State Farm Mutual Automobile Insurance Co. v. Campbell An Update on Punitive Damages Law
By Brian C. Dalrymple
Nixon Peabody LLP Two Embarcadero Center, 26th Floor San Francisco, CA 94111 Telephone: (415) 984-8275 Facsimile: (415) 984-8300 [email protected]
38th Annual SMU Air Law Symposium February 26 – 27, 2004 Dallas, Texas
State Farm Mutual Automobile Insurance Co. v. Campbell An Update On Punitive Damages Law Brian C. Dalrymple*
Introduction Punitive damages and compensatory damages serve distinct purposes. Compensatory damages are intended to redress a specific loss that the plaintiff has suffered as a result of defendant’s wrongful conduct. Punitive damages, however, operate as private fines and are intended to punish the defendant and deter future wrongdoing.1 A jury’s determination regarding the extent of plaintiff’s injury is essentially “a factual determination, whereas its imposition of punitive damages is an expression of its moral condemnation.”2
On April 17, 2003, the Supreme Court decided State Farm Mutual Automobile Insurance Co. v. Campbell,3 an insurance bad faith case which set concrete constitutional limits on punitive damage awards by way of the Due Process Clause of the Fourteenth Amendment. The Court’s decision in Campbell was a culminating moment in a decade of high court jurisprudence reigning in multi-million dollar runaway awards. The lower courts have been quick to respond to the Supreme Court’s mandate: remanding cases with a great disparity between punitive and compensatory awards, excluding evidence of a defendant’s out-of-state, unrelated conduct and generally exercising more vigilance when reviewing punitive damage awards.
This Article will discuss where punitive damages jurisprudence came from and where it is going after the Campbell decision. Part I examines the Campbell case and its major holdings. Part II provides a brief history of the seminal United States Supreme Court cases which have addressed the constitutional limits on punitive damages. Part III looks at some punitive damages cases which have come down since Campbell in different jurisdictions.. Part IV synthesizes the Campbell decision and the subsequent cases which have relied on State Farm as a means of postulating where punitive damages jurisprudence is going and how Campbell has changed the civil litigation landscape.
The Case: State Farm Mutual Automobile Insurance Co. v. Campbell In what some are calling “the most significant punitive damage decision the Supreme Court has ever issued”4 the Supreme Court recently refined its punitive damages-constitutional analysis in State-Farm Automobile Insurance v. Campbell.
Campbell was a bad-faith insurance case. In the underlying action, plaintiff Campbell was involved in an automobile accident after he tried to pass six vehicles on a two-lane highway. The driver of an oncoming vehicle, Ospital, was killed and the driver of another vehicle, Slusher, was badly injured.5
In the ensuing wrongful death action, Campbell insisted that he was not at fault. Although early investigations supported differing conclusions as to who caused the accident, a consensus was reached early on that Campbell’s unsafe pass had caused the crash. Despite the advice from its own investigators, Campbell’s insurance company, State-Farm Mutual Automobile Insurance Company, contested liability and refused to settle with the injured
State Farm Mutual Automobile Insurance Co. v. Campbell An Update on Punitive Damages Law Brian C. Dalrymple*
3 parties for the policy limit of $50,000 ($25,000 per claimant).6 State Farm took the case to trial and assured the Campbells that their assets were safe.7
To the contrary, the jury determined Campbell was one hundred percent at fault and returned a judgment against him for $185,849.8 At first, State Farm refused to cover the $135,849 in excess liability, refused to post the supersedeas bond to allow Campbell to appeal the judgment against him, and told Campbell that he may “want to put for sale signs” on his property to pay off the debt.9 Campbell obtained his own counsel to appeal the verdict. During the pendency of the appeal, Campbell reached an agreement whereby Slusher and Ospital agreed not to seek satisfaction of their claims against the Campbells and in exchange the Campbells would seek a bad faith action against State Farm.10
In 1989 the Utah Supreme Court denied Campbell’s appeal in the wrongful death and tort action and State Farm then paid the entire judgment. Nevertheless, Campbell filed a complaint against State Farm alleging bad faith, fraud, and intentional infliction of emotional distress.11 During the first phase of the trial the jury determined that State Farm’s decision not to settle was unreasonable because there was a substantial likelihood of an excess award. During the second phase, in determining State Farm’s liability for fraud and intentional infliction of emotional distress, Campbell successfully introduced evidence that State Farm’s decision to take the case to trial was a result of a national scheme to meet corporate fiscal goals by capping payments on claims company wide.12 Most of the actions referenced bore no relation to third party automobile claims, the type of claim underlying the Campbell’s complaint.13
The jury awarded the Campbells $2.6 million in compensatory damages and $145 million in punitive damages, which the trial court reduced to $1 million and $25 million respectively.14 The Utah Supreme Court applied the three guideposts outlined in BMW of North America v. Gore— the reprehensibility of the defendant’s conduct, the ratio of compensatory damages to punitive damages, and a comparison of comparable civil or criminal sanctions — and reinstated the $145 million punitive damages award, in large part relying on the defendant’s “massive wealth” and the extrinsic evidence concerning State Farm’s nation-wide policies.15
The Supreme Court granted certiorari to determine whether the punitive damage award was unconstitutional. The Court held that under the principles outlined in BMW, the punitive damages award was so grossly excessive as to violate the Due Process Clause of the Fourteenth Amendment.16 In deciding that the punitive damage award assessed against State Farm was constitutionally excessive, the court revisited each guidepost “in some detail” and provided further direction as to what courts should consider when analyzing a punitive damage award.17
First, the Supreme Court re-examined the “reprehensibility” guidepost. The Court reiterated the principle that the most important indicium of the reasonableness of a punitive damages award is the degree of reprehensibility of the defendants conduct.18 The Court re-affirmed the Gore criteria of evaluating the harm (physical as opposed to economic, whether the harm was the result of malice, whether the harm was intended, etc.)19 The Court held that although State Farm’s conduct “merits no praise” a “more modest punishment for this reprehensible conduct could have satisfied the State’s legitimate objectives.”20
In evaluating State Farm’s reprehensibility, the Supreme Court paid particular attention to the evidence used by the jury to judge State Farm. The Court admonished the Utah Supreme Court for their opinion which made it “explicit that State Farm was being condemned for its nationwide policies rather than for the conduct directed toward the Campbells.”21 The Court was clear that evidence of State Farm’s unrelated national policies should
State Farm Mutual Automobile Insurance Co. v. Campbell An Update on Punitive Damages Law Brian C. Dalrymple*
4 have been excluded, reasoning that “dissimilar acts, independent from the acts upon which liability was premised, may not serve as the basis for punitive damages. A defendant should be punished for the conduct that harmed the plaintiff, not for being an unsavory individual or business.”22 The Court cautioned against using a single case as a “platform to expose, and punish, the perceived deficiencies” of a defendant’s operations throughout the country and reiterated that a “state cannot punish a defendant for conduct that may have been lawful where it occurred.”23 Turning to the other criteria, the Court reasoned that the harm arose from a transaction in the economic realm, not from some physical assault or trauma (there were no physical injuries), and since State Farm paid the excess verdict before the complaint was filed, the economic injury was minor.24
As to the second guidepost, the ratio between the actual or potential harm suffered by plaintiff and the punitive damages award, the Supreme Court held that “in practice few awards exceeding a single-digit ratios between punitive and compensatory damages, to a significant degree, will satisfy due process.”25 The Court explained that awards within this single-digit ratio range were more likely to “comport with due process, while still achieving the State’s goals of deterrence and retribution, than awards with ratios in range of 500 to 1.”26 The Court reinforced that it was not providing a “rigid benchmark” and that ratios “that we have previously upheld may comport with due process where a ‘particularly egregious act has resulted in only a small amount of economic damages.’”27 In applying the standard to the facts of the case, the Court held that there is “no doubt that there is a presumption against an award that has a 145-1 ratio.” The Court concluded that in light of the reprehensibility criteria outlined above, and when excluding the evidence of State Farm’s nation-wide practice, the award was constitutionally infirm. 28
Finally, when examining the disparity between the punitive damages award and the civil penalties authorized and imposed in comparable cases, the Court cautioned that “punitive damages are not a substitute for the criminal process, and the remote possibility of a criminal sanction does not automatically sustain a punitive damages award.”29 Applying this guidepost, the court noted that the most relevant civil sanction under Utah law for the wrong done to the Campbells was a $10,000 fine for fraud, an amount dwarfed by the $145 million punitive damages award.30 The Supreme Court reversed the Utah Supreme Court and remanded the case to be reconsidered in light of its decision.
A Brief History of supreme court jurisprudence regarding punitive damages Campbell has been over a decade in the making. Since 1991 the Supreme Court has expressed concern over punitive damage awards that “run wild.”31 Prompted by a trend toward multimillion dollar awards, the Court began in the early 1990’s to set constitutional limits on these “skyrocketing” awards.32 The constitutional check on punitive damages arises out of the “basic unfairness of depriving citizen of life, liberty, or property, through the application, not of law and legal processes, but of arbitrary coercion” and out of concern for providing the defendant with notice of the conduct that will subject him to punishment as well as the severity of the penalty that may be imposed.33 Because of these constitutional concerns, the Court began to limit these awards through the Due Process Clause of the Fourteenth Amendment.
After recognizing that a constitutional check existed, the Court confronted two main issues: what procedures are necessary to ensure that an award does not violate the Due Process Clause of the Fourteenth Amendment, and
State Farm Mutual Automobile Insurance Co. v. Campbell An Update on Punitive Damages Law Brian C. Dalrymple*
5 when is an award is so grossly excessive as to violate the Due Process Clause of the Fourteenth amendment? As a corollary to the second issue, the court has struggled with formulating a workable, predictable standard for determining when a punitive damage award was so grossly excessive as to violate the Due Process Clause of the Fourteenth Amendment.
As to the procedural due process challenge, the Court has suggested that common-law procedures, which provide meaningful review by both the trial court and the appellate court, are constitutional but the Court has provided little more guidance. As to the substantive due process challenge to the amount of the award itself, the Court in BMW developed a highly refined bright-line test with three channeling guideposts. This evolution to a bright-line test has been a gradual one. In the past ten years, the Court evolved from emphatically stating in 1991 that “we need not, and indeed we cannot, draw a mathematical bright line between the constitutionally acceptable and the constitutionally unacceptable that would fit every case”34 to determining in 2003 that “in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process.”35
The Early Decisions: The Supreme Court Struggles With Setting Constitutional Limits
Early Concerns About Runaway Awards
In Browning-Ferris Industries Inc. v Kelco Disposal,36 all nine members of the court noted concern about the constitutionality of a $6 million punitive damage award when the compensatory damages were merely $51,146.37 Browning-Ferris involved a suit for a violation of the Sherman Act and interference with contractual relations in violation of state tort law. Despite its concern with the amount of the punitive damages awarded, the Court rejected the argument that the Excessive Fines Clause of the Eighth Amendment applied to a punitive damages award in a civil case between private parties.38 In dicta, the court did allude to the possibility of a challenge to an excessive award under the Due Process Clause of the Fourteenth Amendment. However, since the parties had not raised the Due Process challenge in the lower courts, the inquiry had to “await another day.”39
Two years later in Pacific Mutual Life Insurance v. Haslip, the court confronted the question head-on.40 In Haslip, various insured’s filed suit against their insurer and its agent for fraud. The insureds alleged that the insurer’s agent had collected premiums but had failed to remit them to the insurers so that the insured’s respective health insurance policies lapsed without their knowledge. The jury returned general verdicts against the insurer and its agent and awarded insured Haslip $200,000 in compensatory damages and $840,000 in punitive damages (an approximately 1 to 4 ratio).
The Supreme Court granted certiorari to “review the punitive damages procedures and award in the light of the long-enduring debate about their propriety.”41 Although the court again noted its concern with punitive damage awards that “run wild” the Court concluded that the punitive damages award assessed against Pacific Mutual did not violate the Due Process Clause of the Fourteenth Amendment because the procedures were constitutionally sound.42 The Court approved Alabama’s review process, following the common-law, which limited jury discretion and provided meaningful appellate review. In this regard, the Court approved the Alabama Supreme Court’s reviewing criteria, drawn from Green Oil v. Hornsby43 Specifically, the Alabama court took the following into consideration when reviewing a punitive damage award:
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1. Whether there is a reasonable relationship between the punitive damages award and the harm likely to result from the defendant’s conduct as well as the harm that actually has occurred;
2. The degree of reprehensibility of the defendant’s conduct, the duration of that conduct, the defendant’s awareness, any concealment and the existence and frequency of similar past conduct;
3. The profitability to the defendant of the wrongful conduct and the desirability of removing that profit and of having the defendant also sustain a loss;
4. The “financial position” of the defendant;
5. All the costs of litigation;
6. The imposition of criminal sanctions on the defendant for its conduct, these to be taken into mitigation; and,
7. The existence of other civil awards against the defendant for the same conduct, these also to be taken in mitigation.44
Eventually, this test would evolve into the condensed three BMW guideposts and be even further refined in Campbell.
Justice Scalia concurred only in the judgment, rejecting the possibility that a substantive due process claim could ever be made into an excessive punitive damage claim. Justice Scalia argued that as long as the process by which juries awarded punitive damages was fair, then the award would never violate Due Process.45 Justice Kennedy also concurred in the judgment, arguing that the court does not have “the authority … to alter the rules of the common law respecting the proper standard for awarding punitive damages and the respective roles of the jury and the court in making that determination.”46 Justice Kennedy argued that it was wiser to stand back and allow the state legislatures and state judges to be the ones to enact punitive damage reform.
Justice O’Connor dissented, arguing that the post-hoc review by the Alabama Supreme Court was not enough and that jury discretion was virtually unlimited. Justice O’Connor argued that the common-law procedures were “so lacking in fundamental fairness that the propriety of any specific award is irrelevant. Any award of punitive damages rendered under these procedures, no matter how small the amount is constitutionally infirm.”47 O’Connor argued that with their virtually unfettered discretion under the common-law, juries are allowed to “target unpopular defendants, penalize unorthodox or controversial views, and redistribute wealth.”48 Instead, O’Connor believed that the post-hoc review factors employed by the Alabama Supreme Court should be submitted to the jury before they decide if punitive damages are warranted and if so, how much, in order to channel its discretion. O’Connor further argued that after applying the Mathews v. Eldridge test to Alabama’s common-law punitive damages scheme, it was clear that the state procedures deprived the defendants without due process of law.49
Only two years later in TXO Production Co. v. Alliance Resources Co.,50 the Court again confronted the constitutional limits on punitive damages but ended up sharply divided. TXO was a common-law action for slander of title. The plaintiff was awarded $19,000 in actual damages and $10 million in punitive damages (the punitive damages award was 526 times as large as the actual damages award).51 The Court granted certiorari to decide whether the punitive
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7 damages award violated the Due Process Clause either because its amount was excessive or because it was the product of an unfair procedure.52 The Court rejected defendant’s substantive due process argument that the award was so grossly excessive as to violate the Due Process Clause but was split in its reasoning.
Justice Stevens, writing for the plurality, held that although the punitive damage award was “certainly large,” he thought that given the amount of money potentially at stake, the defendant’s bad faith, the fact that the scheme employed in this case was “part of a larger pattern of fraud, trickery and deceit,” and given the defendant’s enormous wealth the award was not unconstitutional.53 The plurality did not address whether the procedure was constitutional because it was not properly presented to the state supreme court.54
Justice Kennedy concurred in part and concurred in the judgment. Justice Kennedy argued that “a more manageable constitutional inquiry focuses not on the amount of money a jury awards in a particular case but on its reasons for doing so.”55 Justice Kennedy emphasized that it was crucial to look at whether the award reflects bias, passion, or prejudice rather than the absolute or relative size of the award.56 Justices Scalia and Thomas concurred in the judgment, echoing Justice Scalia’s concurrence in Haslip.57
Justice O’Connor, along with Justices White and Souter concurred in part and dissented in part. Justice O’Connor vigorously argued for judicial intervention when punitive awards were “monstrous.”58 Justice O’Connor argued both that the procedure was flawed and the award was so excessive as to violate Due Process. Furthermore, she criticized the plurality for not erecting a “single guidepost to help other courts find their way through this area” and insisted that the court provide guidance, not necessarily by way of a mathematical formula, to courts that review jury verdicts.59 O’Connor suggested that when determining whether an award was excessive, the court must make a “searching review” of “various objective indicators” including the relationship between the punitive damages award and compensatory damages, awards of punitive damages upheld against other defendants in the same jurisdiction, awards upheld for similar torts in other jurisdictions, and legislatively designed penalties for similar misconduct.60 Justice O’Connor believed that in light of these factors, the award was excessive.
The Supreme Court Confronts What Procedures Are Necessary To Comport With Due Process
In Honda Motor Co. v. Oberg,61 the Court revisited the question of what procedures were necessary when awarding punitive damages in order to comply with the Due Process Clause. At issue was an amendment to the Oregon constitution which prohibited judicial review of a punitive damages award “unless the court can affirmatively say there is no evidence to support the verdict.”62 The Supreme Court held that the prohibition was inconsistent with the Due Process Clause of the Fourteenth Amendment.63
Honda was a products liability case. The plaintiff was awarded $919,390.39 in compensatory damages and $735,512.31 in punitive damages (reduced from $5 million because of plaintiff’s contributory negligence).64 The defendant argued that the punitive damages award violated the Due Process Clause because the award was excessive and because the procedure was inadequate; the Oregon courts lacked the power on appeal to correct excessive verdicts.65 The Court unambiguously recognized that the “constitution imposes a substantive limit on the size of punitive damages awards” but noted that “today we are not directly concerned with the character of the standard that will identify unconstitutionally excessive awards.”66 The Court left this task for later. Instead, the Court confronted the question of “what procedures are necessary to ensure that punitive damages are not
State Farm Mutual Automobile Insurance Co. v. Campbell An Update on Punitive Damages Law Brian C. Dalrymple*
8 imposed in an arbitrary manner. More specifically, the question is whether the Due Process Clause requires judicial review of the amount of punitive damages awards.”67
In holding that the Oregon procedure violated Due Process the court emphasized the “importance of the procedural component of the Due Process Clause” and that judicial review of the size of punitive damages awards have been a safeguard “against excessive verdicts for as long as punitive damages have been awarded.”68 The court held that Oregon had removed that safeguard “without providing any substitute procedure and without any indication that the danger of arbitrary awards has in any way subsided over time.”69 Although it did not provide a bright-line test, the court held that Oregon’s departure from the common-law raised a presumption that its procedures violated Due Process.70 The court left open for another day “the more difficult question of what standard of review is constitutionally required.”71
Justice Scalia concurred stating “the Court’s opinion establishes that the right of review eliminated by the amendment was a procedure traditionally accorded at common law. The deprivation of property without observing (or providing a reasonable substitute for) an important traditional procedure for enforcing state- prescribed limits upon such deprivation violates the Due Process Clause.”72
Justice Ginsberg, along with Chief Justice Renquist, dissented. Justice Ginsberg argued that Oregon’s procedure, which guided the fact-finder’s discretion in awarding punitive damages and required the plaintiff to establish entitlement to punitive damages under specific criteria, satisfied the Due Process Clause. She argued that Oregon’s comprehensive pre-verdict procedures but markedly limited post-verdict review sufficiently satisfied Due Process.73 Finally, Ginsberg criticized the majority for striking Oregon’s procedure without providing “any specific procedures or substantive criteria essential to satisfy due process.”74
Recent Developments: Three Guideposts For Determining When An Award is Unconstitutional and De Novo Review
In BMW v. Gore75 the Supreme Court unambiguously recognized that the Due Process Clause of the 14th Amendment prohibits a state from imposing a “grossly excessive punishment on a tortfeasor,”76 and for the first time the Court recognized that the punitive damage award at issue was grossly excessive.77
In BMW, the plaintiff purchased a BMW sports car that he later found out had been repainted prior to sale due to damage caused by exposure to acid rain during transit between the manufacturing plant and the preparation center.78 Upon discovering that the car had been repainted and that the defendant had not disclosed the defect before selling the car, the plaintiff alleged that the non-disclosure constituted a suppression of a material fact.79 The plaintiff was awarded $4,000 in compensatory damages and $4 million in punitive damages, based on a determination that BMW’s nation-wide nondisclosure policy constituted “gross, oppressive or malicious fraud.”80 The Alabama Supreme Court reduced the punitive damage award to $2 million.81
The Supreme Court granted certiorari because it “believed that a review of this case would help to illuminate the ‘character of the standard that will identify unconstitutionally excessive awards’ of punitive damages.’”82 The Court then proceeded to erect three guideposts to help guide appellate discretion when evaluating whether a punitive damages award was so grossly excessive as to be unconstitutional.
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The first guidepost is the degree of reprehensibility of the defendant’s conduct. This principle, the Court noted, reflects the “accepted view that some wrongs are more blameworthy than others.” 83 The Court further elaborated on what a court should consider when evaluating a defendant’s reprehensibility by directing the lower courts to consider whether the harm caused was physical as opposed to economic, whether the conduct evinced a reckless disregard for safety, whether the target of the conduct was financially vulnerable, whether the conduct involved repeated actions or was an isolated incident and whether the harm was the result of intentional malice, trickery, or deceit or mere accident.84
The court also addressed briefly what kind of evidence could be relied upon in determining the reprehensibility of the defendant’s conduct.85 The court cautioned that in determining punitive damages the court must not rely on a defendant’s out-of-state conduct but rather, the award “must be analyzed in the light of the same conduct, with consideration given only to the interests of Alabama consumers, rather than those of the entire Nation.”86
The second guidepost is the ratio between the actual harm suffered by plaintiff and the punitive damages award. The Court derived this guidepost from the principle that punitive damages must bear a reasonable relationship to compensatory damages.87 The Court set no absolute benchmark and reiterated that it had “consistently rejected the notion that the constitutional line is marked by a simple mathematical formula.”88
The third guidepost is the difference between the punitive damages award imposed and the civil or criminal penalties authorized or imposed in comparable cases.89 The Court explained that this guidepost was important so that substantial deference was given to legislative judgments concerning appropriate sanctions.90
The Supreme Court concluded that BMW’s action were not very reprehensible as the harm was economic and had no impact on the safety of the vehicle. The Court also held that the ratio between compensatory and punitive damages was exorbitant. Finally, when comparing the civil sanctions for similar conduct, the Court believed that the punitive award was excessive. Thus, the Court deemed the award unconstitutional and remanded the case to state court.
Justice Breyer concurred, along with Justice O’Connor and Justice Souter, and painstakingly delineated the difference between the procedural and substantive Due Process challenges. The concurring justices believed that awards following fair procedures were entitled to a strong presumption of validity but in this instance, that presumption had been overcome. Justice Breyer argued that the standards employed by the Alabama courts (drawing from the Green Oil factors) did not channel jury discretion. According to Justice Breyer, that meant that the award in this case was “both (a) the product of a system of standards that did not significantly constrain a court’s, and hence a jury’s discretion in making that award; and (b) grossly excessive in light of the State’s legitimate punitive damages objectives.”91
Justices Scalia and Thomas dissented. Justice Scalia argued that the court was overstepping its judicial bounds, and that the state legislature was the proper branch of government to address punitive damage awards that “run wild.”92 He reiterated his view that the only inquiry should be into the procedure and not into the amount of the award, and that prior punitive damages jurisprudence should not be given stare decisis effect.93 Finally, he criticized the majority’s guidepost analysis as providing no real guidance at all.
In a separate opinion, Justice Ginsberg and Chief Justice Rhenquist also dissented.94 Justice Ginsberg argued that the Court “unnecessarily and unwisely” ventured into territory “traditionally within the States’ domain.”95
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Ginsberg believed the state court had properly followed the procedures set forth in Haslip and TXO and therefore, the award should stand.96
In 2001, in Cooper Industries v. Leatherman,97 the Supreme Court held that the proper standard of appellate review when considering the constitutionality of a punitive damages award was a de novo standard.98 Leatherman Tool Group brought an unfair businesses practices action against competitor Cooper Industries. The jury awarded Leatherman $50,000 in compensatory damages and $4.5 million in punitive damages.99 The Court of Appeals concluded that the district court did not abuse it discretion in declining to reduce the amount of punitive damages.100 Cooper argued that the Court of Appeals applied the wrong standard of review in considering the constitutionality of the punitive damages award.101 The Supreme Court’s holding that the standard of review was de novo was in keeping with its trend of doing its judicial best to curb outrageous awards because de novo review gave the reviewing court more opportunity to reduce or reject large punitive damage awards on appeal.
Justice Thomas concurred although he expressed his belief that the Constitution does not constrain the size of punitive damage awards and he would overrule BMW if given the opportunity.102 Justice Scalia also concurred, echoing Justice Thomas’ argument that excessive punitive damages do not violate the Due Process Clause, but agreeing that according to precedent, de novo was the correct form of review.103
Thus, the Supreme Court’s movement over the past decade has been towards a more bright-line approach which culminated in its series of holdings in Campbell.
The Aftermath: Decisions Since Campbell Immediately following the Campbell decision, there was a flurry of activity by the Supreme Court itself, and in many lower courts to remand, conform, and examine current cases in light of the Supreme Court’s new directive. This section summarizes, by jurisdiction, some of the key cases that have come down since Campbell.
United States Supreme Court
Since its decision in Campbell, the United States Supreme Court denied certiorari in Time Warner Entertainment v. Six Flags Over Georgia.104 Six Flags brought suit alleging that its general partner, Time Warner, had damaged Six Flags by preferring its own financial interest over that of the partnership in violation of various securities and partnership provisions. The jury awarded Six Flags $197 million in compensatory damages and $257 million in punitive damages.105 The Georgia Court of Appeals evaluated the award before Campbell was decided using the BMW guideposts. The Georgia court concluded that the award was warranted despite the fact that the punitive award was the largest awarded in Georgia history.106 The Georgia court cautioned “an award of punitive damages… should not be viewed in the abstract or compared with awards from other cases. The punitive damages award must be viewed in its unique context, in light of the facts of the case and with reference to the actual damages awarded.”107 In upholding the award the court noted the 1 to 1.3 ratio and saw “no ‘shocking disparity’ inherent in this figure.”108 In denying certiorari, the Supreme Court seems to agree with the Georgia court’s reasoning: it is not the sheer value of the award that implicates the Due Process Clause, but rather the award’s relation to the actual damages which makes the award constitutionally suspect.
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In Ford Motor Co. v. Romo,109 the Supreme Court granted Ford’s petition for certiorari, vacated the verdict, and remanded the decision to the California court for further consideration in light of Campbell. Romo was a wrongful death action, arising out of an automobile accident in which three people were killed and three others were injured after a Ford Bronco rolled over several times causing the steel roof to collapse. Juan Romo sued Ford on theories of products liability and negligence.110 The jury awarded $6.23 million in compensatory damages and $290 million in punitive damages.111 The California Court of Appeal reduced the compensatory damages to $4.9 million based on comparative fault but upheld the punitive damages award.112 In upholding the award despite the disparity between compensatory damages and punitive damages, the court reasoned that although the disparity was great, Ford’s conduct had been “grossly reprehensible” and that “wrongful death compensatory damages do not fully reflect the harm to the victims.”113
On remand, the California court determined that the State Farm decision narrowed California’s broad view of punitive damages so that only the conduct that has resulted in “outrage and humiliation” to the plaintiff before the court may be punished.114 “It is not a permissible goal,” after State Farm, the court wrote, “to punish a defendant for everything else it may have done wrong.”115 The Supreme Court had stated in State Farm that “[a] defendant should be punished for the conduct that harmed the plaintiff, not for being an unsavory individual or business.”116 The California court went on to state that “[d]eterrence, under this view, arises from imposing damages over an above traditional compensatory damages, not from the imposing of sanctions in an individual case that are actually disabling to the defendant.”117 Accordingly, there must be a “reasonable relationship” between the compensatory and punitive damages.118
The California court noted the Supreme Court’s presumption that most punitive damage awards should be limited to “single-digit multiplier” of compensatory damage awards.119 However, leaving open the possibility of higher ratios in some cases, the court concluded that the proportionality factor carries less weight in wrongful death cases where the Plaintiff could not be awarded damages for the decedent’s pain and suffering.120 In such cases, the court observed, “the proportionality inquiry must focus . . . on the relationship of the punitive damages to the harm to the deceased victim, not merely to compensatory damages awarded.”121
The California court ordered the $290 million punitive damage award reduced to about $23.7 million, about five times the compensatory damage award, and instructed that if the Plaintiffs did not to accept the reduction, a new trial on the amount of punitive damages was to be held.122
The Supreme Court has also granted certiorari in Ford Motor v. Estate of Smith123 and remanded the case to the Supreme Court of Kentucky for further consideration in light of Campbell. Estate of Smith was a wrongful death action brought by Smith’s estate after he was crushed by his Ford pick-up truck. The truck was on an incline and the transmission “migrated” from park to reverse, moving backwards and crushing Smith against a storage shed.124 The jury awarded $3 million in compensatory damages and $20 million in punitive damages.125
The Supreme Court of Kentucky subsequently reduced the punitive award to $15 million after evaluating it under the three BMW guideposts.126 The court believed that a substantial penalty was warranted and reasoned that Ford’s conduct was particularly reprehensible because for “at least seven years after Ford knew of the dangerous propensities of the C-6 transmission, it continued producing and installing it in its vehicles.”127 The court recognized the disparity between the compensatory damages and punitive damages awards, but nevertheless noted that “in Leatherman and Gore, the amount of punitive damages awarded was a far greater multiplier of compensatory damages than appears here” and that those cases involved economic loss.128 In response to Ford’s
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12 contention that it had no warning that it could be subjected to such a large award, the Kentucky Supreme Court stated:
Ford is a multi-national corporation that is frequently involved in litigation throughout the United States in state and federal courts. It possesses a wealth of information as to settlements, verdicts, and trial and appellate court decisions. Ford knew or should have known of the potential for such a substantial verdict when its defectively designed vehicle caused the death of a Kentucky consumer. Its national experience and the experience of other automobile manufacturers were sufficient to acquaint it with the reality.129
Because the ultimate damage ratio here was a single-digit multiple ($3 million compensatory and $15 million punitive), the Supreme Court probably granted certiorari because of the Kentucky Supreme Court’s emphasis in its opinion on Ford’s status as a large multi-national company.
Finally, the Supreme Court also granted certiorari to Cass v. Stephens130 and remanded the case to the Court of Appeals of Texas for further consideration in light of Campbell. Cass v. Stephens involved a dispute over gas and oil wells. After a partnership dissolved, one of the partners’ widows sued for breach of contract, fraud and conversion. The Texas jury awarded her $2.19 in compensatory damages and $40 million in punitive damages.131 That punitive amount was reduced on remitter to $32.5 million. It seems likely that the Supreme Court remanded this case because of the disparity between the compensatory and punitive awards.
Second Circuit Court of Appeals
In Parker v. Time Warner Entertainment Co.,132 the implications of the Campbell decision were surprising and potentially far-reaching. In Parker, the plaintiffs sued on behalf of a class, alleging that the defendant, Time Warner, violated various provisions of the Cable Communications Policy Act and several state consumer protection laws by selling and disclosing its subscribers’ personal information to third parties and by failing to inform the subscribers of such disclosure.133
The district court had denied class certification because, among other reasons, a class action was not the superior means of litigation. Due to the large numbers of people in the class, a seemingly minor infraction meant potential liability for the defendant in the amount of $12 billion. The court of appeals noted that Due Process concerns may arise when the prospect of a stunningly large damages award “looms as the result of technical violations of the Cable Act that affect potentially millions of subscribers.”134 In dicta, the court relied on Campbell for the proposition that “the Due Process Clause of the Fourteenth Amendment prohibits the imposition of grossly excessive or arbitrary punishments on a tortfeasor”135 and BMW for the proposition that “in a sufficiently serious case the due process clause might be invoked, not to prevent certification, but to nullify that affect and reduce the aggregate damage award.” In his concurrence, Justice Newman echoed those concerns, noting that a judgment of $12 billion for technical violations of the Cable Act “might well encounter due process objections, somewhat analogous to those that the Supreme Court recently identified in setting constitutional limits on punitive damages.”136 Thus, the Second Circuit raised the possibility of using Campbell’s principles as a potentially limiting constitutional device for actual damages, not merely punitive damages.
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Second Circuit—U.S. District Court
In TVT Records v. Island of Def Jam Music Group,137 the district court decided, in anticipation of the damages phase of the trial, whether certain pieces of evidence were admissible against the defendant. The defendant argued that first, plaintiff should be precluded from offering any evidence of allegedly unrelated bad conduct of the defendant or its affiliates.138 The court examined the evidence in light of Campbell and refused to categorically rule. Instead, the court cautioned the plaintiffs that it “should be prepared in due course to explain fully the link between any proposed item of evidence and the harm or harms at issue in this case.”139 Second, the court held that evidence of the defendant’s net worth was admissible. The court reasoned that although the Supreme Court in Campbell had noted that a defendant’s wealth provided an open-ended basis for inflating awards, it did not read the high court’s opinion to completely preclude such evidence. Instead, the district court felt that a defendant’s wealth “is properly considered given the goals of punishment and deterrence served by punitive damages.”140
Third Circuit—Court of Appeals and District Court
Willow Inn v. Public Service Mutual Insurance Co.,141 was a breach of contract and bad faith action brought by Willow Inn, a restaurant, bar, and residence in Willow Grove, Pennsylvania against their insurer, Public Service Mutual Insurance Company, following a claim arising from a windstorm. Originally, the district court awarded Willow Inn $2,000 in compensatory damages and $150,000 in punitive damages (1 to 75 ratio). The insurer filed an appeal raising various issues, including a constitutional challenge to the amount of the punitive damage award (Willow Inn I).142 Days before oral argument was to be held, the Supreme Court decided Campbell. The court of appeals vacated the award and remanded the case to the district court “because the district court did not have the benefit of the Campbell decision when it imposed upon PSM a punitive damaged award.”143
The district court reconsidered the award in light of Campbell and upheld the punitive award ten days later (Willow II) despite the Supreme Court’s strong language regarding the ratio between punitive damages and compensatory damages.144 The district court examined the award and the circumstances of the insurer’s bad faith in light of the three guideposts reaffirmed in Campbell.
In examining reprehensibility, the court emphasized that Willow Inn was financially vulnerable because it was a modest family-run business. It also focused on the insurer’s 2-year delay in making payment, the fact that the delay was the result of a series of instances in which PSM failed or refused to act on Willow Inn’s claim and the fact that the delay was not a mere accident.145 Due to the fact that PSM’s actions were “more than negligent” the court felt that the degree of reprehensibility was sufficient to justify a significant sanction.146
In order to reconcile the ratio of the awards (1 to 75) with Campbell’s mandate that few awards exceeding a single- digit ratio between compensatory and punitive damages will satisfy due process, the district court steered away from using those particular numbers at all. Instead, the court determined that “the punitive damages award of $150,000 is approximately equal to the value of the Willow Inn’s claim under the policy and the payment that it belatedly received.”147 Thus, in order to get a ratio of 1 to 1, the district court used the value of the potential harm to Willow Inn rather than what was actually granted in compensatory damages ($2000) and compared that figure to the punitive award. The court justified its mathematics by reasoning that “because the amount of punitive damages awarded is based on the value placed on the amount of the Willow Inn’s potential harm, the ratio at issue is approximately one to one— a ratio that does not ‘raise a suspicious judicial eyebrow.’”148
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As to the third guidepost, the court looked at Pennsylvania’s bad faith statute which authorized awards of attorney’s fees, costs, and interest in addition to any award of punitive damages. The court reasoned that “because attorney’s fees are authorized … and have been granted in amounts roughly equal to the punitive damages award in this case” an award of $150,000 in punitive damages was warranted. Id. at 10. Thus, the court upheld the punitive award despite the fact that it appeared for all intensive purposes to be unconstitutional.
In DeNofio v. Soto,149 the District Court upheld a punitive damage award that was twice the compensatory award in an action for negligence, negligent misrepresentation, and breach of contract.150 The controversy arose after the defendants failed to construct a home for plaintiffs.151 The court used Campbell as its guide in determining whether the award was constitutionally void. The court reviewed the guideposts and noted that the Supreme Court had cautioned that few awards exceeding a single digit ratio between punitive damages and compensatory damages will satisfy due process.152 In examining the guideposts, the court noted that although the harm was economic, physical harm could have occurred due to the water-filled state the defendants left the property in.153 The court felt that this was reprehensible behavior and considering the “actual harm and distress suffered by the plaintiffs in this case, an award of punitive damages… of twice the amount of compensatory damages… is reasonable.”154
Fourth Circuit—Court of Appeals
In Igen International, Inc. v. Roche Diagnostics GMBH,155 the Fourth Circuit examined the issue of what kind of evidence the jury could consider when determining a punitive damage award. Plaintiff Igen alleged that defendant Roche incorrectly calculated and paid royalties under a biotechnology contract, failed to use its best efforts in developing products, and breached its duty of good faith and fair dealing.156 The jury awarded Igen $105.4 million in compensatory damages and $400 million in punitive damages (a ratio of 1 to 4).157
The Court of Appeals reversed, holding that it was error for the district court to even submit the issue of punitive damages to the jury because Roche’s actions were inconsistent with the level of reprehensibility needed to submit a punitive damages claim in Maryland.158 The court reasoned that the jury had improperly “extended its focus” beyond the conduct at issue in this particular lawsuit.159 Without the evidence of the other culpable conduct, there was insufficient evidence to identify the requisite malice. The Court relied on Campbell for the proposition that “a defendant’s dissimilar acts, independent from the acts upon which liability was premised, may not serve as the basis for punitive damages.”160
Fourth Circuit— U.S. District Court
In McHugh v. Check Investors,161 the plaintiff was awarded $10,163 in actual damages and $15,000 in punitive damages (a 1 to 1.5 ratio) for intentional infliction of emotional distress.162 The claim arose after the defendant, a debt-collection agency, had harassed and threatened the plaintiff regarding a $163 grocery debt she allegedly owed.163 In upholding the punitive damage award of plaintiff’s emotional distress claim, the court noted that it was “mindful” of the Supreme Court’s directive that few awards exceeding a single-digit ratio will satisfy due process when assessing the award.164 The court did not elaborate on the decision beyond recognizing the importance of sticking to the ratio.
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Fifth Circuit—U.S. District Court
In Librado v. M.S. Carriers, Inc.,165 the District Court rejected the defendant’s argument that Campbell barred the discoverability of evidence pertaining to defendant’s unrelated national activities.166 The action arose after the plaintiff served interrogatories on the defendant requesting information “identifying all lawsuits filed against M.S. Carriers… in the preceding 5 years involving claims of personal injury resulting from motor vehicle accidents.” The defendant refused to produce the information, arguing that “the Campbell decision unequivocally resolved confusion as to the scope of system-wide evidence by holding that a party may not be condemned for nationwide policies rather than for conduct made directly against the relevant plaintiffs.”167 The court, however, held that Campbell “addressed the scope of admissible evidence, not discoverable evidence” and that the two are separate issues.168 Therefore, a plaintiff could request such information even though, after Campbell, it was inadmissible at trial. Furthermore, the court found that the evidence requested was reasonably calculated to lead to the discovery of admissible evidence (the threshold under Federal Rule of Civil Procedure 26) and that the evidence was admissible. Finally, the court noted that this ruling was not inconsistent with the requirement that the evidence have a “substantial similarity” in order to be admissible at trial.169
Sixth Circuit— Court of Appeals
In Smoot v. United Transportation Union,170 the Sixth Circuit upheld a $100,000 punitive damage award when the statutory damages were $20,000.171 The action arose when Smoot surreptitiously tape recoded an executive session of a Public Law Board arbitration hearing during which that council decided that Smoot was not entitled to distribution of stock under a labor agreement. Defendants filed counterclaims against Smoot alleging violations of the Federal Wiretap Act after Smoot initiated a civil action in which he sought to set aside the decision. The trial court found for defendants and awarded $250,000 in statutory damages and $100,000 in punitive damages (a ratio of 1 to 4).172 On appeal, the court reduced the amount of statutory damages to $20,000.173 In response, Smoot claimed that the amount of punitive damages should be reduced to mirror the court’s reduction of the compensatory damages. Although the court held that it would not address any constitutional challenge in the first instance on appeal, it noted in dicta that “we nonetheless note that the award in this case appears to pass constitutional muster.”174 The court elaborated no further, but appears to have based its decision on the fact that the ratio between the awards was still a single-digit ratio.
Sixth Circuit— U.S. Bankruptcy Court
In In Re John Richards Homes Building Co.,175 the court found that creditor Adell had filed an involuntary bankruptcy petition in bad faith and John Richards Homes Building Company, the alleged debtor, was entitled to $4.1 million in compensatory damages and $2 million in punitive damages.176 The court examined the award in light of State Farm and concluded that the punitive damages were “necessary and appropriate in this case,” were only one half of the compensatory damages and were “approximately one twentieth of the maximum limit that the Supreme Court suggests for due process purposes, here $41 million.”177 Again, the court focused on the Supreme Court’s mandate as to the ratio between compensatory and punitive damages when scrutinizing the award.
Seventh Circuit— U.S. District Courts
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At issue in Barnes v. Ford Motor Co.,178 was the removal of a class action brought by Ford truck owners against Ford to federal court. Class members sued Ford for fraud after Ford failed to disclose to its customers that the torsion bars on the Ford F-150 truck model were defective.179 Ford removed the action to federal court and plaintiffs challenged the removal, asserting that the federal court lacked jurisdiction because the amount in controversy did not meet the jurisdictional threshold of $75,000.180
The District Court remanded the action to state court. The court held that plaintiffs were alleging only $300 each in damages. Since the claims of the different plaintiffs could not be aggregated, the plaintiffs would have to be seeking more than $74,000 in punitive damages, or 250 times the claimed actual damages. The court rejected Ford’s argument that the total damages for each plaintiff could surpass the jurisdictional amount, citing Campbell for the proposition that “in practice, few awards exceeding a single-digit ration between punitive and compensatory damages, will satisfy due process.”181 The court alluded to the fact that Campbell noted that in some cases where the actual damages were modest, double-digit ratios may be constitutional where a particularly egregious act has resulted in only a small amount of economic damages. However, the court held that even assuming this exception applied, the punitive damages would still not be enough to enable the plaintiffs to satisfy the requisite jurisdictional amount.182
In Re Bridgestown/Firestone183 was a multidistrict litigation involving various wrongful death, personal injury and products liability claims brought by owners of the defendant’s tires and on behalf of owners of the Ford Explorer. Many of the complaints had been filed in state court and the defendant removed the actions to federal court, based on diversity jurisdiction. The cases were then transferred to multidistrict litigation.184 The plaintiffs challenged the removal, alleging that federal subject matter jurisdiction was lacking because the amount in controversy had not been met and filed motions for remand to state court.185
The court separated the claims into two groups: wrongful death/personal injury and products liability. As to the products liability cases, the court relied on Campbell and remanded the actions to state court. The court focused on the fact that as to the products liability tire claims, the plaintiffs sought the cost of replacement tires or the difference between the purchase price of the tires and their actual price plus damages for the plaintiff’s inconvenience in attempting to secure replacement tires.186 The defendant tried to argue that the punitive damages awards would bump up this amount significantly, thus meeting the amount in controversy requirement and satisfying federal subject matter jurisdiction. The court rejected this argument. The court reasoned that in order to meet the jurisdictional amount, each plaintiff class members’ share of the punitive damage and attorney fee award would have to be 100 times each plaintiff’s estimated compensatory recovery, an award which “because it so greatly exceeds the compensatory award, would be constitutionally suspect.”187
In Waits v. Chicago,188 the plaintiff filed an action against the City of Chicago and two police officers, alleging the use of excessive force in violation of his civil rights under 42 U.S.C. § 1983 and a violation of the Illinois Hate Crimes Act.189 The action arose when the plaintiff was arrested at his home. The plaintiff testified that during his transport to the station and during interrogation, he was harassed and beaten by two police officers. The jury found for the plaintiff and awarded him $15,000 in compensatory damages as well as $500,000 in punitive damages against one officer and $1.5 million against the supervising officer.190 Defendants appealed the punitive damages award.
The district court examined the award in light of the three guideposts after recognizing that “it should be presumed that a plaintiff has been made whole by compensatory damages, so punitive damages should be
State Farm Mutual Automobile Insurance Co. v. Campbell An Update on Punitive Damages Law Brian C. Dalrymple*
17 awarded only if the defendant’s culpability is so reprehensible to warrant imposition of further sanctions to achieve punishment and deterrence.”191
First, the court noted that the officer’s conduct was particularly reprehensible but “was not nearly so reprehensible as to justify a total punitive award of $2,000,000” when compared to other punitive awards in similar cases of police brutality.192
Second, the court turned to the ratio between the compensatory award and the punitive award. The court noted that in this case, the award was roughly 133 times the amount of plaintiff’s actual harm. The court recognized that although the Supreme Court has rejected the notion that the constitutional line can be marked by a mathematical formula, it focused on the Supreme Court’s language that “an award of more than four times the amount of compensatory damages might be close to the line of constitutional impropriety.”193 The court went on to say that:
The Supreme Court has recently stated that when compensatory damages are substantial (as is the case here), then a lesser ratio, perhaps only equal to compensatory damages, can reach the outermost limit of the due process guarantee. (State Farm.) Here, the 133 to 1 ratio is particularly spacious, providing further indication that the jury’s award was excessive and must be reduced.194
Finally, the court noted that the police officers were not given fair notice of their potential liability, further evidence that the award must be reduced. Thus, the court reduced the punitive damages down to $20,000 against Officer Durst and $25,000 against Officer Prusank, for a total of $45,000— a significant reduction from the jury’s award of $2 million and almost a 1 to 1 ratio.195 Surprisingly, the court adhered to this formula despite the officer’s egregious conduct and the fact that the plaintiff had been physically injured.
In Motherway, Glenn & Nepleton v. Tehin,196 the District Court for the Northern District of Illinois upheld a punitive damages award of $300,000 when the actual damages were $63,158 (a 1 to 5 ratio).197 The plaintiff’s attorney sued the defendant’s attorney for conversion after he was not paid for the legal services he was owed after serving as co-counsel and local counsel for a case the defendant was handling. The defendant challenged the constitutionality of the punitive damages award and argued that evidence of his past acts should have been excluded. The court upheld the punitive damages award, allowing evidence of defendant’s similar dishonest acts (the defendant was being investigated by the California Bar for other violations) to be admitted.198 The court was cognizant of the Supreme Court’s mandate that a “defendant’s dissimilar acts, independent from the acts upon which liability was premised, may not serve as the basis for punitive damages.”199 However, the court allowed the evidence of the prior acts to be considered in the punitive damage analysis because “many were closely related in time and nature to the conduct of the Defendants toward plaintiff,” and because the evidence demonstrates the “reprehensibility of Defendant’s conduct here” against the particular plaintiff rather than the community-at- large.200
Eighth Circuit— U.S. District Court
In Eden Electric v. Amana Co.,201 the District Court for the Northern District of Iowa reduced a punitive damages award for fraudulent misrepresentation from $17.875 million to $10 million where the compensatory damages were $2.1 million.202 In reducing the punitive damages, the court undertook a careful study of the Campbell
State Farm Mutual Automobile Insurance Co. v. Campbell An Update on Punitive Damages Law Brian C. Dalrymple*
18 decision, focusing on the Supreme Court’s clarification of the second “ratio” guidepost. After noting that the defendant’s conduct was particularly reprehensible, the court examined the disparity between the harm and the punitive damages award.203 The court explained its interpretation of Campbell:
Specifically, this Court reads State Farm to mean that even where all the reprehensible considerations are present, but where the compensatory damages are significant, the punitive damages award cannot ordinarily exceed a 10-1 ratio and still be constitutional. Thus, even where a plaintiff has suffered a physical harm as a result of a recidivist defendant’s intentional and malicious disregard for the health and safety of others, and the defendant targeted his victim before the victim was financially vulnerable, still that plaintiff’s punitive damage award could probably not constitutionally exceed the 10-1 ratio. When the Court compares the punitive damages award in the instant case (an economic harm case) to this hypothetical case, surely it must conclude that the Plaintiff’s 8.5-to-1 ratio award is constitutionally excessive.204
The court then reduced the award by over half despite the fact that “the Court can hardly think of a more reprehensible case of business fraud.”205
The court also addressed whether conduct outside of Iowa could be considered when evaluating the defendant’s fraudulent scheme.206 The court concluded that the evidence was admissible because the evidence of the out-of- state conduct was not considered “for the purpose of multiplying the punitive damages award” rather it was “considered as evidence of the very fraud alleged.”207
Eleventh Circuit— Court of Appeals
The Eleventh Circuit recently affirmed a $13.3 million punitive damages award against the Atlanta-Fulton Public Library system in Bogle v. McClure.208 Plaintiffs were seven Caucasian librarians who alleged racial discrimination after they were transferred to lower-end jobs following a district-wide reorganization plan. The librarians were collectively awarded $3.3 million in compensatory damages. The Court of Appeals upheld the $13.3 million punitive damages award against the Library.209
The Library argued that the punitive damages award was excessive in light of Campbell.210 The Court of Appeals examined the award using the three guideposts and determined that the award was not excessive even in light of Campbell. After concluding that the Library’s wrongdoing was more than a mere accident, and that the Library had “intentionally discriminated against the librarians on the basis of race and used trickery and deceit to cover it up under the guise of a “reorganization’” the court turned to the second guidepost and examined the ratio between compensatory and punitive damages.211 The Eleventh Circuit noted that the Supreme Court had imposed no bright line test but had recognized that “in practice few awards exceeding a single-digit ratio between punitive and compensatory damages to a significant degree, will satisfy due process.”212 The Court of Appeals held that the punitive award in this case was in the neighborhood of the 1 to 4 range, a figure which had previously been approved by the Supreme Court, and which was reasonable in this situation despite the fact that the Librarians “received substantial compensatory damages.”213
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Eleventh Circuit— U.S. District Court
In McClain v. Metabolife,214 the District Court for the Northern District of Alabama waited for the Supreme Court’s decision in Campbell before ruling on defendant Metabolife’s post-judgment motions regarding its punitive damages judgments.215 The underlying action involved defendant Metabolife’s distribution of a dangerous diet pill, ingested by various plaintiffs in varying amounts. The plaintiffs alleged that the diet drug, manufactured and marketed by Metabolife, was defective, unsafe, and caused personal injury. Metabolife appealed the $1 million punitive damage award against it.
The court first noted that “it was not sure that the wait was worth it” as it remained baffled and “was not sure that it fully comprehends all of the possible lessons in State Farm.”216 Among the aspects of the decision that the District Court remained unclear about was whether the jury could consider the wealth and financial impact of punitive damages on a defendant, whether punishment for conduct that is extraterritorial was proper, and whether the court could consider the importance of possible duplication of compensatory damages by the punitive awards.217 As these issues had not been fully briefed by the parties, the District Court left them to another day.
The court did recognize, however, that “State Farm begins to provide real help” in guiding lower court’s discretion in its discussion of the ratio between compensatory damages and punitive damages.218 The court felt that the Supreme Court’s guidance on the ratio was “the most potent ingredient in the witch’s brew.”219 Citing the Supreme Court’s language that “few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process” the District Court used “the top one digit multiplier” and “accordingly… reduce[ed] Ms. Franks $1 million in punitive damages for Metabolife’s AEMLD violation to $450,000 or nine (the single highest single digit) times her compensatory award of $50,000.”220 As to the other plaintiffs, the District Court concluded that a $75,000 punitive damage award, when the corresponding compensatory award was $10,000 is not excessive.221 In upholding this award, the District Court noted that “$75,000 would probably not be excessive in any gross fraud case, no matter how inconsequential the damages were… As the Supreme Court said in State Farm, there is still no bright line. There is still room for an exercise of judicial judgment.”222 Thus, the court treated the Supreme Court’s language in Campbell as a mathematical formula yet simultaneously recognized the possibility of judicial discretion in appropriate cases.
Arkansas Court of Appeals
In Hudson v. Cook,223 the plaintiff was awarded $35,000 in compensatory damages and $250,000 in punitive damages for conversion and interference with business and business expectancy stemming from a disputed property line.224 In upholding the award, the court held that “the approximate 7:1 ratio in this case is well within the acceptable range… under Cooper… and also falls within the range most recently set forth… in State Farm.”225 The court devoted no further discussion to Campbell.
California Supreme Court
The California Supreme Court remanded Henley v. Phillip Morris, Inc.,226 to be considered in light of Campbell.227 Henley was a personal injury action brought by a lifetime smoker who contracted lung cancer. The jury awarded
State Farm Mutual Automobile Insurance Co. v. Campbell An Update on Punitive Damages Law Brian C. Dalrymple*
20 plaintiff $1.5 million in compensatory damages for the tortious misconduct in the manufacture and marketing of cigarettes and $50 million in punitive damages.228 The trial judge reduced the punitive damages award to $25 million. Defendant appealed and the California Supreme Court granted review. In the meantime, Campbell was decided and the California Supreme Court remanded the case to the California Court of Appeal to “reconsider the cause in light of State Farm Mutual Automobile Insurance.”229
California Court of Appeals
In Diamond Woodworks v. Argonaut Insurance Company,230 the California Court of Appeal reduced both compensatory and punitive damages in a breach of contract, insurance bad-faith and fraud action in light of Campbell.231 Diamond, a cabinet and woodworking business, sued Argonaut, a workers compensation insurer when Diamond’s new employee Wilcox (hired from Builders Staff Corporation, an employee leasing company and Argonaut’s insured) was injured on the job and denied worker’s compensation benefits. Wilcox sued Diamond for not covering him.232 Diamond went after Argonaut for denying the coverage.233 The jury awarded Diamond $658,000 in compensatory damages and $14 million in punitive damages. The punitive damages were reduced to $5.5 million on remitter.
The Court of Appeal further reduced the compensatory damages to $404,270 and the punitive damages to $1 million.234 The Court undertook an extensive analysis and application of Campbell.235 It used the three guideposts and determined that the presence of four reprehensibility criteria— the fact that Argonaut demonstrated absolute indifference to the health and safety of Wilcox, Diamond was financially vulnerable, Argonaut’s actions were not isolated incidents, and that Argonaut’s actions were not mere accidents but were intentional— demonstrated Argonaut engaged in reprehensible conduct sufficient to support an award of punitive damages in some amount.236
The Court thoroughly examined the Supreme Court’s directive as to the second guidepost. The California Court concluded that:
Campbell, Gore and Haslip all suggest that in the usual case, i.e., a case in which the compensatory damages are neither exceptionally high nor low, and in which the defendant’s conduct is neither exceptionally extreme nor trivial, the outer constitutional limit on the amount of punitive damages is approximately four times the amount of compensatory damages. Taking into account the jury’s determination in this case, we conclude that the ratio should approximate that outer limit.237
The Court further reduced the punitive damages to $1 million, citing the fact that the ratio between compensatory damages and punitive damages granted by the trial court was 13 to 1 and that “we do not read Campbell as allowing such disproportionality under the facts and circumstances of this case.”238
Unpublished California Appellate decisions
In Taylor Woodrow Homes v. Acceptance Insurance Companies, Inc.,239 the plaintiff developer brought a bad faith action against its insurer after the insurer reneged on its promise to cover the developer’s liability to a homeowner. The
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21 jury awarded the developer $293,000 in compensatory damages (including attorney’s fees) and $5 million in punitive damages.240 The Court of Appeals considered the issue of whether the “unreasonable breach [was] worth $5 million in punitive damages” by examining the three guideposts.241 Although the court found that the insurer’s behavior was reprehensible, the court noted that the ration between the harm suffered and the damages awarded “cuts the other way” for the punitive award was 17 times the amount of the compensatory award.242 In determining what amount was appropriate, the court used Campbell as its guide. The Court held that the “facts here are not as bad as they were in State Farm” but that the case at bar “was just about as blatant and opportunistic a breach of an insurance contract as might be imagined.” The court set the award at $1 million, roughly a 1:3 ratio between compensatory and punitive damages, noting that the Supreme Court had said few awards exceeding a single digit ratio would satisfy due process.243
Connecticut
The impact of Campbell has spilled over even to the arbitration context. In Connecticut, a Superior Court judge recently reviewed an arbitration award to ensure it was not so grossly excessive as to violate Due Process.244 The arbitration arose out of a dispute concerning elections to the Board of Directors of the Subway sandwich franchise advertising board.245 Plaintiffs were Subway franchise owners who sought election to the Board and whose efforts were thwarted by various Board Members. The arbitrator determined that the Board members improperly interfered with the elections and, in doing so, committed an unfair and deceptive trade practice in violation of a Connecticut statute.246 The claimants were awarded $150,000 in punitive damages and $150,000 in attorneys fees and expenses.247 The defendants moved to vacate the arbitration award on the grounds that the punitive damages award violates the public policy contained in the Due Process Clause of the Fourteenth Amendment prohibiting the imposition of grossly excessive awards.248
The court upheld the award after examining it in light of BMW and Campbell.249 The court determined that the defendant’s conduct was reprehensible and then turned to the second guidepost: the ratio of compensatory damages to punitive damages. The defendants argued that the failure of the arbitrator to award any compensatory damages resulted in an unconstitutional ratio because the ratio between a punitive damage award of $150,000 and a compensatory damages award of zero is infinite.250 The court cited Campbell for the proposition that “few awards exceeding a single-digit ratio… will satisfy Due Process.” It also recognized that the Supreme Court had written in a caveat specifying that a double-digit ratio may be constitutionally permissible where a particularly egregious act has resulted in only a small amount of economic damages or where the injury is hard to detect.251 The court departed from the bright line test and invoked the caveat, determining that “this case is a paradigm of an instance where the monetary value of the non-economic harm suffered by the plaintiffs was difficult to determine… the loss of an opportunity to seek election and harm to one’s reputation are not readily susceptible to monetary measure.”252
Indiana Supreme Court
The Indiana Supreme Court recently addressed in Stroud v. Lints253 whether, after Campbell, a defendant’s wealth could be considered when determining punitive damages. The defendant, Stroud, was driving a vehicle at excessive speed while intoxicated when he ran a stop sign and collided with another vehicle. Stroud’s passenger, Lints, was permanently and severely injured and the occupants of the other vehicle were killed.254 Stroud plead
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22 guilty to criminal charges and was sentenced to eight years in prison.255 Lints sued Stroud and was awarded $1.4 million in compensatory damages and $500,000 in punitive damages. Stroud appealed the punitive award, contending it was excessive because, given his financial situation and prospects, there was no possibility he could ever pay it.256 He argued that this information should be considered by the jury. The plaintiff argued that after Campbell, such evidence was inadmissible.
The Indiana Supreme Court remanded the case to the Court of Appeals for examination of the punitive award under the three factors affirmed in Campbell.257 The Court noted that the “Indiana statutory limitation on an award three times the amount of compensatory damages will usually alleviate the specific issue addressed in State Farm on punitive awards that are excessive in relation to compensatory damages” but nevertheless instructed the court to more carefully consider the BMW factors when examining an award for excessiveness. Most importantly, in its analysis, the court gave great importance to the defendant’s wealth and noted “an award that not only hurts but permanently cripples the defendant goes too far” and that “the economic wealth of a defendant tends to show… the point at which an award of punitive damages becomes an amount which will deter and punish the defendant.”258
Missouri Court of Appeals
The Missouri Court of Appeals upheld a punitive damage award of $125,000 against an automobile auctioneer in Werremeyer v. KC Auto Salvage, Copart of Kansas.259 Plaintiffs had bought a car from a salvage company and later learned that the car had been pieced together from a stolen car and a car that had been in an accident. They sued the auctioneer who had sold the car to the salvage yard for fraud and negligence.260 The jury awarded the plaintiff $9,000 in actual damages and $125,000 in punitive damages. The Missouri Court of Appeals upheld the award, despite the disparity between the awards (the ratio was 1 to 13.9). After acknowledging that the award was “suspect” under Campbell, the court pointed out that the Supreme Court had not set forth an unwavering line and had in fact allowed for an exception, acknowledging “that non-single-digit damage multipliers were probably constitutional if the harm suffered by the defendant is difficult to detect.”261 The court held that “this is such a case” explaining that the fraud perpetrated by defendants was difficult if not impossible for the average consumer to detect and thus the higher award was justifiable despite Campbell’s mandate.262
Lessons from Campbell: What does it all mean? Since the Supreme Court issued its decision in Campbell, the lower courts have scrambled to make sense of its many lessons. They have worked quickly in interpreting the high court’s language and after only a few months, Campbell’s legacy is readily apparent. In the following section will highlight some of the trends that have developed since Campbell.
Impact on Discovery and Limitations on the Kind of Evidence Used
First, Campbell has drastically limited the kind and quantity of evidence that the jury can use when imposing a punitive damage award on a national or multi-state company. In Campbell, the Supreme Court admonished the Utah court for relying on the evidence of State Farm’s nationwide policies when making its determination of
State Farm Mutual Automobile Insurance Co. v. Campbell An Update on Punitive Damages Law Brian C. Dalrymple*
23 reprehensibility.263 In response, the Supreme Court held that a defendant cannot be punished for conduct that may have been lawful where it occurred and that a defendant’s dissimilar acts, independent from the acts upon which liability is premised, may not serve as the basis of punitive damages.264 One commentator has noted that the ruling makes the admission of dissimilar evidence relating to the same defendant more difficult, “thereby materially decreasing the amount of inflammatory material that is produced before the jury—especially important when we realize that jurors cannot distinguish among such matters and disregard the ‘similarity’ requirement.”265
As the lower court cases have shown, Campbell has already severely limited the kind of evidence the jury is permitted to hear. In Romo, infra, the California Supreme Court repeatedly referred to the fact that Ford was a wealthy, national company who should have know better. As mentioned, this case was remanded by the United States Supreme Court for reconsideration resulting in a dramatic reduction in the punitive damages award. In Smith, infra, the Kentucky Supreme Court examined plaintiff’s evidence that Ford had received complaints about the parking breaks on its vehicles for 10 years before the accident. The Kentucky Supreme Court concluded that “from the evidence, a jury could have believed that by November 1972, Ford was well aware of the flaw in its C-6 transmission, but it continued producing and installing such transmissions until 1980, thus acting with flagrant indifference to the lives of its consumers.”266 This has also been remanded with an order that the punitive damages award be reconsidered in light of Campbell. It is clear that after Campbell, such evidence will be much more carefully scrutinized and probably excluded. This aspect of the United States Supreme Court’s decision will likely be very important for defenders of large, multi-national, or national companies as the plaintiff will no longer be able to put a company on trial “for generally being an unsavory character or an unethical business.”267 Further, the trial will likely be focused on the particular accident or incident as it happened to that particular plaintiff.
It is also very significant to note that battles are now occurring in many cases regarding the affect of the Campbell decision on the discoverability of evidence. For example, in Librado, infra, the defendant argued that after Campbell, it should not have to produce information regarding its past lawsuits stemming from dissimilar accidents because such evidence is inadmissible at trial.268 Although the district court in Librado rejected this argument, other courts may interpret Campbell as limiting the discoverability of such dissimilar evidence because it is not reasonably calculated to the discovery of admissible evidence.
Impact on Class Action Jurisdiction
Campbell will likely have some ramifications for class actions in the context of removal and meeting the requisite jurisdictional amount in controversy. Because the modern trend has been for juries to award unpredictable punitive damage awards, the speculative nature of such damages has been the wild-card in all kinds of litigation.. Up until Campbell, meeting the jurisdictional amount in controversy in order to get into federal court has been relatively easy if the affect of punitive damages was considered. In theory, the sky was the limit so it was relatively easy for defendants to build an argument that the jurisdictional threshold could be met. After Campbell, it may be more difficult to convince a court that the jurisdictional amount in controversy will be met by virtue of the punitive damage award – particularly when the actual compensatory awards are low. This aspect of the Campbell decision has already impacted class action litigation. The newfound certainty or predictability prevented Ford from removing its case to federal court in Barnes infra, because the alleged compensatory damages were only $300. Similarly, in In Re Bridgestone/Firestone, infra, where the plaintiffs’ were seeking the cost of replacement tires, or the
State Farm Mutual Automobile Insurance Co. v. Campbell An Update on Punitive Damages Law Brian C. Dalrymple*
24 difference between the purchase price of the tires and their actual price, the court remanded the plaintiffs cases back to state court in light of Campbell.
Emphasis on the Ratio, not the Amount of the Award
Commentators have called the Supreme Court’s mandate that the ratio between actual damages and compensatory damages not exceed single digits except in rare cases, “the 21,000 pound bomb… of the law of punitive damages that has been developing in the United States Supreme Court for a couple of decades.”269 Indeed, court after court is quoting the high court’s language and remanding or reducing awards with double-digit ratios. For example, in Romo and Cass, two of the cases the Supreme Court granted certiorari to and remanded for examination in light of Campbell, involved ratios of 1 to 58 and 1 to 19, respectively. Even cases with less extreme disparities have been remanded like in Eden Electric, infra, where the court reduced a punitive award of $17.9 million because the ratio of compensatory damages to punitive damages was 1 to 8.270 In Metabolife, infra, the court used the language from Campbell as a mathematical formula and tailored the punitive damage award to fit the ratio of 1 to 9, the ratio flagged as constitutionally permissible by the United State Supreme Court.271
Other commentators, such as Robert Peck, Senior Director for Legal Affairs for the Association of Trial Lawyers of America, argue that Campbell was an unremarkable decision which did not enunciate new law or doctrine.272 Peck stresses that the Court refused to impose a mathematical ratio and the lower courts should not read the opinion as doing so.273 Even though the high court may have never intended its language to be interpreted as a mathematical ratio with binding ratios, it appears from the most recent cases that it most certainly is being used as one.
It is also clear that absolute dollar amounts are not what the Supreme Court intended the lower courts to focus on; it is the ratio between the two awards that is crucial. For instance, in Six Flags, infra, the jury awarded Six Flags $197 million in compensatory damages and $257 million in punitive damages.274 Although these numbers are high, the Supreme Court denied certiorari, sending the message that as long as the ratio between compensatory awards and punitive awards is a single digit (in Six Flags, the ratio was 1 to 1.5), it may not matter how high the amount of the punitive award is.
At the End of the Day, Courts Are Still Unpredictable
In the aftermath of the decision, practitioners, insurance officials, and academics were either lauding or decrying the Campbell decision for injecting a beacon of predictability into punitive damages litigation. One commentator wrote “with the advent of Campbell, there can be no mistaking the message this time”275 and another reported “they’ve put some real teeth into the ratio.”276 Despite the Supreme Court’s seemingly unambiguous language, the lower courts have found ways to get around its mandate and have already creatively interpreted the holding to maneuver around key language.
For example, in Willow Inn II, infra, the district court was able to manipulate the figures used to calculate the ratio so that it appeared to be only a single digit when in reality the ratio between compensatory and punitive damages was 1 to 75.277 The district court sidestepped the Supreme Court’s language in Campbell that “few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due
State Farm Mutual Automobile Insurance Co. v. Campbell An Update on Punitive Damages Law Brian C. Dalrymple*
25 process”278 and used the potential harm to the plaintiff when calculating the ratio, a “ratio that is approximately one to one – a ratio that does not ‘raise a suspicious judicial eyebrow.’”279
Moreover, even though the language seems clear, the Campbell-BMW test is malleable and still allows the judge quite a bit of discretion. The Supreme Court cautioned that “these ratios are not binding, they are instructive.”280 Also, the Court allows for caveats; it suggests that when the conduct of the defendant is particularly egregious or when the monetary value of non-economic harm is difficult to determine a higher ratio—i.e. in excess of one to nine—might be tolerated.281 Peck argues that if you look closely at the language, “the Court did not deny that a 500 to 1 ratio might be constitutionally valid in an appropriate case.”282 This is what the language of the opinion suggests. However, this is not necessarily how it has turned out.
For instance, in Waits, infra, an award of $2 million for punitive damages was reduced to $45,000 where the compensatory damages were $30,000 (approximately a 1 to 1.5 ratio).283 The court reduced the award despite the fact that the plaintiff had been seriously beaten and verbally abused by two police officers, reasoning that “when compensatory damages are substantial (as is the case here), then a lesser ratio, perhaps only equal to compensatory damages, can reach the outermost limit of the due process guarantee.”284
Compare Waits to Werremeyer, infra, where an award of punitive damages was upheld despite a ratio of 1 to 13.5. The plaintiff brought the action for fraud and negligence after he bought an automobile patched together from stolen and salvaged parts. The court justified upholding the punitive damages award, despite the double-digit ratio and conscious of the fact that it was suspect under Campbell, because the harm suffered by the plaintiff was difficult to detect.285 The court read Campbell as providing an exception in this circumstance. The lesson of Werremeyer and Waits compared against each other is that nothing is a sure thing, despite the Supreme Court’s strong language. A particularly egregious factual situation (Waits) can mean a lower punitive damages award and a seemingly minor negligence claim (Werremeyer) could justify a high punitive award depending on the court you end up in.
A Defendant’s Wealth Can Still be Taken Into Consideration
Contrary to what some commentators are saying, a defendant’s wealth is still being taken into consideration. In Campbell, the Supreme Court noted that the Utah Court had “also relied upon State Farm’s massive wealth,” when determining if State Farm’s actions were reprehensible.286 Some courts, have taken this to mean that the jury cannot take a defendant’s wealth cannot into consideration. Other courts have made it clear that they still intend to take the defendant’s wealth into consideration. For instance, in Stroud, infra, the evidence of the defendant’s poverty was deemed admissible. In Igen, infra, evidence of a defendant’s wealth was allowed to be considered by the jury. Thus, the issue of whether or not a defendant’s wealth is admissible has not been cleared up by the Campbell decision and will likely be a sticking point in subsequent litigation.
Conclusion The Campbell decision was a culmination of a decade of high-court jurisprudence reigning in exorbitant punitive damages awards. In Campbell, the Supreme Court further clarified the three guideposts set forth in BMW and provided strong guidance for courts when examining the ratio between compensatory and punitive damages.
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Campbell’s watershed impact was immediate in the lower courts. In this regard, many of the decisions that came down after Campbell showed that the lower courts were mainly focusing on the Supreme Court’s instruction on the admissibility of evidence of a defendant’s national, unrelated activities, and on the ratio between compensatory and punitive damages. The Court’s decision has injected much-needed predictability into punitive damages law and will allow parties to assess the risks and benefits of litigation more accurately. However, as a few cases have shown, nothing is a sure thing, and although the Supreme Court’s decision contains strong language, lower courts have already taken advantage of its ambiguities. Finally, as discussed above, there are many ways the decision will directly impact future litigation.
* Brian Dalrymple is a partner in the national law firm of Nixon Peabody LLP, resident in their San Francisco office. The author wishes to express his appreciation and gratitude to Molly Brizgys, a summer associate with Nixon Peabody LLP, for her tireless efforts in the preparation of this article. Without her considerable assistance, this article would not have been possible. 1 Gertz v. Robert Welch, Inc., 418 U.S. 323, 350. 2 Cooper v. Leatherman, 532 U.S. 424 (2001). 3 123 S. Ct. 1513 (2003).
4 John Gibeaut, Pruning Punitives: High Court Stresses Guidelines for Deciding Damages, ABA JOURNAL, June 2003 at 26. 5 Campbell, 123 S. Ct. at 1517. 6 Id. at 1518. 7 Id. 8 Id. 9 Id. 10 Id. 11 Id. 12 Id. at 1518-1519. 13 Id. at 1518. 14 Id. at 1519. 15 Id. 16 Id. at 1520. 17 Id. 18 Id. 19 Id. 20 Id. 21 Id. at 1522. 22 Id. at 1523. 23 Id. at 1522. 24 Id. at 1522-1523. 25 Id. at 1524.
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26 Id. at 1523. 27 Id. at 1525. 28 Id. at 1524-1525. 29 Id. at 1526. 30 Id. 31 Pacific Mutual Life Insurance v. Haslip, 111 S. Ct. 1032, 1043 (1991). 32 Browning-Ferris Industries v. Kelco Disposal Inc., 109 S. Ct. 2909, 2924 (1989) (O’Connor, J., concurring and dissenting). 33 BMW of North America v. Gore, 116 S. Ct. 1589, 1605 (1996) (Breyer, J., concurring). 34 Haslip, 111 S. Ct at 1043. 35 Campbell, 123 S. Ct. at 1524. 36 492 U.S. 257 (1989). 37 Browning-Ferris, 109 S. Ct. at 2913. 38 Id. at 2909. 39 Id. at 2909-2922. 40 Haslip, 111 S. Ct. at 1037. 41 Id. at 1044. 42 Id. at 1045. 43 Green Oil Co. v. Hornsby, 539 So.2d 218, 222 (1989). 44 Haslip 111 S. Ct. at 1047 (Scalia, J., concurring). 45 Id. 46 Id. at 1055. 47 Id. at 1056. 48 Id. 49 Id. at 1062. 50 113 S. Ct. 2711 (1993). 51 TXO, 113 S. Ct. at 2714. 52 Id. 53 Id. at 2722.. 54 Id. at 2723. 55 Id. at 2725. 56 Id. 57 Id. at 2726-2728. 58 Id. at 2728. 59 Id. at 2731. 60 Id. at 2732.
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61 114 S. Ct. 2331 (1994). 62 Honda 114 S. Ct. at 2234. 63 Id. 64 Id. 65 Id. 66 Id. at 2335. 67 Id. 68 Id. at 2335. 69 Id. at 2340. 70 Id. 71 Id. 72 Id. at 2342. 73 Id. at 2358. 74 Id. at 2343. 75 116 S. Ct. 1589 (1996). 76 BMW 116 S. Ct at 1592, citing TXO Production Co., 113 S.Ct. 2711, 2718. 77 BMW at 1610 (Scalia, J., dissenting). 78 Id. at 1593, n. 1. 79 Id. 80 Id. at 1593. 81 Id. at 1595. 82 Id. at 1595. 83 Id. at 1599. 84 Id. 85 Id. at 1595. 86 Id. at 1598. 87 Id. at 1601. 88 Id. at 1602. 89 Id. at 1603. 90 Id. 91 Id. at 1609. 92 Id. at 1610. 93 Id. 94 Id. at 1614. 95 Id.
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96 Id. at 1615. 97 121 S. Ct. 1678 (2001). 98 Cooper, 121 S. Ct. at 1683. 99 Id. at 1680. 100 Id at 1682. 101 Id. 102 Id. at 1689. 103 Id. 104 123 S. Ct. 1783 (2003). 105 Time Warner Entertainment Co. v. Six Flags Over Georgia, 254 Ga. App. 598 n. 1 (2002). 106 Id. at 604-608. 107 Id. at 607. 108 Id. 109 123 S. Ct. 1072 (2003). 110 Romo v. Ford Motor Co., 99 Cal. App. 4th 1115, 1125 (2002). 111 Id. at 1125. 112 Id. at 1150. 113 Id. at 1150. 114 Romo v. Ford Motor Co., 113 Cal. App. 4th 738, 749-50 (2003). 115 Id. at 750. 116 123 S. Ct. at 1523. 117 Romo, 113 Cal. App. 4th at 750. 118 Id. at n. 4. 119 Id. at 751. 120 Id. at 761. 121 Id. 122 Id. at 763-64. 123 Ford Motor Co. v. Estate of Smith, 123 S. Ct. 2072 (2003). 124 Sand Hill Energy v. Ford Motor Co., 83 S.W.3d 483, 486 (2002). 125 Id. at 494. 126 Id. at 496. 127 Id. at 493. 128 Id. at 494. 129 Id. at 495. 130 123 S. Ct. 2213 (2003).
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131 Verdict Revisited: Conversion and Fraud, THE NATIONAL L. J., Sept. 10, 2001, at C4. 132 Parker v. Time Warner Entertainment Co., 2003 U.S. App. LEXIS 10909, at *1 (2nd Cir. June 2, 2003). 133 Id. at *3. 134 Id. at *26. 135 Campbell, 123 S.Ct. at 1513. 136 Parker, 2003 U.S. App. LEXIS 10909 at * 38. 137 TVT Records v. The Island Def Jam Music Group, 2003 U.S. Dist. LEXIS 6853 *1 (S.D. N.Y. April 24, 2003). 138 Id. at *18. 139 Id. at *19. 140 Id. at *22, citing Campbell, 123 S.Ct. 1513. 141 Willow Inn, Inc. v. Public Service Mutual Insurance Co., 2003 U.S. App. LEXIS 9767 *1 (3rd Cir., May 20, 2003). 142 Id. at *2. 143 Id. at *4. 144 Willow Inn, Inc. v. Public Service Mutual Insurance Co., 2003 U.S. Dist. LEXIS 9558 *1, *11 (E.D. Penn., May 30, 2003). 145 Id. at *6 146 Id at *7. 147 Id. at *8 148 Id. at *8 (citing Gore, infra note 75 and TXO, infra note 50). 149 DeNofio v. Soto, 2003 U.S. Dist. LEXIS 1225, *1, (E.D. Penn. ,June 24, 2003). 150 Id. at *2. 151 Id. at *1. 152 Id. at *7. 153 Id. at *8. 154 Id. 155 Igen International, Inc. v. Roche Diagnostics GMBH, 2003 U.S. App. LEXIS 13728 *1 (4th Cir. July 9, 2003). 156 Id. at *4. 157 Id. at *2. 158 Id. at *21 159 Id. at *21. 160 Id. at *23 quoting State Farm, 123 S. Ct. 1513, 1523 (2003). 161 2003 U.S. Dist. LEXIS 9065 *1 (W.D. Vir., May 21, 2003). 162 Id. at *12. 163 Id. at *2. 164 Id. at *12. 165 2003 U.S. Dist. LEXIS 8276 *1 (N.D. Tex., May 9, 2003).
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166 Id. at *2-*3. 167 Id. at *7-*8. 168 Id. at *8. 169 Id. at *8-*9. 170 Smoot v. United Transportation Union, 2003 U.S. App. LEXIS 11574 *1 (6th Cir. June 9, 2003). 171 Id. at *6. 172 Id. at *3. 173 Id. at *3. 174 Id. at *5 citing Campbell, 123 S. Ct. 1513 at 1520-26. 175 In re: John Richards Homes Building Co., 2003 Bankr. LEXIS 368 *1 (E.D. Mich. April 25, 2003).. 176 Id. 177 Id. at *31 178 Barnes v. Ford Motor Co., 2003 U.S. Dist. LEXIS 9268 *1 (N.D. Ind. May 30, 2003). 179 Id. 180 Id. at *2. 181 Id. at *9. 182 Id. at *11. 183 In re: Bridgestone/Firestone Inc., 2003 U.S. Dist. LEXIS 6225 *1 (S.D. Ind. April 11, 2003). 184 Id. at *3. 185 Id. at *4. 186 Id. at *16. 187 Id. at *18. 188 Waits v. Chicago, 2003 U.S. Dist. LEXIS 9448 *1 (N.D. Ill. June 6, 2003). 189 Id. at *2-3. 190 Id. at *2. 191 Id. at, *10 citing Campbell 123 S. Ct. at 1521. 192 Id. at *15. 193 Id. at *17 citing Haslip, 111 S. Ct. at 1032 . 194 Id. at *17. 195 Id. at *19-20. 196 Motherway, Glenn & Napleton v. Tehin, 2003 U.S. Dist. LEXIS 10928 *1 (N.D. Ill. June 26, 2003). 197 Id. at *25. 198 See Id. at *16-*18. 199 Id. at *18, citing Campbell, 123 S. Ct. at 1523. 200 Id. at *19-20.
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201 Eden Electric, Ltd. v. Amana Co., 2003 U.S. Dist. LEXIS 7054 *1 (N.D. Iowa, April 21, 2003). 202 Id. at *52. 203 Id. at *36. 204 Id. at *45. 205 Id. at *44. 206 Id. at *27-*28. 207 Id. at *28. 208 Bogle v. McClure, 2003 U.S. App. LEXIS 11332 *1 (11th Cir. 2003). 209 Id. at *2. 210 Id. at *29. 211 Id. at *36. 212 Id. citing Campbell 123 S. Ct. at 1524. 213 Id. at *37. 214 McClain v. Metabolife Internation Inc., 2003 U.S. Dist. LEXIS 7016 *1 ( N.D. Ala. April 24, 2003). 215 Id. at *7. 216 Id. 217 Id. at *7-*10. 218 Id. at *12. 219 Id. at *14. 220 Id. at * 27. 221 Id. 222 Id. at *28. 223 Hudson v. Cook, 2003 Ark App. LEXIS *1 (Ct. App. May 21, 2003). 224 Id. at *2. 225 Id. at *26 (citations omitted). 226 Henley v. Phillip Morris Inc., 2003 Cal. LEXIS 4191 *1 (Sup. Ct. Cal. June 25, 2003). 227 Id. 228 Henley v. Phillip Morris, Inc., 93 Cal. App. 4th 824 (2002). 229 Henley v. Phillip Morris, Inc., 2003 Cal. LEXIS 4191 at *1 (Cal. Sup. Ct. June 25, 2003). 230 Diamond Woodworks v. Argonaut Insurance Co., 2003 Cal. App. LEXIS 872 (Ct. App. Cal., June 13, 2003).. 231 Id. 232 Id. at *3. 233 Id. at *5. 234 Id. at *67. 235 Id. at *55-*67.
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236 Id. at *63-64. 237 Id. at *67. 238 Id. at *67. 239 Taylor Woodrow Homes, Inc. v. Acceptance Insurance Co., 2003 Cal. App. Unpub. LEXIS 5208 (Ct. App. Cal. May 28, 2003). 240 Id. at *2-*3. 241 Id. at *9. 242 Id. at *10 243 Id. at *13 citing Campbell. 244 Hadelman v. DeLuca, 2003 Conn. Super. Lexis 1748 *1 (Superior Court, June 12, 2003).. 245 Id. at *3 246 Id. at *4. 247 Id. at *5. 248 Id. 249 Id. at *9. 250 Id. at *13. 251 Id. at *14 citing Campbell. 252 Id. at *15. 253 Stroud v. Lints, 2003 Ind. LEXIS 536 *1 (Ind. Sup. Ct., June 25, 2003). 254 Id. at *2. 255 Id. 256 Id. 257 Id. at *17. 258 Id. at *19-*20. 259 Werremeyer v. K.C. Auto Salvage, Co., 2003 Mo. App. LEXIS 1074 *1 (Missouri Ct. App., June 30, 2003). 260 Id. at *6. 261 Id. at *25 citing Campbell, 123 S.Ct. at 1524. 262 Id at *31. 263 Campbell, 123 S. Ct. at 1518. 264 Id. at 1523.
265 Michael Brady, A New Predictability in Punitive Damages? 45 No. 6 FOR THE DEFENSE 10, 12 (June 2003). 266 Sand Hill Energy v. Ford Motor Co, 83 S.W.3d 483, 493 (Ken. 2002). 267 Brady, supra note 251, at 12. 268 Librado v. M.S. Carriers, 2003 U.S. Dist. LEXIS 8276 *1, *2 (N.D. Texas, May 9, 2003).. 269 Brady, supra note 251 at 12. 270 Eden Electric, Ltd. v. Amana Co., 2003 U.S. Dist. LEXIS 7054 *1 (N.D. Iowa, April 21, 2003).
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271McClain v. Metabolife Internation Inc., 2003 U.S. Dist. LEXIS 7016 *1 ( N.D. Ala. April 24, 2003). 272 Robert Peck, State Farm v. Campbell Clarifies But Does Not Revolutionize Punitive Damages Jurisprudence, Vol. 1 Issue 11 PRACTICING LAW INSTITUTE ALL-STAR BRIEFING (July 31, 2003). 273 Id. 274 Time Warner Entertainment v. Six Flags, 123 S. Ct. 1783 (2003).
275 Christina J. Imre, Punitive Damages: U.S. High Court Takes Its Biggest Step Yet, 25 CALIFORNIA CIVIL LITIGATION REPORTER 98, 100 (June 2003).
276 John Gibeaut, Pruning Punitives, 89 ABA JOURNAL, June 2003 at 26 (quoting Lori Nugent). 277 Willow Inn, Inc. v. Public Service Mutual Insurance Co., 2003 U.S. Dist. LEXIS 9558 *1, (E.D. Penn., May 30, 2003). 278 Campbell 123 S.Ct. at 1524. 279 Willow Inn, Inc. v. Public Service Mutual Insurance Co., 2003 U.S. Dist. LEXIS 9558 at *8 (E.D. Penn., May 30, 2003). 280 Campbell, 123 S.Ct. at 1524. 281 Brady, supra not 251 at 13. 282 Robert Peck, State Farm v. Campbell Clarifies But Does Not Revolutionize Punitive Damages Jurisprudence, Vol. 1 Issue 11 PRACTICING LAW INSTITUTE ALL-STAR BRIEFING (July 31, 2003). 283 Waits v. Chicago, 2003 U.S. Dist. LEXIS 9448 *1 (N.D. Ill. June 6, 2003). 284 Id. at *18. 285Werremeyer v. K.C. Auto Salvage, Co., 2003 Mo. App. LEXIS 1074 at *31 (Missouri Ct. App., June 30, 2003). 286 Campbell, 123 S.Ct. at 1518.