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WOLF v. P&G

December 22, 1982

STACY E. WOLF, a minor by her Guardian ad litems LEROY A. WOLF and DORIS E. WOLF, Individually, Plaintiffs,
v.
THE PROCTER & GAMBLE COMPANY and THE PROCTER & GAMBLE DISTRIBUTING COMPANY, Defendants



The opinion of the court was delivered by: FISHER

 This is an action by plaintiffs Stacy Wolf, Doris E. Wolf, and Leroy A. Wolf against defendants the Procter & Gamble Company and the Procter & Gamble Distributing Company, (hereinafter "Procter & Gamble"). Plaintiffs allege that in March, 1980, Stacy Wolf contracted Toxic Shock Syndrome (hereinafter "TSS") as a result of using Rely tampons, a product manufactured and distributed by defendants. Plaintiffs' complaint asserts negligence, strict products liability, breach of express and implied warranty and reckless misrepresentation. They seek both compensatory and punitive damages.

 Presently before the Court are eight (8) in limine motions brought by plaintiffs and defendants and a motion to intervene brought by 20 plaintiffs in other Rely tampon actions. All motions are opposed except for plaintiffs' motion to exclude reference to other pending Rely tampon actions as a ground for mitigation of punitive damages. Defendants have advised the Court that they do not intend to introduce such evidence during this trial. I will therefore assume that defendants do not oppose this motion and it is granted.

 I. State of the Art Defense

 Plaintiffs argue that the New Jersey Supreme Court's recent rulings in Freund v. Cellofilm Properties, Inc., 87 N.J. 229, 432 A.2d 925 (1981) and Beshada v. Johns-Manville Products Corp., 90 N.J. 191, 447 A.2d 539 (1982) have eliminated defenses to which such evidence would be relevant.

 In Freund, supra at 237-241, the Court examined the difference between negligence and strict liability theories in the context of an inadequate warning issue. It concluded that whereas the negligence approach is conduct-oriented and looks to the issue of the reasonableness of the manufacturer's actions, the strict liability approach is product-oriented and looks to the dangerousness of the product. Under the latter approach, knowledge of the inherent danger of the product is imputed to the manufacturer and the question of what it knew or should have known is irrelevant. Id. The Court held that in an inadequate warning design defect case, a strict liability charge should be given and that the charge:

 
Must focus on safety and emphasize that a manufacturer, in marketing a product with an inadequate warning as to its dangers, has not satisfied its duty to warn, even if the product is perfectly inspected, designed, and manufactured. Moreover, and importantly, the charge must make clear that knowledge of the dangerous trait of the product is imputed to the manufacturer. It must also include the notion that the warning be sufficient to adequately protect any and all foreseeable users from hidden dangers presented by the product. This duty must be said to attach without regard to prevailing industry standards. 87 N.J. at 242-43.

 Freund does not stand for the proposition that evidence such as that which plaintiff seeks to have excluded is irrelevant and inadmissible where, as here, the manufacturer's negligence is also at issue. Rather, the Court recognized that while the defendant's knowledge may be presumed for purposes of determining strict liability, "in negligence cases, such knowledge must be proved." Id. at 239.

 In Beshada, supra, the Court once again looked at a strict liability case dealing with failure to warn. There it dealt with the issue of the allowability of the state-of-the-art defense, which conditions products liability on whether the product's dangers were scientifically discoverable at the time it was marketed. Id. at 202. It held that in a strict liability failure to warn case, such a defense would not be allowed as the manufacturer's knowledge and fault are not relevant. However the Court did not rule out the use of the state-of-the-art defense where the manufacturer's negligence is at issue. To the contrary, the Court said "state-of-the-art is a negligence defense. It seeks to explain why defendants are not culpable for failing to provide a warning." Id. at 204.

 In the present case, defendants' conduct is very much at issue. Although Count I is based upon strict liability in tort, there is also a count of negligence and one of intentional, knowing, or reckless misrepresentation. Plaintiffs seek not only compensatory damages, but punitive damages as well. Defendants should not be precluded from introducing evidence relevant to the reasonableness of their behavior. A strict liability jury charge as contemplated by the New Jersey Supreme Court in Freund, supra, will prevent the plaintiffs from being unduly prejudiced by this evidence.

 Plaintiffs' motion to exclude evidence pertaining to the state-of-the-art defense is denied.

 Defendants have moved to strike plaintiffs' claim for punitive damages or in the alternative to exclude reference to punitive damages during voir dire and opening statements and to exclude evidence of defendants' finances until plaintiffs establish a prima facie showing of entitlement to punitive damages.

 The motion to strike the punitive damages claim is essentially one for partial summary judgment. Where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law, summary judgment is appropriate. Fed.R.Civ.P. 56(c).

 Defendants contend that the claim for punitive damages is inconsistent with a claim for compensatory damages under strict liability. They refer us to a recent, well reasoned decision in this district where Judge Ackerman, examining New Jersey law, determined that a New Jersey court, as a matter of law, would not allow punitive damages to be awarded in an action based upon strict liability. Gold v. Johns-Manville Sales Corp., 553 F. Supp. 482 (D.N.J. 1982). He based this prediction upon the New Jersey Supreme Court's decision in Beshada, supra, reasoning that a claim for punitive damages, which, like state-of-the-art defense is based upon defendant's knowledge, is a negligence concept and focuses upon the reasonableness of defendant's behavior rather than upon whether the product was reasonably safe. However, the Judge, noting that plaintiffs still intended to assert claims based upon negligence, refused to strike the claims for punitive damages. Id., Tr. 31:8-13. Since, in the case here, plaintiffs still intend to assert claims based upon negligence and intentional, knowing and reckless misrepresentation, we cannot strike plaintiffs' claim for punitive damages as a matter of law. *fn1"

 Defendants argue that plaintiffs will be unable to meet the high burden of proof necessary to establish entitlement to punitive damages and are unlikely to prevail on this issue. However the likelihood of plaintiffs' prevailing is not the appropriate standard to be applied in determining whether to dismiss this claim. Summary judgment is only appropriate if, taking plaintiffs' allegations as true and drawing all inferences in their favor, we are convinced from our review of the evidential sources available that there is no genuine issue of material fact. Scott v. Plante, 532 F.2d 939, 945 (3d Cir. 1976).

 Punitive damages may be awarded where defendant's conduct is "especially egregious." Leimgruber v. Claridge Associates, Ltd., 73 N.J. 450, 454, 375 A.2d 652 (1977). Such conduct must be actuated by intentional wrongdoing or accompanied by wanton and wilful disregard of the rights of another. DiGiovanni v. Pessel, 55 N.J. 188, 191, 260 A.2d 510 (1970).

 Defendants claim that they have acted with the utmost of responsibility and concern for the health and safety of Rely users and that plaintiffs will be unable to meet the heavy burden of proof required for an award of punitive damages. As support for this contention they allege that they thoroughly tested Rely, both prior to marketing it and continually during its lifetime; that at the time of Stacy Wolf's illness, the possible association between TSS and Rely or any other tampon was unknown; that they voluntarily withdrew Rely from the market at the first indication of a statistical correlation between it and TSS; and that they are presently funding, through unrestricted grants, TSS research. They argue that because of these facts, plaintiffs will be unable to demonstrate that defendants knew or should have known of a substantial risk of injury from Rely and that they acted with reckless disregard of the consequences or that they otherwise acted intentionally or with wanton and reckless disregard of plaintiffs' rights.

 It appears from the foregoing that a genuine issue of material fact exists as to whether defendants' actions constituted wanton and reckless disregard for plaintiffs' rights and safety. Defendants' motion to dismiss plaintiffs' claim for punitive damages is therefore denied.

 Defendants seek to preclude plaintiffs from referring to punitive damages during voir dire and opening statements. They also seek to exclude evidence of Procter & Gamble's finances and expenditures on Rely until a prima facie case for punitive damages has been established. Defendants contend that premature mention of punitive damages will unfairly prejudice them and that financial information is not only prejudicial but irrelevant unless and until a prima facie showing of entitlement to punitive damages is established.

 Plaintiffs argue that a rule that would exclude reference to an element of a case before a prima facie showing is made of its existence, would do away with opening statements. In addition they argue that financial information is relevant not only to the issue of punitive damages but also to the issue of defendants' negligence, i.e., whether defendants acted reasonably in failing to conduct certain tests.

 The purpose of voir dire is to enable the trial judge and counsel to determine whether a prospective juror is biased. Photostat Corp. v. Ball, 338 F.2d 783, 786 (10th Cir. 1964). Any potential abuse of the voir dire process is eliminated in this district by the fact that the trial judge conducts the voir dire examination. I fail to see the need to rule now on the question of whether to allow reference to punitive damages during voir dire. That determination can be made by the trial judge when proposed voir dire questions are submitted by counsel.

 The purpose of an opening statement is to inform the jurors of the nature of the action, the issues and the questions of fact involved in order to facilitate their understanding of the evidence to be presented. Shafer v. H.B. Thomas Co., 53 N.J. Super. 19, 26, 146 A.2d 483 (App. Div. 1958), 75 Am. Jur. 2d Trial § 125 (1974). Plaintiffs have alleged and have offered to prove that defendants acted with wanton and reckless disregard of the rights and safety of plaintiffs. They should be allowed, in their opening statement, to advise the jury of the issues and questions of fact they intend to raise so that the jurors will be better able to understand the evidence.

 Defendants also seek to exclude evidence of Procter & Gamble's finances until a prima facie case for punitive damages is established. It is well settled that such evidence is admissible in a case where punitive damages are recoverable. Newport v. Fact Concerts, Inc., 453 U.S. 247, 270, 69 L. Ed. 2d 616, 101 S. Ct. 2748 (1981), Herman v. Hess Oil Virgin Islands Corp., 524 F.2d 767, 772 (3d Cir. 1975).

 As previously stated, plaintiffs propose to introduce evidence that will raise a genuine factual issue as to whether defendants' conduct warrants an award of punitive damages. When they do, evidence of Procter & Gamble's financial condition will be relevant and admissible. Pursuant to Fed.R.Evid. 104(b), *fn2" the Court will admit such evidence upon a finding that plaintiffs have established a prima facie case of entitlement to punitive damages. However, the decision as to evidence of Procter & Gamble's financial condition does not apply to evidence of its expenditure for the development and marketing of Rely, which evidence may be relevant to the reasonableness of defendants' actions.

 For the above reasons, defendants' motion to exclude reference to punitive damages during voir dire and opening statements is denied but their motion to exclude evidence of Procter & Gamble's financial condition until plaintiffs establish a ...


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