Johnson v. Ford Motor Co.

Summary

        California Supreme Court

        Greg and Jo Ann Johnson purchased a used Ford Taurus from a Ford dealership. The dealer concealed that the car's previous owners, the McGills, had traded the car after Ford denied their request to repurchase the car as a "lemon" because of repeated transmission failures. The McGills instead received a $1,500 "owner appreciation certificate" (OAC) credit. A jury awarded the Johnsons $10 million in punitive damages after finding that amount to represent the profit Ford made in California by using its OAC program to avoid reacquiring cars as mandated by the lemon law. The Court of Appeal found the award to be constitutionally excessive and reduced it to $53,435.

        Reversed and remanded. A court reviewing an award of punitive damages must consider the degree of reprehensibility of the misconduct, the disparity between the plaintiff's harm and the punitive damages, and the difference between the punitive damages and civil penalties authorized in similar cases. The Court of Appeal correctly decided that a punitive damage award to a single plaintiff could not be used to force a defendant to disgorge the profits it made from repeated misconduct toward all other hypothetical plaintiffs. However, a jury may use tortious conduct toward others to determine a defendant's reprehensibility. Because the Court of Appeal did not consider how the scale and profitability of Ford's fraud against consumers reflected on its reprehensibility, it erred in awarding only $53,435 in punitive damages.

        

— Brian Cardile