THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Tuesday, May 28, 1996 TAG: 9605240022
SECTION: FRONT PAGE: A14 EDITION: FINAL
TYPE: Editorial
LENGTH: 51 lines
Did ya' hear the one about the car dealer who touched up the paint on the new BMW and got slammed with a $2 million damage award?
Sorry. No punch line. True story.
Until this week, when the U.S. Supreme Court added a postscript: uh-uh.
After staying out of the national fracas over the size of punitive-damage awards, the Supremes found the case of Ira Gore Jr. too outrageous to ignore. Gore, a Birmingham physician, sued BMW for surreptitiously touching up the paint on his $40,000, black 535i four-door before he drove it off the dealer's lot.
Gore discovered the deceit when he took the car to a paint shop in quest of some snazzier trim work.
It turned out that 1,000 of the touched-up automobiles had been sold as new to unsuspecting customers. A jury in Alabama estimated the loss of value on each car at $4,000 (What? Nothing for mental anguish?), multiplied by 1,000, and arrived at a $4 million settlement.
The Alabama Supreme Court said Alabama jurors couldn't sock BMW for what it had done to customers who didn't live in the state. The judges reduced the penalty to $2 million.
In dissenting opinions to the 5-4 decision, Justices Ruth Bader Ginsberg and Antonin Scalia argued that the debate on limiting punitive damages should be settled in the traditional domain of such matters, the 50 states.
In contrast, the court's majority suggested a three-part test to decide if defendants had gotten sufficient notice of potentially heavy punitive damages. One, what was the ``degree of reprehensibility'' of the defendant's conduct? Did they, for instance, cause someone to lose an arm and a leg? Or just lose face?
Second, was the ratio between punitive and actual damages reasonable? In the BMW case, the ratio was 500:1. The court described that gap as ``breathtaking.''
And third, how did the punitive-damage award compare with any civil fines or criminal punishment available for similar conduct? Alabama has a $2,000 fine for violating the state's Deceptive Trade Practices Act.
In his dissent, Scalia suggested that the test did ``nothing at all except confer an artificial air of doctrinal analysis upon its essentially ad hoc determination that this particular award of punitive damages was not fair.''
He is probably right.
Even so, in the face of much political inability to come to grips with excessive jury awards, it was refreshing to have the Supreme Court vote for sanity.
The proposed test allows substantial leeway in interpretation. All the court is saying, in effect, is, Get real. by CNB