BMW v. Gore: Mitigating the Punitive Economics of Punitive Damages

38 Pages Posted: 19 Dec 2008  

Paul H. Rubin

Emory University - Department of Economics

John Calfee

affiliation not provided to SSRN

Mark F. Grady

University of California, Los Angeles (UCLA) - School of Law

Date Written: December, 18 2008

Abstract

In BMW v Gore, the Supreme Court held that a state court's award of punitive damages was so excessive that it violated the Due Process Clause. In three other recent cases, the Court had rejected due process challenges to large awards of punitive damages. Although the Court did not articulate an economic rationale, these four cases are consistent with a theory under which federal courts should intervene only when there is a high risk that punitive damages will systematically appropriate wealth from the citizens of other states. Rather than apply due process analysis directly to punitive damages awards, the Court might more usefully revise the constitutional rules regulating the exercise of long-arm jurisdiction. With clear and realistic rules allowing firms to avoid states in which juries are not adequately restrained, the mechanisms of federalism would adequately control excessive punitive damages. Gore may be an effort to approximate this result by other means.

Keywords: Due Process Clause, punitive damages

Suggested Citation

Rubin, Paul H. and Calfee, John and Grady, Mark F., BMW v. Gore: Mitigating the Punitive Economics of Punitive Damages (December, 18 2008). Supreme Court Economic Review, Vol. 5, 1997; UCLA School of Law, Law-Econ Research Paper No. 08-22. Available at SSRN: https://ssrn.com/abstract=1317857

Paul H. Rubin

Emory University - Department of Economics ( email )

1602 Fishburne Drive
Atlanta, GA 30322
United States
404-931-0493 (Phone)
630-604-9609 (Fax)

HOME PAGE: http://www.economics.emory.edu/Rubi.htm

John Calfee

affiliation not provided to SSRN ( email )

Mark F. Grady (Contact Author)

University of California, Los Angeles (UCLA) - School of Law ( email )

385 Charles E. Young Dr. East
Room 1242
Los Angeles, CA 90095-1476
United States
310-206-1856 (Phone)

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