BMW of North America, Inc. v. Gore

BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996), was a United States Supreme Court case limiting punitive damages under the Due Process Clause of the 14th Amendment.

Facts

The plaintiff, Dr. Ira Gore, bought a new BMW, and later discovered that the vehicle had been repainted before he bought it. Defendant BMW revealed that their policy was to sell damaged cars as new if the damage could be fixed for less than 3% of the cost of the car. Dr. Gore sued, and an Alabama jury awarded $4,000 in compensatory damages (lost value of the car) and $4 million in punitive damages, which was later reduced to $2 million by the Alabama Supreme Court.

Issue

Whether excessively high punitive damages violate the Due Process clause of the Constitution.

Opinion of the Court

The Court, in an opinion by Justice Stevens, found that the excessively high punitive damages in this case violate the Due Process clause. For punitive damages to stand, the damages must be reasonably necessary to vindicate the State’s legitimate interest in punishment and deterrence. Punitive damages may not be "grossly excessive" - if they are, then they violate substantive due process.

The Supreme Court applied three factors in making this determination:

1. The degree of reprehensibility of the defendant’s conduct;
2. the ratio to the compensatory damages awarded (actual or potential harm inflicted on the plaintiff); and
3. Comparison of the punitive damages award and civil or......
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