Two notable rulings have been handed down by the Supreme Court today. One -- considered a major legal victory by gay rights advocates -- overturned a Colorado constitutional amendment banning laws meant to protect homosexuals from discrimination. The second ruling struck down $2 million in punitive damages awarded by an Alabama court to a doctor unhappy with the paint job on his new BMW.

MARGARET WARNER: Today's most notable rulings came in two very different cases. The first struck down a Colorado constitutional amendment that forbid any city or the state from adopting laws or ordinances to protect homosexuals from discrimination. The second struck down a $2 million punitive damages award won by an Alabama doctor unhappy with the paint job on his new BMW. For more on today's decisions, we're joined by NewsHour regular Stuart Taylor, a correspondent with The American Lawyer and Legal Times. Stuart, start by telling us what exactly did this Colorado constitutional amendment say and how did it end up in the state constitution?

STUART TAYLOR, The American Lawyer: The amendment wiped out several local ordinances that towns in Colorado -- Aspen, Denver, and Boulder -- had adopted protecting gays against discrimination and further said that from here on no town in the state itself cannot adopt any gay rights ordinances protecting gays against discrimination or giving them preferences. That is what the Colorado voters adopted by referendum in 1992.

MARGARET WARNER: And so in striking down this amendment, what was the reasoning of the majority of the Supreme Court?

MR. TAYLOR: The court ruled 6-3 that it violates the equal protection cause of the 14th Amendment by denying equal protection of the laws to homosexuals. It stressed that this is a very broad and undifferentiated disability applied on homosexuals across the board, that they cannot seek the protection of the laws in the ordinary way for any form of discrimination against them as homosexuals.

MARGARET WARNER: So just to be clear here, they weren't upholding a specific gay-rights law; rather, they were simply saying gays could not be precluded from seeking such laws.

MR. TAYLOR: Exactly right, and it's not quite clear, for example, of the city of Aspen had just repealed its gay rights ordinance, the court probably wouldn't have done this. It was because at a statewide level, gays were being put in a position where it's harder for them to seek and obtain local or statewide legislation protecting their interests than it is for anyone else that the court ruled as it did today.

MARGARET WARNER: And then what did the three dissenters, what was their argument?

MR. TAYLOR: They ruled in general that it was a perfect -- that the amendment that was struck down today was a perfectly reasonable effort by Colorado's voters to protect traditional American social mores. Justice Scalia, who wrote the dissent, made it clear that he approves of, of anti-gay conduct laws, or at least that was the implication, and he was saying Colorado is doing nothing more than trying to protect the traditional heterosexual mainstream mores against gays who want "special rights," as he puts it.

MARGARET WARNER: And I understand Justice Scalia actually read his from the bench?

MR. TAYLOR: Yes. This is fairly unusual. It happens once or twice a year. He obviously felt very strong about this. For ten or eleven minutes he read his opinion from the bench and it was-- there was a lot of rip-snorting rhetoric in it tied together by a lot of logic but he used a lot of harsh adjectives to describe the court's opinion and result.

MARGARET WARNER: So what is--what are the broader implications of this decision in the whole gay rights area?

MR. TAYLOR: It's clearly the biggest legal victory that gay rights activists have ever won. It's the only victory they've ever won in the U.S. Supreme Court, and it contrasts starkly with the decision 10 years ago in which the court upheld laws making it a crime to engage in homosexual conduct. The implications for future cases are a little unclear simply because what got six justices to strike down this Colorado referendum was its very breadth. There are no other laws on the books anywhere in the country quite like this one, and although gays will certainly get some mileage out of this when they try and argue their case in the gays in the military issue, for example, or on issues like gay marriage, it's by no means clear that they will win simply on the basis of this decision.

MARGARET WARNER: And are there any implications in this decision for these voter-passed referenda that we see all over the place? And there are some, for instance, in California aimed at other specific groups of people, say immigrants. Is there any broader implication for those kinds of referendums?

MR. TAYLOR: It's possible that there could be but you'd have to look at the very particular context. Immigrants, for example, if they're illegal immigrants, which is what the California referendum deals with, would probably have some trouble getting a sympathetic majority on the court, although--and this decision certainly doesn't directly say anything, in general, to say any referendum that hurts anybody is a bad thing. It's very particular to the facts of this case in the Colorado referendum.

MARGARET WARNER: Okay. Let's turn to this BMW case. How did this doctor end up winning $2 million in an award against BMW?

MR. TAYLOR: He bought this $40,000 car, and a few months later, he took it to a place called Slick Finish, I think it was, because he wanted to make it look snazzier, and Slick, Mr. Slick, said, hey, they repainted this car at the factory or something, and, indeed, they had repainted it. It wasn't visible to a non- expert eye, but it developed that there had been some acid rain damage to the finish, and that BMW had repainted it, and Dr. Gores' complaint was they should have told me about this, it diminishes the value of my car.

MARGARET WARNER: And what was the Supreme Court's ruling in striking this one down, this award down?

MR. TAYLOR: The ruling was that the courts of Alabama were within their rights in saying that BMW had a duty to disclose this sort of thing, at least to customers in Alabama, that this would be legal in about half the states and to exact damages, $4,000 was exacted in compensatory damages by the jury that was supposedly the diminution in the value of this $40,000 car. But the court said a $2 million punitive damage award was grossly excessive, and in this case, for the first time ever struck down a state award of punitive damages simply on the ground that it was too much.

MARGARET WARNER: Now, the Justices considered more conservative are actually the ones who dissented from this. What was their argument?

MR. TAYLOR: Um, there was a mix actually. Justice Ginsburg, who's not particularly conservative, joined the three most conservative Justices, Scalia, again, Chief Justice Rehnquist, and Justice Thomas in dissent, so it was 5-4. The general argument was partly state's rights. The states have a right to award punitive damages if they want and there's nothing in the Constitution that says they can't. The other part of it was there is no standard here, there's no guidance, there's no formula to guide lower courts as to how much is too much, and we shouldn't start down this road because we're not capable of drawing clear lines to guide the lower courts.

MARGARET WARNER: And is that, in fact, true, that the majority opinion doesn't give the lower courts any guidance on what's excessive?

MR. TAYLOR: It gives them a little guidance but it certainly leaves an awful lot to the imagination. I mean, the majority says that in this case it was grossly excessive for three main reasons. One, what BMW did wasn't so terrible. I mean, it's not like they hurt somebody, injured somebody, sold an unsafe car, told lies about it. They just didn't disclose everything that the courts of Alabama thought they should have disclosed. Two, the award of punitive damages was 500 times as much as the damage to the car, $4,000 in compensatory damages, $2 million in punitive damages. And three, they said, if you look at the statutes of Alabama for what the legislature sees as a logical penalty to pay for this type of conduct, the amounts are in the low thousand dollars range.

MARGARET WARNER: So what are the broader implications of this decision then for business in general?

MR. TAYLOR: It certainly is encouraging to business. They were watching it closely. They're celebrating it, and they think that they can go into courts in a lot of cases and say based on the Supreme Court's decision, you should strike down this or that award of punitive damages, and they will be able to do that, and in some cases, they'll win. But it certainly doesn't wipe out punitive damages by a long shot, and it probably won't affect the vast majority of cases.

MARGARET WARNER: Well, Stuart, thanks very much.

MR. TAYLOR: Thank you.