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State Farm v. Campbell: Good results, bad jurisprudence

By Robert S. Sargent, Jr.
web posted April 14, 2003

Recently, the Supreme Court in State Farm Mutual Automobile Insurance Co. v. Campbell et al., found that excessive punitive damages violates the Due Process Clause of the 14th Amendment. Isn't this a great victory for those of us who feel there needs to be a cap on the amount of punitive damages allowed? Maybe, but not a victory for those of us who feel that Justices should "apply the law," not impose their personal ideas of what's "right" or "fair."

It would seem that the Eighth Amendment would allow the Justices to "apply the law" in this matter, after all it says, "Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted." This was the argument used in 1989 in the case of Browning-Ferris Industries v. Kelco Disposal. In a unanimous decision, the Court held that "The Excessive Fines Clause of the Eighth Amendment does not apply to punitive damages awards in cases between private parties; it does not constrain such an award when the government neither has prosecuted the action nor has any right to recover a share of the damages awarded." This is very clear, as the Amendments are directed towards the government, and the Eighth Amendment will not be used in the future in these kinds of cases. The Due Process Clause is another matter.

In State Farm, Justice Kennedy, who delivered the majority opinion, wrote, "The Due Process Clause of the Fourteenth Amendment prohibits the imposition of grossly excessive or arbitrary punishments on a tortfeasor." Here's what the relevant part of the 14th Amendment says: "No State shall...deprive any person of life, liberty, or property, without due process of law…." I can see where a state may deprive a person of his property as long as there has been a fair trial, but I can't find where it prohibits "grossly excessive" deprivations.

Kennedy goes on to define what "grossly excessive" means. "Our jurisprudence and the principles it has now established demonstrate, however, that, in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process." So, if the ratio between compensatory and punitive damages is 9 to 1, the Constitution allows the award, and if it's 10 to 1, or higher, the Constitution starts frowning on it. This is what Kennedy and his five concurring Justices, including the often-disappointing Rehnquist, think that the framers of the Fourteenth Amendment had in mind!

Justice Scalia, in his dissent, refers to his dissent in the similar 1996 case BMW of North America, Inc. v. Gore: "The only support for the Court's position is to be found in a handful of errant federal cases, bunched within a few years of one another, which invented (my emphasis) the notion that an unfairly severe civil sanction amounts to a violation of constitutional liberties…. The Court has constructed a framework that does not genuinely constrain, that does not inform state legislatures and lower courts – that does 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….' By today's logic, every dispute as to evidentiary sufficiency in a state civil suit poses a question of constitutional moment, subject to review in this Court. That is a stupefying proposition."

Justice Ginsburg, who joined Thomas and Scalia in BMW, also joined them in State Farm. Usually wrong, but when Ginsburg is right, she can be very good. (I admired her attack on the use of the Equal Protection Clause in Bush v. Gore) She wrote: "In a legislative scheme or a state high court's design to cap punitive damages, the handiwork in setting single-digit and 1-to-1 benchmarks could hardly be questioned; in a judicial decree imposed on the States by this Court under the banner of substantive due process, the numerical controls today's decision installs seem to me boldly out of order."

Those of us looking for tort reform shouldn't be too quick to applaud last week's decision. Reform should be a legislative process, not, in the words of Justice Ginsburg, a "raised eyebrow test" given by an offended Supreme Court.

Robert S. Sargent, Jr. is a frequent contributor to Enter Stage Right and can be reached at rssjr@citcom.net.

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