April 19, 2007

The New Jersey Law Journal highlights a jury verdict on Wednesday in a major Products Liability case.

Ford Motor Co. had been found liable for $10.6 million in compensatory damages (of which $8.5 million was for "pain and suffering") to a paralyzed driver. Ford's allegedly defective throttle design in 1997 Ford Explorers apparently made its accelerator stick in the closed position. When plaintiff Rebekah Zakrocki, then 21, pressed hard on the gas in order to accelerate while driving on the Garden State Parkway, the vehicle lurched forward. Panicked, she turned the wheel to the left, causing the vehicle to roll onto its roof. Her injuries were devastating. Her compensatories were reduced by the "28% comparative negligence" found by the jury (she was speeding, obviously contributing to the potential to lose control of her vehicle).

But Ford was spared a possibly huge punitive damages verdict because its lawyer was allowed to tell jurors about the carmaker's dire financial straits and mass layoffs.

The jury awarded only $42,500 in punitives despite the large compensatories award. Ford's lawyers were allowed, over plaintiff's objections, to enter evidence about the automaker's recent mass layoffs and losses. Ford reported a 2006 full-year net loss of $12.7 billion, and in January the automaker announced plans to eliminate 25,000 to 30,000 jobs in North America and close 14 plants by 2012.

The less efficient a company, the fewer punitives? The more efficient (the more it adds value to the country) the greater the punitives? Decisions like these are surely applauded by defendants, but they are just as surely indications that punitive damages as currently awarded make no sense at all.