A $79.5M punitive damage award against Philip Morris in a smoker's case has twice been tossed out by the U.S. Supreme Court and sent back to Oregon for reconsideration. Now, for the third time, the Oregon Supreme Court has upheld the blockbuster award in Philip Morris v. Williams. The news story is here (hat tip, How Appealing). The decision is here. And as I explain below, if it should go back up to the Supreme Court a third time, Philip Morris will likely lose if the court addresses the size of the award.

The last remand was due to an issue of confusing jury instructions, and the penultimate issue of the size of the award was never reached. The compensatory award was for $821,000, meaning that the punitive: compensatory ratio was almost 100:1. Defendants believe that no more than a 4:1 or 9:1 ratio will survive judicial scrutiny based on the court's prior decison in State Farm v. Campbell (see, for instance, these posts at Drug and Device Law, Insurance Law Journal, the WSJ).

What will the Supreme Court do if they decide the size of the punitive damage award? They will likely let it stand under the present composition of the court, even though neither Roberts or Alito has spoken on the matter.

The reason I believe the almost 100-1 ratio will stand is set forth in this analysis I did in February 2007 in the wake of the last remand by the Supremes back to Oregon:
Philip Morris Punitive Damages Decision -- Why It Was Good For Plaintiffs

Summarizing that post: The prior punitive damage case of State Farm v. Campbell was decided by a 6-3 majority. But two members of that majority are gone (Rehnquist and O'Connor) and two others from that majority indicated in the last decision either in dissent (Stevens) or oral argument (Breyer) that they have no problem with the concept of a 100:1 ratio if the facts deem it appropriate. Therefore, there are already five votes in favor of upholding a 100:1 ratio in principle.

Thus if the Supreme Court reviews this case for a third time, and actually reaches the issue of the ratio of punitive damages to compensatory, then Philip Morris will likely lose.

Here is the history of the case:

• Jury verdict for $821,000 in compensatory damages and $79.5M in punitive damages;
• Punitive damages reduced by trial court to $32M;
• Punitive damage award reinstated by Oregon Court of Appeals;
• Affirmed by Oregon Supreme Court;
• Remanded by U.S. Supreme Court to decide punitive damages issue in light of its new ruling in State Farm v Campbell;
• Affirmed again by Oregon Court of Appeals;
• Affirmed again by Oregon Supreme Court;
• Remanded by the U.S. Supreme Court based on the jury instructions; and
• Affirmed for the third time (today) by the Oregon Court of Appeals.

Elsewhere:

• The cost to Philip Morris of trying to slant jury instructions too far in its favor -- $79.5 million in punitive damages (Bashman, analysis);
• Oregon Supreme Court to U.S. Supreme Court: Thanks, But No Thanks (BLT/Mauro);
• Oregon Supreme Court to SCOTUS: Go piss up a rope (Subject to Complete Defeasance);
• Oregon Supreme Court plays chicken in Williams v. Philip Morris case (Point of Law)
• Oregon High Court Reaffirms $79.5 Million Award in Philip Morris Case (Associated Press via Law.com)
  

Labels: Punitive Damages