WASHINGTON -- The U.S. Supreme Court threw out a $79.5 million punitive damages award to a smoker's widow Tuesday, a boon to businesses seeking stricter limits on big-dollar jury verdicts. The 5 to 4 ruling was a victory for Altria Group Inc.'s Philip Morris USA, which contested an Oregon Supreme Court decision upholding the verdict.
In the majority opinion written by Justice Stephen Breyer, the court said the verdict could not stand because the jury in the case was not instructed that it could punish PM USA only for the harm done to the plaintiff, not [image-nocss] to other smokers whose cases were not before it.
States must provide assurances that juries are not asking the wrong question...seeking, not simply to determine reprehensibility, but also to punish for harm caused strangers, Breyer said, according to the Associated Press report.
The decision did not address whether the size of the award was constitutionally excessive, as PM USA had asked.
Chief Justice John Roberts and Justices Samuel Alito, Anthony Kennedy and David Souter, joined with Breyer. Dissenting were Justices Ruth Bader Ginsburg, Antonin Scalia, John Paul Stevens and Clarence Thomas.
Mayola Williams sued PM USA for fraud on behalf of her husband, a two-pack-a-day smoker of Marlboros for 45 years. Jesse Williams died of lung cancer more than nine years ago. She argued the jury award was appropriate because it punishes PM USA's misconduct for a decades-long massive market-directed fraud that misled people into thinking cigarettes were not dangerous or addictive.
Williams, according to his widow, never gave any credence to the surgeon general's health warnings about smoking cigarettes because tobacco companies insisted they were safe. Only after falling sick did Williams tell his wife: Those darn cigarette people finally did it. They were lying all the time.
The cigarette maker, however, said a jury can punish the company only for the harm done to Williams, not to other smokers. The jury should have been told explicitly that other smokers, no matter how tragic their stories, would have to prove their own cases, the company said.
The Chamber of Commerce, National Association of Manufacturers and trade associations representing car and drug makers have weighed in on behalf of tighter restrictions on damage awards.
The case also was watched closely as a test of whether the new makeup of the Supreme Court would lead to changes in its prior rulings limiting punitive damages. Roberts and Alito, the two newest members, were in the majority Tuesday, giving no hint of a change in the court's approach to punitive damages.
Citigroup tobacco analyst Bonnie Herzog said in a research note: [Although] the court did not rule on whether or not the monetary amount of the punitive award was unconstitutional, which was what PM USA was hoping fornevertheless, this is a big win for Altria's PM USA, and does away with yet another pending lawsuit against tobacco manufacturers. We don't expect the stock to move much on this news, as the main issue regarding how closely punitive damages must resemble the actual harm suffered by the plaintiff was not addressed.
The case is Philip Morris USA v. Williams, 05-1256.
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