Wednesday, November 01, 2006, 6:18 AM

US Supreme Court Hears Argument In Punitive Damages Case

The U.S. Supreme Court heard argument yesterday in Philip Morris v. Williams. The Supreme Court had granted certiorari on two issues, one of which was "Whether due process permits a jury to punish a defendant for the effects of its conduct on non-parties?" Several Justices (Roberts, Breyer, Souter) seemed in agreement that, under the Supreme Court's punitive damages precedents, the due process clause doesn't permit a jury to punish a defendant for harm caused to non-parties. Even Justice Scalia (who opposes due process limits on the size of punitive damage awards) seemed to agree.

In this case an Oregon trial court denied Philip Morris's proposed jury instruction which would've instructed the jury that it couldn't punish Philip Morris for harm caused to other (non-party) smokers. The jury returned a massive punitive damage award ($79.5 million, on $821,485 in compensatory damages), and the Oregon Supreme Court upheld it.

Yesterday's oral argument was consumed by confusion over the proposed jury instruction itself (it was not a model of clarity) and whether the Oregon SCT really believed that a defendant may be punished for harm to non-parties (the Oregon SCT's opinion was ambiguous).

My prediction: the U.S. Supreme Court will make clear that, although conduct toward non-parties may be considered by a jury in determining the reprehensibility of the defendant's conduct, punitive damages may not be used to punish harm to non-parties; and the Court will remand the matter to the Oregon SCT to reconsider the matter in light of that holding.

Of course, a due process decision restricting punitive damages will govern in NC. If you have a client on trial for punitive damages, you'd be wise to request a cautionary instruction, one that that instructs the jury that it can't punish the defendant for harm caused to non-parties.

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