Supreme Court Overturns $79.5 Billion Verdict Against Philip Morris
The U.S. Supreme Court Monday overturned a $79.5 million punitive damage verdict against tobacco company Philip Morris USA and ordered lower courts in Oregon to re-evaluate the size of the award, the Washington Post reports (Walsh, Washington Post, 10/7). The courts are instructed to reconsider the verdict in light of a Supreme Court ruling in April that "sharply limited the power of juries to punish companies with huge punitive damage awards," the Los Angeles Times reports (Savage, Los Angeles Times, 10/7). That ruling suggested a "single-digit" standard to limit punitive damages to about nine times the amount of compensatory damages, finding that any award that exceeds that ratio may violate the due process clause of the U.S. Constitution, the Post reports. That ruling overturned a Utah Supreme Court decision to reinstate a $145 million punitive damage verdict to a couple that had filed suit against State Farm Insurance over its handling of an automobile accident case. The Post reports that yesterday's decision was "a clear indication that the Supreme Court intends to follow the standard it set in the April ruling" (Washington Post, 10/7). Yesterday's ruling was made in an Oregon case in which a jury in 1999 awarded $800,000 in compensatory damages and $79.5 million in punitive damages to the family of deceased smoker Jesse Williams, who died of lung cancer in 1997. The family alleged that Philip Morris conducted a "fraudulent, four-decade-long marketing and public relations campaign to cast doubt on [smoking] risks." The award was reduced to $32 million by Circuit Judge Anna Brown and then reinstated by the Oregon Court of Appeals (American Health Line, 6/6/02). Andrew Frey, an attorney for Philip Morris, argued before the Supreme Court that the verdict against the company was inappropriate in light of the State Farm judgment (Holland, AP/Las Vegas Sun, 10/6).
In a statement issued yesterday after the ruling, Philip Morris said it will ask the Oregon Court of Appeals to order a new trial on all issues in the case, not just the punitive damages. The company added that punitive damages of nearly 100 times the compensatory damages were "far in excess of what the Supreme Court has suggested is constitutionally permissible." William Ohlemeyer, vice president and associate general counsel of Altria Group, the parent company of Philip Morris, said that in the Oregon case and "every other West Coast individual case in which a punitive award has been returned against Philip Morris USA, juries have been allowed to consider evidence of harm to persons other than the plaintiff, conduct outside the state and the company's wealth -- all in direct conflict with the Supreme Court's findings in State Farm" (Washington Post, 10/7). Robert Peck, an attorney for the Williams family, said that the Supreme Court's decision amounts to "inviting every unhappy punitive damage defendant" to file appeals (AP/Las Vegas Sun, 10/6).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.