Supreme Court to Revisit: How Much Punitive Damages is Enough?

November 2, 2006

Jesse Williams, according to his widow, never gave any credence to the surgeon general’s health warnings about smoking cigarettes.

When Williams contracted inoperable lung cancer after smoking two packs a day for 45 years, he told his wife: “Those darn cigarette people finally did it. They were lying all the time.”

Nine years after Williams’ death, the Supreme Court is considering this question: Can Williams’ widow collect $79.5 million in punitive damages for fraud from the cigarette company Philip Morris USA?

To the dismay of anti-smoking groups, the Supreme Court agreed to hear the company’s appeal of a jury verdict in Oregon.

Philip Morris, the maker of Marlboros, is struggling to turn back unfavorable rulings by Oregon state courts in the Williams case. One ruling upheld the jury award after the Supreme Court sent the case back to Oregon once before to make sure it conformed to a 2003 high court opinion limiting punitive damages.

The Williams family is counting on justices to find that Philip Morris’ conduct was so reprehensible that it justifies exceeding guidelines the court has laid out in two rulings in the past 10 years that struck down large awards.

One difference is that the earlier cases did not involve physical injuries.

The company doesn’t deny making public statements rejecting a link between smoking and cancer; rather, it says there’s no evidence Williams ever heard the statements or ever read them.

The court also will be looking at the decision of the state courts that declared it acceptable for the jury in the Williams case to consider harm by Philip Morris to other smokers for conduct similar to that which allegedly injured Williams.

Three years ago, the U.S. Supreme Court said in a different case that a defendant cannot be punished in an individual lawsuit for harm to people other than the plaintiff.

The cigarette company says the approach of the Oregon courts is collective punishment in an individual action, a violation of due process. Philip Morris complained that the nonparties in the case were never identified, their individual circumstances were not presented in court, and there was no way for a defendant to respond to allegations of widespread harm.

The jury awarded Williams’ widow, Mayola, $800,000, in actual damages, a ratio of 97 to one. Justice Anthony Kennedy said three years ago that the ratio of punitive to compensatory damages rarely should be higher than nine to one.

The company says that under long-established practice, when compensatory damages are substantial, the constitutional maximum punishment is between zero and four times the amount of compensatory damages.

The cases is Philip Morris USA v. Williams, 05-1256.

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