The South Carolina Supreme Court recently weighed in again on two issues near and dear to the hearts of those who have an active products liability practice: (1) the admissibility of expert witness testimony and (2) punitive damages. In Austin v. Stokes-Craven Holding Corp., — S.E.2d —-, No. 26784, 2010 WL 760410, (S.C. March 8, 2010), the Supreme Court considered the admissibility of two experts offered by the Plaintiff and whether the punitive damages awarded to that Plaintiff were excessive. In Austin, the Plaintiff filed suit against Stokes-Craven Holding Corporation, d/b/a Stokes Craven Ford, an automobile dealership, after he experienced problems with a vehicle that he purchased used from the dealership. As it turned out, the vehicle had sustained extensive damage in an accident prior to the sale of the vehicle to the Plaintiff, requiring repairs to the tune of over $20,000. Problems ensued even following repairs when the vehicle developed an oil leak, finally prompting the first owner to trade in the vehicle.

When the Plaintiff went to purchase the vehicle, he asked a series of questions related to the extent of the warranty, whether the vehicle had been wrecked, and questions regarding the previous owner. In response, the Plaintiff was informed that the warranty was a “5-year, 100,000 miles powertrain warranty,” that the truck had not been wrecked, and that the previous owner may have been someone with whom the Plaintiff was familiar and considered to be very responsible with regard to vehicle maintenance. A couple of months after purchase, the Plaintiff discovered an oil leak, which he then sought to have repaired. It was then that the Plaintiff was told by the Defendant that the vehicle was not covered by a 5-year, 100,000 mile power train warranty. The Plaintiff further discovered that the vehicle had a 5-year, 100,000 mile warranty limited to the engine, that the truck had been registered to a person different from the person whom the Plaintiff believed first owned the vehicle, and that the vehicle had sustained extensive damage prior to Plaintiff’s purchase. The dealership further provided the Plaintiff with a “Buyer’s Guide” document purportedly containing the Plaintiff’s signature that confirmed that the warranty was only up to 100,000 miles on the diesel engine. The Plaintiff adamantly denied that he signed or ever received the document. After the Plaintiff’s repeated requests to receive a return of the purchase price in exchange for the vehicle were rejected, he filed suit under multiple causes of action.

At the conclusion of trial, the Plaintiff was awarded actual and punitive damages on his causes of action for negligence, fraud, constructive fraud, and violation of the Dealer’s Act, with actual damages being awarded in the amount of $26,371.10 on each cause of action and punitive damages in the amount of $216,600 as to the Plaintiff’s cause of action for fraud. Among the multiple issues on appeal were the admissibility of experts and excessiveness of punitive damages.

The Defendant argued that the trial judge erred in qualifying two of the Plaintiff’s witnesses as experts in the areas of auto-body repair and in appraisal and valuation of Plaintiff’s truck, respectively. As was not unexpected, in both instances, the South Carolina Supreme Court found that the Defendant was not prejudiced by the admission of the expert’s testimony. Key to the Court’s ruling appeared to be its conclusion that the Defendant was able to extensively cross-examine the experts on their qualifications and their ultimate conclusions.

On the issue of punitive damages, the Court applied the guideposts set forth in the recent decision in Mitchell v. Fortis Ins. Co., 385 S.C. 570, 686 S.E.2d 176 (2009), to be applied in conducting a post-judgment review of punitive damages awards, those being: (1) the degree of reprehensibility of defendant’s misconduct; (2) the disparity between the actual and potential harm suffered by the plaintiff and amount of the award; and (3) the difference between the punitive damages awarded and civil penalties authorized or imposed on comparable cases.

As to reprehensibility, multiple additional factors are considered, including whether (1) the harm is physical versus economic; (2) the conduct evinced an indifference to or a reckless disregard for the health or safety of others; (3) the target of the conduct had financial vulnerability; (4) the conduct involved repeated actions or was an isolated incident; and (5) the harm was the result of intentional malice, trickery, or deceit, rather than mere accident. Here, the Court found that, even though the harm was economic, that fact did not minimize the reprehensibility of the dealership’s conduct. The dealership’s employees failed to disclose that the truck had been wrecked and did not have a power train warranty and potentially forged the Plaintiff’s signature to a document in an effort to legitimize the lack of the power train warranty. The Court found that those acts evinced an indifference to or a reckless disregard the health and safety of the Plaintiff and the general public that would share the road with the potentially unsafe vehicle, that the Plaintiff was financially vulnerable, and that the incidence was not isolated in that the dealership’s employee testified that he had never shown a title to a customer.

Turning to the ratio, the Court admitted that an 8.21 ratio was high, particularly given the type of injury. However, the Court noted that it was a single-digit ratio; there was evidence of the Defendant’s ability to pay; that given the extent of wreck damage and resultant safety issues, there was potential for the Plaintiff and his passengers to be subjected to serious injury; and the amount of the award would serve as a deterrent to future misconduct.

Finally, the Court endeavored to review factually-similar cases to assess the reasonability of the award. In doing so, it cited cases from Missouri and Oregon in which plaintiffs had purchased used vehicles that had a past and in which significant punitive damage awards had been affirmed. Accordingly, in light of the above, the Court affirmed the punitive damages award rendered by the jury. Whereas Justice Pleicones dissented in part from the majority opinion, he nonetheless found that punitive damages were warranted, although he would have reduced such damages to $100,000.

Although this morning’s program began a little later (although still early at 7:30 a.m. local time) the room was still bare with only two minutes to go before the official start-time. People slowly trickled in as the program began. The first topic of the day was effective and inexpensive technology and presentation techniques, moderated by John T. Lay, Jr., of Ellis, Lawhorne & Sims in Columbia, South Carolina. Panel members were Robert L. Featherly of Litigation Insights, a company offering jury research and trial presentation services; defense litigator Cathy Havener Greer of Wells, Anderson & Race, L.L.C. in Denver, Colorado; and the Honorable Michael J. Watanabe, a federal magistrate for the U.S. District Court for the District of Colorado.

The lesson of the day: Just because you can conduct a high tech trial in a fully wired courtroom does not mean that you should necessarily do so. For half an hour, the panelists discussed the history of courtroom technology and the tools of the trade, beginning with blackboards all the way to creative computerized visual animations and the latest technological gadgets.

Above: The view from the conference center.

As a no-nonsense judge who takes control of his courtroom, Magistrate Judge Watanabe told the attendees that he expects three things from lawyers in his courtroom: professionalism, preparedness, and punctuality. It is essential for practitioners to know both their jurisdiction and their audience, but also to be ready for anything unexpected (whether that be the judge’s refusal to permit certain evidence or the crashing of one’s computer). He reminded those assembled that it is the judge – not the lawyer – that decides the order and the manner of the presentation of evidence during a judicial proceeding.

Another lesson: The biggest mistake that lawyers can make is to allow technology to interfere with their connection to the jury. Technology, if relied upon too heavily, can create too much distance between the advocate and the finder of fact. As aptly pointed out by Mr. Lay, a lawyer’s charisma and voice are key to any attempt to make a connection with a jury. For that reason, he advocates using technology to enhance a presentation or to highlight a key theme or exhibit, but not to overpower it. Mixing high-tech exhibits with good communication not only fosters the credibility with the jury, but also maintains the jury’s interest, which would certainly wane otherwise. Overall, the session offered some good pointers applicable to any practice area.

Above: The conference center itself.

The seminar then became an interesting plenary session on the role of the human genome and genetic testing in toxic tort and mass tort litigation. The use of DNA testing to determine whether an individual could be or has been injured by an alleged exposure to toxic substances is a cutting edge, but it could one day become central in mass tort and products liability cases. Law professor Gary E. Marchant of Arizona State University commented that, within just a few short years, we will all be “genotyped” and will know our particular traits and susceptibilities. That information can obviously be used in multiple various ways by both plaintiffs and defendants.

Dr. Marchant explained that genes express themselves in different ways when exposed to different chemicals. For instance, in instances of Benzene exposure alleged to have caused leukemia, in approximately 80 percent of such cases, chromosomes 5 and 7 will break. That fact can help to determine whether Benzene exposure actually played a role in the alleged injury.

Above: Just outside the conference center.

What will this mean for litigation? These issues will, of course, continue to develop along with the science. Key issues for the future will be whether manufacturers will have to warn against particular susceptibilities affecting small percentages of the population. So far, the Fourth Circuit has at least determined that there is no duty to protect unusually susceptible people. This may be the way that the law develops at least in the context of strict liability. Turning to negligence, however, as duties extend to even eggshell plaintiffs (you take them as you find them), manufacturers could find themselves on the hook. Another key question is whether courts will one day require that a plaintiff produce evidence of “biomarkers,” or some change in the genes to establish exposure to a particular product or substance. Time will tell.

Last, but certainly not least, the seminar divided into several smaller break-out sessions. Essentially a review of developments in 2009, the products liability session generated much discussion about the new Medicare legislation, which will require that insurers report payments to Medicare-eligible claimants to the Centers for Medicare Services.

Overall, the 2010 ABA Section of Litigation’s Joint CLE Seminar was fruitful and productive. Now it is time to join everyone on the slopes!