Caballero

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
Leo Caballero individually, and as :
Co-representative of the Estate of Pedro :
Jaciel Caballero (deceased), and as :
Co-Representative of the Estate of Emilia Vales :
(deceased); Yolanda Elizabeth Medrano Villa, :
individually, and as Co-Representative of the :
Estate of Pedro Jaciel Caballero (deceased); Cesar :
Caballero individually, and as Representative of the :
Estates of Cesar Isaac Caballero (deceased) and :
Luz Lizeth Galvan (deceased), and as :
Co-Representative of the Estate of Emilia Vales :
(deceased); Osmar Caballero individually, and :
Solidad Avila, individually and as :
Co-Representative of the Estate of Salma :
Guadalupe Caballero (deceased), :
:
Plaintiffs, :
:
v. : C.A. No. N11C-09-170 JRJ
:
Ford Motor Company, Michelin Americas :
Research & Development, Michelin NA, Inc., and :
Michelin France, :
:
Defendants. :
OPINION
Upon Defendant Ford Motor Company’s Motion for Partial Summary
Judgment:
GRANTED
Submitted: December 6, 2013
Decided: June 24, 2014
Timothy E. Lengkeek, Esquire, Young Conaway Stargatt & Taylor, LLP, 1000
West Street, 17th Floor, Wilmington, DE; Richard L. Denney, Esquire, Denney &
Barrett, P.C., 870 Cooperfield Drive, Norman, OK 73072; Attorneys for Plaintiffs.
Christian J. Singewald, Esquire, Timothy S. Martin, Esquire, White & Williams,
LLP, 824 North Market Street, Suite 902, Wilmington, DE; Attorneys for
Defendant Ford Motor Company.
JURDEN, J.
2
I. INTRODUCTION
Before the Court is defendant Ford Motor Company’s (“Defendant”) Motion
for Partial Summary Judgment on the plaintiffs’ (“Plaintiffs”) punitive damages
claim, filed on August 30, 2013.1 For the reasons explained below, Defendant’s
motion is GRANTED.
II. FACTUAL AND PROCEDURAL CONTEXT
This lawsuit arises from a single-vehicle accident that occurred on May 3,
2010, on a Federal Mexican highway (“Highway 40”) in the State of Durango,
Mexico. 2 Plaintiff Leo Caballero (“Leo”) was the driver of the 2000 Ford Explorer
(“Explorer”) involved in the accident.3 The driver’s side rear tire allegedly suffered
a tread separation which caused Leo to lose control of the vehicle. 4 As a result, the
Explorer rolled over numerous times, allegedly causing the seat-belts to fail and
the roof of the vehicle to crush the other occupants inside the vehicle.5 Plaintiffs
Leo and Cesar Ivan Caballero (“Cesar”) were injured, but survived the accident,
however, Salma Caballero (“Salma”), Emilia Vallez (“Emilia”), Luz Lizeth Galvan
1
Def. Ford Motor Co.’s Mot. for Partial Summ. J. on Pls.’ Punitive Damages Claim (“Def.’s
Mot.”) (Trans. Id. 53975790). Plaintiffs are Leo Caballero, individually, and as co-
representative of the Estate of Pedro Jaciel Caballero and as Co-Representative of the Estate of
Emilia Vales; Yolanda Elizabeth Medrano Villa, individually, and as co-representative of the
Estate of Pedro Jaciel Caballero; Cesar Caballero, individually, and as Representative of the
Estates of Cesar Isaac Caballero and Luz Lizeth Galvan, and as co-representative of the Estate of
Emilia Vales; Osmar Caballero, individually; and Solidad Avila, individually, and as co-
representative of the Estate of Salma Guadalupe Caballero.
2
Def.’s Mot. 2.
3
Id.
4
Compl. ¶ 5.
5
Id..
3
(“Luz”), Cesar Isaac Caballero (“Cesar Isaac”), and Pedro Jaciel Caballero
(“Pedro”) (collectively “Decedents”) did not survive.
Plaintiffs are Mexican citizens, but do not reside in the State of Durango.6
The Explorer was sold to its first owner in Missouri, and Leo purchased it in
Kansas.7 Defendant is a Delaware corporation, with its principal place of business
in Dearborn, Michigan. 8 Defendant manufactured the Explorer involved in the
accident.9
Plaintiffs assert claims of negligence, strict liability, and post-sale failure to
warn, 10 and seek punitive damages with respect to Defendant’s allegedly defective
design and marketing of the Explorer.11 Defendant contends that Plaintiffs are not
entitled to punitive damages because the issue of punitive damages is governed by
Michigan law, and Michigan law does not recognize punitive damages. 12 In the
alternative, Defendant contends that Mexican law (State of Durango) is applicable
to Plaintiffs’ punitive damages claim. 13 According to Defendant, the vehicle in
question was primarily designed and developed in Michigan, the significant
decisions concerning its design and development occurred in Michigan, and the
6
Pls.’ S. Br. 13.
7
Pls.’ Resp. 2-3.
8
Compl. ¶ 3.
9
Id. ¶¶ 10-31.
10
Id. ¶¶ 36-40.
11
Def.’s S. Br. 1-7.
12
Id. 9.
13
Id.
4
primary decisions regarding testing and the manufacturing process of the vehicle
also occurred in Michigan.14
In response, Plaintiffs assert that [t]he overwhelming majority of vehicles
[that] Defendant designs and manufactures are sold outside . . . of Michigan.15
Plaintiffs maintain that both Delaware and Missouri have a significant interest in
this dispute: Delaware, because it is Defendant’s state of incorporation and
because Defendant does business in the state; Missouri, because it is where the
Explorer was manufactured and where it was placed “in the stream of
commerce.” 16
III. DISCUSSION
Pursuant to “general conflict of laws principles, the forum court will apply
its own conflict of law rules to determine the governing law in a case.” 17 Delaware
courts conduct a two-part inquiry to determine the applicable law. 18 First, the
Court determines if there is an actual conflict. 19 “In determining whether there is
an actual conflict, Delaware state courts . . . answer a single and simple query: does
14
Def.’s Mot., Aff. of William Ballard, Exh. D ¶¶ 5-8.
15
See Pls.’ Resp. 2.
16
Pls.’ Resp. to Def.’s S. Br. 2.
17
Pallano v. AES Corp., 2011 WL 2803365, at *8 (Del. Super. July 15, 2011) (citing Lumb v.
Cooper, 266 A.2d 196 (Del. Super. 1970)).
18
Laugelle v. Bell Helicopter Textron, Inc., 2013 WL 5460164, at *2 (Del. Super. Oct. 1, 2013).
19
Id.; see Deuley v. DynCorp. Int’l, 8 A.3d 1156, 1161 (Del. 2010).
5
application of the competing laws yield the same result?” 20 In the event of an
actual conflict of law, Delaware courts apply the most significant relationship test
from Section 145 (“Section 145”) of the Restatement (Second) Conflict of Laws
(“Restatement”).21
“Choice-of-law determinations must be made as to each issue when
presented, not to the case as a whole.” 22 Plaintiffs argue that Delaware law, or in
the alternative, the law of the state where the relevant conduct occurred (Michigan
law for design issues; Missouri law for manufacturing and marketing issues)
should apply. 23 Defendant contends Michigan law, or in the alternative, Mexican
law (State of Durango) is applicable.24
The Court finds that an actual conflict exists between Delaware law and
Michigan law on the issue of punitive damages. It is undisputed that applying
Delaware law or Michigan law to Plaintiffs’ punitive damages claim will not yield
the same results. While Michigan allows for the imposition of “exemplary
20
Laugelle, 2013 WL 5460164, at *2.
21
Travelers Indem. Co. v. Lake, 594 A.2d 38, 46-47 (Del. 1991). The Restatement reads: “The
rights and liabilities of the parties with respect to an issue in tort are determined by the local law
of the state which, with respect to that issue, has the most significant relationship to the
occurrence and the parties under the principles stated in § 6.” Restatement (Second) of Conflicts
of Law § 145(1) (1971).
22
Laugelle, 2013 WL 5460164, at *3; ( citing Restatement (Second) of Conflicts of Law §
145(1) (1971)).
23
Pls.’ S. Br. 1-2.
24
Def.’s S. Br. 1.
6
damages ,” 25 “[i]t is well established that generally only compensatory damages
are available in Michigan and that punitive sanctions may not be imposed.” 26 In
contrast, Delaware law permits the imposition of punitive damages. 27
Because there is an actual conflict of law, the Court must consider the
second part of the choice of law analysis. “Pursuant to Section 145 of the
Restatement (Second) of Conflict of Laws, the local law of the state which ‘has the
most significant relationship to the occurrence and the parties under the principles
stated in Section 6 will govern the rights of litigants in a tort suit.” 28
The Court considers the following factors listed in Section 145 when
determining the law applicable to an issue:
(1) the place where the injury occurred;
(2) the place where the conduct causing the injury occurred;
(3) the domicil, residence, nationality, place of incorporation
and place of business of the parties; and
(4) the place where the relationship, if any, between the
parties is centered. 29
25
Ray v. City of Detroit, 242 N.W. 2d 494, 495 (Mich. Ct. App. 1976) (“[I]n Michigan,
exemplary damages which are compensatory in nature are allowable. [Exemplary damages] are
never allowed for the purpose of punishing or making an example of a defendant).
26
McAuley v. Gen. Motors Corp., 578 N.W. 2d 282, 285 (Mich. 1998).
27
Porter v. Turner, 954 A.2d 308, (Del. 2008) (citing Cloroben Chem. Corp. v. Comegys, 464
A.2d 887, 891 (Del. 1983).
28
Travelers, 594 A.2d at 47 (quoting Restatement (Second) of Conflict of Laws § 145(2)
(1971)).
29
Restatement (Second) of Conflicts of Laws § 145(2) (1971).
7
It is not a matter of “simply add[ing] up the interests of the jurisdictions and
apply[ing] the law of the jurisdiction with the most contacts.”30 Rather, the Court
evaluates these contacts “according to their relative importance with respect to the
particular issue.”31 The contacts listed in Section 145 must be weighed in light of
the following policy considerations, as set forth in Section 6 of the Restatement
(“Section 6”):
(1) the needs of the interstate and international systems;
(2) the relevant policies of the forum;
(3) the relevant policies of other interested states and the
relative interests of those states in the determination of
the particular issue;
(4) the protection of justified expectations;
(5) the basic policies underlying the particular field of law;
(6) certainty, predictability and uniformity of result; and
(7) ease in the determination and application of the law to be
applied. 32
The Restatement (“Section 146”) directs the Court to apply the law of the
state where the injury occurred in a personal injury action, unless “some other state
has a more significant relationship under the principles stated in [Section] 6 to the
30
Peña v. Cooper Tire & Rubber Co., 2010 WL 1511709, at *2 (Del. Super. Apr. 15, 2010).
31
Restatement (Second) of Conflict of Laws § 145 (1971).
32
Id. § 6.
8
occurrence and the parties, in which event the local law of the other state will be
applied.” 33
A. Michigan Law is Applicable to Plaintiffs’ Punitive Damages Claim
1. Restatement Section 145 Analysis
“The most significant relationship test is a flexible one and requires each
case to be decided on its own facts.”34 Mexico is the place of injury. The alleged
misconduct occurred in Michigan. Plaintiffs are Mexican nationals residing
outside of the State of Durango. Defendant is Delaware corporation with its
principle place of business in Michigan. The Court finds that Michigan has the
most significant relationship to the occurrence.
i. Place of Injury
“Although the ‘place of injury’ factor is often determinative of the most
significant relationship, this is not the case when the injury in question is
fortuitous.”35 “The place of injury is considered to be fortuitous when there is no
other significant contact with the site other than the injury itself.” 36 When the
33
Id. § 146; see Rasmussen v. Uniroyal Goodrich Tire Co., 1995 WL 945556, at *2 (Del. Super.
Apr. 18, 1995).
34
Peña, 2010 WL 1511709, at *1 (quoting Travelers, 594 A.2d at 48).
35
Cervantes v. Bridgestone/Firestone N.A. Tire Co., 2010 WL 431788, at *2 (Del. Super. Aug.
14, 2008) (citing Restatement (Second) Conflict of Laws § 145, cmt. e (1971)).
36
Id. (citing Thompson v. Reinco, 2004 WL 1426971, at *1); cf. Ortega v. Yokohama Corp.
N.Am., 2010 WL 1534044, at *2 (Del. Super. Mar. 31, 2010) (finding the place of injury was
fortuitous when the only connection to the Mexican State of Michoacán was that the accident
occurred there); Peña, 2010 WL 1511709, at *2 (finding that the place of injury, Chihuahua,
Mexico, was not fortuitous because the plaintiffs resided there).
9
location of the injury bears little relation to the occurrence or the parties, that factor
becomes less persuasive when selecting the applicable law.”37 Generally, the law
of “the state whose interests are most deeply affected” 38 should be applied.39
Durango was the site of the accident, but that is its sole connection to this
case. The Plaintiffs neither reside in Durango, nor allege that any of Defendant’s
culpable conduct occurred there. The place of injury is fortuitous.
ii. Place where the Conduct that Caused the Injury Occurred
“Punitive damages are intended to serve a dual purpose –to punish the
wrongdoer for his outrageous conduct and to deter him and others from similar
conduct.” 40 Choice of law considerations generally favor applying the law of the
state where the conduct that caused the injury occurred for punitive damages and
the law of the state where the injury occurred for compensatory damages. 41
Plaintiffs allege that Defendant concealed defects and misled the public about
the Explorer’s safety through, inter alia, its design, marketing, advertising, and
management decisions.42 Most, if not all, of the alleged misconduct would have
occurred at Defendant’s headquarters and principal place of business in
37
Cervantes, 2010 WL 43188, at *2 (citing Rasmussen, 1995 WL 945556).
38
Id.39
Restatement (Second) of Conflict of Laws § 6, cmt. f (1971).
40
Strauss v. Biggs, 525 A.2d 992, 1000 (Del. 1987).
41
See Restatement (Second) of Conflict of Laws § 145, cmt. c-e (“[W]hen the primary purpose
of the tort rule involved is to deter or punish misconduct, the place where the conduct occurred
has peculiar significance.”).
42
Compl. at ¶¶ 37-39.
10
Michigan. 43 According to Plaintiffs, when Defendant’s engineers recommended
making the Explorer more resistant to rollover, Defendant’s “management rejected
the recommendations because they would have caused a postponement of the
production date.”44 Additionally, Plaintiffs contend that the “decisions of
[Defendant’s] management at all times material to the design and manufacture of
the Explorer in this case demonstrate a pattern of favoring profit . . . despite
knowledge of both a deadly rollover defect and [the availability of] a simple [and]
relative[ly] inexpensive way to fix it”45
Although Michigan, Delaware, Missouri, and the Mexican State of Durango
may have a significant interest in this case, the majority of the alleged misconduct
occurred in Michigan. The Explorer was designed in Michigan and, as Plaintiffs
themselves point out, Defendant’s management in Michigan made the decisions
regarding the manufacture, development, and testing of the Explorer. These
decisions clearly would have been made at the place of “ultimate decision-making”
– Defendant’s headquarters and principal place of business in Dearborn, Michigan.
In Ortega v. Yokohama Corp. of North America, this Court found that Virginia
had the most significant relationship to the occurrence where the place of injury
43
See Cervantes, 2008 WL 3522442, at *1 (“If this misconduct [failure to warn consumer of
allegedly known dangers] is determined to have occurred, it is certain that it would have
occurred primarily at Ford’s Michigan Headquarters . . . [s]ince the allegations of misconduct
focus on the design and not [the] fabrication of the vehicle in questions, Michigan law must be
applied with respect to punitive damages.”).
44
Pls.’ Resp., App. at 5.
45
Id. at 6 (emphasis added).
11
was fortuitous and where the tire at issue was designed and manufactured in
Virginia.46 Similarly, in Artega v. Bell Helicopter Textron, Inc., this Court recently
held that regardless of the fact that the defendant was a Delaware corporation,
Texas had the most significant relationship to the issues, in large part, because the
relevant part was designed, manufactured, and tested in Texas. 47
iii. Domicile, Residence, Nationality, Place of Incorporation, and
Place of Business of the Parties
Defendant is a global company that operates in many states within the United
States. It is not uncommon for a global corporation to be incorporated in Delaware
and have its principal place of business in another state. While the place of
incorporation is a factor in determining the most significant relationship, a
corporation’s principal place of business is a more significant contact. 48 While
Delaware is Defendant’s state of incorporation and Defendant does significant
business here,49 it is Michigan, the location of Defendant’s principal place of
business and world headquarters, that has an interest in preventing misconduct
46
2010 WL 1534044, at *3-4.
47
Artega v. Bell Helicopter Textron, Inc., C.A. No. N12C-05-008 at 11-12 (Del. Super. June 10,
2014).
48
See Restatement (Second) of Conflict of Laws § 145, cmt. e (1971) (“At least with respect to
most issues, a corporation’s principal place of business is a more important contact than the place
of incorporation, and this is particularly true in situations where the corporation does little, or no,
business in the latter place.”).
49
See Ford Motor Co. v. Dir. of Revenue, 2008 WL 2058522, at *1 (Del. Super. Apr. 25, 2008)
(“From January 1999 until October 2002, Ford sold vehicles to automotive dealers in Delaware
with a wholesale value of $727,440,438”).
12
occurring in the state, and in determining the nature of the punishment it will
impose on corporations within its borders. 50
iv. The Place where the Relationship Between the Parties is Centered
To the extent the relationship between the parties in this case can be said to
have been centered anywhere, it is centered in Michigan. The vehicle was
designed in Michigan and manufactured and sold to the first buyer in Missouri,
purchased by Leo in Kansas and then exported to Mexico, where the accident
occurred. Because most of the alleged wrongful conduct regarding the Explorer
occurred in Michigan, the Court finds that the parties’ relationship is centered in
Michigan.
2. Restatement § 6 Policy Considerations
After weighing each of the aforementioned contacts in light of the principles
set forth in Section 6 of the Restatement, the Court finds that Michigan has the
most significant relationship with respect to the issue of punitive damages in this
case. “In determining a question of choice of law, the forum should give
consideration not only to its own relevant policies . . . but also to the relevant
policies of all other interested states.” 51
50
See Aguirre Cruz v. Ford Motor Co., 435 F.Supp.2d at 701, 707-08 (finding that the most
significant relationship on the issue of punitive damages was Michigan, where Ford, the
defendant in the case, had its principle place of business and the alleged misconduct would have
occurred.).
51
Restatement (Second) of Conflict of Laws § 6, cmt. f. (1971).
13
Here, Delaware is the forum state and is an interested state, because it is the
Defendant’s place of incorporation. Delaware has a legitimate interest in
governing the rights of those corporations that have chosen to avail itself of the
laws of the State.52 In Delaware, an assessment of punitive damages implicates
other societal policies, it is not aimed at correcting private wrongs. 53 An award of
punitive damages is gratuitous and must subsist on grounds other than making the
plaintiff “whole.”54
Michigan is an interested state because it is where the Defendant’s principal
place of business is located and where the management decisions were made with
regard to the Explorer’s design. The relative interests of Michigan and Delaware
are in conflict with regard to punitive damages. Delaware’s interest in this case is
mainly dependent on it being the state of incorporation, which, at least in this case,
is not as relevant in a choice of law analysis when compared to the place of
conduct and principal place of business. 55
52
See In re Topps Co. S’holders Litigation, 924 A.2d 951, 958 (Del. Ch. May 5, 2007) (“As the
United States Supreme Court, the Delaware Supreme Court . . . all recognize, a state has a
compelling interest in ensuring the consistent interpretation and enforcement of its corporation
law”).
53
Jardel Co. v. Hughes, 523 A.2d 518, 528 (Del. 1987).
54
Id.55
See Restatement (Second) of Conflict of Laws § 145, cmt. e (1971) (“At least with respect to
most issues, a corporation’s principal place of business is a more important contact than the place
of incorporation, and this is particularly true in situations where the corporation does little, or no,
business in the latter place.”).
14
Michigan’s interest is the most deeply affected. “Michigan has a
predominant interest in protecting the financial integrity of corporations who
conduct substantial business within its borders,”56 and by not imposing punitive
damages, “hopes to promote corporate migration to Michigan [b]y insulating those
companies.”57 “If Michigan did not provide such protection to corporations, such
corporations, [like Defendant], might refuse to locate and conduct any business in
their state.”58
Applying Michigan law rather than Delaware law will foster “certainty,
predictability, and uniformity of result” 59 in the determination of the law to be
applied. In Cervantes v. Bridgestone/Firestone North American Tire Co.,60 the
defendant similarly sought to have Michigan law applied with regard to plaintiff’s
claim for punitive damages. The Court held that “since the allegations of
misconduct focus on the design and not [the] fabrication of the vehicle in question,
Michigan law must be applied with respect to punitive damages.” 61
Michigan has the most significant interest in applying its law regarding
punitive damages; therefore, Michigan law will govern the issue of punitive
damages in this case. Because Michigan law does not provide for punitive
56
Aguirre Cruz, 435 F.Supp.2d at 705.
57
Id.
58
Kelly, 933 F.Supp at 471; see also Martinez v. E.I. DuPont de Nemours & Co., Inc., 82 A.3d 1(Del. 2012).
59
Restatement (Second) of Conflict of Laws § 6(2)(f) (1971).
60
2008 WL 3522442, at *1.
61
Id.15
damages, 62 Defendant’s Motion for Partial Summary Judgment on this issue is
GRANTED.
IV. CONCLUSION
For the foregoing reasons, Defendant’s Motion for Partial Summary
Judgment is GRANTED; Plaintiffs’ claim for punitive damages is DISMISSED.
IT IS SO ORDERED.
Jan R. Jurden, Judge
62
McAuley, 578 N.W.2d at 285.
16