In 1968, Lee Iacocca suggested that Ford Motor Company introduce a subcompact car into the marketplace. The result was the Ford Pinto. The cars seemed fine at first, but later it was determined that a defect in the fuel delivery system made it more likely that the cars would explode upon certain rear end impacts. Several people died in accidents when they were rear-ended in their Pinto vehicles. Ford chose not to adopt a new design, figuring that the new design would cost more than the occasional damages they would have to pay out in tort cases from family members of deceased drivers. Ford executives knew of potential danger because of test crash studies they had done when building the new car.
Several juries across the country imposed hefty damage awards against Ford as a result of these accidents. A jury in California imposed millions of dollars in damages against Ford for the death of a woman from fatal burns after her 1972 Pinto was rear ended. In upholding the award of punitive damages, a California appeals court explained:
Through the results of the crash tests Ford knew that the Pinto’s fuel tank and rear structure would expose consumers to serious injury or death in a 20 to 30 mile-per-hour collision. There was evidence that Ford could have corrected the hazardous design defects at minimal cost but decided to defer correction of the shortcomings by engaging in a cost-benefit analysis balancing human lives and limbs against corporate profits. Ford’s institutional mentality was shown to be one of callous indifference to public safety. There was substantial evidence that Ford’s conduct constituted conscious disregard of the probability of injury to members of the consuming public.