A Utah Supreme Court decision reinstating a $145-million punitive damages award against State Farm Mutual Automobile Insurance Co. in a bad-faith case also upheld “irrelevant” admission of evidence that insurers say.
“We are disappointed the Supreme Court refused to exclude evidence of ‘other acts’ involving State Farm that had no bearing on this case,” commented Monika McGuire, National Association of Independent Insurers (NAII) assistant general counsel, legal services. NAII had submitted a friend of the court brief supporting State Farm’s contention that the trial court erred in allowing evidence of other actions by the company that had no bearing on the auto accident case at hand, filed by Curtis and Inez Campbell. Curtis Campbell is a State Farm policyholder.
Some of that unrelated evidence involved hail damage in Colorado, earthquake damage in California, car repairs cars and allowances for depreciation in evaluating total loss of a car. Other testimony was from cases that were still pending in court so the facts were not yet established. Still other testimony involved conduct that was not unlawful where it occurred.
The case stems from a 1981 auto accident involving Curtis Campbell that resulted in the death of the driver of another vehicle and partially disabling injuries to the driver of still another vehicle. A jury in 1983 found Campbell was responsible for the accident and levied $253,000 in damages against him
Campbell and his wife later sued State Farm, alleging bad faith for failing to accept a pre-trial settlement offer of $50,000. A jury found in favor of the Campbells in 1996, awarding them $2.6 million in compensatory and $145 million in punitive damages. The trial judge ruled the damages were excessive and reduced them to $1 million in compensatory and $25 million in punitive damages.
The Utah Supreme Court last month reinstated the $145 million punitive damages award, saying the larger-than-normal award was necessary to get the insurer’s attention. The high court also upheld the introduction of evidence of other State Farm actions that NAII said was not at all similar to circumstances in the Campbell case.
“Allowing extraneous evidence as occurred in this case impairs a jury’s ability to arrive at a just decision,” McGuire said. “Future cases involving other insurance companies could be jeopardized as evidenced here by the 145-to-1 ratio of punitive to compensatory damages.”
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