tortfeasor

In 1981, Curtis Campbell was driving with his wife Inez in Cache County, Utah, when he attempted to pass six vans on a two-lane highway. This caused an oncoming driver, Todd Ospital, to swerve onto the shoulder, lose control, and collide with a vehicle driven by Robert G. Slawson and his wife, killing Ospital and permanently disabling Slawson. Campbell's insurer, State Farm Mutual Automobile Insurance Company, declined settlement offers of the $50,000 policy limit from Slawson and Ospital's estate despite early investigations indicating Campbell's fault and advice from its own adjuster. A jury in the underlying tort actions found Campbell 100 percent at fault and returned a judgment of $185,849 against him. State Farm refused to pay the $135,849 excess over policy limits or post a supersedeas bond. The Campbells then entered an agreement with Slawson and Ospital's estate under which the claimants would not seek satisfaction of the judgment in exchange for the Campbells pursuing a bad-faith action against State Farm, being represented by the claimants' attorneys, and assigning 90 percent of any recovery to them. The Campbells sued State Farm for bad faith, fraud, and intentional infliction of emotional distress. The trial court bifurcated the case into two phases before separate juries. In phase one the jury found State Farm's refusal to settle unreasonable. In phase two the jury heard evidence that State Farm's decision was part of a nationwide Performance, Planning and Review policy implemented since 1979 to cap payouts and meet corporate profit goals, including testimony from former Utah employees and experts about practices in multiple states over twenty years. The jury awarded $2.6 million in compensatory damages and $145 million in punitive damages. The trial court reduced the compensatory award to $1 million and the punitive award to $25 million. Both sides appealed. The Utah Supreme Court reinstated the $145 million punitive damages award after applying the three guideposts from BMW of North America, Inc. v. Gore and relying on the nationwide evidence, State Farm's wealth, and the statistical likelihood of punishment in only one of 50,000 cases. The United States Supreme Court granted certiorari.

In January 1990, Dr. Ira Gore, Jr., purchased a black BMW sports sedan for $40,750.88 from an authorized dealer in Birmingham, Alabama. The vehicle had been manufactured in Germany by BMW and shipped to the United States, where an independent service company in Brunswick, Georgia, determined that its finish had been damaged by acid rain during transit from Europe and refinished it at a cost of $601.37 before delivery to the Birmingham dealership. At the time of the purchase, BMW of North America, Inc., maintained a policy of not disclosing to dealers or customers that a new vehicle had been refinished if the cost of the repairs was less than 3 percent of the suggested retail price, and the refinishing cost for Gore's car amounted to approximately 1.5 percent of that price. After driving the car for about nine months, Gore took it to an independent detailer, who informed him that the car had been repainted. Gore then filed suit against BMW of North America, Inc., alleging fraud under Alabama law for the failure to disclose the repainting. At trial, BMW acknowledged that it had sold approximately 983 refinished cars as new in the United States since 1983, including 14 in Alabama, without disclosing the repairs when the cost exceeded $300 per vehicle. The jury awarded Gore $4,000 in compensatory damages, representing the difference in value between the car as delivered and its value had it not been refinished, along with $4 million in punitive damages. BMW moved to set aside the punitive damages award, introducing evidence that its nondisclosure policy aligned with the laws of roughly 25 states that required disclosure only for repairs exceeding 3 percent of the suggested retail price. The trial court denied the motion. On appeal, the Alabama Supreme Court affirmed the judgment but reduced the punitive damages to $2 million after applying factors from Green Oil Co. v. Hornsby and Pacific Mutual Life Insurance Co. v. Haslip, concluding that the jury's award was excessive but that $2 million remained permissible. The Supreme Court of the United States granted certiorari to review the case.

In July 1971 petitioners, a class of female employees of the Department of Social Services and of the Board of Education of the City of New York, commenced this action under 42 U.S.C. § 1983 in the United States District Court for the Southern District of New York. They sued the Department and its Commissioner, the Board and its Chancellor, and the city of New York and its Mayor, all in their official capacities. The complaint alleged that the city and its agencies had as a matter of official policy compelled pregnant employees to take unpaid leaves of absence before such leaves were required for medical reasons. The suit sought injunctive relief and backpay for periods of unlawful forced leave. On cross-motions for summary judgment, the District Court held petitioners' claims for injunctive and declaratory relief moot because the city and the Board had changed their maternity-leave policies after the complaint was filed. The court found that the acts complained of were unconstitutional under the Fourteenth Amendment. It denied backpay on the ground that any damages would come ultimately from the city of New York and that holding otherwise would circumvent the immunity conferred on municipalities by Monroe v. Pape. On appeal, petitioners renewed their arguments that the Board of Education was not a municipality within the meaning of Monroe v. Pape and that the District Court had erred in barring a damages award against the individual defendants. The Court of Appeals for the Second Circuit held that the Board was not a “person” under § 1983 because it performed a vital governmental function and had no final say over its appropriations. It also held that a damages action against officials sued in their official capacities could not proceed because any award would have to be paid by a city held not amenable to suit in Monroe v. Pape. The Supreme Court granted certiorari to consider whether local governmental officials and local independent school boards are “persons” within the meaning of 42 U.S.C. § 1983 when equitable relief in the nature of back pay is sought against them in their official capacities. After oral argument, the Court requested the parties to address whether Monroe v. Pape should be reconsidered in light of the legislative history of the Civil Rights Act of 1871.