US Supreme Court Hears Punitive Damages Case, Again

The issue of punitive damages in personal injury cases came before the Supreme Court recently. For the second time in this case. And based on the oral argument, possibly not the last.

In a highly watched case, Philip Morris v. Williams (05-1256) was argued October 31st, with the Justices hinting it may send the case back to the state court from which it came, instead of resolving an open question: How much in punitive damages should a jury be allowed to award?

In Williams, an Oregon jury returned $800,000 in compensatory damages and $79.5M in punitives. Thus began a journey up the appellate ladder in Oregon, where the verdict was affirmed by the state’s highest court, and then on to Washington for an ultimate review by the US Supreme Court. But the Supremes, in the meantime, had decided another punitive damage case (State Farm v. Campbell) and sent Williams back to Oregon to reconsider in light of its opinion.

So after doing an extraordinarily detailed analysis of State Farm, the Oregon Supreme Court affirmed the punitive damage award in this personal injury tobacco case that was almost 100x the compensatory award, writing:

Philip Morris showed indifference to and reckless disregard for the safety not just Williams, but of countless other Oregonians, when it knowingly spread false or misleading information to keep smokers smoking. Philip Morris’s actions were no isolated incident, but a carefully calculated program spanning decades.

Thus, Philip Morris asked the US Supreme Court to review again.

The State Farm opinion has been the source of much legal discussion. In part, it seems to put limits on the amount of punitive damages that can be awarded, and discusses a ratio of compensatory damages to punitive damages. At one point the court mentions a multiplier of 4x and another of 10x, and in other parts specifically saying that there are no “bright line” tests for how much is too much. The source of the limits is that some justices believe that a large punitive damage award violates the due process clause of the 14th Amendment.

What makes Phillip Morris interesting is that it is a personal injury matter, not some commercial dispute. It thus differs from the other cases the high court has heard on the issue. It remains to be seen if the court will create constitutional protections for reckless conduct that endangers the health, safety and welfare of the public, where no such protection presently exists.

So what happened before the US Supreme Court on the new review? Well, it seems that right after oral argument started, the justices got caught up in a contradictory jury instruction that had been requested by Philip Morris. If you read the second sentence, which I placed in italics, you see the contradiction:

“The size of any punishment should bear a reasonable relationship to the harm caused to Jesse Williams [the deceased smoker] by the defendant’s punishable misconduct. Although you may consider the extent of harm suffered by others in determining what that reasonable relationship is, you are not to punish the defendant for the impact of its alleged misconduct on other persons, who may bring lawsuits of their own in which juries can resolve their claims and award punitive damages for those harms, as such other juries see fit.“

So Philip Morris was claiming the jury may consider the harm suffered by others, but can’t punish them for it. What, exactly, does that mean? Perhaps it is no wonder the court refused to give the instruction. The high court justices themselves were confused, as you can see in this ScotusBlog note regarding the argument. A transcript of the oral argument is here. Justice Ginsburg got the ball rolling with this:

JUSTICE GINSBURG: You don’t think that
would confuse the jury if they are first told that they
may consider the extent of harm suffered by others, and
then the next instruction seems to say they can’t?

The court will likely decide the case by June. But don’t be surprised if they avoid the issue and send it back (again) to the Oregon courts to flesh out the issue of the jury instructions.

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