BMW of North America, Inc. v. Gore

Infobox SCOTUS case
Litigants=BMW of North America, Inc. v. Gore
ArgueDate=October 11
ArgueYear=1995
DecideDate=May 20
DecideYear=1996
FullName=BMW of North America, Incorporated, Petitioner v. Dr. Ira Gore, Jr.
USVol=517
USPage=559
Citation=116 S. Ct. 1589; 134 L. Ed. 2d 809; 1996 U.S. LEXIS 3390; 64 U.S.L.W. 4335; 96 Cal. Daily Op. Service 3490; 96 Daily Journal DAR 5747; 9 Fla. L. Weekly Fed. S 585
Prior=Award of punitive damages upheld in Alabama Supreme Court
Subsequent=
Holding=Excessive punitive damages awards violate substantive due process.
SCOTUS=1994-2005
Majority=Stevens
JoinMajority=O'Connor, Kennedy, Souter, Breyer
Concurrence=Breyer
JoinConcurrence=O'Connor, Souter
Dissent=Scalia
JoinDissent=Thomas
Dissent2=Ginsburg
JoinDissent2=Rehnquist
LawsApplied=U.S. Const. amend. XIV

"BMW of North America, Inc. v. Gore", 517 U.S. 559 (1996) [ussc|517|559|Text of the opinion on Findlaw.com] , was a United States Supreme Court case limiting punitive damages under the Due Process Clause of the 14th Amendment.

Facts

The plaintiff, 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]

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 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.

External links

* [http://www.findarticles.com/p/articles/mi_qa3811/is_199810/ai_n8812153 "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