Robinson Helicopter Company v. Dana Corporation

Robinson Helicopter Company (Robinson) (plaintiff), a helicopter manufacturer, contracted for the purchase of sprag clutches, a helicopter part, from Dana Corporation (Dana) (defendant) for many years, including from 1984 to 1998. Dana was the only company that manufactured the clutches that were needed for two of Robinson’s helicopter models. Helicopter parts, including the clutches, needed to meet exact design specifications as approved by the Federal Aviation Administration (FAA), and once a design was approved by the FAA, it could not be modified in any way without further FAA review and approval. Aircraft manufacturers had to provide certificates to the FAA ensuring that all parts had been manufactured according to the already approved designs. From 1984 to July 1996, Dana sold clutches of an approved hardness, known as a 50/55 level of hardness, to Robinson, meeting the required FAA design specifications. However, in July 1996, without notifying Robinson, Dana began manufacturing and supplying clutches with a 61/63 level of hardness, which were not approved by the FAA. Despite the change in the specifications, Dana provided certificates to Robinson asserting that the parts were made in compliance with approved design specifications. Beginning in 1998, the 61/63 hardness clutches experienced a failure rate significantly higher than the 50/55 hardness clutches, and Robinson was forced to recall and repair many helicopters, incurring labor and parts expenses equaling $1,555,924. Robinson sued, claiming breaches of contract and warranty and negligent and intentional misrepresentations. At trial, the jury awarded $1,555,924 in compensatory damages and $6,000,000 in punitive damages. Dana appealed, arguing that the economic-loss doctrine should prevent Robinson from recovering the punitive damages, which stemmed from tort theories.