Chamber Hails High Court Ruling on Punitive Damages

WASHINGTON, D.C. – The United States Chamber of Commerce hailed today's ruling by the Supreme Court that threw-out an excessively large punitive damage award and determined punitive damages must be reasonably in-line with actual damages.

"This is a serious set back for class action trial lawyers seeking large damage awards," said Thomas Donohue, U.S. Chamber President and CEO. "The Supreme Court has sent a strong signal that punitive damages that are out-of-whack in relation to actual damages are unconstitutional."

The case before the Supreme Court arose after a jury sided with Curtis and Inez Campbell against State Farm, the Campbell's auto insurer. The $145 million in punitive damages awarded by the jury was 145 times greater than the $1 million in actual damages assessed by a lower court judge.

The Chamber filed an amicus brief with the Supreme Court, citing previous court rulings that limited punitive damages to a single-digit multiplier, usually not exceeding 4 times actual damages. And, the Chamber argued that a state should not impose punitive damages for conduct that occurred outside that state. In making its decision, a 6–3 majority of the court agreed.

On behalf of the majority, Justice Anthony Kennedy wrote, "a jury may not use evidence of out-of-state conduct to punish a defendant for action that was lawful in the jurisdiction where it occurred." He also held that the Constitution's guarantee of due process would not uphold a large disparity between actual and punitive damages, writing, "we have no doubt that there is a presumption against an award that has a 145-1 ratio."

"This decision shows the court has come down squarely behind reason and fairness – punitive damages must be in-line with actual damages," Donohue said. "Disproportionate punitive awards, like the one in the State Farm case, threaten the ability of businesses to operate and excessive awards serve only to enrich a few, while undermining the public good."

The U.S. Chamber of Commerce is the world's largest business federation representing more than three million businesses and organizations of every size, sector and region.

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