WASHINGTON—The Supreme Court on Tuesday further tightened limits on punitive damages, tossing out a $79.5 million judgment against tobacco giant Philip Morris because jurors had agreed to the award, in part, to punish the company for harming people other than the plaintiff.
The ruling is a significant victory for businesses and their advocates, who've complained that the court's old rules allowed lawyers to win class action-sized judgments in individual lawsuits.
"Plaintiffs won't be able to incite jurors to assess runaway awards based on purported injuries to others," said Lori Nugent, a lawyer with the Cozen O'Connor law firm who specializes in defending corporations in punitive-damages suits. "Juries will evaluate punitive damages based solely on the defendant's conduct toward the plaintiff. This is a significant swing of the pendulum toward returning fairness to courtrooms across the country, and will make a meaningful difference in numerous cases that are set for trial and on appeal right now."
The decision extends a line of high-court rulings that have placed constitutional limits on punitive damage, a novel and somewhat controversial approach that's drawn sharp criticism even from some of the justices.
Tuesday's 5-4 ruling, written by Justice Stephen Breyer, said awarding damages to punish a company for harming nonparties to a suit amounted to taking property without due process. Breyer added: "to permit punishment for injuring a nonparty victim would add a near standardless dimension to the punitive damages equation. How many such victims are there? How seriously were they injured? Under what circumstances did injury occur? The trial will not likely answer such questions as to nonparty victims."
Tuesday's ruling involved a judgment obtained by Mayola Williams after her husband, Jesse, a smoker for 47 years, died of lung cancer. Williams alleged that Philip Morris, now part of Altria Inc., misled her husband into thinking that smoking was safe.
The jury found that Jesse Williams and Philip Morris were equally responsible for his death, and awarded his widow $800,000 in compensatory damages. But it went further, finding the company liable for $79.5 million in punitive damages for a campaign of deceit that allegedly led to health problems for smokers throughout Oregon. None of those smokers was a plaintiff in Williams' suit, yet the judgment reflected their injuries.
The trial judge reduced Williams' award, but the Oregon Court of Appeals reinstated the larger amount and the Oregon Supreme Court upheld that judgment.
Breyer said that was unfair.
"A defendant threatened with punishment for injuring a nonparty victim has no opportunity to defend against the charge, by showing, for example in a case such as this, that the other victim was not entitled to damages because he or she knew that smoking was dangerous or did not rely upon the defendant's statements to the contrary," Breyer wrote.
Chief Justice John G. Roberts and Justices Anthony Kennedy, David H. Souter and Samuel A. Alito Jr. agreed with Breyer.
Justices John Paul Stevens, Antonin Scalia, Ruth Bader Ginsburg and Clarence Thomas dissented.
The court's split in the case defies the crude political categorizations of the justices, and as a result is a poignant example of the court's tendency to cleave along strictly judicial lines in many cases.
Thomas and Scalia, for example, objected to Tuesday's ruling for the same reasons they've resisted all the court's decisions limiting punitive damages: They don't think that the Constitution addresses the issue.
That puts them at odds with Roberts, Alito and Kennedy, the remaining justices in the court's politically conservative wing. Kennedy long has agreed that the Constitution's due-process requirements prevent excessive punitive judgments. Roberts and Alito embraced that thinking for the first time on the high court in Tuesday's ruling.
Stevens' vote represents a departure for him on this issue; he penned the 1996 ruling that established constitutional limits for punitive damages, but said Tuesday's ruling went too far.
(c) 2007, McClatchy-Tribune Information Services.
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