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  Punitive Damage Awards Guarantee Public Safety -- Cases That Made A Difference

 

 

Responsibility is an important value in our democratic society. When a child misbehaves, the parent will punish the child by grounding him or taking away an allowance or some other privilege. Why does the parent punish the child? In order for the child to learn the importance of taking responsibility for her actions. Similarly, our civil justice system requires corporations as well as individuals to be accountable for their actions. One of the must effective methods of deterring bad corporate behavior is an award of punitive damages. Punitive awards bring accountability to the free market without additional government regulation or interference.

Proponents of tort reform contend that innovation is stifled by our products liability system. However, American products are bought around the world because they are the safest products available. In fact, our product liability system often provides the impetus for getting companies to remove dangerous products from the market. The Dalkon Shield IUD is an excellent example of how the system worked to protect the lives of millions of women. Eight punitive awards were made before A.H. Robins recalled the product.

  • A 27-year-old woman suffered a severe pelvic infection requiring a hysterectomy to remove diseased tissue after wearing an intrauterine device (IUD) for several years. After the hysterectomy, the woman's marriage disintegrated and she and her husband divorced. She also must take synthetic hormones that increase her risk of developing endometrial cancer. Evidence at trial established that the manufacturer had known its IUD was associated with a high rate of pelvic disease and septic abortion, that it had misled doctors about the device's safety, and that it had commissioned studies on the device which it dropped or concealed when the results were unfavorable. A $1.7 million compensatory award and a $7.5 million punitive award was affirmed. Tetuon v. A.H. Robins Co., 738 P.2d 1210 (Kan. 1987).

The Dalkon Shield cases are particularly disturbing because they illustrate a pervasive pattern of cover up and deceit. The original Shield was manufactured for $.30 and sold for $4.35. The inventor of the device originally contended that the Shield had a 1.1% pregnancy rate per year making it as effective as oral contraceptives and resulting in an effective advertising campaign. Evidence at trial showed that Robins knew that the failure rate was at least 7-8%. When Robins received reports from doctors regarding problems with septic abortions, it issued a press release denying the connection between the IUD and septic abortion, even though it had at least 250 reports from doctors of septic abortions in its files. When Robins was made aware that the string or tail of the device "wicked," essentially carried bacteria into the uterus and caused pelvic inflammatory disease (PIDs), it ignored changing the composition of the string because it felt that it was too expensive to change the manufacturing process. After the first case involving PIDs reached trial, the president of the company ordered documents destroyed.

Cases such as the Dalkon Shield cases make a difference in the health and safety of millions of women. While punitive damages are rare, the products involved in these cases -- high-estrogen birth control pills, silicone gel implants, Accutane, Oraflex, Merital -- are used exclusively or predominately by women. The one thing that these cases do have in common is that the product manufacturers ignored known dangers. In the end, punitive awards, not the FDA, provided the incentive to manufacturers to remove these dangerous products from the stream of commerce.

  • A woman who received silicone gel implants in breast reconstruction surgery obtained a punitive award against the manufacturer after her implants ruptured and caused mixed connective tissue disease, which has no known cure. She showed that, despite its claims the devices had been tested, were safe, and would last a lifetime, the manufacturer knew that the implants bled, ruptured, and caused immune disease, from which the plaintiff suffered. Dow was so intent on marketing their product in less than five months that it ignored proposed design modifications that would reduce the likelihood of leakage. In fact, Dow instructed its salesmen to wash the implants with soap and water as the implants become oily after being handled and bleed on the velvet in the showcase. Dow was also aware that its implants ruptured. In fact, two new implants ruptured during a TV taped demonstration espousing the benefits of breast augmentation surgery. In addition, Dow failed to conduct long-term research on the health effects of its implants. The longest study examined the effect of implants for only 80 days and revealed evidence of inflammatory immune response caused by the silicone gel. Dow also failed to release a study of the effects of silicone implants in dogs, which showed that silicone gel caused immune reaction. In light of the evidence, the jury awarded $840,000 in compensatory and $6.5 million in punitive damages. Punitive damages were awarded because the defendant knew that its testing was inadequate and that the product was dangerous well before marketing, but put profit ahead of safety. Hopkins v Dow Corning Corp., 33 F.3d 1116 (9th Cir. 1994)
  • An 81-year-old woman died from a fatal kidney-liver ailment after taking the arthritis pain-relief drug Oraflex for about two months. The evidence at trial showed that the manufacturer had known of the serious liver and kidney problems associated with the drug, but failed to warn doctors and patients and withheld the results of relevant tests from the FDA. Further evidence established that British health officials ordered the drug off the market in 1982 after linking 61 deaths in England to Oraflex. Eli-Lilly subsequently removed the drug from the world market after being available in the United States for less than one year. The jury awarded $6 million, all of which was for punitive damages. Borom v. Eli Lilly & Co., No. 83-38-COL (M.D. Ga. Nov. 21, 1983).

Toxic shock syndrome (TSS) cases further illustrate the callous attitude taken by some corporations regarding the health and safety of women. Some women even died from the disease.

  • A 20-year-old college student was hospitalized for abnormally low blood pressure, a high fever, vomiting and diarrhea. She was placed in intensive care after her blood pressure dropped to a near fatal level and her liver and kidneys ceased to function. Her condition stabilized after receiving large doses of intravenous antibiotics. After she was discharged from the hospital, the student's skin peeled off in large chunks. Her doctors' eventually determined that she had suffered from toxic shock syndrome (TSS) , a sometimes fatal disease, associated with the use of tampons in menstruating women. The evidence showed that testing by the manufacturer was inadequate, that adequate testing would have revealed the connection with TSS, and that despite consumer complaints, the manufacturer consciously refused to do further testing, thus blatantly disregarding public safety. This evidence was sufficient to justify compensatory damages of $100,000 and a $1 million punitive award. West v. Johnson & Johnson, 174 Cal. App.3d 831, 220 Cal. Rptr. 437, cert. den. 479 U.S. 824 (1985).
  • A 21-year-old woman died of TSS after using Platex super-absorbent tampons. Her husband sued the manufacturer, alleging it had knowingly marketed the most dangerous tampons on the market without adequately warning consumers. Playtex deliberately disregarded studies and medical reports linking high-absorbency tampon fibers with increased risk of TSS at a time when other manufacturers were modifying or withdrawing their high-absorbency products. In fact, evidence showed that Playtex deliberately sought to profit from this situation by advertising the effectiveness of its high-absorbency tampons when it knew other manufacturers were reducing the absorbency of their products due to the causal connection between high absorbency and toxic shock. Playtex was aware that its product was far more absorbent than necessary for its intended effectiveness. In commenting on the exceptionally over-absorbent Playtex super deodorant tampon, the writer of an internal company memoranda stated "our tampons are similar to automobiles which can achieve a speed of 300 miles an hour, but with which 90% of the drivers will never exceed 55 miles per hour and the remainder will occasionally drive at speeds up to 90 miles per hour." The jury awarded about $1.5 million compensatory damages and $10 million punitive damages, and the appellate court affirmed. Playtex subsequently discontinued the sale of some of its products. O'Gilvie v. International Playtex, Inc., No. 83-18848-K (D. Kan. Feb 25, 1985), aff'd. 821 F.2d 1438 (10th Cir. 1987).

The most notorious case involving a punitive award is the Ford Pinto. In the early 1970s, engineers at Ford Motor Company did an analysis of the costs and benefits of relocating the gas tank on the Pinto to take it out of the "crush zone" and greatly reduce the likelihood of fires and explosions in rear-end collisions. The cost: $11 per vehicle. The benefits: 180 lives saved and 180 serious burn injuries prevented each year. Ford engineers decided that the benefits did not justify the costs. A jury, indignant over Ford's callousness, awarded $125 million in punitive daages. While this is a large award, it has virtually no impact on a billion-dollar company. Ford made more than two times the punitive award in profits from the sale of Pintos during the last quarter of the year of appeal and only paid $3.5 million in punitives, 0.5% of its assets.

Exploding fuel tanks are not limited to the Ford Motor Company. In 1972, GM engineers made a similar cost/benfit analysis on their "A" body cars and concluded that a cost of more than $2.40 per vehicle would not be justified in order to save lives. Toyota also experienced problems with defectively designed fuel systems. While cars have become more high-tech, auto manufacturers have continued to disregard the safety of millions of Americans in an effort to save a few dollars.

  • A 7-year-old boy was killed when the passenger side of his grandfather's pickup truck in which he was riding was struck broadside by a tractor-trailer. The truck, which had been purchased two days earlier and had less than 200 miles, had stalled in the middle of a highway intersection due to an improperly programmed memory chip which regulated the fuel delivery system. Although General Motors revised the memory chip, it did not recall the 600,000 trucks already sold. Instead, it made a business decision to save $42 million by not replacing the defective chips unless a vehicle owner complained of stalling problems, even though the chip could be replaced for $70. The Supreme Court of Alabama remitted the jury's punitive award of $15 million to $7.5 million. General Motors v. Johnston, 592 So.2d 1054 (Ala. 1992).

Between 11 million and 13 million workers have been exposed to asbestos. Asbestos will kill an estimated 200,000 to 300,000 people in the next two decades. Two million now have X-ray evidence of asbestos disease. The lung diseases related to the inhalation of asbestos dust are permanent, irreversible, progressive, and ultimately fatal. The asbestos industry knew of the hazards as early as the mid-30's and devoted concerted efforts to conceal those hazards from the public and from their own workers. This industry includes more than 250 different asbestos manufacturers, from small local companies to Fortune 500 firms like Johns-Manville. A conspiracy is the only way to describe the cover-up by the asbestos industry. Warnings and prtective devices would have prevented hundreds of thousands of deaths, but the industry sacrificed those lives in the name of profit.

Although the most exhaustive study ever on punitive awards in products cases found only 355 cases in 25 years, 95 of those cases were asbestos cases. The first reported award of punitive damages in an asbestos case was in Hammond v. North Am. Asbestos Corp., 454 N.E.2d 210 (Ill. 1982). In Hammond, a 54-year-old asbestos worker developed asbestosis as a consequence of unprotected exposure during his employment in an asbestos processing plant from 1953 to 1972. The worker's widow sued contending that the defendant knew as early as 1931 of the dangers to workers caused by inhalation of raw asbestos fibers. The basis of the punitive award was the company's knowledge of the dangers to workers posed by unprotected exposure, its continued marketing of the product without a warning until 1972, and its active concealment of the risk of asbestos exposure.

Smoking gun evidence in asbestos cases dates back to the 1930s. A 1935 letter from the publisher of an asbestos newsletter to the head of a major manufacturer of asbestos products requested the manufacturer's permission to go public with the known connection between asbestos and the lung disease known as asbestosis. The manufacturer denied permission. A medical study concluded that long-term exposure to asbestos dust caused a progression of fibrosis and then asbestosis. Doctors even recommended that workers whose chest X-rays had been taken for the study and who were diagnosed with asbestosis not be told of their condition until they complained. This cover up continued for over 40 years. A 1966 letter from the Director of Purchases at Johns-Manville illustrates the extent of the industry's heartlessness: "My answer to the problem is: if you have enjoyed a good life while working with asbestos products why not die from it."


As the New Jersey Supreme Court noted, punitive damages are a necessary deterrent, because unlike compensatory damages, punitive damages are inherently unceratin; therefore, manufacturers will be unable to include punitive damages in the price of their product.

The conspiracy within the asbestos industry to conceal information from asbestos workers and from the general public was largely successful for several decades. However, in the 1970s, workers suffering from asbestosis, lung cancer, and other ailments began filing successful suits against asbestos manufacturers. Their stories were often tragic; suits were filed by workers who, after years of loyalty to their company, underwent years of suffering due to the lung diseases which the companies knew would inevitably strike down many of their workers. Many more suits were filed by the widows and children of workers who had succumbed to asbestos-related diseases.

Finally, there is a category of case that stands alone.

  • A 35-year-old mechanic was rendered temporarily quadriplegic and permanently suffers from spasms in all of his extremities after breaking his neck diving onto a defective "Slip 'N' Slide" water slide. He is unable to return to work. The mechanic and his family sued the slide's manufacturer, alleging that the product was unreasonably dangerous for its intended purpose; that the manufacturer had continued to market the product although it was aware that other adults had suffered neck injuries (some fatal); and that the safety warnings were not prominently displayed among the product's list of instructions. Finding the manufacturer 100 percent at fault, the jury awarded the plaintiffs $12.35 million, including $10 million in punitive damages, and the manufacturer has since pulled the product from the market. The parties later reached a post-verdict settlement of $7.5 million. Hubert v. Hockstock, No. 90-CV-103 (Brown Cty Cir. Ct., Wis. June 26, 1991).

Reprinted with the permission of the Association of Trial Lawyers of America.