An Oregon case being heard by the Supreme Court may have a far-reaching impact on how much money juries can award people injured by big corporations.
The case, Philip Morris United States v. Williams, could change the interpretation of the “due process” clause of the 14th Amendment of the Constitution and change the way juries punish big corporations for harming the public.
Jesse Williams of Portland smoked for more than 40 years. At one point smoking as many as three packs a day of Marlboro cigarettes, Williams resisted the notion that cigarettes cause cancer because he did not believe the tobacco companies would sell such a dangerous product, according to documents from the Oregon Supreme Court.
Williams died in 1997, six months after being diagnosed with inoperable lung cancer. His wife, Mayola, filed a lawsuit against Philip Morris, alleging fraud in the company’s decades-long campaign to hide the dangers of smoking. The case alleged that the tobacco industry had known about the health risks of smoking for 40 years but had sought to convince the public that cigarettes were not dangerous.
When the case began, Philip Morris asked the judge to instruct the jury to disregard the harm caused to smokers other than Jesse Williams; the judge refused. When the jury ruled in favor of Mayola Williams, they considered harm to other Oregon smokers when awarding compensatory damages in the amount of $821,485 and punitive damages in the amount of $79.5 million -almost 97 times the compensatory award.
This is where the case gets significant, University law professor Caroline Forell said. Philip Morris appealed the ruling on the grounds that the Supreme Court has ruled that any punitive damages – that is, damages intended to punish the defendant and prevent future misconduct – can not exceed compensatory awards by a ratio greater than 10:1 without violating the right to due process. Both the Oregon Court of Appeals and Oregon Supreme Court upheld the original ruling.
The issue now before the Supreme Court is whether there is ever a case in which enormous punitive awards are constitutional.
In the past the Court has ruled that in determining punitive damages juries must consider three things: the reprehensibility of conduct; the ratio of punitive to compensatory damages; and what civil or criminal sanctions could be assessed, said Norman Williams (no relation to Jesse and Mayola), a law professor at Willamette University. The Court has generally limited the amount of punitive damages allowed, but has never really defined if and when huge awards are constitutional, he said.
The big difference between this case and the others involving the size of punitive damages is that previous cases only involved economic damages, not the death of a human being, Forell said.
“This is very, very different and much more important,” she said.
Norman Williams said the Court’s ruling on this case will be significant because it will finally explain what the previous case, State Farm v. Campbell, really means.
“When Campbell said double digit multipliers are truly ‘rare and exceptional,’ exactly how rare and exceptional did the Supreme Court understand that to be?” he said. “Did they mean even exceptional and invalid in cases involving the death of a human being?”
The other issue at hand is what juries can consider when determining the size of punitive awards, Norman Williams said. In addition to appealing the size of the punitive award, Philip Morris is arguing that the jury should not have been allowed to factor in the harm cigarettes have done to other smokers. The award was so big in part because the harm done to so many others justified a very large fine.
He said that during oral arguments, justices questioned how juries can be told on one hand that they need to award damages commensurate with the defendant’s conduct but that they must also disregard the harm defendants have done to society as a whole.
“I think that type of instruction will only confuse jurors and lead to greater capriciousness in the amount of jury awards that are rendered,” he said.
Forell said requiring juries to disregard harm to parties not involved in the lawsuit would “gut” punitive damages. Factoring in how many people are affected by a corporation’s behavior has always been part of determining whether to give a plaintiff a “windfall,” Forell said.
“In the past it has been very normal that the reason one person would get punitive damages is because they’re acting on behalf of the public to prevent serious wrong doing,” she said.
Forell said this case is unique because it involves “very serious, proven misdoing” on the part of a large corporation that can afford to pay.
“In order to punish them you do have to have an award this large,” she said.
It is difficult to guess how the Court will rule on this case because there are two new justices since the last time it considered the size of punitive damages, Forell said. This will be a case in which the justices are unlikely to rule along political lines.
Norman Williams said that the rulings on both aspects of the case will be far-reaching.
“The legal principles Supreme Court are deciding would apply to all civil litigation in the United States involving all types of misconduct,” he said. “Any defendant – individual or corporate – found to engage in illegal conduct that harmed an individual, the Williams case will shape how much punitive damages a jury could award to a plaintiff in those cases.”
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