KIM v. TOYOTA MOTOR CORPORATIONRespondents’ Response to Amicus Curiae BriefCal.November 17, 2016Case No. §232754 IN THE SUPREME COURT OF CALIFORNIA WILLIAM JAE KIM,etal., Plaintiffs and Appellants, Vs. TOYOTA MOTOR CORPORATION,et al., Defendants and Respondents. Second District Court ofAppeal No. B247672 Los Angeles County Superior Court The Honorable Raul A. Sahagun ETCED. Civil Case No. VC059206 See toe NOV 17 2016 RESPONDENTS’ CONSOLIDATED ANSWER TO AMICUS CURIAEBRIEFS Jorge Navarrete Clerk Deputy Patrick Rogan (SBN 54428) *Robert A. Brundage (SBN pat@patrickroganlaw.com 159890) 20406 Seaboard Rd. robert.brundage@morganlewis.com Malibu, CA 90265 Nicolette L. Young (SBN 280810) Telephone: +1.310.795.5214 nicolette.young@morganlewis.com MORGAN,LEWIS & BOCKIUS David P. Stone LLP . Admittedpro hac vice One Market david.stone@bowmanandbrooke.com Spear Street Tower BOWMANAND BROOKE LLP San Francisco, CA 94105-1596 2501 North Harwood, Suite 1700 Telephone: +1.415.442.1000 Dallas, TX 75201 Facsimile: +1.415.442.1001 Telephone: +1.972.616.1700 Facsimile: +1.972.616.1701 Attorneys for Respondents Toyota Motor Corporation, Toyota MotorSales, U.S.A., Inc., Toyota Motor North America, Inc., Toyota Motor Engineering & Manufacturing North America, Inc. and PowerToyota Cerritos TABLE OF CONTENTS Page I. INTRODUCTION|...eceeeeeeceseeeesseteseesseeseessnessesstesssennsesenses 1 Il. ARGUMENT10... cecssecsccceeeseeeeceseecserscesseeeeeestecsssecsrssusessassees 2 A. There Is No One-Size-Fits-All Rule...........cccccceeee 3 B. Evidence That No Competing Pickup Had ESC WasRelevantto the BarkerRisk/Benefit Factors........... 5 C. Plaintiffs’ Proffered Policy Arguments Do Not Support Categorically Excluding Industry Custom........ 9 Il. CONCLUSIONouncecceeseseeeeessesescseeeneseeseecesesessssecssssssseans 13 TABLE OF AUTHORITIES Page(s) CASES Barker v. Lull Engineering Co. (1978) 20 Cal.3d 413ccccccscessssesescsesscesscssesscerssssssssnscenas 4,5,6,9,12 Cronin v. J.B.E. Olson Corp. (1972) 8 Cal.3d 121 oecccscessssesssseesesecsesscsecsesscsrcsssssssestecssseeneeseaees 9 STATUTES Cal. Evid. Code § BSD ieeecsssceeessesesseseecseeecesssesesessesassesesscsecssessceecsecssesssssseaeeacarenees 9,10 -ii- I. INTRODUCTION No amicushas supportedplaintiffs’ call to ban industry-practice evidence. Theplaintiffs’ bar obviously knowsthis case exists; Consumer Attorneys of California even filed a letter urging depublication of the Court ofAppeal opinion. Consumer Attorneys and other organizations of plaintiffs’ lawyers are no strangersto filing amicus briefs in this Court. The absenceofany amicus support for plaintiffs’ proposed rule, even from the plaintiffs’ bar, underscores a point emphasized by Toyota and its amici. Plaintiffs and defendants have long introduced industry practice as probative ofthe existence (or non-existence) of a design defect. Relying on evidenceof industry practice, appellate courts have repeatedly upheld verdicts for plaintiffs and defendants. See AnswerBrief on the Merits (ABOM)39-44. Plaintiffs’ proposal to categorically exclude evidence of industry practice would deprivejuries of a useful reference point, long recognized by both plaintiffs and defendants,to assist in evaluating whether a design is defective. It would likewise deprive juries of a valuable reality check on the opinions of paid expert witnesses. The amicusbriefs that have been filed reaffirm why industry practice evidence can be admissible, depending on its nature and purpose, and that the trial court did not abuseits discretion in admitting the evidence here. We recognize that the Court has read the amicusbriefs; this briefwill not repeat their arguments at length. We merely attempt to assist the Court -l- by explaining how points made by amicirelate to someoftheparties’ arguments. Wecite a given amicusbrief by the submitting organization and the brief’s page number, referring to the amicusbriefs as follows: “Alliance” is the Alliance of Automobile Manufacturers. “IADC”is the International Association ofDefense Counsel. “PLAC”is the Product Liability Advisory Council. “Chamber”is the Chamber of Commerce ofthe United States. “CJAC”is the joint brief of the Civil Justice Association of California and California Chamber of Commerce. Wecite the Court ofAppeal slip opinion as “Op.” and party briefs as “OB”(plaintiffs’ opening brief), “ABOM”(Toyota’s answerbrief on the merits) and “RBOM”(plaintiffs’ reply brief on the merits). Il. ARGUMENT The Court ofAppeal held that “evidence of industry custom and practice may berelevant and, in the discretion ofthe trial court, admissible in a strict products liability action, depending on the nature of the evidence and the purpose for which the party seeking its admission offers the evidence.” Opinion (“Op.”) 13. It held underthis rule that the trial court did not abuseits discretion in denying plaintiffs’ motion in limine, and that plaintiffs had not otherwise objected or requesteda limiting instruction. Op. 19-25. As Toyota’s brief details, the Court of Appeal’s substantive and -2- procedural holdings were correct on this record. Amici’s briefs further demonstrate why the Court’s holdings makelegal and practical sense for the run of cases, and whyplaintiffs’ contrary arguments are misguided. A. There Is No One-Size-Fits-All Rule. As amici demonstrate, the Court ofAppeal wasright to reject categoricalrules either admitting or excluding industry-practice evidence. Relevance and prejudice are discretionary decisionsfor the trial court based on the nature and purposeofthe evidence. First, the standard ofreview is deferential: abuse of discretion. PLAC 12-13. Second,plaintiffs define industry-standard evidence as evidence that everyone in an industry uses a design feature, or that no onein the industry uses it, which they call “industry standard” evidence. OB 28. But as amici pointout, plaintiffs concede that evidence meeting that definition is admissible for some purposes. Alliance 7-8; PLAC 2, 8-9, 14-15; Chamber 4. Plaintiffs acknowledgedin thetrial court that admissibility depended on the purpose for which the evidence was offered. Op. 19, 24; ABOM 5-6, 23. The Court ofAppeal provided specific examples ofpurposes for which such evidenceis and is not admissible. CJAC 17-18'. ' Toyota disagrees with the Court of Appeal’s statementthat the evidence here was inadmissible for certain particular purposes. ABOM 33-34, 34- 35; see Op. 18-19. Butit agrees that industry-standard evidenceis not -3- Third, plaintiffs’ proposal is brazenly one-sided. Plaintiffs try to characterize evidence comparing the defendant’s design with competitors’ as inadmissible “industry custom” whenit tends to show no defect and admissible probative evidence whenit tends to show a defect. Thus, they claim that evidence of competitors’ practices is admissible when it bears on the risk/benefit factors in waysthat favorplaintiffs (such as showingthat a feature was technically feasible) but inadmissible whenit bears on the Barkerrisk/benefit factors in ways that favor defendants (such as showing that consumers did not wantthe feature, making the feature an adverse consequenceto the consumer and making the feature economically infeasible). Alliance 7-8, 12-13; PLAC 13-17; IADC 12-13; Chamber4; see Barker v. Lull Engineering Co. (1978) 20 Cal.3d 413, 431 (enumerating non-exclusive factors). In this very case, plaintiffs contended that evidence that competitors did not have ESC was admissible undertherisk/benefit test to support plaintiffs’ claim that the Tundra was defective, butthat it wasinadmissible to support Toyota’s claim that it was not. Alliance 7-8; see ABOM 5-6, 23; Op. 3-4 & n.3. Plaintiffs contended that it was admissible to support their claim “underthe risk benefit doctrine” before their motion in limine was denied. ABOM 25; RT-II-310-11. categorically admissible regardless of purpose any morethanit is categorically inadmissible regardless ofpurpose. -4- B. Evidence That No Competing Pickup Had ESC Was Relevant to the Barker Risk/Benefit Factors. The Court ofAppeal explained that evidence that no competing pickup offered ESC wasrelevant to several issues raised bythis record, at the behestofboth plaintiffs and Toyota. Op. 18-25. Toyota’s brief details numerous additional issues to which it was relevant. ABOM 28-39. Plaintiffs do not dispute the evidence’s relevance to support their own defect claim; that relevancebyitself is sufficient to support the trial court’s relevance determination. Plaintiffs nevertheless contend that it was not relevant for certain other purposes. Amici demonstrate someofthe reasons whyplaintiffs are incorrect For example, evidence that no competitor offered ESC tended to corroborate Lobenstein’s testimony that the overwhelming majority of pickup consumers did not want ESC andthey were very price-sensitive, and the evidence that ESC would add hundredsofdollars to the price. ABOM31-32. Plaintiffs try to get around that by asserting the jury should not be able to consider such consumerpreference underthe risk/benefittest, unless the consumers’ preference reflects actual weighingofthe risks and benefits. RBOM 5, 10. As amici explain,this proposal ignores extensive case law holding that consumer willingness to buy the proposedalternative design is a crucial consideration under the risk/benefit test, and sound policy reasons whyit should be admissible. Alliance 12-18 (citing California case law, out-of-state case law, Restatement, and law reviews); IADC 8-12 (explaining law and policy); Chamber 14-15; PLAC 20-21. As amici explain,plaintiffs’ proposal defies the Barkertestitself. The Barker factors include adverse consequences to the consumer and the product. Barker, 20 Cal.3d at 431. Thus the “benefits” of a design include consumer satisfaction. Alliance 15-16; IADC 8-9. Plaintiffs’ proposal would thus impermissibly elevate some Barker factors (bearing onrelative safety of the existing andalternative designs) over others (consequences to the consumer andthe product). Similarly, evidence that no other pickup truck had ESC wasrelevant to disprove plaintiffs’ assertions about gravity and likelihood of harm. It would be surprising that no other manufacturer offered ESC on pickupsif— as plaintiffs claimed—trucks havesignificant controllability problems, ESC is inexpensive and effective at resolving them, and consumersarenot price- sensitive and not opposedto it. ABOM 33. Plaintiffs try to suggest the evidence wasnotrelevantto feasibility and cost-effectiveness because feasibility and cost-effectiveness are supposedly not disputed. OB 32-33: RBOM 1. But as amici pointout, they are disputed. As a matter of engineering feasibility, Toyota could and did put ESC on the 2005 Tundra as an available option, but as a matter of consumerpreferenceandprice, Toyota’s evidence was that making it standard wasnotfeasible. Feasibility under Barker includes such economicfeasibility. Alliance 13-14; PLAC -6- 16-18. Amici also demonstrate that manyofplaintiffs’ other contentions go not to the admissibility of industry practice, but to its weight. Thus plaintiffs say industry practice should not trump “direct” evidence ofrisks and benefits. RBOM 12;see id. 2. Butthere is no legal difference between direct and indirect evidence. The jury decides which to believe. Alliance 8-12; PLAC 18-19, 21-22. And evenif direct evidenceis better, indirect evidence can be importantin corroborating it. PLAC 18-19. Similarly, plaintiffs say industry practice might be dueto inertia instead of conscious judgment, so it does not necessarily show how engineers have weighed costs and benefits. RBOM 1. But evidenceis relevant as long as one permissible inference is relevant, even if another permissible inference would not be. The jury decides which inference to draw. Alliance 10-11. Asto ESC, there is certainly a permissible inference that engineers at competitors weighed the costs and benefits ofESC. Alliance 11. ESC was a known technologythat had beeninstalled for years on other vehicles such as sedans,andplaintiffs’ own theory was that a competitor — Ford — had previously intendedto roll ESC out on pickups. ABOM 6-8. And plaintiffs’ argument would not in any event support a categorical prohibition on industry-standard evidencein all cases. They make no effort to show that no evidence in any case could everjustify an inference that competitors’ engineers had weighedthe costs and benefits. -7- Similarly, the Court of Appealexplained that the reasons for phasing in ESC were relevantto the risk/utility analysis, and that Toyota’s two questions eliciting that no other full-size pickup offered ESC might be relevant to the desirability of the phase-in. Op. 19, 24 n.10; ABOM 19-20, 32. Amici explain the utility of phase-ins in industry generally, and how industry practice plays in. They detailthe utility ofphasing in new technology, the unfairness and impairmentof innovation that wouldresult ifmanufacturers wereheld liable for not instantly installing a new technology on low-cost vehicles as soonasit is available on more expensive vehicles, and how evidenceofindustry practiceis relevant to help jurors understandthe state of the phase-in and why a phase-in made sense. Alliance 6, 13, 22-29; Chamber9, 13-17. Amici’s explanation finds ample support in this record. Explaining why ESC wasphasedin on pickupslater than some othervehicles, Toyota’s expert Carr explained that because pickupsoften have 4-wheel drive and must drive on multiple surfaces such as dirt and gravel, it is a “far more complex task”to design ESCfor pickups than for cars and other vehicles that drive on a single surface. RT-[X-3674-77. Amici also explain how otherrisk/utility jurisdictions address industry custom and how their holdings fit with California law. Most jurisdictions and the Third Restatement, which adopts the risk/utility test, hold that industry practice is admissiblein strict-liability design-defect -8- cases. ABOM 35-37. As amici detail, other risk/utility jurisdictions admit industry-practice evidence. PLAC 10 n.2, 10-12 (citing numerouscases); Chamber 6-7; CJAC 13-14. Plaintiffs acknowledge that many out-of-state cases hold industry practice admissible. Plaintiffs claim these cases are off point because they hold industry practice relevant to whether the design is unreasonably dangerous, and unreasonable dangeris notpart of the legal definition of design defect in California. OB 37 (citing Cronin v. J.B.E. Olson Corp. (1972) 8 Cal.3d 121); RBOM 15-16. But as amici explain, saying that industry practice goes partly to reasonableness does not makeit inadmissible. Industry practice is already relevant because it bears on specific Barker factors, as already described above and in Toyota’s answer brief on the merits. ABOM 28-39. It is relevant in addition because it goes to overall reasonableness. California’s risk/utility balancing seeksto achieve “reasonable and practical safety.” IADC 6-7 (quoting Barker, 20 Cal.3d at 434; emphasis added;further citation omitted); IADC 19-20; Chamber 10-12; CJAC 14; ABOM 58-59. Cc. Plaintiffs’ Proffered Policy Arguments Do Not Support Categorically Excluding Industry Custom. Amici also debunk plaintiffs’ proffered policy reasons for excluding industry practice evidence. Of course, Evidence Codesection 351 abolishesall limitations on admissibility of relevant evidence except those based on statute. Thus it does not allow courts to exclude relevant evidence based on non-statutory policy. ABOM 49-51. Even beyond section 351, however, amici demonstrate the fallacy of plaintiffs’ policy arguments. They demonstrate that if anything, sound policy dictates that trial courts have discretion to admit industry practice — whetherit tends to support the contentionsofplaintiffs or defendants. For example,plaintiffs say that allowing evidence of industry custom “invites a race to the bottom” and “encourag[es] the status quo in safety.” RBOM 9; OB 32. This assertion does not withstand scrutiny, as amici point out. First, manufacturers have manyincentives to adoptsafety devices. Consumersprefer safer products, so manufacturers compete on safety. Alliance 23-24, 27-28; see PLAC 20-21; CJAC 5. Thisis notjust theory. It demonstrably happensin the marketplace, as amicus Alliance of Automobile Manufacturers explains. Consumer websites and product reviews emphasize safety. Alliance 23-25. The automobile industry has seen a waveofsafety innovationsin the recentpast, from backup cameras to collision-avoidance systems. Alliance 26-28. None of these were required by law when manufacturers started incorporating them into vehicles. To the contrary, the federal auto-safety regulator, NHTSA estimatesthat “due purely to market forces,” almost three-quarters of new vehicles sold by 2018 will have backup cameras. Alliance 27. Second, obviously the ability to introduce industry-practice evidence -10- does not deter adoption of safety technologies. These technologiesare proliferating when most jurisdictions allow industry-practice evidence. See PLAC10 n.2, 10-12 (citing numerous cases); Chamber 6-7; CJAC 13-14. Third, a manufacturer would actat its peril in omitting safety features and planning to rely on industry practice if sued. Industry practice is not a complete defense. It is merely a fact for the jury to consider, along with all the otherrisk/benefit evidence. Alliance 22-23. Plaintiffs have it backwards, as amici demonstrate. Plaintiffs’ proposalto categorically exclude industry practice would harm safety to the extent manufacturers are driven byliability considerations. Consider a manufacturer that has a promising safety feature. Onceit rolls the safety feature out on one model, plaintiffs can try to use that fact to show thatit could andshould haveused it on their model too. Plaintiffs here did just that, contending that Toyota could and should have made ESC standard on pickupssince it made ESC standard on SUVs. ABOM5-6, 6-7, 25, 31-32, 57; Op.-19. The manufacturer would likely respondthat the risk/utility balanceis different for the modelthat had notreceived the safety feature (for example, it is an economy modelandthe feature is expensive). This defenseis strongly corroborated if other manufacturers have phased the feature into their comparable models in the same order. Butplaintiffs’ proposed rule would bar such corroborating evidence. To avoid the “you madeit standard on SUVsso you should have madeit standard it on -ll- pickups” type theory, a manufacturer concernedsolely with minimizing liability wouldbe better off waiting to introducethe safety feature on any productuntil it had perfected the feature forall products. Chamber 14-16; Alliance 26. In short: Even if manufacturers were driven solely by liability concerns (they are not), categorically barring industry-practice evidence would disserve safety in the very type of claim broughtbyplaintiffs here. Amici also makeclear that industry custom is consistent with the goals of strict productsliability. Plaintiffs claim that industry custom undermines burden-shifting. OB 33-34. It does not. Underthe risk/benefit test, once plaintiff proves the design caused her harm, defendant has the burden to show that the design’s benefits outweighits risks. Barker, 20 Cal.3d at 431-32. Industry custom will not generally be sufficient to carry the defendant’s burden. The risks and benefits do not ordinarily change whether one manufacturer adopts (or omits) a design or the whole industry does. IADC 14-16. Industry-practice evidenceis also consistent with the loss-spreading and accident-reduction rationalesforstrict liability. Neither policy requires rules that increase plaintiffs’ chances of winning simply because any plaintiffs’ verdict in some sense spreadsthe loss to manufacturers. CJAC 15-16. Nor does industry-practice evidence inevitably help the defense. As Toyota and amici havedetailed, industry-practice evidence often helps plaintiffs, and has beenresponsible for affirming manyplaintiffs’ verdicts. -12- ABOM 39-44; see CJAC 14; IADC 16-17. IH. CONCLUSION The Court should affirm. Dated: November 17, 2016 MORGAN, LEWIS & BOCKIUS LLP py: AutOQ) bus Robert A. Brundage Attorneys for Respondents Toyota Motor Corporation, Toyota Motor Sales, U.S.A., Inc., Toyota Motor North America, Inc., Toyota Motor Engineering & Manufacturing North America, Inc. and Power Toyota Cerritos -13- CERTIFICATE OF WORD COUNT I certify that this brief contains 2,776 words, as counted by the Microsoft Word 2010 software usedto generateit. Robert A. Brundage Dated: November17, 2016 -14- CERTIFICATION OF SERVICE I, Jennifer Gray, certify and declare as follows: I am a citizen of the United States and a resident of the State of California. I am over eighteen years of age, not a party to this action, and am employed in San Francisco County, California at One Market Street, Spear Tower, San Francisco, California 94105. I am readily familiar with the practice of this office for collection and processing of correspondence for mail/fax/hand delivery/next business day delivery, and they are deposited that same dayin the ordinary courseofbusiness. On November 17, 2016, I served the following documentvia U.S. Mail onthe parties set forth below: RESPONDENTS’ CONSOLIDATED ANSWER TO AMICUS CURIAE BRIEFS Patrick Rogan (SBN 54428) Attorneys for Respondents: PATRICK G. ROGAN,P.C. 20406 Seaboard Rd. Toyota Motor Corporation, Malibu, CA 90265 Toyota Motor Sales, U.S.A., Telephone: +1.310.795.5214 Inc., Toyota Motor North America, Inc., Toyota Motor Engineering & Manufacturing North America,Inc., and Power Toyota Cerritos David P. Stone Attorneys for Respondents: Admittedpro hac vice david.stone@bowmanandbrooke.com Toyota Motor Corporation, Bowmanand Brooke LLP : Toyota Motor Sales, U.S.A., 2501 North Harwood, Suite 1700Dallas. TX 75201 Inc., Toyota Motor North Tel t - +1.972.616.1700 America, Inc., Toyota Motor Es “P “te:1 972 61 6 1 70 Engineering & Manufacturing acsimiule: +1.972.616.1701 North America, Inc., and Power Toyota Cerritos Ian Herzog (SBN 41396) Thomas F. Yuhas (SBN 79679) Evan D. Marshall (SBN 82444) LAW OFFICES OF IAN HERZOG APC 11400 West Olympic Boulevard Suite 1150 Los Angeles, CA 90064 Telephone: +1.310.458.6660 Fax: +1.310.458.9065 Attorneys for Appellants: William Jae Kim and Hee Joon Kim Lisa Perrochet (SBN 132858) John A Taylor, Jr. (SBN 129333) Emily V. Cuatto (SBN 260394) Horvitz & Levy, LLP 3601 West Olive Avenue, 8th Floor Burbank, CA 91505-4681 Telephone: +1.818.995.0800 Fax: +1.844.497.6592 Attorneys for Amicus Curiae: Alliance of Automobile Manufacturers Fred J. Hiestand (SBN 44241) Fhiestand@aol.com 3418 Third Ave., Suite 1 Sacramento, CA 95817 Telephone: +1.916.448-5100 Fax: +1.916.442-8644 Erika C. Frank (SBN 221218) Heather L. Wallace (SBN 205201) California Chamber of Commerce 1215 K Street, Suite 1400 Sacramento, CA 95814 Telephone: +1.916.444-6670 Fax: +1.916.444.6685 Attorneys for Amicus Curiae: California Chamberof Commerce The Civil Justice Association of California Mary-Christine Sungaila (SBN 156795)Martin M.Ellison (SBN 292060)HAYNES AND BOONE,LLP600 Anton Boulevard, Suite 700Costa Mesa, CA. 92626Telephone: +1.949.202.3000Fax: +1.949.202.3001 Attorneys for Amicus Curiae:International Association ofDefense Counsel John M. Thomas (SBN 266842) jthomas@dykema.com DYKEMA GOSSETT PLLC 2723 South State Street, Suite 400 Ann Arbor, MI 48104 Telephone: +1.734.214.7613 Fax: +1.734.214.7696 Ashley R. Fickel (SBN 237111) afickel@dykema.com DYKEMA GOSSETT LLP 333 South Grand Avenue, Suite 2100 Los Angeles, CA 90071 Telephone: +1.213.457.1800 Fax: +1.213.457.1850 Attorneys for Amicus Curiae: The ProductLiability Advisory Council, Inc. Edward P. Sangster (SBN 121041) ed.sangster@klgates K&L Gates LLP 4 Embarcadero Center, Suite 1200 San Francisco, CA 94111 Telephone: +1.415.249.1028 J. Nicholas Ranjan (pro hacvice) nicholas.ranjan@klgates K&L Gates LLP K&L Gates Center 210 Sixth Avenue Pittsburgh, PA 15222 Telephone: +1.412.355.6500 Attorneys for Amicus Curiae: Chamber of Commerceofthe United States ofAmerica Brian D. ChaseBisnar & Chase LLP1301 DoveStreet, Suite 120Newport Beach, CA 92660Telephone: +1.949.203.3814 Attorneys forPub/Depublication Requester:Consumer Attorneys ofCalifornia Office of the Clerk California Court of Appeal Second District, Division 7 300 S. Spring Street, 2nd Floor, North Tower Los Angeles, CA 90013 Court of Appeal Clerk Los Angeles County Superior Court For Delivery to the Hon. Raul Sahagun Courtroom D, Room 310 12720 Norwalk Bivd. Norwalk, CA 90650 Trial Court I declare under penalty ofperjury under the laws of California that the foregoing is true and correct. Executed on November 17, 2016,at San Francisco, California. TocGaba ])
