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WASHINGTON (Legal Newsline)-The U.S. Supreme Court on Wednesday heard for the third time arguments over a $79.5 million punitive damages award against tobacco company Altria Group Inc.'s Philip Morris USA unit.

Philip Morris, which is seeking a new trial, says the Oregon Supreme Court circumvented a 5-4 U.S. Supreme Court ruling the company won last year.

The Oregon court subsequently reaffirmed the award, which is a record for a tobacco case, finding that the tobacco company flouted a state procedural requirement.

The original case 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.

Philip Morris, the world's largest cigarette maker, 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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