Opinion ID: 2046018
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Heading Rank: 3

Heading: Was the evidence sufficient to support submission of punitive damages to the jury?

Text: The jury awarded $12.5 million punitive damages to plaintiffs and the court entered judgment against BRK thereon. The parties stipulated that defendant's conduct was not specifically directed at plaintiffs. BRK contends there was insufficient evidence to support the submission of plaintiffs' punitive damage claim to the jury and that BRK's motion for directed verdict and for judgment notwithstanding the verdict in that regard should have been sustained.
Iowa Code section 668A.1(1)(a) sets the standard for an award of punitive damages. Under this section, an award of punitive damages will stand when there is proof of conduct that establishes a willful and wanton disregard for the rights or safety of another. Wilson v. IBP, Inc., 558 N.W.2d 132, 142 (Iowa 1996) (citing Iowa Code § 668A.1(1)(a)). We have approved the following definition of willful and wanton conduct for section 668A.1(1) purposes: [T]he actor has intentionally done an act of an unreasonable character in disregard of a known or obvious risk that was so great as to make it highly probable that harm would follow, and which thus is usually accompanied by a conscious indifference to the consequences. Fell, 457 N.W.2d at 919 (quoting W. Page Keeton, et al., Prosser & Keeton on the Law of Torts § 34, at 213 (5th ed.1984)). The evidence to support an award must be clear, convincing and satisfactory. Iowa Code § 668A.1(1)(a). We have noted that punitive damages serve `as a form of punishment and to deter others from conduct which is sufficiently egregious to call for the remedy.' McClure, 613 N.W.2d at 230 (quoting Coster v. Crookham, 468 N.W.2d 802, 810 (Iowa 1991)). Consequently, punitive damages are appropriate only when actual or legal malice is shown. Schultz v. Security Nat'l Bank, 583 N.W.2d 886, 888 (Iowa 1998). Mere negligent conduct is therefore not sufficient to support a claim for punitive damages. Beeman v. Manville Corp. Asbestos Disease Compensation Fund, 496 N.W.2d 247, 256 (Iowa 1993).
The question is whether a rational jury could find by a preponderance of clear, convincing, and satisfactory evidence, Iowa Code § 668A.1(1)(a), that BRK's conduct constituted willful and wanton disregard for the rights or safety of another. See Schultz, 583 N.W.2d at 888. As will be explained in more detail later in this opinion, plaintiffs' theory at trial was that BRK had knowledge that the model 83R was not as effective as a photoelectric smoke detector at alarming to slow, smoldering fires, but yet continued to market the model 83R ionization detector as a sufficient fire detective device. We conclude later that plaintiffs generated a jury question on their theories of strict liability and negligence as to the effectiveness of ionization smoke detectors, and how the Mercers' smoke detector did, or should have, responded to the fire in their home. However, we reject plaintiffs' contention that BRK's knowledge of the 83R's failure to alarm in certain types of fires, coupled with BRK's failure to test ionization detectors in real world fires and its failure to place a specific warning on the box concerning the 83R's delayed response to certain types of fires, creates a jury question on punitive damages. Both parties presented evidence concerning the effectiveness of the tests incorporated by the UL 217 standard to test real world fires. Plaintiffs' witnesses were especially critical of the smoke box test, which BRK uses to test returned smoke detectors from complaining consumers. On the other hand, BRK's experts testified that the criticisms of the smoke box test and of the UL 217 standard in general, as expressed by plaintiffs' experts, were unfounded. While we cannot say that BRK's adoption of the UL 217 standard proves its state of the art defense, we conclude that this evidence shows a reasonable disagreement over the relative risks and utilities of BRK's conduct in the manufacture and production of the model 83R ionization detector. See Hillrichs v. Avco Corp., 514 N.W.2d 94, 100 (Iowa 1994) (stating that an award of punitive damages is inappropriate when room exists for reasonable disagreement over the relative risks and utilities of the conduct and the device at issue). BRK's experts also testified that the sensitivity level of the ionization and photoelectric components in a combination smoke detector are not as sensitive as a stand-alone device to avoid nuisance alarms. Thus, although a jury could reasonably conclude that BRK was at fault, we do not believe that a rational fact finder could find by clear, convincing, and satisfactory proof a willful and wanton disregard by BRK for the rights of another. Consequently, the district court erred in submitting plaintiffs' claim of punitive damages to the jury and in overruling BRK's post-trial motion in this regard. We reverse on this issue. Although our decision on the admissibility of the consumer complaints into evidence and the punitive damages issue requires reversal, we address other issues raised on appeal that will likely arise again upon retrial.