Supreme Court reinstates $6 million punitive award
The California Supreme Court reinstated a $6 million punitive award to Robinson Helicopter Co., ruling a jury was right to punish an Ohio supplier for misrepresenting faulty engine parts sold to the Torrance-based company.
The state high court's 6-1 decision in San Francisco overturned a lower court ruling that reversed a Superior Court jury's award to the helicopter manufacturer.
Robinson sued Toledo, Ohio-based Dana Corp. after discovering cracks in engine clutches it purchased from the company. Dana had changed the way it manufactured the parts without telling Robinson.
The Sprag clutch is primarily a safety mechanism that allows the helicopter's rotor blades to continue turning, and the pilot to maintain control of the helicopter, even if the aircraft loses power.
Of the 3,707 Sprag clutches Robinson bought from Dana between 1984 and July 1996, only 0.03 percent were faulty. But nearly 10 percent of the approximately 990 clutches purchased between July 1996 and October 1997 failed.
Dana disclosed for the first time in 1998 that it had changed the way it manufactured the parts during that period. Robinson was required to recall and replace all the faulty clutch assemblies, which cost the company more than $1.5 million.
Jurors decided Dana should pay $1.5 million to Robinson in compensatory damages and $6 million in punitive damages. But the 2nd District Court of Appeal reversed the punitive damage award in January 2003, saying it was a contractual dispute that did not warrant punitive damages.
Robinson appealed to the state Supreme Court, which disagreed with the lower court and Dana's argument that "proposes to increase the certainty in contractual relationships by encouraging fraudulent conduct at the expense of an innocent party," the opinion stated.
Associated Press