Supreme Court Upholds Tobacco Award

Supreme Court Upholds Tobacco Award

Robert Barnes
Washington Post Staff Writer
March 31, 2009

The Supreme Court today dealt a blow to Philip Morris, saying it would not decide the cigarette maker's challenge of a punitive damages award brought by the widow of a longtime smoker that now is worth nearly $150 million.

The court's decision, announced in a one-sentence order, was a surprising and anticlimactic ending to a case that has bounded back and forth through the judicial system for nearly a decade. When an Oregon jury awarded Mayola Williams nearly $80 million following the death of her husband, Jesse, it was the largest award of its kind.

Even though the justices have strongly implied that the award was too large and twice sent the case back west, the Oregon Supreme Court found reasons to leave it as it was. After the Oregon justices declined to change the decision for a second time, attorneys for Philip Morris petitioned the high court to "vindicate" its authority.

Instead, the court today said it should not have accepted the case for a third time, and in the language of the court, dismissed the case as "improvidently granted."

Because the case was argued in early December and the court issued its decision only today, it suggests the justices had trouble coming together on how to solve the legal issues raised.

When it last considered the case, the court ruled 5 to 4 that the Oregon court had applied the wrong constitutional standard in reviewing the award. It strongly suggested the figure was too high and told the state court to make sure the jury had not awarded such heavy punitive damages -- which are aimed at discouraging companies from reprehensible behavior -- because of harm the cigarette maker might have done to others, rather than to Williams.

Instead, the Oregon justices rejected Philip Morris's challenge on the grounds of state law, saying the company's proposed jury instructions nearly 10 years prior had been insufficient. The Oregon court said it did not need to get to the question of the court's constitutional standards in order to uphold the award.

At oral arguments, Philip Morris lawyer Stephen M. Shapiro told the justices that the case had returned "because the Oregon court failed to follow this court's directions."

But the justices said that maybe the Oregon court had a point, after all.

Justice Stephen G. Breyer, who wrote the court's 2007 decision in the case, said he thought at first that Oregon was giving the court the "runaround." But after studying the case more closely, he said, "I'm not sure that I think that now."

Chief Justice John G. Roberts Jr. had suggested during the arguments that the court use the case to finally decide the question of whether there should be a cap on punitive damages.

The justices had declined to accept that issue when they took Philip Morris's petition, and doing so would likely have required additional briefing and more arguments.

It would have greatly raised the stakes of the case, and settled a question that big business and trial lawyers have battled over for years. The issue of whether large punitive damages awards are unconstitutional is one that has split the court in a way different from its ideological divide.

Because of interest that the company must pay, it is unclear exactly what the award is currently worth, but it was set at $143 million last June. Under Oregon law, it is to be split between the state and Mayola Williams.

Murray Garnick, a senior vice president at Altria, which owns Philip Morris, said while the company "had hoped for a different outcome," the court's decision today does not end a dispute over whether damages must be paid to Oregon. Philip Morris is seeking a ruling from an Oregon court to keep the state from collecting punitive damages in this case.