New Punitive Damages Decision from U.S. Supreme Court
The United States Supreme Court issued its latest decision on the constitutionality of punitive damages awards in Phillip Morris USA v. Williams, No. 05-1256 slip op. (2007). The Court threw out a $79.5 million punitive damages award from an Oregon state court in a tobacco death case. This new decision clarifies that punitive damages cannot be used to punish a defendant for injury inflicted on nonparties to the litigation. Thus, the Court deemed it improper for the jury to have punished the tobacco company for the injuries it caused to all Oregon smokers.
The Court held that it is unconstitutional for a state to allow a punitive damages award to punish a defendant for injuries to nonparties. Earlier decisions allowed some use of evidence of harm to nonparties to determine the reprehensibility of the defendant’s conduct, a factor relevant to punitive damages. However, in this new decision, the Court held that while “[e]vidence of actual harm to nonparties can help to show that the conduct that harmed the plaintiff also posed a substantial risk of harm to the general public, and so was particularly reprehensible .… a jury may not go further than this and use a punitive damages verdict to punish a defendant directly on account of harms it is alleged to have visited on nonparties.”
The Court held that state courts must implement some procedures to minimize the risk of jury confusion regarding this distinction, although the Court declined to proscribe a specific procedure to be followed. The procedure that will most likely be implemented by courts across the country will be to explain the limited role of such “harm to nonparties” evidence in the jury instructions.
