By Gregory Lopes, The Washington Times - February 21, 2007

The Supreme Court yesterday took away almost $80 million awarded to the widow of a longtime smoker and threw into doubt the prospects of future high-dollar jury awards against businesses.

A divided Supreme Court ruled 5-4 in favor of Altria Group, the parent of Richmond company Philip Morris USA and Kraft Foods, which contested an Oregon Supreme Court's upholding of an earlier verdict that forced the maker of the popular Marlboro cigarette to pay $79.5 million in damages.

Justice Stephen G. Breyer, writing for the majority, said a punitive-damages award based on a jury's desire to punish a defendant for harming those who are not parties to the lawsuit amounted to taking property from the defendant, which would be a violation of the constitutional right of due process. Chief Justice John G. Roberts Jr. and Justices Samuel A. Alito Jr., Anthony M. Kennedy and David H. Souter made up the rest of the majority.

However, the court refused a request from the tobacco giant that it set a clear limit on the size of punitive damages awarded in tobacco cases.

"This decision is a big deal because it will have a tremendous impact on other industries facing similar litigation," said Robin Conrad, senior vice president of the National Chamber Litigation Center at the U.S. Chamber of Commerce. "The court's decision now provides businesses with additional protection against juries' arbitrary awards of punitive damages."

Jonathan S. Franklin, a D.C. lawyer, agreed, saying the ruling that juries can't consider the harm to others "limits the ability of plaintiffs to argue for enormous damage awards."

"This is not just a victory for the tobacco companies," he told the Associated Press, but it's good for any company that might be subject to product liability suits in which punitive awards might be involved.

But Justice Clarence Thomas, in his dissent, said the ruling leaves the court with no clear stance on punitive damages.

"Today's opinion proves once again that this court's punitive damages jurisprudence is 'insusceptible of principled interpretation.' "

The court's decision leaves U.S. juries to ponder punitive damages under this rule: The jury may consider actual or potential harm to others in deciding how reprehensible a company's conduct was, but may not punish the company for the harm caused to others.

"The court took a big wooden spoon and stirred up the swamp, making the view muddier than ever," said Steve Emmert, chairman of the appellate practice subcommittee for the Virginia state bar's litigation section. "I am convinced that this ruling will lead to confused juries looking to confused judges for guidance."

States will have some flexibility to determine the rules that will help minimize jury confusion over the standard set yesterday.

The justices did not split down party lines, further bolstering reaction from lawyers that yesterday's decision leaves punitive damage law on murky ground. The court last placed limits on such awards in 2003.

Mr. Emmert said the decision is likely to result in smaller dollar amounts awarded to defendants but will not slow the number of cases brought to courts around the country.

Just over one-fifth of U.S. adults smoked cigarettes in 2005, down from one-quarter of the country's adults a decade ago.

Mayola Williams sued Philip Morris for fraud on behalf of her husband, a two-pack-a-day smoker for 45 years, who died of lung cancer nine years ago. She argued the jury award was appropriate because it punishes Philip Morris' misconduct for a decades-long "massive market-directed fraud" that misled smokers into thinking cigarettes were not dangerous or addictive.

Philip Morris argued that the jury should have been told explicitly that other smokers must prove their own cases.

"We believe that this decision will provide Philip Morris USA with an opportunity to fully and fairly defend itself in this and other cases," said William S. Ohlemeyer, Philip Morris USA vice president and associate general counsel.

"There are clearly constitutional limits to the imposition of punitive damages, and today's decision makes clear that state courts must properly instruct juries on those limits to ensure that they are punishing only for harm caused to the plaintiff, and not to strangers."

But the day was not a total success for cigarette makers, as the high court turned down the industry's bid to eliminate a 75-cent-per-pack fee on Minnesota residents that the state imposed to help pay for rising health care costs.

Reynolds American Inc., R.J. Reynolds Tobacco, Loews Corp.'s Lorillard Tobacco and Philip Morris said the fee unconstitutionally requires the companies to pay beyond the 1998 $200 billion settlement agreement the industry reached with states.

"This decision doesn't leave us anywhere to go," said David Howard, a spokesman for R.J. Reynolds. "It could give other states the opportunity to look at a similar tax. We think it is double dipping and would oppose it as a violation of the master agreement [1998 settlement]."