ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, May 21, 1996 TAG: 9605210094
SECTION: NATIONAL/INTERNATIONAL PAGE: A-1 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: Associated Press
NOTE: Above
The Supreme Court curtailed huge jury awards aimed at punishing or deterring misconduct Monday in a ruling that could save billions for American business.
The court, voting 5-4, struck down as ``grossly excessive'' a $2million punitive-damages award won by an Alabama doctor dissatisfied with his BMW sedan because it had been partly repainted to touch up damage that occurred in shipping.
Testimony suggested that about 1,000 other BMWs were sold, mostly outside Alabama, with similar undisclosed paint jobs.
The huge award won in an Alabama court violated the car manufacturer's due-process rights, the justices said in perhaps their most important ruling to date on a thorny issue: How much is too much?
While the court was ``not prepared to draw a bright line marking the limits of a constitutionally acceptable punitive-damages award,'' its 26-page majority opinion gave judges nationwide a road map for determining whether juries overstep limits.
``A state may not impose economic sanctions on violators of its laws with the intent of changing ... conduct in other states,'' Justice John Paul Stevens wrote for the court.
``While each state has ample power to protect its own consumers, none may use the punitive-damages deterrent as a means of imposing its regulatory policies on the entire nation,'' he said.
U.S. Chamber of Commerce general counsel Steve Bokat said, ``This is the victory business has been waiting for'' and called the ruling ``a nail in the coffin of excessive punitive-damages awards.''
Jerry Jasinowski, president of the National Association of Manufacturers, agreed, saying, ``Thank God for the common sense of the Supreme Court.'' He said federal legislation still may be required to limit such awards.
David Vladeck, director of the Public Citizen Litigation Group, emphasized that punitive damages still are a big part of personal-injury lawsuits.
``What this decision does not do, and apparently the business community miscomprehends this, is give them a get-out-of-jail-free card when they engage in egregious misconduct,'' Vladeck said.
A.W. Bolt, the Alabama doctor's attorney, said he was concerned the ruling will spur new court battles as judges try to work out its implications. ``It's kind of troubling to see what's been unleashed today,'' he said.
Manufacturers had viewed the Alabama dispute as their latest best chance to rein in awards critics believe are unfair to business.
Consumer advocates contend that large punitive-damage awards keep dangerous products off the market and protect the public from corporate greed.
Some states impose caps on punitive-damages awards, and some disallow them altogether. Congress has tried, so far unsuccessfully, to agree on federal limits.
The merits of punitive damages - paid above and beyond any actual harm - have tied state legislatures, Congress and the Supreme Court in knots for years.
In Monday's ruling, Stevens said there are three major indicators for judging whether an award is excessive:
How reprehensible is the conduct being punished?
The ratio between the compensatory damages and the punitive-damages award.
The difference between the award and civil or criminal sanctions that could be imposed for the same conduct.
``The fact that BMW is a large corporation rather than an impecunious individual does not diminish its entitlement to fair notice of the demands that the several states impose on the conduct of its business,'' Stevens said.
Stevens was joined by Justices Sandra Day O'Connor, Anthony Kennedy, David Souter and Stephen Breyer.
Chief Justice William Rehnquist and Justices Antonin Scalia, Clarence Thomas and Ruth Bader Ginsburg dissented.
Writing for herself and Rehnquist, Ginsburg said the court was infringing on states' powers at a time when more and more states are adopting or considering their own curbs on punitive damages.
Scalia, writing for himself and Thomas, said, ``One might understand the court's eagerness to enter this field, rather than leave it to the state legislators, if it had something useful to say.''
``In fact, however, its opinion provides virtually no guidance to legislatures, and to state and federal courts, as to what a `constitutionally proper' level of punitive damages might be,'' Scalia contended.
Ira Gore Jr., a Birmingham cancer specialist, bought a BMW 535i in 1990. He did not know that his new car had been partly repainted to touch up some damage caused by acid rain while the car was being shipped.
Gore learned of the touch-up nine months after buying his car when he took it to a shop to have decorative detail work done on it. He sued, and an Alabama jury awarded him $4,000 in compensation and added $4 million in punitive damages.
The Alabama Supreme Court reduced Gore's punitive-damages award from $4 million to $2 million. Now the case returns to that court, which must decide whether to come up with a new dollar amount or order a new trial.
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