US Supreme Court Creates Confusing Standard on Punitive Damages in Injury Lawsuits
The U.S. Supreme Court released an opinion on February 27, 2007, which seemed to just muddy the waters regarding excess punitive damage awards. In the case of Phillip Morris v. Williams, the Court held that a jury could not award damages to punish a defendant for injuries inflicted on people who aren't a party to a case. The Court stated that evidence of harm to non-parties could be used to show just how reprehensible the conduct the plaintiff was, but could not be used to determine the amount of punitive damages.
An Oregon jury awarded the estate of a deceased smoker $821,000 in actual damages and $79.5 million in punitive damages. The jury found that Jesse Williams' death was caused by smoking; that Williams had smoked largely because he thought it was safe to do so; and that Phillip Morris led him to believe so.
Phillip Morris argued to the trial judge that he should instruct the jurors that they could not impose punitive damages based on injuries to people who were not party to the case. Williams' attorney had told the jury to "think about how many other Jesse Williams in the last 40 years in the State of Oregon there have been." Phillip Morris asked the judge to instruct the jurors they could consider the extent of harm suffered by others, but that they could not punish Phillip Morris for harm to anyone but Williams. The judge ultimately instructed the jury that "punitive damages are awarded against a defendant to punish misconduct and to deter misconduct," and "are not intended to compensate the plaintiff or anyone else for damages caused by the defendant's conduct."
The U.S. Supreme Court agreed with Phillip Morris' original argument to the trial judge. The Court held that a jury could consider harm to persons not party to a case to determine how "reprehensible" a defendant's conduct was in the present case. However, the Court held that punitive damages could not punish a defendant for injuries it inflicted upon those who are not parties to the case.
Justice Stevens wrote a dissent to the Court's opinion. He wrote that he could not understand how a jury could consider harm to others to determine how reprehensible a defendant's conduct was, but not rely on that harm in assessing punitive damages against the defendant.
More telling in this case is Phillip Morris' argument that the $79.5 million punitive damage award was grossly excessive. The Court refrained from ruling whether the award was excessive. Many companies have been trying for years to get congress to impose tight limits on punitive damages or to convince the judiciary to limit such damages. The Court sent this case back to the trial court for further proceedings based on its directions. Aside from simply cutting the damage award, it's hard to determine what direction the Court has given.