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The 4th U.S. Circuit Court of Appeals has erased a $250 million punitive judgment against DaimlerChrysler Corp., finding the evidence of design flaws and post-sale wrongdoing insufficient to support an award of punitives. The court also reversed and remanded for retrial the jury’s finding of liability and its award of compensatory damages, finding that Chrysler should have been able to introduce evidence that a child who was ejected from a Chrysler minivan was not wearing a seat belt. The verdict was awarded in 1997 to the estate of Sergio Jimenez II, who had been sitting in the back seat of a 1985 Dodge Caravan driven by his mother when the minivan was hit in the left rear. The vehicle spun on impact, then rolled over completely, landing back on its wheels. As the van spun, its back door, or liftgate, sprung open. Sergio, 6, was ejected and killed. The boy’s father sued Chrysler, charging that the design on the liftgate latch was defective. The striker post or bolt on the latch rose straight up with no cap or head on it, so that on impact the latch would slip over the striker and the liftgate would open, the complaint said. The impact required was minimal, said plaintiff’s attorney Mark Joye of Charleston, S.C.’s Joye Law Firm. During shipping, he said, the liftgate opened involuntarily in nearly 25 percent of the minivans. The design was changed in later models, but the latch was not recalled. In 1995, a year after Sergio’s death, Chrysler launched a voluntary service action to replace the latches. The plaintiff contended that 38 people were killed and more than 100 severely injured when the liftgates opened. Chrysler contended that the latches were not defective, but in October 1997, a Charleston, S.C., jury ordered Chrysler to pay the estate $12.5 million in compensatories and $250 million in punitives. After the trial, Chrysler filed motions for judgment as a matter of law, a new trial and remittitur. In December 1997, the trial court upheld all the punitives, while reducing the compensatory award to $9 million. Federal Judge Falcon B. Hawkins of the U.S. District Court for the District of South Carolina declined to touch the punitives, he said, because Chrysler’s “actions were extraordinary culpable” and showed “gross disregard for public safety.” Shortly after the verdict, Chrysler hired Gibson, Dunn & Crutcher attorneys Theodore B. Olson and Theodore J. Boutrous to handle the appeal. For Olson, it was one of the last oral arguments he would make before becoming U.S. solicitor general. These attorneys focused much of the appeal on the claim that there was insufficient evidence to support punitives and that this judgment should be set aside as a matter of law, not simply reversed or reduced because of excessiveness, Boutrous said. The plaintiff also charged that Chrysler’s after-sale actions constituted reckless, wanton and willful misconduct — in particular, that Chrysler knew the liftgates were involuntarily opening and had deliberately withheld information from the public about safety problems involving the latch. But Boutrous said the plaintiff did not meet the standards of evidence required in South Carolina to bring a claim of violation of post-sale duty to warn or recall. On Oct. 19, the appellate court reversed the punitives as a matter of law. It found that, under South Carolina law, “[p]unitive damages are designed to punish only behavior that was obviously reckless at the time of commission.” The court said, “We have little difficulty concluding first that the evidence of conscious wrongdoing contemporaneous to the 1984-85 period is lacking. Daimler/Chrysler pioneered the minivan, creating a novel and popular vehicle that combined passenger and cargo areas with easy access to both. The question whether the rear liftgate was a cargo door or a passenger door for safety purposes was not settled by existing standards or practices at that time.” Joye termed the court’s reasoning on punitives incredible. “They acknowledge that Chrysler made a product that was defective, that Chrysler did no crash testing, that Chrysler destroyed documents, that Chrysler secretly changed the latch, yet they take away the jury’s right to make a decision that that conduct was reckless,” he said. The 4th Circuit also ordered a new trial on liability and compensatory damages, finding trial court error in preventing Chrysler from entering evidence that Sergio had not been wearing a seat belt at the time of the accident. The case is Jimenez v. DaimlerChrysler Corp., No. 00-1021.

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