Vehicle Safety News

March 9, 2007

LawyersUSA, "50M punitive award sidesteps High Court ruling"

In the first major punitive damages award since the U.S. Supreme Court placed new limits on punitive damages earlier this year, a Los Angeles jury ordered DaimlerChrysler to pay $5.2 million in compensatory damages and $50 million in punitives to a man run over by his own truck.

The verdict was on behalf of a 38-year-old longshoreman who was run over when he tried to reenter a truck that had slipped from park to reverse. The plaintiffs argued that DaimlerChrysler had known about the problem for years but failed to address it, leaving millions of vehicles on the road that could spontaneously slip from park to reverse.

The verdict came down two weeks after the Supreme Court's decision in Philip Morris USA v. Williams (127 S.Ct. 1057), which placed further constraints on punitive damages. The high court ruled that juries are not allowed to punish a defendant for injuries to non-parties.

The potential application of Philip Morris to this case was significant, since the DaimlerChrysler case focused on the company's failure to fix a problem that endangered millions of drivers.

A split-second reaction

Richard Mraz was driving a company-owned 1992 Dodge Dakota on April 13, 2004, when he pulled up to the docks at the maritime terminal in San Pedro, Calif. He stopped the pickup, put it in park and got out with the engine running.

"It turns out it wasn't in park," said attorney Robert Nelson of San Francisco. "He placed the transmission in an area between park and reverse."

An eyewitness testified that Mraz was several feet away when the vehicle started moving. When Mraz tried to hop in the truck to stop it, he slipped and hit his head on the ground. The truck ran over him twice as it drove in circles in reverse.

A 'fake recall'

The defense maintained that there's no such thing as a position between park and reverse, noting that the company never found one, and neither did an investigation by the National Highway Traffic Safety Administration (NHTSA).

But the plaintiffs' team countered with a "smoking gun" corporate memo which they claim demonstrates that the company never tested the three most problematic vehicles - the Dakota, the Jeep Cherokee and the Dodge Ram - to determine the cause of the problem. The memo, written by a senior safety manager at the company, warned that conducting a thorough investigation could provide "product liability credence to a hypothesis we have long ignored [and] continually challenged."

So rather than do those tests, the company conducted a "fake recall," according to Nealey, in which they switched out one part in the transmission for another. Several DaimlerChrysler engineers testified at trial that they were bewildered by the recall because it did nothing whatsoever to fix the problem.

While preparing for trial, the plaintiffs' team learned that DaimlerChrysler knew for many years about the so-called park-to-reverse problem. The company received nearly 1,000 complaints about it, including 60 that involved injury or death.

A 'Philip Morris' instructed jury

Ultimately, jurors returned a verdict of $55.4 million. They awarded a little more than $3 million for economic damages, about $2 million for non-economic damages and $50 million in punitives. Accounting for the 10 percent liability attributed to Mraz, his family is slated to receive $54.4 million in damages.

But the potential for a large punitive award raised concerns in light of the Supreme Court's Philip Morris decision.

Nealey read the decision and determined it had nothing to do with the liability claims in this case, but that if the trial moved to punitive damages, crafting a jury instruction in light of it might be helpful.

The judge agreed with Nealey that the decision had nothing to do with liablity claims, and in the end, he used the jury instruction Nealey crafted after reading the decision.