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U.S. Supreme Court Sets New Constitutional Limits on Punitive Damages

Date: 04.07.03

On April 7, 2003, the U.S. Supreme Court set new constitutional limits on punitive damages in a ruling that the business community hailed as a major victory in the long-running effort to shield corporate defendants from unconstrained jury awards.

A $145 million punitive damages award atop a $1 million compensatory award in a bad faith insurance case is grossly excessive in violation of due process, the Court ruled. Applying the three "guideposts" from its BMW v. Gore ruling, it found the award mismatched to the defendant insurer's degree of reprehensibility, and disproportionate to the insured's actual harm and the analogous civil penalties under state law.

Among the amicus curiae briefs filed in this case, State Farm Mut. Auto Ins. Co. v. Campbell is one submitted by The Business Rountable - an association of the chief executives of major U.S. corporations. The association retained Malcolm E. Wheeler, a recognized national expert in the theory and practice of punitive damages, to prepare this brief. Wheeler is a partner at WTO.

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