Gillham v. Admiral Corp., 74-1398

• Citation: 523 F.2d 102
• Decision Date: 25 September 1975
• Docket Number: No. 74-1398,74-1398
• Parties: Zora H. GILLHAM, Plaintiff-Appellant, v. The ADMIRAL CORPORATION, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 102

523 F.2d 102

Zora H. GILLHAM, Plaintiff-Appellant, v. The ADMIRAL CORPORATION, Defendant-Appellee.

No. 74-1398.

United States Court of Appeals Sixth Circuit.

Argued Dec. 9, 1974.

Decided Sept. 25, 1975.

John A. Lloyd, Jr., Thomas A. Huser, Daniel P. Dooley, Frost & Jacobs, Cincinnati, Ohio, for plaintiff-appellant.

Ralph F. Mitchell, Rendigs, Fry, Kiely & Dennis, Cincinnati, Ohio, for defendant-appellee.

Before PHILLIPS, Chief Judge, McCREE, Circuit Judge, and CECIL, Senior Circuit Judge.

McCREE, Circuit Judge.

This is an appeal from an order granting a motion for judgment N. o. v. setting aside an award of punitive damages and attorneys' fees in a products liability action brought to recover damages for injuries caused by a fire in a television set designed and manufactured by The Admiral Corporation (Admiral). Two issues are presented for review: (1) whether the district court erred in concluding that no reasonable person could have found that Admiral's conduct in designing and marketing the television was intentional, reckless, wanton, willful or gross so as to justify the award of punitive damages and attorneys' fees; and (2) whether the district court erred in excluding evidence of Admiral's conduct after appellant's injury, offered to show Admiral's state of mind or intent as a predicate for punitive damages.

We hold that the district court erred in granting the motion for judgment N. o. v. because there was sufficient evidence in the record for a reasonable person to conclude that Admiral's conduct permitted an award of punitive damages and attorneys' fees. Accordingly, we need not decide whether evidence of Admiral's conduct after appellant's injury should have been admitted.

Appellant, Zora Gillham, brought this action in the United States District Court for the Southern District of Ohio against appellee, The Admiral Corporation, seeking compensatory and punitive damages for severe burns and other serious and crippling injuries caused by a fire originating in her Admiral color television set. Jurisdiction is under 28 U.S.C. § 1332 based on diversity of citizenship and damages exceeding $10,000 exclusive of interest and costs. The parties agree that the law of Ohio applies.

The issues of liability and damages were tried separately pursuant to Rule 42(b) of the Federal Rules of Civil Procedure. At the conclusion of the liability phase of the trial, the jury found Admiral liable for Mrs. Gillham's injuries. Thereafter, the claims for compensatory and punitive damages were tried to the same jury. The court permitted the question of punitive damages to go to the jury despite Admiral's motion for a directed verdict on this issue. That motion was taken under advisement in accordance with Rule 50(b) of the Federal Rules of Civil Procedure. The jury awarded compensatory damages of $125,000.00, punitive damages of $100,000.00, and attorneys' fees of $50,000.00.

On January 29, 1974, within a month of the conclusion of the trial, the court granted Admiral's motion for judgment N. o. v., setting aside the award of punitive damages and attorneys' fees. In its order, the court stated that the evidence could

reasonably be interpreted to indicate that the defendant was negligent and even grossly negligent in its design of the television set, in its subsequent activities, and in its failure to warn customers of the potential fire hazard.

It also concluded that Admiral was guilty of a breach of implied warranty. ¹ However, it held that Admiral's conduct was not sufficiently reckless, wanton or outrageous to warrant an award of punitive damages.

The facts are not disputed. Mrs. Gillham purchased an Admiral television set with a 24A2 chassis in June 1964. On the evening of November 19, 1968, she watched a television program in her apartment for about an hour, turned the set off, and observed a blue flash come across the television screen, and left the room. She returned to the room about fifteen minutes later to find the television set on fire with flames rising almost to the ceiling. She attempted to beat out the fire with sofa pillows but when she heard an explosion, she called the fire department. She was severely burned by the flames, which had spread to her doorway by the time she fled the apartment. Burns covered 18.5 percent of her body surface, and 11 percent of her skin was destroyed by third degree burns.

Her burns and the complications resulting from them required her to be hospitalized for 18 months and to have seven operations. The complications attributable to her burns included infection and inflammation of the burns, systemic toxicity, fever, secondary pneumonia, loss of appetite and malnutrition, an acute chronic urinary tract infection, acute pancreatitis, thrombophlebitis, colitis, and a gastrocolonic fistula, which permitted fecal matter to enter her stomach. Her injuries transformed Zora Gillham from an active and vivacious woman into a virtual invalid who requires twenty-four hour nursing care.

In addition to her out-of-pocket expenses of $128,000 for medical care up to the time of trial, the testimony of Dr. William Altemier indicated that as a result of these injuries each year for the rest of her life Mrs. Gillham could be expected to incur medical expenses of $1,000 plus the expenses for full-time nursing care, estimated at $262 per week or $13,624 per year. ²

The evidence established that the fire in Mrs. Gillham's television set was caused by ignition of the set's high voltage transformer, a component also commonly called a horizontal output transformer (H.O.T.) or "flyback" transformer; that this transformer was defectively designed; that the design created a fire hazard; and that Admiral's officials and designers knew that the high voltage transformer in her set and in other Admiral color television sets of the same model was fire hazardous.

Admiral began assembling color television sets of its own design in 1963. Its first color television chassis, consisting of all the electronic mechanisms except a picture tube, speakers or cabinet, was designated the "24" series. Mrs. Gillham's Admiral television contained a 24A2 chassis. Dr. Yon, appellant's expert witness, testified that the principal defect making the transformer in this model fire hazardous was the inclusion of unsuitable paper and wax materials. The paper was interleaved between the transformer windings. One wax compound was used to cover the core of the windings and another to cover the secondary windings.

Admiral made only one heat test on each of five transformers before releasing the design for production. These tests showed that the operating temperatures of the transformers ran from 118.2 degrees Centigrade to 126.2 degrees Centigrade. The American Institute of Electrical Engineering Standard Classification of Insulating Materials specifies that the type of paper insulation employed in this transformer may not be used at temperatures in excess of 105 degrees Centigrade. The temperatures recorded in the heat tests also exceeded the "cold flow" point of the wax compound used on the core, which was 115 degrees Centigrade, and came within three degrees of its softening point, which was 129 degrees Centigrade. In addition, the temperatures came within three degrees of 129o Centigrade, the cold flow point of the wax comprising the outside covering.

Dr. Yon further testified that exposing paper insulation to excessive temperatures and using wax at temperatures exceeding one cold flow distortion point and closely approaching other cold flow and softening points causes these materials to degrade seriously and to wear out much more quickly than expected in normal use. When the materials degrade, the paper cracks and splits, the wax flows out of the transformer core, and the insulation is destroyed at critical points in the transformer. This condition results in electrical failures causing fires from electrical shorts and electrical arcs, which, in turn, ignite the flammable paper and wax. This fire hazard, Dr. Yon testified, should have been apparent to any reasonably prudent and qualified design engineer.

The high voltage transformer in plaintiff's television set was designed by Carl Olson, Project Manager of Admiral's Deflection Laboratory with the assistance of subordinates. Mr. Olson admitted at trial that at the time that he designed the transformer he had anticipated that it might catch fire in customers' homes. Therefore, he designed what Admiral calls a high voltage cage, a device enclosing the high voltage transformer and some other components of the high voltage section. The cage was intended to contain the expected fires. There was testimony that Admiral made two tests in which the transformer was set on fire with a torch, and when the cage was closed, it contained the flames. There was other evidence, however, indicating that it was unreasonable to expect that the cage would contain a fire for any length of time because there were 38 holes in the lid of the cage, an opening at the bottom of the cage, and plastic rivets fastening the cover.

Shortly after the television sets containing this transformer were marketed, Olson and Admiral learned that the wax insulation was melting and dripping out of the high voltage cages and even dripping out of the sets. Olson admitted that this information indicated that the transformers were operating at temperatures higher than Admiral had anticipated. Admiral also learned that fires were originating in its 24A2 chassis caused by the high voltage transformer, and that the fires were not being contained in the cage but were igniting the television sets. In some instances, the resulting fires destroyed home furnishings and dwellings, and caused personal injuries.

As early as October 1964, four customers reported to Admiral that fires had occurred in their Admiral color television sets. All four fires were high voltage fires. Thereafter, Admiral received...