Hooray for common sense. The Supreme Court decision striking down a $2 million punitive damages award to an Alabama doctor who sued BMW for a retouched paint job on his new 535i sedan is a welcome blow for reason. The original jury awarded $4 million for a $4,000 boo-boo, and it wasn't alone in its punitive madness. Two years ago, a jury awarded a woman $2.7 million in punitive damages for spilling hot coffee from a McDonald's in her lap in a moving car. A man received $50 million in punitive damages from Mercury Finance Co. for a $1,000 discrepancy in a used-car loan. This kind of irresponsible behavior erodes faith in the jury system. It doesn't do much to help the business climate either.
Freedom requires restraint, and state and local juries and judges have shown precious little of it lately. Whether it is product liability, medical malpractice, or libel, damages have often been excessive. While it would be much better for the states to rein in their own courts, the U.S. Supreme Court's action is a necessary first step in establishing a conceptual cap on "grossly excessive" awards.
The court wisely refused to impose specific quantitative measures of excessive awards but instead suggested guideposts in determining what Justice John Paul Stevens calls "elementary notions of fairness." Stevens suggested that lower courts consider the "degree of reprehensibility" of the act and the ratio between punitive and actual damages. In the BMW case, the company did not disclose to its customers that it had repainted some of its new cars. But there was only minor economic injury. Even when the Alabama State Supreme Court cut the jury award in half, the $2 million judgment came to 500 to 1. Excessive, according to the highest court. The Supreme Court has said "enough" to juries awarding wild punitive damages. It provided guidelines for the lower courts to follow. We suggest they act quickly.