I. Punitive Damage Awards
1. BMW v Gore (1996) (5-4)
i. first time SC declared limits to imposition of punitive damages by state court
ii. F: New car purchaser sued car distributor based on the dealer’s failure to disclose that the car had been repainted prior to the sale. The jury of the trial court entered a judgment awarding buyer $4,000 in compensatory damages and $4M in punitive damages. The buyer claimed that his repainted car was worth less than a car that had not been refinished ($4,000 differential in value) and that the car distributor should also be punished for 983 refinished cars sold as new in other states, 14 of which were sold in Alabama. The $4M judgment was derived using a $300 per car penalty for approximately 1,000 cars. The Alabama Supreme Court reduced the award to $2M. The US Supreme Ct. reversed the decision of the Alabama Supreme Ct. and remanded.
iii. H: Punitive damages of 500 times actual damages in this case violate the 14th Amendment’s due process clause because none of the justifications for such an extreme reward were met.
iv. The $2 million punitive damages award is grossly excessive and therefore exceeds the constitutional limit. The Supreme Court can regulate punitive damages.
v. R: Three “guideposts” indicate the judgment is excessive: 1. “the degree of reprehensibility of the nondisclosure”; 2. “the disparity between the harm or potential harm suffered by [buyer] and his punitive damages award” (ratio); 3. “the difference between this remedy and the civil penalties authorized or imposed in comparable cases”. None of the aggravating factors associated with egregiously improper conduct were present. Moreover, “a State may not impose economic sanctions on violators of its laws with the intent of changing the tortfeasors’ lawful conduct in other States”.
vi. Most States require that the damages awarded be reasonably necessary to vindicate the State’s interests in punishment and deterrence, and only when an award is grossly excessive in relation does it enter into violation of that Due Process clause of the 14th Amendment.
II. State’s application of BMW
2. Blume v Fred Meyer (1998)
i. F: Store had unwritten policy of randomly checking that customers had receipts. A black woman was stopped who didn’t have a receipt because she wasn’t given one. She was detained while the store clerk was found who verified she bought the items. She was humiliated in public and treated very poorly. She sued for unlawful imprisonment. Jury awarded compensatory damages of $25,000 and punitive damages of $450,000
ii. H: In application of the 3 BMW “guideposts”, the punitive damage award was not excessive.
iii. R: Applied BMW guideposts.
1) Reprehensibility – Analysis of the enormity of the defendant’s offense.
a. Was defendant’s conduct viole
titor used modified versions of manufacturer’s tool in advertising materials for a new similar product competitor launched at a trade show. Some of the pictures were retouched to remove the name of manufacturer. Competitor had not yet finished the design of its tool at the time of use of the advertising materials.
vii. H: Courts of Appeals should apply a de novo standard when reviewing a district court’s determination of the constitutionality of a punitive damage award.
viii. R: Unlike the determination of actual damages, a jury’s determination of punitive damages does not qualify as fact-finding and thus does not implicate the 7th Amendment. “De novo review tends to unify precedent and stabilize the law.” It is the obligation of the appellate court to make a determination whether the trial court acted reasonably
ix. Ginsburg dissent – the awarding of punitive damages by juries is inherently fact-finding. Thus, should be abuse-of-discretion standard.
4. McCann v Wal-Mart (2000)
F: Customers sued for false imprisonment by retail store. Jury awarded $20,000 in compensatory damages. A mother and two children, upon