Filed 4/23/14 Unmodfied version attached
                       CERTIFIED FOR PARTIAL PUBLICATION*

             IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                  FIRST APPELLATE DISTRICT

                                           DIVISION ONE


PATRICK SCOTT et al.,                               A137975
        Plaintiffs and Appellants,
                                                    (Alameda County
v.                                                  Super. Ct. No. RG12613671)
FORD MOTOR COMPANY,
                                                    ORDER MODIFYING OPINION
        Defendant and Appellant.                    AND DENYING REHEARING

                                                    [NO CHANGE IN JUDGMENT]



BY THE COURT:
        It is ordered that the opinion filed herein on March 26, 2014, be modified as
follows:
        1. On page 15, the fourth sentence in the first full paragraph, beginning, “Further,
as noted above,” is amended by deleting all text following the word “point.” The
amended sentence reads:
                Further, as noted above, the Ford employee whose deposition testimony
                was presented made this exact rhetorical point.
        2. On page 16, the first full sentence, beginning “While we agree,” should be
amended by deleting the words “did not object to the line of argument, and” from the
middle of the sentence. The amended sentence reads:
                While we agree the evidence did not support such an argument, Ford had
                the opportunity to respond to the argument in its own closing.

                *
                Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this
opinion is certified for publication with the exception of parts II.A.2. and II.A.3.
         There is no change in the judgment.
         The petition for rehearing of appellant and cross-respondent Ford Motor Company
is denied.
Dated:


                                          ________________________________
                                          Margulies, Acting P.J.




                                               2
Trial Court: Alameda County Superior Court

Trial Judge: Hon. George C. Hernandez, Jr.

Counsel:

Kazan, McClain, Satterley, Lyons, Greenwood & Oberman, Joseph D. Satterley, Dianna
Lyons, Justin A. Bosl, Ted W. Pelletier, and Michael T. Stewart for Plaintiffs and
Appellants Patrick Scott and Sharon Scott.

Nixon Peabody, Ronald Frank Lopez, David A. Pereda, Ross M. Petty; Munger, Tolles &
Olson, Daniel P. Collins, Nicholas C. Soltman; Dykema Gossett, and Eric C. Tew for
Defendant and Appellant Ford Motor Company.

The Product Liability Advisory Council, Inc., Hugh F. Young, Jr.; Snell & Wilmer and
Mary-Christine Sungaila as Amici Curiae on behalf of Defendant and Appellant Ford
Motor Company.
Filed 3/26/14 Unmodified version
                       CERTIFIED FOR PARTIAL PUBLICATION*

             IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                   FIRST APPELLATE DISTRICT

                                        DIVISION ONE


PATRICK SCOTT et al.,
        Plaintiffs and Appellants,
                                                   A137975
v.
FORD MOTOR COMPANY,                                (Alameda County
                                                   Super. Ct. No. RG12613671)
        Defendant and Appellant.


        Plaintiff Patrick Scott (Scott) owned and operated vehicle service stations for over
40 years, during which he was periodically exposed to asbestos from brake and clutch
repair. He eventually developed mesothelioma, a form of cancer uniquely linked to
asbestos. Scott and his wife Sharon (plaintiffs) filed suit against a wide variety of
corporate defendants, alleging several causes of action for negligence and products
liability.
        The lawsuit ultimately proceeded to trial against only one defendant, Ford Motor
Co. (Ford). During plaintiffs’ case, the trial court effectively struck plaintiffs’ demand
for punitive damages, finding Michigan law, which does not permit punitive damages
unless specifically authorized by statute, applicable to this issue. The jury rendered a
plaintiffs’ verdict on the negligence and products liability claims, finding Ford
proportionately liable for Scott’s disease. Following entry of judgment, Ford
unsuccessfully moved for judgment notwithstanding the verdict (JNOV).




        *
         Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this opinion is
certified for publication with the exception of parts II.A.2. and II.A.3.
       Ford raises a number of challenges to the trial court’s denial of its JNOV motion,
among them that Scott, as a service station owner and mechanic, should have qualified as
a “sophisticated user” of automotive parts and must be deemed to have been aware of the
risks asbestos exposure from the repair of brakes and clutches. We conclude the
sophisticated user doctrine did not constitute a complete defense to plaintiffs’ failure to
warn claims because Ford failed to prove the risks of automotive asbestos exposure
should have been known by mechanics in the 1960’s and early 1970’s, when Scott began
his career. Because we affirm the judgment on the basis of the failure to warn claims, we
do not reach Ford’s challenges to the other causes of action.
       In a cross-appeal, plaintiffs challenge the trial court’s decision to invoke Michigan
law to strike their demand for punitive damages. Michigan decisional law denies
punitive damages on the principle that the award of civil damages for the purpose of
punishment, rather than compensation, is inappropriate. Applying California’s
“governmental interest” conflict of laws analysis, we conclude that Michigan courts have
no interest in seeing the application of this principle in the courts of California, which
apply a contrary principle in allowing punitive damages. Accordingly, we remand for a
new trial on the issue of punitive damages.
                                    I. BACKGROUND
       Plaintiffs filed suit against more than 30 defendants, among them Ford, alleging
Scott, an auto mechanic, had developed mesothelioma from exposure to asbestos in
defendants’ products. The complaint asserted causes of action for negligence, breach of
implied warranty, product liability, fraud, and others. Plaintiffs settled or otherwise
resolved their claims against all other defendants, and the case proceeded to jury trial
against Ford. The trial was a long one, and we summarize only the evidence directly
pertinent to the arguments we consider in this appeal.
A. Scott’s Career
       Scott worked as a mechanic for over 40 years. He began working on cars as a
young teenager. After he joined the United States Air Force in 1961, he was trained at a
technical school and served as a mechanic for four years. After his discharge, he worked


                                              2
for eight months at a shipyard, where he suffered significant exposure to a particularly
harmful form of asbestos. With a friend, Scott opened his first service station in 1966.
He owned and operated four different service stations over the succeeding years, at one
time employing as many as 17 workers. While operating the service stations, Scott
became a member of an automotive trade association and earned certification in electrical
systems, engine performance, and advanced engine performance from Automotive
Service Excellence (ASE), and he received some professional training. In the course of
his work, Scott was exposed to asbestos while servicing brakes and clutches supplied by
a wide variety of manufacturers and merchants, including Ford.
B. Knowledge of the Risks of Automotive Asbestos Exposure
       Mesothelioma is a cancer of the lining of the lung particularly associated with
asbestos exposure. Exposure to asbestos does not cause the immediate appearance of
cancer. Instead, the disease has a long latency period; an exposure can result in the
development of cancer from 20 to as many as 70 years later. Exposure that occurs earlier
in a person’s life has greater potential to contribute to the development of mesothelioma
than later exposure.
       The dangers of asbestos exposure began to be recognized by the scientific
community in the late 1920’s. Consciousness of the connection to cancer grew during
subsequent decades, with the connection firmly established by 1955. The causation of
mesothelioma, in particular, by asbestos was recognized by 1960.
       This general knowledge did not necessarily translate to the vehicle service
industry, however, because the type of asbestos fiber used in the manufacture of auto
parts is far less potent in causing harm than other industrial types of asbestos. Awareness
grew throughout the 1940’s, 1950’s, and 1960’s that persons who serviced brakes were
exposed to asbestos. Plaintiffs’ expert testified that by no later than 1964, the type of
asbestos fiber used in vehicle brakes and clutches was recognized by the scientific
community as causing mesothelioma. Yet Ford’s expert testified that the conclusion
from a major scientific conference in 1969 was that “brake linings are not a problem—or
not a hazard.” The publication in the mid-1970’s of a further series of scientific studies


                                              3
caused plaintiffs’ expert to conclude it had become “well known” in the scientific
community that working with brakes exposed workers to dangerous levels of asbestos.1
       There is little direct information in the record about the degree to which these
dangers became known by persons working directly with automobiles, including
mechanics like Scott. The Occupational Safety and Health Administration did not begin
to regulate exposure to asbestos in the workplace until 1971. Although by the early
1970’s, Ford was discussing internally the possible risks of automotive asbestos exposure
and exploring ways to minimize it, its service manuals contained no mention of asbestos
at that time. The first reference in the record to communications directed at service
station workers warning of asbestos exposure is the publication in 1975 of bulletins by
the National Institute of Occupational Health and Safety (NIOSH). There is no indication
how widely known or distributed these publications were at the time.
       The first reference in the record to commercial warnings about exposure to
asbestos in the auto industry appears in 1973, when one brake manufacturer began to
label cartons containing its products. The same year, the Chrysler Corporation first
warned about asbestos exposure in its service manuals. Ford first mentioned asbestos in
a “technical service bulletin” in 1975, and General Motors Corporation placed
information in its service manuals the following year. Consistent with this, Scott’s
business partner, also a mechanic, recalled that warnings about asbestos exposure began
to appear in the mid-1970’s. Prior to that, in the late 1960’s and early 1970’s, he did not
recall receiving any information about asbestos exposure. It was not until at least 1980
that Ford placed warnings on cartons of its replacement brake parts.
C. Evidence of Ford’s Internal Investigation
       As part of their failure to warn and fraud cases, plaintiffs sought the admission of
evidence of an internal investigation by Ford of the prevalence of mesothelioma among
its employees, apparently begun in the late-1970’s and continuing through the early

       1
        Illustrating the difficulty of pinpointing a scientific consensus regarding the
dangers of automotive asbestos exposure, Ford’s expert testified that these same studies
from the mid-1970’s were inconclusive.


                                             4
1980’s. Over Ford’s objection, the trial court admitted several documents and related
videotaped deposition testimony by a Ford employee. In one handwritten memorandum,
a Ford employee appears to have calculated the incidence of mesothelioma cases to be
expected in the general population and compared it to the incidence among Ford
employees, concluding the incidence at Ford was nearly three times the expected rate.
Other documents named some of the Ford workers who had been found to have
contracted mesothelioma and, for many of the workers, described their occupations at
Ford and their possible military exposure to asbestos, if any. None of the workers
appears to have worked directly with brake or clutch assembly or service. During the
deposition that was admitted with the documents, plaintiffs’ counsel repeatedly attempted
to tie the occurrence of these cases of mesothelioma to Ford’s use of asbestos-containing
brakes. The Ford employee was able to note, on at least three occasions, that none of the
employees who contracted mesothelioma was found to have worked with brake
installation. The employee also noted that many of the employees had other industrial
experience outside Ford.
       The trial court declined to exclude the investigation evidence as irrelevant,
reasoning the evidence tended to show Ford “knew that its products increased the
likelihood that users [would develop] mesothelioma.” Having found the evidence
relevant, the court rejected a further objection under Evidence Code section 352, noting
the Ford employee’s testimony was, in part, “helpful” to Ford’s position.
D. Denial of Punitive Damages
       Late in their case, plaintiffs attempted to introduce Ford’s annual report to support
their claim for punitive damages. Ford had earlier argued to the trial court that Michigan
law should be applied to bar plaintiffs’ claim for punitive damages, but the court had
declined to rule on the issue. After lengthy argument by the parties, the court accepted
Ford’s argument, ruling, “Using the government interest analysis, the court concludes
that Michigan’s interest as embodied in its prohibition of punitive damages would be
more impaired if its law were not applied under the circumstances of this case than would



                                             5
California’s interest” in allowing a claim for punitive damages. Accordingly, the court
ruled the annual report inadmissible and precluded the claim for punitive damages.
       The jury returned a special verdict finding Ford liable on theories of failure to
warn, design defect, and negligence, but it found no fraud. Ford was found 22 percent
liable for Scott’s injuries, while Scott was found comparatively responsible for 19
percent. Various other nonparties were assigned responsibility for the remainder, with
the largest share, 33 percent, assigned to the United States Navy. Ford moved for JNOV
and a new trial, raising, among others, its arguments on this appeal. The motions were
summarily denied.
                                     II. DISCUSSION
A. Ford’s Appeal
       1. Sophisticated User Doctrine
       Ford argues it should have been granted judgment notwithstanding the verdict
because the “sophisticated user” doctrine provides a complete defense to plaintiffs’
failure to warn and “consumer expectations” design defect claims. The trial court
instructed the jury on the “sophisticated user” defense, using CACI No. 1244, which
required Ford to prove “that, at the time of the injury, [Scott], because of his particular
position, training, experience, knowledge, or skill, knew or should have known of the
products’ risk, harm or danger.” Because neither party sought a finding on the
sophisticated user defense in the special verdict form, we have no direct indication from
the jury of its conclusion about this issue. By rendering a plaintiffs’ verdict on the failure
to warn claims, however, the jury unequivocally rejected Ford’s present assertion of the
doctrine as a complete defense to plaintiffs’ failure to warn claims.
       On appeal from the denial of a JNOV motion, we “review[] the record in order to
make an independent determination whether there is any substantial evidence to support
the jury’s findings.” (Murray’s Iron Works, Inc. v. Boyce (2008) 158 Cal.App.4th 1279,
1284.) “The scope of the review is limited to determining whether there is any
substantial evidence, contradicted or not, to support the jury’s verdict. [Citation.]
Applying the substantial evidence rule, we resolve ‘all conflicts in the evidence and all


                                              6
legitimate and reasonable inferences that may arise therefrom in favor of the jury’s
findings and the verdict. [Citations.]’ [Citation.] Thus, this court must accept as true the
evidence supporting the verdict, disregard conflicting evidence, and indulge every
legitimate inference to support the verdict. [Citation.] Accordingly, we do not weigh the
evidence or judge the credibility of the witnesses. [Citation.] If sufficient evidence
supports the verdict, we must uphold the trial court’s denial of the JNOV motion.” (Id. at
pp. 1284–1285.)
       The sophisticated user defense was adopted by our Supreme Court in Johnson v.
American Standard, Inc. (2008) 43 Cal.4th 56 (American Standard). In very general
terms, it bars strict liability and negligence claims based on the failure to warn about a
particular risk in a defendant’s product if (1) the plaintiff is shown to be a “sophisticated
user” of the product and (2) the general class of similar sophisticated users knew or
should have known of the particular risk alleged by the plaintiff at “the time of the
plaintiff’s injury.” (See generally American Standard, at pp. 65, 71, 74.)
       Substantial evidence exists to support the jury’s rejection of the defense in Ford’s
failure to satisfy the second requirement of American Standard—proof that the claimed
class of sophisticated users were or should have been aware of the risks associated with
professional asbestos exposure throughout the period of Scott’s exposure. There was no
evidence that Scott, or others like him, were instructed in the claimed risks as part of their
training, in contrast to the plaintiff in American Standard. (American Standard, supra,
43 Cal.4th at p. 62 [discussion of the risks the plaintiff asserted in the litigation contained
in the standard industry training manual].) On the contrary, the nature of the risks of
automotive asbestos exposure had not even become clear to the scientific community
when Scott opened his first service station. Based on the evidence presented at trial, the
earliest possible dates from which constructive knowledge of those risks could be
attributed to the general community of service station owners are 1973, when the first
brake manufacturer placed a warning on its cartons and Chrysler warned in its service
manual, or 1975, at the time of the NIOSH publications. Further, it could easily be
argued that these scattered examples of notice are not evidence of the type of industry


                                               7
recognition necessary to impute knowledge to individual participants under the
sophisticated user doctrine. As noted, Ford did not begin to place a warning on its
cartons of brake parts until 1980, suggesting the industry consensus continued to form
throughout the second half of the 1970’s.
       This is significant because, under American Standard, the constructive knowledge
of sophisticated users is to be measured at “the time of the plaintiff’s injury.” (American
Standard, supra, 43 Cal.4th at p. 74.) Because of the cumulative effects of asbestos
exposure, it is impossible to pinpoint a single time at which Scott was “injured” by
asbestos. As plaintiffs’ expert testified, the time between exposure to asbestos and the
appearance of the disease can be many decades, and earlier exposure is more likely to
contribute to disease than later exposure. In the absence of evidence suggesting
otherwise, Scott must be presumed to have been in the process of being injured by
asbestos throughout his career, and the exposure that occurred earlier in his career weighs
more heavily.2 As a result, in order for the sophisticated user doctrine to provide a
complete defense to plaintiffs’ claims, Ford was required to show that service station
owners knew or should have known of the risks of vehicle repair exposure to asbestos
from the mid-1960’s on. For the reasons discussed above, there is no such evidence for
the first decade of Scott’s career, at a minimum.
       Ford argues “the undisputed evidence . . . demonstrated that, throughout the
relevant time period, there was widely disseminated publicly available information that
brakes contained asbestos, that asbestos presented health risks, and that brakes therefore
might present a potential risk.” By failing to distinguish among types of asbestos, this
greatly overstates the evidence as it relates to the risks of automotive asbestos exposure.
From 1966, the beginning of the relevant time period, there appears to have been a
scientific consensus that industrial exposure to the type of asbestos used in insulation was
dangerous. There was no similar consensus about exposure to asbestos through

       2
        By finding the United States Navy 33 percent responsible for Scott’s injury, the
jury implicitly attributed a portion of his disease to his work at the shipyard, which
preceded most his automotive exposure to asbestos.


                                             8
automotive work, given the far less potent type of asbestos involved. Ford’s own expert
testified as much. While it was certainly possible to speculate on the basis of available
information that automotive exposure to asbestos carried risk, thereby supporting Ford’s
contention that “brakes therefore might present a potential risk” (italics added),
speculation about a risk does not give rise to constructive knowledge of a risk under the
“should have known” test. The jury was not required to find Scott “should have known”
of a risk about which even specialists had not yet reached agreement.3
       Ford bases its argument that sophisticated users should be deemed to have
constructive knowledge of speculative dangers on the Supreme Court’s references in
American Standard to users’ knowledge of the “potential” dangers of a product. (E.g.,
American Standard, supra, 43 Cal.4th at p. 65.) Most industrial dangers are, of course,
“potential.” Explosives are dangerous, but the danger is not realized—i.e., is
“potential”—unless they are mishandled. The American Standard court’s references to
“potential” dangers throughout the decision demonstrate it was referring to this type of
known but contingent danger, rather than the unproven and merely speculative dangers to
which Ford refers. For example, the court referred to the “potential hazards of [welding
chemical] exposure,” which were well known within the industry at the relevant time,
and the “potential harms associated with firing a pellet gun,” which the court deemed to
be “obvious.” (Id. at pp. 62, 67.)
       We note that by finding Scott contributorily negligent in causing his injury, the
jury likely concluded that at some point in his career, Scott should have become aware of
the dangers of asbestos exposure and taken action to protect himself. Our conclusion that


       3
         Ford also appears to argue Scott should have known of the risks of asbestos
exposure from the start of his work as a mechanic because he was aware coworkers at the
shipyard developed asbestosis. The two situations are sufficiently different that the
knowledge cannot be deemed transferrable, at least as a matter of law. That workers with
relatively heavy and constant exposure to one type of asbestos fiber develop asbestosis
does not necessarily mean that workers with intermittent, lower level exposure to a
different type of asbestos fiber will also be adversely affected, particularly by an entirely
different disease.


                                              9
Ford failed to prove the type of constructive knowledge that would entitle it to invoke the
sophisticated user doctrine as a complete defense to Scott’s failure to warn claims is not
inconsistent with the jury’s probable conclusion on this issue.
       Finally, we note that counsel for Ford suggested for the first time at oral argument
that if Scott was not a sophisticated user, then Ford had no duty to warn about the risks of
asbestos exposure in its brakes. Although counsel did not fully articulate this argument,
he appeared to be suggesting that if Scott is not deemed to have known of the risks of
asbestos exposure from automotive brakes, then Ford could not be deemed to have
sufficient knowledge of those risks to trigger a duty to warn. The contention fails, at least
as a matter of law, because the standards for constructive knowledge are different. While
the precise contours of the sophisticated user defense have yet to be worked out, Scott’s
constructive knowledge is judged by, at most, the information reasonably available to
him as a local mechanic or, as Ford argues, a local employer of mechanics.4 That is
unlikely to have included every nook and cranny of the scientific and medical literature.
Ford, in contrast, had a duty to warn of risks that were “ ‘known or knowable in light of
the generally recognized and prevailing best scientific and medical knowledge available
at the time of manufacture and distribution.’ ” (Coleman v. Medtronic, Inc. (2014)
223 Cal.App.4th 413, 428.) Determining what was “ ‘known or knowable’ ” to Ford
requires an evaluation not merely of the information reasonably available to a local
automotive business, like Scott’s, but also the best available scientific knowledge and
Ford’s own knowledge, public or not, as a large international business directly involved
in the manufacture of the product under discussion. Whether these two sets of
knowledge were the same here is a question of fact, not of law, but there is no reason to

       4
         At oral argument, Ford emphasized Scott’s status as an employer, suggesting this
status placed on him a greater degree of awareness than is required of a non-employer.
We do not reach this issue because, as discussed above, we conclude there was
substantial evidence to support a finding that no one in the automotive mechanic
business, whether employer or otherwise, was deemed to have known that exposure to
automotive asbestos presented a serious health risk during at least the first few years of
Scott’s career.


                                             10
assume they were. We decline to engage in any further factual review of the issue
because Ford raised the argument for the first time at oral argument, without providing
proper briefing or an opportunity for plaintiffs to respond.
       Because we find Ford failed to demonstrate the sophisticated user doctrine
provides a complete defense to plaintiffs’ failure to warn claims, we need not address its
further contention the trial court erred in refusing to apply the defense to Scott’s
consumer expectation design defect cause of action. Even if the defense is applicable to
the consumer expectation test, Ford’s failure to prove the defense precludes reversal of
the JNOV denial on this ground. We also decline to address in further detail Ford’s claim
that, wholly apart from the sophisticated user defense, the “relevant class of consumers”
knew or should have known of the dangers of asbestos exposure. For the same reasons
discussed above, the argument is not supported by the evidence.
       2. Efficacy of a Warning
       Ford also argues it should have been granted JNOV on the failure to warn claims
because there was no evidence demonstrating a warning would have prevented Scott’s
exposure to asbestos in Ford products. The argument is premised on Ford’s contention
there was no evidence to suggest “the presence of a warning would have caused Scott to
alter his behavior in such a way as to avoid the harm,” since “the evidence
overwhelmingly shows that, during the relevant time period, Scott was oblivious to, and
ignored, all warnings made available to him.”5



       5
         While we entertain this argument, we have some doubts about its legal validity.
The premise of Ford’s argument, that a defendant’s failure to warn must be a proximate
cause of the plaintiff’s injury, is certainly correct. (Conte v. Wyeth, Inc. (2008)
168 Cal.App.4th 89, 112.) The sole case cited by Ford finding that an absent warning
was not a proximate cause of injury, however, was based on the impracticality of
effectively communicating a warning, not on the plaintiff’s likely resistance to it. (Huitt
v. Southern California Gas Co. (2010) 188 Cal.App.4th 1586, 1604.) It risks
undercutting the policy underpinnings of product liability law to allow a defendant to
argue it was excused from liability for its failure to warn because the plaintiff was
unlikely to have conformed his or her conduct in accordance with the warning.


                                             11
       Substantial evidence supports the jury’s finding that a timely warning to Scott
could have prevented harmful exposure. Scott was described by a former employee at his
service station as safety conscious, and other former employees described safety
precautions he followed in his business. He testified he did not recall ever seeing a
warning regarding the dangers of vehicle-related asbestos exposure. The jury was
entitled to infer that, had he become aware of the risks of automotive asbestos exposure,
he would have taken appropriate precautions.
       Ford argues the jury should have found Scott immune to safety warnings about
asbestos because (1) he took no protective action while working at the shipyard, despite
being aware a fellow worker had developed asbestosis and wore a mask for protection
from further exposure; and (2) he could not recall ever having seen any warnings about
vehicle-related asbestos exposure, despite an overwhelming amount of information on the
subject available over the years, including warnings on other, similar products. While
Scott’s insensibility to warnings is an inference that could be drawn from these
circumstances, the jury was not required to draw that inference. The nature and duration
of Scott’s asbestos exposure at the shipyard was not comparable to his exposure during
his career as a mechanic. It therefore provides a limited basis for comparison. As to the
second argument, the jury could have concluded Scott would have been more susceptible
to an appropriate warning earlier in his career, when Ford failed to provide one. In any
event, this was a judgment of fact properly left to the jury.
       Because we conclude there is no basis for overturning the jury’s verdict on the
failure to warn claims, we need not address Ford’s argument it should have been granted
JNOV on plaintiffs’ other claims. Their success on the failure to warn claims fully
supports the judgment.




                                             12
          3. The Internal Investigation Documents
          Ford contends the evidence regarding its internal investigation of mesothelioma
deaths should have been excluded as irrelevant or as more prejudicial than probative.6
          Evidence is relevant if it has “ ‘any tendency in reason to prove or disprove any
disputed fact that is of consequence to the determination of the action.’ ” (People v.
Jones (2013) 57 Cal.4th 899, 947.) Even relevant evidence can be excluded under
Evidence Code section 352 if “ ‘its probative value is substantially outweighed by
concerns of undue prejudice, confusion, or consumption of time. “Evidence is
substantially more prejudicial than probative [citation] if, broadly stated, it poses an
intolerable ‘risk to the fairness of the proceedings or the reliability of the outcome
[citation].’ ” ’ ” (People v. Edwards (2013) 57 Cal.4th 658, 713.) “ ‘The prejudice which
exclusion of evidence under Evidence Code section 352 is designed to avoid is not the
prejudice or damage to a defense that naturally flows from relevant, highly probative
evidence. . . . “The ‘prejudice’ referred to in Evidence Code section 352 applies to
evidence which uniquely tends to evoke an emotional bias against the defendant . . . and
which has very little effect on the issues.” ’ ” (People v. Lopez (2013) 56 Cal.4th 1028,
1059.) We review the trial court’s decision to admit evidence for abuse of discretion.
(Ibid.)
          We find no abuse of discretion in the trial court’s conclusion that the investigation
evidence was relevant. As part of their failure to warn case, plaintiffs were required to

          6
          It is not entirely clear what evidence is the subject of Ford’s appellate argument.
In the introduction to this argument in its opening brief, Ford claims it is concerned with
the admission of “documents and deposition testimony that identified Ford employees
who reportedly died of mesothelioma,” which evidence it defines as the “employee list.”
Yet on the next page of the brief, Ford states that “[t]he ‘employee list’ is actually four
exhibits that were admitted into evidence and published to the jury . . . , as well as the
related video deposition testimony of Ford’s corporate representative . . . .” This
explanation encompasses virtually all of the investigation evidence, rather than the simple
listing of employee names Ford initially defined as the “employee list.” We take the
second, more comprehensive definition to state the scope of Ford’s appellate argument
and consider the investigation evidence as a whole, rather than limiting our consideration
to the lists of Ford employee names.


                                                13
prove Ford was aware exposure to asbestos in Ford products presented a health risk. The
investigation evidence demonstrated both Ford was sufficiently aware of the dangers of
asbestos to have instigated an internal investigation into the possibility of asbestos
disease among its own employees and Ford employees were three times more likely than
the public at large to have contracted mesothelioma, a disease uniquely linked to asbestos
exposure. The greater-than-expected prevalence of an asbestos-linked disease gave Ford
reason to suspect exposure to asbestos in its products or its manufacturing operations
created a higher level of risk.
       In finding the evidence relevant, we do not rely on the trial court’s reasoning that
admission was justified under the “substantially similar” rationale of Hasson v. Ford
Motor Co. (1982) 32 Cal.3d 388, disapproved on other grounds in Soule v. General
Motors Corp. (1994) 8 Cal.4th 548, 574, 580. In that Hasson, evidence of a design defect
in the 1965 version of Ford’s brakes was admitted to prove the same defect in the 1966
version of the brakes because the brake design and the reason for failure were
“substantially similar.” (Id. at p. 404.) Because, as Ford argues, there was no evidence
exposure to asbestos in brake- or clutch-related operations was the cause of mesothelioma
among any of the Ford workers, it is difficult to argue the reported mesothelioma cases
were substantially similar to Scott’s disease in the manner found probative in Hasson.
(See, e.g., Stephen v. Ford Motor Co. (2005) 134 Cal.App.4th 1363, 1371–1372.)
Nonetheless, for the reason stated above, the evidence was relevant to plaintiffs’ case.
We are not required to affirm the trial court’s reasoning in order to affirm its ruling.
(People v. Cowan (2010) 50 Cal.4th 401, 473, fn. 25 [“ ‘ “we review the ruling, not the
court’s reasoning and, if the ruling was correct on any ground, we affirm” ’ ”].)
       Admission of the evidence over Ford’s Evidence Code section 352 objection is a
closer call. While the evidence was relevant to plaintiffs’ case, it was by no means
critical. The issues of which it was probative, knowledge and notice, were supported by a
large amount of other evidence. Further, the investigation evidence carried a risk of
confusion and undue consumption of time. While none of the deaths found by Ford was
proven to have been related to on-the-job exposure to asbestos through brake or clutch


                                             14
operations, there was a risk the jury could have mistakenly understood the greater
prevalence of asbestos-related disease to have been probative on the issue of the
causation of Scott’s illness. To have wholly eliminated this confusion would have
required Ford to present further evidence regarding each mesothelioma victim’s personal
circumstances, unnecessarily burdening the record.
       We decline to decide whether the trial court abused its discretion in overruling
Ford’s Evidence Code section 352 objection because we conclude the investigation
evidence was not prejudicial under the test of People v. Watson (1956) 46 Cal.2d 818
(Watson), which permits reversal due to the erroneous admission of evidence “only when
the court, ‘after an examination of the entire cause, including the evidence,’ is of the
‘opinion’ that it is reasonably probable that a result more favorable to the appealing party
would have been reached in the absence of the error.” (Id. at p. 836.) The investigation
evidence was not inherently prejudicial. While, as stated above, it was subject to a risk of
misunderstanding, the documents themselves made clear that none of the employees who
contracted mesothelioma had worked directly in brake or clutch operations. Further, as
noted above, the Ford employee whose deposition testimony was presented made this
exact rhetorical point on three different occasions, informing the jury at one point that
“these individuals were not brake mechanics that are in this production [sic], and so there
is really no link between these employees and brake work at Ford Motor Company.” As
the trial court noted, this significantly mitigated the risk of misunderstanding. In any
event, there was a substantial quantity of other, more pertinent evidence regarding the
relationship between brake- and clutch-related asbestos exposure and disease and Ford’s
knowledge of this connection. There is no significant likelihood that admission of this
evidence resulted in a less favorable verdict for Ford.
       Ford notes plaintiffs’ counsel used this evidence in closing argument to suggest
Ford was aware its employees were dying of mesothelioma due to workplace exposure,




                                             15
based on mere speculation about the nature and cause of the employees’ exposure.7
While we agree the evidence did not support such an argument, Ford did not object to the
line of argument, and it had the opportunity to respond to the argument in its own closing.
More importantly, as noted above, there was substantial other evidence unrelated to the
investigation evidence from which the jury could have concluded automotive asbestos
exposure posed risks and Ford was aware of these risks. Plaintiffs’ attorney’s misuse of
the investigation evidence in closing argument was not prejudicial in the manner required
by Watson.
B. Plaintiffs’ Appeal
       Plaintiffs contend the trial court erred in applying Michigan law to bar their claim
for punitive damages. We agree.
       California’s “governmental interest analysis” for resolving conflicts of law was
described most recently in Sullivan v. Oracle Corp. (2011) 51 Cal.4th 1191 (Sullivan).
“We typically summarize governmental interest analysis as involving three steps: ‘First,
the court determines whether the relevant law of each of the potentially affected
jurisdictions with regard to the particular issue in question is the same or different.
Second, if there is a difference, the court examines each jurisdiction’s interest in the
application of its own law under the circumstances of the particular case to determine
whether a true conflict exists. Third, if the court finds that there is a true conflict, it
carefully evaluates and compares the nature and strength of the interest of each
jurisdiction in the application of its own law “to determine which state’s interest would
be more impaired if its policy were subordinated to the policy of the other state”
[citation], and then ultimately applies “the law of the state whose interest would be the
more impaired if its law were not applied.” ’ ” (Id. at p. 1202.) Because this is an issue



       7
        For example, plaintiffs’ attorney argued the investigation documents showed
Ford “know[s] that asbestos is causing people to die, and they decide to keep on using the
product,” despite the attorney’s acknowledgment moments later it was not known
whether any of the cases of mesothelioma was actually associated with brake work.


                                               16
of law, we review the trial court’s decision de novo. (Brown v. Grimes (2011)
192 Cal.App.4th 265, 274.)
       There is little doubt the asserted conflict of law exists; at least, no one contends
differently. Punitive damages may not be awarded as a tort remedy in Michigan. (Burns
v. Van Laan (1962) 367 Mich. 485 [116 N.W.2d 873, 877].) The unavailability of
punitive damages in tort actions is an application of the more general rule that, unless
expressly allowed by statute, Michigan courts do not permit the award of damages whose
purpose is to punish defendants. (McAuley v. GMC (1998) 457 Mich. 513 [578 N.W.2d
282, 285–286 & fn. 8], disapproved on other grounds in Rafferty v. Markovitz (1999)
461 Mich. 265 [602 N.W.2d 367, 370 & fn. 6].) Michigan courts do allow the award of
“exemplary” damages, which “ ‘compensate[] a plaintiff for the “humiliation, sense of
outrage, and indignity” resulting from injuries “maliciously, wilfully and wantonly”
inflicted by the defendant,’ ” but punitive damages based on the same conduct are
unavailable. (Birkenshaw v. Detroit (1981) 110 Mich.App. 500 [313 N.W.2d 334, 339].)
Even the award of exemplary damages, however, has been restricted as actual damages
have evolved to include compensation for the type of mental distress formerly covered by
exemplary damages. (Eide v. Kelsey-Hayes Co. (1988) 431 Mich. 26 [427 N.W.2d 488,
498–500] (conc. & dis. opn. of Griffin, J.); Veselenak v. Smith (1982) 414 Mich. 567 [327
N.W.2d 261, 264].)
       In contrast, California courts, pursuant to statute, allow the award of punitive
damages in tort actions. (Civ. Code, § 3294, subd. (a).) Underlining the direct conflict
between the policies of the two states, California courts acknowledge “ ‘[p]unitive
damages . . . are not intended to compensate the injured party, but rather to punish the
tortfeasor whose wrongful action was intentional or malicious, and to deter him and
others from similar extreme conduct.’ ” (Ferguson v. Lieff, Cabraser, Heimann &
Bernstein (2003) 30 Cal.4th 1037, 1046.) “California law has long endorsed the use of




                                              17
punitive damages to deter continuation or imitation of a corporation’s course of wrongful
conduct.”8 (Johnson v. Ford Motor Co. (2005) 35 Cal.4th 1191, 1207.)
       Recognizing the conflict, we proceed to the second step of the governmental
interests analysis, to examine “ ‘each jurisdiction’s interest in the application of its own
law under the circumstances of the particular case to determine whether a true conflict
exists.’ ” (Sullivan, supra, 51 Cal.4th at p. 1202.) To assess “ ‘whether either or both
states have an interest in applying their policy to the case,’ ” we “examine the
governmental policies underlying [each state’s] laws.” (Offshore Rental Co. v.
Continental Oil Co. (1978) 22 Cal.3d 157, 163.) In doing so, “ ‘we may make our own
determination of [the relevant] policies and interests, without taking “evidence” as such
on the matter.’ ” (Sullivan, at p. 1203.)
       The Michigan prohibition on punitive damages is premised on a simple principle
of public policy: damages awarded by civil courts are appropriate to compensate, but not
to punish. (Association Research & Development Corp. v. CNA Financial Corp. (1983)
123 Mich.App. 162 [333 N.W.2d 206, 210].) The policy was established in two
Michigan Supreme Court decisions dating to 1884, Watson v. Watson (1884) 53 Mich.
168 [18 N.W. 605] and Stilson v. Gibbs (1884) 53 Mich. 280 [18 N.W. 815]. (See
Veselenak v. Smith, supra, 327 N.W.2d 261, 264.) As the court explained in Watson v.
Watson, which ruled inadmissible evidence of a defendant’s financial resources in a suit
for wrongful seduction, “the measure of [a plaintiff’s] redress ought not to depend on a
circumstance unimportant to the injury. . . . The anomaly, that a jury may have liberty to
punish at discretion for a tort, when, if the act were a crime, the penalty would be
carefully limited by law, and that they may award the penalty they agree upon to a private

       8
         In introducing this topic, we stated there is “little doubt” a conflict of law exists.
We qualified the statement because Michigan common law allows punitive damages if
authorized by statute, and punitive damages are authorized by statute in California. It
could therefore be argued that punitive damages would be permitted in this case even
under Michigan law. Because plaintiffs do not make this argument, we do not explore it
further, but it illustrates one of the difficulties associated with the narrow importation of
Michigan law advocated by Ford.


                                              18
suitor to swell his actual damages, has never received much countenance in this State.
Compensation for the wrong done has always been held to be the object to be attained;
and while all circumstances of aggravation have been received in evidence, the reception
has been for the very sufficient reason that the injury to the plaintiff was the greater in
consequence thereof, and that his compensation ought to be in proportion.” (Id. at
p. 609.) The logic was echoed in Stilson, in which the court disapproved a jury
instruction suggesting damages could be awarded to punish the defendant: “The purpose
of an action for tort is to recover the damages which the plaintiff has sustained from an
injury done him by the defendant. In some cases the damages are incapable of pecuniary
estimation; and the court performs its duty in submitting all the facts to the jury, and
leaving them to estimate the plaintiff’s damages as best they may under all the
circumstances. In other cases there may be a partial estimate of damages by a money
standard, but the invasion of the plaintiff’s rights has been accompanied by circumstances
of peculiar aggravation, which are calculated to vex and annoy the plaintiff and cause
him to suffer much beyond what he would suffer from the pecuniary loss. Here it is
manifestly proper that the jury should estimate the damages with the aggravating
circumstances in mind, and that they should endeavor fairly to compensate the plaintiff
for the wrong he has suffered. But in all cases it is to be distinctly borne in mind that
compensation to the plaintiff is the purpose in view, and any instruction which is
calculated to lead them to suppose that besides compensating the plaintiff they may
punish the defendant is erroneous.” (Stilson, supra, 18 N.W. at p. 817.) We have found
no Michigan decision articulating any other or different rationale for the disallowance of
punitive damages in the state’s courts.9



       9
         Although some federal trial courts have attributed a pro-business economic
motive to Michigan’s prohibition of punitive damages (e.g., In re Disaster at Detroit
Metro. Airport (E.D.Mich. 1989) 750 F.Supp. 793, 806), no Michigan court has ever
articulated this rationale, at least to our knowledge. (See Kelly v. Ford Motor Co.
(E.D.Pa. 1996) 933 F.Supp. 465, 468 [acknowledging that no Michigan case has actually
expressed an economic rationale for the ban on punitive damages].)


                                              19
       Given this rationale, we have difficulty pinpointing any interest of Michigan in the
application of its law to this dispute. While all conflicts of law are, at bottom, conflicts of
public policy between judicial systems, the prominence of the debate over punitive
damages highlights that aspect of the conflict here. Reasonable states can and do differ
over the efficacy and appropriateness of punitive damages as a civil remedy. Michigan’s
ban on punitive damages is the expression of a particular view of the appropriate role of
the courts in adjudicating civil disputes: to compensate, rather than to punish. It
represents a declaration of public policy about the wisdom of granting punitive damages
as a legal remedy for noncriminal conduct. In California, our Legislature has resolved
the debate in precisely the opposite manner. While Michigan has a strong interest in
seeing its view of the appropriate policy carried out in its own courts, it has a
correspondingly minimal interest in seeing the same policy implemented in the courts of
California.
       Ford argues we should set aside the judgment of the California Legislature and
import Michigan’s policy because the conduct underlying its failure to warn occurred in
Michigan on behalf of a corporation domiciled in that state. Because the same argument
would hold in all 40-odd other states permitting punitive damages, Ford effectively
argues it should be found to carry a nationwide shield from punitive damage liability
because the state in which it maintains its headquarters has decided punitive damages are
poor public policy. We cannot agree, any more than we expect a Michigan court would
yield to a plaintiff’s plea to impose punitive damages on a California-based corporation
because its home state has made the opposite policy judgment.10 On a matter of public
policy as significant as the imposition of punitive damages, states have the prerogative to

       10
         When asked to follow the example of a sister state in allowing punitive
damages, the Michigan Supreme Court commented, “So far, [except] when the legislature
ordains otherwise . . . , the policy of Michigan’s law of damages in negligence cases has
been compensation—not punishment. . . . So if Georgia permits recovery of punitive
damages in negligence cases, so Georgia has that right; yet we liking our own policy of
compensatory damages need not follow her guide.” (Burns v. Van Laan (1962)
367 Mich. 485 [116 N.W.2d 873, 877, fn. omitted].)


                                              20
establish a uniform rule applicable to all enterprises that elect to do business there, but
they have no legitimate interest in imposing that policy decision on the courts of a sister
state. (Sullivan, supra, 51 Cal.4th at p. 1205.)
       In an effort to justify its invocation of the state’s policy, Ford claims Michigan has
an interest in protecting “ ‘Michigan-domiciled defendants from excessive financial
liability,’ ” citing the conclusion of federal district courts. (Kelly v. Ford Motor Co.,
supra, 933 F.Supp. 465, 468; see similarly In re Disaster at Detroit Metro. Airport,
supra, 750 F.Supp. 793, 805–806.) With due respect to those courts, that is manifestly
not the purpose of the punitive damages ban as it is implemented in Michigan, nor is it an
interest that has ever been articulated by Michigan courts. The Michigan ban on punitive
damages applies equally to all defendants, regardless of their state of domicile. As a
result, “Michigan-domiciled defendants” are provided no more protection from punitive
damages in Michigan courts than persons and corporations resident elsewhere.
       In McCann v. Foster Wheeler LLC (2010) 48 Cal.4th 68, the Supreme Court
cautioned against assuming the interest of a state in enforcing laws that are domicile-
neutral is restricted to promoting the well-being of its own businesses: “When a state
adopts a rule of law limiting liability for commercial activity conducted within the state
in order to provide what the state perceives is fair treatment to, and an appropriate
incentive for, business enterprises, we believe that the state ordinarily has an interest in
having that policy of limited liability applied to out-of-state companies that conduct
business in the state, as well as to businesses incorporated or headquartered within the
state. . . . In the absence of any explicit indication that a jurisdiction’s ‘business friendly’
statute or rule of law is intended to apply only to businesses incorporated or
headquartered in that jurisdiction (or that have some other designated relationship with
the state—for example, to those entities licensed by the state), as a practical and realistic
matter the state’s interest in having that law applied to the activities of out-of-state
companies within the jurisdiction is equal to its interest in the application of the law to
comparable activities engaged in by local businesses situated within the jurisdiction.”
(Id. at pp. 91–92.)


                                               21
       Even if Michigan had expressed an intent to protect its resident businesses from
punitive damages, the state would have no legitimate interest in imposing that intent in
California. A somewhat similar situation was considered in Sullivan, supra, 51 Cal.4th
1191, which rejected the application of the labor laws of other states to work performed
in California. The Sullivan plaintiffs were employees of Oracle, a corporation
headquartered in California, but they resided in Colorado and Arizona. Their job for
Oracle required them to travel for work in several states, including California. (Id. at
p. 1195.) The plaintiffs claimed that while working in California they were required to
be paid pursuant to the overtime laws of California; Oracle contended their compensation
should be governed by the overtime laws of their home states, regardless of the site of
their work. (Ibid.) Responding to Oracle’s argument that Colorado and Arizona “have
an interest in shielding their own businesses from more costly and burdensome regulatory
environments in other states,” the court held, “We do not doubt the premise that a state
can properly choose to create a business-friendly environment within its own boundaries.
‘[T]he federal system contemplates that individual states may adopt distinct policies to
protect their own residents and generally may apply those policies to businesses that
choose to conduct business within that state.’ [Citation.] However, every state enjoys the
same power in this respect. Therefore, ‘[i]t follows from this basic characteristic of our
federal system that, at least as a general matter, a company that conducts business in
numerous states ordinarily is required to make itself aware of and comply with the law of
a state in which it chooses to do business.’ [Citation.] The federal Constitution does not
require a state ‘ “to substitute for its own [laws], applicable to persons and events within
it, the conflicting statute of another state” ’ [citation] or permit one state to project its
regulatory regime into the jurisdiction of another state [citation]. Consequently, neither
Colorado nor Arizona has a legitimate interest in shielding Oracle from the requirements
of California wage law as to work performed here.” (Id. at p. 1205.) For the same
reasons, Michigan has no interest in shielding its resident corporations from punitive
damages when those corporations chose to do business in states permitting the imposition
of such damages.


                                               22
       Ford also argues Michigan has an interest in regulating the legal consequences of
conduct that occurs within its borders.11 In Ford’s telling, the Michigan ban on punitive
damages represents a declaration that corporate conduct occurring in Michigan should
not be subject to punitive damages, regardless of its nature. That argument, however,
suffers from a similar weakness. Michigan has never articulated this as a motive for
banning punitive damages, and Michigan courts do not preclude punitive damages based
on conduct occurring only within the state. Rather, the ban on punitive damages is
entirely independent of the location of the alleged conduct in connection with which
punitive damages are sought and applies to any defendant’s conduct, regardless of where
it occurred.
       Because we find no Michigan interest in the implementation of its policy in the
courts of California, no “true” conflict of law exists. We therefore need not proceed to
the third step of the governmental interests analysis, the relative impairment of interests.
(Washington Mutual Bank v. Superior Court (2001) 24 Cal.4th 906, 920.)
       Plaintiffs were entitled to present their demand for punitive damages to the jury, in
compliance with California law. Because the trial court declined to permit adjudication
of punitive damages, we must remand for a trial limited to that issue. (See Torres v.
Automobile Club of So. California (1997) 15 Cal.4th 771, 776; Cloud v. Casey (1999)
76 Cal.App.4th 895, 912–913.)
                                   III. DISPOSITION
       The judgment of liability and award of compensatory damages against Ford is




       11
         The decisions when and whether to place a warning on Ford’s parts were
presumably made by executives located in Michigan, although, of course, the relevant
supply of unlabeled products occurred here in California.


                                             23
affirmed. The matter is remanded to the trial court for a trial on liability and amount, if
any, of punitive damages.




                                                  _________________________
                                                  Margulies, Acting P.J.


We concur:


_________________________
Dondero, J.


_________________________
Becton, J.*




*
 Judge of the Contra Costa County Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.



                                             24
Trial Court: Alameda County Superior Court

Trial Judge: Hon. George C. Hernandez, Jr.

Counsel:

Kazan, McClain, Satterley, Lyons, Greenwood & Oberman, Joseph D. Satterley, Dianna
Lyons, Justin A. Bosl, Ted W. Pelletier, and Michael T. Stewart for Plaintiffs and
Appellants Patrick Scott and Sharon Scott.

Nixon Peabody, Ronald Frank Lopez, David A. Pereda, Ross M. Petty; Munger, Tolles &
Olson, Daniel P. Collins, Nicholas C. Soltman; Dykema Gossett, and Eric C. Tew for
Defendant and Appellant Ford Motor Company.

The Product Liability Advisory Council, Inc., Hugh F. Young, Jr.; Snell & Wilmer and
Mary-Christine Sungaila as Amici Curiae on behalf of Defendant and Appellant Ford
Motor Company.
