312 F.3d 998 (9th Cir. 2002), 99-15185, White v. Ford Motor Co.

Docket Nº:99-15185.
Citation:312 F.3d 998
Party Name:Ginny V. WHITE; Jimmie D. White, Plaintiffs-Appellees, v. FORD MOTOR COMPANY, a Delaware corporation, Defendant-Appellant, and Orscheln Company, a Missouri corporation, Defendant.
Case Date:December 03, 2002
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

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312 F.3d 998 (9th Cir. 2002)

Ginny V. WHITE; Jimmie D. White, Plaintiffs-Appellees,


FORD MOTOR COMPANY, a Delaware corporation, Defendant-Appellant,


Orscheln Company, a Missouri corporation, Defendant.

No. 99-15185.

United States Court of Appeals, Ninth Circuit

December 3, 2002

Argued and Submitted May 1, 2000.

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Andrew L. Frey (argued), Mayer, Brown, Rowe & Maw, New York, NY, Evan M. Tager and Miriam R. Nemetz (briefed), Mayer, Brown, Rowe & Maw, Washington, D.C., and W. Chris Wicker (briefed), Woodburn & Wedge, Reno, NV, for the appellant.

Shanin Specter (argued), Kline & Specter, P.C, Philadelphia, PA, Don Nomura, Laxalt & Nomura, LTD., Reno, NV, for the appellees.

Appeal from the United States District Court for the District of Nevada; David Warner Hagen, District Judge, Presiding, D.C. No. CV-95-00279-DWH.

Before WOOD1, KLEINFELD, and GRABER, Circuit Judges.

Opinion by Judge Kleinfeld; Partial Concurrence and Partial Dissent by Judge Graber.


KLEINFELD, Circuit Judge:

This decision addresses several issues, the most important of which relate to punitive damages.2

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This case went to jury trial, but on the critical factual points, there is not much dispute. Where there is, the facts are of course taken favorably to the verdict.3

On October 9, 1994, Jimmie White parked his company's 1993 Ford F-350 pickup truck in his driveway. The driveway is sloped, not level, and the truck was parked on the slope pointing downhill. Mr. White testified that he put the truck into first gear, set the parking brake by stepping on the brake pedal, and went inside. He did not lock the truck.

The Whites' three-year-old son Walter was playing outside, with Mrs. White checking on him through the window from time to time. While she wasn't watching, Walter got into his father's pickup truck. The Whites' theory of the case was that Walter pulled or kicked it out of first gear into neutral. The gearshift lever is a long stalk sticking up from the floor. A piggy bank turned up under the seat after the accident, so Walter may have been clambering after his lost piggy bank. The parking brake didn't hold the truck after it was shifted from first to neutral, and it started rolling. Walter got out the passenger door, possibly falling out when the truck rolled over a bump. Tragically, the rear dual wheels of the truck rolled over the little boy's chest and killed him.

The Whites brought this products defect case against Ford and against Orscheln Company,, which made the parking brake for Ford. The Whites alleged strict product liability (defective design), negligence, failure to warn, intentional misrepresentation, and negligent infliction of emotional distress. Orscheln settled during the trial. The jury came back with a verdict against Ford for $2,305,435 in compensatory damages and $150,884,400 in punitive damages. The district court remitted the punitive damages to $69,163,037.10.

The plaintiffs' theory of the case was that the parking brake let go despite being set, and let the truck roll. Ford knew the parking brake was prone to failure, but kept selling it without recalling it and without warning consumers of the danger. Mr. White testified that if he had been informed that Ford had a problem with the parking brake sometimes letting go, he wouldn't have parked his truck on a slope, and if he'd been advised of a recall, he would have brought the truck in immediately to be fixed.

Ford offered alternative theories of how the accident could have occurred. One was that Mr. White had put the car in first gear but not pressed the parking brake down, and the little boy pulled the gear shift into neutral. If this is how the accident occurred, then the theory on which the Whites recovered damages, that the parking brake sometimes allowed trucks to roll despite being engaged and that Ford should have warned its customers, would be irrelevant to this accident. But taking the evidence most favorably to the plaintiff, we assume that the jury believed Mr. White's recollection that he had engaged the parking brake. Mr. White's account was bolstered by testimony that the boy couldn't have pulled the truck out of first gear into neutral, had the parking brake not been engaged, because when it was on a slope the force needed to pull it out of first was considerable.

Parking brakes work with a cable pulled by the pedal, a ratchet wheel, and a pawl. A pawl is a hinged or pivoted finger that

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sticks into a tooth of the ratchet wheel. Parking brakes tend to get loose over time, because the cable stretches. In the early nineties, Orscheln designed a parking brake for Ford that was self-adjusting, so that even as the truck aged, the parking brake would still stay tight. Ford started production in 1991 of model year 1992 F-series pickup trucks with the Orscheln self-tightening parking brake.

By 1990, Ford had pre-production reports of potential problems with the parking brake being designed for the 1992 F-series trucks. By the time the F-series trucks were in production, the reports had increased, from many different sources. Sometimes, customers reported, the parking brake pressed freely right down to the floor without engaging. Ford called this the "skip-through-on-apply" or "skip out" problem. Also, some customers reported that their trucks rolled despite the parking brake being engaged. Ford called this the "rollaway" problem.

Ford told Orscheln to figure out what was going wrong and fix it, and threatened to change suppliers if Orscheln couldn't fix it. Orscheln had a great deal of difficulty getting any parking brakes to fail in laboratory conditions, unless they subjected the brake to extraordinary abuse. In fact, Orscheln and Ford at first believed that the brake could not fail unless subjected to severe abuse. The evidence allowed for the conclusion that the reason why they couldn't easily replicate the failure was because it was a rare event or, alternatively, because it happened only with severe abuse. Of the roughly 785,000 1992 and 1993 F-series trucks with this brake, there were only 73 reports of skip-throughs or rollaways between 1992 and 1993, affecting about one truck in ten thousand.

In 1992, Ford established its own engineering group headed by a somewhat junior design engineer, Timothy Rakowicz, to try to figure out the problem. Following Orscheln's tests, by November 1992, Ford and Orscheln had narrowed in on the problem. Sometimes the tip of the pawl would slip over the tops of the teeth instead of engaging in one of the gaps between the teeth of the ratchet wheel. In April 1993, Mr. Rakowicz wrote a draft report saying that a "tip-on-tip" condition could cause disengagement of the parking brake and that this problem rendered the brakes "defective." Mr. Rakowicz wrote that this phenomenon could cause vehicles parked on an incline to roll down a hill, and that it warranted a field campaign and owner notification. But more senior engineers at Ford disagreed with the draft and required Mr. Rakowicz to tone it down, saying instead that the Orscheln test was not valid. Meanwhile, the evidence of problems with F-series brakes piled up, and by March 1993, the National Highway Traffic Safety Administration had become involved in the investigation, having received reports of rollaways.

By May of 1993, Orscheln had developed a fix. All it took was a plastic wedge over the pawl, to make sure it pressed down between the teeth instead of skipping over them. By August 1993, enough of the plastic wedges were manufactured so that Ford could install them in all the trucks on the road. Of course, if all the trucks on the road were modified with the wedge, it would also take the expense of notifying all the customers and paying for the shop labor to disassemble the truck enough to put in the fifteen cent plastic wedge. In addition to the expense, there were other reasons not to recall all the trucks and put in the wedge. The fix eliminated the self-adjusting feature of the parking brakes. Thus, with the fix installed, the skipovers and rollaways from this cause would be eliminated, but as the trucks aged, the parking brakes would get loose. Also, the

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Orscheln engineers thought the "skip out" was more an inconvenience than a safety problem, because the user would feel the brake going to the floor with no resistance instead of engaging, and had only to release it and press it down again to get it to engage.

For these reasons, instead of recalling the pickup trucks, Ford issued a Technical Service Bulletin to dealers, in November 1993. The bulletin told dealers to install the wedges if customers complained. Meanwhile, though, reports of rollaways were continuing to accumulate, and the National Highway Transportation Office of Defect Investigation was pressuring Ford to recall the trucks. These problems were reported in only a tiny percentage of trucks sold, about one in ten thousand. But still, big pickup trucks rolling downhill without drivers are dangerous, even if only one of these had so far actually involved an injury.

The White truck rolled down the driveway and killed Walter White in October 1994. It had been purchased in September 1993. By then Ford had already figured out that there was a potential rollaway problem. At the end of August 1994, which was before the White accident, Ford decided to recall the pickup trucks to install the plastic wedges. But by the time the recall notice was formulated and mailed out to dealers, it was November, after the White accident. Thus the accident happened after the brake problem was discovered and figured out, after...

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