The Utah Supreme Court on Friday lowered by $136 million the amount of punitive damages State Farm Insurance should pay in a decades-old lawsuit alleging it underpaid insurance claims, cheated customers and destroyed documents.
In an April 2003 ruling, the U.S. Supreme Court held that the $145 million awarded to Inez Campbell of Lewiston and her late husband, Curtis, was unconstitutionally large. The high court remanded the case to the Utah Supreme Court to adjust the amount.
On April 23, the state high court lowered the award amount to just over $9 million, significantly higher than State Farm’s suggestion of $1 million.
“Mrs. Campbell is thrilled with this opinion because it exposes just how odious State Farm’s conduct was,” said Karra Porter, the Campbells’ attorney.
Porter said attorneys read parts of the decision over the phone to the 73-year-old Campbell, who said it was “worth the wait.”
Maria Taylor, a spokeswoman with State Farm Insurance in Greeley, Colo., said the company was still in the process of reviewing the ruling.
“For us, the case still involves important questions of constitutional law,” Taylor said. “We felt that (the Utah Supreme Court) were given clear guidelines by the U.S. Supreme Court and we’re going to review the decision in detail and then make a decision on our next course of action.”
State Farm could ask the U.S. Supreme Court to review the ruling.
“It has been 20 years and the time has come for State Farm to step up to the plate,” Porter said. “One thing that’s going to be very disappointing is if they continue to drag Mrs. Campbell through the mud on this thing instead of just owning up.”
Curtis Campbell sued his insurance company, State Farm Mutual Automobile Insurance Co., after it refused to settle claims arising from a 1981 car accident that killed one driver and left another disabled.
A jury found Campbell at fault in the accident and ordered him to pay the victims about $136,000 in excess of his $50,000 insurance policy limit.
After the verdict, Campbell testified, he asked his State Farm-hired attorney what to do and was told to put a “For Sale” sign on his home.
State Farm eventually paid all the damages, but Campbell and his wife still sued State Farm for punitive damages, alleging bad-faith failure to settle, fraud and emotional distress. A Utah jury awarded the Campbells $1 million in compensatory damages and $145 million in punitive damages, which was later reduced to $25 million on appeal.
In 2001, the Utah Supreme Court reinstated the initial $145 million in punitive damages, taking into account State Farm’s net worth and its business behavior in other states.
The 83-year-old Campbell died of Parkinson’s Disease soon after that ruling. His wife remained a party to the lawsuit, which was appealed to the U.S. Supreme Court.
Justices split 6-3 over whether the award was unconstitutionally excessive.
Justice Anthony M. Kennedy, writing for the majority, said that “courts must ensure that the measure of punishment is both reasonable and proportionate to the amount of harm” someone suffers. Kennedy said it was clear that Campbell was not entitled to $145 million when his actual damages were $1 million.
Justice Ruth Bader Ginsburg wrote in her dissent that the large award “indicates why damage-capping legislation may be altogether fitting and proper.” But, she said, the court should leave that matter to the states.
Copyright 2004 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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