White v. Ford Motor Company ( 2007 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
GINNY V. WHITE; JIMMIE D. WHITE, 
Plaintiffs-Appellees,
v. No. 05-15655
FORD MOTOR COMPANY,
Defendant-Appellant,  D.C. No.
CV-95-00279-DWH
and OPINION
ORSCHELN COMPANY,
Defendant.

Appeal from the United States District Court
for the District of Nevada
David W. Hagen, District Judge, Presiding
Argued and Submitted
May 15, 2006—San Francisco, California
Submission Withdrawn November 6, 2006
Argued and Resubmitted May 2, 2007
Submission Withdrawn May 9, 2007
Resubmitted August 22, 2007
Pasadena, California
Filed August 30, 2007
Before: Alex Kozinski and Raymond C. Fisher,
Circuit Judges, and Frederic Block, District Judge.*
Opinion by Judge Fisher
*The Honorable Frederic Block, Senior United States District Judge for
the Eastern District of New York, sitting by designation.
10993
WHITE v. FORD MOTOR CO. 10997
COUNSEL
Malcolm E. Wheeler (argued), Wheeler Trigg Kennedy LLP,
Denver, Colorado; Theodore J. Boutrous, Jr. (argued), Gib-
son, Dunn & Crutcher LLP, Los Angeles, California; and
Andrew L. Frey, Evan M. Tager and Adam C. Sloan, Mayer,
Brown, Rowe & Maw LLP, Washington, D.C., for the
defendant-appellant.
Shanin Specter (argued) and David J. Caputo, Kline & Spec-
ter, Philadelphia, Pennsylvania; Don Nomura, Laxalt &
Nomura, Ltd., Reno, Nevada; and Peter D. Durney, Durney &
Brennan, Ltd., Reno, Nevada, for the plaintiffs-appellees.
Jonathan M. Hoffman, Martin Bischoff Templeton Langslet
& Hoffman LLP, Portland, Oregon, for amicus curaie The
Product Liability Advisory Council, Inc.
Theodore J. Boutrous, Jr., Gibson, Dunn & Crutcher LLP,
Los Angeles, California; and Theodore B. Olson and Thomas
H. Dupree, Jr., Gibson, Dunn & Crutcher LLP, Washington,
D.C., for amicus curaie The Business Roundtable.
Robin S. Conrad and Amar D. Sarwal, National Chamber Lit-
igation Center, Inc., Washington, D.C.; and Walter Dellinger,
10998 WHITE v. FORD MOTOR CO.
Jonathan D. Hacker, Matthew M. Shors and Charles E. Bor-
den, O’Melveny & Myers LLP, Washington, D.C., for amicus
curaie The Chamber of Commerce of the United States of
America.
OPINION
FISHER, Circuit Judge:
This product liability case arises from the death of three-
year-old Walter White, the son of plaintiffs Ginny and Jimmie
White, who was killed when Mr. White’s parked Ford F-350
pickup truck rolled over him in the family’s driveway. The
case is before us for the second time following a remand for
a new trial on punitive damages. See White v. Ford Motor
Co., 312 F.3d 998 (9th Cir. 2002) (“White I”) (affirming the
first jury’s award of $2,305,435 in compensatory damages but
reversing as to punitive damages). Defendant Ford Motor
Company appeals the district court’s decision that a second
jury’s award of $52 million in punitive damages on remand
did not violate the Due Process Clause of the Fourteenth
Amendment. In addition, Ford argues that during the retrial,
the district court committed multiple reversible errors in its
pretrial and other jury instructions and evidentiary rulings. In
light of the Supreme Court’s intervening decision in Philip
Morris USA v. Williams, 127 S. Ct. 1057 (2007), we reverse
and remand for a new trial on punitive damages.
I. Background
A. The Defective Product
In 1991, Ford began to produce model year 1992 F-series
pickup trucks using a self-adjusting parking brake designed
and manufactured in the 1980s by the Orscheln Company.
Although conventional brakes employ a cable that becomes
WHITE v. FORD MOTOR CO. 10999
loose over time and therefore must be adjusted periodically to
maintain tension, Orscheln’s self-adjusting brake kept the
cable tight, even as the vehicle aged. The brake used a self-
adjusting ratchet wheel and a “pawl,” which is a “hinged or
pivoted finger that sticks into a tooth of the ratchet wheel.”
White I, 312 F.3d at 1002-03. A driver would engage the
brake by depressing the pedal, setting the mechanism in gear
until the pawl tooth fit in between two of the ratchet teeth.
By 1990, Ford had preproduction reports of potential prob-
lems with the Orscheln brake, and by the time the F-series
trucks were in production, the reports had increased. For
example, some customers reported that sometimes the parking
brake did not engage and instead pressed freely down to the
floor, while other customers reported that their trucks rolled
despite the parking brake being engaged. Id. at 1003.
Ford told Orscheln to identify and fix the problem, and in
the fall of 1992, the company assigned Timothy Rakowicz, a
young Ford engineer, to assist in the investigation. By
November 1992, Ford and Orscheln discovered that some-
times the pawl tooth would skip over the tops of the ratchet
wheel teeth instead of engaging in one of the gaps. Ford cal-
led this the “skip-through-on-apply” or “skip out” problem.
Id. In February 1993, Orscheln testing showed that if the pawl
tooth engaged a ratchet tooth at its tip, rather than firmly
engaging between the two teeth, the driver would feel resis-
tance when pressing the brake pedal even though the pawl
tooth was in fact resting on a ratchet tooth tip. Testing also
showed that an outside force on the vehicle could disturb the
equilibrium and cause the brake to disengage, allowing the
vehicle to roll. Ford referred to the tip-on-tip condition as
“spontaneous disengagement,” id. at 1007, or self-release, and
the corresponding effect on the vehicle as “rollaway,” id. at
1003.
Rakowicz included Orscheln’s test results in a February 22,
1993 draft paper to Ford’s Critical Product Problem Review
11000 WHITE v. FORD MOTOR CO.
Group (CPPRG), a committee whose job was to assist with
Ford’s investigation of potential safety problems. In the paper,
titled “F-Series Parking Brake Control Self Releasing Field
Campaign and Owner Notification Paper,” Rakowicz wrote
that “the parking brake control will intermittently self release
after pedal apply causing a decrease in pressure to the rear
brakes.”1 Rakowicz defined the “root cause of the concern” as
a “load carrying, ratchet tooth tip on tip condition,” and refer-
ring to tests three days earlier, wrote that “[t]he condition has
been duplicated during parking brake hill hold testing on Feb-
ruary 19, 1993 at the supplier facility using a part removed
from a problem vehicle.”2 Rakowicz wrote that a customer
with a brake assembly affected with this condition “would
experience the following affects [sic]”:
a. the parking brake pedal apply would feel nor-
mal.
b. the customer will leave the vehicle and in an
arbitrary amount of time, the parking brake control
will self release. A popping noise will be heard if the
customer is within hearing distance. The parking
brake pedal will remain in approximately the same
position it was applied to.
c. If the vehicle is on an incline, the vehicle will
potentially roll down the incline (emphasis added).
Rakowicz believed that the tip-on-tip condition warranted
a recall. At retrial, he testified that he was personally aware
of 22 reported rollaways when he wrote his report.3 However,
1
Rakowicz also testified at the second trial that a “field campaign refers
to recall,” and that “self-releasing refers to spontaneous disengagement.”
2
At the retrial, Rakowicz testified that this paper reflected a “misunder-
standing” of the test results, and that he came to understand that the tests
did not show spontaneous disengagement. But Rakowicz did not testify to
such a misunderstanding in either of two depositions or at the first trial.
3
Rakowicz also acknowledged that, unbeknownst to him, Ford had
additional reports of rollaways at the time.
WHITE v. FORD MOTOR CO. 11001
more senior engineers at Ford disagreed with Rakowicz’s
draft and required him to tone it down, concluding instead
that the Orscheln test was not valid. Id. Thus, the CPPRG did
not then or ever refer the matter to Ford’s Field Campaign
Review Committee (FCRC), which made recall decisions. At
the same time, Ford management worried about a recall and
its potential cost. At a February 23, 1993 meeting of Ford and
Orscheln personnel, a senior Ford engineer lamented that
“this problem may cause serious financial ramifications for
both companies with warrant recall.” A March 30, 1993
memo similarly referred to a full recall as the “worst case sce-
nario.” The ultimate cost to recall 875,000 manual transmis-
sion vehicles was approximately $22 million.
In March 1993, Orscheln proposed a solution for the skip
out problem. The fix was a small plastic wedge, costing 15
cents to manufacture, which could be installed over the pawl
to make sure it pressed down between the teeth instead of
skipping over them. However, the wedge also disabled the
self-adjusting feature of the brake and increased Ford’s cost.
Id. at 1003-04.
Meanwhile, the evidence of problems with the F-series
parking brake increased, and in the same month (March
1993), the National Highway Traffic Safety Administration
(NHTSA) became involved in the investigation, having
received reports of rollaways. In May 1993, Ford disclosed to
NHTSA 65 reports of either skip-through or rollaway. The
agency requested additional information in September 1993,
including complaints, testing documents and accident reports,
which Ford provided in February 1994.4 In addition, the
agency collected and inspected 10 parking brake assemblies
from complainants, bench tested five of these assemblies and
4
In its response to NHTSA, Ford also reported that it had only one
reported injury from rollaway. White I, 312 F.3d at 1004. However, evi-
dence at the retrial showed that five injuries had been reported to Ford,
with the fifth coming in September 1993.
11002 WHITE v. FORD MOTOR CO.
tested three of them on a complaint vehicle. Although
NHTSA was unable to detect a “spontaneous disengagement”
malfunction in these specific assemblies, it did find that some
of them experienced skip out.5
By August or September 1993, the plastic wedge was
approved for use, and enough were manufactured for Ford to
install them in all of the trucks on the road.6 Id. at 1003. But
rather than recall the vehicles, Ford issued a Technical Ser-
vice Bulletin to dealers on November 10, 1993, making the
wedge available for any vehicle owner who complained about
a problem with skip out. Id. at 1004. The bulletin did not
mention spontaneous disengagement or rollaway.
In mid-1994, NHTSA began to pressure Ford to conduct a
recall and install the wedge as a precautionary measure. On
August 30, 1994, and in response to NHTSA’s urging, Ford
informed the agency that it had decided to recall 884,400
manual transmission vehicles — which included 1992
through 1994 F-series pickup trucks — “rather than engag[e]
in a protracted dispute with the agency.” In its letter to the
agency, Ford stated that “[a]lthough all of the vehicles are
potentially susceptible to the condition arising, less than one
percent” — or 8,440 vehicles — “are expected to exhibit it,
5
Specifically, NHTSA observed 15 malfunctions during the bench tests
of the five parking brake assemblies, where the assemblies were cycled
9,400 times. Fourteen of these malfunctions were of the skip out type,
while the other was a failure-to-engage. On the vehicle tests, three parking
brake assemblies were cycled almost 800 times, resulting in seven mal-
functions, one of which was a skip out. The agency also observed addi-
tional skip out malfunctions on the vehicle for two of the three complaint
parking brake assemblies during other tests.
6
Also by this time, Orscheln had proposed a design change for future
vehicles referred to as a “cam-in,” which prevented skip out and the tip-
on-tip condition while also maintaining the self-adjusting feature. In late
1993, Ford authorized the use of the cam-in on future models. Ford was
thus left to decide whether to correct the problem in vehicles that would
be manufactured or sold prior to the availability of the cam-in and whether
to recall vehicles already on the road.
WHITE v. FORD MOTOR CO. 11003
and those which do . . . are expected to do so on an intermit-
tent basis.” In describing the problem, Ford noted that it “may
occur occasionally when the parking brake control self-adjust
pawl lines up in a tip-to-tip relationship with the self-adjust
ratchet,” explaining that “[i]f this occurs, the pawl may skip
over one or more teeth in the ratchet during parking brake
application.” Ford further informed the agency of 44 reports
of “unattended vehicle[s] roll[ing] and result[ing] in property
damage,” one of which alleged that an injury had occurred.
However, the Whites proved at retrial that Ford knew of at
least eight injuries and that it had received reports of over 100
rollaways at the time it submitted its letter to NHTSA.
In November 1994, Ford provided NHTSA with its pro-
posed recall notice, which stated: “During rapid pedal appli-
cation of the parking brake, the pedal may go to the floor with
little or no effort. Should this occur, the parking brake system
may not achieve full tension, potentially resulting in parking
brake ineffectiveness, or diminished effectiveness.” NHTSA
acknowledged receipt of the recall notice and described the
defect as: “The parking brake control self-adjust pawl does
not line up properly with the self-adjust ratchet allowing the
pawl to skip over one or more teeth in the ratchet. The park-
ing brake will not hold the vehicle allowing the vehicle to roll
freely.” The agency, however, did not ask Ford to make any
changes to its notice. On December 16, 1994, Ford issued its
recall notice to vehicle owners.7
B. The Accident, First Trial and First Appeal
On October 9, 1994, two months before Ford issued its
recall, Jimmie White parked his company’s 1993 Ford F-350
pickup truck facing downhill in his sloped driveway. Mr.
7
As of January 2004, 20 percent of owners had not taken in their vehi-
cles for installation of the wedge. In addition, Rakowicz testified at retrial
that Americans still do not know that the vehicles were recalled for the
reason of rollaway.
11004 WHITE v. FORD MOTOR CO.
White put the truck into first gear, set the parking brake by
stepping on the brake pedal and went inside the home. The
Whites’ three-year-old son, Walter, was playing unsupervised
in the front yard, with Mrs. White occasionally checking on
him through the window. Walter climbed into the vehicle’s
cab, and according to the Whites, knocked the gearshift into
neutral. When the parking brake did not hold, the truck started
to roll and Walter fell or climbed out of it. Tragically, the
truck’s rear dual wheels rolled over and crushed the boy’s
body. Id. at 1002.
The truck that killed Walter was built in April 1993 and
sold to Jimmie White’s employer on September 22, 1993. By
the time of the sale of that vehicle, it was clear to Ford that
there was a potential rollaway problem. Id. at 1004. Although
Ford agreed to conduct a recall before the date of the accident,
Ford did not begin issuing the recall notice to owners until
December 1994, two months after Walter’s death. Moreover,
Mr. White’s employer did not receive a recall notice until
March 1995, 25 months after Rakowicz had recommended a
recall and seven months after Ford told NHTSA it would do
so. Thus, as we stated in White I, “the accident happened after
the brake problem was discovered and figured out, after the
technical bulletin to dealers had gone out, and after Ford had
decided to recall the trucks to install the fix, but before the
recall notices or any warnings to ultimate consumers were
sent out.” Id.The Whites brought a products liability action under
Nevada law against Ford and Orscheln, alleging strict product
liability (defective design), negligence, failure to warn, inten-
tional misrepresentation and negligent infliction of emotional
distress. Their theory of the case was that the parking brake
failed to engage, allowing the truck to roll, and that Ford
knew the brake was prone to failure but refused to recall it or
warn consumers of the danger. Id. at 1002.
During the 1998 trial, Orscheln settled with the Whites and
the case went to verdict against Ford. Id. The jury found that
WHITE v. FORD MOTOR CO. 11005
the brake was “defective in design,” but that this design defect
did not proximately cause the accident. Rather, the jury found
that the brake was “defective for Ford’s failure to warn,” that
Ford was negligent with respect to the brake and that Ford
had thereby proximately caused Walter’s death. The jury also
found the Whites 40 percent contributorily negligent. Finally,
the jury found Ford liable for negligent infliction of emotional
distress and intentional misrepresentation of the safety of the
vehicle, and found by clear and convincing evidence that
“ ‘Ford acted with oppression or malice in the conduct’ ” that
caused Walter’s death. Id. at 1012 (quoting the jury question-
naire). The jury returned a verdict against Ford for $2,305,435
in compensatory damages — $1,150,000 to each parent for
emotional distress and $5,434.57 to Walter’s estate for funeral
expenses — and $150,884,400 in punitive damages. The dis-
trict court found that the punitive damages award was consti-
tutionally excessive and therefore remitted it to
$69,163,037.10 — 30 times the compensatory award — on
the theory that the largest punitive damages award the Nevada
courts had approved was 30 times the compensatory damages.
Id. at 1002; see also id. at 1029 (Graber, J., dissenting). The
parties then cross-appealed.
In White I, this court unanimously affirmed the first jury’s
compensatory and punitive liability findings. With respect to
punitive damages, it held that the evidence was sufficient to
support the following conclusions, which in turn were suffi-
cient under Nevada law to support a punitive damages award:
(1) “that Ford knew the parking brake could [mal-
function] and let a pickup truck roll away, didn’t fix
it, didn’t recall it, and didn’t warn drivers of the
trucks, all prior to the White accident”;
(2) “that Ford knew a parking brake [malfunction]
could result in a rollaway, and failed to warn people
driving pickup trucks about the brake in conscious
disregard of their safety (that is, knowing that some-
11006 WHITE v. FORD MOTOR CO.
one could be injured or killed and deliberately failing
to warn)”;
(3) “that when the engineers had figured out the
problem and the fix for it, Ford covered it up with a
euphemistic notice to dealers, rather than consumers,
instead of a plain warning and immediate recall”;
(4) “that ‘skip-through,’ where a person pressed
the parking brake with his foot and felt no resistance,
and rollaway, where the parking brake seemed to
engage but didn’t prevent the truck from rolling
away . . . . were both the same thing, failure of the
pawl to drop properly between the teeth of the
ratchet wheel”; and
(5) “once Ford knew that pickup trucks could be
rolling down hills without drivers behind the wheel,
it was obvious that someone was likely to be killed
if Ford didn’t do something about it.”
Id. at 1010 (majority opinion).
However, a majority of the panel ultimately reversed the
punitive damages award because the district court’s instruc-
tions “unconstitutionally allowed a Nevada jury to punish
Ford for out-of-state conduct.” Id. at 1020. The majority held
that “the jury must be limited to punitive damages reasonably
required to vindicate Nevada’s legitimate interests in punish-
ment and deterrence, if any, and prohibited from imposing
punitive damages to protect people or punish harm outside of
Nevada.” Id. It therefore remanded for a new trial on punitive
damages without addressing whether the original or remitted
amount of punitive damages was unconstitutionally excessive.
See id. at 1016, 1020.
C. The Second Trial
In 2004, District Judge Hagen, who presided over the first
trial, conducted a retrial limited to the amount of punitive
WHITE v. FORD MOTOR CO. 11007
damages before a new jury. The district court did not inform
the second jury of the amount of the White’s compensatory
damages award, but rather told the jury that “[t]he original
jury found for the [Whites] and awarded damages to compen-
sate them for their injuries,” and that the Whites had “already
been compensated for the injuries they suffered.” It also
explained that Ford’s “liability for punitive damages has
already been established” and that “[t]he only remaining ques-
tion for the jury . . . to decide is the amount of punitive dam-
ages.”
After an eight-day trial, the jury awarded the Whites $52
million. The district court initially reduced the award to
$41,497,821 to account for the Whites’ comparative fault, but
subsequently reinstated the full award, concluding that under
Nevada law the Whites’ fault should not be considered. The
district court also concluded that the full $52 million award,
representing a 22.6 to 1 ratio of punitive to compensatory
damages, was constitutionally permissible.
Defendant Ford Motor Company appealed the second
jury’s award as a violation of the Due Process Clause of the
Fourteenth Amendment, and urged us to reverse for instruc-
tional and evidentiary errors. After we heard argument, the
Supreme Court decided Philip Morris USA v. Williams, 127
S. Ct. 1057 (2007), holding that states must provide assur-
ances that juries do not award punitive damages based in part
on a desire to punish defendants for harming nonparties. We
reheard argument to consider the implications of Williams.
II. Discussion
A. Harm to Nonparties Instruction
[1] The Due Process Clause “forbids a State to use a puni-
tive damages award to punish a defendant for injury that it
inflicts upon nonparties or those whom they directly repre-
sent, i.e., injury that it inflicts upon those who are, essentially,
11008 WHITE v. FORD MOTOR CO.
strangers to the litigation.” Williams, 127 S. Ct. at 1063. A
jury may consider evidence of actual harm to nonparties as
part of its reprehensibility determination, but may not “use a
punitive damages verdict to punish a defendant directly.” Id.
at 1064. Where there is a significant risk that jurors will mis-
apprehend the distinction, the court must upon request protect
against that risk by “avoid[ing] procedure that unnecessarily
deprives juries of proper legal guidance.” Id.During closing argument, counsel for the Whites told the
jury that by January 1999, Ford knew that 54 people had been
injured by “rollaways.” Counsel argued that Ford “decided to
do everything possible to avoid telling people the truth” about
the rollaway problem because “[t]hey know there are not less
than 54 people as of January of ’99 who were injured from a
rollaway . . . [a]nd they don’t ever want to have to be account-
able for that conduct.”
Concerned that the jury would punish Ford for the harm
suffered by other rollaway victims, counsel for Ford had
objected to the district court’s proposed jury instructions, and
requested an instruction that would prevent the jury from pun-
ishing “[Ford] in this case not just for the harm to these plain-
tiffs, but for harm to other plaintiffs, whether in state or out
of state.” Ford conceded that evidence of harm to other people
could be considered by the jury in assessing reprehensibility,
but argued that the jury could punish only “for the harm to
this plaintiff.” The district court refused such an instruction,
deciding that it was not required by existing precedent.
[2] Although we are sympathetic to the difficult task that
both district court judges and counsel face in maneuvering
through this ever-shifting area of the law, we are compelled
to reverse here and remand for a new trial in light of the inter-
vening precedent of Williams. As in Williams, there is a sig-
nificant risk that the jury, in arriving at its punitive damage
award, punished Ford for harm to nonparties. Absent a proper
limiting instruction, the jury could have mistakenly under-
WHITE v. FORD MOTOR CO. 11009
stood the Whites’ argument that Ford’s conduct injured 54
other people to justify not just a finding of reprehensibility,
but also to consider those other injuries in calculating the
amount of damages warranted to punish Ford’s reprehensible
conduct. Given Williams’ guidance, we must conclude that
the court’s failure to give a harm to nonparties instruction vio-
lated due process.
[3] The Whites argue that any constitutional error was
harmless because the district court gave an extraterritoriality
instruction, restricting jurors from “add[ing] damages to pro-
tect people or to punish harm to people outside of Nevada”
(emphasis added). We agree this limiting instruction mitigated
the problem. It did not render the error “more probably than
not harmless,” Swinton v. Potomac Corp., 270 F.3d 794, 805
(9th Cir. 2001), however, because the jury may have inter-
preted the extraterritoriality instruction as allowing damages
for harm to people residing inside Nevada.
There was no evidence linking any of the 54 nonparty vic-
tims to Nevada, but neither did the evidence establish that
none of the victims were Nevada residents. This gap in the
evidence was critical because the jury heard plaintiffs’ coun-
sel assert that Nevada residents purchased Ford truck models
affected by the rollaway problem in disproportionate num-
bers. Thus, jury members may have assumed that at least
some of the 54 nonparty victims lived in Nevada.
[4] To remedy the due process violation, we may either
remand for a new trial on punitive damages or “change . . .
the level of the punitive damages award.” Williams, 127 S. Ct.
at 1065. We conclude that a new trial on punitive damages is
the proper remedy. See Werbungs Und Commerz Union Aus-
talt v. Collectors’ Guild, Ltd., 930 F.2d 1021, 1027 (2d Cir.
1991) (holding that remittitur is not designed to compensate
for excessive verdicts in cases where jury is improperly
instructed). On remand, the district court must explain to the
jury that although evidence of harm to nonparties may bear on
11010 WHITE v. FORD MOTOR CO.
Ford’s reprehensibility, any award of punitive damages can-
not be used “to punish [Ford] directly for harms to . . . non-
parties.” Williams, 127 S. Ct. at 1064.8
B. Other Alleged Instructional and Evidentiary Errors
The remainder of Ford’s challenges can be divided into
three categories. First, Ford argues the district court errone-
ously refused to provide a “reasonable relationship” instruc-
tion and further failed to tell the jury the amount of
compensatory damages the first jury awarded to the Whites.
Second, Ford faults the district court’s opening jury instruc-
tions in several respects. Third, Ford argues the district court
erred by admitting into evidence a redacted, one-page version
of Ford’s December 21, 2003 consolidated balance sheet,
which Ford claims misrepresented the company’s financial
condition.
We review the district court’s formulation of jury instruc-
tions and its evidentiary rulings for abuse of discretion. See
Beachy v. Boise Cascade Corp., 191 F.3d 1010, 1012 (9th
Cir. 1999). We conclude that the district court abused its dis-
cretion by not telling the jury: (1) the amount awarded to the
Whites in compensatory damages; (2) that the first jury found
Ford’s brake defect did not proximately cause the accident;
and (3) that the Whites were 40 percent responsible for the
accident. We decline to decide whether the district court
abused its discretion by excluding Ford’s 2002-03 Financial
Statement and 2002 Annual Report, and we reject the remain-
der of Ford’s arguments.
8
The precise wording of the harm to nonparties instruction remains
within the informed discretion of the district court.
WHITE v. FORD MOTOR CO. 11011
1. Reasonable Relationship Instruction and
Compensatory Damages
[5] Reasonable relationship. We reject Ford’s argument
that due process requires the district court to instruct the jury
that any award of punitive damages must bear a reasonable
relationship to compensatory damages. See Hilao v. Estate of
Marcos, 103 F.3d 767, 781-82 (9th Cir. 1996) (holding that
procedural due process does not require the jury to be
instructed that “a reasonable relationship must exist between
the amounts of compensatory and exemplary damages”).
Ford’s argument that Hilao was implicitly overruled by State
Farm and Williams is not persuasive. In State Farm Mutual
Automobile Insurance Co. v. Campbell, 538 U.S. 408 (2003),
the Supreme Court held that “courts must ensure that the mea-
sure of punishment is both reasonable and proportionate to the
amount of harm to the plaintiff and the general damages
recovered.” Id. at 426. But nothing in State Farm precludes
courts from ensuring proportionality through a post-verdict
review, rather than with pre-verdict jury instructions.
[6] Similarly, Williams’ holding is inapposite in the context
of the reasonable relationship inquiry. Williams mandates that
juries receive proper instruction on harm to nonparties, an
instruction that is essential if the jury is to calculate the proper
amount of punitive damages. But the reasonable relationship
inquiry is markedly different from the jury’s determination of
a specific amount of punitive damages; its purpose is to aid
in ascertaining the constitutional ceiling. Unlike the initial
damage calculation, determining the constitutional ceiling on
a punitive damage award is a question of law, properly
reserved for the court. See Bains LLC v. Arco Prods. Co., 405
F.3d 764, 777 (9th Cir. 2005) (holding that “[t]he [constitu-
tional] level of punitive damages is not a finding of ‘fact’ that
must be determined by the jury; it may be determined de novo
by the court”). Although states are certainly free to incorpo-
rate the reasonable relationship concept into jury instructions,
see Morgan v. Woessner, 997 F.2d 1244, 1256-57 n.13 (9th
11012 WHITE v. FORD MOTOR CO.
Cir. 1993), it is also constitutionally permissible for a district
court to delay the reasonable relationship inquiry until the
judge’s post-verdict review. Nevada has taken the latter
course. See Bongiovi v. Sullivan, 138 P.3d 433, 452 (Nev.
2006) (adopting State Farm guideposts for post-verdict judi-
cial review for excessiveness under state law). Compare Nev.
J.I. 10.20, with Cal. BAJI 14.71 (including Nevada’s identi-
cally worded reprehensibility and deterrence factors but
adding a reasonable relationship factor).
[7] Compensatory damages. Although we hold that Ford
was not entitled to a reasonable relationship instruction under
either the Due Process Clause or Nevada law, we nevertheless
conclude that the amount of compensatory damages is rele-
vant to the amount of punitive damages. In accordance with
Nevada law, the jury was properly instructed to consider two
factors in determining the amount of punitive damages: “the
reprehensibility of the conduct of the defendant” and “the
amount of punitive damages which will have a deterrent
effect on the defendant in light of the defendant’s financial
condition.” Nev. J.I. 10.20. In a typical case, the same jury
would award both compensatory and punitive damages. Here,
because of this case’s unique procedural history, the jury
empaneled to award punitive damages was unfamiliar with
the original jury’s verdict and the amount of compensatory
damages it awarded. Without knowing the amount of those
damages, the punitive damages jury could not have come to
a reasoned conclusion as to the amount of additional damages
necessary to deter Ford from similar conduct in the future.
The district court’s withholding of that information was,
therefore, an abuse of discretion.
[8] On remand the district court must instruct the jury that
the Whites have been awarded $2,305,435 in compensation
for the death of their son. Consonant with Nevada law, the
district court in formulating its instruction should ensure that
the jury is not left with the erroneous impression that its puni-
tive damages award must be proportional to the compensatory
WHITE v. FORD MOTOR CO. 11013
award. With that caveat, we leave to the district court’s dis-
cretion the precise wording of the instruction, as well as the
decision of what information, if any, other than the bare
award amount must be provided to the jury.
2. Opening Jury Instructions
[9] Facts found by first jury. We reject Ford’s challenge to
statements made by the district court during its opening jury
instructions. The court did not abuse its discretion by telling
the jury to assume as true that: (1) Mr. White had put the
truck in gear and set the parking brake; (2) the brake failed to
hold; and (3) that Ford knew the parking brake was prone to
failure, but continued to sell it without recalling it or warning
customers. In White I, this court “assume[d] that the jury
believed Mr. White’s recollection” of the facts, including that
he engaged the parking brake and that it was prone to failure
but that Ford continued to use it. See White I, 312 F.3d at
1002; see also id. at 1008 (“If Mr. White’s testimony was cor-
rect, and we must assume that the jury so found . . . .”). In a
typical civil trial, a summary of facts would be unnecessary
because the same jury would decide both compensatory and
punitive damages. The district court’s decision to familiarize
the second jury with facts previously relied on, and implicitly
affirmed, by this court was not an abuse of discretion.
[10] Similarly, the district court did not abuse its discretion
by telling the jury that this court “upheld” the first jury’s lia-
bility findings. White I affirmed the first jury’s compensatory
and punitive liability determinations and remanded only on
the amount of punitive damages. See id. at 1006, 1012, 1020.
The district court did not abuse its discretion by reciting the
law of the case.
[11] Omissions from opening jury instructions. Ford also
challenges certain omissions from the court’s opening instruc-
tions. We agree with Ford that the district court should have
mentioned the previous jury’s finding that the brake defect
11014 WHITE v. FORD MOTOR CO.
did not proximately cause the accident. The punitive damages
award was supposed to be based only on Ford’s failure to
warn, given the first jury’s finding that the defect was not a
proximate cause of the accident. Of course, the jury needed to
know about the brake defect to understand why Ford’s failure
to warn caused the accident. As we explained in White I, Jim-
mie White “testified that, had he known that the brake could
let go despite being set, he wouldn’t have parked the truck on
a slope.” Id. at 1006. But by failing to inform the jury that the
defect was not the proximate cause of the accident, the jury
may not have been focused properly on the conduct actually
found culpable by the first jury. Accordingly, on remand, the
district court should inform the jury of the first jury’s finding
and instruct that punitive damages, if awarded, are to punish
the “reprehensibility of [Ford’s]” failure to warn. See Nev. J.I.
10.20.
[12] The district court also should have disclosed that the
Whites were found to be 40 percent responsible for the acci-
dent. To be sure, the overwhelming weight of authority sug-
gests that Ford cannot offer evidence of the Whites’
comparative negligence to offset the punitive damages award.
See Clark v. Cantrell, 504 S.E.2d 605, 610 n.5 (S.C. Ct. App.
1998) (reviewing 16 reported opinions and identifying only
one that allowed punitive damages to be reduced in accor-
dance with comparative fault). Nonetheless, Nevada law
required the jury to consider — in arriving at a punitive dam-
ages award — “the reprehensibility of [Ford’s] conduct,”
Nev. J.I. 10.20, and reprehensibility is judged in relation to
the conduct and actions of others, not merely by looking at
Ford’s conduct in the abstract. We assess blame for tortious
conduct in relation to other contributory causes. Likewise,
criminal acts may result in lesser punishments when the actor
is not wholly responsible for the harm. This is true even for
extremely blameworthy cases, such as capital defendants
being permitted to show mitigating circumstances caused by
others in order to reduce their punishments. See, e.g., Sum-
merlin v. Schriro, 427 F.3d 623, 642 (9th Cir. 2005) (en
WHITE v. FORD MOTOR CO. 11015
banc). Thus, in determining punitive damages, the jury should
be able to consider Ford’s level of responsibility, as it bears
directly on “the reprehensibility of [its] conduct.” Nev. J.I.
10.20. The district court should therefore instruct the jury that
Ford was only 60 percent responsible for the accident, and
plaintiffs bore the remaining 40 percent of the blame.
3. Evidence of Ford’s Financial Condition
To help the jury in imposing an appropriate punitive award,
the district court admitted into evidence a redacted, one-page
version of Ford’s 2003 consolidated balance sheet, which
revealed Ford’s “[t]otal stockholders’ equity,” or net worth, to
be $11,651,000,000.9 Ford raises a variety of objections to the
district court’s admission of this financial document.
[13] First, Ford argues that the district court erred by admit-
ting the balance sheet at all because such evidence is irrele-
vant to the setting of a punitive damages award. See Fed. R.
Evid. 402. But under Nevada law, a defendant’s wealth is rel-
evant to a jury’s determination of punitive damages. In Dil-
lard Department Stores, Inc. v. Beckwith, 989 P.2d 882 (Nev.
1999), the Nevada Supreme Court noted its consistent recog-
nition that “[t]he wealth of a defendant is directly relevant to
the size of [a punitive damages] award, which is meant to
deter the defendant from repeating his misconduct as well as
punish him for his past behavior.” Id. at 887 (quoting Ains-
worth v. Combined Ins. Co., 763 P.2d 673, 677 (Nev. 1988));
see also United Fire Ins. Co. v. McClelland, 780 P.2d 193,
199 (Nev. 1989) (recognizing “the financial position of the
defendant” as a factor in assessing a punitive damages award).
To that end, the Nevada pattern jury instructions expressly
require that “[i]n arriving at any award of punitive damages,”
the jury consider “the amount of punitive damages which will
9
Like net worth, stockholders’ equity is calculated as the difference
between a business entity’s assets and its liabilities. See Black’s Law Dic-
tionary 1138, 1639 (8th ed. 2004).
11016 WHITE v. FORD MOTOR CO.
have a deterrent effect on the defendant in light of the defen-
dant’s financial condition.” Nev. J.I. 10.20 (emphasis added).
[14] Nevada law on this matter is consistent with the
Supreme Court’s and this circuit’s longstanding recognition
of the admissibility of net worth evidence.10 See TXO Prod.
Corp. v. Alliance Res. Corp., 509 U.S. 443, 462 n.28 (1993)
(noting that it is “well-settled” that a defendant’s “net worth”
is a factor that is “typically considered in assessing punitive
damages”); Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1,
21-22 (1991) (approving, among other factors used to deter-
mine a punitive damage award, the “financial position” of the
defendant); Bains, 405 F.3d at 777 (“A punitive damages
award is supposed to sting so as to deter a defendant’s repre-
hensible conduct, and juries have traditionally been permitted
to consider a defendant’s assets in determining an award that
will carry the right degree of sting.”). Thus, Ford’s argument
that evidence of a defendant’s financial condition is irrelevant
to the setting of a punitive damages award is meritless.
[15] Second, Ford argues that even if evidence of financial
condition is relevant, the district court violated Federal Rule
of Evidence 403 because the consolidated balance sheet’s pro-
10
In State Farm Mutual Automobile Insurance Co. v. Campbell, the
Utah Supreme Court sought to justify an excessive punitive damages
award on, inter alia, the defendant’s “enormous wealth.” 538 U.S. at 426.
The Supreme Court explained that “[t]he wealth of a defendant cannot jus-
tify an otherwise unconstitutional punitive damages award.” Id. at 427(emphasis added). However, we are concerned here with an altogether dif-
ferent question, namely whether a jury can consider a defendant’s finan-
cial condition when determining an appropriate punitive damages award.
As is clear from State Farm itself, the jury’s use of wealth in imposing
punitive damages is both lawful and appropriate. Id. at 427-28 (“[Wealth]
provides an open-ended basis for inflating awards when the defendant is
wealthy . . . . That does not make its use unlawful or inappropriate; it sim-
ply means that this factor cannot make up for the failure of other factors,
such as ‘reprehensibility,’ to constrain significantly an award that purports
to punish a defendant’s conduct.” (emphasis added) (quoting BMW of N.
Am., Inc. v. Gore, 517 U.S. 559, 591 (1996) (Breyer, J. concurring))).
WHITE v. FORD MOTOR CO. 11017
bative value was substantially outweighed by the danger of
unfair prejudice. Reviewing the district court’s decision to
admit the balance sheet for an abuse of discretion, see United
States v. Allen, 341 F.3d 870, 886 (9th Cir. 2003), we con-
clude that admission of the 2003 balance sheet was proper
because the evidence was not unfairly prejudicial. Unfair prej-
udice means “an undue tendency to suggest decision on an
improper basis, commonly, though not necessarily, an emo-
tional one.” Fed. R. Evid. 403, advisory committee’s note.
Because evidence of Ford’s financial condition was probative
and a proper factor in the jury’s analysis, any “prejudice”
experienced by Ford was not “unfair” as that term is used in
Rule 403. See United States v. Bailleaux, 685 F.2d 1105, 1111
n.2 (9th Cir. 1982) (“ ‘[U]nfair prejudice’ means that the evi-
dence not only has a significant impact on the defendant’s
case . . . but that its admission results in some unfairness to
the defendant because of its non-probative aspect.”).
Third, Ford argues that even if the district court properly
admitted the consolidated balance sheet, it should also have
allowed the jury to consider the company’s full 2002-03
Financial Statement and 2002 Annual Report. Ford also chal-
lenges the court’s denial of Ford’s request to argue to the jury
its interpretation of the figures within those documents. Ford
suggests that its financial statement and annual report had to
be admitted also, so that it could argue to the jury that its net
worth was due to factors unrelated to F-series pickup trucks.
Apparently, Ford believes that a defendant’s net worth is rele-
vant only insofar as it is derived from the defendant’s wrong-
doing. This “disgorgement” theory of punitive damages
misunderstands the relevance of net worth. Determining what
amount of punitive damages will “sting” the defendant
requires consideration of its total wealth, not merely wealth
derived from wrongdoing. Nonetheless, because we are
reversing and remanding for a new trial on punitive damages,
we decline to decide whether the district court abused its dis-
cretion by excluding the financial statement and annual
report. The district court should have another opportunity to
11018 WHITE v. FORD MOTOR CO.
determine on remand, and within the context of the new trial
as it develops, whether to admit — subject to normal evidenti-
ary rules such as relevance, hearsay and cumulativeness —
additional documents that might shed light on Ford’s financial
condition.
III. Conclusion
[16] We reverse for a new trial on punitive damages so that
the district court can provide a proper harm to nonparties jury
instruction, and instruct the jury that the Whites received
$2,305,435 in compensatory damages, that Ford’s brake
defect did not proximately cause the accident and that the
Whites were found to be 40 percent responsible for the acci-
dent. Accordingly, we do not address whether the jury’s $52
million award was constitutionally excessive. See White I, 312
F.3d at 1020.
The district court’s judgment is REVERSED and
REMANDED for a new trial on punitive damages. Each party
shall bear its own costs on appeal.
REVERSED and REMANDED.