BMW of North America, Inc. v. Gore

Brief Fact Summary.

Defendant sold plaintiff a ‘new’ car without disclosing that it had been damaged and repainted.

Synopsis of Rule of Law.

There is a non-binding three-part test to determine if punitive damages are excessive:

1. The reprehensibility of the defendant’s actions.
2. The ratio of compensatory damages to punitive damages.
3. The difference (if any) between the punitive damages and alternative civil or criminal remedies.

Facts.

Plaintiff purchased a supposedly brand new car made by the defendant.  About nine months later, he had the car professionally detailed, and the detailing company advised him that the car had been repainted at some point.  Plaintiff sued the defendant, who admitted that the car had indeed been damaged by acid rain and repainted, but that they had a policy of not disclosing such damages if the repair was less than 3 percent of the purchase price.  The jury found for the plaintiff, and awarded compensatory damages of $4,000 and punitive damages of $4,000,000.  Defendant appeals the punitive damages as excessive.

Issue.

Were the punitive damages awarded excessive?

Held.

Yes, the punitive damages were excessive.

Dissent.

Justice Scalia, J. (joined by Thomas, J.)

The justices dissent from the opinion of the majority on the grounds that the three-part test they offer is unhelpful and entirely subjective.

Justice Ginsburg, J (joined by Rehnquist, J.)

The justices dissent from the opinion of the majority on the grounds that it is inappropriate to constrain a jury’s ability to award the amount of punitive damages they see fit.

Concurrence.

Justice Breyer, J. (joined by O’Connor and Souter, JJ.)

The justices concur with the majorities’ opinion, but wishes to emphasize that jurors cannot be expected to reasonably determine the appropriate level of punitive damages without a clear set of standards by which to gauge the behavior in question.

Discussion.

The court found in favor of the defendant and ruled that the punitive damages were excessive.  The court articulated a non-binding three-part test to determine if punitive damages are excessive:

1. The reprehensibility of the defendant’s actions.
2. The ratio of compensatory damages to punitive damages.
3. The difference (if any) between the punitive damages and alternative civil or criminal remedies.

Under the facts of this case, the court was not persuaded that such a large amount of punitive damages were warranted for such a small amount of compensatory damages.  Additionally, the court was not fully convinced that the defendant was acting particularly reprehensibly, as they only did not disclose comparatively small damages to the cars, but did disclose large damages.