Morales v. American Honda Motor Co., Inc.

• Decision Date: 05 October 1998
• Docket Number: Nos. 96-6670,96-6699,s. 96-6670
• Citation: 151 F.3d 500
• Parties: Prod.Liab.Rep. (CCH) P 15,329 Pamela MORALES, Guardian of Gary Thompson; Bank of the Bluegrass and Trust Co., Conservator of Gary Thompson, Plaintiffs-Appellees/Cross-Appellants, v. AMERICAN HONDA MOTOR CO., INC.; Honda Motor Co., Ltd.; Honda R&D Co., Ltd., Defendants-Appellants/Cross-Appellees, v. Pamela MORALES, Third-Party Defendant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 500

151 F.3d 500

Prod.Liab.Rep. (CCH) P 15,329

Pamela MORALES, Guardian of Gary Thompson; Bank of the

Bluegrass and Trust Co., Conservator of Gary

Thompson, Plaintiffs-Appellees/Cross-Appellants, v. AMERICAN HONDA MOTOR CO., INC.; Honda Motor Co., Ltd.;

Honda R&D Co., Ltd., Defendants-Appellants/Cross-Appellees, v. Pamela MORALES, Third-Party Defendant.

Nos. 96-6670, 96-6699.

United States Court of Appeals, Sixth Circuit.

Argued Dec. 9, 1997.

Decided July 30, 1998.

Rehearing and Suggestion for Rehearing En Banc Denied Oct. 5, 1998. ^*

Charles C. Adams, Jr. (argued and briefed), Herren & Adams, Lexington, Kentucky, Samuel E. Davies (briefed), Barbourville, Kentucky, for Plaintiffs-Appellees/Cross-Appellants.

Richard H.C. Clay (argued and briefed), Woodward, Hobson & Fulton, Louisville, Kentucky, Deborah C. Stevens (briefed), Lewis, King, Krieg, Waldrop & Catron, Knoxville, Tennessee, for Defendants-Appellants/Cross-Appellees.

Thomas B. Bell, Fowler, Measle & Bell, Lexington, Kentucky, for Intervenor-Appellee.

Before: KENNEDY, JONES, and CLAY, Circuit Judges.

CLAY, J., delivered the opinion of the court, in which NATHANIEL R. JONES, J., joined. KENNEDY, J. (pp. 519-26), delivered a separate dissenting opinion.

OPINION

CLAY, Circuit Judge.

American Honda Motor Co., Inc., Honda Motor Co., Ltd., and Honda R & D Co., Ltd. ("Defendants") appeal from the final judgment of the district court, entered on September 23, 1996, and from the district court's November 13, 1996, order denying their motions for judgment after trial and for a new trial. Pamela Morales, Limited Guardian of Gary Thompson, and Bank of the Bluegrass and Trust Company, Conservator of Gary Thompson ("Plaintiffs") cross-appeal from the final judgment and from the district court's November 13, 1996, order denying their motion to amend judgment. For the reasons discussed herein, we AFFIRM the final judgment of the district court and the district court's order denying Defendants' motion for judgment after trial and for a new trial as well as denying Plaintiffs' motion to amend judgment.

STATEMENT OF FACTS

On March 24, 1993, Pamela Morales filed suit against American Honda Motor Company ("Honda"), seeking damages associated with the severe injuries sustained by her son, Gary Thompson, as he rode his 1988 Honda Z50R motorcycle into the path of an oncoming pickup truck driven by Helen Graham. Thompson was struck by Graham's vehicle when he darted out from an unpaved farm-entrance road onto a two lane country highway in Garrard County, Kentucky. Graham allegedly could not see Thompson nor the motorcycle until immediately before the collision because several bales of hay lined the farm road leading to the highway and obstructed her view of Thompson, who was nine and one-half years old at the time.

Morales brought a products liability suit against Honda based upon the theories of strict liability, negligence, and breach of warranty. Specifically, Morales alleged that Honda defectively designed the motorcycle because its small size combined with the lack of a safety flag gave the motorcycle extremely low visibility. Morales also alleged that Honda negligently marketed the motorcycle and negligently failed to warn of its dangerous conditions because Honda did not explain the potential harmful consequences in terms that could be understood by a child.

Honda filed a motion for summary judgment, which the district court granted on the grounds that Morales failed to establish a reasonable inference that the alleged defects of the motorcycle were a probable cause of the accident. Morales appealed the decision to this Court, we vacated the district court's decision, and remanded the case for trial on the issues of whether the design of the children's motorcycle was defective, or whether warnings concerning its use were inadequate, and therefore contributed to the cause of the accident. See Morales v. American Honda Motor Co., 71 F.3d 531, 533, 537-39 (6th Cir.1995).

Upon remand, the district court permitted Honda to file a third-party complaint against Morales for negligent supervision of Thompson as he operated the motorcycle. The district court also permitted Morales to amend the original complaint to name Honda Motor Company, Ltd. and Honda R & D Company as additional defendants, and to identify the Bank of the Bluegrass and Trust Company as Thompson's Conservator and as co-plaintiff.

A jury trial commenced on September 13, 1996, and resulted in a $4,500,000 verdict in favor of Plaintiffs. The jury found for Plaintiffs on their strict liability, negligence, and breach of warranty claims; however, it found for Defendants on Plaintiff's failure to warn claim. Although no percentage of fault was apportioned to Morales, forty-three percent of the fault was apportioned to Thompson. Accordingly, a reduced judgment in the amount of $2,565,000 was entered on September 23, 1996.

On October 3, 1996, Defendants filed a motion for judgment after trial pursuant to Fed.R.Civ.P. 50(b), or in the alternative for a new trial pursuant to Fed.R.Civ.P. 59. Plaintiffs filed a motion requesting that the district court amend its judgment to reflect the full amount of damages awarded by the jury. The district court denied these motions on November 13, 1996. Defendants filed a timely notice of appeal, and Plaintiffs filed a timely notice of their cross-appeal.

On appeal, Defendants challenge the district court's decision denying their motion for judgment after trial or, in the alternative, for a new trial, on the basis that no evidence was presented for a reasonable jury to have found that the motorcycle was defective and that the defect was the proximate cause of the accident, as well as on the basis that the jury verdict was legally inconsistent. Defendants also claim that the district court made several evidentiary errors below. In their cross-appeal, Plaintiffs argue that the district court erred in reducing the jury's verdict by Thompson's comparative fault. ¹

DISCUSSION

I.

Defendants first argue that the district court erred in denying their motion for judgment as a matter of law or, in the alternative, for a new trial because insufficient evidence was presented upon which a reasonable jury could have found that the motorcycle was defectively designed and that the defect was the proximate cause of Thompson's accident.

In diversity cases, a state-law standard of review is applied when a Rule 50(b) motion for judgment as a matter of law is based on a challenge to the sufficiency of the evidence necessary to support the jury's verdict. See K & T Enters., Inc. v. Zurich Ins. Co., 97 F.3d 171, 176 (6th Cir.1996). Thus, because this is a diversity case and Defendants' Rule 50 motion challenges the sufficiency of the evidence, we apply the standard of review used by the courts of the state whose substantive law governs the action. See Brocklehurst v. PPG Indus., Inc., 123 F.3d 890, 894 (6th Cir.1997). This action is governed by Kentucky substantive law; therefore, the applicable standard of review is as follows:

Under Kentucky law, a motion for a directed verdict--the same thing as a motion for judgment as a matter of law under Rule 50, Fed.R.Civ.P.--should be granted only if "there is a complete absence of proof on a material issue in the action, or if no disputed issue of fact exists upon which reasonable minds could differ." Washington v. Goodman, 830 S.W.2d 398, 400 (Ky.App.1992). In deciding such a question, "every favorable inference which may reasonably be drawn from the evidence should be accorded the party against whom the motion is made." Baylis v. Lourdes Hosp., Inc., 805 S.W.2d 122, 125 (Ky.1991).

Adam v. J.B. Hunt Transp., Inc., 130 F.3d 219, 231 (6th Cir.1997).

Defendants also challenge the district court's denial of their motion for a new trial made pursuant to Fed.R.Civ.P. 59, on the basis that the verdict was against the great weight of the evidence. "We review a denial of a motion for a new trial for an abuse of discretion." Anchor v. O'Toole, 94 F.3d 1014, 1021 (6th Cir.1996) (citing Gafford v. General Elec. Co., 997 F.2d 150, 171 (6th Cir.1993)). "In diversity cases, we apply federal law in reviewing a denial of a motion for a new trial, '[a]nd, in reviewing a trial court's denial of a new trial motion on the ground that the verdict is against the clear weight of the evidence, we accept the jury's verdict if it was reasonably reached.' " Ridgway v. Ford Dealer Computer Servs., Inc., 114 F.3d 94, 98 (6th Cir.1997) (quoting Anchor, 94 F.3d at 1021).

Defendants claim that Plaintiffs failed to present sufficient evidence upon which a reasonable jury could have found for Plaintiffs on a theory of strict liability. That is, Defendants contend that the evidence did not support a finding that the motorcycle was defective and that a defective condition was the proximate cause of Thompson's accident. At trial, Plaintiffs based their strict liability claim on three allegations of design defect: (1) the motorcycle's lack of a safety flag, (2) lack of a key-lock ignition, and (3) the age appropriateness of the vehicle.

Kentucky has adopted Section 402A of the Restatement (Second) of Torts (1965). See Dealers Transp. Co. v. Battery Distrib. Co., 402 S.W.2d 441 (Ky.1965). Under Section 402A, the standard for imposing liability upon manufacturers or sellers of products is whether the product is "in a defective condition unreasonably dangerous to the user or consumer." Montgomery Elevator Co. v. McCullough, 676 S.W.2d 776, 780 (Ky.1984). In applying this standard, "[t]he manufacturer is presumed to know the qualities and characteristics, and the actual condition, of his product at the time he sells it, and the question is whether the product creates 'such a risk' of an accident of the general nature of the one in question 'that an ordinarily prudent company engaged in the manufacture' of such a product 'would not have put it on the market.' " Id. (quoting ...