High Court to Weigh Limits on Damages

The U.S. Supreme Court will use a $145-million award assessed against State Farm Mutual Automobile Insurance Co. to consider putting new limits on punitive damages.

The case gives businesses a chance to extend a 1996 Supreme Court decision that struck down a $2-million punitive damage award concerning a BMW paint flaw. That case marked the first--and only--time the high court has declared an award to be so large that it violates the U.S. Constitution.

The State Farm award stems from its refusal to pay $50,000 to settle claims against policyholder Curtis Campbell, who was found responsible for a 1981 accident that killed one man and disabled another.

The $50,000 equaled Campbell’s policy limit.