ParfumGigi@aol.com

Howard J. Bashman
Special to Law.com
02-26-2007

The U.S. Supreme Court's recent 5-4 ruling in Philip Morris USA v. Williams, overturning a $79.5 million punitive damages award in favor of the widow of a deceased smoker, received an understandably upbeat reception from the nation's business community. Yet, for reasons I examine below, the decision is not an unmitigated disaster for plaintiffs seeking to recover punitive damages.

The Court's central holding in Philip Morris was that a defendant's due process rights are violated if a jury assesses punitive damages to punish a defendant for having caused harm to persons other than the plaintiff. According to the majority opinion, "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 or those whom they directly represent, i.e., injury that it inflicts upon those who are, essentially, strangers to the litigation."

The plaintiff's lawyer had argued to the jury that, in deciding how much to assess in punitive damages, the jury should consider how many other Oregonians had been harmed by Philip Morris' cigarettes. The jury appeared to have accepted the invitation, awarding $79.5 million in punitive damages on top of a compensatory damages award of $821,000.

The Philip Morris opinion explains that the Court based its ruling primarily on concerns about fairness to the defendant. In the Court's view, it is unfair to allow a defendant to be punished for supposedly having caused harm to others who are not parties to the lawsuit because the defendant cannot readily defend against such a claim and the jury's punitive damages award will thus likely be based on impermissible speculation.

Because punitive damages are considered a windfall to a plaintiff, whose injuries are fully compensated by a jury's compensatory damages award, it isn't surprising that the Supreme Court's ruling in Philip Morris did not address whether it's fair to a group of similarly situated potential plaintiffs to allow the first plaintiff who reached a jury to obtain punitive damages that punish a defendant for having harmed other potential plaintiffs whose cases are not then before the jury.

To appreciate what I'm discussing, assume that a defendant engaged in conduct that harmed 10 separate potential plaintiffs and that the conduct was egregious enough to subject the defendant to punitive damages. Assume further that all 10 plaintiffs sue the defendant separately, and that each plaintiff's lawsuit seeks punitive damages. If the first plaintiff to reach a jury is allowed to request punitive damages that are intended to punish the defendant for having harmed all 10, then the defendant in theory would have a valid argument as to why the other nine should not be permitted to recover punitive damages when their claims reach a jury.

However, in the aftermath of the Philip Morris ruling, each plaintiff in my 10-plaintiff hypothetical will only be able to ask a jury to award punitive damages intended to punish the defendant for having caused harm to that individual plaintiff. Correspondingly, the defendant will lose the ability to argue that it should not be subjected to repeated punitive damage assessments in each of the 10 lawsuits.

Accordingly, the high court's ruling in Philip Morris is good news for defendants because now an individual plaintiff can no longer receive a punitive damages award intended to punish a defendant for having harmed others similarly situated to the plaintiff. But the ruling is also good news for plaintiffs who are not the first to reach a jury, because the defendant will no longer be able to persuasively argue that earlier punitive damages awards aimed at punishing the same conduct at issue in the current plaintiff's lawsuit extracted a punishment sufficient to mandate the dismissal of that particular plaintiff's punitive damages claim.

Because, under Philip Morris, earlier punitive damages awards could not permissibly have punished the defendant for having harmed the plaintiff currently before the court, now each plaintiff would appear to have an individual right to seek a punitive damages windfall based on the harm caused by the defendant.

Only time will tell the exact impact of the Philip Morris ruling. But while the ruling was a pleasant one for defendants facing large punitive damages claims, it also appears to hold good news for plaintiffs who don't win the race to be first to obtain punitive damages against a defendant whose conduct has harmed many.

Howard J. Bashman operates his own appellate litigation boutique in Willow Grove, Pa., a suburb of Philadelphia. He can be reached via e-mail at hjb@hjbashman.com. You can access his appellate Web log at http://howappealing.law.com/.

Law.com's ongoing LEGAL MINDS article series highlights opinion and analysis from our site's contributors and writers across the ALM network of publications.