269 F.3d 439 (4th Cir. 2001), 00-1021, Jimenez v. Daimlerchrysler Corp.

Docket Nº:00-1021
Citation:269 F.3d 439
Party Name:SERGIO JIMENEZ, as personal representative of the estate of the late Sergio Hernandez Jimenez II, Plaintiff-Appellee, v. DAIMLERCHRYSLER CORPORATION,Defendant-Appellant. ALLIANCE OF AUTOMOBILE MANUFACTURERS; PRODUCTS LIABILITY ADVISORY COUNCIL, INCORPORATED; PUBLIC CITIZEN, INCORPORATED; CENTER FOR AUTO SAFETY, Amici Curiae.
Case Date:October 19, 2001
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit
 
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269 F.3d 439 (4th Cir. 2001)

SERGIO JIMENEZ, as personal representative of the estate of the late Sergio Hernandez Jimenez II, Plaintiff-Appellee,

v.

DAIMLERCHRYSLER CORPORATION,Defendant-Appellant. ALLIANCE OF AUTOMOBILE MANUFACTURERS; PRODUCTS LIABILITY ADVISORY COUNCIL, INCORPORATED; PUBLIC CITIZEN, INCORPORATED; CENTER FOR AUTO SAFETY, Amici Curiae.

No. 00-1021

United States Court of Appeals, Fourth Circuit

October 19, 2001

Argued: March 1, 2001

Appeal from the United States District Court for the District of South Carolina, at Charleston. Falcon B. Hawkins, Senior District Judge.

(CA-96-1269-2-11)

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COUNSEL ARGUED: Theodore B. Olson, GIBSON, DUNN & CRUTCHER, L.L.P., Washington, D.C., for Appellant. John Calvin Jeffries,

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Jr., UNIVERSITY OF VIRGINIA SCHOOL OF LAW, Charlottesville, Virginia, for Appellee. ON BRIEF: Theodore J. Boutrous, Jr., Thomas H. Dupree, Jr., GIBSON, DUNN & CRUTCHER, L.L.P., Washington, D.C.; David R. Tyrrell, Robert M. Fulton, HILL, WARD & HENDERSON, Tampa, Florida; Wade H. Logan, III, NELSON, MULLINS, RILEY & SCARBOROUGH, L.L.P., Charleston, South Carolina, for Appellant. Richard A. Simpson, Charles I. Hadden, Lynda Guild Simpson, ROSS, DIXON & BELL, L.L.P., Washington, D.C.; David G. Owen, Columbia, South Carolina; Reese I. Joye, Mark C. Joye, JOYE LAW FIRM, North Charleston, South Carolina, for Appellee. Anthony H. Anikeeff, ALLIANCE OF AUTOMOBILE MANUFACTURERS, Washington, D.C.; Christopher Landau, Jay P. Lefkowitz, Daryl Joseffer, Ashley Parrish, KIRKLAND & ELLIS, Washington, D.C., for Amicus Curiae Alliance. Griffin B. Bell, Chilton Davis Varner, Paul D. Clement, KING & SPALDING, Atlanta, Georgia; Hugh F. Young, Jr., PRODUCT LIABILITY ADVISORY COUNCIL, INC., Reston, Virginia, for Amicus Curiae Council. Alison Van Horn, Michael Quirk, Brian Wolfman, PUBLIC CITIZEN LITIGATION GROUP, Washington, D.C., for Amici Curiae Public Citizen and Center.

Before NIEMEYER, LUTTIG, and WILLIAMS, Circuit Judges.

Reversed in part and vacated and remanded for a partial new trial by published opinion. Judge Niemeyer wrote the opinion for the court except with respect to Part IV.B. Judge Luttig wrote the opinion for the court on Part IV.B, in which Judge Williams joined and on which Judge Niemeyer dissented.

OPINION

NIEMEYER, Circuit Judge, writing for the court except in Part IV.B:

The Estate of 6-year old Sergio Jimenez II ("young Sergio") commenced this product liability action against DaimlerChrysler Corporation ("DaimlerChrysler"), alleging that DaimlerChrysler negligently designed the rear liftgate latch on its 1985 model Dodge Caravan, permitting it to open during an accident. As a result of an accident on April 10, 1994, young Sergio was thrown from a 1985 Dodge Caravan through the open liftgate and killed. A South Carolina jury awarded the Estate $12.5 million in compensatory damages (remitted by the district court to $9 million) and $250 million in punitive damages. On appeal, we reverse the jury's verdict finding liability for negligent misrepresentation and awarding punitive damages; and we vacate the judgment, and we remand for a new trial on the claims for negligent design and strict liability. Our reasons follow.

I

In early 1994, Sergio Jimenez ("Jimenez"), young Sergio's father, purchased a used 1985 Dodge Caravan from a used car dealer in North Charleston, South Carolina. A few months later, on April 10, his wife, Denise Barrientos, was driving the vehicle on an errand with her 8-year old daughter Maria riding in the front seat and young Sergio in the back seat. As Barrientos exited a shopping center parking lot, she drove through a red light and was struck in the left rear by an oncoming car traveling at 30 m.p.h. The impact caused Barrientos' vehicle to flip over and spin around. Young Sergio, who was not wearing a seatbelt, was thrown through the rear liftgate that had opened during the accident. He sustained fatal injuries. Barrientos and Maria, both of whom were wearing seatbelts, were not seriously injured. Young Sergio's Estate sued Barrientos for negligence in running the red light and settled with her for $15,000, the limit of her insurance coverage. The Estate

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then commenced this action against DaimlerChrysler, relying on diversity jurisdiction, and three of its claims -those for strict liability, negligent misrepresentation, and negligent design under South Carolina law -were allowed to go to the jury. Following a four-week trial, the jury returned a verdict finding in favor of the Estate on all three claims and awarding it $12.5 million in compensatory damages and $250 million in punitive damages. The district court remitted the compensatory damage award to $9 million.

At trial, the Estate contended that DaimlerChrysler's 1985 Dodge Caravan included a defectively designed rear liftgate latch, which caused the liftgate to open during the accident. The Estate asserted that "Sergio would not have been seriously injured had he not been ejected from the vehicle, and he would not have been ejected, regardless of seatbelt use, if the rear door latch had not been defective." DaimlerChrysler agrees that if it had included a headed striker post in its liftgate latch, the liftgate would not have opened and Sergio would not have been thrown from the vehicle. Outlining its case against DaimlerChrysler for punitive damages, counsel for the Estate told the jury:

[W]hat makes this case so tragic is that that latch had been known by Chrysler to be defective for more than ten years, and it was in 1.6 million minivans. And the evidence will show they knew it. With their guilty knowledge, they not only did not tell the public about it, they did not offer to fix it, and they ultimately destroyed documents that reflected their guilt and continued to cover it up.

J.A. 81-82.

The vehicle involved in the accident, the Dodge Caravan, was the first "minivan." At the time it was introduced in 1984, its design was unique. The popularity of minivans generated extraordinary sales, so that by 1994, DaimlerChrysler's profits from minivan sales accounted for 46% of its total profits. Although the liftgate latch design was changed in 1988, the design for the latch that was included in the 1985 model was the same as that included in the original 1984 model.

At the time the Caravan was originally designed, there was no federal safety standard applicable to latches on trunks, rear doors, or rear "liftgates." Federal Motor Vehicle Safety Standard 206, which had been promulgated by the National Highway Transportation Safety Administration ("NHTSA") and was applicable to the early minivans, specified minimum strength and design standards for latches used in passenger doors to prevent passenger ejections resulting from doors opening during accidents. But that standard did not apply to any trunk or other rear door. In designing the 1984 Caravan, DaimlerChrysler elected to install a latch for the liftgate similar to that which it had used on internal trunks. This latch contained a vertical striker post that was not as strong as a passenger door latch striker post and that did not contain a head on the top of the post to prevent the latching mechanism from riding up and off of the striker post. 1 The DaimlerChrysler engineer who designed the latch testified at trial:

[W]e designed this latch to our performance standard. We tested it to the performance standard. We put it in vehicles, and we, and this history of the performance standard has been over a number of years. The latch design has

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been a generation of over a hundred, of over years, and we have a good understanding of the latch and a good record of that type of latch.

J.A. 321-22. He explained that a headless striker post was selected because it was being used on the sill of a cargo door, and a headed striker might "hang up the cargo boxes or whatever you slid in on the floor back." J.A. 324, 310.

DaimlerChrysler acknowledged that it performed no crash tests to determine how the minivan latch would perform in an accident, and during discovery, it acknowledged that "the Chrysler latch was noticeably flimsy versus" the latches of competing minivans that came on the market soon thereafter. While DaimlerChrysler conducted no crash tests to determine how the liftgate latch would perform in accidents, it did have fuel-integrity crash test videotapes and data. But these were destroyed in October 1988. These videotapes included tests showing minivans hit from the left side, the type of crash that the Estate contends was the most likely to cause liftgates to pop open unexpectedly. What the videotapes actually showed, however, is unknown. DaimlerChrysler attributed the destruction of the videotapes and records relating to latch changes to its established document retention program. Under that program, such records would have been retained only for vehicles that were the subject of litigation. The Estate maintained that the destruction of the tapes and documents was part of a coverup to protect DaimlerChrysler from an expensive recall, litigation, and adverse publicity.

In August 1985 and January 1986, DaimlerChrysler received its first reports of liftgates opening following collisions, and within the next ten years, the NHTSA became aware of 207 alleged crashrelated liftgate openings that resulted in a reported 134 ejections through liftgate openings. In the middle of the 1988 model year, DaimlerChrysler changed its minivan design to incorporate a headed striker. Although DaimlerChrysler's standard business practice required management approval of a mid-year model change, Daimler Chrysler's representative at trial testified that no...

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