U.S. Supreme Court to Hear Philip Morris $79M Damages Appeal

By James Vicini
June 10, 2008

The U.S. Supreme Court said Monday that it would hear a Philip Morris USA appeal seeking to overturn a $79.5 million punitive damages award won by the widow of a longtime Oregon smoker.

The justices agreed to review a decision in January by the Oregon Supreme Court that upheld the award despite a U.S. Supreme Court ruling last year that had overturned the judgment against the Altria Group Incunit.

The case stemmed from a lawsuit filed by Mayola Williams, whose husband died of lung cancer in 1997 after smoking for more than 40 years.

Williams said her husband, a public-school janitor who smoked as many as three packs a day of Philip Morris' Marlboro cigarettes, believed the decades of tobacco industry assurances that smoking did not pose a health threat.

In 1999, a jury awarded Williams $821,000 in compensatory damages, which was reduced under state law to $521,000, and $79.5 million in punitive damages.

The U.S. Supreme Court overturned the award in 2003 in light of its ruling that generally limits punitive damages to no more than nine times the compensatory damages.

But the Oregon Supreme Court upheld the award and ruled that the company's reprehensible conduct warranted such a large verdict.

The U.S. Supreme Court last year overturned the award for a second time. It ruled that it was unconstitutional for juries to impose damages to punish a defendant for the harm done to those who are not parties in the lawsuit.

But the Oregon Supreme Court in January adhered to the $79.5 million award. It ruled that the proposed jury instructions by Philip Morris were flawed under state law, and the company thus forfeited its claim of federal constitutional error.

Phillip Morris appealed and said the state court had defied the U.S. Supreme Court's directive. The nation's top court agreed to hear that part of the appeal. It said it would not hear the part of the appeal that challenged the award as excessive.

The Supreme Court will hear arguments in the case during its upcoming term, which begins in October.

(Editing by Lisa Von Ahn)