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Punitive damages after Campbell, Smith, and Romo: though not plaintiffs' victories, these three cases are hardly cataclysmic defeats. You can avoid the pitfalls.

Last spring, in three decisions arising from the Utah and Kentucky Supreme Courts and the California Court of Appeals--State Farm Mutual Automobile Insurance Co. v. Campbell, (1) Ford Motor Co. v. Smith, (2) and Ford Motor Co. v. Romo, (3) respectively--the U.S. Supreme Court completely revolutionized the law of punitive damages, sending a clear message that these awards, sometimes called "smart money," are a truly dumb idea. Or so the corporate defendants in those cases and their numerous tort "reform" allies would have you, the public, the media, and the lower courts believe.

For example, the National Association of Manufacturers hailed Campbell as "an important breakthrough in our continuing efforts to make judges more aware of the fact that elements of our judicial system are out of control." (4) The U.S. Chamber of Commerce extolled it as "a major victory for the business community's long-standing concern over unfair ... punitive damages awards." (5) The American Insurance Association celebrated, saying that Smith and Romo "broadened the application of [Campbell] ... by applying the same rules for determining the amount and basis for a punitive damages award to cases involving personal injuries." (6) And the American Tort Reform Association boasted that Campbell, Romo, and Smith collectively show that the "plaintiffs' lawyers' golden goose for punitive damages is now dead." (7)

Although none of the three cases can be fairly described as a plaintiffs' victory, they certainly should not be regarded as cataclysmic defeats, let alone revolutionary "breakthroughs," especially because they merely applied rather than fundamentally altered the standards that the Supreme Court established seven years ago in BMW of North America, Inc. v. Gore. (8) In fact, as the Campbell Court emphasized, "under the principles outlined in BMW, this case is neither close nor difficult." (9)

More important, the Court declined to entertain the truly novel and radical arguments Ford advanced in its certiorari petitions in Smith and Romo, such as the notion that a manufacturer's "good faith" compliance with industry standards or government regulations creates an irrebuttable presumption that its actions were reasonable rather than reprehensible and, thus, that punitive damages cannot be had. Instead, in each case, the Court simply issued curt, identical "GVR" orders, "G"ranting Ford's petitions for certiorari, "V"acating the decisions below, and "R"emanding each case to the court from which it came "for further consideration in light of Campbell."

Contrary to tort "reformers'" inflated claims, the Court's routine housekeeping, docket-clearing rulings in Smith and Romo have absolutely no precedential value. (10) Indeed, contrary to tort "reformers'" assertions, these three cases do not portend the end of punitive damages; rather, the "reformers'" exaggerated claims signal nothing more than their plan to "spin" the Court's fact-bound application of existing precedent into a "landmark" ruling and thus to win in the court of public opinion what they have been unable to achieve in the High Court.

The Court and punitive damages

Punitive damages date back nearly four millennia to Hammurabi's Code (and, indeed, existed in some form in most ancient legal systems), (11) and the U.S. Supreme Court first addressed the general propriety of those awards nearly 200 years ago. (12) Yet until 15 years ago, the Court never considered whether a punitive damages award violated the Constitution, as opposed to whether a particular award ran afoul of common law or admiralty standards. (13) This hands-off approach ended in the mid-1980s, when corporate defendants, abetted by trade associations and industry-funded tort "reform" groups, began an enormous public relations campaign to convince the bench, the bar, and the public that punitive damages awards were "skyrocketing" in number and "exploding" in size, and therefore needed to be "reined in" by the Court. (14)

This campaign did not initially succeed, in large part because empirical studies by disinterested scholars consistently demonstrated that there was then, as now, no truth to those claims. (15) But by the end of the 1980s, the Court started to succumb to corporations' endless entreaties to bring the punitive damages "monster" to heel: It began to grant certiorari in a series of cases to review the constitutionality of punitive damages awards.

Thus, beginning in 1988, the Court issued a string of rulings that together established that punitive damages awards can be upheld only if trial and appellate courts minimize the risk of unwarranted or excessive awards by using safeguards designed to protect defendants' rights to procedural due process. These include adequate instructions to jurors to guide their discretion, trial court review of punitive awards to ensure their reasonableness, and appellate review of any awards that manage to surmount both hurdles. Significantly, it was not until seven years ago that the BMW Court held that a "grossly excessive" award violates defendants' rights to substantive due process.

The cases:

* First, in Bankers Life & Casualty Co. v. Crenshaw, (16) an insurer sought to have the Court overturn $1.6 million in punitive damages (representing 80 times the plaintiff's actual damages) that had been awarded against it for its bad-faith refusal to pay an insured's claim. The defendant contended that the award was so "disproportionate" as to violate the Due Process Clause, the Contract Clause, and the Eighth Amendment's Excessive Fines Clause. Although the Court found the case sufficiently tempting to grant certiorari, it never reached the merits of the petitioner's constitutional claims, as it ultimately recognized that they had not been adequately raised in the lower courts.

* Thirteen months later, an antitrust defendant beseeched the Court to revisit the same questions. It did, with virtually the same results. In Browning-Ferris Industries, Inc. v. Kelco Disposal, Inc., (17) the Court was asked to void a $6 million punitive damages award, again on both excessive fines and procedural due process grounds. The Court rejected the first argument, holding that the Eighth Amendment's proscription does not apply to awards in cases between private parties. And, as in Crenshaw, the Court did not reach the due process argument because it had not been preserved below.

* Two years later, the tort "reformers" again came knocking, this time with a due process challenge in another insurance case, Pacific Mutual Life Insurance Co. v. Haslip. (18) Contrary to the tort "reformers'" expectations, the Court refused to strike down a punitive damages award that was 200 times the size of the compensatory damages award. In upholding the jury's award, the Court stressed that a punitive damages award should be regarded as presumptively constitutional if, as in Haslip, adequate instructions had been available to confine the jury's common law discretion to fix the size of an award (even if the instructions were as vague and confusing as the ones provided in that case), and if judicial review had been available at both the trial and appellate levels.

The Court's opinion nevertheless contained some troubling dicta: As a general rule, a punitive damages award of "more than four times the amount of compensatory damages" might be "close to the line" of "constitutional impropriety," even if the 80:1 ratio of punitive-to-compensatory damages was tolerable on the facts of that particular case. (19)

More inauspiciously still, Justice Sandra Day O'Connor wrote a lengthy, prescient dissent that her colleagues have increasingly relied on in the past decade. Quoting Peter Huber, and discovering what she called "an explosion in the frequency and size of punitive damages awards," (20) O'Connor took issue with the majority's postulate that common law procedures were adequate to shield defendants from unfair and disproportionate awards. Instead, she wrote, "our cases attest to the wildly unpredictable results and glaring unfairness that characterize common law punitive damages procedures," and she insisted that inchoate constitutional strictures should replace common law traditions. (21)

* If 4:1 seemed too "close to the line," then surely 526:1 was well over that line. Or so went the losing argument in TXO Products Corp. v. Alliance Resource Corp. (22) In that 1993 case, TXO, a Texas oil company, plotted to manufacture a "cloud" on the title of valuable property owned by Alliance, a rival West Virginia company--a cloud that TXO envisioned would compel Alliance to sell the property for a fraction of its true worth. What TXO did not count on was being caught in the act. Alliance uncovered the plot early on and sued TXO before any damage was done to the title and value of the property. As a result of Alliance's quick action, it suffered nothing more than $19,000 in litigation costs. Although Alliance's actual damages were small, it convinced a West Virginia jury that it should be awarded the $10 million in profits that TXO had hoped to realize if its scheme had succeeded.

There was no majority opinion for the Court, but a plurality decision written by Justice John Paul Stevens emphasized that a punitive damages award should not be deemed unconstitutional simply because it dwarfs the compensatory damages award. (23) To the contrary, Stevens underscored that punitives should be upheld as long as adequate procedural safeguards were in place, such as appropriate instructions to the jury and the availability of post hoc judicial review for reasonableness. (24) Applying those standards to the case facts, the Court concluded that the punitive damages award, while large and disproportionate, did not offend the Constitution, given the defendant's intentional, malicious, and fraudulent conduct; the fact that it was a repeat offender; its size and wealth; and the size of its "expected gain." (25)

* The following year, in Honda Motor Corp. v. Oberg, (26) the Court invalidated an Oregon stature that precluded appellate review of punitive damages awards. The statute was in keeping with the Oregon Constitution but in derogation of the longstanding common law practices that provide the baseline for due process. Writing for the Court, Stevens declared that appellate review is an essential attribute of procedural due process. (27)

In sum, until 1996, the Court viewed the issue of punitive damages entirely through the lens of procedural due process and focused solely on "the imprecise manner in which punitive damages systems are administered." (28) But in that year a sharply divided BMW Court struck down a "grossly excessive" $2 million punitive damages award against an automaker for repainting new but damaged cars without disclosing that fact to customers.

Ira Gore had paid $40,000 for a "brand new" luxury sedan, only to discover that BMW had repainted the car because it had been scarred by acid rain during shipping. Gore sought compensatory damages equal to the car's diminished value, plus unspecified punitive damages on behalf of himself and the thousands of other similarly situated BMW owners. The jury awarded $4,000 in compensatory damages and $4 million in punitive damages, which the Alabama Supreme Court reduced to $2 million, yielding a 500:1 ratio.

Stevens, writing the majority opinion, concluded that grossly excessive punitive damages work a denial of substantive due process. Although the Court again declined to fix a mathematically precise rule regarding how much was too much, it ruled that, on the facts of the case, 500:1 was certainly over the line. Given that only 56 repainted BMWs had been sold in Alabama during the relevant period, the Court held, the jury's 1,000:1 award was obviously but impermissibly based oil BMW's sales of repainted cars outside the state, even though Gore had never established that such practices were unlawful anywhere outside Alabama. As Stevens explained, "It follows from ... principles of state sovereignty and comity that a state may not impose economic sanctions on violators of its laws with the intent of changing the tortfeasors' lawful conduct in other states." (29)

Equally important, the Court articulated three "guideposts" for lower courts to use in determining whether a punitive damages award is grossly excessive. First, what is the degree of "reprehensibility" of the defendant's conduct? The more dangerous, fraudulent, frequent, or malicious it is, the greater the amount of punitive damages warranted. (30) Second, what is the ratio of punitive damages to the actual and potential harm that the plaintiff and other conceivable victims suffered? (31) Third, how does the punitive damages award compare with the civil or criminal penalties that had been or could be imposed for comparable misconduct? (32)

Finally, two years ago in Cooper Indus tries, Inc. v. Leatherman Tool Group, Inc., the Court in the exercise of its supervisory powers over inferior Article III courts--held that federal appellate courts must review punitive damages awards de novo. (33) The Court stressed that whether an award is grossly excessive, and thus violates due process, is a question of law and therefore subject to plenary review (unlike questions of fact, which cannot be reviewed de novo without violating the Seventh Amendment's Reexamination Clause). (34) Exacting appellate review, the Court explained, is both necessary and compulsory, at least in federal courts, to ensure that a punitive damages award is based on an "application of law, rather than a decision-maker's caprice." (35)

State Farm v. Campbell

In 1981, Curtis Campbell was driving with his wife on a two-lane highway in rural Utah when he decided to pass six vans traveling ahead of them, causing an accident that killed the innocent driver of an oncoming car and permanently disabled the blameless driver of a third car. (36)

Although Campbell told the police and investigators from his insurer, State Farm, that he had been driving carefully and was not to blame for the accident, State Farm's investigators quickly concluded that he was fully at fault and just as quickly advised the company to initiate settlement negotiations with the accident survivors, who had sued Campbell. But State Farm refused both that recommendation and the plaintiffs' own subsequent offer to settle the case for Campbell's policy limit of $50,000. At trial, a jury found Campbell 100 percent at fault and returned a judgment of $185,849 against him.

Although State Farm had previously promised Campbell that it would cover him in the event of an excess liability judgment, it now refused to do so. Furthermore, when Campbell and his wife asked a State Farm lawyer whether they should--and how they could--arrange to pay the excess liability judgment, he cavalierly suggested that they sell their home.

Although the Campbells did not sell their home, they did essentially sell their lawsuit: They settled with the plaintiffs, who pledged not to collect their judgment from the Campbells--thereby enabling the Campbells to pursue a bad-faith action against State Farm for its failure to settle what it knew to be a losing case--in exchange for the Campbells' vow to remit 90 percent of any recovery to the plaintiffs.

The Campbells then sued State Farm for bad faith, fraud, and intentional infliction of emotional distress. At trial, in an effort to establish State Farm's motives and state of mind and to counter the company's contention that its mishandling of the Campbells' defense was merely an unintended and isolated mishap, the Campbells' counsel focused nearly as much on State Farm's overall, nationwide claims-handling policies and practices as they did on its handling of the lawsuit against Campbell.

The jury found for the Campbells, awarding them $2.6 million in compensatory damages and $145 million in punitive damages. The trial court trimmed the awards to $1 million in compensatory and $25 million in punitive damages. The Utah Supreme Court, however, reinstated the $145 million punitive damages award, concluding that "State Farm's fraudulent conduct has been a consistent way of doing business for the last 20 years, directed specifically at some of society's most vulnerable groups." (37)

What does Campbell mean for tort plaintiffs?

The key to the U.S. Supreme Court's decision to reverse the Utah high court's ruling was its rejection, as constitutionally untenable, of that court's finding regarding State Farm's "consistent way of doing business for the last 20 years" across the country.

In a 6-3 opinion written by Justice Anthony Kennedy, the Court concluded that even if State Farm's nationwide policies had been designed to reject legitimate claims and reduce justified payouts in order to boost corporate profits, as the Campbells argued, "most of [those] practices bore no relation to third-party automobile insurance claims, the type of claim underlying the Campbells' complaint." (38) The Court consequently held that the award of $145 million in punitive damages was grossly excessive and therefore violated substantive due process.

Significantly, the Court regarded its decision as anything but new or exceptional, emphasizing that "under the principles outlined in BMW, this case is neither close nor difficult." (39) Indeed, in articulating the rationale for its holding in Campbell, the Court expressly reaffirmed, applied, and elaborated on each prong of BMW's three-part test.

It reiterated that the first factor--the reprehensibility of a defendant's conduct--remains the "most important indicium of the reasonableness of a punitive damages award." (40) In doing so, the Court expanded from three to five the number of criteria that lower courts must consider in assessing reprehensibility--that is, whether

* the harm caused was physical as opposed to economic

* the tortious conduct evinced an indifference to or a reckless disregard for the health or safety of others

* the target of the conduct was financially vulnerable

* the conduct involved repeated actions or was an isolated incident

* the harm resulted from intentional malice, trickery, or deceit, or mere accident. (41)

Notably, although "the existence of any one of these [five] factors weighing in favor of a plaintiff may not be sufficient to sustain a punitive damages award; and [although] the absence of all of them renders any award suspect," (42) the converse also is true: The fact that a defendant's conduct triggers all five factors certainly should tip the scales in favor of a finding that a defendant's actions were thoroughly opprobrious. Indeed, the Court--by reiterating that the first two and most important factors in assessing reprehensibility are physical harm and health or safety, and by repeatedly stressing that Campbell did not involve personal injuries or threats to health or safety (43)--strongly suggested that lower courts should make a more generous allowance for punitive damages in tort cases that do involve injuries, deaths, or threats to public safety and health.

Applying these five criteria to State Farm's conduct, the Court concluded that the Utah Supreme Court's analysis of reprehensibility was irredeemably flawed, as the lower court had condemned State Farm for "dissimilar" and "nationwide" activities, rather than for the company's wrongful conduct toward the Campbells and any conduct toward others that "replicated" State Farm's actions toward the Campbells. (44)

The Court reaffirmed the broad principle that evidence of a defendant's "other acts" may be used both to assess the reprehensibility of the defendant's conduct and to measure the appropriate size of a punitive damages award. Because it is reasonable to "presume" that "a plaintiff has been made whole for his injuries by compensatory damages," (45) the Court has long recognized that the only sound rationale for allowing a private litigant to seek and collect punitive damages is that such damages are often the only means by which the public at large can vindicate its legitimate interest in punishing wrongdoing and in deterring future misconduct by the defendant or others. (46)

For this reason, the principle and calculus have been straightforward--the greater the danger (both actual and potential) to the largest number of people, the higher the amount of punitive damages that should be, and generally will be, sustained. (47)

Campbell does nothing to disturb this basic rule. It directs courts to evaluate whether the defendant's "tortious conduct evinced an indifference to or a reckless disregard for the health or safety of others" and whether the conduct "involved repeated actions." (48) In neither instance are fact-finders and courts admonished to narrowly consider how the conduct affected the health and safety of just the plaintiff or to myopically gauge whether the defendant had engaged in "repeated" misconduct toward the plaintiff alone. (49)

What Campbell does do is clarify what "other acts" evidence is constitutionally relevant and permissible in determining whether punitive damages should be awarded and, if, so, in what amount.

The touchstone of using "other acts" evidence is the similarity of those acts to the conduct that specifically harmed or threatened the plaintiff. On one hand, a court may not base a punitive damages award on the wholly unrelated, "tangential," or "hypothetical" claims of other parties, on a "defendant's dissimilar acts," or on a defendant's status as "an unsavory individual or business." On the other hand, however, due process does not require that "other acts be identical" to those that harmed the plaintiff "to have relevance in the calculation of punitive damages." (50)

Applying these standards to the facts in Campbell, the Court held that the "fundamental reason" the punitive damages awarded were unconstitutional was that the Utah courts "rel[ied] upon" grossly dissimilar conduct, going so far as to award punitive damages "to punish and deter conduct that bore no relation to the Campbells' harm." Thus, the Utah courts erred by punishing State Farm not only for its mistreatment of the Campbells or similarly situated insureds, but also for its mishandling of insurance claims "that had nothing to do with" the kind of "third-party lawsuit" at issue in that case. (51)

As such, the U.S. Supreme Court's decision was a narrow one: "In this case, because the Campbells have shown no conduct by State Farm similar to that which harmed them, the conduct that harmed them is the only conduct relevant to the reprehensibility analysis." (52)

In this light, whether a defendant's similar misconduct happened to occur in one or more other states and whether such similar misconduct happened to be lawful or not in some or all of those states is of secondary importance. To be sure, the Court cautioned that a "state cannot punish a defendant for conduct that may have been lawful where it occurred" (53) and may not even "have a legitimate concern in imposing punitive damages to punish a defendant for unlawful acts committed outside of the state's jurisdiction." (54) At the same time, though, the Court emphasized that even "lawful out-of-state conduct may be probative when it demonstrates the deliberateness and culpability of the defendant's action in the state where it is tortious," as long as "that conduct [has] a nexus to the specific harm suffered by the plaintiff." (55)

The second BMW guidepost to be considered in assessing the constitutionality of a punitive damages award is the ratio between the compensatory and punitive damages. Although the Court again "decline[d] ... to impose a bright-line ratio which a punitive damages award cannot exceed," (56) it also observed that "in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process." (57)

While the Court found that the 145:1 ratio between the punitive and compensatory damages awarded to the Campbells was not justified by either what it regarded as State Farm's relatively minor misconduct (58) or the comparatively modest and extremely well compensated nature of the Campbells' actual injuries, (59) it did not hold that all "disproportionately" high awards are ineluctably unconstitutional. To the contrary, the Court went out of its way to proclaim that "because there are no rigid benchmarks that a punitive damages award may not surpass, ratios greater than we have previously upheld may comport with due process" under three circumstances: where "the injury is hard to detect," "a particularly egregious act has resulted in only a small amount of economic damages," or "the monetary value of non-economic harm might have been difficult to determine." (60)

Indeed, the Court did not overrule, or even question, its decision in TXO, where it upheld a punitive damages award that was 526 times greater than the actual damages awarded by the jury. Nor did the Court give lower courts any reason to second-guess its oft-expressed views that "some wrongs are more blameworthy than others," that the punishment should reflect the "enormity of the offense," and that "aggravating" factors in a "particularly egregious" case can justify both a larger gross award and a higher ratio. (61) Tellingly, though, the Court also suggested that "the converse is also true.... When compensatory damages are substantial, then a lesser ratio, perhaps only equal to compensatory damages, can reach the outermost limit of the due process guarantee." (62)

As a result, many plaintiffs will face an increased burden to justify not only a ratio higher than 9:1 but also a ratio greater than 1:1. They can surmount this hurdle, though, by showing that the defendant's conduct implicated many of the five "reprehensibility" factors and that the compensatory damages awarded are too low to adequately deter misconduct, which remains a principal purpose of punitive damages. (63)

For example, in personal injury cases, plaintiffs should stress that the level of compensatory damages awards in such cases is often "too low in practice to accomplish proper deterrence." (64) The nation's leading "law and economics" scholars--an overwhelmingly conservative, probusiness group of academic theorists--acknowledge that this is especially true about the level of the compensatory damages awarded in wrongful death cases, which generally are calculated on the basis of the survivors' financial losses and invariably fail to compensate fully (if at all) the value of the decedent's life, a failure that therefore causes "systematic underdeterrence" of dangerous conduct. (65)

BMW's "third indicium of excessiveness" invites a comparison between "the punitive damages award and the civil or criminal penalties that could be imposed for comparable misconduct" (66) or between the award and "the civil penalties authorized or [actually] imposed in comparable cases." (67) Despite the fact that the BMW Court declared that penalties can "take the form of legislatively authorized fines or judicially imposed punitive damages" (68)--and thus permitted lower courts to uphold punitive damages awards if they were close to awards previously rendered in similar cases (69)--many post-BMW litigants and courts have focused exclusively on "legislatively authorized" penalties rather than "judicially imposed" ones.

This was true in Campbell, where both parties tried to turn BMW's comparable-legislative-sanctions concept to their advantage. On one hand, the plaintiffs contended (and the Utah Supreme Court agreed) that the jury's $145 million punitive damages award was not unconstitutional because that sum was much smaller than the other legislative penalties, both civil and criminal, that could have been imposed on State Farm, such as "the loss of [its] business license, the disgorgement of profits, and possible imprisonment" of its corporate officers. On the other hand, State Farm argued--and the Court expressly found--that "the most relevant civil sanction under Utah state law for the wrong done to the Campbells appears to be a $10,000 fine for an act of fraud." (70)

If the Campbell Court had stayed true to the BMW approach, it would have acceded to State Farm's arguments and trimmed the punitive damages award to the $10,000 pittance. The Court, however, did nothing of the sort. Instead, it essentially concluded that although State Farm's misconduct did not justify the imposition of the corporate equivalent of a death penalty--the loss of its license to do business in Utah--it did justify substantially more than a $10,000 fine. That conclusion compelled the Court to rethink its doctrine and reconsider the worth of the legislative sanctions factor in the punitive damages calculus.

Accordingly, in a notable retreat from BMW--a retreat that benefitted the plaintiffs in Campbell and could prove advantageous to those in other cases--the Court discounted the usefulness of considering comparable legislative penalties in determining the appropriate size of a punitive damages award. (71) As the Court now sees the situation, although "the existence of a criminal penalty does have bearing on the seriousness with which a state views the wrongful action," the range and size of legislative penalties have "less utility" when "used to determine the dollar amount of [a punitive damages] award." (72) Indeed, the fact that the Court's ultimate recommendation in this case--that the punitive damages that can be awarded to the Campbells on remand should be pegged "at or near the amount of compensatory damages," (73) an amount 100-200 times the maximum "relevant" legislative sanction--demonstrates that this branch of BMW's comparable-penalties guidepost has been pruned to the trunk.

In any event, the Court did "not dwell long on this guidepost," as the comparable legislative sanctions that the Utah Supreme Court had identified could not have been imposed except by relying on constitutionally illegitimate examples of State Farm's misconduct--that is, "evidence of [its] out-of-state and dissimilar conduct."

In this light, when plaintiffs try to satisfy BMW's third guidepost, they should focus on how the defendant's acts were substantially similar to misconduct that had triggered civil fines or criminal sanctions in the past, or could do so in the future. Alternatively, because judicially imposed punitive damages also provide "fair notice ... of the severity of the penalty that a state may impose," plaintiffs can invite comparisons to cases in the state in which "large," "disproportionate" punitive damages had been awarded. (74)

Although defendants and tort "reform" groups will keep trying to depict Campbell as an innovative and watershed decision, it is nothing of the sort. Still, because Campbell elaborated on certain aspects of the first BMW guidepost, clarified key features of the second, and refined one facet of the third, plaintiff lawyers need to study this decision with care and follow its dictates with circumspection.

In the final analysis, however, there is little reason for plaintiff lawyers to become disheartened--and no reason why they should allow the courts, the media, and the public to be misled--about the meaning and import of Campbell. Defendants and tort "reformers" may hope and even believe that Campbell, Romo, and Smith show that "punitive damages [are] now dead," (75) but their wishes and conjectures do not make it so.


(1.) 123 S. Ct. 1513 (2003).

(2.) 123 S. Ct. 2072 (mem.) (2003).

(3.) 123 S. Ct. 2072 (mem.) (2003).

(4.) Press Release, National Association of Manufacturers, NAM Hails High Court's Ruling Against "Excessive" Punitive Damages Awards (Apr. 7, 2003), available at CategoryID=611&DocumentID=26236.

(5.) Press Release, U.S. Chamber of Commerce, Supreme Court Limits Size & Appropriateness of Punitive Damage Awards; $145 Million Utah Ruling Held Unconstitutional (Apr. 7, 2003), available at htm.

(6.) Press Release, American Insurance Association, U.S. Supreme Court Remands, Instructs Lower Courts to Use New Punitive Damages Standards in Personal Injury Cases (May 20, 2003), available at www. PA_9968_9690.htm&root=\\webdb1.

(7.) Press Release, American Tort Reform Association, U.S. Supreme Court Action Confirms Last Month's Opinion on Punitive Damages Applies to Product Liability Cases (May 19, 2003), available at

(8.) 517 U.S. 559 (1996).

(9.) Campbell, 123 S.Ct. 1513, 1521 (emphasis added).

(10.) Lawrence v. Chater, 516 U.S. 163, 168, 170 (1996). A "GVR" is not a final determination on the merits, "but only a conclusion that an intervening decision is sufficiently analogous to make reexamination of file case appropriate." Florida v. Burr, 496 U.S. 914, 918 (1990) (Stevens, J., dissenting to a GVR); accord Bd. of Trs. of Keene State Coll. v. Sweeney, 439 U.S. 24, 26 (1978) (Stevens, J., joined by three other justices, dissenting to a GVR).

(11.) Although the earliest common law cases to explicitly discuss punitive damages are Wilkes v. Wood, 98 Eng. Rep. 489 (C.P. 1763), and Huckle v. Money, 95 Eng. Rep. 768 (K.B. 1763), the equivalents of such damages we re available under ancient Babylonian, Egyptian, Greek, Hittite, Hebrew, Hindu, and Roman codes. See Thomas B. Colby, Beyond the Multiple Punishment Problem: Punitive Damages as Punishment for Individual, Private Wrongs, 87 MINN. L. REV. 583, 614-43 (2003).

(12.) Alexander Murray v. The Charming Betsy, 6 U.S. (2 Cranch) 64 (1804) (per Marshall, C.J.).

(13.) The Court assessed the propriety of punitive damages in The Charming Betsy and other early cases solely in the exercise of its original jurisdiction over admiralty eases, not in the context of constitutional challenges to such awards.

(14.) See Kenneth J. Chesebro, Galileo's Retort: Peter Huber's Junk Scholarship, 42 AM. U. L. REV. 1637, 1705-22 (1993) (detailing the origins, scope, methods, and effectiveness of this and similar tort "reform" campaigns.)

(15.) Empirical studies of jury awards in actual cases have consistently found that punitive damages are infrequently awarded and are especially rare in medical malpractice and products liability suits. See Bureau of Justice Statistics, Civil Justice ,Survey of State Courts, 1996: Tart Dials and Verdicts in Large Counties (1996), BJS BULL., Aug. 2000, at 1; STEPHEN DANIELS & JOANNE MARTIN, CIVIL JURIES AND THE POLITICS OF REFORM 214 (Am. Bar Found. 1995); E. MOLLER, TRENDS IN CIVIL JURY VERDICTS SINCE 1985 33 (RAND 1996); W. LANDES & R. POSNER, THE ECONOMIC STRUCTURE OF TORT LAW 304-07 (1987); T. Eisenberg et al., The Predictability of Punitive Damages, 26 J. LEGAL STUD. 623, 633-37 (1997); Nell Vidmar et al., Punitive Damages by Juries, 38 HARV. J. LEGIS. 487, 487 (2001).

(16.) 486 U.S. 71 (1988).

(17.) 492 U.S. 257 (1989).

(18.) 499 U.S. 1 (1991).

(19.) Id. at 23-24.

(20.) Id. at 61 (O'Connor, J., dissenting).

(21.) Id. at 49.

(22.) 509 U.S. 443 (1993).

(23.) See id. at 459.

(24.) See id. at 456-57.

(25.) Id. at 462.

(26.) 512 U.S. 415 (1994).

(27.) See id. at 430-32.

(28.) Campbell, 123 S. Ct. 1513, 1520 (emphasis added).

(29.) BMW, 517 U.S. 559, 572 (emphasis added).

(30.) Id. at 575.

(31.) Id. at 580.

(32.) Id. at 574-75, 583.

(33.) 532 U.S. 424 (2001).

(34.) Id. at 432-40. Although several state courts have assumed that Cooper applies to the states, that proposition is dubious. See Robert S. Peck, Recent Developments in Appellate Advocacy, 37 TORT & INS. L.J. 281, 289-93 (2002).

(35.) Cooper, 532 U.S. 424, 436.

(36.) Campbell, 123 S. Ct. 1513, 1517.

(37.) Campbell v. State Farm Mut. Auto. Ins. Co., 65 P.3d 1134, 1154 (Utah 2001).

(38.) Campbell, 123 S. Ct. 1513, 1519.

(39.) Id. at 1521.

(40.) Id.

(41.) Id. BMW had mentioned the first, second, and fifth of these five factors. See 517 U.S. 559, 576.

(42.) Campbell, 123 S. Ct. 1513, 1521.

(43.) Id. See also BMW, 517 U.S. 559, 576.

(44.) Campbell, 123 S. Ct. 1513, 1522-23.

(45.) Id. at 1521.

(46.) BMW, 517 U.S. 559, 568, citing TXO, 509 U.S. 443, 456, and Haslip, 499 U.S. 1, 21-22. See EEOC v. Waffle House, Inc., 534 U.S. 279, 294-95 (2002); Newport v. Fact Concerts, Inc., 453 U.S. 247, 266-70 (1981).

(47.) See TXO, 509 U.S. 443, 460.

(48.) 123 S. Ct 1513, 1521 (emphasis added).

(49.) See id. at 1523.

(50.) Id.

(51.) Id. (emphasis added). See id. at 1519.

(52.) Id. at 1524.

(53.) Id. at 1522, citing BMW, 517 U.S. 559, 572.

(54.) Id. (emphasis added).

(55.) Id. Indeed, as the Court noted in TXO, a defendant's "wrongdoing in other parts of the country" is a factor "typically considered in assessing punitive damages." 509 U.S. 443, 462 n.8. See also Brief Amicus Curiae filed in Campbell by the Attorneys General of Minnesota and 11 other states, 2002 WL 31409928, at *3, *4 (Oct. 18, 2002) ("States routinely use out-of-state conduct in the determination of criminal sentences" and in many "regulatory matters.").

(56.) Id. at 1524.

(57.) Id. (emphasis added).

(58.) Id. at 1521, 1528-29.

(59.) In the Court's view, not only did the Campbells receive "substantial" and "complete" compensatory damages for their "minor" nonphysical injuries, but the punitive damages they received also amounted to a double payment for their unusual emotional injuries because "the compensatory damages for the injury suffered here" included "a component which was duplicated in the punitive award." Id. at 1513, 1524-25.

(60.) Id. at 1524, quoting BMW, 517 U.S. 559, 582 (emphasis added).

(61.) BMW, 517 U.8. 559, 575-76, 582.

(62.) Campbell, 123 S. Ct. 1513, 1524 (emphasis added).

(63.) Id. at 1516, citing BMW, 517 U.S. 559, 575. See also Cooper, 532 U.S. 424, 432, and Gertz v. Robert Welch, Inc., 418 U.S. 323, 350 (1974).

(64.) A. Mitchell Polinsky & Steven Shaven, Punitive Damages: An Economic Analysis, 111 HARV. L. REV. 869, 941-42 (1998).

(65.) Id. at 941-42 & n.229. "The limitation of damages to survivors' pecuniary loss ... results in a systematic underestimation of damages." WILLIAM LANDES & RICHARD POSNER, THE ECONOMIC STRUCTURE OF TORT LAW 1987 (1987). See also David Haddock et al., An Ordinary Economic" Rationale for Extraordinary legal Sanctions, 78 CAL. L. REV. 1, 4 & n.10 (1990).

(66.) 517 U.S. 559, 583.

(67.) Id. at 574-75.

(68.) Id. at 572 (emphasis added).

(69.) See, e.g., Cooper v. Casey, 97 F.3d 914, 920 (7th Cir. 1996).

(70.) Campbell, 123 S. Ct. 1513, 1526.

(71.) Id.

(72.) Id.

(73.) Id.

(74.) Id. at 1520, quoting BMW, 517 U.S. 559, 574.

(75.) Press Release, supra note 7.

Ned Miltenberg is senior counsel to the Center for Constitutional Litigation (CCL) in Washington, D.C. He served as U.S. Supreme Court counsel for the plaintiffs in Ford Motor Co. v. Smith and continues to serve as appellate counsel on that cases remand to the Kentucky Supreme Court. Mr. Miltenberg and his CCL colleagues also are serving as U.S. Supreme Court counsel in opposing the defendant's pending petition for certiorari in Philip Morris, Inc. v. Williams, another punitive damages case. Erwin Chemerinsky is the Sydney M. Irmas Professor of Public Interest Law, Legal Ethics, and Political Science at the University of Southern California in Los Angeles. He served as U.S. Supreme Court counsel in Ford Motor Co. v. Romo.
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Author:Chemerinsky, Erwin
Date:Aug 1, 2003
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