Oregon Verdict Against Philip Morris Affirmed

The Oregon Supreme Court on Thursday affirmed a punitive-damage jury verdict against cigarette maker Philip Morris USA Inc. in a lawsuit filed by the widow of a smoker.

Philip Morris, a unit of Altria Group Inc., said it again planned to seek review of the case by the U.S. Supreme Court, which had previously set aside the damage award.

The company contends that the award, worth 152 times the compensatory judgment to the widow of smoker Jesse Williams, is “grossly excessive.”

It said the award conflicted with a 2003 Supreme Court decision involving State Farm Mutual Automobile Insurance Co. The high court had ruled that punitive damages generally should not exceed the amount of compensatory damages in cases with substantial actual or compensatory damages.

The suit was brought on behalf of the family of Jesse Williams, a smoker who died of cancer. In 1999 a jury had awarded $821,000 in compensatory damages, which was reduced under state law to $521,000.

The trial court reduced the punitive-damage award to $32 million, but the Oregon Court of Appeals reinstated the original $79.5-million punitive award in June 2002.

In 2003, the U.S. Supreme Court directed the Oregon appeals court to reconsider the case in view of the State Farm decision.

The appeals court again found in favor of the plaintiff, and Thursday the Oregon Supreme Court again backed that ruling, saying Philip Morris and other companies had engaged in a decades-long scheme to deceive smokers even when they knew cigarettes were dangerous.

“Under such extreme and outrageous circumstances, we conclude that the jury’s $79.5-million punitive-damage award against Philip Morris comported with due process, as we understand that standard to relate to punitive-damage awards,” the Oregon Supreme Court said.

Altria shares fell $1.47, or 2%, to $72.03. But one analyst said the ruling should not have a lasting effect on the shares.

“We expect minimal downside to Altria’s stock, especially given the recent weakness and the fact that we believe this decision is a one-time event,” said Bonnie Herzog, an analyst at Citigroup Investment Research.