Law Suits: OR Gets 60% of Tobacco Suit Award

Reining in juries
The Supreme Court rightly puts some limits on the awarding of outlandish punitive damages.

February 22, 2007

THE U.S. SUPREME COURT went further this week — though not far enough — in reining in juries in civil cases that award outlandish punitive damages. By a disappointingly narrow 5-4 vote, the justices overturned a jury’s decision that Philip Morris should pay $79.5 million to the widow of a smoker who died of lung cancer. The value of her actual damages was only $821,000.

The justices could — and should — have ruled clearly that the $79.5-million award violated previous rulings that punitive damages may not be “grossly excessive” and should bear a reasonable relation to the harm actually experienced by the plaintiff. But in returning the case to the Oregon courts, the court did impose a sensible rule that should make it harder for juries to sock deep-pocket and easily demonized defendants.

Writing for the majority, Justice Stephen G. Breyer faulted the Oregon Supreme Court for allowing the jury to calculate punitive damages based not only on Philip Morris’ “reprehensible” conduct in minimizing the health risks of smoking but also on the effect of its marketing on smokers not connected to the case.

The lawyer for Mayola Williams, whose husband, Jesse, died of cancer, told the jury to “think about how many other Jesse Williams[es] in the last 40 years in the state of Oregon there have been.” The result was a punitive damage award nearly 100 times larger than the actual damages. Breyer said that basing damages on supposed harm to “strangers to the litigation” violated Philip Morris’ due process rights. The court is rightly applying the brake to the notion that private litigation can serve as a substitute for the regulatory power of the state.

Whatever one thinks of litigation against tobacco companies — and we think it’s a blunt weapon to wield against a legal product whose health risks are well known — Breyer has brought some clarity to a confused area of the law. The issue of whether and how juries can take into account possible harm to “strangers” to a lawsuit has bedeviled state as well as federal courts. It figures, for instance, in a different Philip Morris case before the California Supreme Court in which a smoker was awarded $28 billion in punitive damages, later reduced to $28 million — although her actual damages were estimated at $850,000.

In cases like this, juries often are confronted with a brainteaser. In deciding to award punitive damages, they’re supposed to consider whether the conduct of the defendant is “reprehensible,” and one definition of reprehensible conduct is to act in a way that puts many people at risk (such as leaking toxic material into a water supply).

But without proper guidance, jurors can leap to the conclusion that damages should reflect the harm experienced by everyone who might have tasted tainted water — or smoked a cigarette. Though it could have gone further, this week’s decision should make such leaps less likely.

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UPDATE 3-US court rules for Philip Morris on damage award

Feb 20, 2007
By James Vicini

A closely divided U.S. Supreme Court on Tuesday overturned a $79.5 million punitive damages award won by the widow of a longtime smoker against Philip Morris.

By a 5-4 vote, the high court ruled the huge damages award was unconstitutional because it was intended to punish the tobacco company for harming not just the plaintiff but other smokers as well.

The court ruled that the company, a unit of Altria Group Inc. , could not be punished for harm to other smokers in a case involving Mayola Williams, an Oregon woman whose husband died of lung cancer in 1997 after smoking for more than 40 years.

The case had been closely watched by business groups that wanted the court to impose new limits on punitive damages designed to punish and deter misconduct. The court last placed limits on such awards in 2003.

Legal experts said the ruling could have a big impact on other types of product liability cases, such as lawsuits against drug companies and automakers.

Businesses have long complained that punitive damages are skyrocketing out of control, can be arbitrary, and encourage frivolous lawsuits. Lawyers for those who have been injured defend big awards as a way to get companies to fix harmful product defects.

The ruling is “a victory for big business,” said Anthony Sabino, a law professor at St. John’s University’s College of Business in New York. “It puts a heavier burden on plaintiffs to make a strong case for large punitive damage awards.”

Justice Stephen Breyer said for the court majority that Philip Morris could not be punished for the harm to those who were not parties in the lawsuit.

He said a punitive damages award based in part on a jury’s desire to punish a defendant for harming those who are not parties to the lawsuit amounted to a taking of property from the defendant, violating constitutional due process rights.

Breyer said the Supreme Court did not address the question of whether the award in this case was constitutionally excessive.

Without taking on “that gorilla of a question,” the court has nevertheless “drawn a line in the sand that may limit large awards in the future, by requiring juries to only consider injuries to plaintiffs in the lawsuit,” said Steve Benesh, managing partner for law firm Bracewell & Giuliani in Austin, Texas.

AWARD CHALLENGED AS UNFAIR

Philip Morris had challenged the punitive award as excessive and unfair punishment. But Robert Peck, the lawyer representing the smoker’s wife, defended the award she won in her lawsuit for fraud and negligence.

Williams said her husband, a public school janitor in Portland who smoked as many as three packs a day of Marlboros made by Philip Morris, believed the decades of tobacco industry assurances that smoking did not pose a health threat.

In 1999, a jury awarded Williams $821,000 in compensatory damages, which was reduced under state law to $521,000, and $79.5 million in punitive damages. Only the punitive damages were at issue before the Supreme Court.

Philip Morris USA Associate General Counsel William Ohlemeyer said in a statement that Tuesday’s ruling gives the company the opportunity “to fully and fairly defend itself in this and other cases.” He said the decision ensures that juries “are punishing only for harm caused to the plaintiff, and not to strangers.”

Peck was not immediately available to comment on the ruling.

Philip Morris, in its appeal, argued that the Oregon Supreme Court was wrong to rule that the jury can be permitted to punish the tobacco giant for harm suffered by every Oregonian who smoked its cigarettes.

Breyer agreed with the tobacco company’s argument. He said the use of the correct standard in this case by the Oregon Supreme Court could lead to a new trial or a change in the level of the punitive damages award.

Donald Zakarin, head of the litigation department at law firm Pryor Cashman Sherman & Flynn LLP in New York, said the ruling might not have gone as far as corporate America — and in particular, Philip Morris — might have hoped. However, he said, “it is one further step, I believe, in clarifying and restricting the availability of punitive damages.”

Joining Breyer in the majority were Chief Justice John Roberts and Justices Anthony Kennedy, David Souter and Samuel Alito.

Justices John Paul Stevens, Clarence Thomas, Antonin Scalia and Ruth Bader Ginsburg dissented. They said they would uphold the decision of the Oregon Supreme Court against Philip Morris.

Ginsburg in her dissent cited “abundant evidence” of the potential harm the company’s conduct caused. Stevens said he saw no reason why a wrongdoer should not be punished for harming persons who are not parties before the court.

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High Court to Hear Tobacco Firm’s Appeal

By PETE YOST, The Associated Press
October 31, 2006

WASHINGTON — Jesse Williams, according to his widow, never gave any credence to the surgeon general’s health warnings about smoking cigarettes.

When Williams contracted inoperable lung cancer after smoking two packs a day for 45 years, he told his wife: “Those darn cigarette people finally did it. They were lying all the time.”

Nine years after Williams’ death, the Supreme Court is considering this question: Can Williams’ widow collect $79.5 million in punitive damages for fraud from the cigarette company Philip Morris USA?

To the dismay of anti-smoking groups, the Supreme Court agreed to hear the company’s appeal of a jury verdict in Oregon.

Philip Morris, the maker of Marlboros, is struggling to turn back unfavorable rulings by Oregon state courts in the Williams case. One ruling upheld the jury award after the Supreme Court sent the case back to Oregon once before to make sure it conformed to a 2003 high court opinion limiting punitive damages.

Another case being argued Tuesday highlights what critics say are problems with court-appointed attorneys for death row inmates in Florida.

Gary Lawrence, convicted of beating his wife’s lover to death with a pipe and baseball bat then setting the body on fire, is asking the Supreme Court to allow the appeal of his sentence to proceed despite a lower-court ruling that he missed a deadline. Among Lawrence’s arguments is that his lawyer, supervised by Florida courts, was responsible for timely legal filings.

In the case over punitive damages, the Williams family is counting on justices to find that Philip Morris’ conduct was so reprehensible that it justifies exceeding guidelines the court has laid out in two rulings in the past 10 years that struck down large awards.

One difference is that the earlier cases did not involve physical injuries.

The company doesn’t deny making public statements rejecting a link between smoking and cancer; rather, it says there’s no evidence Williams ever heard the statements or ever read them.

The court also will be looking at the decision of the state courts that declared it acceptable for the jury in the Williams case to consider harm by Philip Morris to other smokers for conduct similar to that which allegedly injured Williams.

Three years ago, the U.S. Supreme Court said in a different case that a defendant cannot be punished in an individual lawsuit for harm to people other than the plaintiff.

The cigarette company says the approach of the Oregon courts is collective punishment in an individual action, a violation of due process. Philip Morris complained that the nonparties in the case were never identified, their individual circumstances were not presented in court, and there was no way for a defendant to respond to allegations of widespread harm.

The jury awarded Williams’ widow, Mayola, $800,000, in actual damages, a ratio of 97 to one. Justice Anthony Kennedy said three years ago that the ratio of punitive to compensatory damages rarely should be higher than nine to one.

The company says that under long-established practice, when compensatory damages are substantial, the constitutional maximum punishment is between zero and four times the amount of compensatory damages.

The cases are Philip Morris USA v. Williams, 05-1256, and Lawrence v. Florida, 05-8820.
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EDITORIAL: Runaway damages

Jun. 06, 2006

Last week, the U.S. Supreme Court announced it would decide whether a jury assessed excessive punitive damages against tobacco giant Philip Morris and unjustly enriched the surviving family members of a single, longtime smoker.

An Oregon jury ordered the cigarette maker to pay the relatives of janitor Jesse D. Williams, who died of lung cancer in 1997, compensatory damages of $521,000. However, jurors decided the corporation should pay Mr. Williams’ family $79.5 million in punitive damages as well.

The decision to hear arguments in Philip Morris USA v. Williams gives a newly reconstituted Supreme Court the opportunity to clarify a 2003 ruling that offered no specific formula for setting punitive damages, but said they should be “proportionate to the amount of harm” a plaintiff suffers. A specific ruling from the high court in this case could end runaway damage awards by placing limits not only on litigation against tobacco companies, but all businesses.

Such a ruling won’t come soon enough. Only three days after the high court announced it would take up the Oregon case, a California jury handed down a civil judgment of truly insane proportions.

Edgar Rizkallah, 43, and Kamil Issa, 36, two Pleasanton, Calif., residents of Lebanese descent, worked for FedEx Ground as contract truck drivers. They said they were called “terrorists,” “camel jockeys” and other epithets in 1999 and 2000 by FedEx’s Oakland terminal manager.

They said their complaints to senior managers were ignored, so they sued, demanding damages for enduring a hostile work environment and suffering emotional distress.

On Friday, an Alameda County Superior Court jury awarded the men $11 million in compensatory damages and an astounding $50 million in punitive damages.

No one should have to endure the indignity of racial slurs at their workplace. But $50 million in punitive damages for a case that involved not death, but mere words? This jury, like the Oregon jury that considered the Philip Morris case, simply picked a big, fat number out of thin air.

When the high court rules on the Philip Morris case sometime next year, it should cap punitive damages to a figure that does not exceed actual damages — or simply get rid of them altogether. Civil lawsuits should be based on real liabilities, not lotteries.
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Court to hear Philip Morris smoking case appeal

May 30, 2006

WASHINGTON (Reuters) – The U.S. Supreme Court said on Tuesday that it would hear Philip Morris USA’s appeal of a ruling that upheld a $79.5 million punitive damages award to an Oregon smoker’s widow.

The justices agreed to review an Oregon Supreme Court ruling that rejected a constitutional challenge by the unit of Altria Group Inc. to the punitive damages awarded to Mayola Williams, whose husband died of lung cancer in 1997.

Jesse Williams had smoked Marlboro cigarettes for more than 40 years and eventually smoked three packs a day. After his death, his widow sued Philip Morris for fraud and negligence.

In 1999, a jury awarded Williams $821,000 in compensatory damages, which was reduced under state law to $521,000, and $79.5 million in punitive damages.

In 2003, the U.S. Supreme Court set aside the award and sent the case back for more review in light of its ruling that punitive damages must be reasonable and proportionate to the harm suffered.

The Oregon Supreme Court again upheld the award. It said Philip Morris and other tobacco companies had engaged in a decades-long scheme to deceive smokers even when they knew cigarettes were dangerous.

In its appeal to the U.S. Supreme Court, Philip Morris argued the state court was wrong to rule the tobacco company’s “highly reprehensible” conduct can override the requirement that punitive damages by reasonable related to the harm.

Second, Philip Morris argued the Oregon Supreme Court was wrong to rule that the jury can be permitted to punish the tobacco giant for harms suffered by every Oregonian who smoked its cigarettes.

$79M ruling ignored role of free will

2/6/06

The Oregon Supreme Court struck a blow against personal responsibility with its ruling that the $79.5 million award given a Portland man who died of lung cancer was not excessive.

Cigarette manufacturer Philip Morris had appealed the amount of the judgment awarded to the family of Jesse D. Williams, a Portland janitor who died of lung cancer in 1997 at the age of 67.

The Oregon Supreme Court agreed that the amount was reasonable, given that “Philip Morris knew that smoking caused serious and sometimes fatal diseases …”

Philip Morris plans to appeal the ruling to the U.S. Supreme Court.

It’s not so much the ruling as the entire award to Williams that remains problematic.

We agree that tobacco executives displayed an utter disregard for their customers’ health, despite overwhelming statistical evidence of its lethal properties.

But tobacco remains legal for a variety of economic, cultural and historic reasons. It is therefore hypocritical for the government, through its judicial arm, to seek to punish an industry for the sale of a legal product from which it continues to derive huge tax revenues.

Further, to rule that people are powerless over nicotine and tobacco advertising embraces a culture of victimization and entitlement that undermines democracy.

We cannot have a free society with people in charge of their own lives and health if they are excused from the consequences of their decisions.

Despite the tobacco companies’ lies and false advertising, statistics by the American Lung Association and other anti-smoking groups document a consistent drop-off in the number of smokers — despite corresponding population increases — after 1963, when the U.S. Surgeon General’s Advisory Committee on Smoking and Health announced that smoking causes lung cancer.

At the time, Jesse Williams was in his 30s — old enough to know better and young enough to change.

That Williams was unable to stop his tobacco habit is a tragedy for his family. But it’s hard to see how awarding the family of one smoker almost $80 million benefits anyone except the Williams family — and the state of Oregon, which stands to pocket 60 percent of the punitive damages.

Still smoking, fraud or no

2-06-06

The Oregon Supreme Court has affirmed a huge damage award against a tobacco company on the grounds that the company, Philip Morris, defrauded a Portland smoker who then died of lung cancer. The decision is based on a mistaken implication — namely that the conduct of the tobacco industry makes a crucial difference in whether people smoke.

In summary, the court affirmed the $79.5 million punitive damage award on the grounds that the company, along with others, “engaged in a massive continuous, near-half-century scheme to defraud the plaintiff and many others, even when Philip Morris always had reason to suspect — and for two or more decades absolutely knew — that the scheme was damaging the health of a very large group of Oregonians — the smoking public — and was killing a number of that group.”

The implication is that people smoked because of that fraud, that if they had known differently, they would not have smoked. In fact that’s what the plaintiff claimed: The late Jesse D. Williams kept smoking because the company wouldn’t sell cigarettes if they were not safe. But now the evidence of fraud has been out there for several years, and it has been hammered home in the news. So why is smoking still popular among many people, albeit fewer than 50 years ago?

The fact that smoking continues despite the verdicts based on fraud suggests that keeping the fraud hidden was not the main reason for smoking among individuals. The main reason, then and now, is that some people like smoking — although it’s hard to imagine, considering how they reek.

And further, if the tobacco companies were fraudulent in their public messages, what about Oregon and the other states that continue to allow smoking and even take in vast amounts of money from smoking in direct taxes and in the settlement money from the companies?

Oregon outlaws even riding in a car without buckling up, a practice less dangerous than smoking. (Fewer people die in crashes than from smoking.) So if the state allows smoking but outlaws not buckling up, what does that say to the kid who turns 18 and can now legally smoke?

Ore. Supreme Court Upholds $79.5M Tobacco Suit Award

February 02, 2006

SALEM, Ore. — The Oregon Supreme Court upheld on Thursday a $79.5 million punitive damages award to the family of an Oregon smoker who died of lung cancer, saying the amount isn’t excessive given the “reprehensible” conduct of tobacco giant Philip Morris in marketing cigarettes.

The decision upholds a lower court ruling and responds to a U.S. Supreme Court decision that asked Oregon courts to consider whether the award in the lawsuit against Philip Morris USA Inc., a unit of Altria Group Inc. (MO), was excessive.

The state Supreme Court said it was not, given “such extreme and outrageous circumstances.”

“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,” the court said.

“It deliberately did so to keep smokers smoking, knowing that it was putting the smokers’ health and lives at risk, and it continued to do so for nearly half a century,” it said.

The tobacco company, which is the nation’s largest and the maker of top-selling Marlboro cigarettes, said Thursday it would comment on the ruling after reviewing it. Altria shares fell 87 cents, or 1.2 percent, to $72.63 on the New York Stock Exchange.

The ruling in the Oregon case comes less than two months after the tobacco industry won a major victory when the Illinois Supreme Court tossed out a $10.1 billion fraud judgment against Philip Morris over the marketing of its “light” cigarettes.

In Florida, the state Supreme Court is still reviewing a $145 billion punitive damage award in the Engle class action case that was overturned on appeal.

The Oregon court upheld a 1999 Multnomah County jury award of $79.5 million in punitive damages to the family of Jesse D. Williams, a janitor who died in 1997 of lung cancer at the age of 67. The man’s family also was awarded $500,000 in non-economic damages, to compensate for pain and suffering.

An attorney for Williams’ family, James S. Coon, said, “We think it’s the right decision.”

According to testimony in the trial, Williams started smoking in the 1950s when serving in the Army in Korea, and later he smoked three packs of Marlboros a day.

Williams’ family said he kept smoking because he did not believe a company would sell something that was truly harmful.

After the jury ordered the company to pay the Williams family $79.5 million in punitive damages, the judge reduced the award to $32 million. The state appeals court reinstated the jury’s punitive damage award in 2002.

In 2003, the U.S. Supreme Court ordered Oregon courts to review the award to ensure it was not unconstitutionally excessive under new standards for punitive damages adopted by the high court.

A state appeals court said in 2004 that the award wasn’t excessive, and the state Supreme Court decision upholds that decision.

The $79.5 million award would be a windfall not only for the man’s family, but for the state as well.

Under state law, 60 percent of punitive damages in such cases go to the state, which in turn uses the money to support crime victims assistance programs.

Irresponsible lawsuits need to be stopped

February 03, 2006

Smokers with terminal lung cancer can take heart. If they want to make sure their family is financially taken care of after they die, they should simply move to Oregon. That’s where the state’s Supreme Court agreed that the family of an Oregon smoker who died from lung cancer should be given the $79.5 million they were initially awarded in 1999.

The family claimed that their loved one, Jesse D. Williams, would not have kept on smoking three packs a day if he thought that Philip Morris, Inc. — the company that is supposedly directly responsible for Williams’ death — was selling harmful products to the public. This sounds like another well-crafted lie, a la former President Bill Clinton’s utterance of the now famous phrase, “I did not have sexual relations with that woman.”

Another suspicious factor in the ruling is the fact that in all cases for punitive damages in Oregon, 60 percent of that goes back to the state to fund “crime victims assistance programs,” an Associated Press story said. This is why the Oregon Supreme Court probably does not think that the award amount is too outrageous. It probably figured, “What the heck? The majority of the money is going to a good cause anyway.”

In Florida, Tom Gallagher, a Republican candidate for governor, is urging “tort reform,” which would change the terms under which Florida malpractice suits are filed.

Some of the items Gallagher wishes to put into place are a cap on award amounts to $2 million from a single defendant — known as “joint and liability,” which could protect business from wasteful suits — and the creation of a separate court to deal with business lawsuits, the Tampa Tribune reported.

These limits and restrictions could be useful for preventing those who do not have serious and legitimate claims from tying up the court systems — but Gallagher said in the Tribune article that the Legislature would probably vote against the “joint and liability” measure soon.

Whatever happens with “tort reform,” self-responsibility is the real issue here. Being responsible for one’s actions and for the consequences of those actions is part of being a functioning member of society. Granted, when corporations and businesses are at fault for the injuries of their patrons, they should compensate the victim accordingly.

So if Williams did not think that Philip Morris would sell a product that could be harmful to one’s health, he must have gone through life not paying any attention to the details — including the Surgeon General’s warning that proclaims the dangers of cigarette smoking — on the side of every pack of cigarettes.