My article entitled "Products Liability Claims in South Carolina: What Exactly Does Essentially the Same Condition Mean?" has been published in the November edition of South Carolina Lawyer. You can find a copy of it here.
As you may recall, I did a series over the summer relating to this element of a South Carolina products liability claim (see parts I through V at this link). This article puts all of those posts together and provides more information. Check it out!
Tuesday, November 17, 2009
Monday, November 16, 2009
Case Brief: Taylor v. Nix
By Brian A. Comer
This case brief is of Taylor v. Nix, 307 S.C. 551, 416 S.E.2d 619 (1992). From a product liability standpoint, it is most significant for what it says about the admissibility of recall evidence, which it holds may be admissible to show that a defective condition existed at the time alleged by a plaintiff.
FACTUAL BACKGROUND: Plaintiffs Kathy and Glenn Taylor leased a Porsche from the defendants. 307 S.C. 553, 416 S.E.2d 620. They discovered multiple defects shortly after taking possession. Id. Ms. Taylor alleged headaches from fumes, that her child got a blister from touching the hot middle console in the front seat, and that her legs were reddened when she drove from their proximity to the console. Id. at 554, 416 S.E.2d at 620. They took the car to the dealer multiple times, and the dealer never did anything about the problems. Id. at 554-55, 316 S.E.2d at 620-21. Dealer representatives also treated them poorly (ignored their service requests, made off-color comments, and were generally not helpful). Id., 416 S.E.2d at 621.
PROCEDURE: Plaintiffs sued the lessor and manufacturer for breach of warranty, strict liability and violation of the Regulation of Manufacturers, Distributors and Dealers Act (the "Act"). 307 S.C. at 553, 416 S.E.2d at 620. A jury found that the defendants maliciously violated the Act and returned a verdict of $16,100 in actual damages and three times the actual damages (the maximum under the Act). Id. at 555, 416 S.E.2d at 621.
ISSUES: Defendants appealed multiple issues relating to the Act, the award of attorneys' fees, and admissibility of certain pieces of evidence. 307 S.C. at 553, 416 S.E.2d at 620.
DISPOSITION: The South Carolina Supreme Court affirmed the trial court decision. 307 S.C. at 558, 416 S.E.2d at 623.
RULES AND OPINION: The Act adequately provides notice of what conduct is prohibited under it, and it is not unconstitutionally vague. 307 S.C. at 555, 416 S.E.2d at 621. Though the trial court's charge as to the definition of "arbitrary" under the Act was erroneous, it was not prejudicial and the defendants were not harmed because of it. Id. at 555-56, 416 S.E.2d at 621. With regard to damages under the Act, the trial court charged that the jury should assess actual damages under the breach of warrranty and strict liability claims and then determine only if the defendants' conduct violated the statute. Id. at 556, 416 S.E.2d at 622. This was erroneous. Id. The jury should have been charged to determine what damage arose from the defendants' conduct which constituted a violation of the Act. Id. Even so, the defendants were not prejudiced because any actual damages suffered by the Plaintiffs resulted from the defendants' acts, which violated the Act. Id. There was also sufficient evidence to find "malice" by the defendants under the Act so as to justify treble damages. Id. at 556-57, 416 S.E.2d at 622.
Defendants also challenged the awarding of attorneys' fees by saying that the portion related to the non-statutory actions (breach of warranty and strict liability) should have been excluded from consideration. 307 S.C. at 557, 416 S.E.2d at 622. Though the appellate court agreed, the defendants' presentation to the lower court of what would have constituted reasonable fees was not adequate. Id. The party asserting the right to attorneys fees has to provide an itemized affidavit of their fees which they believe are related to the statutory claim. Id. The party opposing the fees has the burden of showing which of the fees are clearly unrelated. Id.
With regard to evidentiary issues, Ms. Taylor's notes itemizing malfunctions of the car were prepared prior to taking it for service, making them admissible as a witness's past recollection. 3-7 S.C. 557, 416 S.E.2d at 622. The court held that subsequent remedial measures, though inadmissible to show negligence, may be admissible for other purposes, such as showing that the defective condition existed at the time alleged. Id. at 558, 416 S.E.2d at 623. Therefore, the subsequent recall of the car due to overheating of the catalytic converter was admissible for this purpose. Id.
This post is subject to the DISCLAIMER & TERMS OF USE of this website.
This case brief is of Taylor v. Nix, 307 S.C. 551, 416 S.E.2d 619 (1992). From a product liability standpoint, it is most significant for what it says about the admissibility of recall evidence, which it holds may be admissible to show that a defective condition existed at the time alleged by a plaintiff.
FACTUAL BACKGROUND: Plaintiffs Kathy and Glenn Taylor leased a Porsche from the defendants. 307 S.C. 553, 416 S.E.2d 620. They discovered multiple defects shortly after taking possession. Id. Ms. Taylor alleged headaches from fumes, that her child got a blister from touching the hot middle console in the front seat, and that her legs were reddened when she drove from their proximity to the console. Id. at 554, 416 S.E.2d at 620. They took the car to the dealer multiple times, and the dealer never did anything about the problems. Id. at 554-55, 316 S.E.2d at 620-21. Dealer representatives also treated them poorly (ignored their service requests, made off-color comments, and were generally not helpful). Id., 416 S.E.2d at 621.
PROCEDURE: Plaintiffs sued the lessor and manufacturer for breach of warranty, strict liability and violation of the Regulation of Manufacturers, Distributors and Dealers Act (the "Act"). 307 S.C. at 553, 416 S.E.2d at 620. A jury found that the defendants maliciously violated the Act and returned a verdict of $16,100 in actual damages and three times the actual damages (the maximum under the Act). Id. at 555, 416 S.E.2d at 621.
ISSUES: Defendants appealed multiple issues relating to the Act, the award of attorneys' fees, and admissibility of certain pieces of evidence. 307 S.C. at 553, 416 S.E.2d at 620.
DISPOSITION: The South Carolina Supreme Court affirmed the trial court decision. 307 S.C. at 558, 416 S.E.2d at 623.
RULES AND OPINION: The Act adequately provides notice of what conduct is prohibited under it, and it is not unconstitutionally vague. 307 S.C. at 555, 416 S.E.2d at 621. Though the trial court's charge as to the definition of "arbitrary" under the Act was erroneous, it was not prejudicial and the defendants were not harmed because of it. Id. at 555-56, 416 S.E.2d at 621. With regard to damages under the Act, the trial court charged that the jury should assess actual damages under the breach of warrranty and strict liability claims and then determine only if the defendants' conduct violated the statute. Id. at 556, 416 S.E.2d at 622. This was erroneous. Id. The jury should have been charged to determine what damage arose from the defendants' conduct which constituted a violation of the Act. Id. Even so, the defendants were not prejudiced because any actual damages suffered by the Plaintiffs resulted from the defendants' acts, which violated the Act. Id. There was also sufficient evidence to find "malice" by the defendants under the Act so as to justify treble damages. Id. at 556-57, 416 S.E.2d at 622.
Defendants also challenged the awarding of attorneys' fees by saying that the portion related to the non-statutory actions (breach of warranty and strict liability) should have been excluded from consideration. 307 S.C. at 557, 416 S.E.2d at 622. Though the appellate court agreed, the defendants' presentation to the lower court of what would have constituted reasonable fees was not adequate. Id. The party asserting the right to attorneys fees has to provide an itemized affidavit of their fees which they believe are related to the statutory claim. Id. The party opposing the fees has the burden of showing which of the fees are clearly unrelated. Id.
With regard to evidentiary issues, Ms. Taylor's notes itemizing malfunctions of the car were prepared prior to taking it for service, making them admissible as a witness's past recollection. 3-7 S.C. 557, 416 S.E.2d at 622. The court held that subsequent remedial measures, though inadmissible to show negligence, may be admissible for other purposes, such as showing that the defective condition existed at the time alleged. Id. at 558, 416 S.E.2d at 623. Therefore, the subsequent recall of the car due to overheating of the catalytic converter was admissible for this purpose. Id.
This post is subject to the DISCLAIMER & TERMS OF USE of this website.
Monday, October 26, 2009
More on Eli Lilly Pharmaceutical Settlement
The State Newspaper included more details about the settlement between South Carolina and drug manufacturer Eli Lilly with regard to allegations of off-label marketing for the drug Zyprexa. The settlement was $45 million, which was the largest dollar amount any state has won from Eli Lilly, per the article cut and pasted below.
S.C., Lilly reach $45 million settlement
Drug company's payout sets record for state
By GINA SMITH - gnsmith@thestate.com
South Carolina reached a record $45 million settlement Friday with drug maker Eli Lilly over the marketing of an anti-psychotic drug, Zyprexa.
State lawmakers will have the final say on how 84 percent - or nearly $38 million of the money - is spent. The rest goes to the attorneys who represented the state and to the state attorney general's office.
The settlement is the second largest in state's history, behind only the 1998 multibillion-dollar Tobacco Master Settlement Agreement, according to the attorney's general's office.
It's also the largest dollar amount any state has won from Eli Lilly. Connecticut is second with its $30 million settlement.
"This is a victory for South Carolina's taxpayers who were forced to bear the financial costs of Eli Lilly's unlawful conduct," Attorney General Henry McMaster said Friday.
Eli Lilly spokeswoman Marni Lemons said Friday it's time to move on.
"We think that putting the issue behind us is not only in the best of interest of Eli Lilly, but also the patients and physicians who count on Zyprexa as a life-saving drug every day," Lemons said.
South Carolina and 44 other states have brought some action against the Indianapolis-based drug maker, claiming it falsely marketed Zyprexa, a drug approved for the treatment of schizophrenia and bipolar disorder only.
In the lawsuit, South Carolina sought to recover the millions of dollars Medicaid and the state health plan paid for the drug and to treat side effects caused by off-label use of the drug. The suit alleges nearly 64,000 S.C. patients were affected from 1996 to 2007.
South Carolina and other states successfully argued Eli Lilly:
- Did not properly warn of the drug's side effects, including heart problems, diabetes, hyperglycemia and an increased risk of death in patients with dementia
- Pushed doctors to prescribe the drug to treat other illnesses, including depression, attention deficit disorder and dementia
While 84 percent of South Carolina's settlement could go to reimburse the state's Medicaid and state health plan, state lawmakers have the final say.
POLITICAL COMPLICATIONS?
Under a unique retention agreement McMaster's office drafted in 2004, 15 percent, or nearly $7 million, will go to three attorneys hired by McMaster's office to represent South Carolina in the case. The attorneys' fees are the smallest in the nation, McMaster's office said.
And 1 percent, or about $647,000, will go to the attorney general's office.
Under the agreement, outside attorneys hired to do work for McMaster's office are paid between 4 percent and 23 percent of a judgment/settlement. The larger the award/settlement, the less the attorneys receive.
Then, attorneys must give 10 percent of their pay back to the attorney general's office.
"Ours is considered a model ... agreement," McMaster said, noting bills have been introduced in both the state Senate and House to require future S.C. attorneys general and solicitors to adopt the same agreement.
"We did copious research to come up with the best agreement based on what other states do," McMaster said. "It keeps complete control of the litigation with the (attorney general), who can relieve his (appointed attorneys) for any reason or no reason at all. It protects the interest of the state."
But the arrangement smells fishy to Darren McKinney of the American Tort Reform Association, a Washington D.C.-based nonprofit.
McMaster, who is running for governor, accepted campaign contributions from two of the attorneys he hired to help work on the Zyprexa case.
After being criticized by rival campaigns, McMaster returned the donations.
"If you're signing on with your buddies who agree to give you 10 percent off the top plus campaign contributions, that stinks on its face," McKinney said. "That's not in the public interest."
McMaster's office has said the appointment of the attorneys was based on their expertise with other drug cases - not friendships or promises of campaign contributions.
SEPARATION OF POWER?
Under the agreement, the attorney general's office will receive about $647,000 of the settlement.
Eli Lilly's attorneys unsuccessfully argued in court papers that only the General Assembly and the state Budget and Control Board can allocate state funds.
Attorney Dick Harpootlian, a key adviser to a rival gubernatorial candidate, said McMaster's agreement is not illegal, but is problematic.
"You want your prosecutors, your attorney general making decisions on what's best for the state of South Carolina, not what's best for their budget," Harpootlian said. "There's, in appearance, a constitutional problem with this. It almost puts a bounty on these cases. It puts him at a conflict of interest."
But McMaster's office points to various state laws that allow the office to keep the funds. McMaster said he would put the money into his general fund to be used to "prosecute more bad guys."
Reach Smith at (803) 771-8658.
This post is subject to the DISCLAIMER & TERMS OF USE of this website.
S.C., Lilly reach $45 million settlement
Drug company's payout sets record for state
By GINA SMITH - gnsmith@thestate.com
South Carolina reached a record $45 million settlement Friday with drug maker Eli Lilly over the marketing of an anti-psychotic drug, Zyprexa.
State lawmakers will have the final say on how 84 percent - or nearly $38 million of the money - is spent. The rest goes to the attorneys who represented the state and to the state attorney general's office.
The settlement is the second largest in state's history, behind only the 1998 multibillion-dollar Tobacco Master Settlement Agreement, according to the attorney's general's office.
It's also the largest dollar amount any state has won from Eli Lilly. Connecticut is second with its $30 million settlement.
"This is a victory for South Carolina's taxpayers who were forced to bear the financial costs of Eli Lilly's unlawful conduct," Attorney General Henry McMaster said Friday.
Eli Lilly spokeswoman Marni Lemons said Friday it's time to move on.
"We think that putting the issue behind us is not only in the best of interest of Eli Lilly, but also the patients and physicians who count on Zyprexa as a life-saving drug every day," Lemons said.
South Carolina and 44 other states have brought some action against the Indianapolis-based drug maker, claiming it falsely marketed Zyprexa, a drug approved for the treatment of schizophrenia and bipolar disorder only.
In the lawsuit, South Carolina sought to recover the millions of dollars Medicaid and the state health plan paid for the drug and to treat side effects caused by off-label use of the drug. The suit alleges nearly 64,000 S.C. patients were affected from 1996 to 2007.
South Carolina and other states successfully argued Eli Lilly:
- Did not properly warn of the drug's side effects, including heart problems, diabetes, hyperglycemia and an increased risk of death in patients with dementia
- Pushed doctors to prescribe the drug to treat other illnesses, including depression, attention deficit disorder and dementia
While 84 percent of South Carolina's settlement could go to reimburse the state's Medicaid and state health plan, state lawmakers have the final say.
POLITICAL COMPLICATIONS?
Under a unique retention agreement McMaster's office drafted in 2004, 15 percent, or nearly $7 million, will go to three attorneys hired by McMaster's office to represent South Carolina in the case. The attorneys' fees are the smallest in the nation, McMaster's office said.
And 1 percent, or about $647,000, will go to the attorney general's office.
Under the agreement, outside attorneys hired to do work for McMaster's office are paid between 4 percent and 23 percent of a judgment/settlement. The larger the award/settlement, the less the attorneys receive.
Then, attorneys must give 10 percent of their pay back to the attorney general's office.
"Ours is considered a model ... agreement," McMaster said, noting bills have been introduced in both the state Senate and House to require future S.C. attorneys general and solicitors to adopt the same agreement.
"We did copious research to come up with the best agreement based on what other states do," McMaster said. "It keeps complete control of the litigation with the (attorney general), who can relieve his (appointed attorneys) for any reason or no reason at all. It protects the interest of the state."
But the arrangement smells fishy to Darren McKinney of the American Tort Reform Association, a Washington D.C.-based nonprofit.
McMaster, who is running for governor, accepted campaign contributions from two of the attorneys he hired to help work on the Zyprexa case.
After being criticized by rival campaigns, McMaster returned the donations.
"If you're signing on with your buddies who agree to give you 10 percent off the top plus campaign contributions, that stinks on its face," McKinney said. "That's not in the public interest."
McMaster's office has said the appointment of the attorneys was based on their expertise with other drug cases - not friendships or promises of campaign contributions.
SEPARATION OF POWER?
Under the agreement, the attorney general's office will receive about $647,000 of the settlement.
Eli Lilly's attorneys unsuccessfully argued in court papers that only the General Assembly and the state Budget and Control Board can allocate state funds.
Attorney Dick Harpootlian, a key adviser to a rival gubernatorial candidate, said McMaster's agreement is not illegal, but is problematic.
"You want your prosecutors, your attorney general making decisions on what's best for the state of South Carolina, not what's best for their budget," Harpootlian said. "There's, in appearance, a constitutional problem with this. It almost puts a bounty on these cases. It puts him at a conflict of interest."
But McMaster's office points to various state laws that allow the office to keep the funds. McMaster said he would put the money into his general fund to be used to "prosecute more bad guys."
Reach Smith at (803) 771-8658.
This post is subject to the DISCLAIMER & TERMS OF USE of this website.
Monday, October 12, 2009
Case Brief: Duncan v. Ford Motor Company
By Brian A. Comer
At long last, here is the case brief for Ford v. Duncan. Sorry for the delay (and length...there is a lot to this case). I will circle back around and drop in citations once the case is published. In the meantime, you can find it here.
FACTUAL BACKGROUND: A fire, originating under the hood of Plaintiffs' 2000 Ford Expedition, destroyed Plaintiffs' home on March 1, 2005. Evidence was presented at trial that Ford had recalled two lines of vehicles because of under-hood fires (one in 1999, and one in 2005). Ford attributed the under-hood fires to a certain failure of the speed control deactivation switch (the "switch"), which was manufactured by Texas Instruments ("TI") and installed by Ford. One month after the 1999 recall, a group of scientists employed by Ford produced an internal document that analyzed causes of the fires and proposed solutions. Ford acknowledged in the report that it did not completely understand the cause of the fires, but the report identified a failure in the switch as a potential cause. Ford did not implement any of the report's proposed solutions and did not address the switch failure during the 1999 recall.
At trial, Ford's expert, Mark Hoffman, testified that Ford did not incorporate the proposed solutions because it determined the switch failure and subsequent fires were caused by manufacturing problems at TI. Mr. Hoffman testified that Ford ensured that TI resolved its manufacturing issues, and it replaced any switches that deviated from its specifications. Plaintiffs' expert Jeff Morrill testified that (1) the switch in Plaintiffs' vehicle was the same type of switch that was in the line of vehicles recalled in 1999, (2) the fire was caused by the same failure in the switch as the one that caused the failure in the 1999 recall, and (3) Ford knew of the switch failure before manufacturing Plaintiffs' vehicle, as evidenced by the 1999 recall and the internal report. Plaintiffs' then called their engineering expert Kendrick Richardson, who testified that Ford breached the engineering standard of care. Plaintiffs also offered a report by economist Oliver Wood relating to Ford's net worth and ability to pay a punitive damages award.
PROCEDURE: Plaintiffs brought suit against Defendant Ford. The jury returned a verdict in Plaintiffs' favor, awarding them $620,759.79 in actual damages, reduced to $589,721.80 in proportion to Plaintiffs' comparative fault, and $3 million in punitive damages. Ford appealed the verdict.
ISSUES: Ford's arguments on appeal related to the trial court's admission of certain evidence and the jury's award of punitive damages.
RULES AND OPINION: With regard to Ford's evidentiary arguments, the South Carolina Court of Appeals found as follows:
(1) Plaintiffs' expert Jeff Morrill testified within his area of expertise (i.e., the cause and origin of the fire), and he never offered any design opinions. Morrill's testimony about the switch failure was not that it was defectively designed, but that it was the cause of the fire. Furthermore, he relied on the internal report to provide this opinion, and therefore he could testify about it (despite not having firsthand knowledge of the report, and despite not having worked at Ford).
(2) The trial court did not abuse its discretion by allowing Plaintiffs' expert Kendrick Richardson to respond to the hypothetical question of whether Ford breached its engineering standard of care, based on Morrill's conclusions. As stated before, Morrill was qualified to offer his testimony. Plaintiffs' posing of this question to Richardson at trial was not misleading--even though it omitted the manufacturing problems at TI--because it was based on Morrill's testimony and the internal report, neither of which referred to manufacturing issues at TI.
(3) The trial court did not err in preventing Ford from asking Morrill and Richardson who manufactured the switch and why Ford decided to recall the line of vehicles in 1999. "A manufacturer who incorporates into his product a component made by another has a responsibility to test and inspect such components, and his negligent failure to properly perform such duty renders him liable for injuries proximately caused as a consequence." (citing Nelson v. Coleman Co., 249 S.C. 652, 657, 155 S.E.2d 917, 920 (1967)). Because Ford incorporated the switch manufactured by TI, it was legally responsible for it in the event that it failed and caused damage. For this reason, the fact that TI made the switch was irrelevant. In addition, Ford produced no evidence that its 1999 recall was prompted by manufacturing problems at TI. Even if the trial court committed error in precluding this line of questioning, Ford was not prejudiced.
(4) The trial court did not abuse its discretion by allowing the 1999 recall into evidence. The evidence indicated that the under-hood fires that prompted the 1999 recall of the other line of Ford vehicles were substantially similar to the under-hood fires in the Plaintiffs' Expedition. (Citing Whaley v. CSX Transp., Inc. 362 S.C. 356, 483, 609 S.E.2d 286, 300 (2005) (noting other incidents must be substantially similar to be relevant and admissible in a products liability action)).
(5) The court did not find error with regard to submission of Plaintiff Anna Duncan's claim for emotional distress to the jury in the absence of expert testimony. The jury verdict of $620,759.79 was less than the evidence of actual damages presented at trial (exclusive of the claim for emotional distress), and therefore the verdict should not be disturbed on appeal. (Citing Burns v. Universal Health Servs., Inc., 361 S.C. 221, 232, 603 S.E.2d 605, 611 (Ct. App. 2004)).
(6) The trial court did not abuse its discretion by excluding Jack Threadgill's appraisal of Plaintiffs' home from evidence. Ford sought to introduce the document to show the value Threadgill assigned to Plaintiff's home, and the business records exception does not allow subjective opinions within documents to be introduced into evidence. (Citing S.C. R. Evid. 803(6)). Threadgill's appraisal was a subjective opinion.
With regard to Ford's punitive damages arguments, the South Carolina Court of Appeals found as follows:
(1) The court upheld that clear and convincing evidence concerning Ford's conduct supported the jury's award of punitive damages. As stated by the court:
(2) The court did not believe that the evidence or the arguments in the case required that the trial court charge the jury "not to consider conduct occurring outside of South Carolina or harm to non-parties when decideing whether to award punitive damages." The Due Process Clause requires this charge only when there is a risk that a jury may award punitives for conduct occurring outside the state for harm to non-parties. The recalls introduced into evidence by the plaintiffs were introduced for notice and to show that a prior recall was due to the same type of failure. Plaintiffs introduced evidence to show the reprehensible nature of Ford's conduct, and not to show the number of vehicles recalled or the number of under-hood fires.
(3) The court disagreed that Oliver Wood's expert testimony about Ford's general wealth and ability to pay a punitive damages award was inadmissible. The court cited to prior authority in which testimony beyond a defendant's mere net worth was allowed to establish the defendant's ability to pay a punitive damages award. The court also stated that Dr. Wood's testimony allowed the jury to follow the court's instructions and "punish the defendant but not effect bankruptcy."
(4) The court reviewed the procedural and substantive constitutional limitations on the award of punitive damages as set forth in BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 562 (1996). With regard to reprehensibility of conduct, the court noted that the damage was economic (destruction of the house), as opposed to physical, which weighed in Ford's favor. However, in spite of this, the court found that Ford's conduct was reprehensible because:
At long last, here is the case brief for Ford v. Duncan. Sorry for the delay (and length...there is a lot to this case). I will circle back around and drop in citations once the case is published. In the meantime, you can find it here.
FACTUAL BACKGROUND: A fire, originating under the hood of Plaintiffs' 2000 Ford Expedition, destroyed Plaintiffs' home on March 1, 2005. Evidence was presented at trial that Ford had recalled two lines of vehicles because of under-hood fires (one in 1999, and one in 2005). Ford attributed the under-hood fires to a certain failure of the speed control deactivation switch (the "switch"), which was manufactured by Texas Instruments ("TI") and installed by Ford. One month after the 1999 recall, a group of scientists employed by Ford produced an internal document that analyzed causes of the fires and proposed solutions. Ford acknowledged in the report that it did not completely understand the cause of the fires, but the report identified a failure in the switch as a potential cause. Ford did not implement any of the report's proposed solutions and did not address the switch failure during the 1999 recall.
At trial, Ford's expert, Mark Hoffman, testified that Ford did not incorporate the proposed solutions because it determined the switch failure and subsequent fires were caused by manufacturing problems at TI. Mr. Hoffman testified that Ford ensured that TI resolved its manufacturing issues, and it replaced any switches that deviated from its specifications. Plaintiffs' expert Jeff Morrill testified that (1) the switch in Plaintiffs' vehicle was the same type of switch that was in the line of vehicles recalled in 1999, (2) the fire was caused by the same failure in the switch as the one that caused the failure in the 1999 recall, and (3) Ford knew of the switch failure before manufacturing Plaintiffs' vehicle, as evidenced by the 1999 recall and the internal report. Plaintiffs' then called their engineering expert Kendrick Richardson, who testified that Ford breached the engineering standard of care. Plaintiffs also offered a report by economist Oliver Wood relating to Ford's net worth and ability to pay a punitive damages award.
PROCEDURE: Plaintiffs brought suit against Defendant Ford. The jury returned a verdict in Plaintiffs' favor, awarding them $620,759.79 in actual damages, reduced to $589,721.80 in proportion to Plaintiffs' comparative fault, and $3 million in punitive damages. Ford appealed the verdict.
ISSUES: Ford's arguments on appeal related to the trial court's admission of certain evidence and the jury's award of punitive damages.
- With regard to the admission of evidence, Ford argued that the trial court (1) erred by allowing Plaintiffs' expert Jeff Morrill to present design opinions; (2) erred by allowing Plaintiffs to ask Plaintiffs' expert Kendrick Richardson whether Ford breached its engineering standard of care based on Mr. Morrill's conclusions; (3) erred by preventing Ford from asking Plaintiffs' experts, Morrill and Richards, who manufactured the switch and why Ford decided to recall the line of vehicles in 1999; (4) erred by admitting the 19999 recall of the line of vehicles into evidence; (5) erred by submitting Plaintiff Anna Duncan's claim for emotional distress to the jury in the absence of expert testimon; and (6) abused its discretion by not admitting Jack Threadgill's appraisal of the Plaintiffs home into evidence because it qualified as a business record.
- Ford contended that the jury's award of punitive damages should be reversed because (1) Ford's conduct did not rise to the level of reckless, willful, or wanton conduct, and (2) the trial court should have instructed the jury not to consider conduct occurring outside of South Carolina or harm to non-parties when deciding whether to award punitive damages, (3) the trial court should not have allowed economist Oliver Wood to testify because his testimony invited the jury to return an award of punitive damages against it based solely on its financial well-being, and (4) Ford's conduct satisfied the guideposts set forth in BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996).
RULES AND OPINION: With regard to Ford's evidentiary arguments, the South Carolina Court of Appeals found as follows:
(1) Plaintiffs' expert Jeff Morrill testified within his area of expertise (i.e., the cause and origin of the fire), and he never offered any design opinions. Morrill's testimony about the switch failure was not that it was defectively designed, but that it was the cause of the fire. Furthermore, he relied on the internal report to provide this opinion, and therefore he could testify about it (despite not having firsthand knowledge of the report, and despite not having worked at Ford).
(2) The trial court did not abuse its discretion by allowing Plaintiffs' expert Kendrick Richardson to respond to the hypothetical question of whether Ford breached its engineering standard of care, based on Morrill's conclusions. As stated before, Morrill was qualified to offer his testimony. Plaintiffs' posing of this question to Richardson at trial was not misleading--even though it omitted the manufacturing problems at TI--because it was based on Morrill's testimony and the internal report, neither of which referred to manufacturing issues at TI.
(3) The trial court did not err in preventing Ford from asking Morrill and Richardson who manufactured the switch and why Ford decided to recall the line of vehicles in 1999. "A manufacturer who incorporates into his product a component made by another has a responsibility to test and inspect such components, and his negligent failure to properly perform such duty renders him liable for injuries proximately caused as a consequence." (citing Nelson v. Coleman Co., 249 S.C. 652, 657, 155 S.E.2d 917, 920 (1967)). Because Ford incorporated the switch manufactured by TI, it was legally responsible for it in the event that it failed and caused damage. For this reason, the fact that TI made the switch was irrelevant. In addition, Ford produced no evidence that its 1999 recall was prompted by manufacturing problems at TI. Even if the trial court committed error in precluding this line of questioning, Ford was not prejudiced.
(4) The trial court did not abuse its discretion by allowing the 1999 recall into evidence. The evidence indicated that the under-hood fires that prompted the 1999 recall of the other line of Ford vehicles were substantially similar to the under-hood fires in the Plaintiffs' Expedition. (Citing Whaley v. CSX Transp., Inc. 362 S.C. 356, 483, 609 S.E.2d 286, 300 (2005) (noting other incidents must be substantially similar to be relevant and admissible in a products liability action)).
(5) The court did not find error with regard to submission of Plaintiff Anna Duncan's claim for emotional distress to the jury in the absence of expert testimony. The jury verdict of $620,759.79 was less than the evidence of actual damages presented at trial (exclusive of the claim for emotional distress), and therefore the verdict should not be disturbed on appeal. (Citing Burns v. Universal Health Servs., Inc., 361 S.C. 221, 232, 603 S.E.2d 605, 611 (Ct. App. 2004)).
(6) The trial court did not abuse its discretion by excluding Jack Threadgill's appraisal of Plaintiffs' home from evidence. Ford sought to introduce the document to show the value Threadgill assigned to Plaintiff's home, and the business records exception does not allow subjective opinions within documents to be introduced into evidence. (Citing S.C. R. Evid. 803(6)). Threadgill's appraisal was a subjective opinion.
With regard to Ford's punitive damages arguments, the South Carolina Court of Appeals found as follows:
(1) The court upheld that clear and convincing evidence concerning Ford's conduct supported the jury's award of punitive damages. As stated by the court:
Under South Carolina law, punitive damages may be awarded to punish torfeasors who have acted in a "reckless, willful, or wanton" manner. The plaintiff must prove punitive damages by clear and convincing evidence. Clear and convincing evidence is: "that degree of proof which will produce in the mind of the trier of facts a firm belief as to the allegations sought to be established." The clear and convincing standard is the highest burden of proof known to civil law.(Citations omitted). Based on this standard, the court found that Ford knew that the switch it installed could fail and that the failures were causing fires before its manufacture of Plaintiffs' vehicle. Ford's knowledge and failure to make any changes to the switch rose to the level of reckless, willful, and wanton conduct.
(2) The court did not believe that the evidence or the arguments in the case required that the trial court charge the jury "not to consider conduct occurring outside of South Carolina or harm to non-parties when decideing whether to award punitive damages." The Due Process Clause requires this charge only when there is a risk that a jury may award punitives for conduct occurring outside the state for harm to non-parties. The recalls introduced into evidence by the plaintiffs were introduced for notice and to show that a prior recall was due to the same type of failure. Plaintiffs introduced evidence to show the reprehensible nature of Ford's conduct, and not to show the number of vehicles recalled or the number of under-hood fires.
(3) The court disagreed that Oliver Wood's expert testimony about Ford's general wealth and ability to pay a punitive damages award was inadmissible. The court cited to prior authority in which testimony beyond a defendant's mere net worth was allowed to establish the defendant's ability to pay a punitive damages award. The court also stated that Dr. Wood's testimony allowed the jury to follow the court's instructions and "punish the defendant but not effect bankruptcy."
(4) The court reviewed the procedural and substantive constitutional limitations on the award of punitive damages as set forth in BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 562 (1996). With regard to reprehensibility of conduct, the court noted that the damage was economic (destruction of the house), as opposed to physical, which weighed in Ford's favor. However, in spite of this, the court found that Ford's conduct was reprehensible because:
In short, Ford installed a switch into the [Plaintiffs'] Expedition that it knew could cause fires. This conduct clearly amounts to a reckless disregard for the health and safety of others. . . . While Ford's conduct did not rise to the level of intentional malice, trickery, or deceit, Ford's act of installing a switch in the [Plaintiffs'] Expedition that it knew could cause fires amounts to affirmative misconduct.
The court also found the award to be reasonable (with regard to Gore's second factor). The economic harm, combined with the threat of serious physical injury, made the punitive damages award that was 5.087 times the actual damages reasonable. Finally, in examining Gore's third factor regarding comparable civil fines, the court found that the jury's award of three million dollars in punitive damages was not unconstitutionally excessive.
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Thursday, October 8, 2009
Settlement in Pharmaceutical Case
The action brought by Attorney General Henry McMaster against drug manufacturer Eli Lilly has reportedly settled. The below appeared in today's issue of The State newspaper. This lawsuit related to alleged off-label promotion of the drug Zyprexa.
Settlement reportedly reached in Lilly case
Drug maker Eli Lilly & Co. has agreed to settle a lawsuit brought by state Attorney General Henry McMaster on behalf of South Carolina.
Sources close to the case say a settlement has been reached but the details, including how much money South Carolina will receive, are not yet available.
South Carolina sued Eli Lilly in 2007, alleging the company marketed its anti-psychotic medication, Zyprexa, for off-label purposes and failed to disclose side effects including weight gain.
The drug is only approved to treat schizophrenia and bipolar disorder.
South Carolina had hoped to recoup $200 million in its lawsuit that it said was wrongfully spent on Zyprexa prescriptions and millions of dollars more in fines.
The company has already agreed to pay more than $360 million to more than 30 states following a U.S. Justice Department investigation into its marketing practices.
The lawsuit has also brought some controversy to S.C. Attorney General Henry McMaster who is also seeking the Republican nomination in next year's gubernatorial race. McMaster accepted campaign donations from the two private attorneys he hired to represent South Carolina in the Lilly case.
McMaster has since returned nearly $33,000 in donations he has received during his time in office from attorneys he has hired to work on cases for the state.
- Gina Smith
This post is subject to the DISCLAIMER & TERMS OF USE of this website.
Settlement reportedly reached in Lilly case
Drug maker Eli Lilly & Co. has agreed to settle a lawsuit brought by state Attorney General Henry McMaster on behalf of South Carolina.
Sources close to the case say a settlement has been reached but the details, including how much money South Carolina will receive, are not yet available.
South Carolina sued Eli Lilly in 2007, alleging the company marketed its anti-psychotic medication, Zyprexa, for off-label purposes and failed to disclose side effects including weight gain.
The drug is only approved to treat schizophrenia and bipolar disorder.
South Carolina had hoped to recoup $200 million in its lawsuit that it said was wrongfully spent on Zyprexa prescriptions and millions of dollars more in fines.
The company has already agreed to pay more than $360 million to more than 30 states following a U.S. Justice Department investigation into its marketing practices.
The lawsuit has also brought some controversy to S.C. Attorney General Henry McMaster who is also seeking the Republican nomination in next year's gubernatorial race. McMaster accepted campaign donations from the two private attorneys he hired to represent South Carolina in the Lilly case.
McMaster has since returned nearly $33,000 in donations he has received during his time in office from attorneys he has hired to work on cases for the state.
- Gina Smith
This post is subject to the DISCLAIMER & TERMS OF USE of this website.
Wednesday, September 30, 2009
Medical Device Review Under Scrutiny
Though not specific to South Carolina, I have been reading recently about how the FDA is planning to take a closer look at its 510K review process for medical devices. This is the abbreviated process for obtaining medical device approval. There is a good article in the Wall Street Journal today summarizing what is going on, and if you do medical device work, this should be of interest.
FIRMS WARN OF DELAYS FROM FDA SCRUTINY
(September 30, 2009 edition of the Wall Street Journal)
By ALICIA MUNDY
Medical-device makers including Johnson & Johnson are warning of delays in device approvals after the Food and Drug Administration announced a major review of the process that has allowed quick clearance for thousands of products.
An internal FDA memo suggests that the tightening of the abbreviated process known as 510k is beginning already, before the review has been completed.
"It's Autumn, and change is in the air. This is particularly true for our 510k program," said Donna-Bea Tillman, head of the device evaluation office, in an email to her staff late Friday that was reviewed by The Wall Street Journal.
Dr. Tillman said in the memo that she needed to "get a better lay of the land" and called on branch chiefs to inform her when they were asked to clear a new "indication" or use "that you have never cleared for that device type." FDA reviewers typically don't run such individual applications by an official at Dr. Tillman's level, according to two FDA scientists.
Dr. Tillman didn't respond to requests for comment. The FDA said in a statement that her memo "reflects and is a furtherance of [FDA head Peggy Hamburg's] new direction."
The FDA's action came after it found "definite threats" to the integrity of its approvals in the case of a knee device approved last year that was the target of intensive lobbying by Democratic politicians. Dr. Tillman's role in the approval was critiqued in the FDA report on the episode.
The FDA has also commissioned an outside group to look into the issue.
The reviews "could have an impact now, in that they may lead FDA reviewers to be more conservative or more cautious in 510k reviews," said Jeffrey Gibbs, a Washington lawyer who advises device makers on FDA issues. "It's a very nervous time for the device industry."
A Johnson & Johnson spokeswoman defended the current 510k process, which streamlines clearance for products deemed "substantially equivalent" to devices already on the market. Carol Goodrich said the process "builds on ever-expanding knowledge" and accelerates innovation. Requiring more evidence for approval through the 510k process "would raise development costs substantially while also creating barriers to market entry that would reduce competition," she said.
At J&J, about $23 billion of the company's $64 billion in world-wide sales in 2008 came from the medical devices and diagnostic equipment division.
The FDA's Dr. Tillman said in her memo that the agency has set up a working group on 510k matters in her unit, and she called for extra scrutiny of certain applications.
She said the new scrutiny is "just the first of what I am sure will be many things that we will be doing to strengthen the 510k and all of our other programs in the months ahead."
The FDA's moves came in the wake of other potentially bad news for the industry in Washington. Leading Democrats have included a tax on device makers in health-overhaul legislation that would raise $40 billion over 10 years. Companies are fighting on Capitol Hill to stop or reduce those taxes.
Companies have valued the 510k process because it doesn't normally require lengthy clinical trials, allowing them to get their products to market sooner. Some members of Congress and some FDA device reviewers say the process is used too often for complex products that need more testing for safety and efficacy.
The Advanced Medical Technology Association, the industry's lobbying group, has met with members to discuss how to get their concerns reflected in the reviews at the FDA.
The association's executive vice president, David Exon, said the industry supports the reviews and is open to changes, so long as the "standards are reasonable and applied with consistency and transparency."
But Mr. Exon said he fears the multiple reviews could have a "chilling effect now" on FDA staff.—Nomaan Merchant contributed to this article.
Write to Alicia Mundy at alicia.mundy@wsj.com
FIRMS WARN OF DELAYS FROM FDA SCRUTINY
(September 30, 2009 edition of the Wall Street Journal)
By ALICIA MUNDY
Medical-device makers including Johnson & Johnson are warning of delays in device approvals after the Food and Drug Administration announced a major review of the process that has allowed quick clearance for thousands of products.
An internal FDA memo suggests that the tightening of the abbreviated process known as 510k is beginning already, before the review has been completed.
"It's Autumn, and change is in the air. This is particularly true for our 510k program," said Donna-Bea Tillman, head of the device evaluation office, in an email to her staff late Friday that was reviewed by The Wall Street Journal.
Dr. Tillman said in the memo that she needed to "get a better lay of the land" and called on branch chiefs to inform her when they were asked to clear a new "indication" or use "that you have never cleared for that device type." FDA reviewers typically don't run such individual applications by an official at Dr. Tillman's level, according to two FDA scientists.
Dr. Tillman didn't respond to requests for comment. The FDA said in a statement that her memo "reflects and is a furtherance of [FDA head Peggy Hamburg's] new direction."
The FDA's action came after it found "definite threats" to the integrity of its approvals in the case of a knee device approved last year that was the target of intensive lobbying by Democratic politicians. Dr. Tillman's role in the approval was critiqued in the FDA report on the episode.
The FDA has also commissioned an outside group to look into the issue.
The reviews "could have an impact now, in that they may lead FDA reviewers to be more conservative or more cautious in 510k reviews," said Jeffrey Gibbs, a Washington lawyer who advises device makers on FDA issues. "It's a very nervous time for the device industry."
A Johnson & Johnson spokeswoman defended the current 510k process, which streamlines clearance for products deemed "substantially equivalent" to devices already on the market. Carol Goodrich said the process "builds on ever-expanding knowledge" and accelerates innovation. Requiring more evidence for approval through the 510k process "would raise development costs substantially while also creating barriers to market entry that would reduce competition," she said.
At J&J, about $23 billion of the company's $64 billion in world-wide sales in 2008 came from the medical devices and diagnostic equipment division.
The FDA's Dr. Tillman said in her memo that the agency has set up a working group on 510k matters in her unit, and she called for extra scrutiny of certain applications.
She said the new scrutiny is "just the first of what I am sure will be many things that we will be doing to strengthen the 510k and all of our other programs in the months ahead."
The FDA's moves came in the wake of other potentially bad news for the industry in Washington. Leading Democrats have included a tax on device makers in health-overhaul legislation that would raise $40 billion over 10 years. Companies are fighting on Capitol Hill to stop or reduce those taxes.
Companies have valued the 510k process because it doesn't normally require lengthy clinical trials, allowing them to get their products to market sooner. Some members of Congress and some FDA device reviewers say the process is used too often for complex products that need more testing for safety and efficacy.
The Advanced Medical Technology Association, the industry's lobbying group, has met with members to discuss how to get their concerns reflected in the reviews at the FDA.
The association's executive vice president, David Exon, said the industry supports the reviews and is open to changes, so long as the "standards are reasonable and applied with consistency and transparency."
But Mr. Exon said he fears the multiple reviews could have a "chilling effect now" on FDA staff.—Nomaan Merchant contributed to this article.
Write to Alicia Mundy at alicia.mundy@wsj.com
Friday, September 25, 2009
Another Punitive Damages Case
The South Carolina Supreme Court decided Mitchell v. Fortis Insurance on September 14, 2009. This is another punitive damages case, coming shortly after Duncan v. Ford, so there has been quite a bit of activity on the punitive damages front here lately. A copy of the case can be found here. Also, my friend and colleague, Christian Stegmaier, has posted some good summary material on his blog concerning retail and hospitality law. You can find his post here.
In a nutshell, the decision seems to show a greater reliance on the punitive damages standards set forth in the United States Supreme Court decision of BMW of North America v. Gore, 517 U.S. 559 (1996). Though the court reduced the punitive damages award, it upheld an award toward outer limits of the single-digit ratio. At trial, plaintiffs had received $36,000 in actual damages for breach of contract, $150,000 in actual damages for the bad faith rescission claim, and $15 million in punitive damages from the bad faith claim. On appeal, the South Carolina Supreme Court reduced the punitive damages to $10 million.
An article about it appeared in the State here, and it is cut and pasted below.
SC man gets $10M after health insurance rejection
By JEFFREY COLLINS - Associated Press Writer
COLUMBIA, S.C. -- The South Carolina Supreme Court on Monday upheld a multimillion verdict against an insurer who the justices said revoked a man's health policy after he tested positive for HIV based solely on a nurse writing down the wrong year for the test.
The court in this conservative, often pro-business state called Fortis Insurance Company's actions "highly reprehensible," but did reduce punitive damages awarded to Jerome Mitchell Jr. from $15 million to $10 million.
Mitchell first found out he might have HIV when he tried to donate blood in April 2002. The Red Cross let him know his sample tested positive, and a trip to his personal physician confirmed the diagnosis.
Fortis said it revoked Mitchell's policy because he didn't reveal his diagnosis when he applied for insurance in May 2001 as the then 17-year-old from Florence prepared to head to college and could no longer be covered under his mother's policy. The company cited a note made by a nurse on Mitchell's chart that incorrectly gave the wrong year for the test confirming the HIV diagnosis, placing it one day before Mitchell's application for insurance, according to court records.
The committee that decides whether to revoke policies heard Mitchell's case and 45 others in a two-hour session. Court records showed the members were given a report from an underwriter that included the note: "Technically, we do not have the results of the HIV test. This is the only entry in the medical records regarding HIV status. Is it sufficient?"
Mitchell would later hire a lawyer who sent the company the original test results with the correct date. But a second committee also upheld revoking the insurance and Mitchell didn't have coverage for 20 months before Fortis changed its mind, according to trial testimony.
The company's "conduct involved repeated acts of deliberate indifference for more than two years," the justices wrote in their decision.
A phone listing for Mitchell could not be found, and his attorneys didn't return a phone call seeking comment. A spokesman for Fortis, which now does business as Assurant Health, said the company doesn't comment on pending lawsuits.
Fortis had appealed the case, saying the trial judge allowed improper evidence, the jury ruled on passion instead of the law and the $15 million in punitive damages was too much. The justices only budged on the damages, saying awarding Mitchell nearly 14 times the approximately $1.1 million it will cost to treat him during his life was excessive.
The justices also ruled the trial judge was correct to allow jurors to consider the value of the care Mitchell got at the free clinic when it considered how much money to give him.
This post is subject to the DISCLAIMER & TERMS OF USE of this website.
In a nutshell, the decision seems to show a greater reliance on the punitive damages standards set forth in the United States Supreme Court decision of BMW of North America v. Gore, 517 U.S. 559 (1996). Though the court reduced the punitive damages award, it upheld an award toward outer limits of the single-digit ratio. At trial, plaintiffs had received $36,000 in actual damages for breach of contract, $150,000 in actual damages for the bad faith rescission claim, and $15 million in punitive damages from the bad faith claim. On appeal, the South Carolina Supreme Court reduced the punitive damages to $10 million.
An article about it appeared in the State here, and it is cut and pasted below.
SC man gets $10M after health insurance rejection
By JEFFREY COLLINS - Associated Press Writer
COLUMBIA, S.C. -- The South Carolina Supreme Court on Monday upheld a multimillion verdict against an insurer who the justices said revoked a man's health policy after he tested positive for HIV based solely on a nurse writing down the wrong year for the test.
The court in this conservative, often pro-business state called Fortis Insurance Company's actions "highly reprehensible," but did reduce punitive damages awarded to Jerome Mitchell Jr. from $15 million to $10 million.
Mitchell first found out he might have HIV when he tried to donate blood in April 2002. The Red Cross let him know his sample tested positive, and a trip to his personal physician confirmed the diagnosis.
Fortis said it revoked Mitchell's policy because he didn't reveal his diagnosis when he applied for insurance in May 2001 as the then 17-year-old from Florence prepared to head to college and could no longer be covered under his mother's policy. The company cited a note made by a nurse on Mitchell's chart that incorrectly gave the wrong year for the test confirming the HIV diagnosis, placing it one day before Mitchell's application for insurance, according to court records.
The committee that decides whether to revoke policies heard Mitchell's case and 45 others in a two-hour session. Court records showed the members were given a report from an underwriter that included the note: "Technically, we do not have the results of the HIV test. This is the only entry in the medical records regarding HIV status. Is it sufficient?"
Mitchell would later hire a lawyer who sent the company the original test results with the correct date. But a second committee also upheld revoking the insurance and Mitchell didn't have coverage for 20 months before Fortis changed its mind, according to trial testimony.
The company's "conduct involved repeated acts of deliberate indifference for more than two years," the justices wrote in their decision.
A phone listing for Mitchell could not be found, and his attorneys didn't return a phone call seeking comment. A spokesman for Fortis, which now does business as Assurant Health, said the company doesn't comment on pending lawsuits.
Fortis had appealed the case, saying the trial judge allowed improper evidence, the jury ruled on passion instead of the law and the $15 million in punitive damages was too much. The justices only budged on the damages, saying awarding Mitchell nearly 14 times the approximately $1.1 million it will cost to treat him during his life was excessive.
The justices also ruled the trial judge was correct to allow jurors to consider the value of the care Mitchell got at the free clinic when it considered how much money to give him.
This post is subject to the DISCLAIMER & TERMS OF USE of this website.
Tuesday, September 1, 2009
Update
My apologies for not posting a brief of Ford v. Duncan, as per my last post below. I am two-thirds of the way through briefing this lengthy (and "meaty") opinion, but my wife and I recently welcomed a new baby into the world, so my blog has been somewhat on hold.
I have been trying to average about one post per week, but things have been a bit hectic as of late with settling into a new firm and a new baby. I hope to have a full brief of the case up soon. Thanks for your patience, and I hope that you will continue checking in on the blog.
As I have requested in the past, if anyone has any news that is not posted, suggestions or other feedback, I welcome your comments.
I have been trying to average about one post per week, but things have been a bit hectic as of late with settling into a new firm and a new baby. I hope to have a full brief of the case up soon. Thanks for your patience, and I hope that you will continue checking in on the blog.
As I have requested in the past, if anyone has any news that is not posted, suggestions or other feedback, I welcome your comments.
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