Ultimate Lawsuit Machine: Justices To Hear Bmw Case

$4 MILLION PAINT JOB: A jury awarded huge punitive damages to a doctor with a nice car that had received an undisclosed repair. The case has become celebrated in Congress. Now the Supreme Court is in the driver's seat.

WASHINGTON - If it hadn't involved a wealthy doctor and a $40,000 BMW, perhaps the $4 million jury verdict over an undisclosed touch-up job would not have caused such a stir.

But tomorrow, Ira Gore Jr., a cancer doctor in Birmingham, Ala., and his shiny, black BMW 535i will be the focus of attention at the Supreme Court.

The issue before the court is whether large jury awards for punitive damages have become so outrageous that they violate the Constitution's guarantee of due process of law. It also is an issue in Congress, where this case is often mentioned as justification for putting a cap on such damages.

Gore, a graduate of Harvard University and Duke University Medical School, is unusually particular about how his automobiles look.

Going for a "snazzier" look

So, as he had done before with other cars, Gore took his new BMW to Leonard Slick, owner of an automobile detailing shop called "Slick Finish," because, said Gore, he "wanted it to look shined up and look, I guess, snazzier than it normally would appear."

When Gore returned to pick up the car, Slick told him the car had been partially repainted before Gore bought it. Under the bright lights of the detail shop, Gore could see tape marks left behind from the paint job. Later he learned that BMW had repainted the hood, trunk and roof because of damage from acid rain during shipping from Germany.

Horrified, Gore called not his dealer but his lawyer, who filed suit in 1992 against the dealership and BMW for fraud for failing to disclose the repair. The dealer, who also was not informed by BMW that the car was damaged goods, testified that a repainted car would normally sell for $4,000 less. And there was also testimony from BMW that 983 other damaged BMWs had been sold across the United States.

Gore's lawyer, A.W. Bolt, appealed to the jury to teach BMW a lesson.

"They have taken advantage of Dr. Gore," Bolt said in closing arguments.

If roughly 1,000 such cars had been sold at full price despite losing $4,000 of their value, Bolt told the jurors, BMW had defrauded Americans to the tune of $4 million.

"Four million dollars in profits that they have made were wrongfully taken from people," Bolt said. "That's wrong, ladies and gentlemen. They ought not be permitted to keep that. You ought to do something about it."

They did. In addition to $4,000 in compensatory damages, they gave him $4 million in punitive damages.

Disproportionate punishment?

Though the Alabama Supreme Court later reduced the punitive damages to $2 million, BMW, backed by much of the U.S. business community, has asked the U.S. Supreme Court to intercede.

Even $2 million is excessive and violates due process, given the lack of proportion to Gore's actual damages of $4,000, the company says.

"Such disproportionate punishment cannot be justified by reference to the nature of (BMW's) conduct," the company said in its brief to the court. "On the scale of reprehensibility, BMW's conduct in this case barely registers."

Moreover, the company said, most states have laws that specifically allow autombobile dealers not to disclose repairs if their cost is not more than from 3 percent to 6 percent of the car's retail value. BMW's policy was not to disclose repairs under 3 percent. Gore's car cost $600 to fix, or 1.5 percent.

Legal experts think the justices may be more interested in another of BMW's arguments: It says it is a violation of several constitutional provisions for an Alabama jury to base its award on transgressions in other states. Only about a dozen of the 983 damaged cars were sold in Alabama.