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Campbell v. State Farm Mutual Auto Insurance Company

(2003)

Supreme Court of the United States - 538 U.S. 408

tl;dr:

Jury awarded $145M in punitive damages and $1M in compensatory damages against State Farm; Court holds that the punitive damages were grossly excessive and unconstitutional.

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Facts & HoldingCampbell v. State Farm Mutual Auto Insurance Company case brief facts & holding

Facts:Plaintiff Campbell was involved in a car accident and was...

Holding:The US Supreme Court held that the punitive damages award...

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Campbell v. State Farm Mutual Auto Insurance Company | Case Brief DeepDive
Majority opinion, author: Justice Kennedy
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The case involves whether an award of $145 million in punitive damages, in addition to $0.1 million in compensatory damages, violates the Due Process Clause of the Fourteenth Amendment. The incident occurred in 1981 when Curtis Campbell caused a fatal accident due to his unsafe driving. State Farm, Campbell's insurance company, contested liability and took the case to trial despite offers to settle for the policy limit of $50,000. The jury found Campbell 100% at fault, and a judgment was returned for $185,849, which was more than the amount offered in settlement. State Farm initially refused to cover the excess liability of $135,849, and even suggested that the Campbells sell their property to pay for it. The parties reached an agreement where the Campbells agreed to pursue a bad-faith action against State Farm, and Slusher and Ospital's attorneys would represent them. The trial court erred by granting State Farm's motion for summary judgment, but that ruling was reversed on appeal. The trial was bifurcated into two phases, and in the first phase, the jury determined that State Farm's decision not to settle was unreasonable. The second phase of the trial addressed State Farm's liability for fraud and intentional infliction of emotional distress, as well as compensatory and punitive damages. The trial court allowed the Campbells to introduce extensive expert testimony regarding fraudulent practices by State Farm in its nationwide operations to prove the existence of this scheme. Although State Farm moved to exclude such evidence prior to the second phase of the trial and continued to object to it at trial, the trial court ruled that such evidence was admissible to determine whether State Farm's conduct in the Campbell case was intentional and sufficiently egregious to warrant punitive damages.

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Dissenting opinion, author: Justice Scalia
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Justice Scalia dissents from the majority opinion and argues that the Due Process Clause does not provide protection against excessive punitive damages. He also criticizes the lack of a principled application in the jurisprudence surrounding punitive damages, which has developed from BMW v. Gore. Therefore, he does not believe that the case should be given stare decisis effect. Justice Scalia would uphold the judgment of the Utah Supreme Court.

Dissenting opinion, author: Justice Thomas
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Justice Thomas disagrees with the decision made by the lower court and believes that there is no limit to the amount of money that can be awarded as punishment in a legal case. He uses past cases to support his argument and respectfully disagrees with the decision.

Dissenting opinion, author: Justice Ginsburg
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The Utah Supreme Court upheld a large damages award against State Farm for their unfair practices in denying claimants fair benefits. State Farm's PP&R program had a negative impact on Utah residents, and the trial court found that the company intentionally designed its policy to exploit vulnerable consumers. The Excess Liability Handbook instructed adjusters to add "self-serving" documents to files and leave out critical items, and expert testimony indicated that the Campbells' case was a classic example of State Farm's improper practices taught in the Handbook. State Farm's bad-faith claim handling, which resulted in severe damages to the Campbells, was a result of the unlawful profit scheme implemented by top management. The jury had ample basis to find that everything that happened to the Campbells was a direct application of State Farm's overall profit scheme, operating through high-level manager Bill Brown and others. State Farm's inability to produce the manuals was not accidental and was considered an attempt to avoid liability. While damages-capping legislation may be necessary, the Supreme Court should not substitute its judgment for that of Utah's decision-makers based on the trial record and award amount alone.

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