Ospital was killed and Slusher injured in a car accident caused by Campbell. Slusher and the estate of Ospital brought personal injury and wrongful death claims against Campbell. Both plaintiffs offered to settle for the policy limits of $25,000 each, but State Farm refused this offer while making representations to Campbell that it would represent his interests and keep his assets safe without the need for him to hire his own lawyer. A jury eventually awarded damages of over $185,000 to Campbell and Slusher, of which State Farm initially decided to cover only the original $50,000.Rejecting the opportunity to appeal on Campbell's behalf, State Farm told Campbell to sell his house. Campbell found separate legal counsel to file the appeal while using the attorney of Slusher and Ospital to sue State Farm for bad faith, fraud, and the intentional infliction of emotional distress. Slusher and Ospital agreed that they would not seek to collect on the original damages award against Campbell but would instead receive 90 percent of the damages awarded against State Farm. After the appellate court denied Campbell's appeal in the original cases against Slusher and Ospital, State Farm agreed to cover the entire amount of $185,000. Campbell proceeded with his claim against State Farm anyway and prevailed.The jury awarded Campbell $2.6 million in compensatory damages and $145 million in punitive damages, but the awards were reduced to $1 million in compensatory damages and $25 million in punitive damages. On appeal, the reduced compensatory damages award was affirmed, while the original punitive damages award was reinstated.
A lesser punitive damages award would have been adequate to achieve the objectives of awarding punitive damages. Considering jury awards in similar cases, this judgment was a clear outlier and a disproportionate amount considering the harm done or threatened to Campbell. He suffered only minor economic damage and no physical injury, while it is important to note that State Farm ultimately paid the full judgment. Fundamental notions of fairness may limit the authority of states to award punitive damages when they are arbitrary or grossly excessive. This is in part because an unjust deprivation of property may occur, since defendants in civil litigation lack the protections of criminal defendants. Some punitive damages were appropriate based on State Farm's conduct, but it appeared that the jury and the lower courts used this verdict as punishment for State Farm's failings on a nationwide basis. They should have limited their analysis to its conduct in the case at hand and the harm done to a specific individual, since a state does not have the power to punish parties for actions outside its boundaries unless there is a clear connection to the harm suffered by a citizen of that state.
Although investigators and witnesses concluded that Curtis Campbell caused an accident in which one person was killed and another permanently disabled, his insurer, petitioner State Farm Mutual Automobile Insurance Company (State Farm), contested liability, declined to settle the ensuing claims for the $50,000 policy limit, ignored its own investigators' advice, and took the case to trial, assuring Campbell and his wife that they had no liability for the accident, that State Farm would represent their interests, and that they did not need separate counsel. In fact, a Utah jury returned a judgment for over three times the policy limit, and State Farm refused to appeal. The Utah Supreme Court denied Campbell's own appeal, and State Farm paid the entire judgment. The Campbells then sued State Farm for bad faith, fraud, and intentional infliction of emotional distress. The trial court's initial ruling granting State Farm summary judgment was reversed on appeal. On remand, the court denied State Farm's motion to exclude evidence of dissimilar out-of-state conduct. In the first phase of a bifurcated trial, the jury found unreasonable State Farm's decision not to settle. Before the second phase, this Court refused, in BMW of North America, Inc. v. Gore, 517 U. S. 559, to sustain a $2 million punitive damages award which accompanied a $4,000 compensatory damages award. The trial court denied State Farm's renewed motion to exclude dissimilar out-of-state conduct evidence. In the second phase, which addressed, inter alia, compensatory and punitive damages, evidence was introduced that pertained to State Farm's business practices in numerous States but bore no relation to the type of claims underlying the Campbells' complaint. The jury awarded the Campbells $2.6 million in compensatory damages and $145 million in punitive damages, which t