Opinion ID: 2625838
Heading Depth: 4
Heading Rank: 2

Heading: Civil or Criminal Penalties Authorized in Comparable Cases

Text: ¶ 63 The final factor for determining whether a punitive award is excessive under federal law is to [c]ompar[e] the punitive damages award and the civil or criminal penalties that could be imposed for comparable misconduct. BMW, 517 U.S. at 583, 116 S.Ct. 1589. Possible imprisonment for such conduct is a strong indication that the conduct warrants high punitive damages. Id. ¶ 64 The trial court found that this factor does not require reduction of the punitive damage award because the penalties that could be imposed under Utah law for the fraudulent scheme that has been pursued by State Farm are enormous. Specifically, the trial court found that State Farm could be forced: (1) to pay a $10,000 fine for each act of fraud under Utah Code Ann. §§ 31A-26-301 et seq.; (2) to renounce its business license or have its Utah operations dissolved under Utah Code Ann. §§ 31A-26-213, 76-3-201(2) and (3), XX-XX-XXXX(ppp), and XX-XX-XXXX.5(5); (3) to disgorge all the illicit profits gained by the scheme, plus pay a fine of twice the value of those profits, under Utah Code Ann. §§ 76-10-1602 et seq.; and (4) to publically acknowledge that its officers had been convicted of fraud under Utah Code Ann. § 76-3-303. Moreover, under Utah Code Ann. § 76-3-303, State Farm's officers could be imprisoned or removed for up to five years, an extremely important consideration for the BMW court. BMW, 517 U.S. at 584, 116 S.Ct. 1589. ¶ 65 State Farm disputes these findings, arguing that since this case is the only bad faith action against it in the last fifteen years, there is no evidence that it has defrauded customers or gained illicit profits. Moreover, State Farm argues that even if it could be punished for its practices, permissible punishment is limited by the actual fining practice of the Insurance Commission. Id. at 83. ¶ 66 State Farm's logic is unpersuasive for several reasons. First, such an interpretation runs contrary to the clear language of BMW indicating the Court was examining the civil or criminal penalties that could be imposed for comparable misconduct, not other punishments already issued against the defendant. BMW, 517 U.S. at 583, 116 S.Ct. 1589 (emphasis added). ¶ 67 Second, State Farm's argument that there is no evidence of fraud is contrary to the trial court's findings and to the evidence that we have reviewed supporting those findings. It is difficult to understand how State Farm can argue that there is no evidence that it committed fraud or acted illicitly when the record contains volumes of such evidence. The evidence was so extensive and convincing that it took the trial court nearly twenty-eight pages to summarize it in his findings on the post-trial motions. ¶ 68 Finally, State Farm's argument that the Insurance Commission's practices in assessing fines are applicable, rather than the maximum statutory penalties, is contrary to BMW. The BMW court clearly indicated that the punitive award was to be compared to legislatively set penalties, not administrative agency practices. BMW, 517 U.S. at 584, 116 S.Ct. 1589. For example, the Supreme Court stated that it was examining the statutory fines and [t]he maximum civil penalty authorized by the Alabama Legislature. Id. Moreover, BMW also stated that a reviewing court engaged in determining whether an award of punitive damages is excessive should accord substantial deference to legislative judgments concerning appropriate sanctions for the conduct at issue. Id. at 583, 116 S.Ct. 1589 (internal quotation marks omitted and emphasis added). We conclude that the trial court correctly found that a large punitive damage award was justifiable under this third guidepost. ¶ 69 In conclusion, we hold that the trial court's analysis of the punitive damage award under BMW was correct. In light of the foregoing analysis of state and federal law, we vacate the trial court's remittitur order and reinstate the jury's verdict awarding $145 million in punitive damages.