Honda Motor Co. v. Oberg

1994-06-24

Headline: Court rules Oregon may not bar judges from reviewing the size of punitive jury awards, reversing the state’s rule and making it easier for courts to limit excessive punitive damages against businesses.

Holding: The Court held that Oregon’s constitutional prohibition on judicial review of the size of jury punitive-damage awards violates the Fourteenth Amendment’s Due Process Clause and reversed the Oregon court’s judgment.

Real World Impact:

Requires state courts to provide postverdict review for excessive punitive awards.
Makes it easier for companies to seek judicial reduction of large punitive jury awards.
Affects how state courts instruct juries and handle punitive-damage appeals.

Topics: punitive damages, due process, state court review, product liability

Summary

Background

Honda manufactured and sold a three-wheeled all-terrain vehicle that overturned and severely injured a driver, Karl Oberg. A jury awarded Oberg $919,390.39 in compensatory damages (later reduced 20% to $735,512.31) and $5 million in punitive damages. Oregon’s Constitution contained an amendment that generally barred courts from reexamining jury facts, preventing judges from reducing punitive awards unless they could say there was no evidence to support the verdict. The Oregon courts upheld their approach, and the United States Supreme Court agreed to review the issue.

Reasoning

The Court asked whether the Fourteenth Amendment’s Due Process Clause requires judicial review of the size of punitive awards. Relying on prior decisions and long-standing common-law practice, the majority concluded that denying any postverdict review of the amount removes an important traditional safeguard against arbitrary deprivations of property. The Court acknowledged that Oregon uses preverdict protections—clear-and-convincing proof, seven statutory factors for juries to consider, limits tied to the complaint, and rules on when a defendant’s wealth can be shown—but found those measures do not replace the need for some form of judicial review after the verdict. The Court held Oregon’s absolute ban on reviewing award size violates due process and reversed.

Real world impact

The decision requires Oregon courts, and any similar-state procedures, to provide a postverdict mechanism to review or correct excessive punitive awards. The Court did not prescribe a single numeric standard; instead it remanded the case to the Oregon Supreme Court for further proceedings consistent with this opinion, so outcomes may vary as lower courts adopt workable review rules.

Dissents or concurrances

Justice Scalia concurred, adding a historical perspective supporting review; Justice Ginsburg (joined by the Chief Justice) dissented, arguing Oregon’s procedures were adequate and should have been upheld.