| Venue: | SCOTUS |
| Facts: | There is a smash-up, and State Farm advises the Campbells quite badly. They refuse to settle, and then at trial the award is way above the policy limit. They the refuse to cover the excess liability, and tell the Campbells to sell their stuff. The Campbells and the plaintiffs gang up on State Farm for bad faith. |
| Posture: | UT SC denies Campbells' appeal in the wrongful death actions. State Farm then pays up, but the Campells sue anyway. Summary judgment for State Farm at trial, reversed on appeal. Way too complicated. Anyway, in the end, finding for the plaintiffs: $2.6M compensatory and $145M punitive, reduced by the trial court to $1M and $25M. Both parties appeal. |
| Issue: | Is this ratio of punitives to compensatory violative of due process? |
| Holding: | Yes. Single-digit multipliers only, please. Remanded. |
| Rule: | The three guideposts of BMW of North America v. Gore for
deciding whether a punitive damage award is appropriate:
|
| Reasoning: | We don't question whether punitives were warranted, but a more modest
award would have satisfied the objectives. UT can't punish State
Farm for bad deeds in other states, and it looks like they're
trying to send a message about this policy overall.
Each state gets to decide what to punish, and how much. It's hard to identify a concrete limit on punitive damages, and we're not doing so now, but rarely would something beyond single-digit multipliers make any sense. This isn't a substitute for criminal sanctions. |
| Dicta: | Scalia (dissenting): the due process clause says nothing about protections
against excessive punitive damages awards.
Thomas (dissenting): Me too. |