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Question: CLARK v. CHRYSLER CORPORATION U.S. COURT OF APPEALS FOR THE SIXTH CIRCUIT 2006 U.S. APP. LEXIS 24…

CLARK v. CHRYSLER CORPORATION

U.S. COURT OF APPEALS FOR THE SIXTH CIRCUIT

2006 U.S. APP. LEXIS 2435

Charles Clark was fatally injured in an automobile accident when he pulled into an intersection in front of an oncoming vehicle and collided with it. He was not wearing a seat belt and was consequently ejected from his vehicle. His wife sued Chrysler, claiming that its pickup truck was defectively and negligently designed.

After a three-day trial, the jury rendered a unanimous verdict in favor of Mrs. Clark on claims of strict liability, negligence, and failure to warn. The jury found Chrysler and Mr. Clark each 50% at fault, returning a verdict of $471,258.26 in compensatory damages and $3,000,000 in punitive damages. The court entered a judgment against Chrysler for $3,235,629.13, reflecting 50% of the compensatory damages plus the $3 million punitive damages award. After a series of appeals, the last being an appeal of the trial court’s motion to deny the defendant’s motion for remittitur, the case finally landed at the Circuit Court of Appeals on the issue whether the jury verdict was constitutionally excessive.

JUDGE JANE A. RESTANI

…The Court in State Farm elaborated on the three Gore guideposts that courts must consider when reviewing punitive damage awards. Namely, (1) the degree of reprehensibility of the defendant’s misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damage award; and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.… In light of State Farm â€¦ we conclude that the $3 million award here is constitutionally excessive. An application of the Gore guideposts to the facts of this case reveals that a punitive damage award approximately equal to twice the amount of compensatory damages, or $471,258.26, would comport with the requirements of due process.

With respect to the first Gore guidepost, State Farm emphasized that the degree of reprehensibility is the most important indicium of the reasonableness of a punitive damages award.… The Court laid out a list of five criteria that lower courts must consider in determining the reprehensibility of a defendant’s conduct: the harm caused was physical as opposed to economic; the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others; the target of the conduct had financial vulnerability; the conduct involved repeated actions or was an isolated incident; and the harm was the result of intentional malice, trickery, or deceit, or mere accident. The existence of any one of these factors weighing in favor of a plaintiff may not be sufficient to sustain a punitive damages award; and the absence of all of them renders any award suspect. … [T]he physical harm suffered by Mr. Clark weighs strongly in favor of finding Chrysler’s conduct reprehensible. After considering the four other factors, however, we conclude that the factors as a whole show that Chrysler’s conduct was not sufficiently reprehensible to warrant a $3 million punishment.

… The second guidepost is the disparity between the actual or potential harm inflicted on the plaintiff and the punitive damage award.… [B]ecause the compensatory damage award here is not particularly large, a 1:1 ratio is inappropriate.… But due to the lack of several of the reprehensibility factors, any ratio higher than 2:1 is unwarranted. Accordingly, we conclude that a ratio of approximately 2:1 would comport with the requirements of due process.

The third guidepost is the difference between the punitive damage award and the civil or criminal penalties that could be imposed for comparable misconduct.… Given State Farm’s focus on civil penalties, however, we now conclude that a $3 million punitive damage award is excessive in light of comparable civil penalties.

Denial of Chrysler’s motion for remittitur REVERSED and REMANDED with instructions to enter a punitive damage award of $471,258.26.

Answer the Discussion Question: What values are guiding the judge’s decision that the punitive-damage award was excessive? Do you think the values promoted by the decision are appropriate for the situation? Why or why not?