High court agrees to hear appeal in $80 million tobacco case settlement

June 19, 2006

The Supreme Court said this month it will decide if tobacco giant Philip Morris must pay nearly $80 million in damages to the family of a longtime smoker, a case that could shield companies from large jury awards if the company wins.

Lawyers on both sides of the issue said the case could go a long way to determining whether the high court will place limits on punitive damage awards in a variety of cases beyond tobacco.

“The case is significant with respect to … constitutional constraints on runaway punitive damage awards, which is what we feel happened in this particular case,” said Andrew Frey, a lawyer for Philip Morris.

A ruling could set a precedent for a range of civil cases, including those involving wrongdoing by a criminal defendant, said Edward Sweda Jr., senior attorney for the Tobacco Products Liability Project at Northeastern University School of Law in Boston.

A decision in favor of Philip Morris “could largely eviscerate the whole concept of punitive damages,” which is to punish wrongful behavior to deter future wrongdoing, Sweda said.

At $79.5 million, the award in the Oregon case is more than 150 times the $521,000 actual damages awarded by the jury.

The Oregon Supreme Court ruled in February that the amount was not excessive given the “extraordinarily reprehensible” conduct of Philip Morris in marketing cigarettes.

A jury had ordered damages be paid to the family of Jesse D. Williams, a janitor who smoked three packs of Marlboros a day before he died of lung cancer in 1997. Williams took up cigarettes in the 1950s while serving in the U.S. Army in Korea.

The case gives Supreme Court justices a chance to clarify a 2003 ruling in an insurance case that said punitive damages should generally be in line with actual damages. Robin Conrad, a lawyer for the U.S. Chamber of Commerce, said business groups have been seeking a case to apply the court’s ruling in the 2003 case, known as State Farm v. Campbell.

Justices ruled that punitive damages should be “proportionate to the amount of harm” someone suffers but did not give a specific formula for determining how such damages should be set.

Arguments in the Oregon case are expected this fall. The case is Philip Morris USA v. Williams, 05-1256.

In a statement, Philip Morris called the punitive damages in the Oregon case “grossly excessive and inconsistent” with the State Farm ruling. Philip Morris is part of Altria Group Inc.

The Oregon Supreme Court said in the Williams case that Philip Morris “knew that smoking caused serious and sometimes fatal disease, but it nevertheless spread false or misleading information to suggest to the public that doubts remained about the issue.”

Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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