Burke v. Deere & Co.

• Decision Date: 22 September 1993
• Docket Number: No. 92-1990,92-1990
• Citation: 6 F.3d 497
• Parties: Prod.Liab.Rep.(CCH)P. 13,609 Clair W. BURKE, Appellee, v. DEERE & COMPANY, a/k/a John Deere Company, a Delaware Corporation, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 497

6 F.3d 497

Prod.Liab.Rep.(CCH)P. 13,609

Clair W. BURKE, Appellee, v. DEERE & COMPANY, a/k/a John Deere Company, a Delaware Corporation, Appellant.

No. 92-1990.

United States Court of Appeals Eighth Circuit.

Submitted Dec. 17, 1992.

Decided Aug. 27, 1993.

Rehearing and Suggestion for Rehearing En Banc Denied Sept.

22, 1993.

Richard J. Sapp, Des Moines, IA, argued (Richard J. Sapp, W. Don Brittin, Jr., Des Moines, IA, and Tim Harrington, Moline, IL, on the brief), for appellant.

Kirk T. May, Kansas City, MO, argued (Kirk T. May and Brant M. Laue, Kansas City, MO, Randy Shanks, Council Bluffs, IA Bonnie J. Campbell and Craig Kelinson, Des Moines, IA, and Richard E. Mull, Ames, IA, on the brief, for amicus curiae State of Iowa ex rel. Civil Reparations Trust Fund.

and Jefferson D. Sellers and Jack B. Sellers, Sapalpa, OK, on the briefs), for appellee.

Before MAGILL, Circuit Judge, HEANEY, Senior Circuit Judge, and BEAM, Circuit Judge.

AMENDED

BEAM, Circuit Judge.

This is a products liability case tried in federal court under diversity jurisdiction. The jury awarded plaintiff, Clair W. Burke, $650,000 for compensatory damages, and $50,000,000 for punitive damages. The compensatory damages were reduced to $390,000 under a finding of comparative fault and the punitive damages were reduced to $28,000,000 through a district court order of remittitur. Deere & Company (Deere) appeals citing numerous trial errors. We reverse.

I. BACKGROUND

This case is governed by Iowa law. The issues, though significant, should have been relatively uncomplicated. Unfortunately, the litigation went awry due to confusion about various theories of recovery and defense and the admissibility and use of evidence under these theories. The facts are set forth in the district court's order on Deere's motion for judgment notwithstanding the verdict, for new trial or for remittitur. Burke v. Deere & Co., 780 F.Supp. 1225, 1230-34 (S.D.Iowa 1991). We will repeat them only as necessary for our discussion.

Burke was injured on November 13, 1984, when a vertical auger on a model 6620 John Deere Titan Series Combine cut his right hand. Mark Goranson, Burke's employer had purchased the combine new in 1979. Burke's injury occurred when he reached through a clean-out door in the vertical auger's housing to remove debris in the grain delivery system while preparing the combine for transfer to Deere's dealer for a design modification of the clean-out door. Goranson had turned on the auger from the operator's cab just before or just after Burke placed his hand in the combine.

At trial, the district court permitted Burke to present evidence of other accidents involving the Titan series combine and admitted evidence of post-sale and post-accident acts by Deere and its dealers. Some of the evidence showed that Deere implemented both a decal program and, later, a field-modification program after receiving several reports of injuries involving the auger. The district court submitted the issue of punitive damages to the jury.

Deere assigns error to numerous evidentiary rulings and instructions. Deere contends that: (1) the district court's admission of evidence of other accidents and evidence of post-sale conduct by Deere resulted in unfair prejudice; (2) Jury Instruction 36 erroneously instructed the jury that Iowa law imposes a continuing duty to modify or to retrofit; (3) the district court erred in submitting the punitive damages issue to the jury; (4) the punitive damages award is unconstitutional; (5) the verdict form was improper and unduly prejudicial to its case; and (6) the district court erred by permitting argument which informed the jury that a portion of any punitive damages award would be paid into a civil reparations trust fund administered by the district court. ¹

II. DISCUSSION

A. Overview--Theory of the Case

Before further discussing the details of this case, we find it necessary to analyze the issues framed by the pleadings and Iowa law applicable to the theories of recovery and defense. In his complaint, Burke alleged that "[a]s designed, made and sold, the machine [combine] was defective and unreasonably dangerous and was a trap and a snare to the user." Appellant's appendix at 17. There were no allegations of negligent conduct on the part of Deere.

The complaint further alleged: "Deere acted wantonly, with gross disregard for plaintiff's safety and the safety of other users and plaintiff is entitled to punitive damages." Id. While that sentence could be construed to include an allegation of "negligent" acts by Deere, plaintiff's counsel stated at the instruction conference that "[t]his isn't a negligence case." Transcript at 2331. Later plaintiff's counsel said "plaintiff generally claims that the product is defective and unreasonably dangerous." Transcript at 2372. These statements, coupled with counsel's still later statement that "we haven't amended our complaint," transcript at 2384, establish that the plaintiff's only substantive theory of recovery in this case was strict liability in tort under Restatement (Second) of Torts Sec. 402A (1965) (Restatement). ²

The Iowa Supreme Court adopted section 402A of the Restatement in Hawkeye-Security Ins. Co. v. Ford Motor Co., 174 N.W.2d 672, 684 (Iowa 1970). In a series of cases after Hawkeye-Security, including, particularly, Hughes v. Magic Chef, Inc., 288 N.W.2d 542 (Iowa 1980), and Fell v. Kewanee Farm Equip. Co., 457 N.W.2d 911 (Iowa 1990), the Iowa Supreme Court established the elements of the strict liability theory and applicable defenses. For purposes of this case, Iowa Civil Jury Instruction 1000.1 adequately sets forth the elements of a claim under a strict products liability theory. ³ The requirement that the plaintiff prove the product was dangerously defective when it left defendant's control is particularly important in this case. See Iowa Civil Jury Instruction 1001.1(3). The combine at issue here probably left Deere's control at the time of sale. It had clearly left Deere's control at the time the decal retrofit program was completed.

As stated, the only theory upon which the case was tried was strict liability in tort. There were, as also stated, no allegations of negligence--specifically, there were no allegations involving a negligent failure to warn. Had such a claim been made, Iowa law on that theory, including Restatement (Second) of Torts Sec. 388, may have been implicated. ⁴ While the negligence and strict liability theories seem to merge in a case alleging that a product is defective because of inadequate warning, see, e.g., Nassif v. National Presto Indus., Inc., 731 F.Supp. 1422, 1424 (S.D.Iowa 1990), important distinctions remain. Liability for defective design and manufacture relates to conditions existing at the time the product leaves the seller's control. Restatement Sec. 402A cmt. g (1965); Hawkeye-Security, 174 N.W.2d at 684; see also Hale v. Firestone Tire & Rubber Co., 756 F.2d 1322, 1336 (8th Cir.1985) (under Missouri law evidence of post-sale knowledge of a defect may not be the basis for punitive damages based on inadequate warning in strict liability).

In a case alleging negligent failure to warn, on the other hand, there may be a continuing duty to warn of dangers which become known after the product has entered the stream of commerce. See, e.g., Iowa Code Sec. 668.12 (the state-of-the-art defense does not diminish duty to warn concerning subsequently acquired knowledge of a defect). As Deere correctly notes, the issue of inadequate warning was a "red herring" which confused the issues, evidence and burdens of proof in this case. ⁵ This does not mean, however, that the issue of warnings or cautions falls out of this lawsuit.

It is undisputed that when the combine was manufactured and sold Deere provided no specific warnings or cautions concerning the dangers inherent in the auger clean-out system. The combine was fitted at the time of delivery, however, with a general warning decal that stated: "CAUTION. 1) Keep all shields in place. 2) Disengage and shut off all engine power and/or motor power before servicing or unclogging machine. 3) Keep hands, feet, and clothing away from power driven parts." This decal was located at eye level on a toolbox twenty-six inches from the auger clean-out door. Burke testified that, prior to the accident, he had read and understood this warning, transcript at 1517-18, and had read a similar but more extensive warning in the operator's manual. Transcript at 1505. Between the time of sale and the accident, Deere began to receive reports of injuries resulting from contact with the vertical auger. Indeed, there were enough incidents that Deere instigated a "decal" program whereby additional warning or caution decals were prepared and distributed to owners of the Titan combine. The retrofit decals were to be placed directly on the grain clean-out housing. This warning retrofit program seems to have created confusion on the part of the parties and the court as they attempted to formulate jury instructions at the end of the trial.

In order to establish his strict liability claim, Burke had to establish: 1) that the product had a defect and was unreasonably dangerous at the time it left Deere's hands; 2) that the dangerous defect caused the injury; and 3) damages. See, e.g., Fell, 457 N.W.2d at 916. A plaintiff who does not prove all of these elements is not entitled to recovery. The district court instructed the jury that the time of sale was the focal point in the defect inquiry. See Appellee's Appendix at 15, Jury Instruction 10. This may have been incorrect given the decal retrofit program.

The combine was sold, as indicated, without specific auger clean-out cautions. After the sale but prior to the accident, it is arguable that control of the combine was, at least constructively, returned to Deere so that the decal warning program could be completed. ⁶ Although these warnings did...