Sand Hill Energy, Inc. v. Ford Motor Co.

• Decision Date: 16 May 2002
• Docket Number: No. 1999-SC-1028-DG.,No. 2000-SC-0444-DG.,No. 1999-SC-1029-DG.,1999-SC-1028-DG.,1999-SC-1029-DG.,2000-SC-0444-DG.
• Citation: 83 S.W.3d 483
• Parties: SAND HILL ENERGY, INC., Appellant, v. FORD MOTOR COMPANY, et al., Appellees. and Brenda Smith, Administratrix of the Estate of Tommy Smith, Appellant, v. Ford Motor Company, et al., Appellants, and Ford Motor Company, et al., Appellees. and v. Brenda Smith, Administratrix of the Estate of Tommy Smith, et al. Appellees.
• Court: United States State Supreme Court — District of Kentucky

83 S.W.3d 483

SAND HILL ENERGY, INC., Appellant, v. FORD MOTOR COMPANY, et al., Appellees. and Brenda Smith, Administratrix of the Estate of Tommy Smith, Appellant, v. Ford Motor Company, et al., Appellants, and Ford Motor Company, et al., Appellees. and v. Brenda Smith, Administratrix of the Estate of Tommy Smith, et al. Appellees.

No. 1999-SC-1028-DG.

No. 1999-SC-1029-DG.

No. 2000-SC-0444-DG.

Supreme Court of Kentucky.

May 16, 2002.

Rehearing Denied September 26, 2002.

COPYRIGHT MATERIAL OMITTED

Clint J. Harris, Manchester, Counsel for Sand Hill Energy, Inc.

John A. Rogovin, Brian P. Brooks, O'Melveny & Myers LLP, Washington, DC, B. Todd Thompson, Sallie Jacobs Stevens, Amy Sullivan, Thompson & Miller PLC, Louisville, Counsel for Ford Motor Company, Inc.

R. Scott Madden, Ricky D. Bailey, Morgan and Bailey, Mary Latta Lee, Manchester, Sharon K. Allen, McKee, Counsel for Brenda Smith, Etc.

Hugh F. Young, Jr., Product Liability Advisory Council, Inc., Reston, VA, Virginia Hamilton Snell, Wyatt, Tarrant & Combs, LLP, Louisville, Evan M. Tager, Mayer, Brown & Platt, Washington, DC, Counsel for Product Liability Advisory Council, Inc., Amicus Curiae.

LAMBERT, Chief Justice.

Upon a jury verdict in a products liability action claiming wrongful death, the Estate of Tommy Smith ("the Estate") recovered judgment against Ford Motor Company ("Ford") for three million dollars in compensatory damages and twenty million dollars in punitive damages. The Court of Appeals of Kentucky reversed the judgment on grounds of misallocation of peremptory challenges and ordered a new trial. It did not reach the other issues raised on appeal. We granted discretionary review to the Estate on the issue decided by the Court of Appeals. We also granted Ford's cross-motion for discretionary review to consider the issues it raised on appeal. Sand Hill Energy is likewise before this Court for review of the trial court's directed verdict, affirmed sub silentio, rendered against it.

At the time of his death in 1993 at age thirty, the decedent was working for Sand Hill Energy, Inc., and in the process of unloading bags of ammonium nitrate from a 1977 F-250 Ford pickup truck. The vehicle was parked on a 4% downhill grade, with the motor running and the transmission set in park. While the decedent was behind the vehicle, the transmission "migrated" from park to reverse, and the vehicle moved backwards and up the incline. Smith was slowly crushed to death against a storage shed. He was survived by his widow, Brenda Smith, and their child.

At trial, the Estate presented evidence that the Ford C-6 transmission was defectively designed by virtue of a propensity to migrate from mispositioned false park to powered reverse due to engine vibration. There was evidence that Ford had known of the propensity of the C-6 transmission for such migration for several years prior to the manufacture of the 1977 model F-250 pickup truck involved here. Ford documents bearing 1971 and 1972 dates established that Ford had received numerous customer complaints about its vehicles containing C-6 transmissions that were said to have "jumped out of park into reverse.¹ Other Ford documents reveal its understanding that the shift lever detent design "permits transmission lever placement on a `land' between a positive park position and reverse position with the possibility of vehicle vibration moving the lever from park to reverse in an unattended vehicle."² These documents establish the existence of a design flaw and that Ford had knowledge of it long before the vehicle involved here was manufactured.

Ford defended on grounds that the vehicle, sixteen years old and with at least 143,000 miles at the time of the accident, was in deplorable condition. Ford contended that crucial mechanical parts were broken, misaligned, worn or loose, and that other crucial parts had been replaced with makeshift parts. It maintained that the engine and transmission had been entirely rebuilt, that there was internal and external leakage of brake fluid, and concluded that dirt, debris, and corrosion were the likely cause of the accident. Among other things, Ford produced evidence that in post-accident testing by the U.S. Mine Safety and Health Administration, when the vehicle had been placed undeniably in the park latch position, it still migrated to powered reverse on numerous occasions. On the other hand, Ford verified that if a driver shifted the transmission more than 40%, but less than 60%, of the way from reverse to park, i.e., between the reverse valley and the park valley, the transmission would then be in hydraulic neutral and might move into powered reverse due to vibration forces from the engine. It conditioned this admission upon the claim that such a design was common throughout the industry and represented the state of the art at that time.

In 1980, Ford modified the transmission design at issue here to protect against unexpected shifts from park to powered reverse. Ford was also required by virtue of a consent decree with the National Highway Traffic Safety Association ("NHTSA") to send out more than 22 million warnings of the possibility of unintended park to powered reverse shifts in its vehicles.

I. PEREMPTORY CHALLENGES

The Court of Appeals reversed the trial court upon its allocation of peremptory challenges and we will first address this issue. To properly analyze this issue it is necessary to examine the structure of the litigation.

Initially, the Smith Estate and two Smith individual parties brought a products liability claim against Ford and Mideast Ford Mercury, Inc. Ford then filed a third party complaint against Sand Hill Energy, Inc., the decedent's employer, because prevailing case law required active assertion of a claim to entitle Ford to an apportionment instruction.³ In response to the third party complaint, Sand Hill brought a counterclaim against Ford alleging its liability for some $200,000 in regulatory fines and increased workers compensation costs it had incurred as a result of the accident. Thereafter, Ford dismissed its third party claim against Sand Hill. Thus, the basic structure of the litigation was that Smith sued Ford and Ford brought in Sand Hill by means of a third party complaint.⁴

At trial, however, the court restructured the case and designated the Smith Estate and Sand Hill as plaintiffs against Ford as the defendant. Ford then asserted that the Estate and Sand Hill should share peremptory challenges, but the trial court ruled otherwise and allowed the Estate and Sand Hill separate peremptory challenges.

The Court of Appeals adopted Ford's argument that at the time of trial the interests of the Smith Estate and Sand Hill were not antagonistic. The Court quoted but did not entirely observe CR 47.03(1),⁵ giving little or no attention to the fact that despite restructuring at trial, the Estate and Sand Hill were opposing sides. Instead the court focused exclusively on whether they had antagonistic interests, the portion of the rule that allows separate peremptory challenges to co-parties with antagonistic interests.

There can be no doubt that the Smith Estate and Sand Hill were not co-parties but were opposing sides. While the Smith Estate did not bring an action against Sand Hill, presumably due to the exclusive remedy provision of the Workers Compensation Act,⁶ Ford did bring Sand Hill before the court as a third party defendant. Its purpose may be presumed to have been to obtain an instruction allowing apportionment of all or part of the liability against Sand Hill thereby relieving Ford of any part so apportioned. As such, Ford placed the Smith Estate and Sand Hill on opposing sides, and there was no error in allowing them separate peremptory challenges.

While a strict application of the rule would be sufficient, we make additional observations that bear upon the question of proper allocation of peremptory challenges. The gist of Ford's argument is that by bringing in a third party defendant for purposes of its own and the trial court's determination, for simplicity at trial, that the third party defendant and the plaintiff should be aligned with one another, the plaintiff and the third party defendant should be required to share peremptory challenges. This argument borders on an assertion that the defendant should be able to adopt a strategy for its own benefit that simultaneously diminishes the plaintiff's ability to pursue its own strategy. At the least, this argument appears at odds with notions of fair play. A party should not be able to create a community of common interests between other parties and then assert that interest to their detriment. But for Ford's decision to bring Sand Hill before the court so that it could reduce its own exposure, there would be no question about the plaintiff's entitlement to separate peremptory challenges as Sand Hill would not be a party to the litigation.

Moreover, under these circumstances, it would be extraordinary to find reversible error. While it may appear in retrospect that the Smith Estate and Sand Hill lacked any substantial antagonistic interest, such could not have been known by the trial court at the time the jury was selected.⁷ It has been suggested that the positions parties take at trial should determine whether they have antagonistic interests, but such a rule is utterly unworkable. At the time a trial judge must make the allocation of peremptory challenges, there can be no certainty as to what the evidence will show or precisely what the claims or defenses will be. Moreover, the instant trial court, after having determined that by virtue of their being on different sides, entitling all parties to separate peremptory challenges, nevertheless physically separated the three parties and directed that they have no contact with one another in exercise of their peremptory challenges. We have carefully reviewed Bowling Green Mun. Utils. v. Atmos Energy Corp.,⁸ and...