BMW of North America V. Gore

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BMW of North America, Inc. v. Gore

· Case Name and Citation Plaintiff in this case is Dr. Gore and Defendant is BMW of North America. This case may be found in volume 116 of the Supreme Court Reporter, starting on page 158. The Supreme Court decided this case in 16.

· Key facts and Judgment of court holding The plaintiff Dr. Gore purchased a new BMW automobile in Alabama. Dr. Gore noticed that the paint on the vehicle was flawed after nine months. BMW acknowledged that it had a nationwide policy that if the cost of repairing damages done during manufacturing or transportation did not exceed % of the retail value, the automobile was sold as new. The Jury returned a verdict finding BMW liable for compensatory damages of $4000. In addition jury assessed a $ 4million in punitive damages, based on the determination that the nondisclosure policy constituted “gross, oppressive or malicious” fraud. The Alabama Supreme Court reduced the punitive damages from 4 million to million, because this Court lack jurisdiction to compensate for all automobiles sold nationwide. The judgment is reversed, and the case is remanded for further proceedings not consistent with this opinion.

· Issue Dr. Gore sued BMW, because they sold him a repainted automobile as new without disclosure. He is suing for $4000 in compensatory damages based on the testimony of BMW dealer, and $4million in punitive damages based on the 8 refinished cars sold nationwide since 18.




· Holding The judgment is reversed, and the case is remanded for further proceedings not consistent with this opinion because the Supreme Court was fully convinced that the grossly excessive award imposed in this case transcends the constitutional limit.

· Summary of court’s reasoning The Jury returned a verdict finding BMW liable for compensatory damages of $4000. In addition jury assessed a $ 4million in punitive damages, based on the determination that the nondisclosure policy constituted “gross, oppressive or malicious” fraud. The trial judge denied BMW’s post-trial motion.

$4 million punitive damages were awarded based on the fact that BMW sold 8 refinished cars without disclosure of the repair, and the price of the refinished automobile should be 10 percent less of the retail value. BMW generated revenue of $40 million from the sale of refinished automobiles. 10 percent of $ 40 million is $ 4 million.

The Alabama Supreme Court reduced the judgment from $4 million to $ million, because jury improperly calculated the punitive damages. The Court notes that one state cannot attempt to regulate commercial behavior in all states by awarding excessive punitive damages, where it lacks jurisdiction.

Three issues that U.S. Supreme court examines in evaluating whether a punitive damages award violates the due process clause are First, the reasonableness of a punitive damages award is the degree of reprehensibility of the defendant’s conduct. The presale refinishing of car had no effect on its performance or safety features. BMW’s conduct evinced no difference to or reckless disregard for the health and safety of others. The second and perhaps most commonly cited indicium of an unreasonable or excessive punitive damages award is its ratio to the actual harm inflicted on the plaintiff. There is no constitutional formula to calculate the punitive damages on the basis of actual damages. Third, in this case the $ million economic sanction imposed on BMW is substantially greater than the statutory fines available in Alabama and elsewhere for similar malfeasance. The U.S. Supreme Court has not defined dollar limits on punitive damages award.

Work Cited

Corley, Robert N., et al. The Legal & Regulatory Environment of Business. Boston McGraw Hill, 00.





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