In 1981, Curtis Campbell (Campbell) was driving with his wife, Inez Preece Campbell, in Cache County, Utah. He decided to pass six vans traveling ahead of them on a two-lane highway. Todd Ospital was driving a small car approaching from the opposite direction. To avoid a head-on collision with Campbell, who by then was driving on the wrong side of the highway and toward oncoming traffic, Ospital swerved onto the shoulder, lost control of his automobile, and collided with a vehicle driven by Robert G. Slusher. Ospital was killed, and Slusher was rendered permanently disabled. The Campbells escaped unscathed.
Guess quickly: which plaintiff in the resulting twenty years of litigation won the biggest jury verdict?
How many of you say Ospital?
How many of you say Slusher?
You’re both wrong. The plaintiff with the biggest jury verdict was Curtis Campbell, whom a jury awarded an incredible $147.6 million.
You see, when Slusher and Ospital sued Campbell, they offered to settle for Campbell’s $50,000 policy limit. Campbell, however, maintained that the accident was not his fault: he completed his pass without hitting any vehicles, Ospital was driving 80 mph when he lost control of the car, and Campbell said that he had already completed his pass when Ospital lost control; one witness even said it was another vehicle attempting to pass the caravan that caused Ospital’s accident, and another witness said that Slusher had told him in the hospital that it was not Campbell’s fault. So Campbell’s insurer, State Farm, decided to litigate the case. Meanwhile Slusher, who had also sued Ospital, settled with Ospital for $65,000 on the condition that Ospital change his theory of liability and solely blame Campbell for the accident. And Campbell lost: a jury held him 100% responsible, with a verdict of $185 thousand. State Farm at first refused to pay this amount, but eventually agreed to do so; Slusher and Ospital never executed on the judgment, so Campbell’s personal assets suffered no consequence.
Instead, the two settled with Campbell: no money changed hands, but they instead agreed that Campbell would give them a piece of (and control of) a lawsuit against State Farm for “bad faith”. Campbell and his wife, represented by attorneys picked by Ospital and Slusher, sued. The trial was absent of any objective evidence of emotional or mental distress, but a jury still awarded $2.6 million in “compensatory” damages; in the punitive damages proceeding, every alleged bad act State Farm had ever done in any line of insurance or treatment of its employees was put into evidence (including practices explicitly authorized or required by state regulation, such as the use of non-original-equipment manufacturer parts or claiming comparative negligence in litigation, and practices that are completely innocuous, such as using a computer program to find the best prices for auto parts in Colorado), and a jury issued $145 million in punitives. The trial judge reduced damages to $1 million compensatory, and $25 million punitive—still a windfall—but the Utah appellate courts reinstated the $145 million punitive damages award, along with almost a million dollars in other fees and awards.
State Farm v. Campbell went on to the United States Supreme Court, which held that the 145:1 punitive damages and the punishment of legal out-of-state conduct violated the Constitution. It remanded the case for further consideration, and the Utah Supreme Court (98 P.3d 409 (Utah 2004)) reduced the punitives to a 9:1 ratio of $9 million; further appeals were rejected.
State Farm is a mutual insurance company; it is owned by its policyholders, who get rebates when State Farm has a profit. So Campbell, Ospital, Slusher, and their attorneys split $11 million; and honest State Farm policyholders are a little bit poorer; Curtis Campbell, who suffered no economic damages, had no evidence of noneconomic damages, and was found by a jury to be responsible for the death of Ospital, took home hundreds of thousands of dollars. And reform opponents have the chutzpah to say that State Farm v. Campbell is a case where plaintiffs were treated unfairly, when in fact it is an example of a gigantic shakedown of an innocent defendant being turned into a merely very large shakedown with an unjust windfall.