Arguments on punitive damage limits heard

WASHINGTON--The U.S. Supreme Court on Tuesday heard oral arguments concerning what, if any, limits should be placed on punitive damage awards in personal injury cases.

The case, Philip Morris USA vs. Mayola Williams, presents the justices with two questions: Whether, in reviewing a jury's award of punitive damages, an appellate court's conclusion that a defendant's conduct was highly reprehensible and analogous to a crime can "override" the constitutional requirement that punitive damages be reasonably related to the plaintiff's harm; and whether due process permits a jury to punish a defendant for the effects of its conduct on nonparties.

The case centers on the Oregon Supreme Court's Feb. 2 ruling that upheld a $79.5 million punitive damage award to the widow of a smoker. The award came atop a compensatory award of $821,485, which was later reduced by $300,000 to bring it in line with Oregon's cap on wrongful death damages.

The size of the punitive damage award seemed to go against the guidelines spelled out by the U.S. Supreme Court in its 2003 decision in State Farm Mutual Insurance Co. vs. Curtis Campbell et al. In that case, the high court's majority held that under most circumstances, punitive damages in excess of single-digit multiples of the underlying compensatory damages are so disproportionate as to be unconstitutional.

The Oregon Supreme Court, however, said that Philip Morris' conduct was so "extreme and outrageous" that the guidelines didn't apply. In addition, the Oregon court also took into account harm allegedly sustained by other smokers who weren't parties to the Williams lawsuit. Philip Morris appealed to the high court.

"It's one thing to produce a punishment that can properly be replicated in case after case without producing an excessive total punishment. It's another thing to punish in case after case for the same harms," said Andrew L. Frey, a partner in the law firm Mayer Brown Rowe & Maw L.L.P., who presented Philip Morris' case before the high court.

But Robert S. Peck, president of the Center for Constitutional Litigation, who presented Mrs. Williams' case, said juries don't look at punitive damages as "multiples," adding that they shouldn't do so. Instead, he said, they are looking at misconduct.