Court May Decide What Size Award Violates Rights
At Issue: Punitive Damages, Due Process

By Robert Barnes
Washington Post Staff Writer
Thursday, December 4, 2008

In civics books, and sometimes even in real life, the Supreme Court speaks and everybody falls in line, like it or not.

The vote counting stops in Florida, and George W. Bush becomes president. No matter what the president or Congress say, terrorism detainees held at Guantanamo Bay, Cuba, receive constitutional rights.

But sometimes the decisions of the high court are not followed, and the power of justices to force state courts to respond to their orders becomes the issue -- as happened yesterday in Philip Morris USA v. Williams.

The case, in which an Oregon jury awarded nearly $80 million in punitive damages against Philip Morris, made its third appearance at the Supreme Court after bouncing back and forth through the judicial system for nearly a decade. Even though the justices have strongly implied that the award was too large and twice sent the case back west, their Oregon counterparts have consistently found reasons to leave it just the way it is.

After the Oregon Supreme Court declined to change its decision for a second time, lawyers for the cigarette maker petitioned the high court to "vindicate" its authority. But something funny happened at the showdown: Several justices said that maybe the Oregon courts were not being obstreperous, after all.

Justice David H. Souter defended the Oregon courts but also wondered about others who might not act in good faith.

"The problem that I think we all have is: How do we, in effect, guard against making constitutional decisions which are simply going to be nullified by some clever device" by a lower court? Souter asked. "Is there any way for us to ensure against, in effect, a bad-faith response to our decision?"

And after nearly an hour of debate, Chief Justice John G. Roberts Jr. introduced a new issue that would transform the case from a judicial spat into something more far-reaching. Maybe, Roberts said, the justices themselves should tackle the issue the court has avoided: How large does a punitive damages award need to be before it violates the constitutional guarantee of due process?

The Oregon Supreme Court has twice upheld the nearly $80 million in punitive damages awarded to Mayola Williams, whose husband, Jesse, smoked three packs of Marlboros a day and died of lung cancer.

When it last considered the case, the U.S. Supreme Court ruled 5 to 4 that the Oregon court had applied the wrong constitutional standard in reviewing the award. It strongly suggested the figure was too high and told the state court to make sure the jury had not awarded such heavy punitive damages -- which are aimed at discouraging companies from reprehensible behavior -- because of harm the cigarette maker may have done to others, rather than to Jesse Williams.

"The Due Process Clause prohibits a State's inflicting punishment for harm caused strangers to the litigation," Justice Stephen G. Breyer wrote.

Instead, the Oregon justices rejected Philip Morris's challenge on the grounds of state law, saying the company's proposed jury instructions nearly 10 years prior had been insufficient. The Oregon court said it did not need to get to the question of the court's constitutional standards in order to uphold the award.

"We are here today because the Oregon court failed to follow this court's directions," Philip Morris lawyer Stephen M. Shapiro told the justices.

But he immediately ran into trouble with Souter, who had been in the majority in last year's decision, and Justice Ruth Bader Ginsburg, who had been one of the dissenters. They suggested that the Oregon justices had been justified in deciding the case on the grounds of state law before considering the constitutional questions.

"What business do we have" telling the Oregon court the sequence of its consideration? Souter wondered.

Even Breyer was open to Oregon's reasoning. He said he thought at first that Oregon was giving the court the "runaround." But after studying the case more closely, he said, "I'm not sure that I think that now."

It is not uncommon for cases to reappear at the Supreme Court, especially on complicated issues involving state laws and constitutional protections. The court often remands cases to the lower courts for further action with instructions that are sometimes specific but other times opaque.

The justices often take pains to decide cases as narrowly as possible -- that has been one of Roberts's goals -- and they think that "legal doctrine should develop incrementally," said former Texas solicitor general R. Ted Cruz, who has argued frequently before the court, including on death penalty cases that have made more than one appearance.

Sometimes, state courts pay little attention to the directives; the reluctance to follow the Supreme Court's lead on civil rights for minorities is the most commonly cited area of past defiance.

But when Shapiro mentioned one of those cases yesterday, Justice John Paul Stevens challenged him to prove the Oregon courts had acted in bad faith.

Williams's lawyer, Robert S. Peck of the Center for Constitutional Litigation, argued that the Oregon justices had complied with the court's directions. But Justice Antonin Scalia said that was not true.

"'We remand so that the Oregon Supreme Court can apply the standard we have set forth,' " Scalia read from the 2007 opinion, adding, "which has nothing to do with the issue we have been discussing this morning."

About then Roberts made the surprising suggestion that perhaps he and his colleagues should settle the punitive damages question themselves, rather than sending it back to the state.

The justices had declined to decide that issue when they accepted Philip Morris's petition earlier this year, and doing so would likely require additional briefing and more arguments.

It would greatly raise the stakes of the case, and would settle a question that big business and trial lawyers have battled over for years. The issue of whether large punitive damages awards are unconstitutional is one that has split the court in a way different from its ideological divide.

Scalia and Justice Clarence Thomas think that a limit on punitive damages cannot be found in the Constitution. Ginsburg disagrees with a limit for other reasons.

Roberts and Justice Samuel A. Alito Jr. have not voted on the issue but were in the majority that sent the Williams award back to Oregon in 2007. And they sided with Souter last term when he wrote that in the Exxon Valdez case, punitive damages should be the same as compensatory damages, which are tied to actual economic loss.

The court has previously suggested that the correct ratio of punitive damages to actual damages might be less than 10 to 1, which is one of the reasons Philip Morris and the tobacco industry have been so vigorous in fighting the Williams award.

The award is nearly 100 times the $821,000 the jury gave Mayola Williams in compensatory damages. With the interest that accumulated during the years of legal wrangling, the award is now more than $145 million, Philip Morris said in court documents.

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