Justices To Rule on Punitive Damages
Wednesday, May 31, 2006
The Supreme Court re-entered the national debate over tort reform yesterday, announcing that it would rule on the constitutionality of an Oregon jury's decision to assess Philip Morris tens of millions of dollars for civil fraud related to its past promotion of cigarette smoking.
The court's one-line order granted Philip Morris USA's request to review a February 2006 ruling by the Oregon Supreme Court, which upheld the award.
Philip Morris v. Williams , No. 05-1256, began with a lawsuit by Mayola Williams, the widow of Jesse Williams, a lifelong Marlboro smoker who died of lung cancer in 1997. She claimed that the company had knowingly lied when it minimized the health risks of smoking.
The case, which will be argued in the court term that begins in October and decided by July 2007, gives the court a chance to update its recent decisions seeking to rein in jury awards.
It is a subject on which the court has been closely divided. The impact of President Bush's appointees, Chief Justice John G. Roberts Jr. and Justice Samuel A. Alito Jr., whose views on tort-related issues were not closely examined during their confirmation hearings, could be crucial.
At issue is the relationship between compensatory damages, which juries give victims to make up for the pain, suffering or death caused by corporate misconduct, and punitive damages, which juries assess to condemn and deter that misconduct.
For many years, business and its supporters have complained that punitive damages, which are subject to a patchwork of laws in the 50 states, are out of control and impose crippling, unpredictable financial costs on companies.
In recent years the Supreme Court has sided with business, ruling that the Constitution prohibits excessive punitive damage awards because they violate companies' right to due process of law.
But the rulings have not been unanimous, nor have they followed the court's usual ideological lines. Of current members of the court, four -- John Paul Stevens, Anthony M. Kennedy, David H. Souter and Stephen G. Breyer -- have favored constitutional limits on punitive damages. Three -- Antonin Scalia, Clarence Thomas and Ruth Bader Ginsburg -- have dissented.
Three years ago, in a Utah case involving $145 million in punitive damages assessed on top of a $1 million compensatory award, the court specified that the ratio between punitive and compensatory damages may not normally exceed 9 to 1.
In the case the court agreed to hear yesterday, the jury's $79.5 million punitive award, though later reduced by a judge to $32 million, was still much more than nine times the compensatory award of $521,485.
The Oregon Supreme Court said that was not excessive, considering the cigarette maker's "extraordinarily reprehensible" conduct. It also ruled that the trial judge properly refused Philip Morris's request to bar the jury from punishing the company for harm it caused other smokers as well as Jesse Williams.
Philip Morris argues that the Oregon court's decision on the damage award violated the Supreme Court's 2003 ruling -- and that punitive damages cannot be assessed for the impact of corporate behavior on people who are not parties to a particular lawsuit.