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News & trends
April 2008 | Volume 44, Issue 4

Oregon Supreme Court upholds punitive damages against Philip Morris

Allison Torres Burtka, Associate Editor

The Oregon Supreme Court recently upheld a landmark punitive damages verdict against tobacco giant Philip Morris, hinging its decision on a jury instruction that the company had proposed and the trial court rejected. (Williams v. Philip Morris, Inc., 2008 WL 256614 (Or. Jan. 31, 2008).)

Mayola Williams, the widow of a smoker who died of lung cancer after years of smoking, sued the cigarette manufacturer, alleging that its fraud and negligence caused her husband’s death. The case made its way to the Supreme Court twice.

“It’s been nine years,” said Raymond Thomas, a Portland, Oregon, lawyer who represents Williams. “It’s time for the case to be concluded.”

“[T]he unanimous opinion by the Oregon Supreme Court in the case of Williams v. Philip Morris is a resounding victory not only for the Williams family, but also for the principle of corporate accountability,” said Edward Sweda Jr., senior attorney for the Tobacco Products Liability Project at Northeastern University School of Law in Boston, in a press release.

During closing arguments at trial, Williams’s attorney told the jurors that in determining the amount of punitive damages they should “think about how many other Jesse Williamses in the last 40 years in the state of Oregon there have been.” Lawyers for Philip Morris asked the judge to use a jury instruction it proposed that would have told the jury that it could not punish the company for injuries to nonparties, but the judge rejected that instruction.

The jury awarded Williams compensatory damages of $821,485.50 and punitive damages of $79.5 million, and the court reduced the punitive award to $32 million. Both sides appealed. The appeals court held that the trial court should not have reduced the punitive damages and did not err in refusing to give the jury instruction.

The Oregon Supreme Court denied review. The U.S. Supreme Court granted certiorari, vacated the appeals court’s judgment, and remanded the case for further consideration in light of State Farm Mutual Automobile Insurance Co. v. Campbell, which addressed constitutional limitations on punitive damages under the Due Process Clause of the Fourteenth Amendment. (538 U.S. 408 (2003).) The appeals court again held that the punitive damages award didn’t violate due process and that the trial court didn’t err in rejecting the instruction. The Oregon high court then affirmed that decision.

The Supreme Court took up the case again, noting that “the Constitution’s Due Process Clause forbids a state to use a punitive damages award to punish a defendant for injury that it inflicts upon nonparties . . . those who are, essentially, strangers to the litigation.” However, the Court also said that harm to nonparties can be used to show the degree of reprehensibility of the defendant’s conduct. (127 S. Ct. 1057 (2007).)

Acknowledging that the distinction between punishing for harm to nonparties and using it to determine reprehensibility may prove difficult for lower courts, the Court said that where the risk of jurors misunderstanding that distinction is significant, “a court, upon request, must protect against that risk.” It said the Oregon Supreme Court had applied the wrong standard but did not address whether the award was unconstitutionally excessive.

Considering the case again, the Oregon Supreme Court found that Philip Morris’s jury instruction misstated Oregon law. Part of the instruction said: “Factors that you may find to bear upon the degree of reprehensibility include . . . the degree to which the defendant was motivated by the desire to obtain illicit profits from its misconduct.”

The plaintiff argued that while “may” is discretionary, those factors are mandatory under the Oregon statute on punitive damages in products liability actions. The plaintiff also argued that the “motivated by the desire” language was erroneous because the statute tells the jury to consider “the profitability of the defendant’s misconduct”—focusing on the outcome rather than the defendant’s intent.

The court agreed with the plaintiff on both points, holding that “to have given the instruction in the form proffered by [the] defendant would have been error under Oregon law.”

Writing for the court, Justice W. Michael Gillette noted that “asking the court to give a multiple-page instruction—essentially placing all the party’s eggs in one instructional basket—involves a significant danger that the proffered instruction will be erroneous in some aspects.”

This outcome serves to advise attorneys to keep their instructions short and address one issue at a time, so that the entire instruction is not invalidated, said Robert Peck, president of the Center for Constitutional Litigation (CCL) in Washington, D.C., who also represents the plaintiff.

Some observers have noted that Philip Morris tried too hard to slant the jury instruction in its favor. However, Peck said, “it struck me that different lawyers for Philip Morris in different locations had differing levels of faith that this was a real issue.” It seemed to be less a matter of influencing the jury than a potential matter for appeal once the instruction was rejected, he said.

A day before the Oregon court’s decision, the California Court of Appeal held in another tobacco case brought by an individual plaintiff that Philip Morris’s proposed jury instruction on punitive damages should not have been rejected, citing the Supreme Court’s decision in Williams, and ordered a new trial on punitive damages. (Bullock v. Philip Morris USA, Inc., 2008 WL 240989 (Cal. App. Jan. 30, 2008).) But, Peck noted, this instruction was short and to the point, unlike that in Williams.

Philip Morris is expected to file for certiorari with the Supreme Court again. However, Thomas said, “there’s no purpose to be served by further review.”

What does Williams mean for the issue of unconstitutionally excessive punitive damages?

“The Supreme Court twice has suggested that there might be a presumptive ratio, but no mathematical bright line,” CCL’s Peck said. “The traditional, centuries-old measure is the gravity of the offense.”

He added that in the Williams case, “the jury saw overwhelming evidence of Philip Morris’s misconduct. That’s the explanation for the verdict that the jury rendered.”

Mark Gottlieb, director of the Tobacco Products Liability Project, noted in a statement that the Williams decision “will loom large for the thousands of pending Florida claims recently filed in the wake of the Engle class action and should encourage more attorneys to take on individual tobacco products liability cases.”

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