The Truth About the BMW "Paint Rip Off" Case

In 1990 a customer paid over $40,000.00 for a new BMW 535i which BMW marketed as the "ultimate driving machine," with "flawless body panels" that retain "their original luster" after many miles of wear.

Because of these representations the customer was lead to believe that his car had never been damaged. However, nine months after the purchase, he learned that nearly the entire car had been repainted due to acid rain damage sustained in transit. BMW had records of the repairs but no one disclosed these repairs to its customers and even failed to disclose to its own dealers that hundreds of cars had been repainted.

After discovering the truth, the customer filed a fraud suit against BMW and the dealer. During the trial, the customer proved that:

1. the repainted car was unavoidably substandard because the super-heated painting process at the factory could not be later duplicated;

2. even if the repaint was done perfect the car still would be worth 10% less;

3. BMW had assumed a policy to deliberately conceal that vehicles had been repainted; and

4. at least 983 other cars had been sold with similar problems and more than 5,850 other repaired vehicles had been sold as "new" without disclosing various repairs.

Because of its deception BMW made millions of dollars. The jury awarded the customer $4,000 for the diminished value of the car and $4 million in punitive damages to punish and deter BMW. The juries verdict succeeding in its purpose. Five days after the verdict, BMW changed its policy the manufacturer now discloses all damage to its cars.

In discussing the jury's award, the court stated that BMW had "deliberately engag[ed] in a scheme of fraud from which [it] derived monetary benefits," that the scheme "had gone on for several years," and that in light of the "monetary benefits accumulated by [BMW's] wrongful acts . . . the jury was justified in awarding sufficient damages to prevent similar wrongs in the future."

Despite misrepresentations made by the media and politicians regarding out of control punitive damages, this case shows what it takes to punish and deter a company that intentionally defrauds its customers. Punitive damages are an important weapon in fighting corporate greed which will not stop until corporations are hit where it hurts: their pocket book.

DISCLAIMER
This information has been prepared only for general purposes and is not
legal advice. Presentation of this information is not intended to create an
attorney client relationship. Do not act upon this information without
seeking professional counsel.