Supreme Court Opens October Term with Punitive Damages Case on the Horizon

On Monday, October 2, 2006, the Supreme Court of the United States opened its October term, and the second term under the watch of Chief Justice John Roberts, Jr. Many crucial and difficult issues will be addressed this term, but one case of note to personal injury lawyers, and personal injury victims, is Philip Morris USA v. Williams In this case, the Court will address the issue of punitive damages.

Oral argument is scheduled for October 31, 2006, in Philip Morris USA v. Williams. Factually, the case addresses the inoperable lung cancer diagnosis of Jesse Williams, who smoked three packs of cigarettes a day for 47 years. Following a diagnosis of inoperable lung cancer at age 67, Mr. Williams passed away a mere six months later.

The Plaintiff, Mr. Williams’s widow, filed suit in May of 1997 in Oregon, claiming that Philip Morris USA “knew for 50 years of the potential health risks its product posed, but failed to inform the public of those risks.” Trial began in February of 1999, and in March, the jury returned with a stunning verdict. The jury found that Philip Morris USA had engaged in negligent and fraudulent actions, and awarded compensatory damages of over $800,000. Next, in their punitive damages award (more commonly termed “pain and suffering”) the jury found that because the conduct by Philip Morris USA was systematic over a 50 year period, punitive damages in the amount of $74.5 million dollars were justified. The trial judge, while noting that the $74.5 million dollar award was “was within the range a rational juror could assess based on the record as a whole,” found the award excessive and reduced the amount to $32 million dollars.

Both parties appealed the decision to the Oregon Court of Appeals, which reinstated the $74.5 million dollar award. This was affirmed by the Oregon Supreme Court. Philip Morris USA sought an initial review from the Supreme Court in light of the Court’s decision in State Farm v. Campbell. Under State Farm v. Campbell awards of punitive damages could be reduced if the award greatly exceeded the amount of compensatory damages. In addition, the punitive damages award was found to be subject to a numerical ratio. Awards could not be more than nine times the amount of the compensatory award. However, the Court relied upon the case of BMW of North America v. Gore. In this case, a three part set of guidelines was applied to punitive awards:

The degree of reprehensibility of the defendant’s misconduct; the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.

Under these guidelines, the case was sent back to the Oregon Supreme Court. Again, that Court upheld the award, stating that the cigarette company showed “indifference and reckless disregard” toward the safety of its customers, and that this spanned over 50 years. As such, the Oregon Supreme Court held, while the punitive award of $74.5 million appeared to violate the standard set in State Farm v. Campbell, the high degree of culpability and blatant disregard on the part of Philip Morris USA required the high award.

Philip Morris USA again sought review from the Supreme Court, and its appeal for review was granted in May of 2006.

This will be the first time that the Supreme Court will address issues involving personal injury matters since the addition of Chief Justice Roberts and Justice Samuel Alito to the Court. As one of the attorneys for the Plaintiff in Philip Morris USA v. Williams stated:

I think holding courts to limits takes it away from jurors and judges. If the amounts are too small, large corporations begin to think it’s just an acceptable part of the cost of doing business.

Personal injury attorneys would be wise to track the Court’s decision in this case.