JERMANO et al v. GRACO CHILDREN'S PRODUCTS INC.

Filing 59

ORDER Denying Defendant's 51 Motion for Reconsideration, or, in the Alternative, to Certify Under 28 U.S.C. 1292(b). n Signed by District Judge Matthew F. Leitman. (HMon)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
JOSEPH JERMANO et al.,
Plaintiffs,

Case No. 13-cv-10610
Hon. Matthew F. Leitman

v.
GRACO CHILDREN’S
PRODUCTS, INC.,
Defendant.
_________________________________/
ORDER DENYING DEFENDANT’S MOTION TO RECONSIDER, OR, IN
THE ALTERNATIVE, TO CERTIFY UNDER 28 U.S.C. § 1292(b) (ECF #51)
INTRODUCTION
On April 15, 2015, this Court issued an Opinion and Order (the “Order”) in
which it held, among other things, that Pennsylvania’s law concerning punitive and
compensatory damages applied to Plaintiffs’ negligence and strict liability claims.
(See ECF #48.) Graco now asks the Court to reconsider its choice-of-law ruling
or, in the alternative, to certify the Order for interlocutory appellate review
pursuant to 28 U.S.C. § 1292(b) (the “Reconsideration Motion”). (See ECF #51.)
Plaintiffs’ have responded to the Reconsideration Motion (see ECF #55), and the
Court conducted a telephonic hearing on the motion on May 20, 2015. For the
reasons described below, the Court DENIES the Reconsideration Motion.

1

ANALYSIS
A.

Reconsideration
1. The Governing Standard
To prevail on a motion for reconsideration, a party must “not only

demonstrate a palpable defect by which the court and the parties and other persons
entitled to be heard on the motion have been misled but also show that correcting
the defect will result in a different disposition of the case.” E.D. Mich. L.R.
7.1(h)(3). “A palpable defect is a defect that is obvious, clear, unmistakable,
manifest or plain.” Witzke v. Hiller, 972 F.Supp. 426, 427 (E.D. Mich. 1997).
2. Punitive Damages
Graco argues that the Court made two palpable errors when it decided to
apply Pennsylvania’s law of punitive damages to Plaintiffs’ negligence and strict
liability claims. First, Graco contends that the Court erroneously treated this action
as a “design defect case” and failed to appreciate the significance of Plaintiffs’
manufacturing defect claims. (See, e.g., Reconsideration Mot. at 21, Pg. ID 961.)
This argument is now moot. Following the telephonic hearing on May 20, 2015,
the parties presented to the Court, and the Court entered, a stipulated order that
dismisses, among other claims, Plaintiffs’ manufacturing defect claims. (See ECF
#58.)

2

Second, Graco contends that the Court palpably erred when it did not adhere
to the Pennsylvania rule that “[w]hen an injury arises from an accident whose
location is non-fortuitous … the law of the place of injury presumptively controls.”
(Reconsideration Mot. at 13, Pg. ID 953.) Graco argues that the location of the
accident underlying Plaintiffs’ claims – Michigan – was not fortuitous and that
Plaintiffs failed to overcome the presumption that Michigan’s law concerning
punitive damages applies to their claims. (See id. at 13-16, Pg. ID 953-956.)
The Court carefully considered and rejected this argument when it initially
concluded that Pennsylvania law applies here. The Court expressly acknowledged
the Pennsylvania rule that “in an action for personal injuries, the law of the state
where the injury occurred normally determines the rights and liabilities of the
parties” (Order at 19, Pg. ID 842) (quoting Laconis v. Burlington County Bridge
Comm., 583 A.2d 1218, 122 (Pa. Super. 1990)), but the Court then noted that
Pennsylvania courts have qualified this rule in a critical respect: the law of the state
of injury controls “unless another state, applying the contacts test, has a more
significant relationship to the occurrence and parties.” (Id., quoting Laconis,
supra). Indeed, decisions of the United States Court of Appeals for the Third
Circuit make absolutely clear that even when faced with an injury in a nonfortuitous location, a court applying Pennsylvania’s choice-of-law rules must
balance the competing interests of each relevant state. See, e.g., LeJune v. Bliss3

Salem, Inc., 85 F.3d 1069, 1072 (3d Cir. 1996) (after concluding that an
“accident’s occurrence in Delaware was not fortuitous,” court said that it “must
next examine which state has a greater interest in having its law applied”). As
explained in the Order, under the circumstances of this case, Pennsylvania has a
very strong interest in having its law of punitive damages applied while Michigan,
has a negligible interest in applying its law precluding an award of punitive
damages. Thus, any presumption that Michigan law applies because the accident
occurred in this state must give way and has been overcome.
Graco argues that the decision of the United States Court of Appeals for the
Third Circuit in Calhoun v. Yamaha Motor Corp., 216 F.3d 338 (3d Cir. 2000)
(applying punitive damages law of the place of injury), makes clear that
Michigan‘s law prohibiting punitive damages must apply in this action. The Court
disagrees. The plaintiff in Calhoun was a Pennsylvania resident who suffered an
injury while riding a Yamaha jet ski in Puerto Rico. The plaintiff brought a
products liability claim against Yamaha in a Pennsylvania federal court and sought
to recover punitive damages under Pennsylvania law. Yamaha argued that the
plaintiff’s claims for damages were governed by the law of Puerto Rico, where the
injury occurred. Puerto Rico law precluded awards of punitive damages. The
Third Circuit agreed with Yamaha and held that Puerto Rico law applied to, and
precluded, the plaintiff’s claim for punitive damages.
4

Neither the reasoning nor result of Calhoun is inconsistent with the Order.
Indeed, the Third Circuit in Calhoun analyzed the choice-of-law issue there in
much the same way that this Court analyzed the choice-of-law question presented
in this action.1 The Third Circuit concluded that the location of the accident was
not fortuitous, and it recognized that that fact weighed in favor of applying Puerto
Rico’s law of punitive damages. But the Third Circuit did not treat the place of
injury as dispositive on the choice of law question. Instead, just as this Court
balanced the interests of Pennsylvania and Michigan, the Third Circuit carefully
weighed the competing interests of Pennsylvania and Puerto Rico and determined
that Puerto Rico’s interests in precluding an award of punitive damages
outweighed Pennsylvania’s interest in allowing punitive damages.

The Third

Circuit stressed that Puerto Rico had “an especially strong interest” in regulating
“the waterways surrounding the island to preserve the economic benefits it derives
from both tourism and other commercial enterprises.” Id. at 348. That interest
weighed heavily in the court’s decision to apply Puerto Rico law precluding an
award of punitive damages.

1

Calhoun did not resolve its choice-of-law issue under Pennsylvania’s choice-oflaw rules. Instead, the issue was decided under “[f]ederal choice-of-law rules in
the admiralty arena.” Calhoun, 216 F.3d at 345. Nevertheless, Calhoun is relevant
to the Court’s current analysis because the framework and federal admiralty
principles applied in Calhoun appear to be substantially similar to the Pennsylvania
choice-of-law rules that apply here, and Calhoun relied upon several Pennsylvania
decisions.
5

Here, Michigan has no comparably strong interest in applying its law
precluding an award of punitive damages. Graco highlights Michigan’s interest in
“controlling the safety of its roadways” (Reconsideration Mot. at 18, Pg. ID 958),
but that generic interest is not nearly as significant as Puerto Rico’s special interest
in regulating the waterways which were, in essence, one of the lifelines of its
economy.
Moreover, Pennsylvania has a much stronger interest in applying its punitive
damages law in this action than it did in Calhoun. The Plaintiffs in this action
claim that a product was defectively designed in Pennsylvania and that Graco
committed outrageous conduct in Pennsylvania.

As explained in the Order,

Pennsylvania has a very strong interest in deterring and punishing tortious conduct
that occurs within its borders. That interest was simply not present in Calhoun
because the plaintiffs did not allege that any tortious conduct occurred in
Pennsylvania.

See Calhoun, 216 F.3d at 347 (“The sole relationship that

Pennsylvania enjoys with this incident is that the Calhouns –and Natalie prior to
her death – were Pennsylvania domicilliaries, as well as the fact that Natalie's
estate will be administered in Pennsylvania”). Thus, the Third Circuit’s refusal to
apply Pennsylvania’s law of punitive damages in Calhoun does not weigh
significantly against applying Pennsylvania’s punitive damages rules here.

6

The Court will not reconsider its ruling that Pennsylvania’s punitive
damages law applies in this action.
3. Compensatory Damages
During the telephonic hearing on May 20, 2015, Graco argued that even if
this Court chooses to apply Pennsylvania’s law of punitive damages, it should
apply Michigan’s law of compensatory damages. More specifically, Graco asked
the Court to apply the provision of Michigan law that imposes a $500,000 cap on
noneconomic damages for product liability claims that cause a “permanent loss of
a vital bodily function” unless a plaintiff proves gross negligence, MCL
§600.2946a, rather than Pennsylvania law, which has no such damages cap. Graco
argued that Pennsylvania has no strong interest in (1) governing the amount of
compensation to be awarded to Michigan residents for an injury that occurred in
Michigan nor (2) displacing Michigan’s cap on compensatory damages. The Court
disagrees.
Once again, Pennsylvania has a strong interest in deterring tortious conduct
that occurs within its borders, and requiring Pennsylvania tortfeasors to fully
compensate their victims for all injuries they cause – i.e., to internalize all of the
costs they impose – is an important means of achieving that deterrence. Cf. Farrell
v. Davis Ent., Inc., 1996 WL 21128, at *3 (E.D. Pa. 1996) (Pennsylvania’s joint
and several liability regime is intended to deter tortious conduct by Pennsylvania
7

residents). Indeed, courts have recognized that awarding full compensation for
injured persons “will deter tortious conduct and will encourage [manufacturers] to
make safe products for [their] customers.” Johnson v. Spider Staging Corp., 555
P.2d 997, 1002 (Wash. 1976); Villaman v. Schee, 15 F.3d 1095 at *4 (9th Cir. 1994
(Table) (“Arizona tort law is designed in part to deter negligent conduct within its
borders; thus, Arizona has a strong interest in the application of its laws allowing
for full compensatory and punitive damages”) (emphasis added).2

Thus,

Pennsylvania does have a strong interest in applying its law that requires full
compensation for all injuries caused by a Pennsylvania tortfeasor.
In contrast, for all of the reasons explained in the Order, Michigan does not
have an overriding interest in applying its cap on compensatory damages here to
protect Graco. Michigan’s cap on damages is intended, in part, to encourage outof-state companies to do business here (see Order at 12, Pg. ID 35), but the cap
need not be applied in order to induce Graco to sell its products here. Indeed,
Graco willingly does business in myriad states, including those that allow punitive
damages awards and uncapped compensatory damages. (See id. at 22, n.3, Pg. ID
845.) There is simply no reason to believe that declining to apply Michigan’s
damages cap will in any way inhibit Graco from selling its products in Michigan.
2

The Court recognizes that the Johnson and Schee cases cited above did not
involve Pennsylvania law and are distinguishable in many respects. The Court
cites these cases solely for their recognition of the principle that the availability of
full compensatory damages has some deterrent effect on potential tortfeasors.
8

See, e.g., Johnson, 555 P.2d at 584, n. 2d (concluding that out-of-state company
could not have relied on Kansas law limiting available damages when selling
product in Kansas because the company “advertise[s] and sell[s] their products in
all 50 states,” including states without damages limitations). Thus, Michigan does
not have a strong interest in capping Plaintiffs’ compensatory damages.
The Court adheres to its decision to apply Pennsylvania’s law of
compensatory damages.
B.

Certification for Interlocutory Review
Graco has asked the Court to certify the choice-of-law question for

interlocutory appeal pursuant to 28 U.S.C. § 1292(b). (See Reconsideration Mot.
at 22-25, Pg. ID 962-965.) This statute provides, in relevant part, that:
When a district judge, in making in a civil action an order
not otherwise appealable under this section, shall be of
the opinion that such order involves a controlling
question of law as to which there is substantial ground
for difference of opinion and that an immediate appeal
from the order may materially advance the ultimate
termination of the litigation, he shall so state in writing in
such order. The Court of Appeals which would have
jurisdiction of an appeal of such action may thereupon, in
its discretion, permit an appeal to be taken from such
order, if application is made to it within ten days after the
entry of the order[.]
28 U.S.C. 1292(b). Such certifications should be “granted sparingly and only in
exceptional cases.” In re City of Memphis, 293 F.3d 345, 350 (6th Cir. 2002).

9

The Court is not persuaded that this is an appropriate case for an
interlocutory appeal. Graco has not convinced the Court that allowing such an
appeal would in any way enhance the efficiencies of this action or materially
advance the ultimate resolution of this case. The Court is confident that, following
a trial, the Sixth Circuit will be able to meaningfully review this Court’s choice-oflaw rulings on the damages issues and will be able to disallow any aspects of a
damages award that are inconsistent with Michigan law, if that court accepts
Graco’s argument that Michigan law applies. Accordingly, the Court will not
certify the damages choice-of-law question for interlocutory review.
CONCLUSION
For all of the reasons stated above, Graco’s Reconsideration Motion (ECF
#51) is DENIED.

s/Matthew F. Leitman
MATTHEW F. LEITMAN
UNITED STATES DISTRICT JUDGE
Dated: May 29, 2015

I hereby certify that a copy of the foregoing document was served upon the
parties and/or counsel of record on May 29, 2015, by electronic means and/or
ordinary mail.
s/Holly A. Monda
Case Manager
[phone]
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