Opinion ID: 1404934
Heading Depth: 1
Heading Rank: 4

Heading: availability of punitive damages

Text: As stated at the outset, the jury returned a verdict for punitive damages of twenty million dollars. The Court of Appeals did not reach this issue because it had reversed and remanded on the allocation of peremptory challenges. Ford brought the issue to this Court through its cross-motion for discretionary review. At the time this case was tried, the controlling legal standard for punitive damages in Kentucky was found in KRS 411.184(1)(c) and required a determination that the defendant acted with flagrant indifference to the rights of the plaintiff and with a subjective awareness that such conduct will result in human death or bodily harm. We have held this statute to be unconstitutional, [21] but in this case, no issue was raised as to the constitutionality of the statute and the case was tried upon the statutory standard. Since neither of the parties challenged the constitutionality of the statute at trial and since the statute was in effect at the time of the accident and the trial, [this Court] will review the question under the terms of the statute as it then existed. [22] Ford broadly attacks the legitimacy of the award of any punitive damages in this case. It contends that a determination by the National Highway Traffic Safety Administration which entered into a settlement agreement with Ford and, by the terms of such agreement, required only a mailed reminder instead of a recall, demonstrates that it could not have acted with malice. Ford also claims a finding of malice is precluded by its conformity to industry standards. While there was evidence that Ford C-6 transmissions experienced more park to reverse incidents than those of its competitors, Ford attacks such evidence as being statistically unsound even though some such evidence came from NHTSA documents. As a further explanation, Ford also contends that it received more consumer complaints than its competitors because it aggressively investigated and solicited information about park to reverse incidents. As additional basis for claiming that malice was not shown, Ford contends that at most there was a reasonable disagreement among informed persons as to the best product design, and that when reasonable persons can disagree, a finding of malice is precluded. Finally, Ford argues, perhaps disingenuously, that it should not have been subjected to punitive damages because the only evidence introduced by plaintiff to show `malice' concerned prior incidents of unattended rearward movement involving Ford vehicles. Presumably, plaintiff hoped to show by implication that Ford must have known of a `defect' because it had received complaints of unattended rearward movement. Citing David G. Owen, Problems in Assessing Punitive Damages Against Manufacturers of Defective Products, [23] it concludes, but `the bare fact of [even] a large number of product failures ... falls far short of establishing the manufacturer's flagrant culpability in selling the product. In this vein, Ford insists that it behaved as a responsible corporation by aggressively undertaking actions to discover the cause of the failure and ameliorate its consequences. Based on this conduct, Ford insists that no reasonable jury could have concluded that it acted with malice. It is true that during the seven or eight year period between 1972 and 1980, Ford studied the possibility of a new design, responded to a NHTSA investigation, and entered into a settlement agreement with NHTSA whereby Ford agreed to mail reminders to drivers advising them not to leave running vehicles unattended, to secure parking brakes, and to shift fully into park. The Smith Estate, however, presented evidence that in 1970 Ford began receiving complaints concerning incidents of unintended migration from park to powered reverse. Among other things, the Estate produced four exhibits bearing 1971 and 1972 dates from Ford engineers articulating problems with the C-6 transmission and disclosing numerous customer complaints of jumped out of park into reverse or some similar terminology. Of the exhibits, a memorandum from principal engineer D.R. Dixon is extraordinary in its description of the flaw, recognition of driver misuse, and recommendation of an alternative. [24] From the evidence, a jury could have believed that by November 1972, Ford was well aware of the flaw in its C-6 transmission, but that it continued producing and installing such transmissions until 1980, thus acting with flagrant indifference to the lives of its consumers.