High court upholds $18.4M damage award in DaimlerChrysler case

Divided Tennessee Supreme Court rules against car maker in lawsuit arising from wreck that killed baby in Nashville

Email | Print By E. Thomas Wood

In an automotive liability case that generated national attention, Tennessee's Supreme Court today upheld an award of $18.4 million in damages against DaimlerChrysler Corp. and a Nashville man. With two of the five justices dissenting, the court ruled that a faulty seat design led to the death of a baby on a Nashville street in 2001.

The ruling overturns a Tennessee the Court of Appeals decision that threw out an award of $13.4 million in punitive damages for Jeremy Flax and Rachel Sparkman, parents of eight-month-old Joshua Flax. The appeals court concurred with a $5 million compensatory damage award.

The child perished in a wreck that occurred on June 30, 2001. Louis A. Stockell Jr. of Madison, driving a pickup truck on Old Charlotte Pike at some 70 miles per hour — in a 35-mile-per-hour zone — rear-ended the 1998 Dodge Caravan in which Joshua Flax was riding in a car seat. The front passenger seat collapsed on top of the baby, who was fatally injured.

The parents claimed in their lawsuit that the car maker knew its seats tended to collapse backward in rear-end collisions but did nothing to fix the problem. Paul Sheridan, a former chair of the Minivan Safety Leadership Team at Chrysler, testified that his group decided in 1993 to advocate changes in the seats because of the danger. Sheridan claimed the company's chief engineer ordered him to retrieve and destroy all copies of the committee's meetings. Sheridan was fired in 1994.

In November 2004, a jury in Davidson County Circuit Court found Stockell and DaimlerChrysler jointly liable for the baby's death. It imposed total damages of $105 million, but Judge Hamilton Gayden found that amount excessive and cut it to $27.5 million.

On appeal, DaimlerChrysler argued that the evidence did not prove that it acted recklessly or intentionally in failing to make the seats safer. The Court of Appeals agreed, throwing out all but the $5 million in compensatory damages.

In its ruling today, available at this link, the Supreme Court affirmed the appeals court in denying $9.1 million in damages for emotional distress. But it reinstated the punitive damages imposed by the trial judge.

Writing for the majority, Justice Janice Holder said there was "a wealth of evidence supporting the jury’s verdict." She cited testimony that DaimlerChrysler "had received notice of children injured by yielding seatbacks as early as the mid-1980s," as well as Sheridan's testimony. And she noted that accidents similar to the one that killed Joshua Flax had injured children on six other occasions.

Holder characterized the "proof of DCC’s recklessness" as "powerful."

Justice Gary Wade filed a concurring opinion focused on the issue of what liability DaimlerChrysler under consumer protection statutes for failing to issue warnings about the seat defects. Wade agreed with the majority's decisions on damages.

In partial dissent, Justice Cornelia Clark argued that Judge Gayden had "improperly admitted evidence" of wrecks involving seat collapses that occurred after the vehicle in which the child was killed had been purchased. She agreed with the compensatory damages but said the punitive damage case should have been sent back for retrial.

Justice Bill Koch went further in his dissent, arguing that no punitive damages at all were appropriate and that the compensatory damages case should be retried because of the admission of evidence that Clark mentioned.

The Alliance of Automobile Manufacturers, the Chamber of Commerce of the United States of America and the Product Liability Advisory Council each filed friend-of-the-court briefs in the case supporting DaimlerChrysler.

The lead attorney for the baby's parents was Jim Butler, a litigator based in Columbus, Ga. who specializes in automotive liability cases. Gail V. Ashworth of Gideon & Wiseman in Nashville was local counsel.

Daimler was represented by a team of lawyers from offices of Gibson, Dunn & Crutcher LLP around the country, aided by Lawrence A. Sutter and Joy Burns of Sutter, O'Connell & Farchione, a firm based in Cleveland. Ohio that has an office in Franklin.

Defendant Stockell as not involved in the appeal. A note in today's ruling says that during the 2004 trial, he "failed to attend his scheduled deposition and failed to respond to DaimlerChrysler’s interrogatories and request for production of documents. As a sanction, Mr. Stockell was prohibited from testifying at trial and from raising a defense against the plaintiffs’ claims. In addition, the trial court instructed the jury that Mr. Stockell was at fault."

AmLaw Daily — DaimlerChrysler attorney says company will appeal to U.S. Supreme Court:

In particular, Boutrous says the court's decision to allow evidence of similar injuries that occurred after the crash at the center of the case comes close to penalizing DCC for injuries suffered by other parties not named in the suit--something tort reformers hoped would end after the U.S. Supreme Court slashed such punitive damages against Philip Morris USA in a 2007 tobacco case. That case, along with the Supremes' recent decision to cut punitive damages in the Exxon Valdez case from $2.5 billion to $500 million, had reformers like Boutrous optimistic.