Texas Trucking Defense and Litigation

Phillip Morris punitive damages case may actually be good for plaintiffs

Howard J. Bashman, an appellate lawyer in Philadelphia, has some interesting thoughts regarding the recent Phillip Morris case.  He agrees that the case limiting punitive damages is good for defendants.  But he also argues that it’s good for subsequent plaintiffs, i.e., those plaintiff who are not the first to sue a defendant who has harmed multiple parties:

To appreciate what I'm discussing, assume that a defendant engaged in conduct that harmed 10 separate potential plaintiffs and that the conduct was egregious enough to subject the defendant to punitive damages. Assume further that all 10 plaintiffs sue the defendant separately, and that each plaintiff's lawsuit seeks punitive damages. If the first plaintiff to reach a jury is allowed to request punitive damages that are intended to punish the defendant for having harmed all 10, then the defendant in theory would have a valid argument as to why the other nine should not be permitted to recover punitive damages when their claims reach a jury.

However, in the aftermath of the Philip Morris ruling, each plaintiff in my 10-plaintiff hypothetical will only be able to ask a jury to award punitive damages intended to punish the defendant for having caused harm to that individual plaintiff. Correspondingly, the defendant will lose the ability to argue that it should not be subjected to repeated punitive damage assessments in each of the 10 lawsuits.

Accordingly, the high court's ruling in Philip Morris is good news for defendants because now an individual plaintiff can no longer receive a punitive damages award intended to punish a defendant for having harmed others similarly situated to the plaintiff. But the ruling is also good news for plaintiffs who are not the first to reach a jury, because the defendant will no longer be able to persuasively argue that earlier punitive damages awards aimed at punishing the same conduct at issue in the current plaintiff's lawsuit extracted a punishment sufficient to mandate the dismissal of that particular plaintiff's punitive damages claim.

U.S. Supreme Court limits punitive damages

As reported in Law.com:

The Supreme Court on Tuesday tossed out a $79.5 million punitive damage award won by a smoker's widow against Philip Morris, ruling that Oregon jurors improperly considered harm to other smokers in punishing the tobacco giant.

By a 5-4 vote, the Court said that a state violates the Constitution's due-process clause when it uses a punitive damage award to punish a defendant for injuries suffered by "strangers to the litigation," in the words of Justice Stephen Breyer, who wrote the majority opinion.

"A defendant threatened with punishment for injuring a nonparty victim has no opportunity to defend against the charge," Breyer wrote.

Business advocates applauded the ruling as a major body blow, grounded in the Constitution, against high punitive damage awards.

"This is a huge, huge win for corporate defendants," said Lori Nugent, chair of the enterprise risks practice of Cozen O'Connor in Chicago, and author of a state-by-state guide on punitive damages. "Lawyers who exhort jurors to send a message; that has to stop now. It rips the guts right out of a case."

But plaintiffs groups say the decision won't change much, especially since the Court on Tuesday also said that harm to others could still be considered by jurors in determining the defendant's level of "reprehensibility."

"Ultimately, I don't think this is going to be very significant. The Court was slaying dragons that don't exist," said Robert Peck, who argued the case on behalf of Mayola Williams, widow of longtime Oregon smoker Jesse Williams, whose estate won the case against Philip Morris. On remand to Oregon, Peck said, the case could still result in a significant punitive damage award.

The ruling also disappointed some business groups because it explicitly stopped short of setting numerical limits on excessive punitive damages -- a holy grail for critics of the tort system. The Court's sidestep caused some tobacco-company stocks to dip on Wall Street after the ruling.

The decision in Philip Morris USA v. Williams represented the first time Chief Justice John Roberts Jr. and Justice Samuel Alito Jr. showed their stripes on an issue that scrambles the usual alliances on the Court. Both Roberts and Alito joined the Breyer majority, along with Justices Anthony Kennedy and David Souter. In dissent were Justices Clarence Thomas -- who sees no limit to punitive damages written in the Constitution -- and Justices John Paul Stevens, Antonin Scalia and Ruth Bader Ginsburg.

It was also the first time that evidence of tobacco-company misconduct, dug up by years of discovery in litigation, was before the Court, albeit in the background. But Breyer's majority made scant mention of the evidence or of any particulars of Williams' case.

Commentators and dissenters questioned how the Court's ruling will be applied in real courtrooms. Breyer said judges will have to be vigilant in ensuring that jurors only consider harm to others in assessing reprehensibility, not in deciding the level of punitive damages. "State courts cannot authorize procedures that create an unreasonable and unnecessary risk of any such confusion occurring," Breyer said.

"It seems, then, that jurors can think about harm to others in deciding that the conduct was awful enough to merit punitive damages" in the first place, said Michael Krauss, torts professor at George Mason University School of Law. "But then they can't think about it anymore, because when they set the amount of the damage award, the Court is saying it has to reflect only the harm to the plaintiff. You'll have to wash your brain out" between steps.

Krauss adds, "How you force the jury into this intellectual straightjacket isn't clear. What is clear is that this issue will be back before the Court."

Ginsburg in her dissent also predicted that the task of guiding jurors will be difficult. "A judge seeking to enlighten rather than confuse surely would resist delivering the requested charge."

She added that the majority should have shown greater respect to the Oregon Supreme Court and other state courts that have tried "diligently to adhere to our changing, less than crystalline precedent."

In another key business ruling from the Northwest on Tuesday, the Court ruled unanimously in favor of Weyerhaeuser, the timber company, in a dispute over "predatory bidding." Ross-Simmons, a sawmill company, claimed that Weyerhaeuser tried to drive it out of business by bidding up the price of red alder logs to a level that Weyerhaeuser could afford to pay, but Ross-Simmons could not.

In a ruling by Thomas, the Court agreed that the same standard used in antitrust "predatory pricing" cases should apply to bidding or buying cases -- a standard that is difficult for plaintiffs like Ross-Simmons to meet.

New Jersey vacates $105 million dram shop award, including $75M for punitive damages

Law.com reports that the N.J. Supreme Court has declined to reinstate a $105 million dram shop verdict against a Giants Stadium beer vendor. Mothers Against Drunk Driving filed an amicus brief in the action.

In a Jan. 31 order with no commentary, the court denied a petition for certification by lawyers for Antonia Verni, now 9, who was paralyzed in a crash with a drunken fan after a Giants-Saints game in 1999.

Two years ago, a Bergen County Superior Court jury found the stadium vending company, Harry M. Stevens Inc., and its parent Aramark Corp., liable for $30 million in compensatory damages and $75 million in punitive damages.

The verdict was cited around the country as a warning to the sports industry, its vendors and its insurers of the potential cost of letting fans drink too much at games and tailgate parties.

But an appeals court vacated the award and ordered a retrial in August on grounds that dramatic testimony about the culture of drunkenness at the stadium was impermissible in a dram shop case and had the capacity to enflame the jury.

The Supreme Court's cert denial in Verni v. Harry M. Stevens of New Jersey, C-543, sets the stage for a trial along the lines mandated by the Appellate Division: concentration on whether the fan was served when he was visibly intoxicated, not whether a culture of drunkenness existed