In 1996, the Supreme Court, in BMW of North America, Inc. v. Gore, struck down a punitive damages award on the ground that it was "grossly excessive" in violation of the Due Process Clause of the Fourteenth Amendment . Since BMW, many courts have faced the challenge of applying its principles to determine whether punitive damages awards surpass the constitutional limit. Last June, in Inter Medical Supplies, Ltd. v. EBI Medical Systems, Inc., the Third Circuit faced this difficulty when it considered whether a $50 million punitive damages award, granted in conjunction with a $48 million compensatory damages award, was excessive under the Due Process Clause. Interpreting BMW as holding that economic harms are less worthy of large punitive damages awards than physical harms, the Third Circuit panel concluded that "EBI's conduct . .. was not sufficiently egregious to warrant a punitive damages award of $50 million" and hence reduced the award to $1 million. In doing so, the Third Circuit neglected BMW's core holding - that large punitive damages awards are constitutional when a defendant has notice that his conduct may result in such awards. As a result, the Third Circuit has armed its lower courts with the ability to invalidate many punitive damages awards that raise no real due process concerns under BMW.

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113 Harvard Law Review 627-632 (1999)