OneLBriefs

State Farm Mutual v. Campbell

SCOTUS - 2003 (538 U.S. 408)

Facts:

D sold P an automobile insurance policy.
P performed an unsafe maneuver in his car and caused one person to die and another to sustain serious injury.
D refused to settle the case for $25k even though they recognized that their client was negligent and responsible.
Jury awarded damages to other drivers in the amount of $200k, most of which would have to paid by P.
P sued D for not settling when they had the chance. ("bad faith" claim)

Procedural History:

P won in lower court, compensatory $2.6M (reduced by trial judge to $1.0M), punitive $145M (reduced by trial judge to $25M)
Utah Supreme Court reinstated the $145M in punitive damages.

Issues:

Can a D be punished via punitive damages for conduct dissimilar and independent from the cause of action?
Should punitive damages include consideration for harm to third parties?

Holding/Rule:

The punitive damages reinstated by the Utah Supreme Court were excessive as examined through the lens of Gore.
Punitive damages cannot be awarded based on actions not directly related to those causing harm to the plaintiff.

Reasoning:

Degree of reprehensibility

Can only look at actions that parallel those that impacted the P, not specifically at nationwide policies; thus, no recidivism
Cannot expand scope of the case so that the D may be punished for any malfeasance

Ratio between punitive and compensatory

145:1 is excessive, single-digit multipliers are more likely to comport with due process
Double counting is bad, i.e. the compensatory damages included punitive damages in them
Wealth of a D cannot justify higher punitive damages

Sanctions for comparable misconduct

$10k fine for act of fraud in Utah, dwarfed by $145M figure

Dissent:

D's actions were, in fact, reprehensible to the point of justifying the punitive damages
Actions were similar enough to actions towards P to be relevant.

Notes:

UT on remand put punitive damages at $9.9M (ratio at 9.9:1), basically eff you SCOTUS