Lycoming Loses $89 Million Case (How Does This Affect their Ability to Compete with PMAs)?

16 Apr 2010. 88.7 million dollars was awarded against Avco Lycoming in a recent crash case. Awards like this make you stop and wonder about your company’s potential liability for manufactured products and articles!

The cases was decided April 6. It involved a 1999 plane crash. Four of the five people on the aircraft were killed; the fifth testified in the trial against Avco.

The plaintiff’s attorney successfully argued that the carburetor failed when the needle valve became stuck , which permitted the carburetor to become flooded. The plaintiff’s argued that the part was made of brass when other manufacturers were using stainless steel seats and stainless steel. The manufacturer had argued that the crash was caused by pilot error and that there was nothing wrong with the carburetor.

In addition to $24.7 million in compensatory damages, the jury awarded $64 million in punitive damages. The newspaper article explains that this figure was based on 10% of the company’s net worth (yes, you read that percentage correctly):

After Common Pleas Judge Patricia A. McInerney gave the jury a stipulated net worth of defendant Avco Corp. of about $640 million, the jury went back to deliberations and returned later Tuesday afternoon with an award of $64 million in punitive damages, according to the verdict sheet.

The plaintiff’s attorney’s press release suggests that an appeal will bear Avco no fruit. This will be interesting to follow (if the matter is not settled outside of appeal) because 10% of total company net worth seems like an especially high value for punitive damages of a large company. In comparison, it would mean that punitive damages against a company like Boeing might reach over $5 billion (ten percent of its market value).

The newspaper account states that this was the largest jury award out of a Pennsylvania jury in the last five years. If this verdict stands and is paid, then it might be worth tracking how this affects Avco Lycoming’s ability to compete in the marketplace, and how it affects its parent company, Textron.

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