Supreme Court to revisit punitive damages.

The U.S. Supreme Court has agreed to reconsider the question of when--and how much--punitive damages are justified, granting review of a $79.5 million punitive damages award against tobacco giant Philip Morris for the death of an Oregon smoker. (Philip Morris USA v. Williams, 92 P.3d 126 (Or. 2004), cert. granted, 126 S. Ct. 2329 (U.S. May 30, 2006) (No. 05-1526).)

The Court will consider whether due process allows juries to award damages to punish a company for the effects of its conduct on nonparties to the suit, and whether a defendant's conduct can be reprehensible enough to override a constitutional requirement that punitive damages be reasonably related to the plaintiff's harm.

Jesse Williams smoked for more than 40 years and died of lung cancer in 1997. His wife, Mayola, sued Philip Morris, claiming that the company had knowingly lied when it made public assertions that smoking did not pose health risks.

The jury awarded compensatory damages of $800,000 and the $79.5 million in punitive damages--a 100 to 1 ratio. Both awards were reduced on appeal, and the final amount maintained a 39 to 1 ratio of punitive damages to compensatory damages.

The Oregon Supreme Court upheld the original $79.5 million punitive damages award, relying on Supreme Court decisions in State Farm v. Campbell (23 S. Ct. 1513 (2003)) and BMW v. Gore (517 U.S. 559 (1996)), which considered the despicability of the defendant's conduct. The Oregon high court ruled that the award was not excessive, considering the tobacco company's "extraordinarily reprehensible" conduct, and that the trial court properly refused to bar the jury from punishing Philip Morris for harm it caused other smokers.

In its petition to the Supreme Court, the company called the Williams decision "dangerous" and argued that upholding the Oregon ruling would allow limitless punitives as "unconstitutional duplicative punishments." It argued that under the Supreme Court's ruling in Campbell, any ratio over 9 to 1 is presumptively unconstitutional.

Attorneys at the Washington, D.C.-based Center for Constitutional Litigation (CCL), who represent Williams, maintain that Campbell did not establish binding ratios--although defendants have since insisted that a single-digit multiplier is the constitutional maximum.

With two new justices on the Court whose views on tort-related issues are largely unknown, there is no way to predict the outcome of Williams, said CCL President Robert Peck.

"The grant of a petition for certiorari does not tell litigants anything about the Court's thinking. It will be the first time the two new justices hear a case about constitutional limits on the amount of punitive damages," Peck said.

"Interestingly, it is the first time the Court is hearing a personal injury case, rather than an economic loss case, in the punitive damages area," he said, adding that he believes such a case makes a stronger argument for them.

"We would certainly argue that--and the Court in State Farm seemed to indicate that that is the case," Peck said.