Business Groups Challenge Punitive Damage Award

A business coalition that includes the nation's largest chemical and pharmaceutical manufacturers is asking the U.S. Supreme Court to overturn an Oregon jury's award of $79.5 million in punitive damages against a tobacco company.

"This case is important, because it deals with a practice that has become all too common in modern civil litigation: plaintiffs' lawyers urging juries to 'send a message' to corporate defendants," says Quentin Riegel, vice president for litigation at the National Association of Manufacturers (NAM).

The case, Philip Morris USA v. Williams, involves the death of a man who smoked cigarettes for 47 years. His widow, Mayola, sued Philip Morris, alleging that her husband's death was influenced by the company's campaign to undercut the effect of public information about the risks of smoking.

The jury awarded Williams $21,485.80 in economic damages, $800,000 in noneconomic damages, and $79.5 million in punitive damages. The latter was based on an argument that the company's alleged misconduct must have harmed thousands of others. The trial court reduced the award to $32 million, but the Oregon Court of Appeals reinstated it in full, and the Oregon Supreme Court affirmed the appellate court decision.

"This is the kind of judicial overreaching that gives the U.S. legal system a bad name," Riegel says. In these types of cases, he observes, juries are frequently called on to substitute their judgment for that of legislatures and regulatory agencies.

"Imposing punitive damages for unproven harm to people who are not involved in the lawsuit is not only bad for businesses and the people they employ, it is also inconsistent with historical practice under the common law and contemporary practice under the class-action procedures of every state," Riegel says.

Donald D. Evans, deputy general counsel at the American Chemistry Council (ACC), says the Supreme Court has tried several times in recent years to place reasonable limits on what it views as excessive punitive damage awards. "Most recently, in State Farm v. Campbell, the Supreme Court clearly said that once punitive damages get into double-digit numbers above compensatory damages, it becomes absurd," Evans notes.

The brief contends that the threat of a massive punitive damage award is "the most powerful weapon at the disposal of plaintiffs' lawyers engaged in coordinated efforts to use the civil justice system to promote regulatory ends—including restrictions on tobacco, guns, and other products—that they have failed to achieve through the democratic process."

NAM and ACC were joined by the Pharmaceutical Research & Manufacturers of America and the Business Roundtable in filing a friend-of-the-court brief on July 28.