Jesse Williams, a Portland, Ore., janitor who smoked three packs of Marlboros a day, died of lung cancer in 1997. His widow, Mayola, sued Philip Morris for fraud and negligence, alleging that any fears her husband had about becoming ill from smoking were eased by the cigarette-maker's publicity campaign that suggested it was safe. Mayola Williams recalled in court filings that when her husband learned he had inoperable cancer, he said, "Those darn cigarette people finally did it. They were lying all the time."
The lawsuit that Mayola Williams filed was among many claims filed against tobacco companies in recent years, but one of the few to lead to a multimillion-dollar judgment. An Oregon jury awarded Williams $79.5 million in punitive damages. Such damages are intended to punish defendants beyond the actual damages they caused and deter future bad conduct.
Williams' award was 97 times greater than the actual — or compensatory — damages awarded by the jury, and according to court records it was based partly on the jury's consideration of Philip Morris' harm to other smokers in Oregon.
Now, Williams' case is before the U.S. Supreme Court and has become one of the most significant tests ever of how far a jury can go in punishing a civil defendant. The question in the Williams case is whether the punitive damages award is so disproportionate to the injury to Jesse Williams that it violates the 14th Amendment's guarantee of due process of law.
In its appeal, Philip Morris says the Oregon verdict violated due process because it was so much higher than the actual damages caused to Jesse Williams and because jurors were punishing the company for injuries to smokers who were not part of the Williams case.
Mayola Williams' attorney, Robert Peck, says in court papers that the cigarette-maker's efforts to hide the dangers of smoking were "monstrous" and says that if ever a big award were justified, this is the case.
The dispute, to be argued before the high court on Tuesday, is a new round in the court's struggle to draw the line between permissible and unconstitutional punitive damages awards.
Business groups, such as the National Association of Manufacturers, say juries improperly use punitive damage awards to "send a message" to corporate defendants. Consumer advocates and trial lawyers counter that punitive damages help bring accountability to businesses that have a history of abuse.
"The tobacco industry has evaded liability for decades ... and the result has been a public health catastrophe," Trial Lawyers for Public Justice says in a court brief filed in the Williams case.
'Court is on the knife edge'
For decades, the Supreme Court considered such jury awards the domain of the states and gave wide latitude to state judges and juries. In recent years, however, the court has begun to rein in awards by setting criteria for punitive damages. The addition of two new justices last term — Chief Justice John Roberts and Justice Samuel Alito, who replaced the late William Rehnquist and the retired Sandra Day O'Connor — could add a wrinkle to the court's approach.
In the justices' most recent ruling on the issue, in 2003, the majority said any punitive damages that are more than 10 times the actual damages for the injury could be presumed to be excessive. Voting 6-3, the court invalidated a $145 million award levied by a jury that had found that the State Farm insurance company acted in bad faith by not settling claims against a policyholder who was involved in a fatal accident.
In the current case, a key question will be whether Philip Morris' conduct was bad enough to justify a punitive damages award beyond the 2003 guideline.
Rehnquist and O'Connor voted with the majority in the State Farm case. Washington lawyer Mark Levy, who follows decisions concerning punitive damages, says that suggests that their replacements, Roberts and Alito, could tip the court's vote either way in assessing whether the award in the Williams case was excessive.
"The court is on the knife edge," Levy says. If Roberts and Alito join the justices who dissented in the State Farm case and want to leave the matter to the states, Levy says, there would be "a sudden and radical change in this area of the law."
1999 award upheld in Oregon court
In her case, Mayola Williams claimed that Philip Morris mounted a fraudulent publicity campaign aimed at minimizing the dangers of smoking. After a month-long trial in 1999, the jury awarded $821,485 in compensatory damages and the $79.5 million in punitive damages.
The Oregon Supreme Court upheld the award. "There can be no dispute that Philip Morris's conduct was extraordinarily reprehensible. (It) knew that smoking caused serious and sometimes fatal disease, but it nevertheless spread false or misleading information to suggest ... that doubts remained about that issue. ... The scheme was damaging the health of a very large group of Oregonians — the smoking public — and was killing a number of that group."
In his appeal to the U.S. Supreme Court, Philip Morris' lawyer, Andrew Frey tells the justices that the Oregon court misinterpreted recent decisions by the high court, particularly the 2003 ruling. He says the State Farm decision does not allow a company to be punished for harm to people who were not involved in the case. Frey says calculating such damages for injuries to outside parties creates an unfair risk of duplicative and excessive punishment.
Peck, Williams' attorney, says the cigarette-maker is seeking to turn "review of punitive damage awards (into) a simple arithmetic exercise," based on the ratio between actual and punitive. He says the Oregon jury's verdict followed proper criteria "to achieve deterrence" and reverse some of Philip Morris' "ill-gotten profit."
$79.5M in punitive damages at core of Supreme Court case