Case Brief: Nelson v. Coleman Co.

Today's case brief is Nelson v. Coleman Co., Inc., 249 S.C. 652, 155 S.E.2d 917 (Ct. App. 1967). This case involves a floor furnace and outlines a manufacturer's duty to test and inspect components in its products. It also discusses circumstantial evidence in a negligence case and the consequences of a defendant's failure to present its own evidence in response to a plaintiff's case. Specifically, although the decision admits that South Carolina does not recognize the Res Ipsa Loquitor doctrine, if a plaintiff is injured and provides circumstantial evidence to explain the cause of the injury, then a defendant proceeds at his own peril by not responding.

FACTUAL BACKGROUND: Plaintiff Homeowner purchased an oil burning floor furnace from Defendant Manufacturer through Defendant's authorized dealer. 249 S.C. at 655, 155 S.E.2d at 919. The dealer installed the furnace, and sixteen hours later, it emitted sparks and flames and destroyed the house and its contents. Id.

PROCEDURE: Plaintiff sued Defendant on negligence grounds. 249 S.C. at 655, 155 S.E.2d at 919. At trial, Defendant moved for nonsuit and directed verdict at the conclusion of Plaintiff's case, and without offering testimony or evidence of its own. Id. at 656, 155 S.E.2d at 919. The motions were denied, and the jury returned a verdict for Plaintiff. Id. Defendant moved for a judgment notwithstanding the verdict or a new trial, and both motions were denied. Id. Defendant appealed the denial of its motions by the trial court.

ISSUES: Defendant raised various different evidentiary and legal rulings as the basis for the appeal, including whether there was sufficient evidence of negligence and damages.

DISPOSITION: The South Carolina Supreme Court affirmed the rulings of the trial court. 249 S.C. at 662, 155 S.E.2d at 922.

RULES AND OPINION: The furnace was delivered from Defendant and installed at Plaintiff's residence without any changes to its condition. 249 S.C. at 655, 155 S.E.2d at 919. Plaintiff offered expert testimony that the fire was caused by a malfunctioning of the fuel regulator, which allowed oil to go into the burner and overflow and burn outside the furnace. Id. at 656, 155 S.E.2d at 919. Plaintiff's expert further testified that the defect in the fuel regulator was not apparent and could only be detected by testing conducted before shipping of the product. Id. at 657, 155 S.E.2d at 920. Defendant contended that the fuel regulator was manufactured by a third-party. Id. Although it was a component to Defendant's product, Defendant contended that it had no duty to test and inspect the component. Id. Even if it had a duty, Defendant contended there was no evidence that it failed to fulfill this duty. Id. The court stated the applicable law as follows:

It is generally held that a manufacturer who incorporates into his product a component made by another has a responsibility to test and inspect such component, and that his negligent failure properly to perform such duty renders him liable for injuries proximately caused thereby.

Id. In this context, the court believed that Plaintiff had provided sufficient circumstantial evidence to support that the fire was caused by the malfunctioning fuel regulator and that the defect could have been discovered by the Defendant with proper inspection and testing. Id. at 658, 155 S.E.2d at 920. Therefore, with regard to the sufficiency of evidence of negligence, there was no error in refusing the Defendant's motions. Id.

Defendant also contested whether Plaintiff had provided competent evidence to support a finding of money damages. Id. Plaintiff presented evidence that the reasonable value of items lost in the fire was $11,198.20, which included a list compiled by Plaintiff of the personal property lost in the fire. Id. at 659, 155 S.E.2d at 921. The court found that it was reasonable for Plaintiff to provide his own estimate of the value of the personal property, and there was no error in refusing Defendant's motions on grounds of insufficient evidence of damages. Id.

Defendant also contested that the trial judge erred in sustaining Plaintiff's objection to certain questions posed to Plaintiff's expert witness, i.e., "Is it customery in the trade for the manufacturers of these regulators to test them after they are manufactured." Id. at 660, 155 S.E.2d at 921. The court found that the trial judge's decision to sustain Plaintiff's objection to this question was not error because Defendant was able to pose a similar question to Plaintiff's expert and get his answer. Id. at 660-61, 155 S.E.2d at 921.

Defendant also asserted that Plaintiff's argument to the jury that Defendant had failed to produce witnesses or offer testimony was improper. Id. at 661, 155 S.E.2d at 922. The court disagreed, stating "We have held in a number of cases that it is proper for counsel to comment on the fact that the defendant has not taken the stand or offered testimony. It would be error in a criminal case so to do but not in a civil case. " Id. Therefore, the court held that this exception by Defendant was meritless. Id.

Finally, Defendant objected to the trial judge's charge that if a party fails to produce testimony of an available witness on a material issue, then the jury may infer that such testimony (if presented) would be adverse to the party failing to call the witness. Id. at 661-662, 155 S.E.2d at 922. Defendant's objection was that the trial judge left out the requirement that the witness be "available." Id. at 662, 155 S.E.2d at 922. However, the court found that Defendant had not properly preserved this objection at trial (i.e., Defendant did not request any clarification, amplification, or other curative measure by the trial judge). Id.

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Ten Takeaways from Branham v. Ford Motor Co.

By Brian A. Comer

I'm sure many folks who have stumbled across my site as a result of the Branham v. Ford Motor Co. case are looking at the case "brief" below, and their eyes are glazing over at its sheer length. Trust me, it took awhile to digest the case and write it. So...what's the "meat of the coconut" as a former colleague of mine used to say? Here are my "Ten Takeaways from Branham v. Ford Motor Co."

(1) Where strict liability and negligence are asserted as product liability claims in South Carolina, failure to prove an element that is common to both results in a directed verdict of both. In other words, if you cannot prove the product was defective and unreasonably dangerous for one of the claims, then the other does not survive either. Although there may be circumstances where one of the claims survives, it depends on the basis of the dismissal of the other claim.

(2) 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. (This is significant to me, as "failure to test" has become a prevalent theory, especially in drug and medical device cases).

(3) As a sports talk radio host that I listen to says, "POWWWWWWWWW!!!!"....the consumer expectations test is GONE in a South Carolina design defect case. The risk-utility test is now the exclusive test, and it requires proof of feasible alternative design. Also, in supporting this holding, the Court cited extensively to the Restatement (Third) of Torts: Products Liability, which opens the door to its adoption in South Carolina.

(4) "The use of post-distribution evidence to evaluate a product's design through the lens of hindsight is improper." Admission of it is prejudicial.

(5) Although evidence of other incidents must be "substantially similar" and tend to prove or disprove some fact in dispute to be admissible, this issue is not even examined if the evidence is post-distribution evidence (see number 4). If it is pre-manufacture, then the Court will look at whether the data is relevant to an issue, even if the specific cause of the other incident is not known (e.g., comparative rollover data).

(6) You cannot inflame the passion and prejudice of the jury with inadmissible and prejudicial evidence in your closing argument. Period.

(7) If co-defendants are joint tortfeasors under the law, then it is improper to apportion fault on the jury form.

(8) The "harm to others" prohibition is alive and well in South Carolina when it comes to punitive damages. Trying to convince a jury that they should punish a manufacturer for all other injuries/deaths/etc. is forbidden by South Carolina and federal authority.

(9) When it comes to evidence for punitive damages, net worth is the safest harbor. Although admission of extrapolated financial data (down to hourly and daily income) has not been found to be abuse of discretion, the Court indicated there could be a limit to this kind of evidence. Furthermore, if you start getting into compensation of executives, stock options, etc., you are asking for reversal on the basis of prejudice.

(10) Courts have authority to re-align parties at any time and at their discretion.

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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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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.

• 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).

DISPOSITION: The South Carolina Court of Appeals affirmed the decision of the circuit court.

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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