Supreme Court To Review $79.5M Award in Oregon Tobacco Lawsuit
The U.S. Supreme Court on Tuesday agreed to hear tobacco company Philip Morris' appeal of an Oregon case in which a jury awarded $79.5 million in punitive damages to the widow of a smoker, the USA Today reports. Mayola Williams was awarded $821,485 in compensatory damages (Biskupic, USA Today, 5/30). Williams' lawsuit alleges that the tobacco company perpetrated fraud for 50 years by downplaying the health effects of smoking (Greenhouse, New York Times, 5/31).
The judge in the case cut the punitive award, calling it "excessive," but a state appeals court reinstated the original $79.5 million award, and the Oregon Supreme Court later affirmed it (USA Today, 5/30). The state Supreme Court ruled that the amount of punitive damages was not excessive because of the "extraordinarily reprehensible" marketing practices of Philip Morris (Daly, AP/Louisville Courier-Journal, 5/30).
Philip Morris in its appeal argues that the Oregon court improperly used its conclusion to "override the constitutional requirement that punitive damages be reasonably related to the plaintiff's harm."
According to the Times, the U.S. Supreme Court "will hardly be writing on a clean slate" in the case because three years ago it ruled 6-3 to overturn an award of $145 million in punitive damages against insurer State Farm. Justice Anthony Kennedy in the majority opinion wrote that "few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process."
However, "the outcome in the new case ... is far from certain," in part because there are two new justices and decisions on punitive damages "have not followed the court's typical liberal-conservative ideological alignments," the Times reports (New York Times, 5/31). Carl Tobias, a law professor at the University of Richmond, said the U.S. Supreme Court's ruling could have a "broad impact" covering any company "that may be exposed to punitive damages."
Oral arguments will begin in the fall (O'Connell/Anderson, Wall Street Journal, 5/31).