The Supreme Court yesterday let stand a ruling preventing a New York woman who allegedly was injured in a Ford Motor Co. car from introducing evidence in a case against Ford claiming that the automaker knew its automatic transmissions sometimes slipped from park to reverse.
In a lawsuit charging Ford with negligence and products liability violations, the woman claimed she was injured five years ago after her husband left their 1976 Mercury Marquis running at a gas station.
The husband said he left the gearshift lever in what appeared to be the park position, but the car began moving backward while the woman was attempting to get out of it, causing her to be injured seriously.
Ford signed an agreement with the government four years later requiring it to tell owners of 20 million Ford vehicles built between 1970 and 1980 of safe parking procedures. Ford also noted the problem in its 1978 owner manuals and, by 1980, changed the controls.
The couple wanted to use these acknowledgements by Ford in its case. A federal district court dismissed the case. The 2nd U.S. Circuit Court of Appeals remanded the case for a new trial, but said that evidence of modifications or warnings by the manufacturer after the accident are inadmissable by a federal rule.
The rule "is prompted by the fear that people will be less likely to take subsequent remedial measures if evidence of their repairs or improvements may be used against them in lawsuits arising out of prior accidents," the appeals court said.
The automatic transmission problem has been blamed for 6,000 accidents and nearly 100 deaths.
In another case, the Supreme Court agreed to decide a tax case that could be important to persons investing in property for tax shelters.
The case involves the purchase of property with nonrecourse loans, usually long-term mortgages in which no partner assumes personal liability and the debt is secured by the property purchased. When the property declines in value, but is later sold for the full amount of the loan, the difference can be used as a tax deduction.
The federal commissioner of revenue claimed that the amount is actually a gain and should be taxed.
However, the 5th U.S. Circuit Court of Appeals reversed a U.S. Tax Court decision and said the sum is not profit and should not be taxed.
The government claimed that the appeals court ruling permits taxpayers who have gained large tax deductions from participating in tax shelter investments to dispose of their interest in the project tax free when the shelter no longer generates significant deductions on their tax returns.