Tuesday, August 24, 2010

Case Brief: Branham v. Ford Motor Co.

By Brian A. Comer

Below is a case brief of the South Carolina Supreme Court's August 16, 2010 decision in Branham v. Ford Motor Co. (first posted about here). This is not that "brief," but bear in mind that the majority opinion alone is about 25 pages and will probably be the new authority on products liability law in South Carolina for years to come.

FACTUAL BACKGROUND: Cheryl Hale ("Hale") purchased a used 1987 Ford Bronco II 4x2 in June of 1999. The vehicle was manufactured in 1986 and had 137,500 miles on it. On June 17, 2001, Hale was driving with her child in the passenger seat and Plaintiff Jesse Branham, III ("Plaintiff") in the backseat. No one was wearing a seatbelt. Hale turned to the backseat to ask the children to quiet down. When doing this, she veered toward the shoulder of the road and the right wheel left the roadway. She responded by overcorrecting to the left. The overcorrection led to the vehicle rolling over, and Plaintiff was thrown from the vehicle and injured.

PROCEDURE: Plaintiff filed a lawsuit against Ford and Hale in Hampton County. Plaintiff did not seriously pursue the case against Hale. The case against Ford was based on two product liability claims (a defective seatbelt sleeve claim and a "handling and stablility" design defect claim relating to the rollover). Both claims were pursued in negligences and strict liability. The jury awarded the plaintiff $16 million in actual damages and $15 million in punitive damages. Ford appealed the verdict pursuant to Rule 204(b) of the South Carolina Appellate Court Rules.

ISSUES: Ford raised issues on appeal relating to (i) the design defect claim (including whether negligence could survive if the trial court granted a directed verdict on strict liability, as well as the proper test for determining if a product is defective and unreasonably dangerous in a design defect claim), (ii) the admission of post-distribution evidence, evidence of other similar incidents, and use of certain evidence during closing arguments, as well as the format of the verdict form, and (iii) the excessiveness of actual and punitive damages. The Court also addressed the issue of the alignment of the parties.

DISPOSITION: Affirmed in part, reversed in part, and remanded for a new trial.

RULES AND OPINION: Set forth below is a summary of the Court's opinion, providing headings concerning the subject matter and primary holdings in bold-faced type.

Design Defect Claims

First, the Court held that the trial court erred in directing a verdict on Plaintiff's strict liability seatbelt claim, but not on the same claim brought in negligence. At trial, Plaintiff claimed that Ford was negligent in failing to adequately test the seatbelt sleeve, but did not challenge the seatbelt sleeve design. Plaintiff had also brought a companion strict liability claim. The trial court directed a verdict on the strict liablity claim, but not on the negligence claim. Because the two claims have common elements (namely, the requirement that the product be in a defective and unreasonably dangerous condition), Ford argued that the negligence claim should have also been dismissed. The Court agreed: "When an element common to multiple claims is not established, all related claims must fail." Whether or not the manufacturer was at fault -- the additional element required for a products liability claim brought pursuant to a negligence theory -- is not even reached if a plaintiff cannot prove the predicate element of defective and unreasonably dangerous condition of the product. The Court distinguished the Court of Appeals decision in Bragg v. Hi-Ranger on this issue and emphasized that the critical inquiry as to whether one of the claims survives (where the other is dismissed) is the grounds for the dismissal. Significantly, the Court also agreed with Ford's argument that there is no separate "failure to test" claim apart from the duty to design and manufacture a product that is not defective and unreasonably dangerous. If the product is not defective and unreasonably dangerous, then failure to test cannot be a proximate cause of an injury.

With regard to the "handling and stability" design defect claim, the Court did not find error in the trial court's submission of these design defect claims to the jury. In reaching this determination, the Court reviewed certain testimony by Plaintiff's expert Dr. Melvin Richardson, former Ford Vice President Thomas Feaheny, and certain internal Ford documents relied upon by Dr. Richardson. In short, the Court discussed the evolution of the Bronco II's suspension, including competing views by Ford engineers and Ford executives about the different suspension options, including the "MacPherson" suspension and the "Twin I-Beam" suspension. The testimony and evidence related to the stability of the vehicles while using alternative suspensions, how using the different suspension options would affect rollout of new models, how they would impact other features of the vehicle, and the procedures and motivations behind selecting certain suspension options. Dr. Richardson testified that from all of the evidence, the Bronco II was "dangerously unstable" when it was designed and built, and that no improvements were made to correct this defect. After reviewing the evidence that was presented, the Court agreed with the trial judge's determination that Plaintiff presented sufficient evidence of a design defect known to Ford at or prior to the date of manufacture to withstand a directed verdict motion.

Next, the Court disagreed with Ford's contention that Plaintiff failed to provide evidence of a reasonable alternative design pursuant to the risk-utility test, but agreed that South Carolina law requires a risk-utility test in design defect cases (to the exclusion of the consumer expectations test.) The Court reviewed the prior opinions summarizing the two tests in Claytor v. General Motors Corp., 277 S.C. 259, 262, 286 S.E.2d 129, 131 (1982) and Bragg v. Hi-Ranger, 319 S.C. 531, 543, 462 S.E.2d 321, 328 (Ct. App. 1995). [The two tests are summarized here, as stated in Bragg]. After reviewing the prior case law, the Court again reviewed the competing suspension options (summarized above) and believed that Plaintiff's focus on the Macpherson suspension was evidence of feasible alternative design. The Court stated that whether this alternative satisfied the risk-utility test was a jury question, but the evidence itself was sufficent to survive a directed verdict motion. The Court then held that "the exclusive test in a products liability design case is the risk-utility test with its requirement of showing a feasible alternative design." While the consumer expectations test fits well in manufacturing defect cases, the Court agreed with Ford that it is ill-suited in design defect cases. The Court noted that in 1974, South Carolina's Legislature adopted the Restatement (Second) of Torts section 402(A) (1965) and identified its comments as legislative intent in S.C. Code section 15-73-10 through 15-73-30. However, since this adoption, the Court noted that the American Law Institute has published the Restatement (Third) of Torts: Products Liability (1998), and that this edition moved away from the consumer expectations test for design defects, and toward the risk-utility test. The Court stated that it did not believe that the Legislature intended to foreclose court consideration of developments in products liability law. The Court noted that its approval of the risk-utility test in the Claytor case had not prompted a legislative response, and the overwhelming majority of jurisdictions now employ some form of the risk-utility test.

We believe that in design defect cases the risk-utility test provides the best means for analyzing whether a product is designed defectively. Unlike the consumer expectations test, the focus of a risk-utility test centers upon the alleged defectively designed product. The risk-utility test provides objective factors for a trier of fact to analyze when presented with a challenge to a manufacturer's design. Conversely, we find the consumer expectations test and its focus on the consumer ill suited to determine whether a product's design is unreasonably dangerous.
The court reviewed prior cases in which there was an emphasis on showing a feasible alternative design in the context of a risk-utility analysis, including Claytor, Bragg, Kennedy v. Custom Ice Equip. Co., 271 S.C. 171, 176, 246 S.E.2d176, 178 (1978), Sunvillas Homeowners Ass'n v. Square D Co., 301 S.C. 330, 334, 391 S.E.2d 868, 870 (Ct. App. 1990), and Gasque v. Heublein , Inc., 281 S.C. 278, 283, 315 S.E.2d 556, 559 (Ct. App. 1984). [A review of feasible alternative design law preceding Branham v. Ford Motor Co. can be found here]. The Court noted as follows:
The very nature of feasible alternative design evidence entails the manufacturer's decision to employ one design over another. This weighing of costs and benefits attendant to that decision is the essence of the risk-utility test.
The Court then cited to the Restatement (Third) of Torts: Products Liability section 2(b) (1998) and University of South Carolina Professor David Owen's article Toward a Proper Test for Design Defectiveness: "Micro-Balancing" Costs and Benefits, 75 Tex. L. Rev. 1661, 1687 (1997) to support the risk-utility test and reasonable alternative design (as a requirement of same). The Court stated that the core of the risk-utility balancing test is whether a product was made safe enough, but cautioned that it also adhered to its longstanding principle that just because a product can be made safer does not mean that the product is defective and unreasonably dangerous.

Evidentiary Issues Justifying
Reversal and Remand for New Trial

Notwithstanding the sufficiency of the evidence to withstand a directed verdict on the handling and stability design defect claim, the Court reversed and remanded the case for a new trial, citing three reasons.

First, Ford was prejudiced by Plaintiff's unrelenting pursuit of post-distribution evidence on the issue of liability. The Court reviewed South Carolina's requirement that a plaintiff must show the product was in a defective condition "'at the time that it left the hands of the particular seller.'" (quoting Claytor v. Gen. Motors Corp., 277 S.C. 259, 264, 286 S.E.2d 129, 131-32 (1982). Post-distribution evidence is "evidence of facts neither known nor available at the time of distribution." The Court again cited to Restatement (Third) of Torts: Products Liability section 2, cmt. a (1998) to support that assessing liability in a products liability claim requires evaluation of a manufacturer's decision based on what was known or "reasonably attainable" at the time of manufacture.
The use of post-distribution evidence to evaluate a product's design through the lens of hindsight is improper.
The Court reviewed numerous examples of post-distribution evidence emphasized by Plaintiff at trial and through Dr. Richardson to support a higher rollover tendency of the Bronco II t(evidence hat came to light after manufacture). The Court found this evidence to be prejudicial and stated that "the law should encourage manufacturers to continue to improve their products in terms of utility and safety free from prior design decisions judged through the lens of hindsight."

Second, the trial court agreed that admission of certain post-distribution "other incident" evidence was prejudicial to Ford, but also ruled against Ford on certain pre-manufacture "other incident" evidence. The Court surveyed South Carolina's law that similar accidents are admissible if the tend to prove or disprove some fact in dispute. However, the Court noted that it need not even address whether certain post-distribution evidence admitted into evidence was "substantially similar." "The post-manufacture evidence of purported similar incidents was error, even if the 'substantially similar' threshold was met." The Court reiterated that post-manufacture evidence of similar incidents is not admissible to provide liability. The Court then reviewed the pre-manufacture rollover data introduced by Plaintiff with regard to the Bronco II and other vehicles in the same class. The Court disagreed with Ford's contention that the pre-manufacture comparative evidence of rollover accidents violated the "substantially similar" test articulated in Whaley v. CSX Transportation, Inc., 362 S.C. 456, 483, 609 S.E.2d 286, 300 (2005) and revisited in Watson v. Ford Motor Co., Op. No. 26786 (S.C. Sup. Ct. filed Mar. 15, 2010) (Shearouse Adv. Sh. No. 10 at 37). Even though there was no showing that the cause of the other accidents was similar to the Plaintiff's rollover accident, the Court found that the rate of rollover of the Bronco II compared to other vehicles was relevant to whether the Bronco II had an unreasonably dangerous tendency to rollover. The Court was not persuaded by Ford's arguments that many accidents may be attributable to inexperienced or impaired drivers, or that Hale's inattention was the cause of the accident.

Third, Plaintiff's counsel's closing argument was designed to inflame and prejudice the jury. The Court provided six different examples of excerpts from the closing argument that served as examples of its inflammatory and prejudicial content. The Court also noted that much of the argument was based on inadmissible evidence.

Next, in light of the remand for a new trial, (and without addressing whether it was prejudicial to Ford) the Court held that the trial court's requirement that jthe ury apportion liability between Ford and Hale on the verdict form was error. Because the accident occurred in 2001, Ford and Hale were joint tortfeasors, meaning that they were jointly and severably responsible for all damages. Therefore, there could be no apportionment of fault. The Court noted that that it had reaffirmed the applicability of joint and several liability among joint tortfeasors since adopting the doctrine of comparative negligence. The Court further rejected the trial court's rationale that the apportionment was necessary to ensure that any punitive damages award was based on negligence, and not strict liability (for which punitive damages are not recoverable, discussed here).

Excessiveness of Damages Issues Raised by Ford

Next, the Court addressed the jury's award of $16 million in actual damages and $15 million in punitive damages. In light of the remand for a new trial, the Court found it unnecessary to resolve Ford's claim that the actual damages award was grossly excessive.

With regard to punitive damages, the Court found that the issue was properly submitted to the jury, but agreed that the award could not withstand constitutional scrutiny. Because of the new trial, the Court addressed Plaintiff's reliance on "harm to others" in the closing argument. A central theme of the closing argument was that the jury should punish Ford for harming all Bronco II rollover victims. The trial court charged the jury not to punish Ford for other "conduct." The Court found that this charge violated the "harm to others" prohibition because by focusing on conduct, as opposed to harm to Plaintiff, the charge invited the jury to punish Ford for all Bronco rollover deaths and injuries, which is forbidden by Durham v. Vinson, 360 S.C. 639, 653, 602 S.E.2d 760, 767 (2004) and Philip Morris USA v. Williams, 549 U.S. 346, 350, 353 (2007).

With regard to financial data, the Court stated that South Carolina upholds that the wealth of a defendant is a relevant factor in assessing punitive damages. The Court reviewed Plaintiff counsel's focus on extrapolating financial data in such a manner so as to break it down in terms of daily income, hourly income, etc. Although prior opinions have not found abuse of discretion in the admission of per day earnings of a defendant, the Court believed that evidence of "net worth" appears to be the safest harbor and directed that the retrial be confined to such evidence. The Court also found that the Plaintiff's introduction Ford's senior management compensation (including salaries, bonuses, stock options, etc.) to be error and highly prejudicial.

Alignment of Parties

Finally, the Court addressed Ford's claim that the trial court should have realigned Hale as a plaintiff. Although the Court did not find that this issue was preserved for review, it addressed it "in the hope that our speaking to the matter will aid the bench and the bar." The Court reviewed the evidence at trial to support that Hale sat on the plaintiff's side during the trial and only cross examined one witness for Plaintiff (and the sole question to Plaintiff's economic expert was, "How many millions are in a billion?"). The Court concluded that the only bona fide defendant in the case was Ford. The Court reviewed Rule 21 of the South Carolina Rules of Civil Procedure and its federal counterpart, as well as federal and state authority interpreting them. From this review, the Court adopted the rule that trial court's have the authority to realign parties "at any state of the action." It is within the sound discretion of the trial court and will not be disturbged on appeal absent a showing of an abuse of discretion and resulting prejudice.

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