Thursday, July 20, 2006
Ford Liable for $55 Million in Punitive Damages for Defective Explorer, Court of Appeal Rules
By TINA BAY, Staff Writer
The Fourth District Court of Appeal yesterday upheld a punitive damages award against Ford Motor Company, but reduced the amount to $55 million.
Div. One upheld jury conclusions that Ford’s deliberate production of a defectively designed Explorer caused severe permanent injuries to Explorer owner Benetta Buell-Wilson, but the panel reduced the compensatory and punitive damage awards.
On January 19, 2002, Wilson was driving her Explorer along Interstate 8 in San Diego County when, as she swerved to avoid a metal object that was bouncing directly toward her windshield, the Explorer fishtailed out of control and rolled over multiple times.
As the car rolled, its roof collapsed nearly a foot into the passenger compartment, crushing down on Wilson’s shoulder with 1,000 to 2,000 pounds of force that pulverized and severed part of her spine. The impact also fractured her bones, cut her spleen, and dislocated her knees, and resulted in permanent disfigurement.
Wilson’s spinal injuries rendered her paraplegic and suffering constant pain treatable only temporarily with medication—ending her once active lifestyle that had included practicing high-level martial arts, camping, hiking, dancing, and traveling. Although metal screws and rods inserted into her back helped to stabilize her upper body, she became totally dependent on her family for personal care and almost every other aspect of her life.
Wilson filed a design defect lawsuit against Ford alleging that it knowingly defectively designed the Explorer by making it dangerously unstable and prone to rollover, and inadequately supporting its roof so that it would readily crush into the passenger compartment in a foreseeable rollover.
Wilson’s husband, Barry S. Wilson, who is a partner in Foley & Lardner LLP’s San Diego’s office, filed a loss of consortium claim arising out of his wife’s life-altering injuries.
At trial, the Wilsons claimed Ford’s management decided to go forward with manufacturing the Explorer for business reasons despite repeated warnings and advice by its engineers.
After hearing the evidence—from which San Diego Superior Court Judge Kevin A. Enright excluded Ford’s expert testimony regarding the Explorer’s safety record and rollover rate as compared with other similar vehicles—the jury found that the Explorer had stability and roof defects that caused Wilson’s injuries, and awarded her approximately $4.5 million for economic losses and $105 million for noneconomic losses. It also awarded Mr. Wilson $13 million for loss of consortium.
Additionally, the jury found by clear and convincing evidence that Ford acted with oppression, fraud or malice in deliberately causing the design defects, and awarded her $246 million in punitive damages.
San Diego Superior Court Judge Kevin A. Enright remitted Wilson’s noneconomic damages to approximately $65 million and her husband’s damages to $5 million, and reduced the punitive damage amount to $75 million.
While agreeing with jury on the issue of liability, the appellate panel reduced total damages to $82.5 million, including $55 million in punitive damages.
Writing for the court, Justice Gilbert Nares explained:
“[I]t is apparent that the jury disregarded the Wilsons’ counsel’s own statements as to what was a reasonable amount to award in this case. On noneconomic damages to Mrs. Wilson, the jury awarded $105 million, or approximately 13 times the amount counsel requested and stated was ‘fair, just and reasonable.’ The reduced award of approximately $65 million is still approximately three to five times that amount. This provides compelling evidence that the jury rejected what even the Wilsons’ counsel believed was fair and reasonable, and acted out of passion or prejudice.”
The justices rejected Ford’s argument that the noneconomic damages award—which is intended to compensate for things such as emotional distress, pain, and disability—was unconstitutionally excessive in violation of due process, noting that Enright clearly instructed the jury on the definition and permissibility of noneconomic damages.
As to punitive damages, the panel concluded that the constitutional maximum for an award was a 2-1 ratio with respect to compensatory damages.
“[A] two-to-one ratio of punitive damages to compensatory damages is sufficient to punish Ford and deter it from similar conduct in the future,” Nares wrote. “This ratio is proportionate to the degree of harm suffered and the substantial award of compensatory damages. An award exceeding a two-to-one ratio would exceed the constitutional maximum that could be awarded under the facts of this case.”
The Wilsons’ appellate counsel, San Francisco attorney Jerome B. Falk Jr., told the MetNews he was happy with the decision.
“On balance, I’m pleased. With interest, this is about $102 million, and so I think it’s a wonderful recovery for our clients,” he said, pointing out that the court rejected Ford’s “radical” position that it could not be subject to punitive damages because reasonable experts disagreed about Ford’s design decisions and because it complied with all applicable governmental regulatory standards.
The one part of the opinion that was problematic, Falk noted, was the court’s limitation of punitive damages.
“The court of appeal here found that Ford’s conduct was reprehensible and they were a repeat offender, and yet they only allowed as the constitutional maximum a 2-1 ratio for punitive damages, and the only explanation given in the opinion was that the compensatory damages were very large.”
Although his clients have not decided whether to seek review on the issue, he said, the panel’s ruling was an aberration when considered in light of other precedents on the issue of punitive damages.
Ford’s appellate counsel Theodore J. Boutrous, of Gibson, Dunn & Crutcher’s Los Angeles office, told the MetNews that Ford believes the panel made “several serious errors” and plans to seek review from the Supreme Court.
“One of the key issues we raised is the fact that the trial court excluded crucial evidence that Ford offered to show the real-world safety record and comparative data of the Explorer, and the court of appeal ruling upholding that exclusion we believe was incorrect, because it resulted in the jury hearing only one side of the story,” noting that in most cases—22 out of 28—juries have found the Explorer to be safe when they heard how the car actually performed.
Although he was pleased the court found that the jury’s verdicts were the product of passion and prejudice, the punitive damages should have been thrown out entirely rather than just reduced, and Ford should get a new trial, Boutrous said.
“We think when a jury’s verdict is a product of passion and prejudice, as the court of appeal found here, the only way to remedy that is through a new trial,” he explained. “We believe that there’s a substantial probability that the passion or prejudice also affected the liability verdict, and that problem is compounded by the fact that crucial evidence was excluded.”
Boutros also said that the appellate court incorrectly applied the standard of review when it chose to disregard all of the evidence Ford had offered on the issues at trial.
Although evidence that Ford introduced overwhelmingly showed that its engineers acted in good faith and sought to design a safe vehicle, he said, the court simply took plaintiff’s contrary version of the facts and assumed they were true.
“The opinion paints a picture that is not correct and is misleading,” he said.
The case is Buell-Wilson v. Ford, D045154.
Copyright 2006, Metropolitan News Company