Judgment Against Philip Morris Is UpheldFeb 2, 2006 | AP
The Oregon Supreme Court upheld on Thursday a $79.5 million punitive damages award to the family of an Oregon smoker who died of lung cancer, saying the amount isn't excessive given the "reprehensible" conduct of tobacco giant Philip Morris in marketing cigarettes. Philip Morris called the award "grossly excessive" and said it would appeal further.
The decision upholds a lower court ruling and responds to a U.S. Supreme Court decision that asked Oregon courts to consider whether the award in the lawsuit against Philip Morris USA Inc., a unit of Altria Group Inc., was excessive.
The state Supreme Court said it was not, given "such extreme and outrageous circumstances."
"Philip Morris knew that smoking caused serious and sometimes fatal disease, but it nevertheless spread false or misleading information to suggest to the public that doubts remained about the issue," the court said.
"It deliberately did so to keep smokers smoking, knowing that it was putting the smokers' health and lives at risk, and it continued to do so for nearly half a century," it said.
Philip Morris said Thursday it would ask the U.S. Supreme Court to consider the case again.
The company said the Oregon court's decision violated the U.S. Supreme Court's 2003 guidelines for punitive damages, which said that punitive damages generally shouldn't be greater than actual damages.
The tobacco company is the nation's biggest tobacco company and makes top-selling Marlboro cigarettes. Altria shares fell $1, or 1.4 percent, to $72.50 in afternoon trading on the New York Stock Exchange.
The ruling in the Oregon case comes less than two months after the tobacco industry won a major victory when the Illinois Supreme Court tossed out a $10.1 billion fraud judgment against Philip Morris over the marketing of its "light" cigarettes.
In Florida, the state Supreme Court is still reviewing a $145 billion punitive damage award in the Engle class action case that was overturned on appeal.
The Oregon court upheld a 1999 Multnomah County jury award of $79.5 million in punitive damages to the family of Jesse D. Williams, a janitor who died in 1997 of lung cancer at the age of 67. The man's family also was awarded $500,000 in non-economic damages, to compensate for pain and suffering.
An attorney for Williams' family, James S. Coon, said, "We think it's the right decision."
According to testimony in the trial, Williams started smoking in the 1950s when serving in the Army in Korea, and later he smoked three packs of Marlboros a day.
Williams' family said he kept smoking because he did not believe a company would sell something that was truly harmful.
After the jury ordered the company to pay the Williams family $79.5 million in punitive damages, the judge reduced the award to $32 million. The state appeals court reinstated the jury's punitive damage award in 2002.
In 2003, the U.S. Supreme Court ordered Oregon courts to review the award to ensure it was not unconstitutionally excessive under new standards for punitive damages adopted by the high court.
A state appeals court said in 2004 that the award wasn't excessive, and the state Supreme Court decision upholds that decision.
The $79.5 million award would be a windfall not only for the man's family, but for the state.
Under state law, 60 percent of punitive damages in such cases go to the state, which in turn uses the money to support crime victims assistance programs.