High court rules "grossly excessive" punitive damages unconstitutional

WASHINGTON, D.C.–The U.S. Supreme Court set federal constitutional limits on state punitive damages awards in a 5-4 decision announced in late May. The Court held that the due process clause of the 14th Amendment prohibits a state from imposing “grossly excessive” punishment in relation to the state’s legitimate interests in punishing unlawful conduct and deterring its repetition.

The Court reversed the Alabama Supreme Court’s decision allowing a $2 million punitive damages award to a plaintiff who sued BMW for not disclosing that it had repainted the car that was sold to him. A jury had awarded Ira Gore $4 million. The high court’s decision marked the first time that the Court has found a state punitive damage award to be unconstitutionally excessive.

Justice John Paul Stevens, writing for the majority, articulated three considerations to determine whether a punitive damage award violates the Due Process clause: the degree of reprehensibility of the defendant’s conduct, the ratio between compensatory and punitive damages, and the difference between the punitive damage award and civil penalties imposed in comparable cases.

A group of news media organizations, including the Reporters Committee for Freedom of the Press, filed an amicus brief with the Court to express special concerns regarding punitive damage awards arising in libel cases. The media groups argued that the Court should either apply a heightened due process standard when press freedoms are at stake, or should instruct lower courts that the Court’s general due process guidelines are not intended to apply when First Amendment issues are involved.

Neither the majority nor the two dissenting opinions addressed the issues raised in the amicus brief.

Justice Antonin Scalia, in a dissenting opinion joined by Justice Clarence Thomas, criticized the majority for “an unjustified incursion into the province of state governments.” Similarly, Justice Ruth Bader Ginsburg, in a dissenting opinion joined by Chief Justice William Rehnquist, stated that punitive damage awards are a “territory traditionally within the state’s domain” and called the majority’s analysis a “raised eyebrow test.” (BMW of North America, Inc. v. Gore; Media Counsel: P. Cameron DeVore, Seattle)