549 U.S. 346 (2007), 05-1256, Philip Morris USA v. Williams

Docket Nº:05-1256.
Citation:549 U.S. 346, 127 S.Ct. 1057, 166 L.Ed.2d 940
Opinion Judge:Breyer, Justice
Party Name:PHILIP MORRIS USA, Petitioner, v. Mayola WILLIAMS, Personal Representative of Estate of Jesse D. Williams, Deceased.
Case Date:February 20, 2007
Court:United States Supreme Court
 
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549 U.S. 346 (2007)

127 S.Ct. 1057, 166 L.Ed.2d 940

PHILIP MORRIS USA, Petitioner,

v.

Mayola WILLIAMS, Personal Representative of Estate of Jesse D. Williams, Deceased.

No. 05-1256.

United States Supreme Court

February 20, 2007

Argued Oct. 31, 2006.

CERTIORARI TO THE SUPREME COURT OF OREGON

[127 S.Ct. 1058] Syllabus

In this state negligence and deceit lawsuit, a jury found that Jesse Williams' death was caused by smoking and that petitioner Philip Morris, which manufactured the cigarettes he favored, knowingly and falsely led him to believe that smoking was safe. In respect to deceit, it awarded $821,000 in compensatory damages and $79.5 million in punitive damages to respondent, the personal representative of Williams' estate. The trial court reduced the latter award, but it was restored by the Oregon Court of Appeals. The State Supreme Court rejected Philip Morris' arguments that the trial court should have instructed the jury that it could not punish Philip Morris for injury to persons not before the court, and that the roughly 100-to-1 ratio the $79.5 million award bore to [127 S.Ct. 1059] the compensatory damages amount indicated a "grossly excessive" punitive award.

Held:

1. A punitive damages award based in part on a jury's desire to punish a defendant for harming nonparties amounts to a taking of property from the defendant without due process. Pp. 352-358.

(a) While "[p]unitive damages may properly be imposed to further a State's legitimate interests in punishing unlawful conduct and deterring its repetition," BMW of North America, Inc. v. Gore, 517 U.S. 559, 568, 116 S.Ct. 1589, 134 L.Ed.2d 809, unless a State insists upon proper standards to cabin the jury's discretionary authority, its punitive damages system may deprive a defendant of "fair notice . . . of the severity of the penalty that a State may impose," id., at 574, 116 S.Ct. 1589; may threaten "arbitrary punishments," State Farm Mut. Automobile Ins. Co. v. Campbell, 538 U.S. 408, 416, 123 S.Ct. 1513, 155 L.Ed.2d 585; and, where the amounts are sufficiently large, may impose one State's (or one jury's) "policy choice" upon "neighboring States" with different public policies, BMW, supra, at 571-572, 116 S.Ct. 1589. Thus, the Constitution imposes limits on both the procedures for awarding punitive damages and amounts forbidden as "grossly excessive." See Honda Motor Co. v. Oberg, 512 U.S. 415, 432, 114 S.Ct. 2331, 129 L.Ed.2d 336. The Constitution's procedural limitations are considered here. Pp. 352-353.

(b) The Due Process Clause forbids a State to use a punitive damages award to punish a defendant for injury inflicted on strangers to the litigation. For one thing, a defendant threatened with punishment for

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such injury has no opportunity to defend against the charge. See Lindsey v. Normet, 405 U.S. 56, 66, 92 S.Ct. 862, 31 L.Ed.2d 36. For another, permitting such punishment would add a near standardless dimension to the punitive damages equation and magnify the fundamental due process concerns of this Court's pertinent cases--arbitrariness, uncertainty, and lack of notice. Finally, the Court finds no authority to support using punitive damages awards to punish a defendant for harming others. BMW, supra, at 568, n.11, 116 S.Ct. 1589, distinguished. Respondent argues that showing harm to others is relevant to a different part of the punitive damages constitutional equation, namely, reprehensibility. While evidence of actual harm to nonparties can help to show that the conduct that harmed the plaintiff also posed a substantial risk to the general public, and so was particularly reprehensible, a jury may not go further and use a punitive damages verdict to punish a defendant directly for harms to those nonparties. Given the risks of unfairness, it is constitutionally important for a court to provide assurance that a jury is asking the right question; and given the risks of arbitrariness, inadequate notice, and imposing one State's policies on other States, it is particularly important that States avoid procedure that unnecessarily deprives juries of proper legal guidance. Pp. 353-355.

(c) The Oregon Supreme Court's opinion focused on more than reprehensibility. In rejecting Philip Morris' claim that the Constitution prohibits using punitive damages to punish a defendant for harm to nonparties, it made three statements. The first--that this Court held in State Farm only that a jury could not base an award on dissimilar acts of a defendant--was correct, but this Court now explicitly holds that a jury may not punish for harm to others. This Court disagrees with the second statement--that if a jury cannot punish for the conduct, there is no reason to consider it--since the Due Process Clause prohibits a State's inflicting [127 S.Ct. 1060] punishment for harm to nonparties, but permits a jury to consider such harm in determining reprehensibility. The third statement—that it is unclear how a jury could consider harm to nonparties and then withhold that consideration from the punishment calculus—raises the practical problem of how to know whether a jury punished the defendant for causing injury to others rather than just took such injury into account under the rubric of reprehensibility. The answer is that state courts cannot authorize procedures that create an unreasonable and unnecessary risk of any such confusion occurring. Although States have some flexibility in determining what kind of procedures to implement to protect against that risk, federal constitutional law obligates them to provide some form of protection where the risk of misunderstanding is a significant one. Pp. 355-357.

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2. Because the Oregon Supreme Court's application of the correct standard may lead to a new trial, or a change in the level of the punitive damages award, this Court will not consider the question whether the award is constitutionally "grossly excessive." Pp. 357-358.

340 Or. 35, 127 P.3d 1165, vacated and remanded.

Breyer, J., delivered the opinion of the Court, in which Roberts, C. J., and Kennedy, Souter, and Alito, JJ., joined. Stevens, J., post, p. 358, and Thomas, J., post, p. 361, filed dissenting opinions. Ginsburg, J., filed a dissenting opinion, in which Scalia and Thomas, JJ., joined, post, p. 362.

COUNSEL

Andrew L. Frey argued the cause for petitioner. With him on the briefs were Andrew H. Schapiro, Lauren R. Goldman, Murray R. Garnick, Kenneth S. Geller, Evan M. Tager, William F Gary, and Sharon A. Rudnick.

Robert S. Peck argued the cause for respondent. With him on the brief were Ned Miltenberg, Charles S. Tauman, James S. Coon, Raymond F Thomas, William A. Gaylord, Maureen Leonard, and Kathryn H. Clarke [*]

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OPINION

BREYER, Justice.

The question we address today concerns a large state-court punitive damages award. We are asked whether the Constitution's Due Process Clause permits a jury to base that award in part upon its desire to punish the defendant for harming persons who are not before the court (e.g., victims whom the parties do not represent). We hold that such an award would amount to a taking of "property" from the defendant without due process.

I

This lawsuit arises out of the death of Jesse Williams, a heavy cigarette smoker. Respondent, Williams' widow, represents his estate in this state lawsuit for negligence and deceit against Philip Morris, the manufacturer of Marlboro, the brand that Williams favored. A jury found that [127 S.Ct. 1061] Williams' death was caused by smoking; that Williams smoked in significant part because he thought it was safe to do so;

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and that Philip Morris knowingly and falsely led him to believe that this was so. The jury ultimately found that Philip Morris was negligent (as was Williams) and that Philip Morris had engaged in deceit. In respect to deceit, the claim at issue here, it awarded compensatory damages of about $821,000 (about $21,000 economic and $800,000 noneconomic) along with $79.5 million in punitive damages.

The trial judge subsequently found the $79.5 million punitive damages award "excessive," see, e.g., BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996), and reduced it to $32 million. Both sides appealed. The Oregon Court of Appeals rejected Philip Morris' arguments and restored the $79.5 million jury award. Subsequently, Philip Morris sought review in the Oregon Supreme Court (which denied review) and then here. We remanded the case in light of State Farm Mut. Automobile Ins. Co. v. Campbell, 538 U.S. 408, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003). 540 U.S. 801, 124 S.Ct. 56, 157 L.Ed.2d 12 (2003). The Oregon Court of Appeals adhered to its original views. And Philip Morris sought, and this time obtained, review in the Oregon Supreme Court.

Philip Morris then made two arguments relevant here. First, it said that the trial court should have accepted, but did not accept, a proposed "punitive damages" instruction that specified the jury could not seek to punish Philip Morris for injury to other persons not before the court. In particular, Philip Morris pointed out that the plaintiff's attorney had told the jury to "think about how many other Jesse Williams in the last 40 years in the State of Oregon there have been.... In Oregon, how many people do we see outside, driving home . . . smoking cigarettes? . . . [C]igarettes . . . are going to kill ten [of every hundred]. [And] the market share of Marlboros [i.e., Philip Morris] is one-third [i.e., one of every three killed]." App. 197a, 199a. In light of this argument, Philip Morris asked the trial court to tell the jury that "you may consider the extent of harm suffered by others in determining what [the] reasonable relationship is"...

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