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KELLY v. FORD MOTOR CO.

July 26, 1996

SUSAN I. KELLY, Administratrix and Personal Representative of the Estate of GERALD A. KELLY. Deceased, on Behalf of Said Decedent's Heirs-At-Law and Next-Of-Kin and on Her Own Behalf, Plaintiff,
v.
FORD MOTOR COMPANY, Defendant.



The opinion of the court was delivered by: REED

 Reed, J.

 July 26, 1996

 Plaintiff Susan I. Kelly ("Kelly"), administratrix and personal representative of the Estate of Gerald A. Kelly, Deceased, on behalf of decedent's heirs-at-law and next-of-kin and on her own behalf, has brought this action against defendant Ford Motor Company ("Ford"). Plaintiff asserts several claims against defendant, including a claim for punitive damages, arising out of an accident which occurred on June 20, 1992, when plaintiff's decedent, driving a Ford Bronco II ("Bronco II"), suffered fatal injuries claimed to be caused by the defective product designed and manufactured by defendant. This Court has jurisdiction pursuant to 28 U.S.C. ยง 1332 as the parties are diverse and the amount in controversy exceeds $ 50,000.

 Currently before this Court is the motion of defendant for partial summary judgment, pursuant to Fed. R. Civ. P. 56, as to the substantive law applicable to plaintiff's claim for punitive damages. (Document No. 20) For the following reasons, the motion will be granted.

 I. FACTUAL BACKGROUND

 On June 30, 1992, the decedent of plaintiff was killed in an automobile accident that occurred while decedent was operating his Bronco II in an easterly direction on the Pennsylvania Turnpike in Montgomery County, Pennsylvania. Plaintiff and decedent had purchased the Bronco II on September 4, 1986, at a Ford dealership in Morrisville, Pennsylvania. Both plaintiff and decedent were domiciled in Pennsylvania and resided in Bucks County, Pennsylvania at the time of the accident.

 Ford is a Delaware corporation with its principal place of business in Dearborn, Michigan. The decision to produce the Bronco II was made by Ford employees in Dearborn, Michigan, as were decisions and activities regarding the design and testing of prototype and production level Bronco II vehicles. Bronco II vehicles were subjected to dynamic tests at Ford's Dearborn Proving Grounds Test Track and the public highways in Michigan. Further, the handling and stability characteristics of the Bronco II's were also tested in Dearborn, Michigan using a computer simulation program that was designed and developed in Ann Arbor, Michigan. The Owner's Manual Supplement and the language of the warning label placed in all Bronco II vehicles were prepared in Michigan.

 II. DISCUSSION

 Pursuant to Fed. R. Civ. P. 56(c), a motion for summary judgment may be granted when the evidence of record "show[s] that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). When considering a motion for summary judgment, "all reasonable inferences that can be drawn from the record must be viewed in the light most favorable to the party opposing the motion." Connors v. Fawn Mining Corp., 30 F.3d 483, 489 (3d Cir. 1994).

 Defendant has brought this motion for partial summary judgment on the plaintiff's claim for punitive damages, arguing that there is no genuine issue of material fact and that Ford is entitled to judgment as a matter of law on this issue. Ford asserts that Michigan's substantive law prohibiting punitive damages applies to this case. *fn1" Plaintiff responds that this Court should apply Pennsylvania law which allows the award of punitive damages.

 When choosing between Michigan and Pennsylvania's laws on punitive damages, in a diversity case such as this one, this Court must apply the choice of law rules of the state in which it sits. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 85 L. Ed. 1477, 61 S. Ct. 1020 (1941). Pennsylvania has adopted a flexible choice of law methodology which combines contacts analysis and interest analysis. Carrick v. Zurich-American Ins. Group, 14 F.3d 907, 909-10 (3d Cir. 1994); Griffith v. United Air Lines, Inc., 416 Pa. 1, 203 A.2d 796 (Pa. 1964).

 Before applying this analysis, however, this Court must first determine whether or not a false conflict exists. A false conflict exists where "only one jurisdiction's governmental interests would be impaired by the application of the other jurisdiction's law." Lacey v. Cessna Aircraft Co., 932 F.2d 170, 187 (3d Cir. 1991); Eagan v. Jackson, 855 F. Supp. 765, 777 (E.D. Pa. 1994). If there is a false conflict, then there is no need to proceed with the contacts and interest analyses. Instead, the court must apply the law of the state whose interest would be harmed if its laws were not applied. Lacey, 932 F.2d at 187.

 In the instant case, a real rather than false conflict exists. Pennsylvania law allows the award of punitive damages when the conduct complained of is especially egregious. Martin v. Johns-Manville Corp., 508 Pa. 154, 494 A.2d 1088, 1096 (Pa. 1985). Punitive damages serve the dual purpose of punishing the defendant for misconduct and deterring the defendant and others from engaging in similar misconduct. Cavalier Clothes Inc. v. Major Coat Co., 1991 U.S. Dist. LEXIS 8861, Civ. A. No. 89-3325, 1991 WL 125179 (E.D. Pa. June 26, 1991). In Michigan, damages may not be awarded to punish the defendant. Kewin v. Massachusetts Mutual Life Ins. Co., 409 Mich. 401, 295 N.W.2d 50 (Mich. 1980). The parties have not identified and this Court has not found any Michigan Supreme Court opinion, or any lower Michigan state court opinion, which explicates the purpose behind Michigan's law prohibiting the award of punitive damages. However, we find persuasive other courts' opinions expressing the policy reflected in laws of other states, such as California and Illinois, which do not allow the award of punitive damages. See In re Air Crash Disaster Near Chicago Ill., 644 F.2d 594 (7th Cir.), cert. denied, 454 U.S. 878, 70 L. Ed. 2d 187, 102 S. Ct. 358 (1981); In re Disaster at Detroit Metro. Airport on August 15, 1987, 750 F. Supp. 793 (E.D. Mich. 1989). Based on their explanation of the purpose behind the disallowance of punitive damages, this Court concludes that the law of Michigan prohibiting the award of punitive damages serves to protect Michigan-domiciled defendants from excessive financial liability. See Detroit 750 Supp. at 805. Furthermore, this Court also concludes that "those states [such as Michigan] which have refused to impose punitive damages on its defendants have done so in order to promote (1) the financial stability of the businesses that conduct their affairs within its borders, and (2) the ...


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