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February 2, 2006

Oregon Supreme Court Affirms $79.5M in Punitive Damages Against
Philip Morris for Wrongful Death of Smoker Jesse Williams

Boston, MA:  
 

In an opinion expressing contempt for the lethal business practices of Philip Morris, the Oregon Supreme Court today affirmed an appeals court ruling restoring a 1999 punitive damages award of $79.5 million in the lung cancer wrongful death trial of Jesse Williams.  This opinion demonstrates that when conduct as reprehensible as that engaged in by cigarette companies is at issue, high punitive damage awards are available to punish and deter such extreme behavior despite a 2003 US Supreme Court case known as State Farm, even when the ratio of punitive to compensatory damages reaches 99 to 1.

See the Oregon Supreme Court's decision.

IN THE SUPREME COURT OF THE STATE OF OREGON

MAYOLA WILLIAMS,
Personal Representative of the Estate of JESSE D. WILLIAMS, Deceased,
Respondent on Review,

v.

PHILIP MORRIS INCORPORATED,
nka PHILIP MORRIS USA INC.,
Petitioner on Review,

and

RJ REYNOLDS TOBACCO COMPANY, FRED MEYER, INC.,
and PHILIP MORRIS COMPANIES, INC.,
Defendants.

(CC 9705-03957; CA A106791; SC S51805)
On review from the Court of Appeals.
Argued and submitted May 10, 2005.

BACKGROUND

The lawsuit was brought by the family of Jesse Williams, who smoked Marlboro cigarettes for 47 years, and resulted in a jury finding that Mr. Williams and Philip Morris were equally at fault for the fatal lung cancer suffered by Mr. Williams.  The jury awarded the family $800,000 in compensatory damages. In addition, the jury found that Philip Morris was guilty of common law fraud for its 50 years of lies and awarded $79.5 million in punitive damages, much of which, under Oregon law, is directed to special state funds to benefit victims of crime. The trial judge reduced the punitive damages to $32 million and both Philip Morris and The Estate of Jesse Williams appealed. 

The Oregon Court of Appeals rejected Philip Morris’s appeal but reinstated the $79.5 million punitive damages award on June 5, 2002.  Philip Morris appealed to the Oregon Supreme Court but was again rebuffed.  Then the company appealed to the U.S. Supreme Court, which had issued a decision in 2003 that can restrict awards of punitive damages that greatly exceed the underlying compensatory damages award (State Farm Insurance Co. v. Campbell).  The nation's high court sent the case back to the Oregon Court of Appeals so that it could reconsider its decision to restore the full punitive damages award in light of the State Farm decision and nullified the restoration of the $79.5 million award stemming from 2002's decision. 

But after applying the appropriate standards for reviewing punitive damages, on June 9, 2004, the Oregon Court of Appeals found ample reason to once again restore the jury's $79.5 million punitive damages verdict against Philip Morris.  The Court, at one point in the decision, states that "it is difficult to conceive of more reprehensible misconduct for a longer duration of time on the part of a supplier of consumer products to the Oregon public than what occurred in this case." Philip Morris then appealed to the Oregon Supreme Court for the second time.  This time, the highest court in Oregon agreed to review the verdict.

The court quotes State Farm on the appropriate size of punitive damages: "Single-digit multipliers are more likely to comport with due process, while still achieving the State's goals of deterrence and retribution, than awards with ratios in [the] range of 500 to 1, or, in this case [referring to Campbell v. State Farm], of 145 to 1."

Continuing to quote State Farm, the court noted that the U.S. Supreme Court, "did acknowledge, however, that even those tentative ratios might be adjusted up or down. A greater ratio might comport with due process if 'a particularly egregious act has resulted in only a small amount of economic damages . . .'."

The court concludes by excoriating Philip Morris's behavior:

Philip Morris's conduct here was extraordinarily reprehensible, by any measure of which we are aware. It put a significant number of victims at profound risk for an extended period of time. The State of Oregon treats such conduct as grounds for a severe criminal sanction, but even that did not dissuade Philip Morris from pursuing its scheme.

In summary, Philip Morris, with others, engaged in a massive, continuous, near-half-century scheme to defraud the plaintiff and many others, even when Philip Morris always had reason to suspect -- and for two or more decades absolutely knew -- that the scheme was damaging the health of a very large group of Oregonians -- the smoking public -- and was killing a number of that group. Under such extreme and outrageous circumstances, we conclude that the jury's $79.5 million punitive damage award against Philip Morris comported with due process, as we understand that standard to relate to punitive damage awards.

Philip Morris will certainly seek to have the decision reviewed a second time the the U.S. Supreme Court.  However, based on the four prior decisions made by Oregon's courts, all finding Philip Morris's behavior to be outrageous and unacceptable, it is highly doubtful the the U.S. Supreme Court will overturn this historic decision.

A recent Working Paper by Tobacco Control Resource Center attorney Sara D. Guardino and Northeastern University School of Law Professor Richard A. Daynard entitled "Punishing Tobacco Industry Misconduct: The Case for Exceeding a Single Digit Ratio Between Punitive and Compensatory Damages, [pdf]" offers additional support for today's Oregon Supreme Court's decision.

COMMENTARY

Mark Gottlieb, Director of the Tobacco Products Liability Project, noted: "This decision is important because it shows that despite the cigarette companies' arguments that the ratio of punitive damages to compensatory damages can never exceed 10 to 1, when the defendant's behavior is as extreme and reprehensible as Philip Morris's has been, our civil justice system is capable of sending a message that society will not tolerate such blatant disregard for health and life."

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