From Oregon, Jurors Gone Wild
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What some might call the jurors-gone-wild show hit the Supreme Court this week in a case as closely watched by business and consumer groups as certain spring-break videos are by young men.
When jurors decide a company behaved badly, “anything goes,” Justice Breyer complained during arguments this week in the case.
Unfettered by clear limits on punitive damages, “they can do almost anything,” he said.
Whether the proverbial runaway jury is as common or as damaging as the U.S. Chamber of Commerce would have us believe is a topic for another day.
The case before the Supreme Court was supposed to be the one in which the justices, with two new Bush appointees, would either impose more restraint, decline to, or at least say yes or no to the $79.5 million punitive award against Philip Morris that prompted the appeal.
Brought by Mayola Williams, the widow of a smoker, this case was supposed to send giant waves through the vast sea of health- and product-liability lawsuits. At least that was the pre-argument buildup.
The Supreme Court has held that any punitive award greater than nine times actual damages is constitutionally suspect. So what does that mean in the Philip Morris case, when the punitive award is 97 times the $821,425 verdict for actual damages?
If any corporate conduct warrants a whopping punitive award, surely it would be in the case against a company that spent four decades boosting profits by lying about the deadly and addictive nature of its product, the plaintiffs argued.
Anticipation ran high, as did the stacks of briefs filed with the Supreme Court by interest groups and law professors.
As the hour-long argument in the crowded courtroom proceeded, you could almost hear expectations deflating. Instead of foreshadowing a definitive ruling, justices’ questions showed more fascination with a highly nuanced, philosophical matter than with the big issue.
It’s the kind of argument that makes you wonder whether all those trees keep judges from noticing the forest. And yet, the tree now blocking their view makes for pretty interesting contemplation.
This much is settled: In figuring how big a verdict to return, jurors must decide just how badly the company behaved. In court-speak, this is the “reprehensibility” factor, and precedent has called it the most important of three points to consider when calculating a punitive award.
Both sides agreed that to decide reprehensibility, jurors could consider whether the misconduct could have endangered others. Was it directed at people beyond the actual plaintiff in the case, as happened with Philip Morris’s campaign to sow doubt about claims that cigarettes were unhealthy?
What jurors can’t do is try to come up with a number that represents the harm the conduct might have done to others, who aren’t part of this single-plaintiff lawsuit. To punish Philip Morris for causing illness and deaths that hadn’t been proven at trial would violate its constitutional right to due process under previous rulings.
So, was the $79.5 million punitive award a legitimate measure of reprehensibility, aimed at punishing the company’s long campaign of putting profit above human life? Or was it designed to penalize the company for unproven harm the jury believed Philip Morris inflicted upon thousands of other Oregonians?
“Punitive damages do not punish for harm; they punish for misconduct,” Robert Peck said, arguing for Mrs. Williams, in perhaps the most succinct description of the issue at hand.
Now, you may wonder at the ability of justices to let a case of this magnitude bog down on such a fine point. But you have to admit it’s a good question.
As Justice Stevens put it: If someone fires a machine gun into a crowd, do you punish him only for the one death that he caused, or do you ratchet up the penalty because he endangered so many others?
As fascinating a philosophical question as it is, Justice Alito, who remained quiet during most of the argument, asked whether jurors could fathom the difference.
Can they understand, he asked, that they can consider the company’s “conduct directed at other people for the purpose of assessing how reprehensible the conduct is, but you can’t punish for the harm that is caused other people?”
Did the Oregon jurors understand the difference? The justices are faced with deciding whether the trial judge made the distinction clear in her instructions to them. Was it grounds for throwing out the punitive award because she refused to use an instruction Philip Morris proposed?
To resolve that, several justices suggested they might send the whole case back to the Oregon Supreme Court for clarification. This case, whose verdict dates to 1999, has already been to that court twice.
In the meantime, don’t assume that justices who worry about whopping punitive awards will strike them down.
“The more severely awful the conduct, the higher the ratio between the damage award and the injury suffered by this victim in court,” Mr. Breyer said at one point.
“And if it’s really bad, you’re going to maybe have a hundred times this compensation,” he added.
Not even the Oregon punitive award is 100 times the compensation the jury awarded the widow.
Ms. Woolner is a columnist for Bloomberg News.