"Uncle!" a/k/a "Thank you sir may I have another!"

Aye, yaye, yaye...it has been over a month since my last post.  My sincere apologies.  The last month has been a busy one here at the South Carolina Products Liability Law Blog with many depositions, work on various files, out of town travel, and other matters.  I hope to get back on a more consistent blog schedule soon. 

In terms of what is going on with me (outside of quite a bit of work per the above), I am speaking on October 7, 2011 at the Palmetto Paralegal Association Annual Seminar here in Columbia on the subject of tort reform and the bill passed by the South Carolina General Assembly and signed into law by Governor Haley. 

Along with other SCDTAA members, I am planning a panel discussion of this same topic for the South Carolina Defense Trial Attorneys Association Annual Meeting November 3-6, 2011 at Amelia Island (i.e., as part of the "breakout" section for the Products Liability Substantive Law Committee).

Finally, I will be attending the 2011 Primerus Annual Conference, which is being held right here in South Carolina in Charleston on October 20-23, 2011.  Primerus is an international society of the world’s finest independent boutique law firms, and Collins and Lacy, P.C. is a proud member. 

There is quite a bit going on as we head into the last quarter of 2011.  Check in soon for more updates and substantive legal discussion of South Carolina products liability law.

New SC Products Liability Case: 5 Star, Inc. v. Ford Motor Co.

Recently, the South Carolina Court of Appeals issued its decision in 5 Star, Inc. v. Ford Motor Company.  You can find the opinion on page 120 here, and also here.  This is a negligent design defect case, and the court basically re-affirms that a negligence theory requires conduct evidence.

FACTUAL BACKGROUND: Plaintiff 5 Star, Inc. (“Plaintiff”) is a lawn maintenance/pressure washing company.  It bought a 1996 Ford F-250 pickup truck in February 2005.  In September 2005, Plaintiff’s owner parked the truck in a warehouse containing tractors, trailers, lawnmowers, and other business equipment.  Upon returning a couple of days later, Plaintiff’s owner discovered a fire had occurred.  Although there were no personal injuries, the truck was destroyed and the building and certain equipment was severely damaged.  Before the lawsuit and before Ford could inspect the truck, Plaintiff’s owner had the truck towed and crushed.

PROCEDURE: Plaintiff filed a products liability action against Ford Motor Co. ("Ford") alleging that negligence in the design of a speed control deactivation switch in the truck caused the fire.  Ford asked the circuit court to dismiss the case as a sanction for spoliation of evidence.  The circuit court declined but instructed the jury that it could draw a negative inference from Plaintiff’s actions.  Ford moved for a directed verdict at the close of Plaintiff’s case and at the end of trial, both of which were denied.  The case was submitted to the jury exclusively on the claim of negligent design.  The jury returned a verdict for $41,000 in actual damages.

ISSUE(S): (1) Whether the circuit court erred in declining to dismiss the action as a sanction for Plaintiff’s spoliation of evidence; (2) whether the circuit court erred in denying Ford’s motion for a directed verdict based on a lack of evidence that Ford was negligent in design of the speed control deactivation switch.

DISPOSITION: The court did not reach the question of whether the circuit court abused its discretion in ruling on the motion to dismiss based on spoliation, citing to Futch v. McAllister Towing of Georgetown, Inc., 335 S.C. 598, 518 S.E.2d 591, 598 (1999) and its recognition that an appellate court need not address remaining issues when resolution of one issue is dispositive.  (See footnote 2).  With regard to denial of Ford’s directed verdict motion, the court reversed the jury verdict and entered judgment in favor of Ford.

RULES AND OPINION: In addition to the three elements common to all products liability claims, a plaintiff asserting a negligent design theory must prove that the defendant manufacturer’s conduct in designing the product breached its duty of due care.  Ford argued on appeal that Plaintiff failed to present such conduct evidence, or to present evidence that the product was in essentially the same condition as when it left the defendant (i.e., one of the three common elements).  (The court did not discuss whether the product was in essentially the same condition for the same reason that it did not address spoliation).

Instead, the court focused on Plaintiff’s failure to present evidence of negligent conduct in the design of the product on or before the time of manufacture.  The court elaborated on how a negligence theory is different in that “’[t]he focus [in a negligence action] is upon the action of the defendant.  The mere fact a product malfunctions does not demonstrate the manufacturer’s negligence.”  Quoting Sunvillas Homeowner’s Ass’n v. Square D Co., 301 S.C. 330, 333, 391 S.E.2d 868, 870 (Ct. App. 1990). 

Ford conceded the switch was defective.  However, Plaintiff was obligated to offer evidence that Ford’s conduct was negligent.  Plaintiff failed to offer any evidence of Ford’s conduct whatsoever.  Neither the City Fire Investigator witness nor Plaintiff’s cause and origin expert testified to any events at or before the manufacture of the truck and switch.  Furthermore, neither witness was qualified as an expert in automotive design or other expertise so as to enable them to offer opinions on whether Ford’s conduct was negligent.  The only other witness who could have provided conduct testimony was a desgn analysis engineer for Ford.  He was qualified as an a vehicle fire cause and origin expert, but he offered no conduct facts/opinions, and Plaintiff's counsel did not ask him any questions relating to Ford's conduct in designing the switch that occurred in 1996 or earlier.

In short, the court held that Plaintiff failed to present expert testimony to prove that Ford was negligent in its design of the switch in 1996.  Therefore, the circuit court erred in not directing a verdict in favor of Ford.  The court distinguished its opinion from the holding in Duncan v. Ford Motor Co., 285 S.C. 119, 128, 682 S.E.2d 877, 881 (Ct. App. 2009) because the plaintiff in Duncan presented expert testimony concerning Ford's conduct.  (See footnote 4). 

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Drilling Down: Implied Warranty of Fitness for a Particular Purpose a/k/a The Stiletto Heel Warranty

You are probably wondering why there are pictures of a red stiletto heel and a hiking shoe at the beginning of this blog post.  Although you may not realize it, the contrast in function and use of these shoes provides the perfect example of this particular warranty.  How?  Read on, as we drill down a bit on the implied warranty of fitness for particular purpose.

The implied warranty of fitness for particular purpose is set forth in S.C. Code § 36-2-315.  It states:

Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods, there is unless excluded or modfied under the next section (§ 36-2-316) an implied warranty that the goods shall be fit for such purpose.

So what exactly does this mean?  Official Comment 2 provides some guidance.  A particular purpose differs from an ordinary purpose for which goods are used because it envisages a specific use by the buyer that is peculiar to his/her business.  "For example, shoes are generally used for the purpose of walking upon ordinary ground, but a seller may know that a particular pair was selected to be used for climbing mountains."  (S.C. Code § 36-2-315, Off. Cmt. 2).

So imagine this hypothetical: Gisele Bundchen walks into a shoe store and says, "Tom and I were thinking about getting away this weekend for a hike somewhere...maybe on the Appalachian Trail.  Can you give me some shoes for that?"  Overwhelmed by her beauty, the merchant automatically reaches for a pair of fire engine red stiletto heels and gawks as Gisele tries them on.  Speechless, he hands her the change as she buys the heels and heads out the door. 

If Gisele breaks a heel and her ankle while on her hiking trip, then she may have an action for breach of implied warranty of fitness for particular purpose against the seller.  Why?  Because she conveyed to him a very particular purpose for which she needed some gear, and it was different from the ordinary purpose for which shoes are generally used (i.e., walking on ordinary ground). 

Obviously, this is an oversimplification of a cause of action for breach of this implied warranty.  However, you get the point.  This implied warranty contemplates -- as its name suggests -- a very specific purpose for the product.  Whether this warranty arises is basically a question of fact determined by the circumstances of the contracting.  The buyer does not necessarily have to prove knowledge of the particular purpose or reliance thereon by the buyer if the circumstances are such that the seller has reason to know of the purpose or reliance.   (S.C. Code § 36-2-315, Off. Cmt. 1).

This really is not known as "The Stiletto Heel Warranty" (and you probably figured out by now that I made that up).  However, it helps me remember how this implied warranty differs from ordinary use encompassed by the implied warranty of merchantability.

Have a nice weekend all.

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Case Brief: Soaper v. Hope Industries, Inc., 309 S.C. 438, 424 S.E.2d 493 (1992)

Today's Case Brief is for Soaper v. Hope Indus., Inc., 309 S.C. 438, 424 S.E.2d 493 (1992).  Soaper involved a color film processor and printer, and it is significant because it illustrates a merger of “fitness for particular purpose” with the warranty of merchantability under its facts.

FACTUAL BACKGROUND: Plaintiff purchased a color film processing machine from Defendant for use in his fast photo business.  309 S.C. at 439, 424 S.E. 2d at 494.  The machine malfunctioned over a period of three years, and Plaintiff ultimately had to close his business.  Id.

PROCEDURE: Plaintiff sued Defendant alleging (1) breach of express warranty, (2) breach of the implied warranty of merchantability, and (3) breach of the implied warranty of fitness for particular purpose.  309 S.C. at 439, 424 S.E. 2d at 494.  At trial, Plaintiff proceeded solely on the cause of action for breach of implied warranty of fitness for a particular purpose.  The jury returned a verdict for Plaintiff for $84,783.40 (i.e., the full value of the machine and its component parts).  Id.  The South Carolina Court of Appeals affirmed, finding ample evidence that "the goods were defective so as to be unfit for their intended use in Soapers fast photo business."  306 S.C. 531, ----, 413 S.E.2d 38, 40 (Ct. App. 1992).  Defendant sought rehearing, which the Court of Appeals denied.  309 S.C. at 439, 424 S.E. 2d at 494.  The South Carolina Supreme Court granted certiorari on the issue sought for re-hearing by Defendant.  Id.

ISSUE(S): "Does a purchaser establish a warranty of fitness for a particular purpose when goods, purchased solely for their ordinary purpose, are found to be unfit for any and all purposes?"  309 S.C. at 439, 424 S.E. 2d at 494.

DISPOSITION:  "[W]here a product is not fit for any purpose, it is not fit for its particular purpose.  Accordingly, the Court of Appeals opinion is affirmed as modified."  309 S.C. at 441, 424 S.E.2d at 495.

RULES AND OPINION: The implied warranty of fitness for a particular purpose arises under the Uniform Commercial Code, S.C. Code section 36-2-315 (1976).  309 S.C. at 439, 424 S.E. 2d at 494.  Defendant maintained that this warranty applies only when the buyer has a particular purpose for a product other than its ordinary/contemplated use.  Id. at 440, 424 S.E.2d at 494.  The court recognized that there was authority for this position but declined to follow it.  Id., 424 S.E.2d at 495.  The court referred to comment 2 to section 2-315, which states that "a contract may of course include both a warranty of merchantability and one of fitness for a particular purpose."  Id.  Section 2-317 also requires that warranties arising under the UCC "be construed as consistent with each other and as cumulative."  Id. 

When Plaintiff purchased the product, he made known to Defendant that his particular purpose for the machine was fast film developing.  Id. at 441, 424 S.E.2d at 395.  When it failed in that purpose, it was both unmerchantable and unfit for its particular purpose.  Id.

We hold that, where the particular purpose for which a product is purchased is also the ordinary or intended purpose of the product, the warranties of merchantability and of fitness for a particular purpose merge and are cumulative, such that a plaintiff may proceed upon either theory. 

Id. at 440, 424 S.E.2d at 495.  This holding accords with other jurisdictions.  Id. at 441, 424 S.E.2d at 495.

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Passing of the Honorable Matthew J. Perry, Jr.

I was saddened to learn of the passing of U.S. District Judge Matthew J. Perry, Jr. over the weekend.  Approximately one year ago to the day, I tried a products liability case before Judge Perry that lasted a couple of weeks.  During that time, I had the opportunity to get to know Judge Perry, see him interact with the attorneys and the jury, and generally watch him run his courtroom.  He was a true gentleman and an icon in South Carolina's history.  I saw him again a few months ago while shopping for groceries and had the opportunity to reminisce with him about our case and how he was doing. 

Judge Perry had an almost "regal" air about him.  He was a delight to be around, but also had the ability to strike fear in even the most seasoned lawyer with his booming voice and his ability to get his point across in as few words as possible.  I cannot say that I knew him "well," but I feel lucky to have had a chance to try a case before him toward the end of his storied career.  He will be missed.

South Carolina Tort Reform: Governor Nikki Haley Signs Bill Capping Punitive Damages Into Law

On Tuesday, Governor Nikki Haley signed into law the tort reform bill passed by the South Carolina State Legislature earlier this year.  The bill includes numerous provisions relating to punitive damages that I blogged about as it was debated earlier this year.  The Charleston Regional Business Journal did a nice write-up yesterday about the signing of the bill and impressions of the bill by members of the South Carolina business community.  The article can be found online here, and a cut and paste is below.

Haley signs tort reform law, creating punitive damages cap

By James T. Hammond
jhammond@scbiznews.com
Published July 27, 2011

Gov. Nikki Haley signed changes to South Carolina civil litigation laws on Tuesday, including a $2 million cap on punitive damages that she said was long overdue.

According to the S.C. Chamber of Commerce, which had sought the changes, the new law includes a cap on punitive damages modeled after the state of Florida. The legislation caps punitive damages greater than $500,000 or three times the compensatory damages awarded.

However, if the court finds a defendant is motivated primarily by financial gain or a defendant’s actions rise to the level of felony charges, then the award can be in­creased to the greater of $2 million or four times compensatory damages.

If it is proven the defendant intended to harm the claim­ant, was convicted of a felony arising out of the same act or acted under the influence of drugs or alcohol, there is no cap for punitive damages.

S.C. Chamber of Commerce President Otis Rawl said passage of the tort reform law was his organization’s No. 1 priority this year. The changes in the law were not everything the chamber wanted, Rawl said, but he added that the legislation was a good compromise.

“We were the only state in the Southeast without a punitive damages cap,” said Rawl, adding that until now, that status had been a competitive disadvantage in recruiting new businesses to the state.

Haley agreed that the lack of such a provision hurt recruiting of industries.

“It automatically became a topic of conversation,” Haley said. “This was very simple. This was a vote either for business or for trial lawyers.”

Haley said tort reform remains a work in progress. She wants provisions added to the law that would require losers in civil litigation to pay the costs of the trial.

She said she thinks the changes create a “fair balance in our state,” while still permitting citizens their day in court.

Harry Lightsey, a Columbia attorney who worked for passage of the civil litigation changes, said the tort reform bill was the culmination of efforts that began in 2003.

“In 2003, Hampton County was recognized as a litigation hell hole,” Lightsey said, referring to a South Carolina county that had become notorious for its generous civil lawsuit awards to plaintiffs.

“Businesses large and small came together to change that,” Lightsey said, adding, “the governor was the difference-maker this year.”

Haley also said the new law represented a just compromise between two extremes.

“The House had a $350,000 cap on punitive damages. I’d like to have seen that happen,” Haley said. “But the original Senate version had no cap at all.”

Louis Gossett, president of the S.C. Manufacturers Alliance, said tort reform remains a work in progress.

“We’re always going to be working on this,” Gossett said. “We’d like loser-pay. What tort reform is about is certainty; it’s about stability. There is a place for litigation in our society. But there must be consequences for frivolous acts.”

As far as who decides what is frivolous, Gossett said, “That’s a good question. Probably the General Assembly and the courts.”

South Carolina Tort Reform: Quotation in South Carolina Lawyers Weekly Article

I did numerous blog entries earlier this year about my involvment in South Carolina's debate and passage of tort reform in the General Assembly.  I failed to blog about it, but I was recently quoted in South Carolina Lawyers Weekly about the bill that was ultimately passed.  My colleague at Collins & Lacy, P.C., Gray Culbreath, was also quoted.  A cut and paste of the article is below.

Not all tort-related wishes come true 

by Caitlin Coakley

Published: July 1st, 2011

Looking back on the past legislative session, attorneys mostly see just one bill: HB 3375, the S.C. Fairness in Civil Justice Act – commonly called the tort reform bill.

Pushed by business groups and conservatives in the legislature, the bill imposes caps on punitive damages to be awarded in tort cases, with some exceptions. It gave Mike Hemlepp, executive director of the South Carolina Association for Justice, a big case of heartburn. As part of an organization that represents trial lawyers, Hemlepp said that he and his group are, on principal, opposed to tort reform and caps of any kind.

“We trust juries,” he said. “Anything that interferes with a jury’s ability to make a judgment, we are opposed to it.”

But with the bill signed into law, Hemlepp is less venomous and more resigned to the new laws. Despite his fundamental opposition to the goal of the bill, he recognizes that the lawyers his organization represents could have gotten off a lot worse.

On the other side of the issue, the defense attorneys say the new law is a good start, but wasn’t as effective as it could have been. Gray Culbreath, president of the South Carolina Defense Trial Attorneys’ Association, said that the bill is a good one, “as a matter of perspective.”

“We have caps now, and we didn’t have any before,” he said. “There is a belief that something’s better than nothing.”

Those mixed feelings are perhaps a reflection of the compromise between the bill introduced in the House of Representatives and the bill that passed the Senate. The House’s original hill was much stricter: a $350,000 across-the-board cap on punitive damages with no exemptions.

But by the time the bill hit the governor’s desk, the punitive-damage caps were more fluid: $500,000 or no more than three times the compensatory damages for most cases, rising to $2 million or four times compensatory damages in cases where the jury ruled that the business or person cut corners in order to rake in an unreasonable profit or if the defendant, business or individual, committed a felony in the process. If the defendant is actually convicted of a felony, caused harm intentionally, or was under the influence of drugs or alcohol, the case is exempted from caps altogether.

The amending and softening that the bill underwent while making its way through the legislative chambers made it into something that Hemlepp begrudgingly admits isn’t too bad.

“I think the legislature did a very good job of educating themselves on something that was very complicated,” he said. “We don’t believe in caps of any kind, but what was passed in this bill is reasonable compared to other states.”

But defense attorneys like Culbreath can’t help but lament some of the things that it left out.

One provision included in the original bill would have overturned a South Carolina statute that disallows information about whether the plaintiff in an automobile accident was wearing a seatbelt.

In the Senate, that provision was taken out, but Culbreath said that the some trucking and manufacturing associations to whom he had spoken have said they wished it had been retained.

Brian Comer, a Columbia attorney who worked with the legislature on the proposed product liability aspects of the bill, also acknowledged that the bill has been watered down from its original form. However, he adds that if the alternative would be to not have anything pass, the new law is enough.

“It’s a compromise,” he said. “It does some good things, there are some things that could have been done, but overall there was something done.” In fact, Comer was happy that  he and other product liability attorneys were successful in keeping the bill from being watered down any further.

The legislature briefly considered adding an amendment that would overturn the August 2010 ruling in Branham v. Ford Motor Co., which created the “feasible design” standard: In cases that alleged a company created a defective product, a plaintiff must demonstrate that the company could feasibly have manufactured a safer product.

Had the case been overturned, the plaintiff would only have to prove that the product did not live up to consumer expectations.

Comer said that the issue is one that deserves another look, but should be considered as a separate issue and not as an amendment to a larger bill.

“We aren’t necessarily averse to doing that, but it needs to come at the end of a debate involving members of bar and academic community,” he said. “It shouldn’t be something that happens at the eleventh hour.”

Even Hemlepp acknowledges that the bill wasn’t completely devastating to trial lawyers. The SCAJ successfully added a provision to the bill that prohibits award caps from being disclosed to the jury. By keeping the jury in the dark as to the award caps, it left the jurors to determine what a fair award would be. Under the bill, if the jury’s punitive damage award exceeds the cap, the plaintiff would get the maximum amount allowed by law.

C. Stuart Mauney, a defense trial lawyer in Greenville, said that even if the bill wasn’t everything the business community hoped for, it accomplished the ultimate goal of sending the message that South Carolina was making an effort to become more business friendly.

Having the caps in place, Mauney said, “creates a more positive business climate. When executives make decisions about whether or not to do business in South Carolina, they make the decisions in part based on the state’s lawsuit environment.”

But Terry Haselden, a Spartanburg attorney who handles tort cases, said the bill isn’t good for much else. He calls it a “feel-good bill” that lawmakers can crow about to constituents but doesn’t have much practical impact, since “punitive damages are extremely rare in South Carolina.”

The cases where the cap will come into play, he said, will be the most tragic ones where people are most severely hurt and the jury believes that the plaintiff deserves a higher sum – in other words, he said, the ones that deserve it the most.

“Juries in South Carolina are extremely conservative,” he said. “They rarely award punitive damages unless there’s a darn good reason.”

Complete URL:

http://sclawyersweekly.com/news/2011/07/01/not-all-tort-related-wishes-come-true/

Upcoming Webinar: "Warnings - Scope of and Exceptions to Duty to Warn"

My firm is a member of the Primerus network of law firms, and on July 21, 2011 at 2 p.m. ET, I am going to be presenting in a webinar entitled "Warnings - Scope of and Exceptions to Duty to Warn."  I am one of three speakers who will be discussing the various limitations on the duty to warn in a products liability case.  We anticipate that the webinar will last between an hour and an hour-and-a-half.  It will include a powerpoint presentation of the various topics discussed, and my co-presenters include Rick Quinlivan and John Brydon.  Both of these gentlemen also have extensive experience in products liability cases and warnings cases (in particular).

I have written numerous blog posts and articles about South Carolina's limitations on the duty to warn , so this is a topic that is fairly familiar to me.  (See, e.g., this post, this post, this article, and this article).  This webinar takes a more general, national approach to this topic so as to provide the audience with some high-level guidance for application in various jurisdictions.

Although I try to keep this blog fairly "even keel" in terms of plaintiff and defense themes/perspectives, this webinar is presented as part of the Primerus Defense Institute, so it is primarily focused on defense strategies in a warnings case.  If you are interested in registering for this webinar, go to this link for more information.  I hope you will join us for what should be an informative presentation.