The Biggest Jury Verdict of 1999

The National Law Journal
By Margaret Cronin Fisk
National Law Journal Contributing Writer

PATRICIA ANDERSON, her four children and Jo Tigner, a family friend, were coming home form church on Christmas Eve 1993 when their 1979 Chevy Malibu was rear-ended by a drunk driver. The Malibu’s gas tank exploded. As the fire consumed the Malibu, the adults were able to escape, but the four children were trapped in the back of the car.

Alisha Parker, now 12, was the most gravely injured. Her burns were so severe that she lost the fingers of one hand and has already undergone nearly 70 surgeries, "and she needs a whole lot more," said plaintiffs’ attorney Brian J. Panish.

The accident, although gruesome, is not unlike others one can read about these days. But what distinguishes this collision is that 5 ½ years later, it led to the largest-ever products liability jury verdict in the United States. A jury hit General Motors Corp., maker of the Malibu, with a $4.9 billion verdict that GM called "outrageous" and "unsupported by the evidence or the law." Anderson v. General Motors Corp., BC116926 (Super. Ct., Los Angeles)

The verdict, the largest jury verdict of 1999 even after it was slashed by the trial judge, was indicative of a yearlong, nationwide trend. Juries nearly everywhere in 1999 wee more generous than ever in their awards to plaintiffs who had sustained physical injury or death. Throughout the United States, in products liability, medical malpractice, personal injury and wrongful death, there was an uptick in the number of jury awards of eight figures or more. Some plaintiffs’ attorneys now contend that million-dollar verdicts – once the gold standard – are meaningless as a measure of success and that only awards of $10 million or more should be considered marks of success. Such trends, and the highest or most significant verdicts of 1999, can be found in The National Law Journal’s annual Verdicts section.

Beyond any yardstick

The judgment against General Motors was beyond any yardstick, new or old. The litigation story beings after the plaintiffs filed a products liability action against GM in 1994, charging that the Malibu had caught fire because the fuel tank was placed 10 inches from he rear bumper. This placement left the Malibu subject to fuel-fed fires in minor collisions, said Mr. Panish. None of the occupants of the Anderson car sustained significant physical injuries beyond the burns, he said: "The worst injury was a broken femur."

General Motors denied that there were any defects in the Malibu’s design. It contended that the Malibu was not a fire risk and had an extremely low fire fatality rate of one per 1.3 billion miles. GM also claimed that the drunk driver who hit the Anderson car – not the company – was at fault for the accident and the subsequent injuries.

The plaintiffs never sued the drunk driver. "He wasn’t the cause of the injuries," argued Mr. Panish. "The defective gas tank was."

Instead, the plaintiffs’ attorneys set out to paint a picture of a cavalier company more interested in turning a profit than making a safer car. To win a large verdict, Mr. Panish said, "we had to show that GM put profits over safety and that GM could have prevented these injuries." To do this, he said, the plaintiffs’ lawyers relied heavily on GM’s internal documents.

The timing of the Anderson trial could not have been better for plaintiffs, Mr. Panish conceded. Years of battle with GM by other plaintiffs’ lawyers had turned up several devastating documents. Key was a 1973 memo written by GM engineer Edward Ivey. It seemingly put a price tag on each human life lost in a fuel-fed fire. The Ivey report estimated that "fatalities related to accidents with fuel-fed fires are costing General Motors $2.40 per automobile in current operation."

"The Ivey memo had been known by some lawyers for years," said Mr. Panish. But GM had been successful in excluding the memo from evidence in previous trials, largely because Mr. Ivey had testified in depositions that he had not been ordered to provide the analysis and that no one in top management had seen it or ever relied on it in making policy decisions.

Over time, however, more documents were discovered that gave grater weight to the memo and led to its admission as evidence, Mr. Panish said. In a 1998 products trial against GM, plaintiffs’ attorney Sheldon J. Schlesinger, of Fort Lauderdale, Fla., brought out the 1981 notes by GM lawyer discussing the potential danger to the carmaker of the Ivey memo. This lawyer had interviewed Mr. Ivey and had written, "Obviously Ive is not an individual whom we would ever, in any conceivable situation, want identified to the plaintiffs in a post-collision fuel-fed fire case, and the documents he generated are undoubtedly some of the potentially most harmful and most damaging were they ever to be produced."

The use of these documents was instrumental, Mr. Panish noted, in Mr. Schlesinger’s winning a $33 million verdict against GM. McGee v. General Motors Corp., No. 922352 (cir. Ct., Broward Co., Fla.). in 1999, Mr. Panish said, plaintiffs’ attorney James E. Butler Jr., of the Columbus, Ga., office of Butler, Wooten, Overby, Pearson, Fryhofer & Daughtery, used the documents to force settlement of another GM fire case.

The Anderson team would build on this work. "General Motors tired to explain away the memo," saying that Mr. Ivey was a low-level employee and that no one had requested or paid any attention to the memo, Mr. Panish said. For the Anderson trial, "we got Ivey’s personnel records and evaluations. At the time the memo was written, his job description was that he was assigned to value new designs. Ivey was told to do this cost analysis by Oldsmobile management."

Another document the Anderson team uncovered related to Mr. Ivey’s salary history in 1983, after GM was first ordered to produce the memo and Mr. Ivey was first required to give deposition testimony about it. GM personnel records showed, Mr. Panish said, "that he had received a 22 ½% raise just before testifying."

The attorneys also sought out records on the testing of the Malibu in the 1970s. "GM had 16 failures in testing before this had gone on the market," Mr. Panish charged. If the gas tank had been placed in a different location or had a shield, this would have improved the safety prospects, he said: "The engineers proposed another location, but it would have cost $6.80 per vehicle or more."

"Lawyers were not able to get this in evidence in many other cases, Mr. Panish said. "But now the truth is coming out."

The primary theme of the plaintiffs was that GM was saving money by keeping the Malibu gas tank in the back, behind the rear axle. General Motors called this absurd, noting in its post-trial motions, "This 1979 Malibu was an entirely new car redesigned from scratch; thus there were no preexisting tank location to change; so placing that tank above the axle would have cost nothing." GM put the gas tank behind the axle for safety reasons, the automaker said.

Who sets safety standards?

The company also pointed out that the Malibu met all safety standards. This became another key theme of the case. The plaintiffs claimed that the Malibu met these standards because GM persuaded the Nixon administration to keep the standards for rear-end crashes low.

"General Motors lobbied the government to influence federal motor vehicle standards," Mr. Panish said. "This meant the federal standard for rear-end collisions was set at a 30-mph barrier." The Malibu exceeded this standard. The plaintiffs, however, contended that this was irrelevant, said Mr. Panish, because GM and the rest of the auto industry essentially set the standards.

On July 9, the Los Angeles jury awarded $4.9 billion, including $107.6 million in compensatories. All but $7.6 million of compensatories were for noneconomic damages.

After the verdict, GM filed post-trial motions for a new trial, judgment notwithstanding the verdict and remittitur. In its motion for a new trial or JNOV, GM contended that throughout the trial, the courts rulings "excluded evidence critical to the defense [and] admitted unfounded, inflammatory stories extraneous of the case."

These extraneous stories, the automaker protested, included "double and triple hearsay stories about how President Nixon told John Ehrlichman to tell Secretary Colpe to stop regulations that weren’t stopped; about how Ivey, at age 22, wrote a memo that [plaintiffs’ witness Ronald] Elwell himself said no one could rely on (and no one ever did)…about how the Malibu’s tank was put below the axle instead of above it to save an $8.59 cost that didn’t exist; about cost-benefit analysis no witness was familiar with and that had nothing to do with this case."

GM protested admission of the lobbying evidence. "The evidence was irrelevant; citizens have a constitutional right to petition government and cannot be subject to liability, much less punished for exercising that right." In its post-trial motions, GM contended there was no evidence that federal standards on rear-end crashes were ever discussed in meetings between Nixon administration official and GM executives.

In motions for remittitur, GM noted that the punitive award was "$4.775 billion and 1,000 times greater than the highest award ever affirmed in a reported case in California history. Its sheer size establishes it to be the product of passion and prejudice; nothing else explains it."

Mr. Panish said the plaintiffs’ team countered GM’s request for remittitur by suggesting, "[U]nless GM is agreeing to a recall, let it stand. They haven’t gotten the message." The amount was reasonable, he said, given the size of General Motors: "For a company like GM, you don’t give a parking ticket."

On Aug. 26, Los Angeles Superior Court Judge Ernest Williams denied GM’s motions for a new trial and JNOV and left the compensatory award intact. Judge Williams called the punitive "excessive" and sliced them to $1.09 billion.

Deterrence through punitive

Judge Williams excoriated GM in his decision, writing, "The Court finds that clear and convincing evidence demonstrated that the defendant’s fuel tank was placed behind the axle on automobiles of the make and model involved here, in order to maximize profits, to the disregard of public safety. The Ivey memorandum, and the fact that defendant has no accepted responsibility, indicated that the policy of deterrence would be served by imposition of punitive damages.

GM immediately protested. In a statement from the automaker, defense trial counsel Richard J. Shapiro, of Phoenix’s Snell & Wilmer, L.L.P., said, "Clearly, GM did not receive justice in this case. Out hearts go out to the people who were hurt in this tragic accident. But the responsibility for their injuries rests with the drunk driver who caused the accident, not with General Motors. The simple trust is that GM designed the Malibu to be a safe car."

GM has appealed the verdict.

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