High Court Reviews High-Dollar Cigarette Judgment The U.S. Supreme Court hears arguments in a case to determine how high punitive damages can go when a state court finds extreme corporate misconduct. In a suit against Phillip Morris, the company was ordered to pay $79.5 million for a smoker's death.
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High Court Reviews High-Dollar Cigarette Judgment

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High Court Reviews High-Dollar Cigarette Judgment

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High Court Reviews High-Dollar Cigarette Judgment

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ROBERT SIEGEL, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

At the Supreme Court today, arguments in a case testing whether juries violate the Constitution when they award huge damages to punish companies for misconduct. The case today centers on an Oregon jury verdict that awarded nearly $80 million in punitive damages in the death of one smoker.

NPR's Nina Totenberg reports.

NINA TOTENBERG: Jesse Williams, a Portland public school janitor, smoked Marlboros for nearly 50 years. When his family pleaded with him to stop, he would point to public statements by Philip Morris that there was no proof smoking caused cancer.

On the steps of the Supreme Court today, his widow, Mayola, said she sued Philip Morris to carry out a promise to her husband.

Ms. MAYOLA WILLIAMS: He believed so much that they wouldn't sell a product that would harm him, so when he learned that he had cancer and didn't have very long to live, he decided to just go to the public and let them know what was going on and why he had cancer.

TOTENBERG: The jury in the Williams case awarded $800,000 for actual harm and 97 times that amount in punitive damages. The state Supreme Court upheld the award, declaring that Philip Morris had engaged in a massive 40 year scheme to spread false and misleading information about the real health risks of smoking, a scheme the court said was so venal it could have subjected the company to manslaughter charges.

In recent years, the U.S. Supreme Court has suggested that punitive damages should not exceed 9 times the amount of actual damages. And the business community has lined up behind Philip Morris in this case in an effort to limit punitive damages even further. Philip Morris argued that punitive damages should be no more than four times the actual damages.

But if the business community thought the Supreme Court might finally swallow up punitive damages in this case, there was little evidence today that the court was, in the words of one business lawyer, willing to eat the whole enchilada.

Instead, the justices focused on lesser issues. The trial judge, for instance, refused a proposal by Philip Morris that would have instructed the jurors that they could consider the harm suffered by others in awarding punitive damages but they could not punish Philip Morris for the impact of its misconduct on others. Several justices said that such an instruction might be confusing.

Justice Souter: As a juror, why am I supposed to be considering harm to others when you've just told me not to punish for it?

Representing Philip Morris, lawyer Andrew Frye responded that when conduct is calculated to harm large numbers of people, then the company can be found more blameworthy. But it cannot be punished for harm to others whose cases are not before the jury.

Justice Scalia: The most the jury can find, it seems to me, is that the conduct here bore a very serious risk of harming other people and therefore the activity is more heinous.

Justice Stevens: Supposing the defendant fired a machine gun into a crowd and killed one person and then another sued and said I want extra punitive damages because all these other people were subjected to the same risk? Wouldn't that be a proper consideration?

Yes, said Lawyer Frye for Philip Morris.

Question: Would it be a proper consideration if other people sued?

Answer: Then I think there's a problem.

Arguing the other side of the case, lawyer Robert Peck noted that this case is different from previous cases where the Court has imposed limits on punitive damages because this case involves physical not economic harm. Punitive damages outside the 9:1 ratio are justified in a case like this, he said, because this was a massive fraud directed not just at Jesse Williams but at all of Philip Morris's customers, a fraud driven by the highest officers of the company, who sought to deceive smokers and in so doing, knowingly endangered their health.

Peck got lots of skeptical questions from Chief Justice Roberts and Justices Alito, Breyer and Souter. But even Breyer, who's been a consistent advocate of limiting punitive damages, seemed to suggest that there are some cases that justify punitive damages outside the norm.

Justice Breyer: It seems to me right that the jury can conclude the more severely awful the conduct, the higher the punitive damage award. If it's really bad, you're going to maybe have 100 times the compensation for actual harm instead of only 10 times or 5 times. It goes to the evilness of the conduct not the actual injury to others.

At days end, it seemed the justices would likely send the case back to the lower courts for a second look, but as for any hard and fast limit on punitive damages, that looked doubtful.

Nina Totenberg, NPR News, Washington.

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