On July 29, 2006 a De Havilland DHC-6 Twin Otter departed the Sullivan, Missouri Regional Airport on a local skydiving flight. Shortly after liftoff the right engine failed, the aircraft lost altitude, and crashed about ½ mile beyond the end of the runway. All on board died.
The National Transportation Safety Board (NTSB) found that the right engine turbine blades failed but could not determine the cause of the failure. [The facts stated are taken from the NTSB Aircraft Accident Summary Report, NTSB/AAR-08/03/SUM PB2008-910403, Notation 8040, adopted September 16, 2008 (the “Report”).] The turbine blades were manufactured by Doncasters, Inc. and were approved by the Federal Aviation Agency (FAA). The NTSB found that the pilot’s decision to use only 1,700 feet of the 4,500 foot runway prevented an emergency landing on the runway and that the pilot’s improper single-engine technique precluded a safe return to the airport. It determined that the probable cause of the accident was pilot error and resulting loss of control after the right engine failed.
The personal representatives of the decedents filed suit against Doncasters based on strict products liability. Plaintiffs offered expert opinion that Doncasters’ turbine blades were defective and unreasonably dangerous because they used materials different from those specified by Pratt & Whitney Canada (PWC), the engine manufacturer. Plaintiffs’ metallurgical expert opined that a coating used by Doncasters facilitated oxidation of the underlying metal alloy, which he contended was more prone to high temperature oxidation than the alloy specified by PWC, and resulted in cracks and blade failure. The jury returned a verdict for $20 million in compensative damages and a $28 million punitive award. The trial Court sustained Doncasters’ post-trial motion for JNOV on the punitive award, holding that Plaintiffs lacked clear and convincing evidence that Doncasters had actual knowledge of the defect upon which compensatory damages were based. On appeal and rehearing en banc, the Court of Appeals reinstated the punitive award, with three Judges dissenting. The Missouri Supreme Court denied transfer.
To recover punitive damages in a Missouri strict products case plaintiff must present clear and convincing evidence that the defendant “placed in commerce an unreasonably dangerous product with actual knowledge of the product’s defect, and that by doing so, the defendant showed a complete indifference to or conscious disregard for the safety of others.” Delacroix, 407 S.W.3d at 39 – 40. In Delacroix, plaintiffs offered evidence that Doncasters’ design failed two 150 hour endurance tests required for FAA certification. (The PWC design also failed such a test). Plaintiffs also elicited testimony from their experts that Doncasters “had actual knowledgethat these particular blades were not fit for the particular use intended,” that it had “actual knowledge that those parts were in a defective condition prior to their being manufactured,” and that Doncasters “had actual knowledge of the defective condition.” 407 S.W.3d at 41 (emphasis in original). Plaintiffs’ experts further testified that using the “defective” materials constituted “reckless disregard for the safety of persons using those parts.” The Delacroix majority held the expert testimony sufficient to satisfy both the “actual knowledge” and “conscious indifference” tests. 407 S.W.3d at 42 – 43.
The dissent asserted that “Plaintiffs’ strongest evidence is not clear and convincing evidence of Doncasters’ actual knowledge of the specific defect supporting the compensatory award, namely the alloy and the coating material.” 407 S.W.3d at 48. It pointed out that the tests relied on by Plaintiffs’ experts proved no shortcoming in Doncasters’ alloy or coating, and that Plaintiffs’ experts offered only conclusory speculation, rather than factual evidence, on the key issue of Doncasters’ knowledge of the “defect:”
“ . . . in reality, the experts were either speculating on Doncasters’ state of mind, which is improper and impermissible (but presented here without objection) or opining as to what Doncasters should have known, based on the tests, which didn’t identify a specific defect.”
407 S.W.3d at 49 – 50 (emphasis in original).
Delacroix shows that the Missouri standards for “clear and convincing evidence” and “actual knowledge” of an alleged defect to support punitive damages are quite liberal, and underscores the importance of protecting the record by timely objection to improper testimony on crucial issues.