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State Farm Mutual Automobile Insurance Co. v. Campbell

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Featuring Black's Law Dictionary 2nd Ed.
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Civil Procedure Keyed to Yeazell

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Bloomberg Law

Citation. 538 U.S. 408, 123 S. Ct. 1513, 155 L. Ed. 2d 585, 2003 U.S. 2713

Brief Fact Summary. Defendant Curtis Campbell sued his insurance carrier, Plaintiff State Farm Mutual Automobile Insurance Co. after Plaintiff refused to settle a suit against Curtis, resulting in a jury returning a verdict against Defendant for $185,849 more than the original parties suing Defendant were willing to settle for.
Synopsis of Rule of Law. The Due Process Clause of the Fourteenth Amendment prohibits the imposition of grossly excessive or arbitrary punishments on a tortfeasor; the reason is that elementary notions of fairness enshrined in constitutional jurisprudence dictate that a person receive fair notice not only of the conduct that will subject him to punishment, but also of the severity of the penalty that a state may impose.

Facts. In 1981, Defendant was driving with his wife, Inez Preece Campbell, in Cache County, Utah. He decided to pass six vans traveling ahead of them on a two-lane highway. Todd Ospital was driving a small car approaching from the opposite direction. To avoid a head-on collision with Defendant, who by then was driving on the wrong side of the highway and toward oncoming traffic, Ospital swerved onto the shoulder, lost control of his automobile, and collided with a vehicle driven by Robert G. Slusher. Ospital was killed, and Slusher was rendered permanently disabled. The Campbells escaped unscathed. In the ensuing wrongful death and tort action, Defendant insisted he was not at fault. Early investigations did support differing conclusions as to who caused the accident, but “a consensus was reached early on by the investigators and witnesses that Mr. Campbell’s unsafe pass had indeed caused the crash.” Defendant’s insurance company, Plaintiff insurance agency, nonetheless decided to contest liability and declined offers by Slusher and Ospital’s estate (Ospital) to settle the claims for the policy limit of $50,000 ($25,000 per claimant). Instead, a jury determined that Defendant was 100 percent at fault, and a judgment was returned for $185,849, far more than the amount offered in settlement. During the pendency of the appeal, in late 1984, Slusher, Ospital, and the Defendant reached an agreement whereby Slusher and Ospital agreed not to seek satisfaction of their claims against the Defendant. In exchange the Defendant agreed to pursue a bad faith action against Plaintiff and to be represented by Slusher’s and Ospital’s attorneys. In 1989, the Utah Supreme Court denied Defendant’s appeal in the wrongful death and tort actions. The Defendant then filed a complaint against Plaintiff alleging bad faith, fraud, and intentional infliction of emotional distress. The jury awarded the Defendant $2.6 million in compensatory damages and $145 million in punitive damages, which the trial court reduced to $1 million and $25 million respectively. Both parties appealed.

Issue. Whether a an award of $145 million in punitive damages, where full compensatory damages are $1 million, is excessive and in violation of the Due Process Clause of the Fourteenth Amendment to the United States Constitution

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