Product Liability Newsletter - December 2013: Punitive Damages Based on Gross Negligence: Massachusetts Bucks the Trend

In the recent decision in Aleo v. SLB Toys USA, Inc., 466 Mass. 398 (2013), the Massachusetts Supreme Judicial Court (SJC) found that an $18 million punitive damages award based on gross negligence was not grossly excessive or violative of due process. As one of eight states that permit punitive damages awards based on gross negligence, Massachusetts is the only state that has not yet enacted statutory restrictions or imposed court-mandated limitations on such damages as articulated by the United States Supreme Court (Supreme Court). The SJC had the opportunity in Aleo to bring the Commonwealth’s treatment of punitive damages awards based on gross negligence in line with other states that permit such awards; unfortunately it chose not to do so. Specifically, the SJC declined to establish a standard to guide juries in the Commonwealth to distinguish between punitive damages awards based on gross negligence and such awards based on willful, wanton or intentional conduct.

Background -

In Aleo, the estate of a woman who died after going down an inflatable pool slide head- first alleged that the defendant retailer failed to test to ensure that the slide complied with a Consumer Product Safety Commission regulation applicable to pool slides. The defendant denied that the regulation applied to inflatable pool slides. Further, it argued that it had in good faith relied on a third-party reputable testing agency, which certified that the slide complied with all applicable federal regulations. The jury found that the defendant was grossly negligent, and awarded $2,640,000 in compensatory damages and $18 million in punitive damages.

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