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Court slashes huge Ford verdict

/ Source: The Associated Press

A record $290 million punitive-damages verdict against Ford over a rollover accident that killed three people was reduced by a California appeals court Tuesday to $23.7 million.

The Fifth District Court of Appeal, based in Fresno, cut the nation’s largest product liability award to conform with a U.S. Supreme Court precedent that in April capped large awards.

The decision is one of dozens of damage verdicts courts across the country are reviewing following the Supreme Court’s edict. It is the largest award to be reduced so far.

The California case involved a 1993 accident in which three members of the Romo family were killed and two others injured. The family sued the automaker, arguing Ford knew that its Bronco “would crush flat as a pancake in a rollover.”

A Stanislaus County jury awarded $290 million in punitive damages in 1999, a sum equal to 1.2 percent of Ford’s net worth at the time.

An appeals court upheld the award, saying Ford had engaged in “despicable conduct” by failing to provide adequate crash protection. But in May, the U.S. Supreme Court sent the case back to have the verdict reduced.

The high court had ruled the previous month in a case against State Farm Insurance that punitive damages should be about four times the amount of damages a jury awards to compensate victims for their actual losses. The compensatory damages in the Ford case were $5 million, making the ratio 58-1.

“We are pleased the court has recognized State Farm fundamentally altered the standards governing punitive damages awards,” said Ford attorney Theodore Boutrous.

Erwin Chemerinsky, the Romo family’s attorney, said he was mulling an appeal. He said under the State Farm decision, juries could award heavy punitive damage awards when death and bodily injury are involved.

“I think this misreads what the Supreme Court said,” Chemerinsky said.