The Supreme Court today discarded a $79.5 million jury award against the Philip Morris tobacco company, the latest in a decade-long series of ruling that limit punitive damage verdicts against corporations.
In a decision closely watched by manufacturing and other industries, the court ruled 5-4 to throw out the punitive damages that jurors in an Oregon case had awarded to a woman who sued Philip Morris USA after her husband died of lung cancer. The company is now part of the Altria Group.
The jury awarded Mayola Williams $821,000 in compensation, then tacked on the punitive award in part to penalize the company for what was termed a "massive market-directed fraud" that convinced people smoking was not dangerous and did harm to many other people.
In reviewing the case, however, the Supreme Court ruled that juries considering such damage claims can focus only on the harm done to the individual involved in the litigation.
In assessing such claims, state courts "must provide assurances that juries are not asking the wrong question . . . seeking, not simply to determine rephrehensibility, but also to punish for harm caused strangers," Justice Stephen Breyer wrote for the majority.
The decision stands as one of several the court has issued since 1996 limiting how far juries can go in punishing companies for alleged wrongdoing.
While compensatory damages make up for a plaintiff's direct loss, punitive damages are imposed as a penalty, and are typically left by state law in the hands of juries.
The court has steadily curtailed punitive rulings, however, finding that they must be proportionate to the wrong committed, and even suggesting a financial limit -- that punitive rulings be no more than 9 times more than any compensatory damages.
Tuesday's ruling in the Oregon case, Philip Morris USA v. Williams Estate, did not address the issue of whether the $97.5 million award was in itself excessive.