Philip Morris Asks Court for Relief
Cigarette Maker Challenges $79.5 Million Damage Award

By Charles Lane
Washington Post Staff Writer
Wednesday, November 1, 2006

The Supreme Court heard a tobacco company's plea for relief from a $79.5 million punitive damages award yesterday, in a case that could illuminate the Roberts court's approach to tort reform.

In recent years, the court has helped the business community on the punitive-damages issue, ruling that excessive awards violate companies' constitutional rights. But yesterday's case may be especially significant because the firm seeking help is tobacco company Philip Morris, and it has been found liable not for bilking a consumer out of money, but for actually killing him.

A ruling in Philip Morris's favor would suggest that the court is so concerned about high punitive damages that it would protect even an unpopular corporate defendant. For their part, consumer and anti-smoking groups hope that the court will rule against Philip Morris -- and show thatpunitive-damage limits do not apply to especially reprehensible conduct.

By the end of oral arguments yesterday, however, it seemed that the court was reluctant to rule broadly in either direction.

Instead, several members of the court, including some who had supported its recent limits on punitive damages, suggested that the best way to handle the case would be to send it back to the Oregon Supreme Court for clarification of technical state law issues.

"What's worrying me about this case is . . . that we're going to be in a kind of bog of mixtures of constitutional law, unclear Oregon state law, not certain exactly what was meant by whom in the context of the trial, et cetera," said Justice Stephen G. Breyer, who voted in favor of the court's previous decisions limiting punitive damages.

Justices Antonin Scalia and Ruth Bader Ginsburg, who dissented from those decisions, made similar points, as did Justice David H. Souter.

Compensatory damages are usually awarded to compensate for economic losses or pain and suffering. About six states do not have punitive damages. Elsewhere, punitive damages may be added -- subject to statutory limits in some states -- to deter and punish corporate misconduct.

Businesses say that the patchwork of state laws, coupled with the unpredictable behavior of juries, has left them at the mercy of an expensive and arbitrary system. Consumer organizations and trial lawyers say punitive damages are often the only effective means to combat corporations' wrongdoing.

In 1996, the Supreme Court sided with business. It overturned a $4 million punitive-damage award to an Alabama man who had sued a BMW dealer for selling him a repainted car instead of a new one.

For the first time, the court declared that the constitutional right to due process of law meant that companies may not be subject to disproportionate punitive damages.

In 2003, the court broadly defined what qualifies as an excessive award, suggesting that punitive damages should normally be no more than nine times as large as compensatory damages.

Yesterday's case, Philip Morris v. Williams , No. 05-1256, began with a lawsuit in Oregon by Mayola Williams, the widow of Jesse Williams, a lifelong Marlboro smoker who died of lung cancer in 1997.

She alleged that the company had knowingly lied when it minimized the health risks of smoking in public statements beginning in the 1950s and stretching over four decades thereafter. Jesse Williams repeatedly referred to those statements in explaining his refusal to quit smoking.

In 1999, an Oregon jury found Philip Morris liable for fraud. It awarded Mayola Williams $821,000 in compensation and assessed the company $79.5 million in punitive damages, a ratio of punitive to compensatory damages of 97 to 1.

The Oregon Supreme Court has upheld the award, even after the Supreme Court asked it to reconsider in light of its ruling outlining a maximum punitive-compensatory ratio of 9 to 1.

"This was a massive, market-directed fraud driven by their rational and deliberate decisions at the highest levels of the company to deceive customers and knowingly endanger their health," Williams's lawyer, Robert S. Peck, said yesterday. "And so this is the misconduct Oregon is seeking to deter."

Philip Morris alleges that the trial judge violated the Constitution when he refused Philip Morris's request to bar the jury from punishing the company for harm it caused other smokers than Jesse Williams.

The jury instruction Philip Morris had proposed would have told jurors that they could "consider" the impact of the company's conduct on other smokers but not punish it.

Several justices thought the instruction was so unclear that it would not have necessarily helped Philip Morris anyway.

"I don't know how a juror is supposed to figure this out," Souter said.

Members of the court also pointed out that the instruction might have violated an Oregon law allowing jurors to assess punitive damages based on probable harm to others in the state.