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Contact:
or Dick Daynard e-mail to media @ tplp.org
June 9, 2004
OREGON COURT OF APPEALS RECONSIDERS PUNITIVE DAMAGES OF $79.5 MILLION AGAINST PHILIP MORRIS AFTER us SUPREME COURT ORDERS THEM TO REVIEW AND FINDS NO NEED TO REDUCE THE SANCTION
Background and Commentary on the Decision of the Court of Appeals
MAYOLA WILLIAMS, Appellant - Cross-Respondent, v. PHILIP MORRIS INCORPORATED, Respondent - Cross-Appellant, and
RJ REYNOLDS TOBACCO COMPANY, Defendants. After the the U.S. Supreme Court ordered the Oregon Court of Appeals to review a $79.5 million punitive damages award against Philip Morris on issued on March 30, 1999 in a wrongful death trial held in Oregon, many tobacco industry observers believed that a reduction in the amount of punitive damages was inevitable. Today, the Oregon Court of Appeals provided a strong argument to the contrary.
This 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’ appeal and went further by reinstating 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).
That decision by 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, 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 will appeal this decision to the Oregon Supreme Court. If, as expected, Oregon's high court declines to further review the case, the last appeal would be a long shot appeal to the U.S. Supreme Court. Mark Gottlieb, an attorney for the Tobacco Products Liability Project at Northeastern University School of Law states that, “much has been made of the impact of last year's U.S. Supreme Court decision in State Farm Ins. Co. v. Campbell with some industry analysts predicting that, for all intents and purposes, the tobacco industry's vulnerability to punitive damages awards was over. Today's decision will help to distinguish the type of conduct and harm that tobacco companies engage in from the withholding of insurance coverage considered in the State Farm case. It takes a powerful financial sanction to deter lethal misbehavior when the defendant makes billions of dollars addicting consumers to a deadly product. This jury's punishment sends a strong message to Philip Morris and other companies that profit by selling lethal products in a fraudulent manner."
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