State Farm gets Supreme Court win
High court overturns $145M punitive damage award against insurance firm, saying it's 'excessive.'
April 7, 2003: 5:52 PM EDT
WASHINGTON (Reuters) - The Supreme Court ruled on Monday
that punitive damages must be reasonable and proportionate to the harm suffered, overturning a $145 million award against State Farm Mutual Automobile Insurance Co. for mishandling a claim and handing a victory to businesses.
By a 6-3 vote, the high court ruled that a punitive damages award 145 times greater than the actual, or compensatory, damages was "excessive" and violated fundamental constitutional principles of due- process fairness.
"In sum, courts must ensure that the measure of punishment is both reasonable and proportionate to the amount of harm to the plaintiff," Justice Anthony Kennedy said for the majority.
The ruling occurred at a time when more and more corporations face huge punitive damage verdicts. Business groups have long complained about skyrocketing awards of punitive damages, which are designed to punish and deter misconduct, and they supported State Farm's appeal.
Policyholder Curtis Campbell sued State Farm in 1989 for damages arising from the insurance company's refusal to pay $50,000 to settle a claim from an accident that killed one driver and left another driver disabled.
Bloomington, Illinois-based State Farm decided to go to trial over the
claim, in which Campbell was the defendant, rather than accept offers to settle for the $50,000 policy limits of his insurance policy.
A jury found Campbell to be at fault and judgments were entered against him totaling $186,000.
Campbell sued State Farm, alleging a bad-faith failure to settle. A jury awarded $2.6 million in compensatory damages -- later reduced to $1 million -- and $145 million in punitive damages.
The judge in the case later cut the punitive damages award to $25 million, but the Utah Supreme Court reinstated the original amount.
Following up on 1996 guideposts
In 1996, the high court had overturned an award of punitive damages for the first time and created "guideposts" on what would pass constitutional muster.
Kennedy said for the majority that under the guideposts the State Farm case was neither close nor difficult to decide.
Applying the guideposts, Kennedy said an award of punitive damages at or near the amount of compensatory damages would probably be justified.
The high court declined to set a rigid formula for calculating how much higher punitive damages can be compared with compensatory damages.
Kennedy said few awards of punitive damages exceeding 10 times the compensatory damages would satisfy due-process principles. Imposed indiscriminately, punitive damages "have a devastating potential for harm," he added.
Justices Antonin Scalia, Clarence Thomas and Ruth Bader Ginsburg dissented.
Ginsburg said it should be up to state legislators, not the Supreme Court, to place caps on punitive damages. "The numerical controls today's decision installs seem to me boldly out of order," she said.
Note that the article doesn't mention that the man suing State Farm was the man who CAUSED the accident. It's interesting that two conservatives dissented on states' rights grounds while O'Connor, the biggest states' rights proponent on the Court, voted with the majority. At any rate, this decision could be the beginning of the end of multimillion (or billion) dollar awards for idiots who spill coffee on themselves or 4-pack-a-day smokers who get cancer.
Any city gets what it admires, will pay for, and, ultimately, deserves…We want and deserve tin-can architecture in a tinhorn culture. And we will probably be judged not by the monuments we build but by those we have destroyed.--Ada Louise Huxtable, "Farewell to Penn Station", New York Times editorial, 30 October 1963 X-Ray Blues
About fucking time! I for one and sick and tired of people who think they've hit the lottery jackpot because of a minor tort. Even the most vocal victim's rights advocates can't possibly think that $145 million was a just figure....and how many more ludicrus punitive judgements have there been over the past decade or so? the $200 million Mc Donalds coffee spill comes to mind.
"This business will get out of control. It will get out of control and we’ll be lucky to live through it.” -Tom Clancy
The Supreme Court helped cause this fucking debacle to begin with by ruling in 1988 (IIRC) that excessive punitive damages didn't violate the 8th Amendment prohibition on excessive fines. Nice to see they're cleaing up their own mess now.
Any city gets what it admires, will pay for, and, ultimately, deserves…We want and deserve tin-can architecture in a tinhorn culture. And we will probably be judged not by the monuments we build but by those we have destroyed.--Ada Louise Huxtable, "Farewell to Penn Station", New York Times editorial, 30 October 1963 X-Ray Blues
Stormbringer wrote:Hopefully this will go a long way to end the rule by lawyer bullshit that's made such a mess of things.
My thoughts exactly.
They say, "the tree of liberty must be watered with the blood of tyrants and patriots." I suppose it never occurred to them that they are the tyrants, not the patriots. Those weapons are not being used to fight some kind of tyranny; they are bringing them to an event where people are getting together to talk. -Mike Wong
But as far as board culture in general, I do think that young male overaggression is a contributing factor to the general atmosphere of hostility. It's not SOS and the Mess throwing hand grenades all over the forum- Red
I'm with Scalia, Thomas, and Ginsburg here. I'm not blind to how ridiculous some awards are in the country, but it's not the domain of the federal government.
BoTM / JL / MM / HAB / VRWC / Horseman
I'm studying for the CPA exam. Have a nice summer, and if you're down just sit back and realize that Joe is off somewhere, doing much worse than you are.
Durran Korr wrote:I'm with Scalia, Thomas, and Ginsburg here. I'm not blind to how ridiculous some awards are in the country, but it's not the domain of the federal government.
On this I have to disagree with you. Punitive damages in excess of ten times the compensatory damages will in most cases constitute excessive fines and bails (which the majority didn't use, which was wrong IMHO), and giving a jury the ability to bankrupt individuals, businesses, and corporations with only a preponderance of evidence and no legal guidelines past feeling bad for the plaintiff is as clear a violation of due process as any I can think of.
Any city gets what it admires, will pay for, and, ultimately, deserves…We want and deserve tin-can architecture in a tinhorn culture. And we will probably be judged not by the monuments we build but by those we have destroyed.--Ada Louise Huxtable, "Farewell to Penn Station", New York Times editorial, 30 October 1963 X-Ray Blues
I'm with Scalia, Thomas, and Ginsburg here. I'm not blind to how ridiculous some awards are in the country, but it's not the domain of the federal government.
Now there's a odd threesome. Two of the most conservative members of the Court with one of the most liberal.
This split apart the usual liberal and conservative voting blocs
"You say that it is your custom to burn widows. Very well. We also have a custom: when men burn a woman alive, we tie a rope around their necks and we hang them. Build your funeral pyre; beside it, my carpenters will build a gallows. You may follow your custom. And then we will follow ours."- General Sir Charles Napier
Ya'll might want to look into that McD's case. The problem wasn't that she spilled the coffee onto herself, it was the fact that the coffee was so hot it gave her 3rd degree burns in a matter of seconds to her gentalia.
The McDonald's coffee case has been very abused. The woman asked for only $10,000, but McDonald's refused to settle. The coffee was hot as HELL, far hotter than anything that you'll get elsewhere. Furthermore, she was only awarded $160,000 compensatory and $480,000 punitive (after the judge slashed the damages from about 1.3 million due to contributory negligence). It wasn't the most ridiculous tort of all time, as it is often pointed out to be.
BoTM / JL / MM / HAB / VRWC / Horseman
I'm studying for the CPA exam. Have a nice summer, and if you're down just sit back and realize that Joe is off somewhere, doing much worse than you are.
Durran Korr wrote:The McDonald's coffee case has been very abused. The woman asked for only $10,000, but McDonald's refused to settle. The coffee was hot as HELL, far hotter than anything that you'll get elsewhere. Furthermore, she was only awarded $160,000 compensatory and $480,000 punitive (after the judge slashed the damages from about 1.3 million due to contributory negligence). It wasn't the most ridiculous tort of all time, as it is often pointed out to be.
Even under the new guidelines, 1.3 million wouldn't be considered excessive. So yeah, the McDonald's coffee case is a bad example.
Any city gets what it admires, will pay for, and, ultimately, deserves…We want and deserve tin-can architecture in a tinhorn culture. And we will probably be judged not by the monuments we build but by those we have destroyed.--Ada Louise Huxtable, "Farewell to Penn Station", New York Times editorial, 30 October 1963 X-Ray Blues
I'm with Scalia, Thomas, and Ginsburg here. I'm not blind to how ridiculous some awards are in the country, but it's not the domain of the federal government.
Now there's a odd threesome. Two of the most conservative members of the Court with one of the most liberal.
This split apart the usual liberal and conservative voting blocs
The liberal/conservative blocs break up more often than people think. On issues where ideaology doesn't matter or doesn't neatly fall into "liberal" or "conservative", you have to look at the justices' individual legal philosophies to guess where they'd go. I'm really surprised it's Ginsburg making the states' rights argument, though, instead of O'Connor.
Any city gets what it admires, will pay for, and, ultimately, deserves…We want and deserve tin-can architecture in a tinhorn culture. And we will probably be judged not by the monuments we build but by those we have destroyed.--Ada Louise Huxtable, "Farewell to Penn Station", New York Times editorial, 30 October 1963 X-Ray Blues
Ginsburg doesn't give a damn about states' rights, she's just exploiting it because on this particular issue she happens to agree. Look at Ginburg's record on other states' rights issues to see what I mean. I would say that Thomas, and to a lesser extent Scalia are the only people on the court interested in states' rights.
BoTM / JL / MM / HAB / VRWC / Horseman
I'm studying for the CPA exam. Have a nice summer, and if you're down just sit back and realize that Joe is off somewhere, doing much worse than you are.
Durran Korr wrote:Ginsburg doesn't give a damn about states' rights, she's just exploiting it because on this particular issue she happens to agree. Look at Ginburg's record on other states' rights issues to see what I mean. I would say that Thomas, and to a lesser extent Scalia are the only people on the court interested in states' rights.
O'Connor is the hardcore states' rights advocate. She's authored a lot of 5-4 decisions that have hobbled the Federal government in recent years.
Any city gets what it admires, will pay for, and, ultimately, deserves…We want and deserve tin-can architecture in a tinhorn culture. And we will probably be judged not by the monuments we build but by those we have destroyed.--Ada Louise Huxtable, "Farewell to Penn Station", New York Times editorial, 30 October 1963 X-Ray Blues
Durran Korr wrote:Ginsburg doesn't give a damn about states' rights, she's just exploiting it because on this particular issue she happens to agree. Look at Ginburg's record on other states' rights issues to see what I mean. I would say that Thomas, and to a lesser extent Scalia are the only people on the court interested in states' rights.
O'Connor is the hardcore states' rights advocate. She's authored a lot of 5-4 decisions that have hobbled the Federal government in recent years.
"Hardcore?"
I wouldn't call any of them hardcore on states' rights...if I'm not mistaken, they've all been equally horrible when it comes to drug-related issues and states' rights. Thomas called the the roadblocking practice where police dogs get to come into your car and sniff around "minimal intrusion."
BoTM / JL / MM / HAB / VRWC / Horseman
I'm studying for the CPA exam. Have a nice summer, and if you're down just sit back and realize that Joe is off somewhere, doing much worse than you are.
Let's hope and pray (if you do that kind of thing) that this is just the tip of the iceberg. I'm sick to death of hearing claims from assholes who abuse the legal system for their own benefit. There's a point to legal compensation, and it's NOT so that you can retire happily.
Proud owner of The Fleshlight
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"I hear and behold God in every object, yet I understand God not in the least, / Nor do I understand who there can be more wonderful than myself."
--Whitman
I wouldn't call any of them hardcore on states' rights...if I'm not mistaken, they've all been equally horrible when it comes to drug-related issues and states' rights. Thomas called the the roadblocking practice where police dogs get to come into your car and sniff around "minimal intrusion."
"Hardcore" is a relative term, of course. The Court HAS been exempting state government from a lot of Federal laws recently. If I recall correctly, it's no longer possible to sue a state employer for violations of the Americans With Disabilities Act.
Any city gets what it admires, will pay for, and, ultimately, deserves…We want and deserve tin-can architecture in a tinhorn culture. And we will probably be judged not by the monuments we build but by those we have destroyed.--Ada Louise Huxtable, "Farewell to Penn Station", New York Times editorial, 30 October 1963 X-Ray Blues
It should also be noted, in the famous "McDonalds coffee" case, that this was NOT the first time coffee had burned someone, severely. More like the 20th, from this particular store. Moreover, there was a paper trail all the way up to corparate headquarters, noting the problem, and recomending that the temperaure of the coffee be lowered. In the spirit of megacorps, at there best, this was lost in the general paper blizzard all big companies produce.
The fact that they knew there was a problem, that could and had already, produced injuries, and was not fixed, as per their own in house recomendations, was PROOF of negligence.
Not following your own safety policies, and having someone get hurt bad enough to require skin grafts, is a bad thing in court.
Hmmmmmm.
"It is happening now, It has happened before, It will surely happen again."
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Emperor Chrostas the Crue wrote:It should also be noted, in the famous "McDonalds coffee" case, that this was NOT the first time coffee had burned someone, severely. More like the 20th, from this particular store. Moreover, there was a paper trail all the way up to corparate headquarters, noting the problem, and recomending that the temperaure of the coffee be lowered. In the spirit of megacorps, at there best, this was lost in the general paper blizzard all big companies produce.
The fact that they knew there was a problem, that could and had already, produced injuries, and was not fixed, as per their own in house recomendations, was PROOF of negligence.
Not following your own safety policies, and having someone get hurt bad enough to require skin grafts, is a bad thing in court.
Yeah, McDonalds had been getting complaints for years about the heat of their coffee and didn't do a damn thing about it. They dug their own grave.
In a way, this was the perfect tort case. McDonalds was not significantly impacted financially by it, the woman was recompensated for at least the full measure of her damages, and McDonalds changed the temperature of its coffee after the case, resulting in a safer product. This is why I like tort; it's a good way of keeping corporations and individuals in line without endless statute.
BoTM / JL / MM / HAB / VRWC / Horseman
I'm studying for the CPA exam. Have a nice summer, and if you're down just sit back and realize that Joe is off somewhere, doing much worse than you are.
