661 P.2d 515 (Okla. 1983), 57815, Thiry v. Armstrong World Industries

Docket Nº:57815.
Citation:661 P.2d 515
Party Name:Kenneth Lee THIRY, Appellant, v. ARMSTRONG WORLD INDUSTRIES, et al., Appellees.
Case Date:March 22, 1983
Court:Supreme Court of Oklahoma

Page 515

661 P.2d 515 (Okla. 1983)

Kenneth Lee THIRY, Appellant,

v.

ARMSTRONG WORLD INDUSTRIES, et al., Appellees.

No. 57815.

Supreme Court of Oklahoma.

March 22, 1983.

Rehearing Denied April 18, 1983.

David L. Graven, Wolf & Wolf, Norman, for appellant.

Scott M. Rhodes, Huckaby, Fleming & Frailey, Oklahoma City, Mort G. Welch, Abowity & Welch, Oklahoma City, Michael W. Hinkle, Holloway, Dobson, Hudson & Bachman, Oklahoma City, submitted on behalf of all appellees.

Page 516

Clarence P. Green, Green, James, Williams & Elliott, Oklahoma City, for appellee Johns-Manville Sales Corp.

DOOLIN, Justice:

The United States District Court for the Western District of Oklahoma has certified two questions of law to the Supreme Court of the State of Oklahoma pursuant to the provisions of 20 O.S.Supp.1980 § 1601 et seq. As certified those questions are:

1. Is a plaintiff under Oklahoma law permitted to allege and prove exemplary and punitive damages as an element of damage in an alleged manufacturers' product liability case?

2. If so, what must be the character of evidence to submit the punitive or exemplary damages to the trier of fact (i.e., willful, wanton, reckless, intentional, etc.)?

An abridged statement of facts necessary to illustrate the nature of the controversy is embodied in the order of certification forwarded to this Court. Those facts disclose and plaintiff alleges he was seriously and permanently injured by the inhalation of insulation materials containing asbestos manufactured by the defendant, Armstrong World Industries, during the scope of his employment. He alleges his respiratory disease is asbestosis.

Plaintiff contends defendants' products were defective in that they failed to adequately warn of health hazards associated with the use of asbestos products. Plaintiff also contends that defendant had an obligation to test its products and remain abreast of the medical and scientific knowledge concerning hazards in the use of products.

Plaintiff seeks recovery of damages for alleged permanent disability and injury as a result of using defendants' products containing asbestos.

In addition, plaintiff alleges that defendants knew that exposure to asbestos would cause asbestosis or if defendants did not know such fact it was due to its gross omission, conscious indifference and utter disregard for persons exposed to the product. In view of such conscious indifference and gross disregard, plaintiff seeks to recover exemplary and punitive damages in such an amount as would deter defendants and others from such conscious indifference and utter disregard for the welfare of users of their products, which plaintiff alleges to be the sum of $1,000,000.00.

Defendants deny plaintiff's alleged respiratory problem is disabling or that it was caused by exposure and use of its products. Defendants deny plaintiff is disabled, if at all, by reason of alleged asbestosis injury and contends his disability results from other causes. Defendants allege the plaintiff was aware of the hazards of working with asbestos because he was aware and had been warned. Defendants further contend the cautions and instructions they did give were adequate. Finally, defendants assert the plaintiff is not entitled to prevail because he voluntarily assumed the risk of a known defect.

Recognizing the need to compensate consumers who are injured by a defective product marketed by a manufacturer, this court adopted the strict liability theory of manufacturers' products liability in the case of Kirkland v. General Motors. 1 By removing the negligence requirement for recovery, strict liability expands the legal consequences of fault to the "innocent" manufacturer of defective products.

But in the quest for developing a shield of protection for the consumer by abolishing privity and negligence requirements, the need for a sword was forgotten. So much attention was devoted to the questions of how innocent manufacturers should be liable for defects in their products that rules applying to the highly blameworthy manufacturer may have been forgotten.

In Smith v. United States Gypsum Company, 2 we stated:

"We leave for another day, the question of whether punitive damages may be recovered

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in an action for manufacturers' products liability." 3

Today is that day.

We hold that a plaintiff may allege and prove exemplary and punitive damages as an element of damage in an alleged manufacturers' product liability case. In doing so we compliment the "shield" of compensation provided by strict liability doctrine with a "sword" of punitive damages. But appropriate control must be exercised to prevent the awarding of excessive judgments. Since the primary purpose of punitive damages is to punish the defendant and deter similar wrongdoing in the future, the "sword" must be used to deter the wrongdoer, not kill him.

Unlike compensatory damages which are imposed for the benefit of the plaintiff, punitive damages are imposed by law on the theory of punishing the offender for the general benefit of society. 4 "Exemplary damages" are intended to restrain the transgressor and warn him and others against committing similar offenses in the future. 5

A jury is authorized to "give damages for the sake of example, and by way of punishing the defendant" ... "in any action for the breach of an obligation not arising from contract, where the defendant has been guilty of oppression, fraud or malice, actual or presumed." 6 Products liability clearly falls within the statutory scope of "any action" and is not within the contract limitation.

In its retributive role, punishment rectifies some of the negative effects of prior misconduct. The important role of punitive damages is the deterence of similar future misconduct.

In order to facilitate this purpose, a general standard of "reckless" disregard for safety of others must sufficiently give notice of the proscribed conduct. Manufacturers should have little difficulty determining whether specific acts fall within the scope of gross misconduct proscribed by the rule.

The manufacturer must also be able to make the product safer. Since the recovery of punitive damages requires a high degree of misconduct, the jury would necessarily have to conclude that the manufacturer was capable of preventing the accident.

To be an effective deterrent the manufacturer must perceive a likelihood of being severely punished. The availability of punitive damages should increase the discovery of offending manufacturers and their punishment by giving the victim additional financial incentive. A manufacturer who markets a defective product likely to cause only minor injuries would no longer feel confident that consumers would not litigate such uneconomical injuries.

It should not be profitable for a manufacturer to knowingly continue to market a defective product. Society indirectly subsidizes the manufacturer of the defective product when the manufacturer is not called on to pay for all the injuries caused by the defective product. Many times the defect is not apparent to the injured consumer. The defect may thus go undiscovered. This is particularly prevalent when the defect is an inadequate warning or design. Manufacturers attempt to shift the financial burden of accident costs onto the shoulders of society.

Manufacturers may also choose to market products with known defects because of the potential drop in sales caused by adequate warnings. It is not only the expense in affixing the warnings but the anticipation that consumers would be afraid to purchase the product that motivates manufacturers to choose to absorb ensuing injury claims.

The objectives of punitive damages can only be achieved if the blameworthy wrongdoers are punished. If manufacturers are

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permitted to insure against punitive damages, only minimal success could be achieved by their imposition. However, we ruled in Dayton Hudson Corp. v. American Mutual Liability Ins. Co. 7 that public policy against insurance protection for punitive damages does not preclude recovery from an insurer by an employer to whom willfulness or gross negligence of an employee became imputable under the doctrine of respondent superior. Such recovery is precluded only when the employer itself is directly guilty of "reckless disregard" of the safety of others in keeping an employee who was in fact "vicious" rather than merely "unfit" or "erratic." To hold the employer liable for the punitive acts of his employee, except in the latter circumstance, would do little to mend the ways of said employer.

There are considerable problems in measuring and controlling punitive damages, particularly in products liability cases, due to the difficulty of determining a proper sum to achieve the objectives of punishment and deterrence.

In order to achieve the goal of deterrence the penalty should increase as the magnitude of the hazard to the public increases. To discourage future misconduct, the penalty must directly attack the profit incentive generated by the marketing misconduct. The award should not only take away any profit realized from the single sale to the plaintiff, but also the profits realized from other such sales of the defective product to others.

The punishment function can only be achieved if the defendant is "stung" by the award. The penalty should therefore not only match the misconduct but of necessity should relate to the wealth of the wrongdoer.

The trial judge must exercise considerable control to avoid excessive punitive damage verdicts since the goal is to punish and deter, not bankrupt and destroy. This is particularly relevant in "mass disaster" cases where there is a significant risk that a...

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