On June 29, 2016, the Louisiana Third Circuit Court of Appeal affirmed a jury’s award of $23 million in punitive damages to the family of a young man fatally injured in a boating accident. The accident occurred on May 7, 2005, on the navigable waters of Louisiana, on a former channel of the Calcasieu River. Derek Hebert was a passenger on an open hull fishing boat manufactured by Champion, owned by Mr. Vamvoras and operated by his son. The Champion’s steering system failed while the boat was on a plane. The boat went into a spin, throwing Derek overboard. The boat’s propeller struck him 19 times, causing his death. His parents brought suit against the Vamvorases, various marinas, and three manufacturers, including Teleflex, manufacturer of the boat’s hydraulic steering system.
Litigation continued for nine years. By the time of the trial the only remaining defendants were the Vamvoras father and son and Teleflex. The Louisiana Department of Wildlife and Fisheries investigated the accident and determined that the boat, which had been purchased pre-owned by Vamvoras, lost its steering because of a hydraulic oil/fluid leak in one of the steering system’s lines at a hose/nut coupling assembly. The Department of Wildlife and Fisheries (and other experts) found that a leak in the hydraulic system can result in total failure of the steering system. Teleflex manufactured and supplied the hydraulic steering system, but one of the original Teleflex hoses had been replaced in the past with a non-Teleflex hydraulic hose. The remaining claim against Teleflex was not for construction or design defects. The claim asserted was that the steering system is defective because it contains an inherent danger unknown to users, and Teleflex breached its duty to warn unsuspecting users of a dangerous risk in using its product.
The case was tried twice to juries. In the first trial the trial judge dismissed the Vamvorases, holding that there was insufficient evidence to support a finding that they knew or should have known that loss of hydraulic fluid could result in catastrophic steering failure. According to testimony if enough fluid is lost the control of the boat is taken from the driver. The motor goes into a free spin, kicking completely to one side. The boat then suddenly turns on its own axis, referred to in the industry as a “kill spin”. Occupants are often ejected and are immediately in danger of being run over. Apparently the evidence showed that Teleflex, a sophisticated boating industry manufacturer, was well aware of this phenomenon. He also found that the warnings that were on the system were not positioned so as to be readily apparent to the operator. The judge also found that the warnings failed to advise the user that loss of fluid could result in system failure leading to ejection or death. In his opinion it was not foreseeable to the owner/driver that the system could fail and that Derek would be ejected from the boat. Thereafter the jury found in favor of Teleflex. However, the judge granted plaintiff’s motion for new trial holding that prejudicial error had occurred. The second trial was held. This time a jury awarded $125,000 compensatory damages and $23 million in punitive damages. There were numerous issues appealed by both the plaintiff and Teleflex.
The Court of Appeal recognized that because Derek was not a seaman or maritime worker his survivors were able to make a claim for punitive damages under the general maritime law. The Court noted that while punitive damages are rarely imposed they have long been recognized as punishment where a defendant’s actions are found to be intentional or so wanton and reckless to amount to a conscious disregard for the rights of others.
The Court noted that the evidence revealed that Teleflex not only knew about the steering loss, but had tested the system as early as 16 years before the accident and was aware of the consequences if there was loss of fluid and thereafter loss of control of steering. The Court concluded that the jury was influenced by this testimony and concluded that Teleflex was wanton and reckless to ignore such results when “an inexpensive stick-on warning costing thirty ($.30) cents could have saved a life”. Based on this and other evidence the Court of Appeal did not disturb the finding that the evidence reasonably supported the jury’s finding that the award of punitive damages was appropriate.
The Court then addressed the amount of the punitive damage award. Teleflex contended that it was grossly excessive as matter of federal maritime and constitutional law. Judge Ulysses Thibodeaux, writing for the Court, launched into a thorough review of U.S. Supreme Court cases where the propriety of the amount of the punitive damage award was at issue, and where the amount of the award was so grossly excessive as to violate the Due Process Clause of the 14th Amendment. The Supreme Court has recognized three guideposts for determining whether an award is grossly excessive: (1) the degree of reprehensibility of the misconduct; (2) the ratio, or disparity between the punitive damage award and the harm, or potential harm, suffered by the plaintiff; and (3) the difference between this remedy and the civil penalties authorized or imposed in comparable cases.
His review of each of the Supreme Court cases, in which all but one punitive damage award was reduced, led Judge Thibodeaux to conclude that each case must be judged on its particular facts. He decided that the Supreme Court’s finding in Exxon Shipping Company v. Baker (2008) that a 1:1 ratio between compensatory damages and the award of punitive was the appropriate measure in maritime cases was not binding. He then went on to find that the evidence supported the judgment and confirmed the 184:1 ratio. Although the Judge went to great pains to explain his reasoning, the author, having read the evidence and testimony cited by the Judge, sees nothing that separated this case from others. Certainly the loss of life is tragic. Legislators and judges across the country have, correctly so, found it in our society’s best interest to allow a tortfeasor to be punished for wanton, reckless and reprehensible conduct that results in injury and death. But there must be a balance. In the author’s opinion there is insufficient evidence to support an award for punitive damages that is 184 times the amount of damages the jury found the plaintiffs suffered. It is expected that Teleflex will appeal this decision to the Louisiana Supreme Court.
Warren v. Shelter Mutual Insurance Company, et al.