March 14, 2010

L.A. Times Story Mangles the Facts on Punitive Damages

This L.A. Times story ("Toyota Just the Latest Automaker To Face Auto Safety Litigation") is not really about punitive damages. But it does touch on the topic, and in the process it gets the facts all wrong.

The author of the story argues that products defect litigation has made cars safer. As an example of a case that spurred safety innovations, the story reports that in the 1975 case Grimshaw v. Ford Motor Co., "a California appeals court ordered the carmaker to pay $125 million in punitive damages to the victims of one of the Ford Pinto's fiery explosions."

Umm, no. The Court of Appeal ordered Ford to pay $3.5 million in punitive damages, not $125 million. The jury awarded $125 million in punitive damages, but the trial court reduced that amount to $3.5 million (by ordering a conditional new trial subject to a remittitur), and the Court of Appeal affirmed that ruling.

The story comes a little closer to the truth when it says a couple of sentences later that "[t]he award was reduced to $3.5 million in a post-verdict negotiation . . . ." But that's not right either. As noted, the punitive damages award was reduced to $3.5 million by the trial court, not as a result of a post-verdict negotiation. The post-verdict negotiations reduced the compensatory damages award from $3.5 million to a little over $3 million (see footnote 1 in the opinion), but the parties did not agree to a reduction of the punitive damages. If the parties had agreed to a post-verdict of reduction of punitive damages, there wouldn't have been an appeal on the punitive damages, and so the Court of Appeal couldn't possibly have ordered Ford to pay the full amount of the jury's award, as the story reports. In short, the article is not only wrong on the facts, but it reports facts that are just plain nonsensical.

As I said, the Times article isn't really about punitive damages, so perhaps I'm being unfair by zeroing in on that part of the article for criticism. But in my view, this article is an example of a recurring pattern; when reporters in the mainstream media start talking about punitive damages, they often mangle the facts.