Appellate Ruling Pares Damages in Tobacco Case

A state appeals court in San Francisco refused to strike down a groundbreaking punitive damages verdict against tobacco giant Philip Morris but pared the award to an ex-smoker with lung cancer to $10.5 million from $26.5 million.

The decision was the first in a California tobacco case to be influenced by a U.S. Supreme Court ruling in April that punitive damages in most cases should be no greater than nine times the amount of compensatory damages awarded.

That Supreme Court ruling triggered a new review of the milestone victory of Patricia Henley, a former Marlboro smoker who started smoking at 15 and accused Philip Morris of concealing the dangers and addictiveness of its products. Her cancer is in remission.

A San Francisco jury in 1999 awarded Henley $1.5 million in compensatory damages and $50 million in punitive damages -- more than three times the amount her attorneys requested. The trial judge later cut the punitive damages to $25 million -- about 16 times the compensatory award. In its ruling Thursday, the appeals court cut the punitive portion to $9 million -- or six times the compensatory damages.

However, the appeals court refused to toss out the entire award, saying $9 million in punitive damages was “permissible and appropriate” because Philip Morris had “touted to children what it knew to be a cumulatively toxic substance.”

Philip Morris said it would appeal the decision to the California Supreme Court. “We have long maintained that these punitive damage awards are excessive, unconstitutional and should be set aside,” said William S. Ohlemeyer, associate general counsel for Philip Morris. “We remain optimistic that the punitive damage awards in these cases will ultimately be rejected.”

Madelyn Chaber, an attorney for Henley, said she had not decided whether to appeal.

Henley’s was the first tobacco case to be tried in California after state legislators in 1998 repealed a 10-year-old law that had immunized cigarette makers against product liability suits. After Henley’s victory, Philip Morris and R.J. Reynolds suffered five consecutive defeats at the hands of individual smokers in California and Oregon.