Like a Good Neighbor: the United States Supreme Court Ignored Malicious Conduct and Precedent to Ratchet Down Punitive Damages in State Farm Mutual Automobile Insurance Co. v. Campbell

JurisdictionUnited States,Federal
CitationVol. 37
Publication year2022


Creighton Law Review

Vol. 37

"No question is ever settled, until it is settled right."(fn1)


Before 1990, the United States Supreme Court abstained from ruling on the dimensions of substantive and procedural due process limitations for punitive damages awards.(fn2) However, the landscape changed in 1996 when the Supreme Court first employed substantive due process in BMW of North America, Inc. v. Gore(fn3) to invalidate an award of punitive damages from a state court.(fn4) In Gore, the Supreme Court outlined three guideposts to instruct courts reviewing punitive damages awards to protect tortfeasors from a state imposing a grossly excessive punishment by examining: 1) the reprehensibility of the defendant's conduct; 2) the ratio between the compensatory and punitive awards; and 3) a comparison of the punitive award with the available civil and criminal penalties for the defendant's conduct.(fn5) The Gore majority refused to set a clear-cut rule regarding the amount of punitive damages permissible in a civil case.(fn6) Scholars predicted the Supreme Court's future review of an award would involve a tort action with no federal or constitutional issue present in the case aside from the size of the award of punitive damages.(fn7)

The United States Supreme Court in State Farm Mutual Automobile Insurance Co. v. Campbell,(fn8) determined a punitive damages award of $145 million was an arbitrary deprivation of State Farm's property when the compensatory damages awarded were $1 million.(fn9) In State Farm, Curtis Campbell caused a traffic accident which killed one person and permanently disabled another.(fn10) Campbell had purchased an insurance policy with State Farm and when State Farm refused to settle the claims against Campbell, a jury subsequently rendered a verdict in excess of Campbell's policy limits.(fn11) Campbell and his wife then pursued a bad faith claim against State Farm, which resulted in the large compensatory and punitive awards.(fn12) The Supreme Court reversed the punitive award, reasoning that it was "well established" there existed substantive and procedural limitations to constrain punitive damage awards.(fn13) Following Gore's three guideposts, the State Farm Court required evidence of State Farm's misconduct around the country to have a nexus to the particular harm the Campbells suffered.(fn14) The Court announced, while no bright line ratio between compensatory and punitive damages existed, most awards with double-digit multipliers were less likely to satisfy due process.(fn15) The Court referenced Gore's historical treatment of punitive damages and going forward noted punitive damages as double, treble, or quadruple sanctions were "instructive."(fn16) The Supreme Court directed courts reviewing awards to ensure the measure of punishment was proportionate to the plaintiff's harm and the general damages recovered.(fn17) However, the Court determined Gore's third guidepost comparing the criminal and civil penalties available for similar conduct, when measured against a punitive damages award, was of less comparative utility than the Court had afforded before.(fn18)

This Note will first examine the facts and holding of State Farm and outline the Supreme Court's review of the Campbell's punitive damages award.(fn19) Then, this Note will explore prior Supreme Court decisions which dealt with the substantive tests for reviewing punitive damages awards.(fn20) This Note will argue the State Farm Court misapplied its own precedent to produce an incorrect decision because the Court failed to distinguish State Farm's conduct from the conduct in Gore and shrunk Gore's analysis in examining the defendant's conduct only in relation to the plaintiff's harm.(fn21) This Note will highlight how the State Farm Court further limited Gore's guideposts with new "instructive" ratios, and ignored prior considerations under Gore's third guidepost when the Court dismissed the available criminal penalties under Utah law and failed to acknowledge all of the Campbells' injuries, or that those injuries were exactly the type of injuries which Gore directed could support a larger award.(fn22) This Note will also argue the Court incorrectly decided State Farm because the result represented an inconsistent departure from the Court's past reasoning which built Gore's guideposts and supported the Campbells' award.(fn23) Finally, this Note will conclude with a discussion of how the Court's decision narrowed the considerations for courts reviewing punitive awards and left more questions open than those the Court incorrectly answered.(fn24)


On May 22, 1981, Curtis Campbell ("Campbell") was driving north on a two lane highway through Sardine Canyon in Cache County, Utah, with his wife, Inez Preece Campbell.(fn25) Todd Ospital ("Ospital") was approaching from the south on the two lane highway when Campbell moved into the southbound lane to pass a six van caravan.(fn26) Ospital swerved onto the shoulder to avoid Campbell's oncoming car, losing control of his own vehicle.(fn27) Ospital then crossed the center line, smashing head-on into the vehicle driven by Robert Slusher ("Slusher").(fn28) Ospital died at the scene and Slusher remained severely and permanently disabled.(fn29) The Campbells were not harmed during the accident.(fn30)

Campbell had purchased an automobile insurance policy from State Farm, in which State Farm had promised to protect Campbell's interests.(fn31) Campbell's policy limitations were $25,000 per person and $50,000 per accident.(fn32) State Farm entrusted the investigation of the claim to Ray Summers ("Summers"), a claims adjuster with eigh-teen years experience investigating and evaluating claims for State Farm.(fn33)

Summers investigated and determined Campbell was at least partially at fault and the evidence demonstrated no fault whatsoever from Slusher.(fn34) Summers reasoned a trial would likely produce an excess judgment against Campbell because Ospital died, Slusher's injuries had already produced over $25,000 in medical bills, and the evidence pointed squarely at Campbell.(fn35) Therefore, Summers concluded the best course for State Farm was to settle the claim.(fn36)

Summers reported his findings to two superiors, State Farm Superintendent Bob Noxon, ("Noxon") and Divisional Superintendent Bill Brown, ("Brown").(fn37) Brown ordered Summers to alter the report by changing any facts and conclusions which tended to support Campbell's exposure.(fn38) Additionally, Summers' superior instructed him to further falsify the file by inserting that Ospital was speeding because he was on his way to visit a pregnant girlfriend.(fn39) Following this, State Farm summarily removed Summers from the claim and replaced him with Wendell Bennett, ("Bennett") an attorney who had extensive experience representing State Farm.(fn40) Bennett and State Farm steadfastly maintained Campbell was not liable.(fn41)

Slusher filed suit in the First District Court of Cache County, Utah, against Campbell, Ospital's estate ("the Ospitals"), and Kenneth Brooks, the owner of the car Ospital had been driving.(fn42) The Ospitals filed a cross-claim against Campbell for wrongful death.(fn43) Campbell filed a cross-claim against Ospital for contribution.(fn44)

At the commencement of the suit, Campbell believed he was not liable because no one affiliated with the claim had informed him of the multiple witnesses against him, that the evidence supported the witness' testimony, or of the possibility he would be legally and wholly liable for the entire judgment even if he was only partially responsible for the accident.(fn45) In the months leading up to trial, Slusher and the Ospitals communicated their desire to settle for the policy limits to State Farm on numerous occasions.(fn46) As trial approached, the Ospitals offered to settle with State Farm for less than $25,000 to avoid the ordeal of reliving their son's death through a lengthy, distressing trial.(fn47) State Farm and Bennett rejected all offers, continually assuring the Campbells that no evidence supported a finding of liability, there was sufficient insurance to cover any risk, and there was no danger to Campbell of exposure beyond the policy limits.(fn48)

In June 1983, Slusher settled his claim against the Ospitals.(fn49) Slusher released all claims against Ospital and both parties continued in the suit against Campbell.(fn50) The trial commenced and Campbell heard, for the first time, eyewitness and expert testimony detailing his role in the accident.(fn51) The jury found Campbell 100% responsible for Slusher's claim and the Ospitals' cross-claim.(fn52) The jury awarded $200,000 to Slusher, and just under $54,000 to the Ospitals.(fn53) In shock, the Campbells turned to Bennett whose sole advice was, "[y]ou may want to put for sale signs on your property to get things moving."(fn54) State Farm refused to post a supersedeas bond to appeal the excess portion of the verdict; thus, Slusher and the Ospitals were free to execute upon their excess judgments against Campbell.(fn55) The Campbells employed other counsel to appeal the judgment and began to inventory all of their assets.(fn56)

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