BMW of North America Inc. Vs. Gore
Supreme Court of the United States, May 20, 1996
Facts: In 1983, the American distributor of the German auto manufacture adopted a policy in which any damages resulted in delivery to dealership would be fixed and sold as new without the dealer knowing as long as it was three percent or less of the suggested retail price. Gore purchased a BMW for $40,750.88 not knowing that it had been repainted and sold as new because it only costed $601.37 which is only 1.47 percent of the retail. Gore was informed by a repair shop 9 months later that there were signs that the car has been repainted. The case was taken to an Alabama court in which he was awarded $4,000 in compensatory damages due to his stating that is costed $4,000 to repair and 4 million in punitive damages. The distributor attempted to get the punitive damages dropped but was denied in the Supreme Court of Alabama but the court did readjust the damages to $2,000 compensatory damages and 2 million punitive damages. On certiorari, the United States Supreme Court reversed and remanded. One guideposts for punitive damages is that the trail should not permit a punitive award more than nine times higher than the compensatory damages. Which in this case is was 500 times the compensatory damages and is not reasonable. Issue: Was the punitive damage award excessive?
Excerpts from Stevens, J., joined by O'Connor, Kennedy, Souter, and Breyer, JJ: it was held that the $ 2 million punitive damages award was grossly excessive and hence exceeded the Fourteenth Amendment limit in that (1) no reprehensibility was present, (2) the punitive damage was 500 times, and the defendant wasn’t harmed (3) the sanction imposed was greater than the statutory fines Analysis: Although I don’t agree with BMW’s policy it has been in place and its more of a buyer beware situation. I do agree with the outcome of the case, according the guide posts and BMW’s policy I believe that the case was ruled...
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