BMW of North America, Inc. v. Gore | 517 US 559 | May 20, 1996 | Pam Karlan

H2O

BMW of North America, Inc. v. Gore

by Pam Karlan
1
517 U.S. 559
116 S.Ct. 1589
134 L.Ed.2d 809
2
BMW OF NORTH AMERICA, INC.

v.

GORE

3
Certiorari to the Supreme Court of Alabama.
4
No. 94-896.
5
Supreme Court of the United States
6
Syllabus *
7
Argued October 11, 1995
8
Decided May 20, 1996
9

          Afterrespondent Gore purchased a new BMW automobile from an authorizedAlabama dealer, he discovered that the car had been repainted. Hebrought this suit for compensatory and punitive damages againstpetitioner, the American distributor of BMW's, alleging, interalia, that the failure to disclose the repainting constitutedfraud under Alabama law. At trial, BMW acknowledged that itfollowed a nationwide policy of not advising its dealers, and hencetheir customers, of predelivery damage to new cars when the cost ofrepair did not exceed 3 percent of the car's suggested retailprice. Gore's vehicle fell into that category. The jury returned averdict finding BMW liable for compensatory damages of $4,000, andassessing $4 million in punitive damages. The trial judge deniedBMW's post-trial motion to set aside the punitive damages award,holding, among other things, that the award was not "grosslyexcessive" and thus did not violate the Due Process Clause of theFourteenth Amendment. See, e.g., TXO Production Corp.v. Alliance Resources Corp., 509 U. S. 443, 454. The AlabamaSupreme Court agreed, but reduced the award to $2 million on theground that, in computing the amount, the jury had improperlymultiplied Gore's compensatory damages by the number of similarsales in all States, not just those in Alabama.

10

          Held:The $2 million punitive damages award is grossly excessive andtherefore exceeds the constitutional limit. Pp. 7-26.

11

            (a)Because such an award violates due process only when it can fairlybe categorized as "grossly excessive" in relation to the State'slegitimate interests in punishing unlawful conduct and deterringits repetition, cf. TXO, 509 U. S., at 456, the federalexcessiveness inquiry appropriately begins with an identificationof the state interests that such an award is designed to serve.Principles of state sovereignty and comity forbid a State to enactpolicies for the entire Nation, or to impose its own policy choiceon neighboring States. See e.g., Healy v. BeerInstitute, 491 U. S. 324, 335-336. Accordingly, the economicpenalties that a State inflicts on those who transgress its laws,whether the penalties are legislatively authorized fines orjudicially imposed punitive damages, must be supported by theState's interest in protecting its own consumers and economy,rather than those of other States or the entire Nation. Gore'saward must therefore be analyzed in the light of conduct thatoccurred solely within Alabama, with consideration being given onlyto the interests of Alabama consumers. Pp. 7-13.

12

            (b)Elementary notions of fairness enshrined in this Court'sconstitutional jurisprudence dictate that a person receive fairnotice not only of the conduct that will subject him to punishmentbut also of the severity of the penalty that a State may impose.Three guideposts, each of which indicates that BMW did not receiveadequate notice of the magnitude of the sanction that Alabama mightimpose, lead to the conclusion that the $2 million award is grosslyexcessive. Pp. 13-14.

13

          (c)None of the aggravating factors associated with the first (andperhaps most important) indicium of a punitive damages award'sexcessiveness-the degree of reprehensibility of the defendant'sconduct, see e.g., Day v. Woodworth, 13 How.363, 371-is present here. The harm BMW inflicted on Gore was purelyeconomic; the presale repainting had no effect on the car'sperformance, safety features, or appearance; and BMW's conductevinced no indifference to or reckless disregard for the health andsafety of others. Gore's contention that BMW's nondisclosure wasparticularly reprehensible because it formed part of a nationwidepattern of tortious conduct is rejected, because a corporateexecutive could reasonably have interpreted the relevant statestatutes as establishing safe harbors for nondisclosure ofpresumptively minor repairs, and because there is no evidenceeither that BMW acted in bad faith when it sought to establish theappropriate line between minor damage and damage requiringdisclosure to purchasers, or that it persisted in its course ofconduct after it had been adjudged unlawful. Finally, there is noevidence that BMW engaged in deliberate false statements, acts ofaffirmative misconduct, or concealment of evidence of impropermotive. Pp. 14-20.

14

            (d)The second (and perhaps most commonly cited) indicium ofexcessiveness-the ratio between the plaintiff's compensatorydamages and the amount of the punitive damages, see e.g.,TXO, 509 U. S., at 459-also weighs against Gore, because his $2million award is 500 times the amount of his actual harm asdetermined by the jury, and there is no suggestion that he or anyother BMW purchaser was threatened with any additional potentialharm by BMW's nondisclosure policy. Although it is not possible todraw a mathematical bright line between the constitutionallyacceptable and the constitutionally unacceptable that would fitevery case, see, e.g., id., at 458, the ratio here isclearly outside the acceptable range. Pp. 20-23.

15

            (e)Gore's punitive damages award is not saved by the third relevantindicium of excessiveness-the difference between it and the civilor criminal sanctions that could be imposed for comparablemisconduct, see, e.g., Pacific Mut. Life Ins.Co. v. Haslip, 499 U. S. 1, 23-because $2 million issubstantially greater than Alabama's applicable $2,000 fine and thepenalties imposed in other States for similar malfeasance, andbecause none of the pertinent statutes or interpretive decisionswould have put an out-of-state distributor on notice that it mightbe subject to a multimillion dollar sanction. Moreover, in theabsence of a BMW history of noncompliance with known statutoryrequirements, there is no basis for assuming that a more modestsanction would not have been sufficient. Pp. 23-25.

16

            (f)Thus, BMW's conduct was not sufficiently egregious to justify thesevere punitive sanction imposed against it. Whether theappropriate remedy requires a new trial or merely an independentdetermination by the Alabama Supreme Court of the award necessaryto vindicate Alabama consumers' economic interests is a matter forthat court to address in the first instance. Pp. 25-26.

17

          646So. 2d 619, reversed and remanded.

18

          Stevens,J., delivered the opinion of the Court, in which O'Connor, Kennedy,Souter, and Breyer, JJ., joined. Breyer, J., filed a concurringopinion, in which O'Connor and Souter, JJ., joined. Scalia, J.,filed a dissenting opinion, in which Thomas, J., joined. Ginsburg,J., filed a dissenting opinion, in which Rehnquist, C. J.,joined.

19

          JusticeStevens delivered the opinion of the Court.

20

          TheDue Process Clause of the Fourteenth Amendment prohibits a Statefrom imposing a "`grossly excessive'" punishment on a tortfeasor.TXO Production Corp. v. Alliance Resources Corp., 509U. S. 443, 454 (1993) (and cases cited). The wrongdoing involved inthis case was the decision by a national distributor of automobilesnot to advise its dealers, and hence their customers, ofpredelivery damage to new cars when the cost of repair amounted toless than 3 percent of the car's suggested retail price. Thequestion presented is whether a $2 million punitive damages awardto the purchaser of one of these cars exceeds the constitutionallimit.

21
I
22

          InJanuary 1990, Dr. Ira Gore, Jr. (respondent), purchased a black BMWsports sedan for $40,750.88 from an authorized BMW dealer inBirmingham, Alabama. After driving the car for approximately ninemonths, and without noticing any flaws in its appearance, Dr. Goretook the car to "Slick Finish," an independent detailer, to make itlook "`snazzier than it normally would appear.'" 646 So. 2d 619,621 (Ala. 1994). Mr. Slick, the proprietor, detected evidence thatthe car had been repainted. [1] Convinced that he had beencheated, Dr. Gore brought suit against petitioner BMW of NorthAmerica (BMW), the American distributor of BMW automobiles.[2] Dr. Gore alleged, inter alia, that the failureto disclose that the car had been repainted constituted suppressionof a material fact. [3] The complaint prayed for $500,000in compensatory and punitive damages, and costs.

23

          Attrial, BMW acknowledged that it had adopted a nationwide policy in1983 concerning cars that were damaged in the course of manufactureor transportation. If the cost of repairing the damage exceeded 3percent of the car's suggested retail price, the car was placed incompany service for a period of time and then sold as used. If therepair cost did not exceed 3 percent of the suggested retail price,however, the car was sold as new without advising the dealer thatany repairs had been made. Because the $601.37 cost of repaintingDr. Gore's car was only about 1.5 percent of its suggested retailprice, BMW did not disclose the damage or repair to the Birminghamdealer.

24

          Dr.Gore asserted that his repainted car was worth less than a car thathad not been refinished. To prove his actual damages of $4,000, herelied on the testimony of a former BMW dealer, who estimated thatthe value of a repainted BMW was approximately 10 percent less thanthe value of a new car that had not been damaged and repaired.[4] To support his claim for punitive damages, Dr. Goreintroduced evidence that since 1983 BMW had sold 983 refinishedcars as new, including 14 in Alabama, without disclosing that thecars had been repainted before sale at a cost of more than $300 pervehicle. [5] Using the actual damage estimate of $4,000per vehicle, Dr. Gore argued that a punitive award of $4 millionwould provide an appropriate penalty for selling approximately1,000 cars for more than they were worth.

25

          Indefense of its disclosure policy, BMW argued that it was under noobligation to disclose repairs of minor damage to new cars and thatDr. Gore's car was as good as a car with the original factoryfinish. It disputed Dr. Gore's assertion that the value of the carwas impaired by the repainting and argued that this good-faithbelief made a punitive award inappropriate. BMW also maintainedthat transactions in jurisdictions other than Alabama had norelevance to Dr. Gore's claim.

26

          Thejury returned a verdict finding BMW liable for compensatory damagesof $4,000. In addition, the jury assessed $4 million in punitivedamages, based on a determination that the nondisclosure policyconstituted "gross, oppressive or malicious" fraud. [6]See Ala. Code Section(s) 6-11-20, 6-11-21 (1993).

27

          BMWfiled a post-trial motion to set aside the punitive damages award.The company introduced evidence to establish that its nondisclosurepolicy was consistent with the laws of roughly 25 States definingthe disclosure obligations of automobile manufacturers,distributors, and dealers. The most stringent of these statutesrequired disclosure of repairs costing more than 3 percent of thesuggested retail price; none mandated disclosure of less costlyrepairs. [7] Relying on these statutes, BMW contended thatits conduct was lawful in these States and therefore could notprovide the basis for an award of punitive damages.

28

          BMWalso drew the court's attention to the fact that its nondisclosurepolicy had never been adjudged unlawful before this action wasfiled. Just months before Dr. Gore's case went to trial, the juryin a similar lawsuit filed by another Alabama BMW purchaser foundthat BMW's failure to disclose paint repair constituted fraud.Yates v. BMW of North America, Inc., 642 So. 2d 937(Ala. 1993). [8] Before the judgment in this case, BMWchanged its policy by taking steps to avoid the sale of anyrefinished vehicles in Alabama and two other States. When the $4million verdict was returned in this case, BMW promptly instituteda nationwide policy of full disclosure of all repairs, no matterhow minor.

29

          Inresponse to BMW's arguments, Dr. Gore asserted that the policychange demonstrated the efficacy of the punitive damages award. Henoted that while no jury had held the policy unlawful, BMW hadreceived a number of customer complaints relating to undisclosedrepairs and had settled some lawsuits. [9] Finally, hemaintained that the disclosure statutes of other States wereirrelevant because BMW had failed to offer any evidence that thedisclosure statutes supplanted, rather than supplemented, existingcauses of action for common-law fraud.

30

          Thetrial judge denied BMW's post-trial motion, holding, inter alia,that the award was not excessive. On appeal, the Alabama SupremeCourt also rejected BMW's claim that the award exceeded theconstitutionally permissible amount. 646 So. 2d 619 (1994). Thecourt's excessiveness inquiry applied the factors articulated inGreen Oil Co. v. Hornsby, 539 So. 2d 218, 223-224(Ala. 1989), and approved in Pacific Mut. Life Ins. Co. v.Haslip, 499 U. S. 1, 21-22 (1991). 646 So. 2d, at 624-625.Based on its analysis, the court concluded that BMW's conduct was"reprehensible"; the nondisclosure was profitable for the company;the judgment "would not have a substantial impact upon [BMW's]financial position"; the litigation had been expensive; no criminalsanctions had been imposed on BMW for the same conduct; the awardof no punitive damages in Yates reflected "the inherentuncertainty of the trial process"; and the punitive award bore a"reasonable relationship" to "the harm that was likely to occurfrom [BMW's] conduct as well as . . . the harm that actuallyoccurred." Id., at 625-627.

31

          TheAlabama Supreme Court did, however, rule in BMW's favor on onecritical point: The court found that the jury improperly computedthe amount of punitive damages by multiplying Dr. Gore'scompensatory damages by the number of similar sales in otherjurisdictions. Id., at 627. Having found the verdicttainted, the court held that "a constitutionally reasonablepunitive damages award in this case is $2,000,000," id., at629, and therefore ordered a remittitur in that amount.[10] The court's discussion of the amount of its remittedaward expressly disclaimed any reliance on "acts that occurred inother jurisdictions"; instead, the court explained that it had useda "comparative analysis" that considered Alabama cases, "along withcases from other jurisdictions, involving the sale of an automobilewhere the seller misrepresented the condition of the vehicle andthe jury awarded punitive damages to the purchaser."[11] Id., at 628.

32

          Becausewe believed that a review of this case would help to illuminate"the character of the standard that will identify constitutionallyexcessive awards" of punitive damages, see Honda Motor Co.v. Oberg, 512 U. S. ___, ___ (1994) (slip op., at 4), wegranted certiorari, 513 U. S. ___ (1995).

33
II
34

          Punitivedamages may properly be imposed to further a State's legitimateinterests in punishing unlawful conduct and deterring itsrepetition. Gertz v. Robert Welch, Inc., 418U. S. 323, 350 (1974); Newport v. Fact Concerts,Inc., 453 U. S. 247, 266-267 (1981); Haslip, 499 U.S., at 22. In our federal system, States necessarily haveconsiderable flexibility in determining the level of punitivedamages that they will allow in different classes of cases and inany particular case. Most States that authorize exemplary damagesafford the jury similar latitude, requiring only that the damagesawarded be reasonably necessary to vindicate the State's legitimateinterests in punishment and deterrence. See TXO, 509 U. S.,at 456; Haslip, 499 U. S., at 21, 22. Only when an award canfairly be categorized as "grossly excessive" in relation to theseinterests does it enter the zone of arbitrariness that violates theDue Process Clause of the Fourteenth Amendment. Cf. TXO, 509U. S., at 456. For that reason, the federal excessiveness inquiryappropriately begins with an identification of the state intereststhat a punitive award is designed to serve. We therefore focus ourattention first on the scope of Alabama's legitimate interests inpunishing BMW and deterring it from future misconduct.

35

          Noone doubts that a State may protect its citizens by prohibitingdeceptive trade practices and by requiring automobile distributorsto disclose presale repairs that affect the value of a new car. Butthe States need not, and in fact do not, provide such protection ina uniform manner. Some States rely on the judicial process toformulate and enforce an appropriate disclosure requirement byapplying principles of contract and tort law. [12] OtherStates have enacted various forms of legislation that define thedisclosure obligations of automobile manufacturers, distributors,and dealers. [13] The result is a patch-work of rulesrepresenting the diverse policy judgments of lawmakers in 50States.

36

          Thatdiversity demonstrates that reasonable people may disagree aboutthe value of a full disclosure requirement. Some legislatures mayconclude that affirmative disclosure requirements are unnecessarybecause the self-interest of those involved in the automobile tradein developing and maintaining the goodwill of their customers willmotivate them to make voluntary disclosures or to refrain fromselling cars that do not comply with self-imposed standards. Thoselegislatures that do adopt affirmative disclosure obligations maytake into account the cost of government regulation, choosing todraw a line exempting minor repairs from such a requirement. Informulating a disclosure standard, States may also consider othergoals, such as providing a "safe harbor" for automobilemanufacturers, distributors, and dealers against lawsuits overminor repairs. [14]

37

          Wemay assume, arguendo, that it would be wise for every State toadopt Dr. Gore's preferred rule, requiring full disclosure of everypresale repair to a car, no matter how trivial and regardless ofits actual impact on the value of the car. But while we do notdoubt that Congress has ample authority to enact such a policy forthe entire Nation, [15] it is clear that no single Statecould do so, or even impose its own policy choice on neighboringStates. See Bonaparte v. Tax Court, 104 U. S. 592,594 (1881) ("No State can legislate except with reference to itsown jurisdiction. . . . Each State is independent of all the othersin this particular").[16] Similarly, one State's power toimpose burdens on the interstate market for automobiles is not onlysubordinate to the federal power over interstate commerce,Gibbons v. Ogden, 9 Wheat. 1, 194-196 (1824), but isalso constrained by the need to respect the interests of otherStates, see, e.g., Healy v. Beer Institute,491 U. S. 324, 335-336 (1989) (the Constitution has a "specialconcern both with the maintenance of a national economic unionunfettered by state-imposed limitations on interstate commerce andwith the autonomy of the individual States within their respectivespheres" (footnote omitted)); Edgar v. MITE Corp.,457 U. S. 624, 643 (1982).

38

          Wethink it follows from these principles of state sovereignty andcomity that a State may not impose economic sanctions on violatorsof its laws with the intent of changing the tortfeasors' lawfulconduct in other States. [17] Before this Court Dr. Goreargued that the large punitive damages award was necessary toinduce BMW to change the nationwide policy that it adopted in 1983.[18] But by attempting to alter BMW's nationwide policy,Alabama would be infringing on the policy choices of other States.To avoid such encroachment, the economic penalties that a Statesuch as Alabama inflicts on those who transgress its laws, whetherthe penalties take the form of legislatively authorized fines orjudicially imposed punitive damages, must be supported by theState's interest in protecting its own consumers and its owneconomy. Alabama may insist that BMW adhere to a particulardisclosure policy in that State. Alabama does not have the power,however, to punish BMW for conduct that was lawful where itoccurred and that had no impact on Alabama or its residents.[19] Nor may Alabama impose sanctions on BMW in order todeter conduct that is lawful in other jurisdictions.

39

          Inthis case, we accept the Alabama Supreme Court's interpretation ofthe jury verdict as reflecting a computation of the amount ofpunitive damages "based in large part on conduct that happened inother jurisdictions." 646 So. 2d, at 627. As the Alabama SupremeCourt noted, neither the jury nor the trial court was presentedwith evidence that any of BMW's out-of-state conduct was unlawful."The only testimony touching the issue showed that approximately60% of the vehicles that were refinished were sold in states wherefailure to disclose the repair was not an unfair trade practice."Id., at 627, n. 6. [20] The Alabama Supreme Courttherefore properly eschewed reliance on BMW's out-of-state conduct,id., at 628, and based its remitted award solely on conductthat occurred within Alabama. [21] The award must beanalyzed in the light of the same conduct, with consideration givenonly to the interests of Alabama consumers, rather than those ofthe entire Nation. When the scope of the interest in punishment anddeterrence that an Alabama court may appropriately consider isproperly limited, it is apparent-for reasons that we shall nowaddress-that this award is grossly excessive.

40
III
41

          Elementarynotions of fairness enshrined in our constitutional jurisprudencedictate that a person receive fair notice not only of the conductthat will subject him to punishment but also of the severity of thepenalty that a State may impose. [22] Three guideposts,each of which indicates that BMW did not receive adequate notice ofthe magnitude of the sanction that Alabama might impose foradhering to the nondisclosure policy adopted in 1983, lead us tothe conclusion that the $2 million award against BMW is grosslyexcessive: the degree of reprehensibility of the nondisclosure; thedisparity between the harm or potential harm suffered by Dr. Goreand his punitive damages award; and the difference between thisremedy and the civil penalties authorized or imposed in comparablecases. We discuss these considerations in turn.

42

          Degreeof Reprehensibility

43

          Perhapsthe most important indicium of the reasonableness of a punitivedamages award is the degree of reprehensibility of the defendant'sconduct. [23] As the Court stated nearly 150 years ago,exemplary damages imposed on a defendant should reflect "theenormity of his offense." Day v. Woodworth, 13 How.363, 371 (1852). See also St. Louis, I. M. & S. R. Co.v. Williams, 251 U. S. 63, 66-67 (1919) (punitive award maynot be "wholly disproportioned to the offense"); Browning-FerrisIndustries of Vt., Inc. v. Kelco Disposal, Inc.,492 U. S. 257, 301 (1989) (O'Connor, J., concurring in part anddissenting in part) (reviewing court "should examine the gravity ofthe defendant's conduct and the harshness of the award of punitivedamages").[24] This principle reflects the accepted viewthat some wrongs are more blameworthy than others. Thus, we havesaid that "nonviolent crimes are less serious than crimes marked byviolence or the threat of violence." Solem v. Helm,463 U. S. 277, 292-293 (1983). Similarly, "trickery and deceit",TXO, 509 U. S., at 462, are more reprehensible thannegligence. In TXO, both the West Virginia Supreme Court andthe Justices of this Court placed special emphasis on the principlethat punitive damages may not be "grossly out of proportion to theseverity of the offense." [25] Id., at 453, 462.Indeed, for Justice Kennedy, the defendant's intentional malice wasthe decisive element in a "close and difficult" case. Id.,at 468. [26]

44

          Inthis case, none of the aggravating factors associated withparticularly reprehensible conduct is present. The harm BMWinflicted on Dr. Gore was purely economic in nature. The presalerefinishing of the car had no effect on its performance or safetyfeatures, or even its appearance for at least nine months after hispurchase. BMW's conduct evinced no indifference to or recklessdisregard for the health and safety of others. To be sure,infliction of economic injury, especially when done intentionallythrough affirmative acts of misconduct, id., at 453, or whenthe target is financially vulnerable, can warrant a substantialpenalty. But this observation does not convert all acts that causeeconomic harm into torts that are sufficiently reprehensible tojustify a significant sanction in addition to compensatorydamages.

45

          Dr.Gore contends that BMW's conduct was particularly reprehensiblebecause nondisclosure of the repairs to his car formed part of anationwide pattern of tortious conduct. Certainly, evidence that adefendant has repeatedly engaged in prohibited conduct whileknowing or suspecting that it was unlawful would provide relevantsupport for an argument that strong medicine is required to curethe defendant's disrespect for the law. See id., at 462, n.28. Our holdings that a recidivist may be punished more severelythan a first offender recognize that repeated misconduct is morereprehensible than an individual instance of malfeasance. SeeGryger v. Burke, 334 U. S. 728, 732 (1948).

46

          Insupport of his thesis, Dr. Gore advances two arguments. First, heasserts that the state disclosure statutes supplement, rather thansupplant, existing remedies for breach of contract and common-lawfraud. Thus, according to Dr. Gore, the statutes may not properlybe viewed as immunizing from liability the nondisclosure of repairscosting less than the applicable statutory threshold. Brief forRespondent 18-19. Second, Dr. Gore maintains that BMW should haveanticipated that its failure to disclose similar repair work couldexpose it to liability for fraud. Id., at 4-5.

47

          Werecognize, of course, that only state courts may authoritativelyconstrue state statutes. As far as we are aware, at the time thisaction was commenced no state court had explicitly addressedwhether its State's disclosure statute provides a safe harbor fornondisclosure of presumptively minor repairs or should be construedinstead as supplementing common-law duties. [27] A reviewof the text of the statutes, however, persuades us that in theabsence of a state-court determination to the contrary, a corporateexecutive could reasonably interpret the disclosure requirements asestablishing safe harbors. In California, for example, thedisclosure statute defines "material" damage to a motor vehicle asdamage requiring repairs costing in excess of 3 percent of thesuggested retail price or $500, whichever is greater. Cal. Veh.Code Ann. Section(s) 9990 (West Supp. 1996). The Illinois statutestates that in cases in which disclosure is not required,"nondisclosure does not constitute a misrepresentation or omissionof fact." Ill. Comp. Stat., ch. 815, Section(s) 710/5 (1994).[28] Perhaps the statutes may also be interpreted inanother way. We simply emphasize that the record contains noevidence that BMW's decision to follow a disclosure policy thatcoincided with the strictest extant state statute was sufficientlyreprehensible to justify a $2 million award of punitivedamages.

48

          Dr.Gore's second argument for treating BMW as a recidivist is that thecompany should have anticipated that its actions would beconsidered fraudulent in some, if not all, jurisdictions. Thiscontention overlooks the fact that actionable fraud requires amaterial misrepresentation or omission. [29] Thisqualifier invites line drawing of just the sort engaged in byStates with disclosure statutes and by BMW. We do not think it canbe disputed that there may exist minor imperfections in the finishof a new car that can be repaired (or indeed, left unrepaired)without materially affecting the car's value. [30] Thereis no evidence that BMW acted in bad faith when it sought toestablish the appropriate line between presumptively minor damageand damage requiring disclosure to purchasers. For this purpose,BMW could reasonably rely on state disclosure statutes forguidance. In this regard, it is also significant that there is noevidence that BMW persisted in a course of conduct after it hadbeen adjudged unlawful on even one occasion, let alone repeatedoccasions. [31]

49

          Finally,the record in this case discloses no deliberate false statements,acts of affirmative misconduct, or concealment of evidence ofimproper motive, such as were present in Haslip andTXO. Haslip, 499 U. S., at 5, TXO, 509 U. S.,at 453. We accept, of course, the jury's finding that BMWsuppressed a material fact which Alabama law obligated it tocommunicate to prospective purchasers of repainted cars in thatState. But the omission of a material fact may be lessreprehensible than a deliberate false statement, particularly whenthere is a good-faith basis for believing that no duty to discloseexists.

50

          Thatconduct is sufficiently reprehensible to give rise to tortliability, and even a modest award of exemplary damages, does notestablish the high degree of culpability that warrants asubstantial punitive damages award. Because this case exhibits noneof the circumstances ordinarily associated with egregiouslyimproper conduct, we are persuaded that BMW's conduct was notsufficiently reprehensible to warrant imposition of a $2 millionexemplary damages award.

51

          Ratio

52

          Thesecond and perhaps most commonly cited indicium of an unreasonableor excessive punitive damages award is its ratio to the actual harminflicted on the plaintiff. See TXO, 509 U. S., at 459;Haslip, 499 U. S., at 23. The principle that exemplarydamages must bear a "reasonable relationship" to compensatorydamages has a long pedigree. [32] Scholars have identifieda number of early English statutes authorizing the award ofmultiple damages for particular wrongs. Some 65 differentenactments during the period between 1275 and 1753 provided fordouble, treble, or quadruple damages. [33] Our decisionsin both Haslip and TXO endorsed the proposition thata comparison between the compensatory award and the punitive awardis significant.

53

          InHaslip we concluded that even though a punitive damagesaward of "more than 4 times the amount of compensatory damages,"might be "close to the line," it did not "cross the line into thearea of constitutional impropriety." Haslip, 499 U. S., at23-24. TXO, following dicta in Haslip, refined thisanalysis by confirming that the proper inquiry is "`whether thereis a reasonable relationship between the punitive damages award andthe harm likely to result from the defendant's conduct aswell as the harm that actually has occurred.'" TXO, 509 U.S., at 460 (emphasis in original), quoting Haslip, 499 U.S., at 21. Thus, in upholding the $10 million award in TXO,we relied on the difference between that figure and the harm to thevictim that would have ensued if the tortious plan had succeeded.That difference suggested that the relevant ratio was not more than10 to 1. [34]

54

          The$2 million in punitive damages awarded to Dr. Gore by the AlabamaSupreme Court is 500 times the amount of his actual harm asdetermined by the jury. [35] Moreover, there is nosuggestion that Dr. Gore or any other BMW purchaser was threatenedwith any additional potential harm by BMW's nondisclosure policy.The disparity in this case is thus dramatically greater than thoseconsidered in Haslip and TXO. [36]

55

          Ofcourse, we have consistently rejected the notion that theconstitutional line is marked by a simple mathematical formula,even one that compares actual and potential damages to thepunitive award. TXO, 509 U. S., at 458. [37]Indeed, low awards of compensatory damages may properly support ahigher ratio than high compensatory awards, if, for example, aparticularly egregious act has resulted in only a small amount ofeconomic damages. A higher ratio may also be justified in cases inwhich the injury is hard to detect or the monetary value ofnoneconomic harm might have been difficult to determine. It isappropriate, therefore, to reiterate our rejection of a categoricalapproach. Once again, "we return to what we said . . . inHaslip: `We need not, and indeed we cannot, draw amathematical bright line between the constitutionally acceptableand the constitutionally unacceptable that would fit every case. Wecan say, however, that [a] general concer[n] of reasonableness . .. properly enter[s] into the constitutional calculus.'" TXO,509 U. S., at 458 (quoting Haslip, 499 U. S., at 18). Inmost cases, the ratio will be within a constitutionally acceptablerange, and remittitur will not be justified on this basis. When theratio is a breathtaking 500 to 1, however, the award must surely"raise a suspicious judicial eyebrow." TXO, 509 U. S., at482 (O'Connor, J., dissenting).

56

          Sanctionsfor Comparable Misconduct

57

          Comparingthe punitive damages award and the civil or criminal penalties thatcould be imposed for comparable misconduct provides a thirdindicium of excessiveness. As Justice O'Connor has correctlyobserved, a reviewing court engaged in determining whether an awardof punitive damages is excessive should "accord `substantialdeference' to legislative judgments concerning appropriatesanctions for the conduct at issue." Browning-Ferris Industriesof Vt., Inc. v. Kelco Disposal, Inc., 492 U. S.,at 301 (O'Connor, J., concurring in part and dissenting in part).In Haslip, 499 U. S., at 23, the Court noted that althoughthe exemplary award was "much in excess of the fine that could beimposed," imprisonment was also authorized in the criminal context.[38] In this case the $2 million economic sanction imposedon BMW is substantially greater than the statutory fines availablein Alabama and elsewhere for similar malfeasance.

58

          Themaximum civil penalty authorized by the Alabama Legislature for aviolation of its Deceptive Trade Practices Act is $2,000;[39] other States authorize more severe sanctions, withthe maxima ranging from $5,000 to $10,000. [40]Significantly, some statutes draw a distinction between firstoffenders and recidivists; thus, in New York the penalty is $50 fora first offense and $250 for subsequent offenses. None of thesestatutes would provide an out-of-state distributor with fair noticethat the first violation-or, indeed the first 14 violations-of itsprovisions might subject an offender to a multimillion dollarpenalty. Moreover, at the time BMW's policy was first challenged,there does not appear to have been any judicial decision in Alabamaor elsewhere indicating that application of that policy might giverise to such severe punishment.

59

          Thesanction imposed in this case cannot be justified on the groundthat it was necessary to deter future misconduct withoutconsidering whether less drastic remedies could be expected toachieve that goal. The fact that a multimillion dollar penaltyprompted a change in policy sheds no light on the question whethera lesser deterrent would have adequately protected the interests ofAlabama consumers. In the absence of a history of noncompliancewith known statutory requirements, there is no basis for assumingthat a more modest sanction would not have been sufficient tomotivate full compliance with the disclosure requirement imposed bythe Alabama Supreme Court in this case.

60
IV
61

          Weassume, as the juries in this case and in the Yates case found,that the undisclosed damage to the new BMW's affected their actualvalue. Notwithstanding the evidence adduced by BMW in an effort toprove that the repainted cars conformed to the same qualitystandards as its other cars, we also assume that it knew, or shouldhave known, that as time passed the repainted cars would lose theirattractive appearance more rapidly than other BMW's. Moreover, weof course accept the Alabama courts' view that the state interestin protecting its citizens from deceptive trade practices justifiesa sanction in addition to the recovery of compensatory damages. Wecannot, however, accept the conclusion of the Alabama Supreme Courtthat BMW's conduct was sufficiently egregious to justify a punitivesanction that is tantamount to a severe criminal penalty.

62

          Thefact that BMW is a large corporation rather than an impecuniousindividual does not diminish its entitlement to fair notice of thedemands that the several States impose on the conduct of itsbusiness. Indeed, its status as an active participant in thenational economy implicates the federal interest in preventingindividual States from imposing undue burdens on interstatecommerce. While each State has ample power to protect its ownconsumers, none may use the punitive damages deterrent as a meansof imposing its regulatory policies on the entire Nation.

63

          Asin Haslip, we are not prepared to draw a bright line markingthe limits of a constitutionally acceptable punitive damages award.Unlike that case, however, we are fully convinced that the grosslyexcessive award imposed in this case transcends the constitutionallimit. [41] Whether the appropriate remedy requires a newtrial or merely an independent determination by the Alabama SupremeCourt of the award necessary to vindicate the economic interests ofAlabama consumers is a matter that should be addressed by the statecourt in the first instance.

64

          Thejudgment is reversed, and the case is remanded for furtherproceedings not inconsistent with this opinion.

65

          Itis so ordered.

66

djq Justice Breyer, with whom Justice O'Connor and JusticeSouter join, concurring.

67

          TheAlabama state courts have assessed the defendant $2 million in"punitive damages" for having knowingly failed to tell a BMWautomobile buyer that, at a cost of $600, it had repainted portionsof his new $40,000 car, thereby lowering its potential resale valueby about 10%. The Court's opinion, which I join, explains why wehave concluded that this award, in this case, was "grosslyexcessive" in relation to legitimate punitive damages objectives,and hence an arbitrary deprivation of life, liberty, or property inviolation of the Due Process Clause. See TXO ProductionCorp. v. Alliance Resources Corp., 509 U. S. 443, 453,454 (1993) (A "grossly excessive" punitive award amounts to an"arbitrary deprivation of property without due process of law")(plurality opinion). Members of this Court have generally thought,however, that if "fair procedures were followed, a judgment that isa product of that process is entitled to a strong presumption ofvalidity." Id., at 457. See also Pacific Mut. Life Ins.Co. v. Haslip, 499 U. S. 1, 40-42 (1991) (Kennedy, J.,concurring in judgment). And the Court also has found that punitivedamages procedures very similar to those followed here were not, bythemselves, fundamentally unfair. Id., at 15-24. Thus, Ibelieve it important to explain why this presumption of validity isovercome in this instance.

68

          Thereason flows from the Court's emphasis in Haslip upon theconstitutional importance of legal standards that provide"reasonable constraints" within which "discretion is exercised,"that assure "meaningful and adequate review by the trial courtwhenever a jury has fixed the punitive damages," and permit"appellate review [that] makes certain that the punitive damagesare reasonable in their amount and rational in light of theirpurpose to punish what has occurred and to deter its repetition."Id., at 20-21. See also id., at 18 ("[U]nlimited jurydiscretion-or unlimited judicial discretion for that matter-in thefixing of punitive damages may invite extreme results that jarone's constitutional sensibilities").

69

          Thisconstitutional concern, itself harkening back to the Magna Carta,arises out of the basic unfairness of depriving citizens of life,liberty, or property, through the application, not of law and legalprocesses, but of arbitrary coercion. Daniels v.Williams, 474 U. S. 327, 331 (1986); Dent v. WestVirginia, 129 U. S. 114, 123 (1889). Requiring the applicationof law, rather than a decisionmaker's caprice, does more thansimply provide citizens notice of what actions may subject them topunishment; it also helps to assure the uniform general treatmentof similarly situated persons that is the essence of law itself.See Railway Express Agency, Inc. v. New York, 336 U.S. 106, 112 (1949) (Jackson, J., concurring) ("[T]here is no moreeffective practical guaranty against arbitrary and unreasonablegovernment than to require that the principles of law whichofficials would impose upon a minority must be imposedgenerally").

70

          Legalstandards need not be precise in order to satisfy thisconstitutional concern. See Haslip, supra, at 20(comparing punitive damages standards to such legal standards as"reasonable care," "due diligence," and "best interests of thechild") (internal quotation marks omitted). But they must offersome kind of constraint upon a jury or court's discretion, and thusprotection against purely arbitrary behavior. The standards theAlabama courts applied here are vague and open-ended to the pointwhere they risk arbitrary results. In my view, although thevagueness of those standards does not, by itself, violate dueprocess, see Haslip, supra, it does invite the kindof scrutiny the Court has given the particular verdict before us.See id., at 18 ("[C]oncerns of . . . adequate guidance fromthe court when the case is tried to a jury properly enter into theconstitutional calculus"); TXO, supra, at 475 ("[I]tcannot be denied that the lack of clear guidance heightens the riskthat arbitrariness, passion, or bias will replace dispassionatedeliberation as the basis for the jury's verdict") (O'Connor, J.,dissenting). This is because the standards, as the Alabama SupremeCourt authoritatively interpreted them here, provided nosignificant constraints or protection against arbitraryresults.

71

          First,the Alabama statute that permits punitive damages does not itselfcontain a standard that readily distinguishes between conductwarranting very small, and conduct warranting very large, punitivedamages awards. That statute permits punitive damages in cases of"oppression, fraud, wantonness, or malice." Ala. Code Section(s)6-11-20(a) (1993). But the statute goes on to define those termsbroadly, to encompass far more than the egregious conduct thatthose terms, at first reading, might seem to imply. An intentionalmisrepresentation, made through a statement or silence, can easilyamount to "fraud" sufficient to warrant punitive damages. SeeSection(s) 6-11-20(b)(1) ("Fraud" includes "intentional . . .concealment of a material fact the concealing party had a duty todisclose, which was gross, oppressive, or malicious andcommitted with the intention . . . of thereby depriving a person orentity of property") (emphasis added); Section(s)6-11-20(b)(2)("Malice" includes any "wrongful actwithout just cause or excuse . . . [w]ith an intentto injure the . . . property of another") (emphasisadded); Section(s) 6-11-20(b)(5) ("Oppression" includes"[s]ubjecting a person to . . . unjust hardship in consciousdisregard of that person's rights"). The statute thereby authorizespunitive damages for the most serious kinds of misrepresentations,say, tricking the elderly out of their life savings, for much lessserious conduct, such as the failure to disclose repainting a car,at issue here, and for a vast range of conduct in between.

72

          Second,the Alabama courts, in this case, have applied the "factors"intended to constrain punitive damages awards, in a way that beliesthat purpose. Green Oil Co. v. Hornsby, 539 So. 2d218 (Ala. 1989), sets forth seven factors that appellate courts useto determine whether or not a jury award was "grossly excessive"and which, in principle, might make up for the lack of significantconstraint in the statute. But, as the Alabama courts haveauthoritatively interpreted them, and as their application in thiscase illustrates, they impose little actual constraint.

73

            (a)Green Oil requires that a punitive damages award "bear areasonable relationship to the harm that is likely to occur fromthe defendant's conduct as well as to the harm that actually hasoccurred." Id., at 223. But this standard does little toguide a determination of what counts as a "reasonable"relationship, as this case illustrates. The record evidence ofpast, present, or likely future harm consists of (a) $4,000 of harmto Dr. Gore's BMW; (b) 13 other similar Alabama States. The AlabamaSupreme Court, disregarding BMW's failure to make relevantobjection to the out-of-state instances at trial (as was thecourt's right), held that the last mentioned, out-of-stateinstances did not count as relevant harm. It went on to find "areasonable relationship" between the harm and the $2 millionpunitive damages award without "consider[ing] those acts thatoccurred in other jurisdictions." 646 So. 2d 619, 628 (1995)(emphasis added). For reasons explored by the majority in greaterdepth, see ante, at 13-25, the relationship between thisaward and the underlying conduct seems well beyond the bounds ofthe "reasonable." To find a "reasonable relationship" betweenpurely economic harm totaling $56,000, without significant evidenceof future repetition, and a punitive award of $2 million is toempty the "reasonable relationship" test of meaningful content. Asthus construed, it does not set forth a legal standard that couldhave significantly constrained the discretion of Alabamafactfinders.

74

          (b)Green Oil's second factor is the "degree ofreprehensibility" of the defendant's conduct. Green Oil,supra, at 223. Like the "reasonable relationship" test, thisfactor provides little guidance on how to relate culpability to thesize of an award. The Alabama court, in considering this factor,found "reprehensible" that BMW followed a conscious policy of notdisclosing repairs to new cars when the cost of repairs amounted toless than 3% of the car's value. Of course, any conscious policy ofnot disclosing a repair-where one knows the nondisclosure mightcost the customer resale value-is "reprehensible" to somedegree. But, for the reasons discussed by the majority,ante, at 14-20, I do not see how the Alabama courts couldfind conduct that (they assumed) caused $56,000 of relevanteconomic harm especially or unusually reprehensible enoughto warrant $2 million in punitive damages, or a significant portionof that award. To find to the contrary, as the Alabama courts did,is not simply unreasonable; it is to make "reprehensibility" aconcept without constraining force, i.e., to deprive theconcept of its constraining power to protect against serious andcapricious deprivations.

75

          (c)Green Oil's third factor requires "punitive damages" to"remove the profit" of the illegal activity and "be in excess ofthe profit, so that the defendant recognizes a loss." GreenOil, supra, at 223. This factor has the ability to limitawards to a fixed, rational amount. But as applied, that concept'spotential was not realized, for the court did not limit the awardto anywhere near the $56,000 in profits evidenced in the record.Given the record's description of the conduct and its prevalence,this factor could not justify much of the $2 million award.

76

            (d)Green Oil's fourth factor is the "financial position" of thedefendant. Ibid. Since a fixed dollar award will punish apoor person more than a wealthy one, one can understand therelevance of this factor to the state's interest in retribution(though not necessarily to its interest in deterrence, given themore distant relation between a defendant's wealth and itsresponses to economic incentives). See TXO, 509 U. S., at462, and n. 28 (plurality opinion); id., at 469 (Kennedy,J., concurring in part and concurring in judgment); Haslip,499 U. S., at 21-22; Browning-Ferris Industries of Vt., Inc.v. Kelco Disposal, Inc., 492 U. S. 257, 300 (1989)(O'Connor, J., concurring in part, dissenting in part). Thisfactor, however, is not necessarily intended to act as asignificant constraint on punitive awards. Rather, itprovides an open-ended basis for inflating awards when thedefendant is wealthy, as this case may illustrate. That does notmake its use unlawful or inappropriate; it simply means that thisfactor cannot make up for the failure of other factors, such as"reprehensibility," to constrain significantly an award thatpurports to punish a defendant's conduct.

77

            (e)Green Oil's fifth factor is the "costs of litigation" andthe State's desire "to encourage plaintiffs to bring wrongdoers totrial." 539 So. 2d, at 223. This standard provides meaningfulconstraint to the extent that the enhancement it authorized islinked to a fixed, ascertainable amount approximating actual costs,even when defined generously to reflect the contingent nature ofplaintiffs' victories. But as this case shows, the factor cannotoperate as a constraint when an award much in excess of costs isapproved for other reasons. An additional aspect of thestandard-the need to "encourage plaintiffs to bring wrongdoers totrial"-is a factor that does not constrain, but enhances,discretionary power-especially when unsupported by evidence of aspecial need to encourage litigation (which the Alabamacourts here did not mention).

78

            (f)Green Oil's sixth factor is whether or not "criminalsanctions have been imposed on the defendant for his conduct."Ibid. This factor did not apply here.

79

            (g)Green Oil's seventh factor requires that "other civilactions" filed "against the same defendant, based on the sameconduct" be considered in mitigation. Id., at 224. Thatfactor did not apply here.

80

          Thus,the first, second, and third Green Oil factors, inprinciple, might sometimes act as constraints on arbitrarybehavior. But as the Alabama courts interpreted those standardsin this case, even taking those three factors together, theycould not have significantly constrained the court system's abilityto impose "grossly excessive" awards.

81

          Third,the state courts neither referred to, nor made any effort to find,nor enunciated any other standard, that either directly, orindirectly as background, might have supplied the constraininglegal force that the statute and Green Oil standards (asinterpreted here) lack. Dr. Gore did argue to the jury an economictheory based on the need to offset the totality of the harm thatthe defendant's conduct caused. Some theory of that general kindmight have provided a significant constraint on arbitrary awards(at least where confined to the relevant harm-causing conduct, seeante, at 10-13). Some economists, for example, have arguedfor a standard that would deter illegal activity causing solelyeconomic harm through the use of punitive damages awards that, as awhole, would take from a wrongdoer the total cost of the harmcaused. See, e.g., S. Shavell, Economic Analysis of AccidentLaw 162 (1987) ("If liability equals losses caused multiplied by .. . the inverse of the probability of suit, injurers will actoptimally under liability rules despite the chance that they willescape suit"); Cooter, Punitive Damages for Deterrence: When andHow Much, 40 Ala. L. Rev. 1143, 1146-1148 (1989). My understandingof the intuitive essence of some of those theories, which I put incrude form (leaving out various qualifications), is that they couldpermit juries to calculate punitive damages by making a roughestimate of global harm, dividing that estimate by a similarlyrough estimate of the number of successful lawsuits that wouldlikely be brought, and adding generous attorneys fees and othercosts. Smaller damages would not sufficiently discourage firms fromengaging in the harmful conduct, while larger damages would"over-deter" by leading potential defendants to spend more toprevent the activity that causes the economic harm, say, throughemployee training, than the cost of the harm itself. See Galligan,Augmented Awards: The Efficient Evolution of Punitive Damages, 51La. L. Rev. 3, 17-20, 28-30 (1990). Larger damages might also"double count" by including in the punitive damages award some ofthe compensatory, or punitive, damages that subsequent plaintiffswould also recover.

82

          Therecord before us, however, contains nothing suggesting that theAlabama Supreme Court, when determining the allowable award,applied any "economic" theory that might explain the $2 millionrecovery. Cf. Browning-Ferris, supra, at 300 (notingthat the Constitution "does not incorporate the views of the Lawand Economics School," nor does it "`require the States tosubscribe to any particular economic theory'") (O'Connor, J.,concurring in part and dissenting in part) (quoting CTSCorp. v. Dynamics Corp. of America, 481 U. S. 69, 92(1987)). And courts properly tend to judge the rationality ofjudicial actions in terms of the reasons that were given, and thefacts that were before the court, cf. TXO, 509 U. S., at 468(Kennedy, J., concurring in part and concurring in judgment), notthose that might have been given on the basis of some conceivableset of facts (unlike the rationality of economic statutes enactedby legislatures subject to the public's control through the ballotbox, see, e.g., FCC v. Beach Communications,Inc., 508 U. S. 307, 315 (1993)). Therefore, reference to aconstraining "economic" theory, which might have counseled moredeferential review by this Court, is lacking in this case.

83

          Fourth,I cannot find any community understanding or historic practice thatthis award might exemplify and which, therefore, would providebackground standards constraining arbitrary behavior and excessiveawards. A punitive damages award of $2 million for intentionalmisrepresentation causing $56,000 of harm is extraordinary byhistorical standards, and, as far as I am aware, finds no analogueuntil relatively recent times. Amici for Dr. Gore attempt toshow that this is not true, pointing to various historical caseswhich, according to their calculations, represented roughlyequivalent punitive awards for similarly culpable conduct. SeeBrief for James D. A. Boyle et al. as Amici Curiae 4-5(hereinafter Legal Historians' Brief). Among others, they citeWilkes v. Wood, Lofft 1, 98 Eng. Rep. 489 (C. P.1763) ( 1,000 said to be equivalent of $1.5 million, forwarrantless search of papers); Huckle v. Money, 2Wills. 205, 95 Eng. Rep. 768 (K. B. 1763) ( 300, said to be$450,000, for 6-hour false imprisonment); Hewlett v.Cruchley, 5 Taunt. 277, 128 Eng. Rep. 696 (C. P. 1813) (2,000, said to be $680,000, for malicious prosection);Merest v. Harvey, 5 Taunt. 442, 128 Eng. Rep. 761 (C.P. 1814) ( 500, said to be $165,000, for poaching). But amiciapparently base their conversions on a mathematical assumption,namely that inflation has progressed at a constant 3% rate ofinflation. See Legal Historians' Brief 4. In fact, consistent,cumulative inflation is a modern phenomenon. See McCusker, How MuchIs That in Real Money? A Historical Price Index for Use as aDeflator of Money Values in the Economy of the United States, 101Proceedings of American Antiquarian Society 297, 310, 323-332(1992). Estimates based on historical rates of valuation, whilehighly approximate, suggest that the ancient extraordinary awardsare small compared to the $2 million here at issue, or other modernpunitive damages figures. See Appendix to this opinion,infra, at 13-14 (suggesting that the modern equivalent ofthe awards in the above cases is something like $150,000, $45,000,$100,000, and $25,000 respectively). And, as the majority opinionmakes clear, the record contains nothing to suggest that theextraordinary size of the award in this case is explained by theextraordinary wrongfulness of the defendant's behavior, measured byhistorical or community standards, rather than arbitrariness orcaprice.

84

          Fifth,there are no other legislative enactments here that classify awardsand impose quantitative limits that would significantly cabin thefairly unbounded discretion created by the absence of constraininglegal standards. Cf., e.g., Tex. Civ. Prac. & Rem. CodeAnn. Section(s) 41.008 (Supp. 1996) (punitive damages generallylimited to greater of double damages, or $200,000, except cap doesnot apply to suits arising from certain serious criminal actsenumerated in the statute); Conn. Gen. Stat. Section(s) 52-240b(1995) (punitive damages may not exceed double compensatory damagesin product liability cases); Fla. Stat. Section(s) 768.73(1) (Supp.1993) (punitive damages in certain actions limited to treblecompensatory damages); Ga. Code. Ann. Section(s) 51-12-5.1(g)(Supp. 1995) ($250,000 cap in certain actions).

85

          Theupshot is that the rules that purport to channel discretion in thiskind of case, here did not do so in fact. That means that the awardin this case was both (a) the product of a system of standards thatdid not significantly constrain a court's, and hence a jury's,discretion in making that award; and (b) was grossly excessive inlight of the State's legitimate punitive damages objectives.

86

          Thefirst of these reasons has special importance where courts review ajury-determined punitive damages award. That is because one cannotexpect to direct jurors like legislators through the ballot box;nor can one expect those jurors to interpret law like judges, whowork within a discipline and hierarchical organization thatnormally promotes roughly uniform interpretation and application ofthe law. Yet here Alabama expects jurors to act, at least a little,like legislators or judges, for it permits them, to a certainextent, to create public policy and to apply that policy, not tocompensate a victim, but to achieve a policy-related objectiveoutside the confines of the particular case.

87

          Tothe extent that neither clear legal principles, nor fairly obvioushistorical or community-based standards (defining, say, especiallyegregious behavior) significantly constrain punitive damagesawards, is there not a substantial risk of outcomes so arbitrarythat they become difficult to square with the Constitution'sassurance, to every citizen, of the law's protection? The standardshere, as authoritatively interpreted, in my view, make this threatreal and not theoretical. And, in these unusual circumstances,where legal standards offer virtually no constraint, I believe thatthis lack of constraining standards warrants this Court's detailedexamination of the award.

88

          Thesecond reason-the severe disproportionality between the award andthe legitimate punitive damages objectives-reflects a judgmentabout a matter of degree. I recognize that it is often difficult todetermine just when a punitive award exceeds an amount reasonablyrelated to a State's legitimate interests, or when that excess isso great as to amount to a matter of constitutional concern. Yetwhatever the difficulties of drawing a precise line, once weexamine the award in this case, it is not difficult to say thatthis award lies on the line's far side. The severe lack ofproportionality between the size of the award and the underlyingpunitive damages objectives shows that the award falls into thecategory of "gross excessiveness" set forth in this Court's priorcases.

89

          Thesetwo reasons taken together overcome what would otherwiseamount to a "strong presumption of validity." TXO, 509 U.S., at 457. And, for those two reasons, I conclude that the awardin this unusual case violates the basic guarantee of nonarbitrarygovernmental behavior that the Due Process Clause provides.

90

          APPENDIXTO OPINION OF BREYER, J.

91

          AlthoughI recognize that all estimates of historic rates of inflation aresubject to dispute, including, I assume, the sources below, thosesources suggest that the value of the eighteenth and nineteenthcentury judgments cited by amici is much less than thefigures amici arrived at under their presumption of aconstant 3% rate of inflation.

92

          In1763, 1 (Eng.) was worth 1.73 Pennsylvania currency. See U. S.Bureau of the Census, Historical Statistics of the United States:Colonial Times to 1970, Series Z-585, p. 1198 (Bicentennial ed.1975). For the period 1766-1772, 1 (Penn.) was worth $45.99 (U. S.1991). See McCusker, How Much Is That in Real Money? A HistoricalPrice Index for Use as a Deflator of Money Values in the Economy ofthe United States, 101 American Antiquarian Society 297, 333(1992). Thus, 1 (Eng. 1763) is worth about $79.56 (U. S. 1991).Accounting for the 12% inflation of the U. S. dollar between 1991and 1995 (when amici filed their brief), see EconomicIndicators, 104th Cong., 2d Sess., p. 23 (Feb. 1996), 1 (Eng. 1763)is worth about $89.11 (U. S. 1995).

93

          Calculatedanother way, 1 (Eng. 1763) is worth about 72.84 (Eng. 1991). SeeMcCusker, supra, at 312, 342, 350. And 1 (Eng. 1991) isworth $1.77 (U. S. 1991). See 78 Fed. Reserve Bulletin A68 (Feb.1992). Thus, 1 (Eng. 1763) amounts to about $128.93 (U. S. 1991).Again, accounting for inflation between 1991 and 1995, this amountsto about $144.40 (U. S. 1995).

94

          Thus,the above sources suggest that the 1,000 award in Wilkes in1763 roughly amounts to between $89,110 and $144,440 today, not$1.5 million. And the 300 award in Huckle that same yearwould seem to be worth between $26,733 and $43,320 today, not$450,000.

95

          Forthe period of the Hewlett and Merest decisions, 1(Eng. 1813) is worth about 25.3 (Eng. 1991). See McCusker,supra, at 344, 350. Using the 1991 exchange rate, 1 (Eng.1813) is worth about $44.78 (U. S. 1991). Accounting for inflationbetween 1991 and 1995, this amounts to about $50.16 (U. S.1995).

96

          Thus,the 2,000 and 500 awards in Hewlett and Merest wouldseem to be closer to $100,320 and $25,080, respectively, than toamici's estimates of $680,000 and $165,000.

97

djq Justice Scalia, with whom Justice Thomas joins,dissenting.

98

          Todaywe see the latest manifestation of this Court's recent andincreasingly insistent "concern about punitive damages that `runwild.'" Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 18 (1991). Since the Constitution does not make that concernany of our business, the Court's activities in this area are anunjustified incursion into the province of state governments.

99

          Inearlier cases that were the prelude to this decision, I set forthmy view that a state trial procedure that commits the decisionwhether to impose punitive damages, and the amount, to thediscretion of the jury, subject to some judicial review for"reasonableness," furnishes a defendant with all the process thatis "due." See TXO Production Corp. v. Alliance ResourcesCorp., 509 U. S. 443, 470 (1993) (Scalia, J., concurring injudgment); Haslip, supra, at 25-28 (Scalia, J.,concurring in judgment); cf. Honda Motor Co. v.Oberg, 512 U. S. ___, ___ (1994) (slip op., at 1-2) (Scalia,J., concurring). I do not regard the Fourteenth Amendment's DueProcess Clause as a secret repository of substantive guaranteesagainst "unfairness"-neither the unfairness of an excessive civilcompensatory award, nor the unfairness of an "unreasonable"punitive award. What the Fourteenth Amendment's proceduralguarantee assures is an opportunity to contest the reasonablenessof a damages judgment in state court; but there is no federalguarantee a damages award actually be reasonable. See TXO,supra, at 471 (Scalia, J., concurring in judgment).

100

          Thisview, which adheres to the text of the Due Process Clause,has not prevailed in our punitive-damages cases. See TXOProduction Corp. v. Alliance Resources Corp., 509 U. S.,at 453-462 (plurality opinion); id., at 478-481 (O'Connor,J., dissenting); Haslip, supra, at 18. When, however,a constitutional doctrine adopted by the Court is not only mistakenbut also insusceptible of principled application, I do not feelbound to give it stare decisis effect-indeed, I do not feeljustified in doing so. See, e.g., Witte v. UnitedStates, 515 U. S. ___, ___ (1995) (Scalia, J., concurring injudgment); Walton v. Arizona, 497 U. S. 639, 673(1990) (Scalia, J., concurring in judgment in part and dissentingin part). Our punitive-damages jurisprudence compels such aresponse. The Constitution provides no warrant for federalizing yetanother aspect of our Nation's legal culture (no matter how much inneed of correction it may be), and the application of the Court'snew rule of constitutional law is constrained by no principle otherthan the Justices' subjective assessment of the "reasonableness" ofthe award in relation to the conduct for which it was assessed.

101

          Becausetoday's judgment represents the first instance of this Court'sinvalidation of a state-court punitive assessment as simplyunreasonably large, I think it a proper occasion to discuss thesepoints at some length.

102
I
103

          Themost significant aspects of today's decision-the identification ofa "substantive due process" right against a "grossly excessive"award, and the concomitant assumption of ultimate authority todecide anew a matter of "reasonableness" resolved in lower courtproceedings-are of course not new. Haslip and TXOrevived the notion, moribund since its appearance in the firstyears of this century, that the measure of civil punishment poses aquestion of constitutional dimension to be answered by this Court.Neither of those cases, however, nor any of the precedents uponwhich they relied, actually took the step of declaring a punitiveaward unconstitutional simply because it was "too big."At the timeof adoption of the Fourteenth Amendment, it was well understoodthat punitive damages represent the assessment by the jury, as thevoice of the community, of the measure of punishment the defendantdeserved. See, e.g., Barry v. Edmunds, 116 U.S. 550, 565 (1886); Missouri Pacific R. Co. v. Humes,115 U. S. 512, 521 (1885); Day v. Woodworth, 13 How.363, 371 (1852). See generally Haslip, supra, at25-27 (Scalia, J., concurring in judgment). Today's decision,though dressed up as a legal opinion, is really no more than adisagreement with the community's sense of indignation or outrageexpressed in the punitive award of the Alabama jury, as reduced bythe State Supreme Court. It reflects not merely, as the concurrencecandidly acknowledges, "a judgment about a matter of degree,"ante, at 12; but a judgment about the appropriate degree ofindignation or outrage, which is hardly an analyticaldetermination.

104

          Thereis no precedential warrant for giving our judgment priority overthe judgment of state courts and juries on this matter. The onlysupport for the Court's position is to be found in a handful oferrant federal cases, bunched within a few years of one other,which invented the notion that an unfairly severe civil sanctionamounts to a violation of constitutional liberties. These were thedecisions upon which the TXO plurality relied in pronouncingthat the Due Process Clause "imposes substantive limits `beyondwhich penalties may not go,'" 509 U. S., at 454 (quotingSeaboard Air Line R. Co. v. Seegers, 207 U. S. 73, 78(1907)); see also 509 U. S., at 478-481 (O'Connor, J., dissenting);Haslip, 499 U. S., at 18. Although they are our precedents,they are themselves too shallowly rooted to justify the Court'srecent undertaking. The only case relied upon in which the Courtactually invalidated a civil sanction does not even supportconstitutional review for excessiveness, since it really concernedthe validity, as a matter of procedural due process, of statelegislation that imposed a significant penalty on a common carrierwhich lacked the means of determining the legality of its actionsbefore the penalty was imposed. See Southwestern Telegraph &Telephone Co. v. Danaher, 238 U. S. 482, 489-491 (1915).The amount of the penalty was not a subject of independentscrutiny. As for the remaining cases, while the opinions doconsider arguments that statutory penalties can, by reason of theirexcessiveness, violate due process, not a single one of thesejudgments invalidates a damages award. See Seaboard,supra, at 78-79; Waters-Pierce Oil Co. v. Texas(No. 1), 212 U. S. 86, 111-112 (1909); Standard Oil Co. ofInd. v. Missouri, 224 U. S. 270, 286, 290 (1912); St.Louis, I. M. & S. R. Co. v. Williams, 251 U. S. 63,66-67 (1919).

105

          Moreimportantly, this latter group of cases-which again are the soleprecedential foundation put forward for the rule of constitutionallaw espoused by today's Court-simply fabricated the "substantivedue process" right at issue. Seaboard assigned no precedentto its bald assertion that the Constitution imposes "limits beyondwhich penalties may not go," 207 U. S., at 78. Waters-Piercecited only Coffey v. County of Harlan, 204 U. S. 659(1907), a case which inquired into the constitutionality of stateprocedure, id., at 662-663. Standard Oil simply citedWaters-Pierce, and St. Louis, I. M. & S. R. Co. offeredin addition to these cases only Collins v. Johnston,237 U. S. 502 (1915), which said nothing to support the notion of a"substantive due process" right against excessive civil penalties,but to the contrary asserted that the prescribing and imposing ofcriminal punishment were "functions peculiarly belonging to theseveral States," id., at 509-510. Thus, the only authorityfor the Court's position is simply not authoritative. These casesfall far short of what is needed to supplant this country'slongstanding practice regarding exemplary awards, see, e.g.,Haslip, 499 U. S., at 15-18; id., at 25-28 (Scalia,J., concurring in judgment).

106
II
107

          Onemight understand the Court's eagerness to enter this field, ratherthan leave it with the state legislatures, if it had somethinguseful to say. In fact, however, its opinion provides virtually noguidance to legislatures, and to state and federal courts, as towhat a "constitutionally proper" level of punitive damages mightbe.

108

          Weare instructed at the outset of Part II of the Court's opinion-thebeginning of its substantive analysis-that "the federalexcessiveness inquiry . . . begins with an identification of thestate interests that a punitive award is designed to serve."Ante, at 7. On first reading this, one is faced with theprospect that federal punitive-damages law (the new field createdby today's decision) will be beset by the sort of "interestanalysis" that has laid waste the formerly comprehensible field ofconflict of laws. The thought that each assessment of punitivedamages, as to each offense, must be examined to determine theprecise "state interests" pursued, is most unsettling. Moreover, ifthose "interests" are the most fundamental determinant of an award,one would think that due process would require the assessing juryto be instructed about them.

109

          Itappears, however (and I certainly hope), that all this is a falsealarm. As Part II of the Court's opinion unfolds, it turns out tobe directed, not to the question "How much punishment is too much?"but rather to the question "Which acts can be punished?" "Alabamadoes not have the power," the Court says, "to punish BMW forconduct that was lawful where it occurred and that had no impact onAlabama or its residents." Ante, at 12. That may be true,though only in the narrow sense that a person cannot be held liableto be punished on the basis of a lawful act. But if a person hasbeen held subject to punishment because he committed an unlawfulact, the degree of his punishment assuredly can be increased on thebasis of any other conduct of his that displays his wickedness,unlawful or not. Criminal sentences can be computed, we have said,on the basis of "information concerning every aspect of adefendant's life," Williams v. New York, 337 U. S.241, 250-252 (1949). The Court at one point seems to acknowledgethis, observing that, although a sentencing court "[cannot]properly punish lawful conduct," it may in assessing the penalty"consider . . . lawful conduct that bears on the defendant'scharacter." Ante, at 12, n. 19. That concession is quiteincompatible, however, with the later assertion that, since"neither the jury nor the trial court was presented with evidencethat any of BMW's out-of-state conduct was unlawful," the AlabamaSupreme Court "therefore properly eschewed reliance on BMW'sout-of-state conduct, . . . and based its remitted award solely onconduct that occurred within Alabama." Ante, at 13. Whycould the Supreme Court of Alabama not consider lawful (butdisreputable) conduct, both inside and outside Alabama, for thepurpose of assessing just how bad an actor BMW was? The Courtfollows up its statement that "Alabama does not have the power . .. to punish BMW for conduct that was lawful where it occurred" withthe statement: "Nor may Alabama impose sanctions on BMW in order todeter conduct that is lawful in other jurisdictions." Ante,at 12. The Court provides us no citation of authority to supportthis proposition-other than the barely analogous cases citedearlier in the opinion, see ante, at 10-11-and I know ofnone.

110

          Thesesignificant issues pronounced upon by the Court are not remotelypresented for resolution in the present case. There is no basis forbelieving that Alabama has sought to control conduct elsewhere. Thestatutes at issue merely permit civil juries to treat conduct suchas petitioner's as fraud, and authorize an award of appropriatepunitive damages in the event the fraud is found to be "gross,oppressive, or malicious," Ala. Code Section(s) 6-11-20(b)(1)(1993). To be sure, respondent did invite the jury to considerout-of-state conduct in its calculation of damages, but anyincrease in the jury's initial award based on that consideration isnot a component of the remitted judgment before us. As the Courtseveral times recognizes, in computing the amount of the remittedaward the Alabama Supreme Court-whether it was constitutionallyrequired to or not-"expressly disclaimed any reliance on acts thatoccurred in other jurisdictions." Ante, at 6 (internalquotation marks omitted); see also ante, at 13.[42] Thus, the only question presented by this case iswhether that award, limited to petitioner's Alabama conduct andviewed in light of the factors identified as properly informing theinquiry, is excessive. The Court's sweeping (and largelyunsupported) statements regarding the relationship of punitiveawards to lawful or unlawful out-of-state conduct are the purestdicta.

111
III
112

          InPart III of its opinion, the Court identifies "[t]hree guideposts"that lead it to the conclusion that the award in this case isexcessive: degree of reprehensibility, ratio between punitive awardand plaintiff's actual harm, and legislative sanctions provided forcomparable misconduct. Ante, at 14-25. The legalsignificance of these "guideposts" is nowhere explored, but theirnecessary effect is to establish federal standards governing thehitherto exclusively state law of damages. Apparently (though it isby no means clear) all three federal "guideposts" can be overriddenif "necessary to deter future misconduct," ante, at 25-aloophole that will encourage state reviewing courts to upholdawards as necessary for the "adequat[e] protect[ion]" of stateconsumers, ibid. By effectively requiring state reviewingcourts to concoct rationalizations-whether within the "guideposts"or through the loophole-to justify the intuitive punitive reactionsof state juries, the Court accords neither category of institutionthe respect it deserves.

113

          Ofcourse it will not be easy for the States to comply with this newfederal law of damages, no matter how willing they are to do so. Intruth, the "guideposts" mark a road to nowhere; they provide noreal guidance at all. As to "degree of reprehensibility" of thedefendant's conduct, we learn that "`nonviolent crimes are lessserious than crimes marked by violence or the threat of violence,'"ante, at 15 (quoting Solem v. Helm, 463 U. S.277, 292-293 (1983)), and that "`trickery and deceit'" are "morereprehensible than negligence," ante, at 15. As to the ratioof punitive to compensatory damages, we are told that a "`generalconcer[n] of reasonableness . . . enter[s] into the constitutionalcalculus,'" ante, at 23 (quoting TXO, supra,at 458)-though even "a breathtaking 500 to 1" will not necessarilydo anything more than "`raise a suspicious judicial eyebrow,'"ante, at 23 (quoting TXO, supra, at 481(O'Connor, J., dissenting), an opinion which, when confronted withthat "breathtaking" ratio, approved it). And as to legislativesanctions provided for comparable misconduct, they should beaccorded "`substantial deference,'" ibid. (quotingBrowning-Ferris Industries of Vt., Inc. v. KelcoDisposal, Inc., 492 U. S. 257, 301 (O'Connor, J.,concurring in part and dissenting in part)). One expects the Courtto conclude: "To thine own self be true." These criss-crossingplatitudes yield no real answers in no real cases. And it must benoted that the Court nowhere says that these three "guideposts" arethe only guideposts; indeed, it makes very clear that they arenot-explaining away the earlier opinions that do not really followthese "guideposts" on the basis of additional factors, thereby"reiterat[ing] our rejection of a categorical approach."Ante, at 23. In other words, even these utter platitudes, ifthey should ever happen to produce an answer, may be overridden byother unnamed considerations. The Court has constructed a frameworkthat does not genuinely constrain, that does not inform statelegislatures and lower courts-that does nothing at all exceptconfer an artificial air of doctrinal analysis upon its essentiallyad hoc determination that this particular award of punitive damageswas not "fair." The Court distinguishes today's result fromHaslip and TXO partly on the ground that "the recordin this case discloses no deliberate false statements, acts ofaffirmative misconduct, or concealment of evidence of impropermotive, such as were present in Haslip and TXO."Ante, at 19. This seemingly rejects the findings necessarilymade by the jury-that petitioner had committed a fraud that was"gross, oppressive, or malicious," Ala. Code Section(s)6-11-20(b)(1) (1996). Perhaps that rejection is intentional; theCourt does not say.

114

          Therelationship between judicial application of the new "guideposts"and jury findings poses a real problem for the Court, since as amatter of logic there is no more justification for ignoring thejury's determination as to how reprehensible petitioner's conductwas (i.e., how much it deserves to be punished), than thereis for ignoring its determination that it was reprehensible at all(i.e., that the wrong was willful and punitive damages aretherefore recoverable). That the issue has been framed in terms ofa constitutional right against unreasonably excessive awards shouldnot obscure the fact that the logical and necessary consequence ofthe Court's approach is the recognition of a constitutional rightagainst unreasonably imposed awards as well. The elevation of"fairness" in punishment to a principle of "substantive dueprocess" means that every punitive award unreasonably imposed isunconstitutional; such an award is by definition excessive, sinceit attaches a penalty to conduct undeserving of punishment. Indeed,if the Court is correct, it must be that every claim that a statejury's award of compensatory damages is "unreasonable" (because notsupported by the evidence) amounts to an assertion ofconstitutional injury. See TXO, supra, at 471(Scalia, J. concurring in judgment). And the same would be true fordeterminations of liability. By today's logic, every dispute as toevidentiary sufficiency in a state civil suit poses a question ofconstitutional moment, subject to review in this Court. That is astupefying proposition.

115

          Forthe foregoing reasons, I respectfully dissent.

116

djq Justice Ginsburg, with whom The Chief Justice joins,dissenting.

117

          TheCourt, I am convinced, unnecessarily and unwisely ventures intoterritory traditionally within the States' domain, and does so inthe face of reform measures recently adopted or currently underconsideration in legislative arenas. The Alabama Supreme Court, inthis case, endeavored to follow this Court's prior instructions;and, more recently, Alabama's highest court has installed furthercontrols on awards of punitive damages (see infra, at 8, n. 6). Iwould therefore leave the state court's judgment undisturbed, andresist unnecessary intrusion into an area dominantly of stateconcern.

118
I
119

          Therespect due the Alabama Supreme Court requires that we strip fromthis case a false issue: no impermissible "extraterritoriality"infects the judgment before us; the excessiveness of the award isthe sole issue genuinely presented. The Court ultimately sorecognizes, see ante, at 12-13, but further clarification isin order.

120

          Dr.Gore's experience was not unprecedented among customers who boughtBMW vehicles sold as flawless and brand-new. In addition to his ownencounter, Gore showed, through paint repair orders introduced attrial, that on 983 other occasions since 1983, BMW had shipped newvehicles to dealers without disclosing paint repairs costing atleast $300, Tr. 585-586; at least 14 of the repainted vehicles, theevidence also showed, were sold as new and undamaged to consumersin Alabama. 646 So. 2d 619, 623 (Ala. 1994). Sales nationwide,Alabama's Supreme Court said, were admissible "as to the issue of a`pattern and practice' of such acts." Id., at 627. There was"no error," the court reiterated, "in the admission of the evidencethat showed how pervasive the nondisclosure policy was and theintent behind BMW NA's adoption of it." Id., at 628. Thatdetermination comports with this Court's expositions. See TXOProduction Corp. v. Alliance Resources Corp., 509 U. S.443, 462, and n. 28 (1993) (characterizing as "well-settled" theadmissibility of "evidence of [defendant's] alleged wrongdoing inother parts of the country" and of defendant's "wealth"); see alsoBrief for Petitioner 22 (recognizing that similar acts,out-of-state, traditionally have been considered relevant "for thelimited purpose of determining that the conduct before the [c]ourtwas reprehensible because it was part of a pattern rather than anisolated incident").

121

          Alabama'shighest court next declared that the

122

          "jurycould not use the number of similar acts that a defendant hascommitted in other jurisdictions as a multiplier when determiningthe dollar amount of a punitive damages award. Such evidence maynot be considered in setting the size of the civil penalty, becauseneither the jury nor the trial court had evidence before it showingin which states the conduct was wrongful." 646 So. 2d, at 627(emphasis in original) (footnote omitted).

123

          Becausethe Alabama Supreme Court provided this clear statement of theState's law, the multiplier problem encountered in Gore's case isnot likely to occur again. Now, as a matter of Alabama law, it isplainly impermissible to assess punitive damages by multiplicationbased on out-of-state events not shown to be unlawful. See,e.g., Independent Life and Accident Ins. Co. v.Harrington, 658 So. 2d 892, 902-903 (Ala. 1994) (underBMW v. Gore, trial court erred in relying ondefendant insurance company's out-of-state insurance policies indetermining harm caused by defendant's unlawful actions).

124

          NoAlabama authority, it bears emphasisno statute, judicial decision,or trial judge instruction-ever countenanced the jury'smultiplication of the $4,000 diminution in value estimated for eachrefinished car by the number of such cars (approximately 1,000)shown to have been sold nationwide. The sole prompt to the jury touse nationwide sales as a multiplier came from Gore's lawyer duringsummation. App. 31, Tr. 812-813. Notably, counsel for BMW failed toobject to Gore's multiplication suggestion, even though BMW'scounsel interrupted to make unrelated objections four other timesduring Gore's closing statement. Tr. 810-811, 854-855, 858,870-871. Nor did BMW's counsel request a charge instructing thejury not to consider out-of-state sales in calculating the punitivedamages award. See Record 513-529 (listing all charges requested bycounsel).

125

          Followingthe verdict, BMW's counsel challenged the admission of the paintrepair orders, but not, alternately, the jury's apparent use of theorders in a multiplication exercise. Curiously, during postverdictargument, BMW's counsel urged that if the repair orders were indeedadmissible, then Gore would have a "full right" to suggest amultiplier-based disgorgement. Tr. 932.

126

          Inbrief, Gore's case is idiosyncratic. The jury's impropermultiplication, tardily featured by petitioner, is unlikely torecur in Alabama and does not call for error correction by thisCourt.

127

          Becausethe jury apparently (and erroneously) had used acts in other statesas a multiplier to arrive at a $4 million sum for punitive damages,the Alabama Supreme Court itself determined "'the maximum amountthat a properly functioning jury could have awarded.'" 646 So. 2d,at 630 (Houston, J., concurring specially) (quoting Big B,Inc. v. Cottingham, 634 So. 2d 999, 1006 (Ala. 1993)).The per curiam opinion emphasized that in arriving at $2 million as"the amount of punitive damages to be awarded in this case, [thecourt did] not consider those acts that occurred in otherjurisdictions." 646 So. 2d, at 628 (emphasis in original). As thisCourt recognizes, the Alabama high court "properly eschewedreliance on BMW's out-of-state conduct and based its remitted awardsolely on conduct that occurred within Alabama." Ante, at 13(citation omitted). In sum, the Alabama Supreme Court left standingthe jury's decision that the facts warranted an award of punitivedamagesa determination not contested in this Court-and the statecourt concluded that, considering only acts in Alabama, $2 millionwas "a constitutionally reasonable punitive damages award." 646 So.2d, at 629.

128
II
129
A
130

          Alabama'sSupreme Court reports that it "thoroughly and painstakingly"reviewed the jury's award, ibid., according to principlesset out in its own pathmarking decisions and in this Court'sopinions in TXO and Pacific Mut. Life Ins. Co. v.Haslip, 499 U. S. 1, 21 (1991). 646 So. 2d, at 621. TheAlabama court said it gave weight to several factors, includingBMW's deliberate ("reprehensible") presentation of refinished carsas new and undamaged, without disclosing that the value of thosecars had been reduced by an estimated 10%,[43] thefinancial position of the defendant, and the costs of litigation.Id., at 625-626. These standards, we previously held,"impos[e] a sufficiently definite and meaningful constraint on thediscretion of Alabama factfinders in awarding punitive damages."Haslip, 499 U. S., at 22; see also TXO, 509 U. S., at462, n. 28. Alabama's highest court could have displayed its laborpains more visibly, [44] but its judgment is nonethelessentitled to a presumption of legitimacy. See Rowan v.Runnels, 5 How. 134, 139 (1847) ("[T]his court will alwaysfeel itself bound to respect the decisions of the State courts, andfrom the time they are made will regard them as conclusive in allcases upon the construction of their own constitution andlaws.").

131

          Weaccept, of course, that Alabama's Supreme Court applied the State'sown law correctly. Under that law, the State'sobjectives-"punishment and deter-rence"-guide punitive damagesawards. See Birmingham v. Benson, 631 So. 2d 902, 904(Ala. 1994). Nor should we be quick to find a constitutionalinfirmity when the highest state court endeavored a corrective forone counsel's slip and the other's oversight-counsel forplaintiff's excess in summation, unobjected to by counsel fordefendant, see supra, at 3-and when the state court did sointending to follow the process approved in our Haslip andTXO decisions.

132
B
133

          TheCourt finds Alabama's $2 million award not simply excessive, butgrossly so, and therefore unconstitutional. The decision leads usfurther into territory traditionally within the States' domain,[45] and commits the Court, now and again, to correct"misapplication of a properly stated rule of law." But cf. S. Ct.Rule 10 ("A petition for a writ of certiorari is rarely grantedwhen the asserted error consists of erroneous factual findings orthe misapplication of a properly stated rule of law.").[46] The Court is not well equipped for this mission.Tellingly, the Court repeats that it brings to the task no"mathematical formula," ante, at 22, no "categoricalapproach," ante, at 23, no "bright line," ante, at26. It has only a vague concept of substantive due process, a"raised eyebrow" test, see ante, at 23, as its ultimateguide. [47]

134

          Incontrast to habeas corpus review under 28 U. S. C. Section(s) 2254,the Court will work at this business alone. It will not be aided bythe federal district courts and courts of appeals. It will be theonly federal court policing the area. The Court's readiness tosuperintend state court punitive damages awards is all the morepuzzling in view of the Court's longstanding reluctance tocountenance review, even by courts of appeals, of the size ofverdicts returned by juries in federal district court proceedings.See generally 11 C. Wright, A. Miller, & M. Kane, FederalPractice and Procedure Section(s) 2820 (2d ed. 1995). And thereexamination prominent in state courts[48] and inlegislative arenas, see Appendix, infra, at 9, serves to underscorewhy the Court's enterprise is undue.

135

          Forthe reasons stated, I dissent from this Court's disturbance of thejudgment the Alabama Supreme Court has made.

136

          APPENDIXTO DISSENTING OPINION OF GINSBURG, J.

137

          StateLegislative Activity Regarding Punitive Damages

138

          Statelegislatures have in the hopper or have enacted a variety ofmeasures to curtail awards of punitive damages. At least one statelegislature has prohibited punitive damages altogether, unlessexplicitly provided by statute. See N. H. Rev. Stat. Ann.Section(s) 507:16 (1994). We set out in this appendix some of theseveral controls enacted or under consideration in the States. Themeasures surveyed are: (1) caps on awards; (2) provisions forpayment of sums to state agencies rather than to plaintiffs; and(3) mandatory bifurcated trials with separate proceedings forpunitive damages determinations.

139

          I.Caps on Punitive Damages Awards

140

          *Colorado-Colo. Rev. Stat. Section(s) 13-21-102(1)(a) and (3) (1987)(as a main rule, caps punitive damages at amount of actualdamages).

141

          *Connecticut-Conn. Gen. Stat. Section(s) 52-240b (1995) (capspunitive damages zat twice compensatory damages in productsliability cases).

142

          *Delaware-H. R. 237, 138th Gen. Ass. (introduced May 17, 1995)(would cap punitive damages at greater of three times compensatorydamages, or $250,000).

143

          *Florida-Fla. Stat. Section(s) 768.73(1)(a) and (b) (Supp. 1992) (ingeneral, caps punitive damages at three times compensatorydamages).

144

          *Georgia-Ga. Code Ann. Section(s) 51-12-5.1 (Supp. 1995) (capspunitive damages at $250,000 in some tort actions; prohibitsmultiple awards stemming from the same predicate conduct inproducts liability actions).

145

          *Illinois-H. 20, 89th Gen. Ass. 1995-1996 Reg. Sess. (enacted Mar.9, 1995) (caps punitive damages at three times economicdamages).

146

          *Indiana-H. 1741, 109th Reg. Sess. (enacted Apr. 26, 1995) (capspunitive damages at greater of three times compensatory damages, or$50,000).

147

          *Kansas-Kan. Stat. Ann. Section(s) 60-3701(e) and (f) (1994) (ingeneral, caps punitive damages at lesser of defendant's annualgross income, or $5 million).

148

          *Maryland-S. 187, 1995 Leg. Sess. (introduced Jan. 27, 1995) (ingeneral, would cap punitive damages at four times compensatorydamages).

149

          *Minnesota-S. 489, 79th Leg. Sess., 1995 Reg. Sess. (introduced Feb.16, 1995) (would require reasonable relationship betweencompensatory and punitive damages).

150

          *Nevada-Nev. Rev. Stat. Section(s) 42.005(1) (1993) (caps punitivedamages at three times compensatory damages if compensatory damagesequal $100,000 or more, and at $300,000 if the compensatory damagesare less than $100,000).

151

          *New Jersey-S. 1496, 206th Leg., 2d Ann. Sess. (1995) (caps punitivedamages at greater of five times compensatory damages, or $350,000,in certain tort cases).

152

          *North Dakota-N. D. Cent. Code Section(s) 32-03.2-11(4) (Supp. 1995)(caps punitive damages at greater of two times compensatorydamages, or $250,000).

153

          *Oklahoma-Okla Stat., Tit. 23, Section(s) 9.1(B)-(D) (Supp. 1996)(caps punitive damages at greater of $100,000, or actual damages,if jury finds defendant guilty of reckless disregard; and atgreatest of $500,000, twice actualdamages, or the benefit accruingto defendant from the injury-causing conduct, if jury finds thatdefendant has acted intentionally and maliciously).

154

          *Texas-S. 25, 74th Reg. Sess. (enacted Apr. 20, 1995) (caps punitivedamages at twice economic damages, plus up to $750,000 additionalnoneconomic damages).

155

          *Virginia-Va. Code Ann. Section(s) 8.01-38.1 (1992) (caps punitivedamages at $350,000).

156

          II.Allocation of Punitive Damages to State Agencies

157

          *Arizona-H. R. 2279, 42d Leg., 1st Reg. Sess. (introduced Jan. 12,1995) (would allocate punitive damages to a victims' assistancefund, in specified circumstances).

158

          *Florida-Fla. Stat. Section(s) 768.73(2)(a)-(b) (Supp. 1992)(allocates 35% of punitive damages to General Revenue Fund orPublic Medical Assistance Trust Fund); see Gordon v.State, 585 So. 2d 1033, 1035-1038 (Fla. App. 1991), aff'd,608 So. 2d 800 (Fla. 1992) (upholding provision against due processchallenge).

159

          *Georgia-Ga. Code Ann. Section(s) 51-12-5.1(e)(2) (Supp. 1995)(allocates 75% of punitive damages, less a proportionate part oflitigation costs, including counsel fees, to state treasury); seeMack Trucks, Inc. v. Conkle, 263 Ga. 539, 540-543,436 S. E. 2d 635, 637-639 (Ga. 1993) (upholding provision againstconstitutional challenge).

160

          *Illinois-Ill. Comp. Stat. ch. 735, Section(s) 5/2-1207 (1994)(permits court to apportion punitive damages among plaintiff,plaintiff's attorney, and Illinois Department of RehabilitationServices).

161

          *Indiana-H. 1741, 109th Reg. Sess. (enacted Apr. 26, 1995) (subjectto statutory exceptions, allocates 75% of punitive damages to acompensation fund for violent crime victims).

162

          *Iowa-Iowa Code Section(s) 668A.1(2)(b) (1987) (in describedcircumstances, allocates 75% of punitive damages, after payment ofcosts and counsel fees, to a civil reparations trust fund); seeShepherd Components, Inc. v. Brice Petrides-Donohue &Assoc., Inc., 473 N. W. 2d 612, 619 (Iowa 1991)(upholding provision against constitutional challenge).

163

          *Kansas-Kan. Stat. Ann. Section(s) 60-3402(e) (1994) (allocates 50%of punitive damages in medical malpractice cases to statetreasury).

164

          *Missouri-Mo. Rev. Stat. Section(s) 537.675 (1994) (allocates 50% ofpunitive damages, after payment of expenses and counsel fees, toTort Victims' Compensation Fund).

165

          *Montana-H. 71, 54th Leg. Sess. (introduced Jan. 2, 1995) (wouldallocate 48% of punitive damages to state university system and 12%to school for the deaf and blind).

166

          *New Jersey-S. 291, 206th Leg., 1994-1995 1st Reg. Sess. (introducedJan. 18, 1994); A. 148, 206th Leg., 1994-1995 1st Reg. Sess.(introduced Jan. 11, 1994) (would allocate 75% of punitive damagesto New Jersey Health Care Trust Fund).

167

          *New Mexico-H. 1017, 42d Leg., 1st Sess. (introduced Feb. 16, 1995)(would allocate punitive damages to Low-Income Attorney ServicesFund).

168

          *Oregon-S. 482, 68th Leg. Ass. (enacted July 19, 1995) (amendingOre. Rev. Stat. Section(s) 18.540 and 30.925, and repealing Ore.Rev. Stat. Section(s) 41.315) (allocates 60% of punitive damages toCriminal Injuries Compensation Account).

169

          *Utah-Utah Code Ann. Section(s) 78-18-1(3) (1992) (allocates 50% ofpunitive damages in excess of $20,000 to state treasury).

170

          III.Mandatory Bifurcation of Liability and Punitive DamagesDeterminations

171

          *California-Cal. Civ. Code Ann. Section(s) 3295(d) (West Supp. 1995)(requires bifurcation, on application of defendant, of liabilityand damages phases of trials in which punitive damages arerequested).

172

          *Delaware-H. R. 237, 138th Gen. Ass. (introduced May 17, 1995)(would require, at request of any party, a separate proceeding fordetermination of punitive damages).

173

          *Georgia-Ga. Code Ann. Section(s) 51-12-5.1(d) (Supp. 1995) (in allcases in which punitive damages are claimed, liability for punitivedamages is tried first, then amount of punitive damages).

174

          *Illinois-H. 20, 89th Gen. Assembly, 1995-1996 Reg. Sess. (enactedMar. 9, 1995) (mandates, upon defendant's request, separateproceeding for determination of punitive damages).

175

          *Kansas-Kan. Stat. Ann. Section(s) 60-3701(a)-(b) (1994) (trier offact determines defendant's liability for punitive damages, thencourt determines amount of such damages).

176

          *Missouri-Mo. Rev. Stat. Section(s) 510.263(1) and (3) (1994)(mandates bifurcated proceedings, on request of any party, for juryto determine first whether defendant is liable for punitivedamages, then amount of punitive damages).

177

          *Montana-Mont. Code Ann. Section(s) 27-1-221(7) (1995) (upon findingdefendant liable for punitive damages, jury determines the amountin separate proceeding).

178

          *Nevada-Nev. Rev. Stat. Section(s) 42.005(3) (1993) (if jurydetermines that punitive damages will be awarded, jury thendetermines amount in separate proceeding).

179

          *New Jersey-N. J. Stat. Ann. Section(s) 2A:58C-5(b) and (d) (West1987) (mandates separate proceedings for determination ofcompensatory and punitive damages).

180

          *North Dakota-N. D. Cent. Code Section(s) 32.03.2-11(2) (Supp. 1995)(upon request of either party, trier of fact determines whethercompensatory damages will be awarded before determining punitivedamages liability and amount).

181

          *Ohio-Ohio Rev. Code Ann. Section(s) 2315.21(C)(2) (1995) (if trierof fact determines that defendant is liable for punitive damages,court determines the amount of those damages).

182

          *Oklahoma-Okla. Stat., Tit. 23, Section(s) 9.1(B)-(D) (Supp.1995-1996) (requires separate jury proceedings for punitivedamages); S. 443, 45th Leg., 1st Reg. Sess. (introduced Jan. 31,1995) (would require courts to strike requests for punitive damagesbefore trial, unless plaintiff presents prima facie evidence atleast 30 days before trial to sustain such damages; provide forbifurcated jury trial on request of defendant; and permit punitivedamages only if compensatory damages are awarded).

183

          *Virginia-H. 1070, 1994-1995 Reg. Sess. (introduced Jan. 25, 1994)(would require separate proceedings in which court determines thatpunitive damages are appropriate and trier of fact determinesamount of punitive damages).

184

[1] The top, hood, trunk, and quarter panels ofDr. Gore's car were repainted at BMW's vehicle preparation centerin Brunswick, Georgia. The parties presumed that the damage wascaused by exposure to acid rain during transit between themanufacturing plant in Germany and the preparationcenter.

185

[2] Dr. Gore also named the German manufacturer and theBirmingham dealership as defendants.

186

[3] Alabama codified its common-law cause of action forfraud in a 1907 statute that is still in effect. Hackmeyerv. Hackmeyer, 268 Ala. 329, 333, 106 So. 2d 245, 249 (Ala.1958). The statute provides: "Suppression of a material fact whichthe party is under an obligation to communicate constitutes fraud.The obligation to communicate may arise from the confidentialrelations of the parties or from the particular circumstances ofthe case." Ala. Code Section(s) 6-5-102 (1993); see Ala. CodeSection(s) 4299 (1907).

187

[4] The dealer who testified to the reduction in valueis the former owner of the Birmingham dealership sued in thisaction. He sold the dealership approximately one year before thetrial.

188

[5] Dr. Gore did not explain the significance of the$300 cut-off.

189

[6] The jury also found the Birmingham dealershipliable for Dr. Gore's compensatory damages and the Germanmanufacturer liable for both the compensatory and punitive damages.The dealership did not appeal the judgment against it. The AlabamaSupreme Court held that the trial court did not have jurisdictionover the German manufacturer and therefore reversed the judgmentagainst that defendant.

190

[7] BMW acknowledged that a Georgia statute enactedafter Dr. Gore purchased his car would require disclosure ofsimilar repairs to a car before it was sold in Georgia. Ga. CodeAnn. Section(s) 40-1-5(b)-(e) (1994).

191

[8] While awarding a comparable amount of compensatorydamages, the Yates jury awarded no punitive damages at all. InYates, the plaintiff also relied on the 1983 nondisclosure policy,but instead of offering evidence of 983 repairs costing more than$300 each, he introduced a bulk exhibit containing 5,856 repairbills to show that petitioner had sold over 5,800 new BMW vehicleswithout disclosing that they had been repaired.

192

[9] Prior to the lawsuits filed by Dr. Yates and Dr.Gore, BMW and various BMW dealers had been sued 14 times concerningpresale paint or damage repair. According to the testimony of BMW'sin-house counsel at the postjudgment hearing on damages, only oneof the suits concerned a car repainted by BMW.

193

[10] The Alabama Supreme Court did not indicate whetherthe $2 million figure represented the court's independentassessment of the appropriate level of punitive damages, or itsdetermination of the maximum amount that the jury could haveawarded consistent with the Due Process Clause.

194

[11] Other than Yates v. BMW of NorthAmerica, Inc., 642 So. 2d 937 (Ala. 1993), in which no punitivedamages were awarded, the Alabama Supreme Court cited no suchcases. In another portion of its opinion, 646 So. 2d, at 629, thecourt did cite five Alabama cases, none of which involved either adispute arising out of the purchase of an automobile or an award ofpunitive damages. G. M. Mosley Contractors, Inc. v.Phillips, 487 So. 2d 876, 879 (Ala. 1986); Hollis v.Wyrosdick, 508 So. 2d 704 (Ala. 1987); Campbell v.Burns, 512 So. 2d 1341, 1343 (Ala. 1987); Ashbee v.Brock, 510 So. 2d 214 (Ala. 1987); and Jawad v.Granade, 497 So. 2d 471 (Ala. 1986). All of these casessupport the proposition that appellate courts in Alabama presumethat jury verdicts are correct. In light of the Alabama SupremeCourt's conclusion that (1) the jury had computed its award bymultiplying $4,000 by the number of refinished vehicles sold in theUnited States and (2) that the award should have been based onAlabama conduct, respect for the error-free portion of the juryverdict would seem to produce an award of $56,000 ($4,000multiplied by 14, the number of repainted vehicles sold inAlabama).

195

[12] See, e.g., Rivers v. BMW of NorthAmerica, Inc., 214 Ga. App. 880, 449 S. E. 2d 337 (1994)(nondisclosure of presale paint repairs that occurred before statedisclosure statute enacted); Wedmore v. Jordan Motors,Inc., 589 N. E. 2d 1180 (Ind. App. 1992) (same).

196

[13] Four States require disclosure of vehicle repairscosting more than 3 percent of suggested retail price. Ariz. Rev.Stat. Ann. Section(s) 28-1304.03 (1989); N. C. Gen. Stat.Section(s) 20-305.1(d)(5a) (1995); S. C. Code Section(s) 56-32-20(Supp. 1995); Va. Code Ann. Section(s) 46.2-1571(D) (Supp. 1995).An additional three States mandate disclosure when the cost ofrepairs exceeds 3 percent or $500, whichever is greater. Ala. CodeSection(s) 8-19-5(22)(c) (1993); Cal. Veh. Code Ann. Section(s)9990-9991 (West Supp. 1996); Okla. Stat., Tit. 47, Section(s)1112.1 (1991). Indiana imposes a 4 percent disclosure threshold.Ind. Code Section(s) 9-23-4-4, 9-23-4-5 (1993). Minnesota requiresdisclosure of repairs costing more than 4 percent of suggestedretail price or $500, whichever is greater. Minn. Stat. Section(s)325F.664 (1994). New York requires disclosure when the cost ofrepairs exceeds 5 percent of suggested retail price. N. Y. Gen.Bus. Law Section(s) 396-p(5)(a), (d) (McKinney Supp. 1996). Vermontimposes a 5 percent disclosure threshold for the first $10,000 inrepair costs and 2 percent thereafter. Vt. Stat. Ann., Tit. 9,Section(s) 4087(d) (1993). Eleven States mandate disclosure only ofdamage costing more than 6 percent of retail value to repair. Ark.Code Ann. Section(s) 23-112-705 (1992); Idaho Code Section(s)49-1624 (1994); Ill. Comp. Stat., ch. 815, Section(s) 710/5 (1994);Ky. Rev. Stat. Ann. Section(s) 190.0491(5) (Baldwin 1988); La. Rev.Stat. Ann Section(s) 32:1260 (Supp. 1995); Miss. Motor VehicleComm'n, Regulation No. 1 (1992); N. H. Rev. Stat. Ann. Section(s)357-C:5(III)(d) (1995); Ohio Rev. Code Ann. Section(s) 4517.61(1994); R. I. Gen. Laws Section(s) 31-5.1-18(d), (f) (1995); Wis.Stat. Section(s) 218.01(2d)(a) (1994); Wyo. Stat. Section(s)31-16-115 (1994). Two States require disclosure of repairs costing$3,000 or more. See Iowa Code Ann. Section(s) 321.69 (Supp. 1996);N. D. Admin. Code Section(s) 37-09-01-01 (1992). Georgia mandatesdisclosure of paint damage that costs more than $500 to repair. Ga.Code Ann. Section(s) 40-1-5(b)-(e) (1994) (enacted after respondentpurchased his car). Florida requires dealers to disclose paintrepair costing more than $100 of which they have actual knowledge.Fla. Stat. Section(s) 320.27(9)(n) (1992). Oregon requiresmanufacturers to disclose all "post-manufacturing" damage andrepairs. It is unclear whether this mandate would apply to repairssuch as those at issue here. Ore. Rev. Stat. Section(s) 650.155(1991).

197

Many, but not all, of the statutes exclude from the computationof repair cost the value of certain components-typically items suchas glass, tires, wheels and bumpers-when they are replaced withidentical manufacturer's original equipment. E.g., Cal. Veh.Code Ann. Section(s) 9990-9991 (West Supp. 1996); Ga. Code Ann.Section(s) 40-1-5(b)-(e) (1994); Ill. Comp. Stat., ch. 815,Section(s) 710/5 (1994); Ky. Rev. Stat. Ann. Section(s) 190.0491(5)(Baldwin 1988); Okla. Stat., Tit. 47, Section(s) 1112.1 (1991); Va.Code Ann. Section(s) 46.2-1571(D) (Supp. 1995); Vt. Stat. Ann.,Tit. 9, Section(s) 4087(d) (1993).

198

[14] Also, a state legislature might plausibly concludethat the administrative costs associated with full disclosure wouldhave the effect of raising car prices to the State's residents.

199

[15] Federal disclosure requirements are, of course, afamiliar part of our law. See, e.g., the Federal Food, Drug,and Cosmetic Act, as added by the Nutrition Labeling and EducationAct of 1990, 104 Stat. 2353, 21 U. S. C. Section(s) 343; the TruthIn Lending Act, 82 Stat. 148, as amended, 15 U. S. C. Section(s)1604; the Securities and Exchange Act of 1934, 48 Stat. 892, 894,as amended, 15 U. S. C. Section(s) 78l-78m; Federal CigaretteLabeling and Advertising Act, 79 Stat. 283, as amended, 15 U. S. C.Section(s) 1333; Alcoholic Beverage Labeling Act of 1988, 102 Stat.4519, 27 U. S. C. Section(s) 215.

200

[16] See also Bigelow v. Virginia, 421 U.S. 809, 824 (1975) ("A State does not acquire power or supervisionover the internal affairs of another State merely because thewelfare and health of its own citizens may be affected when theytravel to that State"); New York Life Ins. Co. v.Head, 234 U. S. 149, 161 (1914) ("[I]t would be impossibleto permit the statutes of Missouri to operate beyond thejurisdiction of that State . . . without throwing down theconstitutional barriers by which all the States are restrictedwithin the orbits of their lawful authority and upon thepreservation of which the Government under the Constitutiondepends. This is so obviously the necessary result of theConstitution that it has rarely been called in question and henceauthorities directly dealing with it do not abound");Huntington v. Attrill, 146 U. S. 657, 669 (1892)("Laws have no force of themselves beyond the jurisdiction of theState which enacts them, and can have extra-territorial effect onlyby the comity of other States").

201

[17] State power may be exercised as much by a jury'sapplication of a state rule of law in a civil lawsuit as by astatute. See New York Co. Times v. Sullivan, 376 U.S. 254, 265 (1964) ("The test is not the form in which state powerhas been applied but, whatever the form, whether such power has infact been exercised"); San Diego Building Trades Council v.Garmon, 359 U. S. 236, 247 (1959) ("regulation can be aseffectively exerted through an award of damages as through someform of preventive relief").

202

[18] Brief for Respondent 11-12, 23, 27-28; Tr. of OralArg. 50-54. Dr. Gore's interest in altering the nationwide policystems from his concern that BMW would not (or could not)discontinue the policy in Alabama alone. Id., at 11. "IfAlabama were limited to imposing punitive damages based only onBMW's gain from fraudulent sales in Alabama, the resulting awardwould have no prospect of protecting Alabama consumers from fraud,as it would provide no incentive for BMW to alter the unitary,national policy of nondisclosure which yielded BMW millions ofdollars in profits." Id., at 23. The record discloses nobasis for Dr. Gore's contention that BMW could not comply withAlabama's law without changing its nationwide policy.

203

[19] See Bordenkircher v. Hayes, 434 U.S. 357, 363 (1978) ("To punish a person because he has done whatthe law plainly allows him to do is a due process violation of themost basic sort"). Our cases concerning recidivist statutes are notto the contrary. Habitual offender statutes permit the sentencingcourt to enhance a defendant's punishment for a crime in light ofprior convictions, including convictions in foreign jurisdictions.See e.g., Ala. Code Section(s) 13A-5-9 (1994); Cal. PenalCode Ann. Section(s) 667.5(f), 668 (West Supp. 1996); Ill. Comp.Stat., ch. 720, Section(s) 5/33B-1 (1994); N. Y. Penal LawSection(s) 70.04, 70.06, 70.08, 70.10 (McKinney 1987 and Supp.1996); Tex. Penal Code Ann. Section(s) 12.42 (1994 and Supp.1995-1996). A sentencing judge may even consider past criminalbehavior which did not result in a conviction and lawful conductthat bears on the defendant's character and prospects forrehabilitation. Williams v. New York, 337 U. S. 241(1949). But we have never held that a sentencing court couldproperly punish lawful conduct. This distinction is precisely theone we draw here. See n. 21, infra.

204

[20] Given that the verdict was based in part onout-of-state conduct that was lawful where it occurred, we need notconsider whether one State may properly attempt to change atortfeasors' unlawful conduct in another State.

205

[21] Of course, the fact that the Alabama Supreme Courtcorrectly concluded that it was error for the jury to use thenumber of sales in other States as a multiplier in computing theamount of its punitive sanction does not mean that evidencedescribing out-of-state transactions is irrelevant in a case ofthis kind. To the contrary, as we stated in TXO ProductionCorp. v. Alliance Resources Corp., 509 U. S. 443, 462,n. 28 (1993), and discuss more fully infra, at 16-19, such evidenceis relevant to the determination of the degree of reprehensibilityof the defendant's conduct.

206

[22] See Miller v. Florida, 482 U. S. 423(1987) (Ex Post Facto Clause violated by retroactive imposition ofrevised sentencing guidelines that provided longer sentence fordefendant's crime); Bouie v. City of Columbia, 378 U.S. 347 (1964) (retroactive application of new construction ofstatute violated due process); id., at 350-355 (citingcases); Lankford v. Idaho, 500 U. S. 110 (1991) (dueprocess violated because defendant and his counsel did not haveadequate notice that judge might impose death sentence). The strictconstitutional safeguards afforded to criminal defendants are notapplicable to civil cases, but the basic protection against"judgments without notice" afforded by the Due Process Clause,Shaffer v. Heitner, 433 U. S. 186, 217 (1977)(Stevens, J., concurring in judgment), is implicated by civilpenalties.

207

[23] "The flagrancy of the misconduct is thought to bethe primary consideration in determining the amount of punitivedamages." Owen, A Punitive Damages Overview: Functions, Problemsand Reform, 39 Vill. L. Rev. 363, 387 (1994).

208

[24] The principle that punishment should fit the crime"is deeply rooted and frequently repeated in common-lawjurisprudence." Solem v. Helm, 463 U. S. 277, 284(1983). See Burkett v. Lanata, 15 La. Ann. 337, 339(1860) (punitive damages should be "commensurate to the nature ofthe offence"); Blanchard v. Morris, 15 Ill. 35, 36(1853) ("[W]e cannot say [the exemplary damages] are excessiveunder the circumstances; for the proofs show that threats,violence, and imprisonment, were accompanied by mental fear,torture, and agony of mind"); Louisville & Northern R.Co. v. Brown, 127 Ky. 732, 749, 106 S. W. 795, 799(1908) ("We are not aware of any case in which the court hassustained a verdict as large as this one unless the injuries werepermanent").

209

[25] Pacific Mut. Life Ins. Co. v.Haslip, 499 U. S. 1, 22 (1991).

210

[26] The dissenters also recognized that "TXO'sconduct was clearly wrongful, calculated, and improper . . . ."TXO, 509 U. S., at 482 (O'Connor, J., dissenting).

211

[27] In Jeter v. M & M Dodge, Inc.,634 So. 2d 1383 (La. App. 1994), a Louisiana court of appealssuggested that the Louisiana disclosure statute functions as a safeharbor. Finding that the cost of repairing presale damage to theplaintiff's car exceeded the statutory disclosure threshold, thecourt held that the disclosure statute did not provide a defense tothe action. Id., at 1384.

212

During the pendency of this litigation, Alabama enacted adisclosure statute which defines "material" damage to a new car asdamage requiring repairs costing in excess of 3 percent ofsuggested retail price or $500, whichever is greater. Ala. CodeSection(s) 8-19-5(22) (1993). After its decision in this case, theAlabama Supreme Court stated in dicta that the remedies availableunder this section of its Deceptive Trade Practices Act did notdisplace or alter pre-existing remedies available under either thecommon law or other statutes. Hines v. RiversideChevrolet-Olds, Inc., 655 So. 2d 909, 917, n. 2 (Ala.1994). It refused, however, to "recognize, or impose on automobilemanufacturers, a general duty to disclose every repair of damage,however slight, incurred during the manufacturing process."Id., at 921. Instead, it held that whether a defendant has aduty to disclose is a question of fact "for the jury to determine."Id., at 918. In reaching that conclusion it overruled twoearlier decisions that seemed to indicate that as a matter of lawthere was no disclosure obligation in cases comparable to this one.Id., at 920 (overruling Century 21-Reeves Realty,Inc. v. McConnell Cadillac, Inc., 626 So. 2d 1273(Ala. 1993), and Cobb v. Southeast Toyota Distributors,Inc., 569 So. 2d 395 (Ala. 1990)).

213

[28] See also Ariz. Rev. Stat. Ann. Section(s)28-1304.03 (1989) ("[I]f disclosure is not required under thissection, a purchaser may not revoke or rescind a sales contract duesolely to the fact that the new motor vehicle was damaged andrepaired prior to completion of the sale"); Ind. Code Section(s)9-23-4-5 (1993) (providing that "[r]epaired damage to acustomer-ordered new motor vehicle not exceeding four percent (4%)of the manufacturer's suggested retail price does not need to bedisclosed at the time of sale"); N. C. Gen. Stat. Section(s)20-305.1(e) (1993) (requiring disclosure of repairs costing morethan 5 percent of suggested retail price and prohibiting revocationor rescission of sales contract on the basis of less costlyrepairs); Okla. Stat., Tit. 47, Section(s) 1112.1 (1991) (defining"material" damage to a car as damage requiring repairs costing inexcess of 3 percent of suggested retail price or $500, whichever isgreater).

214

[29] Restatement (Second) of Torts Section(s) 538(1977); W. Keeton, D. Dobbs, R. Keeton, & D. Owen, Prosser andKeeton on Law of Torts Section(s) 108 (5th ed. 1984).

215

[30] The Alabama Supreme Court has held that a car maybe considered "new" as a matter of law even if its finish containsminor cosmetic flaws. Wilburn v. Larry SavageChevrolet, Inc., 477 So. 2d 384 (Ala. 1985). We notealso that at trial respondent only introduced evidence ofundisclosed paint damage to new cars repaired at a cost of $300 ormore. This decision suggests that respondent believed that the jurymight consider some repairs too de minimis to warrantdisclosure.

216

[31] Before the verdict in this case, BMW had changedits policy with respect to Alabama and two other States. Five daysafter the jury award, BMW altered its nationwide policy to one offull disclosure.

217

[32] See, e.g., Grant v. McDonogh,7 La. Ann. 447, 448 (1852) ("[E]xemplary damages allowed shouldbear some proportion to the real damage sustained");Saunders v. Mullen, 66 Iowa 728, 729, 24 N. W. 529(1885) ("When the actual damages are so small, the amount allowedas exemplary damages should not be so large"); Flannery v.Baltimore & Ohio R. Co., 15 D. C. 111, 125 (1885) (whenpunitive damages award "is out of all proportion to the injuriesreceived, we feel it our duty to interfere"); Houston &Texas Central R. Co. v. Nichols, 9 Am. & Eng. R. R.Cas. 361, 365 (Tex. 1882) ("Exemplary damages, when allowed, shouldbear proportion to the actual damages sustained"); McCarthyv. Niskern, 22 Minn. 90, 91-92 (1875) (punitive damages"enormously in excess of what may justly be regarded ascompensation" for the injury must be set aside "to preventinjustice").

218

[33] Owen, supra n. 23, at 368, and n.23. One English statute, for example, provides that officersarresting persons out of their jurisdiction shall pay doubledamages. 3 Edw., I., ch. 35. Another directs that in an action forforcible entry or detainer, the plaintiff shall recover trebledamages. 8 Hen. VI, ch. 9, Section(s) 6.

219

Present-day federal law allows or mandates imposition ofmultiple damages for a wide assortment of offenses, includingviolations of the antitrust laws, see Section(s) 4 of the ClaytonAct, 38 Stat. 731, as amended, 15 U. S. C. Section(s) 15, and theRacketeer Influenced and Corrupt Organizations Act, see 18 U. S. C.Section(s) 1964, and certain breaches of the trademark laws, seeSection(s) 35 of the Trademark Act of 1946, 60 Stat. 439, asamended, 15 U. S. C. Section(s) 1117, and the patent laws, see 66Stat. 813, 35 U. S. C. Section(s) 284.

220

[34] "While petitioner stresses the shocking disparitybetween the punitive award and the compensatory award, that shockdissipates when one considers the potential loss to respondents, interms of reduced or eliminated royalties payments, had petitionersucceeded in its illicit scheme. Thus, even if the actual value ofthe `potential harm' to respondents is not between $5 million and$8.3 million, but is closer to $4 million, or $2 million, or even$1 million, the disparity between the punitive award and thepotential harm does not, in our view, `jar one's constitutionalsensibilities.'" TXO, 509 U. S., at 462, quoting PacificMut. Life Ins. Co. v. Haslip, 499 U. S., at 18.

221

[35] Even assuming each repainted BMW suffers adiminution in value of approximately $4,000, the award is 35 timesgreater than the total damages of all 14 Alabama consumers whopurchased repainted BMW's.

222

[36] The ratio here is also dramatically greater thanany award that would be permissible under the statutes and proposedstatutes summarized in the appendix to Justice Ginsburg'sdissenting opinion. Post, at 9-11.

223

[37] Conceivably the Alabama Supreme Court's selectionof a 500 to 1 ratio was an application of Justice Scalia'sidentification of one possible reading of the plurality opinion inTXO: any future due process challenge to a punitive damagesaward could be disposed of with the simple observation that "thisis no worse than TXO." 509 U. S., at 472 (Scalia, J.,concurring in judgment). As we explain in the text, this award issignificantly worse than the award in TXO.

224

[38] Although the Court did not address the size of thepunitive damages award in Silkwood v. Kerr-McGeeCorp., 464 U. S. 238 (1984), the dissenters commented on itsexcessive character, noting that the "$10 million [punitive damagesaward] that the jury imposed is 100 times greater than the maximumfine that may be imposed . . . for a single violation of federalstandards" and "more than 10 times greater than the largest singlefine that the Commission has ever imposed." Id., at 263(Blackmun, J., dissenting). In New York Times Co. v.Sullivan, 376 U. S. 254 (1964), the Court observed that thepunitive award for libel was "one thousand times greater than themaximum fine provided by the Alabama criminal statute," andconcluded that the "fear of damage awards under a rule such as thatinvoked by the Alabama courts here may be markedly more inhibitingthan the fear of prosecution under a criminal statute." Id.,at 277.

225

[39] Ala. Code Section(s) 8-19-11(b) (1993).

226

[40] See, e.g., Ark. Code Ann. Section(s)23-112-309(b) (1992) (up to $5,000 for violation of state MotorVehicle Commission Act that would allow suspension of dealer'slicense; up to $10,000 for violation of Act that would allowrevocation of dealer's license); Fla. Stat. Section(s) 320.27(12)(1992) (up to $1,000); Ga. Code Ann. Section(s) 40-1-5(g),10-1-397(a) (1994 and Supp. 1996) (up to $2,000 administratively;up to $5,000 in superior court); Ind. Code Ann. Section(s) 9-23-6-4(1993) ($50 to $1,000); N. H. Rev. Stat. Ann. Section(s) 357-C:15,651:2 (1995 and Supp. 1995) (corporate fine of up to $20,000); N.Y. Gen. Bus. Law Section(s) 396-p(6) (McKinney Supp. 1995) ($50 forfirst offense; $250 for subsequent offenses).

227

[41] Justice Ginsburg expresses concern that we are"the only federal court policing" this limit. Post, at 7. The smallnumber of punitive damages questions that we have reviewed inrecent years, together with the fact that this is the first case indecades in which we have found that a punitive damages awardexceeds the constitutional limit, indicates that this concern is atbest premature. In any event, this consideration surely does notjustify an abdication of our responsibility to enforceconstitutional protections in an extraordinary case such as thisone.

228

[42] The Alabama Supreme Court said:

229

"[W]e must conclude that the award of punitive damages was basedin large part on conduct that happened in other jurisdictions. . .. Although evidence of similar acts in other jurisdictions isadmissible as to the issue of `pattern and practice' of such acts,. . . this jury could not use the number of similar acts that adefendant has committed in other jurisdictions as a multiplier whendetermining the dollar amount of a punitive damages award. Suchevidence may not be considered in setting the size of the civilpenalty, because neither the jury nor the trial court had evidencebefore it showing in which states the conduct was wrongful." 646So. 2d 619, 627 (1994).

230

[43] According to trial testimony, in late May 1992,BMW began redirecting refinished cars out of Alabama and two otherStates. Tr. 964. The jury returned its verdict in favor of Gore onJune 12, 1992. Five days later, BMW changed its national policy toone of full disclosure. Id., at 1026.

231

[44] See, e.g., Brief for Law and EconomicsScholars, et al. as Amici Curiae 6-28 (economic analysisdemonstrates that Alabama Supreme Court's judgment was notunreasonable); W. Landes & R. Posner, Economic Structure ofTort Law 160-163 (1987) (economic model for assessing propriety ofpunitive damages in certain tort cases).

232

[45] See ante, at 7 ("In our federal system,States necessarily have considerable flexibility in determining thelevel of punitive damages that they will allow in different classesof cases and in any particular case."); Browning-FerrisIndustries of Vt., Inc. v. Kelco Disposal, Inc.,492 U. S. 257, 278 (1989) (In any "lawsuit where state law providesthe basis of decision, the propriety of an award of punitivedamages for the conduct in question, and the factors the jury mayconsider in determining their amount, are questions of statelaw."); Silkwood v. Kerr-McGee Corp., 464 U. S. 238,255 (1984) ("Punitive damages have long been a part of traditionalstate tort law.").

233

[46] Petitioner invites the Court to address thequestion of multiple punitive damages awards stemming from the samealleged misconduct. The Court does not take up the invitation, andrightly so, in my judgment, for this case does not present theissue. For three reasons, the question of multiple awards ishypothetical, not real, in Gore's case. First, the punitive damagesaward in favor of Gore is the only such award yet entered againstBMW on account of its nondisclosure policy.

234

Second, BMW did not raise the issue of multiple punitives below.Indeed, in its reply brief before the Alabama Supreme Court, BMWstated: "Gore confuses our point about fairness among plaintiffs.He treats this point as a premature `multiple punitive damages'argument. But, contrary to Gore's assertion, we are not asking thisCourt to hold, as a matter of law, that a `constitutional violationoccurs when a defendant is subjected to punitive damages in twoseparate cases.'" Reply Brief for Appellant in Nos. 1920324,1920325 (Ala. Sup. Ct.), p. 48 (internal citations omitted).

235

Third, if BMW had already suffered a punitive damages judgmentin connection with its nondisclosure policy, Alabama's highestcourt presumably would have taken that fact into consideration. Inreviewing punitive damages awards attacked as excessive, theAlabama Supreme Court considers whether "there have been othercivil actions against the same defendant, based on the sameconduct." 646 So. 2d 619, 624 (1994) (quoting Green Oil Co.v. Hornsby, 539 So. 2d 218, 224 (Ala. 1989)). If so, "thisshould be taken into account in mitigation of the punitive damagesaward." Ibid. The Alabama court accordingly observed thatGore's counsel had filed 24 other actions against BMW in Alabamaand Georgia, but that no other punitive damages award had so farresulted. Id., at 626.

236

[47] Justice Breyer's concurring opinion offers nothingmore solid. Under Haslip, he acknowledges, Alabama'sstandards for punitive damages, standing alone, do not violate dueprocess. Ante, at 3. But they "invit[e] the kind of scrutinythe Court has given the particular verdict before us." Ibid.Pursuing that invitation, Justice Breyer concludes that, matchingthe particular facts of this case to Alabama's "legitimate punitivedamages objectives," ante, at 12, the award was "grosslyexcessive." Ibid. The exercise is engaging, but ultimatelytells us only this: too big will be judged unfair. What is theCourt's measure of too big? Not a cap of the kind a legislaturecould order, or a mathematical test this Court can divine andimpose. Too big is, in the end, the amount at which five Members ofthe Court bridle.

237

[48] See, e.g., Distinctive Printing and PackagingCo. v. Cox, 232 Neb. 846, 857, 443 N. W. 2d 566, 574(1989) (per curiam) ("[P]unitive, vindictive, or exemplary damagescontravene Neb. Const. art. VII, Section(s) 5, and thus are notallowed in this jurisdiction."); Santana v. Registrars ofVoters of Worcester, 398 Mass. 862, 502 N. E. 2d 132 (1986)(punitive damages are not permitted, unless expressly authorized bystatute); Fisher Properties, Inc. v. Arden-Mayfair,Inc., 106 Wash. 2d 826, 852, 726 P. 2d 8, 23 (1986) (enbanc) (same).

238

In Life Ins. Co. of Georgia v. Johnson, No.1940357 (Nov. 17, 1995), the Alabama Supreme Court revised theState's regime for assessments of punitive damages. Henceforth,trials will be bifurcated. Initially, juries will be instructed todetermine liability and the amount of compensatory damages, if any;also, the jury is to return a special verdict on the questionwhether a punitive damages award is warranted. If the jury answersyes to the punitive damages question, the trial will be resumed forthe presentation of evidence and instructions relevant to theamount appropriate to award as punitive damages.After postverdicttrial court review and subsequent appellate review, the amount ofthe final punitive damages judgment will be paid into the trialcourt. The trial court will then order payment of litigationexpenses, including the plaintiff's attorney fees, and instruct theclerk to divide the remainder equally between the plaintiff and theState General Fund. The provision for payment to the State GeneralFund is applicable to all judgments not yet satisfied, andtherefore would apply to the judgment in Gore's case.

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Annotated Case Information

September 29, 2015

"BMW of North America, Inc. v. Gore"

BMW of North America, Inc. v. Gore

Author Stats

Pam Karlan

Professor of Law

Stanford Law School

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