Motion,Ex Parte: LOUIS CASTAGNA VS. ASBESTOS DEFENDANTS (B/P)AS REFLECTED ON EXHIBITS et al

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                                LANKFORD
CRAWFORD
MORENO LLP

ATTORNEYS AT LAW

A

PAUL VY. LANKFORD (State Bar No. 181506)
PAUL LANNUS (State Bar No. 192551)
LANKFORD CRAWFORD MORENO LLP
1850 Mt. Diablo Blvd., Suite 600

Walnut Creek CA 94596

Telephone: 925.300.3520

Facsimile: 925,300.3386

Attorneys for Defendant
FORD MOTOR COMPANY

ELECTRONICALLY
FILED

Superior Court of California,
County of San Francisco

JAN 12 2011

Clerk of the Court
BY: ALISON AGBAY
Deputy Clerk

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF SAN FRANCISCO

SAMUEL LEAL,
*Plaintiff,
Vv.
ASBESTOS DEFENDANTS (BP),

Defendants.

LOUIS CASTAGNA,
Plaintiff,
v.

ASBESTOS DEFENDANTS (B**P),

ASBESTOS
BRAYTON GROUP 536

Case NO, CGC-08-274807

CasE No. CGC-07-274230

DEFENDANT FoRD MOTOR COMPANY’S
MOTION IN LIMINE TO EXCLUDE
EVIDENCE OF DEFENDANT’S FINANCIAL
CONDITIONS AND CERTAIN OTHER

Defendants. EVIDENCE AND ARGUMENT IN
CONNECTION WITH PLAINTIFF'S
PUNITIVE DAMAGE CLAIM [MIL #18]
* The use of the term “plaintiff” as used herein refers to the plaintiff in a personal injury action and the

decedent in a wrongful death action; and the use of “plaintiff” shall refer to both plaintiff in the singular and plural, as

appropriate.

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LANKFORD
CRAWFORD
MORENO LLP

ATTORNEYS ATLAW

GARY COATES,
Plaintiff, Case No. CGC-08-274784

v.
ASBESTOS DEFENDANTS (BP),

Defendants.

CLEM FITZHUGH,
CasE No. CGC-08-274645
Plaintiff,
v.
ASBESTOS DEFENDANTS (BP),

Defendants.

DEFENDANT FORD MOTOR COMPANY’S MOTION IN LIMINE TO EXCLUDE EVIDENCE OF
DEFENDANT’S FINANCIAL CONDITIONS AND CERTAIN OTHER EVIDENCE AND ARGUMENT
IN CONNECTION WITH PLAINTIFF’S PUNITIVE DAMAGE CLAIM [MIL #18]

A1 TABLE OF CONTENTS

2

3). INTRODUCTION... eee

44 THIs COURT SHOULD EXCLUDE ALL REFERENCES TO DEFENDANT’S
WEALTH OR FINANCIAL CONDITION...

5
A. EVIDENCE OF A DEFENDANT’S WEALTH OR FINANCES IS

6 PREJUDICIAL AND IRRELEVANT To Any ISSUE PROPERLY BEFORE

THE JURY dentseseeenesenseeseenease
7

B. REFERENCE TO DEFENDANT’S Gross REVENUES OR PRoFIts, AND
8 OTHER EVIDENCE OF AND REFERENCE TO ECONOMIC ACTIVITIES

OUTSIDE CALIFORNIA, SHOULD BE PRECLUDED... 8
9
Il. THIS COURT SHOULD PRECLUDE PLAINTIFF FROM REFERRING TO PUNITIVE
10 DAMAGES IN His OPENING STATEMENT sereeeee . 10

11] IV. PLAINTIFF SHOULD BE PRECLUDED FROM CLAIMING ANY AMOUNT OF
PUNITIVE DAMAGES BEFORE THE JURY

Vv. PLAINTIFF SHOULD BE PRECLUDED FROM ASKING THE Jury To “SEND A
43 MESSAGE” Or ACT AS “THE CONSCIENCE OF THE COMMUNITY” ....ccceesssecescesesseeeecesnees I

14} VI. ConcLusion

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LANKFORD

CRAWFORD DEFENDANT FORD MOTOR COMPANY'S MOTION IN LIMINE TO EXCLUDE EVIDENCE GF DEFENDANT'S FINANCIAL CONDITIONS AND
MORENO LLP CERTAIN OTHER EVIDENCE AND ARGUMENT IN CONNECTION WITH PLAINTIFF'S PUNITIVE DAMAGE CLAIM
ATTORNEYS AT LAW (MIL #18]28

LANKFORD &
CRAWFORD LLP
ATTORNEYS AT LAW

TABLE OF AUTHORITIES

CASES

Adams v. Murakami
(1991) 54 Cal.3d 105
[284 Cal. Rptr. 318] .

Allstate Ins. Co. v. Hague
(1981) 449 ULS, 302... ecsecsssesssseeessecssreessnseensecsersssavessusesnusrasecsennrersnecseanesseusennesss

BMW of N. Am. Ine. v. Gore

PAGE(S)

-1,5,6, 7,8

(1996) S17 U.S. S59... cecsseeesiecsseecnssessersssseussecssecssneseresssosennnecscorssseeetaeeserseranees 5,

Campbell v. State Farm Mut. Auto. Ins. Co.
(Utah, Oct. 19, 2001) 200 Utah LEXIS 170 oo... ccccsecsscsseesseesccscesectecenenneenetsees

Continental Trend Resources, Inc. v. OXY USA
(10th Cir, 1996) 101 F.3d 634.

Cooper Indus,, Inc. v. Leatherman Tool Group, Ine.
(2001) 532 US. 424... sosecsneessntennaresseseeneeensiey

Cummings Med. Corp. v. Occupational Med. Corp. of Am., Inc.
(1992) 10 Cal.App.4th 1291

[13 Cal. Rptr.2d 585] oc eccseessescessesssssesessmssesseavessesssesssessssssueseesaeeasssseassesseesseasatsaessesseesses

Dyna-Med, Inc. v. Fair Employment & Hous. Comm’n
(1987) 43 Cal.3d 1379
[241 Cal Rptr. 67]

Hoffman v. Erandt
(1966) 65 Cal.2d at 552... ceeccssssscsecstecseesecsssseneesersusesecssesssessueecaceassseseateeneesses

Honda Motor Co. v. Oberg

(1994) 512 U.S. ADS ce cccsccsssessssseecssssnsussssesssssseessasssseeunsstessesneseasteimunseseesnasteie

Lane v. Hughes Aircraft Co.
(2000) 22 Cal.4th 405
[93 Cal. Rptr.2d]

Leatherman Tool Group, Inc. v. Cooper Indus., Inc.

(9th Cir, 2002) 285 F.3d 1146... ceeesssseesssecseecseresnseeecseveeeennessennteeeenneestoneees

Matkasian v. Irwin

(1964) 61 Cal.2d 738 v.cscscscsssseeesseesseeessctsserssssssncesereenessnesssseessneessectenneesnneennnes

Neal v. Farmers Ins. Exch.
(1978) 21 Cal.3d 910

New York Central R.R. Co. v, Johnson
(1929) 279 U.S. 310..

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DEFENDANT FORD MOTOR COMPANY'S MOTION IN LIMINE TO EXCLUDE EVIDENCE OF DEFENDANT'S FINANCIAL CONDITIONS AND
CERTAIN OTHER EVIDENCE AND ARGUMENT IN CONNECTION WITH PLAINTIFF'S PUNITIVE DAMAGE CLAIM

[MIL #18)28

LANKFORD

CRAWFORD
MORENO LLP
ATTORNEYS aT Law

TABLE OF AUTHORITIES
(continued)

Notrica v. State Comp. Ins. Fund
(1999) 70 Cal.App.4th 911
[83 Cal.Rptr.2d 89] .

Pacific Mutual Life Ins. Co. v. » Haslip:

(1991) 499 US. 1.
Phillips Petroleum Co, v, Shutts

(1985) 472 U.S. 797 vssssscscsssssssssssssesssvsssseessseeseesnssencessscennnseriensneeeseasenivanseeeneasastsnsensee

Pivot Point Int'l, Inc. v. Charlene Prods., Inc.

(N.D. LIL 1996) 932 F.Supp. 220 ...cccecsesscssecssessessesssecseesessseseaseaseeneennes

Sierra Club Found. v. Graham
(1999) 72 Cal.App.4th 1135...

Smith v. Ingersoll-Rand Co.

(LOtH Cir, 2000) 214 F.3d 1235 v..ccsssssesssseesssessneecssscessscsseessssssnnesssssesseecnvesesseesseesseessseensaveesenss

State Farm Mut. Auto. Ins. Co, v. Campbell No. 01-1289

(Tune 3, 2000) 122 S.Ct. 2326. eeceerrestessnessescneeneeasecssesnsssssssensenseeseenens

Strickland vy. Owens Corning

TXO Prod. Corp. v. Alliance Res. s Corp

(1993) 509 U.S, 443.

United States v. Johnson

(8th Cir, 1992) 968 F.2d 768... cccssscssssssssessessssseesseensnessssssnessesscaseesssnecsaseesiesssnessteessnectsasenss

United States v. Solivan

(Gth Cir, 1991) 937 F.2d 1146 ..essecssseecsseessssscsecssesssssessnecsreessseesssesssuseesesensecsnuesssnssneeensneessse

Westbrook y. General Tire & Rubber Co.

(Sth Cir, 1985) 754 F.2d 1233 ...cccccsessseessseerseecsessseeseessssssessesssecessessoneess

Whitehead v. Food Max of Miss., Inc.

(Sth Cir, 1998) 163 F.3d 265...ccesecesssesseessseesssesseneessesscesseesseesessseessesnesssaneesnessieeessness

Yu v. Signet Bank/Virginia
(1999) 69 Cal.App.4th 1377

[82 Cal. Rptr2d 304] o..ccseccsscssscssssussesssetssssseussessssnsussstaesiisssieatsisestisassisestisatesaseten

Zazu Designs vy. L’Oreal S.A,

(7th Cit, 1992) 979 F.2d 499... csseesssssesssessseeesecsseeessnessassesseessseessaeensnerseseaseeesseseaveesseeessises

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PAGE(S)

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wey 7

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DEFENDANT FORD MOTOR COMPANY'S MOTION IN LIMINE TO EXCLUDE EVIDENCE OF DEFENDANT'S FINANCIAL CONDITIONS AND
CERTAIN OTHER EVIDENCE AND ARGUMENT IN CONNECTION WITH PLAINTIFF'S PUNITIVE DAMAGE CLAIM

{MAL #18)aI Dw Bw Ww

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LANKFORD
CRAWFORD
MORENO LLP
ATTORNEYS AT LAW

TABLE OF AUTHORITIES
(continued)

PAGE(S)
STATUTES

California Civil Code
section 3295
section 3295(c).
section 3295(d).
section 3295(e).

CONSTITUTIONAL PROVISIONS
ULS. Const, art. 1, $ 8. .cceccsscssesssssssscsecsssensssvscssseesssesseessesacesssssseecsenesserseeessesassessatsesescatseavscsnsnsee
US. Const, art. IV, § Doce cccceseessssssvessssessecsvsreansanscucsssansanecsssuesecsnsansacasensesvesueasssesseeasessassaneasenes 9

U.S. Const., 14" Amend.

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DEFENDANT FORD MOTOR COMPANY'S MOTION IN LIMINE TO EXCLUDE EVIDENCE OF DEFENDANT'S FINANCIAL CONDITIONS AND
CERTAIN OTHER EVIDENCE AND ARGUMENT IN CONNECTION WITH PLAINTIFF'S PUNITIVE DAMAGE CLAIM
[MIL #18}oO OD eB I DH

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LANKFORD &
CRAWFORD LLP
Arrorneys AT Law

InTRopucrion

The above-named defendant (hereinafter “Defendant”) respectfully moves in limine for an
Order of this Court precluding evidence, references, and/or comments on its wealth or financial
condition. This Court should preclude the plaintiff from (1) offering evidence of or in any way
referring to Defendant’s financial condition or net worth; (2) offering evidence of or in any way
referring to Defendant's gross revenues. profits, or other evidence of economic activity outside
California, which would inevitably and unconstitutionally infect the jury’s deliberations by
inviting it to punish Defendant for conduct unconnected with California consumers; (3) referring
to punitive damages in plaintiffs opening statement, which would be unnecessarily and
unavoidably prejudicial to Defendant and would contravene the principles of Cal. Civ. Code
§ 3295(d); (4) claiming, at any point, any specific amount of punitive damages before the jury;
and (5) asking the jury to “send a message” or to act as “the conscience of the community” or
engage in other similar appeals to economic or sectional biases and prejudices, or other improper
factors that go beyond applying the law to the facts of this case.

Il.

THts COURT SHOULD EXCLUDE ALL REFERENCES
TO DEFENDANT’S WEALTH OR FINANCIAL CONDITION

The jury in this case may be asked to impose as award of punitive damages, a
circumstance that presents this Court with an important responsibility. As the United States
Supreme Court has noted with increasing concern:

Punitive damages pose an acute danger of arbitrary deprivation of
property. Jury instructions typically leave the jury with wide
discretion in choosing amounts, and the presentation of evidence of
a defendant’s net worth creates the potential that juries will use
their verdicts to express biases against big businesses, particularly
those without strong local presences. Judicial review of the amount
awarded was one of the few procedural safeguards which the
common law provided against that danger. Honda Motor Co. v.
Oberg (1994) 512 U.S. 415, 432.

As the California Supreme Court has observed in discussing the jurisprudence of the
Supreme Court of the United States, “the high court has made clear a constitutional mandate for

meaningful judicial scrutiny of punitive damages awards.” Adams v. Murakami (1991) 54 Cal.3d

DEFENDANT FORD MOTOR COMPANY'S MOTION IN LIMINE TO EXCLUDE EVIDENCE OF DEFENDANT'S FINANCIAL CONDITIONS AND
CERTAIN OTHER EVIDENCE AND ARGUMENT IN CONNECTION WITH PLAINTIFF'S PUNITIVE DAMAGE CLAIM
[MIL #18)28

LANKFORD,
CRAWFORD
MORENO LLP

ATTORNEYS aT LAW

105, 118 [284 Cal.Rptr. 318]. The Adams court emphasized that because punitive damages are a
“boon” and a “windfall” to a plaintiff, rigorous and objective review is particularly appropriate.
td. at 120.

On more than one occasion and in escalating importance, various Justices of the United
States Supreme Court have remarked about the dangerous and prejudicial nature of evidence of a
corporate defendant’s financial net worth. In Pacific Mutual Life Ins. Co, v. Haslip, Justice
Blackmun writing for the majority noted that “the fact-finder must be guided by more than the
defendant’s net worth.” Pacific Mutual Life Ins. Co. v. Haslip (1991) 499 U.S. 1, 22 (finding that
plaintiffs do not deserve a windfall “because they have the good fortune to have a defendant with
a deep pocket”). Two years later, the same court in [XO Prod. Corp. v. Alliance Res. Corp.
(1993) 509 U.S. 443, 466, agreed with the defendant that emphasizing the defendant’s wealth
increases the risk that prejudice against large corporations influenced the award, but declined to
address the argument since 70 had not preserved the point. Justice O’Connor, dissenting in
TXO, noted that wealth creates a “special danger of bias,” because “juries may well feel
privileged to correct perceived social ills stemming from unequal wealth distribution by
transferring money from ‘wealthy’ corporations to comparatively needier plaintiffs.” Jd. at 491-
92. Just last year, the Supreme Court reaffirmed the central judiciary’s role in guarding against
excessive punitive damage awards. See Cooper Indus., Inc. v. Leatherman Tool Group, Inc.
(2001) 532 U.S. 424, 440-43 (requiring de novo review of trial court’s excessiveness analysis).
Underlining the crucial importance of the fundamental issues posed by punitive damages, the
U.S. Supreme Court has again this year granted certiorari in a case that poses these issues in stark
relief. See State Farm Mut. Auto, Ins. Co. v. Campbell No. 01-1289 (June 3, 2000) 122 $.Ct.
2326 (granting cert. from decision of the Utah Supreme Court in Campbell v. State Farm Mut.
Auto. Ins. Co. (Utah, Oct. 19, 2001) 200 Utah LEXIS 170).

Post-verdict review by the trial and appellate courts, however necessary it may be, is not
itself sufficient to protect a defendant’s due process rights; judicial supervision and control of

California’s punitive damages system must emphatically begin long before a jury renders its

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DEFENDANT FORD MOTOR COMPANY'S MOTION IN LIMINE TO EXCLUDE EVIDENCE OF DEFENDANT'S FINANGIAL CONDITNONS AND
CERTAIN OTHER EVIDENCE AND ARGUMENT IN CONNECTION WITH PLAINTIFF'S PUNITIVE DAMAGE CLAIM.
(MIL #38}28

LANKFORD
CRAWFORD
MORENO LLP
ATTORNEYS ATLAW

verdict. Because the “law does not favor punitive damages and they should be granted with the
greatest caution,” Dyna-Med, Inc. v. Fair Employment & Hous. Comm’n (1987) 43 Cal.3d 1379,
1392 [241 Cal-Rptr. 67] (internal quotations and citations omitted), judicial preclusion of
potentially prejudicial appeals by counsel and the Court’s active and meaningful guidance to the
jury—in advance of any verdict—are absolutely necessary to safeguard a defendant’s rights to
due process of law. Indeed, judicial control at all levels of the proceeding has become especially
important in recent years as “the rise of large, interstate and multinational corporations has
aggravated the problem of arbitrary awards and potentially biased juries.” Oberg, 512 U.S. at
431. Such stringent judicial control is especially important where, as here, the defendant faces
numerous, well-publicized actions around the country, in which multiple plaintiffs are vying to
impose multiple, sky-high punishments for the same conduct.

A. EVImeENce OF A DEFENDANT’S WEALTH OR FINANCES IS PREJUDICIAL AND
TRRELEVANT TO ANY ISSUE PROPERLY BEFORE THE JURY

This Court should preclude plaintiff from offering any evidence relating to Defendant’s
wealth, financial status, or aggregate profits. Defendant’s financial condition plainly has no
rational bearing on issues of liability for either compensatory or punitive damages, and any
introduction of such evidence carries the obvious, unavoidable, and completely unnecessary
danger that it will ignite the jury’s passions and prejudices. See, e.g., Notrica v. State Comp. Ins.
Fund (1999) 70 Cal.App.4th 911, 953 [83 Cal.Rptr.2d 89] (finding that punitive damage award
was excessive, as a matter of law, in part because plaintiff counsel’s arguments “improperly
appealed to the passions and prejudices of the jury and tended te obscure the fact of the actual
damages suffered by [the plaintiff”).

Recognizing this inherent and unjustifiable risk, Cal. Civ. Code § 3295(d) provides for the
automatic exclusion, upon the request of the defendant, of all such evidence until after the jury
retums a verdict of liability on both of these claims. “The purpose behind Civil Code section
3295, which allows bifurcation and preclusion of evidence of a defendant’s wealth and profits

during the liability phase of trial, is to minimize prejudice prior to the jury’s determination of a

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DEFENDANT FORD MOTOR COMPANY'S MOTION IN LIMINE TO EXCLUDE EVIDENCE OF DEFENDANT'S FINANCIAL CONDITIONS AND
CERTAIN OTHER EVIDENCE AND ARGUMENT IN CONNECTION WITH PLAINTIFF'S PUNITIVE DAMAGE CLAIM
[Mil #18]CO WN DH BF BW HY He

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SOD WW BB NY = SF SG He AA A BO 2S

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LANKFORD
CRAWFORD

MORENO LLP
ATIORNEYS ATLAW.

prima facie case of liability for punitive damages.” Nofrica, 70 Cal.App.4th at 939 (emphasis
added). Defendant submits that, pursuant to constitutional mandate and in simple fairness, all
evidence of Defendant’s wealth ought to be prohibited from all phases of the trial in order to
minimize the undeniable prejudicial impact of such evidence not only prior to but also after any
determination of any prima facie case of liability for punitive damages.

Simply put, there is no reason that plaintiff should be permitted to place before the jury
evidence of Defendant’s finances, and to do so would violate Defendant’s federal due process
rights. In its most definitive statement to date regarding the constitutional requirements for
punitive damage awards, the United States Supreme Court identified three required “guideposts”
for judging the reasonableness of a jury’s award, and the propriety of the process that produced
the award: (1) the degree of reprehensibility of the defendant’s conduct; (2) the ratio of the award
to the actual harm inflicted on the plaintiff; and (3) a comparison with the civil and criminal
penalties imposed for comparable misconduct. BMW of N. Am., Inc. v. Gore (1996) 517 US.
559, 574-583. None of these due process components, or “guideposts,” in any way depends on a
defendant’s wealth. /d. at 574.

The Supreme Court in BMW thus made clear that evidence of a defendant’s financial
status cannot be invoked to justify a large punitive damage award. See id. at 575-83, Although
the plaintiff in BMW defended the award in part by reference to BMW’s financial condition, the
Supreme Court did not even consider that factor in deciding whether the jury award violated the
defendant’s right to due process. Id. at 574-85; see also Zazu Designs v. L’Oreal S.A. (7th Cir.
1992) 979 F.2d 499, 508 (finding that a defendant’s financial condition is completely unrelated to
the victim’s injury or “the size of the award needed to cause corporate managers to obey the
law”); Pivot Point Int’l, Ine. v. Charlene Prods., Inc. (N.D. Ill. 1996) 932 F.Supp. 220, 223
([E]ven when considering punitive damages based on state law, the Supreme Court did not treat
the defendant’s wealth as relevant.”).

Basing an award of punitive damages on a defendant’s finances would, therefore,

necessarily and impermissibly supplant and ignore the substantive constitutional guideposts

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DEFENDANT FORD MOTOR COMPANY'S MOTION IN LIMINE TO EXCLUDE BVIDENCE OF DEFENDANT'S FINANCIAL CONDITIONS AND
CERTAIN OTHER EVIDENCE AND ARGUMENT IN CONNECTION WITH PLAINTIFF'S PUNITIVE DAMAGE CLAIM
EMO. #18]28

LANKFORD
CRAWFORD
MORENO LLP

ATTORNEYS ATLAW

recognized in BMW. Augmenting an award of punitive damages based on the defendant’s wealth
that otherwise was found to have acted in an equally reprehensible manner, would be, in the
closely analogous context of criminal sanctions, like imposing a longer sentence on a defendant
simply because he has a longer statistical life expectancy. Not surprisingly, post-BMW decisions
have held that evidence of net worth cannot alone support an award that is higher than the award
supported by the three BMW guideposts. See, e.g., Continental Trend Resources, Inc. v. OXY
USA (10th Cir. 1996) 101 F.3d 634, 641 (“From the Court’s statements we conclude that a large
punitive award against a large corporate defendant may not be upheld on the basis that it is only
one percent of its net worth or a week’s corporate profits.”); see also Lane v. Hughes Aircraft Co.
(2000) 22 Cal.4th 405, 427 [93 Cal.Rptr.2d] (Brown, J., concurring) (stating that plaintiff
attorneys should be precluded from arguing that punitive damages should be “a fixed percentage
of the defendant’s total net worth”).

As the U.S. Supreme Court noted in its most recent decision on punitive damages, it is the
profit gained by the wrongful conduct that is potentially relevant to determining the appropriate
size of the punitive damage award, not the defendant’s overall profitability or sales of an
offending product. See Cooper, 532 U.S. at 441-42, see also Adams, 54 Cal.3d at 110 (stating
that the key question is not “what is the defendant’s net worth?” but rather whether the amount of
damages “exceeds the level necessary to properly punish and deter’”) (quoting Neal v. Farmers
Ins. Exch, (1978) 21 Cal.3d 910, 928 [148 Cal.Rptr. 389]); Cummings Med. Corp. y.
Occupational Med. Corp. of Am., Inc, (1992) 10 Cal.App.4th 1291, 1299 [13 Cal.Rptr.2d 585]
(stating that courts and commentators often look to “the profitability of the defendant’s
misconduct,” instead of the defendant’s net worth, as the proper measure).

The Cooper court rejected the plaintiff's attempt to justify an award of punitive damages
by reference to the defendant’s gross profitability: “Even if [plaintiff's] estimate [of defendant’s
net profit from total sales of the product] were correct, however, it would be unrealistic to assume
that all of [defendant’s] sales of [the product} would have been attributable to its misconduct.”

532 U.S. at 442. Because “that wrongdoing surely could not be treated as the principal cause of

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DEFENDANT FORD MOTOR COMPANY'S MOTION IN LIMINE TO EXCLUDE EVIDENCE GF DEFENDANT'S FINANCIAL CONDITIONS AND.
CERTAIN OTHER EVIDENCE AND ARGUMENT IN CONNECTION WITH PLAINTIFF'S PUNITIVE DAMAGE CLAIM
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[the defendant’s] entire sales volume for a 5-year period,” the defendant’s gross profits from sales
of the offending product could not serve as a benchmark for punitive damages. /d. at 442. Thus,
evidence of Defendant’s overall net worth and vehicie-line profits should be excluded because
plaintiff cannot possibly demonstrate that it is attributable to the specific alleged misconduct that
plaintiff claims warrants an award of punitive damages.

The Ninth Circuit recently confirmed that an award of punitive damages may not be
inflated based on a defendant’s finances in Leatherman Tool Group, Inc. v. Cooper Indus., Inc.
(9th Cir, 2002) 285 F.3d 1146 (“Cooper I”) (reducing punitive damage award from $4.5 million
to $500,000 based on the Supreme Court’s mandate). The Ninth Circuit recognized that evidence
of the defendant’s corporate wealth did not serve to uphold an otherwise unconstitutional punitive
damage award, and could not be used to inflate an award beyond that amount sanctioned by
application of the BA/W criteria: “[W]e acknowledge that the evidence [of defendant’s corporate
wealth] would support a finding that a substantial punitive award might be necessary to have a
sufficient economic effect on [defendant] to create deterrence. On the basis of the record as a
whole, however, and in view of the [BMW y.] Gore factors, we cannot conclude that this
consideration renders the amount awarded by the jury constitutional.” /d. at 1152.

Furthermore, viewing the corporation as wealthy is “an illusion” because unlike wealthy
individuals, corporate investors own the net worth of the corporation and pay the punitive awards
even though they often are persons of only average wealth. See Zazu Designs, 979 F.2d at 508
(finding that corporate assets, net worth, and absolute size are unrelated to the victim’s injury or
the size of the award needed to get the attention of the corporate managers); cf. Notrica, 70
Cal. App.4th at 953 (“We do not think that [defendant insurance agency’s] net worth is a
satisfactory basis for determining the award because [defendant] is required to return surpluses to
employers as dividends. The payment of dividends raises the question of who is to be punished
by the award.”)

To be sure, the defendant’s wealth or financial condition is one of the traditional criteria

invoked by California courts in their review of jury awards of punitive damages, see, e.g, Adams,

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DEFENDANT FORD MOTOR COMPANY'S MOTION IN LIMINE TO EXCLUDE EVIDENCE OF DEFENDANT’S FINANCIAL CONDITIONS AND
CERTAIN OTHER EVIDENCE AND ARGUMENT IN CONNECTION WITH PLAINTIFF'S PUNITIVE DAMAGE CLAIM
[MiL 413}28

LANKFORD
CRAWFORD

MORENO LLP
ATTORNEYS ATLAW

54 Cal.3d at 118 n.9, and the presenting evidence of such wealth to the jury is provided for, at the
same time that it is limited by, Cal. Civ. Code § 3295. To date, however, the California Supreme
Court has not examined or considered the BMW decision, or re-examined in the light of that
decision, the constitutional infirmity of a jury’s examination of evidence of a defendant’s
financial condition in determining an award of punitive damages. Indeed, since the time that the
BMW decision was handed down, the State high court has not addressed the issue of the proper
mode for judging the size of a punitive damages award at all.

Nonetheless, before BMW the California Supreme Court recognized that “the
constitutional mandate for meaningful judicial scrutiny of punitive damage awards” as enunciated
in recent U.S. Supreme Court decisions raised the question of “whether the [traditional]
California ‘passion and prejudice’ standard of review is constitutionally sufficient.” Adams, 54
Cal.3d at 118 & n.9 (noting, without deciding, that the traditional “California standard of review
appears to be similar to those as to which the [U.S.] high court has noted its [due process]
concern”): see, e.g., Pacific Mutual, 499 U.S. at 21 n.10 (noting due process concerns with
punitive damage schemes that set aside or modify judgments only if “manifestly and grossly
excessive” or if it “evinces passion, bias, and prejudice on the part of the jury so as to shock the
conscience”) (internal quotations and citations omitted); TXO Prod. Corp., 509 U.S. at 464
(expressing concern that instructions telling the jury to consider wealth might create danger of
prejudice, but not reaching issue under Due Process Clause); buf see Sierra Club Found. y.
Graham (1999) 72 Cal.App.4th 1135 (upholding California scheme).

In Adams, the State high court interpreted these constitutional precedents as almost
requiring the inclusion in the record of evidence of the defendant’s financial condition as a
necessary prerequisite for adequate judicial review, although the court expressly declined to
endorse any particular “standard for measuring a defendant’s ability to pay.” Adams, 54 Cal.3d at
116 n.7 & 18. This conclusion was reinforced by the court’s survey of the historical origins of
the consideration of a defendant’s wealth as a factor to be taken in mitigation of an award that

otherwise accurately reflected the reprehensibility of the defendant’s conduct and the comparable

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DEFENDANT FORD MOTOR COMPANY'S MOTION IN LIMINE 70 EXCLUDE EVIDENCE OF DEFENDANT'S FINANCIAL CONDITIONS AND
CERTAIN OTHER EVIDENCE AND ARGUMENT IN CONNECTION WITH PLAINTIFI’S PUNITIVE DAMAGE CLAIM
(MEL #18]28

LANKFORD
CRAWFORD

MORENO LLP
ATTORNEYS AT LAW

fines that could have been imposed. Indeed, dating back to punitive damages’ earliest origins, the
use of wealth evidence was limited to protecting the defendant, and played no role in fanning the
flames to increase the size of the punishment. See id. After all, “[a]bsent evidence of a
defendant’s financial condition, a punitive damages award [could] financially annihilate him.” Jd.
at 113, Defendant, however, has not put its financial condition at issue, and therefore, its overall
wealth is irrelevant to the issue of whether a potential punitive damage award would exceed
California’s interests in punishment and deterrence.

Consequently, this Court should exclude all evidence of and reference to Defendant’s
financial condition or status before the jury, even if the admission of such evidence into the
record for purposes of any eventual judicial review would be proper. Such a determination would
be fully consistent with the overriding conceptual theory behind Adams, while paying heed to the
U.S. Supreme Court’s BMW decision. There is a decisive difference between introducing before
a jury evidence that has an inherent and widely-recognized prejudicial potential, and judicial
review of evidence for purposes of mitigating a jury’s award. See, e.g., Oberg, 512 U.S. at 434
(drawing analogy between imposition of criminal penalties and punitive damages, and contrasting
unreviewability of jury acquittals with necessary judicial review of jury convictions). This Court
should acknowledge and defend this vital distinction by precluding any evidence of Defendant’s
financial status in this case.

B. REFERENCE TO DEFENDANT’S GROSS REVENUES OR PRroFits, AND OTHER EVIDENCE

OF AND REFERENCE TO ECONOMIC ACTIVITIES OUTSIDE CALIFORNIA, SHOULD BE
PRECLUDED

This Court should preclude all evidence of or references to Defendant’s gross revenues,
net worth, or other indicia of Defendant's overall financial condition. As demonstrated above,
Defendant’ s aggregate wealth and revenues are simply irrelevant to any question properly before
the jury. Furthermore, even if using evidence of Defendant’s financial condition as a basis for
imposing an award of punitive damages did not contravene the Due Process Clause generally,
evidence of Defendant’s overall net worth may not be used to calculate or justify any punitive

damage award because it necessarily is derived from Defendant’s national—and indeed

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DEFENDANT FORD MOTOR COMPANY'S MOTION IN LIMINE TO EXCLUDE EVIDENCE OF DEFENDANT'S FINANCIAL CONDITIONS AND
CERTAIN OTHER EVIDENCE AND ARGUMENT IN CONNECTION WITH PLAINTIFF'S PUNITIVE DAMAGE CLAIM
(MG #13]oC OD eM ID mH RB BP

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CRAWFORD
MORENO LLP.

ATTORNEYS ATLAW

international—sales. In our federal system, “principles of state sovereignty and comity,” rooted
in both due process, full faith and credit, and the Commerce Clause, mandate that “a State may
not impose economic sanctions on violators of its laws with the intent of changing the tortfeasors’
lawful conduct in other States.” BMW, 517 U.S. at 572; Phillips Petroleum Co. v. Shutts (1985)
472 U.S. 797, 821-22 (even where jurisdiction is proper, state may not apply its own law to
disputes unless it has “a ‘significant contact or significant aggregation of contacts’ to the claims
asserted . . . contacts ‘creating state interests,” in order to ensure that the choice of [the forum
state’s] law is not arbitrary or unfair,”) (quoting Allstate Ins. Co, v. Hague (1981) 449 U.S. 302,
312-13 (plurality opinion); see also U.S. Const, 14% Amend.; U.S, Const., art. I, § 8; U.S. Const.,
art. IV, § 1). “To avoid such encroachment, the economic penalties that a State . . . inflicts on
those who transgress its laws, whether the penalties take the form of legislatively authorized fines
or judicially imposed punitive damages, must be supported by the State’s interest in protecting its
own consumers and its own economy.” BMW, 517 U.S. at 572, Thus, the court in BMW reversed
an award of punitive damages that had been based upon the auto manufacturer’s national sales
figures. Jd. at 574-74.

As the Court of Appeal for the First District has recognized, BMW “thus prohibit[s] an
award of punitive damages herein to punish or deter [defendant’s] conduct with respect to
consumers in states other than California.” Yu v. Signet Bank/Virginia (1999) 69 Cal.App.4th
1377, 1392 [82 Cal.Rptr.2d 304]; see also Smith v. Ingersoll-Rand Co. (10th Cir. 2000) 214 F.3d
1235, 1253 (finding that BMW prohibits an award of punitive damages to punish or deter a
defendant’s conduct with respect to consumers in other states). Evidence of Defendant’s net
worth would thus indelibly taint the jury’s deliberations. Only a small portion of Defendant’s net
revenue comes from the use of asbestos as opposed to some alternative substance, much less from
the use of asbestos in California. Yet, introduction of evidence of Defendant’s aggregate earnings
necessarily would invite the jury to punish Defendant for conduct wholly unrelated to the sale of
products containing asbestos and wholly unconnected to consumers in California. Any such jury

award would exceed the ban on extraterritorial punishment established by BMW and would

-9-

DEFENDANT FORD MOTOR COMPANY'S MOTION IN LIMINE 10 EXCLUDE EVIDENCE OF DEFENDANT'S FINANCIAL CONDITIONS AND
CERTAIN OTHER EVIDENCE AND ARGUMENT IN CONNECTION WITH PLAINTIFF'S PUNTTTVE DAMAGE CLAIM
[MIL #13}CeO WD HR BF YD Bee

NY NY YM NN NY DH ee ea a
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LANKFORD
CRAWFORD
MORENO LLP

AYTORNEYS ATLAW

violate the Due Process, Commerce, and Full Faith and Credit Clauses: “While each State has
ample power to protect its own consumers, none may use the punitive damages deterrent as a
means of imposing its regulatory policies on the entire Nation.” BMW, 517 U.S. at 585 (noting
auto manufacturer’s “status as an active participant in the national economy implicates the federal
interest in preventing individual States from imposing undue burdens on interstate commerce”);
see also U.S. Const., art. I, § 8: U.S. Const., 14" Amend.; U.S. Const., art. IV, § 1. Consequently,

this court should preclude all evidence of and references to such aggregate financial information.

TH.
Tuts COURT SHOULD PRECLUDE PLAINTIFF FROM REFERRING
To PUNITIVE DAMAGES IN His OPENING STATEMENT

Cal. Civ. Code § 3295 gives a defendant an automatic right to bifurcate the punitive
damages phase of the trial from the compensatory phase, in recognition of the prejudicial impact
of the mere allegation that punitive damages are being sought: “The purpose behind Civil Code
section 3295, which allows bifurcation and preclusion of evidence of a defendant’s wealth and
profits during the liability phase of trial, is to minimize prejudice prior to the jury’s determination
of a prima facie case of liability for punitive damages.” Nofrica, 70 Cal.App.4th at 939; see also
Cal. Civ. Code § 3295(c) & (d)}. For similar reasons, this Court should preclude plaintiff from
referring to punitive damages in his opening statement.

Iv.

PLAINTIFF SHOULD BE PRECLUDED FROM CLAIMING
Any AMOUNT OF PUNITIVE DAMAGES BEFORE THE JURY

Cal. Civ. Code § 3295(e) mandates that “[n]o claim for exemplary damages shall state an
amount or amounts.” Therefore, plaintiff is expressly prohibited from claiming any specific
amount of punitive damages, and this prohibition applies not only to statements contained in pre-
trial pleadings, but the statute’s emphatic command—"No claim for exemplary damages”
(emphasis added)—even more importantly precludes plaintiff from “stat[ing] an amount or
amounts” in the jury’s presence. Cal. Civ. Code § 3295(e). Accordingly, plaintiff should be

precluded from specifying any amount of claimed punitive damages before the jury.

-10-

DEFENDANT FORD MOTOR COMPANY'S MOTION IN LIMINE TO EXCLUDE EVIDENCE OF DEFENDANT S FINANCIAL CONDITIONS AND
CERTAIN OTHER EVIDENCE AND ARGUMENT IN CONNECTION WITH PLAINTIFF'S PUNITIVE DAMAGE CLAIM
{MIL #18]oO MW DR HW FB WwW YY

N YN NY NR DY DY Dw HB ee ee a ie
NOD WF BN = SF Cw IQA AH BOHN =| DS

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LANKFORD
CRAWFORD
MORENO LLP
ATTORNEYS ATLAW

Vv.
PLAINTIFF SHOULD BE PRECLUDED FROM ASKING THE JURY To “SEND A MESSAGE” OR ACT
As “THE CONSCIENCE OF THE COMMUNITY”

For the same reasons, plaintiffs counsel should be precluded from appealing to the jurors
to consider extra-judicial factors instead of the trial record in considering liability for or
calculating the amount of any damage award. Plaintiff should not be able to urge in opening
statement, closing argument, or at any other point of the trial, that jury members should “send a
message” to Defendant’s boardrooms, or act as “conscience of the community,” or to consider
similar and equally improper factors in determining whether to award either compensatory or
punitive damages, or in determining the size of an such awards. Such instructions are inherently
prejudicial because they, on their face, urge the jury to render its verdict based on “passion and
prejudice.” Oberg, 512 U.S. at 424.4. Arguments pitting the local jurors against a large, out-
of-state corporation “distract the jury from its ‘sworn duty to reach a fair, honest and just verdict
according to the facts and evidence presented at trial.’” Whitehead v, Food Max of Miss., Inc.
(Sth Cir. 1998) 163 F.3d 265, 277 (quoting Westbrook v. General Tire & Rubber Co, (5th Cir.
1985) 754 F.2d 1233, 1238-39); see, e.g., Hoffman v. Erandt (1966) 65 Cal.2d at 552-53
(reversing “a deliberate attempt by counsel to appeal to social or economic prejudices of the
jury”); Malkasian v. Irwin (1964) 61 Cal.2d 738, 746-47; compare New York Central R.R. Co. v.
Johnson (1929) 279 U.S. 310, 319 (references to defendant as “eastern railroad” that had “come
into this town” and to witnesses “sent on from New York” “have been so often condemned as an
appeal to sectional or local prejudice as to require no comment”); Strickland v. Owens Corning
(6th Cir. 1998) 142 F.3d 353, 359 (“It is true that an ‘us-against-them plea can have no appeal
other than to prejudice by pitting “the community” against a nonresident corporation [and] is an
improper distraction from the jury’s sworn duty to reach a fair, honest and just verdict.’”}
(quoting Westbrook v. General Tire & Rubber Co. (5th Cir. 1985) 754 F.2d 1233, 1238). See
also United States v. Johnson (8th Cir. 1992) 968 F.2d 768, 769-70 (prosecutor’s inflammatory
remark that jury should be a “bulwark” against drugs improperly incited jurors to be the

“conscience of the community”) (internal quotations and citations omitted); United States v.

-li-

DEFENDANT FORD MOTOR COMPANY'S MOTION IN LIMINE TO EXCLUDE EVIDENCE OF DEFENDANT'S FINANCIAL CONDITIONS AND
CERTAIN OTHER EVIDENCE AND ARGUMENT IN CONNECTION WITH PLAINTIFF'S PUNITIVE DAMAGE CLAIM
IMIL #18]28

LANKFORD
CRAWFORD

MORENO LLP
ATTORNEYS ATLAW

Solivan (6th Cir. 1991) 937 F.2d 1146, 1153. Because there is no place in this trial for such
unfairly prejudicial argument, the Court should preclude plaintiff from attempting to engage in it.

VI.
CONCLUSION

Based on the foregoing reason, Defendant respectfully asks that the Court grant its motion
in limine precluding plaintiff from presenting all evidence, references, and/or comments on
Defendant's wealth or financial condition, referring to punitive damages in their opening
statement, claiming any specific amount of punitive damages before the jury, or asking the jury to
act as “the conscience of the community” or engage in similar appeals to other improper factors

that go beyond applying the law to the facts of this case.

Dated: December 2, 2010 LANKFORD CRAWFORD MORENO LLP

oe ?} -
By: Pvt Hlar

PAUL V. LANKFORD
PAUL LANNUS

Attorneys for Defendant
FORD MOTOR COMPANY

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DEFENDANT FORD MOTOR COMPANY'S MOTION IN LIMINE TO EXCLUDE EVIDENCE OF DEFENDANT'S FINANCIAL CONDITIONS AND.
CERTAIN OTHER EVIDENCE AND ARGUMENT IN CONNECTION WITH PLAINTIFF'S PUNITIVE DAMAGE CLAIM
{MIL #18]