Maxey v. Freightliner Corp.

• Decision Date: 25 January 1982
• Docket Number: No. 78-2301,78-2301
• Citation: 665 F.2d 1367
• Parties: Frank MAXEY and Mary Amanda Maxey, Individually and as next Friends of Mary Kathryn Maxey, et al., Plaintiffs-Appellants Cross-Appellees, v. FREIGHTLINER CORPORATION, Defendant-Appellee Cross-Appellant. . *
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1367

665 F.2d 1367

Frank MAXEY and Mary Amanda Maxey, Individually and as next Friends of Mary Kathryn Maxey, et al Plaintiffs-Appellants Cross-Appellees, v. FREIGHTLINER CORPORATION, Defendant-Appellee Cross-Appellant.

No. 78-2301.

United States Court of Appeals Fifth Circuit. ^*

Jan. 25, 1982.

Windle Turley, Sylvia M. Demarest, Dallas, Tex., for Frank Maxey et al.

Strasburger & Price, Royal H. Brin, Jr., Elliott, Churchill, Hansen, Dyess & Maxfield, Thomas G. Nash, Jr., Dallas, Tex., for Freightliner Corp.

A. J. Levy, New Orleans, La., for amicus curiae Ass'n of Trial Lawyers of America.

Jack Pew, Jr., Dallas, Tex., for amicus curiae Tex. Ass'n of Defense Council.

Appeals From the United States District Court for the Northern District of Texas.

Before GODBOLD, Chief Judge, BROWN, CHARLES CLARK, RONEY, GEE, TJOFLAT, HILL, FAY, RUBIN, VANCE, KRAVITCH, FRANK M. JOHNSON, Jr., GARZA, HENDERSON, POLITZ, HATCHETT, ANDERSON, RANDALL, TATE, SAM D. JOHNSON, THOMAS A. CLARK, WILLIAMS and GARWOOD, Circuit Judges. ^**

SAM D. JOHNSON, Circuit Judge:

The Maxeys ¹ brought this action against Freightliner Corporation to recover actual and exemplary damages resulting from the deaths of Billy and Dee Maxey, who were killed when a fuel tank on a truck tractor manufactured by Freightliner ruptured and ignited. Following a jury trial, the district court entered judgment for $150,000 in favor of the Maxey children on the jury's finding that the fuel system manufactured by Freightliner was defectively designed, but set aside the jury's verdict for $10,000,000 in exemplary damages, which was based on the jury's finding of Freightliner's gross negligence in designing the fuel system. The district court also set aside the jury's finding that, by using Freightliner's product, Billy Maxey had assumed the risk of personal injury. The Maxeys appeal the district court's order setting aside the jury's finding of gross negligence, and Freightliner appeals the award of $150,000 in actual damages. A divided panel of this Court affirmed the judgment of the district court. Maxey v. Freightliner Corporation, 623 F.2d 395 (5th Cir. 1980). Finding that, in light of a recent decision of the Texas Supreme Court, which we are Erie ²-bound to acknowledge, it is appropriate to allow the district court to reconsider its decision to set aside the jury's finding of gross negligence on the part of Freightliner, we vacate the judgment of the district court and remand for further proceedings consistent herewith.

I. Facts

On November 21, 1974, Billy and Dee Maxey were en route to Michigan when, while rounding a curve outside of Comanche, Texas, their tractor trailer rig tipped over and skidded to a stop on its right side. The right fuel tank, which was attached to the outside of the truck frame rails, ruptured, spilled its fuel, and ignited. Both Billy and Dee Maxey died as a result of the fire.

Plaintiffs brought this suit, based on diversity of citizenship, 28 U.S.C. § 1332, alleging that the design of the fuel system was unreasonably dangerous, that Freightliner failed to warn users of the product of this danger, and that Freightliner's conduct in the design, testing, and sale of trucks with this fuel system amounted to gross indifference, entitling plaintiffs to an award of both actual and exemplary damages under Texas law.

The case was submitted to the jury on special interrogatories, which found in favor of the Maxeys on their claim that the fuel system and tank were defectively designed, and accordingly awarded the Maxey children $150,000 in actual damages. The jury also found that Freightliner was guilty of gross indifference to the rights and welfare of others in its design of the fuel system and tank, and awarded $10,000,000 in punitive damages. ³ The jury also found, however, that by use of the Freightliner product, Billy Maxey had assumed the risk of injury.

In a subsequent Order and Opinion, Maxey v. Freightliner Corporation, 450 F.Supp. 955 (N.D.Tex.1978), the district court set aside the jury's verdict on the issues of gross indifference and assumption of the risk, and entered judgment on the verdict for actual damages. Relying upon Sheffield Division, Armco Steel v. Jones, 376 S.W.2d 825 (Tex.1964), and Woolard v. Mobil Pipe Line Co., 479 F.2d 557, 565 (5th Cir. 1973), the district court set aside the jury's verdict for exemplary damages on the ground that Freightliner's compliance with industry custom failed to evince "an entire want of care," and therefore negated a finding of "a degree of 'gross negligence' which approximates a fixed purpose to bring about the injury of which the plaintiff complains." 450 F.Supp. at 963, quoting Sheffield Division, Armco Steel Corporation v. Jones, 376 S.W.2d at 828. Finding that neither decedent possessed subjective awareness of the defects inherent in the fuel system, the district court set aside the jury's finding of assumption of the risk. Finally, recognizing that this Court might disagree with its decision to set aside the jury's finding of gross negligence, the district court found that, if exemplary damages were appropriate in this case, the jury's award of $10,000,000 was not excessive.

On appeal, a divided panel of this Court affirmed. 623 F.2d at 395. Relying upon this Court's earlier decision in Hernandez v. Smith, 552 F.2d 142 (5th Cir. 1977), as well as Sheffield Division, Armco Steel Corp. v. Jones, supra, a majority of the panel determined that

Under Texas law, there cannot be that "conscious indifference" to the welfare of others constituting gross negligence for purposes of exemplary damages if it is shown that defendant exercised even "slight" care.

623 F.2d at 399, quoting Hernandez v. Smith, 552 F.2d at 143. Concluding that it was "unable to discern from (a) reading of the record evidence of appellee's failure to use even 'slight' care," the panel majority affirmed the district court's decision to set aside the award of exemplary damages. 623 F.2d at 399. The panel majority also affirmed the district court's determination that Freightliner's compliance with industry custom precluded a finding of gross negligence. With respect to Freightliner's cross-appeal, however, the panel affirmed the district court's decision to set aside the jury's finding of assumption of the risk, as well as its entry of judgment on the award of actual damages. This Court voted to rehear this case en banc, Maxey v. Freightliner Corporation, 634 F.2d 1008 (5th Cir. 1980), thereby vacating the panel opinion. See Fifth Circuit Local Rule 17.

II. The Maxeys' Appeal

In Boeing Co. v. Shipman, 411 F.2d 365 (5th Cir. 1969) (en banc), this Court established the standard by which both this Court and district courts in this Circuit determine whether there is sufficient evidence to submit a case to the jury in connection with motions for directed verdict and for judgment non obstante veredicto. Under the standard established in Boeing, a motion for directed verdict or for judgment n. o. v. should be granted only when the facts and inferences point so strongly and overwhelmingly in favor of the moving party that reasonable persons could not arrive at a contrary verdict. The court should consider all of the evidence-not just that evidence which supports the nonmovant's case-but in the light and with all reasonable inferences most favorable to the party opposed to the motion. If there is substantial evidence opposed to the motion, that is, evidence of such quality and weight that reasonable and fairminded persons in the exercise of impartial judgment might reach different conclusions, the motion should be denied, and the case submitted to the jury. A mere scintilla of evidence is insufficient to present a question for the jury. A motion for directed verdict or judgment n. o. v. should not be decided by which side has the better of the case, nor should the motion be granted only when there is a complete absence of probative facts to support a jury verdict. There must be a conflict in substantial evidence to create a jury question. However, it is the function of the jury as the traditional finder of fact, and not the court, to weigh conflicting evidence and inferences, and to determine the credibility of witnesses. 411 F.2d at 374-75.

As noted in the panel opinion of this case, "(t)he problem, however, lies not with merely stating the rules, but with applying them to a particular set of facts." 623 F.2d at 398. Moreover, cases brought under federal diversity jurisdiction present the additional task of attempting to correctly interpret and apply state law. Following the issuance on August 8, 1980, of the panel opinion in the present case, the Texas Supreme Court decided Burk Royalty Company v. Walls, 616 S.W.2d 911 (Tex.1981), in which that court established a uniform Texas definition of gross negligence, and rejected the "some care" test theretofore often applied by Texas courts in gross negligence cases, as well as by the district court and the panel majority in the case sub judice.

A. The Texas Standard Governing Gross Negligence

The availability of exemplary damages for wrongful death is guaranteed by article 16, section 26 of the Constitution of the State of Texas: ⁴ Every person, corporation, or company, that may commit a homicide, through a wilful act, or omission, or gross neglect, shall be responsible, in exemplary damages, to the surviving husband, widow, heirs of his or her body, or such of them as there may be ....

Almost one hundred years ago, Chief Justice Stayton of the Texas Supreme Court announced the definition of gross negligence that is still controlling today:

Gross negligence, to be the ground for exemplary damages, should be that entire want of care which would raise the belief that the act or omission complained of was a result of a conscious indifference to the right or welfare of the person or persons to be affected by it.

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