Ford Pinto Case

By Jason M. Kroot, Winter 2007

First introduced in 1971, the Ford Pinto was vehicle sold in North America with a deadly design defect. The gas tank would explode at low rear end impacts, resulting in deadly fires. Ford was aware of this design defect and it was established the expense to fix the problem was relatively small.

The Ford Pinto became the focus of a major scandal when a jury determined Ford’s refused to redesign the defect based on simple financial decision. Specifically, Ford’s accountants (or “bean counters”) determined the costs of fixing the design defect was greater than the costs of paying out expected wrongful death lawsuits. The jury awarded initially awarded $125 million in punitive damages and $2.5 million in compensatory damages. The trial judge reduced the punitive damage award to $3.5 million.

According Mother Jones, Pinto crashes needlessly resulted in at least 500 burn deaths. At any impact above 30 miles per hour, reports reveal the Pinto’s rear bumper would buckle like an accordion — right up to the back seat — at any impact over 30 miles per hour. With minor modifications, the Pinto’s deadly design defect was corrected in its 1977 models.

Despite the fact the punitive damage award was dramatically reduced, Ford Pinto case illustrates the important function of punitive damages. Often, a compensatory award will pose little or no incentive to correct wrongdoing. Punitive damages, or the mere threat of punitive damages, can change that equation. They create a healthy, if not necessary, incentive for corporations to make responsible decisions that effect every day consumers. Without punitive damages, the incentive is gone.