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Law School Case Brief

BMW of N. Am. v. Gore - 701 So. 2d 507 (Ala. 1997)

Rule:

The following three "guideposts" are to be used by a reviewing court in determining whether a punitive damages award is constitutionally excessive: (1) the degree of reprehensibility of the defendant's conduct; (2) the ratio between the plaintiff's award of compensatory damages and the amount of the punitive damages; and (3) the difference between the punitive damages award and the civil or criminal sanctions that could be imposed for comparable misconduct.

Facts:

Dr. Ira Gore, purchaser of a BMW automobile, sued BMW of North America, Inc. (BMW), alleging, among other things, that BMW and Bayerische Motoren Werke, A.G., the foreign manufacturer of the automobile, had fraudulently failed to disclose to him that the automobile he was purchasing had been repainted after being damaged by acid rain during its shipment from Germany. At trial, BMW admitted that the car had been damaged and that BMW had a nationwide policy not to advise its dealers of pre-delivery damage to new cars when the cost of repair did not exceed three percent (3%) of the car's suggested retail price. The jury returned a verdict for Gore, awarding him $4,000 in compensatory damages and $4 million in punitive damages. The trial court denied BMW's post-trial motion challenging the punitive damages award as excessive.

Issue:

Was the punitive damages award of $4,000,000 excessive?

Answer:

Yes.

Conclusion:

The Court found the punitive award excessive and reduced it to $2 million. The Court found that BMW’s action was not highly reprehensible, emphasizing that the Gore was a successful medical doctor who was not financially vulnerable and had suffered meager economic damages. The Alabama Supreme Court concluded that the BMW could not have reasonably anticipated that its actions could incur such a large punitive damages award and that its due process rights were violated.

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