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Reining in juries

The Supreme Court rightly puts some limits on the awarding of outlandish punitive damages.

February 22, 2007

THE U.S. SUPREME COURT went further this week -- though not far enough -- in reining in juries in civil cases that award outlandish punitive damages. By a disappointingly narrow 5-4 vote, the justices overturned a jury's decision that Philip Morris should pay $79.5 million to the widow of a smoker who died of lung cancer. The value of her actual damages was only $821,000.

The justices could -- and should -- have ruled clearly that the $79.5-million award violated previous rulings that punitive damages may not be "grossly excessive" and should bear a reasonable relation to the harm actually experienced by the plaintiff. But in returning the case to the Oregon courts, the court did impose a sensible rule that should make it harder for juries to sock deep-pocket and easily demonized defendants.

Writing for the majority, Justice Stephen G. Breyer faulted the Oregon Supreme Court for allowing the jury to calculate punitive damages based not only on Philip Morris' "reprehensible" conduct in minimizing the health risks of smoking but also on the effect of its marketing on smokers not connected to the case.

The lawyer for Mayola Williams, whose husband, Jesse, died of cancer, told the jury to "think about how many other Jesse Williams[es] in the last 40 years in the state of Oregon there have been." The result was a punitive damage award nearly 100 times larger than the actual damages. Breyer said that basing damages on supposed harm to "strangers to the litigation" violated Philip Morris' due process rights. The court is rightly applying the brake to the notion that private litigation can serve as a substitute for the regulatory power of the state.

Whatever one thinks of litigation against tobacco companies -- and we think it's a blunt weapon to wield against a legal product whose health risks are well known -- Breyer has brought some clarity to a confused area of the law. The issue of whether and how juries can take into account possible harm to "strangers" to a lawsuit has bedeviled state as well as federal courts. It figures, for instance, in a different Philip Morris case before the California Supreme Court in which a smoker was awarded $28 billion in punitive damages, later reduced to $28 million -- although her actual damages were estimated at $850,000.

In cases like this, juries often are confronted with a brainteaser. In deciding to award punitive damages, they're supposed to consider whether the conduct of the defendant is "reprehensible," and one definition of reprehensible conduct is to act in a way that puts many people at risk (such as leaking toxic material into a water supply).

But without proper guidance, jurors can leap to the conclusion that damages should reflect the harm experienced by everyone who might have tasted tainted water -- or smoked a cigarette. Though it could have gone further, this week's decision should make such leaps less likely.

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