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July 25, 2008

Tennessee Supreme Court Sustains Punitive Damages Award Against DaimlerChrysler Corp.

Flax v. DaimlerChrysler Corp. arose out of the death of eight-month old Joshua Flax when the Dodge Grand Caravan his grandfather was driving was rear-ended by a pickup truck that was traveling at an excessive rate of speed.  Joshua's mother, Rachel Sparkman, was seated  in a captain's chair directly behind the driver's seat.  Joshua was sitting in a child safety seat in the captain's chair directly behind the front passenger seat.  The passenger seat in front was occupied by Joe McNeil.  The collision caused the backs of the seats of the driver and passengers to yield rearward into a reclining position.  The front passenger seat collapsed far enough for McNeil's head to hit Joshua's, causing Joshua to suffer a fractured skull and brain damage.  Joshua died the following day.

Ms. Sparkman and Joshua's father, Jeremy Flax, brought suit against the driver of the pickup truck and DaimlerChrysler Corporation, the Caravan manufacturer.  The complaint alleged that the seats were defective and unreasonably dangerous, that DCC failed to warn that the seats posed a hidden danger to children sitting behind them, and that DCC was strictly liable under the Tennessee Products Liability Act of 1978, Tenn. Code. Ann. §§ 29-28-101 to -108 (2000).  The plaintiffs also alleged that the the condition of the seats was the proximate cause of Joshua's death and was the cause of severe emotional distress suffered by Ms. Sparkman, and that DCC acted recklessly, justifying the imposition of punitive damages.

At trial a jury found the seats were defective and unreasonably dangerous, that DCC failed to warn the plaintiffs of the dangers of the seats at the time of sale, and that the company acted recklessly, justifying the award of punitive damages.  The jury assigned half the fault to DCC and half the fault to the driver of the pickup truck.  The jury awarded $5,000,000 in damages to the plaintiffs for the wrongful death of Joshua and $2,500,000 to Ms. Sparkman for the negligent infliction of emotional distress.  At the second stage of the trial the jury awarded $65,000,000 in punitive damages to the plaintiffs for Joshua's wrongful death and $32,500,000 in punitive damages to Ms. Sparkman for NIED.

The trial court reduced the punitive damages to $20,000,000, a remittitur of $78,000,000, because of the large discrepancy between compensatory and punitive damages.  The trial court concluded in its final order that the plaintiffs were entitled to $13,367,345 in punitive damages for the wrongful death of Joshua Flax and that Ms. Sparkman was individually entitled to $6,632,655 in punitive damages for NIED. 

The Tennessee Court of Appeals reversed the award of compensatory and punitive damages for Ms. Sparkman's NIED on the grounds that she failed to meet the heightened proof requirements for a "stand-alone" NIED claim required by Camper v. Minor, 915 S.W.2d 437, 446 (Tenn.1996).   The court of appeals also concluded that there was not clear and convincing evidence that DCC acted recklessly or intentionally and therefore reversed the trial court's award of all remaining punitive damages.  The court of appeals affirmed the award of $5,000,000 in compensatory damages for Joshua's wrongful death.

The Tennessee Supreme Court affirmed the court of appeals' reversal of the compensatory and punitive damages awards based on Ms. Sparkman's NIED claim on the basis that her claim should have been supported by expert medical or scientific proof of a severe emotional injury.  The supreme court reversed the court of appeals on the remaining punitive damages issue, holding that the trial court's punitive damages determination was adequately supported by the evidence and that the damages were not excessive.

Applying the Gore and Campbell guideposts, the supreme court reversed the court of appeals on the remaining punitive damages issue, holding that the trial court's punitive damages determination was adequately supported by the evidence and that the damages were not excessive.  The court concluded that DCC's conduct was reprehensible, and that the 1 to 5.35  ratio of compensatory  (DCC's share of the compensatory damages award was $2,500,000) to punitive damages in the case was not excessive, given the court's emphasis on the reprehensibility of DCC's conduct.  In applying the third guideline the court compared the Tennessee penalty for reckless homicide by a corporation, a $125,000 fine, to the punitive damages award in the case, but concluded that the statutory fine would be an inappropriate limitation on punitive damages.  The court noted that the limitation would be inconsistent with the result suggested by the first two guidelines, and recognized the lack of guidance provided by the courts in resolving the discrepancy.  The court concluded that the first two guidelines were entitled to more weight than the third. 

DCC also argued that under Phillip Morris its right to due process was violated because the jury was allowed to punish DCC for harm suffered by persons not parties to the action.  DCC requested a jury instruction stating that it could not be punished for harm suffered by nonparties.  The trial court denied the instruction, but DCC did not raise the issue in the court of appeals and the supreme court held that it could  not be resurrected in the supreme court.

MKS

July 25, 2008 | Permalink | Comments (0) | TrackBack

July 23, 2008

A New Essay by Prof. Sharkey on the Impact of Riegel on FDA Preemption of State Law Claims

Click here to see Professor Catherine Sharkey's recently posted essay in Northwestern Colloquy, "What Riegel Portends for FDA Preemption of State Law Products Liability Claims."

MKS

July 23, 2008 | Permalink | Comments (0) | TrackBack

July 7, 2008

CPSC's Safety Review

The July issue of the U.S. Consumer Product Safety Commission's The Safety Review is available online.  Following is an excerpt from the introductory comment, "Picking up the Pace," by Nancy Nord, acting chair of the Commission:

Lawmakers responded to my requests for changes at the CPSC that will
help us continue to face the issues of today and respond to the needs
of tomorrow. The resources provided by Congress have enabled us to
pick up the pace of our plans already underway. We’re increasing staff,
including the creation of an Import Surveillance Group to monitor ports
for hazardous imports. We’re bolstering our relationship with the Chinese
government to better control the quality of goods coming to our shores.

We’re providing industry with necessary information for it to address new
quality control measures for some consumer products.
And there are other innovative changes underway. Our new Early Warning
System will provide advanced intelligence to detect emerging hazards.
We’re replacing our outdated laboratory with a facility that will be critical
for the evaluation of a broad-range of hazards. Our plans to extensively
upgrade our information technology will address 21st century consumer
issues.

MKS

July 7, 2008 | Permalink | Comments (0) | TrackBack

July 3, 2008

Consumer Product Safety Commission Fireworks Safety Tips

As we close in on the Fourth of July it's worth taking a look at the Consumer Product Safety Commission's Fireworks Safety Tips.

MKS

July 3, 2008 | Permalink | Comments (0) | TrackBack

July 2, 2008

New Jersey Superior Court Appellate Division Rules on Merck's Appeal in Vioxx Cases

In McDarby v. Merck & Co., Inc., and Cona v. Merck & Co., Inc., the New Jersey Superior Court Appellate Division on Monday ruled on two appeals involving products liability and consumer fraud claims against Merck.   The appeals were heard back-to-back, but the court issued a single opinion covering both cases.  Merck appealed from a $15.7 million judgment that awarded compensatory and punitive damages, along with attorneys' fees and costs to the McDarbys on their products liability and consumer fraud claims arising out of Merck's sale of Vioxx, and a $2.27 million judgment for the Conas on their consumer fraud claims for damages of $135, with the remainder as attorneys' fees and costs.  In a lengthy opinion, the court upheld the award of compensatory damages to the McDarbys, rejecting Merck's argument that the products liability act claim was preempted by the Food Drug and Cosmetic Act or by a 2006 preamble  to revised federal prescription drug regulations that contained preemptive language.  The court reversed the punitive damages award, holding that it was preempted by the FDCA.  The court also reversed the award of damages to McDarby and Cona and the attorneys' fees awards pursuant to the consumer fraud act on the basis that those claims were subsumed within the products liability act.

MKS

July 2, 2008 | Permalink | Comments (0) | TrackBack

July 1, 2008

Texas Supreme Court Applies Proportionate Responsibility Law to Implied Warranty Theory

JCW Electronics, Inc. v. Garza, a June 27 decision of the Texas Supreme Court, arose out of the death of Rolando Montez, who was arrested for public intoxication and jailed In the Port Isabel jail.  He made a call to his mother, Pearl Garza, to arrange for bail.  He made the call from his jail cell on a phone provided by JCW Electronics, Inc.  JCW had installed the collect-only phones for inmates under a contract with the city police department.  Montez was found dead in his cell, hanging from the phone cord, on the day he was to be released.  Ms. Garza sued the police department and JCW.  The jury in the case generally found for Garza on negligence, misrepresentation,  and breach of implied warranty of fitness theories, and attributed 60 percent of the liability to Montez, 25 percent to the city, and 15 percent to JCW.  JCW moved for judgment, arguing that the finding of 60 percent fault on the part of Montez barred recovery on all claims under Chapter 33 of the Texas Civil Practice and Remedies Code, which provides for the apportionment of responsibility among those responsible in "any cause of action based on tort."  Tex. Civ. Prac. & Rem. Code § 33.002(a)(1)Texas law provides that a claimant is not entitled to recover "if his percentage of responsibility is greater than 50 percent."  Tex. Civil Practice and Remedies Code § 33.001.  The key issue in the case was whether the implied warranty of fitness counted as an "action based on tort."  Applying the 1995 version of the Texas proportionate responsibility law, the Texas Supreme Court concluded that the implied warranty theory was a tort theory within the meaning of the statute and held that the plaintiff was barred from recovery under all theories of recovery, including the implied warranty theory.

MKS

July 1, 2008 | Permalink | Comments (0) | TrackBack