$80.3-Million Oregon Tobacco Verdict Upheld

In a key West Coast defeat for Big Tobacco, the Oregon Supreme Court refused to hear Philip Morris Cos.’ appeal of an $80.3-million award to the family of a lung cancer victim, marking the first time a state high court has upheld a punitive damage verdict in a smoking-and-health case.

The top U.S. cigarette maker said Thursday that it would seek a review by the U.S. Supreme Court, though there is no guarantee it would take the case.

By a 4-2 vote, the Oregon court rejected the appeal, declaring simply that “the court has considered the petition for review and orders that it be denied.” Though issued Tuesday, the decision was not publicly announced and did not reach lawyers in the case until Thursday.

“This is the farthest that a punitive damage award in a tobacco case has gone, and we’re talking a very substantial award,” said Richard Daynard, a Northeastern University law professor and director of the Tobacco Products Liability Project, which promotes lawsuits against the industry.

Philip Morris was seeking to overturn the award of damages to the family of Jesse D. Williams, a Portland school custodian and longtime Marlboro smoker who died of lung cancer five years ago at age 67.

The 1999 award of about $800,000 in compensatory and $79.5 million in punitive damages was at the time the largest verdict in favor of an individual smoker. It has since been surpassed in cases in California and Oregon, where six major plaintiffs’ victories over tobacco firms are in various stages of appeal.

“We are happy that the courts are doing their job and that Philip Morris is being slowly cornered -- to the point where they’re going to eventually have to accept accountability for what they’ve done,” said William A. Gaylord, a lawyer for the Williams family.

But the plaintiffs are not celebrating, Gaylord added, “because if anything is predictable, it’s that Philip Morris will try to drag this out further.”

William S. Ohlemeyer, vice president and associate general counsel for Philip Morris, said in a statement that he was “disappointed that the Oregon Supreme Court sidestepped this case because it involves legal issues that are critically important.”

In particular, he said, the ratio of punitive damages to compensatory damages in the Williams case -- 97 to 1 -- violated the principle that punitive awards bear a reasonable relationship to actual harm suffered by a plaintiff.

Business groups are hoping that a Utah case now before the U.S. Supreme Court will establish guidelines or even a formula to rein in punitive damage awards. The case involves a disputed award of $145 million in punitive damages to State Farm auto insurance policyholders, whose compensatory award was $1 million. Philip Morris alluded to the State Farm case Thursday in its statement on the Williams ruling.

After the Williams verdict in March 1999, the trial judge declared the jury’s punitive damage verdict excessive and trimmed it to $32 million.

But in June of this year, the Oregon Court of Appeals ruled that the trial judge had erred in reining in the jury. “An award that might be a serious punishment for one defendant could be only a minor inconvenience for another,” the appeals court said.

“We see nothing in a ratio of 97 to 1 that raises our judicial eyebrows, given the egregious nature of the defendant’s conduct as implicitly determined by the jury,” the appeals court found.

It was this ruling that the Oregon Supreme Court declined to review.

Despite a rise in courtroom defeats for the once-invincible industry, tobacco companies have yet to pay a dime in punitive damages and have paid compensatory damages in only one smoking-and-health case.

Grady Carter, a longtime Florida smoker who contracted lung cancer, last year received $1.1 million from Brown & Williamson Tobacco Corp. after the company exhausted its appeals.