Washington – The Supreme Court overturned a nearly $80 million verdict Tuesday intended to punish the Philip Morris tobacco company for endangering the lives of smokers, and it set limits on how jurors can decide to make big companies pay for wrongdoing.
The court’s 5-4 narrowly written decision said that an Oregon court had improperly let juries calculate the harm done to many in deciding the damages paid to an individual.
The court ruled that the Constitution’s due process clause forbids a state to use punitive damages to punish a company for injury that it inflicts upon others who are “essentially, strangers to the litigation,” according to the majority opinion written by Justice Stephen Breyer.
The case was seen at the beginning of the term as one of the most important business decisions that would be made by the court under new Chief Justice John Roberts, and it was clearly a victory for Phillip Morris and other big companies. It continues the reasoning in the court’s recent rulings that punitive damages – aimed at punishing a company and deterring future wrongdoing – must be proportionate to the wrong committed.
But in sending the case back to Oregon courts for further litigation, the justices sidestepped a decision that industry had most wanted: whether to set a solid cap on how much could be awarded for punitive damages, perhaps based on a specific ratio to the actual damages done to the individual who brought the suit.
So both sides in the case found something to like.
The case involved Jesse Williams, a Portland janitor who smoked at least two packs of Marlboros every day for 45 years and died of lung cancer in 1996. Phillip Morris, now owned by Altria Group, had denied during that time that its cigarettes were addictive, and at trial, lawyers for his estate told the jury to consider the damage done to other smokers in Oregon.
The jury awarded Williams’ widow, Mayola, $821,000 in compensation, then tacked on the $79.5 million punitive award.
The nearly 100-1 ratio of punitive damages to compensatory damages is far outside the “single-digit” ratio the Supreme Court has suggested in previous cases, but a firm limit never has been set.
The majority opinion issued Tuesday agreed with Williams that the jury could hear evidence of harm to others to show that a company’s conduct was reprehensible, which could increase the punitive damages award.
But Breyer wrote a “jury may go no further than this and use a punitive damages verdict to punish a defendant directly on account of harms it is alleged to have visited on nonparties.”
In other decisions Tuesday, the court:
- Vacated a $79 million award against Weyerhaeuser Co. in a lawsuit alleging the forest products company tried to monopolize the hardwood lumber market in the Pacific Northwest.
- Ruled 5-4 that a Florida death row inmate could not challenge his conviction in the federal court system because he missed a one-year filing deadline.
