ACSBlog: The Blog of the American Constitution Society

by Jay M. Feinman, Distinguished Professor of Law, Rutgers University, Camden

Philip Morris USA v. Williams No. 05-1256

Punitive damages have been awarded since the early days of the Republic. Their purposes are to punish and to deter wrongdoing; as a New Jersey court stated in 1791, punitive damages serve to "mark [the jury's] disapprobation and be an example to others." Over the past decade, business interests and conservative groups have mounted a campaign to cut back on the courts' power to punish and deter wrongdoers. This term, the Supreme Court will address the latest front in that campaign in Philip Morris USA v. Williams.

In BMW of North America v. Gore, 517 U.S. 559 (1996), the Supreme Court first created constitutional limitations on punitive damages, requiring courts to weigh the reprehensibility of the defendant's conduct, the relationship between the harm suffered by the victim and the amount of punitive damages, and the relationship between the size of the punitive damage award and civil or criminal penalties that could be imposed for the defendant's conduct. Most recently, in State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408 (2003), the Court prohibited consideration of wrongful conduct other than the harm to the individual victim in assessing punitive damages and noted that few awards exceeding a single-digit ratio of punitive to compensatory damages would be constitutional, although there could be exceptions.

In the Philip Morris case, the Oregon Supreme Court held that extraordinary facts justified such an exception.

Mayola Williams sued Philip Morris following the death from lung cancer of her husband, Jesse, a lifelong smoker of Marlboro cigarettes. Although Jesse's wife and children urged him to quit smoking, he continued because of their addictive power and because, as the Oregon Supreme Court stated, Philip Morris and other tobacco companies "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." 127 P.3d at 1181-882.

The jury found Philip Morris's scheme of deceiving the public about the dangers of smoking constituted fraud and granted $821,000 in compensatory damages (which the trial court reduced to $521,000) and $79.5 million in punitive damages. The jury's award was upheld by an Oregon appellate court in 2002, but the U.S. Supreme Court ordered reconsideration of the case after it decided State Farm v. Campbell.

The Oregon Supreme Court again upheld the $79.5 million award because of the extreme outrageousness of Philip Morris's conduct. The company's fraud, the court wrote, "would, naturally and inevitably, lead to significant injury or death." 177 P. 3d at 1177. Indeed, its conduct was the equivalent of manslaughter under the criminal law. A double-digit ratio of punitive to actual damages was justified because Philip Morris's conduct was "extraordinarily reprehensible." 177 P.3d at 1181.

The legal issues involved in Williams are whether the reprehensibility of Philip Morris's conduct is enough to overcome the normal limitation to a single digit multiplier, and whether the punitive damages can take into account the harm done to Oregonians other than Jesse Williams. The broader issue is the ability of courts and juries to punish corporate wrongdoers. Punitive damages are infrequently given by juries and even less frequently upheld by reviewing courts, but the possibility of their award lurks as a deterrent to businesses that would cut corners on safety or defraud consumers. If the Supreme Court extends its limitations on punitive damages in Williams, even the most egregious corporate misbehavior that affects thousand or millions of people will be further sheltered from significant deterrence and punishment.

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Jay Feinman is Distinguished Professor of Law at Rutgers University School of Law, Camden, and the author of Un-Making Law: The Conservative Campaign to Roll Back the Common Law (Beacon Press, 2004).