BMW of North America, Inc. v. Gore

In 1990, Gore (plaintiff) purchased a black BMW car from an Alabama franchise of BMW of North America (defendant). After driving the car for nine months with no problems, Gore took the car into an independent detailer to embellish the car’s paint. The detailer noticed that the car appeared to have been repainted. Feeling that he had been cheated, Gore brought suit in Alabama state court against BMW of North America on the grounds that its failure to disclose that the car was repainted prior to purchase constituted suppression of a material fact. He sought $500,000 in compensatory and punitive damages and costs. At trial, BMW acknowledged that it adopted a nationwide policy in 1983 concerning cars damaged in the course of manufacture or transportation. If the cost of repairing the car was more than three percent of the car’s suggested retail price, the car was repaired and sold as used. However, if the cost of repair was less than three percent of the car’s retail value, the car was repaired and sold as new without advising the purchaser that the car was ever damaged. Since the cost of repainting Gore’s car was only 1.5 percent of its retail value, it was repainted and sold to him as new. The jury awarded Gore $4,000 in compensatory damages based on its finding that a repaired car was worth less than a new car and assessed $4 million in punitive damages because it found that BMW’s nondisclosure policy constituted “gross, oppressive, or malicious fraud.” On appeal, the Alabama Supreme Court rejected BMW’s assertion that the punitive damages violated its due process rights, but reduced the award of punitive damages to $2 million. The United States Supreme Court granted certiorari.