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Torts/Discovery: Punitive Damage Evidentiary Threshold Required to Discover Financial Worth of Defendant

Posted by Ted A. Schmidt | Aug 31, 2022 | 0 Comments

Swift Transp.Co. v. Carman, No. CV-20-0119-PR (August 23, 2022) (J. Brutinel)

Defendant Swift Transportation's driver drove his tractor trailer in the rain with the Jake Brake engaged, cruise control set at 62 miles per hour in a 75 mile per hour zone, and passed another vehicle in the right hand lane on a downhill sloping curve. The truck hydroplaned and jackknifed blocking traffic in the left lane. Another tractor trailer, trying to avoid colliding with defendant, hit two other vehicles causing numerous injuries and death.

Plaintiffs sued defendant alleging negligence under a respondeat superior theory and filed a Motion on Prima Facie Case for Punitive Damages, seeking to discover defendant's financial worth.  The trial court granted the motion finding:

  1. [Defendant's driver] had been trained it wasdangerous to drive in the rain with the Jake Brake engaged and should have disengaged it when it started raining; (2) he knew it was dangerous to operate his vehicle with cruise control in the rain and while pulling an empty trailer; (3) he knew driving with an empty trailer makes the truck less stable and more likely to hydroplane; (4) he was traveling at sixty- two miles per hour in heavy rain; (5) his visibility was impaired by the rain and he was trained to be careful with his speed when traveling downhill and around curves especially in low visibility environments; (6) he did not slow down as he went downhill and around a curve in the rain immediately prior to the collision; (7) he passed a vehicle on the right while he was entering the downhill left curve; (8) he did not leave his vehicle following the initial collision and did not try to warn other vehicles of the hazard; (9) he was on the phone with his daughter using a hands-free Bluetooth device and had been talking with her for at least thirty minutes before the collision and was still talking with her when the crash occurred; and (10) he told investigating officers at the crash site that he was traveling only forty-five miles per hour at the time of the crash.

Defendant brought this special action. The Arizona Court of Appeals granted jurisdiction but denied relief. The Arizona Supreme Court vacated the court of appeals order and reversed the trial court's order specifying its decision did not preclude the trial court from reconsidering the ruling should additional facts be submitted.

The supreme court found that while each of the alleged acts, if proven, could establish negligence if not gross negligence, they were insufficient to establish a prima facie case of punitive damages to justify requiring the defendant to produce financial records in discovery.

We therefore hold that to be entitled to punitive damages in a negligence action, a plaintiff generally must show that the defendant's conduct was “outrageous, oppressive or intolerable,” and “create[d] [a] substantial risk of tremendous harm,” thereby evidencing a “conscious and deliberate disregard of the interest[s] and rights of others.” Volz, 155 Ariz. at 570 (emphasis added) (quoting Gurule, 152 Ariz. at 602). A “substantial risk of harm” is the product of outrageous conduct, which society typically deters by imposing criminal liability. See Rawlings, 151 Ariz. at 162 (citing to Arizona's statutory definition of criminal recklessness as one appropriate baseline for punitive damages); see also A.R.S. § 13-105(10) (defining a criminally culpable mental state as acting “intentionally, knowingly, recklessly or with criminal negligence”); cf. Haralson v. Fisher Surveying, Inc., 201 Ariz. 1, 8 ¶ 36 (2001) (McGregor, J., concurring in part and dissenting in part) (describing punitive damages as “quasi-criminal” fines).

To be clear, this holding does not require a plaintiff to establish criminal conduct to show that a defendant's conduct created a substantial risk of significant injury. Nor must a plaintiff identify an applicable criminal statute to qualify for punitive damages, although such evidence is a strong indication that the defendant's conduct is worthy of punishment and should be deterred by measures extending beyond having to compensate the plaintiff for his or her losses. Rather, a plaintiff must establish that the defendant knew, or intentionally disregarded, facts that created an unreasonable risk of physical harm—a risk substantially greater than that necessary to make his or her conduct negligent or even grossly negligent—and consciously disregarded that risk. See Restatement § 500 cmt. a; see also Linthicum, 150 Ariz. at 330–31; Gurule, 152 Ariz. at 602. Although it is enough that the defendant had reason to know of the facts creating a substantial risk, it is not enough that a defendant had reason to appreciate the severity of the risk; the defendant must have actually appreciated the severity of the risk before consciously disregarding it. See Hutchinson ex rel. Hutchinson v. Luddy, 870 A.2d 766, 771–72 (Pa. 2005) (rejecting the “reasonable man standard” for punitive damages and requiring that a defendant have “a subjective appreciation of the risk of harm to which the plaintiff was exposed”); see also Restatement § 500 cmt. a (distinguishing an objective definition of reckless disregard from a subjective one). Absent proof of the intent to cause harm or that the defendant acted out of spite or ill will, outrageous conduct will always be required to sustain a claim for punitive damages in negligence cases.

The distinction between ordinary or even gross negligence and the conduct that permits punitive damages is critical. Indeed, it will be only the rare negligence case that meets this standard

About the Author

Ted A. Schmidt

Ted's early career as a trial attorney began on the other side of the fence, in the offices of a major insurance defense firm. It was there that Ted acquired the experience, the skills and the special insight into defense strategy that have served him so well in the field of personal injury law. Notable among his successful verdicts was the landmark Sparks vs. Republic National Life Insurance Company case, a $4.5 million award to Ted's client. To this day, it is the defining case for insurance bad faith, and yet it is only one of several other multi-million dollar jury judgments won by Ted during his career. He is certified by the State Bar of Arizona as a specialist in "wrongful death and bodily injury litigation".


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