Call Us Toll-Free: 1.877.767.3108

Posted in Content, Consumer & Class Action Blog, Trial Practice Blog

Punitive Damages after Phillip Morris USA v. Williams

August 1st, 2007 by John Campbell

On February, 27, 2007, the U.S. Supreme Court issued its decision in Phillip Morris USA v. Williams, ____ U.S. _____, 127 S. Ct. 1057 (2007).  (To read the entire opinion click here.) In Phillip Morris, an Oregon jury awarded the widow of a Marlboro smoker $821,000 in compensatory damages and $79.5 million in punitive damages.  The widow alleged that Phillip Morris deceived her husband in its advertisements about its cigarettes.

The Supreme Court considered two questions on appeal.  1) Whether a state-court jury in a punitive damages award may punish the defendant for harm caused to parties not before the court; and 2) whether the punitive damage award was “grossly excessive.”  The answer to the first question is the basis for this post.

Although the Supreme Court refused to create a bright line for how to measure whether punitive damages are “grossly excessive,” thereby leaving undisturbed the somewhat hazy standard set out in State Farm Mutual Insurance Company v. Campbell, 538 U.S. 408 (2003), the Court did address what a jury may consider when awarding punitive damages. (To read State Farm click here).

The Supreme Court laid out two fundamental tenants that any plaintiff’s attorney must internalize:

1) Evidence of harm done to others by a defendant’s actions or products can be submitted to the jury.  However, this is only for the limited purpose of allowing the jury to evaluate the “reprehensibility” of the defendant’s conduct toward the plaintiff.  
2) Due Process considerations under the 14th Amendment do not allow a defendant to be punished for its actions against parties not involved in the litigation.  Thus, no jury can award punitive damages in order to punish a defendant for what it did to anyone besides the plaintiff or plaintiffs.

The Court’s two holdings create potential problems when dealing with jury instructions.  The Supreme Court noted that allowing in evidence of wrongdoing to others would require states to “provide assurance that juries are not asking the wrong question, i.e. seeking, not simply to determine reprehensibility, but also to punish for harm caused to strangers.”  127 S. Ct. at 1064.  This is easier said than done.

Unless attorneys seeking punitive damages are careful, defendants will likely use Phillip Morris as a method for challenging punitive damage awards.  If instructions are not precisely crafted, the defense can argue that large punitive damage awards violate a defendant’s due process rights.  So, what is an attorney seeking punitive damages to do?

I would suggest that if evidence of wrongdoing to third parties is introduced at any time during trial, a wise attorney will craft a jury instruction to avoid reversal.  The Supreme Court did not provide a model, but one can be discerned from the opinion.  An attorney could submit an instruction that reads roughly as follows: “When considering whether or not to award punitive damages, you may consider evidence of Defendant’s wrongdoing to third parties.  However, you may consider this evidence only to determine the reprehensibility of Defendant’s conduct towards Plaintiff.  If you decide to award punitive damages, you may only punish Defendant for its conduct toward Plaintiff.  You cannot punish Defendant for its actions towards parties not involved in this lawsuit.” 

Something like this instruction (crafted to fit the needs of particular states) should insulate punitive damage awards on appeal while still allowing an attorney to introduce the often critical evidence of offensive behavior by the defendant against third parties.

Share This