Riley v. Volkswagen Group of America

Under BMW v. Gore, three guidelines establish “whether punitive damage awards comply with due process: (1) the reprehensibility of defendant’s conduct; (2) the disparity between . . . harm suffered . . . [and] punitive damages; and (3) the difference between the punitive damages and . . . civil penalties . . . in comparable cases.” BMW v. Gore, 517 U.S. 559, 575 (1996).

Appellants opted out of class action suit against Volkswagen regarding its installation of emissions defeat devices. Appellants brought a personal claim seeking compensatory and punitive damages; subsequently, they appealed the district court’s reduction of the punitive damages awarded. Appellants assigned error to the district court’s calculation of punitive damages as a violation of due process. Under BMW v. Gore, three guidelines establish “whether punitive damage awards comply with due process: (1) the reprehensibility of defendant’s conduct; (2) the disparity between . . . harm suffered . . . [and] punitive damages; and (3) the difference between the punitive damages and . . . civil penalties . . . in comparable cases.” BMW v. Gore, 517 U.S. 559, 575 (1996). The Court reasoned Volkswagen’s deliberate misrepresentation and deceit established a high level of reprehensibility. In analyzing the jury’s calculation of damages, the Court reasoned that Volkswagen’s conduct applied to all Appellants equally; therefore, it concluded the ratio of 8 to 1 (the lowest of several ratios applied by the jury) should be used in calculating the maximum damages allowed for every Appellant. The Court found eight times the compensatory damages was the maximum punitive damages allowable to comport with constitutional due process. The Court vacated and remanded the punitive damages awards to each Appellant with instructions to recalculate based on its determination.