Excerpts from the Supreme Court decision in:

-------- No. 94-896 --------

BMW OF NORTH AMERICA, INC., PETITIONER v. IRA GORE, Jr.

on writ of certiorari to the supreme court of alabama [May 20, 1996]

Justice Stevens delivered the opinion of the Court.

The Due Process Clause of the Fourteenth Amendment prohibits a State from imposing a -`grossly excessive'- punishment on a tortfeasor. TXO Production Corp. v. Alliance Resources Corp., 509 U. S. 443, 454 (1993) (and cases cited). The wrongdoing involved in this case was the decision by a national distributor of automobiles not to advise its dealers, and hence their customers, of predelivery damage to new cars when the cost of repair amounted to less than 3 percent of the car's suggested retail price. The question presented is whether a $2 million punitive damages award to the purchaser of one of these cars exceeds the constitutional limit.

I In January 1990, Dr. Ira Gore, Jr. (respondent), pur- chased a black BMW sports sedan for $40,750.88 from an authorized BMW dealer in Birmingham, Alabama. After driving the car for approximately nine months, and without noticing any flaws in its appearance, Dr. Gore took the car to -Slick Finish,- an independent detailer, to make it look -`snazzier than it normally would ap- pear.'- 646 So. 2d 619, 621 (Ala. 1994). Mr. Slick, the proprietor, detected evidence that the car had been re- painted. Convinced that he had been cheated, Dr. Gore brought suit against petitioner BMW of North America (BMW), the American distributor of BMW auto- mobiles. Dr. Gore alleged, inter alia, that the failure to disclose that the car had been repainted constituted suppression of a material fact. The complaint prayed for $500,000 in compensatory and punitive damages, and costs.

At trial, BMW acknowledged that it had adopted a na- tionwide policy in 1983 concerning cars that were dam- aged in the course of manufacture or transportation. If the cost of repairing the damage exceeded 3 percent of the car's suggested retail price, the car was placed in company service for a period of time and then sold as used. If the repair cost did not exceed 3 percent of the suggested retail price, however, the car was sold as new without advising the dealer that any repairs had been made. Because the $601.37 cost of repainting Dr. Gore's car was only about 1.5 percent of its suggested retail price, BMW did not disclose the damage or repair to the Birmingham dealer.

Dr. Gore asserted that his repainted car was worth less than a car that had not been refinished. To prove his actual damages of $4,000, he relied on the testimony of a former BMW dealer, who estimated that the value of a repainted BMW was approximately 10 percent less than the value of a new car that had not been damaged and repaired. To support his claim for punitive dam- ages, Dr. Gore introduced evidence that since 1983 BMW had sold 983 refinished cars as new, including 14 in Alabama, without disclosing that the cars had been re- painted before sale at a cost of more than $300 per ve- hicle. Using the actual damage estimate of $4,000 per vehicle, Dr. Gore argued that a punitive award of $4 million would provide an appropriate penalty for selling approximately 1,000 cars for more than they were worth.

In defense of its disclosure policy, BMW argued that it was under no obligation to disclose repairs of minor damage to new cars and that Dr. Gore's car was as good as a car with the original factory finish. It disputed Dr. Gore's assertion that the value of the car was impaired by the repainting and argued that this good-faith belief made a punitive award inappropriate. BMW also main- tained that transactions in jurisdictions other than Ala- bama had no relevance to Dr. Gore's claim.

The jury returned a verdict finding BMW liable for compensatory damages of $4,000. In addition, the jury assessed $4 million in punitive damages, based on a de- termination that the nondisclosure policy constituted -gross, oppressive or malicious- fraud. See Ala. Code 6-11-20, 6-11-21 (1993). BMW filed a post-trial motion to set aside the punitive damages award. The company introduced evidence to establish that its nondisclosure policy was consistent with the laws of roughly 25 States defining the disclo- sure obligations of automobile manufacturers, distribu- tors, and dealers. The most stringent of these statutes required disclosure of repairs costing more than 3 per- cent of the suggested retail price; none mandated dis- closure of less costly repairs. Relying on these stat- utes, BMW contended that its conduct was lawful in these States and therefore could not provide the basis for an award of punitive damages.

BMW also drew the court's attention to the fact that its nondisclosure policy had never been adjudged unlaw- ful before this action was filed. Just months before Dr. Gore's case went to trial, the jury in a similar law- suit filed by another Alabama BMW purchaser found that BMW's failure to disclose paint repair constituted fraud. Yates v. BMW of North America, Inc., 642 So. 2d 937 (Ala. 1993). Before the judgment in this case, BMW changed its policy by taking steps to avoid the sale of any refinished vehicles in Alabama and two other States. When the $4 million verdict was returned in this case, BMW promptly instituted a nationwide policy of full disclosure of all repairs, no matter how minor.

In response to BMW's arguments, Dr. Gore asserted that the policy change demonstrated the efficacy of the punitive damages award. He noted that while no jury had held the policy unlawful, BMW had received a num- ber of customer complaints relating to undisclosed re- pairs and had settled some lawsuits. Finally, he main- tained that the disclosure statutes of other States were irrelevant because BMW had failed to offer any evidence that the disclosure statutes supplanted, rather than sup- plemented, existing causes of action for common-law fraud.

The trial judge denied BMW's post-trial motion, hold- ing, inter alia, that the award was not excessive. On appeal, the Alabama Supreme Court also rejected BMW's claim that the award exceeded the constitutionally per- missible amount. 646 So. 2d 619 (1994). The court's excessiveness inquiry applied the factors articulated in Green Oil Co. v. Hornsby, 539 So. 2d 218, 223-224 (Ala. 1989), and approved in Pacific Mut. Life Ins. Co. v. Haslip, 499 U. S. 1, 21-22 (1991). 646 So. 2d, at 624-625. Based on its analysis, the court concluded that BMW's conduct was -reprehensible-; the nondisclo- sure was profitable for the company; the judgment -would not have a substantial impact upon [BMW's] financial position-; the litigation had been expensive; no criminal sanctions had been imposed on BMW for the same conduct; the award of no punitive damages in Yates reflected -the inherent uncertainty of the trial process-; and the punitive award bore a -reasonable relationship- to -the harm that was likely to occur from [BMW's] conduct as well as . . . the harm that actually occurred.- Id., at 625-627.

The Alabama Supreme Court did, however, rule in BMW's favor on one critical point: The court found that the jury improperly computed the amount of punitive damages by multiplying Dr. Gore's compensatory dam- ages by the number of similar sales in other jurisdic- tions. Id., at 627. Having found the verdict tainted, the court held that -a constitutionally reasonable punitive damages award in this case is $2,000,000,- id., at 629, and therefore ordered a remittitur in that amount. The court's discussion of the amount of its remitted award expressly disclaimed any reliance on -acts that occurred in other jurisdictions-; instead, the court explained that it had used a -comparative analysis- that considered Alabama cases, -along with cases from other jurisdictions, involving the sale of an automobile where the seller misrepresented the condition of the vehicle and the jury awarded punitive damages to the purchaser.- Id., at 628. Because we believed that a review of this case would help to illuminate -the character of the standard that will identify constitutionally excessive awards- of puni- tive damages, see Honda Motor Co. v. Oberg, 512 U. S. ___, ___ (1994) (slip op., at 4), we granted certiorari, 513 U. S. ___ (1995).

II Punitive damages may properly be imposed to further a State's legitimate interests in punishing unlawful con- duct and deterring its repetition. Gertz v. Robert Welch, Inc., 418 U. S. 323, 350 (1974); Newport v. Fact Con- certs, Inc., 453 U. S. 247, 266-267 (1981); Haslip, 499 U. S., at 22. In our federal system, States necessarily have considerable flexibility in determining the level of punitive damages that they will allow in different classes of cases and in any particular case. Most States that authorize exemplary damages afford the jury similar latitude, requiring only that the damages awarded be reasonably necessary to vindicate the State's legitimate interests in punishment and deterrence. See TXO, 509 U. S., at 456; Haslip, 499 U. S., at 21, 22. Only when an award can fairly be categorized as -grossly excessive- in relation to these interests does it enter the zone of arbitrariness that violates the Due Process Clause of the Fourteenth Amendment. Cf. TXO, 509 U. S., at 456. For that reason, the federal exces- siveness inquiry appropriately begins with an identifica- tion of the state interests that a punitive award is designed to serve. We therefore focus our attention first on the scope of Alabama's legitimate interests in punishing BMW and deterring it from future misconduct.

No one doubts that a State may protect its citizens by prohibiting deceptive trade practices and by requiring automobile distributors to disclose presale repairs that affect the value of a new car. But the States need not, and in fact do not, provide such protection in a uniform manner. Some States rely on the judicial process to formulate and enforce an appropriate disclosure require- ment by applying principles of contract and tort law. Other States have enacted various forms of legislation that define the disclosure obligations of automobile manufacturers, distributors, and dealers. The result is a patchwork of rules representing the diverse policy judgments of lawmakers in 50 States. ***

We think it follows from these principles of state sov- ereignty and comity that a State may not impose eco- nomic sanctions on violators of its laws with the intent of changing the tortfeasors' lawful conduct in other States. Before this Court Dr. Gore argued that the large punitive damages award was necessary to induce BMW to change the nationwide policy that it adopted in 1983. But by attempting to alter BMW's nationwide policy, Alabama would be infringing on the policy choices of other States. To avoid such encroachment, the eco- nomic penalties that a State such as Alabama inflicts on those who transgress its laws, whether the penalties take the form of legislatively authorized fines or judi- cially imposed punitive damages, must be supported by the State's interest in protecting its own consumers and its own economy. Alabama may insist that BMW adhere to a particular disclosure policy in that State. Alabama does not have the power, however, to punish BMW for conduct that was lawful where it occurred and that had no impact on Alabama or its residents. Nor may Ala- bama impose sanctions on BMW in order to deter con- duct that is lawful in other jurisdictions. ***

When the scope of the interest in punishment and deterrence that an Alabama court may appropriately consider is properly limited, it is apparent-for reasons that we shall now address-that this award is grossly excessive.

III Elementary notions of fairness enshrined in our consti- tutional jurisprudence dictate that a person receive fair notice not only of the conduct that will subject him to punishment but also of the severity of the penalty that a State may impose. Three guideposts, each of which indicates that BMW did not receive adequate notice of the magnitude of the sanction that Alabama might impose for adhering to the nondisclosure policy adopted in 1983, lead us to the conclusion that the $2 million award against BMW is grossly excessive: the degree of reprehensibility of the nondisclosure; the disparity be- tween the harm or potential harm suffered by Dr. Gore and his punitive damages award; and the difference between this remedy and the civil penalties authorized or imposed in comparable cases. We discuss these considerations in turn.

Degree of Reprehensibility-- Perhaps the most important indicium of the reason- ableness of a punitive damages award is the degree of reprehensibility of the defendant's conduct. *** In this case, none of the aggravating factors associated with particularly reprehensible conduct is present. The harm BMW inflicted on Dr. Gore was purely economic in nature. The presale refinishing of the car had no effect on its performance or safety features, or even its appearance for at least nine months after his purchase. BMW's conduct evinced no indifference to or reckless disregard for the health and safety of others. To be sure, infliction of economic injury, especially when done intentionally through affirmative acts of misconduct, id., at 453, or when the target is financially vulnerable, can warrant a substantial penalty. But this observation does not convert all acts that cause economic harm into torts that are sufficiently reprehensible to justify a significant sanction in addition to compensatory damages.

Dr. Gore contends that BMW's conduct was particu- larly reprehensible because nondisclosure of the repairs to his car formed part of a nationwide pattern of torti- ous conduct. *** Because this case exhibits none of the circumstances or- dinarily associated with egregiously improper conduct, we are persuaded that BMW's conduct was not suffi- ciently reprehensible to warrant imposition of a $2 mil- lion exemplary damages award.

Ratio-- The second and perhaps most commonly cited indicium of an unreasonable or excessive punitive damages award is its ratio to the actual harm inflicted on the plaintiff. See TXO, 509 U. S., at 459; Haslip, 499 U. S., at 23. The principle that exemplary damages must bear a -reasonable relationship- to compensatory damages has a long pedigree. Scholars have identified a number of early English statutes authorizing the award of mul- tiple damages for particular wrongs. Some 65 different enactments during the period between 1275 and 1753 provided for double, treble, or quadruple damages. Our decisions in both Haslip and TXO endorsed the proposition that a comparison between the compensatory award and the punitive award is significant. In Haslip we concluded that even though a punitive damages award of -more than 4 times the amount of compensatory damages,- might be -close to the line,- it did not -cross the line into the area of constitutional impropriety.- Haslip, 499 U. S., at 23-24. TXO, follow- ing dicta in Haslip, refined this analysis by confirming that the proper inquiry is -`whether there is a reason- able relationship between the punitive damages award and the harm likely to result from the defendant's con- duct as well as the harm that actually has occurred.'- TXO, 509 U. S., at 460 (emphasis in original), quoting Haslip, 499 U. S., at 21. Thus, in upholding the $10 million award in TXO, we relied on the difference be- tween that figure and the harm to the victim that would have ensued if the tortious plan had succeeded. That difference suggested that the relevant ratio was not more than 10 to 1. The $2 million in punitive damages awarded to Dr. Gore by the Alabama Supreme Court is 500 times the amount of his actual harm as determined by the jury. Moreover, there is no suggestion that Dr. Gore or any other BMW purchaser was threatened with any addi- tional potential harm by BMW's nondisclosure policy. The disparity in this case is thus dramatically greater than those considered in Haslip and TXO. ***

Sanctions for Comparable Misconduct-- Comparing the punitive damages award and the civil or criminal penalties that could be imposed for compara- ble misconduct provides a third indicium of excessive- ness. *** The maximum civil penalty authorized by the Alabama Legislature for a violation of its Deceptive Trade Prac- tices Act is $2,000; other States authorize more se- vere sanctions, with the maxima ranging from $5,000 to $10,000. Significantly, some statutes draw a distinc- tion between first offenders and recidivists; thus, in New York the penalty is $50 for a first offense and $250 for subsequent offenses. None of these statutes would provide an out-of-state distributor with fair notice that the first violation-or, indeed the first 14 viola- tions-of its provisions might subject an offender to a multimillion dollar penalty. Moreover, at the time BMW's policy was first challenged, there does not ap- pear to have been any judicial decision in Alabama or elsewhere indicating that application of that policy might give rise to such severe punishment. The sanction imposed in this case cannot be justified on the ground that it was necessary to deter future mis- conduct without considering whether less drastic reme- dies could be expected to achieve that goal. The fact that a multimillion dollar penalty prompted a change in policy sheds no light on the question whether a lesser deterrent would have adequately protected the interests of Alabama consumers. In the absence of a history of noncompliance with known statutory requirements, there is no basis for assuming that a more modest sanction would not have been sufficient to motivate full compli- ance with the disclosure requirement imposed by the Alabama Supreme Court in this case.

IV We assume, as the juries in this case and in the Yates case found, that the undisclosed damage to the new BMW's affected their actual value. Notwithstanding the evidence adduced by BMW in an effort to prove that the repainted cars conformed to the same quality standards as its other cars, we also assume that it knew, or should have known, that as time passed the repainted cars would lose their attractive appearance more rapidly than other BMW's. Moreover, we of course accept the Alabama courts' view that the state interest in protect- ing its citizens from deceptive trade practices justifies a sanction in addition to the recovery of compensatory damages. We cannot, however, accept the conclusion of the Alabama Supreme Court that BMW's conduct was sufficiently egregious to justify a punitive sanction that is tantamount to a severe criminal penalty. The fact that BMW is a large corporation rather than an impecunious individual does not diminish its entitle- ment to fair notice of the demands that the several States impose on the conduct of its business. Indeed, its status as an active participant in the national econ- omy implicates the federal interest in preventing indi- vidual States from imposing undue burdens on inter- state commerce. While each State has ample power to protect its own consumers, none may use the punitive damages deterrent as a means of imposing its regula- tory policies on the entire Nation. As in Haslip, we are not prepared to draw a bright line marking the limits of a constitutionally acceptable punitive damages award. Unlike that case, however, we are fully convinced that the grossly excessive award imposed in this case transcends the constitutional lim- it. Whether the appropriate remedy requires a new trial or merely an independent determination by the Alabama Supreme Court of the award necessary to vindicate the economic interests of Alabama consumers is a matter that should be addressed by the state court in the first instance. The judgment is reversed, and the case is remanded for further proceedings not inconsistent with this opin- ion. It is so ordered.

Justice Breyer, with whom Justice O'Connor and Justice Souter join, concurring.

*** Members of this Court have gener- ally thought, however, that if -fair procedures were followed, a judgment that is a product of that process is entitled to a strong presumption of validity.- Id., at 457. See also Pacific Mut. Life Ins. Co. v. Haslip, 499 U. S. 1, 40-42 (1991) (Kennedy, J., concurring in judgment). And the Court also has found that punitive damages procedures very similar to those followed here were not, by themselves, fundamentally unfair. Id., at 15-24. Thus, I believe it important to explain why this presumption of validity is overcome in this instance.

The reason flows from the Court's emphasis in Haslip upon the constitutional importance of legal standards that provide -reasonable constraints- within which -discretion is exercised,- that assure -meaningful and adequate review by the trial court whenever a jury has fixed the punitive damages,- and permit -appellate review [that] makes certain that the punitive damages are reasonable in their amount and rational in light of their purpose to punish what has occurred and to deter its repetition.- Id., at 20-21. See also id., at 18 (-[U]nlimited jury discretion-or unlimited judicial discretion for that matter-in the fixing of punitive damages may invite extreme results that jar one's constitutional sensibilities-).

This constitutional concern, itself harkening back to the Magna Carta, arises out of the basic unfairness of depriving citizens of life, liberty, or property, through the application, not of law and legal processes, but of arbitrary coercion. ***

The standards the Alabama courts applied here are vague and open-ended to the point where they risk arbitrary results. In my view, although the vagueness of those standards does not, by itself, violate due process, see Haslip, supra, it does invite the kind of scrutiny the Court has given the particular verdict before us. See id., at 18 (-[C]oncerns of . . . adequate guidance from the court when the case is tried to a jury properly enter into the constitutional calculus-); TXO, supra, at 475 (-[I]t cannot be denied that the lack of clear guidance heightens the risk that arbitrariness, passion, or bias will replace dispassionate deliberation as the basis for the jury's verdict-) (O'Connor, J., dissenting). This is because the stan- dards, as the Alabama Supreme Court authoritatively interpreted them here, provided no significant con- straints or protection against arbitrary results.

First, the Alabama statute that permits punitive damages does not itself contain a standard that readily distinguishes between conduct warranting very small, and conduct warranting very large, punitive damages awards.***

Second, the Alabama courts, in this case, have applied the -factors- intended to constrain punitive damages awards, in a way that belies that purpose. Green Oil Co. v. Hornsby, 539 So. 2d 218 (Ala. 1989), sets forth seven factors that appellate courts use to determine whether or not a jury award was -grossly excessive- and which, in principle, might make up for the lack of significant constraint in the statute. But, as the Alabama courts have authoritatively interpreted them, and as their application in this case illustrates, they impose little actual constraint. ***

Third, the state courts neither referred to, nor made any effort to find, nor enunciated any other standard, that either directly, or indirectly as background, might have supplied the constraining legal force that the statute and Green Oil standards (as interpreted here) lack.*** The record before us, however, contains nothing suggesting that the Alabama Supreme Court, when determining the allowable award, applied any -economic- theory that might explain the $2 million recovery.***

Fourth, I cannot find any community understanding or historic practice that this award might exemplify and which, therefore, would provide background standards constraining arbitrary behavior and excessive awards. A punitive damages award of $2 million for intentional misrepresentation causing $56,000 of harm is extraordi- nary by historical standards, and, as far as I am aware, finds no analogue until relatively recent times. Amici for Dr. Gore attempt to show that this is not true, pointing to various historical cases which, according to their calculations, represented roughly equivalent punitive awards for similarly culpable conduct. See Brief for James D. A. Boyle et al. as Amici Curiae 4-5 (hereinafter Legal Historians' Brief). Among others, they cite Wilkes v. Wood, Lofft 1, 98 Eng. Rep. 489 (C. P. 1763) (-1,000 said to be equivalent of $1.5 million, for warrantless search of papers); Huckle v. Money, 2 Wills. 205, 95 Eng. Rep. 768 (K. B. 1763) (-300, said to be $450,000, for 6-hour false imprisonment); Hewlett v. Cruchley, 5 Taunt. 277, 128 Eng. Rep. 696 (C. P. 1813) (-2,000, said to be $680,000, for malicious prosection); Merest v. Harvey, 5 Taunt. 442, 128 Eng. Rep. 761 (C. P. 1814) (-500, said to be $165,000, for poaching). But amici apparently base their conversions on a mathemati- cal assumption, namely that inflation has progressed at a constant 3% rate of inflation. See Legal Historians' Brief 4. In fact, consistent, cumulative inflation is a modern phenomenon. See McCusker, How Much Is That in Real Money? A Historical Price Index for Use as a Deflator of Money Values in the Economy of the United States, 101 Proceedings of American Antiquarian Society 297, 310, 323-332 (1992). Estimates based on historical rates of valuation, while highly approximate, suggest that the ancient extraordinary awards are small com- pared to the $2 million here at issue, or other modern punitive damages figures. See Appendix to this opinion, infra, at 13-14 (suggesting that the modern equivalent of the awards in the above cases is something like $150,000, $45,000, $100,000, and $25,000 respectively). And, as the majority opinion makes clear, the record contains nothing to suggest that the extraordinary size of the award in this case is explained by the extraordi- nary wrongfulness of the defendant's behavior, measured by historical or community standards, rather than arbitrariness or caprice.

Fifth, there are no other legislative enactments here that classify awards and impose quantitative limits that would significantly cabin the fairly unbounded discretion created by the absence of constraining legal standards. Cf., e.g., Tex. Civ. Prac. & Rem. Code Ann. 41.008 (Supp. 1996) (punitive damages generally limited to greater of double damages, or $200,000, except cap does not apply to suits arising from certain serious criminal acts enumerated in the statute); Conn. Gen. Stat. 52-240b (1995) (punitive damages may not exceed double compensatory damages in product liability cases); Fla. Stat. 768.73(1) (Supp. 1993) (punitive damages in certain actions limited to treble compensatory damages); Ga. Code. Ann. 51-12-5.1(g) (Supp. 1995) ($250,000 cap in certain actions).

The upshot is that the rules that purport to channel discretion in this kind of case, here did not do so in fact. That means that the award in this case was both (a) the product of a system of standards that did not significantly constrain a court's, and hence a jury's, discretion in making that award; and (b) was grossly excessive in light of the State's legitimate punitive damages objectives.

Justice Scalia, with whom Justice Thomas joins, dissenting.

Today we see the latest manifestation of this Court's recent and increasingly insistent -concern about punitive damages that `run wild.'- Pacific Mut. Life Ins. Co. v. Haslip, 499 U. S. 1, 18 (1991). Since the Constitution does not make that concern any of our business, the Court's activities in this area are an unjustified incur- sion into the province of state governments.

In earlier cases that were the prelude to this decision, I set forth my view that a state trial procedure that commits the decision whether to impose punitive damages, and the amount, to the discretion of the jury, subject to some judicial review for -reasonableness,- furnishes a defendant with all the process that is -due.- *** I do not regard the Fourteenth Amend- ment's Due Process Clause as a secret repository of substantive guarantees against -unfairness--neither the unfairness of an excessive civil compensatory award, nor the unfairness of an -unreasonable- punitive award. What the Fourteenth Amendment's procedural guarantee assures is an opportunity to contest the reasonableness of a damages judgment in state court; but there is no federal guarantee a damages award actually be reason- able. See TXO, supra, at 471 (Scalia, J., concurring in judgment). ***

The Constitution provides no warrant for federalizing yet another aspect of our Nation's legal culture (no matter how much in need of correction it may be), and the application of the Court's new rule of constitutional law is constrained by no principle other than the Justices' subjective assessment of the -reasonableness- of the award in relation to the conduct for which it was assessed.

Because today's judgment represents the first instance of this Court's invalidation of a state-court punitive assessment as simply unreasonably large, I think it a proper occasion to discuss these points at some length.

I The most significant aspects of today's decision-the identification of a -substantive due process- right against a -grossly excessive- award, and the concomitant assumption of ultimate authority to decide anew a matter of -reasonableness- resolved in lower court proceedings-are of course not new. Haslip and TXO revived the notion, moribund since its appearance in the first years of this century, that the measure of civil punishment poses a question of constitutional dimension to be answered by this Court. Neither of those cases, however, nor any of the precedents upon which they relied, actually took the step of declaring a punitive award unconstitutional simply because it was -too big.-

At the time of adoption of the Fourteenth Amendment, it was well understood that punitive damages represent the assessment by the jury, as the voice of the commun- ity, of the measure of punishment the defendant de- served. See, e.g., Barry v. Edmunds, 116 U. S. 550, 565 (1886); Missouri Pacific R. Co. v. Humes, 115 U. S. 512, 521 (1885); Day v. Woodworth, 13 How. 363, 371 (1852). See generally Haslip, supra, at 25-27 (Scalia, J., concurring in judgment). Today's decision, though dressed up as a legal opinion, is really no more than a disagreement with the community's sense of indignation or outrage expressed in the punitive award of the Alabama jury, as reduced by the State Supreme Court. It reflects not merely, as the concurrence candidly acknowledges, -a judgment about a matter of degree,- ante, at 12; but a judgment about the appropriate degree of indignation or outrage, which is hardly an analytical determination.

There is no precedential warrant for giving our judgment priority over the judgment of state courts and juries on this matter. ***

II One might understand the Court's eagerness to enter this field, rather than leave it with the state legisla- tures, if it had something useful to say. In fact, however, its opinion provides virtually no guidance to legislatures, and to state and federal courts, as to what a -constitutionally proper- level of punitive damages might be. ***

As Part II of the Court's opinion unfolds, it turns out to be directed, not to the question -How much punishment is too much?- but rather to the question -Which acts can be punished?- -Alabama does not have the power,- the Court says, -to punish BMW for conduct that was lawful where it occurred and that had no impact on Alabama or its residents.- Ante, at 12. That may be true, though only in the narrow sense that a person cannot be held liable to be punished on the basis of a lawful act. But if a person has been held subject to punishment because he committed an unlaw- ful act, the degree of his punishment assuredly can be increased on the basis of any other conduct of his that displays his wickedness, unlawful or not. Criminal sentences can be computed, we have said, on the basis of -information concerning every aspect of a defendant's life,- Williams v. New York, 337 U. S. 241, 250-252 (1949). *** Why could the Supreme Court of Alabama not consider lawful (but disreputable) conduct, both inside and outside Alabama, for the purpose of assessing just how bad an actor BMW was? ***

III In Part III of its opinion, the Court identifies -[t]hree guideposts- that lead it to the conclusion that the award in this case is excessive: degree of reprehensibility, ratio between punitive award and plaintiff's actual harm, and legislative sanctions provided for comparable misconduct. Ante, at 14-25. The legal significance of these -guide- posts- is nowhere explored, but their necessary effect is to establish federal standards governing the hitherto exclusively state law of damages. Apparently (though it is by no means clear) all three federal -guideposts- can be overridden if -necessary to deter future misconduct,- ante, at 25-a loophole that will encourage state review- ing courts to uphold awards as necessary for the -adequat[e] protect[ion]- of state consumers, ibid. By effectively requiring state reviewing courts to concoct rationalizations-whether within the -guideposts- or through the loophole-to justify the intuitive punitive reactions of state juries, the Court accords neither category of institution the respect it deserves.

Of course it will not be easy for the States to comply with this new federal law of damages, no matter how willing they are to do so. In truth, the -guideposts- mark a road to nowhere; they provide no real guidance at all. As to -degree of reprehensibility- of the defendant's conduct, we learn that -`nonviolent crimes are less serious than crimes marked by violence or the threat of violence,'- ante, at 15 (quoting Solem v. Helm, 463 U. S. 277, 292-293 (1983)), and that -`trickery and deceit'- are -more reprehensible than negligence,- ante, at 15. As to the ratio of punitive to compensatory damages, we are told that a -`general concer[n] of reasonableness . . . enter[s] into the constitutional calculus,'- ante, at 23 (quoting TXO, supra, at 458)-though even -a breathtaking 500 to 1- will not necessarily do anything more than -`raise a suspicious judicial eyebrow,'- ante, at 23 (quoting TXO, supra, at 481 (O'Connor, J., dissenting), an opinion which, when confronted with that -breathtaking- ratio, approved it). And as to legislative sanctions provided for comparable misconduct, they should be accorded -`substantial deference,'- ibid. (quoting Browning-Ferris Industries of Vt., Inc. v. Kelco Disposal, Inc., 492 U. S. 257, 301 (O'Connor, J., concurring in part and dissenting in part)). One expects the Court to conclude: -To thine own self be true.-

These criss-crossing platitudes yield no real answers in no real cases. And it must be noted that the Court nowhere says that these three -guideposts- are the only guideposts; indeed, it makes very clear that they are not-explaining away the earlier opinions that do not really follow these -guideposts- on the basis of addi- tional factors, thereby -reiterat[ing] our rejection of a categorical approach.- Ante, at 23. In other words, even these utter platitudes, if they should ever happen to produce an answer, may be overridden by other un- named considerations. The Court has constructed a framework that does not genuinely constrain, that does not inform state legislatures and lower courts-that does nothing at all except confer an artificial air of doctrinal analysis upon its essentially ad hoc determination that this particular award of punitive damages was not -fair.-

The Court distinguishes today's result from Haslip and TXO partly on the ground that -the record in this case discloses no deliberate false statements, acts of affirma- tive misconduct, or concealment of evidence of improper motive, such as were present in Haslip and TXO.- Ante, at 19. This seemingly rejects the findings necessarily made by the jury-that petitioner had committed a fraud that was -gross, oppressive, or malicious,- Ala. Code 6-11-20(b)(1) (1996). Perhaps that rejection is inten- tional; the Court does not say.

The relationship between judicial application of the new -guideposts- and jury findings poses a real problem for the Court, since as a matter of logic there is no more justification for ignoring the jury's determination as to how reprehensible petitioner's conduct was (i.e., how much it deserves to be punished), than there is for ignoring its determination that it was reprehensible at all (i.e., that the wrong was willful and punitive damag- es are therefore recoverable). That the issue has been framed in terms of a constitutional right against unrea- sonably excessive awards should not obscure the fact that the logical and necessary consequence of the Court's approach is the recognition of a constitutional right against unreasonably imposed awards as well. The elevation of -fairness- in punishment to a principle of -substantive due process- means that every punitive award unreasonably imposed is unconstitutional; such an award is by definition excessive, since it attaches a penalty to conduct undeserving of punishment. Indeed, if the Court is correct, it must be that every claim that a state jury's award of compensatory damages is -unrea- sonable- (because not supported by the evidence) amounts to an assertion of constitutional injury. See TXO, supra, at 471 (Scalia, J. concurring in judgment). And the same would be true for determinations of liability. By today's logic, every dispute as to eviden- tiary sufficiency in a state civil suit poses a question of constitutional moment, subject to review in this Court. That is a stupefying proposition. For the foregoing reasons, I respectfully dissent.

Justice Ginsburg, with whom The Chief Justice joins, dissenting.

The Court, I am convinced, unnecessarily and unwisely ventures into territory traditionally within the States' domain, and does so in the face of reform measures recently adopted or currently under consideration in legislative arenas. The Alabama Supreme Court, in this case, endeavored to follow this Court's prior instructions; and, more recently, Alabama's highest court has in- stalled further controls on awards of punitive damages (see infra, at 8, n. 6). I would therefore leave the state court's judgment undisturbed, and resist unnecessary intrusion into an area dominantly of state concern.

I The respect due the Alabama Supreme Court requires that we strip from this case a false issue: no impermissi- ble -extraterritoriality- infects the judgment before us; the excessiveness of the award is the sole issue genuine- ly presented.***

B The Court finds Alabama's $2 million award not sim- ply excessive, but grossly so, and therefore unconsti- tutional. The decision leads us further into territory traditionally within the States' domain, and commits the Court, now and again, to correct -misapplication of a properly stated rule of law.- But cf. S. Ct. Rule 10 (-A petition for a writ of certiorari is rarely granted when the asserted error consists of erroneous factual findings or the misapplication of a properly stated rule of law.-). The Court is not well equipped for this mis- sion. Tellingly, the Court repeats that it brings to the task no -mathematical formula,- ante, at 22, no -cate- gorical approach,- ante, at 23, no -bright line,- ante, at 26. It has only a vague concept of substantive due process, a -raised eyebrow- test, see ante, at 23, as its ultimate guide.

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