Cigarette
Altria gets High Court hearing on $79.5 million award
The U.S. Supreme Court agreed to hear arguments for the second time from Altria Group Inc.'s Philip Morris USA unit, the country's largest cigarette maker, on a $79.5 million award in an Oregon smoker lawsuit.
The decision to hear the company's appeal averts, at least for now, what would be a record payment in an individual smoker case. The award to a smoker's widow has grown to more than $140 million with interest.
Philip Morris and its corporate allies say lower courts around the country are ignoring Supreme Court rulings putting limits on punitive damages. In the latest case, the justices will decide whether an Oregon court, reconsidering the case on orders from the Supreme Court, improperly relied on a state-law ground in reaffirming the award.
The Oregon court ruling “is symptomatic of the disregard that some state courts show for precedents of this court that protect the rights of locally unpopular defendants against arbitrary punitive damages awards,” the U.S. Chamber of Commerce argued in a court filing. The group pointed to recent decisions upholding awards against Ford Motor Co. and Exxon Mobil Corp.
The justices won't consider the more far-reaching question of whether the award is so large it violates the Constitution.
The suit centers on Jesse Williams, a school janitor who smoked Marlboros for 42 years before dying of lung cancer in 1997 at age 67. His widow, Mayola Williams, claimed in her lawsuit that he relied on the company's fraudulent assurances that its products were safe.
“Misconduct on this scale is reprehensible in the extreme,” Mayola Williams's lawyers said in a court filing. “It will, one hopes, be vanishingly rare. It deserves rare punishment.”
Damages Awarded
The jury's 1999 punitive award came on top of $821,485 in compensatory damages, an amount later cut to $521,485 because of Oregon's limits on awards. At the time, it was the largest individual verdict against the cigarette maker, and it sent company shares plummeting 8 percent that day.
If upheld, the punitive damage award would top the record $82.5 million that Philip Morris paid in 2006 in a California case. Altria was unchanged at $21.53 at 11:05 a.m. in trading on the New York Stock Exchange.
The U.S. Supreme Court last year used the Williams case to declare that juries can't impose punishment for harm suffered by people who aren't involved in the lawsuit. The high court told the Oregon Supreme Court to reconsider its ruling upholding the Williams award.
The Oregon Supreme Court then concluded that it didn't need to reach the constitutional question because the jury instructions Philip Morris had proposed for use at trial would have misstated state law. The court said the company's misstep constituted an "independent and adequate state ground'' for upholding the award.
At the U.S. Supreme Court, Philip Morris argued that the Oregon court “lacked the power to disobey this court's directive.'' The company is based in Richmond, Virginia.
Williams's lawyers said the Oregon court “meticulously reviewed this court's decision and faithfully followed it.”
(Published by Bloomberg - june 10, 2008)