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

Supreme Court, U.S.

cre

OCT 8 - 2009

\uk2- (3) OFFICE OF THE CLERK

No. 09-297

IN THE

Supreme Court of the Wnited States

FORD MOTOR COMPANY,

Petitioner,

V.

BENETTA BUELL-WILSON, et al.,

Respondents.

On Petition for a Writ of Certiorari

to the California Court of Appeal

BRIEF OF DRI—THE VOICE OF THE

DEFENSE BAR AS AMICUS CURIAE IN

SUPPORT OF PETITIONER

MICHAEL W. DAVIS CARTER G. PHILLIPS

SIDLEY AUSTIN LLP C. FREDERICK BECKNER III

One South Dearborn REBECCA K. Woop*

Street EAMON P. JOYCE

Chicago, Illinois 60603 SIDLEY AUSTIN LLP

(312) 853-7000 1501 K Street, N.W.

Washington, D.C. 20005

(202) 736-8000

Counsel for Amicus Curiae

October 8, 2009 * Counsel of Record

ee ee

WILSON-EPES PRINTING CO., INC. — (202) 789-0096 — WASHINGTON, D. C. 20002

TABLE OF CONTENTS

Page

py 0 PCR Ney 8) ogy) >. ener 8

INTEREST OF AMICUS CURIAE DRI.............. 1

IT ons cccndacensnencibsdsveuiendivessernness 3

REASONS FOR GRANTING THE PETITION...

I. THIS COURTS REVIEW IS NEEDED TO

CLARIFY THAT DUE PROCESS

REQUIRES OBJECTIVE STANDARDS

THAT PROVIDE FAIR NOTICE THAT

PRIMARY CONDUCT MAY BE SUBJECT

TO PUNITIVE DAMAGES .....00...... eee 5

Il. REVIEW IS NEEDED TO ADDRESS THE

CIRCUMSTANCES IN WHICH COMPLI-

ANCE WITH GOVERNMENT AND

INDUSTRY STANDARDS LIMITS OR

PRECLUDES THE IMPOSITION OF

Si five yy Bi’ | ¢) _-. Sa nla 10

Ii. THE DECISION BELOW CONFLICTS

WITH MANY WELL-REASONED DECI-

SIONS HOLDING THAT COMPLIANCE

WITH OBJECTIVE GOVERNMENT AND

INDUSTRY STANDARDS IS RELEVANT

TO OR PRECLUDES PUNITIVE DAM-

on

(i)

3s

TABLE OF AUTHORITIES

CASES Page

Aldworth Co. v. England, 648 S.E.2d 198

(Coa. CC. a irc iensceicesscccces.. 21

Averitt v. Southland Motor Inn of Okhkla.,

720 F.2d 1178 (10th Cir. 1983).................. 21

BMW of N. Am., Inc. v. Gore, 517 U.S. 559

(TOG) cccacacack nee nner cciessccecss0ce. 6, 7,9

Bankers Life & Cas. Co. v. Crenshaw, 486

US. TY GE crsescscsccceces. 9

Boute v. City of Columbia, 378 U.S. 347

bo: Ppp 5

Brand v. Mazda Motor Corp., 978 F. Supp.

LBS CED. Te atta ittacassnscsccsceece..s. 19

Browning-Ferris Indus. of Vt., Inc. v. Kelco

Disposal, Inc., 492 U.S. 257 (1989)............ 2,9

Center for Auto Safety v. Peck, 751 F.2d

LSDS COC, Ge eel tteccstescnscreccecesees. 13

Conde v. Velsicol Chem. Corp., 24 F.3d 809

(Gta Cae, ete itectccscesencse....... 11

Dorsey v. Honda Motor Co., 655 F.2d 650

(Sth Cir. Unit B Sent. 196})....................... 19

Exxon Shipping Co. v. Baker, 128 S. Ct.

ZEDGE Ce ae a aatitdrrsekcs cress... 8

First Natl Bank in Albuquerque v. United

States, 552 F.2d 370 (10th Cir. 1977)........ 1]

Gasperint v. Center for Humanities, Inc.,

51S UF, re ea riecisescescoveee. 1

Geier v. American Honda Motor Co., 529

U.S. GB a Ga... 000... 12, 15

General Motors Corp. v. TIracheta, 90

S.W.3d 725 (Tex. App. 2002), rev'd on

other grounds, 161 S.W.3d 462 (Tex.

SODG) .sccccccencsneee IRE aetaeeesesesscese. 18

Giaccio v. Pennsylvania, 382 U.S. 399

Ob or a 8

ili

TABLE OF AUTHORITIES—continued

Grimshaw v. Ford Motor Co., 199 Cal. App.

3d 757 (1981)

International Union v. Bagwell, 512 U.S.

821 (1994)

Lane v. Amsted Indus., Inc., 779 S.W.2d

104 (lo. CL. Bpm. TGBB)-<.....cccccseccscsrscscenssse

Mci3oyle v. United States, 283 U.S. 25

(1931)

Miles v. Ford Motor Co., 922 S.W.2d 572

(Tex. App. 1996), rev'd on other grounds,

967 S.W.2d 377 (Tex. 1998)

Motor Vehicle Mfrs. Ass’n of U.S., Inc. v.

State Farm Mut. Auto. Ins. Co., 463 U.S.

29 (1983)

Philadelphia, Wilmington & Baltimore

R.R. v. Quigley, 62 U.S. (21 How.) 202

Phillip Morris USA v. Williams, 549 U.S.

346 (2007)

Rhone-Poulenc, Inc v. FDA, 636 F.2d 750

(D.C. Cir. 1980)

Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47

Sloman v. Tambrands, Inc., 841 F. Supp.

699 (D. Md. 1993)

State Farm Mut. Auto. Ins.

Page

Campbell, 538 U.S. 408 (2003) 1, G7, 32

Stolt-Nielsen S.A. v. Antimalfeeds Intl

Corp., No. OB-1106 CB.) ccvcccssesssessnsenesccens

Stone Man, Inc. v. Green, 435 S.E.2d 205

(Ga. 1993)

TXO Prod. Corp. v. Alliance Res. Corp., 509

U.S. 443 (1993)

i

iv

TABLE OF AUTHORITIES—continued

Page

Trotter v. B&W Cartage Co., No. 05-cv-

0205-MJR, 2006 WL 1004882 (S.D. Ill.

Apr. 13, 2006)

United States v. Bass, 404 U.S. 336 (1971).. 6, 16

United States v. Carroll Towing Co., 159

F.2d 169 (2d Cir. 1947)

United States v. Harriss, 347 U.S. 612

(1954)

United States v. Lanier, 520 U.S. 259

(1997)

United States v. Wiltberger, 18 U.S. (5

Wheat.) 76 (1820)

Wise v. Broadway, 433 S.E.2d 857 (S.C.

STATUTE AND REGULATIONS

49 U.S.C. § 30101

49 C.F.R. § 571.216

36 Fed. Reg. 23299 (Dec. 8, 1971)

52 Fed. Reg. 49033 (Dec. 29, 1987)

61 Fed. Reg. 28550-01 (June 5, 1996)

Federal Motor Vehicle Safety Standards;

Roof Crush Resistance, 70 Fed. Reg.

49223 (Aug. 23, 2005)

SCHOLARLY AUTHORITIES

2 Am. Law Inst., Enterprise Responsibility

for Personal Injury—Reporters’ Study 95

(1991)

Richard C. Ausness et al., Providing a Safe

Harbor for Those Who Play by the Rules,

Ue VFRME Tin, BI BIG vioiisivnsccencecsececcccceceas: 12, 1

Vv

TABLE OF AUTHORITIES—continued

Stephen Breyer, Breaking the Vicious

Circle: Toward Effective Risk Regulation

(1993)

John D. Graham, Product Liability and

Motor Vehicle Safety, in The Liability

Maze 120 (Peter Huber & Robert E.

Litan eds., 1991)

Peter Huber, Safety and the Second Best:

The Hazards of Public Risk Management

in the Courts, 85 Colum. L. Rev. 277

Victor E. Schwartz & Mark A. Behrens,

Punitive Damages Reform—State

Legislatures Can and Should Meet the

Challenge Issued By the Supreme Court

of the United States in Haslip, 42 Am. U.

L. Rev. 1365 (1993)

W. Kip Viscusi, The Social Costs of

Punitive Damages Against Corporations

in Environmental and Safety Torts, 87

Geo. L.J. 285 (1998)

OTHER AUTHORITY

Restatement (Third) of Torts: Products

Liability (1998)

Page

12

INTEREST OF AMICUS CURIAE DRI}

Amicus curtae DRI—the Voice of the Defense Bar,

which is celebrating its 50th anniversary this year, is

an international organization that includes more

than 23,000 attorneys involved in the defense of civil

litigation. DRI is committed to enhancing the skills,

effectiveness, and _ professionalism of defense

attorneys. Because of this commitment, DRI seeks to

address issues germane to defense attorneys and the

civil justice system, to promote the role of the defense

attorney, to improve the civil justice system, and to

preserve the civil jury. DRI has long been a voice in

the ongoing effort to make the civil justice system

more fair, efficient, and—where national issues are

involved—consistent. To promote these objectives,

DRI participates as amicus in cases that raise issues

of importance to its membership and to the judicial

system.

Recently, DRI has filed amicus briefs in cases

involving the inconsistent application of law to issues

of national importance. See, e.g., Stolt-Nielsen S.A.

v. Animalfeeds Intl Corp., No. 08-1198 (U.S.). DRI

long has been a participant in cases involving due

process issues, including fair notice, relevant to

punitive damages. See State Farm Mut. Auto. Ins.

Co. v. Campbell, 538 U.S. 408 (2003), Gasperini v.

|! Pursuant to Supreme Court Rule 37.6, amicus curiae DRI

states that no counsel for any party authored this brief in whole

or in part and that no entity or person, aside from amicus

curtae, its members, and its counsel, made any monetary

contribution towards the preparation and submission of this

brief. Pursuant to Supreme Court Rule 37.3, counsel of record

for all parties have received timely notice of amicus curiae’s

intent to file this brief and have consented to the filing of this

brief in letters on file with the Clerk’s office.

2

Center for Humanities, Inc., 518 U.S. 415 (1996);

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

Inc., 492 U.S. 257 (1989).

The decision below raises issues of special concern

to DRI and its members. Although this Court has

established a number of guideposts for determining

when the amount of punitive damages impermissibly

exceeds due process limits, there remains a need for

additional clarity about when primary conduct is

subject to any punitive damages at all. This need is

particularly acute in the context of regulated conduct

where an entity—having complied with detailed

safety requirements established by a government

entity charged with determining the appropriate level

of public safety or industry standards reflecting a

high degree of care—can hardly be expected to

imagine that such primary conduct would later be

exposed to punitive damages.

Additional guidance from this Court is needed to

clarify the circumstances in which full compliance

with federal, state, or industry standards is still not

sufficient to avoid punishment by way of punitive

damages, given the requirement that the defendant

should be entitled to fair notice before such

punishment can be meted out consistent with due

process. In the absence of such guidance, awards of

punitive damages remain marked by unacceptable

unpredictability. Here, for example, although the

California Court of Appeal points to no dispute that

the defendant complied with detailed federal and

industry standards regarding the very design points

at issue in the litigation, the jury was instructed that

complhance with such standards “does not exempt”

the defendant from liability. Special Jury Instruction

No. 5, Buell-Wilson v. Ford Motor Co., No.

GIC800836 (Cal. Sup. Ct. June 3, 2004). The jury

3

was further instructed that there is “no fixed

standard” regarding punitive damages and given no

objective benchmarks for determining whether such

damages were warranted. Jury Instruction, No.

3949. Left without any meaningful guidance, the

jury awarded $246 million in punitive damages (twice

what the plaintiffs sought)}—which the court later

reduced to $55 million based on due _ process

excessiveness principles. Pet. App. 4a, 6a. As to the

fundamental question whether any punitive damages

were warranted in light of such compliance, the

defendant did not even receive a_case-specific

analysis from the court before going to the jury.

The lower and state courts’ confusion over whether

and when compliance with regulatory and industry

standards is sufficient to preclude punitive damages

calls out for this Court’s review. As it stands, the

utter randomness of when a regulated entity’s

conduct can be subject to punitive damages is not

tolerable. This Court should grant certiorari and

confirm that fundamental notions of due process

dictate that punitive damages can be imposed only

where a defendant has fair notice, based on objective

standards, that particular conduct is subject to

punishment.

INTRODUCTION

This case represents a _ disturbing trend for

defendants: An enormous punitive damages award

(originally well beyond what the plaintiff sought) is

handed down by a jury with respect to injuries

suffered from an accident involving a product built in

conformance with substantial, directly applicable

federal regulations and industry standards. In this

context, objective standards do not exist under

California state law that allow a regulated entity t

ra)

AvVaUy vy

4

figure out what it must do to avoid being subject to

punitive damages. As the law stands in California

and other States, even for products that comply with

applicable objective standards, the simple post hoc

notion that a product could be made safer or better—

as all products in some sense can be—appears

sufficient by itself to support an award of punitive

damages. Indeed, it appears California courts have

concluded that compliance with federal, state, and

industry standards is irrelevant to the imposition of

punitive damages. This violates the fundamental due

process requirement of fair notice. The court should

grant certiorari to preclude States from imposing

punitive damages on defendants in the absence of

established, objective criteria putting the defendant

on fair notice of what is required of it.

A fundamental aspect of due process is knowing

what conduct potentially is subject to punishment.

These notice principles apply with equal force to

imposing punitive damages in the civil context. We

do not doubt that in some circumstances compliance

with government or industry standards will not be

enough to immunize regulated entities from

compensating injured parties. It is another matter

entirely, however, to expose such parties to

punishment. Where a defendant has complied with

extensive government requirements or industry

standards, it is hard to see how it can be said that the

entity acted with the heightened intent, such as

malice, typically required to impose _ punitive

damages. In such a case, elemental notions of notice

and the purpose of punitive damages—to deter future

improper conduct and to punish prior bad conduct—is

absent. Compliance with objective federal, state, and

industry standards must be taken fully into account

before any punishment is imposed.

o

Where a_ regulated entity complies with all

applicable federal and industry regulatory standards

regarding the matters at issue in the litigation, and

these standards impose detailed and substantial

safety requirements, there is no reasonable way to

anticipate the kind of result and award in this case.

This is underscored by the fact that eleven other

juries found no compensatory damages, let alone

punitive damages, were warranted in similar cases

involving the same alleged defect. There is no way to

conform primary conduct to these types of random

jury awards. The purposes of punishment—deter-

rence and retribution—are rendered meaningless

where a regulated entity would not reasonably know

its conduct is open to punishment.

REASONS FOR GRANTING THE PETITION

I. THIS COURT'S REVIEW IS NEEDED TO

CLARIFY THAT DUE PROCESS REQUIRES

OBJECTIVE STANDARDS THAT PROVIDE

FAIR NOTICE THAT PRIMARY CONDUCT

MAY BE SUBJECT TO PUNITIVE DAM-

AGES.

The Due Process Clause of the Fourteenth

Amendment protects defendants against arbitrary

punishment by States. A fundamental aspect of due

process is fair notice of what conduct is illegal and

the consequences for not meeting that standard. See,

e.g., International Union v. Bagwell, 512 U.S. 821,

836-37 (1994) (“Due process traditionally requires

that criminal laws provide prior notice both of the

conduct to be prohibited and of the sanction to be

imposed.”); Boute v. City of Columbia, 378 U.S. 347,

350-51 (1964) (“The basic principle that a criminal!

statute must give fair warning of the conduct that it

makes a crime has often been recognized by this

6

Court.”); McBoyle v. United States, 283 U.S. 25, 27

(1931) (“To make the warning [that criminal liability

is possible] fair, so far as possible the line should be

clear.”). Fair notice also undergirds the traditional

rule of lenity. See generally United States v. Bass,

404 U.S. 336, 348 (1971) (“where there is ambiguity

in a criminal statute, doubts are resolved in favor of

the defendant”); United States v. Wiltberger, 18 U.S.

(5 Wheat.) 76, 95-97, 105-06 (1820) (Marshall, C.J.)

(explaining the rule of lenity).

The “constitutional requirement of definiteness is

violated by a criminal statute that fails to give a

person of ordinary intelligence fair notice that his

contemplated conduct is forbidden by the statute.”

United States v. Harriss, 347 U.S. 612, 617 (1954).

“The underlying principle is that no man shall be

held criminally responsible for conduct which he

could not reasonably understand to be proscribed.”

Id.

These fair notice requirements apply with equal

force to the context of civil punitive damages. See,

e.g., BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 574

n.22 (1996) (“[T]he basic protection against ‘judg-

ments without notice’ afforded by the Due Process

Clause is implicated by civil penalties.”) (citation

omitted). This follows because “these awards serve

the same purposes as criminal! penalties,” namely to

punish conduct the defendant was on notice was

illegal and to deter future bad conduct. Campbell,

538 U.S. at 416 (“punitive damages serve a broader

function [than compensatories]; they are aimed at

deterrence and retribution”); accord Phillip Morris

USA v. Willlams, 549 US. 346, 352 (2007)

(“[pJunitive damages may properly be imposed to

further a State’s legitimate interests in punishing

unlawful conduct and deterring its repetition”)

f

(alteration in original) (quoting BMW, 517 US. at

568).

For these reasons, punitive damages typically

require a showing of highly culpable intent, such as

malice, conscious disregard for safety, or other

despicable conduct. See, e.g., Philadelphia, Wilming-

ton & Baltimore R.R. v. Quigley, 62 U.S. (21 How.)

202, 213-14 (1858) (observing that the malice

required for punitive damages “implies that the act

complained of was conceived in a spirit of mischief, or

of criminal indifference to civil obligations”).

The Court’s precedents make clear that due process

constrains not only the severity of punitive damages,

but also whether any punitive damages may be

imposed at all. “Elementary notions of fairness

enshrined in our constitutional jurisprudence dictate

that a person receive fair notice not only of the

conduct that will subject him to punishment, but also

of the severity of the penalty that a State may

impose.” BMW, 517 U.S. at 574; see also Campbell,

538 U.S. at 416 (due process “prohibits the imposition

of grossly excessive or arbitrary punishments on a

tortfeasor’).

Particularly because civil defendants lack the full

range of protections criminal defendants receive, the

Court has expressed significant “concerns over the

imprecise manner in which punitive damages

systems are administered” and the “acute danger of

arbitrary deprivation of property.” Campbell, 538

U.S. at 417. This Court also has recognized that

these concerns are magnified when jury instructions

give wide discretion and provide few objective criteria

for the jury to consider. Jd. at 417-18. Accordingly it

has long been

8

established that 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 or leaves

judges and jurors free to decide, without any

legally fixed standards, what is prohibited and

what is not in each particular case.

Giaccio v. Pennsylvania, 382 U.S. 399, 402-03 (1966).

For example, in considering punitive damages based

on injuries to non-parties, the Court rejected the

“near standardless dimension to the punitive

damages equation” in which “[t]he jury will be left to

speculate” thereby creating a circumstance in which

“the fundamental due process concerns to which our

punitive damages cases refer—risks of arbitrariness,

uncertainty and lack of notice—will be magnified.”

Philip Morris, 549 U.S. at 354; see also Exxon

Shipping Co. v. Baker, 128 S. Ct. 2605, 2640 (2008)

(Breyer, J., concurring) (explaining the “need,

grounded in the rule of law itself, to assure that

punitive damages are awarded according to

meaningful standards that will provide notice of how

harshly certain acts will be punished and that will

help to assure the uniform treatment of similarly

situated persons’).

Given these concerns, the Court’s precedents make

clear that due process requires an objective standard

for imposing punishment. For example, in Safeco

Insurance Co. of America v. Burr, 551 U.S. 47 (2007),

in assessing whether a defendant recklessly disre-

garded the terms of the Fair Credit Reporting Act,

the Court explained that although it disagreed with

the defendant’s erroneous reading of the pertinent

statute, the defendant’s interpretation was not

“objectively unreasonable.” Jd. at 70 (“Given this

dearth of guidance and the _less-than-pellucid

9

statutory text, [defendant’s] reading was _ not

objectively unreasonable, and so falls well short of ...

[evidencing] reckless liability.”); cf. United States v.

Lanier, 520 U.S. 259, 270 (1997) (explaining that the

qualified immunity inquiry, like the fair notice one, is

objective and “seeks to ensure that defendants

reasonably can anticipate when their conduct may

give rise to liability by attaching liability only if the

contours of the right violated are sufficiently clear

that a reasonable [defendant] would understand” that

the conduct violates the pertinent legal standard)

(internal quotation and alteration omitted). Thus, an

objective standard is inherent in the very nature of

“fair notice.”

In response to these concerns, the Court has on

several occasions established parameters for

determining whether an award of punitive damages

is unconstitutionally excessive. See, e.g., BMW, 517

U.S. at 575. These guideposts include, “the degree of

reprehensibility’ of the conduct; the “disparity”

between the compensatory and punitive aspects of

the award; and the difference between the punitive

damages award “and the civil penalties authorized or

imposed in comparable cases.” Id.

This case presents an opportunity for the Court to

address an even more fundamental question—when a

regulated entity has fair notice of objective standards

regarding the type of conduct subject to punitive

damages. See generally Browning-Ferris, 492 U.S. at

277 (“[W]e have never addressed the precise question

presented here: whether due process acts as a check

on undue jury discretion to award punitive damages

in the absence of any express statutory limit. That

inquiry must await another day.”) (citation omitted);

Bankers Life & Cas. Co. v. Crenshaw, 486 U.S. 71, 87

(1988) (O’Connor, J., concurring in part and concur-

10

ring in judgment) (observing that whether an entity

had “advance notice of what conduct could render it

liable for punitive damages” and “permitting juries to

impose unlimited punitive damages on an ad hoc

basis” has “touched on a due process issue that I

think is worthy of the Court’s attention in an

appropriate case”). This case presents that question

cleanly and the time for the Court to resolve it has

come.

At a minimum, under existing due _ process

standards, regulated entities should be entitled to a

legal analysis by the court of whether their own

conduct was objectively reasonable vis-a-vis objective

guideposts such as pertinent government and

industry standards. An objective standard for

determining the illicit intent or conduct needed to

support an award of punitive damages is critical to

ensure that regulated entities can order their conduct

ex ante to avoid punishment.

Il. REVIEW IS NEEDED TO ADDRESS THE

CIRCUMSTANCES IN WHICH COMPLI-

ANCE WITH GOVERNMENT AND INDUS-

TRY STANDARDS LIMITS OR PRECLUDES

THE IMPOSITION OF PUNITIVE DAM-

AGES.

Potential defendants across a variety of industries

organize their conduct—and thus receive notice of

what acts may lead to the imposition of lability—by

reference to a web of federal, state, and local regula-

tions, as well as to detailed and rigorous industry

standards. Like petitioner here, many manufac-

turers have regular interaction with the bodies that

regulate them, and go to great lengths to conform

their conduct to the requirements established by

those regulators.

11

Regulators’ core responsibilities often include

conducting risk-benefit analyses. See, e.g., Conde v.

Velsicol Chem. Corp., 24 F.3d 809, 811 (6th Cir. 1994)

(discussing EPA’s risk-benefit analyses); Rhone-

Poulenc, Inc v. FDA, 636 F.2d 750, 754 (D.C. Cir.

1980) (per curiam) (same, FDA); First Natl Bank in

Albuquerque v. United States, 552 F.2d 370, 376-77

(10th Cir. 1977) (same, Department of Agriculture);

see also Motor Vehicle Mfrs. Ass’n of U.S., Inc. v.

State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 51 (1983)

(requiring that agency’s rule-making give consider-

ation to “effective and cost-beneficial” technology).

Whether by setting standards, determining whether

a product or activity meets those standards, or by

directly analyzing the product or activity across a

range of criteria, regulators often make threshold

determinations that potential negative _ social

consequences do not outweigh potential gains.

As part of this inquiry, regulatory bodies necessari-

ly recognize that there is “no free lunch” in striking

this balance. That is, in many cases, it may not be

possible to increase the notion of “safety” in one

respect without reducing it in another respect or

imposing other significant costs. A change that

reduces potential injuries of one kind may actually

increase the risk of another type of injury. Put

another way, subject only to the limits of what

technology and the laws of nature will permit, many

products can be made “safer” in the abstract. But

that gain often can be made only at the cost of

making it less effective, unusable for its intended use,

or potentially too expensive to be of any real value to

most consumers. See, e.g., W. Kip Viscusi, The Social

Costs of Punitive Damages Against Corporations in

Environmental and Safety Torts, 87 Geo. L.J. 285,

307 (1998) (discussing “the exorbitant costs of

12

reducing risks to a zero level’); Stephen Breyer,

Breaking the Vicious Circle: Toward Effective Risk

Regulation 13-14 (1993) (“It seems unlikely that the

public would pay 24 to 60 times more per car to save

far fewer lives.”); Restatement (Third) of Torts:

Products Liability § 2, cmt. a (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.”).

In the automobile industry and a host of other

fields, legislatures, regulators, and other technical

bodies are best positioned—possessing the expertise

and global perspective—to assess what tradeoffs are

efficient and necessary. See generally Geier v.

American Honda Motor Co., 529 U.S. 861, 876-80

(2000) (discussing the range of considerations the

Department of Transportation and the National

Highway Traffic Safety Administration (NHTSA)

assess before striking a regulatory balance in

establishing federal standards). As many commen-

tators have explained, “legislative bodies and regula-

tory agencies are better equipped than courts to

formulate effective safety standards.” Richard C.

Ausness et al., Providing a Safe Harbor for Those

Who Play by the Rules, 2008 Utah L. Rev. 115, 132-

33; id. at 133 n.160 (discussing this principle in the

context of automobile safety); see, e.g., Peter Huber,

Safety and the Second Best: The Hazards of Public

Risk Management in the Courts, 85 Colum. L. Rev.

277, 333-35 (1985).

Unlike a jury, which sees accidents and other

negative effects of a product or activity only in

hindsight without sufficient perspective about the

typical benefits, regulators must set standards that

prospectively account for social costs and benefits

13

overall. Cf. Oral Argument, Warner Lambert Co. v.

Kent, No. 06-1498, 2008 WL 495030, at *30 (U.S. Feb.

25, 2008) (““Now, who would you rather have make

the decision as to whether this drug is, on balance,

going to save people or, on balance, going to hurt

people? An expert agency, on the one hand, or 12

people pulled randomly for a jury rol[l] who see before

them only the people whom the drug hurt and don’t

see those who need the drug to cure them?”).

The federal safety standards at issue in this case,

for instance, involve highly complex issues and are

administered by the NHTSA, which is empowered to

“prescribe motor vehicle standards” and “carry out

needed safety research and development.” 49 U.S.C.

§ 30101. NHTSA has formidable technical expertise

that permits it to fulfill these functions. See, e.g.,

Motor Vehicle Mfrs. Ass’n, 463 U.S. at 53 (noting

“agency’s discretion to pass upon the generalizability

of ... field studies .... is precisely the type of issue

which rests within the expertise of NHTSA, and upon

which a reviewing court must be most hesitant to

intrude”); Center for Auto Safety v. Peck, 751 F.2d

1336, 1360 (D.C. Cir. 1985) (Scalia, J.) (“[E]ngineer-

ing judgment is assuredly the sort of expertise that

NHTSA preeminently possesses.”).

Here, the NHTSA had directly applied its

considerable technical expertise to the stability and

roof safety issues implicated by the plaintiffs’ claims

and the punitive damages verdict. For instance,

NHTSA studied stability safety issues for decades

and adopted standards that provided for consumer

safety without “reduc{ing] the capability of utility

vehicles.” 52 Fed. Reg. 49033, 49036-37 (Dec. 29,

1587). The agency also explained in detail that

imposition of certain rollover standards would

14

require other safety sacrifices that it was unwilling to

make:

[Vjehicle rollover stability is not the same as

vehicle handling and control. Some measures

that improve [rollover] do not necessarily result

in improved directional control and stability....

[D]irectional control and stability would be

adversely affected as a result of relying upon

suspension changes to make small increases in

the vehicle safety metrics.

61 Fed. Reg. 28550, 28552-53 (June 5, 1996).?

Similarly, the agency specifically studied roof safety

and promulgated standards governing the issue. See

49 C.F.R. § 571.216 (commonly known as FMVSS

216); see 36 Fed. Reg. 23299, 23299 (Dec. 8, 1971)

(discussing findings based on available data, and

stating “[t]he roof crush standard will provide

protection in rollover accidents”); see also Federal

Motor Vehicle Safety Standards; Roof Crush

Resistance, 70 Fed. Reg. 49223 (Aug. 23, 2005).

In this light and in similar circumstances, the

objective standards imposed by agencies—which rest

upon their superior technical expertise and their

determinations that meeting the standards will have

desirable consequences—should be deemed highly

relevant, if not dispositive, for due process purposes.

A regulated entity’s effort to comply with meaningful

government standards on safety or efficacy is telling.

Evidence of such efforts should be relevant to, if not

outright preclude, the conclusion that the defendant

2 Safety rarely, if ever, is a zero-sum game. See, e.g., John D.

Graham, Product Liability and Motor Vehicle Safety, in The

Liability Maze 120, 126 (Peter Huber & Robert E. Litan eds.,

1991) (noting that some safety features may increase exposure

to liability claims related to those features).

15

had notice that the very conduct found by the

regulator to be appropriate nonetheless may give rise

to the imposition of punishment in the form of puni-

tive damages. As here, where “malice” is required for

the imposition of punitive damages, a company’s

dutiful compliance with the law is simply not

reconcilable with the mens rea required for the

punishment. See, e.g., Ausness, supra, at 155

(“[E]ven if safety standards are not optimal, good

faith compliance with them would still be inconsis-

tent with the type of intent that is necessary to

impose punitive damages.”); 2 Am. Law _ Inst.,

Enterprise Responsibility for Personal Injury—

Reporters’ Study 95, 101 (1991) (‘If a defendant has

fully complied with a regulatory requirement ... it is

hard to justify the jury’s freedom to award punitive

damages.”), quoted in Victor E. Schwartz & Mark A.

Behrens, Punitive Damages Reform—State Legisla-

tures Can and Should Meet the Challenge Issued By

the Supreme Court of the United States in Haslip, 42

Am. U. L. Rev. 1365, 1383 (1993); cf. Geter, 529 U.S.

at 893 (Stevens, J., dissenting) (noting that compli-

ance with federal regulations “would presumably

weigh against an award of punitive damages’).

At times, of course, the balance struck by a

company and approved by the applicable regulatory

body is not perfect. An error may cause a harm that

would have been avoidable through a _ socially

beneficial additional expenditure on safety. It is one

thing for a State to assess liability for negligence or

strict liability in the face of such errors. But it is

3 Of course, depending on the nature of the congressional

scheme, the specific regulatory action, and the claim at issue,

such conduct also may be subject to a preemption analysis.

Preemption is not, however, being invoked by petitioner here.

See Pet. 18 n.2.

16

altogether another matter to impute “malice” to what

was, at most, a defendant’s reasonable error in

judgment that the expert regulatory body also made.

Unless compliance with regulatory standards or

state-of-the-art industry guidelines are appropriately

considered in the due process inquiry, there is

significant danger that juries will continue to conflate

mere awareness of potential risks with malice—

unconstitutionally imposing punishment without

meaningful notice as a result. In some sense, in

every case, a regulated entity might be said to be

aware that its product or activity creates a certain

degree of risk, which is why compensatory awards

may remain legitimate in some cases. Yet, in

assessing whether constitutionally sufficient notice

exists for a punitive award, there must be a clear line

demarcating that mere knowledge of potential,

sometimes inevitable, risk from the knowledge and

conduct that reaches the level of malice. Otherwise,

as under the rule of the court below, there is the

absurd result that every potential defendant is

viewed effectively to have sufficient notice that it may

be liable for punitive damages simply for under-

standing a universal truth, viz. more safety is always

theoretically possible. Under this improper view,

compliance with objective federal, state and industry

standards is irrelevant to the imposition of punitive

damages. That, however, is no way to impute notice

and imyose a punishment akin to a criminal sanction.

Such a misguided rule stands in great tension with

principles of notice that have remained constant in

this Court’s criminal jurisprudence. See McBoyle,

283 U.S. at 27 (“To make the warning [that criminal

liability is possible] fair, so far as possible the line

should be clear.”); accord Bass, 404 U.S. at 348; see

also Wiltberger, 18 U.S. (5 Wheat.) at 95-97, 105-06.

17

Ill. THE DECISION BELOW CONFLICTS WITH

MANY WELL-REASONED DECISIONS

HOLDING THAT COMPLIANCE WITH

OBJECTIVE GOVERNMENT AND INDUS-

TRY STANDARDS IS RELEVANT TO OR

PRECLUDES PUNITIVE DAMAGES.

There is a deep and growing division abou: whether

compliance with government or industry standards

negates the culpable conduct often essential to

awarding punitive damages.

Many courts have recognized that compliance with

objective standards—-be they imposed by a govern-

ment or industry body—precludes or otherwise limits

the imposition of punitive damages because such

conduct is irreconcilable with the highly culpable

mental state typically necessary to award punitive

damages. An entity that has endeavored to comply

with specific and meaningful standards enacted by a

government regulator (or recognized industry stan-

dard setters) charged with ensuring safety and other

societal goods, or industry standards evidencing a

high degree of care, cannot be said to have acted with

the malice typically meeded to award punitive

damages.

For example, in reversing a punitive damages

award, the Georgia Supreme Court held that

“compliance with county, state, and _ federal

regulations is not the type of behavior which supports

an award of punitive damages; indeed, punitive

damages, the purpose of which is to ‘punish, penalize

or deter’ are, aS a general rule, improper where a

defendant has adhered to environmental and safety

regulations.” Stone Man, Inc. v. Green, 435 S.E. 2d

205, 206 (Ga. 1993). ‘This follows because such

compliance “tend[s] to show that there is no clear and

convincing evidence of ‘willful misconduct, malice,

18

fraud, wantonness, oppression, or that entire want of

care which would raise the presumption of a

conscious indifference to consequences.” Jd. (quoting

General Refactories, Co. v. Rogers, 239 S.E.2d 7965,

798 (Ga. 1977)). Similarly, the District of Maryland

recognized that where a “defendant successfully

proved that it complied with federal regulations, the

Court concludes that [defendant] did not act with

malice ... and thus plaintiff is not entitled to punitive

damages.” Sloman v. Tambrands, Inc., 841 F. Supp.

699, 704 n.8 (D. Md. 1993).

In the same vein—in a case that presents

particular problems for the rule of law because it

involved Ford, the petitioner here, and comes to a

different result than this case—the Texas Court of

Appeals concluded that when a defendant “relies in

good faith ... on conclusions by the governmental

agencies charged with administering safety regula-

tions in the area of its product that the product is not

unreasonably dangerous, it cannot be said ... to have

acted with conscious indifference to an extreme risk.”

Miles v. Ford Motor Co., 922 S.W.2d 572, 589-90 (Tex.

App. 1996) (reversing jury’s finding of malice as

unsupported by the evidence and remanding for a

new trial), rev'd on other grounds, 967 S.W.2d 377

(Tex. 1998); see General Motors Corp. v. Iracheta, 90

S.W.3d 725, 741 (Tex. App. 2002) (“In Miles, the court

of appeals recognized that most commentators

suggest that compliance with a safety standard

should bar liability for punitive damages.”), rev'd on

other grounds, 161 S.W.3d 462 (Tex. 2005). This

follows because even when a defendant's decision

about a product, in retrospect, “may have turned out

to be a mistake (ordinary negligence), it certainly

cannot be said to have been a decision ... in spite of a

19

known extreme risk of harm.” Miles, 922 S.W.2d at

590 (emphasis added).

Similarly, the Missouri Court of Appeals has

explained that “[clompliance with industry standard

and custom impinges to prove that the defendant

acted with a nonculpable state of mind ... and hence

to negate any inference of complete indifference ... for

the safety of others the proof of punitive damages

entails.” Lane v. Amsted Indus., Inc., 779 S.W.2d

754, 759 (Mo. Ct. App. 1989).

The court below and other courts, unfortunately,

follow a differ.nt path. See, e.g., Dorsey v. Honda

Motor Co., 655 F.2d 650, 656 (5th Cir. Unit B Sept.

1981); Brand v. Mazda Motor Corp., 978 F. Supp.

1382, 1387-88, 1391-93 (D. Kan. 1997). The decision

below provides a particularly stark example. Based

on a nearly three decades’ old decision, Grimshaw v.

Ford Motor Co., 199 Cal. App. 3d 757, 811 (1981), the

court below concluded that federal safety standards

are irrelevant to the notice aspect of the due process

inquiry and do not even entitle defendants to a case-

specific analysis. See Pet. App. 6la-62a. But

Grimshaw did not involve a defense of compliance

with existing regulatory standards, but dealt with

industry standards alone. See 199 Cal. App. 3d at

803; accord Pet. App. 27a-28a. Neither Grimshaw

nor any case on which it relied cited the United

States Constitution or appeared to consider an as-

applied federal due process challenge. See Grim-

shaw, 199 Cal. App. 3d at 811 (collecting cases). In

all events, the approach of the court below was

improper because it ignored substantial develop-

ments in this Court’s jurisprudence concerning the

due process implications of awarding punitive

damages, see, e.g., Campbell, 538 U.S. at 416-17, as

20

well as regulatory activity that has occurred since

that time.

Any purported “analysis” by the court below, and

there was none in any meaningful sense, is no more

than ipse dixit. See Pet. App. 6la-62a; see also id. at

27a-28a. The court failed to analyze within the

context of this Court’s due process precedents how a

defendant’s compliance with industry standards

shapes what notice it has about the nature and

extent of its liability. Moreover, the court below did

not even attempt to grapple with notice in light of

existing regulation. It should go without saying that

the emerging efforts to regulate automobile safety at

the time of the accident in Grimshaw bear little

resemblance to the well-defined regulatory state of

today. As described above, the DOT and NHTSA

have a primary role in assessing the sufficiency of

automobile safety measures, including those directly

implicated by petitioner's claims. See §II, supra.

This and other courts have acknowledged the

expertise of those regulators and deferred to their

policy judgments as rational, see id., which should

carry some weight in the notice inquiry.

The court below instead opined that compliance

with prevailing objective standards was _ not

controlling—not only for purposes of negligence and

strict liability, but also for determining malice

itself—because Ford supposedly knew it could make

the Explorer safer, but declined to do so because of

economic considerations. But this is nothing more

than a tautology. As discussed above, any product

can be made safer in some sense at a cost. See § II,

supra; see also United States v. Carroll Towing Co.,

159 F.2d 169, 173 (2d Cir. 1947) (Hand, J.).

Moreover, except by reference to the existing

regulatory and industry standards, a party has little

21

basis to know how much additional safety is required

ex ante. Cf. Restatement (Third) of Torts: Products

Liability § 2, cmt. a. If the mere existence of know-

ledge that a product could be made safer is by itself

sufficient to give notice that punitive damages may

be imposed, then potential defendants are always

exposed arbitrarily to punitive damages, no matter

how carefully they act. In addition, the Court of

Appeal further erred in holding that it would be

reversible error even to consider comparable rollover

statistics and in positing that industry standards are

irrelevant to the analysis.

Such an approach also stands to create significant

asymmetry in the assessment of punitive damages.

In many jurisdictions, violations of government

standards already serve as a predicate for the

imposition of punitive damages. See, e.g., Averitt v.

Southland Motor Inn of Ohkla., 720 F.2d 1178, 1182-

83 (10th Cir. 1983) (punitive damages justified where

defendant violated health department regulations);

Aldworth Co. v. England, 648 S.E.2d 198, 201 (Ga.

Ct. App. 2007) (defendant’s violation of federal

trucking regulation supported punitive damages);

Wise v. Broadway, 433 8.E.2d 857, 859 (S.C. 1993)

(punitive damages may be submitted to the jury

where evidence of a _ statutory violation exists);

Trotter v. B&W Cartage Co., No. 05-cv-0205-MJR,

2006 WL 1004882, at *8-9 & n.1 (S.D. Ill. Apr. 13,

2006) (collecting cases where punitive damages issues

were submitted to juries based on violation of

regulatory standards). Against this backdrop, it

stands to reason that compliance with such standards

should provide potential defendants with reasonable

assurance that their conduct would not trigger the

imposition of punitive damages. At a minimum,

compliance with such standards must be considered

22

to be relevant to whether punitive damages can be

imposed. Yet, under the decision of the court below, a

defendant would have no more and no less notice that

it might be found liable for punitive damages

irrespective of the objective lawfulness of its actions.

* x * *

This Court’s immediate review is important for

resolving the confusion below. In recent years, this

Court has done much to bring clarity to punitive

damages law, particularly with respect to how severe

a punitive damage award may be imposed if a jury

finds such damages appropriate. As the petition and

the foregoing discussion make plain, however,

defendants continue to face great unpredictability as

to when they may be lable in the first instance for

punitive damages. This continued uncertainty is

unacceptable. As Justice O’Connor recognized more

than a decade ago, “[a]s little as 30 years ago,

punitive damages awards were ‘rarely assessed,” but

their frequency has “skyrocket[ed].” 7XO Prod. Corp.

v. Alliance Res. Corp., 509 U.S. 443, 500-01 (1993)

(O’Connor, J., dissenting). Despite the proliferation,

as here, “many courts continue to provide jurors with

skeletal guidance” about when punitive damages are

appropriate. Jd. Thus, defendants may be left with-

out fair notice that their conduct—even when compli-

ant with federal or other regulatory standards—can

expose them to punishment. Only this Court’s review

can properly cabin punitive damages in line with the

fundamental protections of due process.

23

CONCLUSION

For these reasons, and those stated by petitioner,

this Court should grant the petition for certiorari.

Respectfully submitted,

MICHAEL W. DAVIS CARTER G. PHILLIPS

SIDLEY AUSTIN LLP C. FREDERICK BECKNER III

One South Dearborn REBECCA K. WoopD*

Street EAMON P. JOYCE

Chicago, Illinois 60603 SIDLEY AUSTIN LLP

(312) 853-7000 1501 K Street, N.W.

Washington, D.C. 20005

(202) 736-8000

Counsel for Amicus Curiae

October 8, 2009 * Counsel of Record