repair did not exceed three percent ofrnthe car’s suggested retail price. Whenrnthe plaintiff discovered his car had beenrnrepainted, he sued BMW. The juryrnreturned a verdict finding BMW liablernfor economic (out of pocket) damagesrnof $4,000, Additionally, the jury heldrnBMW liable for four million dollars inrnpunitive damages because it foundrnBMW’s policy of selling a repainted carrnas new to be “gross, oppressive or malicious”rnfraud. The Alabama SupremernCourt reduced the punitive damagernaward, holding that “a constitutionallyrnreasonable punitive damages award” inrnthe case was two million dollars.rnThe majority opinion for the U.S.rnSupreme Court, written by Justice JohnrnPaul Stevens, conceded that “punitiverndamages may properly be imposed tornfurther a state’s legitimate interestsrnin punishing unlawful conduct and deterringrnits repetition.” According tornStevens, “States necessarily have considerablernflexibility in determining the levelrnof punitive damages that they will allow”rnin any particular case. However, Stevensrnnoted that when an award is “grossly excessive”rnin relation to the state’s interestsrnit enters the “zone of arbitrariness thatrnviolates the Due Process Clause of thernFourteenth Amendment.” Stevens concludedrnthat while the court is “not preparedrnto draw a bright line marking thernlimits of a constitutionally acceptablernpunitive damages award,” it was fullyrnconvinced that the “grossly excessivernaward” in the BMW case “transcends thernconstitutional limit.”rnJustice Antonin Scalia, in a dissentrnjoined by Justice Clarence Thomas,rnpointed out that at the “time of adoptionrnof the Fourteenth Amendment,” itrnwas well understood that punitive damagesrnrepresented “the assessment by thernjury, as the voice of the community, ofrnthe measure of punishment the defendantrndeserved.” Scalia said that the majority’srndecision is “really no more than arndisagreement with the community’srnsense of indignation or outrage expressedrnin the punitive damage award” of the juryrnas reduced by the Alabama SupremernCourt. He also noted that nothing inrnthe due process clause gives the U.S.rnSupreme Court “priority over the judgmentrnof state courts and juries” with regardrnto punitive damages, and concludedrnthat the “Constitution provides nornwarrant for federalizing yet another aspectrnof our Nation’s legal culture (nornmatter how much in need of correctionrnit may be), and the application of thernCourt’s new rule of constitutional law isrnconstrained by no principle other thanrnthe Justices’ subjective assessment of thern’reasonableness’ of the award in relationrnto the conduct for which it was assessed.”rnJustice Ruth Bader Ginsburg, in a separaterndissenting opinion joined in byrnChief Justice William Rehnquist, wroternthat the majority “unnecessarily and unwiselyrnventures into territory traditionallyrnwithin the States’ domain, and does so inrnthe face of reform measures recentlyrnadopted or currently under considerationrnin legislative arenas.” Cinsburgrnincluded an appendix to her opinion listingrn14 states that have capped punitiverndamage awards. Additionally, at leastrnthree other state legislatures were consideringrncaps on punitive damages at therntime of the BMW decision. Ohio’s wasrnone of those reform proposals then underrnconsideration.rnThe Ohio legislature’s broad tort reformrnproposal includes a wide array ofrnchanges in the personal injury lawsuitrnsystem, including provisions aimed atrnlimiting the number of frivolous lawsuitsrnand placing caps on noneconomic (commonlyrnknown as “pain and suffering”)rnas well as punitive damages. Since itsrnintroduction in early 1995 by Ohio RepresentativernPat Tiberi, a Republican fromrnColumbus, the bill has been widely debatedrnin the legislature and the media.rnWhile the legislative process is neverrnprettv, it does permit various interestedrnparties to present their viewpoints. ThernOhio legislature heard from trial attorneysrnand former personal injurv suitrnplaintiffs advocating status quo in therntort system. They claimed there was nornlawsuit crisis and that juries should determinernthe amount of compensationrnthat injured plaintiffs receive. On thernother side, the legislature heard fromrnsmall business owners, farmers, professionals,rnlike accountants, physicians, andrndentists, and many others who testifiedrnhow the threat of lawsuit abuse and hugernjury awards affect their businesses. Thernlegislature also heard from representativesrnof the Ohio Bar Association andrnstate judges giving their input on howrnthe proposed changes would affect therncourts and the parties to personal injuryrnlawsuits. Some polls showed that asrnmany as 80 percent of Ohioans thoughtrnthat the personal injury lawsuit systemrnneeded reform.rnThe bill as introduced capped punitiverndamages to an amount not to exceedrnthe amount to economic damages. Economicrndamages, commonly known asrn”out of pocket” damages, like lost wagesrnand medical bills, were not in any wayrnlimited in the proposed legislation.rnPunitive damages are meant to punishrnthe defendant and, generall}’, are awardedrnonly when the defendant’s conduct isrnfound to be willful or wanton. By cappingrnpunitive damages to the amount ofrneconomic damages, the Ohio legislaturernwas attempting to tie the extent of thernpunishment to the actual harm done.rnWhen the bill emerged from the conferencerncommittee (which had the taskrnof ironing out the differences betweenrnthe House and Senate versions), it limitedrnpunitive damages to the lesser ofrnthree times the amount of compensatoryrndamages, or $100,000, when the defendantrnis an individual or employer with 25rnor fewer employees. For larger employersrnthe cap is three times compensatoryrndamages, or $250,000, whichever isrngreater. When Voinovich signed the billrninto law, the elected officials of Ohio,rnwho are accountable to the citizenry, hadrnfinally passed significant tort reform.rnThe importance of maintaining staternsovereignty over such matters was recognizedrnby our Founders. As James Madisonrnwrote in Federalist 51, “In the compoundrnrepublic of America, the powerrnsurrendered by the people, is first dividedrnbetween two distinct governments,rnand then the portion allotted to each,rnsubdivided among distinct and separaterndepartments. Hence a double securityrnarises to the rights of the people.” Botlirnof those features—respect for the divisionrnof power between state and federalrngovernments and the separation of powersrn—were disregarded in the BMW case.rnThe intended function of federal courtsrnis to apply the law as it comes to themrnfrom the legislature. The U.S. SupremernCourt disagreed with the state of punitiverndamage law in Alabama, so it followedrnits own agenda for punitive damages.rnIn doing so, the Supreme Courtrndisregarded the separation of powers byrntaking the issue from the legislativernbranch and establishing itself, an eliterngroup of unelected judges, as king in thernrealm of punitive damages. Furthermore,rnthe Court disregarded the notionrnof limited federal government by decidingrnthe issue at the federal level despiternthe fact that state legislatures, likernOhio’s, were establishing their own rulesrnwith regard to personal injury lavysuits,rngenerally, and punitive damages, specifi-rnMAY 1997/47rnrnrn