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February 20, 2007 U.S. SUPREME COURT OVERTURNS
PUNITIVE DAMAGES AWARD IN WILLIAMS Background and Commentary No. 05-1256 PHILIP MORRIS USA, v. MAYOLA WILLIAMS, 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 1999. 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. Boston, MA: Neither Philip Morris nor the lawyers taking on Big Tobacco were entirely happy with today's 5-4 decision of the U.S. Supreme Court in Philip Morris, USA v. Williams. Obviously, while Philip Morris and many corporate defendants hoped that today's decision would set firm limits on the amount of punitive damages that could be awarded to punish and deter reprehensible business practices that injure and kill, it did no such thing. Rather, it imposed a requirement that punitive damages awards must not be used to punish defendants for harm to anyone not involved in the litigation. On the plus side for Philip Morris, a punitive damages award of $79.5 million is no longer valid but may be reinstated, reduced, or a new trial to determine the amount of punitive damages could be ordered. The two questions that the U.S. Supreme Court reviewed were:
The Court did not address the first question. Justice Breyer, who authored the Majority Opinion, states: In our view, the Constitution’s Due Process Clause forbids a State to use a punitive damages award to punish a defendant for injury that it inflicts upon nonparties or those whom they directly represent, i.e., injury that it inflicts upon those who are, essentially, strangers to the litigation. This conclusion stems from the rejection of a jury instruction proposed by Philip Morris that stated, in part: The size of any punishment should bear a reasonable relationship to the harm caused to Jesse Williams by the defendant's punishable misconduct. Although you may consider the extent of harm suffered by others in determining what that reasonable relationship is, you are not to punish the defendant for the impact of its alleged misconduct on other persons, who may bring lawsuits of their own in which other juries can resolve their claims and award punitive damages for those harms, as such other juries see fit. At oral arguments before the U.S. Supreme Court on October 31, 2006, Robert Peck, arguing for Mayola Williams (the widow of the deceased smoker, Jesse Williams), maintained that Philip Morris's proposed instruction was not permissible under Oregon law and so it was not an error to exclude it. This was the finding of both the Oregon Court of Appeals and Supreme Court of Oregon.
Andrew Frey, arguing for Philip Morris, asserted that it would not be fair to punish them for simply putting others at risk through its conduct. Justice Stevens asked whether it would be fair to consider the risk to others in ascertaining the reprehensibility of the conduct where someone shot a machine gun into a crowd but only killed one person. In today's ruling, the Court essentially answers this question by saying that the jury may consider the harm to others or risk to others in determining the reprehensibility of the machine gun attack, but any punitive damages must be limited only to punishing the defendant for the harm to the plaintiff in the court room. At oral arguments, several of the Justices expressed concern that the instruction sought by Philip Morris was not especially clear. It may turn out that after considering the meaning of today's ruling, the Oregon Supreme Court will find that the instruction was properly denied and reinstate the verdict. If that happens, Philip Morris will again seek review by the U.S. Supreme Court on the unaddressed question of possible excessiveness of the award. It is far from a sure thing that the Court will agree to revisit this case. Richard Daynard, Professor of Law at Northeastern University in Boston suggested that, "this result suggests to me that there are not 5 votes at the U.S. Supreme Court for keeping punitive damages to single digit multipliers. If there were, it would have been a much simpler matter for the Court to simply say so and strike the award on that basis. If the award is ultimately affirmed in Oregon, I doubt that the U.S. Supreme Court will choose to overturn the award on the claim that it is excessive." Mark Gottlieb, Director of the Tobacco Products Liability Project noted: "What the Court did not do today was to impose any new limits on the amount of punitive damages in tobacco cases. This is a result that most people expected after hearing oral arguments in October. The Oregon Supreme Court must now determine whether the denial of the jury instruction in question was proper and whether the jury may have improperly punished Philip Morris for injuring and killing Oregonians besides Jesse Williams. If not, the award will likely be reinstated. If so, it may be reduced or punitive damages would have to be determined by another jury." Edward L. Sweda, Jr., Senior Attorney for the Tobacco Products Liability Project at Northeastern University School of Law in Boston, noted that, "We are encouraged that there appears to be no desire by U.S. Supreme Court to put an artificial cap (such as never exceeding a single-digit ratio between punitives and compensatory damages) on the level of punitive damage awards, as Philip Morris had strenuously urged the court to do.” Edward L. Sweda, Jr., attended the oral argument in this case last October.
Brief for Philip Morris [pdf] Brief for Mayola Williams [pdf] 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]" supports the important role of punitive damages and distinguishes two types of reprehensibility: primary, concerning the reprehensibility of the defendant’s underlying conduct, and secondary, involving the reprehensibility of the defendant’s “scorched earth” litigation tactics, which often result in the plaintiff’s inability to maintain an action against the defendant. [ University of Pittsburgh Law Review 2005;67.] The Tobacco Control Legal Consortium, along with the Tobacco Control Resource Center submitted a friend of the court brief [pdf] in this case arguing that such litigation tactics should be taken into account when considering the role and constitutionality of punitive damages. Our position was summarized in our essay for the American Constitution Society for Law and Policy Blog.
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