Patton v. TIC United Corp.

• Decision Date: 25 July 1994
• Docket Number: No. 91-2331-JWL.,91-2331-JWL.
• Citation: 859 F. Supp. 509
• Court: U.S. District Court — District of Kansas
• Parties: Ryan M. PATTON and Kathy Strunk, Plaintiffs, v. TIC UNITED CORPORATION, et al., Defendants.

859 F. Supp. 509

Ryan M. PATTON and Kathy Strunk, Plaintiffs, v. TIC UNITED CORPORATION, et al., Defendants.

No. 91-2331-JWL.

United States District Court, D. Kansas.

July 25, 1994.

James A. Patton, Patton Law Office, Hiawatha, KS, Robin G. Maxon, Topeka, KS, Gary D. McCallister, Chicago, IL, for Kathy Patton Strunk.

James A. Patton, Patton Law Office, Hiawatha, KS, Jerry R. Palmer, Palmer & Lowry, Topeka, KS, Gary D. McCallister, Chicago, IL, for Ryan M. Patton.

Curtis L. Tideman, Lathrop & Norquist, Gregory L. Musil, William V. North, Shughart, Thomson & Kilroy, Overland Park, KS, Daniel M. Dibble, Lathrop & Norquist, Kansas City, MO, Thomas A. Sheehan, R. Lawrence Ward, Mark A. Olthoff, Dennis D. Palmer, Philip W. Bledsoe, Shughart, Thomson & Kilroy, Kansas City, MO, for Lear Siegler Inc., Lear Siegler Diversified Holdings Corp.

Curtis L. Tideman, Lathrop & Norquist, Overland Park, KS, Daniel M. Dibble, Lathrop & Norquist, Jennifer H. McCoy, Brian J. Madden, Lathrop & Norquist, Kansas City, MO, for Hutchinson Wil-Rich Mfg. Co.

Daniel M. Dibble, Lathrop & Norquist, Kansas City, MO, for TIC United Corp., a Delaware corporation.

Gregory L. Musil, William V. North, Shughart, Thomson & Kilroy, Overland Park, KS, Thomas A. Sheehan, R. Lawrence Ward, Mark A. Olthoff, Dennis D. Palmer, Shughart, Thomson & Kilroy, Kansas City, MO, for Rapistan Corp., LS Acquisition Corp., No. 27, LSDHC Corp., LS Acquisition Corp. No. 50, LS Acquisition Corp. No. 6.

MEMORANDUM AND ORDER

LUNGSTRUM, District Judge.

I. Introduction

On May 17, 1994, a jury returned its verdict in this product liability action assessing 76 percent of the fault for plaintiff Ryan Patton's serious injuries to defendant TIC United Corporation ("TIC") because of its breach of the duty to provide a post-sale warning. The jury also awarded damages, which led this court, following the application of Kansas' comparative fault statute and K.S.A. 60-19a02(b), to enter judgment in favor of the plaintiffs against TIC in the amount of $998,735.61. The jury also provided on its verdict form that TIC acted in a wanton manner, thereby entitling plaintiff's to punitive damages under K.S.A. 60-3702.

On July 20, 1994, following the receipt of written submissions, the court conducted a separate proceeding regarding the punitive damage issue as provided for in K.S.A. 60-3702. At the hearing, the parties introduced evidence regarding the proper amount of punitive damages to be awarded. Additionally, the court issued it rulings on several post-trial motions.¹

Having considered the evidence, the papers filed by the parties and their oral arguments, the court is now prepared to issue its ruling on the due process argument contained in TIC's Rule 50 motion (Doc. # 291) and concerning the amount to be awarded as punitive damages in the case. For the reasons set forth below, TIC's due process argument is denied and the court hereby enters judgment for plaintiff's against TIC for punitive damages in the amount of $1,000,000.00.

II. Discussion

A. TIC's Due Process Argument

TIC argues that the court's submission of the punitive damage question to the jury was violative of its due process rights and public policy, and thus erroneous, because prior Kansas law gave no notice to TIC that its conduct in not giving a post-sale warning could be the basis for an award of punitive damages. TIC bought the factory that made the defective cultivator in August of 1987. Ryan Patton's accident occurred in April of 1990. TIC argues that it was not until the Kansas Supreme Court's decision in Patton v. Wil-Rich Mfg. Co., 253 Kan. 741, 861 P.2d 1299 (1993), which was filed on October 29, 1993, that there was a judicially created post-sale duty to warn in Kansas and, therefore, TIC had no notice prior to that date that it could be liable in any manner for punitive damages based on a theory of its breach of a post-sale duty to warn. TIC argues that due process requirements are not satisfied if punitive damages are imposed based on a rule of law created after the occurrence of the conduct which gives rise to the punitive damages claim.

In support of its argument, TIC relies primarily on TXO Production Corp. v. Alliance Resources Corp., ___ U.S. ___, 113 S.Ct. 2711, 125 L.Ed.2d 366 (1993). TXO involved a common-law action for slander of title in the state of West Virginia in which respondents obtained a judgment against petitioner for $19,000.00 in actual damages and $10 million in punitive damages. The Supreme Court granted certiorari to decide whether that punitive damages award violated the Due Process Clause of the Fourteenth Amendment, either because the amount was excessive or because it was the product of an unfair procedure. Throughout the majority of its opinion, the TXO court discusses petitioner's argument that a $10 million punitive damages award — an award 526 times greater than the actual damages awarded by the jury — was so excessive that it must be deemed an arbitrary deprivation of property without due process of law. The court rejected this argument. Id. at ___, 113 S.Ct. at 2722-23. Following this analysis, the court, in the last paragraph of its opinion, summarily disposed of respondent's argument that the procedure followed in the case to award punitive damages "was unconstitutionally vague" because it "had no notice of the possibility that the award of punitive damages might be divorced from an award of compensatory damages." Id. at ___, 113 S.Ct. at 2724. The court stated that:

In Wells v. Smith, 171 W.Va. 97, 105, 297 S.E.2d 872, 880 (1982), the West Virginia Supreme Court of Appeals held that a defendant could be liable for punitive damages even if the jury did not award the plaintiff any compensatory damages. In any event, the notice component of the Due Process Clause is satisfied if prior law fairly indicated that a punitive damages award might be imposed in response to egregiously tortious conduct. Prior law, in West Virginia and elsewhere, unquestionably did so.

Id.

Defendant also cites three state court opinions in support of its argument that the imposition of punitive damages in this case would violate its due process rights or would, at least, be unfair and contrary to public policy. Those cases are Vigil v. Arzola, 102 N.M. 682, 699 P.2d 613 (N.M.App.1983); Kelsay v. Motorola, Inc., 74 Ill.2d 172, 23 Ill. Dec. 559, 384 N.E.2d 353 (Ill.1979); and Nees v. Hocks, 272 Or. 210, 536 P.2d 512 (1975). Each of those cases involved a situation in which an employer had terminated an employee in reliance on long-standing terminable-at-will rules. Prior to the cases in question, the law in each of the three states had been that an employer could discharge an employee for any reason without incurring liability. In each of the three cases, the court reversed the prior terminable-at-will rules and found the employer liable for discharge of the employee based on public policy grounds. However, each of the courts denied any award of punitive damages on the grounds that it would be unfair to punish defendants for conduct which they could not have determined beforehand was even actionable. The Kansas Court of Appeals reached a similar conclusion in Murphy v. City of Topeka, 6 Kan.App.2d 488, 630 P.2d 186 (1981).

TIC contends that the holdings of these state court cases, when analyzed in light of the Supreme Court's statement in TXO, virtually leads to a constitutional rule that a newly created duty, such as defendant contends is present in this case, cannot give rise to a claim for punitive damages. Defendant contends that the proper test is whether prior law fairly apprises an actor that the actor's conduct may lead to a punitive damages award against it. Defendant argues that, in this case, there was no prior law that gave any hint that its failure to issue a post-sale warning might warrant the imposition of punitive damages. Thus, defendant contends that imposition of punitive damages in this case would run afoul of the constitutional mandate of TXO, or at least would be so contrary to the public policy considerations enunciated in the state court cases that Kansas would decline to do so.

In response to defendant's argument, plaintiffs cite the Tenth Circuit case of Southwest Forest Industries, Inc. v. Sutton, 868 F.2d 352 (10th Cir.1989). In Southwest Industries, the court held that punitive damages could be awarded for the retaliatory discharge of employees covered by collective bargaining agreements, even though the Kansas appellate court's opinion extending the cause of action to such persons was handed down during the pendency of the litigation. The court held that the presence of the prior Kansas Court of Appeals decision in Murphy recognizing the cause of action with respect to non-union employees had given the defendant ample notice of the potential for an award of punitive damages. Id. at 356. Thus, even though no Kansas court had spoken directly to the issue of whether employees covered by collective bargaining agreements could bring a retaliatory discharge action at the time of defendant's conduct, the Tenth Circuit held that punitive damages could properly be imposed.

Plaintiffs argue that, like the situation in Southwest Industries, in the present case there was a line of authority in Kansas that gave notice to defendant that post-sale duties did exist under Kansas law, and that such a duty could be extended to defendant under the facts of this case. See Wooderson v. Ortho Pharmaceutical Corp., 235 Kan. 387, 681 P.2d 1038, cert denied 469 U.S. 965, 105 S.Ct. 365, 83 L.Ed.2d 301 (1984); State ex rel. Stephan v. GAF Corp., 242 Kan. 152, 747 P.2d 1326 (1987); Stratton v. Garvey Intern., Inc., 9 Kan.App.2d 254, 676 P.2d 1290 (1984). Plaintiffs further point out that defendant conducts business in many states, some of which had explicitly recognized a post-sale duty to warn under circumstances similar to those present in this case well before Ryan Patton...