Supremes Rule Against Oregon Smoking Decision

In a narrow 5-4 ruling, the Supreme Court today rejected an Oregon jury's verdict to award $80 million to the widow of a smoker.  The ruling hinged on the Constitution's due process clause, which

"forbids a state to use punitive damages to punish a company for injury that it inflicts upon others who are "essentially, strangers to the litigation," according to the majority opinion written by Justice Stephen G. Breyer.

"Breyer said jurors may take into account that harm caused to others shows reprehensible conduct, but 'a jury may go no further than this and use a punitive damages verdict to punish a defendant directly on account of harms it is alleged to have visited on nonparties.'"

The decision, which is being hailed by business leaders as a victory, did not fall along ideological lines.  Joining Breyer were Chief Justice John Roberts, Samuel Alito, Anthony Kennedy and David Souter.  In dissent were Ruth Bader Ginsburg, Antonin Scalia, John Paul Stevens and Clarence Thomas.

The case is being sent back to lower courts, where, Breyer wrote, "there was no need to address the amount of the punitive award. He said that the lower court reconsiderations may lead to a new trial, or a change in the punitive damages award."

Discuss.

  • (Show?)

    Hmmm... well, perhaps not along social left/right ideological lines, but it certainly seems as if it fell along corporate/noncorporate ideological lines.

    If I'm not mistaken, Stephen Breyer, John Roberts, Samuel Alito, Anthony Kennedy and David Souter have all served as corporate lawyers - while Ruth Bader Ginsburg, Antonin Scalia, John Paul Stevens and Clarence Thomas have not.

    Certainly, those five seem to be the most pro-corporation justices on the bench.

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    But Thomas and Scalia generally rule in favor of the market, don't they? Moreover, it's surprising to see those two siding with the trial lawyers.

  • John Mulvey (unverified)
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    I wouldn't read a whole lot of significance into this ruling. It's just a finding of error by the trial court in its instructions to the jury regarding punitive damages.

    John

  • Brian (unverified)
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    This court is nothing more than a dog and pony show. I doubt any one on this court wants to force any corporation to pay for the negative health effects its product has on the people of this country.

  • Bill (unverified)
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    This is the right verdict, but focusing on the wrong issue.

    From a Time article:

    Williams, according to his widow, never gave any credence to the surgeon general's health warnings about smoking cigarettes because tobacco companies insisted they were safe. Only after falling sick did Williams tell his wife: "Those darn cigarette people finally did it. They were lying all the time."

    Somehow, the company was guilty of fraud because the gentleman didn't want to believe that what he was doing was bad for him. Even though every pack he opened told him so.

  • blizzak (unverified)
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    Thomas and Scalia also believe in states' rights and were probably reluctant to overturn a state jury verdict.

  • lin qiao (unverified)
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    Yep, Scalia believes in states' right in the sense of "state of emergency".

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    My understanding is that the court said, basically, punitive damages are about the present litigant(s) and not about other parties who aren't in court, didn't give evidence, and therefore about whom nothing is really known (because no evidence was presented and therefore no evidence could be refuted about their damages). While I hate to see the tobacco pushers catch a break, I don't think this is bad law in the abstract.

    What will happen in the future (I hope) is that juries will still make big awards of punies to plaintiffs they consider deserving, but in each case the plaintiff's counsel will make a point of not asking the jury to consider possible harm to others, and the judge will make a point of instructing the jury not to consider possible harm to others, and then the jurors will go back into the jury room and do whatever they want to do. But at that point, procedurally, Big Tobacco (or Big Wrongdoer of any stripe) will have to conjure up another argument to avoid liability (these arguments can delay payment for many years even if they are unsuccessful, of course).

    The Constitutional argument is still waiting in the wings.

  • PanchoPdx (unverified)
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    For Scalia and Thomas, their dissent was about a logical hole in the majority opinion (there is no reason to limit punitive damages factors to the plaintiff's facts if the purpose is to punish rather than compensate). The reason for their vote is probably more not giving credence to the concept of substantive due process.

    Once upon a time "substantive due process" was a powerful legal doctrine for conservatives, it was used protected things like the right to contract for employers. But it was eviscerated by the Court as essentially "made up law" during the first half of the 20th Century.

    But it didn't die completely as a concept and continued to offer the court a convenient hook for arriving at "just" decisions without a clear constitutional authority. When it comes to punitive damages, supporters of substantive due process theory assert that at some point large awards become clearly "unjust".

    For example, imagine a jury awarding punitive damages to penalize a major insurance company for denying a claim. It's not too hard to imagine a really angry jury deciding to awarding ten times the entire value of the insurance company (say, a hundred billion dollars) to send a message to other insurance companies. Such a decision might bankrupt the insurance company and leave tens of thousands of their customers unprotected (not to mention the shareholders, mutual funds and pension fund investments stripped of their stock value).

    Adherents of substantive due process say that at some point such a decision works a manifest injustice (although the line is not at all clear).

    Originalists like Scalia and Thomas dislike substantive due process because it is an invitation to discover concepts of "justice" without the guidance of (written) objective standards.

  • John Mulvey (unverified)
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    I feel like I should clarify my previous post: Undoubtedly the ruling sucks for the plaintiffs, and anytime the tobacco companies or any other deep pocket can delay or get a mistrial or find some procedural defect, they win and the rest of us lose.

    I was just responding to the OP's attempt to count noses on the Court in order to draw a conclusion on the substantive issue.

    John

  • Andy (unverified)
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    A couple of points, first of all this is the second time that the US Supreme Court has sent this case back to Oregon so they are trying to send a message. Not sure if Oregon gets it yet or not.

    Second, the primary blame has to be assigned to the original trial lawyer who got too greedy and went for the $80M payout. Had he just asked for $1M it would've been paid and finished up years ago. He screwed his client by getting greedy and in the long run his mistake will cost lots of other plaintiffs money also. The $80M payout was a stupid gesture on the part of the lawyer, his client, the jury and the judge. They'll keep getting spanked because of their greed.

    Of course, the whole trial was a farce since the guy consumed a legal product with a warning label. So it is someone else's fault that the guy was too stupid to pay attention to the warning label? If the product is such a hazard then why not have the FDA regulate it? Oh wait, then we would lose all of that tax revenue that is supplied by the addicts.

  • (Show?)

    If the product is such a hazard then why not have the FDA regulate it? Oh wait, then we would lose all of that tax revenue that is supplied by the addicts.

    The FDA could certainly regulate it - and that would not mean anything about the tax revenue.

    After all, they regulate Viagra - and Pfizer pays plenty of taxes.

  • Lebanese-American (unverified)
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    "...where it is considered incredible that George W. Bush from his corporate buddies raised $140 million in ’04, now the press is talking about Hillary and McCain and Giuliani raising $200 million, $300 million. If Mayor Bloomberg gets in the race -- and let me tell you, they’re talking about it in his circles -- he’ll spend half-a-billion dollars from his own fortune, which means that the press not only deals largely with the horse race instead of the substantive issues and the records of the candidates, it deals with it like a bar graph. You know, how much did Hillary raise this last week compared to McCain? It’s so rancid. It’s so disrespectful of the voters in this country."

  • John Mulvey (unverified)
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    Andy,

    This issue has nothing to do with the lawyer being greedy or the plaintiff being warned. This case was presented to a jury --your peers --who heard evidence of wrongdoing by the tobacco companies and concluded that a money award was required to correct the wrongdoing.

    First you should be aware that Oregon juries are notoriously stingy --they rarely lavish foolishly large awards on plaintiffs. In this case they heard evidence from both sides and concluded that 1) the tobacco companies caused harm to the plaintiff, 2) the warnings on the package don't sheild those manufacturers from being held accountable for their actions, 3) the manufacturers actions were so bad that there needed to be additional punitive damages to make them stop their bad behavior, and 4) that it would require $80 mill to make them change their ways.

    The lawyers didn't pluck that figure out of thin air. The jury picked the figure because something less --like $1mil that you suggested --would be chump change to these companies, who would simply pay it off and go right on harming other people.

    So I'm not sure what "message" you think "Oregon" should get here. Jurors usually have quite a bit of common sense, and they don't hand out huge verdicts for no reason. They are the ones who listened to both sides present the most pursuasive information they could. You didn't.

    John

  • Andy (unverified)
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    John,

    Ya right, jurors had common sense when they handed out a $80M award to some guy who smoked for 30 years. They were morons and you know it, they know it, everyone knows it. That is why the case has bounced around for 10 years and will continue to bounce around.

    The jury system hands out stupid results on a regular basis, especially when the jurors think that someone else is paying the bill. It didn't take more than a few case studies in law school to figure that one out.

    The Oregon courts knew better than passing this one and they messed up. The Supremes were fairly clear in BMW and in State Farm that punitive damages can't become so large that they become arbitrary or policy choices. The Oregon courts ignored the precedents and got slapped. And it all started because the original lawyer (or his client) got greedy and swung for the fence.

  • Andy (unverified)
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    Kari,

    Sorry, I took too many logical jumps in that phrase to follow. Basically you're correct but only if tobacco would remain a legal product. But the FDA could't keep tobacco as legal in light of the thousands of deaths a year that it causes. If Viagra killed thousands of people a year it would be quickly pulled off the market.

    The issue with tobacco is complicated by tradition, economics (lots of farmers) free choice, addiction, etc. People like to use it, it ciculates a lot of money in the economy, and it kills people. Personally I don't care if people smoke it and kill themselves. Guess I'm a libertarian on the issue. But I don't see any reason to extort money from the company that makes the product when we all know what the game is. The plaintiffs in these cases are just free loaders trying to extort money from their fellow addicts.

  • Bob Tiernan (unverified)
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    Jeff Alworth:

    But Thomas and Scalia generally rule in favor of the market, don't they? Moreover, it's surprising to see those two siding with the trial lawyers

    Bob Tiernan:

    I keep telling people like you that USSC justices are more unpredictable than anyone admits - and maybe "unpredictable" is the wrong word.

    Bob Tiernan

  • Bob Tiernan (unverified)
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    Blizzak:

    Thomas and Scalia also believe in states' rights and were probably reluctant to overturn a state jury verdict.

    Bob T:

    Oh, here we go -- fishing for an explanation. "States'rights" has different meanings, and besides, even a generic definition doesn't call for not overturning state jury verdicts. Get off that high horse of yours and look reality in the face.

    Bob Tiernan

  • Bob Tiernan (unverified)
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    Lebanese-American:

    If Mayor Bloomberg gets in the race....he’ll spend half-a-billion dollars from his own fortune

    Bob T:

    And? I can remember when lefties used to complain about personal fortunes being spent to attain powerful offices (well, they still do, sort of) but then I need to remind myself that they were stone silent when Cantwell bought her Senate seat and Corzine bought his as well as the NJ statehouse. But that's okay -- to me the real issue to talk about is where these people stand on the issues. Forget the money they spend (because you guys forget it when you want to).

    Bob Tiernan

  • (Show?)

    "Ya right, jurors had common sense when they handed out a $80M award to some guy who smoked for 30 years. They were morons and you know it, they know it, everyone knows it. That is why the case has bounced around for 10 years and will continue to bounce around."

    Not true on any count, Andy. First of all, it's been explained right here that the issue has nothing to do with the amount of the award, but the way it was calculated--to include harm to others beyond the plaintiff.

    Secondly, either you work for RJR or you've been under a rock for the last 30 years. The entire time, the tobacco industry has sworn under oath that they were not manipulating nicotine levels, and that nicotine was not addictive. If you'd like a simple term, they were LYING about the harm their product could cause.

    You don't get to lie about your product's health effects, particularly when you're talking about controlled substances. They did. They were found guilty of it, based on internal documents that completely contradicted the BS they were selling to Congress and the FDA.

    It is 100% legitimate to hold the tobacco companies accountable for those actions, on the grounds that it conceivably led to confusion among smokers as to the true effects.

  • Urban Planning Overlord (unverified)
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    <h2>The basic problem with punitive damage awards, based upon the late 1990's notorious BMW of Alabama Supreme Court decision, is that they violate the due process clauses of the Constitution. Yes, those are the same clauses used to justify all sorts of rights, like the right to privacy (hint, hint, NARAL types). The Court has suggested a punitive award of more than nine times the actual damages is going to be consittutionally suspect, and I would suggest that the Oregon Supreme Court, the next time it considers this matter, throw down the towel instead of the gauntlet.</h2>
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