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Will Punitives Go up in Smoke?

From corporate boardrooms to PI law offices, all eyes today are on the Supreme Court, which hears arguments in Philip Morris USA v. Williams on the extent to which punitive damages can punish a tobacco company for "highly reprehensible" conduct and for the effects of its conduct on non-parties. It is a case, writes Lyle Denniston at SCOTUSblog, that "pits familiar gladiators debating broad cultural questions over whether and how to make Big Tobacco pay."

At issue is a punitive damages award of $79.5 million to the Oregon widow of a Marlboro smoker. Supreme Court observers such as Denniston and Legal Times reporter Tony Mauro agree that the outcome of the case may turn on the votes of the court's newest members, Chief Justice John G. Roberts Jr. and Associate Justice Samuel A. Alito Jr.

The case is significant on multiple levels. Mauro writes that it could be a watershed in tobacco litigation:

The case ... marks a major milestone in the decades-long litigation battle against big tobacco. For the first time, the justices will have before them evidence of tobacco-industry misbehavior drawn from the 35 million documents pried from company files in Minnesota’s 1990s lawsuit against the industry. Included are decades of statements from tobacco company executives, scientists, and lawyers acknowledging the dangers of smoking and strategizing ways to keep customers hooked.

NPR legal affairs correspondent Nina Totenberg says today that the case "is the ultimate test of whether the Constitution imposes significant limits on punitive damages in each and every case of misconduct." She continues:

On any scale of reprehensibility, the conduct of the tobacco industry is right up there at the top. The question in this case from Oregon is: How much freedom does a state have to assess damages in an individual case involving reprehensible conduct?

In an editorial today, the New York Times answers that question in favor of allowing state juries loose rein.

The purpose of punitive damages is, the Supreme Court has noted, 'punishing unlawful conduct and deterring its repetition.' In cases of extremely bad conduct, particularly when a defendant is large and willful, a bigger award may be necessary. In this case, $79.5 million does not strike us as unreasonable. Nor do we see any basis for holding that this jury verdict, affirmed in a thoughtful decision by Oregon’s highest court, is a denial of Philip Morris’s due process rights.

Today's oral arguments may foreshadow the eventual outcome. In the meantime, Legal Times offers a preview of each side's arguments in a set of dueling opinion pieces written by lawyers who filed amicus briefs: Too Much? Yes and Too Much? No.

Posted by Robert J. Ambrogi on October 31, 2006 at 03:04 PM | Permalink | Comments (0)

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