Aleo v. SLB Toys USA, Inc.
466 Mass. 398 (2013)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A punitive damages award does not violate the Fourteenth Amendment's Due Process Clause if it is not 'grossly excessive' when reviewed against the reprehensibility of the defendant's conduct, the ratio of the punitive award to actual harm, and a comparison to civil or criminal penalties for comparable misconduct.
Facts:
- In 2005, Toys R Us decided to purchase and import the Banzai Falls In-Ground Pool Slide from a vendor in China for sale in the United States.
- Toys R Us retained Bureau Veritas, an independent testing laboratory, but did not request or confirm that the slide was tested for compliance with 16 C.F.R. § 1207, a Federal safety standard applicable to swimming pool slides.
- The Banzai Falls In-Ground Pool Slide's instruction manual and warning label indicated it could support only 200 pounds and that head-first sliding could result in serious injury or death, directly conflicting with 16 C.F.R. § 1207 requirements for 350-pound capacity and head-first testing.
- In 2006, Sarah Letsky purchased a Banzai Falls In-Ground Pool Slide from Toys R Us and installed it at her home in Andover.
- On July 29, Robin Aleo, weighing approximately 145 pounds, slid head-first down the slide; the bottom part of the underinflated slide collapsed under her weight.
- Robin's head struck the concrete deck of the swimming pool through the fabric of the slide, fracturing her upper two cervical vertebrae and resulting in quadriplegia.
- Robin Aleo died the following day after her family, in accordance with her wishes, decided to withdraw life support.
Procedural Posture:
- In 2008, Michael Aleo, Robin’s widower, filed an action in the Superior Court, both individually and as administrator of Robin’s estate, against SLB Toys USA, Inc., and Amazon.com, Inc., alleging negligence, breach of the implied warranty of merchantability, wrongful death, and violation of G. L. c. 93A.
- Toys R Us and Amazon.com Kids, Inc., were subsequently added as additional defendants.
- SLB Toys USA, Inc., Amazon.com, Inc., and Amazon.com Kids, Inc. settled the claims against them during trial and were not parties to the appeal.
- A Superior Court jury found Toys R Us liable for negligence, breach of warranty, and wrongful death, awarding compensatory damages of $2,640,000.
- The jury also found Toys R Us grossly negligent and awarded punitive damages in the amount of $18 million.
- The judge denied Toys R Us’s post-trial motions for a new trial on all issues, judgment notwithstanding the verdict, and a new trial on damages subject to remittitur.
- Toys R Us appealed, and the Supreme Judicial Court of Massachusetts allowed both parties’ applications for direct appellate review.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does an $18 million punitive damages award against a retailer for gross negligence causing wrongful death, with a compensatory damages award of $2.64 million, violate the Due Process Clause of the Fourteenth Amendment to the United States Constitution?
Opinions:
Majority - Lenk, J.
No, the $18 million punitive damages award against Toys R Us for gross negligence leading to a wrongful death does not exceed constitutional limits and therefore does not violate the Due Process Clause of the Fourteenth Amendment. The court applied the three-factor test established in BMW of N. Am., Inc. v. Gore to assess the award's constitutionality. First, regarding the 'degree of reprehensibility' of Toys R Us's conduct, the court found it substantially reprehensible. Toys R Us's conduct, though grossly negligent rather than malicious, caused grievous physical harm (death), evinced an indifference to the safety of others by neglecting to ensure compliance with applicable safety regulations, and involved repeated actions (importing thousands of non-compliant slides). Second, concerning the 'ratio of the punitive award to the actual harm inflicted,' the $18 million punitive damages and $2,640,000 compensatory damages resulted in a ratio of slightly less than seven to one. Citing State Farm Mut. Auto. Ins. Co. v. Campbell, the court noted that single-digit ratios are generally within constitutional bounds and that a higher ratio can be appropriate when noneconomic harm, such as the loss of a young woman's life, is difficult to quantify. Third, in comparing 'the punitive damages award and the civil or criminal penalties that could be imposed for comparable misconduct,' the court determined that Toys R Us's importation of non-compliant slides could have triggered civil penalties under 15 U.S.C. § 2069(a)(1) for 'knowing' violations. Given that Toys R Us imported approximately 4,000 slides, the maximum civil penalty at the time would have been $1,250,000. This resulted in a punitive to civil penalty ratio of approximately fourteen to one. While this ratio appeared high, the court emphasized that strict equivalence is not necessary and cited other cases where higher ratios were approved, also noting later legislative amendments that increased maximum penalties as a reflection of the conduct's gravity. Based on these guideposts, the court concluded the award was not 'grossly excessive' or arbitrary.
Analysis:
This case provides crucial guidance on the constitutional limits of punitive damages in product liability and wrongful death actions, particularly when the defendant's conduct is characterized by gross negligence rather than intentional malice. By thoroughly applying the BMW v. Gore factors, the Supreme Judicial Court of Massachusetts reinforces that substantial punitive awards are permissible to deter corporate indifference to safety regulations, especially when such negligence leads to severe physical harm or death and involves widespread distribution of dangerous products. The decision underscores that courts will give significant weight to the reprehensibility of the conduct and the difficulty of valuing noneconomic harm when assessing the ratio of punitive to compensatory damages, providing a strong incentive for companies to prioritize robust product safety compliance to avoid severe financial penalties.
