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From Products Liability Law Daily, September 16, 2013

$18 million punitive damages award against retail seller of pool slide constitutional

By Pamela C. Maloney, J.D.

A jury’s award of $18 million in punitive damages against the retail seller of an in-ground pool slide did not exceed constitutional limits in light of the retailer’s gross negligence and the amount of the compensatory damage award, the Massachusetts Supreme Judicial Court declared (Aleo v. SLB Toys USA, Inc., September 13, 2013, Lenk, B.). The court also upheld the trial court’s exclusion of evidence of misuse and the jury’s finding of negligence and breach of warranty.

Background. A young woman fractured two cervical vertebrae when she slid head first down an inflatable swimming pool slid and stuck her head against the concrete deck of the pool when the bottom of the slide collapsed. The fractured vertebrae resulted in quadriplegia and the young woman died the day after the accident after being removed from life support. The woman’s husband filed an action against SLB Toys USA, Inc., and Amazon.com alleging negligence and breach of an implied warranty of merchantability. The seller of the slide, Toys “R” Us, and Amazon.com Kids, Inc., were added as additional defendants. The jury found Toys “R” Us liable for negligence, breach of warranty, and wrongful death and awarded compensatory damages in the amount of $2,640,000. The jury also found Toys “R” Us grossly negligent and awarded punitive damages in the amount of $18,000,000.

Punitive damages. The retail seller, Toys “R” Us, challenged the punitive damages awards on two grounds: (1) there was insufficient evidence to establish gross negligence, and (2) the punitive damages award was so excessive as to violate due process. In reviewing the evidence submitted to the jury, the court acknowledged that the jury could have found that the retail seller’s conduct, which included its failure to test the slide or to warrant that it complied with all applicable standards and regulations and the inclusion of an indemnity clause in a purported vendor agreement with the manufacturer of the slide, evinced a lack of care or indifference as to the safety of its customers.

Turning to the amount of the award—$18 million—the court rejected the retail seller’s arguments that the award was grossly excessive and violated due process. In evaluating the factors to consider in determining whether a punitive damages award was excessive, the court found that under the circumstances of this case, the retail seller exhibited a substantial degree of reprehensibility. Although the conduct was only grossly negligent, rather than malicious or willful, the court found that the conduct (1) caused grievous physical harm (the death of a young woman); (2) evinced an indifference to the safety of persons using the retail seller’s products (the seller neglected to ensure that the slide conformed with applicable safety regulations); and (3) involved repeated actions (the retail seller imported more than 4,000 slides into the United States).

The court further concluded that the ratio of punitive damages awarded to the actual harm was within the single-digit range that generally accords with due process and a comparison of punitive damages to possible civil penalties for violation of a federal safety standard suggested that the award was no so excessive as to exceed constitutional bounds. Although the court acknowledged that the award in this case might have been higher than other similar awards, it could not be categorized as grossly excessive in relation to Massachusetts’ legitimate interests in condemnation and deterrence.

Evidentiary issues. The retail seller also argued that the trial court’s exclusion of certain evidence of misuse was improper. The retail seller attempted to establish that the young woman had misused the slide by jumping or diving, rather than sliding, from the platform at the top of the slide. The retail seller sought admission of statements in the police report and in medical records to support its claim of misuse. However, the statements in the police report were made by unknown declarants or by other police officers, and there was no evidence that the declarants had personal knowledge of the woman’s manner of descent. Thus, the statements were inadmissible hearsay. The statements contained in the medical records as to the woman’s manner of descent were not made from the personal knowledge of the medical reporters nor were they based on the personal knowledge of anyone who had an obligation in the course of their employment to transmit that medical information to the recorders who witnessed the accident. Thus, the statements in the medical records were not admissible under the business records exception to the hearsay rule. Further, like the statements in the police report, there was no evidence that the statements in the medical records were based on the personal knowledge of anyone who witnessed the accident.

The trial court properly limited the use of tests run by an expert to demonstrate the physical properties of the slide, ruling that the expert could not offer her opinion, based on the tests, that the woman could not have been injured by sliding down the slide. There were substantial differences between the conditions of the experiments and those of the accident to justify the trial court’s ruling.

Negligent design. Evidence that the slide did not meet the federal safety standard applicable to all pool slides regardless of the materials of manufacturer or structural characteristics of the slide was sufficient to support the jury’s determination that the retailer was negligent. The federal regulation (6 C.F.R. §1207.1) required that all slides be capable of supporting 350 pounds and that they be tested for head-first sliding. Both the instruction manual include with the slide and the warning label affixed to it stated that the slide could support only 200 pounds and that head-first sliding could result in serious injury or death. There was also evidence that the company hired by the retail seller to test the slide to confirm that it met all applicable regulatory requirements did not test the slide to determine whether it met the requirements specified by this regulation. According to the evidence, the company performed only those tests ordered by the retail seller, and that the testing company did not have written instructions to determine which standards and regulations applied to the products it tested for the retailer was sufficient to support the jury’s finding that the retail seller was negligent in failing to comply with applicable federal regulatory requirements.

The case number is: SJC-11294.

Attorneys: Thomas W. Smith (Sugarman & Sugarman) for Michael Aleo. Gregory T. Parks (Morgan, Lewis & Bockius LLP) for Toys R Us.

Companies: Toys “R” Us; Toysrus.com

MainStory: TopStory EvidentiaryNews DesignManufacturingNews DamagesNews SportsandRecEquipmentNews MassachusettsNews

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