532 U.S. 424 (2001)
In the early 1980s Leatherman Tool Group, Inc., a small company that manufactures and distributes multifunction tools, introduced its original Pocket Survival Tool featuring pliers, a knife, a can opener, a screwdriver, a file, and a ruler.1 Leatherman was the first to introduce this type of tool and achieved substantial commercial success.2
In the mid-1990s Cooper Industries, Inc. decided to introduce a competing multifunction tool called the Toolzall with similar features.3 Cooper sent a prototype to Leatherman before marketing it.4 Leatherman responded with a cease-and-desist letter alleging patent and trademark infringement, yet Cooper proceeded to market the Toolzall.5
Cooper used photographs of a modified Pocket Survival Tool in its posters, packaging, and advertising materials at the National Hardware Show in Chicago and in catalogs distributed throughout the United States.6 Leatherman brought this action in the United States District Court for the District of Oregon alleging patent and trademark infringement, unfair competition, and violation of the Federal Trademark Dilution Act.7 Leatherman sought both compensatory and punitive damages.8
A jury found in favor of Leatherman on its unfair competition, trademark, and trademark dilution claims.9 The jury awarded fifty thousand dollars in compensatory damages and four million five hundred thousand dollars in punitive damages.10 The District Court denied Cooper's post-trial motion seeking reduction of the punitive damages award.11
The Court of Appeals for the Ninth Circuit affirmed the judgment in an unpublished opinion after applying an abuse of discretion standard to the denial of the motion for a new trial or remittitur.12 The Supreme Court granted certiorari to decide whether the Court of Appeals applied the correct standard of review.13
Whether the Court of Appeals applied the correct standard of review when it rejected the claim that a punitive damages award was grossly excessive?14
The Due Process Clause of the Fourteenth Amendment imposes substantive limits on the size of punitive damages awards, and a court determining whether a particular award is grossly excessive must consider the degree of reprehensibility, the disparity between harm and the award, and the difference between the award and civil penalties in comparable cases.15 The constitutionality of a punitive damages award presents a question of law that appellate courts review de novo to ensure consistent and principled application of the constitutional standard.16
No. The Court of Appeals reviewed the District Court's denial of Cooper's motion for a new trial or remittitur under an abuse-of-discretion standard.17 The established facts show that the District Court upheld a $4.5 million punitive award after the jury found malice and reckless indifference in Cooper's use of modified PST photographs for advertising the Toolzall.18 Because the question whether that award is grossly excessive is a legal determination under the Gore factors, the Court of Appeals was required to apply de novo review rather than defer to the District Court's ruling.19 The facts of the advertising campaign and the jury's $50,000 compensatory award therefore must be reexamined independently on remand to test the award's constitutionality.20
The Court of Appeals did not apply the correct de novo standard of review to the District Court's determination that the punitive damages award was constitutional.21
Related opinions on this issue
Justice Thomas continued to believe that the Constitution does not constrain the size of punitive damages awards.22 For this reason he would have voted to overrule BMW if given the opportunity.23 This case did not present such an opportunity.24
The only issue before the Court was what standard should be used to review a trial court's ruling on a BMW challenge.25 Justice Thomas agreed with the Court's resolution of that issue and therefore joined the opinion of the Court.26
Justice Scalia remained of the view that excessive punitive damages do not violate the Due Process Clause.27 He had also believed that courts should review for abuse of discretion rather than de novo on fact-bound constitutional issues resembling the excessiveness question.28 The Court had held otherwise in Ornelas and Bajakajian.29
Given those precedents, Justice Scalia agreed that de novo review of the question of excessive punitive damages best accords with the jurisprudence and therefore concurred in the judgment.30
Justice Ginsburg would have held that the proper standard of appellate oversight is review for abuse of discretion rather than de novo review.31 In Gasperini, the Court had held that appellate review of a federal trial court's refusal to set aside a jury verdict as excessive is reconcilable with the Seventh Amendment. Appellate control is limited to review for abuse of discretion.32 The reasoning of that diversity case applied equally to an action challenging a punitive damages award as excessive under the Constitution.33
District courts possess a superior vantage on the reprehensibility inquiry, and practical as well as Seventh Amendment considerations supported deferential review.34