• Supreme Court to Revisit Constitutionality of Punitive Damages Awards
  • July 12, 2006 | Author: Elizabeth S. Campbell
  • Law Firm: Pepper Hamilton LLP - Philadelphia Office
  • For the second time in less than three years, the U.S. Supreme Court will consider the constitutionality of a punitive damages award in Philip Morris v. Williams. The case, set to be argued in October 2006, will allow the Court a chance to further clarify the interplay between condemning corporate wrongdoing while ensuring that due process is served.

    In 2003, the Court issued a decision in State Farm Mutual Automobile Insurance Co. v. Campbell, which many believed would be a landmark decision with widespread effect. The decision questioned the constitutionality of punitive damages awards where punitive damages are more than a single-digit multiple of compensatory damages. Since that time, state and federal courts across the country have grappled with how to apply State Farm, particularly in cases involving “extraordinarily reprehensible” conduct.

    In Philip Morris, Mayola Williams, widow of Jesse Williams – a life-long smoker who smoked up to three packs of cigarettes a day – sued Philip Morris. She claimed that the company knowingly lied when it minimized the health risks of smoking. Williams’ lawyer urged the jury to consider other Oregon residents who might have died because of Philip Morris’ alleged fraud and negligence. The jury awarded Williams more than $800,000 in compensatory damages and $79.5 million in punitive damages – nearly 100 times the compensatory damages. Although the trial judge reduced the jury’s verdict to $32 million, the verdict was upheld by the Oregon Supreme Court by applying the guideposts of State Farm and BMW of North America, Inc. v. Gore, 517 U.S. 599 (1996), a Supreme Court decision that allowed the fact finder to consider the reprehensibility of the defendant’s conduct when awarding punitive damages.

    In its Petition for Writ of Certiorari to the Supreme Court, Philip Morris argued that the jury’s punitive damages award and its consideration of the effect of Philip Morris’ conduct on non-parties violated the Court’s ruling in State Farm. Philip Morris asked the Court to grant its appeal to consider whether the finding that its conduct was “highly reprehensible and analogous to crime” could override the constitutional requirement that punitive damages be reasonably related to the harm to the plaintiff. In addition, Philip Morris asked the Court to consider whether due process permits a jury to punish defendants for the effects of its conduct on non-parties. The case will be decided by July 2007.