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SUPREME COURT APPLIES PUNITIVE-DAMAGE LIMITS TO PERSONAL INJURY.

The Supreme Court vacated two large awards of punitive damages in wrongful death cases Oct. 6, sending them back to lower courts to reconsider in light of its decision this year in State Farm v. Campbell.

Without comment, the court remanded Philip Morris USA Inc. v. Mayola Williams (02-1553) to the Oregon Court of Appeals and Chrysler Corp. v. Dorothy Clark (02-1748) to the Sixth U.S. Circuit Court of Appeals.

The court's action appeared to bring personal injury and wrongful death cases within the scope of its rulings limiting punitive damages, although all of those rulings dealt with economic injury.

Sherman Joyce, president of the American Tort Reform Association, said extending the limits to personal injury cases was no surprise - indeed, for the court to have found otherwise "would have been quite extraordinary."

"Our assumption is that they were articulating a broad constitutional principle" in the court's earlier rulings, he said.

In the most definitive of its rulings on punitive damages, BMW of North America v. Gore, the Supreme Court had said lower courts must consider a number of factors in deciding whether such an award is reasonable - among them whether the harm was physical rather than economic.

The other tests are whether the conduct evinced an indifference to or reckless disregard of the health or safety of others; whether it involved repeated actions or was an isolated incident; and whether it resulted from intentional malice, trickery or deceit, or mere accident.

The decision in Gore had not said a particular ratio between punitive and compensatory damages would be acceptable, but State Farm v. Campbell provided more guidance (Liability & Insurance Week, April 14).

"We decline again to impose a bright-line ratio which a punitive damages award cannot exceed," Justice Anthony Kennedy wrote for the 6-3 majority. But he noted the court had previously cited a long legislative history "providing for sanctions of double, treble, or quadruple damages to deter and punish. . . .

"While these ratios are not binding, they are instructive. They demonstrate what should be obvious: Single-digit multipliers are more likely to comport with due process, while still achieving the State's goals of deterrence and retribution, " than multipliers of 145 as was the case in Campbell.

In Philip Morris v. Williams, the Oregon appellate court had reinstated a jury award of $79.5 million on top of $800,000 in compensatory damages to the family of Jesse Williams, a longtime Marlboro smoker - a ratio of more than 99 to 1.

In Williams v. Philip Morris (9705-03957; A106791), the appellate court said the jury's award of $79.5 million "is equal to a little more than two and a half weeks' profit."

As for the disparity between compensatory and punitive damages, it said, "when the defendant's conduct involves a course of conduct that has affected people other than the plaintiff, the jury may properly consider the effect of that conduct on people other than the immediate plaintiff." It added that Oregon law would permit future judges and juries to take the awards into account when they evaluating punitive damage awards in like cases.

In a statement, Philip Morris said it would ask the Oregon court to order a new trial on all issues in the case, not just the punitive damages.

In Chrysler v. Clark, the ratio of punitive to compensatory damages was more than 12 to 1.

Dorothy Clark had sued the manufacturer after her husband Charles was killed when he made a left turn in his 1992 Dodge Ram club cab pickup in front of a police cruiser going about 55 mph. The cruiser struck the truck and Charles Clark, who wasn't wearing a seatbelt, was thrown from the pickup.

The widow claimed defective design of the truck's door latches contributed to her husband's death because it allowed him to be thrown out.

A Kentucky jury found Chrysler and Charles Clark each 50 percent at fault and returned a verdict of $471,258 in compensatory damages and $3 million in punitive damages. The judge entered judgment against Chrysler for half the compensatory damages and all the punitive damages.

The Sixth Circuit upheld the award in Clark v. Chrysler (97-6380).

Although Chrysler challenged the punitive damages under Gore, the appellate panel said that decision's factors "quickly reveals that this case is a far cry from Gore. Here, Chrysler's conduct resulted in the loss of life, which clearly evidences a greater disregard for the rights and safety of others than failure to reveal that a car has been repainted," as was the case in Gore.

"The disparity between the jury's compensatory damages award and its punitive damages award is also not comparable to that in Gore," the panel said.

"Lastly, it can be said that automobile manufacturers are generally on notice that their reckless conduct resulting in death could trigger a substantial punitive damages award."
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Publication:Liability & Insurance Week
Geographic Code:1USA
Date:Oct 13, 2003
Words:805
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