Grimshaw v. Ford Motor Co.
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| Grimshaw v. Ford Motor Co. | |
|---|---|
| Court | Court of Appeals of California, Fourth Appellate District, Division Two |
| Full case name | RICHARD GRIMSHAW, a Minor, etc., Plaintiff and Appellant, v. FORD MOTOR COMPANY, Defendant and Appellant; CARMEN GRAY, a Minor, etc., et al., Plaintiffs and Appellants, v. FORD MOTOR COMPANY, Defendant and Appellant |
| Decided | May 29, 1981 |
| Citation(s) | 119 Cal.App.3d 757 |
| Court membership | |
| Judges sitting | Tamura (Acting P.J.) McDaniel · Kaufman |
| Case opinions | |
| Decision by | Tamura, joined by McDaniel |
| Concurrence | Kaufman |
Grimshaw v. Ford Motor Company (119 Cal.App.3d 757) was a California case about the safety of the Ford Pinto car, manufactured by Ford Motor Company with knowledge of design flaws that could lead to serious injury.
Facts
A 1972 Ford Pinto hatchback stalled on a freeway, erupting into flames when it was rear-ended by a Ford Galaxie proceeding in the same direction. Lilly Gray, the driver of the Pinto, suffered severe burns to her entire body and resulted in her death by congestive heart failure. 13-year-old Richard Grimshaw, a passenger, suffered severe, permanently disfiguring burns to his entire body. Grimshaw underwent numerous skin grafts and extensive surgeries, but still lost portions of the fingers on his left hand and his left ear in the accident. Doctors estimated that Grimshaw would require many more surgeries within the next 10 years.
The plaintiff's expert testified that the Pinto's gas tank was pushed forward upon impact and punctured by a flange or bolt on the differential housing. Fuel sprayed from the tank and entered the passenger compartment through the gaps between the rear wheel wells and the floor.
Design of the Pinto Fuel System In 1968, Ford began designing the subcompact car that would eventually become known as the Pinto. The Pinto's styling required the gas tank to be placed behind the rear axle, instead of over the rear axle as seen in some vehicles at the time, though competitive vehicles manufactured in the USA usually located the fuel tank between the rear axle and the rear bumper, like the Pinto. This placement resulted in only 9 or 10 inches of "crush space" - far less than any other American automobile[citation needed] or Ford subcompact sold overseas. The Pinto's rear bumper lacked the support structures found in larger cars and in all of Ford's overseas models. An exposed flange and a line of bolt heads in the differential housing were sufficient to puncture a gas tank driven forward upon rear impact.
Crash Tests Ford tested numerous prototypes and two production models of the Pinto to determine, among other things, the integrity of the fuel system in rear-end impacts. Crash tests proved that the Pinto could not meet a proposed federal regulation requiring all vehicles manufactured in 1972 to be able to resist a 20 MPH fixed barrier impact without significant fuel spillage, nor the proposed regulation requiring vehicles manufactured in 1973 to resist a 30 MPH impact.
The Cost to Remedy Design Deficiencies Design changes that would have enhanced the fuel system at very little cost include:
→ Longitudinal side members: $2.40 ea.
→ Cross members: $1.80 ea.
→ Shock absorbing "flak suit" for the fuel tank: $4.00
→ Tank within a tank and placement of the tank over the rear axle: $5.08 to $5.79
→ Nylon bladder within the tank: $5.25 to $8.00
→ Placement of the tank over the rear axle with a protective barrier: $9.95
→ Substitution of rear axle with a smooth differential housing: $2.10
→ Protective shield between differential housing and fuel tank: $2.35
→ Improvement and reinforcement of rear bumper: $2.60
→ Additional 8" crush space: $6.40
Equipping the Pinto with a reinforced rear structure, smooth axle, improved bumper, and an additional 8" crush space would have made the fuel tank safer in a 34-38 MPH crash with a car the size of the Ford Galaxie. Adding a bladder or tank within a tank configuration to those improvements would have made the Pinto safe in a 40-45 MPH impact. Placing the tank over the rear axle would have made the Pinto safer in crashes at 50+ MPH.[1]
Procedural History
Defendant's Appeals
Ford contended that the trial court erroneously admitted irrelevant, highly prejudicial documentary evidence. The document, Exhibit No. 125, was a report presented at a Ford production review meeting in April 1971 recommending actions to be taken in light of the proposed 1972 federal regulation. In the report, Ford deferred the installation of "flak suits" or "bladders," available at a cost of $4 to $8 per car, in all Ford cars to 1976, which allowed the company to realize a savings of $20.9 million. A reasonable inference can be drawn from the evidence shows that, despite management's knowledge that the Pinto's fuel system could be made safer at only a marginal cost, Ford preferred its savings over customer safety. Therefore, the evidence was highly relevant.
Ford also contended that it was entitled to a verdict notwithstanding the judgment on the issue of punitive damages on two grounds: 1) punitive damages are statutorily and constitutionally impermissible in design defect cases; and 2) there was no evidentiary support for a finding of malice or corporate responsibility for malice. Ford argued that the punitive damages must be reversed because of erroneous instructions and excessiveness of the award.
At the time of trial, Civil Code § 3294 read: "In an action for the breach of an obligation not arising from contract, where the defendant has been guilty of oppression, fraud, or malice, express or implied, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant." Ford argued that 3294 required an "evil motive," or an intent to injure the person harmed. The court disagreed.
In Taylor v. Superior Court,[2] the California Superior Court held that a conscious disregard of the safety of others is sufficient to meet the animus malus required by 3294, adding: "In order to justify an award of punitive damages on this basis, the plaintiff must establish that the defendant was aware of the probable dangerous consequences of his conduct, and that he willfully and deliberately failed to avoid those consequences." In a commercial context, the imposition of punitive damages deters the furtherance of "objectional corporate policies" and encourages the remedy of safety concerns that might otherwise go unchecked.
Grimshaw produced sufficient evidence to show that Ford was aware of the dangers associated with the faulty design of the Pinto's fuel system, and that those defects could have been addressed at very little cost. Instead, Ford decided to do a cost-benefit analysis between the cost of human life and limb versus corporate profits. Ford's institutional mindset was one of callous indifference to public safety. The court held that there was substantial evidence that management was aware of the design flaws and that Ford could not shirk its corporate responsibility "by giving an employee a non-managerial title and relegating to him crucial policy decisions."
Ford also argued that the amount awarded in punitive damages was excessive. The test for deciding whether the amount was excessive as a matter of law or was so grossly disproportionate as to raise the presumption that it was the product of passion or prejudice is four-prong: 1) the degree of reprehensibility of defendant's conduct; 2) wealth of the defendant; 3) the amount of compensatory damages; and 4) an amount which would serve as a deterrent effect on like conduct by the defendant and others. The court held that Ford's conduct was "reprehensible in the extreme," having endangered the lives of thousands of Pinto owners. In light of Ford's 7.7 billion dollar net worth and 983 million dollar income after taxes in 1976, the court found that the punitive award was approximately 0.005% of Ford's net worth and 0.03% of its income. The ratio of punitive damages to compensatory damages was approximately 1.4:1. Significantly, Ford did not argue about the excessiveness of the compensatory damages. Lastly, the punitive award was sufficient to require Ford to take notice, rather than allowing the company to write it off as a mere business expense.
Plaintiff's Appeals Grimshaw appeals from the order granting a conditional new trial and from the amended judgment entered pursuant to the order. Grimshaw argues that 1) the punitive damages awarded by the jury where not excessive as a matter of law; 2) the specification of reasons was inadequate; and 3) the court abused its discretion in cutting the award so drastically. The appellate court held that the trial court did not err in reducing the jury's award of punitive damages from more than 122 million to 3.5 million or in granting a new trial for excessive damages. There was no evidence showing that the trial judge abused his discretion, nor that he acted in any way that was not fair and reasonable under the circumstances.
