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Award in Smoking Case Is Cut

September 22, 2004|From Bloomberg News

A California appeals court Tuesday upheld a jury verdict against Altria Group Inc.'s Philip Morris USA on behalf of a deceased smoker, but sliced the punitive damages award in half.

Philip Morris, the world's largest cigarette maker, won a second reduction to what was once a $3-billion jury verdict as the appeals court slashed the award to $50 million.

The jury's punitive damage award to Richard Boeken, who suffered from lung cancer and died in 2002, had already been reduced to $100 million by the trial judge. The California Court of Appeal in Los Angeles said even the reduced amount was excessive and cut the punitive damages to about nine times the size of a separate $5.5-million compensatory award. The appeals court didn't change the compensatory award.

The $50-million figure set by the appellate judges reflects a U.S. Supreme Court decision that the Constitution caps punitive damages at around 10 times the amount of the compensatory award.

"We are satisfied that the reprehensible conduct established by the evidence, repeated over four decades, and resulting in the death of Boeken, justifies the highest single digit ratio that will satisfy due process while furthering California's policy of punishment and deterrence," wrote Justice Gary Hastings in a decision for the three-judge panel.

Philip Morris lost its bid for a new trial in the case. The company had cited seven different errors during the 2001 trial, including the judge's refusal to allow the jury to hear evidence concerning Boeken's 1992 felony conviction and removal of a juror during deliberations.

The appeals court also rejected Philip Morris' argument that the jury should have been told that the company has immunity for its conduct from 1988 to 1998. The California Supreme Court in 2002 decided that smokers suing tobacco companies can't rely on evidence of deception during that 10-year period.

"We cannot agree with Philip Morris' suggestion that the 10-year immunity" provided by the law "makes its conduct any less reprehensible," Hastings wrote.

Michael Piuze, an attorney for Boeken, and Lisa Gonzalez, a spokeswoman for New York-based Altria, said they hadn't seen the ruling and couldn't immediately comment.

Shares of Altria fell 93 cents to $46.15 in New York Stock Exchange composite trading.

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