State Farm Mutual Automobile Insurance Co. v. Campbell

Plaintiff was driving with his wife. He decided to pass six vans traveling ahead of them on a two-lane highway. Todd Ospital (Ospital) was driving a small car approaching from the opposite direction. To avoid a head-on collision, Ospital swerved onto the shoulder, lost control of his automobile, and collided with a vehicle driven by Robert G. Slusher (Slusher). Ospital was killed and Slusher was rendered permanently disabled. A consensus was reached early on by the investigators and witnesses that Plaintiff’s unsafe pass had caused the crash. Defendant, nonetheless decided to contest liability and declined offers by Slusher and Ospital’s estate to settle the claims for the policy limit of $50,000.00 ($25,000.00 per claimant). Defendant ignored the advice of one of its own investigators and took the case to trial, assuring Plaintiffs that “their assets were safe, that they had no liability for the accident, that Defendant would represent their interests, and that they did not need to procure separate counsel.” The jury found that Plaintiff was 100% at fault, and returned a judgment against Plaintiff for $185,849.00. Defendant refused to cover the $135,849.00 in excess liability. Defendant also refused to post a bond to allow Plaintiff to appeal the judgment against him. Plaintiff obtained his own counsel to appeal the verdict. During the appeal Slusher, Ospital, and Plaintiff reached an agreement whereby Slusher and Ospital agreed not to seek satisfaction of their claims against Plaintiff. In exchange, Plaintiff agreed to pursue a bad faith action against Defendant, and to be represented by Slusher’s and Ospital’s attorneys. According to the agreement, Slusher and Ospital would play a part in all major decisions in the action against Defendant. Slusher and Ospital would receive 90% of any verdict against Defendant. Defendant then paid Plaintiff $135,849.00. Plaintiff filed a complaint against Defendant alleging bad faith, fraud, and intentional infliction of emotional distress. Defendant claimed it made an honest mistake. The jury awarded Plaintiff $2.6 million in compensatory damages and $145 million in punitive damages. The trial judge reduced those damages to $1 million and $25 million respectfully. The State Supreme Court reinstated the $145 million punitive damages award. The court concluded that Defendant’s conduct was reprehensible. The court also relied upon Defendant’s “massive wealth” and on testimony indicating “Defendant’s actions, because of their clandestine nature, will be punished at most in one out of every 50,000 cases as a matter of statistical probability,” and concluded that the ratio between punitive and compensatory damages was not unwarranted. Finally, the court noted that the punitive damages award was not excessive when compared to various civil and criminal penalties Defendant could have faced.