Grimshaw v Ford Motor Company
The Supreme Court of the United States has been whittling away
at punitive damages. The idea of putting a cap on the size of punitive
damage awards is an extraordinarily bad idea. As much as anyone might
reasonably hate lawyers, limiting the size of punitive damage awards is
not an answer. Perhaps, limiting the size of contingency fees is.
The following is and excerpt from the book The Truth About
Automobiles. It is published here because I feel so strongly that
limiting punitive damages is an egregious error.
The Pinto
The following is somewhat of a digression, but it is very
important. It concerns something that only a very powerful
corporation in a tight oligopoly or shared monopoly can do. It
involves Lee Iacocca and might shed some light on a minor episode
in American political history.
The Pinto affair has very important lessons for us all. Its
story can teach us much about the power of huge corporations and
what corporations can do when they face no real competition. It
carries an important lesson about how the minds of those who run
the world's colossal corporations work.
As a background, it is important to know what a corporation
is and what it is supposed to do. In real life, a private,
for-profit corporation is supposed to return a profit to the
owners (shareholders) of the corporation by conducting some sort
of manufacturing, trading, or service business. That is its only
real purpose. Its purpose is not to make the world a safe,
healthful, beautiful, clean, wholesome, etc., place for all its
inhabitants. As a matter of fact, if the management of a
for-profit corporation adopted those goals, they would surely be
removed. Its purpose is to engage itself in some sort of
business to make money for its owners. If, in the process, it
can make its top management outrageously and embarrassingly rich,
well, that's OK with them, too.
There are various ways of going about earning a profit. It
would be nice if, in earning these profits, corporations would
do no, or at least very little, harm to people and other things.
However, they don't have to do it that way. There is no physical
nor legal way to prevent maleficent corporate acts before they
occur. Generally, the best the law can do, if it is allowed, is
to try to compensate for injury after it has occurred. That is
the way the world works. The only real limitation is the damage
a corporation can do to its reputation. If a corporation behaves
as an outlaw, and this behavior becomes known to the consuming
public, the corporation may lose its customers. Maybe. If, on
the other hand, there are only two or three other providers of
the goods or services, and these are something people must have,
what can you do? This is particularly true if a manufacturer
happens to be one of the world's largest corporations. From Big
Business's point of view, that is one of the great things about
an oligopoly - market power.
The product liability lawsuit and appeal titled Grimshaw v.
Ford Motor Company is a case in point and ought to be read by
everyone. Grimshaw is an example of the type of thing that can
happen when an industry insulates itself from competition. Until
product competition returns to the automobile market, everyone
who contemplates buying a new car ought to read this case. The
fact that there is a Japan has helped, but it has not been
enough.
You should be able to find the case at all county law
libraries. It can be found as Grimshaw v. Ford Motor Co., 174
Cal. Rptr. 348. We all know that we are all presumed to know
the law. If you are one of the few individuals who does not
know the law, you might think those at the county law libraries
would consider you to be a good citizen if you trooped in there
to learn the law. You might be in for a rude welcome. In many
county law libraries they generally don't want non-lawyer types
in there, even though many, if not all, county law libraries are
not funded solely by lawyers. The money which funds county law
libraries often comes from court produced fines.
The following material is taken from the Grimshaw v. Ford
Motor Company opinion of the California Court of Appeals. I
believe the court did an excellent job in laying out the facts
and the law. Justice Tamura, who wrote the court's opinion,
understood the law and the facts and crafted a clear and forceful
opinion. He is a courageous man. Excerpts from the Court's
opinion follow:
In November of 1971 the Grays purchased a new
1972 Pinto hatchback manufactured by Ford in October
of 1971. The Grays had trouble with the car from the
outset. During the first few months of ownership,
they had to return the car to the dealer for repairs
a number of times. Their car problems included
excessive gas and oil consumption, down shifting of
the automatic transmission, lack of power, and
occasional stalling. It was later learned that the
stalling and excessive fuel consumption were caused by
a heavy carburetor float.
On May 28, Mrs. Gray, accompanied by 13-year-old
Richard Grimshaw, set out in the Pinto from Anaheim
for Barstow to meet Mr. Gray. The Pinto was then six
months old and had been driven approximately 3,000
miles. Mrs. Gray stopped in San Bernardino for
gasoline, got back onto the freeway (Interstate 15)
and proceeded toward her destination at 60 - 65 miles
per hour. As she approached the Route 30 off-ramp
where traffic was congested, she moved from the outer
fast lane to the middle lane of the freeway. Shortly
after this lane change, the Pinto suddenly stalled and
coasted to a halt in the middle lane. It was later
established that the carburetor float had become so
saturated with gasoline that it suddenly sank, opening
the float chamber and causing the engine to flood and
stall. A car traveling immediately behind the Pinto
was able to swerve and pass it but the driver of a
1962 Ford Galaxie was unable to avoid colliding with
the Pinto. The Galaxie had been traveling from 50 to
55 miles per hour but before the impact had been
braked to a speed of 28 to 37 miles per hour.
At the moment of impact, the Pinto caught fire
and its interior was engulfed in flames. According to
plaintiff's expert, the impact of the Galaxie had
driven the Pinto's gas tank forward and caused it to
be punctured by the flange or one of the bolts on the
differential housing so that fuel sprayed from the
punctured tank and entered the passenger compartment
through gaps resulting from the separation of the rear
wheel well sections from the floor pan. By the time
the Pinto came to rest after the collision, both
occupants had sustained serious burns. When they
emerged from the vehicle, their clothing was almost
completely burned off. Mrs. Gray died a few days
later of congestive heart failure as a result of the
burns. Grimshaw managed to survive but only through
heroic medical measures. He has undergone numerous
and extensive surgeries and skin grafts and was
expected to have to undergo additional surgeries over
the next 10 years. He lost portions of several
fingers on his left hand and portions of his left ear,
while his face required many skin grafts from various
portions of his body. . . .
Design of the Pinto Fuel System:
In 1968, Ford began designing the subcompact
automobile which ultimately became the Pinto. Mr.
Iacocco [sic], then a Ford Vice President, conceived
the project and was its moving force. Ford's
objective was to build a car at or below 2,000 pounds
to sell for no more than $2,000.
Ordinarily marketing surveys and preliminary
engineering studies precede the styling of a new
automobile line. Pinto, however, was a rush project,
so that styling preceded engineering and dictated
engineering design to a greater degree than usual.
Among the engineering decisions dictated by styling
was the placement of the fuel tank. It was then the
preferred practice in Europe and Japan to locate the
gas tank over the rear axle in subcompacts because a
small vehicle has less crush space between the rear
axle and the bumper than larger cars. The Pinto's
styling, however, required the tank to be placed
behind the rear axle leaving only 9 or 10 inches of
crush space - far less than in any other American
automobile or Ford overseas subcompact. . . .
I want to emphasize what was said here. It was the styling
which required the fuel tank to be placed in a vulnerable
position. Think back, if you will, to the earlier discussion of
styling. Continuing with the Court's opinion concerning Ford's
crash tests of the Pinto:
The crash tests revealed that the Pinto's fuel
system as designed could not meet the 20-mile-per-hour
proposed standard. Mechanical prototypes struck from
the rear with a moving barrier at 21-miles-per-hour
caused the fuel tank to be driven forward and to be
punctured, causing fuel leakage in excess of the
standard prescribed by the proposed regulation. A
production Pinto crash tested at 21-miles-per-hour
into a fixed barrier caused the fuel neck to be torn
from the gas tank and the tank to be punctured by a
bolt head on the differential housing. In at least
one test, spilled fuel entered the driver's
compartment through gaps resulting from the separation
of the seams joining the real [sic] wheel wells to the
floor pan. The seam separation was occasioned by the
lack of reinforcement in the rear structure and
insufficient welds of the wheel wells to the floor
pan.
Tests conducted by Ford on other vehicles,
including modified or reinforced mechanical Pinto
prototypes, proved safe at speeds at which the Pinto
failed. Where rubber bladders had been installed in
the tank, crash tests into fixed barriers at
21-miles-per-hour withstood leakage from punctures in
the gas tank. Vehicles with fuel tanks installed
above rather than behind the rear axle passed the fuel
system integrity test at 31-miles-per-hour fixed
barrier. A Pinto with two longitudinal hat sections
added to firm up the rear structure passed a
20-mile-per-hour rear impact fixed barrier test with
no fuel leakage.
The Cost To Remedy Design Deficiencies:
When a prototype failed the fuel system integrity
test, the standard of care for engineers in the
industry was to redesign and retest it. The
vulnerability of the production Pinto's fuel tank at
speeds of 20 and 30-miles-per-hour fixed barrier tests
could have been remedied by inexpensive "fixes," but
Ford produced and sold the Pinto to the public without
doing anything to remedy the defects. Design changes
that would have enhanced the integrity of the fuel
tank system at relatively little cost per car included
the following: Longitudinal side members and cross
members at $2.40 and $1.80, respectively; a single
shock absorbent "flak suit" to protect the tank at $4;
a tank within a tank and placement of the tank over
the axle at $5.08 to $5.79; a nylon bladder within the
tank at $5.25 to $8; placement of the tank over the
axle surrounded with a protective barrier at a cost of
$9.95 per car; substitution of a rear axle with a
smooth differential housing at a cost of $2.10;
imposition of a protective shield between the
differential housing and the tank at $2.35;
improvement and reenforcement of the bumper at $2.60;
addition of eight inches of crush space a cost of
$6.40. Equipping the car with a reinforced rear
structure, smooth axle, improved bumper and additional
crush space at a total cost of $15.30 would have made
the fuel tank safe in a 34 to 38-mile-per-hour rear
end collision by a vehicle the size of the Ford
Galaxie. If, in addition to the foregoing, a bladder
or tank within a tank were used or if the tank were
protected with a shield, it would have been safe in a
40 to 45-mile-per-hour rear impact. If the tank had
been located over the rear axle, it would have been
safe in a rear impact at 50 miles per hour or more.
Management's Decision To Go Forward
With Knowledge Of Defects:
The idea for the Pinto, as has been noted, was
conceived by Mr. Iacocco [sic], the Executive Vice
President of Ford. The feasibility study was
conducted under the supervision of Mr. Robert
Alexander, Vice President of Car Engineering. Ford's
Product Planning Committee, whose members included Mr.
Iacocca, Mr. Robert Alexander, and Mr. Harold
MacDonald, Ford's Group Vice President of Car
Engineering, approved the Pinto's concept and made the
decision to go forward with the project. . . .
Harley Copp, a former Ford engineer and executive
in charge of the crash testing program, testified that
the highest level of Ford's management made the
decision to go forward with the production of the
Pinto, knowing that the gas tank was vulnerable to
puncture at low rear impact speeds creating a
significant risk of death or injury from fire and
knowing that fixes were feasible at nominal cost.
He testified that management's decision was based on
the cost savings which would inure from omitting the
fixes.
. . .
. . . A reasonable inference may be drawn from
the evidence that despite management's knowledge that
the Pinto's fuel system could be made safe at a cost
of but $4 to $8 per car, it decided to defer
corrective measures to save money and enhance profits.
The jury in this case brought in a verdict for the plaintiffs in
excess of $128 million of which $125 million were punitive
damages.
This was a jury of ordinary, everyday people. This was not
a group of radical commies or a stranded band of intrinsically
evil Klingons. They were just everyday types, and $128 million
is what they thought was appropriate. Because the trial judge
thought the amount of damages the jury gave to Grimshaw was
excessive, he reduced the payment by Ford Motor Co. to Grimshaw
down to $3.5 million from the $128 the jury felt was proper. In
other words, the trial judge gave Grimshaw the choice of the
reduced amount of $3.5 million or face another trial.
Plaintiffs, when presented with such choices, almost always
accept the court's ultimatum and take the money. I have often
wondered, though, what would happen if the plaintiff did not
accept the reduction, went through the agony of another trial,
and received an even larger award.
It might be recalled that in 1987 or 1988 there were rumors
about Mr. Iacocca running for President of the United States.
As much as he might have desired or lusted for the Presidency,
there was, of course, no way he could run for the office. Sooner
or later the Pinto would have been brought up in a news
conference or some other forum. What could he say? Mr.
Iacocca's name would eventually become synonymous with Pinto.
The American public would probably be repulsed by such corporate
callousness and soundly reject Mr. Iacocca.
To Mr. Iacocca's credit, however, it should be said that
Chrysler Corporation was the first domestic automobile
manufacturer to include at least one air bag in all its
domestically manufactured automobiles. The air bag is clearly
one of the greatest safety innovations the automobile industry
has ever had. Furthermore, Mr. Iacocca appears to have pushed
more vigorously than the chief executives of other domestic
automobile manufacturers for the incorporation of air bags into
different types of vehicles. Of course, the industry could have
taken that action in the 1970's. However, it didn't, and,
eventually, Chrysler did. Perhaps the suffering inflicted by the
Pinto was not in vain.
Anyway, such is the work of corporate America. The leaders
of America's corporations live in a world of wealth and power far
removed from the world of work-a-day people. The Pinto was the
brainstorm of people who are decades from actually touching a
fuel rail, or camshaft, or wheel bearing, if they ever touched
one in their lives. To the executives of the Only Three, cars
are not what they are to the people who buy them. To the
corporate executives, particularly those who are not engineers,
they are commodities like detergents or hot dogs; and they are
sold like them.
There is another very important point to be made by this
case. Ford knew that the Pinto was going to kill or burn people
because of its design, but, because of the "cost savings which
would inure from omitting the fixes," Ford decided to let it go.
Consider carefully exactly what Ford Motor Company was doing
here. One could argue that Ford was conducting cost-benefit
analysis. To the Ford executives, the benefits were clear,
calculable, and immediately available. Ford would save a few
dollars on each Pinto manufactured. The costs would accrue in
the future and would not be paid by Ford. Unfortunately, the
costs were the lives and permanent injuries of nameless and
faceless future consumers. The Pinto would appear to be a prime
example of laying off costs. The suffering, the destroyed lives
and families apparently were of minor consideration in the
calculations when Ford performed the cost-benefit analysis.
No one, not even an engineer much less the average car
buyer, can evaluate all of the engineering decisions and mistakes
that go into the design and manufacture of a modern automobile.
In the old days, any fool could look at a buggy or wagon and
arrive at a reasonable estimate of its suitability and safety.
Today, no one can evaluate every aspect of the performance of the
many systems in an automobile on which one's very life depends.
Until the Pinto, anyone could, reasonably and probably
justifiably, assume that crucial decisions, of which the location
and protection of the fuel tank is but one example, received very
high consideration. Next to the vehicle's passengers, the
vehicle's fuel tank is the most important thing to protect
because of the fuel's volatile and explosive nature which
presents extreme potential danger to the vehicle's occupants and
others in the immediate vicinity. No one considering the
purchase of an automobile would ever expect, nor should the ever
have to expect, to concern themselves with something as basic as
the location and protection of the fuel tank.
Now you know that considerations other than your life and
safety can rank higher in the minds of the executives of the Only
Three. Nonetheless, we really have no other choice. We all must
put our faith into the integrity and quality of the engineers who
design the vehicles made available to us for purchase.
Unfortunately, we must also trust the "bean-counters" (alias "the
management") who make engineering decisions on the basis of cost.
Producing junk because it is too expensive to change the
technology base is bad enough. We also must face those who value
the corporate climb and the Bloomfield Hills mansion enough to
risk the lives and health of others to further their quest for
the lifestyles of the rich and famous.
With this in mind, consider another corporate political
campaign. Big business is pushing very hard to put a cap on
punitive damages. Generally stated, punitive damages are an
award of money to be paid by a defendant or defendants to a
plaintiff or plaintiffs and are intended to punish the defendant
for past conduct which is considered egregious. It is money
beyond that necessary to compensate the plaintiff or plaintiffs
for their injury. It is intended to be an amount so large as to
deter the wrongdoer from ever again engaging in such actions.
Perhaps more importantly, punitive damages are intended to deter
similar conduct in the future by those in a similar situation.
It is clear that punitive damages must be awarded on a case
by case basis. An amount which would deter you or I from ever
doing anything again would be unnoticeable to corporations the
size of GM, Ford, or Chrysler. It must be so large as to cause
a rational man to immediately rule out manufacturing a dangerous
piece of junk or a fire-bomb on wheels. Much of corporate
America doesn't like punitive damages. The corporate complaint
and furor over punitive damages is that they are too
unpredictable. Gee whiz!? OF COURSE THEY ARE!
Punitive damages must be unpredictable. If they were not,
some corporate CEO could assign his statisticians to find out
exactly how much it will cost to put out a cheap piece of junk
including their probable expenses to dead, disfigured, and
crippled accident victims - and they are able to determine these
costs with good accuracy since such is the basis of the insurance
industry - verses a safe product. In a market without real
competition, as long as a company can obtain a reasonably good
guess of the total costs and legal liabilities of producing junk,
they can produce junk profitably. As long as a huge and isolated
corporation can profitably produce junk, they will produce junk.
Punitive damages, however, are the wild card. Punitive
damages are the variable which does not allow the calculation to
be made. If punitive damages are capped or made predictable, I
fear it will be open season on consumers 365 days per year. The
Supreme Court has recently turned back another attempt to have
punitive damages declared unconstitutional.