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When the U.S. Supreme Court decided State Farm Mutual Automobile Insurance Co. v. Campbell, 123 S.Ct. 1513, in April, it said some punitive damages awards far exceed what is reasonable in light of the compensatory damages. But far from drawing a line in the sand, the Supreme Court left a lot to be interpreted. In Campbell, the court held that the punitive award — 145 times the compensatory award — was neither “reasonable nor proportionate to the wrong committed, and it was an irrational and arbitrary deprivation of the property of the defendant.” The court recommended punitive damages in an amount “at or near” the compensatories in this case, and no more than a “single-digit multiple” generally. In 1981, Curtis Campbell drove the wrong way on a two-lane highway. The ensuing collision left one person dead and another paralyzed. Campbell and his wife, who was also in the car, were not hurt. State Farm Mutual Automobile Insurance Co. assumed the Campbells’ defense but, against the advice of its investigator, refused to settle within the $50,000 policy limits before a larger judgment was entered. The insurer refused to pay the excess for some 18 months. The Campbells sued for bad faith, saying that this treatment by their insurer was part of a nationwide, decades-long scam by the insurer to defraud insureds and courts by not paying legitimate claims. It was alleged that the insurer targeted the scam at those most vulnerable, such as the poor, elderly and sick. The jury awarded $1 million in compensatories and $145 million in punitives, which the Utah Supreme Court approved. Justice Anthony Kennedy, writing for the majority, reversed, remanded and scolded: “This case is neither close nor difficult.” The court, in a 6-3 vote, applied three “guideposts” in determining what is “reasonable and proportionate”: “(1) the degree of reprehensibility of the defendant’s misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.” After Campbell, significant questions remain:

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