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Philip Morris USA v. Williams: Another Logical Step in the Control of Punitive Damages Or a Catalyst for a New Approach?

By David B. Broughel

On Feb. 20, 2007, the U.S. Supreme Court issued its decision in Philip Morris USA v. Williams, ____ U.S. ____, 127 S. Ct. 1057 (2007), the latest in a series of decisions since 1991 exploring the limits that the Due Process Clause of the 14th Amendment imposes on state jury awards of punitive damages. An Oregon jury had awarded the widow of a Marlboro smoker $821,000 in compensatory damages and $79.5 million in punitive damages on a deceit claim against Philip Morris. After a series of appeals, the Supreme Court of Oregon had upheld the punitive damages award. The U.S. Supreme Court accepted the case to address two specific questions: 1) whether a state-court jury in a punitive damages award may punish the defendant for harm caused to parties not before the court; and 2) whether the $79.5 million punitive damages award was 'grossly excessive' because it was not reasonably related to the actual or potential harm caused by the defendant to the plaintiff. In a 5-4 decision, the Court answered the first question 'no' and declined to address the second question until the Oregon state courts had considered the case further.

While acknowledging that its prior decisions in State Farm Mutual Insurance Company v. Campbell, 538 U.S. 408 (2003) and BMW of North America v. Gore, 517 U.S. 559 (1996) left unclear whether a punitive damages award may punish harm to others, the majority in Philip Morris emphatically held that any award punishing a defendant for harm to others not before the court constitutes a 'taking of 'property' … without due process.' 127 S. Ct. at 1060. Characterizing the decision as one involving the Due Process Clause's 'procedural limitations' on punitive damages awards, the Court imposed a significant and substantive limit on the power of state courts, and state legislatures, to impose punitive damages.

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