Sand Hill Energy, Inc. v. Ford Motor Co.

83 S.W.3d 483, 2002 Ky. LEXIS 101, 2002 WL 1000917

• Court: Kentucky Supreme Court
• Decided: May 16, 2002
• Docket: 1999-SC-1028-DG, 1999-SC-1029-DG, 2000-SC-0444-DG
• Status: Published

Opinions

LAMBERT, Chief Justice.

Upon a jury verdict in a products liability action claiming wrongful death, the Estate of Tommy Smith (“the Estate”) recovered judgment against Ford Motor Company (“Ford”) for three million dollars in compensatory damages and twenty million dollars in punitive damages. The Court of Appeals of Kentucky reversed the judgment on grounds of misallocation of peremptory challenges and ordered a new trial. It did not reach the other issues raised on appeal. We granted discretionary review to the Estate on the issue decided by the Court of Appeals. We also granted Ford’s cross-motion for discretionary review to consider the issues it raised on appeal. Sand Hill Energy is likewise before this Court for review of the trial court’s directed verdict, affirmed sub silentio, rendered against it.

At the time of his death in 1993 at age thirty, the decedent was working for Sand Hill Energy, Inc., and in the process of unloading bags of ammonium nitrate from a 1977 F-250 Ford pickup truck. The vehicle was parked on a 4% downhill grade, with the motor running and the transmission set in park. While the decedent was behind the vehicle, the transmission “migrated” from park to reverse, and the vehicle moved backwards and up the incline. Smith was slowly crushed to death against a storage shed. He was survived by his widow, Brenda Smith, and their child.

At trial, the Estate presented evidence that the Ford C-6 transmission was defectively designed by virtue of a propensity to migrate from mispositioned false park to powered reverse due to engine vibration. There was evidence that Ford had known of the propensity of the C-6 transmission for such migration for several years prior to the manufacture of the 1977 model F-250 pickup truck involved here. Ford documents bearing 1971 and 1972 dates established that Ford had received numerous customer complaints about its vehicles containing C-6 transmissions that were said to have “jumped out of park into reverse.” ¹ Other Ford documents reveal its understanding that the shift lever detent design “permits transmission lever placement on a ‘land’ between a positive park position and reverse position with the possibility of vehicle vibration moving the lever from park to reverse in an unattended vehicle.”² These documents establish the existence of a design flaw and that Ford had knowledge of it long before the vehicle involved here was manufactured.

Ford defended on grounds that the vehicle, sixteen years old and with at least 143,000 miles at the time of the accident, was in deplorable condition. Ford contended that crucial mechanical parts were broken, misaligned, worn or loose, and that other crucial parts had been replaced with makeshift parts. It maintained that the engine and transmission had been entirely rebuilt, that there was internal and external leakage of brake fluid, and concluded that dirt, debris, and corrosion were the likely cause of the accident. Among other things, Ford produced evidence that in post-accident testing by the U.S. Mine Safety and Health Administration, when the vehicle had been placed undeniably in the park latch position, it still migrated to powered reverse on numerous occasions. On the other hand, Ford verified that if a driver shifted the transmission more than 40%, but less than 60%, of the way from reverse to park, i.e., between the reverse valley and the park valley, the transmission would then be in hydraulic neutral and might move into powered reverse due to vibration forces from the engine. It conditioned this admission upon the claim that such a design was common throughout the industry and represented the state of the art at that time.

In 1980, Ford modified the transmission design at issue here to protect against unexpected shifts from park to powered reverse. Ford was also required by virtue of a consent decree with the National Highway Traffic Safety Association (“NHTSA”) to send out more than 22 million warnings of the possibility of unin-’' tended park to powered reverse shifts in its vehicles.

I. PEREMPTORY CHALLENGES

The Court of Appeals reversed the trial court upon its allocation of peremptory challenges and we will first address this issue. To properly analyze this issue it is necessary to examine the structure of the litigation.

Initially, the Smith Estate and two Smith individual parties brought a products liability claim against Ford and Mideast Ford Mercury, Inc. Ford then filed a third party complaint against Sand Hill Energy, Inc., the decedent’s employer, because prevailing case law required active assertion of a claim to entitle Ford to an apportionment instruction.³ In response to the third party complaint, Sand Hill brought a counterclaim against Ford alleging its liability for some $200,000 in regulatory fines and increased workers compensation costs it had incurred as a result of the accident. Thereafter, Ford dismissed its third party claim against Sand Hill. Thus, the basic structure of the litigation was that Smith sued Ford and Ford brought in Sand Hill by means of a third party complaint.⁴

At trial, however, the court restructured the case and designated the Smith Estate and Sand Hill as plaintiffs against Ford as the defendant. Ford then asserted that the Estate and Sand Hill should share peremptory challenges, but the trial court ruled otherwise and allowed the Estate and Sand Hill separate peremptory challenges.

The Court of Appeals adopted Ford’s argument that at the time of trial the interests of the Smith Estate and Sand Hill were not antagonistic. The Court quoted but did not entirely observe CR 47.03(1),⁵ giving little or no attention to the fact that despite restructuring at trial, the Estate and Sand Hill were opposing sides. Instead the court focused exclusively on whether they had antagonistic interests, the portion of the rule that allows separate peremptory challenges to co-parties with antagonistic interests.

There can be no doubt that the Smith Estate and Sand Hill were not co-parties but were opposing sides. While the Smith Estate did not bring an action against Sand Hill, presumably due to the exclusive remedy provision of the Workers Compensation Act,⁶ Ford did bring Sand Hill before the court as a third party defendant. Its purpose may be presumed to have been to obtain an instruction allowing apportionment of all or part of the liability against Sand Hill thereby relieving Ford of any part so apportioned. As such, Ford placed the Smith Estate and Sand Hill on opposing sides, and there was no error in allowing them separate peremptory challenges.

While a strict application of the rule would be sufficient, we make additional observations that bear upon the question of proper allocation of peremptory challenges. The gist of Ford’s argument is that by bringing in a third party defendant for purposes of its own and the trial court’s determination, for simplicity at trial, that the third party defendant and the plaintiff should be aligned with one another, the plaintiff and the third party defendant should be required to share peremptory challenges. This argument borders on an assertion that the defendant should be able to adopt a strategy for its own benefit that simultaneously diminishes the plaintiffs ability to pursue its own strategy. At the least, this argument appears at odds with notions of fair play. A party should not be able to create a community of common interests between other parties and then assert that interest to their detriment. But for Ford’s decision to bring Sand Hill before the court so that it could reduce its own exposure, there would be no question about the plaintiffs entitlement to separate peremptory challenges as Sand Hill would not be a party to the litigation.

Moreover, under these circumstances, it would be extraordinary to find reversible error. While it may appear in retrospect that the Smith Estate and Sand Hill lacked any substantial antagonistic interest, such could not have been known by the trial court at the time the jury was selected.⁷ It has been suggested that the positions parties take at trial should determine whether they have antagonistic interests, but such a rule is utterly unworkable. At the time a trial judge must make the allocation of peremptory challenges, there can be no certainty as to what the evidence will show or precisely what the claims or defenses will be. Moreover, the instant trial court, after having determined that by virtue of their being on different sides, entitling all parties to separate peremptory challenges, nevertheless physically separated the three parties and directed that they have no contact with one another in exercise of their peremptory challenges. We have carefully reviewed Bowling Green Mun. Utils. v. Atmos Energy Corp.,8 and determined that it is factually distinguishably from this case in that the parties to whom were awarded the excessive number of peremptory challenges were all plaintiffs, most of whom were represented by the same counsel. Accordingly, we reverse the Court of Appeals on the peremptory challenges issue and affirm the actions of the trial court in this respect.

II. ADMISSIBILITY OF EXPERT TESTIMONY

Of the issues presented by Ford on cross-appeal, we will first address the admissibility of the testimony of the Smith Estate’s expert, Melvin Richardson. It should be noted at the outset that Richardson is the holder of a B.S. in mechanical engineering from Clemson University, a Master’s degree in mechanical engineering from North Carolina State University, and a Master’s degree in applied mathematics and a Ph.D. in engineering mechanics from the University of Alabama. From 1965 to 1985, he taught various mechanical engineering courses at Clemson University and since 1981 has investigated and analyzed numerous accidents and incidents in which the Ford C-6 transmission was implicated.

Under prevailing law, a pivotal event in litigation where expert testimony under KRE 702 is proffered is the so-called “Daubert hearing.” This Court has embraced Daubert v. Merrell Dow Pharmaceuticals ⁹ and its progeny including Kwn-ho Tire v. Carmichael.¹⁰ Our most recent encounter with the law in this area is Goodyear Tire and Rubber Co v. Thompson.11 These cases, while identifying “nonexclusive factors,” to be considered by the trial court, all emphasize the gate-keeping function of the trial court and reiterate the considerable breadth of discretion possessed by trial courts.¹² The admissibility standard to be applied has been described as flexible, permitting the trial court to broadly analyze the proffered testimony to discover whether it bears appropriate indi-cia of reliability.¹³ With the admissibility standard described above, a reviewing court must, of necessity, give great deference to the trial court’s ruling and reverse only in circumstances of clear abuse.¹⁴

The claim by the Smith Estate was that the Ford C-6- transmission produced and installed in the 1977 Ford vehicle was defective by virtue of a “false park” transmission position. Under this contention, a vehicle operator could set the transmission in what appeared to be park, but was actually a “land” between park and reverse, and due to vibration from the engine, the transmission setting could vibrate into powered reverse.

At the Daubert hearing, Dr. Richardson testified to his academic background and teaching experience. He testified to extensive study of the C-6 type transmissions and stated that he had investigated such transmissions as an engineer since 1981. He had tested transmission production units and had done a complete engineering analysis of the shift characteristics of the Ford C-6 transmission. He had compared Ford transmissions with those of other manufacturers.

Ford attacks Dr. Richardson’s testimony on grounds that it failed to satisfy the five Daubert factors. It urges a determination of trial court error on grounds of failure to apply these factors to the admission of the Richardson testimony.

The trial court was fully cognizant of its role as gatekeeper. An extensive Daubert hearing was held in which Dr. Richardson testified and was subjected to cross-examination. A key question in the Daubert analysis is whether the theory advanced can be or has been tested. While Dr. Richardson acknowledged not having tested his alternative design, it appears that such would have been unavailing as Ford changed the design in 1980 and adopted changes similar to those proposed by Richardson. The trial court was aware of this as the issue of admissibility of subsequent remedial measures was also before the court on Ford’s motion to exclude such evidence.¹⁵ While not having recited findings of fact, the trial court clearly considered all relevant questions and determined that the proffered testimony satisfied the requirements of Kentucky law as embodied in KRE 702. The trial court was aware of the difference between its role as gatekeeper and the jury’s role in determining the weight evidence should have.

Our recent decision in Goodyear v. Thompson emphasizes repeatedly the discretion of the trial court with respect to the admission or exclusion of expert testimony under KRE 702. There was no abuse of that discretion here.

III. SUFFICIENCY OF THE EVIDENCE

Ford claims trial court error for failure to grant its motion for a directed verdict at the close of the evidence. The Court of Appeals did not reach the issue as it had reversed the judgment on other grounds. Ford sought review and the issue of sufficiency of the evidence is properly before this Court.

We have a number of recent decisions articulating the standard by which we review trial court rulings on motions for directed verdict.¹⁶ The prevailing standard is concisely stated in Lewis v. Bledsoe Surface Mining,17 as follows:

Upon review of the evidence supporting a judgment entered upon a jury verdict, the role of an appellate court is limited to determining whether the trial court erred in failing to grant the motion for directed verdict. All evidence which favors the prevailing party must be taken as true and the reviewing court is not at liberty to determine credibility or the weight which should be given to the evidence, these being functions reserved to the trier of fact. Kentucky & Indiana Terminal R. Co. v. Cantrell, 298 Ky., 743, 184 S.W.2d 111 (1944), and Cochran v. Downing, Ky., 247 S.W.2d 228 (1952). The prevailing party is entitled to all reasonable inferences which may be drawn from the evidence. Upon completion of such an evidentiary review, the appellate court must determine whether the verdict rendered is “ ‘palpably or flagrantly’ against the evidence so as ‘to indicate that it was reached as a result of passion or prejudice.’ ” NCAA v. Hornung, Ky., 754 S.W.2d 855, 860 (1988). If the reviewing court concludes that such is the case, it is at liberty to reverse the judgment on the grounds that the trial court erred in failing to sustain the motion for directed verdict. Otherwise, the judgment must be affirmed.¹⁸

Ford makes a multi-faceted attack on the evidence offered by the Estate. Primarily, it relies on the age of the vehicle (seventeen years old at the time of the accident) and its significant state of disrepair, and it also claims alteration of the vehicle. Ford also claims a failure of proof of causation. Evidence on behalf of the Estate was presented primarily by its expert witness, Dr. Richardson. Richardson essentially made the case for the Estate, and his testimony, along with the testimony of Ford’s experts, answered the contentions Ford makes here. Concerning the condition of the transmission, Richardson testified that despite its age, the relevant parts worked as they did when new by virtue of being sent from the factory in a way a re-builder cannot change. He claimed the underlying defect was unaffected by the age and repair condition of the vehicle. Ford’s experts confirmed the propensity of the C-6 transmissions to be mispositioned allowing migration from the false park position to powered reverse. As to possible remedies of the transmission defect, Richardson proposed creating a greater distance between the reverse and park positions and a deeper detent at the park position. This alternative design was not inconsistent with the proposal made by Ford engineer D.R. Dixon by memorandum dated December 8, 1971, nor with the design change Ford made in 1980 according to Ford expert Lee Carr. In sum, there was evidence from Dr. Richardson and Ford’s engineers that the C-6 transmission was defectively designed to create a false park position creating the propensity upon engine vibration for the transmission to self-shift from false park or to powered reverse.

When all is said and done, the Estate presented substantial evidence of a design defect and some evidence that the cause of the accident was mispositioning of the gear shift on the land position permitting vibration into powered reverse. Ford presented evidence that the vehicle was in a dreadful state of disrepair and some evidence that the gear shift was placed correctly in the park position. With the evidence in such a state, the jury might have found for either side. As this Court said in Coleman v. Baker:¹⁹

Reasonable probability is all that is required of evidence in order to support a factual conclusion. 20 Am.Jur. 1099, 1101 (Evidence, §§ 1248, 1250). “Evidence reasonably tending to prove the essential facts, either directly or indirectly, or by permissible inference, is sufficient to sustain a judgment. * ⅜ * And essential facts may be proved by circumstantial evidence in which event it is not necessary that proof rise to a degree of certainty which will exclude every other reasonable conclusion than the one reached by the jury.”²⁰

There was no error in the trial court’s refusal to grant a directed verdict.

IV. AVAILABILITY OF PUNITIVE DAMAGES

As stated at the outset, the jury returned a verdict for punitive damages of twenty million dollars. The Court of Appeals did not reach this issue because it had reversed and remanded on the allocation of peremptory challenges. Ford brought the issue to this Court through its cross-motion for discretionary review.

At the time this case was tried, the controlling legal standard for punitive damages in Kentucky was found in KRS 411.184(l)(c) and required a determination that the defendant acted with “flagrant indifference to the rights of the plaintiff and with a subjective awareness that such conduct will result in human death or bodily harm.” We have held this statute to be unconstitutional,²¹ but in this case, no issue was raised as to the constitutionality of the statute and the case was tried upon the statutory standard. “Since neither of the parties challenged the constitutionality of the statute at trial and since the statute was in effect at the time of the accident and the trial, [this Court] will review the question under the terms of the statute as it then existed.”²²

Ford broadly attacks the legitimacy of the award of any punitive damages in this case. It contends that a determination by the National Highway Traffic Safety Administration which entered into a settlement agreement with Ford and, by the terms of such agreement, required only a mailed reminder instead of a recall, demonstrates that it could not have acted with malice. Ford also claims a finding of malice is precluded by its conformity to industry standards. While there was evidence that Ford C-6 transmissions experienced more park to reverse incidents than those of its competitors, Ford attacks such evidence as being statistically unsound even though some such evidence came from NHTSA documents. As a further explanation, Ford also contends that it received more consumer complaints than its competitors because it aggressively investigated and solicited information about park to reverse incidents. As additional basis for claiming that malice was not shown, Ford contends that at most there was a reasonable disagreement among informed persons as to the best product design, and that when reasonable persons can disagree, a finding of malice is precluded. Finally, Ford argues, perhaps disingenuously, that it should not have been subjected to punitive damages “because the only evidence introduced by plaintiff to show ‘malice’ concerned prior incidents of unattended rearward movement involving Ford vehicles. Presumably, plaintiff hoped to show by implication that Ford must have known of a ‘defect’ because it had received complaints of unattended rearward movement.” Citing David G. Owen, Problems in Assessing Punitive Damages Against Manufacturers of Defective Products,²³ it concludes, “but ‘the bare fact of [even] a large number of product failures ... falls far short of establishing the manufacturer’s flagrant culpability in selling the product.” In this vein, Ford insists that it behaved as a responsible corporation by aggressively undertaking actions to discover the cause of the failure and ameliorate its consequences. Based on this conduct, Ford insists that no reasonable jury could have concluded that it acted with malice.

It is true that during the seven or eight year period between 1972 and 1980, Ford studied the possibility of a new design, responded to a NHTSA investigation, and entered into a settlement agreement with NHTSA whereby Ford agreed to mail reminders to drivers advising them not to leave running vehicles unattended, to secure parking brakes, and to shift fully into park. The Smith Estate, however, presented evidence that in 1970 Ford began receiving complaints concerning incidents of unintended migration from park to powered reverse. Among other things, the Estate produced four exhibits bearing 1971 and 1972 dates from Ford engineers articulating problems with the C-6 transmission and disclosing numerous customer complaints of “jumped out of park into reverse” or some similar terminology. Of the exhibits, a memorandum from principal engineer D.R. Dixon is extraordinary in its description of the flaw, recognition of driver misuse, and recommendation of an alternative.²⁴ From the evidence, a jury could have believed that by November 1972, Ford was well aware of the flaw in its C-6 transmission, but that it continued producing and installing such transmissions until 1980, thus acting with flagrant indifference to the lives of its consumers.

V. PUNITIVE DAMAGE INSTRUCTIONS

We have considered Ford’s contention that the trial court erred with respect to the punitive damages instruction it gave. A practice of long-standing in this Court’s jurisprudence, indeed a venerated practice, is the giving of “bare-bones” instructions.²⁵ The instructions given here were taken from Palmore’s Kentucky Instructions to Juries²⁶ and included the language of KRS 411.186. Moreover, counsel for the Estate reminded the jury time and again that the purpose of punitive damages was to punish wrongdoing. We discern no shortcoming in the instructions given that violates the standards set forth in Hanson v. American Bank,27 nor has any other argument been advanced sufficient to persuade us to re-examine our long-standing practices and the authorities upon which they are based.

VI. AMOUNT OF PUNITIVE DAMAGES

We now turn to the issue of whether the amount of punitive damages was excessive, requiring that it be modified or vacated. For years this Court observed the “first blush” rule which focused on whether the amount of punitive damages appeared to have been given under the influence of passion or prejudice and in disregard of the evidence.²⁸ This rule was modified in Davis v. Graviss²⁹ and Cooper v. Fultz30 where we distanced appellate courts from a direct review of the sum awarded. Instead, we imposed on the trial court the responsibility to analyze whether the award was given improperly, and reserved to appellate tribunals the responsibility to review for abuse of discretion.

The appellate court no longer steps into the shoes of the trial court to inspect the actions of the jury from his perspective. Now the appellate court reviews only the actions of the trial judge to determine if his actions constitute an error of law. There is no error of law until the trial judge is said to have abused his discretion and thereby render his decision clearly erroneous.³¹

In May of 2001, however, the role of appellate courts was changed by the Supreme Court of the United States where federal constitutional questions are preserved and presented for review. No longer may appellate courts defer to trial courts on questions of excessiveness of punitive damages and limit their review to abuse of discretion. We must now return to our former role and review the amount of punitive damages de novo.32 In Cooper v. Leatherman,³³ the Supreme Court held that

the Due Process Clause of the Fourteenth Amendment to the Federal Constitution imposes substantial limits on that [state law] discretion. That Clause makes the Eighth Amendment’s prohibition against excessive fines and cruel and unusual punishment applicable to the States. Furman v. Georgia, 408 U.S. 238, 92 S.Ct. 2726, 33 L.Ed.2d 346 (1972) per curium. The Due Process Clause of its own force prohibits the states from imposing “grossly excessive” punishment on tortfeasors.³⁴

On remand to the United States Court of Appeals for the Ninth Circuit, the Court directed that “the de novo standard should govern its decision.”³⁵

In Leatherman, the Court re-iterated its reliance on the three factors set forth in BMW v. Gore as appropriate for consideration by appellate courts as they undertake the process of de novo review.³⁶ The Gore factors are 1) the degree of reprehensibility of the defendant’s misconduct, 2) the disparity between the harm (or potential harm) suffered by the plaintiff and the punitive damages awarded, and 3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.³⁷

As to the degree of reprehensibility of Ford’s conduct, we conclude that it was substantial. There is no doubt that for at least seven years after Ford knew of the dangerous propensities of the C-6 transmission, it continued producing and installing it in its vehicles. The vehicle which killed Tommy Smith was a 1977 model manufactured five or more years after Ford knew of the dangerous propensity of its transmission. Ford attempts to explain its conduct by relying on the absence of a NHTSA recall, by a reliance on industry standards, and by characterizing its conduct as a “good faith judgment call.”³⁸ The fact remains, however, that by Ford’s own engineers and through many consumers, some of whom were maimed or killed, Ford was forcefully informed that its transmission was dangerous.

We must also consider the disparity between the harm suffered by the plaintiff and the punitive damages awarded. The harm to Tommy Smith was death. The harm to his. estate was the total destruction of his power to labor and earn money. It would be impossible to overstate the degree of harm. On the other hand, substantial compensatory damages were awarded and the amount of punitive damages was almost seven times compensatory damages.³⁹ We note that in Leatherman and Gore, the amount of punitive damages awarded was a far greater multiple of compensatory damages than appears here,⁴⁰ but we also note that those cases involved relatively small sums in compensatory damages for economic loss, and that to achieve any real punishment, a substantial multiple would be required.

The third Gore factor is the difference between the punitive damages awarded and the civil penalties authorized or imposed in similar cases.⁴¹ Ford argues that neither federal nor state penalties for violations of the type at issue here authorize any such award as returned by the jury. It also contends that our prior jury verdicts provided no warning that Ford might be subjected to a $20 million penalty. It points to the $5 million punitive damage judgment upheld in Hanson v. American Bank⁴² as the largest punitive damage verdict ever affirmed on appeal in Kentucky.

Ford’s view of this factor is far too restrictive. This Court is not confined to a review only of Kentucky verdicts and decisions as we consider whether Ford had fair warning that it might be subjected to a significant penalty in a Kentucky court. Ford is a multi-national corporation that is frequently involved in litigation throughout the United States in state and federal courts. It possesses a wealth of information as to settlements, verdicts, and trial and appellate court decisions. Ford knew or should have known of the potential for a substantial verdict when its defectively designed vehicle caused the death of a Kentucky consumers. Its national experience and the experience of other automobile manufacturers were sufficient to acquaint it with the reality.⁴³ While Ford is correct that our decision in Hanson v. American Bank is the largest punitive damage award ever finally affirmed by Kentucky courts, it is also true that this Court has in recent years encountered punitive damages in several cases and shown no particular disinclination to uphold such awards where the evidence justified it. In Owens-Coming v. Golightly,44 we affirmed a judgment of $290,000 in compensatory damages and $435,000 in punitive damages.⁴⁵ We also held that successive awards of punitive damages for the same course of conduct did not violate the Due Process Clause.⁴⁶ In Kroger v. Willgruber.;⁴⁷ we affirmed a judgment of $500,000 in punitive damages for intentional infliction of emotional distress, and in Farmland Mutual Insurance Company v. Johnson,⁴⁸ we affirmed a punitive damages judgment of $2 million for bad faith and violation of the Kentucky Unfair Claims Settlement Practices Act.

Our recent decision in Owens-Coming v. Golightty contains an excellent analysis of Kentucky law on review of punitive damage awards as it existed prior to Cooper Industries v. Leatherman. We determined that, contrary to the position of Owens-Corning, our process of review was not constitutionally infirm. Owens-Coming amounts to a concise statement of the requirements of our law as it existed when this case was tried. We are confident the trial judge discharged his duty to review under the “first blush” rule. In discharge of our new responsibility to review the amount of the punitive damages award de novo, we have considered the factors set forth in BMW v. Gore and a number of decisions from other jurisdictions. We recognize the flexibility of the Gore factors and that no court has yet discovered an infallible constitutional line or simple mathematical formula for determining whether an award of punitive damages is proper.⁴⁹ We observe that many of the cases reversed on appeal for excessive punitive damage awards were cases involving purely economic loss as opposed to loss of life or bodily injury.⁵⁰ Our decision in Golightty restated a view long held in Kentucky law as to the assessment of punitive damages.

In Kentucky, the assessment of punitive damages requires consideration of not only the nature of the defendant’s act, but also the extent of the harm resulting to the plaintiff. Fowler v. Mantooth, Ky., 683 S.W.2d 250, 253 (1984). In other words, the jury is to consider not only the defendant’s conduct, but the relationship of that conduct to the injury suffered by this particular plaintiff.⁵¹

This is not inconsistent with the Gore standards.

Upon all of the foregoing, and in discharge of our duty of de novo review under Cooper Industries v. Leatherman, and recognizing that substantial compensatory damages were awarded, we are of the opinion that $5 million of the punitive damages award should be set aside. We hereby affirm the judgment as to $15 million in punitive damages. As no issue was raised as to the amount of compensatory damages awarded, we will affirm that portion of the trial court’s judgment.

VII. SAND HILL DIRECTED VERDICT

At trial, the court granted Ford’s motion for directed verdict against Sand Hill Energy, Inc. As earlier stated, Ford brought Sand Hill into the litigation by means of a third party complaint. Sand Hill counterclaimed against Ford for damages sustained in the nature of regulatory fines and increased Workers’ Compensation premium costs. Sand Hill reasoned that but for Ford’s defective design of the C-6 transmission, the accident would not have occurred and it would not have incurred the enhanced costs. Sand Hill presented evidence that as a result of the accident with Tommy Smith, it had been required to pay an administrative fine of $15,000; that its Workers’ Compensation premiums had increased by approximately $35,000. We believe this evidence is sufficient to permit Sand Hill to be heard on its claim and that the trial court erred in directing a verdict against it. While the parties have not raised any issue as to the applicability of principles of collateral es-toppel, on remand, the trial court should consider whether it will be necessary to retry the question of whether the C-6 transmission was defectively designed.

VIII. CONCLUSION

For the reasons set forth hereinabove, the opinion of the Court of Appeals is reversed. The judgment of the trial court of $3 million in compensatory damages and $15 million in punitive damages,⁵² plus interest and costs, is reinstated. The judgment of the trial court, affirmed sub silen-te), granting a directed verdict against Sand Hill Energy, Inc., on its claim is reversed and remanded to the trial court for further consistent proceedings.

LAMBERT, C.J., and KELLER, STUMBO, and WINTERSHEIMER, JJ., concur.

KELLER, J., files a separate concurring opinion.

COOPER, J., files a separate dissenting opinion in which GRAVES and JOHNSTONE, JJ., join.

GRAVES, J., files a separate dissenting opinion in which COOPER and JOHNSTONE, JJ., join.

1 . Ford customer complaints regarding a 1972 Ford with C-6 transmission and 10,900 miles, a 1971 Ford with a C6 transmission and 20,-074 miles, and a 1969 Mercury with a C6 transmission and 40,400 miles(from a November 28, 1972 Ford memorandum entitled "Automatic Transmissions 'Jumping Out of Park” ’ listing the six (6) additional cases reported in the last two (2) weeks).

2 . Inter Office Communication, D.R. Dixon, Principal Engineer, Ford Classic Safety Systems Department, June 30, 1971. This document also recommends "that forward design and development be directed towards a feasible alternative which positively positions shift lever in park or reverse, to prevent a false sense of security as to transmission position.”

3 . Floyd v. Carlisle Construction Co., Ky., 758 S.W.2d 430 (1988).

4 . As no issue has been raised as to Ford’s good faith in filing and then dismissing its third party complaint, we need not speak to the practice it employed. We note, however, that CR 11 requires that pleadings be in good faith.

5 . CR 47.03(1) states: "In civil cases each opposing side shall have three peremptory challenges, but co-parties having antagonistic interests shall have three peremptory challenges each.”

6 .The exclusive remedy provision of the Workers Compensation Act, KRS 342.690, precluded the Estate or the decedent's survivors from seeking damages from Sand Hill; see, e.g., Shamrock Coal Co. v. Maricle, Ky., 5 S.W.3d 130 (1999); Zurich American Ins. Co. v. Haile, Ky., 882 S.W.2d 681 (1994).

7 . Mackey v. Greenview Hospital, Inc., Ky.App., 587 S.W.2d 249, 259 (1979), makes it clear that the time for determining the allocation of peremptory challenges is when the jury is selected. Despite subsequent dismissal of physician cross-claims, the Mackey Court relied on the existence of cross-claims at the time the trial commenced as a factor establishing antagonism of interests.

8 . Ky., 989 S.W.2d 577 (1999).

9 . 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993).

10 . 526 U.S. 137, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999).

11 . Ky., 11 S.W.3d 575 (2000).

12 . Goodyear at 578.

13 . Id.

14 . Goodyear at 5 77-578.

15 . See KRE 407.

16 . NCAA v. Hornung, 754 S.W.2d 855, 860 (1988); Bierman v. Klapheke, 967 S.W.2d 16, 18-19 (1998).

17 . Ky., 798 S.W.2d 459 (1990).

18 . Id. at 461-462.

19 . Ky., 382 S.W.2d 843 (1964).

20 . Id. at 847-848.

21 . Williams v. Wilson, Ky., 972 S.W.2d 260 (1998).

22 . Atmos Energy, 989 S.W.2d at 580.

23 . 49 U. Chi. L.Rev. 1, 23-28 (1982).

24 . The text of the Dixon memorandum, with diagram omitted, is as follows:

Current Chassis shift lever detent design permits transmission lever placement on a 'land” between a positive park position and reverse position with the possibility of vehicle vibration moving the lever from part to reverse in an unattended vehicle.

[Diagram] Shift lever-spring loaded against insert plate in improper position which appears to customer as proper.

Present Condition

Present customer usage patterns indicate that this condition of careless shift lever actuation is occurring frequently in the field with actual high accident incidence.

It is recommended that forward design and development be directed toward a feasible alternative which positively positions shift lever in park or reverse, to prevent a false sense of security as to transmission position.

25 . King v. Ford Motor Company, 209 F.3d 886 (6th Circuit 2000); Smith v. Louis Berkman Co., 894 F.Supp. 1084 (W.D.Ky.1995); Young v. J.B. Hunt Transportation, Ky., 781 S.W.2d 503 (1989); Cox v. Cooper, Ky., 510 S.W.2d 530 (1974); Collins v. Galbraith, Ky., 494 S.W.2d 527 (1973).

26 . John S. Palmore and Ronald W. Eades, Kentucky Instructions to Juries, Vol. 2, Civil.

27 . 865 S.W.2d 302 (1993).

28 . See, e.g., Koch v. Stone, Ky., 332 S.W.2d 529, 532 (1960).

29 . Ky., 672 S.W.2d 928 (1984).

30 . Ky., 812 S.W.2d 497 (1991).

31 . Prater v. Arnett, Ky.App., 648 S.W.2d 82, 86 (1983).

32 . Cooper v. Leatherman, 532 U.S. 424, 121 S.Ct. 1678, 149 L.Ed.2d 674 (2001).

³³

34 . Id. at 1684.

35 . Id. at 1689.

36 . Id. at 1687.

37 . BMW v. Gore, 517 U.S. 559, 574-575, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996); Leatherman at 1687.

38 . We have addressed the industry standards defense in Owens-Corning v. Golightly, Ky., 976 S.W.2d 409 (1998), and Jones v. Hutchinson, Ky.App, 502 S.W.2d 66 (1973). In Owens-Coming, we said:

The purpose of KRS 411.310(2) is not to insulate an entire industry from liability just because every member of that industry was manufacturing and distributing a product known to be inherently dangerous.

Owens-Coming at 411.

39 .Specifically, the $3 million in compensatory damages included $2 million for loss of earning capacity and $1 million for pain and suffering.

40 . In Leatherman, the amount of punitive damages awarded ($4.5 million) was ninety (90) times the amount of compensatory damages ($50,000). In Gore, the amount of punitive damages ($4 million) was one thousand (1,000) times the amount of compensatory damages ($4,000). In this case, as mentioned above, the amount of punitive damages was somewhat less than seven times the amount of compensatory damages.

41 . Gore at 575, 116 S.Ct. 1589.

42 . Ky., 865 S.W.2d 302 (1993). We recognize that our decision here amounts to a modification of the rule applied in Hanson v. American National Bank. In our view, however, the Hanson rule has been superceded by the Supreme Court of the United States in Cooper Industries v. Leatherman, supra,

43 . See, e.g., Ford Motor Co. v. Nowak, 638 S.W.2d 582 (Tex.App.l982)($4 million in punitive damages on facts similar to these was affirmed); Hasson v. Ford Motor Co., 32 Cal.3d 388, 185 Cal.Rptr. 654, 650 P.2d 1171 (1982)($4 million in punitive damages upheld); Ford Motor Co. v. Ammerman, 705 N.E.2d 539 (Ct.App.Ind.l999)(punitive damage judgment of $13.8 million affirmed on appeal).

44 . Ky., 976 S.W.2d 409 (1998).

45 . Id. at 410, 413-15.

46 . ⅛ at 412-413.

47 . Ky., 920 S.W.2d 61 (1996).

48 . Ky., 36 S.W.3d 368 (2000).

49 . Gore at 582, 116 S.Ct. 1589.

50 . See, e.g., Inter Med. Supplies v. EBI Med. Sys., 181 F.3d 446, 465-67 (3d Cir.1999); Denesha v. Farmers Ins. Exch., 161 F.3d 491, 502-05 (8th Cir. 1998).

51 .Golightty at 412.

52 . See, supra, p. 496.