From Products Liability Law Daily, February 12, 2016

Philip Morris $25M Oregon punitive award to Supreme Court

By Pamela C. Maloney, J.D.

Philip Morris USA Inc. has challenged the basis for an Oregon jury’s award of $25 million in punitive damages, asking the U. S. Supreme Court to review that verdict because the jury failed to specify the basis for the damages (Philip Morris USA Inc. v. Schwarz, Docket No. 15-1013, filed February 10, 2016).

On remand from the Oregon Supreme Court, the Oregon Court of Appeals had upheld a jury’s award of $25 million dollars to the estate of a smoker, finding that the award was not arbitrary or excessive, nor did it not violate state law or the U.S. Constitution. The evidence established that the tobacco company’s decades-long marketing of its brand of low-tar cigarettes as a healthier choice and its financial gain from its pattern of deceiving smokers about the health dangers justified the jury’s verdict. Following the initial trial on the estate’s claims, which were based on allegations of negligence, strict product liability, and fraud in the manufacturing, marketing, and research of Philip Morris’s brand of low-tar cigarettes, the jury had awarded the estate $168,514 in compensatory damages and $150 million in punitive damages. However, the Oregon Supreme Court found that the trial court had improperly instructed the jury on punitive damages and remanded the case for a new trial limited to that issue. Following a second trial, at which the estate sought a determination of punitive damages on the fraud claim only, a jury awarded the estate $25 million in punitive damages and Philip Morris appealed on four grounds. In upholding the jury’s award, the appeals court addressed only two of the arguments: (1) the trial court erred in refusing to reduce the punitive damages award because it was arbitrary and excessive in violation of Oregon law and the U.S. Constitution; and (2) the record in this case did not support anything more than a nominal award of punitive damages.

Question presented. Philip Morris asked the U.S. Supreme Court to determine whether it violates due process for a jury in a partial retrial to determine the amount of punitive damages, but not the threshold question of liability for punitive damages where the first jury did not specify which of multiple possible tort theories was the basis for its finding that the defendant was liable for punitive damages.

The case is Docket No. 15-1013

Attorneys: Theodore J. Boutrous (Gibson, Dunn & Crutcher LLP) and William F. Gary (Harrang Long Gary Rudnick P.C.)

Companies: Philip Morris USA Inc.

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