yesterday at the US Supreme Court: Philip Morris USA, Inc. v. Williams. 549 U.S. 346 (2007)

In the case it was held that the due process clause of the Fourteenth Amendment bars punitive damages for harm caused to individuals not involved in the litigation.

Mayola Williams, the widow of Jesse D. Williams, who died of smoking-related lung cancer, sued Philip Morris USA, a cigarette manufacturer, for fraud based on Philip Morris advertisements and sponsored studies that made cigarettes seem less dangerous than they actually were. At trial, the jury found for Williams and awarded her $821,485.50 in compensatory damages and $79.5 million in punitive damages. The trial court found that the compensatory damages exceeded the state cap and the punitive damages were “grossly excessive”. It reduced the respective amounts to $521,485.50 and $32 million.

On appeal, the Oregon Court of Appeals reversed and reinstated the $79.5 million judgment. Following the “guideposts” established in BMW of North America, Inc. v. Gore, the Court of Appeals examined whether the punitive damages were appropriate based on (1) the degree of reprehensibility of the conduct, (2) the disparity between the actual harm and the punitive damages, and (3) the difference between the punitive damages and civil penalties allowed in similar cases. While determining the reprehensibility of Philip Morris’s actions, the court considered the length of the misinformation campaign and the number of people it had reached, concluding that its actions were so reprehensible that they justified punitive damages 97 times greater than the actual damages. The Oregon Supreme Court denied review.

The Supreme Court of the United States then granted certiorari, vacated the Court of Appeals’ judgment, and remanded the case to the Court of Appeals for that court to reconsider the amount of the punitive damages award in light of State Farm v. Campbell. The Court of Appeals again reinstated the $79.5 million judgment. On appeal, the Supreme Court of Oregon affirmed, also holding that the courts can consider evidence of similar conduct to other people in Oregon–even those not party to the law suit–when awarding punitive damages.

Is this a legally and a morally good outcome?