SCOTUS Restricts Punitive Damages Again

When a jury awards punitive damages, in setting the amount, can it consider harm to people not part of the lawsuit?

Answer: only through the back door.

Punitive damages, although they get a lot of press, are rarely awarded. Clients tend to think the defendant's behavior in their case was outrageous, and they should get such damages. Some states don't allow punitive damages at all. Others restrict them.

Now the U.S. Supreme Court (SCOTUS) has found in the U.S.Constitution reason to impose new restrictions on these damages. Philip Morris USA v. Williams (2007) 2007 DJDAR 2233.

Jesse Williams died, and the jury found smoking killed him, and Philip Morris, manufacturer of his favorite Marlboros, defrauded him into believing smoking was safe. (I know, I know, what planet was he living on? But this post is not about this jury finding.) The jury awarded him $ 821,000 in actual damages, and nearly $ 80 million in punitive damages, which the trial judge reduced to a skimpy $ 32 million. The Oregon Supreme Court restored the original amount.

The case found its way to the U.S. Supreme Court, because of a challenge to the verdict under the U.S. Constitution. Without a federal question, the Oregon Supreme Court would have been the last stop.

SCOTUS has already suggested that punitive damages must bear a reasonable relationship to actual damages, although they haven't said for certain what the maximum multiple is, but has suggested that 9 times might be about right. This case doesn't speak to that issue.

What it says is that in considering the amount of punitive damages, the jury can only consider harm to the plaintiff or plaintiffs in the case itself, not harm to others. In deciding how reprehensible the conduct was, however, the jury can consider harm to others. So, for instance, if Philip Morris hid the dangers of smoking from many people, resulting in more deaths, that fact would make its conduct more worthy of blame (reprehensible), which might increase the amount of punitive damages, but in actually fixing the amount to be awarded, the jury can take into account only the dollar amount it awarded for harm to the plaintiffs in the case itself.

Otherwise, SCOTUS held, all kinds of terrible things might happen, including multiple awards against a defendant for the same harm.

Fair enough, perhaps, but how can the effect on many of the defendants bad acts be considered for blameworthiness, but not for determining whether the multiplier from the actual damages to the punitive damages is constitutionally proper, that is, affords the defendant due process of law?

Only in the fun house world of the law, it seems. We ask juries to do strange things all the time, such as receive evidence for one purpose but not for another. Lawyers know that juries do all kinds of things when they are alone, and don't always follow the instructions, but everyone goes along with the fiction that they can understand subtle distinctions that only a lawyer can love.

Say the plaintiffs slips on a broken sidewalk. Normally, the fact that the defendant fixed the sidewalk after the accident would not be admitted into evidence, because that would discourage people from fixing things after an accident. However, the fact that a private party and not the city fixed the sidewalk might be admitted to show the private party had actual control of the sidewalk, and so was responsible for its condition. Then we ask the jury to consider the evidence for purposes of deciding who had control of the sidewalk, but not to consider the repair as evidence the private party was negligent in not fixing the sidewalk earlier.

So with punitive damages. The jury can look at all the people made ill and killed by smoking Marlboros, to decide that Philip Morris really deserves harsh punishment. It's not supposed to consider harm to other people in fixing the dollar amount of the punitive damages, if in fact it awards any.

Can your letter carrier make this distinction? (Letter carriers often end up on juries in long trials, because the government pays them their full pay while they sit, and they won't be in the rain or in range of a bulldog's teeth for the duration).

Perhaps not. But if the average juror can figure this one out, it might be a little harder, in the future, to get huge punitive damages awards.

One case likely to to be affected is the endless litigation over the Exxon Valdez oil spill case. The punitive damage award keeps getting appealed, then sent back to the trial court, and then appealed again, as SCOTUS continues to clarify the law that applies. SCOTUS loves to reverse the 9th Circuit, the Court of Appeals that decided the Philip Morris v. Williams case.

We haven't heard the last of this issue. When huge punitive damages awards are at stake, and the law is in flux, there's every incentive to appeal, appeal, appeal.