BMW v. Gore

In BMW v. Gore, 517 U.S. 559, 568, 116 S. Ct. 1589, 134 L. Ed. 2d 809 (1996) plaintiff paid more than $ 40,000 for a "new" car, but later discovered that BMW had repainted the car, presumably due to acid rain damage which occurred during shipping. The plaintiff sued on behalf of himself and all other similarly situated BMW owners. Id., 116 S. Ct. at 1593. The jury awarded the plaintiff $ 4,000 in compensatory damages and $ 4 million in punitive damages. Id. at 565, 116 S. Ct. at 1593-1593-94. The Alabama Supreme Court reduced the punitive damages to $ 2 million. Id. at 567, 116 S. Ct. at 1595. On appeal to the United States Supreme Court, the Court held that under the facts of the case, the award of $ 2 million in punitive damages, which constitutes a 500 to 1 ratio (punitive damages to compensatory damages), was a violation of substantive due process. "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." Id. at 575, 116 S. Ct. at 1598. The Gore Court declined to fix a bright line mathematical rule, but articulated three guideposts for trial courts to use in determining whether a punitive damages award is "grossly excessive" and thus violative of due process: (1) the degree of reprehensibility of the defendant's misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases. Id. at 575, 116 S. Ct. at 1598-99.