Clark v. Chrysler Corp.

• Decision Date: 01 February 2006
• Docket Number: No. 04-5279.,04-5279.
• Parties: Dorothy CLARK, Plaintiff-Appellee, v. CHRYSLER CORPORATION, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

436 F.3d 594

Dorothy CLARK, Plaintiff-Appellee, v. CHRYSLER CORPORATION, Defendant-Appellant.

No. 04-5279.

United States Court of Appeals, Sixth Circuit.

Argued: April 22, 2005.

Decided and Filed: February 1, 2006.

COPYRIGHT MATERIAL OMITTED

ARGUED: Theodore J. Boutrous, Jr., Gibson, Dunn & Crutcher, Washington, D.C., for Appellant. Richard Hay, Law Office of Richard Hay, Somerset, Kentucky, for Appellee. ON BRIEF: Theodore J. Boutrous, Jr., Thomas H. Dupree, Jr., Gibson, Dunn & Crutcher, Washington, D.C., Lawrence A. Sutter, Sutter, O'Connell, Mannion & Farchione, Cleveland, Ohio, for Appellant. Richard Hay, Law Office of Richard Hay, Somerset, Kentucky, for Appellee.

Before: KENNEDY and MOORE, Circuit Judges; RESTANI, Chief Judge.^*

RESTANI, C.J., delivered the opinion of the court.

KENNEDY, J. (pp. 612 - 614), delivered a separate opinion concurring in part and concurring in the judgment.

MOORE, J. (pp. 614 - 627), delivered a separate opinion concurring in part and dissenting in part.

OPINION

RESTANI, Chief Judge.

Chrysler Corporation appeals the district court's order, entered on remand, upholding Dorothy Clark's $3 million punitive damage award as reasonable and proportionate to the wrong committed and denying Chrysler's motions for judgment as a matter of law, for remittitur, and for a new trial. Because we conclude that the punitive damage award is constitutionally excessive, we remit the amount of punitive damages to $471,258.26.

I. BACKGROUND¹

On October 14, 1993, Charles Clark was fatally injured in an automobile accident while driving a 1992 Dodge Ram club cab pickup truck. The accident occurred when Mr. Clark pulled into an intersection in front of an oncoming vehicle and the two vehicles collided. Mr. Clark, who was not wearing a seat belt, was ejected from his vehicle and died a short time later.

Mr. Clark's wife sued Chrysler, claiming that its pickup truck was defectively and negligently designed. On October 1, 1997, after a three-day trial, the jury rendered a unanimous verdict in favor of Mrs. Clark on claims of strict liability, negligence, and failure to warn. The jury found that Chrysler and Mr. Clark were each 50% at fault and returned a verdict of $471,258.26 in compensatory damages and $3,000,000 in punitive damages. The court entered a judgment against Chrysler for $3,235,629.13, reflecting 50% of the compensatory damages plus the $3 million punitive damages award.

After trial, Chrysler renewed its request for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50 and for a new trial pursuant to Federal Rule of Civil Procedure 59. In its motion for judgment as a matter of law, Chrysler argued that because there was no evidence of "gross negligence," an award of punitive damages was improper. [J.A. at 81-85.] Chrysler alternatively argued for a new trial in its Rule 59 motion. The district court denied both motions. [J.A. 87-92.] On appeal, we affirmed the district court's judgment and upheld the jury's compensatory and punitive damage awards.

Several months later, the Supreme Court decided State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003). In State Farm, the Court elaborated on the procedural and substantive constraints that the Due Process Clause imposes on punitive damage awards. After State Farm was issued, Chrysler petitioned for a writ of certiorari, requesting that the Court "grant certiorari, vacate the decision below, and remand for further consideration ("GVR") in light of its recent decision in State Farm v. Campbell." Pet. for Writ of Cert., No. 02-1748, 2003 WL 22428164, at *2 (U.S. May 21, 2003).² In its petition, Chrysler insisted that the jury's $3 million punitive damage award was constitutionally excessive. Id. 2003 WL 22428164 at *18-*25. Clark opposed the petition, arguing that Chrysler had waived its constitutional challenge by failing to raise it in its post-judgment motions before the district court, and that even if the issue was preserved for review, the amount of the punitive damage award was within constitutional boundaries. See Resp't Br. in Opp'n to Pet. for Writ of Cert., No. 02-1748, 2003 WL 22428165, at *19-*30 (U.S. July 1, 2003).

On October 6, 2003, the Supreme Court granted Chrysler's petition, vacated our judgment, and remanded the case to us "for further consideration in light of State Farm." Chrysler Corp. v. Clark, 540 U.S. 801, 124 S.Ct. 102, 157 L.Ed.2d 12 (2003). We, in turn, remanded the case to the district court for further proceedings in accordance with the Supreme Court's order. See Clark v. Chrysler Corp., 80 Fed.Appx. 453 (6th Cir.2003). On February 6, 2004, the district court upheld the jury's award, and denied Chrysler's motions for judgment as a matter of law, for remittitur, and for a new trial. See Dist. Ct. Op. & Order (Feb. 6, 2004), J.A. at 31-43. Chrysler timely appealed.³

II. DISCUSSION

In State Farm, the Supreme Court elaborated on the measure of punishment, by means of punitive damages, that a state may impose upon a defendant in a civil case. The Court reiterated the principle that, "[w]hile States possess discretion over the imposition of punitive damages, it is well established that there are procedural and substantive constitutional limitations on these awards. The Due Process Clause of the Fourteenth Amendment prohibits the imposition of grossly excessive or arbitrary punishments on a tortfeasor." 538 U.S. at 416, 123 S.Ct. 1513 (citations omitted). The Court also expressed its concern with the manner in which punitive damages systems are administered, noting that vague instructions "do little to aid [a jury] in its task of assigning appropriate weight to evidence that is relevant and evidence that is tangential or only inflammatory." Id. at 417-18, 123 S.Ct. 1513. In light of these concerns, the Court applied the three guideposts set forth in BMW v. Gore,⁴ and concluded that a punitive damage award of $145 million, where compensatory damages were $1 million, was constitutionally excessive. Id. at 418-29, 123 S.Ct. 1513.

Because of State Farm's narrow focus on punitive damages and the Court's limited GVR order, we do not reconsider our earlier holdings regarding liability, compensatory damages, or the sufficiency of evidence to support some award of punitive damages.⁵ We must, however, decide whether State Farm requires us to change our conclusion that the amount of the punitive damage award was within constitutional limits. We conclude that it does.

In the discussion below, we explain that (A) Chrysler's claim regarding the constitutionality of the award has been preserved for review; (B) the award is constitutionally excessive and should be reduced to $471,258.26 and (C) a new trial on the amount of punitive damages is warranted only if the reduced award is rejected by Mrs. Clark.

A. Chrysler's claim regarding the constitutionality of the award has been preserved for review

The parties dispute whether Chrysler properly preserved its claim that the punitive damage award is constitutionally excessive. We conclude that even though Chrysler initially waived this challenge by failing to raise it in its post-trial motions before the district court, subsequent proceedings in the Sixth Circuit and Supreme Court preserved the issue for review.

Challenges to the excessiveness of verdicts must be brought in the trial court through post-trial motions. Young v. Langley, 793 F.2d 792, 794 (6th Cir.1986). This procedure allows the trial judge an opportunity to initially correct errors, exercise his discretion, and create a full record for appeal. Id. Absent the timely filing of a post-trial motion and the trial court's ruling thereon, an appellate court will generally not review the alleged excessiveness of damages awards. Id.; see also O'Connor v. Huard, 117 F.3d 12, 18 (1st Cir.1997) ("We generally will not review a party's contention that the damages award is excessive or insufficient where the party has failed to allow the district court to rule on the matter."); DeWitt v. Brown, 669 F.2d 516, 524 (8th Cir.1982) (citations omitted) (noting that the "inadequacy or excessiveness of a verdict is basically, and should be, a matter for the trial court which has had the benefit of hearing the testimony and of observing the demeanor of the witnesses and which knows the community and its standards").

In Local Union No. 38, Sheet Metal Workers' International Ass'n v. Pelella, for example, the Second Circuit refused to decide whether the punitive damage award was constitutionally excessive because the appellant failed to raise the issue in its post-trial motions before the district court. 350 F.3d 73, 89-90 (2d Cir.2003), cert. denied, 541 U.S. 1086, 124 S.Ct. 2821, 159 L.Ed.2d 248 (2004). Although State Farm was decided during the course of the appeal and the appellant raised the issue in its reply brief, the Pelella court held that the matter had been waived. See id. The court reasoned that the appellant "could unquestionably have invoked Gore in the district court proceedings to suggest that the jury's punitive award was constitutionally excessive." Id. at 90.

Similarly, in this case Chrysler did not challenge the punitive damage award as constitutionally excessive in either of its post-trial motions. See J.A. at 63-74, 75-86. Unlike in Pelella, however, we nevertheless addressed the issue on appeal. Specifically, we stated that,

Chrysler also maintains that ... the jury's award was so excessive as to violate the Due Process Clause. [We do] not agree.... In none of its briefing does Chrysler indicate why, under Gore, a due process violation occurred in this case. However, a review of the [three] factors quickly reveals that this case is a far cry from Gore.

Clark, 310 F.3d at 481-82. As a result, although Chrysler waived its constitutional challenge by failing to raise it in its post-trial motions before the district court,⁶ our...