BMW of North America, Inc. v. Gore
Citation and Court
517 U.S. 559 (1996), Supreme Court of the United States
Facts
Gore purchased a new BMW and later discovered that the car had been repainted before sale due to minor damage, reducing its value by approximately 4,000 in compensatory damages and 2 million.
Issue
Whether the $2 million punitive damages award against BMW was so grossly excessive as to violate the Due Process Clause of the Fourteenth Amendment.
Holding
The Supreme Court held that the punitive damages award was unconstitutionally excessive and violated due process.
Rule / Doctrine
Courts must evaluate punitive damages awards under three guideposts: (1) the degree of reprehensibility of the defendant’s conduct; (2) the ratio between punitive damages and actual or potential harm suffered; and (3) the difference between the punitive award and civil penalties authorized for comparable misconduct. A 500:1 ratio of punitive to compensatory damages was grossly excessive.
Significance
BMW v. Gore established the constitutional framework for reviewing punitive damages awards, imposing substantive due process limits on excessive awards. It introduced the three-guidepost test that courts must apply and signaled that very high ratios of punitive to compensatory damages are constitutionally suspect. This case pairs with State Farm Mutual Automobile Insurance Co. v. Campbell to form the core punitive damages due process doctrine.