424
OCTOBER TERM, 2000
Syllabus
certiorari to the united states court of appeals for the ninth circuit
No. 99-2035. Argued February 26, 2001—Decided May 14, 2001
Respondent Leatherman Tool Group, Inc., manufactures a multifunction tool which improves on the classic Swiss army knife. When petitioner Cooper Industries, Inc., used photographs of a modified version of Leatherman's tool in posters, packaging, and advertising materials introducing a competing tool, Leatherman filed this action asserting, inter alia, violations of the Trademark Act of 1946 (Lanham Act). Ultimately, a trial jury awarded Leatherman $50,000 in compensatory damages and $4.5 million in punitive damages. Rejecting Cooper's arguments that the punitive damages were grossly excessive under BMW of North America, Inc. v. Gore, 517 U. S. 559, the District Court entered judgment. As relevant here, the Ninth Circuit affirmed the punitive damages award, concluding that the District Court did not abuse its discretion in declining to reduce that award.
Held: Courts of Appeals should apply a de novo standard when reviewing district court determinations of the constitutionality of punitive damages awards. The Ninth Circuit erred in applying the less demanding abuse-of-discretion standard in this case. Pp. 432-443.
(a) Compensatory damages redress the concrete loss that a plaintiff has suffered by reason of the defendant's wrongful conduct, but punitive damages are private fines intended to punish the defendant and deter future wrongdoing. A jury's assessment of the former is essentially a factual determination, but its imposition of the latter is an expression of its moral condemnation. States have broad discretion in imposing criminal penalties and punitive damages. Thus, when no constitutional issue is raised, a federal appellate court reviews the trial court's determination under an abuse-of-discretion standard. Browning-Ferris Industries of Vt., Inc. v. Kelco Disposal, Inc., 492 U. S. 257, 279. However, the Fourteenth Amendment's Due Process Clause imposes substantive limits on the States' discretion, making the Eighth Amend-ment's prohibition against excessive fines and cruel and unusual punishments applicable to the States, Furman v. Georgia, 408 U. S. 238, and prohibiting States from imposing "grossly excessive" punishments on tortfeasors, e. g., Gore, 517 U. S., at 562. The cases in which such limits
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