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BMW of North America v. Gore

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Brief Fact Summary.

Gore sued BMW for failure to disclose that the car had been repainted as a failure to disclose a material fact. The jury awarded damages of $4 million, and the Alabama Supreme Court adjusted it to $2 million.

Synopsis of Rule of Law.

The grossly excessive inquiry asks 1) what is the state’s interest in deterring this tortious behavior? and 2) is there a less excessive damage that could still serve the state’s interest?

Points of Law - Legal Principles in this Case for Law Students.

Elementary notions of fairness enshrined in our 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.

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Facts.

Gore purchased a BMW for roughly $40,000 from an authorized BMW dealership. After taking it to a detailer, he found out that the car had been repainted prior to his purchase of the car. Gore sued BMW for failure to disclose that the car had been repainted as a failure to disclose a material fact. BMW adopted a nationwide policy of nondisclosure regarding cars that were damaged in transit or manufacturing if the cost of repair did not exceed 3% of the car’s retail price. Repainting Gore’s car cost 1.5% of the cost of the car.

A jury found for Gore and awarded him over $4 million. BMW appealed to the Alabama Court of Appeals and Supreme Court. They upheld the verdict but adjusted the damages to $2 million. BMW appealed the award as grossly excessive.

Issue.

Does the damage award in this case violate the Fourteenth Amendment‘s prohibition on grossly excessive punishment on a tortfeasor?

Held.

Yes, the award in this case is grossly excessive and therefore unconstitutional.

Dissent.

Justice Scalia (with Thomas)

Policing damages is not actually a Constitutional issue. Fourteenth Amendment Due Process is not about an unfair or unreasonable result; it is about the procedures that get you to that result.

Discussion.

Punitive damages are useful deterrent tools. When damage award enters the “grossly disproportionate” category, they enter the zone of arbitrariness that can violate the Due Process Clause of the Fourteenth Amendment. To evaluate proportionality, a court needs to determine the state’s interest in punishing the tortfeasor. Then, a court needs to ask whether it is necessary to deter future misconduct or if a lesser deterrent would also work. A court should also evaluate the degree of reprehensibility, the ratio of harm to damages, and sanctions for comparable misconduct.

In this case, a less excessive award would protect the interest of Alabama consumers. Therefore, the award is unconstitutionally excessive.


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