Title: Estate of Michelle Schwarz v. Philip Morris Inc.

State: oregon

Issuer: Oregon Supreme Court

Document:

FILED: December 30, 2010
IN THE SUPREME COURT OF THE STATE OF OREGON
THE ESTATE OF MICHELLE SCHWARZ,
Deceased,
by and through her Personal Representative, 
PAUL SCOTT SCHWARZ,
Petitioner on Review,  
v.
PHILIP MORRIS INCORPORATED,
nka PHILIP MORRIS USA INC.,
a foreign corporation,
Respondent on Review. 
(CC 000201376; CA A118589; SC S053644)
On petitioner on
review's petition for reconsideration filed July 8, 2010.*
Maureen Leonard,
Portland, filed the petition for reconsideration for petitioner on review. 
With her were Robert K. Udziela, D. Lawrence Wobbrock, Charles S. Tauman, and
Richard A. Lane.
Sharon A.
Rudnick, Harrang Long Gary Rudnick P.C., Eugene, filed the reply for respondent
on review.  With her were William F. Gary and Susan D. Marmaduke.
Before De Muniz,
Chief Justice, and Durham, Balmer, Walters, and Kistler, Justices.**
WALTERS, J.
The petition for
reconsideration is allowed.  The former opinion is modified and adhered to as
modified.  Respondent on review's statement of costs and disbursements is
allowed in the amounts and on the conditions described in this opinion.
*348 Or 442, 235 P3d 668 (2010).
** Gillette and Linder, JJ., did not participate in the consideration or decision of this
petition for reconsideration.
WALTERS, J.
The matter before the court is
plaintiff's petition for reconsideration of our decision in Estate of
Michelle Schwarz v. Philip Morris Inc., 348 Or 442, 235 P3d 668
(2010).  On reconsideration, we clarify that the issue on remand is not whether
defendant is liable for punitive damages, but rather what is the correct amount
of those damages.  We also address defendant's statement of costs and
disbursements and allow it in part and disallow it in part.  In all other
respects, we adhere to our prior opinion.  
At trial of this case, the court
instructed the jury that, to recover punitive damages, plaintiff had to show,
by clear and convincing evidence, that defendant had "'shown a reckless
and outrageous indifference to a highly unreasonable risk of harm and [had]
acted with a conscious indifference to the health, safety, and welfare of
others.'"  348 Or at 447.  By awarding punitive damages in any amount, the
jury necessarily found that defendant's conduct was as described and that
defendant was liable for punitive damages.  Defendant did not challenge, on
appeal, the sufficiency of the evidence to support that conclusion, and that
conclusion is not subject to retrial on remand.  As we explained in our earlier
opinion, id. at 458, the jury was permitted to use evidence of
harm to others to assess the reprehensibility of defendant's conduct and,
working from that factual premise, to determine defendant's liability for
punitive damages, and the trial court did not err in that aspect of its
instruction to the jury.  
The trial court also instructed the
jury that, if it found that defendant's conduct was as described, it could
consider various factors, including the likelihood of serious harm and the
degree of defendant's awareness of that harm, and award an amount of punitive
damages not to exceed $300 million.  In doing so, the trial court erred in
failing to inform the jury that, while it could use evidence of harm to others
to determine the reprehensibility of defendant's conduct, it could not directly
punish the defendant for that harm.  Id.  Thus, that error likely affected
the jury's determination of the amount of punitive damages to award and that
was the limited reason that we decided that a new trial was necessary.  We
remanded this case to the trial court for a "new trial limited to the
question of punitive damages."  Id. at 460.  That wording may lack
precision.  The logic of our earlier opinion made it plain that the trial
court's instructional error had incorrectly stated the law that governed the
jury's determination of the amount of punitive damages, not the jury's decision
that punitive damages should be awarded.  We therefore clarify that, in
remanding for a new trial, we intended to remand for a new trial limited to the
amount of punitive damages.
In our earlier opinion, we designated
defendant as the prevailing party on appeal and awarded defendant its costs on
review.  Plaintiff requests that we reconsider our decision awarding costs to
defendant and exercise discretion to deny costs to defendant, or, in the
alternative, order that costs abide the result on retrial, citing ORAP 13.05(4)
(allowing costs to abide the outcome on remand in cases "in which the
party who ultimately will prevail remains to be determined").  
We adhere to our ruling awarding
costs to defendant.  Defendant was the prevailing party on review by this court
and therefore is entitled to recover the costs it incurred in this court.  ORS
20.310(1) (in any appeal to the Court of Appeals or review by the Supreme
Court, court "shall" allow costs and disbursements to the prevailing
party, with some exceptions).  As to plaintiff's alternative request that we
provide that the award of costs on review abide the result on retrial under
ORAP 13.05(4), we find that that provision does not apply under the
circumstances presented in this case.  The party who ultimately will prevail does
not "remain to be determined."  Plaintiff already has obtained a
judgment against defendant, part of which was affirmed on appeal, and, when a
final judgment eventually is entered by the trial court, plaintiff will be the
party who prevails on remand.  Although we therefore decline to provide that
the award of costs on review must abide the result on remand, we do think it
appropriate to provide that the effective date of the cost award will be the
effective date of the trial court's judgment on remand.  We will determine the
amount of the allowable costs on review, but we will not include that amount in
the appellate judgment.  Defendant will be entitled to that sum when the trial
court issues its judgment at the conclusion of this matter on remand.   
With regard to the amount of costs
and disbursements on review, defendant filed a statement of those costs and
disbursements seeking the total sum of $561,816.84, plus $638 per day from July
1, 2010, until the letter of credit procured by defendant is released. 
Plaintiff filed objections to the cost bill, including an objection that
defendant had waived any claim for costs incurred before the Court of Appeals. 
Plaintiff asserted that defendant did not timely submit a claim for those costs
under ORS 20.320 (cost statement must be filed 21 days from the date of the
appellate court's decision) and ORAP 13.05(5)(a) (same; also providing that the
filing of a petition for review or reconsideration does not suspend the time
for filing a cost statement).  Plaintiff's objection is well taken, and we
disallow defendant's request for costs that it did not seek within 21 days of
the decision of the Court of Appeals.  Those disallowed costs include the transcript
costs ($10,037.80) and costs related to maintaining the letter of credit prior
to the issuance of the Court of Appeals decision.  We allow the prevailing
party fee ($100), the filing fee ($140), and the cost of filing briefs in the
Supreme Court ($255.10).  We also allow the cost of maintaining the letter of
credit after the Court of Appeals issued its decision ($367,205.82 through June
30, 2010).  The total amount of allowed costs is $367,700.92, plus $638 per day
from July 1, 2010, until release of the letter of credit or issuance of the
appellate judgment, whichever occurs first. 
The petition for reconsideration is
allowed.  The former opinion is modified and adhered to as modified. 
Respondent on review's statement of costs and disbursements is allowed in the
amounts and on the conditions described in this opinion.