STATE FARM v. CAMPBELL
538 U.S. 408 (2003)
Case Brief
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STATE FARM v. CAMPBELL
• PURPOSE: This discusses punitive
damages.
Copyright 2007 Thomson Delmar Learning.
All Rights Reserved.
STATE FARM v. CAMPBELL
• CAUSE OF ACTION: The Campbells sued
State Farm, their insurance company, for
bad faith, fraud, and intentional infliction of
emotional distress.
Copyright 2007 Thomson Delmar Learning.
All Rights Reserved.
STATE FARM v. CAMPBELL
• FACTS: The Campbell car was attempting to
pass on a two-lane highway despite oncoming
traffic. The attempted pass resulted in the other
driver’s (Ospital) death and left another person
(Slusher) permanently disabled. State Farm, the
Campbell’s insurer refused Ospital’s and
Slusher’s offers to settle for $25,000 each
($50,000 policy limit) and took the case to trial.
The jury awarded $185,849 against the
Campbells. Initially, State Farm refused to pay,
forcing the Campbells to appeal. (continued)
Copyright 2007 Thomson Delmar Learning.
All Rights Reserved.
STATE FARM v. CAMPBELL
• Although State Farm paid the entire judgment
following the appeal, the Campbells sued State
Farm for bad faith, fraud, and intentional
infliction of emotional distress. At trial, the court
allowed the Campbells to introduce evidence of
State Farm’s allegedly fraudulent actions over a
twenty-year period to prove that State Farm was
engaged in a scheme to enhance its finances by
refusing to pay claims. Jury verdict: $2.6 million
compensatory damages, $145 million punitive
damages.
Copyright 2007 Thomson Delmar Learning.
All Rights Reserved.
STATE FARM v. CAMPBELL
• ISSUE: Whether, under the circumstances,
an award of $145 million in punitive
damages, where full compensatory
damages are $1 million, is excessive and in
violation of the Due Process Clause of the
Fourteenth Amendment to the Constitution
of the United States.
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STATE FARM v. CAMPBELL
• HOLDING: Yes. The punitive award of
$145 million was neither reasonable nor
proportionate to the wrong committed,
and it was an irrational and arbitrary
deprivation of the property of the
defendant.
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STATE FARM v. CAMPBELL
• REASONING: The Court stated that the
Campbells were improperly allowed to use
much evidence about State Farm that was
irrelevant. In an earlier case, the Court
stated that a court hearing a case
concerning punitive damages should
consider the following three factors:
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STATE FARM v. CAMPBELL
1. The degree of reprehensibility of the
defendant’s misconduct; 2. the disparity
between the actual or potential harm
suffered by the plaintiff and the punitive
damages award; and 3. the difference
between the punitive damages awarded
by the jury and the civil penalties
authorized or imposed in comparable
cases.
Copyright 2007 Thomson Delmar Learning.
All Rights Reserved.