Punitive Damages: Conflict of Laws
Posted in Punitive Damages on February 9, 2015
Scott v. Ford Motor Company, (First District, March 26, 2014 | Certified for Partial Publication) 2014 WL 1244358 — Cal.Rptr.3d —-
A former owner and operator of multiple service stations filed an action against Ford Motor Company, alleging that exposure to asbestos while servicing brakes and clutches supplied by Ford had caused him to develop mesothelioma. The plaintiff asserted various products liability theories, including failure to warn, design defect, and negligence, as well as fraud.
When the plaintiff attempted to introduce Ford’s annual report to support his claim for punitive damages, Ford argued that the trial court should apply Michigan law, which unlike California, does not permit punitive damages unless specifically authorized by statute. Using a government interest analysis, the trial court agreed with Ford, and concluded that Michigan’s interest as embodied in its prohibition of punitive damages would be more impaired if its law were not applied under the circumstances than would California’s interest in allowing a claim for punitive damages. The court ruled the annual report inadmissible and precluded the claim for punitive damages.
Following a verdict in favor of the plaintiff, the court of appeal affirmed the judgment of liability and award of compensatory damages, but remanded the case for a trial on liability and the amount, if any, of punitive damages, finding that because there was “no Michigan interest in the implementation of its policy in the courts of California, no “true” conflict of law exists”:
[W]e have difficulty pinpointing any interest of Michigan in the application of its law to this dispute. While all conflicts of law are, at bottom, conflicts of public policy between judicial systems, the prominence of the debate over punitive damages highlights that aspect of the conflict here. Reasonable states can and do differ over the efficacy and appropriateness of punitive damages as a civil remedy. Michigan’s ban on punitive damages is the expression of a particular view of the appropriate role of the courts in adjudicating civil disputes: to compensate, rather than to punish. It represents a declaration of public policy about the wisdom of granting punitive damages as a legal remedy for noncriminal conduct. In California, our Legislature has resolved the debate in precisely the opposite manner. While Michigan has a strong interest in seeing its view of the appropriate policy carried out in its own courts, it has a correspondingly minimal interest in seeing the same policy implemented in the courts of California.
Ford argues we should set aside the judgment of the California Legislature and import Michigan’s policy because the conduct underlying its failure to warn occurred in Michigan on behalf of a corporation domiciled in that state. Because the same argument would hold in all 40–odd other states permitting punitive damages, Ford effectively argues it should be found to carry a nationwide shield from punitive damage liability because the state in which it maintains its headquarters has decided punitive damages are poor public policy. We cannot agree, any more than we expect a Michigan court would yield to a plaintiff’s plea to impose punitive damages on a California-based corporation because its home state has made the opposite policy judgment. On a matter of public policy as significant as the imposition of punitive damages, states have the prerogative to establish a uniform rule applicable to all enterprises that elect to do business there, but they have no legitimate interest in imposing that policy decision on the courts of a sister state. …
Even if Michigan had expressed an intent to protect its resident businesses from punitive damages, the state would have no legitimate interest in imposing that intent in California.