U.S. Supreme Court Holds Juries Cannot Award Punitive Damages For Harm To Non-Parties
April, 2007
by Edward M. Kay and Melinda S. Kollross
Philip Morris USA v. Williams, 127 S. Ct. 1057 (2007)
Facts
Decedent Jesse Williams was a heavy Marlboro cigarette smoker. His widow sued Marlboro's manufacturer, Philip Morris, for negligence and deceit. An Oregon state court jury found that smoking caused Williams' death; that Williams smoked in significant part because he thought it was safe to do so; and that Philip Morris knowingly and falsely led him to believe that it was safe. The jury returned a verdict against Philip Morris on both claims; awarding $821,000 in compensatory and $79.5 million in punitive damages on the deceit claim.
The trial court found the punitive award excessive and reduced it to $32 million. Both sides appealed and the Oregon appellate court restored the $79.5 million award. Philip Morris sought review from the Oregon Supreme Court (which was denied) and then the U.S. Supreme Court, which remanded the case in light of State Farm. The Oregon appellate court adhered to its original ruling on remand. Philip Morris again sought Oregon Supreme Court review, which was granted.
Philip Morris argued that: (1) the trial court erred in rejecting its tendered jury instruction specifying that the jury could not seek to punish Philip Morris for injury to other persons not before the court; and (2) the roughly 100-to-1 ratio between the $79.5 million punitive award and the $821,000 compensatory award rendered the punitive award "grossly excessive." Philip Morris contended that the instruction was necessary because of plaintiff's counsel's arguments concerning other cigarette smokers (besides Williams) and that there was a significant likelihood that the $79.5 million punitive award represented punishment for its having harmed others, a punishment forbidden by the Due Process Clause. The Oregon Supreme Court rejected both arguments, holding that the Constitution does not prohibit a state court jury from using punitive damages to punish a defendant for harm to nonparties and that the $79.5 million award was not grossly excessive given the reprehensibility of defendant's conduct.
Philip Morris sought and obtained certiorari to the U.S. Supreme Court.
Analysis
In a 5-4 decision, the U.S. Supreme Court vacated and remanded for further proceedings.
The Court began its analysis by reviewing the principles governing punitive damages. Although the Supreme Court "has long made clear that punitive damages may properly be imposed to further a State's legitimate interest in punishing unlawful conduct and deterring its repetition," the Court has also emphasized "the need to avoid an arbitrary determination of an award's amount." Unless a State insists upon proper standards "that will cabin the jury's discretionary authority," its punitive damages system may deprive a defendant of fair notice of the severity of the penalty which may be imposed, threaten "arbitrary" punishments, and impose one State's (or one jury's) policy choice upon neighboring States with different public policies. For these and other reasons, the Court has found that the Constitution imposes certain limits with respect to the procedures for awarding punitive damages and to amounts forbidden as "grossly excessive."
The Court then considered the Constitution's procedural limitations, holding that the Due Process Clause forbids a State from using a punitive damages award to punish a defendant for injury inflicted upon nonparties or those whom they directly represent, i.e. injury it inflicts upon strangers to the litigation. While a plaintiff may show harm to others in order to demonstrate the reprehensibility of defendant's conduct, a jury may not go further "and use a punitive damages verdict to punish a defendant directly on account of harms it is alleged to have visited on nonparties." The Court based its conclusion on three basic grounds: (1) a defendant threatened with punishment for injuring a nonparty victim has no opportunity to defend against the charge; (2) to permit punishment for injury to a nonparty victim "would add a near standardless dimension to the punitive damages equation," magnifying the risk of arbitrariness, uncertainty and lack of notice; and (3) an absence of authority supporting the use of punitive damages awards to punish a defendant for harming others.
The Court declined to reach the excessiveness issue given its conclusion that the Oregon Supreme Court applied the wrong constitutional standard when considering Philip Morris' appeal. As the Court explained, application of the correct standard "may lead to the need for a new trial, or a change in the level of the punitive damages award."
Learning Point
Where plaintiff's counsel adduces evidence or makes jury arguments concerning actual or potential harm to non-parties allegedly caused by defendant's conduct, the court must, "upon request", protect defendant against the risk that the jury will award punitive damages for the alleged harm to others. Although Philip Morris does not dictate what specific protective procedures should be employed, its discussion suggests that a jury instruction like that proposed by Philip Morris would be appropriate. We accordingly recommend that defendants tender a "Philip Morris" type instruction informing the jury that they may not punish defendant or award punitive damages for any alleged harm to others caused by defendant's conduct and objecting to any instructions which do not so provide. We also recommend objecting to any evidence or argument suggesting that the jury may award punitive damages for harm to others not before the court, and potentially moving for a mistrial if particularly egregious evidence or argument is presented.
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