Tobacco Industry Disappointed as U.S. Supreme Court refuses chance to re-consider $79 million Dollar punitive damage award

March 31 (Bloomberg) — The U.S. Supreme Court dismissed Philip Morris USA Inc.’s appeal of a $79.5 million smoker award, declining to rule in a case that business groups had hoped would lead to tougher restrictions on punitive damages. 

The justices today issued a one-sentence order throwing out the Altria Group Inc. unit’s appeal of a case that was argued in December. 

The rebuff leaves intact an award that has grown to more than $150 million with interest and, if paid in full, would set a record in an individual smoker case. Today’s action comes after a dozen years of litigation between Philip Morris, the largest U.S. cigarette maker, and Mayola Williams, whose husband died of lung cancer in 1997. 

“Tobacco litigation has been a war of attrition,” said Robert Peck, a Washington lawyer who represented Williams at the Supreme Court. “This is a testament to sticking to principle and pursuing a case to its end.” 

The company will still have a chance to argue at the lower court level that it shouldn’t have to pay the 60 percent of the award that under Oregon law goes to the state. 

“If Philip Morris USA prevails, the company would be obligated to pay only the remaining 40 percent of the punitive damages award to the plaintiff in this case,” the company said in a statement. Altria is based in Richmond, Virginia. 

‘Improvidently Granted’ 

The court dismissed the case as “improvidently granted.” The justices use that language when they discover problems with a case that prevent them from reaching the issue they planned to resolve. 

Business groups had asked the court to insist on more vigilance from lower courts in policing punitive damages. Philip Morris and its corporate allies argued that some judges have ignored Supreme Court rulings restricting awards. 

The Supreme Court had twice before set aside the Williams award and ordered reconsideration. In the latest case, Philip Morris was seeking a new trial or at least another hearing before the Oregon Supreme Court. 

The case centers on Jesse Williams, a school janitor who smoked Marlboros for 42 years before dying of lung cancer in 1997 at age 67. Mayola Williams claimed in her lawsuit that her husband relied on the company’s fraudulent assurances that its products were safe. 

Compensatory Damages 

The jury’s 1999 punitive award — issued 10 years ago yesterday — came on top of $821,485 in compensatory damages, an amount later cut to $521,485 because of Oregon’s limits on awards. At the time, it was the largest individual verdict against the cigarette maker, and it sent company shares plummeting 8 percent that day. 

The U.S. Supreme Court first ordered reconsideration of the Williams award in 2003, pointing to a punitive-damages ruling the high court had recently issued. 

The Oregon Supreme Court upheld the award, and the U.S. Supreme Court agreed to hear arguments. The high court then used the Williams case to declare that, under the Constitution, juries can’t impose punishment for harm suffered by people who aren’t involved in the lawsuit. As part of that ruling, the justices set aside the award again and returned the case to the Oregon courts. 

State Law 

The Oregon Supreme Court then said it wouldn’t consider Philip Morris’s constitutional arguments because the jury instructions the company proposed for use at trial would have misstated state law. The court said that misstep violated a state law requirement that proposed jury instructions be “correct in all respects.” 

In the latest U.S. Supreme Court round, Philip Morris argued that the Oregon court disobeyed the higher court. Williams’s lawyers contended that courts have discretion to decide which issues to resolve first in evaluating a case. 

During arguments, Justice Stephen Breyer said his views had changed in the three months since the court agreed to take up the dispute. Originally, “I thought this is a runaround, and I’m not sure I think that now,” Breyer said. 

Another justice, David Souter, said the company had a “steep hill” to climb to persuade the court to bar Williams from raising an argument based on state courtroom procedure. “What business do we have to do that?” Souter asked. 

The case was one of two involving Philip Morris on the court’s 2008-09 calendar. In December, the justices ruled 5-4 that smokers can sue over the marketing of “light” cigarettes. 

The case is Philip Morris v. Williams, 07-1216. 

 

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