Argument Tuesday 10/31/06: Punishing Big Tobacco

By Lyle Denniston
on Oct 30, 2006 at 11:25 am

Much of the argument in Philip Morris USA v. Williams (05-1256) on Tuesday (10 a.m.) will focus on what the Supreme Court meant as it sought over the past decade to refine constitutional “guideposts” on how heavily a corporation may be punished for wrongdoing. But over-hanging the one-hour of legal inquiry will be the simple fact that this case is about the tobacco industry and harms suffered by smokers. It thus pits familiar gladiators debating broad cultural questions over whether and how to make Big Tobacco pay.

Perhaps symbolic of the case’s life-or-death overtones, a group called the Center for a Just Society has filed an amicus brief discussing how punitive damages should be used as a measure of the value of human life.

Business groups, on their side of the case, see it as an ultimate test of their ability to compete in global markets, with many industries tying their fate to that of Philip Morris.

If a Portland, Ore., widow, Mayola Williams ultimately wins the case, she would stand to get $79.5 million in punitive damages and $521,485.40 in compensatory damages. Her late husband, Jesse Williams, died of lung cancer – a heavy smoker, mainly of Philip Morris’ Marlboro cigarettes.

Mrs. Williams’ lawsuit was a wide-ranging attack on 50 years of the company’s conduct, and her lawyers urged the jury to impose heavy punitive damages – not only for the harms done to Jesse Williams, but to other, unidentified Oregonians, many of whom, they argued, would get lung cancer after smoking Marlboros. They told the jury: “It’s fair to think about how many other Jesse Williams in the last 40 years in the state of Oregon there have been.”

The verdict in her favor, and the way it was reached, led to the legal questions at stake: how high can punitive damages go in relation to compensatory awards, may some kinds of corporate misconduct be punished far more heavily than others (for example, actions that arguably result in human death or injury), and may a punitive damages verdict be based in part on harms to victims who were not involved in a case as parties?

On Tuesday, the case will be argued for Philip Morris by Andrew L. Frey of the New York office of Mayer, Brown, Rowe & Maw, and, for Mayola Williams, by Robert S. Peck of the Center for Constitutional Litigation, based in Washington.

After the Oregon courts originally upheld the verdict, Philip Morris took the case to the Supreme Court. The case was sent back to the Oregon Supreme Court in 2003, with instructions to consider the then-new Supreme Court ruling on punitive damages “guideposts” – State Farm Automobile Insurance Co. v. Campbell (a ruling that added detail to the guidepost concept the Court had first laid out in 1996 in BMW of North America v. Gore). On remand, Oregon’s highest court upheld the same verdict, and Philip Morris again appealed. The Justices agreed last May 30 to hear the case.

The votes of three members of the Court appear quite predictable. In the decision in State Farm, Justices Antonin Scalia and Clarence Thomas stated again in dissent their view that the Constitution does not put limits on the size of punitive damage awards, and dissenting Justice Ruth Bader Ginsburg said “this Court has no warrant to reform state law governing awards of punitive damages.” She blamed the majority for converting the guideposts “into instructions that begin to resemble marching orders.”

Four justices remain from the State Farm majority: Justice Anthony M. Kennedy, who wrote that decision, along with Justices Stephen G. Breyer, David H. Souter and John Paul Stevens. Thus, the balance of voting power this time may well be held by the new Chief Justice, John G. Roberts, Jr., and the new Associate Justice, Samuel A. Alito, Jr.

In the briefs filed in the case (the merits briefs of the two sides and a dozen amici briefs on each side), much of the most vigorous argument is on how important the guidepost of “reprehensibility” can be in punitive damages verdicts. The Court had said, in the BMW case in 1996, that reprehensibility is “the first (and perhaps most important)” indicator of when such a verdict was unconstitutionally excessive and thus violates due process. In the Philip Morris case, the Oregon courts found that the tobacco company’s conduct was “extraordinarily reprehensible,” justifying far more emphasis on that factor than on the wide gap in the ratio between punitive and compensatory damages.

Because the tobacco industry’s reputation has been under aggressive attack for so long in so many forums for the human impact of its conduct, the Philip Morris case highlights in a special way the reprehensibility factor. The Court, in BMW and State Farm, had made much of the fact that the injury claimed in those cases was economic and not physical, and thus the conduct might be less reprehensible. Now, for the first time, the Court has a case in which the harm allegedly caused was death. Oregon courts found that Philip Morris’ actions might well have constituted manslaughter.

Because of the state courts’ findings on that first factor, they were not troubled that the verdict for Mrs. Williams vastly exceeded the single-digit disparity that the Supreme Court, in State Farm, had indicated would often be sufficient. The Court has said, however, that a low-digit ratio is not a mathematically rigid formula..

The briefs also are heavy with discussion of the question of whether a punitive verdict can be based on harms to others beyond those who sued. The Court had stressed, in both BMW and State Farm, that such verdicts may not reach beyond a state’s borders. Now, the question is whether they can reach beyond the parties; in the Philip Morris case, the jury appeared to have reacted favorably to Mrs. Williams’ lawyers’ argument that many more Oregonians than her husband were harmed by smoking Philip Morris brands. The state courts allowed that reach.