Summary of Phillip Morris USA v. Williams
Citation: 549 U.S. 346 (2007)
Relevant Facts: Jesse Williams died of cancer that his widow claimed was related to his smoking cigarettes manufactured by Appellant Phillip Morris USA. Mayola Williams, Jesse’s widow, brought suit alleging both negligence and deceit and claimed that Phillip Morris had knowingly and falsely lead her husband to believe that smoking cigarettes was safer than it really was. At trial, the jury ruled in Williams favor and awarded compensatory damages of $821,000, in addition to punitive damages of $79.2 million. The trial judge reduced the punitive damages award, but on appeal the Oregon Court of Appeals restored the original punitive damages award. The Oregon Supreme Court affirmed, concluded that the trial judge did not err in refusing to instruct the jury regarding punishing the defendant for injuries to parties not before the court. That Court also rejected claims by Phillip Morris that the punitive damages award was excessive, based not only on conduct to non-parties by the ratio between the compensatory and punitive damages (in this case almost 100-1).
Issue: Does a jury award of punitive damages not limited to punishing the defendant for conduct towards parties before the court violated the defendant’s due process rights? Was the punitive damages aware excessive in violating of defendant’s due process rights?
Holding: Yes, a punitive damages award that punishes the defendant for conduct towards nonparties amounts to a taking of property without due process of law. The Court did not consider whether the award was grossly excessive, having already determined the proper standard for protecting the defendant’s due process rights and remanded the case for further proceedings.
Reasoning: Justice Breyer delivered the opinion of the Court. Justice Breyer pointed out that the Court has recognized both procedural limitations and amount limitations for punitive damages awards, both rooted in Constitutional due process. While states may allow the imposition of punitive damages to further legitimate interests in punishing conduct and preventing recurrence, the rights of the parties demands that the state do so in a way that provides defendants with fair notice. Due process demands that defendants not be subject to punishment inflicted on strangers to the litigation. While harm to others may be part of the consideration of punitive damages, as it demonstrates the reprehensibility of conduct inflicted on plaintiffs and others, imposing punishment for conduct towards non-parties denies defendants the opportunity to defend themselves against charges and avoid arbitrary punishments. States are required to give juries proper guidance so that they avoid the risk of such arbitrary imposition of punitive damages. Turning to the rationale of the Oregon Supreme Court, Justice Breyer responded specifically to three conclusions of that Court. First, the majority agreed that punitive damages could not extend to punishment for dissimilar conduct, but made clear here that that same limitation applies to similar conduct towards non-parties. Second, Justice Breyer pointed out that juries may consider conduct towards non-parties, but only as it relates to the evaluation of reprehensibility of the defendant’s conduct. Finally, the majority concluded that in allowing evidence of conduct towards non-parties, but limiting the use of that information, states must adopt procedures to avoid unreasonable or unnecessary risks of jury confusion. While the constitution does allow for some procedural flexibility in protecting due process, states are constrained to the extent that they must give juries proper guidance to limit punitive damages to conduct towards parties before the Court while also allowing evidence of other conduct to aide juries in evaluating the nature of the defendant’s conduct. The Court remanded the case for application of the standard announced, concluding that it may well result in a new trial, and thus the issue of whether the verdict was constitutionally excessive was not necessary for their consideration.
Dissent: Justice Stevens dissented, arguing that he agreed with constitutional limitations on punitive damages awards, but that the Oregon Supreme Court had adequately applied the appropriate standard. Furthermore, he explained that while compensatory damages are properly limited to the parties before the court, punitive damages serve to advance state interests beyond the plaintiffs in a particular case, analogize punitive damages to criminal punishment. Justice Thomas dissented, arguing that the Constitution imposed no substantive limitation on the size of punitive damage awards, and that the Court’s standard was incapable of principled application. Justice Ginsburg dissented, joined by Justices Scalia and Thomas. She argued that the Oregon Supreme Court properly applied the appropriate standard, and that the majority went beyond the properly preserved objections of the Petitioner to consider matters not properly before the Court. In light of the unclear standards announced by the majority, the proper procedures below focusing the jury’s attention on the nature of the defendant’s conduct, and in accordance with proper respect for state court proceedings, Justice Ginsburg, would have affirmed the Oregon Supreme Court.
Conclusion: States must take steps to limit jury consideration of the defendant’s conduct towards non-parties in reaching punitive damages determination. The Due Process clause imposes both a procedural and substantive limitation on punitive damages in civil cases.
Subsequent History: On remand, the Oregon Court of Appeals affirmed the original judgment. The Oregon Supreme Court affirmed, concluding that under the appropriate standard announced by the Supreme Court here, juries may consider evidence on conduct towards non-parties (also in Oregon), and that the jury had properly done so here in evaluating the defendant’s conduct. On appeal, the Supreme Court declined the rehear the case, effectively affirming the subsequent determination of the Oregon Supreme Court.