Insurers Urge U.S. Supreme Court to Reverse Utah Ruling in Landmark Punitive Damages Case

September 2, 2004

The National Association of Mutual Insurance Companies (NAMIC) and the Property Casualty Insurers Association of America (PCI) have filed an amicus brief urging the U.S. Supreme Court to consider a remand of a second Utah Supreme Court judgment on punitive damages in the case of State Farm Mutual Automobile Insurance Company v. Campbell and Inez Preece Campbell.

In 2003, the Utah Supreme Court awarded punitive damages of $145 million, with compensatory damages of $1 million in a case that involved an auto crash with actual damages of $2,086.75. On appeal the U.S. Supreme Court ruled that the special damage award was far in excess of what would be permitted by the Constitution’s Fourteenth Amendment’s Due Process Clause. The case was remanded to the Utah Supreme Court to reconsider its decision to make it consistent with the Federal Supreme Court’s ruling. In its decision following the remand, the Utah Supreme Court awarded punitive damages of $9 million to the plaintiffs, raising the issue of whether the U.S. Supreme Court’s decision was correctly followed.

“The Utah Supreme Court flouted this Court’s opinion and mandate, disregarding the Court’s carefully reasoned conclusion…and the proper proportion between punitive and compensatory damages in this case,” the associations’ brief said.

The brief also argues that, “the ‘devastating potential for harm’ posed by arbitrary and excessive punitive damages awards…is revived and exacerbated by the Utah Supreme Court’s decision. It is thus critical that this (U.S. Supreme) Court correct that decision, not only to ensure compliance with its mandate in this case, but to ensure the continuing vitality of the constitutional standards for review of punitive damages.”

The brief points out that the pain and suffering damages awarded in the second Utah Supreme Court Case is still more than 4,800 times the actual damage. Speaking on behalf of their members, the associations maintain that such an outrageous award could impact future punitive damage cases involving other insurers.

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