Legal Document

538 U.S. 408 STATE FARM MUTUAL AUTOMOBILE INSURANCE CO.v.CAMPBELL ET AL. No. 01-1289. Supreme Court of United States. Argued December 11, 2002. Decided April 7, 2003. Although investigators and witnesses concluded that Curtis Campbell caused an accident in which one person was killed another permanently disabled, his insurer, petitioner State Farm Mutual Automobile Insurance Company (State Farm), contested liability, declined to settle the ensuing claims for $50,000 policy limit, ignored its own investigators' advice, took case trial, assuring wife they had no liability accident, would represent their interests, did not need separate counsel. In fact, a Utah jury returned judgment over three times refused appeal. The denied Campbell's appeal, paid entire judgment. Campbells then sued bad faith, fraud, intentional infliction emotional distress. trial court's initial ruling granting summary reversed on On remand, court Farm's motion exclude evidence dissimilar out-of-state conduct. first phase bifurcated found unreasonable decision settle. Before second phase, this refused, BMW North America, Inc. v. Gore, 517 U. S. 559, sustain $2 million punitive damages award accompanied $4,000 compensatory award. renewed conduct evidence. addressed, inter alia, damages, introduced pertained business practices numerous States but bore relation type underlying Campbells' complaint. awarded $2.6 $145 reduced $1 $25 respectively. Applying reinstated Held: A million, where full are is excessive violates Due Process Clause Fourteenth Amendment. Pp. 416-429. (a) Compensatory intended redress plaintiff's concrete loss, while aimed at different purposes deterrence retribution. prohibits imposition grossly or arbitrary punishments tortfeaser. E. g., Cooper Industries, Leatherman Tool Group, Inc., 532 424, 433. Punitive awards serve same purpose as criminal penalties. However, because civil defendants accorded protections afforded defendants, pose acute danger deprivation property, heightened when decisionmaker presented with having little bearing amount should be awarded. Thus, has instructed courts reviewing consider (1) degree reprehensibility defendant's misconduct, (2) disparity between actual potential harm suffered by plaintiff award, (3) difference penalties authorized imposed comparable cases. supra, 575. application these guideposts subject de novo review. 424. 416-418. (b) Under Gore's guideposts, neither close nor difficult. 418-428. To determine — most important indicium award's reasonableness must whether: physical rather than economic; tortious evinced indifference reckless disregard health safety others; involved repeated actions isolated incident; resulted from malice, trickery, deceit, mere accident. S., 576-577. It presumed been made whole so only if culpability reprehensible warrant further sanctions achieve punishment deterrence. Id., case, handling against merits praise, more modest could have satisfied State's legitimate objectives. Instead, used platform expose, punish, perceived deficiencies operations throughout country. cannot punish defendant may lawful it occurred, id., 572. Nor does concern imposing unlawful acts committed outside jurisdiction. argue such merely demonstrate, generally, motives insured. Lawful probative demonstrates deliberateness action tortious, nexus specific plaintiff. More fundamentally, relying evidence, deter harm. process permit adjudicate other parties' hypothetical under guise analysis. Punishment bases creates possibility multiple conduct, nonparties normally bound For reasons, Court's justified grounds recidivist. justify based upon recidivism, ensure question replicates prior transgressions. There scant misconduct sort injured Campbells, review decisions below convince punished toward Campbells. Because shown similar harmed them, relevant analysis them. 419-424. With regard Gore guidepost, reluctant identify constitutional limits ratio harm, award; but, practice, few exceeding single-digit will satisfy due process. See, e. 581. Single-digit multipliers likely comport process, still achieving retribution goals, 145-to-1 ratios, case. there rigid benchmarks, ratios greater those previously upheld particularly egregious act small economic 582, substantial, even lesser can reach outermost limit guarantee. Here, presumption ratio; year half distress substantial; outrage humiliation component both awards. sought massive premises proportionality 424-428. dwell third guidepost. sanction state law wrong done appears $10,000 fine grand dwarfed references broad fraudulent scheme drawn were insufficient amount. P. 428. (c) facts here, especially light substantial near resolve instance proper calculation principles discussed here. 429. 65 3d 1134, remanded. KENNEDY, J., delivered opinion Court, REHNQUIST, C. STEVENS, O'CONNOR, SOUTER, BREYER, JJ., joined. SCALIA, post, p. 429, THOMAS, GINSBURG, 430, filed dissenting opinions. CERTIORARI TO THE SUPREME COURT OF UTAH. Sheila L. Birnbaum argued cause petitioner. her briefs Barbara Wrubel, Douglas W. Dunham, Ellen Quackenbos. Laurence H. Tribe respondents. him brief Kenneth Chesebro, Jonathan Massey, Roger Christensen, Karra J. Porter.* JUSTICE KENNEDY Court. 1 We address once again measure punishment, means impose whether, circumstances we shall recount, violation Amendment Constitution 2 * 1981, (Campbell) driving wife, Inez Preece Campbell, Cache County, Utah. He decided pass six vans traveling ahead them two-lane highway. Todd Ospital car approaching opposite direction. avoid head-on collision who side highway oncoming traffic, swerved onto shoulder, lost control automobile, collided vehicle driven Robert G. Slusher. killed, Slusher rendered disabled. escaped unscathed. 3 wrongful death tort action, insisted he fault. Early investigations support differing conclusions "a consensus reached early Mr. unsafe indeed crash." 1141 (Utah 2001). insurance company, nonetheless contest offers Ospital's estate (Ospital) ($25,000 per claimant). also advice "their assets safe, [State Farm] procure counsel." 1142. contrary, determined 100 percent fault, $185,849, far offered settlement. 4 At cover $135,849 excess liability. Its counsel clear Campbells: "`You want put sale signs your property get things moving.'" Ibid. willing post supersedeas bond allow appeal him. obtained verdict. During pendency late 1984, Slusher, Ospital, agreement whereby agreed seek satisfaction exchange pursue bad-faith represented Slusher's attorneys. right play part all major concerning action. No settlement without approval, receive 90 any verdict Farm. 5 1989, wrongful-death actions. 777 2d 437. judgment, including amounts limits. complaint alleging initially granted verdict, 840 130 App. 1992). remand moved limine alleged occurred unrelated cases Utah, motion. request into two phases conducted before juries. likelihood 6 559 (1996), damages. Based decision, exclusion Pet. Cert. 168a-172a. 189a. 7 addressed fraud distress, well aptly characterized trial: 8 "State during II take `honest mistake' contrast, result national meet corporate fiscal goals capping payouts company wide. This referred `Performance, Planning Review,' PP & R, policy. prove existence scheme, allowed introduce extensive expert testimony regarding nation-wide operations. continued object ruled admissible whether sufficiently damages." 3d, 1143. 9 Evidence pertaining PP&R concerned 20 years Most third-party automobile claims, claim company. Both parties appealed. 10 apply identified 574-575, Relying large policy, reprehensible. relied "massive wealth" indicating actions, clandestine nature, out every 50,000 matter statistical probability," 1153, unwarranted. Finally, noted compared various faced, each suspension license disgorgement profits, imprisonment. 1154-1155. certiorari. 535 1111 (2002). 11 recognized 424 (2001), our judicial system although usually time decisionmaker, purposes. 432. "are loss reason conduct." (citing Restatement (Second) Torts § 903, pp. 453-454 (1979)). By broader function; 432; see 568 ("Punitive properly interests punishing deterring repetition"); Pacific Mut. Life Ins. Co. Haslip, 499 1, 19 (1991) ("[P]unitive deterrence"). 12 While possess discretion established procedural substantive limitations supra; 559; Honda Motor Oberg, 512 415 (1994); TXO Production Corp. Alliance Resources Corp., 509 443 (1993); supra. tortfeasor. 433; 562; 587 (BREYER, concurring) ("This concern, itself harkening back Magna Carta, arises basic unfairness depriving citizens life, liberty, through application, legal processes, coercion"). "[e]lementary notions fairness enshrined jurisprudence dictate fair notice severity penalty impose." 574; 433 ("Despite respect Federal imposes discretion"). extent excessive, furthers constitutes property. 42 (O'CONNOR, dissenting) powerful weapon. Imposed wisely restraint, advance interests. indiscriminately, however, devastating Regrettably, common-law procedures awarding fall latter category"). 13 penalties, subjected applicable proceeding. increases concerns imprecise manner systems administered. admonished "[p]unitive Jury instructions typically leave wide choosing amounts, presentation net worth juries use verdicts express biases big businesses, strong local presences." Motor, 59 ("[T]he classify arbitrariness virtue. Indeed, point general order behavior. interest deliberately making unable solely bias whim"). Our presented, discuss, Vague instructions, inform "passion prejudice," 108a-109a, do aid task assigning appropriate weight tangential inflammatory. 14 concerns, guideposts: misconduct; reiterated importance Industries mandated appellate jury's Exacting ensures "`application law, decisionmaker's caprice.'" 436 (quoting concurring)). III 15 outlined error reinstate guidepost some detail. 16 "[T]he considering opposed target financial vulnerability; factors weighing favor sufficient absence renders suspect. injuries culpability, after 17 instant acknowledge praise. employees altered company's records make appear less culpable. disregarded overwhelming near-certain probability that, taking amplified safe later telling postjudgment, for-sale sign house. suggest objectives, gone further. 18 instead, makes explicit being condemned nationwide policies directed 1143 wide"). was, well, rationale approving though million. 120a demonstrated, worked testimony, pattern adjustment program anomaly, consistent, feature operations, orchestrated highest levels management"). contend blame reliance record contention. From opening statements onward framed chance rebuke activities. 208 ("You're going hear commission around country unwilling inept protecting people abuses"); 242 ("[T]his very case.... [I]t transcends file. involves practice. And you, evaluating assessing, hopefully requiring stand accountable what it's doing across country, damages"). position maintained litigation. opposing convinced limitation scope considered precedents. 172a ("As I read [Gore], struck fact message ... seems less. inviting area current rulings indicate"); 189a (trial ruling). occurred. 572; Bigelow Virginia, 421 809, 824 (1975) ("A acquire power supervision internal affairs welfare affected travel State"); New York Head, 234 149, 161 (1914) ("[I]t impossible statutes Missouri operate beyond jurisdiction throwing down barriers restricted within orbits authority preservation Government depends. obviously necessary rarely called hence authorities directly dealing abound"); Huntington Attrill, 146 657, 669 (1892) ("Laws force themselves enacts extra-territorial effect comity States"). Nor, rule, Any adjudication persons require inclusion, and, parties, courts, usual laws Phillips Petroleum Shutts, 472 797, 821-822 (1985). 21 dispute much They argue, primary basis sense, motive Brief Respondents 46-47 ("[E]ven described malum se prohibitum, became tools implement policy"). argument misses mark. instructed, furthermore, 572-573 (noting "does [a defendant] impact [the State] residents"). principle federalism reasoned about permitted proscribed borders, alone any, 569 not, provide protection uniform manner"). 22 fundamental reason, erred evidence: acts, independent premised, plaintiff, unsavory individual business. analysis, doubt 1149 ("Even appropriately minimal, assessment situation target: `The minor aggregate'"). conduct; obtains. 593 ("Larger might `double count' compensatory, punitive, subsequent plaintiffs recover"). 23 reasons lead us conclude "[o]ur holdings recidivist severely offender recognize malfeasance," 577, context TXO, 462, n. 28 look "`the frequency past conduct'" 21-22)). 24 courts' identical relevance here nothing lawsuit length. Other tangential. example, criticized investigation personal life approach, corrupted employees. 1148, 1150. attempt theory dollar profit underpaying claimant first-party one. 45; 1150 ("State continuing illicit practice created market disadvantages honest companies increased profits. As plaintiffs' established, wrongfully competitive advantages pressure adopt tactics, distortions ultimately hurt consumers"). already stated, unconvincing. expand malfeasance, extended 20-year period. B 25 Turning 582 ("[W]e consistently rejected notion line marked simple mathematical formula, compares award"); 458. decline bright-line exceed. now significant degree, upholding four impropriety. 23-24. cited 4-to-1 Gore. referenced long legislative history, dating 700 forward today, providing double, treble, quadruple punish. 581, 33. binding, instructive. demonstrate obvious: retribution, range 500 or, 145 1. 26 Nonetheless, benchmarks surpass, Ibid.; ibid. (positing higher "the injury hard detect monetary value noneconomic difficult determine"). converse true, however. When ratio, perhaps equal precise course, 27 sum, reasonable proportionate recovered. ratio. complete compensation. arose transaction realm, assault trauma; injuries; filed, 18-month period moreover, duplicated Much insurer; role condemn contain element. See 908, Comment c, 466 (1977) ("In many include indignation aroused act, demarcation compensation specified frequently includes elements both"). pointing purported failure report $100 Texas headquarters; consumers; probability; enormous wealth. 1153. Since applying discuss analyzed only. similar, reprehensibility, described. dissimilar, marginal weight. lawsuit; entered case; settled fraction justification, inability direct demonstrating (other case) indicates adverse population minor. 29 remaining bear are, rather, arguments defend departure well-established constraints enjoy considerable deducing warranted, set forth Here rare coupled reference (which, insured rely payment claims) sustained wealth otherwise unconstitutional 585 ("The corporation impecunious diminish entitlement demands several business"); 591 ("[Wealth] provides open-ended inflating wealthy.... That inappropriate; simply factor up factors, `reprehensibility,' constrain significantly purports conduct"). implemented care, proportionality. C 30 "civil cases." note past, looked imposed. 583; 23. seriousness views utility. Great care taken assess observed, including, standards proof. substitute remote automatically 31 1154, speculated license, possible imprisonment, IV 32 An (a portion contained element), therefore, committed, irrational defendant. resolved, instance, courts. 33 reversed, remanded proceedings inconsistent opinion. 34 ordered. Notes: Briefs ofamici curiae urging reversal American Insurers et al. Mark F. Horning, Charles Cole, Bennett Evan Cooper; Council William Sheehan Victoria Fimea; Tort Reform Association Roy T. Englert, Jr., Alan Untereiner; Business Roundtable Malcolm Wheeler; Chamber Commerce Andrew Frey, Schapiro, M. Tager, Robin Conrad; Common Good Philip K. Howard, A. Long, Keith Noreika; Defense Research Institute Patrick Lysaught; Ford Theodore Boutrous, Miguel Estrada, John Thomas, Michael O'Reilly; Health America N. Weiner Nancy Perkins; International Mass Retail Daniel Bromberg, Verdisco, David Zoll, Donald D. Evans; National Manufacturers Carter Phillips, Gene Schaerr, Richard Bernstein, Stephen B. Kinnaird, Jan Amundson, Quentin Riegel; Conference Legislators Lynch; Product Liability Advisory Council, Victor Schwartz Leah Lorber; Washington Legal Foundation Arvin Maskin, Popeo, Paul Kamenar; Mitchell Polinsky Dan Kahan. amici affirmance Minnesota Mike Hatch, Attorney General Minnesota, Attorneys respective follows: Jane Brady Delaware, Butterworth Florida, Ieyoub Louisiana, Joseph Curran, Maryland, Moore Mississippi, Jeremiah (Jay) Nixon Missouri, McGrath Montana, Frankie Sue Del Papa Nevada, Drew Edmondson Oklahoma, Hardy Myers Oregon, Sheldon Whitehouse Rhode Island; Trial Lawyers Jeffrey White; California Consumer Care Eugene R. Anderson Healy; Certain Leading Social Scientists Simmons Shernoff; Hylton Garry Bryant. Abbott Laboratories Walter Dellinger; DeKalb Genetics Seth Waxman Ogden; Truck Exchange Ellis Horvitz, Thomas Todd, Mary-Christine Sungaila. 35 dissenting. 36 adhere view expressed my 598-599 "excessive" "`unreasonable'" am sprung insusceptible principled application; accordingly, feel giving stare decisis effect. 599. affirm 37 38 "I continue believe size awards." (2001) (THOMAS, 599 (1996) (SCALIA, joined dissenting)). Accordingly, respectfully dissent. 39 40 Not ago, hesitant federal check state-court judgments Browning-Ferris Vt., Kelco Disposal, 492 257 (1989), held Excessive Fines Eighth common circumscribed private parties. 262-276, 277-280. Two later, (1991), observed "unlimited [or judicial] fixing invite extreme results jar one's sensibilities," 18; Clause, suggested, attend sensibilities guard awards, 17-24. Nevertheless, Haslip "more 200 plaintiff's] out-of-pocket expenses," "much imposed." (1993), affirmed "526 jury." 453;1 cf. Browning-Ferris, 262 (ratio 1). 41 until 1996, time, invalidated unreasonably large. dissenting). If activity domain "well established," ante, 416, 427, takes place ground held. stated why resisted foray "territory traditionally States' domain." 612 (dissenting opinion). views, unlike habeas corpus convictions 2254, "work[s] [of checking courts] alone," unaided participation district appeals. 613. particular suffice [to superintend awards] judges legislators initiate system-wide change." (KENNEDY, concurring judgment). traditional view. 43 damages-capping legislation altogether fitting proper. Neither record, justifies substitution Utah's competent decisionmakers. regard, count key criterion "reprehensibility," good deal story abbreviated account tells. 44 Ample find treatment typified "Performance, Review" (PP&R) program; top management 1979, objective using claims-adjustment center." 116a. evidence," noted, documenting "that functioned, continues function, deny benefits owed consumers paying preset, payout targets designed enhance profits." 118a-119a. encompassing scope; "applied equally claims." 119a. But 423-424, 427 (suggesting "nothing lawsuit"). 45 credit demonstrated regularly adversely residents. Ray Summers, adjuster handled employee almost twenty years," methods claimants benefits, "falsifying withholding files." 121a. tactic, Summers recounted, "unjustly attac[k] character, reputation credibility mak[e] notations file create prejudice event ever came 130a (internal quotation marks omitted). manager Bob Noxon, testified, resorted tactic "instruct[ed] write (who accident) speeding way pregnant girlfriend." truth, "[t]here Expert tactics "completely improper." 46 employees, Felix Jensen Samantha Bird, whom recalled "intolerable" "recurrent" reduce value. 119a complained managers, told "get kitchen" heat; Bird she team player." times, said, "was forced commit dishonest knowingly underpay 120a. Eventually, quit. managers superior indicated, improperly influenced encourage underpayments. documents performance Noxon Brown "contained preset average goals." 47 Regarding limits, document titled "Excess Handbook"; written handbook adjusters pad files "self-serving" documents, critical items files, evaluations insured's exposure. 127a-128a Divisional superintendent Bill train 134a. overseeing ordered change portions fault cost correspondingly high. 3a. according recited, classic example improper taught Excess Handbook." 128a. 48 "deliberately crafted" prey unlikely themselves. 122a. former affirming trained weakest herd" elderly, poor, least knowledgeable rights thus vulnerable trickery money real alternative accept inadequate offer value." 49 placed "weakest category. couple appeared economically emotionally fragile. 3360a-3361a (Order Denying Motion Judgment NOV Intentional Infliction Emotional Distress). "Mr. residuary effects stroke Parkinson's disease." 3360a. 50 insulate "systematic" efforts destroy reveal 123a, 124a. special historical department copy manuals claim-handling dates section manual changed." Yet discovery proceedings, failed produce 124a-125a. 51 manuals, accidental. Documents retained Bird's showed pending, Janet Cammack, "an in-house attorney sent management, meeting search offices material proved damaging litigation particular, old memos, school notes, procedure guides documents." 125a. "These orders followed participant, Short, personally aware kinds materials requested case." 52 Consistent admitted destroyed single 1988, preserved minimal expense. Fortuitously, 1979 subpoena employee. 132a. cases, never produced document. 53 "As final, related tactic," reasonably "in recent extraordinary lengths stop place." 126a. kept attendant verdicts. damage payments, payments reported [Internal Revenue Service] states rate increases." Regional Vice President Buck Moskalski testified "he Campbells'] reporting practices." 54 "wrongful evasion schemes," underscored, 132a: 55 "The fully supports conclusion exposed 1983, severe product earlier. showing how insistence claims-handling employees' reducing regardless claim, manifested limits— indeed, lower high-level heavy indemnity question. pay bond, keep year-end numbers down, since incentive meant keeping helping much-desired transfer Colorado.... ample concepts Handbook, alteration manipulation posting dutifully carried everything happened Campbells—when repeatedly went `excess' overall operating others." 133a-134a. 56 "policies practices," out, "responsible Campbells," "callous, clandestine, fraudulent, dishonest." 136a; 113a (finding "ample evidence" responsible injuring "many decades"). record-based recitations, understandably behavior "egregious malicious." 18a. 57 dismisses describing essentially irrelevant, "no harm." Ante, 422; ("conduct Campbells] analysis"). hardly apparent so. What infirm experience exemplifies reflects overarching underpayment "repeated them," 423? silence score revealing: Once recognizes show "conduct becomes shrink sole maintain, odds determination court, 113a, minor," 427. 58 acknowledges, "probative [even occurred] tortious...." 419 (reiterating instruction accident"). "Other acts" just "deliberateness" "culpability." admissible, ruled: "reprehensible" "rebut Farm's] assertion [its] inadvertent errors mistakes judgment." 3329a Various Motions Exclude Plaintiffs' Evidence). Viewed light, surely nexus" "other Campbells]." 422. ventured override moderately. "[i]n system, necessarily flexibility determining level classes 568. Today's exhibits restraint. longer content accord validity," 457, announces "few process." 425.2 Moreover, adds, doubling "can guarantee." 429 ("facts high design cap handiwork setting 1-to-1 questioned; decree banner numerical controls today's installs seem me boldly order. 60 61 remain reform governing 607 (GINSBURG, Even prepared flexible prescribed join swift conversion begin resemble marching orders. undisturbed. switching focus succeeded describe inTXO (1996). 443, "[u]nder well-settled law," "wrongdoing parts country" "impressive worth" "typically assessing remains seen which, unsettle law.

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