Dorothy Clark v. Chrysler Corporation

Chrysler Corporation appeals the district court's order, entered on remand, upholding Dorothy Clark's $3 million punitive damage award as reasonable and proportionate to the wrong committed and denying Chrysler's motions for judgment as a matter of law, for remittitur, and for a new trial. Because we conclude that the punitive damage award is constitutionally excessive, we remit the amount of punitive damages to $471,258.26.

On October 14, 1993, Charles Clark was fatally injured in an automobile accident while driving a 1992 Dodge Ram club cab pickup truck. The accident occurred when Mr. Clark pulled into an intersection in front of an oncoming vehicle and the two vehicles collided. Mr. Clark, who was not wearing a seat belt, was ejected from his vehicle and died a short time later.

Mr. Clark's wife sued Chrysler, claiming that its pickup truck was defectively and negligently designed. On October 1, 1997, after a three-day trial, the jury rendered a unanimous verdict in favor of Mrs. Clark on claims of strict liability, negligence, and failure to warn. The jury found that Chrysler and Mr. Clark were each 50% at fault and returned a verdict of $471,258.26 in compensatory damages and $3,000,000 in punitive damages. The court entered a judgment against Chrysler for $3,235,629.13, reflecting 50% of the compensatory damages plus the $3 million punitive damages award.

After trial, Chrysler renewed its request for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50 and for a new trial pursuant to Federal Rule of Civil Procedure 59. In its motion for judgment as a matter of law, Chrysler argued that because there was no evidence of "gross negligence," an award of punitive damages was improper. [J.A. at 81-85.] Chrysler alternatively argued for a new trial in its Rule 59 motion. The district court denied both motions. [J.A. 87-92.] On appeal, we affirmed the district court's judgment and upheld the jury's compensatory and punitive damage awards.

Several months later, the Supreme Court decided State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003). In State Farm, the Court elaborated on the procedural and substantive constraints that the Due Process Clause imposes on punitive damage awards. After State Farm was issued, Chrysler petitioned for a writ of certiorari, requesting that the Court "grant certiorari, vacate the decision below, and remand for further consideration ("GVR") in light of its recent decision in State Farm v. Campbell." Pet. for Writ of Cert., No. 02-1748, 2003 WL 22428164, at *2 (U.S. May 21, 2003).2 In its petition, Chrysler insisted that the jury's $3 million punitive damage award was constitutionally excessive. Id. 2003 WL 22428164 at *18-*25. Clark opposed the petition, arguing that Chrysler had waived its constitutional challenge by failing to raise it in its post-judgment motions before the district court, and that even if the issue was preserved for review, the amount of the punitive damage award was within constitutional boundaries. See Resp't Br. in Opp'n to Pet. for Writ of Cert., No. 02-1748, 2003 WL 22428165, at *19-*30 (U.S. July 1, 2003).

On October 6, 2003, the Supreme Court granted Chrysler's petition, vacated our judgment, and remanded the case to us "for further consideration in light of State Farm." Chrysler Corp. v. Clark, 540 U.S. 801, 124 S.Ct. 102, 157 L.Ed.2d 12 (2003). We, in turn, remanded the case to the district court for further proceedings in accordance with the Supreme Court's order. See Clark v. Chrysler Corp., 80 Fed.Appx. 453 (6th Cir.2003). On February 6, 2004, the district court upheld the jury's award, and denied Chrysler's motions for judgment as a matter of law, for remittitur, and for a new trial. See Dist. Ct. Op. & Order (Feb. 6, 2004), J.A. at 31-43. Chrysler timely appealed.3

In State Farm, the Supreme Court elaborated on the measure of punishment, by means of punitive damages, that a state may impose upon a defendant in a civil case. The Court reiterated the principle that, "[w]hile States possess discretion over the imposition of punitive damages, it is well established that there are procedural and substantive constitutional limitations on these awards. The Due Process Clause of the Fourteenth Amendment prohibits the imposition of grossly excessive or arbitrary punishments on a tortfeasor." 538 U.S. at 416, 123 S.Ct. 1513 (citations omitted). The Court also expressed its concern with the manner in which punitive damages systems are administered, noting that vague instructions "do little to aid [a jury] in its task of assigning appropriate weight to evidence that is relevant and evidence that is tangential or only inflammatory." Id. at 417-18, 123 S.Ct. 1513. In light of these concerns, the Court applied the three guideposts set forth in BMW v. Gore,4 and concluded that a punitive damage award of $145 million, where compensatory damages were $1 million, was constitutionally excessive. Id. at 418-29, 123 S.Ct. 1513.

Because of State Farm's narrow focus on punitive damages and the Court's limited GVR order, we do not reconsider our earlier holdings regarding liability, compensatory damages, or the sufficiency of evidence to support some award of punitive damages.5 We must, however, decide whether State Farm requires us to change our conclusion that the amount of the punitive damage award was within constitutional limits. We conclude that it does.

In the discussion below, we explain that (A) Chrysler's claim regarding the constitutionality of the award has been preserved for review; (B) the award is constitutionally excessive and should be reduced to $471,258.26 and (C) a new trial on the amount of punitive damages is warranted only if the reduced award is rejected by Mrs. Clark.

A. Chrysler's claim regarding the constitutionality of the award has been preserved for review

The parties dispute whether Chrysler properly preserved its claim that the punitive damage award is constitutionally excessive. We conclude that even though Chrysler initially waived this challenge by failing to raise it in its post-trial motions before the district court, subsequent proceedings in the Sixth Circuit and Supreme Court preserved the issue for review.

Challenges to the excessiveness of verdicts must be brought in the trial court through post-trial motions. Young v. Langley, 793 F.2d 792, 794 (6th Cir.1986). This procedure allows the trial judge an opportunity to initially correct errors, exercise his discretion, and create a full record for appeal. Id. Absent the timely filing of a post-trial motion and the trial court's ruling thereon, an appellate court will generally not review the alleged excessiveness of damages awards. Id.; see also O'Connor v. Huard, 117 F.3d 12, 18 (1st Cir.1997) ("We generally will not review a party's contention that the damages award is excessive or insufficient where the party has failed to allow the district court to rule on the matter."); DeWitt v. Brown, 669 F.2d 516, 524 (8th Cir.1982) (citations omitted) (noting that the "inadequacy or excessiveness of a verdict is basically, and should be, a matter for the trial court which has had the benefit of hearing the testimony and of observing the demeanor of the witnesses and which knows the community and its standards").

In Local Union No. 38, Sheet Metal Workers' International Ass'n v. Pelella, for example, the Second Circuit refused to decide whether the punitive damage award was constitutionally excessive because the appellant failed to raise the issue in its post-trial motions before the district court. 350 F.3d 73, 89-90 (2d Cir.2003), cert. denied, 541 U.S. 1086, 124 S.Ct. 2821, 159 L.Ed.2d 248 (2004). Although State Farm was decided during the course of the appeal and the appellant raised the issue in its reply brief, the Pelella court held that the matter had been waived. See id. The court reasoned that the appellant "could unquestionably have invoked Gore in the district court proceedings to suggest that the jury's punitive award was constitutionally excessive." Id. at 90.

Similarly, in this case Chrysler did not challenge the punitive damage award as constitutionally excessive in either of its post-trial motions. See J.A. at 63-74, 75-86. Unlike in Pelella, however, we nevertheless addressed the issue on appeal. Specifically, we stated that,

Chrysler also maintains that ... the jury's award was so excessive as to violate the Due Process Clause. [We do] not agree.... In none of its briefing does Chrysler indicate why, under Gore, a due process violation occurred in this case. However, a review of the [three] factors quickly reveals that this case is a far cry from Gore.

Clark, 310 F.3d at 481-82. As a result, although Chrysler waived its constitutional challenge by failing to raise it in its post-trial motions before the district court,6 our passing on the issue essentially preserved it for Supreme Court review. See United States v. Williams, 504 U.S. 36, 41, 112 S.Ct. 1735, 118 L.Ed.2d 352 (1992) ("Our traditional rule... precludes a grant of certiorari only when the question presented was not pressed or passed upon below.") (quotations and citations omitted); Va. Bankshares, Inc. v. Sandberg, 501 U.S. 1083, 1099 n. 8, 111 S.Ct. 2749, 115 L.Ed.2d 929 (1991) (rejecting respondents argument that it should decline to address an issue that was not raised below because "[i]t suffices for our purposes that the court below passed on the issue presented, particularly where the issue is ... in a state of evolving definition and uncertainty, and one of importance to the administration of federal law") (quotations and citations omitted); Payton v. New York, 445 U.S. 573, 582 n. 19, 100 S.Ct. 1371, 63 L.Ed.2d 639 (1980) ("Although it is not clear from the record that appellants raised this constitutional issue in the trial courts, since the highest court of the State passed on it, there is no doubt that it is properly presented for review by this Court.") (citation omitted).

Furthermore, the Supreme Court's GVR order suggests that the issue has been preserved for reconsideration on remand. In this case, the Court granted Chrysler's request for a GVR order; whereas in two other cases, the Court denied similar requests where the appeals courts refused to pass on the constitutional issue. In Pelella, for instance, the Second Circuit refused to decide whether the punitive damage award was constitutionally excessive because the appellant, Local Union, did not raise the issue in the trial court. See discussion supra Part II.A. On petition to the Supreme Court, Local Union's request for a GVR order in light of State Farm was denied. See Pet. for Writ of Cert., No. 03-1472, 2004 WL 892040, at *16 (U.S. Apr.20, 2004) (asking Supreme Court to either resolve whether punitive damages are constitutionally permissible or remand to Second Circuit for reconsideration in light of State Farm); Local Union No. 38, Sheet Metal Workers' Int'l Ass'n v. Pelella, 541 U.S. 1086, 124 S.Ct. 2821, 159 L.Ed.2d 248 (2004), denying cert. to 350 F.3d 73 (2d Cir.2003). Similarly, in Time Warner Entertainment Co. v. Six Flags Over Georgia, LLC, the Georgia Court of Appeals held that Time Warner waived its constitutional challenge by failing to cite any relevant facts, provide record citations, or present any legal analysis in support of its argument. 254 Ga.App. 598, 563 S.E.2d 178, 184 (2002). Time Warner's petition to the Supreme Court, requesting a GVR order for further consideration in light of State Farm, was denied. See Pet. for Writ of Cert., No. 02-0978, 2002 WL 32133807, at *25-*27 (U.S. Dec.23, 2002) (requesting, at a minimum, a GVR in light of State Farm); Time Warner Entm't Co. v. Six Flags Over Ga., 538 U.S. 977, 123 S.Ct. 1783, 155 L.Ed.2d 665 (2003) (denying cert.).

Therefore, even though Chrysler initially waived its constitutional claim by failing to raise it in the district court, our earlier decision and the Supreme Court's GVR order indicates that the issue has been preserved, and should be considered further on remand. See Lawrence v. Chater, 516 U.S. 163, 168, 116 S.Ct. 604, 133 L.Ed.2d 545 (1996) (explaining that "GVR orders are premised on matters that [the Court] ... believe[s] the court below did not fully consider, and ... require only further consideration").

B. The punitive damage award is constitutionally excessive

As discussed above, the Court in State Farm elaborated on the three Gore guideposts that courts must consider when reviewing punitive damage awards. Namely, (1) the degree of reprehensibility of the defendant's misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damage award; and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases. See Gore, 517 U.S. at 574-75, 116 S.Ct. 1589. In light of State Farm, and after a de novo review, Cooper Industries, Inc. v. Leatherman Tool Group Inc., 532 U.S. 424, 431, 121 S.Ct. 1678, 149 L.Ed.2d 674 (2001), we conclude that the $3 million award here is constitutionally excessive. An application of the Gore guideposts to the facts of this case reveals that a punitive damage award approximately equal to twice the amount of compensatory damages, or $471,258.26, would comport with the requirements of due process.

With respect to the first Gore guidepost, State Farm emphasized that the degree of reprehensibility is "[t]he most important indicium of the reasonableness of a punitive damages award." 538 U.S. at 419, 123 S.Ct. 1513 (quoting Gore, 517 U.S. at 575, 116 S.Ct. 1589). The Court laid out a list of five criteria that lower courts must consider in determining the reprehensibility of a defendant's conduct: We have instructed courts to determine the reprehensibility of a defendant by considering whether: the harm caused was physical as opposed to economic; the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others; the target of the conduct had financial vulnerability; the conduct involved repeated actions or was an isolated incident; and the harm was the result of intentional malice, trickery, or deceit, or mere accident. The existence of any one of these factors weighing in favor of a plaintiff may not be sufficient to sustain a punitive damages award; and the absence of all of them renders any award suspect.

Id. (citation omitted). In our original opinion, we concluded that Chrysler's conduct was reprehensible because the loss of life evidenced a greater disregard for the rights and safety of others than the economic damage sustained in Gore. See Clark, 310 F.3d at 482. State Farm does not change our conclusion that the physical harm suffered by Mr. Clark weighs strongly in favor of finding Chrysler's conduct reprehensible. After considering the four other factors, however, we conclude that the factors as a whole show that Chrysler's conduct was not sufficiently reprehensible to warrant a $3 million punishment.

a. Physical or economic harm

Because Chrysler's conduct resulted in physical harm and ultimately the loss of Mr. Clark's life, this factor weighs heavily in favor of finding Chrysler's conduct reprehensible. Cf. Gore, 517 U.S. at 576, 116 S.Ct. 1589 (the harm inflicted was "purely economic in nature"); State Farm, 538 U.S. at 426, 123 S.Ct. 1513 (same).

b. Indifference to or reckless disregard for the safety of others

At trial, Clark introduced evidence that the 1992 Dodge Ram door latch and the metal frame of the truck against which the latch closed — the B-pillar — were improperly designed, such that the forces of the accident caused the B-pillar to deform, or "twist out," and force open the latch, allowing Mr. Clark to be thrown from the truck. Clark's experts testified that Chrysler utilized a thin piece of formed sheet metal as a B-pillar; that the truck's "unboxed" B-pillar design was inadequate to withstand low-impact accidents; that the sheet metal type of B-pillar was substantially outdated and had been removed from the modern state of the art and state of the industry for over 40 years; that every other manufacturer utilized reinforced, boxed-in, or supported B-pillar designs that did not experience bypass failure; and that B-pillar twist-out was a known failure in the automotive industry. In addition, a Chrysler representative testified that his group did not test for latch failures involving B-pillar twist-out. Also, a member of the Chrysler Safety Office stated that a B-pillar is generally a boxed-in section of metal, and that an unboxed piece of metal is weak in almost every direction. Finally, there was evidence introduced at trial that Chrysler knew that if a driver was ejected, the risk of death substantially increased.7

As we stated in our earlier opinion, this evidence is sufficient to support the jury's decision to award punitive damages.8 In other words, viewing this evidence in the light most favorable to Clark, there is not a "complete absence of proof" that Chrysler's use of a weak and outdated unboxed B-pillar constituted a reckless disregard for the safety of others, including Mr. Clark.9 Consequently, we previously affirmed the district court's denial of Chrysler's motion for judgment as a matter of law to the extent it was based on the sufficiency of the evidence to support a punitive damages award.10 On the other hand, because there is no evidence that a boxed-in B-pillar would have prevented the harm suffered by Mr. Clark, and because there is a good-faith dispute over whether B-pillar testing is necessary, we disagree with the district court's decision that Chrysler's conduct is sufficiently indifferent or reckless to support a $3 million award.

First, although the evidence indicates that Chrysler utilized a weak, unboxed B-pillar design, there is no proof that even a stronger, boxed-in B-pillar would have prevented Mr. Clark's accident. Although Clark's experts testified as to their belief that the un-boxed B-pillar was weak, they did not conduct any tests to see whether another B-pillar would have prevented a door latch from opening under similar circumstances. See J.A. at 145 ("I believe [that Chrysler's B-latch] was unreasonably dangerous ... [b]ecause there were better systems out there ... that probably would have prevented this ejection.") (emphasis added); J.A. at 336-42 (testifying that "[t]o understand the strength of [a pillar] you need to run tests," but admitting that no tests were conducted to determine whether a boxed-in B-pillar would have prevented a door from opening during a similar impact). In the absence of evidence that a different design would have prevented Mr. Clark's accident, we cannot conclude that Chrysler's use of an unboxed B-pillar shows a level of indifference or reckless disregard sufficient to establish reprehensibility.11

Second, although Chrysler failed to conduct a B-pillar twist-out test, the record shows that there was a good-faith dispute over whether such testing was necessary. In 1987, General Motors ("GM") informed the National Highway Traffic Safety Administration ("NHTSA"), as well as other automobile manufacturers, including Chrysler, that it had developed a "Horizontal Rotation Test" as a way of simulating and ultimately reducing the incidence of latch bypass. [J.A. at 232-36, 394-95, 443.] In response, NHTSA conducted an evaluation of the GM test to determine whether the government should replace, or supplement, its existing testing requirements. See Denial of Motor Vehicle Defect Petition, 61 Fed.Reg. 64,563, 64,565 (Dep't Transp. Dec. 5, 1996). Ultimately, NHTSA decided against requiring the GM test. [J.A. 331-32.] As a result, GM is the only automobile manufacturer that conducts the test. [J.A. 333.] Therefore, although it is possible that GM's test may have alerted Chrysler to the deficiencies of its B-pillar design and prevented Mr. Clark's accident, because the test was neither required by the government nor used by other manufacturers, we cannot conclude that Chrysler's failure to adopt the test indicates a level of indifference to or reckless disregard for the safety of others sufficient to weigh in favor of reprehensibility.12 See Barber v. Nabors Drilling U.S.A., Inc., 130 F.3d 702, 710 (5th Cir.1997) (reversing punitive damage award where there was no evidence the defendant acted with malice or reckless indifference to plaintiff's rights and where the evidence demonstrated a "good faith dispute" as to whether the defendant's conduct violated plaintiff's rights under the ADA); Satcher v. Honda Motor Co., 52 F.3d 1311, 1317 (5th Cir.1995) (vacating award of punitive damages against motorcycle manufacturer after concluding, inter alia, that a genuine dispute existed in the scientific community as to whether leg guards do more harm than good, no government or agency had ever required them, and the industry as a whole had categorically rejected them as unnecessary).

Thus, in the absence of evidence that a boxed-in or supported B-pillar would have prevented the harm suffered by Mr. Clark, and because there is a good-faith dispute over whether B-pillar testing is necessary, we conclude that Chrysler's conduct does not evince a level of indifference to or reckless disregard for the safety of others to permit a $3 million punitive damage award.

c. Financially vulnerable target

With respect to financial vulnerability, the district court held that this factor weighed in favor of finding Chrysler's conduct reprehensible because Mr. Clark was a purchaser of one of Chrysler's vehicles and Chrysler has substantial financial resources. Because Chrysler's wealth has no connection to the actual harm sustained by Mr. Clark, we disagree.

The financial vulnerability of a target is particularly relevant when the harm inflicted is economic in nature. See Gore, 517 U.S. at 576, 116 S.Ct. 1589 (explaining that the "infliction of economic injury, especially when done intentionally ... or when the target is financially vulnerable, can warrant a substantial penalty"). Even when a plaintiff endures economic injury, however, "[t]he wealth of a defendant cannot justify an otherwise unconstitutional punitive damages award." State Farm, 538 U.S. at 427, 123 S.Ct. 1513; see also Gore, 517 U.S. at 585, 116 S.Ct. 1589 ("The fact that BMW is a large corporation rather than an impecunious individual does not diminish its entitlement to fair notice ...."); Mathias v. Accor Economy Lodging, Inc., 347 F.3d 672, 676 (7th Cir.2003) ("a person is punished for what he does, not for who he is, even if the who is a huge corporation"). Rather, to serve as justification for a punitive damage award, a defendant's wealth must bear some relation to the harm sustained by the plaintiff. See State Farm, 538 U.S. at 427, 123 S.Ct. 1513. In this case, economic injury is not involved, and as our discussion in supra Part II.B.1.a. indicates, no other connection between Chrysler's financial resources and the physical injury suffered by Mr. Clark was established. Thus, Chrysler's wealth is an inappropriate basis for the $3 million punitive damage award and this factor weighs against finding Chrysler reprehensible.

d. Repeated actions or isolated incident

The district court also held that Chrysler's conduct was not isolated because it was aware that there was no correlation between its door latch testing and the strength of its B-pillar, and thus Chrysler put anyone who drove a Dodge Ram pickup truck at risk. Because there is no evidence that Chrysler repeatedly engaged in misconduct while knowing or suspecting that it was unlawful, we conclude to the contrary.

"[E]vidence that a defendant has repeatedly engaged in prohibited conduct while knowing or suspecting that it was unlawful would provide relevant support for an argument that strong medicine is required to cure the defendant's disrespect for the law." Gore, 517 U.S. at 576-77, 116 S.Ct. 1589. In determining whether a defendant engaged in repeated misconduct, "courts must ensure the conduct in question replicates the prior transgressions." State Farm, 538 U.S. at 423, 123 S.Ct. 1513. In this case, there is no evidence that Chrysler knew that its use of the un-boxed B-pillar could cause Mr. Clark's injury.13 Indeed, there is no evidence of earlier, similar accidents that might have alerted Chrysler to the problem.14 And as discussed above, because Chrysler was not under any duty to conduct B-pillar testing, its failure to do so does not show any disrespect for the law. This absence of evidence of repeated misconduct weighs against finding Chrysler's conduct reprehensible.

e. Intentional malice, trickery, or deceit

Although the district court concluded that Chrysler did not act with intentional malice, trickery, or deceit, it held that Clark's death was not the result of a mere accident. We agree that Chrysler ignored potential hazards presented by a weak B-pillar. Indeed, we upheld the jury's decision to award punitive damages. But, we disagree that this factor weighs in favor of finding Chrysler's conduct reprehensible.

The concept that trickery and deceit are more reprehensible than negligence reflects the principle that punitive damages may not be "grossly out of proportion to the severity of the offense." Gore, 517 U.S. at 576, 116 S.Ct. 1589 (quotations and citations omitted). In Gore, the Court concluded that the defendant's conduct was not sufficiently reprehensible to warrant a $2 million award and noted the absence of "deliberate false statements, acts of affirmative misconduct, or concealment of evidence of improper motive." Id. at 579, 116 S.Ct. 1589. Thereafter, in State Farm, the Court added "intentional malice, trickery, or deceit" to the list of factors that courts should consider. 538 U.S. at 419, 123 S.Ct. 1513; see also Rhone-Poulenc Agro, S.A. v. DeKalb Genetics Corp., 345 F.3d 1366, 1371 (Fed.Cir.2003) ("For the Court's majority, [intentional malice, trickery, or deceit] has become an important criterion of what the Constitution accepts as reprehensible conduct."). In State Farm, even though there was evidence that the defendant had altered company records and engaged in acts that amplified the plaintiffs' harm, the Court held that such conduct did not warrant a $145 million award. See 538 U.S. at 419-20, 123 S.Ct. 1513. Unlike in State Farm, there is no evidence here that Chrysler engaged in any acts of intentional malice, trickery, or deceit. On the other hand, the evidence indicates that Chrysler knew that its B-pillar design was weak. Therefore, we conclude that this factor is neutral, favoring neither party.

In sum, only the first of the five factors weighs in favor of reprehensibility. The factors viewed as a whole indicate that Chrysler's conduct was not sufficiently reprehensible to support such a large punitive damage award.15