Can a manufacturer be held liable for punitive damages in a design defect case, and if so, is there a constitutional limit on the amount that can be awarded?

In 1972, a Ford Pinto driven by Lilly Gray stalled on a freeway and was struck from behind, causing the fuel tank to rupture and the vehicle to ignite. Mrs. Gray suffered fatal burns in the incident, while 13-year-old passenger Richard Grimshaw sustained severe and permanent burn injuries. Subsequent investigations revealed that the Pinto's fuel tank design was defective, with crash tests indicating its vulnerability to rupture in low-speed rear impacts. Ford Motor Company was aware of these design flaws but opted not to implement safer alternatives due to cost considerations.

Grimshaw and Gray's heirs filed a lawsuit against Ford Motor Company. Following a six-month trial, the jury awarded Grimshaw $2,516,000 in compensatory damages and $125 million in punitive damages, with the latter amount later reduced to $3.5 million. The Gray family received $559,680 in compensatory damages.

Grimshaw and the Grays filed a lawsuit against Ford Motor Company and other defendants. A six-month jury trial ensued, resulting in verdicts favoring the plaintiffs against Ford. Ford subsequently filed a motion for a new trial. In response, the court required Grimshaw to remit a significant portion of the punitive damages award, leaving $3.5 million, as a condition for denying Ford's motion.

Ford appealed both the judgment and the denial of its motion for judgment notwithstanding the verdict regarding punitive damages. Grimshaw, in turn, appealed the order granting the conditional new trial and the amended judgment. The Grays cross-appealed the judgment and an order that denied their request to amend their complaint to include punitive damages.

(Tamura, J.)

Yes. Manufacturers can be held liable for punitive damages in design defect cases, and there are constitutional limits on the amount that can be awarded. Punitive damages are permissible in strict products liability cases based on design defect when there is substantial evidence of malice and corporate responsibility for that malice. The constitutional limits on punitive damages require that the award be reasonable and proportionate to the harm suffered. In determining the appropriateness of punitive damages, courts consider the reprehensibility of the defendant's conduct, the disparity between the harm suffered and the punitive damages award, and the difference between the punitive damages and civil penalties authorized or imposed in comparable cases. The amount of punitive damages must not be grossly excessive or arbitrary in relation to the state's legitimate interests in punishment and deterrence. When assessing the reasonableness of a punitive damages award, courts also take into account the defendant's financial status and the potential for the award to deter future misconduct. The reduced punitive damages award in this case was deemed not excessive given the manufacturer's conduct and financial position. This decision reinforces the principle that punitive damages serve an important role in products liability law by deterring manufacturers from knowingly placing defective and dangerous products into the stream of commerce.

Concurrence (McDaniel, J.) Concurred with the majority opinion without providing a separate written opinion.

Concurrence/Dissent (Kaufman, J.) The judgments and majority opinion are correct, except for three specific areas. First, Copp's testimony regarding reasons for his termination by Ford should not have been admitted. Second, there were no violations of the order in limine as claimed. Third, the design defect instructions given to the jury were improper. These issues, while not altering the overall outcome, are significant enough to warrant separate consideration and could impact future product liability cases involving corporate defendants.