Philip Morris U.S.A. v. Williams (07-1216)
Oral argument: Dec. 3, 2008
Appealed from: Oregon Supreme Court (Mar. 24, 2008)
PUNITIVE DAMAGES, PRODUCTS LIABILITY, NEGLIGENCE, DUE PROCESS
In 1997, Mayola Williams’s husband Jesse Williams died from lung cancer as a result of smoking cigarettes manufactured and marketed by Philip Morris USA Inc. Mayola Williams sued Philip Morris alleging negligence, strict product liability, and fraud. At trial, the court rejected Philip Morris’s request for a jury instruction on punitive damages which stated that Philip Morris could not be punished for harms suffered by nonparties. The jury awarded Williams $79.5 million dollars in punitive damages. In Philip Morris USA v. Williams (“Williams II”), the U.S. Supreme Court vacated the decision of the Oregon Supreme Court upholding this award and instructed the lower court to apply its standard of prohibiting punishment of a defendant for damage to nonparties. On remand, the Oregon Supreme Court upheld its decision, finding that a state procedural law not previously addressed justified the trial judge’s denial of the requested instruction. In this case, the Court will decide whether a lower court can decline to apply a standard that the Court has articulated and instead uphold its ruling on state procedural law grounds. This decision will affect the Supreme Court’s institutional supremacy and state courts’ treatment of punitive damages awards.
When this case was last before it, this Court reversed the decision of the Oregon Supreme Court and held that due process precludes a jury from imposing punitive damages to punish for alleged injuries to persons other than the plaintiff. Philip Morris USA v. Williams, 127 S. Ct. 1057, 1065 (2007). This Court then remanded the case to the Oregon Supreme Court with directions to “apply the [constitutional] standard we have set forth.” Ibid. On remand, however, the Oregon Supreme Court refused to follow this Court’s directive. Instead, the Oregon court “adhered to” the judgment that this Court had vacated because it found that Philip Morris had procedurally defaulted under state law and thereby forfeited its claim of federal constitutional error. App., infra, 22a.
The questions presented—the second of which was accepted for review but not reached when this case was last before the Court—are:
1. Whether, after this Court has adjudicated the merits of a party’s federal claim and remanded the case to state court with instructions to “apply” the correct constitutional standard, the state court may interpose—for the first time in the litigation—a state-law procedural bar that is neither firmly established nor regularly followed.
2. Whether a punitive damages award that is 97 times the compensatory damages may be upheld on the ground that the reprehensibility of a defendant’s conduct can “override” the constitutional requirement that punitive damages be reasonably related to the plaintiffs harm.
1. Whether, when the Supreme Court remands a case and instructs a state court to apply a constitutional standard, the state court can then decide the case using a procedural rule not previously mentioned in litigation.
2. Whether punitive damages 97 times greater than compensatory damages can be awarded based on the reprehensibility of a defendant’s conduct rather than the harm actually suffered by the plaintiff.
In 1950, Jesse Williams began smoking cigarettes and eventually smoked three packs a day of Marlboros, which are manufactured and marketed by Philip Morris USA Inc. (“Philip Morris”). See Brief for Petitioner, Philip Morris USA Inc. at 2. Jesse Williams was diagnosed with lung cancer and died in 1997. See Brief for Respondent, Mayola Williams at 1. Jesse Williams’s widow, Mayola Williams (“Williams”), alleges that for approximately forty years Philip Morris knew that smoking cigarettes causes cancer, that millions were addicted to cigarettes, and that Philip Morris had either denied this knowledge or assured customers smoking would not harm their health. See id. at 1. Williams sued Philip Morris alleging negligence, strict product liability, and fraud. See Brief for Petitioner at 3. At trial, Philip Morris requested and was denied a jury instruction on punitive damages, which would have prohibited the jury from punishing Philip Morris for harm to nonparties. See id. at 3–4.
In 1999, an Oregon jury found Philip Morris liable for negligence and misrepresentation, and awarded Williams $79.5 million dollars in punitive damages for the misrepresentation claim, which argued that Philip Morris made fraudulent statements to consumers about the health risks of cigarettes. See Brief for Respondent at 1–2. The Supreme Court granted Philip Morris’s petition for certiorari, and in Philip Morris USA Inc. v. Williams (“Williams I”) remanded the case to the Oregon Court of Appeals with directions to reconsider the case in light of their decision in State Farm Mutual Automobile Insurance Co. v. Campbell. See Brief for Petitioner at 5. The Oregon Court of Appeals and the Oregon Supreme Court considered the case in light of State Farm, but determined that it did not change the result. See Brief for Respondent at 3–4.
The Supreme Court, in Philip Morris USA v. Williams (“Williams II”) reversed the Oregon court’s decision and held that, “the Constitution’s Due Process Clause forbids a State to use a punitive damages award to punish a defendant for injury that it inflicts upon nonparties or those whom they directly represent, i.e., injury that it inflicts upon those who are, essentially, strangers to the litigation.” Brief for Petitioner at 7. The Due Process Clause requires States to ensure that juries are not seeking to punish for harm caused to strangers, and that where there is significant risk of jury confusion, the court must protect against that risk upon request. See id. The Court remanded the case to the Oregon courts with instructions to apply the standard. See Brief for Respondent at 5.
On remand, the Oregon Supreme Court found that the trial court had correctly refused Philip Morris’s requested jury instruction. See Brief for Respondent at 5. It found Philip Morris had incorrectly submitted all of its proposed instructions on harms to nonparties and punitive damages in the same document, and one proposed instruction incorrectly stated Oregon law. See Brief for Petitioner at 9–10. Philip Morris sought a writ of certiorari, arguing that the Oregon Supreme Court had incorrectly disregarded the Supreme Court’s directive to implement the standard it set down, and that a new trial should be granted. See id. at 2. The Supreme Court granted certiorari on June 9, 2008. 128 S.Ct. 2904.
The Supreme Court’s decision in this case raises important issues for federalism and the authority of the Supreme Court as an institution. Petitioner Philip Morris USA Inc. (“Philip Morris”) argues that the Oregon Supreme Court had no authority to refuse to apply the Supreme Court’s constitutional standard and to instead find its constitutional claim barred by state law. See Brief for Petitioner, Philip Morris USA Inc. at 10–11. Philip Morris contends that the state should not be able to use a state-law procedural barrier for the first time on remand to ignore the Court’s directions, and uphold an unconstitutional judgment. Id. at 11. Respondent Mayola Williams (“Williams”), however, contends that there is no reason to believe the Oregon Supreme Court deliberately defied the Supreme Court. See Brief for Respondent, Mayola Williams at 10. Williams argues that Oregon’s procedural rule, which requires that jury instructions be “clear and correct in all respects,” is well known among Oregon lawyers. See id. at 6. Williams contends that disregarding the law would deprive Williams of a hearing on her procedural state law objections and ignore the state’s interest in promoting judicial efficiency by placing the burden on litigants to ensure the jury is correctly instructed. See id. at 10.
A decision in favor of Philip Morris would reaffirm the Supreme Court’s institutional superiority. The U.S. Chamber of Commerce argues that the Oregon Supreme Court’s refusal to give full effect to the Court’s decision in Philip Morris USA v. Williams (“Williams II”) is indicative of the reaction of other lower courts. See Brief of Amicus Curiae Chamber of Commerce of the United States of America in Support of the Petitioner at 5. If the Court finds the Oregon court improperly evaded its mandate, it will send a message to other courts reinforcing the decision and rejecting future attempts to evade it. See id. at 10. Adherence to the rule laid down in Williams II also serves businesses’ interests in being able to rely on predictable rulings, rather than having extreme variations among courts on punitive damages awards. See id. at 2. In addition, the National Association of Manufacturers asserts that this is of particular importance to products manufacturers, who are uniquely vulnerable to such awards during litigation about defects in mass produced products. See Brief of Amicus Curiae National Association of Manufacturers in Support of Petitioner at 1.
However, this decision also has important implications for the independence of state judicial systems. Eight states (the “States”) writing in support of Williams argue that reversing the Oregon Supreme Court’s decision would undercut the federalist principle that the Court cannot review a state court decision based on an “independent and adequate state-law ground.” See Brief of Amici Curiae States of Oregon, et al. in Support of the Respondent at 2. The States argue that this doctrine reflects the deference given to states in fashioning their procedural rules, and that a rule preventing states from using alternative grounds of decision on remand would undercut states’ authority and force them to unnecessarily decide federal constitutional issues. See id. at 2–3.
The Need for a New Trial v. Endless Delay
A decision in favor of Philip Morris will impact whether new trials are necessary in cases involving constitutional errors in jury instructions for liability and punitive damages. Philip Morris argues due process favors a new trial because of the Oregon court’s repeated defiance and the possibility that a properly instructed jury might have imposed a less severe penalty. See Brief for Petitioner at 45–47. The National Association of Mutual Insurance Companies (“NAMIC”) argues that because this issue is likely to reoccur in punitive damages cases, the Court’s guidance is required. Depending on the situation, NAMIC argues, the jury should be required to examine not only the punitive damages issue but also issues of underlying liability. See Brief of Amicus Curiae National Association of Mutual Insurance Companies in Support of Petitioner at 2.
However, groups in opposition to the big tobacco companies argue that granting Philip Morris a new trial is inconsistent with due process principles as it ignores the litigation strategy consistently pursued by cigarette manufacturers. See Brief of Amici Curiae Public Justice P.C. et al. in Support of Respondent at 4–5. These groups argue that granting a new trial would reward cigarette companies’ long-standing tactic of using their vast resources to achieve delays, with the result of discouraging claimants from pursuing cases against them. See id. at 5. This strategy is “especially ominous for those, like the Williams, who suffer significant harm that generates low compensatory damages: retirees, homemakers, and those who are aged or impecunious when they suffer injury or death from a defendant’s purposeful and profitable wrongful conduct.” Id. at 5–6. Consequently, amici argue, states have an interest in using their procedural rules to protect such litigants from abuse. See id. at 6.
Should the Oregon Supreme Court have Considered State Law Issues on Remand?
In Philip Morris USA v. Williams (“Williams II”), the U.S. Supreme Court remanded this case to the Oregon Supreme Court and instructed it to apply the constitutional standard it had just established. See 549 U.S. 346 (2007). On remand, however, the Oregon court found that Philip Morris USA Inc. (“Philip Morris”) had forfeited its constitutional claim by procedurally defaulting under state law. See Brief for Petitioner, Philip Morris USA Inc. at 9–10. In light of the Supreme Court’s instructions, Petitioner Philip Morris contends that the Oregon court acted illegitimately in applying state law to bar its constitutional rights. See id. at 14.
Respondent Mayola Williams (“Williams”) counters that the Oregon court “legitimately considered state law issues on remand” because the Supreme Court made state law considerations “part of the new constitutional standard.” Brief for Respondent, Mayola Williams at 44. The constitutional standard prohibits juries from punishing a defendant for harm to nonparties and requires trial courts, “upon request,” to “protect against that risk.” Id. In applying this standard, Williams argues, courts must therefore determine whether the defendant made a proper request under state law. See id. at 44–45. Williams contends that Philip Morris’s request did not satisfy Oregon law. See id. at 6. In Oregon, a requested jury instruction is proper only if it is “clear and correct in all respects.” Id. at 6. Philip Morris’s requested instruction included multiple paragraphs, one of which asked the court to warn the jury not to punish it for harm to nonparties. See id. Williams argues that even if that paragraph was “correct in all respects,” some of the other paragraphs in the same instruction were inaccurate. See id. at 21.Therefore, Williams argues, the Oregon court properly held that Philip Morris procedurally defaulted and consequently forfeited its constitutional claim. See id. at 5.
On the other hand, Philip Morris counters that the Oregon court should not have considered state law to determine whether its request was proper, because the Supreme Court, in Williams II, implicitly held that Philip Morris made a proper request and so preserved its federal claim. See Brief for Petitioner at 19. When the Supreme Court implicitly rules on an issue, lower courts are bound by that ruling. See id. Philip Morris argues that the Court in Williams II could have avoided the constitutional issue of whether juries can punish defendants for harm to nonparties by holding that—regardless of whether juries can punish for such harm—Philip Morris had forfeited its right to a jury instruction protecting against that risk by failing to properly request one under state law. See id. The Court, however, did address the constitutional issue and held that juries cannot punish for harm to nonparties. See id. at 19–21. By reaching the constitutional issue, Philip Morris argues, the Court implicitly held that Philip Morris preserved its federal claim by making a proper request. See id.
Is Oregon State Law Sufficient to Defeat Philip Morris’s Federal Rights?
Even if the Oregon Supreme Court legitimately considered state law issues on remand, the parties disagree over whether Oregon’s “correct in all respects” law was sufficient to bar Morris’s federal rights. See Brief for Petitioner at 26; Brief for Respondent at 25, 42. State procedural laws must satisfy certain “federal standards of adequacy” in order to bar federal claims: first, the law must be “firmly established” and “regularly followed”; secondly, the law must serve a legitimate state purpose. Brief for Petitioner at 26.
(a) Was the “Correct in All Respects” Law Firmly Established?
Philip Morris argues that in determining whether a law is firmly established, the test is not whether the law itself is well-known, but whether its application in a particular situation is firmly established. See Brief for Petitioner at 39. Therefore, although Philip Morris agrees that the “correct in all respects” law was firmly established when its trial occurred, it argues that the law was still insufficient to bar its federal claim because its application in this case was novel and unforeseeable. See id. at 39–40. Philip Morris’s requested instruction comprised multiple paragraphs, one of which asked the court to warn the jury not to punish it for harm to nonparties. See id. at 3. When Philip Morris later claimed that the court erred by not issuing that warning, the Oregon Supreme Court found that Philip Morris had forfeited the constitutional right to a warning under the “correct in all respects” law because other paragraphs in the instruction were incorrect. See id. at 39–40. Philip Morris argues that this is the first time an Oregon court has found that a party forfeits its federal claim where the paragraph in the requested instruction pertaining to the claim is accurate, but other paragraphs in the instruction, dealing with different legal propositions, are inaccurate. See id. According to Philip Morris, Oregon courts have invalidated claims under the “correct in all respects” law only where the substantive issue on appeal was incorrectly formulated in the instruction. See id.
Williams, on the other hand, argues that the law’s application in this case is firmly established. See Brief for Respondent at 25. She contends that the law’s plain language establishes that a party forfeits its federal claim even when the instruction is inaccurate only in sections unrelated to the federal claim itself. See id. at 34–35. The law, Williams explains, specifically requires the instruction to be correct in “all” respects, not just “some” respects. See id. Furthermore, Williams points to the numerous Oregon practice manuals that encourage attorneys to separate each point of law into a separate instruction to “reduce the likelihood that the trial court will reject an entire multifaceted … instruction.” Id. at 28–29, 35.
Philip Morris, however, contends that the Oregon Supreme Court’s application of the “correct in all respects” law in this case is inconsistent with the court’s own precedent, specifically State v. George. See Brief for Petitioner at 36; 97 P.3d 656 (Or. 2004). In State v. George,the Oregon court held that a party does not need to correct its proposed jury instruction if the trial court rejects it on the merits, because doing so would be pointless. See id. at 38. Similarly, Philip Morris argues that it did not need to correct its proposed instruction, because the trial court rejected it on the merits by holding that the jury could punish for harm to nonparties. See id.
Williams counters that State v. George is consistent with the Oregon Supreme Court’s application of the “correct in all respects” law here. See Brief for Respondent at 31–33. She argues that the two cases differ, because the trial court in this case—contrary to Philip Morris’s contentions—did not reject the instruction on the merits. See id. at 13–14, 32. The record of the trial court proceedings, Williams argues, shows that the trial court rejected Philip Morris’s instruction only because it was formulated inaccurately. See id. at 13–15. Therefore, unlike in State v. George, it would not have been pointless for Philip Morris to correct its instruction, and Philip Morris consequently forfeited its federal claim by not doing so. See id. at 31.
(b) Does the “Correct in All Respects” Law Serve a Legitimate State Purpose?
Philip Morris argues that the application of the “correct in all respects” law in this case serves no legitimate state purpose. See Brief for Petitioner at 30. Philip Morris contends that the law is supposed to encourage attorneys to accurately prepare their jury instructions and prevent judges from having to edit them. See id. Where, however, the rule is applied to invalidate an instruction containing different points of law because one of those points is inaccurate, as in this case, then the rule’s purpose is no longer satisfied. See id. at 31. Then, Philip Morris argues, the rule’s “only effect” would be to cause attorneys to submit individual instructions for each point of law. Id.
Williams, however, counters that the law’s application in this case serves a legitimate state purpose. See Brief for Respondent at 42. Williams argues that the law functions as a rule of appellate review, because it authorizes an appellate court to find that a trial court does not err in rejecting an instruction if the instruction is not “correct in all respects.” See id. at 42–43. Therefore, Williams argues, the rule decreases expensive retrials and results in finality to judgments. See id. at 43.
The U.S. Supreme Court in this case will determine whether the Oregon Supreme Court acted legitimately on remand when it held that Philip Morris USA Inc. (“Philip Morris”) forfeited its federal claim by procedurally defaulting under Oregon state law. Philip Morris argues that the Oregon Supreme Court’s decision should be reversed, because it should not have taken state law into account. Alternatively, Philip Morris argues that the state law at issue was insufficient to defeat its federal claim. Mayola Williams, on the other hand, argues that the Oregon court legitimately considered state law in its decision, and that the state law was sufficient to bar Philip Morris’s federal claim. The Supreme Court’s decision will mark the third time that it confronts this case.
Edited by: Hana Bae
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