Byline: James P. Miller
In a decision that promises to benefit major corporations, the U.S. Supreme Court on Monday overturned as excessive a $145 million punitive-damage award and established the clearest standard yet for how judges and juries should handle such controversial penalties.
In a 6-3 ruling, the justices said that even though State Farm Insurance Cos. had mishandled a customer's claim, the large punitive damage award was "neither reasonable nor proportionate" to the $1 million in actual damages that the jury found State Farm had caused.
And for the first time, the high court spelled out what it considers a maximum ratio between harm done to a plaintiff and the punitive damages that can be awarded. In almost every case, the justices said, the punitive award should be a single-digit multiple of the actual harm.