Cooper Industries Inc. v. Leatherman Tool Group, Inc.,

A manufacturer of a multi-function hand tool sued a competitor for, among other things, false advertising. The jury awarded $50,000 in compensatory damages and $4.5 million in punitive damages. Rejecting the competitor’s arguments that the punitive damage award was grossly excessive under BMW v. Gore, the district court entered judgment. The Ninth Circuit Court of Appeals affirmed finding the district court’s refusal to reduce the award did not constitute an abuse of discretion. The Supreme Court held that a Court of Appeals should apply a de novo standard when reviewing a district court’s determination of the constitutionality of a punitive damage award.

The court reviewed the Gore factors to consider when determining whether a punitive damage award is grossly disproportionate and therefore violative of the Fourteenth Amendment due process clause. These factors are: (1) the degree of the defendant’s reprehensibility or culpability; (2) the relationship between the penalty and the harm to the victim, and; (3) sanctions imposed in other cases for comparable misconduct.

In separate concurrences Justices Scalia and Thomas both noted they do not believe excessive punitive damage awards violate the due process clause. Justice Thomas noted that he would overrule the BMW v. Gore case while Justice Scalia agreed with the review of punitive damages on a de novo standard.