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The Utah Supreme Court has upheld a 145-to-1 ratio of punitives to compensatories in a massive bad-faith judgment against State Farm Mutual Automobile Insurance Co. The court reinstated a $145 million punitive jury verdict awarded to plaintiffs Curtis and Inez Campbell in 1996, finding that the trial judge had erred when he reduced the punitives to $25 million as a matter of law. The court completely rejected State Farm’s claims that the punitives were unwarranted and excessive — even at the reduced amount — and supported the trial court’s conclusion that a substantial punitive judgment was required to deter the insurance company from future wrongful conduct. The 1996 jury verdict came more than 15 years after the accident that spurred the litigation; the Utah Supreme Court decision seemingly concludes more than 20 years of litigation over the incident. On May 22, 1981, Curtis Campbell was driving north on Utah’s State Road 91 when he moved into the southbound lane to pass other vehicles. While he was passing, another car, driven by Todd Ospital, appeared over a hill coming toward him in the southbound lane. Ospital avoided hitting Campbell, but lost control of his car and hit a van head-on. Ospital was killed and the driver of the van, Robert Slusher, was seriously injured. Campbell’s car was untouched. FIVE TIMES POLICY LIMIT Slusher and Ospital’s parents sued Campbell. Campbell was insured by State Farm, but State Farm refused the plaintiffs’ offers to settle within policy limits. In 1983, a Logan, Utah, jury found Campbell 100 percent responsible for the accident, and awarded Slusher $200,000 and awarded Ospital’s estate $53,000. The total was five times Campbell’s $50,000 policy limit, leaving Campbell responsible for the excess. Campbell appealed. In 1989, the Utah Supreme Court upheld the verdict, and State Farm paid the entire judgment with interest. As this appeal was pending, Campbell and his wife entered into an agreement with the Ospitals and Slusher. The plaintiffs agreed not to take the Campbells’ assets, and the Campbells agreed to pursue a bad-faith claim against State Farm and to pay 90 percent of any proceeds to Slusher and the Ospital estate. The Campbells sued State Farm after the initial verdict was upheld, charging bad faith, fraud and intentional infliction of emotional distress. The Campbell action was bifurcated for trial, and in November 1995 a Salt Lake City jury found that State Farm had acted unreasonably in not settling the Ospital and Slusher claims. The second phase concerned damages and the Campbells’ charges of fraud and intentional infliction of emotional distress. State Farm contended that its refusal to settle was an “honest mistake.” The Campbells charged that the refusal was part of a nationwide practice to cheat and deceive its customers. In July 1996, a second Salt Lake City jury awarded the Campbells $2.6 million in compensatories and $145 million in punitives. In December 1997, Judge William Bohling cut the compensatories to $1 million and the punitives to $25 million, finding the jury’s punitive award excessive as a matter of law. State Farm appealed, contending that the punitives were unwarranted and at the least should be reduced to a 3-to-1 ratio. The Campbells cross-appealed, seeking reinstatement of the $145 million punitive award. Shortly after the verdict, the Campbells’ trial attorneys, Roger P. Christensen and L. Rich Humpherys of Salt Lake City’s Christensen & Jensen, brought in Harvard Law School professor Laurence H. Tribe to preserve the punitive award on appeal. The plaintiffs’ team decided to seek reinstatement of the full amount because “it would take more than $25 million to get State Farm’s attention,” Tribe said. Plus, he said, “the more I looked at it, [Bohling's] only basis for knocking it down was his assumption that anything above 3:1 was problematic. He approved a 25:1 ratio, but this was not a defensible compromise.” There is “no mathematical formula” for punitives, he said. To prove this to the Utah Supreme Court, the plaintiffs focused on State Farm’s conduct. “This was … corporate greed and misconduct,” Tribe said. State Farm has not decided if it will appeal, said defense counsel Paul M. Belnap of Salt Lake City’s Strong & Hanni. Campbell v. State Farm Mutual Automobile Insurance Co., No. 951564.

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