BMW of North America, Inc. v. Gore
134 L. Ed. 2d 809 · Supreme Court of the United States · 1996
Facts
Dr. Ira Gore, Jr. purchased a new black BMW sports sedan for $40,750.88 from an authorized BMW dealer in Birmingham, Alabama. After driving the car for nine months, he took it to an independent detailer who detected evidence that the car had been repainted. BMW had a nationwide policy since 1983 not to disclose pre-delivery damage to new cars if the repair cost was less than 3 percent of the suggested retail price. The cost of repainting Dr. Gore's car was $601.37, which was about 1.5 percent of its retail price, so BMW did not disclose the repair. Dr. Gore asserted his repainted car was worth $4,000 less than an undamaged one and sued BMW, alleging suppression of a material fact.
Procedural history
Dr. Gore sued BMW, and a jury awarded him $4,000 in compensatory damages and $4 million in punitive damages. The trial judge denied BMW's post-trial motion to set aside the punitive damages award. On appeal, the Alabama Supreme Court rejected BMW's claim that the award was unconstitutionally excessive but found the jury improperly computed the amount based on out-of-state sales. The Alabama Supreme Court then ordered a remittitur, reducing the punitive damages award to $2 million. The U.S. Supreme Court granted certiorari to review the case.
Issue
Does a $2 million punitive damages award for undisclosed pre-sale repainting of a new car, where the repair cost was 1.5% of the car's value, exceed the constitutional limit imposed by the Due Process Clause of the Fourteenth Amendment?
Holding
Yes, the $2 million punitive damages award is grossly excessive and transcends the constitutional limit. The judgment is reversed and remanded for further proceedings.
Rule
The Due Process Clause of the Fourteenth Amendment prohibits a State from imposing a "grossly excessive" punishment on a tortfeasor. Three guideposts determine if a punitive damages award is grossly excessive: the degree of reprehensibility of the defendant’s conduct, the disparity between the harm or potential harm suffered by the plaintiff and the punitive damages award, and the difference between this remedy and the civil penalties authorized or imposed in comparable cases. A State may not impose economic sanctions to change a tortfeasor's lawful conduct in other States, and penalties must be supported by the State's interest in protecting its own consumers and economy.
Read the full opinion on CourtListener
Case brief last reviewed . Prepared by CaseReader from the published opinion.