Punitive Damages

The U.S. Supreme Court granted certiorari today in a long-running

Oregon

punitive damages case.  In Williams v. Philip Morris, a jury awarded $79 million in punitives (in addition to compensatory damages).  The trial judge reduced the award to $32 million.  The Oregon Court of Appeals reinstated the jury verdict, and the Oregon Supreme Court denied review.  The U.S. Supreme Court vacated the decision and remanded for reconsideration in light of State Farm Mut. Automobile Ins. Co. v. Campbell, 538

US

408, 123 S Ct 1513, 155 LEd2d 585 (2003).  On remand, the Court of Appeals adhered to its earlier decision, and in February of this year, the Oregon Supreme Court affirmed the Court of Appeals decision.  340 Or 35, 127 P3d 1165 (2006). 

The Oregon Supreme Court concluded its opinion with the observation that “Philip Morris, with others, engaged in a massive, continuous, near-half-century scheme to defraud the plaintiff and many others, even when Philip Morris always had reason to suspect--and for two or more decades absolutely knew--that the scheme was damaging the health of a very large group of Oregonians--the smoking public--and was killing a number of that group.”

The U.S. Supreme Court granted Philip Morris’s petition for certiorari, limited to two questions:  does a finding that a company's misconduct was outrageous override the single digit “ratio” rule of thumb that State Farm established, and does the due process clause prevent juries from awarding damages to punish a company for the effects of its conduct on persons who are not parties to the case?

The U.S. Supreme Court may use this case to tell us whether the State Farm “ratio” rule of thumb (“few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process”) is a “marching order,” as Justice Ginsburg said in dissent, or something less than that. 

State Farm was a 6-3 decision, with Chief Justice Rehnquist and Justice O’Connor in the majority (and Justices Scalia and Thomas, along with Justice Ginsburg, dissenting), so this is one field of law in which the two new members of the Court may make a difference.