538 U.S. 408 (2003)
Tags: Torts, Excessive damages, Due process
See also: BMW of North America v. Gore
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The case of "State Farm Mutual Automobile Insurance Co. v. Campbell et al." involves the issue of punitive damages in civil cases. The defendant, Curtis Campbell, caused a car accident resulting in the death of Todd Ospital and permanent disability of Robert Slusher. Despite evidence to the contrary, Campbell denied fault, and his insurance company, State Farm, contested liability and declined settlement offers, taking the case to trial. The jury found Campbell 100% at fault and awarded a judgment of $185,849, much more than the settlement offer. State Farm refused to cover the excess liability and was unwilling to post a supersedeas bond for Campbell's appeal. Campbell obtained his own counsel for the appeal and later reached an agreement with Slusher and Ospital to pursue a bad-faith action against State Farm. The question before the court is whether an award of $145 million in punitive damages, where full compensatory damages are $.1 million, is excessive and violates the Due Process Clause of the Fourteenth Amendment. The majority opinion, delivered by Justice Kennedy, addresses this issue and concludes that the award is excessive and violates due process. The Campbells filed a complaint against State Farm alleging bad faith, fraud, and intentional infliction of emotional distress. The trial court allowed extensive expert testimony regarding fraudulent practices by State Farm in its nationwide operations to prove the existence of a scheme to cap payouts on claims. State Farm objected to this evidence, but the trial court ruled it admissible to determine whether State Farm's conduct in the Campbell case was intentional and egregious enough to warrant punitive damages.
The Utah Supreme Court reinstated a $145 million punitive damages award against State Farm for reprehensible conduct related to their PP&R policy and business practices. The degree of reprehensibility of the defendant's conduct is the most important factor in reviewing punitive damages in civil cases. State Farm mishandled the claims against the Campbells, but the Utah courts erred in going too far with the punitive damages award. Few awards exceeding a single-digit ratio between punitive and compensatory damages will satisfy due process. The defendant's wealth cannot justify an unconstitutional punitive damages award. Care must be taken to avoid using the civil process to assess criminal penalties.
The case involves a $145 million punitive damages award that was deemed excessive and is remanded for further proceedings to properly calculate punitive damages. Evidence showed that State Farm engaged in bad-faith claim handling as part of an unlawful profit scheme. The Utah Supreme Court found State Farm's behavior to be egregious and malicious. The lawyer disagrees with the Court's decision to impose numerical controls on punitive damages and believes it is not within their authority to change state law. They would uphold the Utah Supreme Court's judgment.
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