Thursday, October 05, 2006

Supreme Court series: Philip Morris USA v. Williams

S. Ct. thumbnailPhilip Morris USA v. Williams, No. 05-1256. Certiorari granted, Feb. 2, 2006 (Oregon Supreme Court); argument scheduled, Oct. 31, 2006. See also Northwestern University's helpful resource page.

Like a ghoul in a late-night horror movie, punitive damages haunted a peculiar coalition of the Rehnquist Court: the bourgeois alliance that Stanford Law School classmates William Rehnquist and Sandra Day O'Connor led against a strange opposition uniting the high court's most conservative (Antonin Scalia and Clarence Thomas) and most liberal members. Punitives weren't the only issue that generated this sort of split -- the retroactivity dispute in Harper v. Virginia Department of Taxation, 509 U.S. 86 (1993), comes readily to mind -- but they endure as evidence of a fundamental fissure in contemporary America's conservative coalition. Economic conservatives, typified by their interest in variations on the theme of capitalism, have almost nothing in common with social or cultural conservatives, whose agenda begins and ends with banning abortion, punishing homosexuality, and substituting prayer for science education in public schools. (Okay, that's a bit unfair. The cultural conservatives' agenda also includes degrading the environment for fun, suffocating medical research in its cradle, and diverting the instruments of war two time zones west of Osama bin Laden.) The schism is reminsicent of Marx versus Kant (means of production versus pure reason) or perhaps the battle royale between Booker T. Washington, W.E.B. DuBois, and Marcus Garvey.

Smoking killsWilliams is rooted in a 1999 lawsuit by the widow of a lung cancer victim against Philip Morris. Mayola Williams alleged that the cigarette manufacturer conducted a deliberate campaign to deceive the public by fostering the illusion of serious scientific debate over smoking’s deleterious health effects.

An Oregon jury sided with Williams. On its finding that Philip Morris had committed negligence and fraud, the jury awarded $821,485 in compensatory damages.

The jury also concluded that Philip Morris had engaged in systematic fraud affecting a large group of smokers over a 50-year period. It accordingly awarded $79.5 million in punitive damages.

The trial judge, purporting to follow "federal standards" governing punitive damage awards, reduced the punitive damages awarded to $32 million. The Oregon Court of Appeals reinstated the $79.5 million award, and the Oregon Supreme Court affirmed.

Williams comes a full decade after the Supreme Court entered the business of reviewing the constitutionality of punitive damage awards in BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996). The high water mark of Gore arguably came in 2003, though, when the Court invalidated a punitive damages award that gave $145 million, compared with $1 million in compensatory damages. In State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408 (2003), Justice Kennedy's opinion for the Court observed "that, in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process."

Appropriately enough for Ratio Juris, a weblog dedicated to mathetical and empirical analysis of legal decisionmaking, Williams raises two distinctively mathematical points.

The first of these points is the nature of the majority coalition that is expected to emerge in Williams. The Wall Street Journal's law blog explains things rather nicely:
It’s hard to divine how the new guys are going to vote on this issue. Supreme Court punitive damages jurisprudence has no clear ideological lines. Conservatives Scalia and Thomas have refused to go along with rulings that set caps on punitive damages. As strict constructionists, they don’t think the Constitution protects against “excessive punitive damages.” Joining Scalia and Thomas is liberal Justice Ginsburg, who also opposes caps. A worst-case scenario for Big Business on this issue would be if Roberts and Alito agreed with Scalia, Thomas, and Ginsburg, creating a five-justice majority that would open up the floodgates for runaway punitive damages verdicts.
The second mathematical twist in this case has to do with the constitutional merits of this dispute over punitive damages. The ratio between punitive and compensatory damages in Williams is approximately 97:1, or an order of magnitude beyond what Campbell hinted as the upper limit on the ratio between punitive and compensatory damages. Campbell cited legislative precedent as well as the Supreme Court's own previous cases on punitive damages.

For its part, the Oregon Supreme Court in Williams relied on Gore, which prescribed three factors for evaluating punitive damage awards rather than relying on a single ratio of punitive to compensatory damages:
  • The degree of reprehensibility of the defendant’s misconduct.

  • The disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award.

  • The difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.
Oregon's high court, in effect, has argued that the jury's revulsion at Philip Morris's behavior in this case may justify a departure from Campbell's "single-digit ratio" guideline to constitutionality. Whether such a departure is warranted, and to what extent if would be warranted, will guide the probable path of decision in Williams.


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