Bmw, Inc. v. Gore

517 U.S. 559 (1996)


Gore (P) purchased a black BMW for $40,750.88 from an authorized BMW distributor in Alabama. After driving the car for nine months, P took the car to an auto detailer who discovered that the car had been repainted. P sued BMW (D) for suppression of a material fact. At trial, D acknowledged that it had adopted a nationwide policy regarding damaged cars from transit and so long as the cost of repair did not exceed 3% of the value of the car, the car was repaired and sold as new without advising the dealer that any repairs had even been made. The cost of repainting P's car was 1.5% of the suggested retail price, and so the car was sold as new. P presented evidence to show that a repainted car was worth 10% less than one that had not been repainted. P then argued that punitive damages were proper and that $4,000 per vehicle was a proper measure of that damage for the 983 cars that had been repainted and sold as new. The jury found for P and assessed $4 million in punitive damages. D filed a post judgment motion to overturn the punitive damages award and presented evidence to show that its policy was in line with 25 state laws regarding the matter of repaired vehicles sold as new. D claimed that its nondisclosure policy was consistent with the laws in 25 states. D also entered evidence that showed its nondisclosure policy had never been adjudged unlawful before the action was filed. P pointed to the immediate response by D of reinstituting an honest policy of disclosing all repairs made on cars. P also entered evidence that D had numerous customer complaints on this very issue. P also maintained that the other states disclosure statutes were irrelevant because D failed to enter any evidence that they supplanted existing common law actions for fraud. The judge refused to reduce the punitive award. Eventually, D got a reduction in the verdict by appealing in that the award should be reduced to $2 million. The Alabama Supreme Court held that the jury improperly computed the amount of punitive damages by multiplying P’s compensatory damages by the number of similar sales in other jurisdictions. The court then held that a constitutionally reasonable damages award was $2 million and therefore it ordered remittitur in that amount; the court used comparative analysis that considered Alabama cases and cases from other jurisdictions. The Supreme Court granted certiorari.