Johnson v. Ford Motor Co.

Plaintiffs, purchasers of a used automobile, sued the manufacturer, Ford Motor Company (Ford), for concealing the automobile’s history of transmission repairs and replacements when reselling the car. Plaintiffs presented evidence of corporate practices by Ford identical or closely similar to the fraud inflicted on them, practices they maintain earned Ford millions of dollars in profit in California every year. The jury found in plaintiffs’ favor and awarded them $17,811.60 in compensatory damages and $10 million in punitive damages. The Court of Appeal, holding Ford could constitutionally be punished in this case only for its fraud on plaintiffs and not for its overall course of conduct, reduced the punitive damages award to $53,435, approximately three times the compensatory damages.

We agree with the Court of Appeal that the $10 million punitive damages award may not, under the circumstances of this case, constitutionally be justified on the basis of disgorgement of profits earned by Ford through its entire course of wrongful conduct toward other consumers. In reducing the punitives to a small multiple of the relatively modest compensatory damages award, however, the…

Concurring and Dissenting.—I concur in the rationale and holding of the majority opinion. However, I disagree with two aspects of the majority’s characterization of the opinion of the Court of Appeal below.

First, I do not agree that the Court of Appeal failed to properly consider the evidence of Ford Motor Company’s policies and practices, and their scale and profitability, in reaching its determination that a punitive damages award of three times the compensatory damages is the maximum constitutionally permissible award under the three-pronged test of State Farm Mut. Auto Ins. Co. v. Campbell (2003) 538 U.S. 408 [ 155 L.Ed.2d 585 , 123 S.Ct. 1513 ] (State Farm). Nor do I agree that the Court of Appeal gave no express weight *1215 to the scale and profitability of Ford’s conduct in its analysis of reprehensibility under the first prong of that test. (Maj. opn., ante, at p. 1213.)

In discussing the sufficiency of the evidence to support the award of punitive damages in this case, the Court of Appeal wrote, “Compelling evidence . . . supports an inference that the present transaction was typical of owner appreciation certificate transactions, which numbered over 1,000 per year,…

Concurring.—I agree fully with the majority opinion that I have signed. I write separately only to emphasize my understanding that the Court of Appeal is not precluded from reaching the same result on remand after reconsidering all relevant factors if it believes that result is correct under the law as explained in today’s opinion.

As the majority opinion states, the Court of Appeal found that “ ‘defendant’s entire customer response program was structured precisely to short-circuit lemon law claims whenever defendant plausibly could,’ by restrictively interpreting state lemon laws and ignoring the possibility of nonpresumptive lemons.” (Maj. opn., ante, at p. 1200, italics added.) Defendant was content with the result in the Court of Appeal, so it did not petition for review on this point, and the majority properly expresses no opinion regarding it. (Maj. opn., ante, at p. 1212, fn. 13.) It is not clear to me that defendant’s overall behavior was as reprehensible as the Court of Appeal suggests. As might be expected, defendant has taken a very narrow view of what qualifies as a “lemon.” It has also attempted to avoid laws requiring notification of defects to future buyers. But…

Law Office of Daniel U. Smith, Daniel U. Smith, Kentfield, Ted W. Pelletier; Robinson, Calcagnie & Robinson, Sharon J. Arkin, Newport Beach; Rose, Klein & Marias, David A. Rosen, Los Angeles; Shernoff, Bidart & Darras, Michael J. Bidart, Claremont; Law Offices of Nicholas Wagner, Nicholas Wagner, Fresno; Robin E. Brewer; Donna Bader, Laguna Beach; Law Offices of Ian Herzog, Ian Herzog, Santa Monica; Law Offices of Jill P. McDonell, Jill P. McDonell; Michels & Watkins, Steven B. Stevens, Los Angeles; Law Offices of Donald L. Galine, Donald L. Galine, San Mateo; and Lea-Ann Tratten for Consumer Attorneys of California as Amicus Curiae on behalf of Plaintiffs and Respondents.

Law Offices of Jeffrey K. Winikow, Jeffrey K. Winikow, Los Angeles; The deRubertis Law Firm, David M. deRubertis, Woodland Hills; Pine & Pine and Norman H. Pine, Los Angeles, for California Employment Lawyers Association as Amicus Curiae on behalf of Plaintiffs and Respondents.

Pillsbury & Levinson, Arnold R. Levinson, San Francisco; Esner & Chang, Stuart B. Esner, Los Angeles, Andrew N. Chang; Bach Law Office and Amy Bach, Mill Valley, for United Policyholders as Amici Curiae.

WERDEGAR, J.

Plaintiffs,…