Oregon Appeals Court Reinstates Punitive Award in Smoker's Case; Philip Morris USA Will Appeal to Oregon Supreme Court and Seek New Trial

The Oregon Court of Appeals today refused to reduce a jury’s 1999 award of $79.5 million in punitive damages to a single smoker’s estate. Philip Morris USA said that the award – 152 times the compensatory damages awarded in the case – is grossly excessive and clearly inconsistent with the U.S. Supreme Court’s recent decision in State Farm v. Campbell. The company will seek Oregon Supreme Court review of the decision.

“The Oregon Court of Appeals’ opinion misapplies State Farm and the constitutional limits it places on punitive damage awards,” said William S. Ohlemeyer, Philip Morris USA vice president and associate general counsel.

“The company will ask the Oregon Supreme Court to overturn the verdict and send the case back for retrial.”

The lawsuit, known as the Williams-Branch case, was brought on behalf of the family of Jesse Williams, a longtime smoker who died of cancer. In 1999, the jury awarded $821,000 in compensatory, or actual damages, which were reduced under state law to $521,000. The trial court reduced the punitive damages award to $32 million, but in a June 2002 ruling the Oregon Court of Appeals reinstated the original $79.5 million punitive damage award.

In October 2003, the U.S. Supreme Court accepted review of the case and directed the Court of Appeals to vacate its June 2002 opinion and reconsider the case in view of State Farm, the high court’s landmark 2003 opinion setting forth a number of constitutional limitations on punitive damage awards.

In State Farm, the U.S. Supreme Court indicated that, in cases (like Williams-Branch ) involving substantial compensatory damages, punitive damages generally should not exceed the amount of compensatory damage. The Supreme Court further indicated that rarely, if ever, should the ratio exceed 9:1, except in cases of low compensatory damage.

Notwithstanding this constitutional limitation, today’s decision leaves intact a $79.5 million punitive damage award to the estate of a single individual, with the resulting punitive to compensatory damages ratio of 152:1.

The State Farm decision also held that a defendant cannot be punished based on allegations of harm to persons other than the plaintiff, conduct that occurred outside the state in which the case was tried, or a defendant’s wealth.

“Contrary to the constitutional principles outlined in State Farm, the Williams-Branch jury was allowed to base its punitive damages award on harm to persons other than the plaintiff, conduct outside the state and the company’s wealth,” Ohlemeyer said.

“The only way to fairly remedy this situation is for the Oregon Supreme Court to reverse this decision and order a new trial, and that’s what the company will seek in its appeal.”

Ohlemeyer also said today’s decision in Williams-Branch is inconsistent with two recent California appellate decisions in cases where juries had awarded punitive damages.  On April 7, 2004, the California Court of Appeal ordered a new trial, in the Whiteley case, and on April 28, 2004 the California Supreme Court granted Philip Morris USA’s request that it once again review the Henley decision.

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