BMW of North America, Inc. v. Gore
Encyclopedia
BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996), was a United States Supreme Court case limiting punitive damages
under the Due Process Clause of the 14th Amendment.
, Dr. Ira Gore, bought a new BMW
, and later discovered that the vehicle had been repainted before he bought it. Defendant
BMW revealed that their policy was to sell damaged cars as new if the damage could be fixed for less than 3% of the cost of the car. Dr. Gore sued, and an Alabama
jury awarded $4,000 in compensatory damages (lost value of the car) and $4 million in punitive damages
, which was later reduced to $2 million by the Alabama Supreme Court
.http://www.law.cornell.edu/supct/html/94-896.ZO.html
The Supreme Court applied three factors in making this determination:
Using these factors, the Court found that BMW’s conduct was not particularly reprehensible (no reckless disregard for health or safety, nor even evidence of bad faith). The ratio of actual or potential damages to punitive damages was suspiciously high. Finally, the criminal sanctions available for similar conduct were limited to $2,000, making the $2 million assessment the equivalent of a severe criminal penalty.
The Court noted, however, that these three factors can be over-ridden if it is "necessary to deter future conduct."
Dissenting opinions were written by Justice Scalia and Justice Ginsburg both contending that the Constitution was not implicated here, raising principles of federalism.
in order to preempt the role of state courts and legislatures. These same people say the Court should not spend its time as a "super jury," second-guessing jury verdicts, but rather, "[T]he court should be more deferential to state courts and legislatures, and more concerned with developing a coherent framework."
Punitive damages
Punitive damages or exemplary damages are damages intended to reform or deter the defendant and others from engaging in conduct similar to that which formed the basis of the lawsuit...
under the Due Process Clause of the 14th Amendment.
Facts
The plaintiffPlaintiff
A plaintiff , also known as a claimant or complainant, is the term used in some jurisdictions for the party who initiates a lawsuit before a court...
, Dr. Ira Gore, bought a new BMW
BMW
Bayerische Motoren Werke AG is a German automobile, motorcycle and engine manufacturing company founded in 1916. It also owns and produces the Mini marque, and is the parent company of Rolls-Royce Motor Cars. BMW produces motorcycles under BMW Motorrad and Husqvarna brands...
, and later discovered that the vehicle had been repainted before he bought it. Defendant
Defendant
A defendant or defender is any party who is required to answer the complaint of a plaintiff or pursuer in a civil lawsuit before a court, or any party who has been formally charged or accused of violating a criminal statute...
BMW revealed that their policy was to sell damaged cars as new if the damage could be fixed for less than 3% of the cost of the car. Dr. Gore sued, and an Alabama
Alabama
Alabama is a state located in the southeastern region of the United States. It is bordered by Tennessee to the north, Georgia to the east, Florida and the Gulf of Mexico to the south, and Mississippi to the west. Alabama ranks 30th in total land area and ranks second in the size of its inland...
jury awarded $4,000 in compensatory damages (lost value of the car) and $4 million in punitive damages
Punitive damages
Punitive damages or exemplary damages are damages intended to reform or deter the defendant and others from engaging in conduct similar to that which formed the basis of the lawsuit...
, which was later reduced to $2 million by the Alabama Supreme Court
Alabama Supreme Court
The Supreme Court of Alabama is the highest court in the state of Alabama. The court consists of an elected Chief Justice and eight elected Associate Justices. Each justice is elected in partisan elections for staggered six year terms. The Governor of Alabama may fill vacancies when they occur...
.http://www.law.cornell.edu/supct/html/94-896.ZO.html
Issue
Whether excessively high punitive damages violate the Due Process clause of the Constitution.Opinion of the Court
The Court, in an opinion by Justice Stevens, found that the excessively high punitive damages in this case violate the Due Process clause. For punitive damages to stand, the damages must be reasonably necessary to vindicate the State’s legitimate interest in punishment and deterrence. Punitive damages may not be "grossly excessive" - if they are, then they violate substantive due process.The Supreme Court applied three factors in making this determination:
- The degree of reprehensibility of the defendant’s conduct;
- the ratio to the compensatory damages awarded (actual or potential harm inflicted on the plaintiff); and
- Comparison of the punitive damages award and civil or criminal penalties that could be imposed for comparable misconduct.
Using these factors, the Court found that BMW’s conduct was not particularly reprehensible (no reckless disregard for health or safety, nor even evidence of bad faith). The ratio of actual or potential damages to punitive damages was suspiciously high. Finally, the criminal sanctions available for similar conduct were limited to $2,000, making the $2 million assessment the equivalent of a severe criminal penalty.
The Court noted, however, that these three factors can be over-ridden if it is "necessary to deter future conduct."
Dissenting opinions were written by Justice Scalia and Justice Ginsburg both contending that the Constitution was not implicated here, raising principles of federalism.
Aftermath
On remand, the Supreme Court of Alabama ordered a new trial unless plaintiff accepted a remittitur of all but $50,000 of the punitive damages awarded. The court reasoned that it may not have given sufficient weight to the degree of reprehensibility of BMW's conduct, and selected the $50,000 as in the range of other Alabama verdicts in cases of repaired cars being sold as new.Federalism Questions
Some have questioned the appropriateness of federal courts reading substantive rights into the Due Process Clause of the United States ConstitutionUnited States Constitution
The Constitution of the United States is the supreme law of the United States of America. It is the framework for the organization of the United States government and for the relationship of the federal government with the states, citizens, and all people within the United States.The first three...
in order to preempt the role of state courts and legislatures. These same people say the Court should not spend its time as a "super jury," second-guessing jury verdicts, but rather, "[T]he court should be more deferential to state courts and legislatures, and more concerned with developing a coherent framework."
See also
- State Farm v. Campbell (2003)
- List of United States Supreme Court cases, volume 517
- List of United States Supreme Court cases
- Lists of United States Supreme Court cases by volume
- List of United States Supreme Court cases by the Rehnquist Court
External links
- "Bad enough to punish: The application of the responsibility guidepost in punitive damages cases after BMW v. Gore" Federation of Insurance & Corporate Counsel Quarterly, Fall 1998