Tobacco award is overturned
WASHINGTON — The Supreme Court on Tuesday put new limits on large verdicts intended to punish corporate wrongdoers when it overturned a $79-million punitive jury award against cigarette maker Philip Morris.
In a 5-4 opinion, the court said companies could not be punished for harm they might have inflicted on thousands of people based on a lawsuit brought on behalf of one person. Justice Stephen G. Breyer said that these others were "essentially strangers to the litigation," and that it was unfair to punish the corporations for any harm they might have suffered.
The ruling could have a broad effect, because multimillion-dollar punitive verdicts against companies are often based, at least in part, on the jury's belief that an untold number of victims were hurt by defective products or corporate fraud. However, the wording of the opinion, which seemed to puzzle two of the dissenting justices, appeared to leave open other avenues for plaintiffs to seek large punitive awards.
Typically, a plaintiff in a civil lawsuit seeks money to compensate him or her for an injury or a loss. But sometimes, a lawyer asks the jury to go beyond compensation and to punish the defendant for wrongdoing.
Lawyers for corporations and insurance firms long have wished for limits on these punitive verdicts because they can be wild cards. On occasion, an apparently minor lawsuit involving a single person results in a huge verdict when an angry jury decides to punish a large corporation.
The Supreme Court has moved over the last decade to put some limits on these verdicts. For example, the justices said four years ago that the amount of punitive damages rarely should exceed 10 times the actual damages.
In Tuesday's decision, the majority took an extra step by limiting how the punitive damages could be calculated. For the first time, the justices "hold explicitly that the jury may not punish for the harm caused to others," Breyer said.
Significance not clear
Los Angeles lawyer Theodore J. Boutrous Jr., who represents Ford Motor Co. and other firms that are fighting large punitive verdicts, said the ruling would be very helpful to corporate defendants.
"This is very significant because this situation comes up all the time," Boutrous said.
Ford's lawyers are appealing a $55-million punitive verdict handed down in a San Diego court that grew out of a severe auto accident involving a Ford Explorer.
