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BMW
v Gore
S. Ct U.S. [1996]
Author:- Sam
Biers
Punitive
Damages
Relevant
Facts: Dr. Gore purchased a BMW for $40K from an authorized
BMW dealer in AL. After driving it for 9 mos and w/o
noticing any flaws, he took the car in to get it detailed at
Slick Finish. Mr. Slick noticed that the car had been
repainted to repair acid rain damage while the car was in
transit. BMW acknowledged at trial that it adopted a
nationwide policy to sell the cars as new if the damages was less
than 3%; and if more to sell them as used after service. If
sold as new the purchaser was not advised of any repairs.
Dr. Gore’s witness est the value of a repainted BMW was
approx 10% less than the value of a new car; $4000.00
Legal
Issue(s): Whether a $2 million punitive damages award to the
purchaser of a new BMW that had been deceived about the condition
of the car when it was purchased exceeds the constitutional
limit?
Court’s
Holding: Yes
Procedure:
Jury trial verdict comp damages $4000, punitives $4 million;
Judge denied DF Motion to set aside punitive award; Df appealed,
AL S. Ct reduced to $2 million. S. Ct reversed and remand with
instructions for remittur.
Law
or Rule(s): The D P Clause of the 14th prohibits a
State from imposing a grossly excessive punishment on a
tortfeasor. Punitive damages may properly be imposed to
further a State’s legitimate interests in punishing unlawful
conduct and deterring its repetition.
Court
Rationale: The Fed excessiveness inquiry begins with an i/d of
the state’s interests that a punitive award is designed to
serve. AL does not have the power to punish BMW for conduct
that was unlawful where it occurred and that had no impact on AL
or its residents, nor to deter conduct in other jurisdictions. A
person has to receive fair notice not only of the conduct that
will subject him to punishment, but also of the severity of the
penalty that a State may impose. The ct uses three guideposts in
determining whether the award was grossly excessive; Degree of
Reprehensibility, BMW’s conduct evinced no indifference
to or reckless disregard for the health and safety of others.
There were no deliberate false statements, no evidence of bad
faith, or that BMW persisted in a course of unlawful conduct
after it was adjudged unlawful. Ratio of actual harm
inflicted upon Pl; damages must bear a ‘reasonable
relationship’ to compensatory, there is no mathematical
formula, but 500 times the actual harm must surely ‘raise a
suspicious judicial eyebrow. Sanctions for Comparable
Misconduct; comparing the puni award and civil or criminal
penalties that could be imposed for comparable misconduct, (max
Al civil penalty $2000), this sanction cannot be justified on the
ground that it was necessary to deter future misconduct w/o
considering less drastic remedies. No State may use
puni damages as a deterrent means of imposing its regulatory
policies on the entire Nation. The grossly excessive award
transcends the constitutional limit.
Plaintiff’s
Argument: A punitive award of $4million will provide an
appropriate penalty for selling 1000 cars for more than they were
worth.
Defendant’s Argument: The award was grossly excessive and
unconstitutional
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