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By Tony Mauro
Legal Times
02-21-2007

The Supreme Court on Tuesday tossed out a $79.5 million punitive damage award won by a smoker's widow against Philip Morris, ruling that Oregon jurors improperly considered harm to other smokers in punishing the tobacco giant.

By a 5-4 vote, the Court said that a state violates the Constitution's due-process clause when it uses a punitive damage award to punish a defendant for injuries suffered by "strangers to the litigation," in the words of Justice Stephen Breyer, who wrote the majority opinion.

"A defendant threatened with punishment for injuring a nonparty victim has no opportunity to defend against the charge," Breyer wrote.

Business advocates applauded the ruling as a major body blow, grounded in the Constitution, against high punitive damage awards.

"This is a huge, huge win for corporate defendants," said Lori Nugent, chair of the enterprise risks practice of Cozen O'Connor in Chicago, and author of a state-by-state guide on punitive damages. "Lawyers who exhort jurors to send a message; that has to stop now. It rips the guts right out of a case."

But plaintiffs groups say the decision won't change much, especially since the Court on Tuesday also said that harm to others could still be considered by jurors in determining the defendant's level of "reprehensibility."

"Ultimately, I don't think this is going to be very significant. The Court was slaying dragons that don't exist," said Robert Peck, who argued the case on behalf of Mayola Williams, widow of longtime Oregon smoker Jesse Williams, whose estate won the case against Philip Morris. On remand to Oregon, Peck said, the case could still result in a significant punitive damage award.

The ruling also disappointed some business groups because it explicitly stopped short of setting numerical limits on excessive punitive damages -- a holy grail for critics of the tort system. The Court's sidestep caused some tobacco-company stocks to dip on Wall Street after the ruling.

The decision in Philip Morris USA v. Williams represented the first time Chief Justice John Roberts Jr. and Justice Samuel Alito Jr. showed their stripes on an issue that scrambles the usual alliances on the Court. Both Roberts and Alito joined the Breyer majority, along with Justices Anthony Kennedy and David Souter. In dissent were Justices Clarence Thomas -- who sees no limit to punitive damages written in the Constitution -- and Justices John Paul Stevens, Antonin Scalia and Ruth Bader Ginsburg.

It was also the first time that evidence of tobacco-company misconduct, dug up by years of discovery in litigation, was before the Court, albeit in the background. But Breyer's majority made scant mention of the evidence or of any particulars of Williams' case.

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