Court tosses punitive damages against Big Tobacco

Story Highlights

• NEW: Supreme Court votes 5-4 to overturn nearly $80M tobacco verdict
• Decision limits punitive damages against Philip Morris USA
• Oregon court had ruled in favor of smoker's widow

By Bill Mears
CNN Washington Bureau

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WASHINGTON (CNN) -- Splitting 5-4, the U.S. Supreme Court on Tuesday threw out a nearly $80 million punitive damages ruling against Philip Morris.

The damages had been awarded in a suit brought by the family of an Oregon man who died from a smoking-related disease.

The case, Philip Morris USA v. Williams, tested the power of juries to impose large punitive awards against tobacco and other well-heeled corporations in product-liability cases.

In their ruling, the justices decided to follow recent precedent that punitive damages should, in most cases, match "actual" damages.

An Oregon jury had ruled in favor of the estate of building custodian Jesse Williams, who died in 1997 after having smoked as many as three packs per day for 47 years.

1999 award overturned

A jury awarded his estate $800,000 in compensatory damages in 1991 and almost 100 times that -- $79.5 million -- in punitive damages.

In arguments before the justices in October, a lawyer for Philip Morris USA argued that juries can punish a tobacco company by awarding damages to a smoker's widow but not to other smokers.

Attorney Andrew Frey argued that the family of a longtime smoker deserved compensation based only on individual harm, not harm to the public at large.

The justices had seemed torn over how to apply past precedents limiting punitive damages against Big Tobacco and other deep-pocketed corporations in product-liability cases to the case of Williams.

Court records show Williams never believed claims that cigarettes were a health danger, until he contracted cancer. His widow, Mayola, testified Williams told her: "Those darn cigarette people finally did it. They were lying all the time."

Honoring a dying wish

Mayola Williams who appeared last fall at the high court with her family, sued Philip Morris, manufacturer of the popular Marlboro brand. The company is now part of the Altria Group.

She said she pursued the case to the Supreme Court, to honor her husband's dying wish.

The Oregon jurors concluded the company engaged in fraud and negligence affecting a large number of people over five decades.

The trial judge reduced the punitive damages to $32 million, but higher state courts restored the award to the original amount. Much of the money, under state law, is to go to a special fund to help victims of crime.

Williams' attorney, Robert Peck, had argued that the tobacco company "was engaged in a massive, market-driven fraud ... to deceive customers." He said the jury properly took "the harm suffered by others into account."

Justice Stephen Breyer wrote the majority opinion. He was joined by Chief Justice John Roberts and Justices Samuel Alito, Anthony Kennedy and David Souter.

Dissenting were Justices Ruth Bader Ginsburg, Antonin Scalia, John Paul Stevens and Clarence Thomas.

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