SAND HILL ENERGY, INC . V. BRENDA SMITH, ADMINISTRATRIX OF THE ESTATE OF TOMMY SMITH ; AND FORD MOTOR COMPANY AND BRENDA SMITH, ADMINISTRATRIX OF THE ESTATE OF TOMMY SMITH V. SAND HILL ENERGY, INC . ; AND FORD MOTOR COMPANY
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S
Auprrutr (gourf of
1999-SC-1028-DG
SAND HILL ENERGY, INC.
V.
APPELLANT
ON REMAND FROM UNITED STATES SUPREME COURT
02-1096
ON REVIEW FROM THE COURT OF APPEALS
1997-CA-2420,1997-CA-2583, AND 1997-CA-2584
CLAY CIRCUIT COURT NO. 94-CI-00167
BRENDA SMITH, ADMINISTRATRIX OF
THE ESTATE OF TOMMY SMITH ; AND
FORD MOTOR COMPANY
APPELLEES
AND
1999-SC-1029-DG
BRENDA SMITH, ADMINISTRATRIX OF
THE ESTATE OF TOMMY SMITH
V.
ON REMAND FROM UNITED STATES SUPREME COURT
02-1096
ON REVIEW FROM THE COURT OF APPEALS
1997-CA-2420,1997-CA-2583, AND 1997-CA-2584
CLAY CIRCUIT COURT NO . 94-CI-00167
SAND HILL ENERGY, INC . ; AND
FORD MOTOR COMPANY
AND
APPELLANT
APPELLEES
2000-SC-0444-DG
FORD MOTOR COMPANY ; AND
MID-EAST FORD MERCURY, INC.
V.
APPELLANTS
ON REMAND FROM UNITED STATES SUPREME COURT
02-1096
ON REVIEW FROM THE COURT OF APPEALS
1997-CA-2420,1997-CA-2583, AND 1997-CA-2584
CLAY CIRCUIT COURT NO. 94-CI-00167
BRENDA SMITH, ADMINISTRATRIX OF
THE ESTATE OF TOMMY SMITH ; AND
SAND HILL ENERGY, INC.
APPELLEES
OPINION OF THE COURT BY JUSTICE KELLER
VACATING AND REMANDING
I. INTRODUCTION, PROCEDURAL BACKGROUND, AND ISSUE
In a 4-3 plurality decision in Sand Hill Energy, Inc . v. Ford Motor Company ,' this
Court reversed a decision of the Court of Appeals and reinstated a $3 million
compensatory award and $15 million of the original $20 million punitive damages award
in this wrongful death action. When Sand Hill I became final, Ford Motor Company
("Ford") filed a petition for a writ of certiorari before the United States Supreme Court,
arguing that the $15 million punitive damages award was unconstitutional . While Ford's
petition was pending, the United States Supreme Court decided State Farm Mutual
Insurance Co . v. Campbell ,2 in which it invalidated a $145 million punitive damages
award in a Utah case involving bad faith and fraud in the context of an insurance
settlement . Thereafter, the United States Supreme Court granted Ford's petition for
' Ky., 83 S.W .3d 483 (2002) ["Sand Hill I"] .
2 538 U .S . 408, 123 S .Ct . 1513, 155 L.Ed .2d 585 (2003) ["State Farm"].
certiorari, vacated Sand Hill I , and remanded the matter to this Court "for further
consideration in light of State Farm. Because Ford's petition for certiorari addressed
only the constitutionality of the punitive damages award, Ford has since paid the full
value of the compensatory damages award, with interest - a total amount of
$5,596,425.00 - and the parties agree that the only issue remaining before the Court is
the viability of the $20 million punitive damages award .
After reviewing State Farm and the evidence of the defendant's out-of-state
conduct presented to the jury in Sand Hill, we vacate the punitive damages award and
remand the case for a new determination of the amount of punitive damages because
the trial court's jury instructions failed to include a limiting instruction concerning
extraterritorial punishment .
II. ANALYSIS
A. STATE FARM AND EXTRATERRITORIALITY
In State Farm, the plaintiffs pursued punitive damages in their bad faith claim on
the basis that the insurance company employed a scheme to cap payouts on the
company's claims . To prove this scheme the plaintiffs presented testimony about State
Farm's fraudulent practices occurring nationwide . The trial court determined that such
evidence was admissible for the determination of whether State Farm's conduct was
reprehensible . After deliberation, the jury returned a punitive damages award of $145
million against State Farm.
The United States Supreme Court ("Supreme Court") granted State Farm's
petition for certiorari, reversed the decision of the Supreme Court of Utah, which had
reinstated the punitive damages award, and remanded the case for further proceedings
with regard to punitive damages. Citing its previous decisions in Cooper Industries, Inc.
v. Leatherman Tool Group, Inc . , 3 BMW of North America, Inc . v. Gore ,4 TXO Production
Corp . v. Alliance Resources Corp. ,5 and Pacific Mutual Life Insuran ce
Comipan~t v.
Haslip , 6 the Supreme Court stated that although the States "possess discretion over the
imposition of punitive damages . . . . the Due Process Clause of the Fourteenth
Amendment prohibits the imposition of grossly excessive or arbitrary punishments . ,7
The Supreme Court held that the punitive damages award in State Farm violated the
Due Process Clause of the Fourteenth Amendment as it was grossly excessive and
expressed particular concern over the evidence of State Farm's out-ofstate/extraterritorial conduct :
Lawful out-of-state conduct may be probative when it
demonstrates the deliberateness and culpability of the
defendant's action in the state where it is tortious, but that
conduct must have a nexus to the specific harm suffered by
the plaintiff . A jury must be instructed, furthermore, that it
may not use evidence of out-of-state conduct to punish a
defendant for action that was lawful in the jurisdiction where
it occurred .8
In the Supreme Court's opinion, the conduct upon which the punitive
damages award was based bore no relation to the plaintiffs' harm, which resulted in the
"case . . . [being] used as a platform to expose, and punish, the perceived deficiencies
3 532 U .S . 424, 121 S .Ct. 1678, 149 L .Ed .2d 674 (2001).
4 517 U .S . 559, 116 S .Ct. 1589, 134 L .Ed .2d 809 (1996).
5 509 U .S . 443, 113 S .Ct. 2711, 125 L .Ed .2d 366 (1993).
6 499 U.S . 1, 111 S .Ct. 1032, 113 L.Ed .2d 1 (1991).
State Farm Mutual Insurance Co. v. Campbell, 538 U .S . 408, 412, 123 S .Ct.
1513, 155 L .Ed .2d 585,
(2003).
8 538 U .S. at 422-423 .
of State Farm's operations throughout the country,"9 instead of being used to condemn
State Farm for its conduct towards the plaintiffs .
The Supreme Court held that the punitive damages award was unreasonable
and irrational and remanded the case for further proceedings with appropriate
instructions .
B. EVIDENCE AND ARGUMENT IN THE RECORD CONCERNING FORD'S
EXTRATERRITORIAL CONDUCT
Similar to what occurred in State Farm , the jury in Sand Hill considered Ford
Motor Company's conduct on a nationwide scale in arriving at the punitive damages
award of $20 million . The jury heard testimony regarding the number of vehicles sold
nationwide that contained the "defective" transmission (6.5-7 million), the number of
reports nationwide of similar incidents of inadvertent shifts from "park" to "reverse" (by
1980 the count was 23,000), and the number of individuals who were killed by such
incidents nationwide (hundreds) . Counsel for the plaintiff advised the jury in closing that
"we have to make them pay" and proceeded to discuss the number of "defective" Ford
transmissions that were "on the road ." It is clear that the jury was encouraged to punish
Ford for its conduct throughout the country .
In applying the analysis set forth in State Farm , we find that the nexus between
the conduct and the specific harm to the plaintiff in Sand Hill is evident from the fact
that the incidents were of a similar nature . While the jury may evaluate those incidents
in determining Ford's culpability, a new trial on the amount of punitive damages is
required since the jury instructions contained no limitations on extraterritorial
punishment .
9 538 U .S. at 420 .
C . PRESERVATION
One important question that this Court must answer before remanding the case
is whether Ford fairly and adequately presented its position regarding extraterritoriality
to the trial court via its four (4) page proposed punitive damage instruction .
On remand from the United States Supreme Court, Ford's Supplemental Brief
contains passing comments upon the overall constitutional inadequacy of the punitive
damages instructions . However, the only instructional error that Ford pursues in
support of relief concerns the trial court's failure to instruct the jury that it could not
punish Ford for its conduct outside the Commonwealth of Kentucky. Ford made this
same argument in its earlier brief in the case. The punitive damages instruction that the
trial court gave to the jury provided as follows :
You have found for the Estate of Tommy Smith against
Ford Motor Company and determined that the Estate was
entitled to a sum or sums of money for compensatory
damages . If you are further satisfied from the evidence that
Ford Motor Company acted toward Tommy Smith with
malice, you may in your discretion award punitive damages
against Ford Motor Company in addition to the damages you
have already awarded . The plaintiff must prove malice with
clear and convincing evidence, and you may consider the
evidence introduced in the first phase of this trial as well as
the second phase of this trial.
As used in this instruction:
(a) malice means either conduct which is specifically
intended by Ford Motor Company to cause tangible or
intangible injury to the plaintiff or
(b) conduct that is carried out by Ford Motor Company
both with a flagrant indifference to the rights of the plaintiff
and with a subjective awareness that such conduct will result
in human death or bodily harm .
If you award punitive damages in determining the amount
thereof, you should consider the following factors.
(a) The likelihood at the relevant time that serious harm
would arise from Ford Motor Company's misconduct ;
(b) The degree of Ford Motor Company's awareness of
that likelihood ;
(c) The profitability of the misconduct to Ford Motor
Company ;
(d) The duration of the misconduct and any concealment
of it by Ford Motor Company;
(e) Any actions by Ford Motor Company to remedy the
misconduct once it became known to Ford Motor Company.
On the final day of trial, Ford tendered to the trial court a seventeen (17) page
document captioned "Punitive Damages Instructions Tendered by Defendant, Ford
Motor Company," which contained two (2) proposed punitive damages instructions .
The first page of the document explained that Proposed Instruction A addressed Ford's
liability for punitive damages and Proposed Instruction B addressed how the jury should
determine the amount of punitive damages. Two (2) versions of each of the
instructions were included : a "court copy" that included citations to relevant authorities
followed by a "clean copy" for submission to the jury. The four (4) page "court copy" of
Ford's Proposed Instruction B stated :
(a)
(b)
(c)
(d)
(e)
If you determine that punitive damages should be awarded
against Ford, then you shall assess the sum of the punitive
damages . In determining the amount of punitive damages
to be assessed, you should consider the following factors :
the likelihood, at the time Ford designed the automatic
transmission system for the F-250 pickup truck involved in
this case, that serious injury would arise from Ford's
misconduct in designing that system ;
the degree of Ford's awareness, if any, of that likelihood of
injury, and its motivation ;
the profitability of the misconduct to Ford ;
the duration of Ford's misconduct and whether it attempted
to conceal such misconduct ; and
any actions by Ford to remedy the misconduct, once it
became known to Ford .
You must remember that the purpose of punitive damages
is not to award the Estate of Tommy Smith a windfall, but to
punish Ford for its misconduct and to deter Ford and others
from similar conduct in the future . Society would be harmed
by, and you must not award, punitive damages in any
amount larger than what is needed to accomplish this
purpose. You must not award punitive damages for any
other purpose. You must award only the amount that you
find, by clear and convincing evidence, is necessary to
impose appropriate punishment and deterrence for the
wrongful conduct that you find to have occurred in this case .
Ordinarily, it constitutes sufficient punishment and
deterrence to deprive a corporate defendant of the monetary
gain realized from the wrongful conduct of its employees .
Therefore, if you decide to award punitive damages in this
case, the maximum amount you may award is the amount of
money saved by Ford by not utilizing the alternative designs
proposed by the plaintiff in similar vehicles sold in Kentucky,
less the amount of compensatory damages you have
awarded .$
In determining the amount of punitive damages that is
necessary for punishment and deterrence, you may consider
only Ford's wrongful conduct that has, or has had, an impact
on the citizens of Kentucky. You may not award any
punitive damages for the purpose of punishing Ford relative
to the sale of vehicles in other states, or for the purpose of
changing Ford's conduct outside the state of Kentucky. 9
The purpose of compensatory damages is to compensate
the plaintiff and make the plaintiff whole .
However, a
substantial award of compensatory damages also has the
effect of punishing and deterring misconduct, without the
necessity of awarding punitive damages . Therefore, in
determining the amount of punitive damages necessary for
appropriate punishment and deterrence, you must consider
the punishment and deterrent effect associated with the
monetary award paid by Ford for the compensatory
damages alone .' °
In determining the amount of punitive damages, the most
important factor to consider is the reprehensibility or
blameworthiness of Ford's conduct .
In evaluating the
reprehensibility of Ford's conduct, you must consider, for
example, (1) the extent to which the product complied with
industry custom and practice, and (2) the absence of any
objective test from which Ford could determine in advance
whether the automatic transmission control system was
defective under Kentucky law, and (3) any other
circumstances shown by the evidence that bear on
determining a proper amount of punitive damages .'
Ford's wealth, size or financial condition should play no
part in a jury's determination of the amount of punitive
damages that should be awarded .
With these Instructions in mind, and using the attached
Verdict Form, you will award against Ford that sum of
money, if any, you find by clear and convincing evidence
should be awarded as punitive damages .
General Authorities : Pacific Mut. Line Ins. Co v. Haslip, 499
U.S . 1 (1991); Miller's Bottled Gas, Inc. v. Borg-Warner
Corp., 817 F.Supp. 643 (W.D.Ky. 1993) ; Hanson v.
American Nat'l Bank & Trust Co., Ky., 865 S .W .2d 302
(1993); Wittmer v. Jones, Ky., 864 S.W.2d 885 (1993); and
KRS 411 .186.
6Pacific Mutual Life Ins. Co. v. Haslip, 499 U .S . 1
(1991) ; Malcolm E . Wheeler, (A Proposal for Further
Common Law Development of the Use of Punitive Damages
in Modern Product Liability Litigation), 40 Ala. L . Rev. 919,
947 (1989).
7A corporation's liability is entirely vicarious and
predicated on the wrongdoing of its employees or agents.
See, e.g., Uniform Law Commissioners' Model Punitive
Damages Act, § 6, Comments at 12 (Discussion Draft, April
4, 1996) ("Discussion Draff'). Issues relating to when a
corporation will be held liable for punitive damages based
upon the acts of its employees or agents are themselves
ripe for common law development .
See Uniform Law
Commissioners' Model Punitive Damages Act, § 6(c)
(Approval Draft, July 1996) ("Approval Draft") (legal entity
liable for punitive damages based on wrongful acts of
employee only if the wrongful conduct is committed by an
officer, director, or agent with policyrnaking authority) .
8 See generally BMW of North America, Inc. v. Gore,
116 S. Ct . 1589 (1996); Uniform Law Commissioner's Model
Punitive Damages Act, § 6(c) (Approval Draft, July 1996) ;
American Law Institute, Reporters' Study: Enterprise
Responsibility for Personal Injury, Vol. II, at 254 (1991);
Malcolm E. Wheeler, (A Proposal for Further Common Law
Development of the Use of Punitive Damages in Modern
Product Liability Litigation), 40 Ala . L. Rev. 919, 947 (1989) .
9BMW of North America, Inc. v. Gore, 116 S . Ct. 1589
(1996) .
'°See Prosser and Keeton on Torts § 4 at 25-26 (one
reason for imposing tort liability is to provide incentive to
avoid future harm ; this "idea of prevention shades into
punishment of the offender") .
"BMW of North America, Inc. v. Gore, 116 S . Ct.
1589(1996) .
12
Hensley v . Paul Miller Ford, Inc., Ky., 508 S .W .2d
759, 764 (1974) ; Givens v. Berkley, 108 Ky. 236, 56 S .W .
158 (1900); Shields' Adm'rs v. Rowland, 151 Ky. 822, 152
S .W . 943 (1913).
The "clean copy" of Ford's Proposed Instruction B omitted footnotes 6-12 and the
"general authorities" cited at the end of the "court copy." Ford also tendered a pleading
entitled "Memorandum of Defendant, Ford Motor Company, Regarding Necessity of
Complete Instructions on Punitive Damages" in which it cited Taylor v. Kentuckyl° and
Carter v. Kentucky ' 1 for the proposition that "under the United States Constitution[,]
`arguments of counsel cannot substitute for instructions by the court."'
Shortly after Ford tendered its proposed documents to the trial court, the
proceedings were delayed by the tardiness of a juror who had overslept, and the
videotaped record shows the trial judge examining the tendered instructions for
approximately fourteen (14) minutes before he called a recess. After the jury left the
courtroom, the trial court took up a matter concerning the scope of a defense witness's
testimony and then asked the attorneys if there was "anything else we can do to
expedite the case while we are waiting on the juror . . . other than me read the punitive
damage instructions and look over my notes?"
Later that day, the trial court gave the parties' attorneys copies of the written
instructions that it had prepared and permitted them to make objections . 12
At that time, Ford's attorneys did not specifically object to the omission of its
extraterritoriality instruction from the trial court's instructions, but did refer in general to
the trial court's failure to incorporate the provisions in Ford's proposed instructions :
10
11
12
436 U .S. 478, 98 S .Ct. 1930, 56 L.Ed .2d 468 (1978) .
450 U .S . 288, 101 S .Ct. 1112, 67 L .Ed.2d 241 (1981) .
See CR 51(2).
- 1 0-
Mr. Cowgill : I object to the entire set of instructions to be
given by the Court insofar as they fail to incorporate the
various components of the instructions tendered b
Motor Co . and I will not take the Court's time to itemize all
those . We have indicated by our tendered instructions all of
those things that we do think are necessary to properl
instruct this jury on the matter of punitive damages . The
Court has rejected those instructions so that error is
preserved , but turning then to the instructions that the Court
has indicated it intends to make, I make these further
objections your honor. First of all, I object to the inclusion of
paragraph (a), the first prong of the malice definition on the
ground that in this case there is no evidence whatsoever that
Ford engaged in any conduct which was specifically
intended by Ford to cause tangible or intangible injury to this
plaintiff.
Therefore, that is completely superfluous
instruction . It has no relationship to any evidence in this
case and I am concerned it may merely confuse the jury
regarding the other branch of the malice instruction . This
simply isn't a case for malice of the specific intent variety
that is included in that first branch of the statutory definition.
Secondly, your honor, I do object to the inclusion of (c)
profitability of the misconduct of Ford on the ground that
there has been no evidence in this case that the alleged
misconduct in rendering this defective design was profitable
to Ford in any way. Therefore, the inclusion of that factor
lacks any foundation in the evidence causes the jury to
believe there may be something there that has not been
there in the evidence and causes the jury to speculate about
something for which it does not have any evidentiary
support . There is simply no basis for that. Finally, your
honor, we would reiterate our constitutional objections to
these instructions . I believe those appear in our answer to
the complaint in this case. They are also incorporated in our
own proposed set of instructions but to reiterate them in the
context of these instructions that the court has prepared,
your honor, we would note that these instructions do not
pass constitutional muster according to our view and
according to the recent decisions of the U.S . Supreme Court
because they do not provide a jury in Kentucky with
adequate guidelines as to whether punitive damages should
be rendered and also fail to provide the jury with adequate
guidelines as to determining the amount of punitive
damages if it determines that punitive damages are in order.
In particular, and as regards to the amount of punitive
damages these instructions even if they are in accordance
with the Kentucky statute fail to _give the jury any cap or
other adequate guideline or limitation on the _amount of any
punitive damages award in this case and therefore there is a
due process violation by permitting a jury to simply come up
with some completely arbitrary number as an award of
punitive damages in this case . I believe in context with the
instructions that we have tendered, your honor, that
adequately reflects all of our objections to the instructions
that you have prepared .
Court : Objections overruled . . . .
Mr. Hawse : Can I just add a couple of other things real
quick on our objections, your honor? That phrase flagrant
indifference is not defined thus it goes directly to the point
that Mr. Cowgill made that there is no guideline to the jury on
when punitive damages are justifiable. The instruction
proposed by the Court is devoid in any guidance on what the
purpose of punitive damages are and what they are
The parallel to that is in the
supposed to achieve .
compensatory instructions where as the Court knows that
the jury is instructed that the jury to award a fair and
reasonable amount that will compensate the plaintiff. We
believe that a parallel instruction ought to be given in the
punitive damage phase that a fair and reasonable amount
that would achieve the purposes of the punitive damages as
set out at all, and I don't want to go through all that again
because we have already done it. And finally, with regard to
paragraph (e) the way this thing reads is the jury can find
punitive damages because Ford undertook a remedy. We
think that that specific paragraph ought to couch the back
conduct as mitigating as opposed to justifying malice, of
finding malice to start with .
Court : These five factors set forth are the five factors for
them to consider in determining the amount . That is the
most appropriate argument for you to make.
Mr . Hawse : I will do the very best I can with it, your honor .
Court : I am sure you will. Those are the factors that are
presented under the statute . Basically, I am following the
statute, I am following the Palmore's instructions, I am not at
this point in time in any position to rule as far as
constitutionality of the statute's concerned . That issue is
[not] properly before me. If it were me writing the law on
punitive damages, there might be a whole lot more here that
is not here but I am not the one doing that.
- 1 2-
Under our Rules of Civil Procedure, the question of preservation turns upon
whether Ford's tendered instructions and objections to the trial court's instructions "fairly
and adequately presented his position" to the trial court:
(1) At any time before or during the trial, the court may
direct the parties to tender written instructions . At the
close of the evidence any party may move the court to
instruct the jury on any matter appropriate to the issues
in the action .
(2) After considering any tendered instructions and motions
to instruct and before the commencement of the
argument, the court shall show the parties the written
instructions it will give the jury, allowing them an
opportunity to make objections out of the hearing of the
jury. Thereafter, and before argument to the jury, the
written instructions shall be given .
(3) No party may assign as error the giving or the failure to
give an instruction unless he has fairly and adequately
presented his position by an offered instruction or by
motion, or unless he makes obiection before the court
instructs the fury, stating specifically the matter to which
he objects and theground or grounds of his objection . 13
The underlying purpose of CR 51(3) is to "obtain the best possible trial at the trial court
level" 14 by "giv[ing] the trial judge an opportunity to correct any errors before instructing
the jury. "15 Generally speaking, if a party's "offered instructions clearly present [the]
13
CR 51 (emphasis added) .
Cobb v. Hoskins , Ky.App., 554 S .W .2d 886, 887 (1977). See also Kentucky
Border Coal Co . v. Mullins , Ky., 504 S.W.2d 696, 698 (1974) ("The purpose of the rule
is to . . . screen out errors at the trial rather than the appellate level."); Sparks v . Doe ,
Ky., 379 S.W .2d 252, 256 (1964) ("The object of CR 51 is to smoke out all impurities
beforehand, to the end that the jury will be properly instructed and the case tried but
once ."); Sams v. Siqmon Ikerd Co. , Ky., 280 S .W .2d 515, (1955) ("'[An] underlying
objective of these Rules is to secure the best possible trial at the trial court level rather
than in the Court of Appeals . . . . All too often are instructions simply fertile fields in
which errors are planted and the crop is harvested by reversal on appeal .") (quoting
Watson Clay, Kentucky Civil Rules : Practice & Procedure CR 51, at 458-59 (West
Publishing Co . 1954)) .
14
15
Ellison v. R & B Contracting, Inc . , Ky., 32 S .W .3d 66, 72-73 (2000) . See also
Burke Enterprises, Inc . v. Mitchell , Ky., 700 S .W .2d 789, 792 (1985) ("The object of the
rules is to require counsel to assist the trial court at arriving at proper instructions and,
-13-
party's position, no further action is required 06 to preserve for appellate review an
allegation that the trial court erred by failing to give a requested instruction ." On a
number of occasions, however, in both civil and criminal 18 cases, Kentucky appellate
conversely, to prevent counsel from building reversible error into the case by a general
or misleading objection ."); Bruce v. Commonwealth , Ky., 581 S .W .2d 8, 9-10 (1979)
("CR 51(3) stands for the proposition that the trial court should have any defects in the
proposed instructions called to his attention so that he is afforded the opportunity to
give the correct instructions .") ; Cox v. Hardy, Ky., 371 S .W .2d 945, 947 (1963) ("The
justification for CR 51 is exemplified by this record . In essence that Rule requires the
lawyers in a case to assist the judge in giving correct instructions and disallows an ex
post facto objection as a means of obtaining a reversal of the judgment on appeal.");
Young v. De Bord, Ky., 351 S .W.2d 502, 503 (1961) ("'One important purpose of [CR
51's] requirement is to limit the use of a general objection as a device in securing a
subsequent reversal, when the court may well have obviated the error if its attention
was directed at the proper time to the proper matter about which the party may
subsequently complain on appeal .") (quoting Clay, CR 51, cmt . 4, at 458)); Chaney v.
Slone, Ky., 345 S .W .2d 484, 486 (1961) ("The object of [CR 51] is to give the trial court
an opportunity to avoid error."); Brumley v. Richardson , Ky., 273 S .W.2d 54, 55 (1954)
("The purpose of the rule is to inform the trial judge of possible errors so that he may
have an opportunity to correct them .") .
16
Surber v. Wallace , Ky.App ., 831 S .W.2d 918, 920 (1992).
17 Karem v. Bennett, Ky., 481 S .W .2d 29, 32 (1972) (citing CR 51 in dismissing
argument that objection was necessary to preserve error) ; Massengale v. Lester, Ky.,
403 S.W.2d 701, 703 (1966) ("Massengale . . . did offer 13 instructions, 11 of which
were rejected, and among those rejected were four instructions on the theory of
privilege . This was enough to require a proper instruction on that theory[ .]").
18
We observe that RCr 9 .54(2), the Rule of Criminal Procedure that addresses
preservation of jury instruction errors, is nearly identical to CR 51(3) . In fact, the only
difference between the rules is that the criminal rule employs gender-neutral language :
No party may assign as error the giving or the failure to give
an instruction unless the party's position has been fairly and
adequately presented to the trial judge by an offered instruction or by
motion, or unless the party makes objection before the court
instructs the jury, stating specifically the matter to which the party
objects and the ground or grounds of the objection .
And, between March 1, 1974 and January 1, 1985, RCr 9.54(2) was actually
identical to the current version of CR 51(3), which has been in existence since July 1,
1969 . After an amendment effective in January 1, 1985, however, RCr 9.54(2) read :
Any party may tender instructions but no party may assign
as error the giving or the failure to give an instruction unless he
makes specific objection to the giving or the failure to give an
-1 4-
courts have explained that a tendered instruction will not fairly and adequately present
the party's position as to an allegation of instructional error when: (1) the omitted
language or instruction was not contained in the instruction tendered to the trial court;
i.e., when the allegation of error was not presented to the trial court at all;' 9 (2) the
minor differences between the language of the tendered instruction and the instruction
given by the trial court would not call the trial court's attention to the alleged error;2° or
(3) the tendered instruction itself was otherwise erroneous or incomplete .21
instruction before the court instructs the jury, stating specifically the
matter to which he objects and the ground or grounds of his
objection .
This Court applied that version of RCr 9.54(2) while it was in effect, see
Chumbler v. Commonwealth , Ky., 905 S.W.2d 488, 499 (1995); Commonwealth v.
Collins, Ky., 821 S .W.2d 488, 492 (1992); Grooms v. Commonwealth , Ky., 756 S .W .2d
131, 139-40 (1988) ; Evans v. Commonwealth , Ky., 702 S.W.2d 424 (1986), but those
cases must be considered in their historical context and are clearly inapplicable to the
civil case at bar. In light of the identity between CR 51(3) and the version of RCr
9.54(2) that was in effect between March 1, 1974 and January 1, 1985 and substantial
identity between CR 51(3) and the version of RCr 9 .54(2) that has been in effect since
September 1, 1993, we find our past applications of those versions of RCr 9 .54(2) to be
instructive to our analysis here .
19
First Property Management, Ky., 867 S .W.2d 185,186 (1993) (observing that
"the plaintiff's proposed instruction [which did not employ the language that the
appellant claimed had been erroneously omitted from the trial court's instruction] was a
poor vehicle upon which to expect the trial judge to arrive at the instruction advocated
on appeal ."); Rainbo Baking Co. v. S & S Truck Co . , Ky., 459 S .W .2d 155 (1970)
(holding that "under CR 51 [the Appellants] did not adequately specify to the trial court
the theory upon which they now rely in this court" in a case where "it is demonstrably
clear from the . . . language of [the] objection and of the tendered instruction that
[Appellants] did not have this requirement in mind and did not bring it to the attention of
the trial court .") ; Brumley, 273 S .W .2d at 56 (1954) ("If we should adopt [the view that
tendered instructions preserve error], it would not avail the appellant here, because the
instructions offered by him did not make clear his position on the specific question of
right of way; in fact they did not even contain the words `right of way."').
2°
Johnson v. Cormney, Ky.App ., 596 S .W .2d 23, 26 (1980) ("But for the use of
the word `condoned,' those instructions tendered by appellant do not differ substantially
from those given by the court, and we find no objection by appellant at trial, or tendered
instruction, that could be said to make reasonably clear to the trial court what the
appellant had in mind as to his objection to the use of the word `condoned ."'); Miller v.
-15-
While the tendered instruction in this case clearly avoids either of the first two (2)
pitfalls, it is debatable whether the four (4) page tendered instruction, which included six
(6) separate instructional paragraphs that were not included in the trial court's
instructions, was "a fully correct instruction." 22 It is clear from State Farm that "a jury
must be instructed that it may not use evidence of out-of-state conduct to punish a
defendant for action that was lawful in the jurisdiction where it occurred[,],
23
and thus
the extraterritoriality admonition contained in the fourth paragraph of Ford's Proposed
Quaife, Ky ., 391 S .W.2d 682, 684 (1965) ("The instruction tendered by him does not
point up the claimed error; thus he is not in a position to complain now.").
21
Davis v. Commonwealth , Ky., 967 S .W.2d 574, 580-81 (1998) ("Having
tendered an improper [because it was incorrectly identified as a lesser-included offense
of murder] instruction, having advised the trial judge on two occasions that he
`accepted' or had `no objection' to the trial court's proposed instructions, and having
failed to specifically object to that portion of the instruction of which he now complains,
Davis failed to fairly and adequately present his position to the trial court and thereby
preserve the issue for review ."); Meyers v. Chapman Printing Co ., Inc. , Ky., 840 S.W.2d
814, 823-24 (1992) ("Although Meyers objected to the "but for' language, Meyers
tendered no description fully describing her view of how to properly frame the same
issue . . . . The requirements of CR 51(3) are such that before a party may complain of
error in the instructions, the party must accompany the objection with a fully correct
instruction , or, at the least, must advise the court sufficiently so that the court can
understand both the nature of the objection and what needs to be done to correct it.")
(emphasis added); Ball v. E .W . Scripps Co . , Ky., 801 S .W .2d 684, 691 (1990) ("[T]he
proposed interrogatories [actually, 41 `jury charges,' 47 pages in length, followed by
interrogatories, which were a far cry from Kentucky's `bare bones' instructions] were
both unsuitable and unreasonable, so completely so that they could not form the basis
of a complaint regarding failure to give interrogatories[ .]"); Long v. Commonwealth , Ky.,
559 S .W .2d 482, 484-85 (1977) (where the defendant's tendered self defense
instruction in a murder case included only the privilege to use physical force and did not
address deadly physical force, the Court held that the tendered instruction "did not
'fairly and adequately' present his position to the trial court" even though the tendered
instruction did omit the questionable "qualifications" included in the instruction given to
the jury). See also Long v. Smith , 663 F .2d 18 (6 th Cir. 1981) (providing additional
factual context by identifying the "qualifications" in the trial court's self-protection
instruction).
22
Meyers, 840 S . W .2d at 824.
State Farm Mut. Ins . Co. v. Campbell , 538 U .S . 408, 422, 123 S .Ct. 1513,
1522, 155 L.Ed .2d 585,
(2003) .
-1 623
Instruction B should have been included in the trial court's instructions . However,
portions of the rest of the tendered instruction are far more questionable - the most
egregious example being the third paragraph, which purported to instruct the jury that
the maximum amount of punitive damages it could award was "the amount of money
saved by Ford by not utilizing the alternative designs . . . less the amount of
compensatory damages."
It would have been improper for the trial court's instruction to include all of Ford's
Proposed Instruction B, but we are inclined to hold that Ford's Proposed Instruction B
properly preserved its allegation of error concerning the omission of the extraterritoriality
admonition because the individual paragraphs in Ford's tendered instruction appear
discrete and severable and the trial court could have avoided the error by "cutting and
pasting" or "slicing and dicing" and incorporating the fourth paragraph of Ford's
proposed instruction into its own instruction . Although the issue of preservation would
be more clear cut if Ford's trial counsel had expressly argued for the introduction of the
extraterritoriality admonition within the trial court's instruction - as it did with respect to
the "purpose of punitive damages" language - the critical inquiry is whether the
proposed instructions gave the trial court a fair opportunity to "get it right," and Ford's
Proposed Instruction B did give the trial court that opportunity because it communicated
Ford's position that the paragraph regarding extraterritoriality be included in the trial
court's instruction on punitive damages .
D. INSTRUCTIONS ON REMAND
At the time this case was tried, the standard for awarding punitive damages was
set forth in KRS 411 .184, but subsequently, in 1998, we held portions of the statute
unconstitutional . Those portions were contained in the instructions in this case;
however, as neither party made any challenge to those portions of the statute, the jury's
determination that Ford's conduct authorized an award of punitive damages stands ; it is
the law of the case . In light of State Farm , however, this case must be remanded for
24
Williams v . Wilson, Ky., 972 S .W .2d 260 (1998).
Cf. Bowling Green Municipal Utilities v. Atmos Energy Corp., Ky., 989 S.W.2d
577, 580 (1993) (where failure to raise an objection, after Williams v. Wilson , to
instructions given under KRS 411 .184, resulted in the case being reviewed under the
statute) ; Goodloe v. City of Richmond , Ky., 283 Ky. 633, 142 S .W.2d 155, 159 (1940)
("Applying the "law of the case rule" to the questions here presented, it follows that the
appellant, upon remand of his case, was entitled to a retrial upon the one and only
issue declared upon the second appeal to present a recoverable loss and upon which
he was entitled to go before the jury under proper instructions for an award of damages
against the light and water company."); Lexington & E. Ry. Co. v. Sexton, Ky., 193 Ky.
201, 235 S .W. 773, 774 (1921)
(This court gives a broader application to [the "law of
the case"] rule than do courts of some other jurisdictions .
We have uniformly extended it so as to bar on a second
appeal, not only all questions that were actually determined
on the first one, but likewise all questions which were
involved in the first record or which could have been
presented under the record therein, though unnoticed and
though no reference was made thereto in the first opinion .
If, however, the first opinion showed expressly on its face
that the matters relied on subsequent thereto were not
considered or determined, they will be left open and not
affected by the rule . . . . Applying the rule to this appeal, the
alleged errors in giving and refusing instructions cannot be
considered by us, although we should conclude they
possessed merit, for the same instructions were offered,
given, and refused at the trial which was under review in the
former opinion and the same errors were relied on then as
now.);
25
Louisville & N .R . Co . v. Payne , Ky., 133 Ky. 539, 118 S .W . 352, 354-55
(1909)("It has frequently been held that, where certain instructions have been approved
as the law of the case, upon a retrial only such should be given, and it is error for the
trial court to fail or refuse to give those, or to give other or additional instructions . Of
course, if the facts upon the retrial were different from those upon the former trial, the
trial court would be justified in making the instructions conform to the facts."); Sturm v.
Meyer , Ky., 14 S.W . 359 (1890) (where instructions not excepted to will be regarded as
the law of the case) ; Ohio Valley R. Co . v. Alves, Ky., 11 Ky. L. Rptr. 811 (1890)
(instructions not excepted to are taken to be the law of the case) ; H .R . ex rel. Taylor v.
-18-
a new determination of the amount of any punitive damages awarded 26 using an
instruction similar to the following instruction, which sets forth the purpose of punitive
damages and provides a safeguard from extraterritorial punishment :
A jury previously found that Tommy Smith's injury and
death were caused by the defective design of the
transmission system installed by Ford Motor Company in the
Ford F-250 pickup truck in 1977 and awarded Tommy
Smith's Estate $3,000,000 .00 as compensatory damages for
his injury and death . The jury also determined that Ford
Revlett, Ky.App ., 998 S .W .2d 778, 780 (1999) (quoting Siler v. Williford , Ky., 375
S.W .2d 262, 263 (1964)) ("The "law of the case" doctrine provides that: When an
appellate court decides a question concerning evidence or instructions, the question of
law settled by the opinion is final upon a retrial in which the evidence is substantially the
same and precludes the reconsideration of the claimed error on a second appeal .).
26
Smith v. McMillan , Ky., 841 S.W .2d 172, 175 (1992) ("As we regard the issue
of damages as "distinct and severable" from the issue of liability in this case and
discern no injustice which will result, retrial will be limited to damages."); Turfway Park
Racing Ass'n v. Griffin , Ky., 834 S .W.2d 667, 672 (1992) ("This Court has long
endorsed the view that damages may be separated from liability and that a case may
be properly remanded for retrial of damages only . We have gone further and held in a
personal injury case that an award of medical expenses without any award for pain and
suffering was contrary to the law and remanded for a retrial of only the erroneous
portion of the verdict .") (citations omitted) ; Deutsch v. Shein , Ky., 597 S.W.2d 141, 146
(1980) ("[W]here a distinct and severable issue is to be decided, a trial on that issue
alone is appropriate unless such a retrial would result in injustice ."); Caton v. McGill , Ky.
488 S .W.2d 345, 347 (1972) ("In view of the fact that the jury found against the
appellees on the issue of liability, which finding is not challenged by cross-appeal in this
court, and we are not cited to any manifest injustice which would result from a limited
retrial, the retrial should be limited to the issue of damages."); Louisville and Jefferson
County Bd . of Health v. Mulkins , Ky., 445 S .W.2d 849, 853 (1969) ("Since we find no
error in regard to the determination of liability and since there are no indications of any
prejudicial influences that might have affected that determination, we are remanding the
case for a retrial only on the question of damages."); City of Ashland v. Smith , Ky., 340
S .W.2d 208, 209 (1960) (where liability was established and judgment reversed
because of excessiveness of damages, retrial limited to damages only.); Shortridge v .
Rice, Ky.App ., 929 S .W .2d 194, 198 (1996) ('`In light of our determination that
Shortridge was wrongfully deprived of a jury instruction on punitive damages, we must
consider the appropriateness of a retrial on the issue of punitive damages alone. [CR]
59.01 specifically authorizes a new trial for only "part of the issues" and "[t]he Kentucky
Supreme Court has noted its strong preference for limited retrials on the issue of
damages alone .") ; see also 7 KURT A . PHILIPPS, JR ., KENTUCKY PRACTICE, CR 59 .01,
cmt . 4 (5th ed . 1995) .
- 1 9-
Motor Company acted toward Tommy Smith with malice ;
therefore, you may now, in your discretion, award Tommy
Smith's Estate punitive damages in addition to the
compensatory damages previously awarded .
"Malice" means conduct that was carried out by the
Ford Motor Company both with a flagrant indifference to the
rights of Tommy Smith and with a subjective awareness that
such conduct would result in human death or bodily harm.
"Punitive damages" are damages awarded against
Ford Motor Company for the purpose of punishing Ford
Motor Company for its misconduct in this case and deterring
it and others from engaging in similar conduct in the future .
Whether you make an award of punitive damages, in
addition to the compensatory damages previously awarded,
is a matter exclusively within your discretion . If, however,
you award punitive damages, in determining the amount
thereof, you should consider the following factors :
(a) The likelihood at the time of such misconduct by
Ford Motor Company that serious harm would arise from it;
(b) The degree of Ford Motor Company's awareness
of that likelihood ;
(c) The profitability of the misconduct to Ford Motor
Company;
(d) The duration of the misconduct and any
concealment of it by Ford Motor Company; and
(e) Any actions by Ford Motor Company to remedy
the misconduct once it became known to Ford Motor
Company.
Evidence of Ford Motor Company's conduct occurring
outside Kentucky may be considered only in determining
whether Ford Motor Company's conduct occurring in
Kentucky was reprehensible, and if so, the degree of
reprehensibility . However, you must not use out-of-state
evidence to award the Estate of Tommy Smith punitive
damages against Ford Motor Company for conduct that
occurred outside Kentucky.
If you award punitive damages, they must be fixed
with calm discretion and sound reason, and must never be
either awarded, or fixed in amount, because of any
sympathy, or bias, or prejudice with respect to any party to
the case .
-20-
VERDICT FORM
(check one)
We, the jury, do not award punitive damages to Tommy Smith's
Estate .
OR
We, the jury, award Tommy Smith's Estate punitive damages of
[Number of jurors required for a verdict]
We would also note that should the question arise on remand of whether to
admit evidence of Ford's financial condition, that in State Farm , the United States
Supreme Court frowned upon "'the presentation of evidence of a defendant's net
worth[, because it] creates the potential that juries will use their verdicts to express
biases against big businesses, particularly those without strong local presences ."'2'
Likewise, our predecessor court stated that "we are clearly of the opinion that no
evidence as to the financial condition of either defendant or plaintiff should be admitted
in any case in which punitive damages might be recovered" because "[t]he tendency of
this class of testimony would be to lead the jury to consider chiefly the pecuniary
condition of the defendant, rather than the enormity or wantonness of the act for which
punitive damages might be allowed ."28
27
State Farm Mut . Auto . Ins . Co. v. Campbell, 538 U .S . 408, 417, 123 S .Ct.
1513, 1520, 155 L.Ed .2d 585,
(2003) (quoting Honda Motor Co . v. Oberg , 512 U.S .
415, 432, 116 S .Ct. 2331, 2340-2341, 129 L .Ed .2d 336, 349 (1994)).
28 Givens v . Berkley , Ky., 56 S.W. 158, 159 (1900) .
-2 1-
III . CONCLUSION
For the above reasons, we vacate the judgment's award of punitive damages
and remand for a new determination of the amount of punitive damages, if any, in
accordance with this opinion .
Lambert, C .J . ; Cooper, Graves and Johnstone, JJ ., concur. Wintersheimer, J .,
dissents by separate opinion in which Stumbo, J., joins .
COUNSEL FOR SAND HILL ENERGY, INC . :
Clint Harris
21 Bankers Alley
Manchester, Kentucky 40962-1371
COUNSEL FOR BRENDA SMITH, ADMINISTRATRIX OF THE ESTATE
OF TOMMY SMITH :
Rickey D. Bailey
Suite 1, 116 Lawyer Street
Manchester, Kentucky 40962
Mary Latta Lee
316 River Street
Manchester, Kentucky 40962
R. Scott Madden
116 Lawyers Street
Suite 2
Manchester, Kentucky 40962
Ned Miltenberg
Center for Constitutional Litigation, P .C.
1050 31 St Street, N .W .
Washington, D .C . 20007-4499
Roy Glenn Collins
McKinnley Morgan
250 Richmond Road
Manchester, Kentucky 40962
Sharon K. Allen
PO Box 1228
McKee, Kentucky 40447
COUNSEL FOR FORD MOTOR COMPANY :
John A. Rogovin
Brian P . Brooks
Jonathan D . Hacker
Walter E . Dellinger, III
Matthew M . Shores
O'Melveny & Myers
Suite 500 West
55513th Street, N.W .
Washington, D .C. 20004
B . Todd Thompson
Sallie Jacobs Stevens
R. Thaddeus Keal
Thompson, Miller & Simpson, P .L.C.
600 West Main Street, Suite 500
Louisville, Kentucky 40202
Amy Crosland Sullivan
3430 N . Dickerson Street
Arlington, Virginia 22207
COUNSEL FOR MID-EAST FORD MERCURY, INC. :
John A. Rogovin
Brian P . Brooks
O'Melveny & Meyers
Suite 500 West
55513th Street, N .W .
Washington, D .C . 20004
B . Todd Thompson
Thompson, Miller & Simpson
600 West Main Street, Suite 500
Louisville, Kentucky 40202
Amy Crosland Sullivan
3430 N . Dickerson Street
Arlington, Virginia 22207
COUNSEL FOR AMICUS CURIAE, PRODUCT LIABILITY ADVISORY COUNCIL,
INC. :
Virginia Hamilton Snell
Wyatt, Tarrant & Combs
2600 PNC Plaza
500 West Jefferson Street
Louisville, Kentucky 40202-2898
Evan M . Tager
Mayer, Brown & Platt
1909 K Street, N .W .
Washington, D.C . 20006
Hugh F. Young, Jr.
Product Liability Advisory Council, Inc .
1850 Centennial Park Drive
Suite 510
Reston, Virginia 22091
Jay C. Johnson
Mayer, Brown, Rowe & Maw
1909 K Street, N.W .
Washington, D .C . 20006
Robin S . Conrad
National Chamber Litigation Center, Inc.
1615 H Street, N .W .
Washington, D .C . 20062
COUNSEL FOR AMICUS CURIAE, EQUITABLE RESOURCES, INC .:
Bridget H. Papalia
Brown, Todd & Heyburn
3200 Providian Center
Louisville, Kentucky 40202-3363
Henry P . Sorett
Cynthia D . Craig
Brickley, Sears & Sorett
75 Federal Street
Boston, MA 02110
COUNSEL FOR AMICUS CURIAE, EQUITABLE PRODUCTION COMPANY :
Bridget H . Papalia
Brown, Todd & Heyburn
3200 Providian Center
Louisville, Kentucky 40202-3363
Henry P . Sorett
Cynthia D. Craig
Brickley, Sears & Sorett
75 Federal Street
Boston, MA 02110
COUNSEL FOR AMICUS CURIAE, ASSOCIATED INDUSTRIES OF KENTUCKY:
Bridget H . Papalia
Brown, Todd & Heyburn
3200 Providian Center
Louisville, Kentucky 40202-3363
COUNSEL FOR AMICUS CURIAE, KENTUCKY OIL AND GAS ASSOCIATION :
Bridget H . Papalia
Brown, Todd & Heyburn
3200 Providian Center
Louisville, Kentucky 40202-3363
RENDERED : AUGUST 26, 2004
TO BE PUBLISHED
,Suprtmt (gourf of Artifurku
1999-SC-1028-DG
SAND HILL ENERGY, INC.
V.
APPELLANT
ON REMAND FROM UNITED STATES SUPREME COURT
02-1096
ON REVIEW FROM THE COURT OF APPEALS
1997-CA-2420,1997-CA-2583, AND 1997-CA-2584
CLAY CIRCUIT COURT NO. 94-CI-00167
BRENDA SMITH, ADMINISTRATRIX OF
THE ESTATE OF TOMMY SMITH; AND
FORD MOTOR COMPANY
APPELLEES
AND
1999-SC-1029-DG
BRENDA SMITH, ADMINISTRATRIX OF
THE ESTATE OF TOMMY SMITH
V.
ON REMAND FROM UNITED STATES SUPREME COURT
02-1096
ON REVIEW FROM THE COURT OF APPEALS
1997-CA-2420,1997-CA-2583, AND 1997-CA-2584
CLAY CIRCUIT COURT NO. 94-CI-00167
SAND HILL ENERGY, INC. ; AND
FORD MOTOR COMPANY
AND
APPELLANT
APPELLEES
2000-SC-0444-DG
FORD MOTOR COMPANY; AND
MID-EAST FORD MERCURY, INC.
V.
APPELLANTS
ON REMAND FROM UNITED STATES SUPREME COURT
02-1096
ON REVIEW FROM THE COURT OF APPEALS
1997-CA-2420,1997-CA-2583, AND 1997-CA-2584
CLAY CIRCUIT COURT NO. 94-CI-00167
BRENDA SMITH, ADMINISTRATRIX OF
THE ESTATE OF TOMMY SMITH ; AND
SAND HILL ENERGY, INC .
APPELLEES
DISSENTING OPINION BY JUSTICE WINTERSHEIMER
I must respectfully dissent from the majority opinion because the failure to
include additional limiting instructions concerning extraterritorial punishment was not a
sufficient reason to vacate the punitive damages award and remand the case for a new
trial on that issue.
In my review, it would appear that the question of whether this objection was
properly preserved is highly debatable. Ford did not present objections to specific
omissions by the trial judge in declining to apply a 17-page suggested instruction .
Ford's counsel stated "I object to the entire set to be given by the court insofar as they
fail to incorporate the various components of the instructions tendered by Ford Motor
Company and I will not take the court's time to itemize all those ." Although counsel for
Ford pointed to other specific items that it considered important, the component of
extraterritorial punishment was not made specifically.
This blanket objection to the failure to incorporate poorly worded and egregiously
self-serving instructions serves in at least some fashion, as a subversive tactic by Ford
to stall the plaintiffs and potentially drive the cost of litigation so high that Ford could
achieve a reduced settlement or avoid the payment altogether . It also pushes the
perceived cost of litigating against Ford so high that diminishing the punitive damage
awards or creating the perception that punitive damages will be small may serve as a
significant deterrent to future plaintiffs who seek redress from Ford .
Sand Hill is an action for wrongful death . It is clearly in the interest of the
Commonwealth to protect its citizens from such harm and could be considered as
distinct from the interest of protecting citizens from mere economic damages . The right
to recover in wrongful death claims is specifically protected by constitutional sections
14, 15 and 241 . Reliance on State Farm Mut. Auto. Ins. Co . v. Campbell, 538 U .S. 408,
123 S.Ct . 1513, 155 L.Ed.2d 585 (2003), is misplaced because that case involves an
action for bad faith with economic loss rather than personal injury or wrongful death.
It is curious to note that the argument presented by Ford is exactly the same
argument it advanced in its earlier brief in the case of Sand Hill Energy, Inc. v. Ford
Motor Co . , Ky., 83 S.W.3d 483 (2002), in which a majority of this Court reversed a
decision of the Court of Appeals and reinstated a $3 million compensatory award and
$15 million of the original $20 million for punitive damages . The Supreme Court of the
United States granted the petition of Ford to vacate Sand Hill I and remanded it to this
Court for further consideration in the light of State Farm , supra . As noted in the majority
opinion, Ford has paid the compensatory damage award of $5,596,425, and the parties
agree that the only issue remaining is the viability of the $20 million punitive award . If
we are to consider this case only on the basis of suggested ratios in State Farm , the
multiplier of 6+ times the $3 million would give us a $20 million punitive award which is
well within the range suggested by the United States Supreme Court .
However, in the majority decision in this case, we have departed from what
appears to be the mandate of the United States Supreme Court and embarked upon a
reconsideration of our original decision in Sand Hill in 2002 . The instructional issue was
raised in that case and in particular, discussed at length in a dissenting opinion . It
could now be said that we are in a kind of rehearing mode rather than accepting the
direction of the remand order. The parties are not served by this de facto rehearing or
reconsideration.
Even if we consider this case as distinct from the economic damage theory
advanced in State Farm , we should consider the analysis provided by Judge Richard
Posner of the Seventh Circuit Court of Appeals in Mathias v . Accor Economy Lodging
Inc., 347 F .3d 672 (7 th Cir. III. 2003) . The Federal Court of Appeals in that case gave
an example of the recovery allowed for a battery committed by spitting in another's
face . In such cases, the compensatory damages must be nominal because there is no
way to represent the actual damages adequately . Therefore, and among other
reasons, the U .S . Court of Appeals concluded that applying a ratio to such a case is
meaningless . The Court stated "the judicial function is to police a range, not a point."
In the Mathias case, the plaintiff had suffered personal injuries because of being bitten
by bed bugs in a motel . Judge Posner likened their damage more to having been spit
in the face, than to damages caused by breach of contract . Even though the plaintiffs
had actual damages represented by medical bills, the federal court determined that
there is more purpose behind the punitive damage concept than merely magnifying
actual costs . Adequate deterrence of the tortious activity and of vigorous litigation, as
well as making it economically feasible to litigate such cases, were among the reasons
stated for upholding the entire punitive damage award. Therefore, the court upheld the
punitive damages without regard to the ratio between compensatory and punitive .
Under all the circumstances, we should do the same . Further elongation of the
litigation here does no service to anyone and merely blurs the line between
compensatory and punitive damages .
Nationally, there is no question that some jury verdicts awarding punitive
damages have been excessive. The United States Supreme Court has wisely chosen
to address such a situation by requiring a de novo review of such awards by state
appellate courts and has suggested some numerical guidelines for such review. It is
very unfortunate that there are a few runaway juries that award outrageously large
punitive verdicts . On the other side of the coin is the fact that individual and corporate
entitites must be held accountable for flagrant misbehavior that results in both physical
and economic injury and damage . There is no doubt that the many advances in
consumer safety and health have resulted from diligent pursuit of civil wrongdoers . The
key to a just solution is balance and reasonableness . It is only the venal and greedy
who have anything to fear. A simple mistake that does not result from negligence,
malice, carelessness or indifference is rarely the subject of a significant punitive award .
In Campbell , the United States Supreme Court properly promulgated a general
standard to be applied as each particular case required . Under any analysis, the ratio
formula suggested by Campbell is not exceeded here . Thus, it can be considered that
the punitive damage award is well within any acceptable guideline .
Fear of unreasonable litigation has impaired, to some degree, our basic ability to
make sensible decisions . Doctors, clergy, teachers and even lawyers, as well as the
general public and business, find every day decisions conditioned by a concern about
frivolous litigation . Many people are nervous about doing almost anything . Such an
atmosphere is not consistent with true liberty and freedom of activity. Lawsuits have a
place in our culture, but not the only place. They should be undertaken carefully for
valid causes . Threats have no place .
Certainly, excessive punitive verdicts are a serious problem, but equally serious
is the unreasoned fear of the application of such verdicts to well-meaning professionals
and organizations . Both conditions contribute significantly to excessive insurance rates
for many businesses and professionals . The answer is not to unduly or
unconstitutionally limit the right of recovery, but rather for an improvement of the
regulation of the insurance industry such as has been accomplished in California.
There is no easy solution . Perhaps part of the resolution could be an intense
comprehensive study by the appropriate governmental agency as to a proper review of
the regulation of the insurance industry. Certainly, our society is flexible enough to
accommodate many competing concerns without diluting our fidelity to Sections 14, 54
and 241 of the Kentucky Constitution which protect the rights of the citizens to recover
damages .
True reconsideration, by definition, does not necessarily mean automatic
change. The remand authorized by the majority is unwarranted and does not satisfy
the mandate of the United States Supreme Court.
However, considering the approach taken by the majority, it is my opinion that
the original decision of this Court should be vacated and the punitive damage award
given by the jury should be reinstated .
Stumbo, J., joins this dissenting opinion .
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