For The Defense, December 2011 - DRI Today

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Product LiabiLity sive, albeit incorrect definition, a court or jury will find this factor present in nearly every product liability case because individual consumers almost always have a smaller net worth than product manufacturers. Third, to the extent that courts construe repetitive conduct to refer to continuing to sell a product rather than to discrete, repeated acts in designing or failing At no point has the Supreme Court ever held that the five State Farm factors are the definitive five factors that juries and courts must always apply to assess reprehensibility for any and all purposes and in all cases. to redesign a product, this factor will be present in almost every product liability case because nearly all goods are mass- produced and mass- marketed. Instructing a jury on these factors, at least as some of the courts have interpreted them, can amount to a finding that three of the five State Farm reprehensibility factors automatically support an award of punitive damages. What is called for instead are factors that meaningfully aid juries and courts to situate—in product liability actions— 32 ■ For The Defense ■ December 2011 a particular defendant’s conduct along a spectrum from the least to the most reprehensible. Because the State Farm factors do not assist a jury or a court to determine whether a defendant in a product liability case is “more blameworthy than others,” it is, therefore, appropriate and necessary to develop a list of factors that do. Meaningfully Assessing Reprehensibility—Place Conduct Along a Behavior Continuum A jury may assess punitive damages only after awarding compensatory damages. Whether punitive damages are appropriate or constitutional depends on whether imposing them in addition to the compensatory damages that already make a plaintiff whole is necessary either to punish that defendant or to deter conduct in the future. State Farm, 538 U.S. at 419 (“It should be presumed that a plaintiff has been made whole for his injury by compensatory damages, so punitive damages should only be awarded if the defendant’s culpability, after having paid compensatory damages, is so reprehensible as to warrant the imposition of further sanctions to achieve punishment or deterrence.”). This hinges primarily on how reprehensibly a defendant has acted. The more reprehensible a defendant’s conduct, the more necessary a substantial financial penalty becomes to punishing and deterring that conduct, while the less reprehensible a defendant’s conduct, the less necessary it becomes. “Some wrongs,” the Supreme Court has explained, “are more blameworthy than others.” Gore, 517 U.S. at 575. Reprehensibility is not a black and white proposition to which a court or a jury can simply say “yes” or “no,” but rather a matter of degree. See, e.g., id. at 568 (noting a need for “flexibility in determining Table 1. Reprehensibility Factors in Punitive Damages Assessments from BMW of North America v. Gore, 517 U.S. 559 (1996), and State Farm Mutual Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003) Inherent in Product Liability Factor Actions Varies by Facts Conduct caused physical, not economic harm √ Conduct showed indifference to the safety of others √ Plaintiff was financially vulnerable √ Defendant engaged in similar conduct on other occasions √ Defendant acted intentionally √ the level of punitive damages”). The factors that a jury or a court uses must function as tools to help place a defendant’s conduct along a spectrum of reprehensible behavior. These factors need not be—and should not be—static across all torts. For what may be a helpful factor in assessing reprehensibility in an intentional or economic tort may be common to all product liability torts and thus of no value in assessing the degree of a product liability defendant’s reprehensibility. Relying solely on the State Farm factors will deny juries and courts access to several helpful yardsticks for evaluating reprehensibility that the case did not mention. In other words, a “one-size-fitsall” approach to evaluating reprehensibility has a substantial downside, and so the law has a real need to fashion factors useful to assessing degrees of reprehensibility in product liability actions. Importantly, at no point has the Supreme Court ever held that the five State Farm factors are the definitive five factors that juries and courts must always apply to assess reprehensibility for any and all purposes and in all cases. To the contrary, the Court in Gore observed that it is entirely legitimate for “the level of punitive damages” to vary for “different classes of cases.” Id. Assessing Reprehensibility by Considering a Typical Product Liability Defendant’s Conduct The logical place to start to pinpoint the most useful factors to evaluate the reprehensibility of a defendant’s conduct in a product liability case is to identify factors that would evaluate a typical manufacturer’s conduct during a typical sequence of events. Usually, such a defendant has designed a product, which has subsequently injured others, including the plaintiff. Thus, two general categories of conduct- related factors emerge from this sequence: (1) factors relevant to a defendant’s conduct when it initially designs a product, and (2) factors relevant to the defendant’s conduct when it discovers an injury- causing or potentially injury- causing defect after manufacturing and selling a product. Product-Design Conduct Factors When designing a product, the following factors can help a court or a jury evaluate
a defendant’s conduct as more or less reprehensible by degree depending on the circumstances and facts: 1. Whether the defendant, in designing the product, attempted to comply with applicable government or industry safety standards 2. Whether the defendant engaged in safety testing 3. Whether the defendant took steps to warn consumers about possible injury 4. Whether the defendant affirmatively concealed its knowledge of defects known to cause injury. See Table 2 below. Complying with Industry and Government Safety Standards A defendant that takes the time to consult relevant safety protocols—whether governmental or industry standards—and then incorporates them into its product design acts in a responsible and blameless fashion that does not warrant punishment or deterrent measures. Nor is there a compelling basis for punitive damages when a defendant has designed the product to meet the most closely analogous standards available after developing a novel or a cutting- edge product for which government or industry has yet to develop safety standards. In these scenarios, a defendant has not acted reprehensibly. And a defendant’s behavior is the very antithesis of punitive- damages- worthy conduct if it took the additional step of trying to develop safety standards for a new type of product. What is more reprehensible is when a defendant elects to ignore clearly applicable standards entirely. As one would expect, the law mirrors this logic. In many states, compliance with applicable standards is a complete defense to punitive damages or minimizes a finding of liability. See, e.g., Ohio Rev. Stat. Ann. §2307.80(D)(1) (establishing a complete defense); DiCarlo v. Keller Ladders, Inc., 211 F.3d 465, 468 (8th Cir. 2000) (referring to complying with industry safety standards as relevant to design defect claims). Even if it doesn’t completely bar liability, compliance or attempted compliance with industry or government standards is at a minimum almost universally viewed as weighing against punitive damages. See, e.g., Richards v. Michelin Tire Corp., 21 F.3d 1048, 1317 (11th Cir. 1994). Safety Testing A defendant that engages in product safety testing acts cautiously, not reprehensibly. What matters in this regard is the quantity and quality of the safety testing, the resources devoted to it, and whether the testing was reasonable. Awards conferred to a product manufacturer for product safety and use of a product by persons or entities charged with public safety are, by their very nature, pertinent to demonstrate the reasonableness and blamelessness of a defendant’s testing protocols. Conversely, when a defendant “rush[es] into production” without pertinent testing or fails to test at all, the conduct may warrant a punitive damages award to punish or deter. Smith v. Ingersoll- Rand Co., 214 F.3d 1235, 1253–54 (10th Cir. 2000). Warning Consumers Compared to a defendant that knows that its product may injure consumers but doesn’t warn them or attempt to correct the product, a defendant that knows that its product may injure acts less reprehensibly when it warns consumers about the danger. Most products are not designed to be completely injury proof, and trying to make them so would often be unreasonable because it would rob them of their intended functionality and utility. A knife is a knife only if it has a sharp blade, and a bicycle is a bicycle despite its tendency to tip over when someone rides it. With such products, it is entirely reasonable for a defendant to choose to warn against a risk rather than to ameliorate the so-called “defect” that causes an injury, and choosing to warn a consumer certainly is not a basis for punitive damages. Defendants that make this choice act responsibly— not reprehensibly. See, e.g., Toole v. Baxter Healthcare Corp., 235 F.3d 1307, 1317 (11th Cir. 2000) (“[W]e have repeatedly held that the issue of punitive damages should not go to the jury when a manufacturer takes steps to warn the plaintiff of the potential danger that injured him; such acts bar a finding of wantonness.”). Affirmatively Concealing Injury-Causing Defects A defendant that, in designing a product, learns that the product has defects that may cause injury and, instead of remedying the defect or warning consumers about the risk, decides instead to conceal the defect to make the product more marketable engages in far more reprehensible conduct than a defendant that is “up front” with consumers by taking corrective measures. To be sure, a defendant does not need to disclose every design and testing process step or every conclusion that it draws along the way. But defendants that learn of Reprehensibility
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