Appendix — State Farm Mutual Automobile Insurance v. Campbell

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DECISION OF THE UTAH SUPREME COURT

DATED APRIL 23, 2004

Supreme Court of Utah.

Inez Preece CAMPBELL and Matthew C. Barneck, Special

Administrator and Personal

Representative of the Estate of Curtis B. Campbell,

Plaintiffs, Appellees, and

: Cross-Appellants,

v.

STATE FARM MUTUAL AUTOMOBILE INSURANCE

COMPANY, Defendant, Appellant, and

Cross-Appellee.

No. 981564

April 23, 2004

On Remand from the United States Supreme Court

NEHRING, Justice:

4 1 Wetakeup this case after remand from the United States

Supreme Court, which held that the imposition of a $145

million punitive damages award against State Farm Mutual

Automobile Insurance Company in favor of State Farm's

insured, Curtis B. Campbell, and his wife, Inez Preece Camp-

bell, was excessive and violated the due process clause of the

Fourteenth Amendment to the Constitution of the United

States. State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S.

408, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003) (Campbell II)

(rev'g 2001 UT 89, 65 P.3d 1134 (Campbell I)). The Supreme

Court directed us to recalculate the punitive damages award

under principles articulated in its decision. We have performed

this task and reduced the jury's award to $9,018,780.75 in

punitive damages, a figure nine times the amount of compensa-

tory and special damages awarded to the Campbells.

— en ee

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I. FACTS AND PROCEDURAL HISTORY’

§ 2 Mr. Campbell was responsible for an automobile

accident that disabled Robert Slusher and killed Todd Ospital.

At the time, Mr. Campbell was insured by State Farm up to

$25,000. State Farm chose not to settle the case. At trial, Mr.

Campbell was found 100 percent responsible and a judgment

was entered against him for $135,000. State Farm refused to

pay this amount, suggesting instead that the Campbells put their

house up for sale to pay off the judgment. Although State Farm

did eventually pay the judgment, the Campbells sued for bad

faith. At trial, the Campbells were permitted to introduce

evidence that State Farm had a comprehensive nationwide

policy of handling certain claims in a like manner.

4 3 The jury awarded the Campbells $2,086.75 in special

damages, $2.6 million in compensatory damages, and $145

million in punitive damages. The trial judge remitted this

amount to $1 million in compensatory damages and $25

million in punitive damages. On appeal, we reinstated the

original jury verdict of $145 million in punitive damages. State

Farm then appealed our decision in Campbell I to the United

States Supreme Court, which reversed and remanded the case

to us, after determining that $145 million violated due process.

4 4 We first address the limitations imposed on and discre-

tion extended to us by the Supreme Court's remand order. We

then turn to our application of the Supreme Court's principles

set forth in Campbell II.

Il. DUTY ON REMAND

4 5 State Farm suggests that our duty in the face of a remand

order demands unwavering fidelity to the letter and spirit of the

mandate. Thurston v. Box Elder County, 892 P.2d 1034, 1038

' A complete recitation of the facts in this case is available in Campbell I,

2001 UT 89 at #¥ 2-12, 65 P.3d 1134. An abbreviated version, applying

only facts deemed relevant by the United States Supreme Court is available

in Campbell II, 538 U.S. at 412-15.

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(Utah 1995).? We agree. State Farm further argues that the

letter and spirit of the mandate erect an impenetrable ceiling on

the punitive damages award of $1,002,086.75, based on a

1-to-1 ratio of punitive damages to compensatory damages.

{6 State Farm makes two arguments in aid of this conten-

tion. First, it invokes what it characterizes as the "mandate

rule" which, it claims, elevates all of the statements in the

Supreme Court's opinion to the status of a holding, thereby

binding us to what would otherwise be properly deemed dicta.

Second, having identified and broadly defined a "mandate

rule," State Farm then turns to the text of Campbell II which

states that "[a]n application of the [relevant] guideposts to the

facts of this case ... likely would justify a punitive damages

award at or near the amount of compensatory damages."

Campbell II, 538 U.S. at 429. State Farm claims that, when

given the dignity required by the mandate rule, this language

limits our punitive damages award to the amount of compensa-

tory damages.

4 7 Weare both sensitive to our responsibility as an inferior

court to honor the Supreme Court's remand order with utmost

fidelity and skeptical of claims that our duties can be reduced

to an enumerated task list imposed by a "mandate rule." We do

not, therefore, interpret the Supreme Court's mandate to be as

restrictive as State Farm claims. Had the letter of the Supreme

Court's mandate included an express punitive damages award,

our responsibilities would be easily discharged. The Supreme

Court declined, however, to fix a substitute award, choosing

instead to entrust to our judgment the calculation of a punitive

award which both achieves the legitimate objectives of punitive

damages and meets the demands of due process. We take

seriously the Supreme Court's direction that "[t]he proper

calculation of punitive damages under the principles we have

discussed should be resolved, in the first instance, by the Utah

courts." Jd.

§ 8 By assigning to us the duty to resolve the issue of

punitive damages by fixing an award, the Supreme Court

2 Although both parties briefed this issue for us, the Supreme Court did not

address it.

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signaled its intention to vest in us some discretion to exercise

our independent judgment to reach a reasonable and propor-

tionate award. To faithfully exercise our discretion, we must

properly identify and apply the Supreme Court's principles

announced in Campbell II. These principles restated and

refined the analytical tools first announced in BMW of North

America, Inc. v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 134

L.Ed.2d 809 (1996). In Gore, the Supreme Court issued an

invitation to the Alabama Supreme Court to undertake on

remand an “independent determination" of an appropriate

punitive damages award consistent with the guideposts erected

by the Supreme Court. Jd. at 586. We understand our duties to

mirror those assigned to the Alabama Supreme Court, supple-

mented by the evolving principles of punitive damages juris-

prudence announced in Campbell II.

{ 9 Itis within this delegated responsibility that the "spirit"

of the Supreme Court's order of remand resides, presenting the

greater challenge to us to honor that mandate. Accordingly, our

view of the limits of our discretion to award punitive damages

relies little on the "mandate rule" or any similar interpretive aid.

Rather, the text of Campbell IT provides us with clear direction.

§ 10 The Supreme Court has long held the view that, except

when they transgress due process guarantees, punitive damages

awards are properly the province of the states. Cooper Indus.,

Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 433, 121

S.Ct. 1678, 149 L.Ed.2d 674 (2001) ("Despite the broad

discretion that States possess with respect to the imposition of

criminal penalties and punitive damages, the Due Process

Clause of the Fourteenth Amendment to the Federal Constitu-

tion imposes substantive limits on that discretion."); Browning-

Ferris Indus. of Vt., Inc. v. Kelco Disposal, Inc., 492 U.S. 257,

278, 109 S.Ct. 2909, 106 L.Ed.2d 219 (1989) ("[T]he propriety

of an award of punitive damages for the conduct in question,

and the factors the jury may consider in determining their

amount, are questions of state law.").

§ 11 Reinforcing our conclusion that we may properly

exercise our judgment in fixing the punitive damages award are

certain themes prominently featured in Campbell II and Gore.

In both cases, the Supreme Court resisted the impulse to draw

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bright lines or create categorical classifications in fixing

punitive damages awards, electing instead to adopt general

standards and guideposts. Campbell II, 538 U.S. at 425; Gore,

517 U.S. at 582-83. The Supreme Court has also consistently

recognized punitive damages as a means to "further a State's

legitimate interests in punishing unlawful conduct and deterring

its repetition." Gore, 517 U.S. at 568. Taken together, these

themes create a logical underpinning to an interpretation of the

Supreme Court's remand order which sanctions and expects us

to exercise a considerable measure of independent judgment in

fixing the punitive damages award.

4 12 Even the Supreme Court's observation that this case

"likely would justify a punitive damages award at or near the

amount of compensatory damages" does not cause us to retreat

from our view that we have been granted discretion to deter-

mine the amount of punitive damages. Campbell IT, 538 U.S.

at 429. Contrary to State Farm's assertions, this language

cannot reasonably be interpreted as a conclusive determination

that the magnitude of State Farm's blameworthiness merits a

punitive damages award no greater than the compensatory

award. These are words of prediction, not direction, and are

wholly compatible with a remand order which both instructs us

to apply the Supreme Court's standards with fidelity and

recognizes that Utah courts are best able to address our state's

legitimate interests. Consistent with that view, the Supreme

Court has clearly communicated its intention to cede to us the

responsibility to assess the reprehensibility of State Farm's

conduct, to identify Utah's legitimate interests, and to exercise

reasoned judgment in fixing punitive damages.

Il. ANALYSIS LIMITED TO ACTIVITY IN UTAH

4 13 While authorizing us to determine the amount of the

punitive damages award, the Supreme Court leashed us more

tightly to the established analytical guideposts of Gore in two

ways: by narrowing the scope of relevant evidence which we

may consider in evaluating the reprehensibility of State Farm's

conduct, and by providing more detailed guidance for determin-

ing the relationship between compensatory and punitive

damages. Campbell IT, 538 U.S. at 419-22, 424-28.

4 14 The Supreme Court chided us for basing our reinstate-

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ment of the jury's $145 million punitive damages award on

State Farm's "nationwide policies rather than for the conduct

direct [sic] toward the Campbells." /d. at 420. The Supreme

Court found impermissible our reliance on State Farm's

conduct outside Utah in measuring the reprehensibility of the

company's conduct. Jd. at 421. Drawing on views expressed

in Gore, the Supreme Court limited evidence that can properly

be weighed in the reprehensibility scale to behavior which took

place within our borders and was directed at the Campbells. Jd.

at 421-22. We are mindful that it was our consideration of

irrelevant extra-territorial evidence concerning reprehensibility

which attracted most of the Supreme Court's criticism in

Campbell II. We therefore reevaluate State Farm's conduct

based solely on its behavior that affected the Campbells and

took place within Utah.

4 15 The Supreme Court stopped well short, however, of

punctuating its disagreement with the evidence we considered

in our analysis by pinning State Farm's behavior to a particular

location along the reprehensibility continuum. It instead simply

issued the mandate that "a more modest punishment for this

reprehensible conduct could have satisfied the State's legitimate

objectives, and the Utah courts should have gone no further."

Id. at 419-20.

q{ 16 Had the Supreme Court injected into Campbell IIits own

conclusive findings concerning the degree of State Farm's

blameworthiness, it would have announced a federal standard

measuring reprehensibility. By creating such a national

reprehensibility standard, however, the Supreme Court would

have collided with its own rationale for limiting the scope of

relevant reprehensibility evidence to intra-state conduct. The

Supreme Court's rejection of our consideration of State Farm's

conduct in other states was grounded in the recognition that

much of the out-of-state conduct was lawful where it occurred.

Id. 2t 422. The Supreme Court respected states' autonomy to

make policy choices about the lawfulness of human and

corporate behavior within their own borders, and used that

deference to justify disallowing out-of-state conduct as an

indicator of reprehensibility.

4 17 Just as behavior may be unlawful or tortious in one state

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and not in another, the degree of blameworthiness assigned to

conduct may also differ among the states. As long as the

Supreme Court stands by its view that punitive damages serve

a legitimate means to satisfy a state's objectives to punish and

deter behavior which it deems unlawful or tortious based on its

own values and traditions, it would seemingly be bound to

avoid creating and imposing on the states a nationwide code of |

personal and corporate behavior.

{ 18 In this instance, we find the blameworthiness of State

Farm's behavior toward the Campbells to be several degrees

more offensive than the Supreme Court's less than condemna-

tory view that State Farm's behavior "merits no praise." /d. at

419. We reach this conclusion after applying the relevant

reprehensibility standards to the facts approved for consider-

ation of State Farm's reprehensibility in Campbell II, and in

light of Utah's values and traditions. We now turn to explain-

ing how we exercised the discretion granted us by the Supreme

Court to award the Campbells $9,018,780.75 in punitive

damages.

IV. FEDERAL DUE PROCESS GUIDEPOSTS

{ 19 InGore, the Supreme Court established three guideposts

for punitive damages awards in Gore: (1) the degree of

reprehensibility of the defendant's misconduct; (2) the disparity

between the actual or potential harm suffered by the plaintiff

and the punitive damages award; and (3) the difference between

the punitive damages awarded by the jury and the civil penal-

ties authorized or imposed in comparable cases. Campbell II,

538 U.S. at 418 (citing Gore, 517 U.S. at 574-75). The

Supreme Court structured its constitutional review of our

reinstatement of the jury's $145 million punitive damages

award in Campbell I within the framework of these guideposts.

{ 20 In Campbell I, we conducted two separate reviews of

the trial court's punitive damages award, under both state and

federal law.? In Campbell II, the Supreme Court limited its

> In Utah, punitive damages are analyzed under a seven-factor test

commonly known as the Crookston standards. The Crookston factors are:

(continued...)

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review of the constitutionality of our award to the Gore

guideposts. Since Campbell IT, we have continued to apply our

state standards, recognizing that they substantially reflect the

Supreme Court's directives and modifying them as necessary to

fully meet the federal requirements. See, e.g., Smith v. Fairfax

Realty, 2003 UT 41, J 31, 82 P.3d 1064. However, in this case

we follow the lead of the Supreme Court and restrict our review

to the guideposts set forth in Gore.

A. Reprehensibility

4] 21 Just as we reinstated the jury's $145 million punitive

damages award primarily because of our assessment of the

reprehensibility of State Farm's conduct, Campbell I, 2001 UT

89, J§] 27-36, 53, 65 P.3d 1134 (analyzing reprehensibility

under Crookston standards), so do we again look primarily to

Gore's reprehensibility guidepost to fix those damages on

remand. We do so in recognition of the Supreme Court's

reaffirmation in Campbell IT that reprehensibility is " '[t]he

most important indicium of the reasonableness of a punitive

damages award.'" 538 U.S. at 419 (quoting Gore, 517 U.S. at

575).

4] 22 Because any determination ofreprehensibility inevitably

implicates moral judgments and is therefore susceptible to an

arbitrary, inexplicable, and disproportionate outcome, the

Supreme Court has fashioned certain measuring tools. These

include consideration of whether

the harm caused was physical as opposed to economic;

the tortious conduct evinced an indifference to or a

reckless disregard of the health or safety of others; the

target of the conduct had financial vulnerability; the

conduct involved repeated actions or was an isolated

. (...continued)

(i) the relative wealth of the defendant; (ii) the nature of the alleged

misconduct; (iii) the facts and circumstances surrounding such conduct; (iv)

the effect thereof on the lives of the plaintiff and others; (v) the probability

of future recurrence of the misconduct; (vi) the relationship of the parties;

and (vii) the amount of actual damages awarded. Crookston v. Fire Ins.

Exch., 817 P.2d 789, 808 (Utah 1991); see also Crookston v. Fire Ins.

Exch., 860 P.2d 937 (Utah 1993).

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incident; and the harm was the result of intentional

malice, trickery, or deceit, or mere accident.

Id.

{23 First, we consider whether the harm was economic or

physical. We are mindful of the Supreme Court's observation

that "the harm [in this case] arose from a transaction in the

economic realm, not from some physical assault or trauma."

Id. at 426. We do not, however, read this comment to foreclose

our value-based assessment of the type of injuries which may

flow from the abuse of transactions in the economic realm, nor

to bar us from judging the reprehensibility of such abusive

conduct. The Supreme Court's observation is carefully phrased.

It does not classify the injury inflicted on the Campbells by

State Farm as "economic." Rather, it notes that the transaction

which gave rise to the injury was in the "economic realm."

4] 24 If we were to hold the view that insurance has no

purpose beyond providing economic compensation for loss,

there would be little reason to dwell on this first

reprehensibility factor. So interpreted, not only would the harm _

caused by State Farm be purely economic in nature, but the

economic harm sustained by the Campbells would be minimal.

State Farm ultimately paid the entire judgment which was

awarded against the Campbells, including amounts in excess of

the policy limits. However, we do not believe that the Camp-

bells' injuries were limited to their economic loss.

{25 Instead, we recognize that the gravity of harm which an

insurer may potentially inflict on an insured is unique to the

nature of the product and service that insurance provides. Life

is fraught with uncertainty and risk. In Utah alone, our citizens

pay nearly $1 billion annually in automobile insurance premi-

ums in _ effort to ameliorate the anxiety caused by uncertainty

and risk.

* Utah Department of Insurance, 2002 Utah Market Share Report--

Private Passenger Auto, available at _ http://

www.insurance.state.ut.us/MS/MS_PPAuto.pdf (stating that in 2002, Utahns

spent $969,222,336 on automobile insurance premiums) (last visited Apr.

16, 2004).

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{26 We have shaped our law relating to first party insurance

contracts to recognize the practical reality "that insurance

frequently is purchased not only to provide funds in case of

loss, but to provide peace of mind for the insured or his

beneficiaries." Beck v. Farmers Ins. Exch., 701 P.2d 795, 802

(Utah 1985). Peace of mind clearly plays a central role in

accounting for the appeal of liability insurance.

In insurance each party must take a risk. But it is inaccurate

to assert that if the insured event does not occur then the

insured receives nothing in return for the premium payment

made. Each insured receives at the time of contract forma-

tion present assurance of compensation if the loss occurs

which is a valuable peace-of-mind protection.

1-1 Holmes' Appleman on Insurance 2d § 1.3.

{ 27 Anallegation that one's negligent conduct has caused the

injury or death of another inevitably triggers fear and apprehen-

sion that insurance succors.

Insureds buy financial protection and peace of mind

against fortuitous losses. They pay the requisite premi-

ums and put their faith and trust in their insurers to pay

policy benefits promptly and fairly when the insured

event occurs. Good faith and fair dealing is their expec-

tation. It is the very essence of the insurer-insured

relationship. In some instances, however, insurance

companies refuse to pay the promised benefits when the

underwritten harm occurs. When an insurer decides to

delay or to deny paying benefits, the policyholder can

suffer injury not only to his economic well-being but to

his emotional and physical health as well. Moreover, the

holder of a policy with low monetary limits may see his

whole claim virtually wiped out by expenses if the

insurance company compels him to resort to court action.

2-8 Holmes' Appleman on Insurance 2d § 8.7.

§ 28 As the facts of this case make clear, misconduct which

occurs in the insurance sector of the economic realm is likely

to cause injury more closely akin to physical assault or trauma

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than to mere economic loss.* When an insurer callously betrays

the insured's expectation of peace of mind, as State Farm did to

the Campbells, its conduct is substantially more reprehensible

than, for example, the undisclosed repainting of an automobile

which spawned the punitive damages award in Gore.°

{| 29 State Farm expressly assured the Campbells that their

assets would not be placed at risk by the negligence and

wrongful death lawsuit brought against them. The company

then unnecessarily subjected the Campbells to the risks and

>In Campbell II, the Supreme Court articulated bipolar injury categories of

"economic" and "physical." 538 U.S. at 419 (citing Gore, 517 U.S. at

576-77). These categories are well suited to highlight the Supreme Court's

view that the injury suffered by a misled and disappointed BMW purchaser

could not reasonably justify the moral outrage which ought properly be

reserved for conduct that results in physical harm. State Farm has sought to

exploit, unhelpfully in our view, an exaggerated economic versus physical

dichotomy. For example, as we observed in Campbell I, State Farm

attempted to diffuse the odious nature of its conduct by claiming that it did

not “after all, involve murder, torture, or deliberate poisoning of the

environment." 2001 UT 89 at ¥ 33, 65 P.3d 1134.

© In Gore, Dr. Gore bought a new black BMW from a BMW dealership.

After driving it for nine months, he took it to an independent detailer to

make it look "snazzier than it normally would appear." 517 U.S. at 563.

The detailer determined that the car had been repainted to hide damage. /d.

The damage was later shown to be caused by acid rain which settled on the

car's exterior en route from Germany to the United States. /d. at 563, n. 1.

Other cases in the punitive damages canon are equally distinguishable from

this case. For example, in Cooper, Cooper Industries was sued by

Leatherman Tool Group for trademark infringement after Cooper used

photographs of a modified version of the Leatherman tool in its ads. 532

U.S. at 427-28. TXO Production Corp. v. Alliance Resources Corp.

involved a slander of title to oil and gas rights owned by Alliance. 509 U.S.

443, 446, 113 S.Ct. 2711, 125 L.Ed.2d 366 (1993). In a case most factually

similar to the one at hand, employees of a company paid insurance

premiums to an insurance agent who was obligated to turn over the

premiums to the insurer. When the agent failed to do so, the insurance

policies lapsed. When one employee tried to make a claim on her insurance

policy, she was denied. Once this was discovered, the employees sued the

agent for fraud. Pac. Mut. Life Ins. v. Haslip, 499 U.S. 1, 5-6, 111 S.Ct.

1032, 113 L.Ed.2d 1 (1991). However, in Honda Motor Co. v. Oberg, 512

U.S. 415, 418, 114 S.Ct. 2331, 129 L.Ed.2d 336 (1994), the court sustained

a jury award finding Honda 80 percent liable for injuries sustained by the

driver of a three-wheel all-terrain vehicle manufactured by Honda that

overturned, certainly a physical, and not economic, harm.

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rigors of a trial. State Farm disregarded facts from which it

should have concluded that the Campbells faced a near-certain

probability of having a judgment entered against them in excess

of policy limits. When this probability came to pass, State

Farm withdrew its expressions of assurance and told the

Campbells to place a "for sale" sign on their house. These acts,

all of which the Supreme Court conceded that State Farm had

committed, Campbell IT, 538 U.S. at 419, and for which State

Farm has not voiced so much as a whisper of apology or

remorse, caused the Campbells profound noneconomic injury.

4] 30 It simply will not do to classify this injury as solely

"economic" for the purposes of evaluating it under the first

prong of the Gore reprehensibility test, and we decline to do so.

We turn now to the remaining Gore indicia for evaluating

reprehensibility.

{| 31 The second factor in assessing reprehensibility is

whether State Farm showed indifference or reckless disregard

for the health and safety of the Campbells. There is little doubt

that State Farm could reasonably have known that its conduct

would cause stress and trauma to a policyholder. State Farm

was clearly indifferent to this result, evincing a reckless

disregard for the Campbells' peace of mind.

4 32 The third factor is whether the victims were financially

vulnerable. It remains obvious to us that not only were the

Campbells financially vulnerable, but their vulnerability

enabled, if not motivated, State Farm's conduct. We need stray

no further into the record than to the post-judgment advice

given to the Campbells by State Farm's attorney that they put a

"for sale" sign on their house to make this point. It is difficult

to imagine State Farm making this statement to a sophisticated

insured whom State Farm believed to have the wherewithal to

protect himself from its predations.

4] 33 Fourth, we consider whether the reprehensible conduct

was repeated or merely an isolated incident. We take up this

measure of reprehensibility with considerable caution because,

although Gore instructs us to consider whether "the conduct

involved repeated actions or was an isolated incident," id.

(citing Gore, 517 U.S. at 576-77), the Supreme Court expressly

found that we erred in determining that State Farm was a

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recidivist. Jd. at 423. Repeated misconduct justifies a more

severe sanction both because it minimizes the likelihood that

the conduct was a unique aberration and because it justifies the

imposition of punitive damages as a deterrent. Although we

are bound by the Supreme Court's finding that State Farm was

not a recidivist, absence of prior bad acts does not mean that

State Farm has forsworn the conduct that caused the Campbells'

injury, and that the citizens of Utah therefore have no reason to

deter State Farm's future conduct. State Farm's obdurate

insistence that its treatment of the Campbells was proper

clearly calls out for vigorous deterrence.

§ 34 In Campbell I, we voiced our incredulity over State

Farm's protestations of blamelessness. We noted:

State Farm refuses in its brief on appeal to concede any

error or impropriety in the handling of the Campbell case.

Rather, testimony at trial indicated that State Farm was

"proud" of the way it treated the Campbells. Further,

State Farm asserts that it is in fact a "victim" in this case

because it is the target of the secret "conspiracy" perpe-

trated by the Campbells, Ospital, Slusher, and their

attorneys to bring this bad faith lawsuit and to share any

recovery received.

2001 UT 89 at J 35, 65 P.3d 1134 (internal citations omitted).

The Supreme Court did not take issue with this observation.

Since Campbell I, State Farm has directed us to no evidence

suggesting that it has gained insight into the wrongfulness of its

behavior or has reconsidered its feelings of pride and victimiza-

tion.

§ 35 We will not and, consistent with our duty on remand,

cannot invoke deterrence as a justification for punitive damages

based on conduct dissimilar to that which State Farm inflicted

on the Campbells. We can, however, find ample grounds to

defend an award of punitive damages in the upper range

permitted by due process based on our concern that State

Farm's defiance strongly suggests that it will not hesitate to

treat its Utah insureds with the callousness that marked its

treatment of the Campbells. See Diversified Holdings, L.C. v.

Turner, 2002 UT 129, 4¥ 21, 34, 63 P.3d 686 (stating that the

chief aggravating factor was "a lack of remorse increasing the

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likelihood of recidivism").

{| 36 Lastly, we consider whether the substantial emotional

damages sustained by the Campbells were the result of State

Farm's intentional malice, trickery, and deceit. We conclude

that the damages sustained by the Campbells were no mere

accident. At trial, Ray Summers, the adjuster who handled the

Campbell case, testified that State Farm resorted to various

tactics to create prejudice inthe event the case ever went before

a jury. Campbell I, 2001 UT 89 at J 29, 65 P.3d 1134. For

example, State Farm manager Bob Noxon instructed Summers

to manufacture the false story that Todd Ospital, who was

killed in the automobile accident for which Mr. Campbell was

found to be at fault, was speeding because he was on his way

to see a pregnant girlfriend. /d. In truth, there was no pregnant

girlfriend, nor was Mr. Ospital even speeding; this story was

invented only to cause prejudice in the record. Jd. This

deceitful conduct can only be explained as part of a scheme to

reduce State Farm's economic exposure. The possibility that its

dissembling would expose the Campbells to an excess judg-

ment must have been apparent to State Farm. To react as it did

when the excess judgment became a reality only confirms the

toxicity of State Farm's behavior.

B. Ratio of Compensatory Damages to Punitive Damages

4 37 We turn now to the second Gore guidepost: the ratio

between actual and punitive damages awarded. State Farm

focuses its attention on the Supreme Court's statement that

"[w]hen compensatory damages are substantial, then a lesser

ratio [of compensatory to punitive damages], perhaps only

equal to compensatory damages, can reach the outermost limit

of the due process guarantee." Campbell IT, 538 U.S. at 425.

The compensatory damages award to the Campbells was

substantial and, in the Supreme Court's view, provided them

"complete compensation." Jd. at 426. This is due at least in

part to the possibility, recognized by the Supreme Court, that

the compensatory damages award for emotional distress

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incorporated within it a punitive component.’ Jd.

{| 38 Such a conclusion, though plausible as an abstract

proposition, does not account for the circumstances of the

compensatory damages award in this case. The jury awarded

the Campbells $2.6 million in compensatory damages. The

trial court granted State Farm's motion for remittitur and

reduced the award to $1 million: $600,000 for Mr. Campbell

and $400,000 for Mrs. Campbell. The trial court's ruling was

supported by extensive and detailed findings explaining the

basis for the reduced compensatory damages award. Based on

this thorough record, we conclude that the trial court's compen-

satory damages award was purged of elements which may have

been more properly placed in the category of punitive damages.

We are convinced that the combined efforts of the jury and the

trial judge ensured that the compensatory damages award was

what it purported to be: compensation based on considered

evaluation of the degree of emotional harm inflicted on the

Campbells by State Farm. Because it is exclusively for actual

harm sustained by the Campbells, the compensatory damages

award supports a punitive damages award exceeding $1

million.

{ 39 In its discussion of the relationship between compensa-

tory and punitive damages, the Supreme Court reaffirmed that

ratios exceeding single- digits, which it strongly implied mark

the outer limits of due process, may be appropriate only where

"'a particularly egregious act has resulted in only a small

amount of economic damages,'" or where " ‘the monetary value

of noneconomic harm may have been difficult to determine.' "

Id. at 425 (quoting Gore, 518 U.S. at 582). These circum-

stances are not present here. But, neither is this a proper case

to limit a punitive damages award to the amount of compensa-

tory damages. The 1-to-1 ratio between compensatory and

punitive damages is most applicable where a sizeable compen-

; Campbell II, 538 U.S. at 426 (" ‘In many cases in which compensatory

damages include an amount for emotional distress, such as humiliation or

indignation aroused by the defendant's act, there is no clear line of

demarcation between punishment and compensation and a verdict for a

specified amount frequently includes elements of both.' ") (quoting

Restatement (Second) of Torts § 908, cmt. c (1977)).

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satory damages award for economic injury is coupled with

conduct of unremarkable reprehensibility. This scenario,

likewise, does not describe this case.

4 40 Here, the Campbells were awarded substantial

noneconomic damages for emotional distress. As the Supreme

Court noted, "Much of the distress was caused by the outrage

and humiliation the Campbells suffered at the actions of their

insurer; and it is a major rule of punitive damages to condemn

such conduct." /d. at 426. The trial court valued the extent of

the Campbells' injury at $1 million. We have no difficulty

concluding that conduct which causes $1 million of emotional

distress and humiliation is markedly more egregious than

conduct which results in $1 million of economic harm.

Furthermore, such conduct is a candidate for the imposition of

punitive damages in excess of a 1-to-1 ratio to compensatory

damages. Simply put, the trial court's determination that State

Farm caused the Campbells $1 million of emotional distress

warrants condemnation in the upper single-digit ratio range

rather than the 1-to-1 ratio urged by State Farm.

4 41 When considered in light of all of the Gore

reprehensibility factors, we conclude that a 9-to-1 ratio between

compensatory and punitive damages, yielding a $9,018,780.75

punitive damages award, serves Utah's legitimate goals of

deterrence and retribution within the limits of due process.

C. Comparable Civil and Criminal Penalties

4 42 The application of Gore's final guidepost, the difference

between the punitive damages awarded by the jury and the civil

penalties authorized or imposed in comparable cases, to State

Farm's conduct does not cause us to retreat from our determina-

tion that a punitive damages award nine times greater than the

compensatory damages is called for here.

q 43 In Campbell IT, the Supreme Court pointed to a potential

$10,000 fine for fraud as "the most relevant civil sanction" to

which State Farm was exposed for its conduct toward the

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Campbells.’ 538 U.S. at 428; see also Utah Code Ann.

§ 31A-26-303 (2003). According to the Supreme Court, this

fine was "dwarfed" by the $145 million punitive damages jury

award. Jd. It is unclear, however, what amount of punitive

damages would be supported by a $10,000 fine. The Supreme

Court endorsed a punitive damages award of $1 million, which

is one hundred times greater than the $10,000 fine. Presum-

ably, then, this 100-to-1 ratio does not offend due process.

Thus, somewhere between $1 million and $145 million, the

difference between the $10,000 civil penalty and the punitive

damages award becomes so great that the latter "dwarfs" the

former. State Farm claims in its brief that the Supreme Court

impliedly found that the civil penalty would be dwarfed by a

$17 million punitive damages award. Whether or not this is

true, we hold fast to our conviction that a punitive damages

award of $9,018,780.75 is in line with the third Gore guidepost.

| 44 The nature of a civil or criminal penalty provides some

useful guidance to courts when fixing punitive damages

because it reflects "legislative judgments concerning appropri-

ate sanctions for the conduct at issue." Browning-Ferris, 492

U.S. at 301 (O'Connor, J., concurring in part and dissenting in

part). However, the quest to reliably position any misconduct

within the ranks of criminal or civil wrongdoing based on

penalties affixed by a legislature can be quixotic. For example,

while a $10,000 fine for fraud may appear modest in relation-

ship to a multi-million dollar punitive damages award, it is

identical to the maximum fine which may be imposed on a

person in Utah for the commission of a first degree felony, the

classification assigned our most serious crimes. Utah Code

Ann. § 76-3-301 (2003).

4 45 The Campbells invite us to conduct anew an analysis of

the potential penalties to which State Farm may be exposed,

® The Campbells also invite us to consider the possibility that State Farm's

license to underwrite insurance in Utah could be revoked for failure to meet

good faith requirements. We do not need to develop this argument in its

entirety in order to support our punitive damages award. However, we

recognize that State Farm's behavior, particularly if it were to become a

pattern in Utah, may indeed be justification for termination of its license, a

penalty that surely would cost it more than $10,000.

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based on the narrowed range of conduct deemed relevant by the

Supreme Court. While we agree that the Supreme Court

opened the door to such a reassessment, we believe that it is

unnecessary in light of our conclusion that $9,018,780.75 is

amply supported by the $10,000 civil penalty.

§ 46 In sum, the Supreme Court affirmed the authority of a

state to "make its own reasoned judgment about what conduct

is permitted or proscribed within its borders." Campbell IT, 538

U.S. at 422 (citing Gore, 517 U.S. at 569). It follows, there-

fore, that each state retains the right and the responsibility to

draw on its own values and traditions when assessing the

reprehensibility of tortious conduct for the purpose of review-

ing the propriety of a punitive damages award, so long as that

review conforms to the Gore guidelines and the demands of

due process. To the extent that our conclusions about what size

punitive damages award best serves the legitimate interests of

Utah exceeds an award suggested by the Supreme Court, we are

exercising what we interpret to be a clear grant of discretion to

do so. We have carefully considered the scope of the Supreme

Court's mandate and have endeavored scrupulously to confine

ourselves to it.

V. ATTORNEY FEES, EXCESS VERDICT, AND

SPECIAL DAMAGES

{47 Finally, we turn to the Campbells' claim that costs and

attorney fees incurred in this action, as well as the excess

portion of the verdict not covered by insurance, should be

included as part of the denominator in calculating a ratio

between compensatory and punitive damages. We disagree.

§ 48 We believe that fairly read, the Supreme Court's opinion

forecloses consideration of a compensatory damages number

other than the $1,000,000 awarded by the jury. The Supreme -

Court's analysis of the reasonableness and proportionality of the

punitive damages award was grounded in its conviction "that

there is a presumption against an award that has a 145-to-1

ratio." Campbell IT, 538 U.S. at 426. While that analysis may

not have been different had the denominator been

$1,939,518.10 (the amount of the compensatory damages,

special damages, excess verdict, and attorney fees combined),

and the ratio thereby reduced to 75-to-1, the considerable

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attention given by the Supreme Court to the issue of compensa-

tory damages and the methodology for arriving at a constitu-

tionally permissible ratio of compensatory to punitive damages

convinces us that we would not be at liberty to consider a

substitute denominator. We do, however, include the award of

special damages as part of our punitive damages award as both

parties agree it is part of the overall damages assessment.

{ 49 To consider attorney fees and expenses in awarding

punitive damages also invites unnecessary conceptual and

practical complications to an already complex enterprise. In

almost every case, including this one, the attorney fees and

expense damage component would require its own independent

reprehensibility assessment using the Gore standards. The

manner in which a defendant conducts litigation bears a

rational relationship to the conduct giving rise to the claim for

punitive damages and would inevitably lead to an unseemly and

time-consuming appendage to the trial.

§ 50 The incorporation of attorney fees and expenses into the

compensatory damages award would substantially alter the

manner in which trials are conducted in this state. Under our

general practice, the issues of whether attorney fees are

available to a party and the reasonableness of the requested fees

are reserved for determination by the judge after the conclusion

of the trial or other proceedings. Meadowbrook, LLC v.

Flower, 959 P.2d 115, 117-18 (Utah 1998). We have little

doubt that the interests of justice would be subverted by

sidetracking the focus of a trial away from the central claims of

the parties and onto issues relating to attorney fees and ex-

penses. Jd.

VI. CONCLUSION

{ 51 Inconclusion, we hold that State Farm's behavior toward

the Campbells was so egregious as to warrant a punitive

damages award of $9,018,780.75, an amount nine times greater

than the amount of compensatory and special damages.

§ 52 Chief Justice Durham, Justice Wilkins, Justice Parrish,

and Judge Billings concur in Justice Nehring's opinion.

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4 53 Having disqualified himself, Associate Chief Justice

Durrant does not participate herein; Utah Court of Appeals

Judge Judith Billings sat.