Bright Line of Reprehensibility

Damage limits at stake in tobacco appeal

PORTLAND, Ore. -- The question of whether juries should be allowed to award massive punitive damages is at stake when the U.S. Supreme Court hears arguments over an $80 million verdict against tobacco giant Philip Morris, said the Associated Press.

The Oregon case is widely seen as a test of how the court will interpret previous cases on punitive damagesthe additional money intended to punish a company or individual for their behavior and act as a deterrent.

Two key cases have suggested there should be a limit of 9-to-1 or less [image-nocss] on punitive damages compared to actual or compensatory damages, intended to simply restore any financial or economic losses.

The ruling in Philip Morris v. Williamsscheduled for oral arguments Tuesdaymay have a sweeping effect on jury awards beyond the tobacco industry, attracting intense interest from corporate America and trial attorneys.

This ruling might apply to pharmaceuticals, it might apply to automobiles, or it might apply to all products, said Carl Tobias, a University of Richmond School of Law professor who tracks punitive damage cases.

The $79.5 million in punitive damages awarded to the family of Jesse Williams in Oregon was more than 150 times the $521,000 in actual damages, an amount the Oregon Supreme Court ruled last February was not excessive given the extraordinarily reprehensible conduct of PM USA in marketing cigarettes.

Williams started smoking in the 1950s while serving in the Army in Korea, a habit that reached three packs of Marlboros a day before he died of lung cancer in 1997. His widow, Mayola, declined to comment to AP, along with officials of Altria Group Inc., the corporate parent of PM USA.

The attorney who will be arguing the case for the Williams family said he believes the court could use the Oregon case to emphasize there are exceptions to every ruleespecially when misconduct is severemeaning reprehensible or egregious in legal terms.

I think this case is unlike anything they've heard to date in the area of punitive damages, said Robert Peck, president of the Center for Constitutional Litigation. Knowing that, by lying to their customers they were going to kill quite a few of them and cause disease in every one of them, tobacco companies reached an order of reprehensibility that's unlike anything the court has faced before, he said.

But an attorney who filed a friend of the court brief supporting PM USA said he doubted the court would consider the tobacco company an exception to the guidelines on punitive damages it has been shaping. I think this case definitely does not fall into any of the exceptions, said Ted Boutrous, an attorney for the Product Liability Advisory Council, made up of various manufacturers such as automakers and appliance makers. It includes PM USA. Plaintiffs in product liability cases almost always make the same kind of argument: Their case shows a company engaging in particularly bad behavior, and therefore the sky is the limit on punitive damages, he said.

Business groups, including the council and the U.S. Chamber of Commerce, have been seeking a case to apply guidelines the court set out in two previous cases. Brooklyn Law School professor Anthony J. Sebok noted the Supreme Court ruled in a 1996 Alabama case called BMW v. Gore that there could be a limit on the size of punitive damages under the due process clause of the U.S. Constitution. In that case, the court overturned a $2 million punitive damages award that resulted from a consumer fraud claim involving only $4,000 worth of compensatory damages.

Sebok noted that Justice Antonin Scalia dissented in the Alabama case, rejecting the argument that the Constitution set any sort of limit on state jury awards.

The court visited the issue again in 2003, in a Utah case called State Farm v. Campbell, where the punitive damages were $145 million compared to compensatory damages of $1 million. The court noted, in an opinion by Justice Anthony Kennedy, that single-digit multipliers between punitive and actual damagesmeaning 9-to-1 or lessare more likely to comport with due process. But the court also said, We decline again to impose a bright-line ratio which a punitive damages award cannot exceed.

In the Oregon case, that bright line might easily be crossed when the test of reprehensibilitythe level of misconductis weighed by the court, said Edward Sweda Jr., senior attorney for the Tobacco Products Liability Project at Northeastern University School of Law in Boston. As the court noted in the State Farm case, the test for reprehensibility includes whether the harm was physical rather than economic; the conduct showed indifference or reckless disregard for health and safety; the conduct was repeated; and the harm was intentional, rather than accidental.

Sweda said that PM USA meets all those requirements in the Oregon case.

They are the worst of the worst in terms of corporate wrongdoers, Sweda said.

If the court rules for PM USA, it would effectively immunize companies from being held accountable for wrongdoing and eviscerate the doctrine of punitive damages that goes back several centuriesgoes back before the founding of this country, Sweda said.

Boutrous, who represents big manufacturers, disagreed. He also cited legal history dating back to the founding of the nation, saying the courts have placed limits on all kinds of punishments, including criminal sentences. He suggested the Supreme Court is merely trying to make the law more uniform. The court has said that due process has long regulated damages and punishments and there is some limit on those punishments, Boutrous said.

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