|BMW of North America, Inc. v. Gore (94-896), 517 U.S. 559 (1996). |
[ Scalia ]
[ Ginsburg ]
[ Stevens ]
[ Breyer ]
BMW OF NORTH AMERICA, INC., PETITIONER v. IRA
on writ of certiorari to the supreme court of alabama
The respect due the Alabama Supreme Court requires that we strip from this case a false issue: no impermissible "extraterritoriality" infects the judgment before us; the excessiveness of the award is the sole issue genuinely presented. The Court ultimately so recognizes, see ante, at 12-13, but further clarification is in order.
Dr. Gore's experience was not unprecedented among customers who bought BMW vehicles sold as flawless and brand new. In addition to his own encounter, Gore showed, through paint repair orders introduced at trial,
that on 983 other occasions since 1983, BMW had shipped new vehicles to dealers without disclosing paint repairs costing at least $300, Tr. 585-586; at least 14 of the repainted vehicles, the evidence also showed, were sold as new and undamaged to consumers in Alabama. 646 So. 2d 619, 623 (Ala. 1994). Sales nationwide, Alabama's Supreme Court said, were admissible "as to the issue of a `pattern and practice' of such acts." Id., at 627. There was "no error," the court reiterated, "in the admission of the evidence that showed how pervasive the nondisclosure policy was and the intent behind BMW NA's adoption of it." Id., at 628. That determination comports with this Court's expositions. See TXO Production Corp. v. Alliance Resources Corp., 509 U.S. 443, 462, and n. 28 (1993) (characterizing as "well settled" the admissibility of "evidence of [defendant's] alleged wrongdoing in other parts of the country" and of defendant's "wealth"); see also Brief for Petitioner 22 (recognizing that similar acts, out of state, traditionally have been considered relevant "for the limited purpose of determining that the conduct before the [c]ourt was reprehensible because it was part of a pattern rather than an isolated incident").
Alabama's highest court next declared that the
"jury could not use the number of similar acts that a defendant has committed in other jurisdictions as a multiplier when determining the dollar amount of a punitive damages award. Such evidence may not be considered in setting the size of the civil penalty, because neither the jury nor the trial court had evidence before it showing in which states the conduct was wrongful." 646 So. 2d, at 627 (emphasis in original) (footnote omitted).
Because the Alabama Supreme Court provided this clear statement of the State's law, the multiplier problem encountered in Gore's case is not likely to occur again. Now, as a matter of Alabama law, it is plainly impermissible to assess punitive damages by multiplication based on out of state events not shown to be unlawful. See, e.g., Independent Life and Accident Ins. Co. v. Harrington, 658 So. 2d 892, 902-903 (Ala. 1994) (under BMW v. Gore, trial court erred in relying on defendant insurance company's out of state insurance policies in determining harm caused by defendant's unlawful actions).
No Alabama authority, it bears emphasis- no statute, judicial decision, or trial judge instruction--ever countenanced the jury's multiplication of the $4,000 diminution in value estimated for each refinished car by the number of such cars (approximately 1,000) shown to have been sold nationwide. The sole prompt to the jury to use nationwide sales as a multiplier came from Gore's lawyer during summation. App. 31, Tr. 812-813. Notably, counsel for BMW failed to object to Gore's multiplication suggestion, even though BMW's counsel interrupted to make unrelated objections four other times during Gore's closing statement. Tr. 810-811, 854-855, 858, 870-871. Nor did BMW's counsel request a charge instructing the jury not to consider out of state sales in calculating the punitive damages award. See Record 513-529 (listing all charges requested by counsel).
Following the verdict, BMW's counsel challenged the admission of the paint repair orders, but not, alternately, the jury's apparent use of the orders in a multiplication exercise. Curiously, during postverdict argument, BMW's counsel urged that if the repair orders were indeed admissible, then Gore would have a "full right" to suggest a multiplier based disgorgement. Tr. 932.
In brief, Gore's case is idiosyncratic. The jury's improper multiplication, tardily featured by petitioner, is unlikely to recur in Alabama and does not call for error correction by this Court.
Because the jury apparently (and erroneously) had used acts in other states as a multiplier to arrive at a $4 million sum for punitive damages, the Alabama Supreme Court itself determined "'the maximum amount that a properly functioning jury could have awarded.'" 646 So. 2d, at 630 (Houston, J., concurring specially) (quoting Big B, Inc. v. Cottingham, 634 So. 2d 999, 1006 (Ala. 1993)). The per curiam opinion emphasized that in arriving at $2 million as "the amount of punitive damages to be awarded in this case, [the court did] not consider those acts that occurred in other jurisdictions." 646 So. 2d, at 628 (emphasis in original). As this Court recognizes, the Alabama high court "properly eschewed reliance on BMW's out of state conduct and based its remitted award solely on conduct that occurred within Alabama." Ante, at 13 (citation omitted). In sum, the Alabama Supreme Court left standing the jury's decision that the facts warranted an award of punitive damages-- a determination not contested in this Court--and the state court concluded that, considering only acts in Alabama, $2 million was "a constitutionally reasonable punitive damages award." 646 So. 2d, at 629.
Alabama's Supreme Court reports that it "thoroughly and painstakingly" reviewed the jury's award, ibid., according to principles set out in its own pathmarking decisions and in this Court's opinions in TXO and Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 21 (1991). 646 So. 2d, at 621. The Alabama court said it gave weight to several factors, including BMW's deliberate ("reprehensible") presentation of refinished cars as new and undamaged, without disclosing that the value of those cars had been reduced by an estimated 10%, [n.1] the financial position of the defendant, and the costs of litigation. Id., at 625-626. These standards, we previously held, "impos[e] a sufficiently definite and meaningful constraint on the discretion of Alabama factfinders in awarding punitive damages." Haslip, 499 U. S., at 22; see also TXO, 509 U. S., at 462, n. 28. Alabama's highest court could have displayed its labor pains more visibly, [n.2] but its judgment is nonetheless entitled to a presumption of legitimacy. See Rowan v. Runnels, 5 How. 134, 139 (1847) ("[T]his court will always feel itself bound to respect the decisions of the State courts, and from the time they are made will regard them as conclusive in all cases upon the construction of their own constitution and laws.").
We accept, of course, that Alabama's Supreme Court applied the State's own law correctly. Under that law, the State's objectives--"punishment and deterrence"--guide punitive damages awards. See Birmingham v. Benson, 631 So. 2d 902, 904 (Ala. 1994). Nor should we be quick to find a constitutional infirmity when the highest state court endeavored a corrective for one counsel's slip and the other's oversight--counsel for plaintiff's excess in summation, unobjected to by counsel for defendant, see supra, at 3--and when the state court did so intending to follow the process approved in our Haslip and TXO decisions.
The Court finds Alabama's $2 million award not simply excessive, but grossly so, and therefore unconstitutional. The decision leads us further into territory traditionally within the States' domain, [n.3] and commits the Court, now and again, to correct "misapplication of a properly stated rule of law." But cf. S. Ct. Rule 10 ("A petition for a writ of certiorari is rarely granted when the asserted error consists of erroneous factual findings or the misapplication of a properly stated rule of law."). [n.4] The Court is not well equipped for this mission. Tellingly, the Court repeats that it brings to the task no "mathematical formula," ante, at 22, no "categorical approach," ante, at 23, no "bright line," ante, at 26. It has only a vague concept of substantive due process, a "raised eyebrow" test, see ante, at 23, as its ultimate guide. [n.5]
In contrast to habeas corpus review under 28 U.S.C. § 2254 the Court will work at this business alone. It will not be aided by the federal district courts and courts of appeals. It will be the only federal court policing the area. The Court's readiness to superintend state court punitive damages awards is all the more puzzling in view of the Court's longstanding reluctance to countenance review, even by courts of appeals, of the size of verdicts returned by juries in federal district court proceedings. See generally 11 C. Wright, A. Miller, & M. Kane, Federal Practice and Procedure §2820 (2d ed. 1995). And the reexamination prominent in state courts [n.6] and in legislative arenas, see Appendix, infra, at 9, serves to underscore why the Court's enterprise is undue.
For the reasons stated, I dissent from this Court's disturbance of the judgment the Alabama Supreme Court has made.
APPENDIX TO DISSENTING OPINION OF
State Legislative Activity Regarding
State legislatures have in the hopper or have enacted a variety of measures to curtail awards of punitive damages. At least one state legislature has prohibited punitive damages altogether, unless explicitly provided by statute. See N. H. Rev. Stat. Ann. §507:16 (1994). We set out in this appendix some of the several controls enacted or under consideration in the States. The measures surveyed are: (1) caps on awards; (2) provisions for payment of sums to state agencies rather than to plaintiffs; and (3) mandatory bifurcated trials with separate proceedings for punitive damages determinations.
I. Caps on Punitive Damages Awards" Colorado--Colo. Rev. Stat. §§13-21-102(1)(a) and (3) (1987) (as a main rule, caps punitive damages at amount of actual damages).
" Connecticut--Conn. Gen. Stat. §52-240b (1995) (caps punitive damages at twice compensatory damages in products liability cases).
" Delaware--H. R. 237, 138th Gen. Ass. (introduced May 17, 1995) (would cap punitive damages at greater of three times compensatory damages, or $250,000).
" Florida--Fla. Stat. §§768.73(1)(a) and (b) (Supp. 1992) (in general, caps punitive damages at three times compensatory damages).
" Georgia--Ga. Code Ann. §51-12-5.1 (Supp. 1995) (caps punitive damages at $250,000 in some tort actions; prohibits multiple awards stemming from the same predicate conduct in products liability actions).
" Illinois--H. 20, 89th Gen. Ass. 1995-1996 Reg. Sess. (enacted Mar. 9, 1995) (caps punitive damages at three times economic damages).
" Indiana--H. 1741, 109th Reg. Sess. (enacted Apr. 26, 1995) (caps punitive damages at greater of three times compensatory damages, or $50,000).
" Kansas--Kan. Stat. Ann. §§60-3701(e) and (f) (1994) (in general, caps punitive damages at lesser of defendant's annual gross income, or $5 million).
" Maryland--S. 187, 1995 Leg. Sess. (introduced Jan. 27, 1995) (in general, would cap punitive damages at four times compensatory damages).
" Minnesota--S. 489, 79th Leg. Sess., 1995 Reg. Sess. (introduced Feb. 16, 1995) (would require reasonable relationship between compensatory and punitive damages).
" Nevada--Nev. Rev. Stat. §42.005(1) (1993) (caps punitive damages at three times compensatory damages if compensatory damages equal $100,000 or more, and at $300,000 if the compensatory damages are less than $100,000).
" New Jersey--S. 1496, 206th Leg., 2d Ann. Sess. (1995) (caps punitive damages at greater of five times compensatory damages, or $350,000, in certain tort cases).
" North Dakota--N. D. Cent. Code §32-03.2-11(4) (Supp. 1995) (caps punitive damages at greater of two times compensatory damages, or $250,000).
" Oklahoma--Okla Stat., Tit. 23, §§9.1(B)-(D) (Supp. 1996) (caps punitive damages at greater of $100,000, or actual damages, if jury finds defendant guilty of reckless disregard; and at greatest of $500,000, twice actual damages, or the benefit accruing to defendant from the injury causing conduct, if jury finds that defendant has acted intentionally and maliciously).
" Texas--S. 25, 74th Reg. Sess. (enacted Apr. 20, 1995) (caps punitive damages at twice economic damages, plus up to $750,000 additional noneconomic damages).
" Virginia--Va. Code Ann. §8.01-38.1 (1992) (caps punitive damages at $350,000).
II. Allocation of Punitive Damages
to State Agencies" Arizona--H. R. 2279, 42d Leg., 1st Reg. Sess. (introduced Jan. 12, 1995) (would allocate punitive damages to a victims' assistance fund, in specified circumstances).
" Florida--Fla. Stat. §§768.73(2)(a)-(b) (Supp. 1992) (allocates 35% of punitive damages to General Revenue Fund or Public Medical Assistance Trust Fund); see Gordon v. State, 585 So. 2d 1033, 1035-1038 (Fla. App. 1991), aff'd, 608 So. 2d 800 (Fla. 1992) (upholding provision against due process challenge).
" Georgia--Ga. Code Ann. §51-12-5.1(e)(2) (Supp. 1995) (allocates 75% of punitive damages, less a proportionate part of litigation costs, including counsel fees, to state treasury); see Mack Trucks, Inc. v. Conkle, 263 Ga. 539, 540-543, 436 S. E. 2d 635, 637-639 (Ga. 1993) (upholding provision against constitutional challenge).
" Illinois--Ill. Comp. Stat. ch. 735, §5/2-1207 (1994) (permits court to apportion punitive damages among plaintiff, plaintiff's attorney, and Illinois Department of Rehabilitation Services).
" Indiana--H. 1741, 109th Reg. Sess. (enacted Apr. 26, 1995) (subject to statutory exceptions, allocates 75% of punitive damages to a compensation fund for violent crime victims).
" Iowa--Iowa Code §668A.1(2)(b) (1987) (in described circumstances, allocates 75% of punitive damages, after payment of costs and counsel fees, to a civil reparations trust fund); see Shepherd Components, Inc. v. Brice Petrides Donohue & Assoc., Inc., 473 N. W. 2d 612, 619 (Iowa 1991) (upholding provision against constitutional challenge).
" Kansas--Kan. Stat. Ann. §60-3402(e) (1994) (allocates 50% of punitive damages in medical malpractice cases to state treasury).
" Missouri--Mo. Rev. Stat. §537.675 (1994) (allocates 50% of punitive damages, after payment of expenses and counsel fees, to Tort Victims' Compensation Fund).
" Montana--H. 71, 54th Leg. Sess. (introduced Jan. 2, 1995) (would allocate 48% of punitive damages to state university system and 12% to school for the deaf and blind).
" New Jersey--S. 291, 206th Leg., 1994-1995 1st Reg. Sess. (introduced Jan. 18, 1994); A. 148, 206th Leg., 1994-1995 1st Reg. Sess. (introduced Jan. 11, 1994) (would allocate 75% of punitive damages to New Jersey Health Care Trust Fund).
" New Mexico--H. 1017, 42d Leg., 1st Sess. (introduced Feb. 16, 1995) (would allocate punitive damages to Low Income Attorney Services Fund).
" Oregon--S. 482, 68th Leg. Ass. (enacted July 19, 1995) (amending Ore. Rev. Stat. §§18.540 and 30.925, and repealing Ore. Rev. Stat. §41.315) (allocates 60% of punitive damages to Criminal Injuries Compensation Account).
" Utah--Utah Code Ann. §78-18-1(3) (1992) (allocates 50% of punitive damages in excess of $20,000 to state treasury).
III. Mandatory Bifurcation of Liability and
Punitive Damages Determinations" California--Cal. Civ. Code Ann. §3295(d) (West Supp. 1995) (requires bifurcation, on application of defendant, of liability and damages phases of trials in which punitive damages are requested).
" Delaware--H. R. 237, 138th Gen. Ass. (introduced May 17, 1995) (would require, at request of any party, a separate proceeding for determination of punitive damages).
" Georgia--Ga. Code Ann. §51-12-5.1(d) (Supp. 1995) (in all cases in which punitive damages are claimed, liability for punitive damages is tried first, then amount of punitive damages).
" Illinois--H. 20, 89th Gen. Assembly, 1995-1996 Reg. Sess. (enacted Mar. 9, 1995) (mandates, upon defendant's request, separate proceeding for determination of punitive damages).
" Kansas--Kan. Stat. Ann. §60-3701(a)-b) (1994) (trier of fact determines defendant's liability for punitive damages, then court determines amount of such damages).
" Missouri--Mo. Rev. Stat. §§510.263(1) and (3) (1994) (mandates bifurcated proceedings, on request of any party, for jury to determine first whether defendant is liable for punitive damages, then amount of punitive damages).
" Montana--Mont. Code Ann. §27-1-221(7) (1995) (upon finding defendant liable for punitive damages, jury determines the amount in separate proceeding).
" Nevada--Nev. Rev. Stat. §42.005(3) (1993) (if jury determines that punitive damages will be awarded, jury then determines amount in separate proceeding).
" New Jersey--N. J. Stat. Ann. §§2A:58C-5(b) and (d) (West 1987) (mandates separate proceedings for determination of compensatory and punitive damages).
" North Dakota--N. D. Cent. Code §32.03.2-11(2) (Supp. 1995) (upon request of either party, trier of fact determines whether compensatory damages will be awarded before determining punitive damages liability and amount).
" Ohio--Ohio Rev. Code Ann. §2315.21(C)(2) (1995) (if trier of fact determines that defendant is liable for punitive damages, court determines the amount of those damages).
" Oklahoma--Okla. Stat., Tit. 23, §§9.1(B)-(D) (Supp. 1995-1996) (requires separate jury proceedings for punitive damages); S. 443, 45th Leg., 1st Reg. Sess. (introduced Jan. 31, 1995) (would require courts to strike requests for punitive damages before trial, unless plaintiff presents prima facie evidence at least 30 days before trial to sustain such damages; provide for bifurcated jury trial on request of defendant; and permit punitive damages only if compensatory damages are awarded).
" Virginia--H. 1070, 1994-1995 Reg. Sess. (introduced Jan. 25, 1994) (would require separate proceedings in which court determines that punitive damages are appropriate and trier of fact determines amount of punitive damages).
1 According to trial testimony, in late May 1992, BMW began redirecting refinished cars out of Alabama and two other States. Tr. 964. The jury returned its verdict in favor of Gore on June 12, 1992. Five days later, BMW changed its national policy to one of full disclosure. Id., at 1026.
2 See, e.g., Brief for Law and Economics Scholars, et al. as Amici Curiae 6-28 (economic analysis demonstrates that Alabama Supreme Court's judgment was not unreasonable); W. Landes & R. Posner, Economic Structure of Tort Law 160-163 (1987) (economic model for assessing propriety of punitive damages in certain tort cases).
3 See ante, at 7 ("In our federal system, States necessarily have considerable flexibility in determining the level of punitive damages that they will allow in different classes of cases and in any particular case."); Browning Ferris Industries of Vt., Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 278 (1989) (In any "lawsuit where state law provides the basis of decision, the propriety of an award of punitive damages for the conduct in question, and the factors the jury may consider in determining their amount, are questions of state law."); Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 255 (1984) ("Punitive damages have long been a part of traditional state tort law.").
4 Petitioner invites the Court to address the question of multiple punitive damages awards stemming from the same alleged misconduct. The Court does not take up the invitation, and rightly so, in my judgment, for this case does not present the issue. For three reasons, the question of multiple awards is hypothetical, not real, in Gore's case. First, the punitive damages award in favor of Gore is the only such award yet entered against BMW on account of its nondisclosure policy.
Second, BMW did not raise the issue of multiple punitives below. Indeed, in its reply brief before the Alabama Supreme Court, BMW stated: "Gore confuses our point about fairness among plaintiffs. He treats this point as a premature `multiple punitive damages' argument. But, contrary to Gore's assertion, we are not asking this Court to hold, as a matter of law, that a `constitutional violation occurs when a defendant is subjected to punitive damages in two separate cases.' " Reply Brief for Appellant in Nos. 1920324, 1920325 (Ala. Sup. Ct.), p. 48 (internal citations omitted).
Third, if BMW had already suffered a punitive damages judgment in connection with its nondisclosure policy, Alabama's highest court presumably would have taken that fact into consideration. In reviewing punitive damages awards attacked as excessive, the Alabama Supreme Court considers whether "there have been other civil actions against the same defendant, based on the same conduct." 646 So. 2d 619, 624 (1994) (quoting Green Oil Co. v. Hornsby, 539 So. 2d 218, 224 (Ala. 1989)). If so, "this should be taken into account in mitigation of the punitive damages award." Ibid. The Alabama court accordingly observed that Gore's counsel had filed 24 other actions against BMW in Alabama and Georgia, but that no other punitive damages award had so far resulted. Id., at 626.
5 Justice Breyer's concurring opinion offers nothing more solid. Under Haslip, he acknowledges, Alabama's standards for punitive damages, standing alone, do not violate due process. Ante, at 3. But they "invit[e] the kind of scrutiny the Court has given the particular verdict before us." Ibid. Pursuing that invitation, Justice Breyer concludes that, matching the particular facts of this case to Alabama's "legitimate punitive damages objectives," ante, at 12, the award was "grossly excessive." Ibid. The exercise is engaging, but ultimately tells us only this: too big will be judged unfair. What is the Court's measure of too big? Not a cap of the kind a legislature could order, or a mathematical test this Court can divine and impose. Too big is, in the end, the amount at which five Members of the Court bridle.
6 See, e.g., Distinctive Printing and Packaging Co. v. Cox, 232 Neb. 846, 857, 443 N. W. 2d 566, 574 (1989) (per curiam) ("[P]unitive, vindictive, or exemplary damages contravene Neb. Const. art. VII, §5, and thus are not allowed in this jurisdiction."); Santana v. Registrars of Voters of Worcester, 398 Mass. 862, 502 N. E. 2d 132 (1986) (punitive damages are not permitted, unless expressly authorized by statute); Fisher Properties, Inc. v. Arden Mayfair, Inc., 106 Wash. 2d 826, 852, 726 P. 2d 8, 23 (1986) (en banc) ( same).
In Life Ins. Co. of Georgia v. Johnson, No. 1940357 (Nov. 17, 1995), the Alabama Supreme Court revised the State's regime for assessments of punitive damages. Henceforth, trials will be bifurcated. Initially, juries will be instructed to determine liability and the amount of compensatory damages, if any; also, the jury is to return a special verdict on the question whether a punitive damages award is warranted. If the jury answers yes to the punitive damages question, the trial will be resumed for the presentation of evidence and instructions relevant to the amount appropriate to award as punitive damages. After postverdict trial court review and subsequent appellate review, the amount of the final punitive damages judgment will be paid into the trial court. The trial court will then order payment of litigation expenses, including the plaintiff's attorney fees, and instruct the clerk to divide the remainder equally between the plaintiff and the State General Fund. The provision for payment to the State General Fund is applicable to all judgments not yet satisfied, and therefore would apply to the judgment in Gore's case.