Case Summary
Philip Morris USA v. Williams

A jury may not punish a defendant for the effects of tortious conduct toward nonparties, but may consider harm to nonparties when deciding how reprehensible the conduct toward plaintiff was, and thus how great an amount, in comparison to the compensatory damages, should be awarded for punitive damages. Philip Morris USA v. Williams (2007) ___ U.S. ___ [127 S.Ct.1057].

A man who smoked three packs of cigarettes a day for 47 years died of lung cancer. His widow sued Philip Morris, claiming the company knew of the potential health risks its product posed, but failed to inform the public of those risks. During trial, plaintiff's counsel argued that the jury should punish Philip Morris for the harms suffered by every Oregonian who smoked the company's cigarettes. The trial court rejected a jury instruction proposed by Philip Morris that would have advised the jury it could not punish for harm to others, although such harm could be considered in assessing the reprehensibility of defendant's conduct. The jury awarded $821,485 in compensatory damages and $79.5 million in punitive damages (a ratio of 97 to one).

The trial court found that though the large punitive award "was within the range a rational juror could assess based on the record as a whole," it was "excessive under federal standards," and reduced the amount to $32 million. The Oregon Court of Appeals, however, reversed the trial judge's decision and reinstated the $79.5 million award. The Oregon Supreme Court affirmed even though it concluded that the amount of the jury's punitive award was not reasonably related to the plaintiff's harm. The court held that Philip Morris' conduct was so highly reprehensible that this consideration alone could "override" the constitutional requirement that punitive damages be reasonably related to the plaintiff's harm, i.e., generally not more than nine times greater than the plaintiff's compensatory damages.

The United States Supreme Court reversed and remanded on the ground that, consistent with the defendant's rejected punitive damages jury instruction, a jury may not impose punishment for harm to nonparties: "the Constitution's Due Process Clause forbids a State to use a punitive damages award to punish a defendant for injury that it inflicts upon nonparties or those whom they directly represent, i.e., injury that it inflicts upon those who are, essentially, strangers to the litigation." The Court reasoned that "a defendant threatened with punishment for injuring a nonparty victim has no opportunity to defend against the charge, by showing, for example in a case such as this, that the other victim was not entitled to damages because he or she knew that smoking was dangerous or did not rely upon the defendant's statements to the contrary," and "to permit punishment for injuring a nonparty victim would add a near standardless dimension to the punitive damages equation. How many such victims are there? How seriously were they injured? Under what circumstances did injury occur?" The Court noted, "it may be appropriate to consider the reasonableness of a punitive damages award in light of the potential harm the defendant's conduct could have caused. But we have made clear that the potential harm at issue was harm potentially caused the plaintiff." (Original emphasis.)

The Court concluded that "Evidence of actual harm to nonparties can help to show that the conduct that harmed the plaintiff also posed a substantial risk of harm to the general public, and so was particularly reprehensible" (i.e., supporting a punitive award that is closer to nine times the amount of compensatory damages rather than merely equal to or less than the compensatory damages), but "a jury may not go further than this and use a punitive damages verdict to punish a defendant directly on account of harms it is alleged to have visited on nonparties," and state courts must "provide assurance" that juries understand this distinction. The Court's holding may require in limine rulings limiting evidence and argument regarding harm to others (especially in the first phase of a bifurcated trial, during which reprehensibility is not in issue) as well as the crafting of special jury instructions.

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