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?