Product Liability 2009 - Arnold & Porter LLP

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damage to other property. Finally, a product liability plaintiff may
recover punitive damages, which are discussed below.
6.3 Can damages be recovered in respect of the cost of
medical monitoring (e.g. covering the cost of investigations
or tests) in circumstances where the product has not yet
malfunctioned and caused injury, but it may do so in
future?
Since the late 1980s, some federal and state courts have ordered
product liability defendants to pay for medical monitoring of
plaintiffs to detect the future development of latent injuries or
diseases. Courts have expressed divergent views about the
circumstances under which medical monitoring claims are
appropriate. Some courts have rejected medical monitoring claims
absent manifest physical injury, while others recognise these claims
as the only appropriate way to compensate parties for an increased
risk of injury.
6.4 Are punitive damages recoverable? If so, are there any
restrictions?
Most jurisdictions allow for the recovery of punitive damages in
product liability actions. A plaintiff typically must prove, by clear
and convincing evidence, that a defendant acted wilfully, wantonly
or with malice in order to recover punitive damages. Many
jurisdictions require that actual damages are awarded in order to
award punitive damages.
The United States Supreme Court struck down a punitive damages
award that was 145 times the amount of the compensatory damages
award on the ground that such an award was an arbitrary
deprivation of property in violation of the defendant’s constitutional
right to due process. See State Farm Mutual Automobile Insurance
Co. v. Campbell, 538 U.S. 408 (2003). The Court noted that any
award ten times the amount of compensatory damages or larger
would likely be unconstitutional on due process grounds.
Since the Supreme Court’s decision in State Farm, there have been
hundreds of cases that reference the case, yet result in extremely
varied interpretations of it’s ratio guideline. See, e.g., Adidas
America, Inc. v. Payless Shoesource, Inc. 2008 WL 4279812 at *16
(D. Or. Sept. 12, 2008) (reducing a punitive damages award to less
than a 1:1 ratio); Bunton v. Bentley, 153 S.W.3d 50 (Tex. Dec. 19,
2004) (reducing a single-digit ratio award in light of State Farm);
Buhmeyer v. Case New Holland, Inc. 446 F. Supp. 2d 1035 (S. D.
Iowa 2006) (holding a punitive damages award of over twentyseven
times compensatory damages unconstitutionally high). Other
courts find ways to circumvent the single-digit ratio guideline or
interpret the ratio guideline as a suggestion rather than a
requirement. See, e.g., Mathias v. Accor Economy Lodging, Inc.,
347 F.3d 672 (7th Cir. Oct. 21, 2003) (interpreting State Farm’s
ratio guideline as a suggestion rather than a rule); and Santamaria
v. Dallas Independent School District, 2007 WL 1073850 (N.D.
Tex. April 10, 2007) (upholding 100:1 ratio in a case involving
nominal damages).
These varied interpretations of State Farm have resulted in
extremely inconsistent punitive damages awards. In an effort to
control the awarding of inconsistent punitive damages, 32 states
have enacted punitive damage reform of some sort. See Tort
Reform Record: December 2008 at www.atra.org. Also, the
Supreme Court recently limited punitive damages in Philip Morris
USA v. Williams, where it held that punitive damages are
inappropriate for harm allegedly done to non-parties. See 127 S.Ct.
1057, 549 U.S. 346 (2007).
6.5 Is there a maximum limit on the damages recoverable
from one manufacturer e.g. for a series of claims arising
from one incident or accident?
There is not a limit on the amount of monetary damages recoverable
from one manufacturer. However, some states limit the number of
punitive damage awards, but not the amount, to one award that may
be recovered from a single defendant for any act or omission,
regardless of the number of claims that arise.
6.6 Do special rules apply to the settlement of
claims/proceedings e.g. is court approval required for the
settlement of group/class actions, or claims by infants, or
otherwise?
Federal and state courts often require court approval for settlement
of claims, including claims involving minors or those ruled
incompetent. Also, Rule 23(e) of the Federal Rules of Civil
Procedure requires federal court approval of the settlement of any
certified class action.
6.7 Can Government authorities concerned with health and
social security matters claim from any damages awarded
or settlements paid to the Claimant without admission of
liability reimbursement of treatment costs, unemployment
benefits or other costs paid by the authorities to the
Claimant in respect of the injury allegedly caused by the
product. If so, who has responsibility for the repayment of
such sums?
Liens may attach to a settlement or damage award from a product
liability lawsuit if the plaintiff received governmental assistance
through Medicare or Medicaid for the injury that gives rise to the
lawsuit. These liens will usually require the repayment of any
governmental assistance received. See 42 U.S.C. § 1396a. Such
liens do not require prior notice and can attach to the total amount
recovered, after attorney fees and expenses.
7 Costs / Funding
7.1 Can the successful party recover: (a) court fees or other
incidental expenses; (b) their own legal costs of bringing
the proceedings, from the losing party?
Rule 54 of the Federal Rules of Civil Procedure provides that a
prevailing party may recover costs other than attorneys’ fees as a
matter of course unless the court directs otherwise. “Costs” are
defined by 28 U.S.C. § 1920 to include fees of the court clerk, fees
of transcripts necessarily obtained for the case, fees for printing,
witness fees (limited under 28 U.S.C. § 1821 to $40 per day plus
mileage and reasonable travel expenses), copying costs and fees of
court-appointed experts and translators.
Attorneys’ fees are generally recoverable only where specifically
authorised by a statute creating a cause of action, such as claims of
alleged civil rights violations. Attorneys’ fees are typically not
recoverable in product liability suits.
7.2 Is public funding e.g. legal aid, available?
While a criminal defendant is entitled, under the Fifth Amendment
to the United States Constitution, to the effective assistance of legal
counsel, which requires federal and state governments to pay the
costs of securing such counsel for indigent defendants, there is no
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