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Automobile Fraud: 8.11.2.6 Intent, Malice, Trickery, or Deceit

The fifth factor in evaluating reprehensibility is whether the harm resulted from intentional malice, trickery or deceit, or from mere accident. Reckless indifference may be sufficient.590 In nearly all automobile fraud cases the proof of the merits of the claim will show that the defendant’s acts involved intentional malice, trickery, deceit, or reckless indifference, thus satisfying this element.591

Automobile Fraud: 8.11.3.1.1 Gore, State Farm, and Philip Morris

The second guidepost identified by Gore and State Farm for determining the constitutionality of a punitive damages award is the ratio of punitive damages to compensatory damages. Gore did not suggest numerical standards for the ratio. In State Farm, while rejecting a “bright-line ratio,” the Court warned that “in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process.”596

Automobile Fraud: 8.11.3.1.2 Exxon Shipping Co. v. Baker as interpreting maritime law

The Supreme Court’s 2008 decision in Exxon Shipping Co. v. Baker600 also addresses the ratio between punitive and compensatory damages, but it is based entirely on maritime law, not constitutional law. The Court, acting as a common law court deciding maritime law, refused to allow more than a one-to-one ratio for an unintentional multibillion dollar oil spill off the Alaskan coast for which the plaintiffs received $500 million in compensatory damages.

Automobile Fraud: 8.11.3.2 Justifying a High Ratio

Although it focused on ratios, State Farm reiterated the Supreme Court’s earlier disavowal of “rigid benchmarks.”607 Many courts have taken the Court at its word.608 The Fifth Circuit has stressed that the ratio analysis only embodies a general evaluation of reasonableness.609 The Seventh Circuit commented that a rule limiting punitive damages to a 4-to-1 or single-digit ratio would be unreasonable because it would undermine the goal

Automobile Fraud: 8.11.3.3 Treatment of Emotional Distress and Other Intangible Harm

One factor a number of courts have cited in approving higher ratios is the difficulty of quantifying certain types of injuries, such as fear, emotional distress, and violations of individual constitutional rights.624 While the Supreme Court has cautioned that a compensatory damages award that includes damages for emotional distress may already have a punitive component that the punitive damages award should not duplicate,625 the Court also approved a higher ratio when the harm is difficult t

Automobile Fraud: 8.11.3.5.1 Potential harm to the plaintiff

The ratio is to be based on not only the actual damages the plaintiff has suffered, but also the potential damages the plaintiff could have suffered. Gore makes this clear, phrasing this guidepost as whether there is “a reasonable relationship between the punitive damages award and the harm likely to result from the defendant’s conduct as well as the harm that actually has occurred.”635 Likewise, a major factor the Court cited in TXO Production Corp. v.

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.