Opinion
Civil Action Nos. 03-1508 (RMC), 04-363 (RMC).
July 11, 2005
MEMORANDUM OPINION AND ORDER
Joan Betty Danziger and Alan Mercado ("Plaintiffs") sue Ford Motor Company ("Defendant" or "Ford") in these consolidated cases, seeking damages for injuries resulting from a crash caused by an allegedly defective Ford Explorer. This matter is before the Court on Plaintiffs' motions to amend their complaints to add claims for punitive damages. The Court finds that Maryland law applies, allowing a tort victim to pursue punitive damages under certain circumstances. The Court will grant Plaintiffs leave to amend their complaints to include demands for punitive damages.
Ms. Danziger has brought suit both individually and as the representative of her deceased husband's estate.
BACKGROUND
The facts are taken from the complaints, Defendant's Opposition ("Opp'n"), and Plaintiffs' Reply ("Reply").
Ms. Danziger was driving her Ford Explorer on July 12, 2002, accompanied by her husband and Mr. Mercado. While on Interstate-80 in Keith County, Nebraska, the Explorer rolled over. Ms. Danziger suffered numerous injuries in the accident, some permanent. Ms. Danziger's husband was ejected from the vehicle and died as a result of his injuries. Mr. Mercado was also ejected from the vehicle and sustained permanent damage to his spinal cord.
Ms. Danziger and Mr. Mercado each assert claims for injury in strict liability and in negligence. Ms. Danziger also asserts claims on behalf of the estate of her deceased husband under the District of Columbia's Wrongful Death and Survival statutes. See D.C. Code § 16-2701, et. seq.; D.C. Code § 12-101, et seq.
Ms. Danziger and Mr. Mercado currently claim District of Columbia and Virginia residence, respectively. At the time of the incident, both resided in D.C. Ford, the sole defendant, is incorporated in Delaware but Michigan is the location of its principal place of business. Ford designed the Explorer in Michigan and manufactured it in Kentucky. The Danzigers purchased the Explorer in Maryland.
LEGAL STANDARD
Rule 15(a) of the Federal Rules of Civil Procedure allows a party to amend a pleading by leave of court "and leave shall be freely given when justice so requires." Fed.R.Civ.P. 15(a). See Caribbean Broad. Sys., Ltd. v. Cable Wireless P.L.C., 148 F.3d 1080, 1083 (D.C. Cir. 1998). "If the underlying facts or circumstances relied upon by a plaintiff may be a [sic] proper subject[s] of relief, he ought to be afforded an opportunity to test his claim on the merits." Foman v. Davis, 371 U.S. 178, 182 (1962).
The grant or denial of leave is committed to the discretion of the district court. Firestone v. Firestone, 76 F.3d 1205, 1208 (D.C. Cir. 1996). Denial of leave to amend constitutes an abuse of discretion unless the court gives sufficient reason, such as futility of amendment, undue delay, bad faith, dilatory motive, undue prejudice, or repeated failure to cure deficiencies by previous amendments. Foman, 371 U.S. at 182; Caribbean Broad. Sys., 148 F.3d at 1083. A demand for punitive damages may be properly sought through a Rule 15 motion. See, e.g., Foltz v. U.S. News World Report, Inc., 108 F.R.D. 57 (D.D.C. 1985) (granting motion for leave to amend complaint to include demand for punitive damage).
ANALYSIS
Plaintiffs have moved to amend their complaints to add claims for punitive damages. Defendant argues that the motions should be denied because "Michigan law is applicable and does not permit punitive damages, [and therefore] amending the complaint to assert claims for punitive damages would be futile." Opp'n at 2. See Firestone, 76 F.3d at 1208 (not abuse of discretion to deny leave to amend complaint where futile). Plaintiffs argue in reply that the law of Delaware, Maryland, or D.C. is more appropriate, that these States permit claims for punitive damages, and that the motions should be granted because these amendments to the complaints would not be futile.
A. D.C. Choice of Law Analysis
The District of Columbia employs a two-step "modified governmental interest analysis" to determine which State's law applies to a claim. Long v. Sears Roebuck Co., 877 F. Supp. 8, 10 (D.D.C. 1995) (citation omitted). First, the Court must "evaluate the governmental policies underlying the applicable laws" of the interested States. Id. Second, from those found to have conflicting interests, the Court must determine "which jurisdiction's policy would be most advanced by having its law applied to the facts in the case." Id.
A genuine conflict exists between Maryland law and Michigan law regarding the recovery of punitive damages. See Eli Lilly Co. v. Home Ins. Co., 764 F.2d 876, 882 (D.C. Cir. 1985) (a court must determine if there is a genuine or false conflict); Biscoe v. Arlington County, 738 F.2d 1352, 1360 (D.C. Cir. 1984) (false conflict exists if the policies of one State would be advanced by application of its law and the polices of another State would not be advanced by applying its law); Pearce v. E.F. Hutton Group, Inc., 664 F. Supp. 1490, 1496 (D.D.C. 1987) (false conflict exists if State laws are the same).
"The potentially interested states are determined by looking to a list of contacts with the litigation — place of injury, place where conduct occurred, residence or domicile of parties, and center of the parties' relationship, if any — and evaluating the relative importance of the contacts with respect to the particular issue." In re Air Crash Disaster, 559 F. Supp. 333, 342 (D.D.C. 1983) (citing Restatement (Second) of Conflicts of Laws § 145(2)). Based on these factors, as many as six States and the District of Columbia arguably have some interest in the litigation of this case. During oral argument on the motions, the choice was reduced to two: Michigan and Maryland. See Keene Corp. v. Ins. Co. of N. Am. 597 F. Supp. 934, 938-39 (D.D.C. 1984) (noting that "the States with the most significant interest are those in which the conduct occurred and in which the principal place of business and place of incorporation are located;" "[the] domicile of plaintiff has no interest in imposing punitive damages;" and "[t]he place where the injury occurred and where the parties' relationship is centered do not claim as great an interest in the punitive damages issues as in other tort-related issues"); Kelly v. Ford Motor Co., 933 F. Supp. 465, 469 (E.D. Pa. 1996) (a corporation's principal place of business is a more important contact than the place of incorporation).
These include: Nebraska, where the injury occurred; Maryland, where the vehicle was sold; Michigan, where Ford has its headquarters and designed the car; Delaware, where Ford is incorporated; Kentucky, where the Explorer was manufactured; Virginia, where Mr. Mercado now resides; and D.C., where both plaintiffs and the deceased lived at the time of purchase.
1. Governmental Policies of Michigan and Maryland
According to Ford, Michigan's interest in the litigation is based on the theory "that the allegedly wrongful conduct," the design and engineering of the vehicle, "occurred entirely in Michigan by a corporation based in Michigan. . . ." Opp'n at 7. Defendant cites Comment "c" of the Second Restatement of Conflict of Laws, which indicates that "[i]f the primary purpose of the tort rule involved is to deter or punish misconduct . . . the state where the conduct took place may be the state of dominant interest and thus that of most significant relationship." Restatement (Second) of Conflict of Laws § 145 cmt. c (1971). Ford argues that Michigan's interest in the litigation stems from its
strong interest in seeing that its domiciliary defendants are protected from excessive financial liability. By insulating companies such as Ford, who conduct extensive business within its borders, Michigan hopes to promote corporate migration into its economy. If Michigan did not provide such protection to corporations, such corporations might refuse to locate and conduct any business in their state. . . . For these reasons, Michigan has a very strong interest in the application of its punitive damages law to the issue of Ford's financial liability.Kelly, 933 F. Supp. at 471 (internal citations omitted). Given Michigan's interest in protecting the pocketbooks of its corporate citizens, it is no surprise that Michigan does not permit the recovery of punitive damages. See McAuley v. Gen'l Motors Corp., 578 N.W.2d 282, 285 (Mich. 1998) ("It is well established that generally only compensatory damages are available . . . and that punitive sanctions may not be imposed."), overruled on other grounds by Rafferty v. Markovitz, 602 N.W.2d 367 (Mich. 1999).
Plaintiffs argue that Maryland, among other jurisdictions, has a greater interest than Michigan in "Ford's misconduct," and, therefore, Maryland law should govern with respect to punitive damages. Reply at 2-3. According to Plaintiffs, Maryland's interest stems from Ford's introduction of an injurious product, in this case the allegedly ill-designed Explorer, into the State's stream of commerce. Reply at 3. Under Plaintiffs' theory, the wrongful conduct did not occur in the design of the Explorer in Michigan. Rather, it occurred wholly within Maryland when Ford sold the allegedly defective vehicle in that State. See Reply at 7-8. To give teeth to its policy to punish those who sell dangerous goods within its jurisdiction and to deter others from doing the same, Maryland law allows the assessment of punitive damages in product liability suits. See, e.g., Owens-Illinois, Inc. v. Zenobia, 601 A.2d 633 (Md. 1992).
2. State with the Most Significant Relationship to the Punitive Damages Issue
The ultimate goal of a governmental interest analysis is to determine the jurisdiction with "the most significant relationship" to the issue in dispute. Long, 877 F. Supp. at 11. Typically, the most significant relationship is found with the State whose policy would be most advanced through application of its law. Id. at 11 n. 1. See Hercules Co. v. Shama Rest. Corp., 566 A.2d 31, 41 n. 18 (D.C. 1989) (noting that D.C. courts engage in a "constructive blending" of the "government interest analysis" and the "most significant relationship test" and agreeing with the In re Air Crash Disaster Court that the State with the most significant relationship should also be the State whose policy is advanced by application of its law). Therefore, in choosing the applicable law, the most important considerations in a tort case are the relevant policies of the interested States. Long, 877 F. Supp. at 11.
In Long, the court focused on the interest of the State where "the defendants placed an allegedly defective product into commerce and misrepresented the safety features of that product. . . ." 877 F. Supp. at 13. It applied the law of the State of sale because it had "the most significant relationship to the dispute for purposes of applying its punitive damages law" and "would serve to punish the defendants for conduct occurring [within the jurisdiction] and would deter similar conduct from occurring. . . ." Id.
In Long, a Maryland resident bought a riding lawnmower in the District of Columbia. 877 F. Supp. at 10. The mower was designed and manufactured in South Carolina by a company incorporated in Delaware. Id. When the mower rolled and injured the plaintiff, the plaintiff sued the corporations involved in its production. Id.
Punitive damages serve a markedly different purpose than compensatory damages. Compensatory damages are awarded to make the plaintiff whole, Croley v. Republican Nat'l Comm., 759 A.2d 682, 689 (D.C. 2000), while punitive damages are awarded to "punish egregious conduct of a defendant and deter future wrongful conduct by the defendant and others," In re Air Crash Disaster, 559 F. Supp. at 353.
Based on this logic, Maryland is the jurisdiction with the most significant relationship with the issue at bar. Ford placed the allegedly defective Explorer into the stream of commerce in Maryland and, according to Plaintiffs, allegedly misrepresented the vehicle's safety features in Maryland. Because the purpose of punitive damages is to sanction tortfeasors, Maryland's policy to punish and deter wrongful conduct within its jurisdiction would be significantly advanced through application of its product liability law.
Assuming, arguendo, that wrongful conduct occurred in the vehicle's design, Michigan law would not necessarily control the assessment of punitive damages. Ford points to Comment "c" of the Restatement, which indicates that the State where the conduct took place may be the State of dominant interest. Restatement (Second) of Conflict of Laws § 145 cmt. c. However, Ford fails to cite Comment "e," which provides, "[t]he place where the defendant's conduct occurred is of less significance in situations where . . . a potential defendant might choose to conduct his activities in a state whose tort rules are favorable to him." Id. § 145 cmt. e. Thus, even if Michigan were the site of the wrongful conduct, this factor is of less significance in balancing the States' relative interests because Ford chooses to operate in a State whose punitive damages law shields it from excess liability.
Ford's argument that Michigan's policy should prevail, protecting corporations from punitive damages, is not persuasive. This Court has recognized limits on the extent to which one State can impose its local policy on the residents of another. In In re Air Crash Disaster, the defendant-manufacturer's principal place of business was Washington, a State that does not permit punitive damage claims. 559 F. Supp. at 336. After evaluating the policies behind conflicting tort law in that State and the District of Columbia, the Court concluded that, "while Washington State, through its legislature, may weigh the rights of its own injured victims against its resident tortfeasors, the sovereignty of other States prevents it from placing on that scale the rights of those injured elsewhere." Id. at 359. In other words, "Washington state had no legitimate interest in promoting its own business environment at the expense of non-residents injured outside the state." Reply at 5.
Here, State sovereignty similarly prevents Michigan from protecting its resident corporations from punishment for tortious conduct occurring elsewhere. Maryland's legitimate interest in protecting area residents from defective products sold in Maryland outweighs Michigan's interest in promoting its economy by shielding its corporate citizens from excess liability. Thus, Maryland has the more significant relationship to the litigation in this case and its laws should be controlling for the purpose of determining whether punitive damages can be sought here.