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The Unusual Story of Williams v. Philip Morris, and Its Third Trip to the Supreme Court – Including Some Predictions About What the Court Will Do This Time


Tuesday, Dec. 16, 2008

Earlier this month, the United States Supreme Court heard the case of Williams v. Philip Morris -- for the third time. It is very unusual for a case to go up the Court more than once, let alone more than twice, and Williams is certainly an unusual case.

In this column, I will explain why this case, which is about a $79.5-million punitive damages award, has made three trips to Washington, D.C. from Oregon. I will also make a few cautious predictions, based on the questions posed by the Court during oral argument, about what the outcome of this case might be.

Background: The Oregon Supreme Court's 2008 Ruling, and Why It Seemed to Flout the U.S. Supreme Court's 2007 Ruling

Earlier this year, the Oregon Supreme Court issued a surprising ruling in the Williams case: It refused to reduce or remand the case for a new trial -- even in the face of a strong challenge to the punitive damages award granted by a jury to the wife of a deceased smoker, Jesse Williams, in a tort suit against Philip Morris in 1999. (My column on the Oregon Supreme Court's ruling can be found here.)

This 2008 ruling was surprising because it had previously seemed that the United States Supreme Court had held that the punitive-damages award violated due process, in its landmark 2007 decision in Williams v. Philip Morris (which I will call Williams II). Thus, one might have expected that the Oregon Supreme Court, abiding by that holding, would act to revise the award or grant a new trial, or give the trial court an opportunity to do so.

The 2007 U.S. Supreme Court decision had held that the trial judge, in 1999, had given an erroneous jury instruction, which denied Philip Morris its due process rights under the federal constitution. The instruction in question permitted the jury to take into account, when determining the size of the punitive damages award it would render against the defendant, the harms caused by the defendant to other Oregon citizens by the same conduct that injured the plaintiff's husband.

The U.S. Supreme Court held, however, that states may not use punitive damages, which are part of the tort law, to punish the defendant for injuries suffered by anyone other than the person who sued the defendant under the state's tort law. Justice Breyer, writing for the majority, ended his opinion by remanding the "case so that the Oregon Supreme Court can apply the standard we have set forth."

Yet the Oregon Supreme Court "applied" the standard and came to the conclusion that the original jury verdict should stand. This ruling seemed to observers (including myself) to be in plain conflict with the United States Supreme Court's clear finding that the jury instructions had violated Philip Morris's due process rights when the jury determined that appropriate punitive damages award under Oregon law should be almost $80 million dollars, in a case where there were less than $1 million of actual damages to the victim.

The Oregon Supreme Court's Justification for a Ruling that Appeared Not to Follow the Supreme Court's Plain Guidance in the Case Before It

The Oregon Supreme Court did give a reason for not modifying the Williams verdict: It said that that the jury instructions requested by Philip Morris could not have been given by the trial judge under Oregon law, since the proposed jury instructions were not "clear and correct in all respects."

In particular, it seemed that Philip Morris had rewritten the pattern jury instructions for Oregon to reflect not only the view concerning punishment for harms to nonparties that was adopted in Williams II, but also two other concepts. One was the concept that the jury "may" (not "shall") use certain factors in deciding whether to award punitive damages. The other was the concept that one factor the jury was required to take into account, in deciding whether to award punitive damages, was the defendant's motive to secure "illicit" profits, not the total profitability that resulted from the defendant's wrongful acts.

The Oregon Supreme Court noted, in addition, that the rule the Supreme Court had stated in Williams II was that a trial judge was required to take steps to protect a defendant against the risk of punishment for harms caused to nonparties "upon the request" of the defendant. It concluded that Philip Morris could never have made such a request of the trial judge in 1999, since its "request"—its objection when the judge announced instructions which permitted punishment for harms to nonparties—was infected by other errors, and therefore had no legal standing.

In other words, in the view of the Oregon Supreme Court, it was as if the defendant, Philip Morris, had never protested at all, or had stood up in court and made its protest in a foreign language unrecognizable to the trial judge. And it is familiar law that if a defendant does not protest a jury instruction, its objection to that instruction is waived, and can never be raised again, including on appeal.

Was the Oregon Supreme Court's Ruling Merely a "Run-Around" to Avoid Applying the U.S. Supreme Court's Standard?

Needless to say, the position adopted by the Oregon Supreme Court seems, at first glance, to be a provocation to the United States Supreme Court – especially when one reviews a little more background in the case, as follows:

The U.S. Supreme Court first remanded Williams in 2003, after it decided State Farm Mut. Auto Ins. Co. v. Campbell, on the grounds that the holding in Campbell cast doubt over the $79.5 million punitive damages awarded by the jury under the instructions. In Campbell, the U.S. Supreme Court had held that, in determining punitive damages, a jury could not take into account wrongful conduct "unrelated" to the wrongful conduct that harmed the plaintiff, and it also suggested that any punitive-damages award whose ratio to the actual injury suffered by the plaintiff (as represented by compensatory damages) was above "single digits" (for instance, 10:1) would be presumptively unconstitutional.

On remand, however, despite Campbell, the Oregon Supreme Court affirmed the original jury award. This prompted Williams II, which was an emphatic rejection of the Oregon Supreme Court's understanding of the due process clause as articulated in Campbell.

In oral argument on December 3, 2008, Justice Breyer—the author of Williams II -- noted that he had first thought that what the Oregon Supreme Court did was "a run-around," but now, he was not sure. This is bad news for Philip Morris, since the company might have hoped that it could pick up Breyer's vote merely on the basis that he might feel some personal investment in the remand order, which the Oregon Supreme Court seemingly "ran around."

Why the $79.5-Million Punitive Damages Award Against Philip Morris May Stand, After All

Justice Breyer's openness to accepting the inevitability of the $79.5-million punitive award in Williams may be based on two factors. First, if the Court were to allow the award to stand, then the holding of Williams II would not be affected. The only party that would be affected would be Philip Morris, which would be out $79.5 million.

That is bad news for the company, but not as bad as the news that Philip Morris and other defendants would have to live in a world in which the unconstitutional jury instructions that generated the $79.5-million award were permitted into the law of the fifty states. That could lead to much larger punitive damages in the future.

The other factor is that the Oregon "clear and correct in all respects" rule for jury instructions, while draconian in its effect, may simply be good law in Oregon. Importantly, too, that rule forms an independent and adequate state law ground for affirming the jury award, regardless of the federal constitutional violation. This is what the lawyers for Mayola Williams argued before the Court, and they make a very persuasive case.

Two Powerful Arguments That Clash with Each Other: A State Rule that Resolves Everything, and the Complaint that the Rule Was Not Invoked Earlier

Williams III is now no longer about punitive damages; it is about Oregon civil procedure and the interaction between federal constitutional rights and state's rights. The arguments that the Court reviewed in the briefing and in oral argument are fascinating, and difficult to summarize. My sense, though, is that there are two very powerful arguments that are being made, one on each side, and it is hard to see whether the Court can find a middle ground between them.

On one side is the argument made by the plaintiffs, which was described above: Oregon has a rule that forces a party to forfeit an otherwise-valid objection to the jury instructions that were given by a court, if the instructions that the party has offered in the alternative are flawed in any respect. The exact scope of this rule was challenged by Philip Morris—for example, does this rule apply to errors made on jury instructions that concern different issues of law? Or, that are written on different pages of the instruction sheet?—but that is really not the main problem with the plaintiff's position.

The main problem with the plaintiff's position, as Justice Breyer noted at oral argument, is that it seems to secure something good for the State of Oregon at the risk of a imposing a very heavy penalty upon litigants. The goal of the rule is to force the litigant to carefully police her own work product. Forfeiture of the right to appeal because of an error anywhere in your pleadings will certainly force lawyers to triple-check their work. The rule invoked by the Oregon Supreme Court does not go that far, but in a sense, the "clear and correct in all respects" rule is justified by the same reasoning. Justice Breyer asked: What if the litigant was a criminal defendant who made a mistake in one part of his proffered jury instructions? Would he lose his right to a new trial under the Oregon rule? And if so, does that make sense?

On the other side, Philip Morris's argument is that, if the Oregon courts were going to apply the "clear and correct in all respects" rule, then they should have done it sooner, rather than later. What was the point of going to the United States Supreme Court twice if the appeal raised by the defendant was moot all along? One of the most fundamental principles of constitutional law is that the United States Supreme Court does not issue advisory opinions – that is, opinions on occasions where there is no live legal controversy to be decided. In a sense, this argument suggests that the Oregon courts (and, perhaps, Mayola Williams) effectively organized the appellate process to trick the United States Supreme Court into giving an advisory opinion about the due process clause. Why wasn't the "clear and correct in all respects" rule raised earlier?

The problem with this argument as applied to the Oregon Supreme Court, as Justice Souter noted, is that it assumes that there is a certain "order of battle" that the state courts must adopt when dealing with appeals. Justice Souter -- who was a justice on the New Hampshire Supreme Court for many years, before moving to the U.S. Court of Appeals for the First Circuit and then to United States Supreme Court -- must be especially sensitive to the problem of the federal courts' telling the state courts how they have to do things. If the "clear and correct in all respects" rule is not unconstitutional as a matter of due process—and Philip Morris did not argue that it was—then on what grounds could the United States Supreme Court find that it was unconstitutional as applied in this case? Just because it took nine years – rather than, say, one year -- for the defendant to find out that it had lost?

The Possibility Chief Justice Roberts Raised: Moving on to an Unresolved Question about the Permissible Ratio of Punitive to Compensatory Damages

I have to admit that I find it difficult to choose between these two arguments. There may be some middle ground that the Court will locate which will allow it to remand the case for a new trial without making a sweeping pronouncement about the "clear and correct in all respects" rule. Certainly, Philip Morris's lawyers tried to show the Justices such a middle ground by suggesting, following Justice Breyer's line of questioning, that the rule may be unconstitutional as applied in this case. But I am not sure that I see why.

Chief Justice Roberts ended the argument with an interesting veiled threat: He suggested that perhaps the Court should revisit the second due process question raised by Campbell, which asks if there is a "hard cap" of a single-digit ratio between compensatory damages and punitive damages in all cases arising from the state courts. This would make the question of whether the defendant properly requested an instruction from the judge moot, since the single-digit ratio rule would presumably apply whether or not it was "requested," and could not be forfeited by the failure of a party or court to raise it earlier.

If the Court follows Roberts's invitation, then the stakes involved in Williams III become much larger than whether one defendant pays $79.5 million or not. If the Court were to revisit the ratio question in the context of a personal injury suit, and were to impose the ratio, this would be an unwelcome extension of Campbell and a disaster for the plaintiffs' bar. In contrast, if the Court were to refuse to impose the ratio, or worse, repudiate it in the context of personal injury suits, then the defense bar will rue the day that one of their own asked the court to revisit Williams.

Anthony J. Sebok, a FindLaw columnist, is a Professor at Benjamin N. Cardozo School of Law in New York City. His other columns on tort issues may be found in the archive of his columns on this site.

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