Source: http://www.butler.legal/writ-of-certiorari-dismissed-as-improvidently-granted-the-ambiguous-end-to-philip-morris-usa-inc-v-williams
Timestamp: 2019-04-20 09:17:07+00:00

Document:
On March 31, 2009, the United States Supreme Court dismissed, as improvidently granted, a writ of certiorari in Philip Morris USA, Inc. v. Williams.1 While the reason for the court's action remains a mystery, it seemed to signal an end to the court's interest in the central constitutional issue in the case: punitive damages. Unfortunately, the court's decision to abandon the issue leaves both the litigants and observers wondering what, if anything, had been gained by years of decisions, reversals and remands.
The facts of the case are well known. The litigation concerned a punitive damages award against a cigarette manufacturer in an action for negligence and deceit brought by the widow of a smoker, Jesse Williams against Philip Morris.2 Mrs. Williams asserted that the company had purposefully taken actions to obscure the dangers of smoking and, as a result, her husband was deceived into believing smoking was not harmful and that 47 years of smoking ultimately caused his death.
On remand, the Oregon Supreme Court again took pains to sidestep the Due Process violation underlying the punitive damage award. Instead, while the Oregon court acknowledged that it was being called upon to reconsider and reassess its earlier holding, it found that any claim of "error" would have to be predicated upon the defendant's request for a jury instruction limiting consideration of potential harm to third-parties when awarding punitive damages. The trial court had declined to give the instruction and plaintiff's counsel argued that such potential damage to others should be considered in the award of punitive damages. Dodging the constitutional issue entirely, the Oregon Supreme Court found that the trial court's refusal was not in error because, under state law, the defendant's proposed instruction could be refused because it did not correctly state the law of Oregon. According to the court, unless the proposed instruction was clear and correct in form and substance and altogether free from error, an appellate court could not reverse a trial court's refusal to give a proposed jury instruction. In the Oregon court's view, if the danger that the jury rendered a punitive damage award based upon speculative damage to strangers to the litigation was predicated on the failure to give the proffered instruction, the independent state basis for the trial court's decision on the instruction obviated any claim of constitutional error.
In our view, 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. For one thing, the Due Process Clause prohibits a State from punishing an individual without first providing that individual with an opportunity to present every available defense. Lindsey v. Normet, 405 U.S. 56, 66, 92 S.Ct. 862, 31 L.Ed.2d 36 (1972) (internal quotation marks omitted). Yet 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.
On remand, the Oregon court advises that the trial court would have performed its constitutional duty to instruct the jury if the defendant's proffered instruction on the issue had been perfect. As it was not, the trial court's ruling disallowing the proffered instruction was not an error and the trial court had no independent duty to guard against a punitive damage verdict predicated on speculative damage to strangers to the litigation. The Oregon Supreme Court's position is at odds with the U.S. Supreme Court's repeated admonishment that courts have an independent obligation to ensure that punitive damage fall within constitutional constraints. Consistent with its earlier decisions, the Oregon Supreme Court left the punitive damage award, 96.7 times the jury's award of economic and non-economic damages, intact.
Not only does the procedural bar at issue here serve no legitimate state interest; it also is neither firmly established nor regularly followed. We demonstrated in our opening brief that prior to this case, no Oregon appellate court had ever invoked the correct in all respects rule to cast aside a perfectly correct instructional request, considered individually and rejected on the merits, simply because an appellate court is later able to identify an unrelated error in a separately numbered paragraph of the proposed jury charge. We also showed that the decision below conflicts with two separate aspects of previously-settled Oregon law: (i) the rule that litigants are not required to make futile and repetitive gestures in order to preserve an argument for appeal, and (ii) the axiom that Oregon courts do not reach federal constitutional issues if the case may be resolved by resort to state law.
Despite the ill concealed contempt of the Oregon Supreme Court for the Due Process concerns outlined by the U.S. Supreme Court's opinions, and the apparent substance of the issues raised by the defendant in light of those opinions, four months after the Petitioner's response brief was filed, the writ of certiorari was dismissed as improvidently granted.14 The reason for the action or inaction remains a mystery.
Despite the victory of the Oregon Supreme Court, the final substantive decision of the U.S. Supreme Court in the litigation made it clear that a jury may not punish a defendant based upon rank speculation as to actual or potential harm to unnamed and unknown victims. In addition, states in civil actions must have procedures that ensure the jury does not base a punitive damage award on such speculation as such an award would violate Due Process.
To its credit, the U.S. Supreme Court addressed the question posed by the Oregon court: "How can we know whether a jury, in taking account of harm caused others under the rubric of reprehensibility, also seeks to punish the defendant for having caused injury to others?" Unfortunately, the Court's response however gives little guidance except that the lower courts are bound to "do something" to prevent juries from basing punitive damages on speculative injuries to non-parties.
The reaction of other state courts has been mixed. Of the cases citing to the U.S. Supreme Court's last decision in Philip Morris USA v. Williams,20 most noted both the issues that had concerned the U.S. Supreme Court; the appeal for punitive damages based upon damaged to strangers to the litigation and the ratio between compensatory and punitive damages.21 A review of some of those cases is instructive.
In Grefer v. Alpha Technical, 965 So. 2d 511, (La. App. 4th Cir. 2007)22 plaintiffs were landowners who sued an oil company and that company's equipment cleaning contractor. The defendant oil company had leased the property from the landowners and, according to the landowners, had contaminated their property with naturally occurring radioactive material contained on pipes. The Grefers asserted causes of action in negligence, strict liability, absolute liability, nuisance, fraud, and breach of contract. They sought compensatory damages for the loss of use and the remediation of the property as well as punitive damages pursuant to La. C.C. art. 2315.3.
After a five-week trial, the jury returned a verdict in favor of the Grefers and awarded them compensatory damages in the amount of $56,145,000.00, which included $145,000.00 in general damages and $56,000,000.00 in restoration costs (special damages). The jury also awarded exemplary (punitive) damages in the amount of one billion dollars, eighteen times the compensatory damage award.
In this particular case, Louisiana law permits you to consider an additional element of damages called exemplary damages (or called "punitive damages" in other states).
(4) the plaintiffs' damages were caused by the defendant's wanton and reckless conduct.
The phrase "wanton and reckless" means a conscious indifference to consequences, amounting almost to a willingness that harm to the public safety would follow. Stated another way, wanton and reckless conduct is that which amounts to intentional and deliberate action that has the character of outrage frequently associated with crime.
Unless you find that the defendant acted with almost a willingness that harm to the public safety would follow, then you may not award exemplary damages.
Even if you decide that the plaintiffs are entitled to exemplary damages, you may not award such damages for conduct that the defendants engaged in before 1984 or after 1996. Under Louisiana law, the plaintiffs are not entitled to exemplary damages for conduct that the defendants engaged in before 1984 or after 1996.
Exemplary damages are within your discretion. This means that even if you find that the defendants' conduct was wanton or reckless, you are not required to award exemplary damages to the plaintiffs.
(5) the deterrent effect, i.e. whether it will deter future or similar conduct by the defendant and others.
As in Phillip Morris, on remand, the state appellate court found no reason to disturb its earlier decision. The court held that, in instructing the jury with respect to whether exemplary damages should be awarded to the Grefers, the trial judge set forth a correct statement of the law and had not impermissibly suggested that the punitive damage award could be based on damage to persons who were not parties to the litigation.
The Louisiana appellate court acknowledged that the trial judge had referred to harm or the potential (risk of) harm to nonparties resulting from the defendant's conduct when she referred to the public safety in her explanation of "wanton" and "reckless" conduct. However, the court noted that, under the U.S. Supreme Court's opinions, the jury may consider the reprehensible nature of the defendant's conduct in deciding whether exemplary damages are warranted. The court advised that the trial judge's only other reference to nonparties occurred when she instructed the jury that exemplary damages were awarded not to benefit the plaintiff but to punish the defendant, to compel the defendant to have "proper regard for the rights of the public," and to deter others from following the defendant's example. According to the Louisiana court, as the U.S. Supreme Court has found no constitutional violation in imposing punitive damages "to further a State's legitimate interest in punishing unlawful conduct and deterring its repetition."26 Thus, the trial court's reference to nonparties within the context of the public's interest and safety did not violate the defendant's rights to due process.
A similar dispute over jury instructions was the focus of the court's decision in Cook v. Rockwell International Corporation, 564 F. Supp. 2d 1189 (D. Co. 2008). In that case property owners had filed a class action against operators of a nuclear weapons manufacturing plant to recover for damages caused by repeated release of hazardous substances from plant. The jury awarded compensatory damages of $176.8 million which the court found was not excessive. Plaintiffs had requested compensatory damages of $248 million and presented evidence, including both expert and lay witness testimony, upon which the jury could have found that the amount of compensatory damages awarded was caused by the defendants'' conduct.
Defendants objected to the award of exemplary damages, asserting that the instruction given the jury was unconstitutional under Philip Morris USA v. Williams,29 because it defined "willful and wanton conduct" in part as "conduct that was done heedlessly and recklessly, either without regard to the consequences, or without regard to the rights and safety of others, particularly the Plaintiff Class." It was this reference to "the rights and safety of others," Defendants argued, that renders the instruction, and the exemplary damages awards based on it, unconstitutional because, under Philip Morris, a jury may not consider harm to others in deciding whether to impose punitive damages.
The appellate court disagreed. The court advised that the reference in the instruction was taken directly from Colorado's exemplary damages statute. The action was a trespass and nuisance class action alleging that the operators of the nuclear weapons manufacturing plant released plutonium and other hazardous substances onto the properties of class members. According to the court, there was no significant risk that jury based its exemplary damages determination on a desire to punish operators for causing injury to anyone not before court. As a consequence, the jury's award of exemplary damages did not violate operators' due process rights, even though jury instruction referred to conduct done without regard to "rights and safety of others."
The Oregon court's opinion in Phillip Morris suggested that trial courts have no independent duty to protect the due process rights of a defendant faced with a jury's punitive damage award. This perspective was echoed in Kauffman v. Maxim Healthcare Services, Inc.30 In Kauffman an employee brought a retaliation action alleging violations of § 1981, and the New York State Human Rights Law. The jury returned a verdict finding employer liable for retaliation and awarding $137,935 in compensatory damages and $1.5 million in punitive damages.
The court nevertheless declined to consider the defendant's argument that the court's jury instructions were not clear in light of the Supreme Court's guidance in Philip Morris. The district court held that the defendant had failed to request a jury instruction based on the holding of Philip Morris case or object to the court's instruction on that basis. According to the court, the defendant's claim that the jury was allowed to award punitive damages based upon injuries to strangers to the litigation was thus "unpreserved."
Taken together, these cases suggest that the constitutional prohibition against punitive damage awards based upon speculative damage to strangers to the litigation is illusory. Plaintiffs are free to proffer such evidence and argue it throughout the trial to establish the 'reprehensibility" of defendant's conduct. Trial courts apparently have no independent duty to fashion instructions to address the danger posed by reprehensibility evidence and argument. Instead, defendants who wish to enforce their constitutional rights must take care to request instructions that do so. As the decision of the Oregon court demonstrates, defendant's instructions must be perfect, as any facile basis for the trial court to reject those instructions will waive the defendant's constitutional rights. Once the trial court rejects the defendant's instructions, the court is under no obligation to fashion its own instruction to protect the defendant's constitutional rights or even advise defendant how the rejected instruction is defective.
The Phillip Morris decisions have been viewed a contest between the U.S. Supreme Court and a state appellate court. The U.S. Supreme court has held there are Due Process limits to punitive damage awards. The Oregon appellate court has rejected any such limitations.
In defense of its position on Due Process, including the limits on the ratio between the compensatory and punitive damages, the U.S. Supreme Court has stated that it is acting in the position of a common law court of last review, faced with a perceived defect in a common law remedy.35 While the Supreme Court has repeatedly declined to impose a bright-line ratio which a punitive damages award cannot exceed, it has held that in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process. In Pacific Mut. Life Ins. Co. v. Haslip,36 the Court concluded that an award of more than four times the amount of compensatory damages might be close to the line of constitutional impropriety. The court cited that 4-to-1 ratio again in Gore.37 The Court further referenced a long legislative history, dating back over 700 years, providing for sanctions of double, treble, or quadruple damages to deter and punish.38 In State Farm Mutual Automobile Insurance Company v. Campbell,39 the Supreme Court held "[W]hile these ratios are not binding, they are instructive. They demonstrate what should be obvious: Single-digit multipliers are more likely to comport with due process, while still achieving the State's goals of deterrence and retribution, than awards with ratios in range of 500 to 1."
In its remand to the Oregon appellate court, the U.S. Supreme Court held "[w]e believe that the Oregon Supreme Court applied the wrong constitutional standard when considering Philip Morris' appeal. We remand this case so that the Oregon Supreme Court can apply the standard we have set forth. Because the application of this standard may lead to the need for a new trial, or a change in the level of the punitive damages award, we shall not consider whether the award is constitutionally grossly excessive. We vacate the Oregon Supreme Court's judgment and remand the case for further proceedings not inconsistent with this opinion.
[t]he jury in assessing the amount of punitive damages was entitled to draw reasonable inferences as to the number of smokers in Oregon who had been defrauded during the past decades and would be affected in the future by defendant's conduct, if that conduct were not deterred. Based on the evidence before it, and, particularly, the pervasiveness of defendant's advertising scheme in Oregon, it would have been reasonable for the jury to infer that at least 100 members of the Oregon public had been misled by defendant's advertising scheme over a 40-year period in the same way that Williams had been misled. Such a conservative calculation of compensatory damages based on William's actual damages and the potential magnitude of damage to the public thus would cause the ratio between compensatory and punitive damages, whatever it is, to fall within State Farm's 4-to-1 boundary.
But even if the $79 million award is deemed to exceed a single-digit ratio, it is difficult to conceive of more reprehensible misconduct for a longer duration of time on the part of a supplier of consumer products to the Oregon public than what occurred in this case. We think that the reprehensibility of defendant's conduct far exceeds that of TXO where the Court upheld a 10-to-1 ratio, or in Bocci, where we upheld a 7-to-1 ratio. Here, in contrast to those cases, the number of potentially defrauded and injured victims is much greater. As the State Farm Court stated in the above-quoted language, there are no bright-line ratios or rigid benchmarks that a punitive damage award cannot exceed. We think the unique facts in this case, when compared to the circumstances considered by the Supreme Court and this court in other cases, would justify more than a single-digit award under the Due Process Clause.
There seems little doubt that the remand to the Oregon Supreme Court was intended to prompt a reconsideration of the Oregon's Court's attempt to sidestep the Due Process limits in the U.S. Supreme Court's decision in Campbell. In its previous decision, the Oregon Court first attempted to argue that the award was within Due Process limitations because the "real" ratio based upon the potential damage to strangers to the litigation was closer to 4 to 1. As an alternative to this dubious assertion, the Oregon Court asserted that the Due Process limits outlined by the U.S. Supreme Court simply didn't apply to limit the punitive damage award in the case given the "reprehensible" nature of the defendant's conduct. In its remand, the U.S Supreme Court made it clear that punitive damage awards, and the calculation of the ratio between punitive and compensatory damages, could not be based on the potential damage to strangers to the litigation. The Oregon Court's response was that this Due Process violation had been waived by the defendant's failure to proffer a "perfect" jury instruction to protect itself from a patently unconstitutional jury award.
In effect, the Oregon appellate court has taken the position that courts in that state have no role in curtailing patently unconstitutional awards of punitive damages. Instead, the application of constitutional protections is simply part of an adversarial game between defendants on one side and plaintiffs' counsel and state courts hostile to any Due Process limitations on the other. Some state legislatures have reacted to this increasingly dysfunctional system by limiting punitive damages by law. Other states, like Oregon, have reacted by passing legislation that gives the state the lion's share of every punitive damage award, increasing the incentive to turn a blind eye to jury awards that ignore the constitutional rights of defendants.
While the reason for the U.S. Supreme Court's capitulation in Phillip Morris is a mystery, the impact is not. The Oregon Supreme Court stands victorious in its war of attrition with the U.S. Supreme Court, a punitive damage award 96.7 times the jury's award of economic and non-economic damages, and based in part upon unspecified claims of damage to unknown persons not before the court, stands undisturbed. The state government of Oregon, of which the Oregon Court is a part, stands to rake in a profit of approximately $47,700,000 from the alleged Due Process violation. If the U.S. Supreme Court has not abandoned this area of Due Process jurisprudence, its next decision needs to provide not guidance but boundaries.
1 Philip Morris USA Inc. v. Williams, 129 S.Ct. 1436 (U.S. 2009).
2 Philip Morris USA v. Williams, 127 S.Ct. 1057 (U.S. 2007).
3 BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996). State Farm Mutual Automobile Ins. Co. v. Campbell, 538 U.S. 408 (2003). In Campbell the Supreme Court recognized the States' legitimate interests underlying punitive damages, but found excessive awards of punitive damages do not further a legitimate state purpose and constitute an arbitrary deprivation of property in violation of the Due Process Clause of the Fourteenth Amendment. See also: John J. , Crossing the Line: Punitive Damages and the Supreme Court, Mealey's Litigation Report – Insurance Bad Faith, Volume 16, Issue 2, May 15, 2002, and John J. and William R. Lewis, The Campbell Cap, Mealey's Litigation Report – Insurance Bad Faith, Volume 17, Issue 2, May 21, 2003.
4 Williams v. Philip Morris Inc., 48 P.3d 824, (Or. App. 2002).
5 Williams v. Philip Morris, Inc., 61 P.3d 938 (Or. 2002).
6 Philip Morris USA Inc. v. Williams, 540 U.S. 801 (2003).
7 State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408 (2003).
8 Williams v. Philip Morris Inc., 92 P.3d 126 (Or. App. 2004).
9 Williams v. Philip Morris Inc., 127 P.3d 1165, (Or., 2006).
10 Philip Morris USA v. Williams, 549 U.S. 346, 357 (U.S. 2007).
12 The most significant potential beneficiary of the punitive damage award was the State of Oregon. Under the terms of O.R.S. § 31.735 (1) (a), forty percent of a punitive damage award is paid to the Plaintiff. Sixty percent goes to the Criminal Injuries Compensation Account of the Department of Justice Crime Victims' Assistance Section. The attorney for the prevailing party takes his or her share from the amount due the Plaintiff. Regardless of the agreement between the Plaintiff and his or her counsel, the attorneys share is limited to no more than 20 percent of the punitive damage award, or half the amount due the Plaintiff.
13 On Writ of Certiorari to The Supreme Court of Oregon, Reply Brief for the Petitioner, 2008 WL 4791927 (U.S.).
14 Philip Morris USA Inc. v. Williams, 129 S.Ct. 1436 (U.S. 2009).
15 Gore supra, at 575.
16 State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. at 423.
18 Williams v. Philip Morris Inc., supra, 127 P.3d at FN 3.
19 Philip Morris USA v. Williams, 127 S.Ct. supra at 1065.
20 Philip Morris USA v. Williams, 549 U.S. 346, (U.S. 2007).
FN2. Defendants have attached a copy of Phillip Morris to their motion. However, it is not necessary for defendants to include a copy of this case with every motion on the issue of punitive damages. The Court was well aware of this opinion on the day it was decided and, at this point, defendants are cluttering the Court's CM-ECF system by attaching the case as an exhibit. Aside from the fact that the Court has Westlaw and would read Supreme Court decisions before issuing an opinion on federal constitutional law, Phillip Morris has been published in the Supreme Court Reporter and copies are available to the general public.
22 The court's decision followed the court's initial opinion in Grefer v. Alpha Technical, 901 So.2d 1117 (La.App. 4 Cir., 2005) which was reversed and remanded by the United States Supreme Court in Exxon Mobil Corporation. v. Grefer, 549 U.S. 1249 (U.S. 2007) for further consideration in light of its decision in Philip Morris USA v. Williams, 549 U.S. 346 (U.S. 2007).
23 BMW of North America, Inc., v. Gore, 517 U.S. 559 (U.S. 1996).
26 Grefer v. Alpha Technical, 965 So.2d 511 (La. App. 4 Cir. 2007) citing Philip Morris, 549 U.S. at ----, 127 S.Ct. at 1062, citing BMW of North America, Inc., v. Gore, 517 U.S. 559, 568, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996).
27 Grefer v. Alpha Technical, 967 So.2d 523, 2007-1800 (La. 11/16/07) (La. 2007).
28 Exxon Mobil Corp. v. Grefer, 128 S.Ct. 2054 (U.S. La. 2008).
29 Philip Morris USA v. Williams, 549 U.S. 346, 127 S.Ct. 1057, 166 L.Ed. 2d 940 (2007).
30 Kauffman v. Maxim Healthcare Services, Inc., 509 F. Supp. 2d 210 (E.D.N.Y. 2007).
31 Philip Morris v. Williams, 127 S.Ct. 1057, 1063 (U.S. 2007).
32 Kauffman v. Maxim Healthcare Services, Inc., supra citing Morris v. Williams, 127 S.Ct. 1057, 1063 (U.S. 2007) at 1064.
"In view of these goals and the Gore factors discussed above, the punitive damages award in this case was excessive. Punitive damages in the amount of five hundred fifty one thousand four hundred seventy dollars ($551,470.00) (a ratio of 4 to 1) would be sufficient to punish Defendant and deter similar wrongful conduct, would be consistent with the reprehensibility of the conduct, and would be proportionate to the actual injury suffered by Plaintiff."
34 Philip Morris, 127 S.Ct. at 1065.
35 Exxon Shipping Co. v. Baker, 128 S.Ct. 2605 (U.S. 2008).
36 Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 42 (1991). "To the extent an award is grossly excessive, it furthers no legitimate purpose and constitutes an arbitrary deprivation of property." See also, John J. and Matthew W. Peaire, Anger and Punishment, Mealey's Litigation Report – Insurance Bad Faith, Volume 16, Issue 18, January 22, 2003.
37 Gore, 517 U.S. at 581, 116 S.Ct. 1589.
38 Id. at 581, and n.33, 116 S.Ct. 1589.
39 State Farm Mutual Automobile Insurance Company v. Campbell, 538 U.S. 408 (U.S. 2003).

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