’s approach exac-

erbates that problem by allowing punitive damages

to be imposed in essentially any case in which the

jury finds that a product is defective. The California

punitive damages statute, like the statutes and com-

mon law of many other jurisdictions,? allows jurors

to impose punitive damages on a defendant guilty of,

unter alia, “malice”—defined in this case as “despica-

ble conduct which is carried on by the defendant

with a willful and conscious disregard for the rights

or safety of others.” Pet. at 4. As applied here, that

statute allows juries to impose punishment based on

a post hoc determination that a manufacturer was

aware that it could have made the product safer,

even when all objective indicators show that the de-

fendant’s conduct was reasonable.

2 Numerous state punitive damages statutes include a

standard comparable to, or even weaker than, California’s

“malice” requirement. See Catherine M. Sharkey, Punitive

Damages as Societal Damages, 113 Yale L.J. 347, 358 n.19

(2003) (“States at present require different evidentiary show-

ings to sustain punitive awards. It is no longer the case that

malice or wanton conduct is required; increasingly, state legis-

latures and courts acknowledge that reckless disregard can suf-

fice.”). Other state appellate courts, like California’s, have de-

clined to consider whether a particular defendant against

whom punitive damages were imposed had fair notice. See,

e.g., Palmer u. A.H. Robins, 684 P.2d 187, 214-15 (Colo. 1984);

Sturm, Ruger & Co. v. Day, 594 P.2d 38, 46 (Alaska 1979),

overruled on other grounds by Dura Corp. v. Harned, 703 P.2d

396 (Alaska 1985); Stoner v. Nash Finch, Inc., 446 N.W.2d 747,

756 (N.D. 1989).

8

In reality, that is no standard at all, because

manufacturers are always aware both that their

products may cause harm and that those products

could be made safer if more money were spent. Un-

fortunately, many products—and certainly automo-

biles, which are designed to transport people at high

speeds—can and do cause serious injury and death.

Yet many of the risks associated with certain prod-

ucts are effectively unavoidable, because consumers

are unwilling to accept the cost-tradeoffs required to

reduce or eliminate those risks. See, e.g., Stephen

Breyer, Breaking the Vicious Circle: Toward Effec-

tuue Risk Regulation 13-14 (1993). For example, an

automobile manufacturer could make every car it

designs a tank, but few consumers could afford to

purchase it

In every products liability case, then, a plaintiff

will be able to show that some alternative design,

identified years later, could have made the product

safer. As one pair of commentators has observed,

“[rJegardless of how high the manufacturer sets the

design safety standard, when an accident does occur,

the plaintiffs lawyer will have an expert to testify

the product could have been made safer, and the in-

jury prevented, if the manufacturer had just been

willing to spend some additional money.” Andrew C.

Clausen & Annette M. Carwie, Problems Applying

the Life of Georgia v. Johnson Case in the Liability

Setting: Where Do We Go With Punitive Damages

After BMW v. Gore?, 58 Ala. Law. 46, 48 (1997); see

Aaron D. Twerski, Punitive Damages: Through the

Five Prisms, 39 Vill. L. Rev. 353, 356 (1994) (“the

modern products liability case comes with ‘intent’

built in”). In these cases, “[t]he ex post perspective

9

of litigation exerts a hydraulic force that distorts

judgment.” Carroll v. Otis Elevator Co., 896 F.2d

210, 215-16 (7th Cir. 1990) (Easterbrook, J., concur-

ring).4

For these reasons, the “malice” standard does not

itself provide a manufacturer any notice of when it

will be subject to punishment, nor does it permit the

manufacturer to select designs that will avoid sub-

stantial punishment years or even decades later.

Applying a malice standard to a non-intentional tort

case involving serious injury or death is inherently

fraught with arbitrariness unless courts take ser1-

ously the notice required by federal due process.

Rather than engaging that question at all, the Court

of Appeal simply noted that since the jury was prop-

erly instructed under a statute that is not facially

unconstitutional, its due process inquiry was at an

end. That is not only fundamentally wreng, it repre-

sents common thinking by state appellate courts and

creates enormous problems not only for automobile

manufacturers but product manufacturers as a

whole.

This case is a textbook illustration of the prob-

lem. The design at issue here complied with the

strictest applicable federal safety standards and also

comported with industry standards. Before this

trial, eleven cases involving similar claims had gone

+ For recent punitive damages awards involving automobile

design, see, e.g., Mraz v. DaimlerChrysler, No. BC-332487, (Cal

Super. Ct., L.A. County, Mar. 7, 2007) (awarding punitive dam-

ages of $50 million); Mundy v. Ford Motor Co., No. 07-A-74503-

2 (Ga. Super. Ct., DeKalb County, Apr. 29, 2009) (awarding

punitive damages of more than $30 million).

10

to judgment, and in all eleven, judgment was en-

tered for petitioner: Pet. at 5. Without the con-

straint of judge-applied objective standards, a

twelfth jury imposed substantial punishment based

on its own “personal predilections” concerning risk-

utility balancing. Kolender v. Lawson, 461 U.S. 352,

357-58 (1983) (internal quotation marks omitted).

This is the precise result procedural due process is

meant to prevent. “Indeed, the point of due proc-

ess—of the law in general—is to allow citizens to or-

der 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.” Pac. Mut. Life Ins.

Co v. Haslip, 499 U.S. 1, 59 (1991) (O’Connor, J., dis-

senting). An aberrant verdict from the twelfth jury

to consider a design is not even remotely the kind of

notice that allows manufacturers to “order their be-

havior” to avoid punishment.

2. A system in which juries are permitted to

award punitive damages based solely on subjective

risk-utility balancing is not only fundamentally un-

fair to manufacturers; it creates perverse incentives

resulting in direct harm to consumers as well. Em-

pirical evidence shows that many jurors decide to in-

flict punitive damages because a defendant has en-

gaged in risk-utility balancing. W. Kip Viscusi, Cor-

porate Risk Analysis: A Reckless Act?, 52 Stan. L.

Rev. 547, 550-51, 556, 589-90 (2000). In other

words, jurors conflate intentional conduct, such as

deciding on a design after a cost-benefit analysis,

with intentional harm.

Ironically, this sometimes leads juries to punish

defendants whose engineers have engaged in the

11

very thorough study and debate of the risks and

benefits of various product designs that the law en-

courages. Viscusi, Corporate Risk Analysis, supra,

at 550, 558; see also Richard C. Ausness, Retribution

and Deterrence: The Role of Punitive Damages in

Product Liability Litigation, 74 Ky. L.J. 1, 88-89

(1985) (explaining that a responsible manufacturer

Should balance various factors including risk of

harm, durability, ease of operation and manufacture,

and cost of materials and labor). Although responsi-

ble manufacturers should engage in this kind of bal-

ancing ex ante, ex post it is a “red flag[]” demonstrat-

ing a “callous disregard for human health.” Viscusi,

Corporate Risk Analysis, supra, at 578; see also Ste-

ven Garber, Product Liability, Punitive Damages,

Business Decisions and Economic Outcomes, 1998

Wis. L. Rev. 237, 287 n.135 (“It seems widely agreed

by both plaintiffs’ and defense attorneys that credi-

ble trial evidence of cost-benefit balancing—so-called

‘trading off lives against dollars makes punitive

damages particularly likely. This is in stark con-

trast to the fact that economic efficiency—and deter-

rence aimed at economic efficiency—requires cost-

benefit balancing.”).

If manufacturers are subject to punishment un-

der such circumstances, it encourages irresponsible

corporate conduct and can even lead manufacturers

to stop selling any product that can cause injuries

and that some jury may, years or even decades later,

find could have been made more safe. “[A] firm

might be induced to withdraw its product from the

marketplace even though consumers place a higher

value on the product than its full cost of production,

which includes the averaye harm caused by the

12

product.” <A. Mitchell Polinsky & Steven Shavell,

Punitive Damages: An Economic Analysis, 111 Harv.

L. Rev. 869, 882 (1998). And even for those manu-

facturers that continue making their products in the

face of this risk, the specter of punitive damages is

likely to chill innovation. These results harm manu-

facturers and consumers alike.

B. THIS COURT’S CRIMINAL CASES SEOW

WHY DUE PROCESS LIMITS THE

THRESHOLD IMPOSITION OF PUNI-

TIVE DAMAGES

This Court has held in many contexts that defen-

dants may not be punished without fair notice that

their conduct will subject them to punishment, so

that they can structure their behavior in order to

avoid such punishment. The petition explains why

the decision below is irreconcilable with this Court's

punitive damages cases, e.g., State Farm Mut. Auto.

Ins. Co. v. Campbell, 538 U.S. 408, 417 (2003); BMW

of N. Am. v. Gore, 517 U.S. 559, 574 (1996), and its

void-for-vagueness precedents, e.g., Hoffman-Estates

vu. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 499

(1982); Giaccto v. Pennsylvania, 382 U.S. 399, 402

(1966). See Pet. at 14-15.

This Court’s criminal law cases provide further

support for these conclusions. In the criminal law,

defendants are entitled to greater procedural protec-

tions at the stage when their threshold guilt is de-

termined than at the stage when the severity of their

sentence is decided. In the punitive damages con-

text, this Court has repeatedly held that due process

limits the extent of punishment that can be imposed.

It follows a fortiori that due process constraints ap-

13

ply at the initial stage of deciding whether a defen-

dant is subject to punitive damages.

1. This Court has frequently analogized jury-

imposed punitive damages to criminal penalties.

“[P]unitive damages advance the interests of pun-

ishment and deterrence, which are also among the

interests advanced by the criminal law.” Browning-

Ferris indus. v. Kelco Disposal, Inc., 492 U.S. 257,

275 (1989); see Philip Morris, 549 U.S. at 358-59

(Stevens, J., dissenting) (“There is little difference

between the justification for a criminal sanction,

such as a fine or a term of imprisonment, and an

award of punitive damages.”). As this Court has ex-

plained, while compensatory damages “are intended

to redress the concrete loss that the plaintiff has suf-

fered by reason of the defendant’s wrongful conduct,”

punitive damages “operate as ‘private fines’ intended

to punish the defendant and to deter future wrong-

doing.” Cooper Indus., Inc. v. Leatherman Tool

Greup, Inc., 532 U.S. 424, 432 (2001). Imposition of

punitive damages, moreover, “is an expression of [a

jury's] moral condemnation.” Jd. (citing Gertz uv.

Robert Welch, Inc., 418 U.S. 323, 350 (1974)).

Given the “quasi-criminal” nature of punitive

damages, Haslip, 499 U.S. 1 at 19, this Court has

looked to developments in criminal sentencing law

for guidance on the permicsible extent of punitive

damages. In Exxon Shipping Co., for example, this

Court—after noting that the “points of similarity”

between punitive damages and criminal law “are ob-

vious,” 128 S. Ct. at 2628—looked to sentencing de-

velopments for instruction on how to attain consis-

tency in damages awards. Id. at 2628-29 (explaining

that “[t]his federal criminal law development, with

14

its many state parallels, strongly suggests that as

long as there are no punitive-damages guidelines,

corresponding to the federal and state sentencing

guidelines, it is inevitable that the specific amount of

punitive damages awarded whether by a judge or by

a jury will be arbitrary.” (internal quotation marks

omitted)). And, in Gore, the Court cited a number of

criminal cases in announcing guideposts for the re-

view of the severity of punitive damages. 517 U.S. at

575 n.22 (citing, e.g., Miller v. Florida, 482 U.S. 423

(1987); Boute v. City of Columbia, 378 U.S. 347

(1964)).

2. It is a basic principle of the criminal! law that

defendants are afforded greater procedural protec-

tions at the guilt stage than at the sentencing stage.

For example, defendants have a right to a jury to de-

termine whether they have committed every element

of a crime. See Apprendi v. New Jersey, 530 U.S.

466, 477 (2000). But defendants have no right to a

jury to determine their specific sentence. See United

States v. Booker, 543 U.S. 220, 233 (2005) (“when a

trial judge exercises his discretion to select a specific

sentence within a defined range, the defendant has

no right to a jury determination of the facts that the

judge deems relevant.”). Similarly, a defendant's

guilt must be established beyond a reasonable doubt.

Apprendi, 530 U.S. at 478. But a judge may deter-

mine relevant sentencing factors by a preponderance

of the evidence. See McMillan v. Pennsylvania, 477

U.S. 79, 91-93 (1986). While the elements of a crime

must be set out in an indictment. sentencing factors

need not be. Apprendi, 530 U.S. at 483. And al-

though at the guilt stage, tribunals “always have

been hedged in by strict evidentiary procedural! limi-

15

tations” this is not the case with sentencing. Wil-

liams v. New York, 337 U.S. 241, 246 (1949). As

these differences reflect, heightened procedures ap-

ply in the criminal law “when the State threatens to

stigmatize or incarcerate an individual for engaging

in prohibited conduct.” McMillan, 477 U.S. at 98

(citing In re Winship, 397 U.S. 358, 363-64 (1970)).

3. This Court’s holdings in Gore and elsewhere

impose due process constraints on “the severity of

the penalty that a state may impose.” Gore, 517 U.S.

at 559. “The Due Process Clause of the Fourteenth

Amendment prohibits the imposition of grossly ex-

cessive or arbitrary punishments on a tortfeasor.”

State Farm, 538 U.S. at 416 (citing Cooper Indus.,

532 U.S. at 433). For “[t]o the extent an award is

grossly excessive, it furthers no legitimate purpose

and constitutes an arbitrary deprivation of prop-

erty.” Id. Given this Court’s application of due proc-

ess constraints on the degree of punitive damages

that may be awarded, it follows necessarily that the

basic due process principle of fair notice apples to

the threshold imposition of punishment. This Court

should grant the petition to affirm that fundamental

principle.

OF THIS COURT SHOULD HOLD THAT OB-

JECTIVELY REASONABLE CONDUCT IS

NOT SUBJECT TO PUNITIVE DAMAGES

This Court’s precedents also provide a rule for

evaluating the question whether a manufacturer has

sufficient notice that it will be punished for its con-

duct. That rule is readily administrable, and will

avoid the problems plaguing lower-court review of

16

punitive damages awards in non-intentional tort

cases today.

1. This Court has already created the appropri-

ate rule for evaluating challenges like this one

through its void-for-vagueness doctrine. Under this

Court’s precedents, a statute authorizing punish-

ment is so vague that it violates due process when it

“fail[s] to provide the kind of notice that will enable

ordinary people to understand what conduct it pro-

hibits.” City of Chicago v. Morales, 527 U.S. 41, 56

(1999). Tnis principle applies in civil cases, and this

Court has prohibited civil punishments in a variety

of cases where reasonable people acting in good faith

could disagree on whether the defendant’s conduct

was lawful. See, e.g., Giaccio, 382 U.S. at 402-03;

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

241-43 (1932); A.B. Small Co. v. Am. Sugar Ref. Co.,

267 U.S. 233, 238-42 (1925); Sw. Tel. & Tel. Co. v.

Danaher, 238 U.S. 482, 490-91 (1915). These prece-

dents all recognize that no punishment is allowed

where people “can—and do—disagree” on what con-

duct the law prohibits. Colautti v. Franklin, 439

U.S. 379, 401 (1979).

In United States v. Lanier, this Court recognized

that the due process vagueness rule is functionally

identical to the qualified immunity rule, which pro-

tects public officials from civil liability based on legal

obligations that are not “clearly established.” 520

U.S. 259, 270-71 (1997). As the Court observed, 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 have traditionally possessed in the

17

face of vague criminal statutes.” Jd. This Court’s

upinions establish that officials are entitled to quali-

fied immunity as long as their conduct is “objectively

reasonable’—i.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 “objectively reasonable

manner’); accord Hunter v. Bryant, 502 U.S. 224,

227 (1991) (under “settled law,” officers are entitled

to immunity “if a reasonable officer could have be-

heved” that his or her conduct was lawful (internal

quotation marks omitted)); Anderson v. Creighton,

483 U.S. 635, 641 (1987). “[I]f officers of reasonable

competence could disagree on [the matter at] issue,

immunity should be recognized.” Malley, 475 U.S. at

341.

That same rule should govern the question of

when a defendant has received fair notice that it

may be subject to punitive damages. This Court

should hold that punitive damages cannot be im-

posed when the defendant's conduct was objectively

reasonable. Only such an objective standard can en-

sure that manufacturers will be able to tailor their

conduct to the law and avoid arbitrary punishment.

2. The facts of this case highlight how the ap-

proach applied by the California courts and others,

see supra n.2, denies manufacturers the fair notice

required by due process. The plaintiffs argued that

Ford acted with “malice” in designing the Explorer

based on two alleged design defects relating to the

strength of the vehicle’s roof and the alleged ten-

dency of the vehicle to roll over. They claimed that

“Ford had the technology to make the Explorer sta-

ble and to strengthen the roof to protect the occu-

18

pant, but did not use it.” Pet. App. 53a. In response,

Ford showed that its design complied with federal

regulations, exceeded industry standards, and were

the subject of good-faith debates among engineers

about how best to balance performance and safety.

Those objective factors demonstrate that reasonable

people could differ concerning whether the benefits

of the Explorer’s design outweighed its risks. At a

minimum, they showed that Ford had ample basis

for concluding that its product design was reason-

able and would not subject it to punishment.

a. A manufacturer's compliance with applicable

federal safety requirements indicates the reason-

ableness of its conduct. In Gore, this Court recog-

nized the relevance of compliance with regulatory

standards in assessing the appropriateness of puni-

tive damages. There, the Court noted that “BMW

could reasonably rely on state disclosure statutes for

guidance” in determining “the appropriate line be-

tween presumptively minor damage [to automobiles]

and damage requiring disclosure to purchasers.” 517

U.S. at 579. Other courts have likewise recognized

that punitive damages are inappropriate when a

manufacturer complies with applicable regulatory

schemes. See, e.g., Richards v. Michelin Tire Corp.,

21 F.3d 1048, 1059 (11th Cir. 1994); Welch v. Gen.

Motors Corp., 949 F. Supp. 843, 845 (N.D. Ga. 1996);

Boyette v. L.W. Looney & Son, 932 F. Supp. 1344,

1348 (D. Utah 1996). A leading treatise agrees that

“film most contexts ... compliance with a statutory

standard should bar liability for punitive damages.”

W. Page Keeton, Prosser & Keeton on the Law of

Torts 233 n.41 (5th ed. 1984). In this case, Ford

demonstrated that the Explorer complied with all

19

applicable standards promulgated by the National

Highway Transportation Safety Administration

(“NHTSA”), the federal agency charged with setting

automotive safety requirements.

b. Compliance with industry standards offers a

further objective indication that punishment is inap-

propriate. Numerous courts have recognized that

punitive damages cannot be justified under the

amorphous “malice” standard when a manufac-

turer's product comports with then-current industry

standards. See, e.g., Satcher v. Honda Motor Co., 52

F.3d 1311, 1316-17 (5th Cir. 1995); Drabik v.

Stanley-Bostitch, 997 F.2d 496, 510 (8th Cir. 1993);

Nigro v. Remington Arms Co., 637 A.2d 983, 989-90

(Pa. Super. Ct. 1993). Here, plaintiffs’ Ford Explorer

had “one of the best roll-over rates compared to other

SUVs in its class.,” Pet. App. 25a (internal quotation

marks and alteration omitted); the Explorer com-

plied with five commonly used vehicle stability tests,

Reporter’s Transcript (“RT”) 3635-36, 3657; and for

ten consecutive years, Consumer's Union awarded

the Explorer a “recommended” rating for safety

based on independent testing, RT 3232. Those test

results demonstrate the effectiveness of the Ford en-

gineers’ design. They confirm further that Ford had

no basis for predicting that its design could be

deemed not only defective but maliciously so.

c. The existence of a good-faith debate over the

best design is another objective indicator that rea-

sonable people could disagree over whether a manu-

facturcr’s conduct in designing a product was lawful

Many courts have observed that punitive damages

are not appropriate when there has been a genuine

scientific or engineering debate about a design. See,

20

e.g., Satcher, 52 F.3d at 1816-17; Hillrichs v. Avuco

Corp., 514 N.W.2d 94, 100 (lowa 1994).

Here, Ford engineers devoted considerable good-

faith efforts to vehicle safety when designing the Ex-

plorer. See AA 2483-88; AA 2502. In making those

decisions, Ford balanced an incremental safety ad-

vantage above the levels approved by NHTSA and

validated by testing with tradeoffs for consumers in

cost and other desirable features. The fact that Ford

engineers debated plaintiffs’ alleged design defects

and came to opposite conclusions shows that the

company was engaging in precisely the “line-

drawing,” Gore, 517 U.S. at 579, that a manufacturer

must make all the time in selecting a design. The

fact that there was a debate in the engineering and

regulatory community over the proper standards re-

veals that Ford lacked fair notice that its decisions

could subject it to punitive damages.

“*nwnk *

Each of these factors demonstrates that Ford’s

product design was objectively reasonable. In af-

firming the punitive damages verdict here, the Court

of Appeal set aside all of these objective indicators

upon which reasonable people would rely, based

solely on the fact that the jury was properly in-

structed, and then decided to impose punitive dam-

ages. Pet. App. 28a, 56a-57a. Although proper jury

instruction under state law may be necessary, it 1s

insufficient on its own to afford a defendant due

process. Without reference to objective standards,

punitive damages statutes like the one at issue here

can be so vague as applied that manufacturers sim-

ply cannot know what non-intentional conduct a jury

might later decide warrants punishment. By failing

21

even to engage in the appropriate due process analy-

sis, the Court of Appeal erred. Because that error is

both commonplace in lower courts and devastating to

automobile manufacturers, this Court should grant

review.

CONCLUSION

The Court should grant the petition for a writ of

certiorari.

Respectfully submitted,

JOHN T. WHATLEY MATTHEW M. SHORS

ALLIANCE OF AUTOMOBILE Counsel of Record

MANUFACTURERS IRVING L. GORNSTEIN

1401 Eye Street, N.W. JUSTIN FLORENCE

Washington, D.C. 20005 O’MELVENY & MYERS LLP

1625 Eye Street, N.W.

Washington, D.C. 20006

(202) 383-5300

Attorneys for Amicus Curiae

October 8, 2009