Observer: Efforts to constrain punitive awards faces 'uphill battle'

Chris Rizo Apr. 2, 2009, 2:38pm

James Copland

WASHINGTON (Legal Newsline)-The U.S. Supreme Court's decision not to hear an appeal of a $79.5 million punitive damages award against tobacco company Altria Group Inc.'s Philip Morris USA unit could signal an "uphill battle" for tort reform efforts, a leading expert said.

Philip Morris had sought a new trial, arguing that the Oregon Supreme Court circumvented a 5-4 U.S. Supreme Court ruling the company won last year. The high court on Tuesday dismissed the Philip Morris appeal without issuing an opinion.

"It's hard to know what is going on behind the closed doors," said James Copland, director of the Manhattan Institute Center for Legal Policy. "But any confidence that the business community have in the Supreme Court look increasingly misplaced."

By rejecting the Phillip Morris appeal, the justices might have "opened the door" to other states granting what critics characterize as outrageous punitive damage awards, Copland said, adding that the cost of litigation for businesses will likely increase as a result of the court's move.

"The take-away from this is that the Supreme Court is not going to act as an aggressive gatekeeper in enforcing limitations on state punitive awards, which it signaled it might," in earlier cases that limited punitive damage awards, including BMW of North America, Inc. v. Gore.

"Efforts to constrain punitive damage awards appear to be an uphill battle," Copland told Legal Newsline.

The original case against Phillip Morris was brought by Mayola Williams of Portland, Ore., the widow of a smoker who died of cancer in 1997, after smoking Marlboros for 42 years.

Williams' late husband, Jesse, began smoking in 1950. He was diagnosed with lung cancer in 1996, and he died the following year. An Oregon jury awarded Williams $821,485 in actual damages and $79.5 million in punitive damages.

The U.S. Supreme Court has heard three appeals of the 1999 verdict.

Philip Morris, the world's largest cigarette maker, most recently appealed the case to the U.S. high court after the Oregon Supreme Court left the entire award intact despite a U.S. Supreme Court ruling last year that had overturned the judgment against the cigarette maker.

The U.S. Supreme Court overturned the award in 2003, following its pattern of ruling that punitive damages should generally be no more than nine times the size of compensatory damages.

But in its ruling, the Oregon Supreme Court said Philip Morris could not challenge the verdict because it failed to comply with state court procedural rules regarding jury instructions in the case.

"The Oregon Supreme Court's defiance of this court's directive should not be countenanced," Philip Morris said in the appeal. "The Oregon Supreme Court had no authority either to disobey the clear instructions of this court or to conjure up state-law procedural grounds for the judgment."

Because the case has lingered in the courts, the award, including interest accrued since the judgment, could cost Philip Morris as much as $145 million.

Under Oregon law, 60 percent of punitive damages go to the crime victims' assistance fund.

The case is Philip Morris USA v. Williams, 07-1216.

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