proven "beyond a reasonable doubt." Colo. Rev. Stat. § 13-25-127 (1987). In addition, Colorado limits punitive damages awards for personal injury to the amount of actual damages unless the court determines that the defendant has continued the behavior in a willful and wanton manner. Colo. Rev. Stat. § 13-21-102 (1987).
In general, Illinois does not permit punitive damages in wrongful death or survival actions. Poole v. Alpha Therapeutic Corp., 698 F. Supp. 1367, 1372 (N.D. Ill. 1988); Mattyasovszky v. West Towns Bus Co., 61 Ill. 2d 31, 330 N.E.2d 509 (1975).
Punitive damages are awarded in other actions "when torts are committed with fraud, actual malice, deliberate violence or oppression, or when the defendant acts willfully, or with such gross negligence as to indicate a wanton disregard of the rights of others." Kelsay v. Motorola, Inc., 74 Ill. 2d 172, 384 N.E.2d 353, 359, 23 Ill. Dec. 559 (1978).
A true conflict exists in the availability of punitive damages under the laws of Colorado, California and Illinois. These laws reflect a balance reached by each state between deterrence of wrongful conduct and protection of defendants from excessive financial liability. Air Crash, 644 F.2d at 610. Illinois, Colorado and California all have legitimate interests in controlling the activity of defendant United Airlines. Colorado and California's interests are limited to activity within their states. Illinois has an interest in activity performed in all three states. The appropriate method to resolve the conflict is to determine which state interest would be most impaired by failure to apply its law.
United Airlines argues that Illinois is not as committed to its punitive damages law as Colorado or California because Illinois common law rather than statutory authority defines the right to punitive damages. Common law authority is not necessarily inferior to statutory authority of another state. See, id. at 613-614, 625, 626 (finding that California, Missouri, Illinois and New York all have strong commitments to their respective approaches to punitive damages). The state legislature may have purposefully acquiesced in the judicial resolution of the punitive damages standard. Defendants do not cite a case in which a state was found to lack a commitment to its punitive damages law. Consequently, the choice of law decision will be based upon the "fit" between the purpose of each state's punitive damages law and the circumstances of the case. id. at 622 (citations omitted).
In general, plaintiffs raise two separate bases for punitive damages against United. First, plaintiffs contend that United recklessly maintained, tested or inspected the aircraft. United asserts that these alleged reckless acts could only occur in California. United contends that California has a direct deterrent interest in faulty maintenance performed in California and that California law should apply. The second basis for punitive damages is alleged reckless operation of the aircraft. United contends that allegations concerning the flight crew relate to the crew's training in Colorado. United asserts that Colorado law should govern punitive damages claims regarding the activity of the flight crew.
However, United is not engaged in the business of manufacturing planes or training flight crews. Although United may bring its aircraft to California for servicing and train its flight crews in Colorado, United's primary activity is to carry passengers. United's central hub and principal place of business are located in Illinois. Flight 232 was destined for Illinois. United argues that the locale of the wrongful conduct is closely associated with the conduct "because the likelihood of injury from the conduct is generally greater in that place." United Memorandum at 28. However, injury is unlikely to occur at the site of United's training or maintenance. It is likely to occur at United's primary place of business, where United flights frequently arrive and depart.
Illinois is an appropriate forum to balance the deterrent function of punitive damages against the need to protect United Airlines from excessive financial liability. Illinois benefits from United's presence and Illinois risks the consequences of United's wrongful conduct. Illinois' interest in its law respecting punitive damages would be impaired more than either Colorado's or California's if its law were not applied. As United's principal place of business, Illinois law regarding punitive damages governs claims against United Airlines.
2. McDonnell Douglas
McDonnell Douglas designed and built the aircraft in California. Its principal place of business is Missouri. In Air Crash, McDonnell Douglas was a defendant. Under analogous circumstances, the seventh circuit wrestled with the question whether Missouri or California punitive damages policies would be more impaired if they were not applied. The court concluded that both states' policies would be equally impaired. The court decided that a California court would escape the quandary by applying Illinois law. Air Crash, 644 F.2d at 622-626.
Subsequent decisions by California state courts indicate that in the event California shares an equal interest in application of its law with another state, a California court would apply California law. See, Am. Nat'l Bank of Commerce v. Corondoni, 169 Cal. App. 3d 368, 215 Cal. Rptr. 331 (1985) (California's general preference is to apply its own law). California courts have "repeatedly asserted that California has an important interest in regulating products manufactured in California." Corrigan v. Bjork Shiley Corp., 182 Cal. App. 3d 166, 180, 227 Cal. Rptr. 247, cert. denied sub nom. Shiley Inc. v. Corrigan, 479 U.S. 1049, 93 L. Ed. 2d 973, 107 S. Ct. 921 (1987). Since Missouri and California law would be equally impaired if not applied, California law governs claims for punitive damages against McDonnell Douglas.
3. General Electric
General Electric manufactured the engines on Flight 232 in Ohio. Its principal place of business is New York. As discussed above, Iowa was the fortuitous site of the crash, and Iowa has no real interest in imposing punitive damages against General Electric. Colorado has some interest in having its punitive damages law applied in this case because Denver has a busy airport from which Flight 232 departed. However, Ohio and New York have stronger interests than either Colorado or Iowa. Consequently, the comparative impairment analysis is limited to Ohio and New York.
A brief summary of the punitive damage laws of Ohio and New York reveals that a true conflict exists. Ohio prohibits punitive damage awards in wrongful death actions. Rubeck v. Huffman, 54 Ohio St. 2d 20, 374 N.E.2d 411, 413, 8 Ohio Op. 3d 11 (1978). In order to award punitive damages in other actions, a jury must find clear and convincing evidence that a manufacturer "manifested a flagrant disregard of the safety of persons who might be harmed by the product in question." Ohio Rev. Code § 2307.80(A).
New York permits awards of punitive damages in wrongful death actions, N.Y. Est. Powers & Trusts Law § 5-4.3(b), survival actions, N.Y. Est. Powers & Trusts Law § 11-3.2(b), and ordinary personal injury actions. New York allows imposition of punitive damages for conduct that is "morally culpable, or is actuated by evil and reprehensible motives." Walker v. Sheldon, 10 N.Y.2d 401, 404, 179 N.E.2d 497, 498, 223 N.Y.S.2d 488, 490 (1961).
General Electric argues that Ohio has expressed a stronger, more recent interest in the imposition of its punitive damages law. General Electric points out that Ohio law is codified and offers greater protection to a corporation than New York law. However, the fact that New York's punitive damage provision was not codified may imply that the state legislature agrees with the judicial resolution of the punitive damages standard. The fact that Ohio law affords greater protection to defendants than New York law indicates only that Ohio has struck a different balance between deterrence and protection than New York.
Ohio interests would be more impaired if its punitive damages policy were not applied. General Electric manufactures aircraft engines in Ohio and not in New York. General Electric's principal place of business is in New York because other holdings, including the National Broadcasting Company, Kidder, Peabody Group, Inc. and GE Turbine Operations, are located in New York. Since the alleged wrongful acts occurred in Ohio, and Ohio is the principal place of business of General Electric's aircraft engine manufacturing division, Ohio has a greater opportunity to balance interests of deterrence against protection of General Electric regarding airplane engine manufacturing. Ohio law governs the punitive damage claims against General Electric.
The three cases originally filed in California each assert claims for punitive damages based upon personal injuries. The punitive damage claims against United Airlines shall be governed by Illinois law. The claims against McDonnell Douglas shall be governed by California law. The claims against General Electric shall be governed by Ohio law.
B. Cases Transferred From Colorado, Iowa, New York, and Georgia and cases filed in Illinois
Six cases stating claims for punitive damages were filed in Colorado, Iowa, Illinois, New York and Georgia.
Colorado, Iowa, Illinois and New York all apply the "most significant relationship" test described in § 145 et seq. of the Restatement (Second) of the Conflict of Laws ("the Restatement").
The Supreme Court of Georgia has never decided whether the Restatement should be applied in air crash cases, but Georgia would adopt the Restatement if the question were raised.
The seventh circuit delineated the Restatement test in Air Crash, 644 F.2d at 611-612:
The Restatement (Second) provides two sets of criteria for the measurement of the "most significant relationship." The first set of criteria includes general factors such as the needs of the interstate system; relevant policies of the forum and other interested states; protection of justified expectations; the basic policies underlying the particular field of law; certainty, predictability and uniformity of result; and ease in the determination and application of the law to be applied. The second set of criteria includes the contacts to be taken into account in applying these principles. These contacts are: (1) the place of the injury; (2) the place of misconduct; (3) the domicile, residence, nationality, place of incorporation and place of business of the parties; and (4) the place where the relationship between the parties is centered. These contacts are to [be] evaluated according to their relative importance to the issue involved and according to the purposes sought to be achieved by the relevant rules of the interested states.
The most significant relationship test must be applied independently to each defendant.
1. United Airlines
The first issue is which states to consider. In this action, the states that must be considered are: Iowa, the place of the injury; Colorado and California, the places of the alleged misconduct; Illinois, the principal place of business of United Airlines; Delaware, the place of incorporation of United Airlines.
It is difficult to ascertain where the relationship between the parties is "centered." Since the relationship must have been centered in Colorado, California, Iowa or Illinois, the question need not be resolved. The interests of these states will be considered. The states of domicile of the plaintiffs are not relevant to the choice of punitive damage laws. Air Crash, 644 F.2d at 612-613.
The interests of each state in application of its punitive damage laws must be considered. The purpose of punitive damages is punishment of the defendant and deterrence of future wrongdoing. These purposes are balanced against the danger of imposing excessive financial liability on the defendant.
As the site of the injury, Iowa has presumptively significant interests in the action. However, the eventual crash in Iowa was fortuitous. Iowa's interest or ability to deter United's conduct depended upon an unforeseen emergency landing in Sioux City. Illinois, Colorado and California each have a substantial connection to United's business activity, and a corresponding interest in balancing deterrence against protection of a defendant like United.
California has an interest in monitoring United's maintenance activity conducted in California. Colorado has an interest in regulating the training of United's flight crews in Colorado. United proposes that California law govern punitive damage claims arising from alleged faulty maintenance and Colorado law govern punitive damage claims arising from training the crew. However, it is unclear that corporate decisions resulting in allegedly wrongful acts by United would necessarily have occurred in either California or Colorado. Colorado and California derive substantial sales and income taxes, as well as other revenues, directly or indirectly from United's activities in their states.
United's principal place of business is Illinois. As discussed earlier, Illinois benefits from United's economic activity within the state, and Illinois suffers a substantial risk that wrongful behavior will result in an accident occurring on flights scheduled to arrive in or depart from Chicago. United may have committed wrongful acts relating to maintenance of the aircraft or training of its flight crew. Allegations concerning United's wrongful conduct may easily be recharacterized as permitting passengers to travel upon a faulty aircraft flown by an ill-trained crew. Illinois has the most significant relationship to United's passenger business. Consequently, Illinois is well placed to achieve a balance between deterrence of wrongful conduct and protection from excessive liability.
United argues that potential defendants would be encouraged to choose their principal place of business to minimize punitive damage liability. However, defendants are just as likely to manipulate the location of their maintenance or training centers to minimize liability. The application of Illinois law achieves certainty, predictability and ease of application, as well as the purposes of punitive damages. Applying a single standard to the issue of punitive damages with respect to United's activities simplifies the issue. Accordingly, punitive damage claims in the consolidated cases subject to the Restatement are governed by Illinois law. As discussed earlier, Illinois does not permit punitive damage claims in survival actions or wrongful death actions.
2. McDonnell Douglas
The Restatement analysis regarding McDonnell Douglas is limited to California, site of the alleged wrongful conduct, Missouri, McDonnell Douglas' principal place of business, Maryland, its place of incorporation
and Iowa, the site of the injury. For the reasons stated above, Iowa law will not be applied. As between California and Missouri, in Air Crash the seventh circuit determined that these states had an equal interest in the application of their punitive damage laws and resolved the conflict by application of Illinois law, the site of the crash. Since no acceptable alternative to California or Missouri law exists in this case, a resolution to the conflict must be reached.
The Restatement § 145, comment c, provides: "if the primary purpose of the tort rule involved is to deter or punish misconduct, . . . the state where the conduct took place may be the state of dominant interest and thus that of most significant relationship. . . ." See, Houston North Hosp. Prop. v. Telco Leasing, Inc., 688 F.2d 408, 409, n. 3b (5th Cir. 1982). See also, Restatement § 145 comment e. At this early stage of the litigation, some doubt exists about the site of allegedly wrongful conduct. Conceivably, wrongful conduct resulting in the accident could have occurred in either state. However, the design and manufacture of the aircraft occurred in California. Since faulty design and manufacture are the basis for the punitive damage claims against McDonnell Douglas, California law appropriately governs these actions. California does not permit punitive damages in wrongful death actions but does permit punitive damages in survival actions.
3. General Electric
General Electric manufactured and designed the aircraft's engine in Ohio. New York is General Electric's principal place of business. General Electric's aircraft engine business takes place predominantly in Ohio. As discussed above, New York's relationship to General Electric's aircraft engine manufacturing business is objectively less than Ohio's interest. Accordingly, Ohio law governs punitive damage claims against General Electric. Ohio law permits punitive damages in survival actions but not in wrongful death actions.
C. Cases Transferred From Pennsylvania and the District of Columbia
Two cases asserting punitive damage claims were originally brought in Pennsylvania and the District of Columbia.
Pennsylvania and the District of Columbia apply a combination of the governmental interest analysis and the most significant relationship test.
In Hercules, the District of Columbia Court of Appeals concurred with Judge Joyce Green in In re Air Crash Disaster, 559 F. Supp. 333, 342 (D.D.C. 1983) that "the state with the 'most significant relationship' should also be the state whose policy is advanced by application of [its] law." Hercules, 566 A.2d at 41 n. 18. In Air Crash, the seventh circuit observed that "the tests to be used, although containing significant differences, mandate an analytical inquiry which is basically the same." Air Crash, 644 F.2d at 610. Since California's governmental interest analysis and the Restatement test produced the same result for each defendant, it is unnecessary to repeat the analysis with regard to the combined tests employed by Pennsylvania and the District of Columbia.
The choice of law rules of Pennsylvania and the District of Columbia would result in application of Illinois law to punitive damage claims against United, California law to claims against McDonnell Douglas and Ohio law to claims against General Electric.
Defendants' motions to bar punitive damage claims are denied. Plaintiffs' claims for punitive damages against United Airlines are governed by Illinois law. Plaintiffs' claims for punitive damages against McDonnell Douglas are governed by California law. Plaintiffs' punitive damage claims against General Electric are governed by Ohio law.
Plaintiffs may move to take expedited discovery as to any specifically identified disputed fact material to this court's choice of law analysis.