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Full Opinion
delivered the Opinion of the Court.
¶2 We review the following issues on appeal:
¶3 Did the District Court abuse its discretion when it excluded Evenfloâs evidence that the OMW model 207 complied with FMVSS 213 for the purposes of compensatory damages ?
¶4 Did the District Court abuse its discretion by admitting evidence regarding the recall and test failures of the OMW model 206?
¶5 Did the District Court abuse its discretion by applying unfairly its FMVSS 213 evidentiary ruling with respect to compensatory damages?
¶6 Did the District Court abuse its discretion when it excluded Evenfloâs FMVSS 213 compliance evidence with respect to punitive damages?
FACTUAL AND PROCEDURAL BACKGROUND The âOn My Wayâ Child Safety Seat
¶7 Evenflo manufactures child restraint systems, or child seats. Evenflo marketed the OMW as a rear-facing vehicle child safety seat intended for transporting infants weighing up to 20 pounds. Evenflo designed the OMW for use with or without its detachable base. The user routed the vehicleâs seat belt through an enclosed seat belt âtunnelâ on the base when they used the detachable base. The seat then latched into the base. The user also could unlatch the seat from the base and use it as a baby carrier. When used without the base, Evenflo designed the seat belt to be slipped into a U-shaped, open-ended plastic seat belt hook on one side of the seat. The user would route the seat belt over the seatâs foot-end and through an open-ended plastic seat belt hook on the other side of the seat. The user then latched the seat belt into the vehicleâs seat belt buckle.
¶8 The National Highway Traffic and Safety Administration (NHTSA) requires that all child restraint systems comply with the minimum requirements of Federal Motor Vehicle Safety Standard 213 (FMVSS 213). See 49 C.F.R. §571.213 (2009). NHTSArequired Evenflo to conduct internal testing of the OMW to determine if it complied with the FMVSS 213 standards. NHTSA and Transport Canada, the
¶9 FMVSS testing consists in part of a front-end sled test at speeds of 27-30 mph. See 49 C.F.R. § 571.213 (1994). In the sled test, the tester accelerates a child restraint seat and a test dummy to 30 mph and crashes it into a frontal barrier. The child restraint seat must manage the force from the crash âso that the forces imparted to the dummy are within tolerable limits.â 67 Fed. Reg. 21806, 21812 (May 1, 2002). FMVSS 213 does not require side-impact, rear-impact, or rollover testing.
¶10 Evenflo first manufactured the OMW model 206 in May of 1994. By February of 1995, Evenfloâs internal testing indicated that the production model 206 was prone to failure of the plastic seat belt hooks and/or the adjacent plastic shell. Internal videotapes showed the OMW seats breaking apart in the area of the vehicle seat belt path. The breaking caused the OMW to come loose from the test sledâs seat belt. The videotapes depicted the OMW ejecting from the sled due to the open belt hook design.
¶11 Evenflo briefly halted production of the OMW. Evenflo notified NHTSA on June 12, 1995, that it was going to conduct a âconsumer corrective action/recall campaignâ as the OMW did not meet the requirements of FMVSS 213. Evenflo represented to NHTSA that the hazard posed by the design of the OMW model 206 was a âseparationâ under the seatâs cloth padding that resulted in a sharp edge that could cause a âcut or pinchâ hazard to the child. Evenflo did not notify NHTSA that the OMWâs belt hooks had broken off in some tests and that these breaks had caused the OMW to detach from the vehicle restraint system.
¶12 Evenflo had manufactured and sold approximately 200,000 OMWs at the time of the recall. Evenflo designed a plastic âretrofit kitâ to be riveted into the underside of the safety seat. Evenflo mailed the plastic retrofit kit to the current OMW users. Evenflo described the recall as a âconsumer corrective actionâ and instructed the OMW owners to install the plastic insert using double-sided tape. Evenflo also had approximately 55,000 OMW model 206s in its inventory at the time of the recall. Evenflo installed the retrofit kit on its unsold inventory. Evenflo rebranded the retrofitted OMWs as model 207x and sent all 55,000 seats to retailers.
¶13 Evenflo altered the plastic mold used to create the OMW at a total cost of $2500. Evenflo added ribs, gussets, and fillets and designated the modified OMW as model 207. Evenflo did not change the OMWâs
¶14 In 1997, Ruthie Gonzales of Merced, California, reported to Evenflo that her retrofitted model 207 OMWâs belt hook had broken off during a rollover accident. The OMW came loose from the seatbelt and ended up on her front dashboard. Devon Orneleas of Patterson, California, reported to Evenflo on August 10, 1999, that both belt hooks had broken off her production model 207 in a rollover accident. Ms. Orneleas testified that the OMW came loose from the vehicle seat belt and flew forward when the seat hooks fractured and broke away. Ms. Orneleas found her baby, still secured in the child seat, on the front seat floorboard after the rollover.
¶15 Ms. Orneleas testified that she had reported the incident because she wanted Evenflo to know âthat they had a defective product and I wanted them to recall it.â Ms. Orneleas testified that when she called Evenflo, the customer service representative said that âshe was shocked and hadnât heard of that before.â Ms. Orneleas further testified that Evenflo had called her back and told her that the OMW was designed to withstand only a 30 mph frontal crash, rather than the physical forces present in a rollover crash.
¶16 Evenflo denied that it had made this statement and claimed that Ms. Orneleas âmust have misunderstood.â Three other OMW owners also called Evenflo in the years before the Malcolm accident to report that seatbelts had slipped out of the open belt hook of the OMW in rollover, side-impact, and rear-end situations. Evenflo did not test the OMW in rear-end, side impact, or rollover scenarios before the Malcolm accident.
The Malcolm Accident
¶17 The Malcolms lived south of Livingston, Montana, on a ranch near Emigrant. Chad Malcolm was the fourth generation of the family to ranch in the area. A friend gave Jessica Malcolm the OMW while Jessica was pregnant with Tyler. Jessica called Evenflo to ask if the OMW model 207 was safe to use. Evenflo assured her that the OMW was not subject to any of their recalls and that the OMW was safe to use. Evenflo Director of Product Safety Randolph Kiser testified that Jessica Malcolm did not have a right to know about the cracking during testing or the owner reports of seatbelts slipping out of the open belt hooks unless Evenflo considered the problem to be a ârampant safety related defect.â
¶18 Jessica Malcolm drove to Emigrant on the evening of July 16, 2000, in her 1996 Suburban to pick up pizza and a movie with her
¶19 Jessica Malcolm did not suffer serious injury. Her sister sustained a severe head injury. The left belt hook of the OMW broke off during the rollover. The seat belt slipped out from the open-ended belt hook on the opposite side of the seat. The forces of the accident ejected the OMW from the Suburban. The OMW came to rest approximately 60 feet from the Suburban. Tyler remained strapped in the OMW. Tyler suffered brain injuries that resulted in his death.
Pretrial
¶20 The Malcolmsâ case sounded exclusively in strict liability in tort, design defect theory. The Malcolms claimed that the Evenflo OMW model 207 infant child safety seat constituted a defectively designed product that failed catastrophically even though they had used the seat in a reasonably anticipated manner. The Malcolms pointed to the OMWâs open-ended belt hook design and the lack of expanded polystyrene (EPS) padding. The Malcolms contended that Evenflo could have manufactured the OMW using a feasible superior alternative design that required the vehicleâs seatbelt to be routed through an enclosed seat belt tunnel even when the seat was used without the base. The Malcolms also sought punitive damages. The Malcolms alleged that Evenflo âcontinued selling the defective product in conscious, deliberate and intentional disregard of the danger presented.â
¶21 Evenflo contended that the OMW model 207 was not defective in any way. Evenflo argued that the severity of the forces involved in the accident solely caused Tylerâs death. Evenflo argued that the âtremendous forcesâ that occurred during the rollover forced open the rear passenger door, which was immediately adjacent to Tylerâs child seat. Evenflo posited that Tylerâs car seat came into direct contact with the ground as the Suburban rolled. Evenflo suggested that the contact caused the seat to detach from the seat belt system and ultimately fly out the open door. Evenflo emphasized that the production model 207 passed each of the FMVSS tests conducted on the seat. Evenflo also argued that the OMW model 207 differed completely from the OMW model 206.
¶23 The District Court granted the Malcolmsâ motion in limine to exclude arguments by Evenflo that the OMW model 207 complied with FMVSS 213. The District Court reasoned that evidence of compliance with FMVSS 213 âdoes not appear to be relevant to the issues or facts in this case.â The District Court stated that even if evidence of Evenfloâs alleged compliance with FMVSS 213 was relevant, âit is more prejudicial than probative and would confuse the jury.â The District Court denied Evenfloâs motion for reconsideration.
Trial
¶24 The District Court conducted a jury trial from July 16 to July 25, 2007. The Malcolms testified as to the severe trauma that resulted from Tylerâs death. Jessica and Chad both had undergone personality changes. Chad Malcolm no longer could perform competently the daily ranch work. The Malcolms could not face living in such close proximity to the location of the accident. The Malcolms eventually moved into Livingston. Chad went to work for a gravel company. Jessica obtained certification as a child seat fit expert and advocated for safer child seats.
¶25 Both sides presented expert witnesses. The Malcolms contended that the OMW model 206 and model 207 were identical with respect to the faulty design of the open belt hook and the lack of padding. The Malcolmsâ design expert Lou DâAulerio testified that he had analyzed 582 sled tests conducted on the OMW under the FMVSS 213 standards. The tests included the OMW models 206 and 207 and prototypes. DâAulerio compiled an 11-page chart titledâChronological List of Test Failures.â The chart included a column of âTest Report Remarksâ that consisted of excerpts from the test reports that described cracks, tears, and other âfailuresâ of the shell. DâAulerio determined that Evenflo had noted that the plastic shell had cracked or fractured in 157, or 27%, of the tests. DâAulerio designated these tests âfailures.â The Malcolms also mentioned these test âfailuresâ during their opening statement and closing argument.
¶27 The jury awarded the Malcolms $6,697,491 in compensatory damages. The jury also awarded the Malcolms $3,700,000 in punitive damages in a separate proceeding conducted the following day, pursuant to §27-l-221(7)(a), MCA.
Post-trial
¶28 The District Court reviewed the juryâs award of punitive damages as required by §27-l-221(7)(c), MCA. Evenflo argued that the court improperly had excluded evidence of Evenfloâs compliance with FMVSS 213. Evenflo relied in part on this Courtâs decision in Sunburst School Dist. No. 2 v. Texaco, Inc., 2007 MT 183, 338 Mont. 259, 165 P.3d 1079, which we decided after the juryâs verdict in this case. The District Court affirmed the juryâs punitive damages award. The District Court also denied Evenfloâs post-trial motions, including its motion for a new trial, motion for remittitur, motion for judgment as a matter of law. Evenflo appeals.
STANDARD OF REVIEW
¶29 We review a district courtâs evidentiary rulings for an abuse of discretion. Sunburst, ¶ 74. A district court possesses broad discretion to determine the admissibility of evidence. Sunburst, ¶ 74. A district court abuses its discretion when it acts arbitrarily without conscientious judgment or so exceeds the bounds of reason as to work a substantial injustice. State v. Giddings, 2009 MT 61, ¶ 42, 349 Mont. 347, 208 P.3d 363.
DISCUSSION
¶30 Did the District Court abuse its discretion when it excluded Evenfloâs evidence that the OMW model 207 complied with FMVSS 213 for the purposes of compensatory damages ?
¶32 Strict liability recognizes that the seller is in the best position to insure product safety. Sternhagen v. Dow Co., 282 Mont. 168, 180, 935 P.2d 1139, 1146 (1997). Design defect liability therefore places the risk of loss on the manufacturer. This imposition of risk provides âan incentive to design and produce fail-safe products which exceed reasonable standards of safety.â Sternhagen, 282 Mont. at 178, 935 P.2d at 1145. Design defect strict liability may be imposed even if the seller has âexercised all possible care,â and even though the product was faultlessly manufactured. See McAlpine, ¶¶ 17, 21; § 27-1-719, MCA; Mont. Pattern Jury Instr. Civ. 7.00, 7.02 (2d rev. ed. 2003).
¶33 Evenflo argues that the District Court abused its discretion when it excluded any evidence that the OMW model 207 complied with FMVSS 213. Evenflo contends that the fact that the OMW model 207 passed 341 tests performed under FMVSS 213 is âhighly relevant to [the Malcolmsâ] claim that the model 207 was defective and unreasonably dangerous.âEvenflo opines that FMVSS 213 is a âsevereâ test with âstrict performance standards.â
¶34 Evenflo urges this Court to adopt the Restatement (Third) of Torts: Products Liability §4 (1998). Section 4 provides that compliance with an applicable regulation is admissible in connection with liability for defective design. Evenflo contends that the majority ofjurisdictions hold that compliance with product safety regulation is relevant and admissible on the question of defectiveness, but is not necessarily controlling. Evenflo also contends that this Court has adopted the Restatement (Third) approach in the negligence context. Evenflo argues that âTt]here is no reason why such highly relevant evidence should be admissible in negligence, but not products liability cases.â
¶35 Evenflo points to Martel v. Montana Power Co., 231 Mont. 96, 752 P.2d 140 (1988). Martel suffered severe injuries after coming into contact with power lines owned by Montana Power. Martel, 231 Mont. at 98-99, 752 P.2d at 142. Martel alleged that Montana Power negligently had failed to comply with the National Electric Safety Code. Martel, 231 Mont. at 100-03, 752 P.2d at 142-45. The Court held
¶36 This Court reiterated those principles in Schmidt v. Washington Contractors Group, Inc., 1998 MT 194, 290 Mont. 276, 964 P.2d 34. Schmidt sustained injuries when he crashed his motorcycle while descending a temporary freeway entrance ramp in a construction zone. Schmidt, ¶ 3. The Court noted that the construction company owed a duty of ordinary care in maintaining the road construction site in a reasonably safe condition. Schmidt, ¶ 15. The construction company argued that it was not negligent as it properly had posted warning signs as required by the Manual of Uniform Traffic Control Devices (MUTCD). Schmidt, ¶ 12. The Court stated that âevidence of compliance with the MUTCD does not necessarily establish due care because the MUTCD, like any other national industry standard or code, is only a minimum standard.â Schmidt, ¶ 17.
¶37 The District Court correctly recognized, however, that Montana draws âa bright lineâbetween cases asserting strict liability in tort and those grounded in negligence theory. The court pointed to Lutz v. National Crane Corp., 267 Mont. 368, 385, 884 P.2d 455, 465 (1994). Lutz died from electrocution when a craneâs cable contacted a power line. Lutz, 267 Mont. at 372, 884 P.2d at 457. Lutzâs estate claimed that the craneâs failure to include insulating links constituted a defective design. Lutz, 267 Mont. at 372-73, 884 P.2d at 457. The manufacturer attempted to introduce evidence that governmental regulations did not require that cranes be equipped with insulated links. Lutz, 267 Mont. at 384, 884 P.2d at 464. This Court affirmed the district courtâs exclusion of the evidence. Lutz, 267 Mont. at 385, 884 P.2d at 465. The Court observed that Twjhile most courts allow government regulations to be used against manufacturers in negligence cases, the same is not true where the issue is strict liability.â Lutz, 267 Mont. at 385, 884 P.2d at 465. The Court emphasized that â[the] issue in products liability cases is not the conduct of the âreasonable person,â but the condition of the product.â Lutz, 267 Mont. at 380, 884 P.2d at 462 (emphasis in original). The Court rejected the manufacturerâs attempt âto interject negligence concepts into this design defect case.â Lutz, 267 Mont. at 379, 884 P.2d at 461.
¶38 This Court again distinguished strict liability from negligence when it rejected the âstate of the artâ defense in Sternhagen, 282 Mont.
¶39 We likewise reject Evenfloâs efforts to inject negligence principles into the strict liability setting. We decline to adopt the Restatement (Third) of Torts: Products Liability, §4. Section 4 conflicts with the core principles of Montanaâs strict products liability law. To recognize Section 4 improperly would inject into strict products liability analysis the manufacturerâs reasonableness and level of care-eoncepts that are fundamental to negligence law, but irrelevant on the issue of design defect liability. Sternhagen, 282 Mont. at 176, 935 P.2d at 1144; McAlpine, ¶¶ 17, 21; §27-1-719, MCA; Mont. Pattern Jury Instr. Civ. 7.00, 7.02 (2d rev. ed. 2003). The District Court correctly relied upon Montana precedent that emphasizes the fundamental difference between strict liability and negligence law. See Sternhagen, 282 Mont. at 176, 935 P.2d at 1144; Lutz, 267 Mont. at 379-80, 884 P.2d at 461-62; see also Kuiper v. Goodyear Tire & Rubber Co., 207 Mont. 37, 63-64, 673 P.2d 1208, 1222.
¶40 The Dissent raises the specter of the âcamelâs nose in the tentâ despite our explicit rejection of the Restatement (Third) of Torts: Products Liability §4. See ¶ 119. The Dissent insists that our decision somehow will assist corporations to overturn âwell-settled, decades-old principles of strict liabilityâ and convince the courts or the legislature to adopt the Restatement (Third) of Torts: Products Liability §4. We discuss at length and approve in ¶¶ 31-39 the âWell-settled, decades-old principles of strict liabilityâ for which the dissent fears. Our decision in fact slams the door on the camelâs nose. Only in a desert mirage could our clear repudiation of th e Restatement (Third) of Torts:
¶41 A district court abuses its broad discretion regarding the admissibility of evidence if it acts arbitrarily without conscientious judgment or so exceeds the bounds of reason so as to work a substantial injustice. Sunburst, ¶ 74; Giddings, ¶ 42. The District Court extensively analyzed both FMVSS 213 and the nature of the Malcolm accident in determining that evidence of compliance with FMVSS 213 would not be relevant to the question of whether Evenflo had sold the OMW model 207 in a defective condition. The District Court emphasized in its post-trial order that the FMVSS 213 âaddresses only minimum levels of performance in 27-30 mph frontal impacts.âThe court further noted that âFMVSS 213 does not set forth any requirements, or create any reasonable expectations in the mind of the manufacturer, concerning the dynamic performance of a child seat in a motor vehicle rollover.â The court stated that evidence at trial had established that âthe dynamic forces unleashed in a high-speed rollover collision are very different from those present in a minimal 27 to 30 mph frontal crash.â
¶42 The District Court added that âthe risk of mischief and jury confusionâ inherent in allowing Evenflo to defend based on the âself-servingâ argument that the OMW model 207 had âpassedâFMVSS 213 was âparticularly apparent when the limited purpose of the federal motor vehicle standards is viewed in the light of Montana products liability law.â The District Court recognized that the safety standards are âa minimum standard for motor vehicle or motor vehicle equipment performance.â See 49 U.S.C. §30102(a)(9) (2006). The court emphasized that Congress has established that a person may not use compliance with a motor vehicle safety standard as a defense at common law and compliance does not exempt a person from liability at common law. See 49 U.S.C. §30103(e) (2006); H.R. Rpt. 1776 at 24 (July 28, 1966).
¶43 The District Court also highlighted the letter of NHTSA Administrator Ricardo Martinez, M.D., sent to manufacturers, including Evenflo, on September 14, 1999. Dr. Martinez stated that âhiere compliance with the minimum requirements of the standard is not enough.â Dr. Martinez urged manufacturers to âensure that their restraints perform above the minimum requirementsâ of the safety standards. See 65 Fed. Reg. 1224,1224-25. (Jan. 7, 2000). The District Court concluded that Dr. Martinezâs warning was âconsistent with the
¶44 We conclude that the District Court did not act arbitrarily without conscientious judgment when it denied Evenfloâs evidence of compliance with FMVSS 213. Giddings, ¶ 42. The District Court acted within its âbroad discretionâ when it determined that evidence of the OMW model 207âs compliance with FMVSS 213 would be irrelevant to the Malcolmsâ design defect strict liability claim. Sunburst, ¶ 74. We also cannot determine that the District Court abused its discretion when it concluded that even if Evenfloâs compliance with FMVSS 213âs âminimal standardsâ would be relevant, the evidence would be more prejudicial than probative and might tend to mislead or confuse the jury. Sunburst, ¶ 74. The District Courtâs evidentiary rulings properly focused the juryâs compensatory damages analysis on the condition of the OMW rather than on the conduct of Evenflo. Lutz, 267 Mont. 368 at 380, 884 P.2d at 462.
¶45 Did the District Court abuse its discretion by admitting evidence regarding the recall and test failures of the OMW model 206?
¶46 Evenflo claims prejudice from the District Courtâs decision to allow the Malcolms to introduce evidence regarding the testing and the 1995 recall of the OMW model 206. Evenflo argues that the court allowed the Malcolms to ''put on trial a different child seatâ than the Malcolmsâ OMW model 207. Evenflo contends that the OMW model 206 and model 207 are substantially different seats and that the mode of alleged failure that led to the model 206âs recall differed from the alleged defect in the model 207. The Malcolms argue that âan ejection due to the defective open belt hook design in a model 206 is the same as one in a 207.â
¶47 Evenflo representative Randolph Kiser testified that Evenflo had recalled the OMW model 206 due to its failure to conform to FMVSS 213. The District Court admitted letters between Evenflo and NHTSA that referred to the OMW model 206âs failure to comply with the standards of FMVSS 213. The court also admitted videos of the OMW model 206 breaking apart during FMVSS 213 testing. The District Court allowed the Malcolmsâ expert DâAulerio to testify regarding the cracks and other damage to the model 206 that had occurred during FMVSS 213 testing. The court further allowed the Malcolms to
Substantial Similarity
¶48 Evenflo broadly asserts that â[i]t is generally improper in a products liability case to admit evidence regarding a product model other than the one at issue.â The three out-of-jurisdiction cases that Evenflo cites do not support its sweeping assertion. The courts in each case excluded evidence of different product models due to lack of similarity.
¶49 For example, in Brock v. Caterpillar, Inc., 94 F.3d 220 (6th Cir. 1996), Brockâs expert testified that the Caterpillar D9H bulldozerâs brake system was defective and unreasonably dangerous. Brock, 94 F.3d at 224. The trial court permitted the expert to base his opinion on a comparison with the allegedly improved braking system of the newer and much larger model DIO. Brock, 94 F.3d at 224-25. The Sixth Circuit Court of Appeals concluded that the trial court had committed prejudicial error on the grounds that the comparison between the two models at most was âtenuously relevant.â Brock, 94 F.3d at 225.
¶50 The court recognized that evidence of product failures âof substantial similarityâ would be ârelevant and admissible.â Brock, 94 F.3d at 224. The court highlighted the substantial differences between the Caterpillar model D9H and the model DIO. Brock, 94 F.3d at 224-26. The court noted that âthere were a large number of changes in character, size, style, and technological advancement between the manufacture design of the D9H ... and that of the DIO some years later.â Brock, 94 F.3d at 225. The court emphasized that Caterpillar had not manufactured the DIOâs allegedly superior braking system until well after the accident involving the D9H. Brock, 94 F.3d at 225.
¶51 The court in McBurney Law Ser., Inc. v. Apex, Inc., 771 A.2d 911 (R.I. 2001), determined that the trial court had not abused its discretion when it refused to permit the plaintiffs to cross-examine a defense witness concerning test reports regarding two toaster products manufactured by the defendants different from the model at issue. McBurney, 771 A.2d at 912. The plaintiffs intended to use the reports to impeach the assertions of the defenseâs expert witness, made in response to plaintiffsâ own questions, that these other models could not produce a relatively large fire. McBurney, 771 A.2d at 911. The court cited the fact that the toasters were different models with features that varied from those in the toaster that the plaintiffs claimed had ignited the building fire. McBurney, 771 A.2d at 911-12.
¶52 Evenflo also points to Blevins v. New Holland North America, Inc., 128 F. Supp. 2d 952, 960-61 (W.D. Va. 2001), in which the court