Case:    Warren v. Shelter Mutual Ins. Co..
             Louisiana Third Circuit Court of Appeal
             No. 15-354, 2015 La. LEXIS 1962 (6/29/16)

A boating accident occurred on the navigable inland waters of Louisiana on May 7, 2005. A twenty-one year passenger was killed when the boat's steering failed. The boat went into a spin and threw the decedent overboard. The boat's propeller struck the decedent nineteen times, causing his death.

The parents of the decedent brought survival and wrongful death claims under general maritime law and sought punitive damages against several defendants. At the time of the trial, the only remaining defendants were the boat owners and Teleflex, the manufacturer and supplier of the boat's hydraulic steering system. The claims against Teleflex centered on the defective nature of the steering system, which contained an inherent danger unknown to users. Plaintiffs claimed Teleflex breached its duty to warn unsuspecting users of a dangerous risk in using its product.

A jury originally found in favor of Teleflex after the first trial and dismissed the claims against them. However, the trial court granted a new trial on the basis of prejudicial error during in the original trial. At the conclusion of the second trial, the jury rendered a verdict in favor of the Plaintiff and against Teleflex, awarding $125,000 in compensatory damages and $23 million in punitive damages.

On appeal, the Louisiana Third Circuit noted punitive damages are rarely imposed but have long been recognized as an available remedy in general maritime law, where the defendants' intention or wanton and reckless conduct amounted to a conscious disregard for the rights of others. The appellate court noted, not only did Teleflex know about the about steering loss problems, but it had tested the system and documented the test results nine years before the accident. The court reasoned the jury was likely influenced by the startling results of the tests and considered it wanton and reckless to ignore such results when an inexpensive stick-on warning decal costing only thirty cents could have a saved a life.

The Third Circuit thus affirmed the jury's punitive damage award after considering various factors, including the nature and extent of the harm to the plaintiff; the wealth and financial situation of the defendant; the character of the conduct involved; the extent to which the conduct offends a sense of justice; and the amount necessary to deter similar conduct. Teleflex argued the amount of punitive damages awarded was grossly excessive and furthered no legitimate state purpose, constituting an arbitrary deprivation of property under the Due Process Clause of the Fourteenth Amendment.

The grossly excessive standard is generally determined by three guideposts; i.e., the degree of reprehensibility; ratio or disparity between punitive award and the harm or potential harm suffered; and the difference between this remedy and the civil penalties authorized or imposed in other cases. While agreeing that due process imposes some substantive limitation on the size of the punitive awards, the court admonished that there are no absolutes and no mathematical bright lines in determining excessiveness. The court weighed heavily on the perceived reprehensible nature of the conduct, noting that an action taken or omitted in order to augment profit represents an "enhanced degree of punishable culpability," and further, that hard-to -detect wrongdoing is even more reprehensible and subjects the more culpable tortfeasor to greater punishment. Citing to the United States Supreme Court in the matter of Exxon Shipping Co. v. Baker, 554 U.S. 471 (2008)(oil spill case awarding $2.5 billion in punitive damages), the Third Circuit remarked "t is viewed as concealment and bad faith when a company has knowledge through its own testing that is product is dangerous and still withholds the knowledge from those who purchase the product and create the very wealth the defendant enjoys."

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