AGNETA v. FORD MOTOR COMPANY

Filed 6/27/06

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION EIGHT

APPEAL from the judgment of the Superior Court of Los Angeles County. Howard J. Schwab, Judge. Affirmed.

Shook, Hardy & Bacon and Frank P. Kelly, III; Lewis, Brisbois, Bisgaard & Smith and Steven R. Lewis; Gibson, Dunn & Crutcher, Theodore J. Boutrous, Jr., William E. Thomson and J. Christopher Jennings for Defendant and Appellant.

Martin N. Buchanan; Esner & Chang and Stuart B. Esner; Girardi & Keese, Thomas V. Girardi, Howard B. Miller, and David R. Lira; Law Offices of Marvin Kay and Marvin Kay for Plaintiffs and Respondents.

Defendant Ford Motor Company (Ford) appeals from the judgment entered after a jury verdict in this product liability action awarded plaintiff Johan Karlsson more than $30 million in compensatory and punitive damages. We hold that evidence and issue preclusion sanctions that were ordered against Ford for various discovery violations were properly imposed before trial. We also hold that those sanctions were, for the most part, properly applied during the trial in the form of jury instructions, evidentiary rulings, and plaintiff's jury arguments, and that any errors by the court were harmless. We also conclude that, because the court imposed discovery sanctions after it had summarily adjudicated plaintiff's punitive damages claims in Ford's favor, the court was entitled to reconsider and vacate its summary adjudication order. The court also did not err when it imposed lesser sanctions against plaintiff for failing to preserve certain evidence. We next hold the court correctly denied Ford's new trial motion based on allegations of juror misconduct. Finally, plaintiff's claims were not preempted by federal seat belt regulations because Ford waived the issue. We therefore affirm the judgment.

FACTS AND PROCEDURAL HISTORY

On November 22, 1996, five-year-old Johan Karlsson (Johan) had his spine broken and became a paraplegic when the 1996 Ford Windstar minivan in which he was riding struck a 15-ton steel coil that fell off the back of a tractor trailer and into the middle of Interstate 5. The accident happened when the driver of that tractor trailer dozed off and rear-ended a truck in front of him. Also in the van with Johan were his mother, uncle, and four siblings (the Karlssons). The Karlssons and Johan sued the somnolent truck driver and his employer, TransContinental Transport (TCT).

The Windstar van had three rows of seating, and provided combination lap belt and shoulder harnesses for all of the seats but one--the center seat of the rear, third row bench, where Johan was seated. Instead of the so-called three point harness worn by the others, Johan was provided only a lap belt. While everyone else in the van was also injured, their injuries were less severe and all six of them made full recoveries. Johan's spinal injuries were consistent with something physicians call seat belt syndrome, when a passenger restrained by only a lap belt jackknifes over at the waist due to the force of the collision. Had Johan been wearing a three-point restraint, his injuries would have been no more severe than the other occupants of the Windstar. Johan's mother testified that she adjusted Johan's lap belt for him before starting their trip, making sure it fit snugly and rested low on his hips.

TCT cross-complained against Ford for indemnity, alleging that the van had been negligently designed, thereby contributing to Johan's injuries. The Karlssons and Johan eventually added Ford as a defendant to their action on two product liability theories--that the van had a design defect and that Ford failed to warn of known dangers associated with the use of the lap belt.

Johan and the Karlssons settled with TCT in exchange for $10 million and TCT's assistance in litigating the case against Ford. When the case eventually went to trial seven years later in September 2003, Johan was the only plaintiff and Ford was the only defendant. A jury found for Johan on both of his product liability theories and awarded him $10.45 million in economic damages, $20 million for pain and suffering, and $15 million in punitive damages. The parties stipulated to reduce the total verdict to $30,341,636.50 based on findings of comparative fault by TCT and the amount of the earlier TCT settlement. (Code Civ. Proc., § 877; Civ. Code, § 1431.2.)

The issues on appeal concern numerous rulings by the court before, during, and after the trial. Before trial, Ford was the subject of several discovery motions filed by Johan and TCT. As a result of the fifth such motion, the trial court imposed issue and evidence preclusion sanctions against Ford on the issues of warnings and the technical feasibility of a safer, alternative seat belt design, as well as on an attempt by Ford to conceal certain evidence during discovery. These sanctions were presented to the jury by way of jury instructions, formed the basis for some of Johan's witness examinations and jury arguments, and were used to limit the evidence Ford could present on its behalf. As a result of the sanctions ruling, the trial court also vacated its earlier summary adjudication order striking Johan's punitive damages claim, allowing the jury to reach the issue at trial. Ford in turn sought evidence sanctions against Johan, claiming he had lost a key piece of evidence: the rear bench seat of the Karlsson's Windstar. Ford was allowed to present evidence and make argument on that issue, and a general instruction on concealing evidence was given to the jury. During jury deliberations, one juror made comments to the others about having seen a new model Windstar that did not correct the absence of a three point belt in the center rear seat, and about having seen such belts in the mid-bench seat of another Ford vehicle. Those statements prompted an unsuccessful new trial motion based on juror misconduct.

On appeal, Ford contends that the discovery sanctions were not warranted and were excessive, and that the scope of those sanctions was improperly expanded during trial by virtue of comments by the court, the argument of Johan's counsel, various evidentiary rulings, and certain related jury instructions. Ford also contends that the trial court erred by: reinstating Johan's punitive damages claim based on the discovery sanctions; allowing Johan to argue that Ford's discovery abuses were grounds for awarding punitive damages; failing to sanction Johan because he did not preserve the rear bench seat of his parents' minivan; and by failing to order a new trial for jury misconduct. Ford also contends, for the first time on appeal, that Johan's claims are preempted by federal seat belt regulations.

BACKGROUND OF THE DISCOVERY SANCTIONS

1. Product Liability Theories Applicable at Trial

Under California law, there are three ways to hold a manufacturer strictly liable for injuries caused by its product: (1) if the product is defectively manufactured; (2) if it is defectively designed; or (3) if it is distributed without sufficient warnings or instructions about its potential for harm. (Arnold v. Dow Chemical Co. (2001) 91 Cal.App.4th 698, 715 (Arnold).) A product is defectively manufactured if it contains some unintended flaw. (In re Coordinated Latex Glove Litigation (2002) 99 Cal.App.4th 594, 606.) There are two tests for establishing a design defect: (1) under the consumer expectations test, if the plaintiff shows that the product failed to perform as safely as an ordinary consumer would expect when using the product in an intended or reasonably foreseeable manner; and (2) under the risk-benefit test, where the trier of fact is asked to balance the risk of danger inherent in the challenged design versus the feasibility of a safer design, the gravity of the danger, and the adverse consequences to the product of a safer design. (Arnold, at p. 715.) A determination of the risk-benefit issue involves â€