Warren v. Shelter Mut. Ins. Co.

• Decision Date: 18 October 2017
• Docket Number: No. 2016–C–1647,2016–C–1647
• Citation: 233 So.3d 568
• Parties: Ron WARREN, individually and on behalf of the Estate of Derek Hebert v. SHELTER MUTUAL INSURANCE COMPANY, et al.
• Court: Louisiana Supreme Court

233 So.3d 568

Ron WARREN, individually and on behalf of the Estate of Derek Hebert

v.SHELTER MUTUAL INSURANCE COMPANY, et al.

No. 2016–C–1647

Supreme Court of Louisiana.

October 18, 2017

MANION GAYNOR MANNING LLP, David Ross Frohn ; PHELPS DUNBAR, LLP, Harry Alston Johnson III ; LUNDY, LUNDY, SOILEAU & SOUTH, Rudie Ray Soileau, Jr. ; MAURICE L TYNES & ASSOCIATES, PLC, Maurice L. Tynes ; For Applicant-Defendant.

Anthony Fazzio; BARTON W BERNARD LAW FIRM, Barton Willis Bernard ; BROUSSARD & HART, LLC, J. Steven Broussard, Randall Earl Hart, Aaron James Broussard ; For Respondent-Plaintiff.

ON WRIT OF CERTIORARI TO THE COURT OF APPEAL, THIRD CIRCUIT, PARISH OF CALCASIEU

GUIDRY, Justice

Ron Warren, individually and on behalf of the Estate of Derek Hebert, filed a petition for damages seeking to recover for the wrongful death of his son in a recreational boating accident under general maritime law and products liability. A jury found the defendant, Teleflex, Inc. ("Teleflex"), liable under the plaintiff's failure to warn theory of the case and awarded compensatory damages of $125,000 and punitive damages of $23,000,000. The court of appeal affirmed. We granted Teleflex's writ application mainly to review whether the trial court properly granted the plaintiff a new trial and whether the award of punitive damages was excessive and resulted in a violation of the defendant's right to constitutional due process. For the reasons expressed below, we affirm the lower court's judgment in part, amend the judgment to award $4,250,000 in punitive damages to the plaintiff, and affirm as amended.

FACTS AND PROCEDURAL HISTORY

On May 7, 2005, Daniel Vamvoras was operating a 1998 Champion boat owned by his father, Glen Vamvoras, on navigable waters consisting of a former channel of the Calcasieu River. Derek Hebert was a passenger in the boat along with several other young people. As the boat was on plane, that is, travelling at a sufficiently high rate of speed to cause the hull to rise out of the water, the hydraulic steering system manufactured by the defendant Teleflex suddenly failed, causing the boat to turn violently, referred to as a "J-hook," ejecting Derek and four of the other passengers from the boat. Because the kill switch had not been engaged, the boat spun around and its propeller struck Derek nineteen times, causing traumatic damage that resulted in his death. A dive team later recovered his body from the bottom of the lake.

Derek's parents filed survival and wrongful death claims against various defendants, as well as a punitive damages claim under general maritime law. Those defendants included Glen Vamvoras and his son Daniel, as well as the operator of another boat that had collided with the Vamvoras boat after the latter lost steering, various marinas, insurers, and manufacturers. Derek's mother's claims were settled after mediation and her suit dismissed. Derek's father proceeded with his wrongful death and survival actions, seeking compensatory damages, punitive damages, and judicial interest thereon.

This matter was tried twice, as explained herein. After years of litigation, the matter finally came to trial in 2014 against defendants Glen and Daniel Vamvoras and Teleflex. This trial was bifurcated as to the issues of liability and exemplary damages. At the close of the liability portion of that first trial, the district court granted the Vamvorases' motions for a directed verdict, dismissing them from the suit and leaving Teleflex as the only defendanton the verdict form. The first jury returned with a finding of no liability on the part of Teleflex; so, the trial court signed a judgment in September 2014 dismissing the plaintiff's claims. However, the trial court thereafter granted the plaintiff's motion for new trial based on what it believed to be prejudicial error during the first trial.

The second trial, which involved only Teleflex as the defendant and which was not bifurcated as to liability and exemplary damages, resulted in a jury verdict in favor of the plaintiff. The jury found liability on the part of Teleflex and awarded compensatory damages of $125,000 and exemplary damages of $23,000,000. Based on this verdict, the trial court signed a judgment in December 2014 awarding these amounts, as well as prejudgment interest on compensatory damages.¹

Teleflex sought a JNOV or, in the alternative, a motion for new trial or a remittitur on punitive damages. The trial court denied Teleflex's post-trial motions following a hearing. Thereafter, Teleflex filed a suspensive appeal. The court of appeal, as discussed more fully below, affirmed. Warren v. Shelter Mut. Ins. Co. , 15–354 (La. App. 3 Cir. 6/29/16), 196 So.3d 776. We granted Teleflex's writ application to review that judgment. Warren v. Shelter Mut. Ins. Co. , 16–1647 (La. 1/13/17), 215 So.3d 246.

DISCUSSION

In this court, Teleflex asserts six assignments of error.

1. The district court granted a new trial without determining whether the issue on which it based that grant was material to the verdict or had prejudiced the plaintiff, or properly determining that there had been a miscarriage of justice, and the appellate court erred in affirming that ruling.

2. The court of appeal erred in affirming the trial court's rejection of proposed jury instructions informing the jury that the duty of a component part manufacturer to warn differs from that of the manufacturer of an end product sold to the public.

3. The court of appeal erred in affirming the trial court's decision in the second trial to "un-bifurcate" and allow punitive damages evidence and argument to be presented during the trial of liability, and further erred in failing to address the substantial prejudice and unfairness to Teleflex caused by un-bifurcation.

4. The court of appeal erred in affirming the trial court's finding of liability for punitive damages despite a lack of evidence of reckless, wanton, or callous conduct.

5. The court of appeal erred in affirming the trial court's acceptance of the amount of punitive damages, which is grossly excessive as a matter of federal maritime and constitutional law.

6. The court of appeal erred in failing to scrutinize fully the fairness and propriety of the verdict and judgment in this punitive damages case in light of: (a) the lack of evidence supporting punitive damages; (b) introduction into the case of passion and prejudice resulting from the failure to bifurcate liability from punitive damages; (c) erroneous instructions on the duties of Teleflex; and (d) a grossly disproportionate punitive damages award.

Liability and Compensatory Damages

Before we address these individual assignments, we will summarize the basis on which the jury found liability on the part of Teleflex, which Teleflex specifically assigned as error in the court of appeal. Warren , p. 35, 196 So.3d at 799–800. The court of appeal found no manifest error in the jury's finding that Teleflex had breached a duty owed to the plaintiff and that such breach had caused the plaintiff's damages. Id. , p. 36, 196 So.3d at 800. Although Teleflex challenges the process that resulted in that finding of liability as corrupted by the trial court's failure to bifurcate trial on the liability claim from trial on the punitive damages claim, and further corrupted by the trial court's refusal to instruct the jury on the duty of a component part manufacturer, the court of appeal nevertheless affirmed the jury's verdict on liability and compensatory damages for failure to warn.

The plaintiff sought damages under general maritime law and the Louisiana Products Liability Act alleging Teleflex had failed to warn of the inherent danger in its product. The plaintiff's theory of liability at trial was that the steering system itself was defective due to an inherently dangerous risk that was not obvious to the user such that it required adequate warnings, and the warnings Teleflex had provided were not adequate. Teleflex's defense was that its product was not defective and that such warnings were not necessary, because the loss of fluid would result in tell-tale signs indicating to the operator that there was an issue with the steering system. Teleflex also asserted the leaks in the system in this case were caused by the replacement by an unknown party of one of the hydraulic hoses with a non-Teleflex hose, and that there were obvious signs of leaking fluid in the boat, which someone had attempted to resolve by using a pipe-wrench on the hose coupling.

The court of appeal cited the law as follows, which Teleflex does not contest.

In considering whether a warning in an instruction manual is inadequate because it should have been placed on the product itself, a court must consider the nature and severity of danger to be warned against, likelihood that the product will be used by persons who have not read the manual, practicality and effectiveness of placing the warning on the product itself, and any other relevant factors.

Jaeger v. Auto. Cas. Ins. Co. , 95–2448, pp. 8–9 (La. App. 4 Cir. 10/9/96), 682 So.2d 292, 297, writ denied , 96–2715 (La. 2/7/97), 688 So.2d 498 (citing Black v. Gorman–Rupp , 94–1494 (La. App. 4 Cir. 5/16/95), 655 So.2d 717 ).

In Pavlides v. Galveston Yacht Basin, Inc ., 727 F.2d 330, 338 (5th Cir.1984) (footnote omitted), the federal Fifth Circuit stated:

It is a fundamental principle of the law of product liability in this Circuit that a manufacturer has a responsibility to instruct consumers as to the safe use of its product and to warn consumers of dangers associated with its product of which the seller either knows or should know at the time the product is sold. Borel [v. Fibreboard Paper Prods. Corp. ], 493 F.2d [1076, 1088–90 (5th Cir.1973), cert. denied , 419 U.S. 869, 95 S.Ct. 127, 42 L.Ed.2d 107 (1974) ]; see Restatement (Second) of Torts, Section 402 A. comment j. In assessing what hazards are foreseeable, a manufacturer is held to the status of an expert.

Borel , 493 F.2d at 1089. The lack of

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