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Rose v. Brown & Williamson Tobacco Corp.9/29/2005
authorized or imposed in comparable cases.
(Id. at 575.) In applying these guideposts to the facts in the case, the Court held that the award violated due process. As to the first guidepost, the Court found that BMW's policy concerning disclosure of pre-sale repairs to its automobiles, which complied with the strictest state statute governing such disclosures, was not of such a reprehensible nature as to warrant the $2 million award. (Id. at 578, 580.) As for the second guidepost, the court noted that the punitive-to-compensatory damages award ratio was 500-to-1 and there was no showing that the potential harm to plaintiff was any greater than plaintiff's actual harm. (Id. at 582.) For the third guidepost, the Court found that the punitive damages award was well in excess of statutory fines imposed by states for similar conduct, which ranged from $50 to $10,000. (Id. at 584.) Since the $2 million dollar punitive damage award in this case went well astray from each guidepost, the Court concluded that it was overly excessive and thus violated due process. (Id. at 585.) After finding the award unconstitutional, the court did express concern that a corporate defendant's wealth could be used to justify a punitive damages award, but only to the extent that it would be used to justify an otherwise unconstitutional award. (Id.)
In Cooper Industries, the Supreme Court held that the Court of Appeals should apply a de novo standard in reviewing district court determinations on the constitutionality of punitive damage awards. (Cooper Industries, 532 US at 426.) The Court reiterated the Gore guideposts as the relevant factors the circuit courts should consider in their review. (Id. at 439.) The defendant corporation's wealth was not an issue in the Court's decision.
In State Farm, the Court once again applied the guideposts it set down in Gore to vacate a $145 million punitive damage award against a corporate defendant. (State Farm, 538 US at 429.) The injury in question was emotional distress caused by the defendant insurer's unwillingness to settle an automobile accident claim. The jury awarded plaintiffs $1 million in compensatory damages for their injuries. In its determination, the Supreme Court found that the award ran afoul of each of the Gore guideposts. With regard to the first guidepost, the Court found that, while defendant's conduct towards the plaintiffs was not worthy of praise, it was not so reprehensible as to warrant the $145 million award. (Id. at 419-420.) The Court also noted that most of the evidence introduced concerned defendant's nationwide practices and policies, and had little relation to the tortious conduct directed toward defendants. (Id. at 420-425.) With regard to the second guidepost, the court found that there is a presumption against a 145-to-1 punitive- to- actual damages ratio. (Id. at 426.) It further noted that compensatory damages in emotional distress cases frequently include punitive elements already, so that the punitive-to-actual ratio may be even higher. (Id.) As to the third guidepost, the Court found that the only relevant state civil sanction was a $10,000 fine for the act of fraud. (Id. at 428.) In its analysis, the Court noted that " he wealth of a defendant cannot justify an otherwise unconstitutional punitive damages award." (Id. at 427 [emphasis added].)
Contrary to defendants' arguments, nothing in these cases forecloses consideration of a defendant's wealth in assigning a punitive damages award. As the Court noted in Gore, a state has a legitimate interest in imposing punitive damages on conduct within certain guidelines. Accordingly, juries considering state common law tort actions should be free to consider relevant and material
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