Calif. Supremes Wait for Smoke to Clear Over Punitive Damages
If the U.S. Supreme Court can provide guidance, why not let it?
On Wednesday, at the urging of tobacco giant Philip Morris USA Inc., the California Supreme Court put on hold a major punitive damages case to await a ruling by the nation's highest court on identical issues.
The state court's 6-0 vote freezes for now an April 21 appellate court ruling that OK'd a $28 million punitive damages award against Virginia-based Philip Morris -- an amount 33 times greater than the compensatory damages in the case.
Chief Justice Ronald George was absent and did not vote.
Philip Morris' attorneys at Arnold & Porter want the punitive damages reduced or dismissed, but asked the California Supreme Court to await the findings of the federal court in Philip Morris USA Inc. v. Williams, 05-1256.
The higher court granted certiorari on May 30 to decide whether the Oregon Supreme Court was justified in affirming an award of $79.5 million in punitive damages to a longtime smoker, which was about 100 times the compensatory damages.
Both the Oregon court and Los Angeles' 2nd District Court of Appeal in the California case had found the tobacco manufacturer's conduct so reprehensible that it justified punitive damages in excess of a single-digit ratio.
In both cases, 45-year smokers Jesse Williams of Oregon and Betty Bullock of California died of lung cancer. Survivors said both believed industry claims that smoking wasn't dangerous.
Philip Morris' attorneys argue, however, that the huge monetary judgments in both cases run afoul of the U.S. Supreme Court's 2003 ruling in State Farm Mutual Automobile Insurance Co. v. Campbell. That opinion held that "few awards" resulting in more than a single-digit ratio between punitive and compensatory damages would satisfy due process.
The California Supreme Court agreed in 2005's Simon v. San Paolo U.S. Holding.
In his petition for review on behalf of Philip Morris, Ronald Redcay, a partner in Arnold & Porter's Los Angeles office, noted that the U.S. Supreme Court plans to use the Oregon case to decide whether a defendant's highly reprehensible conduct "can 'override' the constitutional requirement that punitive damages be reasonably related to the plaintiff's harm."
He said the high court also intends to decide whether jurors are allowed to punish tobacco companies for the harm their products cause not only the named plaintiff, but any other smokers who could have filed claims.
The 2nd District decision put on hold Wednesday, Bullock v. Philip Morris USA Inc., was at odds with a 2005 ruling by another division of the same court. In Boeken v. Philip Morris, 172 Cal.App.4th 1640, a panel of justices found it appropriate to cut a $100 million punitive damage award down to achieve a ratio of 9-1.
There was even a dissenter in the 2nd District's Bullock decision. Justice Patti Sue Kitching said $28 million in punitive damages was "a grossly excessive punishment" that violates the due process clause of the 14th Amendment.
