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Business Groups Ask Nevada Supreme Court to Reconsider “Civil Death Penalty” Decision

Business groups across the nation have asked the Nevada Supreme Court in an amicus brief to reconsider its decision to uphold a $30 million verdict against Goodyear Tire and Rubber Company in a product liability case. The organizations filed an amicus brief because, while they are not parties to the litigation, they have an interest in the outcome. They believe the “civil death penalty” used in this case unjustly limits the rights of businesses in litigation.

The Nevada Supreme Court’s Decision

The controversy stems from a product liability case against Goodyear for a rollover accident that occurred in 2004. The plaintiffs claim that the Goodyear tires on the vehicle were defective and caused the accident in which three people died and seven were injured.

A Nevada trial court judge ordered sanctions against Goodyear after finding that the company stalled and obstructed the pre-trial discovery process. The judge applied what is sometimes called the “civil death penalty,” and ruled that Goodyear could not present its claims.

The rationale behind this sanction is that a party should not be able to make its claims in court if the party refuses to comply with the required procedures. Therefore, Goodyear was held liable and all that remained for the jury to consider was the amount of damages to award. The jury returned with a $30 million amount.

In July, 2010, the Nevada Supreme Court upheld the trial court’s decision. The Supreme Court concluded that Goodyear’s conduct throughout the discovery process caused stalling and unnecessary delays. It affirmed the trial judge’s sanction, noting that a discovery commissioner made a finding that the company was not acting in good faith when it repeatedly refused to produce documents or answer questions.

Why Businesses Oppose the Decision

Business organizations have urged the Nevada Supreme Court to reconsider its decision. Their amicus brief says the Court’s decision was a “shot heard around the United States business community” because it denied a business its “constitutional right to defend itself in court.”

An advisor for a national manufacturing association says the case is alarming because of its extreme outcome and how it may affect future product liability lawsuits. He contends that the ruling creates an incentive for plaintiffs to make discovery as long and complicated as possible in hopes that the defendant company will make a mistake that a judge will seize upon as enough to justify the civil death penalty.

However, it is disingenuous to equate this sanction that cost Goodyear a fraction of its quarterly net income with the extreme consequences of the death penalty. While it was a drastic measure, seven judges and an independent commissioner concluded that Goodyear earned the consequence with its egregious behavior.

Furthermore, corporate defendants historically have been more prone to abusing the discovery process than plaintiffs. Some companies respond to litigation by intentionally prolonging discovery because they know an individual plaintiff will run out of money to maintain the litigation long before a company’s coffers are emptied. While some business people disagree, perhaps the Nevada Supreme Court’s decision is simply meant to fiercely protect consumers from deadly defective products and manufacturers’ stalling tactics.