State Farm Mutual Automobile Insurance Co v Campbell (2003): The Misguided Legacy of Proportionality

State Farm Mutual Automobile Insurance Co v Campbell (2003): The Misguided Legacy of Proportionality

Description

State Farm v Campbell stands as the ‘high water mark’ of constitutional excessiveness review of punitive damages in the United States, where the US Supreme Court has held that the Due Process Clause of the Fourteenth Amendment prohibits the imposition of grossly excessive or arbitrary punitive damages on a tortfeasor based on the notion that: Elementary notions of fairness enshrined in our constitutional jurisprudence dictate that a person receive fair notice not only of the conduct that will subject him to punishment, but also of the severity of the penalty that a State may impose. In Campbell, the Court overturned a US$145m punitive damages verdict against an insurance company that was assessed US$1m in compensatory damages for bad-faith failure to settle an automobile tort claim of one of its insureds. In so doing, the Court reasoned that ‘few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy [constitutional] due process’. Moreover, according to the Court, ‘an award of more than four times the amount of compensatory damages might be close to the line of constitutional impropriety’. With these dicta in Campbell, the Court planted the seeds of a particular type of ‘proportionality’ jurisprudence of punitive damages, focused narrowly on the ratio of punitive-to-compensatory damages. The effect on lower state and federal courts can be seen in their tendencies to ‘race to ratios’ of punitive to compensatory damages in their analyses of the validity of punitive damages awards. And the impact on legal scholarship is likewise evident in the rash of articles highlighting the quasi-criminal aspects of punitive damages excessiveness review. My central claim is that this particular brand of ‘proportionality jurisprudence’, which stems from an over-reading, if not misreading, of Campbell, has had a profound impact. It stands as Campbell’s misguided legacy. Regarding the proportionality-fueled ratio analysis, nowhere does the Court explain why the amount of compensatory damages should be an appropriate comparator for the excessiveness of the amount of punitive damages. Justice Kennedy (author of the Campbell majority opinion) himself evinced deep scepticism (in an earlier case): ‘The Constitution identifies no particular multiplier of compensatory damages as an acceptable limit for punitive awards; it does not concern itself with dollar amounts, ratios, or the quirks of juries in specific jurisdictions’. The relationship that should matter is between size of the punitive damages award and the legitimate objectives of punitive damages (punishment and deterrence) – which do not relate in any systematic way to the amount of compensatory damages. That critical point is obscured in the Campbell Court’s pronouncement that ‘Single-digit multipliers are more likely to comport with due process, while still achieving the State’s goal of deterrence and retribution, than awards with ratios in [the] range of 500 to 1’. The Supreme Court recognises here – as it has throughout its trilogy of punitive damages cases concerning constitutional excessiveness – that punitive damages is a state law remedy; and the Court is establishing ‘guidelines’ for reviewing excessiveness, not mandates to override legitimate state interests. This federalism principle – in this case, respect for the legitimate state law purposes of punitive damages – should mitigate the effects of the Campbell Court’s dicta that might otherwise be read as establishing a presumption (if not a bright-line rule) in favour of punitive awards with single-digit punitive-to-compensatory ratios. But few courts pause to consider the threshold question of why (ie, the purposes for which) punitive damages have been awarded at all, before plunging into their ratio analyses. To the extent courts and scholars do pause to engage the purposes of punitive damages, Campbell’s ‘proportionality’ message – drawn from the language of criminal law, where punishments are to be proportional to the crime – steers them towards the retributive punishment underpinnings of punitive damages, to the exclusion of the (non-retributive) deterrence purposes. Thus ‘blinded by proportionality’, courts and scholars – both in the United States and abroad – fail to recognise an alternative (but at least as crucial) non-retributive deterrence framework, centered on the internalisation of widespread harms.

First Page

265

DOI

https://doi.org/10.5040/9781509967032.ch-013

Source Publication

Landmark Cases in the Law of Punitive Damages

Source Editors/Authors

James Goudkamp, Eleni Katsampouka

Publication Date

12-8-2024

Publisher

Hart Publishing

State Farm Mutual Automobile Insurance Co v Campbell (2003): The Misguided Legacy of Proportionality

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