High Court Orders Review of Ford Case

The U.S. Supreme Court on Monday ordered a California appeals court to reconsider a $290-million jury award against Ford Motor Co. in a 10-year-old sport utility vehicle accident that killed three members of a Northern California family.

Ford’s Los Angeles attorney, Theodore Boutrous Jr., said the ruling “sends a strong signal that excessive and arbitrary awards will not be tolerated.”

The high court decision in the Ford case came in the wake of the court’s ruling last month that juries cannot indicate their displeasure with an entire industry or an “unsavory business” by punishing a single company with an enormous damage award.

In that case, the Supreme Court found unconstitutional a $145-million punitive damage award against State Farm Mutual Insurance Co. in a fatal auto accident in which the compensatory, or actual, damages were $1 million.

Although it didn’t establish formal limits for damage awards, the court held that punitive awards should rarely be more than nine times greater than compensatory damages.

With the ruling in April, “the U.S. Supreme Court signaled that judges should carefully review excessive punitive damage awards and should not hesitate to reduce them,” said Rex S. Heinke, a Los Angeles-based appellate specialist with the Washington law firm Aikin, Gump, Strauss, Hauer and Feld.

In addition to the Ford case, a number of high-profile cases involving automotive, tobacco and insurance companies could be affected, analysts said.

General Motors Corp., for example, is awaiting word on its appeal of a $1.2-billion punitive award in a Los Angeles Superior Court case involving the fiery crash of a 1979 Chevrolet Malibu in which six people were burned.

Erwin Chemerinsky, the USC law professor who argued the case against Ford before the Supreme Court, called Monday’s decision “very predictable.”

After a major ruling such as the State Farm case in April, he said, the high court typically “sends back a large number of cases on the same topic for reconsideration.”

But the justices were “very clear in saying there is no rule at which a punitive damage award is automatically unconstitutional,” Chemerinsky said. “This doesn’t mean the court of appeal will change” its ruling upholding the $290-million award in the Ford case.

The case began with a highway accident that killed a Stanislaus County couple and one of their four children when their 1978 Ford Bronco rolled over after swerving to avoid a collision.

The three surviving children of Ramon and Salsuita Romo sued, claiming that Ford knew that the Bronco’s detachable metal and fiberglass roof would collapse in a rollover.

Ford strengthened the roof design in later years but did not recall the earlier models.

In July 1999, a Superior Court jury in Stanislaus County found Ford liable and awarded the Romo family $4.9 million in compensatory damages and $290 million in punitive damages.

Ford argued that the punitive damages in the case were unreasonable.

Later that month, trial Judge Roger M. Beauchesne overturned the punitive award on grounds of juror impropriety. The judge, after hearing evidence that one juror told others of a dream in which their children were killed in a Bronco that rolled over, said the deliberations had been “infested with passion and prejudice.”

The Romo family appealed, and last year the 5th District Court of Appeal in Fresno reinstated the award, comparing Ford’s behavior in marketing the Bronco to manslaughter. The appeals court ruled that there was no proof the jury had failed to decide the case on its merits.

Ford appealed that decision to the California Supreme Court, which in October declined to hear the matter, setting the stage for the U.S. Supreme Court’s ruling.

Separately on Monday, the high court vacated a $15-million punitive damage award on behalf of a Kentucky man killed in 1993 when his Ford pickup slipped into reverse from park and crushed him.

The court sent the case back to the Kentucky courts to reconsider the award.

On Monday, Ford’s stock closed at $9.82, down 20 cents, on the New York Stock Exchange.