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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

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