Philip Morris v. Williams--Punitive Damages

I smell reversal, big time, in this case which comes from my home state--Oregon. It has to do with a huge punitive damage award in a smoking case--an award of $79 million dollars. This punitive damages award was 97 times the amount of compensatory damages awarded by a Multnomah County jury. On the one hand, then, the case is simply about what we might call the "constitutionally permitted ratio" between compensatory and punitive damages in a tort case. I will get to that issue below, and how the Supreme Court has spoken on the issue.

But there is another issue that is going on here, an issue that relates to the Oregon psyche, an issue which, no doubt, will not be embraced by the US Supreme Court and will lead to Oregon's being slapped upside the head. The issue is simple. Under Oregon law, juries rule. It is almost as simple as that. If a state court jury considers all the evidence, doesn't appear to have been tampered with, and comes up with a verdict, it is sacred. Courts may reduce an award a little in post-trial motions, but generally jury verdicts stand. Even the Supreme Court of the US might be ignored by the Oregon courts, until that Court is so explicit as to remove all doubt that it is ordering the Oregon courts to change their ways.

This background is helpful to understand the twists and turns of this smoking/cancer/fraud case.

Some Background Facts

Jesse Williams began smoking cigarettes in 1950. He smoked Marlboros, manufactured by Philip Morris. He eventually smoked three packs a day, was diagnosed with cancer in 1996 and died the following year. Alleging negligence and fraud, his widow sued Philip Morris.

At trial, Williams mounted a wide-ranging attack on 50 years of alleged Philip Morris misconduct. In closing arguments, plaintiff's lawyer urged the jury to punish Philip Morris not only for the harm caused to Williams, but also for the alleged harms suffered by countless other, unidentified people who were not present in the lawsuit but who had also died or been significantly injured from smoking Philip Morris' products. Philip Morris objected to this approach and urged the judge to allow "Requested Instruction Number 34" to the jury. This instruction would have required the jury:

"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.”

In other words, Philip Morris was saying, "Punish us only for the harm done to Mr. Williams, if you punish us at all."

This was an enormously significant request, for if it was turned down, the floodgates open. Indeed, the judge decided that such an instruction was not constitutionally required, and so the jury was not instructed according to it. The only instruction on amount given to the jury was that they could award any amount of punitive damages up to $100 million, the amount that plaintiffs picked "out of the air" and listed in their complaint.

The jury found for plaintiff on both the fraud and negligence claims and awarded $821,485 in compensatory damages (later reduced according to an Oregon law) and then $79.5 milllon in punitive damages on the fraud claim. During post-trial motions, the trial court reduced the punitive damage amount to $32 million, saying that it was required to do so under "federal standards."

Appeal and Subsequent History

On appeal, the Oregon Court of Appeals rejected Philip Morris' contention that the court improperly rejected its Instruction # 34, and in addition, reinstated the $79.5 million verdict. The Oregon Supreme Court denied review. Then, Philip Morris petitioned the US Supreme Court, which accepted review, vacated the judgment of the Oregon courts and remanded it in light of a 2003 case (State Farm v. Campbell, 538 US 408 (2003)), which moved to a "single-digit multiplier" view of the relationship of compensatory and punitive damages, except in extraordinary cases.

On remand, the Oregon Court of Appeals held that State Farm had no impact on its analysis or conclusions and reinstated the $79.5 million verdict. See what I mean about Oregon's spirit of independence, especially when it has to do with the "sacredness" of a jury verdict? This court held that unspecified damages to the "Oregon public" were sufficient to support the original verdict. The Oregon Supreme Court decided they better get into the issue, too, and they affirmed the work of their colleagues.

Before the Supreme Court

Thus, the issue coming before the US Supreme Court is really fairly t simple--whether the Oregon Courts were mistaken in allowing a $79.5 million punitive damage award to stand after the US Supreme Court had gently suggested to them that they look at their case again. I think this Supreme Court is reluctant to grant damages in excess of the single digit multiplier, and I believe they will say so to my friends on the Oregon appellate courts. In my judgment, they will say, "Use the single digit multiplier, dummies," though they won't use the last word in their opinion. Thus, the case will be remanded, and Oregon will have to pare down the damages..... yet we still won't really have solved the issue of how badly we think we ought to punish cigarette companies for their hoodwinking of the American public for nearly 1/2 century..

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