US Supreme Court agrees to hear Philip Morris appeal in $79.5 million damages case
10 Jun 2008
Are tobacco companies liable to pay damages for the death of a smoker due to smoking-related causes, even though smoking is a conscious choice made by knowledgeable adults? Or are the smokers not knowledgeable enough about the dangers of smoking because the tobacco giants intentionally conceal that information? These and other questions will be considered when the US Supreme Court hears arguments for the second time from Altria Group Inc.'s Philip Morris USA unit, the country's largest cigarette maker, on a $79.5-million award given earlier to the widow of an Oregon smoker who had died of lung cancer.
The decision to hear the company's appeal, as announced yesterday, averts, at least for now, what would be a record payment in an individual smoker case. The award to a smoker's widow has grown to more than $140 million with interest. If upheld, the punitive damage award would top the record $82.5 million that Philip Morris paid in 2006 in a California case.
The justices agreed to review a decision in January by the Oregon Supreme Court that upheld the award despite a US Supreme Court ruling last year that had overturned the judgment against the Altria Group Inc unit. However, they won't consider the more far-reaching question of whether the award is so large it violates the Constitution. Still, the decision to hear the appeal ultimately may lead to a reduction in the award or a new trial.
Philip Morris and its corporate allies say lower courts around the country are ignoring Supreme Court rulings putting limits on punitive damages. In the latest case, the justices will decide whether an Oregon court, reconsidering the case on orders from the Supreme Court, improperly relied on a state-law ground in reaffirming the award.
The Oregon court ruling ''is symptomatic of the disregard that some state courts show for precedents of this court that protect the rights of locally unpopular defendants against arbitrary punitive damages awards,'' the US Chamber of Commerce argued in a court filing. The group pointed to recent decisions upholding awards against Ford Motor Co. and Exxon Mobil Corp.
The case stemmed from a lawsuit filed by Mayola Williams, whose husband Jesse Williams died of lung cancer in 1997 after smoking for more than 40 years.
Williams said her husband, a public-school janitor who smoked as many as three packs a day of Philip Morris' Marlboro cigarettes, believed the decades of tobacco industry assurances that smoking did not pose a health threat.
The current case has dragged on quite long in front of different courts and different judges, who have often handed down contradictory rulings.
The Oregon jury's 1999 punitive award of $79.5 million came on top of $821,485 in compensatory damages, an amount later cut to $521,485 because of Oregon's limits on awards. At the time, it was the largest individual verdict against the cigarette maker.
The US Supreme Court overturned the award in 2003 in light of its ruling that generally limits punitive damages to no more than nine times the compensatory damages.
But the Oregon Supreme Court upheld the award and ruled that the company's reprehensible conduct warranted such a large verdict.
Again, in 2007, the US Supreme Court overturned the award saying that it was unconstitutional for juries to impose damages to punish a defendant for the harm done to those who are not parties in the lawsuit. It had then told the Oregon Supreme Court to reconsider its ruling upholding the Williams award.
The Oregon Supreme Court then concluded that it didn't need to reach the constitutional question because the jury instructions Philip Morris had proposed for use at trial would have misstated state law. The court said the company's misstep constituted an ''independent and adequate state ground'' for upholding the award.
Now, Philip Morris is arguing that the Oregon court disobeyed the higher court.
''A state court may not wait until after this court decides a federal constitutional claim to interpose, for the first time, a state-law bar to that claim,'' the Virginia-based company claimed.
The opposition argues that courts ''retain the discretion to determine which issues they will address, which they find unnecessary to address and in what order they will address them,'' adding that the Oregon court ''faithfully followed'' the 2007 Supreme Court ruling.
