Court limits punitive damages
on Feb 20, 2007 at 10:03 am
The Supreme Court ruled on Tuesday that it is unconstitutional for a jury to award punitive damages out of a desire to punish a company for harming individuals other than those directly involved in the lawsuit — that is, “strangers to the litigation.” The Court ruled 5-4 in the case of Philip Morris USA v. Williams Estate (05-1256) that a punitive award based on harms done to such “strangers” would amount to a government seizure of private property without due process.
The ruling nullified a $79.5 million punitive award against Philip Morris in a case that grew out of the death from lung cancer of a smoker, Jesse Williams of Portland, Ore. The Oregon Supreme Court upheld the punitive verdict, along with compensatory damages of $821,000. Lawyers for the Williams estate used the case to make a wide-ranging attack on 50 years of Philip Morris’ coinduct, and argued that the company should be punished not only for harms done to Williams, but to other, unidentified Oregon smokers.
Justice Stephen G. Breyer’s opinion for the Supreme Court majority said it was not deciding whether the punitive award was unconstitutionally excessive, as Philip Morris had asked it to do. Instead, it ordered the state Supreme Court to reconsider, applying the new constitutional standard outlined in the decision; it said a new trial might be necessary.
In the second ruling of the day, the Court decided unanimously that the antitrust standard the Court laid down in 1993 for “predatory selling” also applies to claims of “predatory buying” — that is, a party suing must show that the buying company paid so much for goods that it lost money, and could recoup its losses after having harmed competitors. Justice Clarence Thomas wrote the decision in Weyerhaeuser v. Ross-Simmons Hardwood Lumber (05-381).
In the third and final decision, the Court, dividing 5-4, ruled that the one-year filing period for a federal habeas challenge of a state conviction is not interrupted while the inmate has a petition for review pending in the U.S. Supreme Court. That “tolling period,” the Court said, only applies when a post-conviction challenge is pending in state courts. Justice Thomas wrote the majority opinion in Lawrence v. Florida (05-8820).
In an order issued before the rulings came down, the Court agreed to decide whether states have the authority to use either a convention or a primary election system for choosing nominees to run for state office in the general election. It granted review of the case of New York State Board of Elections v.Torres (06-766). The Second Circuit Court ruled in the case that direct primary elections had to be used for the selection of state trial judges, to avoid the control of the nominating process by party bosses at a convention.
The Court also agreed to hear a pauper case, Logan v. U.S. (06-6911), testing when an individual convicted of misdemeanor crimes is to be treated as a career criminal, resulting in an enhanced sentence.
The newly granted cases presumably will be heard in the new Term starting Oct. 1. The argument calendar for the current Term is full.
In another order, the Court asked the U.S. Solicitor General to supply the government’s views on whether private medical clincis and doctors have a right to sue to enforce health care benefits for needy children under the federal-state Medicaid program. That issue arises in the case of Selig v. Pediatric Specialty Care (06-415).
While Philip Morris won a substantial victory in the Court’s ruling Tuesday in the punitive damages case, it — along with other tobacco companies — lost out on another appeal. The Court, in a brief, unexplained order, turned down an appeal testing the constitutional authority of states to pass laws to impose a “health impact fee” on each pack of cigarettes, to cover the states’ costs of providing health care for smokers. The companies’ appeal in 06-633 contended that this was an invalid interference with contract rights that states had given to the tobacco indusry in the 1998 settlement, which included a waiver of future claims for reimbursement of health costs beyond the annual payments the industry was obliged to make under the settlement. The case involved a fee imposed in Minnesota; the state Supreme Court upheld the fee. The Court also turned down a separate appeal on the issue by a group of tobacco companies that did not join in the settlement but are subject to the fee 06-805.
Among other cases denied review on Tuesday was an appeal — examined repeatedly by the Justices at a succession of private Conferences — seeking a new review of the constitutionality of displaying religious symbols during holidays at public schools. The case was Skoros v. New York City (06-271).
The Court also turned aside an appeal by a controversial Southfield, Mich., attorney, Geoffrey N. Fieger, who was officially reprimanded for caustic comments he had made on a radio program about state appeals court judges who had overturned a verdict Feiger had won for a client in a medical malpractice case. Fieger’s appeal in 06-596 claimed a violation of his First Amendment rights.
By denying review, the Court cleared the way for deporation of a lawful permanent resident, a native of Pakistan, who claimed that he should not be deported after being convicted of a mere misdemeanor assault under state law. The case involved Harood Rashid (Rashid v. Gonzales, 06-930); Justice Breyer had temporarily stayed the deportation order on Dec. 6, but that stay dissolved automatically Tuesday with denial of review of Rashid’s appeal.
Among other potentially significant issues on which the Justices declined review Monday were these:
** Whether local governments have constitutional authority to put limits on the airspace above private property to aid in airplane takoffs and landings. An appeal by a Las Vegas airport, supported by virtually the entire air transport industry, was denied in McCarran International Airport v. Sisoloak (06-658).
** Whether there is a right to bring a Sherman Act anti-monopoly claim based on a theory of “leveraging” monopoly power in one market because of a patent on a product in that market, in order to gain an advantage in a second market. The case was Schor v. Abbott Laboratories (06-577).
** Whether the Constitution restricts a state’s authority to limit voters’ rights to put a specific issue on a ballot measure. The case was Initiative and Referendum Institute v.Herbert (06-534).
** Whether federal law requires an employer to take steps to find alternative tasks for a disabled worker, or whether it is up to the worker to suggest a way to accommodate the disability. The case was Warren v. Volusia County (06-755).
** Whether the Court would clarify the kind of economic activity by a company that has economic value beyond mere tax savings and thus can qualify for favorable tax treatment. Two cases were denied: Dow Chemical v. U.S. (06-478) and Coltec Industries v. U.S.(06-659).
** Whether the Court would define how courts are to calculate the amount in issue in a lawsuit in order to meet the minimum $75,000 threshhold for federal jurisdiction. A lower court ruled that the minimum figure must be met by the value of the suing party’s claim, not the overall value of the litigation to both sides. The case was Waggoner v. Suisse Security Bank (06-824).
