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Automobile Fraud: 8.11.3.5.2 What can be included in the compensatory damages award to which punitive damages are compared?

It is important to include all compensatory awards in the amount to which the punitive damages award is compared—the denominator of the ratio. Compensatory damages awarded for emotional distress should not be discounted but treated as any other actual damages.652 Several courts have held that if prejudgment interest is part of compensatory damages, it should be included in the denominator.653

Automobile Fraud: 8.11.3.5.4 Treatment of multiple claims

When multiple claims go to a jury, make sure that the jury makes an appropriate compensatory damages award on the claims for which punitive damages are available. If the law of the jurisdiction requires the jury to be instructed not to award duplicative compensatory damages on multiple counts, still ask the jury to reveal its analysis of the compensatory damages on each claim.

Automobile Fraud: 8.11.3.5.5 Using the right ratio for the right defendant

Many automobile fraud cases will involve several defendants, each of whom participated in the fraud at some stage in the vehicle’s history. Because a punitive damages award is the individual liability of the defendant to whom it relates,671 it would be wrong to add up all the punitive damages awards against all the defendants and compare that total to the compensatory damages award.

Automobile Fraud: 8.11.4.1 The Supreme Court’s Description of This Guidepost

The third guidepost by which to assess a punitive damages award’s consistency with due process is to compare the award to the civil penalties authorized or imposed in comparable cases.683 This guidepost serves the purpose of ensuring that “a person receives fair notice not only of the conduct that will subject him to punishment, but also of the severity of the penalty that a state may impose.”684 Because in Gore the maximum civil penalty under Alabama’s unfair and deceptive acts and

Automobile Fraud: 8.11.4.2.2 Civil penalties under UDAP statutes and the FTC Act

The Federal Trade Commission Act (FTC Act) authorizes fines of up to $43,792 per day (this is the 2021 amount, which is adjusted each year for inflation) for failing to comply with a rule or a standard announced in a final cease and desist order (other than a consent order) relating to unfair and deceptive practices.699 Because misrepresentation of the mechanical condition of a used vehicle and making oral or written statements that contradict the window sticker are violations of the FTC Used Car Rule,

Automobile Fraud: 8.11.4.2.3 Statute that caps punitive damages can give defendant fair notice of potential liability

A number of states and a few federal statutes cap punitive damages at a certain amount. The existence of such a law can demonstrate that the defendant had fair notice that the penalties could be as high as the cap.708 Even the exclusion of the defendant’s tort from the provisions of the state cap is probative, because it places the defendant on notice that society considers the conduct in question worthy of punishment greater than the cap.709

Automobile Fraud: 8.11.5 Presenting Evidence of Defendant’s Wealth When Appropriate

The Supreme Court has not included the defendant’s wealth among the guideposts for evaluating whether punitive damages violate due process. In the section of its opinion discussing the ratio of punitive damages to compensatory damages, the State Farm Court held that the defendant’s wealth was an insufficient basis on which to uphold the award on due process grounds:

Automobile Fraud: 8.11.6 Framing Jury Instructions

In addition to the substantive limits on the size of punitive damages awards discussed in the preceding subsections, Supreme Court decisions impose requirements on the process by which a court and jury consider and award punitive damages.

Automobile Fraud: 8.11.7 Trial Court and Appellate Review of Punitive Damages Awards

The Supreme Court has held that the trial court, post-verdict, should conduct a “meaningful and adequate review” of the punitive damages award.741 In addition, an appellate court should review both the verdict and the post-trial review, a review that should “make certain that the punitive damages are reasonable in their amount and rational in light of their purpose to punish what has occurred and deter its repetition.”742

Automobile Fraud: 8.11.8.2 The Supreme Court Has Upheld the Constitutionality of Statutory Damages Without Regard to Their Ratio to Actual Harm

The only time the United States Supreme Court has addressed the constitutionality of statutory damages is in its 1919 decision St. Louis, Iron Mountain & Southern Railway Co. v. Williams.756 The Court there addressed an Arkansas statute that imposed a penalty of between $50 and $300 on railroads that charged more than the fare approved by law. The appellant railroad had collected 66¢ more than the authorized fare.

Automobile Fraud: 8.11.8.3 Fair Notice Is Provided by Statutory Damage Provisions

One of the concerns underlying Gore’s punitive damages ruling is: “Elementary notions of fairness enshrined in our constitutional jurisprudence dictate that a person receive fair notice not only of the conduct that will subject him to punishment, but also of the severity of the penalty that a State may impose.”763 By contrast, fair notice is not an issue in the case of statutory or multiple damages, because the statute itself provides full and fair notice of the potential severity of the penalty.

Automobile Fraud: 8.11.8.4 Comparison of Actual Harm to Statutory Damages May Be Impossible

Another major reason cited by the Eighth Circuit in Capitol Records for refusing to apply the Gore/State Farm criteria to statutory damages is that the second guidepost—that of comparing actual harm suffered to the punitive damages imposed—has no logical application in cases involving statutory damages. Because statutory damages are often crafted for instances in which actual harm cannot be determined, any comparison between the harm actually suffered and the statutory damages awarded is by definition infeasible.

Automobile Fraud: 8.11.8.6 Statutory Damages Are Not Decided in an “Imprecise Manner”

Another key concern of the Supreme Court in Gore was “the imprecise manner in which punitive damages systems are administered.”774 This concern is not relevant to statutory or multiple damages.775 As the First Circuit held in Matamoros: “Here—unlike in [State Farm Mutual Automobile Ins. v.] Campbell—there is no cause for concern about the ‘imprecise manner in which punitive damages systems are administered’ by juries. . . .

Automobile Fraud: 8.12.1 Advantages and Disadvantages

In most states, a plaintiff may use a common law fraud action either to rescind the used car sales contract, or to affirm it and sue for damages.777 In an action for damages, a used car purchaser keeps the car and seeks to recover compensation for the fraud. In contrast, in a rescission action, the plaintiff ordinarily must return what was received, that is, the car, in exchange for the purchase price.778

Automobile Fraud: 3.1 What Every Consumer Lawyer Needs to Know About Automobile Titles

Successful investigation and litigation of automobile fraud requires a thorough understanding of federal and state titling requirements. With an astonishing frequency, dealers flaunt state and federal mandates. These violations may provide a federal cause of action, enhance punitive damages in a fraud claim, and aid in the success of other state claims.

Automobile Fraud: 3.2.1 Introduction

While each state has its own unique title system, a number of general statements can be made, in part because federal law specifies certain minimum requirements as to titles and because states use fairly uniform systems. This section will describe how title transfer and documentation works. It also examines the movement toward electronic titling.

Automobile Fraud: 3.4.3 Title Brands and Salvage Titles

Consumers are generally not transferred salvage certificates of title, but such titles may show up in a vehicle title search. In many states, when a vehicle is in a major collision or is flood damaged, a salvage certificate of title must be sought. At some point after a vehicle is reconstructed, this salvage certificate of title will be exchanged for a standard certificate of title, but subsequent titling of that vehicle may indicate the salvage history with a brand on the new title.75

Automobile Fraud: 3.4.4 Duplicate Titles

With few exceptions, duplicate titles are conspicuously marked “duplicate.” When a title is lost or damaged, the owner, or a dealer under a power of attorney, applies for a duplicate title. A duplicate title may be part of a fraud scheme by which a dealer intends to “wash” information off the original certificate of title, particularly when that title has had several assignments since being issued (assignments of which the state will usually have no record).