VOL. 124 | NO. 63 | Wednesday, April 1, 2009
Court Ends Philip Morris Appeal of $79.5M Award
By MARK SHERMAN | Associated Press Writer
WASHINGTON (AP) – The U.S. Supreme Court on Tuesday threw out a cigarette maker’s appeal of a $79.5 million award to a smoker’s widow, ending a 10-year legal fight to keep her from collecting.
In a one-sentence order, the court left in place a ruling by the Oregon Supreme Court in favor of Mayola Williams. The state court has repeatedly upheld a verdict against Altria Group Inc.’s Philip Morris USA in a fraud trial in 1999.
The judgment has grown to more than $155 million with interest, and Williams stands to collect between $60 million and $65 million, before taxes and payments to her lawyers, said Robert Peck, her Washington-based lawyer.
The justices heard arguments in the case in December, but said Tuesday they are not passing judgment on the legal issues that were presented. Instead, it is as if the court had declined to hear the case at all.
Philip Morris had argued that the award should be thrown out and a new trial ordered because of flaws in the instructions given jurors before their deliberations.
Business interests had once hoped the high court would use the case to set firm limits on punitive damages, intended to punish a defendant for its behavior and deter a repeat offense.
Peck said the court has signaled a willingness to allow large awards in certain circumstances. “I think we can take from this long tale that if the behavior is sufficiently reprehensible, then larger awards are merited,” Peck said.
Murray Garnick, Altria’s associate general counsel, said the decision does not undo earlier high court rulings setting limits on punitive damages.
“While we had hoped for a different outcome, the Supreme Court has decided not to review a narrow procedural ruling by the state court,” Garnick said.
The case has bounced around appellate courts since 1999, when Williams convinced a jury that Philip Morris should be held accountable for misleading people into thinking cigarettes are not dangerous or addictive.
Williams’ husband, Jesse, was a janitor in Portland who started smoking during a 1950s Army hitch and died in 1997, six months after he was diagnosed with lung cancer.
His widow was awarded $800,000 in actual damages. The punitive damages are about 97 times greater. A state court previously cut the compensatory award to $521,000.
The company pegged the size of the award at $143 million a year ago because of accrued interest. At an interest rate of 9 percent a year, authorized by Oregon law, the pot now exceeds $155 million. Sixty-percent of it would go to an Oregon crime victims fund, although the company said Tuesday it plans to contest the portion owed the state.
The Oregon high court made its first decision in 2002, refusing to hear an appeal from Philip Morris.
Then the U.S. Supreme Court rejected the judgment of nearly $80 million, saying in another case that damages generally should be held to no more than nine times the actual economic damages. It declined, however, to make that a firm rule.
Next, the Oregon Supreme Court upheld the punitive damages, citing “extraordinarily reprehensible” conduct by Philip Morris officials.
Then came the U.S. Supreme Court’s second take on the case. In 2007, the court ruled in a 5-4 decision that jurors may punish a defendant only for harm done to someone who is suing, not other smokers who could make similar claims.
The state court was told to reconsider the award in the context of instructions for the trial jury that Philip Morris proposed and the trial judge rejected.
In January, the Oregon court said there were other defects in the instructions that violated Oregon law, and supported the trial judge’s decision not to give the proposed instructions to the jury.
The case is Philip Morris USA v. Williams.
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