Supreme Court Ends Philip Morris's Challenge of Punitive Award
Wednesday, April 1, 2009
The Supreme Court dealt a blow to Philip Morris yesterday, ending the cigarette maker's challenge of an award now worth more than $150 million to the widow of a longtime smoker.
The court's decision not to intervene, announced in a one-sentence order months after the justices heard oral arguments in the dispute, was a surprising and anticlimactic ending to a case that has bounded back and forth through the judicial system for nearly a decade.
An Oregon jury in 1999 agreed with Mayola Williams that Philip Morris, through its marketing, was guilty of misleading her husband, Jesse, into believing that cigarettes were not harmful or addictive, and awarded nearly $80 million in punitive damages. The sum, to be split between the Williams family and the state under Oregon law, has nearly doubled because of interest charged to Philip Morris as it challenged the decision, and it is the largest award of its kind.
Even though the justices have strongly implied that the award was too large and twice sent the case back west for further deliberation, the Oregon Supreme Court found reasons to leave it as it was. After the Oregon justices declined to change their decision a second time, citing state law, lawyers for Philip Morris petitioned the high court to "vindicate" its authority.
Instead, the justices said in the unsigned opinion that they should not have accepted the case for a third time, and in the language of the court, dismissed it as "improvidently granted."
The justices did not explain why, but the length of time between the argument and yesterday's announcement indicates they had given it a shot, but in the end had trouble finding a majority that could agree on how to handle the legal issues raised. The non-decision leaves unsettled the court's jurisprudence on punitive damages.
The question of whether jury awards for punitive damages, which are meant to discourage companies from reprehensible behavior, become so large at some point that they violate the Constitution has been a battle between big business and trial lawyers for years. It has split the Supreme Court in a way that is different from its usual ideological divide.
When it last considered the case, the court in a 5 to 4 ruling strongly suggested that the award to the Williams family was too high, and said state courts should make sure that juries awarding punitive damages base their decisions on harm caused to the plaintiff, not to others outside the lawsuit.
Murray Garnick, a lawyer for Philip Morris USA's parent company, Altria Group, looked for a silver lining in yesterday's decision by noting that the justices did not disturb that ruling.
But Robert S. Peck of the Center for Constitutional Litigation, who represented Williams, said that in dismissing the case, the court had done what his side had argued and now had passed up three opportunities to rule that the award was too large. That sent a message to tobacco companies and others, he said.
"Reprehensibility is still the most important factor" in judging the appropriateness of a punitive damages award, Peck said, and the Oregon court "expressed true outrage at Philip Morris's behavior."
Under Oregon law, the award is to be split, with 40 percent going to Williams and 60 percent to the state. Altria lawyer Garnick said the company will fight paying the money to Oregon, because an agreement between the states and tobacco companies bars the state from collecting punitive damages.