In a major victory for American business, the U.S. Supreme Court curtailed jury awards aimed at punishing or deterring misconduct. By a 5-4 vote, the court struck down as "grossly excessive" a $2 million punitive-damages award won by an Alabama doctor dissatisfied with his BMW sedan. The justices said the huge award unconstitutionally violated the car manufacturer's due-process rights.

SUPREME COURT OF THE UNITED STATES

Syllabus



BMW OF NORTH AMERICA, INC.

v.

GORE

CERTIORARI TO THE SUPREME COURT OF ALABAMA

No. 94-896.  Argued October 11, 1995-Decided May 20, 1996

After respondent Gore purchased a new BMW automobile from an
authorized Alabama dealer, he discovered that the car had been
repainted. He brought this suit for compensatory and punitive
damages against petitioner, the American distributor of BMW's,
alleging, inter alia, that the failure to disclose the repainting
constituted fraud under Alabama law. At trial, BMW acknowledged
that it followed a nationwide policy of not advising its dealers, and
hence their customers, of predelivery damage to new cars when the
cost of repair did not exceed 3 percent of the car's suggested retail
price. Gore's vehicle fell into that category. The jury returned a
verdict finding BMW liable for compensatory damages of $4,000,
and assessing $4 million in punitive damages. The trial judge denied
BMW's post-trial motion to set aside the punitive damages award,
holding, among other things, that the award was not "grossly
excessive" and thus did not violate the Due Process Clause of the
Fourteenth Amendment. See, e.g., TXO Production Corp. v.
Alliance Resources Corp., 509 U. S. 443, 454. The Alabama
Supreme Court agreed, but reduced the award to $2 million on the
ground that, in computing the amount, the jury had improperly
multiplied Gore's compensatory damages by the number of similar
sales in all States, not just those in Alabama.

Held:  The $2 million punitive damages award is grossly excessive
and therefore exceeds the constitutional limit. Pp. 7-26.

(a) Because such an award violates due process only when it can
fairly be categorized as "grossly excessive" in relation to the State's
legitimate interests in punishing unlawful conduct and deterring its
repetition, cf. TXO, 509 U. S., at 456, the federal excessiveness
inquiry appropriately begins with an identification of the state
interests that such an award is designed to serve. Principles of state
sovereignty and comity forbid a State to enact policies for the entire
Nation, or to impose its own policy choice on neighboring States.
See e.g., Healy v. Beer Institute, 491 U. S. 324, 335-336.
Accordingly, the economic penalties that a State inflicts on those who
transgress its laws, whether the penalties are legislatively authorized
fines or judicially imposed punitive damages, must be supported by
the State's interest in protecting its own consumers and economy,
rather than those of other States or the entire Nation. Gore's award
must therefore be analyzed in the light of conduct that occurred solely
within Alabama, with consideration being given only to the interests
of Alabama consumers. Pp. 7-13.


(b) Elementary notions of fairness enshrined in this Court's
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. Three
guideposts, each of which indicates that BMW did not receive
adequate notice of the magnitude of the sanction that Alabama might
impose, lead to the conclusion that the $2 million award is grossly
excessive. Pp. 13-14.

(c) None of the aggravating factors associated with the first (and
perhaps most important) indicium of a punitive damages award's
excessiveness--the degree of reprehensibility of the defendant's
conduct, see e.g., Day v. Woodworth, 13 How. 363, 371--is
present here. The harm BMW inflicted on Gore was purely
economic; the presale repainting had no effect on the car's
performance, safety features, or appearance; and BMW's conduct
evinced no indifference to or reckless disregard for the health and
safety of others. Gore's contention that BMW's nondisclosure was
particularly reprehensible because it formed part of a nationwide
pattern of tortious conduct is rejected, because a corporate executive
could reasonably have interpreted the relevant state statutes as
establishing safe harbors for nondisclosure of presumptively minor
repairs, and because there is no evidence either that BMW acted in
bad faith when it sought to establish the appropriate line between
minor damage and damage requiring disclosure to purchasers, or that
it persisted in its course of conduct after it had been adjudged
unlawful. Finally, there is no evidence that BMW engaged in
deliberate false statements, acts of affirmative misconduct, or
concealment of evidence of improper motive. Pp. 14-20.

(d) The second (and perhaps most commonly cited) indicium of
excessiveness--the ratio between the plaintiff's compensatory
damages and the amount of the punitive damages, see e.g., TXO,
509 U. S., at 459--also weighs against Gore, because his $2 million
award is 500 times the amount of his actual harm as determined by
the jury, and there is no suggestion that he or any other BMW
purchaser was threatened with any additional potential harm by
BMW's nondisclosure policy. Although it is not possible to draw a
mathematical bright line between the constitutionally acceptable and
the constitutionally unacceptable that would fit every case, see, e.g.,
id., at 458, the ratio here is clearly outside the acceptable range. Pp.
20-23.

(e) Gore's punitive damages award is not saved by the third relevant
indicium of excessiveness--the difference between it and the civil or
criminal sanctions that could be imposed for comparable misconduct,
see, e.g., Pacific Mut. Life Ins. Co. v. Haslip, 499 U. S. 1, 23--
because $2 million is substantially greater than Alabama's applicable
$2,000 fine and the penalties imposed in other States for similar
malfeasance, and because none of the pertinent statutes or interpretive
decisions would have put an out-of-state distributor on notice that it
might be subject to a multimillion dollar sanction. Moreover, in the
absence of a BMW history of noncompliance with known statutory
requirements, there is no basis for assuming that a more modest
sanction would not have been sufficient. Pp. 23-25.

(f) Thus, BMW's conduct was not sufficiently egregious to justify
the severe punitive sanction imposed against it. Whether the
appropriate remedy requires a new trial or merely an independent
determination by the Alabama Supreme Court of the award necessary
to vindicate Alabama consumers' economic interests is a matter for
that court to address in the first instance. Pp. 25-26. 646 So. 2d
619, reversed and remanded.

STEVENS, J., delivered the opinion of the Court, in which
O'CONNOR, KENNEDY, SOUTER, and BREYER, JJ., joined.
BREYER, J., filed a concurring opinion, in which O'CONNOR and
SOUTER, JJ., joined. SCALIA, J., filed a dissenting opinion, in
which THOMAS, J., joined. GINSBURG, J., filed a dissenting
opinion, in which REHNQUIST, C. J., joined.


______________________________________________________
__


NOTICE: This opinion is subject to formal revision before
publication in the preliminary print of the United States Reports.
Readers are requested to notify the Reporter of Decisions, Supreme
Court of the United States, Washington, D.C. 20543, of any
typographical or other formal errors, in order that corrections may be
made before the preliminary print goes to press.

SUPREME COURT OF THE UNITED STATES


No. 94-896


BMW OF NORTH AMERICA, INC.,
PETITIONER

v.

IRA GORE, JR.

ON WRIT OF CERTIORARI TO THE SUPREME COURT OF
ALABAMA

[May 20, 1996]

JUSTICE STEVENS delivered the opinion of the Court.

The Due Process Clause of the Fourteenth Amendment prohibits a
State from imposing a "`grossly excessive'" punishment on a
tortfeasor. TXO Production Corp. v. Alliance Resources Corp., 509
U. S. 443, 454 (1993) (and cases cited). The wrongdoing involved
in this case was the decision by a national distributor of automobiles
not to advise its dealers, and hence their customers, of predelivery
damage to new cars when the cost of repair amounted to less than 3
percent of the car's suggested retail price. The question presented is
whether a $2 million punitive damages award to the purchaser of one
of these cars exceeds the constitutional limit.


In January 1990, Dr. Ira Gore, Jr. (respondent), purchased a black
BMW sports sedan for $40,750.88 from an authorized BMW dealer
in Birmingham, Alabama. After driving the car for approximately
nine months, and without noticing any flaws in its appearance, Dr.
Gore took the car to "Slick Finish," an independent detailer, to make
it look "`snazzier than it normally would appear.'"  646 So. 2d 619,
621 (Ala. 1994). Mr. Slick, the proprietor, detected evidence that the
car had been repainted.1   Convinced that he had been cheated, Dr.
Gore brought suit against petitioner BMW of North America
(BMW), the American distributor of BMW automobiles.2   Dr. Gore
alleged, inter alia, that the failure to disclose that the car had been
repainted constituted suppression of a material fact.3 The complaint
prayed for $500,000 in compensatory and punitive damages, and
costs.

At trial, BMW acknowledged that it had adopted a nationwide policy
in 1983 concerning cars that were damaged in the course of
manufacture or transportation. If the cost of repairing the damage
exceeded 3 percent of the car's suggested retail price, the car was
placed in company service for a period of time and then sold as used.
If the repair cost did not exceed 3 percent of the suggested retail
price, however, the car was sold as new without advising the dealer
that any repairs had been made. Because the $601.37 cost of
repainting Dr. Gore's car was only about 1.5 percent of its suggested
retail price, BMW did not disclose the damage or repair to the
Birmingham dealer.

Dr. Gore asserted that his repainted car was worth less than a car that
had not been refinished. To prove his actual damages of $4,000, he
relied on the testimony of a former BMW dealer, who estimated that
the value of a repainted BMW was approximately 10 percent less
than the value of a new car that had not been damaged and repaired.4
To support his claim for punitive damages, Dr. Gore introduced
evidence that since 1983 BMW had sold 983 refinished cars as new,
including 14 in Alabama, without disclosing that the cars had been
repainted before sale at a cost of more than $300 per vehicle.5
Using the actual damage estimate of $4,000 per vehicle, Dr. Gore
argued that a punitive award of $4 million would provide an
appropriate penalty for selling approximately 1,000 cars for more
than they were worth.

In defense of its disclosure policy, BMW argued that it was under no
obligation to disclose repairs of minor damage to new cars and that
Dr. Gore's car was as good as a car with the original factory finish.
It disputed Dr. Gore's assertion that the value of the car was impaired
by the repainting and argued that this good-faith belief made a
punitive award inappropriate. BMW also maintained that
transactions in jurisdictions other than Alabama had no relevance to
Dr. Gore's claim.

The jury returned a verdict finding BMW liable for compensatory
damages of $4,000. In addition, the jury assessed $4 million in
punitive damages, based on a determination that the nondisclosure
policy constituted "gross, oppressive or malicious" fraud.6   See Ala.
Code Sections 6-11-20, 6-11-21 (1993).

BMW filed a post-trial motion to set aside the punitive damages
award. The company introduced evidence to establish that its
nondisclosure policy was consistent with the laws of roughly 25
States defining the disclosure obligations of automobile
manufacturers, distributors, and dealers. The most stringent of these
statutes required disclosure of repairs costing more than 3 percent of
the suggested retail price; none mandated disclosure of less costly
repairs.7   Relying on these statutes, BMW contended that its
conduct was lawful in these States and therefore could not provide
the basis for an award of punitive damages.

BMW also drew the court's attention to the fact that its nondisclosure
policy had never been adjudged unlawful before this action was filed.
Just months before Dr. Gore's case went to trial, the jury in a similar
lawsuit filed by another Alabama BMW purchaser found that BMW's
failure to disclose paint repair constituted fraud. Yates v. BMW of
North America, Inc., 642 So. 2d 937 (Ala. 1993).8 Before the
judgment in this case, BMW changed its policy by taking steps to
avoid the sale of any refinished vehicles in Alabama and two other
States. When the $4 million verdict was returned in this case, BMW
promptly instituted a nationwide policy of full disclosure of all
repairs, no matter how minor.

In response to BMW's arguments, Dr. Gore asserted that the policy
change demonstrated the efficacy of the punitive damages award. He
noted that while no jury had held the policy unlawful, BMW had
received a number of customer complaints relating to undisclosed
repairs and had settled some lawsuits.9   Finally, he maintained that
the disclosure statutes of other States were irrelevant because BMW
had failed to offer any evidence that the disclosure statutes
supplanted, rather than supplemented, existing causes of action for
common-law fraud.

The trial judge denied BMW's post-trial motion, holding, inter alia,
that the award was not excessive. On appeal, the Alabama Supreme
Court also rejected BMW's claim that the award exceeded the
constitutionally permissible amount. 646 So. 2d 619 (1994). The
court's excessiveness inquiry applied the factors articulated in Green
Oil Co. v. Hornsby, 539 So. 2d 218, 223-224 (Ala. 1989), and
approved in Pacific Mut. Life Ins. Co. v. Haslip, 499 U. S. 1, 21-22
(1991). 646 So. 2d, at 624-625. Based on its analysis, the court
concluded that BMW's conduct was "reprehensible"; the
nondisclosure was profitable for the company; the judgment "would
not have a substantial impact upon [BMW's] financial position"; the
litigation had been expensive; no criminal sanctions had been
imposed on BMW for the same conduct; the award of no punitive
damages in Yates reflected "the inherent uncertainty of the trial
process"; and the punitive award bore a "reasonable relationship" to
"the harm that was likely to occur from [BMW's] conduct as well as
. . . the harm that actually occurred."  Id., at 625-627.

The Alabama Supreme Court did, however, rule in BMW's favor on
one critical point: The court found that the jury improperly computed
the amount of punitive damages by multiplying Dr. Gore's
compensatory damages by the number of similar sales in other
jurisdictions. Id., at 627. Having found the verdict tainted, the court
held that "a constitutionally reasonable punitive damages award in
this case is $2,000,000," id., at 629, and therefore ordered a
remittitur in that amount.10   The court's discussion of the amount of
its remitted award expressly disclaimed any reliance on "acts that
occurred in other jurisdictions"; instead, the court explained that it
had used a "comparative analysis" that considered Alabama cases,
"along with cases from other jurisdictions, involving the sale of an
automobile where the seller misrepresented the condition of the
vehicle and the jury awarded punitive damages to the purchaser."11
Id., at 628.

Because we believed that a review of this case would help to
illuminate "the character of the standard that will identify
constitutionally excessive awards" of punitive damages, see Honda
Motor Co. v. Oberg, 512 U. S. ___, ___ (1994) (slip op., at 4), we
granted certiorari, 513 U. S. ___ (1995).


Punitive damages may properly be imposed to further a State's
legitimate interests in punishing unlawful conduct and deterring its
repetition. Gertz v. Robert Welch, Inc., 418 U. S. 323, 350 (1974);
Newport v. Fact Concerts, Inc., 453 U. S. 247, 266-267 (1981);
Haslip, 499 U. S., at 22. In our federal system, States necessarily
have considerable flexibility in determining the level of punitive
damages that they will allow in different classes of cases and in any
particular case. Most States that authorize exemplary damages afford
the jury similar latitude, requiring only that the damages awarded be
reasonably necessary to vindicate the State's legitimate interests in
punishment and deterrence. See TXO, 509 U. S., at 456; Haslip,
499 U. S., at 21, 22. Only when an award can fairly be categorized
as "grossly excessive" in relation to these interests does it enter the
zone of arbitrariness that violates the Due Process Clause of the
Fourteenth Amendment. Cf. TXO, 509 U. S., at 456. For that
reason, the federal excessiveness inquiry appropriately begins with
an identification of the state interests that a punitive award is designed
to serve. We therefore focus our attention first on the scope of
Alabama's legitimate interests in punishing BMW and deterring it
from future misconduct.

No one doubts that a State may protect its citizens by prohibiting
deceptive trade practices and by requiring automobile distributors to
disclose presale repairs that affect the value of a new car. But the
States need not, and in fact do not, provide such protection in a
uniform manner. Some States rely on the judicial process to
formulate and enforce an appropriate disclosure requirement by
applying principles of contract and tort law.12   Other States have
enacted various forms of legislation that define the disclosure
obligations of automobile manufacturers, distributors, and dealers.13
The result is a patchwork of rules representing the diverse policy
judgments of lawmakers in 50 States.

That diversity demonstrates that reasonable people may disagree
about the value of a full disclosure requirement. Some legislatures
may conclude that affirmative disclosure requirements are
unnecessary because the self-interest of those involved in the
automobile trade in developing and maintaining the goodwill of their
customers will motivate them to make voluntary disclosures or to
refrain from selling cars that do not comply with self-imposed
standards. Those legislatures that do adopt affirmative disclosure
obligations may take into account the cost of government regulation,
choosing to draw a line exempting minor repairs from such a
requirement. In formulating a disclosure standard, States may also
consider other goals, such as providing a "safe harbor" for
automobile manufacturers, distributors, and dealers against lawsuits
over minor repairs.14

We may assume, arguendo, that it would be wise for every State to
adopt Dr. Gore's preferred rule, requiring full disclosure of every
presale repair to a car, no matter how trivial and regardless of its
actual impact on the value of the car. But while we do not doubt that
Congress has ample authority to enact such a policy for the entire
Nation,15  it is clear that no single State could do so, or even impose
its own policy choice on neighboring States. See Bonaparte v. Tax
Court, 104 U. S. 592, 594 (1881) ("No State can legislate except
with reference to its own jurisdiction. . . . Each State is independent
of all the others in this particular").16   Similarly, one State's power
to impose burdens on the interstate market for automobiles is not
only subordinate to the federal power over interstate commerce,
Gibbons v. Ogden, 9 Wheat. 1, 194-196 (1824), but is also
constrained by the need to respect the interests of other States, see,
e.g., Healy v. Beer Institute, 491 U. S. 324, 335-336 (1989) (the
Constitution has a "special concern both with the maintenance of a
national economic union unfettered by state-imposed limitations on
interstate commerce and with the autonomy of the individual States
within their respective spheres" (footnote omitted)); Edgar v. MITE
Corp., 457 U. S. 624, 643 (1982).

We think it follows from these principles of state sovereignty and
comity that a State may not impose economic sanctions on violators
of its laws with the intent of changing the tortfeasors' lawful conduct
in other States.17 Before this Court Dr. Gore argued that the large
punitive damages award was necessary to induce BMW to change the
nationwide policy that it adopted in 1983.18   But by attempting to
alter BMW's nationwide policy, Alabama would be infringing on the
policy choices of other States. To avoid such encroachment, the
economic penalties that a State such as Alabama inflicts on those who
transgress its laws, whether the penalties take the form of
legislatively authorized fines or judicially imposed punitive damages,
must be supported by the State's interest in protecting its own
consumers and its own economy. Alabama may insist that BMW
adhere to a particular disclosure policy in that State. Alabama does
not have the power, however, to punish BMW for conduct that was
lawful where it occurred and that had no impact on Alabama or its
residents.19   Nor may Alabama impose sanctions on BMW in order
to deter conduct that is lawful in other jurisdictions.

In this case, we accept the Alabama Supreme Court's interpretation
of the jury verdict as reflecting a computation of the amount of
punitive damages "based in large part on conduct that happened in
other jurisdictions."  646 So. 2d, at 627. As the Alabama Supreme
Court noted, neither the jury nor the trial court was presented with
evidence that any of BMW's out-of-state conduct was unlawful.
"The only testimony touching the issue showed that approximately
60% of the vehicles that were refinished were sold in states where
failure to disclose the repair was not an unfair trade practice." Id., at
627, n. 6.20   The Alabama Supreme Court therefore properly
eschewed reliance on BMW's out-of-state conduct, id., at 628, and
based its remitted award solely on conduct that occurred within
Alabama.21   The award must be analyzed in the light of the same
conduct, with consideration given only to the interests of Alabama
consumers, rather than those of the entire Nation. When the scope of
the interest in punishment and deterrence that an Alabama court may
appropriately consider is properly limited, it is apparent--for reasons
that we shall now address--that this award is grossly excessive.


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.22   Three guideposts, each of
which indicates that BMW did not receive adequate notice of the
magnitude of the sanction that Alabama might impose for adhering to
the nondisclosure policy adopted in 1983, lead us to the conclusion
that the $2 million award against BMW is grossly excessive: the
degree of reprehensibility of the nondisclosure; the disparity between
the harm or potential harm suffered by Dr. Gore and his punitive
damages award; and the difference between this remedy and the civil
penalties authorized or imposed in comparable cases. We discuss
these considerations in turn.

Degree of Reprehensibility

Perhaps the most important indicium of the reasonableness of a
punitive damages award is the degree of reprehensibility of the
defendant's conduct.23   As the Court stated nearly 150 years ago,
exemplary damages imposed on a defendant should reflect "the
enormity of his offense."  Day v. Woodworth, 13 How. 363, 371
(1852). See also St. Louis, I. M. & S. R. Co. v. Williams, 251 U.
S. 63, 66-67 (1919) (punitive award may not be "wholly
disproportioned to the offense"); Browning-Ferris Industries of Vt.,
Inc. v. Kelco Disposal, Inc., 492 U. S. 257, 301 (1989)
(O'CONNOR, J., concurring in part and dissenting in part)
(reviewing court "should examine the gravity of the defendant's
conduct and the harshness of the award of punitive damages").24
This principle reflects the accepted view that some wrongs are more
blameworthy than others. Thus, we have said that "nonviolent
crimes are less serious than crimes marked by violence or the threat
of violence."  Solem v. Helm, 463 U. S. 277, 292-293 (1983).
Similarly, "trickery and deceit", TXO, 509 U. S., at 462, are more
reprehensible than negligence. In TXO, both the West Virginia
Supreme Court and the Justices of this Court placed special emphasis
on the principle that punitive damages may not be "grossly out of
proportion to the severity of the offense."25   Id., at 453, 462.
Indeed, for JUSTICE KENNEDY, the defendant's intentional malice
was the decisive element in a "close and difficult" case. Id., at
468.26

In this case, none of the aggravating factors associated with
particularly reprehensible conduct is present. The harm BMW
inflicted on Dr. Gore was purely economic in nature. The presale
refinishing of the car had no effect on its performance or safety
features, or even its appearance for at least nine months after his
purchase. BMW's conduct evinced no indifference to or reckless
disregard for the health and safety of others. To be sure, infliction of
economic injury, especially when done intentionally through
affirmative acts of misconduct, id., at 453, or when the target is
financially vulnerable, can warrant a substantial penalty. But this
observation does not convert all acts that cause economic harm into
torts that are sufficiently reprehensible to justify a significant sanction
in addition to compensatory damages.

Dr. Gore contends that BMW's conduct was particularly
reprehensible because nondisclosure of the repairs to his car formed
part of a nationwide pattern of tortious conduct. Certainly, evidence
that a defendant has repeatedly engaged in prohibited conduct while
knowing or suspecting that it was unlawful would provide relevant
support for an argument that strong medicine is required to cure the
defendant's disrespect for the law. See id., at 462, n. 28. Our
holdings that a recidivist may be punished more severely than a first
offender recognize that repeated misconduct is more reprehensible
than an individual instance of malfeasance. See Gryger v. Burke,
334 U. S. 728, 732 (1948).

In support of his thesis, Dr. Gore advances two arguments. First, he
asserts that the state disclosure statutes supplement, rather than
supplant, existing remedies for breach of contract and common-law
fraud. Thus, according to Dr. Gore, the statutes may not properly be
viewed as immunizing from liability the nondisclosure of repairs
costing less than the applicable statutory threshold. Brief for
Respondent 18-19. Second, Dr. Gore maintains that BMW should
have anticipated that its failure to disclose similar repair work could
expose it to liability for fraud. Id., at 4-5.

We recognize, of course, that only state courts may authoritatively
construe state statutes. As far as we are aware, at the time this action
was commenced no state court had explicitly addressed whether its
State's disclosure statute provides a safe harbor for nondisclosure of
presumptively minor repairs or should be construed instead as
supplementing common-law duties.27   A review of the text of the
statutes, however, persuades us that in the absence of a state-court
determination to the contrary, a corporate executive could reasonably
interpret the disclosure requirements as establishing safe harbors. In
California, for example, the disclosure statute defines "material"
damage to a motor vehicle as damage requiring repairs costing in
excess of 3 percent of the suggested retail price or $500, whichever
is greater. Cal. Veh. Code Ann. Section 9990 (West Supp. 1996).
The Illinois statute states that in cases in which disclosure is not
required, "nondisclosure does not constitute a misrepresentation or
omission of fact."  Ill. Comp. Stat., ch. 815, Section 710/5
(1994).28   Perhaps the statutes may also be interpreted in another
way. We simply emphasize that the record contains no evidence that
BMW's decision to follow a disclosure policy that coincided with the
strictest extant state statute was sufficiently reprehensible to justify a
$2 million award of punitive damages.

Dr. Gore's second argument for treating BMW as a recidivist is that
the company should have anticipated that its actions would be
considered fraudulent in some, if not all, jurisdictions. This
contention overlooks the fact that actionable fraud requires a material
misrepresentation or omission.29   This qualifier invites line drawing
of just the sort engaged in by States with disclosure statutes and by
BMW. We do not think it can be disputed that there may exist minor
imperfections in the finish of a new car that can be repaired (or
indeed, left unrepaired) without materially affecting the car's
value.30   There is no evidence that BMW acted in bad faith when it
sought to establish the appropriate line between presumptively minor
damage and damage requiring disclosure to purchasers. For this
purpose, BMW could reasonably rely on state disclosure statutes for
guidance. In this regard, it is also significant that there is no
evidence that BMW persisted in a course of conduct after it had been
adjudged unlawful on even one occasion, let alone repeated
occasions.31

Finally, the record in this case discloses no deliberate false
statements, acts of affirmative misconduct, or concealment of
evidence of improper motive, such as were present in Haslip and
TXO. Haslip, 499 U. S., at 5, TXO, 509 U. S., at 453. We accept,
of course, the jury's finding that BMW suppressed a material fact
which Alabama law obligated it to communicate to prospective
purchasers of repainted cars in that State. But the omission of a
material fact may be less reprehensible than a deliberate false
statement, particularly when there is a good-faith basis for believing
that no duty to disclose exists.

That conduct is sufficiently reprehensible to give rise to tort liability,
and even a modest award of exemplary damages, does not establish
the high degree of culpability that warrants a substantial punitive
damages award. Because this case exhibits none of the
circumstances ordinarily associated with egregiously improper
conduct, we are persuaded that BMW's conduct was not sufficiently
reprehensible to warrant imposition of a $2 million exemplary
damages award.

Ratio

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. See TXO, 509 U. S., at 459;
Haslip, 499 U. S., at 23. The principle that exemplary damages
must bear a "reasonable relationship" to compensatory damages has a
long pedigree.32   Scholars have identified a number of early English
statutes authorizing the award of multiple damages for particular
wrongs. Some 65 different enactments during the period between
1275 and 1753 provided for double, treble, or quadruple damages.33
Our decisions in both Haslip and TXO endorsed the proposition that
a comparison between the compensatory award and the punitive
award is significant.

In Haslip we concluded that even though a punitive damages award
of "more than 4 times the amount of compensatory damages," might
be "close to the line," it did not "cross the line into the area of
constitutional impropriety."  Haslip, 499 U. S., at 23-24. TXO,
following dicta in Haslip, refined this analysis by confirming that the
proper inquiry is "`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.'"
TXO, 509 U. S., at 460 (emphasis in original), quoting Haslip, 499
U. S., at 21. Thus, in upholding the $10 million award in TXO, we
relied on the difference between that figure and the harm to the victim
that would have ensued if the tortious plan had succeeded. That
difference suggested that the relevant ratio was not more than 10 to
1.34

The $2 million in punitive damages awarded to Dr. Gore by the
Alabama Supreme Court is 500 times the amount of his actual harm
as determined by the jury.35   Moreover, there is no suggestion that
Dr. Gore or any other BMW purchaser was threatened with any
additional potential harm by BMW's nondisclosure policy. The
disparity in this case is thus dramatically greater than those
considered in Haslip and TXO.36

Of course, we have consistently rejected the notion that the
constitutional line is marked by a simple mathematical formula, even
one that compares actual and potential damages to the punitive award.
TXO, 509 U. S., at 458.37   Indeed, low awards of compensatory
damages may properly support a higher ratio than high compensatory
awards, if, for example, a particularly egregious act has resulted in
only a small amount of economic damages. A higher ratio may also
be justified in cases in which the injury is hard to detect or the
monetary value of noneconomic harm might have been difficult to
determine. It is appropriate, therefore, to reiterate our rejection of a
categorical approach. Once again, "we return to what we said . . . in
Haslip: `We need not, and indeed we cannot, draw a mathematical
bright line between the constitutionally acceptable and the
constitutionally unacceptable that would fit every case. We can say,
however, that [a] general concer[n] of reasonableness... properly
enter[s] into the constitutional calculus.'" TXO, 509 U. S., at 458
(quoting Haslip, 499 U. S., at 18). In most cases, the ratio will be
within a constitutionally acceptable range, and remittitur will not be
justified on this basis. When the ratio is a breathtaking 500 to 1,
however, the award must surely "raise a suspicious judicial
eyebrow."  TXO, 509 U. S., at 482 (O'CONNOR, J., dissenting).

Sanctions for Comparable Misconduct

Comparing the punitive damages award and the civil or criminal
penalties that could be imposed for comparable misconduct provides
a third indicium of excessiveness. As JUSTICE O'CONNOR has
correctly observed, a reviewing court engaged in determining
whether an award of punitive damages is excessive should "accord
`substantial deference' to legislative judgments concerning
appropriate sanctions for the conduct at issue."  Browning-Ferris
Industries of Vt., Inc. v. Kelco Disposal, Inc., 492 U. S., at 301
(O'CONNOR, J., concurring in part and dissenting in part). In
Haslip, 499 U. S., at 23, the Court noted that although the
exemplary award was "much in excess of the fine that could be
imposed," imprisonment was also authorized in the criminal
context.38   In this case the $2 million economic sanction imposed on
BMW is substantially greater than the statutory fines available in
Alabama and elsewhere for similar malfeasance.

The maximum civil penalty authorized by the Alabama Legislature for
a violation of its Deceptive Trade Practices Act is $2,000;39  other
States authorize more severe sanctions, with the maxima ranging
from $5,000 to $10,000.40   Significantly, some statutes draw a
distinction between first offenders and recidivists; thus, in New York
the penalty is $50 for a first offense and $250 for subsequent
offenses. None of these statutes would provide an out-of-state
distributor with fair notice that the first violation--or, indeed the first
14 violations--of its provisions might subject an offender to a
multimillion dollar penalty. Moreover, at the time BMW's policy
was first challenged, there does not appear to have been any judicial
decision in Alabama or elsewhere indicating that application of that
policy might give rise to such severe punishment.

The sanction imposed in this case cannot be justified on the ground
that it was necessary to deter future misconduct without considering
whether less drastic remedies could be expected to achieve that goal.
The fact that a multimillion dollar penalty prompted a change in
policy sheds no light on the question whether a lesser deterrent
would have adequately protected the interests of Alabama consumers.
In the absence of a history of noncompliance with known statutory
requirements, there is no basis for assuming that a more modest
sanction would not have been sufficient to motivate full compliance
with the disclosure requirement imposed by the Alabama Supreme
Court in this case.


We assume, as the juries in this case and in the Yates case found, that
the undisclosed damage to the new BMW's affected their actual
value. Notwithstanding the evidence adduced by BMW in an effort
to prove that the repainted cars conformed to the same quality
standards as its other cars, we also assume that it knew, or should
have known, that as time passed the repainted cars would lose their
attractive appearance more rapidly than other BMW's. Moreover, we
of course accept the Alabama courts' view that the state interest in
protecting its citizens from deceptive trade practices justifies a
sanction in addition to the recovery of compensatory damages. We
cannot, however, accept the conclusion of the Alabama Supreme
Court that BMW's conduct was sufficiently egregious to justify a
punitive sanction that is tantamount to a severe criminal penalty.

The fact that BMW is a large corporation rather than an impecunious
individual does not diminish its entitlement to fair notice of the
demands that the several States impose on the conduct of its
business. Indeed, its status as an active participant in the national
economy implicates the federal interest in preventing individual States
from imposing undue burdens on interstate commerce. While each
State has ample power to protect its own consumers, none may use
the punitive damages deterrent as a means of imposing its regulatory
policies on the entire Nation.

As in Haslip, we are not prepared to draw a bright line marking the
limits of a constitutionally acceptable punitive damages award.
Unlike that case, however, we are fully convinced that the grossly
excessive award imposed in this case transcends the constitutional
limit.41   Whether the appropriate remedy requires a new trial or
merely an independent determination by the Alabama Supreme Court
of the award necessary to vindicate the economic interests of
Alabama consumers is a matter that should be addressed by the state
court in the first instance.

The judgment is reversed, and the case is remanded for further
proceedings not inconsistent with this opinion.

It is so ordered.


______________________________________________________
__


SUPREME COURT OF THE UNITED STATES


No. 94-896


BMW OF NORTH AMERICA, INC.,
PETITIONER

v.

IRA GORE, JR.

ON WRIT OF CERTIORARI TO THE SUPREME COURT OF
ALABAMA

[May 20, 1996]

JUSTICE BREYER, with whom JUSTICE O'CONNOR and
JUSTICE SOUTER join, concurring.

The Alabama state courts have assessed the defendant $2 million in
"punitive damages" for having knowingly failed to tell a BMW
automobile buyer that, at a cost of $600, it had repainted portions of
his new $40,000 car, thereby lowering its potential resale value by
about 10%. The Court's opinion, which I join, explains why we
have concluded that this award, in this case, was "grossly excessive"
in relation to legitimate punitive damages objectives, and hence an
arbitrary deprivation of life, liberty, or property in violation of the
Due Process Clause. See TXO Production Corp. v. Alliance
Resources Corp., 509 U. S. 443, 453, 454 (1993) (A "grossly
excessive" punitive award amounts to an "arbitrary deprivation of
property without due process of law") (plurality opinion). Members
of this Court have generally thought, however, that if "fair
procedures were followed, a judgment that is a product of that
process is entitled to a strong presumption of validity."  Id., at 457.
See also Pacific Mut. Life Ins. Co. v. Haslip, 499 U. S. 1, 40-42
(1991) (KENNEDY, J., concurring in judgment). And the Court
also has found that punitive damages procedures very similar to those
followed here were not, by themselves, fundamentally unfair. Id., at
15-24. Thus, I believe it important to explain why this presumption
of validity is overcome in this instance.

The reason flows from the Court's emphasis in Haslip upon the
constitutional importance of legal standards that provide "reasonable
constraints" within which "discretion is exercised," that assure
"meaningful and adequate review by the trial court whenever a jury
has fixed the punitive damages," and permit "appellate review [that]
makes certain that the punitive damages are reasonable in their
amount and rational in light of their purpose to punish what has
occurred and to deter its repetition." Id., at 20-21. See also id., at 18
("[U]nlimited jury discretion--or unlimited judicial discretion for that
matter--in the fixing of punitive damages may invite extreme results
that jar one's constitutional sensibilities").

This constitutional concern, itself harkening back to the Magna Carta,
arises out of the basic unfairness of depriving citizens of life, liberty,
or property, through the application, not of law and legal processes,
but of arbitrary coercion. Daniels v. Williams, 474 U. S. 327, 331
(1986); Dent v. West Virginia, 129 U. S. 114, 123 (1889).
Requiring the application of law, rather than a decisionmaker's
caprice, does more than simply provide citizens notice of what
actions may subject them to punishment; it also helps to assure the
uniform general treatment of similarly situated persons that is the
essence of law itself. See Railway Express Agency, Inc. v. New
York, 336 U. S. 106, 112 (1949) (Jackson, J., concurring)
("[T]here is no more effective practical guaranty against arbitrary and
unreasonable government than to require that the principles of law
which officials would impose upon a minority must be imposed
generally").

Legal standards need not be precise in order to satisfy this
constitutional concern. See Haslip, supra, at 20 (comparing punitive
damages standards to such legal standards as "reasonable care," "due
diligence," and "best interests of the child") (internal quotation marks
omitted). But they must offer some kind of constraint upon a jury or
court's discretion, and thus protection against purely arbitrary
behavior. The standards the Alabama courts applied here are vague
and open-ended to the point where they risk arbitrary results. In my
view, although the vagueness of those standards does not, by itself,
violate due process, see Haslip, supra, it does invite the kind of
scrutiny the Court has given the particular verdict before us. See id.,
at 18 ("[C]oncerns of . . . adequate guidance from the court when the
case is tried to a jury properly enter into the constitutional calculus");
TXO, supra, at 475 ("[I]t cannot be denied that the lack of clear
guidance heightens the risk that arbitrariness, passion, or bias will
replace dispassionate deliberation as the basis for the jury's verdict")
(O'CONNOR, J., dissenting). This is because the standards, as the
Alabama Supreme Court authoritatively interpreted them here,
provided no significant constraints or protection against arbitrary
results.

First, the Alabama statute that permits punitive damages does not
itself contain a standard that readily distinguishes between conduct
warranting very small, and conduct warranting very large, punitive
damages awards. That statute permits punitive damages in cases of
"oppression, fraud, wantonness, or malice."  Ala. Code Section 6-
11-20(a) (1993). But the statute goes on to define those terms
broadly, to encompass far more than the egregious conduct that those
terms, at first reading, might seem to imply. An intentional
misrepresentation, made through a statement or silence, can easily
amount to "fraud" sufficient to warrant punitive damages. See
Section 6-11-20(b)(1) ("Fraud" includes "intentional . . .
concealment of a material fact the concealing party had a duty to
disclose, which was gross, oppressive, or malicious and committed
with the intention . . . of thereby depriving a person or entity of
property") (emphasis added); Section 6-11-20(b)(2)("Malice"
includes any "wrongful act without just cause or excuse . . . [w]ith
an intent to injure the... property of another") (emphasis added);
Section 6-11-20(b)(5) ("Oppression" includes "[s]ubjecting a person
to . . . unjust hardship in conscious disregard of that person's
rights"). The statute thereby authorizes punitive damages for the
most serious kinds of misrepresentations, say, tricking the elderly
out of their life savings, for much less serious conduct, such as the
failure to disclose repainting a car, at issue here, and for a vast range
of conduct in between.

Second, the Alabama courts, in this case, have applied the "factors"
intended to constrain punitive damages awards, in a way that belies
that purpose. Green Oil Co. v. Hornsby, 539 So. 2d 218 (Ala.
1989), sets forth seven factors that appellate courts use to determine
whether or not a jury award was "grossly excessive" and which, in
principle, might make up for the lack of significant constraint in the
statute. But, as the Alabama courts have authoritatively interpreted
them, and as their application in this case illustrates, they impose little
actual constraint.

(a) Green Oil requires that a punitive damages award "bear a
reasonable relationship to the harm that is likely to occur from the
defendant's conduct as well as to the harm that actually has
occurred."  Id., at 223. But this standard does little to guide a
determination of what counts as a "reasonable" relationship, as this
case illustrates. The record evidence of past, present, or likely future
harm consists of (a) $4,000 of harm to Dr. Gore's BMW; (b) 13
other similar Alabama instances; and (c) references to about 1,000
similar instances in other States. The Alabama Supreme Court,
disregarding BMW's failure to make relevant objection to the out-of-
state instances at trial (as was the court's right), held that the last
mentioned, out-of-state instances did not count as relevant harm. It
went on to find "a reasonable relationship" between the  harm and the
$2 million punitive damages award without "consider[ing] those acts
that occurred in other jurisdictions."  646 So. 2d 619, 628 (1995)
(emphasis added). For reasons explored by the majority in greater
depth, see ante, at 13-25, the relationship between this award and the
underlying conduct seems well beyond the bounds of the
"reasonable."  To find a "reasonable relationship" between purely
economic harm totaling $56,000, without significant evidence of
future repetition, and a punitive award of $2 million is to empty the
"reasonable relationship" test of meaningful content. As thus
construed, it does not set forth a legal standard that could have
significantly constrained the discretion of Alabama factfinders.
(b) Green Oil's second factor is the "degree of reprehensibility" of
the defendant's conduct. Green Oil, supra, at 223. Like the
"reasonable relationship" test, this factor provides little guidance on
how to relate culpability to the size of an award. The Alabama court,
in considering this factor, found "reprehensible" that BMW followed
a conscious policy of not disclosing repairs to new cars when the
cost of repairs amounted to less than 3% of the car's value. Of
course, any conscious policy of not disclosing a repair--where one
knows the nondisclosure might cost the customer resale value--is
"reprehensible" to some degree. But, for the reasons discussed by
the majority, ante, at 14-20, I do not see how the Alabama courts
could find conduct that (they assumed) caused $56,000 of relevant
economic harm especially or unusually reprehensible enough to
warrant $2 million in punitive damages, or a significant portion of
that award. To find to the contrary, as the Alabama courts did, is not
simply unreasonable; it is to make "reprehensibility" a concept
without constraining force, i.e., to deprive the concept of its
constraining power to protect against serious and capricious
deprivations.

(c) Green Oil's third factor requires "punitive damages" to "remove
the profit" of the illegal activity and "be in excess of the profit, so that
the defendant recognizes a loss."  Green Oil, supra, at 223. This
factor has the ability to limit awards to a fixed, rational amount. But
as applied, that concept's potential was not realized, for the court did
not limit the award to anywhere near the $56,000 in profits evidenced
in the record. Given the record's description of the conduct and its
prevalence, this factor could not justify much of the $2 million
award.


(d) Green Oil's fourth factor is the "financial position" of the
defendant. Ibid. Since a fixed dollar award will punish a poor
person more than a wealthy one, one can understand the relevance of
this factor to the state's interest in retribution (though not necessarily
to its interest in deterrence, given the more distant relation between a
defendant's wealth and its responses to economic incentives). See
TXO, 509 U. S., at 462, and n. 28 (plurality opinion); id., at 469
(KENNEDY, J., concurring in part and concurring in judgment);
Haslip, 499 U. S., at 21-22; Browning-Ferris Industries of Vt., Inc.
v. Kelco Disposal, Inc., 492 U. S. 257, 300 (1989) (O'CONNOR,
J., concurring in part, dissenting in part). This factor, however, is
not necessarily intended to act as a significant constraint on punitive
awards. Rather, it provides an open-ended basis for inflating awards
when the defendant is wealthy, as this case may illustrate. That does
not make its use unlawful or inappropriate; it simply means that this
factor cannot make up for the failure of other factors, such as
"reprehensibility," to constrain significantly an award that purports to
punish a defendant's conduct.

(e) Green Oil's fifth factor is the "costs of litigation" and the State's
desire "to encourage plaintiffs to bring wrongdoers to trial."  539 So.
2d, at 223. This standard provides meaningful constraint to the
extent that the enhancement it authorized is linked to a fixed,
ascertainable amount approximating actual costs, even when defined
generously to reflect the contingent nature of plaintiffs' victories.
But as this case shows, the factor cannot operate as a constraint when
an award much in excess of costs is approved for other reasons. An
additional aspect of the standard--the need to "encourage plaintiffs to
bring wrongdoers to trial"--is a factor that does not constrain, but
enhances, discretionary power--especially when unsupported by
evidence of a special need to encourage litigation (which the Alabama
courts here did not mention).


(f) Green Oil's sixth factor is whether or not "criminal sanctions have
been imposed on the defendant for his conduct."  Ibid. This factor
did not apply here.

(g) Green Oil's seventh factor requires that "other civil actions" filed
"against the same defendant, based on the same conduct" be
considered in mitigation. Id., at 224. That factor did not apply here.

Thus, the first, second, and third Green Oil factors, in principle,
might sometimes act as constraints on arbitrary behavior. But as the
Alabama courts interpreted those standards in this case, even taking
those three factors together, they could not have significantly
constrained the court system's ability to impose "grossly excessive"
awards.

Third, the state courts neither referred to, nor made any effort to find,
nor enunciated any other standard, that either directly, or indirectly as
background, might have supplied the constraining legal force that the
statute and Green Oil standards (as interpreted here) lack. Dr. Gore
did argue to the jury an economic theory based on the need to offset
the totality of the harm that the defendant's conduct caused. Some
theory of that general kind might have provided a significant
constraint on arbitrary awards (at least where confined to the relevant
harm-causing conduct, see ante, at 10-13). Some economists, for
example, have argued for a standard that would deter illegal activity
causing solely economic harm through the use of punitive damages
awards that, as a whole, would take from a wrongdoer the total cost
of the harm caused. See, e.g., S. Shavell, Economic Analysis of
Accident Law 162 (1987) ("If liability equals losses caused
multiplied by... the inverse of the probability of suit, injurers will act
optimally under liability rules despite the chance that they will escape
suit"); Cooter, Punitive Damages for Deterrence: When and How
Much, 40 Ala. L. Rev. 1143, 1146-1148 (1989). My understanding
of the intuitive essence of some of those theories, which I put in
crude form (leaving out various qualifications), is that they could
permit juries to calculate punitive damages by making a rough
estimate of global harm, dividing that estimate by a similarly rough
estimate of the number of successful lawsuits that would likely be
brought, and adding generous attorneys fees and other costs.
Smaller damages would not sufficiently discourage firms from
engaging in the harmful conduct, while larger damages would "over-
deter" by leading potential defendants to spend more to prevent the
activity that causes the economic harm, say, through employee
training, than the cost of the harm itself. See Galligan, Augmented
Awards: The Efficient Evolution of Punitive Damages, 51 La. L.
Rev. 3, 17-20, 28-30 (1990). Larger damages might also "double
count" by including in the punitive damages award some of the
compensatory, or punitive, damages that subsequent plaintiffs would
also recover.

The record before us, however, contains nothing suggesting that the
Alabama Supreme Court, when determining the allowable award,
applied any "economic" theory that might explain the $2 million
recovery. Cf. Browning-Ferris, supra, at 300 (noting that the
Constitution "does not incorporate the views of the Law and
Economics School," nor does it "`require the States to subscribe to
any particular economic theory'") (O'CONNOR, J., concurring in
part and dissenting in part) (quoting CTS Corp. v. Dynamics Corp.
of America, 481 U. S. 69, 92 (1987)). And courts properly tend to
judge the rationality of judicial actions in terms of the reasons that
were given, and the facts that were before the court, cf. TXO, 509
U. S., at 468 (KENNEDY, J., concurring in part and concurring in
judgment), not those that might have been given on the basis of some
conceivable set of facts (unlike the rationality of economic statutes
enacted by legislatures subject to the public's control through the
ballot box, see, e.g., FCC v. Beach Communications, Inc., 508 U.
S. 307, 315 (1993)). Therefore, reference to a constraining
"economic" theory, which might have counseled more deferential
review by this Court, is lacking in this case.

Fourth, I cannot find any community understanding or historic
practice that this award might exemplify and which, therefore, would
provide background standards constraining arbitrary behavior and
excessive awards. A punitive damages award of $2 million for
intentional misrepresentation causing $56,000 of harm is
extraordinary by historical standards, and, as far as I am aware, finds
no analogue until relatively recent times. Amici for Dr. Gore attempt
to show that this is not true, pointing to various historical cases
which, according to their calculations, represented roughly equivalent
punitive awards for similarly culpable conduct. See Brief for James
D. A. Boyle et al. as Amici Curiae 4-5 (hereinafter Legal Historians'
Brief). Among others, they cite Wilkes v. Wood, Lofft 1, 98 Eng.
Rep. 489 (C. P. 1763) (1,000 said to be equivalent of $1.5 million,
for warrantless search of papers); Huckle v. Money, 2 Wills. 205,
95 Eng. Rep. 768 (K. B. 1763) (300, said to be $450,000, for 6-
hour false imprisonment); Hewlett v. Cruchley, 5 Taunt. 277, 128
Eng. Rep. 696 (C. P. 1813) (2,000, said to be $680,000, for
malicious prosection); Merest v. Harvey, 5 Taunt. 442, 128 Eng.
Rep. 761 (C. P. 1814) (500, said to be $165,000, for poaching).
But amici apparently base their conversions on a mathematical
assumption, namely that inflation has progressed at a constant 3%
rate of inflation. See Legal Historians' Brief 4. In fact, consistent,
cumulative inflation is a modern phenomenon. See McCusker, How
Much Is That in Real Money? A Historical Price Index for Use as a
Deflator of Money Values in the Economy of the United States, 101
Proceedings of American Antiquarian Society 297, 310, 323-332
(1992). Estimates based on historical rates of valuation, while highly
approximate, suggest that the ancient extraordinary awards are small
compared to the $2 million here at issue, or other modern punitive
damages figures. See Appendix to this opinion, infra, at 13-14
(suggesting that the modern equivalent of the awards in the above
cases is something like $150,000, $45,000, $100,000, and $25,000
respectively). And, as the majority opinion makes clear, the record
contains nothing to suggest that the extraordinary size of the award in
this case is explained by the extraordinary wrongfulness of the
defendant's behavior, measured by historical or community
standards, rather than arbitrariness or caprice.

Fifth, there are no other legislative enactments here that classify
awards and impose quantitative limits that would significantly cabin
the fairly unbounded discretion created by the absence of
constraining legal standards. Cf., e.g., Tex. Civ. Prac. & Rem.
Code Ann. Section 41.008 (Supp. 1996) (punitive damages
generally limited to greater of double damages, or $200,000, except
cap does not apply to suits arising from certain serious criminal acts
enumerated in the statute); Conn. Gen. Stat. Section 52-240b (1995)
(punitive damages may not exceed double compensatory damages in
product liability cases); Fla. Stat. Section 768.73(1) (Supp. 1993)
(punitive damages in certain actions limited to treble compensatory
damages); Ga. Code. Ann. Section 51-12-5.1(g) (Supp. 1995)
($250,000 cap in certain actions).

The upshot is that the rules that purport to channel discretion in this
kind of case, here did not do so in fact. That means that the award in
this case was both (a) the product of a system of standards that did
not significantly constrain a court's, and hence a jury's, discretion in
making that award; and (b) was grossly excessive in light of the
State's legitimate punitive damages objectives.

The first of these reasons has special importance where courts review
a jury-determined punitive damages award. That is because one
cannot expect to direct jurors like legislators through the ballot box;
nor can one expect those jurors to interpret law like judges, who
work within a discipline and hierarchical organization that normally
promotes roughly uniform interpretation and application of the law.
Yet here Alabama expects jurors to act, at least a little, like legislators
or judges, for it permits them, to a certain extent, to create public
policy and to apply that policy, not to compensate a victim, but to
achieve a policy-related objective outside the confines of the
particular case.

To the extent that neither clear legal principles, nor fairly obvious
historical or community-based standards (defining, say, especially
egregious behavior) significantly constrain punitive damages awards,
is there not a substantial risk of outcomes so arbitrary that they
become difficult to square with the Constitution's assurance, to every
citizen, of the law's protection? The standards here, as
authoritatively interpreted, in my view, make this threat real and not
theoretical. And, in these unusual circumstances, where legal
standards offer virtually no constraint, I believe that this lack of
constraining standards warrants this Court's detailed examination of
the award.

The second reason--the severe disproportionality between the award
and the legitimate punitive damages objectives--reflects a judgment
about a matter of degree. I recognize that it is often difficult to
determine just when a punitive award exceeds an amount reasonably
related to a State's legitimate interests, or when that excess is so great
as to amount to a matter of constitutional concern. Yet whatever the
difficulties of drawing a precise line, once we examine the award in
this case, it is not difficult to say that this award lies on the line's far
side. The severe lack of proportionality between the size of the
award and the underlying punitive damages objectives shows that the
award falls into the category of "gross excessiveness" set forth in this
Court's prior cases.

These two reasons taken together overcome what would otherwise
amount to a "strong presumption of validity." TXO, 509 U. S., at
457. And, for those two reasons, I conclude that the award in this
unusual case violates the basic guarantee of nonarbitrary
governmental behavior that the Due Process Clause provides.


APPENDIX TO OPINION OF BREYER, J.

Although I recognize that all estimates of historic rates of inflation are
subject to dispute, including, I assume, the sources below, those
sources suggest that the value of the eighteenth and nineteenth
century judgments cited by amici is much less than the figures amici
arrived at under their presumption of a constant 3% rate of inflation.


In 1763, 1 (Eng.) was worth 1.73 Pennsylvania currency. See U.
S. Bureau of the Census, Historical Statistics of the United States:
Colonial Times to 1970, Series Z--585, p. 1198 (Bicentennial ed.
1975). For the period 1766-1772, 1 (Penn.) was worth $45.99 (U.
S. 1991). See McCusker, How Much Is That in Real Money? A
Historical Price Index for Use as a Deflator of Money Values in the
Economy of the United States, 101 American Antiquarian Society
297, 333 (1992). Thus, 1 (Eng. 1763) is worth about $79.56 (U. S.
1991). Accounting for the 12% inflation of the U. S. dollar between
1991 and 1995 (when amici filed their brief), see Economic
Indicators, 104th Cong., 2d Sess., p. 23 (Feb. 1996), 1 (Eng. 1763)
is worth about $89.11 (U. S. 1995).

Calculated another way, 1 (Eng. 1763) is worth about 72.84 (Eng.
1991). See McCusker, supra, at 312, 342, 350. And 1 (Eng. 1991)
is worth $1.77 (U. S. 1991). See 78 Fed. Reserve Bulletin A68
(Feb. 1992). Thus, 1 (Eng. 1763) amounts to about $128.93 (U. S.
1991). Again, accounting for inflation between 1991 and 1995, this
amounts to about $144.40 (U. S. 1995).

Thus, the above sources suggest that the 1,000 award in Wilkes in
1763 roughly amounts to between $89,110 and $144,440 today, not
$1.5 million. And the 300 award in Huckle that same year would
seem to be worth between $26,733 and $43,320 today, not
$450,000.

For the period of the Hewlett and Merest decisions, 1 (Eng. 1813) is
worth about 25.3 (Eng. 1991). See McCusker, supra, at 344, 350.
Using the 1991 exchange rate, 1 (Eng. 1813) is worth about $44.78
(U. S. 1991). Accounting for inflation between 1991 and 1995, this
amounts to about $50.16 (U. S. 1995).

Thus, the 2,000 and 500 awards in Hewlett and Merest would seem
to be closer to $100,320 and $25,080, respectively, than to amici's
estimates of $680,000 and $165,000.


______________________________________________________
_


SUPREME COURT OF THE UNITED STATES


No. 94-896


BMW OF NORTH AMERICA, INC.,
PETITIONER

v.

IRA GORE, JR.

ON WRIT OF CERTIORARI TO THE SUPREME COURT OF
ALABAMA

[May 20, 1996]

JUSTICE SCALIA, with whom JUSTICE THOMAS joins,
dissenting.

Today we see the latest manifestation of this Court's recent and
increasingly insistent "concern about punitive damages that `run
wild.'" Pacific Mut. Life Ins. Co. v. Haslip, 499 U. S. 1, 18
(1991). Since the Constitution does not make that concern any of
our business, the Court's activities in this area are an unjustified
incursion into the province of state governments.

In earlier cases that were the prelude to this decision, I set forth my
view that a state trial procedure that commits the decision whether to
impose punitive damages, and the amount, to the discretion of the
jury, subject to some judicial review for "reasonableness," furnishes
a defendant with all the process that is "due." See TXO Production
Corp. v. Alliance Resources Corp., 509 U. S. 443, 470 (1993)
(SCALIA, J., concurring in judgment); Haslip, supra, at 25-28
(SCALIA, J., concurring in judgment); cf. Honda Motor Co. v.
Oberg, 512 U. S. ___, ___ (1994) (slip op., at 1-2) (SCALIA, J.,
concurring). I do not regard the Fourteenth Amendment's Due
Process Clause as a secret repository of substantive guarantees
against "unfairness"--neither the unfairness of an excessive civil
compensatory award, nor the unfairness of an "unreasonable"
punitive award. What the Fourteenth Amendment's procedural
guarantee assures is an opportunity to contest the reasonableness of a
damages judgment in state court; but there is no federal guarantee a
damages award actually be reasonable. See TXO, supra, at 471
(SCALIA, J., concurring in judgment).

This view, which adheres to the text of the Due Process Clause, has
not prevailed in our punitive-damages cases. See TXO Production
Corp. v. Alliance Resources Corp., 509 U. S., at 453-462 (plurality
opinion); id., at 478-481 (O'CONNOR, J., dissenting); Haslip,
supra, at 18. When, however, a constitutional doctrine adopted by
the Court is not only mistaken but also insusceptible of principled
application, I do not feel bound to give it stare decisis effect--indeed,
I do not feel justified in doing so. See, e.g., Witte v. United States,
515 U. S. ___, ___ (1995) (SCALIA, J., concurring in judgment);
Walton v. Arizona, 497 U. S. 639, 673 (1990) (SCALIA, J.,
concurring in judgment in part and dissenting in part). Our punitive-
damages jurisprudence compels such a response. The Constitution
provides no warrant for federalizing yet another aspect of our
Nation's legal culture (no matter how much in need of correction it
may be), and the application of the Court's new rule of constitutional
law is constrained by no principle other than the Justices' subjective
assessment of the "reasonableness" of the award in relation to the
conduct for which it was assessed.

Because today's judgment represents the first instance of this Court's
invalidation of a state-court punitive assessment as simply
unreasonably large, I think it a proper occasion to discuss these
points at some length.


The most significant aspects of today's decision--the identification of
a "substantive due process" right against a "grossly excessive"
award, and the concomitant assumption of ultimate authority to
decide anew a matter of "reasonableness" resolved in lower court
proceedings--are of course not new. Haslip and TXO revived the
notion, moribund since its appearance in the first years of this
century, that the measure of civil punishment poses a question of
constitutional dimension to be answered by this Court. Neither of
those cases, however, nor any of the precedents upon which they
relied, actually took the step of declaring a punitive award
unconstitutional simply because it was "too big."

At the time of adoption of the Fourteenth Amendment, it was well
understood that punitive damages represent the assessment by the
jury, as the voice of the community, of the measure of punishment
the defendant deserved. See, e.g., Barry v. Edmunds, 116 U. S.
550, 565 (1886); Missouri Pacific R. Co. v. Humes, 115 U. S. 512,
521 (1885); Day v. Woodworth, 13 How. 363, 371 (1852). See
generally Haslip, supra, at 25-27 (SCALIA, J., concurring in
judgment). Today's decision, though dressed up as a legal opinion,
is really no more than a disagreement with the community's sense of
indignation or outrage expressed in the punitive award of the
Alabama jury, as reduced by the State Supreme Court. It reflects not
merely, as the concurrence candidly acknowledges, "a judgment
about a matter of degree," ante, at 12; but a judgment about the
appropriate degree of indignation or outrage, which is hardly an
analytical determination.

There is no precedential warrant for giving our judgment priority
over the judgment of state courts and juries on this matter. The only
support for the Court's position is to be found in a handful of errant
federal cases, bunched within a few years of one other, which
invented the notion that an unfairly severe civil sanction amounts to a
violation of constitutional liberties. These were the decisions upon
which the TXO plurality relied in pronouncing that the Due Process
Clause "imposes substantive limits `beyond which penalties may not
go,'" 509 U. S., at 454 (quoting Seaboard Air Line R. Co. v.
Seegers, 207 U. S. 73, 78 (1907)); see also 509 U. S., at 478-481
(O'CONNOR, J., dissenting); Haslip, 499 U. S., at 18. Although
they are our precedents, they are themselves too shallowly rooted to
justify the Court's recent undertaking. The only case relied upon in
which the Court actually invalidated a civil sanction does not even
support constitutional review for excessiveness, since it really
concerned the validity, as a matter of procedural due process, of state
legislation that imposed a significant penalty on a common carrier
which lacked the means of determining the legality of its actions
before the penalty was imposed. See Southwestern Telegraph &
Telephone Co. v. Danaher, 238 U. S. 482, 489-491 (1915). The
amount of the penalty was not a subject of independent scrutiny. As
for the remaining cases, while the opinions do consider arguments
that statutory penalties can, by reason of their excessiveness, violate
due process, not a single one of these judgments invalidates a
damages award. See Seaboard, supra, at 78-79; Waters-Pierce Oil
Co. v. Texas (No. 1), 212 U. S. 86, 111-112 (1909); Standard Oil
Co. of Ind. v. Missouri, 224 U. S. 270, 286, 290 (1912); St. Louis,
I. M. & S. R. Co. v. Williams, 251 U. S. 63, 66-67 (1919).

More importantly, this latter group of cases--which again are the sole
precedential foundation put forward for the rule of constitutional law
espoused by today's Court--simply fabricated the "substantive due
process" right at issue. Seaboard assigned no precedent to its bald
assertion that the Constitution imposes "limits beyond which
penalties may not go," 207 U. S., at 78. Waters-Pierce cited only
Coffey v. County of Harlan, 204 U. S. 659 (1907), a case which
inquired into the constitutionality of state procedure, id., at 662-663.
Standard Oil simply cited Waters-Pierce, and St. Louis, I. M. & S.
R. Co. offered in addition to these cases only Collins v. Johnston,
237 U. S. 502 (1915), which said nothing to support the notion of a
"substantive due process" right against excessive civil penalties, but
to the contrary asserted that the prescribing and imposing of criminal
punishment were "functions peculiarly belonging to the several
States," id., at 509-510. Thus, the only authority for the Court's
position is simply not authoritative. These cases fall far short of
what is needed to supplant this country's longstanding practice
regarding exemplary awards, see, e.g., Haslip, 499 U. S., at 15-18;
id., at 25-28 (SCALIA, J., concurring in judgment).


One might understand the Court's eagerness to enter this field, rather
than leave it with the state legislatures, if it had something useful to
say. In fact, however, its opinion provides virtually no guidance to
legislatures, and to state and federal courts, as to what a
"constitutionally proper" level of punitive damages might be.

We are instructed at the outset of Part II of the Court's opinion--the
beginning of its substantive analysis--that "the federal excessiveness
inquiry . . . begins with an identification of the state interests that a
punitive award is designed to serve."  Ante, at 7. On first reading
this, one is faced with the prospect that federal punitive-damages law
(the new field created by today's decision) will be beset by the sort of
"interest analysis" that has laid waste the formerly comprehensible
field of conflict of laws. The thought that each assessment of
punitive damages, as to each offense, must be examined to determine
the precise "state interests" pursued, is most unsettling. Moreover, if
those "interests" are the most fundamental determinant of an award,
one would think that due process would require the assessing jury to
be instructed about them.

It appears, however (and I certainly hope), that all this is a false
alarm. As Part II of the Court's opinion unfolds, it turns out to be
directed, not to the question "How much punishment is too much?"
but rather to the question "Which acts can be punished?"  "Alabama
does not have the power," the Court says, "to punish BMW for
conduct that was lawful where it occurred and that had no impact on
Alabama or its residents."  Ante, at 12. That may be true, though
only in the narrow sense that a person cannot be held liable to be
punished on the basis of a lawful act. But if a person has been held
subject to punishment because he committed an unlawful act, the
degree of his punishment assuredly can be increased on the basis of
any other conduct of his that displays his wickedness, unlawful or
not. Criminal sentences can be computed, we have said, on the basis
of "information concerning every aspect of a defendant's life,"
Williams v. New York, 337 U. S. 241, 250-252 (1949). The Court
at one point seems to acknowledge this, observing that, although a
sentencing court "[cannot] properly punish lawful conduct," it may in
assessing the penalty "consider . . . lawful conduct that bears on the
defendant's character."  Ante, at 12, n. 19. That concession is quite
incompatible, however, with the later assertion that, since "neither
the jury nor the trial court was presented with evidence that any of
BMW's out-of-state conduct was unlawful," the Alabama Supreme
Court "therefore properly eschewed reliance on BMW's out-of-state
conduct, . . . and based its remitted award solely on conduct that
occurred within Alabama."  Ante, at 13. Why could the Supreme
Court of Alabama not consider lawful (but disreputable) conduct,
both inside and outside Alabama, for the purpose of assessing just
how bad an actor BMW was?

The Court follows up its statement that "Alabama does not have the
power . . . to punish BMW for conduct that was lawful where it
occurred" with the statement: "Nor may Alabama impose sanctions
on BMW in order to deter conduct that is lawful in other
jurisdictions."  Ante, at 12. The Court provides us no citation of
authority to support this proposition--other than the barely analogous
cases cited earlier in the opinion, see ante, at 10-11--and I know of
none.

These significant issues pronounced upon by the Court are not
remotely presented for resolution in the present case. There is no
basis for believing that Alabama has sought to control conduct
elsewhere. The statutes at issue merely permit civil juries to treat
conduct such as petitioner's as fraud, and authorize an award of
appropriate punitive damages in the event the fraud is found to be
"gross, oppressive, or malicious," Ala. Code Section 6-11-20(b)(1)
(1993). To be sure, respondent did invite the jury to consider out-of-
state conduct in its calculation of damages, but any increase in the
jury's initial award based on that consideration is not a component of
the remitted judgment before us. As the Court several times
recognizes, in computing the amount of the remitted award the
Alabama Supreme Court--whether it was constitutionally required to
or not--"expressly disclaimed any reliance on acts that occurred in
other jurisdictions." Ante, at 6 (internal quotation marks omitted); see
also ante, at 13.*  Thus, the only question presented by this case is
whether that award, limited to petitioner's Alabama conduct and
viewed in light of the factors identified as properly informing the
inquiry, is excessive. The Court's sweeping (and largely
unsupported) statements regarding the relationship of punitive
awards to lawful or unlawful out-of-state conduct are the purest
dicta.


In Part III of its opinion, the Court identifies "[t]hree guideposts" that
lead it to the conclusion that the award in this case is excessive:
degree of reprehensibility, ratio between punitive award and
plaintiff's actual harm, and legislative sanctions provided for
comparable misconduct. Ante, at 14-25. The legal significance of
these "guideposts" is nowhere explored, but their necessary effect is
to establish federal standards governing the hitherto exclusively state
law of damages. Apparently (though it is by no means clear) all three
federal "guideposts" can be overridden if "necessary to deter future
misconduct," ante, at 25--a loophole that will encourage state
reviewing courts to uphold awards as necessary for the "adequat[e]
protect[ion]" of state consumers, ibid. By effectively requiring state
reviewing courts to concoct rationalizations--whether within the
"guideposts" or through the loophole--to justify the intuitive punitive
reactions of state juries, the Court accords neither category of
institution the respect it deserves.

Of course it will not be easy for the States to comply with this new
federal law of damages, no matter how willing they are to do so. In
truth, the "guideposts" mark a road to nowhere; they provide no real
guidance at all. As to "degree of reprehensibility" of the defendant's
conduct, we learn that "`nonviolent crimes are less serious than
crimes marked by violence or the threat of violence,'" ante, at 15
(quoting Solem v. Helm, 463 U. S. 277, 292-293 (1983)), and that
"`trickery and deceit'" are "more reprehensible than negligence,"
ante, at 15. As to the ratio of punitive to compensatory damages, we
are told that a "`general concer[n] of reasonableness . . . enter[s] into
the constitutional calculus,'" ante, at 23 (quoting TXO, supra, at
458)--though even "a breathtaking 500 to 1" will not necessarily do
anything more than "`raise a suspicious judicial eyebrow,'" ante, at
23 (quoting TXO, supra, at 481 (O'CONNOR, J., dissenting), an
opinion which, when confronted with that "breathtaking" ratio,
approved it). And as to legislative sanctions provided for comparable
misconduct, they should be accorded "`substantial deference,'" ibid.
(quoting Browning-Ferris Industries of Vt., Inc. v. Kelco Disposal,
Inc., 492 U. S. 257, 301 (O'CONNOR, J., concurring in part and
dissenting in part)). One expects the Court to conclude: "To thine
own self be true."

These criss-crossing platitudes yield no real answers in no real cases.
And it must be noted that the Court nowhere says that these three
"guideposts" are the only guideposts; indeed, it makes very clear that
they are not--explaining away the earlier opinions that do not really
follow these "guideposts" on the basis of additional factors, thereby
"reiterat[ing] our rejection of a categorical approach."  Ante, at 23.
In other words, even these utter platitudes, if they should ever
happen to produce an answer, may be overridden by other unnamed
considerations. The Court has constructed a framework that does not
genuinely constrain, that does not inform state legislatures and lower
courts--that does nothing at all except confer an artificial air of
doctrinal analysis upon its essentially ad hoc determination that this
particular award of punitive damages was not "fair."

The Court distinguishes today's result from Haslip and TXO partly
on the ground that "the record in this case discloses no deliberate
false statements, acts of affirmative misconduct, or concealment of
evidence of improper motive, such as were present in Haslip and
TXO." Ante, at 19. This seemingly rejects the findings necessarily
made by the jury--that petitioner had committed a fraud that was
"gross, oppressive, or malicious," Ala. Code Section 6-11-20(b)(1)
(1996). Perhaps that rejection is intentional; the Court does not say.

The relationship between judicial application of the new "guideposts"
and jury findings poses a real problem for the Court, since as a
matter of logic there is no more justification for ignoring the jury's
determination as to how reprehensible petitioner's conduct was (i.e.,
how much it deserves to be punished), than there is for ignoring its
determination that it was reprehensible at all (i.e., that the wrong was
willful and punitive damages are therefore recoverable). That the
issue has been framed in terms of a constitutional right against
unreasonably excessive awards should not obscure the fact that the
logical and necessary consequence of the Court's approach is the
recognition of a constitutional right against unreasonably imposed
awards as well. The elevation of "fairness" in punishment to a
principle of "substantive due process" means that every punitive
award unreasonably imposed is unconstitutional; such an award is by
definition excessive, since it attaches a penalty to conduct
undeserving of punishment. Indeed, if the Court is correct, it must
be that every claim that a state jury's award of compensatory
damages is "unreasonable" (because not supported by the evidence)
amounts to an assertion of constitutional injury. See TXO, supra, at
471 (SCALIA, J. concurring in judgment). And the same would be
true for determinations of liability. By today's logic, every dispute as
to evidentiary sufficiency in a state civil suit poses a question of
constitutional moment, subject to review in this Court. That is a
stupefying proposition.

For the foregoing reasons, I respectfully dissent.

*The Alabama Supreme Court said:

"[W]e must conclude that the award of punitive damages was based
in large part on conduct that happened in other jurisdictions. . . .
Although evidence of similar acts in other jurisdictions is admissible
as to the issue of `pattern and practice' of such acts, . . . this jury
could not use the number of similar acts that a defendant has
committed in other jurisdictions as a multiplier when determining the
dollar amount of a punitive damages award. Such evidence may not
be considered in setting the size of the civil penalty, because neither
the jury nor the trial court had evidence before it showing in which
states the conduct was wrongful."  646 So. 2d 619, 627 (1994).


______________________________________________________
__


SUPREME COURT OF THE UNITED STATES


No. 94-896


BMW OF NORTH AMERICA, INC.,
PETITIONER

v.

IRA GORE, JR.

ON WRIT OF CERTIORARI TO THE SUPREME COURT OF
ALABAMA

[May 20, 1996]

JUSTICE GINSBURG, with whom THE CHIEF JUSTICE joins,
dissenting.

The Court, I am convinced, unnecessarily and unwisely ventures into
territory traditionally within the States' domain, and does so in the
face of reform measures recently adopted or currently under
consideration in legislative arenas. The Alabama Supreme Court, in
this case, endeavored to follow this Court's prior instructions; and,
more recently, Alabama's highest court has installed further controls
on awards of punitive damages (see infra, at 8, n. 6). I would
therefore leave the state court's judgment undisturbed, and resist
unnecessary intrusion into an area dominantly of state concern.


The respect due the Alabama Supreme Court requires that we strip
from this case a false issue: no impermissible "extraterritoriality"
infects the judgment before us; the excessiveness of the award is the
sole issue genuinely presented. The Court ultimately so recognizes,
see ante, at 12-13, but further clarification is in order.

Dr. Gore's experience was not unprecedented among customers who
bought BMW vehicles sold as flawless and brand-new. In addition
to his own encounter, Gore showed, through paint repair orders
introduced at trial,

that on 983 other occasions since 1983, BMW had shipped new
vehicles to dealers without disclosing paint repairs costing at least
$300, Tr. 585-586; at least 14 of the repainted vehicles, the evidence
also showed, were sold as new and undamaged to consumers in
Alabama. 646 So. 2d 619, 623 (Ala. 1994). Sales nationwide,
Alabama's Supreme Court said, were admissible "as to the issue of a
`pattern and practice' of such acts."  Id., at 627. There was "no
error," the court reiterated, "in the admission of the evidence that
showed how pervasive the nondisclosure policy was and the intent
behind BMW NA's adoption of it."  Id., at 628. That determination
comports with this Court's expositions. See TXO Production Corp.
v. Alliance Resources Corp., 509 U. S. 443, 462, and n. 28 (1993)
(characterizing as "well-settled" the admissibility of "evidence of
[defendant's] alleged wrongdoing in other parts of the country" and
of defendant's "wealth"); see also Brief for Petitioner 22 (recognizing
that similar acts, out-of-state, traditionally have been considered
relevant "for the limited purpose of determining that the conduct
before the [c]ourt was reprehensible because it was part of a pattern
rather than an isolated incident").

Alabama's highest court next declared that the "jury could not use the
number of similar acts that a defendant has committed in other
jurisdictions as a multiplier when determining the dollar amount of a
punitive damages award. Such evidence may not be considered in
setting the size of the civil penalty, because neither the jury nor the
trial court had evidence before it showing in which states the conduct
was wrongful."  646 So. 2d, at 627 (emphasis in original) (footnote
omitted).

Because the Alabama Supreme Court provided this clear statement of
the State's law, the multiplier problem encountered in Gore's case is
not likely to occur again. Now, as a matter of Alabama law, it is
plainly impermissible to assess punitive damages by multiplication
based on out-of-state events not shown to be unlawful. See, e.g.,
Independent Life and Accident Ins. Co. v. Harrington, 658 So. 2d
892, 902-903 (Ala. 1994) (under BMW v. Gore, trial court erred in
relying on defendant insurance company's out-of-state insurance
policies in determining harm caused by defendant's unlawful
actions).


No Alabama authority, it bears emphasis--no statute, judicial
decision, or trial judge instruction--ever countenanced the jury's
multiplication of the $4,000 diminution in value estimated for each
refinished car by the number of such cars (approximately 1,000)
shown to have been sold nationwide. The sole prompt to the jury to
use nationwide sales as a multiplier came from Gore's lawyer during
summation. App. 31, Tr. 812-813. Notably, counsel for BMW
failed to object to Gore's multiplication suggestion, even though
BMW's counsel interrupted to make unrelated objections four other
times during Gore's closing statement. Tr. 810-811, 854-855, 858,
870-871. Nor did BMW's counsel request a charge instructing the
jury not to consider out-of-state sales in calculating the punitive
damages award. See Record 513-529 (listing all charges requested
by counsel).

Following the verdict, BMW's counsel challenged the admission of
the paint repair orders, but not, alternately, the jury's apparent use of
the orders in a multiplication exercise. Curiously, during postverdict
argument, BMW's counsel urged that if the repair orders were indeed
admissible, then Gore would have a "full right" to suggest a
multiplier-based disgorgement. Tr. 932.

In brief, Gore's case is idiosyncratic. The jury's improper
multiplication, tardily featured by petitioner, is unlikely to recur in
Alabama and does not call for error correction by this Court.

Because the jury apparently (and erroneously) had used acts in other
states as a multiplier to arrive at a $4 million sum for punitive
damages, the Alabama Supreme Court itself determined "'the
maximum amount that a properly functioning jury could have
awarded.'"  646 So. 2d, at 630 (Houston, J., concurring specially)
(quoting Big B, Inc. v. Cottingham, 634 So. 2d 999, 1006 (Ala.
1993)). The per curiam opinion emphasized that in arriving at $2
million as "the amount of punitive damages to be awarded in this
case, [the court did] not consider those acts that occurred in other
jurisdictions." 646 So. 2d, at 628 (emphasis in original). As this
Court recognizes, the Alabama high court "properly eschewed
reliance on BMW's out-of-state conduct and based its remitted award
solely on conduct that occurred within Alabama."  Ante, at 13
(citation omitted). In sum, the Alabama Supreme Court left standing
the jury's decision that the facts warranted an award of punitive
damages--a determination not contested in this Court--and the state
court concluded that, considering only acts in Alabama, $2 million
was "a constitutionally reasonable punitive damages award."  646
So. 2d, at 629.



Alabama's Supreme Court reports that it "thoroughly and
painstakingly" reviewed the jury's award, ibid., according to
principles set out in its own pathmarking decisions and in this
Court's opinions in TXO and Pacific Mut. Life Ins. Co. v. Haslip,
499 U. S. 1, 21 (1991). 646 So. 2d, at 621. The Alabama court said
it gave weight to several factors, including BMW's deliberate
("reprehensible") presentation of refinished cars as new and
undamaged, without disclosing that the value of those cars had been
reduced by an estimated 10%,1  the financial position of the
defendant, and the costs of litigation. Id., at 625-626. These
standards, we previously held, "impos[e] a sufficiently definite and
meaningful constraint on the discretion of Alabama factfinders in
awarding punitive damages."  Haslip, 499 U. S., at 22; see also
TXO, 509 U. S., at 462, n. 28. Alabama's highest court could have
displayed its labor pains more visibly,2  but its judgment is
nonetheless entitled to a presumption of legitimacy. See Rowan v.
Runnels, 5 How. 134, 139 (1847) ("[T]his court will always feel
itself bound to respect the decisions of the State courts, and from the
time they are made will regard them as conclusive in all cases upon
the construction of their own constitution and laws.").

We accept, of course, that Alabama's Supreme Court applied the
State's own law correctly. Under that law, the State's objectives--
"punishment and deterrence"--guide punitive damages awards. See
Birmingham v. Benson, 631 So. 2d 902, 904 (Ala. 1994). Nor
should we be quick to find a constitutional infirmity when the highest
state court endeavored a corrective for one counsel's slip and the
other's oversight--counsel for plaintiff's excess in summation,
unobjected to by counsel for defendant, see supra, at 3--and when
the state court did so intending to follow the process approved in our
Haslip and TXO decisions.


The Court finds Alabama's $2 million award not simply excessive,
but grossly so, and therefore unconstitutional. The decision leads us
further into territory traditionally within the States' domain,3  and
commits the Court, now and again, to correct "misapplication of a
properly stated rule of law."  But cf. S. Ct. Rule 10 ("A petition for a
writ of certiorari is rarely granted when the asserted error consists of
erroneous factual findings or the misapplication of a properly stated
rule of law.").4   The Court is not well equipped for this mission.
Tellingly, the Court repeats that it brings to the task no "mathematical
formula," ante, at 22, no "categorical approach," ante, at 23, no
"bright line," ante, at 26. It has only a vague concept of substantive
due process, a "raised eyebrow" test, see ante, at 23, as its ultimate
guide.5

In contrast to habeas corpus review under 28 U. S. C. Section 2254,
the Court will work at this business alone. It will not be aided by the
federal district courts and courts of appeals. It will be the only
federal court policing the area. The Court's readiness to superintend
state court punitive damages awards is all the more puzzling in view
of the Court's longstanding reluctance to countenance review, even
by courts of appeals, of the size of verdicts returned by juries in
federal district court proceedings. See generally 11 C. Wright, A.
Miller, & M. Kane, Federal Practice and Procedure Section 2820 (2d
ed. 1995). And the reexamination prominent in state courts6 and in
legislative arenas, see Appendix, infra, at 9, serves to underscore
why the Court's enterprise is undue.

For the reasons stated, I dissent from this Court's disturbance of the
judgment the Alabama Supreme Court has made.


APPENDIX TO DISSENTING OPINION OF
GINSBURG, J.

STATE LEGISLATIVE ACTIVITY REGARDING
PUNITIVE DAMAGES

State legislatures have in the hopper or have enacted a variety of
measures to curtail awards of punitive damages. At least one state
legislature has prohibited punitive damages altogether, unless
explicitly provided by statute. See N. H. Rev. Stat. Ann. Section
507:16 (1994). We set out in this appendix some of the several
controls enacted or under consideration in the States. The measures
surveyed are: (1) caps on awards; (2) provisions for payment of
sums to state agencies rather than to plaintiffs; and (3) mandatory
bifurcated trials with separate proceedings for punitive damages
determinations.

I. CAPS ON PUNITIVE DAMAGES AWARDS

* Colorado--Colo. Rev. Stat. Sections 13-21-102(1)(a) and (3)
(1987) (as a main rule, caps punitive damages at amount of actual
damages).

* Connecticut--Conn. Gen. Stat. Section 52-240b (1995) (caps
punitive damages at twice compensatory damages in products liability
cases).


* Delaware--H. R. 237, 138th Gen. Ass. (introduced May 17, 1995)
(would cap punitive damages at greater of three times compensatory
damages, or $250,000).

* Florida--Fla. Stat. Sections 768.73(1)(a) and (b) (Supp. 1992) (in
general, caps punitive damages at three times compensatory
damages).

* Georgia--Ga. Code Ann. Section 51-12-5.1 (Supp. 1995) (caps
punitive damages at $250,000 in some tort actions; prohibits multiple
awards stemming from the same predicate conduct in products
liability actions).

* Illinois--H. 20, 89th Gen. Ass. 1995-1996 Reg. Sess. (enacted
Mar. 9, 1995) (caps punitive damages at three times economic
damages).

* Indiana--H. 1741, 109th Reg. Sess. (enacted Apr. 26, 1995) (caps
punitive damages at greater of three times compensatory damages, or
$50,000).

* Kansas--Kan. Stat. Ann. Sections 60-3701(e) and (f) (1994) (in
general, caps punitive damages at lesser of defendant's annual gross
income, or $5 million).

* Maryland--S. 187, 1995 Leg. Sess. (introduced Jan. 27, 1995) (in
general, would cap punitive damages at four times compensatory
damages).

* Minnesota--S. 489, 79th Leg. Sess., 1995 Reg. Sess. (introduced
Feb. 16, 1995) (would require reasonable relationship between
compensatory and punitive damages).

* Nevada--Nev. Rev. Stat. Section 42.005(1) (1993) (caps punitive
damages at three times compensatory damages if compensatory
damages equal $100,000 or more, and at $300,000 if the
compensatory damages are less than $100,000).

* New Jersey--S. 1496, 206th Leg., 2d Ann. Sess. (1995) (caps
punitive damages at greater of five times compensatory damages, or
$350,000, in certain tort cases).

* North Dakota--N. D. Cent. Code Section 32-03.2-11(4) (Supp.
1995) (caps punitive damages at greater of two times compensatory
damages, or $250,000).

* Oklahoma--Okla Stat., Tit. 23, Sections 9.1(B)-(D) (Supp. 1996)
(caps punitive damages at greater of $100,000, or actual damages, if
jury finds defendant guilty of reckless disregard; and at greatest of
$500,000, twice actual damages, or the benefit accruing to defendant
from the injury-causing conduct, if jury finds that defendant has
acted intentionally and maliciously).

* Texas--S. 25, 74th Reg. Sess. (enacted Apr. 20, 1995) (caps
punitive damages at twice economic damages, plus up to $750,000
additional noneconomic damages).

* Virginia--Va. Code Ann. Section 8.01-38.1 (1992) (caps punitive
damages at $350,000).

II. ALLOCATION OF PUNITIVE DAMAGES
TO STATE AGENCIES

* Arizona--H. R. 2279, 42d Leg., 1st Reg. Sess. (introduced Jan.
12, 1995) (would allocate punitive damages to a victims' assistance
fund, in specified circumstances).


* Florida--Fla. Stat. Sections 768.73(2)(a)-(b) (Supp. 1992)
(allocates 35% of punitive damages to General Revenue Fund or
Public Medical Assistance Trust Fund); see Gordon v. State, 585 So.
2d 1033, 1035-1038 (Fla. App. 1991), aff'd, 608 So. 2d 800 (Fla.
1992) (upholding provision against due process challenge).

* Georgia--Ga. Code Ann. Section 51-12-5.1(e)(2) (Supp. 1995)
(allocates 75% of punitive damages, less a proportionate part of
litigation costs, including counsel fees, to state treasury); see Mack
Trucks, Inc. v. Conkle, 263 Ga. 539, 540-543, 436 S. E. 2d 635,
637-639 (Ga. 1993) (upholding provision against constitutional
challenge).

* Illinois--Ill. Comp. Stat. ch. 735, Section 5/2-1207 (1994)
(permits court to apportion punitive damages among plaintiff,
plaintiff's attorney, and Illinois Department of Rehabilitation
Services).

* Indiana--H. 1741, 109th Reg. Sess. (enacted Apr. 26, 1995)
(subject to statutory exceptions, allocates 75% of punitive damages to
a compensation fund for violent crime victims).

* Iowa--Iowa Code Section 668A.1(2)(b) (1987) (in described
circumstances, allocates 75% of punitive damages, after payment of
costs and counsel fees, to a civil reparations trust fund); see
Shepherd Components, Inc. v. Brice Petrides-Donohue & Assoc.,
Inc., 473 N. W. 2d 612, 619 (Iowa 1991) (upholding provision
against constitutional challenge).

* Kansas--Kan. Stat. Ann. Section 60-3402(e) (1994) (allocates
50% of punitive damages in medical malpractice cases to state
treasury).

* Missouri--Mo. Rev. Stat. Section 537.675 (1994) (allocates 50%
of punitive damages, after payment of expenses and counsel fees, to
Tort Victims' Compensation Fund).

* Montana--H. 71, 54th Leg. Sess. (introduced Jan. 2, 1995)
(would allocate 48% of punitive damages to state university system
and 12% to school for the deaf and blind).

* New Jersey--S. 291, 206th Leg., 1994-1995 1st Reg. Sess.
(introduced Jan. 18, 1994); A. 148, 206th Leg., 1994-1995 1st Reg.
Sess. (introduced Jan. 11, 1994) (would allocate 75% of punitive
damages to New Jersey Health Care Trust Fund).

* New Mexico--H. 1017, 42d Leg., 1st Sess. (introduced Feb. 16,
1995) (would allocate punitive damages to Low-Income Attorney
Services Fund).

* Oregon--S. 482, 68th Leg. Ass. (enacted July 19, 1995)
(amending Ore. Rev. Stat. Sections 18.540 and 30.925, and
repealing Ore. Rev. Stat. Section 41.315) (allocates 60% of punitive
damages to Criminal Injuries Compensation Account).

* Utah--Utah Code Ann. Section 78-18-1(3) (1992) (allocates 50%
of punitive damages in excess of $20,000 to state treasury).

III. MANDATORY BIFURCATION OF LIABILITY AND
PUNITIVE DAMAGES DETERMINATIONS

* California--Cal. Civ. Code Ann. Section 3295(d) (West Supp.
1995) (requires bifurcation, on application of defendant, of liability
and damages phases of trials in which punitive damages are
requested).

* Delaware--H. R. 237, 138th Gen. Ass. (introduced May 17, 1995)
(would require, at request of any party, a separate proceeding for
determination of punitive damages).


* Georgia--Ga. Code Ann. Section 51-12-5.1(d) (Supp. 1995) (in all
cases in which punitive damages are claimed, liability for punitive
damages is tried first, then amount of punitive damages).

* Illinois--H. 20, 89th Gen. Assembly, 1995-1996 Reg. Sess.
(enacted Mar. 9, 1995) (mandates, upon defendant's request,
separate proceeding for determination of punitive damages).

* Kansas--Kan. Stat. Ann. Section 60-3701(a)-(b) (1994) (trier of
fact determines defendant's liability for punitive damages, then court
determines amount of such damages).

* Missouri--Mo. Rev. Stat. Sections 510.263(1) and (3) (1994)
(mandates bifurcated proceedings, on request of any party, for jury
to determine first whether defendant is liable for punitive damages,
then amount of punitive damages).

* Montana--Mont. Code Ann. Section 27-1-221(7) (1995) (upon
finding defendant liable for punitive damages, jury determines the
amount in separate proceeding).

* Nevada--Nev. Rev. Stat. Section 42.005(3) (1993) (if jury
determines that punitive damages will be awarded, jury then
determines amount in separate proceeding).

* New Jersey--N. J. Stat. Ann. Sections 2A:58C-5(b) and (d) (West
1987) (mandates separate proceedings for determination of
compensatory and punitive damages).

* North Dakota--N. D. Cent. Code Section 32.03.2-11(2) (Supp.
1995) (upon request of either party, trier of fact determines whether
compensatory damages will be awarded before determining punitive
damages liability and amount).

* Ohio--Ohio Rev. Code Ann. Section 2315.21(C)(2) (1995) (if trier
of fact determines that defendant is liable for punitive damages, court
determines the amount of those damages).

* Oklahoma--Okla. Stat., Tit. 23, Sections 9.1(B)-(D) (Supp. 1995-
1996) (requires separate jury proceedings for punitive damages); S.
443, 45th Leg., 1st Reg. Sess. (introduced Jan. 31, 1995) (would
require courts to strike requests for punitive damages before trial,
unless plaintiff presents prima facie evidence at least 30 days before
trial to sustain such damages; provide for bifurcated jury trial on
request of defendant; and permit punitive damages only if
compensatory damages are awarded).


* Virginia--H. 1070, 1994-1995 Reg. Sess. (introduced Jan. 25,
1994) (would require separate proceedings in which court determines
that punitive damages are appropriate and trier of fact determines
amount of punitive damages).


ENDNOTES FOR OPINION

1 The top, hood, trunk, and quarter panels of Dr. Gore's car were
repainted at BMW's vehicle preparation center in Brunswick,
Georgia. The parties presumed that the damage was caused by
exposure to acid rain during transit between the manufacturing plant
in Germany and the preparation center.

2 Dr. Gore also named the German manufacturer and the
Birmingham dealership as defendants.

3 Alabama codified its common-law cause of action for fraud in a
1907 statute that is still in effect. Hackmeyer v. Hackmeyer, 268
Ala. 329, 333, 106 So. 2d 245, 249 (Ala. 1958). The statute
provides: "Suppression of a material fact which the party is under an
obligation to communicate constitutes fraud. The obligation to
communicate may arise from the confidential relations of the parties
or from the particular circumstances of the case."  Ala. Code Section
6-5-102 (1993); see Ala. Code Section 4299 (1907).

4 The dealer who testified to the reduction in value is the former
owner of the Birmingham dealership sued in this action. He sold the
dealership approximately one year before the trial.

5 Dr. Gore did not explain the significance of the $300 cut-off.

6 The jury also found the Birmingham dealership liable for Dr.
Gore's compensatory damages and the German manufacturer liable
for both the compensatory and punitive damages. The dealership did
not appeal the judgment against it. The Alabama Supreme Court held
that the trial court did not have jurisdiction over the German
manufacturer and therefore reversed the judgment against that
defendant.

7 BMW acknowledged that a Georgia statute enacted after Dr. Gore
purchased his car would require disclosure of similar repairs to a car
before it was sold in Georgia. Ga. Code Ann. Sections 40-1-5(b)-(e)
(1994).

8 While awarding a comparable amount of compensatory damages,
the Yates jury awarded no punitive damages at all. In Yates, the
plaintiff also relied on the 1983 nondisclosure policy, but instead of
offering evidence of 983 repairs costing more than $300 each, he
introduced a bulk exhibit containing 5,856 repair bills to show that
petitioner had sold over 5,800 new BMW vehicles without disclosing
that they had been repaired.

9 Prior to the lawsuits filed by Dr. Yates and Dr. Gore, BMW and
various BMW dealers had been sued 14 times concerning presale
paint or damage repair. According to the testimony of BMW's in-
house counsel at the postjudgment hearing on damages, only one of
the suits concerned a car repainted by BMW.

10 The Alabama Supreme Court did not indicate whether the $2
million figure represented the court's independent assessment of the
appropriate level of punitive damages, or its determination of the
maximum amount that the jury could have awarded consistent with
the Due Process Clause.

11 Other than Yates v. BMW of North America, Inc., 642 So. 2d
937 (Ala. 1993), in which no punitive damages were awarded, the
Alabama Supreme Court cited no such cases. In another portion of
its opinion, 646 So. 2d, at 629, the court did cite five Alabama cases,
none of which involved either a dispute arising out of the purchase of
an automobile or an award of punitive damages. G. M. Mosley
Contractors, Inc. v. Phillips, 487 So. 2d 876, 879 (Ala. 1986);
Hollis v. Wyrosdick, 508 So. 2d 704 (Ala. 1987); Campbell v.
Burns, 512 So. 2d 1341, 1343 (Ala. 1987); Ashbee v. Brock, 510
So. 2d 214 (Ala. 1987); and Jawad v. Granade, 497 So. 2d 471
(Ala. 1986). All of these cases support the proposition that appellate
courts in Alabama presume that jury verdicts are correct. In light of
the Alabama Supreme Court's conclusion that (1) the jury had
computed its award by multiplying $4,000 by the number of
refinished vehicles sold in the United States and (2) that the award
should have been based on Alabama conduct, respect for the error-
free portion of the jury verdict would seem to produce an award of
$56,000 ($4,000 multiplied by 14, the number of repainted vehicles
sold in Alabama).

12 See, e.g., Rivers v. BMW of North America, Inc., 214 Ga. App.
880, 449 S. E. 2d 337 (1994) (nondisclosure of presale paint repairs
that occurred before state disclosure statute enacted); Wedmore v.
Jordan Motors, Inc., 589 N. E. 2d 1180 (Ind. App. 1992) (same).

13 Four States require disclosure of vehicle repairs costing more than
3 percent of suggested retail price. Ariz. Rev. Stat. Ann. Section 28-
1304.03 (1989); N. C. Gen. Stat. Section 20-305.1(d)(5a) (1995);
S. C. Code Section 56-32-20 (Supp. 1995); Va. Code Ann. Section
46.2-1571(D) (Supp. 1995). An additional three States mandate
disclosure when the cost of repairs exceeds 3 percent or $500,
whichever is greater. Ala. Code Section 8-19-5(22)(c) (1993); Cal.
Veh. Code Ann. Sections 9990-9991 (West Supp. 1996); Okla.
Stat., Tit. 47, Section 1112.1 (1991). Indiana imposes a 4 percent
disclosure threshold. Ind. Code Sections 9-23-4-4, 9-23-4-5
(1993). Minnesota requires disclosure of repairs costing more than 4
percent of suggested retail price or $500, whichever is greater.
Minn. Stat. Section 325F.664 (1994). New York requires
disclosure when the cost of repairs exceeds 5 percent of suggested
retail price. N. Y. Gen. Bus. Law Sections 396-p(5)(a), (d)
(McKinney Supp. 1996). Vermont imposes a 5 percent disclosure
threshold for the first $10,000 in repair costs and 2 percent
thereafter. Vt. Stat. Ann., Tit. 9, Section 4087(d) (1993). Eleven
States mandate disclosure only of damage costing more than 6
percent of retail value to repair. Ark. Code Ann. Section 23-112-705
(1992); Idaho Code Section 49-1624 (1994); Ill. Comp. Stat., ch.
815, Section 710/5 (1994); Ky. Rev. Stat. Ann. Section
190.0491(5) (Baldwin 1988); La. Rev. Stat. Ann Section 32:1260
(Supp. 1995); Miss. Motor Vehicle Comm'n, Regulation No. 1
(1992); N. H. Rev. Stat. Ann. Section 357-C:5(III)(d) (1995); Ohio
Rev. Code Ann. Section 4517.61 (1994); R. I. Gen. Laws Sections
31-5.1-18(d), (f) (1995); Wis. Stat. Section 218.01(2d)(a) (1994);
Wyo. Stat. Section 31-16-115 (1994). Two States require disclosure
of repairs costing $3,000 or more. See Iowa Code Ann. Section
321.69 (Supp. 1996); N. D. Admin. Code Section 37-09-01-01
(1992). Georgia mandates disclosure of paint damage that costs more
than $500 to repair. Ga. Code Ann. Sections 40-1-5(b)-(e) (1994)
(enacted after respondent purchased his car). Florida requires dealers
to disclose paint repair costing more than $100 of which they have
actual knowledge. Fla. Stat. Section 320.27(9)(n) (1992). Oregon
requires manufacturers to disclose all "post-manufacturing" damage
and repairs. It is unclear whether this mandate would apply to
repairs such as those at issue here. Ore. Rev. Stat. Section 650.155
(1991).

Many, but not all, of the statutes exclude from the computation of
repair cost the value of certain components--typically items such as
glass, tires, wheels and bumpers--when they are replaced with
identical manufacturer's original equipment. E.g., Cal. Veh. Code
Ann. Sections 9990-9991 (West Supp. 1996); Ga. Code Ann.
Sections 40-1-5(b)-(e) (1994); Ill. Comp. Stat., ch. 815, Section
710/5 (1994); Ky. Rev. Stat. Ann. Section 190.0491(5) (Baldwin
1988); Okla. Stat., Tit. 47, Section 1112.1 (1991); Va. Code Ann.
Section 46.2-1571(D) (Supp. 1995); Vt. Stat. Ann., Tit. 9, Section
4087(d) (1993).

14 Also, a state legislature might plausibly conclude that the
administrative costs associated with full disclosure would have the
effect of raising car prices to the State's residents.

15 Federal disclosure requirements are, of course, a familiar part of
our law. See, e.g., the Federal Food, Drug, and Cosmetic Act, as
added by the Nutrition Labeling and Education Act of 1990, 104
Stat. 2353, 21 U. S. C. Section 343; the Truth In Lending Act, 82
Stat. 148, as amended, 15 U. S. C. Section 1604; the Securities and
Exchange Act of 1934, 48 Stat. 892, 894, as amended, 15 U. S. C.
Sections 78l-78m; Federal Cigarette Labeling and Advertising Act,
79 Stat. 283, as amended, 15 U. S. C. Section 1333; Alcoholic
Beverage Labeling Act of 1988, 102 Stat. 4519, 27 U. S. C. Section
215.

16 See also Bigelow v. Virginia, 421 U. S. 809, 824 (1975) ("A
State does not acquire power or supervision over the internal affairs
of another State merely because the welfare and health of its own
citizens may be affected when they travel to that State"); New York
Life Ins. Co. v. Head, 234 U. S. 149, 161 (1914) ("[I]t would be
impossible to permit the statutes of Missouri to operate beyond the
jurisdiction of that State . . . without throwing down the
constitutional barriers by which all the States are restricted within the
orbits of their lawful authority and upon the preservation of which
the Government under the Constitution depends. This is so
obviously the necessary result of the Constitution that it has rarely
been called in question and hence authorities directly dealing with it
do not abound"); Huntington v. Attrill, 146 U. S. 657, 669 (1892)
("Laws have no force of themselves beyond the jurisdiction of the
State which enacts them, and can have extra-territorial effect only by
the comity of other States").

17 State power may be exercised as much by a jury's application of a
state rule of law in a civil lawsuit as by a statute. See New York Co.
Times v. Sullivan, 376 U. S. 254, 265 (1964) ("The test is not the
form in which state power has been applied but, whatever the form,
whether such power has in fact been exercised"); San Diego Building
Trades Council v. Garmon, 359 U. S. 236, 247 (1959) ("regulation
can be as effectively exerted through an award of damages as through
some form of preventive relief").

18 Brief for Respondent 11-12, 23, 27-28; Tr. of Oral Arg. 50-54.
Dr. Gore's interest in altering the nationwide policy stems from his
concern that BMW would not (or could not) discontinue the policy in
Alabama alone. Id., at 11. "If Alabama were limited to imposing
punitive damages based only on BMW's gain from fraudulent sales
in Alabama, the resulting award would have no prospect of
protecting Alabama consumers from fraud, as it would provide no
incentive for BMW to alter the unitary, national policy of
nondisclosure which yielded BMW millions of dollars in profits."
Id., at 23. The record discloses no basis for Dr. Gore's contention
that BMW could not comply with Alabama's law without changing
its nationwide policy.

19 See Bordenkircher v. Hayes, 434 U. S. 357, 363 (1978) ("To
punish a person because he has done what the law plainly allows him
to do is a due process violation of the most basic sort"). Our cases
concerning recidivist statutes are not to the contrary. Habitual
offender statutes permit the sentencing court to enhance a defendant's
punishment for a crime in light of prior convictions, including
convictions in foreign jurisdictions. See e.g., Ala. Code Section
13A-5-9 (1994); Cal. Penal Code Ann. Sections 667.5(f), 668 (West
Supp. 1996); Ill. Comp. Stat., ch. 720, Section 5/33B-1 (1994); N.
Y. Penal Law Sections 70.04, 70.06, 70.08, 70.10 (McKinney 1987
and Supp. 1996); Tex. Penal Code Ann. Section 12.42 (1994 and
Supp. 1995-1996). A sentencing judge may even consider past
criminal behavior which did not result in a conviction and lawful
conduct that bears on the defendant's character and prospects for
rehabilitation. Williams v. New York, 337 U. S. 241 (1949). But
we have never held that a sentencing court could properly punish
lawful conduct. This distinction is precisely the one we draw here.
See n. 21, infra.

20 Given that the verdict was based in part on out-of-state conduct
that was lawful where it occurred, we need not consider whether one
State may properly attempt to change a tortfeasors' unlawful conduct
in another State.

21 Of course, the fact that the Alabama Supreme Court correctly
concluded that it was error for the jury to use the number of sales in
other States as a multiplier in computing the amount of its punitive
sanction does not mean that evidence describing out-of-state
transactions is irrelevant in a case of this kind. To the contrary, as
we stated in TXO Production Corp. v. Alliance Resources Corp.,
509 U. S. 443, 462, n. 28 (1993), and discuss more fully infra, at
16-19, such evidence is relevant to the determination of the degree of
reprehensibility of the defendant's conduct.

22 See Miller v. Florida, 482 U. S. 423 (1987) (Ex Post Facto
Clause violated by retroactive imposition of revised sentencing
guidelines that provided longer sentence for defendant's crime);
Bouie v. City of Columbia, 378 U. S. 347 (1964) (retroactive
application of new construction of statute violated due process); id.,
at 350-355 (citing cases); Lankford v. Idaho, 500 U. S. 110 (1991)
(due process violated because defendant and his counsel did not have
adequate notice that judge might impose death sentence). The strict
constitutional safeguards afforded to criminal defendants are not
applicable to civil cases, but the basic protection against "judgments
without notice" afforded by the Due Process Clause, Shaffer v.
Heitner, 433 U. S. 186, 217 (1977) (STEVENS, J., concurring in
judgment), is implicated by civil penalties.

23 "The flagrancy of the misconduct is thought to be the primary
consideration in determining the amount of punitive damages."
Owen, A Punitive Damages Overview: Functions, Problems and
Reform, 39 Vill. L. Rev. 363, 387 (1994).

24 The principle that punishment should fit the crime "is deeply
rooted and frequently repeated in common-law jurisprudence."
Solem v. Helm, 463 U. S. 277, 284 (1983). See Burkett v. Lanata,
15 La. Ann. 337, 339 (1860) (punitive damages should be
"commensurate to the nature of the offence"); Blanchard v. Morris,
15 Ill. 35, 36 (1853) ("[W]e cannot say [the exemplary damages] are
excessive under the circumstances; for the proofs show that threats,
violence, and imprisonment, were accompanied by mental fear,
torture, and agony of mind"); Louisville & Northern R. Co. v.
Brown, 127 Ky. 732, 749, 106 S. W. 795, 799 (1908) ("We are not
aware of any case in which the court has sustained a verdict as large
as this one unless the injuries were permanent").

25 Pacific Mut. Life Ins. Co. v. Haslip, 499 U. S. 1, 22 (1991).

26 The dissenters also recognized that "TXO's conduct was clearly
wrongful, calculated, and improper . . . ." TXO, 509 U. S., at 482
(O'CONNOR, J., dissenting).

27 In Jeter v. M & M Dodge, Inc., 634 So. 2d 1383 (La. App.
1994), a Louisiana court of appeals suggested that the Louisiana
disclosure statute functions as a safe harbor. Finding that the cost of
repairing presale damage to the plaintiff's car exceeded the statutory
disclosure threshold, the court held that the disclosure statute did not
provide a defense to the action. Id., at 1384.

During the pendency of this litigation, Alabama enacted a disclosure
statute which defines "material" damage to a new car as damage
requiring repairs costing in excess of 3 percent of suggested retail
price or $500, whichever is greater. Ala. Code Section 8-19-5(22)
(1993). After its decision in this case, the Alabama Supreme Court
stated in dicta that the remedies available under this section of its
Deceptive Trade Practices Act did not displace or alter pre-existing
remedies available under either the common law or other statutes.
Hines v. Riverside Chevrolet-Olds, Inc., 655 So. 2d 909, 917, n. 2
(Ala. 1994). It refused, however, to "recognize, or impose on
automobile manufacturers, a general duty to disclose every repair of
damage, however slight, incurred during the manufacturing
process."  Id., at 921. Instead, it held that whether a defendant has a
duty to disclose is a question of fact "for the jury to determine."  Id.,
at 918. In reaching that conclusion it overruled two earlier decisions
that seemed to indicate that as a matter of law there was no disclosure
obligation in cases comparable to this one. Id., at 920 (overruling
Century 21-Reeves Realty, Inc. v. McConnell Cadillac, Inc., 626
So. 2d 1273 (Ala. 1993), and Cobb v. Southeast Toyota
Distributors, Inc., 569 So. 2d 395 (Ala. 1990)).

28 See also Ariz. Rev. Stat. Ann. Section 28-1304.03 (1989) ("[I]f
disclosure is not required under this section, a purchaser may not
revoke or rescind a sales contract due solely to the fact that the new
motor vehicle was damaged and repaired prior to completion of the
sale"); Ind. Code Section 9-23-4-5 (1993) (providing that "[r]epaired
damage to a customer-ordered new motor vehicle not exceeding four
percent (4%) of the manufacturer's suggested retail price does not
need to be disclosed at the time of sale"); N. C. Gen. Stat. Section
20-305.1(e) (1993) (requiring disclosure of repairs costing more than
5 percent of suggested retail price and prohibiting revocation or
rescission of sales contract on the basis of less costly repairs); Okla.
Stat., Tit. 47, Section 1112.1 (1991) (defining "material" damage to
a car as damage requiring repairs costing in excess of 3 percent of
suggested retail price or $500, whichever is greater).

29 Restatement (Second) of Torts Section 538 (1977); W. Keeton,
D. Dobbs, R. Keeton, & D. Owen, Prosser and Keeton on Law of
Torts Section 108 (5th ed. 1984).

30 The Alabama Supreme Court has held that a car may be
considered "new" as a matter of law even if its finish contains minor
cosmetic flaws. Wilburn v. Larry Savage Chevrolet, Inc., 477 So.
2d 384 (Ala. 1985). We note also that at trial respondent only
introduced evidence of undisclosed paint damage to new cars
repaired at a cost of $300 or more. This decision suggests that
respondent believed that the jury might consider some repairs too de
minimis to warrant disclosure.

31 Before the verdict in this case, BMW had changed its policy with
respect to Alabama and two other States. Five days after the jury
award, BMW altered its nationwide policy to one of full disclosure.

32 See, e.g., Grant v. McDonogh, 7 La. Ann. 447, 448 (1852)
("[E]xemplary damages allowed should bear some proportion to the
real damage sustained"); Saunders v. Mullen, 66 Iowa 728, 729, 24
N. W. 529 (1885) ("When the actual damages are so small, the
amount allowed as exemplary damages should not be so large");
Flannery v. Baltimore & Ohio R. Co., 15 D. C. 111, 125 (1885)
(when punitive damages award "is out of all proportion to the injuries
received, we feel it our duty to interfere"); Houston & Texas Central
R. Co. v. Nichols, 9 Am. & Eng. R. R. Cas. 361, 365 (Tex. 1882)
("Exemplary damages, when allowed, should bear proportion to the
actual damages sustained"); McCarthy v. Niskern, 22 Minn. 90, 91-
92 (1875) (punitive damages "enormously in excess of what may
justly be regarded as compensation" for the injury must be set aside
"to prevent injustice").

33 Owen, supra n. 23, at 368, and n. 23. One English statute, for
example, provides that officers arresting persons out of their
jurisdiction shall pay double damages. 3 Edw., I., ch. 35. Another
directs that in an action for forcible entry or detainer, the plaintiff
shall recover treble damages. 8 Hen. VI, ch. 9, Section 6.

Present-day federal law allows or mandates imposition of multiple
damages for a wide assortment of offenses, including violations of
the antitrust laws, see Section 4 of the Clayton Act, 38 Stat. 731, as
amended, 15 U. S. C. Section 15, and the Racketeer Influenced and
Corrupt Organizations Act, see 18 U. S. C. Section 1964, and
certain breaches of the trademark laws, see Section 35 of the
Trademark Act of 1946, 60 Stat. 439, as amended, 15 U. S. C.
Section 1117, and the patent laws, see 66 Stat. 813, 35 U. S. C.
Section 284.

34 "While petitioner stresses the shocking disparity between the
punitive award and the compensatory award, that shock dissipates
when one considers the potential loss to respondents, in terms of
reduced or eliminated royalties payments, had petitioner succeeded in
its illicit scheme. Thus, even if the actual value of the `potential harm'
to respondents is not between $5 million and $8.3 million, but is
closer to $4 million, or $2 million, or even $1 million, the disparity
between the punitive award and the potential harm does not, in our
view, `jar one's constitutional sensibilities.'"  TXO, 509 U. S., at
462, quoting Pacific Mut. Life Ins. Co. v. Haslip, 499 U. S., at 18.

35 Even assuming each repainted BMW suffers a diminution in value
of approximately $4,000, the award is 35 times greater than the total
damages of all 14 Alabama consumers who purchased repainted
BMW's.

36 The ratio here is also dramatically greater than any award that
would be permissible under the statutes and proposed statutes
summarized in the appendix to JUSTICE GINSBURG's dissenting
opinion. Post, at 9-11.

37 Conceivably the Alabama Supreme Court's selection of a 500 to 1
ratio was an application of JUSTICE SCALIA's identification of one
possible reading of the plurality opinion in TXO: any future due
process challenge to a punitive damages award could be disposed of
with the simple observation that "this is no worse than TXO."  509
U. S., at 472 (SCALIA, J., concurring in judgment). As we explain
in the text, this award is significantly worse than the award in TXO.

38 Although the Court did not address the size of the punitive
damages award in Silkwood v. Kerr-McGee Corp., 464 U. S. 238
(1984), the dissenters commented on its excessive character, noting
that the "$10 million [punitive damages award] that the jury imposed
is 100 times greater than the maximum fine that may be imposed . . .
for a single violation of federal standards" and "more than 10 times
greater than the largest single fine that the Commission has ever
imposed."  Id., at 263 (BLACKMUN, J., dissenting). In New York
Times Co. v. Sullivan, 376 U. S. 254 (1964), the Court observed
that the punitive award for libel was "one thousand times greater than
the maximum fine provided by the Alabama criminal statute," and
concluded that the "fear of damage awards under a rule such as that
invoked by the Alabama courts here may be markedly more inhibiting
than the fear of prosecution under a criminal statute." Id., at 277.

39 Ala. Code Section 8-19-11(b) (1993).

40 See, e.g., Ark. Code Ann. Section 23-112-309(b) (1992) (up to
$5,000 for violation of state Motor Vehicle Commission Act that
would allow suspension of dealer's license; up to $10,000 for
violation of Act that would allow revocation of dealer's license); Fla.
Stat. Section 320.27(12) (1992) (up to $1,000); Ga. Code Ann.
Sections 40-1-5(g), 10-1-397(a) (1994 and Supp. 1996) (up to
$2,000 administratively; up to $5,000 in superior court); Ind. Code
Ann. Section 9-23-6-4 (1993) ($50 to $1,000); N. H. Rev. Stat.
Ann. Sections 357-C:15, 651:2 (1995 and Supp. 1995) (corporate
fine of up to $20,000); N. Y. Gen. Bus. Law Section 396-p(6)
(McKinney Supp. 1995) ($50 for first offense; $250 for subsequent
offenses).

41 JUSTICE GINSBURG expresses concern that we are "the only
federal court policing" this limit. Post, at 7. The small number of
punitive damages questions that we have reviewed in recent years,
together with the fact that this is the first case in decades in which we
have found that a punitive damages award exceeds the constitutional
limit, indicates that this concern is at best premature. In any event,
this consideration surely does not justify an abdication of our
responsibility to enforce constitutional protections in an extraordinary
case such as this one.


ENDNOTES FOR APPENDIX TO DISSENT

1 According to trial testimony, in late May 1992, BMW began
redirecting refinished cars out of Alabama and two other States. Tr.
964. The jury returned its verdict in favor of Gore on June 12,
1992. Five days later, BMW changed its national policy to one of
full disclosure. Id., at 1026.

2 See, e.g., Brief for Law and Economics Scholars, et al. as Amici
Curiae 6-28 (economic analysis demonstrates that Alabama Supreme
Court's judgment was not unreasonable); W. Landes & R. Posner,
Economic Structure of Tort Law 160-163 (1987) (economic model
for assessing propriety of punitive damages in certain tort cases).

3 See ante, at 7 ("In our federal system, States necessarily have
considerable flexibility in determining the level of punitive damages
that they will allow in different classes of cases and in any particular
case."); Browning-Ferris Industries of Vt., Inc. v. Kelco Disposal,
Inc., 492 U. S. 257, 278 (1989) (In any "lawsuit where state law
provides the basis of decision, the propriety of an award of punitive
damages for the conduct in question, and the factors the jury may
consider in determining their amount, are questions of state law.");
Silkwood v. Kerr-McGee Corp., 464 U. S. 238, 255 (1984)
("Punitive damages have long been a part of traditional state tort
law.").

4 Petitioner invites the Court to address the question of multiple
punitive damages awards stemming from the same alleged
misconduct. The Court does not take up the invitation, and rightly
so, in my judgment, for this case does not present the issue. For
three reasons, the question of multiple awards is hypothetical, not
real, in Gore's case. First, the punitive damages award in favor of
Gore is the only such award yet entered against BMW on account of
its nondisclosure policy.

Second, BMW did not raise the issue of multiple punitives below.
Indeed, in its reply brief before the Alabama Supreme Court, BMW
stated: "Gore confuses our point about fairness among plaintiffs. He
treats this point as a premature `multiple punitive damages' argument.
But, contrary to Gore's assertion, we are not asking this Court to
hold, as a matter of law, that a `constitutional violation occurs when a
defendant is subjected to punitive damages in two separate cases.'"
Reply Brief for App