U.S. Supreme Court Lets Stand Punitive Damage Award 97 Times Compensatory Award

U.S. Supreme Court dismisses appeal of $79.5 million punitives award in tobacco case; compensatory award was $800,000, later reduced to $521,000.

From the ABA Journal:

The U.S. Supreme Court has dismissed an appeal of a $79.5 million punitive award in a tobacco case, saying it had erred in granting certiorari.

The appeal by tobacco maker Phillip Morris was “dismissed as improvidently granted” in a one-sentence order, according to SCOTUSblog and the Associated Press. The dismissal leaves undisturbed an Oregon Supreme Court decision upholding the award.

The case had been “something of a judicial minuet between the Supreme Court and the Oregon Supreme Court,” according to SCOTUSblog. The Supreme Court has twice overturned the punitive verdict, and the Oregon Supreme Court has twice reinstated it.

In its most recent decision, the Oregon high court avoided a constitutional issue that had troubled the Supreme Court—whether jurors were unconstitutionally punishing Phillip Morris for damages done to people who weren’t parties to the lawsuit. Instead the Oregon court upheld the verdict based on an independent state ground--that jury instructions proposed by the company had misstated state law.
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So we have an exception to the previous "suggestion" by the high court that punitive damages are "generally" to be no more than nine times the compensatory damages in the case. The award will stand despite the Court's 5-to-4 ruling in the same case back in 2007 that the defendant could be punished only for harm to the plaintiff, not other smokers who were also arguably harmed by the conduct of defendant.

Further factual background on the case, Philip Morris USA v. Williams, 07-1216, in the New York Times.

(Image courtesy U.S. Supreme Court.)