TorteDeForm

Alan Morrison

What Is The Supreme Court Doing Deciding How Much Is Too Much for Punitive Damages?

Last week I participated in a moot court for the lawyer who will represent the plaintiff defending a $79.5 million punitive damages award in the Supreme Court on October 31st. (Philip Morris v. Williams, No. 05-1256) The experience caused me to ask, what is the Supreme Court doing deciding how much is too much for punitive damages, and if the tobacco industry does not deserve to be hit this hard on punitive damages, why do we bother having them at all?

Big business has been on a tear over punitive damages. They have successfully lobbied some state legislatures to impose limits on multipliers or absolute caps, and they have also been working the courts, including the Supreme Court, asking for rulings that “excessive” punitive damages violated the Constitution. After some failures in their attempt “to make a federal case” out of the issue, the Court finally gave in, first with procedural rulings and then with decisions saying that there is a substantive due process ceiling on how much a court can punish a defendant in a civil case (while at the same time having no difficulty upholding very harsh criminal sentences, such as California’s “Three Strikes” law and lengthy mandatory minimums for drug dealers). Every defendant who has been hit with a punitive damages award now wants the Court to rescue it, if the state or lower federal courts do not.

This development cannot be blamed on any supposed shifted of the Court to right, as Justices Scalia and Thomas have dissented, and several of the liberals, including Justices Stevens and Breyer, have gone along with anti-punitive damages champions, who included now-retired Justice O’Connor. In assessing blame, one could look to the state courts that have failed to do a minimum job of policing these awards, so that Alabama sustained $4 million in punitives for a bad paint job, and Utah allowed $145 million for failure of pay an insurance claim. The facts are actually much worse than that, but the only harms were economic, and one can at least have some sympathy for the defendants for being upset about the awards and the Supreme Court for having to deal with them when state courts (or legislatures) did not.

But the most recent response in the 2003 State Farm case, in which the Court said it was attempting to bring some clarity to what it would allow, either will be the end of punitive damages, or the Court will have to conclude that it can only have meant what it said when the torts involve economic damages of the kind at issue there. The Court in State Farm focused on the need for some proportionality between compensatory damages and the amount of punitives, with the Court suggesting that, except where actual damages are very low, or in very unusual circumstances, a ratio beyond 9:1 would be excessive. If a legislature did that, we could argue abut the numbers, but not the approach, but when did the Supreme Court receive legislative powers? There are numbers in the Constitution when bright lines are useful – ages for voting or holding certain office, the amount in controversy for which jury trials must be maintained, and the terms for federal officeholders – yet there is nothing about magic numbers for punitive damages, let alone that the Supreme Court has the right to decide them.

In cases involving economic torts, ratios may make sense because the costs and benefits of the conduct are relatively easy to calculate, both by the wrongdoer and the court reviewing its conduct. But when the harm is to the human body, the situation changes, and use of fixed ratios make no sense. Consider Jesse Williams, a smoker for almost 50 years who contracted lung cancer and died in less than six months. He had about $21,000 in medical and other expenses, and the jury awarded his family $800,000 (reduced by Oregon law to $500,000) for the loss of his companionship. If a ceiling of nine times actual damages were imposed, his family could receive no more than $7.4 million. But suppose instead of killing a retired janitor like Jesse, the victim was a 45 year old executive who was making $200,000 a year and who lived for three years, in and out of hospitals, before he died. If those losses totaled $5 million, his family could receive up to $45 million in punitive damages, and yet the conduct for which Philip Morris was being punished would be identical. Since a major purpose of imposing punitive damages is to deter similar conduct in the future, that disparity is nothing short of irrational, yet Philip Morris is arguing that State Farm compels that result in cases of personal as well as economic injury.

Still, $79.5 million is a big number, at least until you look at the evidence, which showed a concerted industry campaign that lasted more than 50 years, in which Philip Morris intentionally deceived the public about the connection between smoking and disease. It did that because if it did not do, millions would stop smoking and millions more would never start. Their campaign, which was approved over and over again at the highest levels of the company, was designed to bring in vast profits, which it did. The result has been hundreds of thousands of tobacco related deaths every year and many more illnesses that caused prolonged suffering. The industry has adopted a defense strategy in which they never settle a case and fight each one, far beyond the potential value of the case, to send a message that every plaintiff and plaintiff’s lawyer can expect a protracted, and many would say nasty battle, with as many appeals as the law allows. One result is that only a few lawyers are willing to take these cases, and without the lure of punitive damages, there would probably be none. As it is, there have been only a handful of punitive damages awards against tobacco companies, and even they have hardly put a dent in the billions in profits that the industry has made over the years. And despite all the evidence about these decades’ long deceptive tactics, there is not an ounce of contrition ever shown by Philip Morris or its co-conspirators.
Here is my question to the Supreme Court: if this is too much money for this conduct, what else has anyone ever done in this country that is more deserving of such punishment?

Alan Morrison: Author Bio | Other Posts
Posted at 9:43 AM, Oct 25, 2006 in
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Comments

1st my heart goes out to people who lost love ones, just as I did and very close friends of mine, but the families have received substantiate amount of money (I know it does not compensate fully for there lost) from the fund, (and I have seen a lot wasted frivolouslyfrom people that live around me) on top of there own insurance, which I think the children deserve what ever they got they should be taken care of just like the people you call the heroes. the people you call heroes are truly heroes, but September 11,2001 that day just is never ending for these heroes and families they have kids also,( but no one is thinking of them, as there kids and family watch there love ones get sicker and sicker) probably the same age, same school, as the ones that died that day just imagine these kids are not able to play with daddy or mommy anymore or maybe for a short time (yes just like the people who lost there lives that day but the difference there is there not watching it daily in there face, there able to somewhat go on with there lives), these kids no something is wrong they have to struggle and not understand even though they are here, why can’t they do things with them, I had to explain why my kids daddy is on medicine (and not working) and why he can not walk up a flight of stairs with out being winded and why he breathes so heavy and going for all these test and Dr’s appt’s, in my opinion the people that died on 9/11 and the people we call heroes today are very equal I admire everyone of them, a huge amount died under fire while people like my husband tried to save and find people, working down there 20 hours on and 4 off of course knowing my husband he couldn’t sleep or rest if I know my husband it would be out of guilt, that he is alive and able to try and do something, so believe me he was not able to rest until the obvious, which we deal with all the time still sleepless nights etc to much to get into,now they are dyeing a slow death or suffering and no one cares. Here are a very special and unique group of people putting there own live on the line to help other people and when they need help everyone turns there back on them and there family (they have to sometime pay for the cost of test and medicine exams cause the insurance co. won’t cover it, which adds up and we keep getting it’s not good from the Dr’s?),I don’t know is something wrong with this picture what is it, live for the moment and forget about everything else and we wonder why our country is going down and jobs are sent over sea????? I wonder why????????????????
Charlene Morrill

Posted by: Charlene | October 26, 2006 12:17 AM

Charlene,

Thank you for your very personal and revealing comments on Tort Deform.

If you would like to help further with this issue please email me personally at cdugger@drummajorinstitute.org

Posted by: Cyrus Dugger | October 26, 2006 5:30 PM