Filed: May 10, 2001

LINDA McCATHERN,

Respondent on Review,

v.

TOYOTA MOTOR CORPORATION,
a foreign corporation,
TOYOTA MOTOR SALES, INC.,
a foreign corporation,
and BROADWAY TOYOTA,
an Oregon corporation,

Petitioners on Review,

and

TAKATA CORPORATION,
a foreign corporation,

Defendant.

On review from the Court of Appeals.*

Argued and submitted May 10, 2000.

Malcolm E. Wheeler, of Wheeler Trigg & Kennedy, P.C., Denver, Colorado, argued the cause for petitioners on review. With him on the briefs were Jonathan M. Hoffman and Julie K. Bolt, of Martin, Bischoff, Templeton, Langslet & Hoffman, LLP, Portland.

Kathryn H. Clarke, Portland, argued the cause for respondent on review. With her on the brief were Maureen Leonard, Jeffrey P. Foote, and Jana Toran, Portland.

Arthur C. Johnson, of Johnson, Clifton, Larson, & Corson, P.C., Eugene, filed a brief for amicus curiae Oregon Trial Lawyers Association.

Karen O'Kasey, of Schwabe, Williamson & Wyatt, Portland, filed a brief for amicus curiae Oregon Association of Defense Counsel.

Christopher W. Angius, of Perkins Coie, Portland, and Victor E. Schwartz, Mark A. Behrens, and Leah Lorber, of Crowell & Moring, LLP, Washington, D.C., filed a brief for amicus curiae Product Liability Advisory Council, Inc. Also appearing on the brief was Of Counsel Hugh F. Young, Jr., Product Liability Advisory Council, Inc., Reston, Virginia.

Before Carson, Chief Justice, and Gillette, Durham, Kulongoski, Leeson, and Riggs, Justices.**

KULONGOSKI, J.

The decision of the Court of Appeals and the judgment of the circuit court are affirmed.

* Appeal from Multnomah County Circuit Court, Jopseph F. Ceniceros, Judge. 160 Or App 201, 985 P2d 804 (1999).

** Van Hoomissen, J., retired December 31, 2000, and did not participate in the decision of this case. De Muniz, J., did not participate in the consideration or decision of this case.

KULONGOSKI, J.

The primary issue on review in this product liability civil action is whether plaintiff introduced sufficient evidence to establish that the 1994 Toyota 4Runner was designed defectively. (1) Plaintiff was injured when the 1994 4Runner vehicle in which she was riding as a passenger rolled over. Plaintiff sued defendants -- the manufacturer, distributor, and seller of the 4Runner -- alleging that the 1994 4Runner was dangerously defective and unreasonably dangerous because its design rendered it unstable and prone to roll over. A jury returned a verdict in favor of plaintiff and awarded noneconomic damages totaling $2,250,000 and economic damages totaling $5,400,000. The Court of Appeals affirmed. McCathern v. Toyota Motor Corp., 160 Or App 201, 985 P2d 804 (1999). We now affirm the decision of the Court of Appeals.

The following facts are taken from the record. We view the evidence, and the reasonable inferences to be drawn therefrom, in the light most favorable to the party in whose favor the jury returned the verdict, i.e., plaintiff. Parrott v. Carr Chevrolet, Inc., 331 Or 537, 542, 17 P3d 473 (2001).

The accident that caused plaintiff's injuries took place one evening in May 1995, when plaintiff and her daughter, together with plaintiff's cousin, Sanders, and her daughter, were riding in Sanders's 1994 Toyota 4Runner. Sanders was driving, plaintiff was in the front passenger seat, and the children were in the back seat. Everyone was wearing a seatbelt.

While the group was traveling south on Highway 395 at a speed of approximately 50 miles per hour, an oncoming vehicle veered into Sanders's lane of travel. (2) Sanders steered to the right onto the paved shoulder to avoid a collision, then steered to the left to stay on the highway, at which point the 4Runner began to rock from side-to-side. She then steered to the right again to return to the south-bound lane, at which point the 4Runner rolled over and landed upright on its four wheels. During the rollover, the roof over the front passenger seat collapsed and, as a result, plaintiff sustained serious and permanent injuries. The other passengers in the 4Runner sustained only cuts and bruises. The vehicle that had veered into Sanders's lane did not stop, and no other vehicles were involved in the accident.

In January 1996, plaintiff filed the present action against defendants (collectively "Toyota"). (3) Plaintiff's complaint alleged that the 1994 4Runner "was dangerously defective and unreasonably dangerous in that the vehicle, as designed and sold, was unstable and prone to rollover." (4)

At trial, plaintiff presented expert testimony in support of her theory that the 1994 4Runner was designed defectively. One of plaintiff's accident reconstruction experts, Fries, opined that the accident was caused solely by the geometry of the 1994 4Runner, as opposed to any other tripping mechanism, such as braking, off-road travel, or a "rim trip." (5) Robertson, a statistician specializing in injury statistics, testified regarding the correlation between the height of a vehicle's center of gravity, its track width, (6) and its rollover resistence. Robertson stated that the 1994 4Runner was unreasonably dangerous because widening the vehicle by only eight inches would have increased its stability and decreased its propensity to roll over. Tamny, another engineer and accident reconstruction expert, also opined that the 1994 4Runner was unreasonably dangerous because the manufacturer could have designed it in such a way that it would have skidded instead of rolling over when making sharp turns on flat, dry pavement.

Beginning with its opening statement and continuing throughout the trial, Toyota conceded that it was aware that the 1994 4Runner rolls over on flat, dry pavement due to tire friction forces alone. According to Toyota, however, the 1994 4Runner's design was not defective because almost all sport utility vehicles (SUVs) will roll over under conditions similar to those present during plaintiff's accident. (7) Toyota conceded that the design modifications that plaintiff's experts had suggested -- lowering the vehicle's center of gravity or widening its track width to increase rollover resistance -- were feasible at the time the 1994 model 4Runner was designed. Toyota argued, however, that those changes were not practicable because they would have diminished the 4Runner's utility and inhibited its performance in an off-road environment.

Plaintiff also presented evidence that Toyota had redesigned the 1994 model 4Runner in 1996 by lowering its center of gravity and widening its track width. Toyota's senior staff engineer, Yonekawa, testified that the design modifications made to the 1996 4Runner had improved the vehicle's handling and rollover resistance. In Toyota's testing, the 1994 model 4Runner had overturned at speeds of less than 40 miles per hour with steering input alone, i.e., without applying the brakes. By contrast, the 1996 4Runner did not roll over with steering input alone. According to plaintiff's expert, Tamny, "if you have to hit the brakes to make the vehicle unstable, it has better handling characteristics than if you can get it to lift off from steering alone." Tamny also characterized the 1996 4Runner as a reasonably safe vehicle because, when a driver makes an "obstacle avoidance maneuver" (8) on flat, dry pavement, the 1996 design slides or skids to a stop, and does not roll over. Finally, Dobashi, Toyota's engineer who was responsible for testing and evaluating the 1996 4Runner, also testified that the 1996 design changes had improved the handling and stability of the 4Runner. When asked whether the 1996 4Runner was worse in any respect than the 1994 model, i.e., whether the design modifications of the 1996 4Runner had affected its utility as an SUV, Dobashi testified that, to his knowledge, "all performances are about the same or better."

Finally, to counter the argument that no ordinary consumer would expect a 4Runner to stay upright during evasive turns, plaintiff presented evidence that Toyota had promoted the 1994 4Runner as a safe and dependable vehicle for both highway and off-road purposes. Toyota's national merchandising manager for the United States, Cecconi, testified that Toyota had marketed the 1994 4Runner to older, wealthier drivers who would use the vehicle for commuting as well as for outdoor activities. According to Cecconi, Toyota was aware that many consumers thought that the 4Runner's height was a safety feature because it allowed better visibility. He also admitted, however, that Toyota's advertising did not attempt to communicate to consumers the rollover risk attendant with the vehicle's height. When presented with an example of a television commercial depicting the 4Runner performing evasive maneuvers similar to those that occurred in plaintiff's accident, Cecconi admitted that, under certain conditions, the maneuvers being depicted in the commercial might cause the vehicle to roll over. Cecconi also was shown several Toyota advertising brochures and testified that he was "not really sure" whether the 1994 4Runner safely could perform the evasive maneuvers depicted in the brochures's diagrams.

At the close of plaintiff's evidence, Toyota moved for a directed verdict on plaintiff's design-defect claim on two grounds: (1) that plaintiff had failed to prove that the 1994 4Runner was dangerously defective and unreasonably dangerous because she had failed to adduce sufficient evidence of the practicability of her proposed alternative design, viz., the 1996 4Runner; and (2) that plaintiff had failed as a matter of law to prove that the design of the 1994 4Runner had caused her injuries because she had failed to demonstrate that it was more probable than not that the accident and injuries would not have occurred had Toyota manufactured and sold the product with plaintiff's proposed alternative design. The court denied Toyota's motion on both grounds. Toyota renewed that motion on the same two grounds at the close of the evidence, and the court again denied the motion.

As noted, the jury found for plaintiff, awarding her economic and noneconomic damages. Toyota timely filed a motion for judgment notwithstanding the verdict (JNOV) or, in the alternative, a new trial, based on the same grounds as its earlier motion for a directed verdict. The trial court did not rule on the motion, and it therefore was denied by operation of law. ORCP 63 D; ORCP 64 F.

On appeal, the Court of Appeals concluded that the trial court did not err in denying Toyota's motions for directed verdict and JNOV because plaintiff had submitted evidence from which a jury could have concluded that the 1994 4Runner had failed to meet ordinary consumer expectations and, therefore, was defective. McCathern, 160 Or App at 204. After reviewing the history of "the controlling standard of strict products liability under Oregon law: the 'consumer expectation' test," id. at 207, the Court of Appeals held that a plaintiff in Oregon could establish defective design by proving ordinary consumer expectations under either a "representational" theory, a "consumer risk-utility" theory, or both. Id. at 218. The court also concluded that plaintiff's proof legally was sufficient under both theories. Id. at 222, 228.

Toyota petitioned for review, renewing its contention that plaintiff had failed to introduce sufficient evidence to support her design-defect claim. We allowed review to consider that issue. Before we reach that issue, however, we consider an additional issue raised in Toyota's petition for review concerning the trial court's admission of "other similar incidents" evidence.

At trial, plaintiff presented expert testimony by Wallingford, a forensic engineer specializing in accident reconstruction. Plaintiff had retained Wallingford to review approximately 35 rollover accidents involving pre-1996 Toyota 4Runners to determine whether those accidents were "substantially similar" to plaintiff's accident. The majority of Wallingford's testimony was based on information that he had reviewed from lawsuits or investigation reports involving those incidents, including police reports, police photographs, and witness depositions. In some of the cases, Wallingford actually had visited the accident scene or had examined the vehicle involved in the accident. After analysis, Wallingford concluded that approximately 20 of the 35 rollover accidents reviewed were "substantially similar" to plaintiff's accident. (9)

In response to Toyota's objection that the "other similar incidents" evidence was cumulative, and in the interest of time, the court restricted Wallingford's testimony to 15 incidents. Toyota also objected that the factual information underlying Wallingford's opinions was inadmissible hearsay. The court overruled that objection and permitted Wallingford to give a brief summary of each accident for the jury and then to offer his opinion whether each accident was "substantially similar" to plaintiff's accident based on the criteria that he had identified.

On cross-examination, Toyota sought to impeach Wallingford's opinion testimony by referring to information contained in several police reports that were part of the factual information on which Wallingford had based his opinions. According to Toyota, those reports had included accident descriptions that directly contradicted Wallingford's conclusions about the substantial similarity of the other accidents to plaintiff's accident. When Toyota offered those police reports into evidence, plaintiff's counsel objected to their admission on the basis that the reports contained inadmissible hearsay. Defense counsel responded:

"It's true that the offering attorney may be prevented from putting things into evidence on the grounds that what the expert relied on is hearsay, but that is not true on cross. [O]n cross, the opposite rule applies: If the witness has relied on the information, it is admissible for impeachment purposes, and it's admissible in the record for that purpose."

The trial court initially sustained plaintiff's objection. Thereafter, the trial court changed its mind about the hearsay nature of the reports and admitted them into evidence for impeachment purposes. Plaintiff again objected and argued that their admission was prejudicial to her because other information in Wallingford's file that the court had not admitted, such as deposition testimony, supported Wallingford's conclusions. In response to that objection, Toyota offered and stipulated to the admission of Wallingford's entire file, which included the reports, depositions, and photographs from the 15 accidents. Accordingly, the trial court admitted Wallingford's entire file into evidence.

On appeal, Toyota argued that the trial court erred when it overruled its hearsay objections and allowed Wallingford's testimony about the factual information contained in his file on which he based his opinions. The Court of Appeals refused to consider the merits of that argument, because it concluded that Toyota had waived any error on that issue when it subsequently offered and stipulated to the admission of Wallingford's file. McCathern, 160 Or App at 235-36.

On review, Toyota asserts that the Court of Appeals' refusal to consider that argument was incorrect because it conflicts with this court's holding in Wallace v. American Life Ins. Co., 111 Or 510, 533-37, 225 P 192, on reh'g 227 P 465 (1924). Toyota argues that the evidence was inadmissible: (1) because it was hearsay; and (2) because it was unfairly prejudicial. For the reasons set out below, we agree that Toyota did not waive its objection by stipulating to the admission of Wallingford's file. (10) Nonetheless, we do not agree that the testimony was hearsay or that it was unfairly prejudicial.

We first consider plaintiff's argument that Toyota waived its hearsay objections to Wallingford's testimony by stipulating to the admission of his file. Toyota is correct that, under Wallace, plaintiff's waiver argument fails. The plaintiff in Wallace argued that the defendant had waived its objections to the plaintiff's expert's opinion evidence for two reasons: first, because the defendant had "met [the] plaintiff's expert witnesses with expert witnesses and offered 'opinion evidence' against 'opinion evidence,'" 111 Or at 533; and, second, because the defendant had cross-examined the plaintiff's expert about the same evidence that, during the direct examination of that expert, the court had admitted and the plaintiff had used over the defendant's objections, id. at 537. The court in Wallace disagreed with the plaintiff's waiver arguments, explaining:

"The defendant did not waive his objection and exception by attempting to disprove the matters testified to, or to prove facts inconsistent with them. A party excepting to the admission of testimony is not bound to concede its truth, or to refrain from combating it, in order to retain his exception."

Id. at 536 (internal quotation marks omitted).

The rationale articulated in Wallace is consistent with the general understanding that, when a party's objection is made and overruled, that party

"is entitled to treat [that] ruling as the 'law of the trial' and to explain or rebut, if he can, the evidence admitted over his protest. Consequently, there is no waiver if he cross-examines the adversary's witness about the matter, even though the cross-examination entails a repetition of the fact, or if he meets the testimony with other evidence which, under the theory of his objection, would be inadmissible."

McCormick, Evidence,