State High Court Gets It Right on Punitive Damages

Guest Commentary

R. Ben Sperry, Washington Legal Foundation Fellow & law student, George Mason University School of Law

A principled civil justice system allows plaintiffs to seek redress for actual harms.  However, this does not mean courts have free rein to impose punitive damages upon defendants in an arbitrary manner.

The U.S. Supreme Court has recognized and defined this principle in a series of rulings.  Many State Supreme Courts have been reluctant in applying it, though. For instance, in State Farm v. Campbell, the U.S. Supreme Court ruled that the 145:1 ratio of punitive to compensatory damages the Utah courts imposed on State Farm was an unconstitutional violation of their Due Process rights.  The decision suggested that an “application of the [relevant] guideposts to the facts of this case… likely would justify a punitive damages award at or near the amount of compensatory damages.”  The Utah Supreme Court seemingly thumbed its nose at this decision, though, choosing to impose a punitive award nine times greater than the compensatory damages. 

Thus, we must applaud the Oregon Supreme Court’s recent ruling in Schwarz v. Philip Morris because the justices firmly protected the rights of a defendant which is regularly vilified in the public and even in some courts.

In Schwartz, the Court affirmed the ruling of a divided state court of appeals sitting en banc which vacated a $100 million punitive damage award, and remanded the case for a new trial on punitive damages. 

The U.S. Supreme Court ruled in Williams v. Philip Morris Inc., 549 US 346, 355 (2007) (known as Williams II) that juries may not consider evidence of harm to parties other than the plaintiff when imposing punitive damages.  However, evidence of harm to other parties may be useful for determining the reprehensibility of a defendant.  Reprehensibility, in turn, may be used in conjunction with other considerations to calculate punitive damages.

This is, as the Supreme Court itself acknowledged, a fine distinction, and one which Oregon’s uniform jury instruction fails to convey.  When Philip Morris challenged the use of this uniform instruction in Schwartz, the trial judge’s somewhat cavalier response, according to the Oregon Supreme Court’s opinion, was “when I tell them who the plaintiff is and who the defendant is, I think the jury is going to limit their findings to those two entities.”

The Oregon high court did not accept Philip Morris’s suggested jury instruction, but did find the state’s uniform punitive damage instruction constitutionally faulty in light of Williams II.  The Court went on to reject the plaintiff’s demand that the justices assess the proper amount of punitive damages, as well as the defendant’s request for an entirely new trial on remand.  Instead, the remedy provided was a retrial on the amount of punitive damages.  Through an amicus brief filed last April, WLF argued that an appellate court’s refusal to award an entirely new trial, and instead limiting the retrial to determining punitive damages, as a remedy to a faulty initial trial violates the defendant’s Seventh Amendment rights.  The U.S. Supreme Court regretfully denied the petitioner’s request for review in Wyeth v. Scroggin, on June 21.

The U.S. Supreme Court has consistently stated that the role of punitive damages is to punish defendants for the particular harm to the plaintiff or plaintiffs who filed suit.  Judges and juries should not be able to arbitrarily substitute their own opinions on justice and fairness in place of the law, and use the civil justice system as a means to punish defendants for the supposed harms they have caused to society in general.

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