Not Even U.S. Supreme Court Victory Can Vanquish $79.5 Million Punitive Award Against Philip Morris

Howard J. Bashman

Related: Bashman Archive

Little did I realize at the time, however, was that the U.S. Supreme Court's ruling would turn out not to be bad news even for the plaintiff in that very case. But on Jan. 31, 2008, on remand from the U.S. Supreme Court, the Supreme Court of Oregon reinstated the entire $79.5 million punitive damages award that the U.S. Supreme Court had overturned nearly one year earlier. What's more, the manner in which Oregon's highest court reinstated that award makes it exceedingly unlikely that the U.S. Supreme Court will want to have any further involvement in the case.

Many people must be wondering, "How could this be?" How can the highest court of a state so readily flout or disobey a U.S. Supreme Court ruling that represents the law of the land concerning the procedural due process protections required under the 14th Amendment to the U.S. Constitution? The answer, as it turns out, is that Oregon's highest court was able to quite easily avoid the consequences of the U.S. Supreme Court's decision in favor of Philip Morris in this very case.

When Philip Morris last brought this case to the U.S. Supreme Court, the company asked the Court to consider two objections to the punitive damages award. First, Philip Morris advanced a procedural due process challenge, asserting that a defendant's due process rights are violated if a jury assesses punitive damages to punish a defendant for having caused harm to persons other than the plaintiff. And second, Philip Morris advanced a substantive due process challenge, asserting that the punitive damages award was unconstitutionally excessive because, among other reasons, it was nearly 100 times larger than the award of compensatory damages.

When the U.S. Supreme Court issued its 5-4 ruling in February 2007, the Court agreed with Philip Morris' procedural due process argument. As a result, the U.S. Supreme Court found it unnecessary to address the company's substantive due process challenge to the punitive damages award as unconstitutionally excessive.

Philip Morris had sought to preserve its procedural due process objection by means of a proposed jury instruction offered during the trial of the underlying case. In its recent ruling on remand from the U.S. Supreme Court, the Supreme Court of Oregon held that the trial court had properly refused to deliver to the jury Philip Morris' proposed jury instruction because it misstated Oregon's law of punitive damages in various other respects.

Under Oregon law, a party has no right to have a trial court deliver its proposed jury instruction unless the instruction is entirely unobjectionable. Philip Morris' proposed jury instruction was far from entirely unobjectionable, according to Oregon's highest court, and therefore Philip Morris has no one to blame other than itself (and its trial lawyers) for failing to have its procedural due process rights vindicated in accordance with the U.S. Supreme Court's February 2007 ruling.

It seems likely that the recent Supreme Court of Oregon decision constitutes an adequate and independent state law ground that will prevent Philip Morris from benefiting from the U.S. Supreme Court's February 2007 procedural due process ruling in Philip Morris' favor. This still leaves the company with the ability to again seek U.S. Supreme Court review of its substantive due process challenge to the punitive damages award as unconstitutionally excessive. Remember that the U.S. Supreme Court had originally granted certiorari to review that question but then found it unnecessary to resolve.

For better or worse, the Supreme Court of Oregon's recent ruling has likely transformed this case into an unattractive vehicle for U.S. Supreme Court review on the substantive due process question of the unconstitutional excessiveness of punitive damages. To determine whether a punitive damages award is unconstitutionally excessive, one must consider the evidence that was before the fact-finder. Here, due to Philip Morris' failure to provide the trial court with a valid punitive damages instruction, the company has forfeited any ability to object to the jury's consideration, in assessing punitive damages, of the harm that Philip Morris caused to Oregon smokers other than the plaintiff.

Determining whether this particular punitive damages award is unconstitutionally excessive will thus require the U.S. Supreme Court to weigh a type of evidence that, as a result of the Court's earlier ruling in this very case, other juries won't ever be considering when deciding whether to award punitive damages. A substantive due process ruling in this case would amount to little more than error correction and would be unlikely to result in a ruling of widespread application to other cases. The U.S. Supreme Court ordinarily avoids granting review in those types of cases.

Even though this case may no longer present an attractive vehicle for examining the substantive due process limits of excessive punitive damages, Philip Morris can still hope that the U.S. Supreme Court, before it gets around to denying the company's forthcoming cert petition, will decide, or agree to decide, another case presenting a substantive due process challenge to excessive punitive damages.

It is worth emphasizing, in closing, that the reason Philip Morris failed to benefit from the U.S. Supreme Court's punitive damages ruling in its favor in this very case is that the trial lawyers for Philip Morris tried to slant their proposed punitive damages instruction too far in the defendant's favor. Had the company's proposed punitive damages instruction faithfully tracked the applicable Oregon statute, the Supreme Court of Oregon's ruling would have likely set aside the jury's punitive damages award and granted a new trial. The next time young litigation associates are pondering how far to twist the law in the client's favor in proposed jury instructions, it's best if they remember: Attempting to gain your client some subtle, modest advantage could backfire and eventually cause your client to lose its ability to overturn a nearly $80 million punitive damages award.

Howard J. Bashman operates his own appellate litigation boutique in Willow Grove, Pa., a suburb of Philadelphia. He can be reached via e-mail at hjb@hjbashman.com. You can access his appellate Web log at http://howappealing.law.com/.