BMW v. Gore
SCOTUS - 1996 (116 S.Ct. 1589)
Facts:
- P bought a BMW for $40,750 from an authorized dealer of D.
- P took car to a detail shop and was informed that there was evidence that the car had been repainted.
- P sued D, alleging that D failed to disclose that the car had been repainted, constituting suppression of a material fact.
Procedural History:
- Lower court found for P, $4k in compensatory, $4M in punitive
- AL Supreme Court held decision but lowered punitive damages to $2M via remittitur
- SCOTUS 5-4 to overrule punitive damages.
Issues:
- Do excessive punitive damages violate due process?
- Do states have the right to impose sanctions on violators of its laws with the intent to change the violators' policies in other states?
- How do courts determine if punitive damage awards are excessive?
Holding/Rule:
- Punitive damages were excessive because there was not sufficient notice of the magnitude of the sanction the state might impose.
- States cannot punish someone for performing actions that are lawful in other states.
Reasoning:
- Three guideposts that provide this adequate notice:
- Degree of reprehensibility
- Violent?
- Repeated?
- Trickery or deceit?
- Ratio between punitive and compensatory damages
- Too high of a ratio (500:1 in this case) should "raise a judicial eyebrow", trigger remittitur
- Can be higher ratio for small economic impact or injury hard to detect
- Sanctions for comparable misconduct
- Highest possible penalty for action in this case was $2,000
- States cannot use the punitive damages deterrent as a means of imposing its regulatory policies on the entire nation
Dissent:
- Guideposts offer no real guidance at all and can be overridden if necessary to deter future misconduct
- Difficulty of states to follow these guideposts in determining whether an award is excessive
- There is no federal guarantee that a damages award actually be reasonable.
- Court should not interfere in a realm that should be regulated by the states and their legislatures.
Notes:
