State Farm v. Campbell: Curtailment of Punitive Damages?

For the fifth time in 12 years, the Supreme Court agreed to hear a case involving the imposition of punitive damages and, once again, the Court articulated criteria and principles against which lower courts and litigants can measure the type of conduct that should support an award of punitive damages. State Farm Mut. Auto Ins. v. Campbell, 123 S.Ct. 1513 (April 7, 2003). Vague jury instructions affording broad discretion, unrestrained passion and prejudice overshadowing reason, and permissive state court judges substantially approving disproportionate awards have all conspired to undermine the principled application of BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996), by state courts. (Justice Antonin Scalia’s dissent in Campbell deemed Gore “insusceptible of principled application.”) Writing for the 6-3 majority, Justice Anthony Kennedy opined: “The Utah Supreme Court sought to apply the three guideposts we identified in Gore.” (emphasis added) Continued unpredictable state punitive damage awards arising out of inconsistent application of the Gore guideposts led the Court’s majority to define applicable constitutional standards further and offer what is hoped will be a greater measure of predictability to would-be litigants. No doubt, Campbell has afforded corporate defendants significant tools for curtailing runaway exemplary damages. Still, amid the defendants’ celebrations (remember that similar euphoria followed Gore), uncertainty remains. In fact, Justice Ruth Bader Ginsburg’s dissent cautioned that Campbell “takes place on ground not long held.” In short, it may be too soon for defendants to celebrate.

What is certain is that substantive due process offers defendants a compelling argument: that disproportionate punitive judgments constitute an arbitrary deprivation of property by failing to provide defendants with fair notice of punishable conduct and fair notice of the gravity of the penalty. Specifically, Campbell affords defendants: