New York Times

"Supreme Court to Weigh Award in a Smoker's Death"

Linda Greenhouse, May 30, 2006

The Supreme Court, opening a new chapter in its effort to establish constitutional boundaries for punitive damages, agreed on Tuesday to hear a cigarette maker's appeal of a $79.5 million punitive damage award.

The amount was 97 times greater than the compensatory damages that an Oregon jury awarded in the case to the widow of a smoker who died of lung cancer.

As in earlier punitive damages cases, the question for the justices is whether the award was so disproportionate to the injury as to violate the constitutional guarantee of due process. The Supreme Court has been closely divided in these cases, and with two new justices, the court may have decided that the time was right for a fresh look.

When the justices take up the case in their next term, they will hardly be writing on a clean slate. In an important victory for corporate defendants, the court three years ago overturned an award of $145 million in punitive damages against the State Farm insurance company and set out some guidelines.

In the State Farm case, a Utah jury had assessed compensatory damages of $1 million, meaning that there was a 145:1 ratio of punitive damages to compensatory. Finding the punitive award ''neither reasonable nor proportionate to the wrong committed,'' Justice Anthony M. Kennedy wrote for the majority that ''few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process.''

The vote in that case was 6 to 3; two members of the majority, Chief Justice William H. Rehnquist and Justice Sandra Day O'Connor, are no longer on the court. Not only for that reason, the outcome in the new case, Philip Morris USA v. Williams, No. 05-1296, is far from certain.

Punitive damages decisions have not followed the court's typical liberal-conservative ideological alignments. Justices Antonin Scalia, Clarence Thomas and Ruth Bader Ginsburg were the dissenters last time, with Justice Ginsburg complaining that the majority was ''boldly out of order'' to invade the province of state legislatures and state courts in placing limits on punitive damages.

Further, the court's major punitive damages rulings have come in cases in which the injury that led to the lawsuit was economic rather than physical. The State Farm case began as a suit over the insurance company's initial refusal to settle a claim for a policyholder. Another important precedent, a 1996 decision that overturned a $2 million punitive damage award against the BMW automobile company, began as a complaint that cars were being sold as new without informing buyers that the paint had been touched up.

In his opinion in the State Farm case, Justice Kennedy noted that the case involved ''no physical injuries.'' While he did not elaborate, the suggestion was that other considerations might apply had the harm to the plaintiffs consisted of more than ''only minor economic injuries.''

The plaintiff in the new case, Mayola Williams, was married to a man who began smoking while serving in the United States Army in Korea in 1950 and who went on to smoke three packs of Marlboro cigarettes a day for decades. In 1996, lung cancer was diagnosed in the man, Jesse Williams, and he died the next year.

Mrs. Williams's lawsuit asserted that the maker of Marlboro, Philip Morris, which with its various brands accounts for about half the cigarette sales in the United States, had perpetrated a 50-year fraud to conceal the health effects of smoking. Her lawyer asked the jury to consider ''how many other Jesse Williamses in the last 40 years in the state of Oregon there have been.''

The company's Supreme Court appeal argues that it violates due process to punish a defendant ''for the effects of its conduct on nonparties,'' that is, on other smokers whose cases were not before the jury.

Rejecting that argument in its opinion in February of this year, the Oregon Supreme Court said that Philip Morris ''engaged in a massive, continuous, near half-century scheme to defraud the plaintiff and many others'' by concealing the truth and inducing its customers to keep smoking. The state court called the company's conduct ''extraordinarily reprehensible, by any measure of which we are aware.''

The Supreme Court's precedents have referred to ''reprehensibility'' as a factor to consider in evaluating a punitive damages award. In this case, Philip Morris argues in its appeal, the Oregon court improperly permitted its conclusion on reprehensibility to ''override the constitutional requirement that punitive damages be reasonably related to the plaintiff's harm.''

The company's appeal was supported by briefs filed by the United States Chamber of Commerce and the Product Liability Advisory Council, a coalition of 133 manufacturers. The case will be argued in November or December.