Grimshaw v. Ford
FACTS
FACTS
• Richard Grimshaw (child) suffered severe burns on face and body in Ford Pinto accident
• Jury finds in Grimshaw’s favor, awarding $2,516,000 for compensatory damages, and $125 million in punitive damages from Ford
• This is a LOT of money. Trial judge reduced the awards significantly – Grimshaw forced to remit all but $3.5 million; Court of Appeals affirmed the reduction
• Ford disregarded the probability of injury
• Placement of fuel tank between back axle and bumper – not very safe
• Design scheme focused on attractiveness, not safety
Issue: Grimshaw as a rejection of cost-benefit analysis?
• Ford conducted cost/benefit analysis – determined B, P, L
• In doing such analysis, Ford was explicitly taking into account costs and benefits
Why were punitive damages granted?
• CA code §3294 sets standards for punitive damages – malice
• Court said Ford exhibited malice in order to maximize corporate profits
• We know that cost/benefit analysis is done all the time and we think it is generally good
• Grimshaw makes no sense then – it is an anomaly in the system
• Wanton disregard?
How is the reduction in awards consistent with the refutation of Ford’s cost-benefit analysis?
• the trial judge (and appeals court) took other factors into account (Ford’s bottom line, the huge magnitude of the jury award, etc.)
• Courts are more likely to adhere to and apply some form of cost-benefit analysis as opposed to juries – courts restrain the juries.
• POLICY Issues:
Consumer choice/economic disparity
Cost-benefit analysis in the abstract/ cost-benefit analysis discreetly
Prevailing social value that we should only be exposed to a certain level of risk, period.
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