Jesse Williams started smoking as a 21-year-old soldier in Korea in 1950. Though Williams was taught as a child that it was unhealthy to smoke, and, in turn, taught his children not to smoke, he refused entreaties from doctors and family to quit smoking. After 45 years of smoking two packs a day, with the packs carrying the Surgeon General’s warnings for nearly 30 of those years, Williams died of inoperable lung cancer. His widow sued Philip Morris for damages on grounds of product design and “fraud.”
The Supreme Court will be hearing arguments in the case Philip Morris v. Williams this Halloween. The case will not be about suing from failure to overcome vice, but rather the punitive damages issued in the case. Two questions are before the Court. Under what circumstances, if any, is a 97-to-1 ratio of punitive to compensatory damages constitutionally appropriate? And can a plaintiff point to a defendant’s conduct outside the specific case to justify a large punitive award?
Mrs. Williams based her fraud claim on 14 statements Philip Morris made about the link between cancer and smoking over the course of her husband’s life, though there was no evidence that he had ever seen any of the statements the lawyers alleged were fraudulent; seven of the statements never even appeared in the popular media.
The jury found Williams only 50 percent responsible for his own smoking and awarded $821,485 in compensatory damages. This was reduced to $521,485 because of a cap, but while Oregon has capped some types of damages, it has not capped others, reducing the effectiveness of the reform.
The jury went on to award an uncapped $79.5 million in punitive damages against Philip Morris for the alleged fraud – 97 times the compensatory damages. Williams’ attorneys asked for punitive damages, not just for their client but on behalf of all Oregon smokers. The Oregon Supreme Court upheld this award twice, and the U.S. Supreme Court has agreed to hear Philip Morris’s appeal.
The idea of gigantic punitive damages well in excess of actual damages is a modern innovation of the entrepreneurial trial bar. In just the last seven years, American juries issued more $100-million punitive damage awards than were issued in the entire history of the nation before 1999.
We have become so desensitized to such giant verdicts that many don’t even make headlines any more, encouraging plaintiffs’ attorneys to argue for even more record-breaking verdicts. One trial lawyer in a Vioxx case suggested to a New Jersey jury that they issue a $19-billion punitive damages award.
When the litigation lobby fights against caps on punitive damages, they trot out the argument that the legislature is infringing upon the decisions of juries. But the truth is precisely the opposite. Unbounded damages allow one jury to overrule the decision of dozens of other juries.
Imagine a set of lawsuits where 100 different plaintiffs sue over similar allegations across the country; 99 juries find the defendant’s conduct blameless and award no damages. But the 100th, swept up by the emotional appeal of the plaintiff’s attorney and sympathy for the plaintiff, issues a bankrupting punitive damages verdict in the billions. This last jury has effectively vetoed the decision of the first 99. Only by capping punitive damages can the overwhelming majority of juries’ decisions be truly honored.
Limitless punitive or non-economic damages multiply the harm that errors in the judicial system cause. Not even the most ardent defender of the jury system thinks juries get it right every time: how can they, when juries hearing identical evidence so frequently come to opposite conclusions? We accept the mistakes that juries make because we value the principles behind the jury system, but celebrating the principles does not mean that we should celebrate the mistakes.
If a defendant is worthy of punishment, then most other juries will also think so and award legitimate punitive damages. A blockbuster award is not necessary. Though a jury occasionally makes a mistake and lets the defendant off the hook, that should not prejudice a future plaintiff’s case. But if a defendant is not worthy of punishment, fundamental fairness dictates that it should not be forced into a game of legal Russian roulette, where plaintiffs’ lawyers get to try over and over again to induce a mistake by a jury that will bankrupt the defendant.
The problem is multiplied when juries are asked to consider the defendant’s conduct outside that of the individual plaintiff’s case, because then the defendant is being asked to answer multiple times for the same alleged wrongs, with the risk of multiple punishments. In criminal law, this is called double jeopardy and explicitly prohibited by the Constitution. It is not any fairer in the civil law context, and should not be permitted there either.
In two previous landmark cases, BMW v. Gore and Campbell v. State Farm, the Supreme Court elucidated what it considered to be the constitutional limits of punitive damages awards, holding that generally, punitive damages should not exceed compensatory damages by a ratio of more than 9-to-1. These were controversial 5-4 and 6-3 decisions with conservative and liberal members of the Court on both sides of the decisions.
But two of the Campbell majority votes, Chief Justice William Rehnquist and Sandra Day O’Connor, are no longer on the Court. It is unclear whether there are still five votes in support of the Gore and Campbell idea that the Constitution by itself creates a constraint on the punitive damages juries can award.
Of course, what is wise public policy is not always constitutionally required, and vice versa. In his confirmation hearings, Chief Justice Roberts spoke of the importance of judicial modesty, and a modest Roberts Court may choose to withdraw from this field and let legislatures make the final decision. If the Supreme Court does make that choice, it will be important for elected representatives across the nation to step in and restore order to our civil justice system, following the lead of states that have capped non-economic and punitive damages.
Ted Frank is Resident Fellow at the American Enterprise Institute for Public Policy Research and Director of the AEI Liability Project. He is also a guest columnist for the Media Research Center’s Business & Media Institute.