Oregon court upholds damages against tobacco firm

PORTLAND - The Oregon Supreme Court for a third time has allowed a $79.5 million punitive-damages judgment against Philip Morris, an award twice struck down by the U.S. Supreme Court, which suggested it was excessive.

The case will go back to the nation's highest court, the tobacco maker said. Business groups have watched the case closely for its potential as a precedent for large jury awards in product liability suits.

The money was for the family of Jesse Williams, a former Portland janitor who started smoking during a 1950s Army hitch and died in 1997 six months after he was diagnosed with lung cancer.

The Oregon court's decision on Thursday did not take issue with the U.S. Supreme Court's latest ruling, which said that when juries assess punitive damages, they can punish a defendant only for the harm done to the people suing, not for harm done to others who aren't part of the case.

But the Oregon court said jury instructions proposed by Philip Morris at the trial had other defects, so a judge's decision not to allow them was correct.

The instructions about punitive damages have been at the center of the legal battle over the suit brought by Williams' widow, Mayola. A jury in Portland made the award in 1999.

The Oregon high court made its first decision in 2002, refusing to hear an appeal from Philip Morris.

Then the U.S. Supreme Court rejected the judgment of nearly $80 million, saying that punitive damages generally should be held to no more than nine times actual economic damages. It declined, however, to make that a firm rule.

In the Williams case, the family was awarded $521,000 in actual damages. The punitive damages are about 150 times greater.

Next, the Oregon Supreme Court upheld the punitive damages, citing "extraordinarily reprehensible" conduct on the part of Philip Morris officials.

The Oregon court said Thursday that Philip Morris and the tobacco industry worked during the 1950s on a "program of disinformation" to create doubt about the dangers of smoking. Williams, the court said, "learned from watching television that smoking did not cause lung cancer," but, once he came down with it, said the "cigarette people" had lied to him.

Then came the U.S. Supreme Court's second take on the case, last year, a narrower ruling that did not address the size of the award but only how juries could consider the conduct of defendants in determining punitive damages.

Philip Morris called Thursday's decision inexplicable and said it would ask the U.S. Supreme Court again to hear the case.

"The U.S. Supreme Court did not take the time and effort to consider this case and remanded it to the Oregon Supreme Court in order for that court to reach the same erroneous decision," said William Ohlemeyer, vice president and associate general counsel for Philip Morris USA.

A lawyer on the family's side, James Coon of Portland, said Mayola Williams is "well into her 70s" and barely ambulatory, living in North Portland and not granting interviews.

The family released a statement hailing the decision and noting that under Oregon law about 60 percent of punitive damage awards go to a statewide fund to assist crime victims.

Coon said the Oregon court was right to focus on whether the jury instructions were correct under Oregon law, a threshold question that has to be answered before the courts consider whether the damages are unconstitutionally large.

The Oregon court said that, for example, the jury instructions Philip Morris suggested would have forbidden the jury to consider the profits the tobacco company made through misconduct that was not illegal.

"Once the profitability of the misconduct is identified, it makes no difference whether it was otherwise licit (not against law) or illicit (against law)," the court said. "Either way, it was relevant to the jury's inquiry."

Edward Sweda Jr. of the Tobacco Products Liability Project at Northeastern University School of Law in Boston said it's possible the U.S. Supreme Court won't reconsider the size of the award.

"They had an ample opportunity to do that and would not do so, indicating that there is a good likelihood they would turn down Philip Morris," he said.

Despite the narrow legal issues it has turned on, he said, the case remains significant nationally and could open the door for other cases seeking significant sums that the business community has been wanting the court to limit.