Oregon Supreme Court to SCOTUS: Go piss up a rope.

The U.S. Supreme Court, in its self-appointed role as national tort “reformer,” has been using the Due Process Clause of the Fourteenth Amendment to impose both procedural and substantive limits on state court punitive damages awards since the late 1980s. In recent times the Court has become more aggressive in reversing punitive damages awards on the ground that they’re unconstitutionally “excessive,” and lower courts are following suit.

Williams v. Philip Morris, Inc. was a wrongful death action filed in an Oregon state court. The widow of a man who died of cigarette-related lung cancer brought the suit, alleging that the negligence and fraud of Philip Morris caused her husband’s death. The decedent, a long-time, three-pack-a-day Marlboro smoker, allegedly resisted all attempts at getting him to quit because he believed Philip Morris’ bullshit that the connection between smoking and lung cancer rested somewhere between “exaggerated” and “nonexistent” on the continuum of causation.

An Oregon jury found for the widow, awarding $821,485.50 in compensatory damages and a whopping $79.5 million in punitive damages. The trial judge reduced the punitive damages award to $32 million and entered judgment for the reduced amount.

Both sides appealed. The Oregon Court of Appeals ruled that the trial judge erred in reducing the punitive damages award and ordered the original amount reinstated.

After the Oregon Supreme Court declined to hear its appeal, Philip Morris requested review from SCOTUS. The high court vacated the Oregon Court of Appeals’ judgment and remanded the case for further consideration in light of State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003), a case in which SCOTUS ruled that an award of punitive damages can’t constitutionally be based on out-of-state conduct that’s lawful in the state where it occurred.

On remand, the Oregon Court of Appeals affirmed its prior decision upholding the $79.5 million punitive damages award. The Oregon Supreme Court likewise affirmed, and the case headed back to SCOTUS.

Philip Morris made two arguments: (1) the award violated substantive due process because it was “grossly excessive”; and (2) the award violated procedural due process because it punished Philip Morris for cigarette-related harm sustained by “strangers to the litigation,” i.e., persons other than the plaintiff’s husband. The procedural due process argument centered on the trial judge’s refusal to give Philip Morris’ rambling three-page proposed jury instruction on the law of punitive damages. The instruction read in pertinent part:

The size of any punishment should bear a reasonable relationship to the harm caused to Jesse Williams by the defendant’s punishable misconduct. Although you may consider the extent of harm suffered by others in determining what that reasonable relationship is, you are not to punish the defendant for the impact of its alleged misconduct on other persons, who may bring lawsuits of their own in which other juries can resolve their claims and award punitive damages for those harms, as such other juries see fit.

By a 5-4 vote, SCOTUS sided with Philip Morris. Philip Morris USA v. Williams, 549 U.S. ___, 127 S. Ct. 1057 (2007). The Court ruled 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.” Due process permits consideration of harm to nonparties as a measure of the reprehensibility of the defendant’s misconduct, but juries cannot take the next step and actually punish the defendant for such harm:

[T]he Due Process Clause prohibits a State’s inflicting punishment for harm caused strangers to the litigation. At the same time we recognize that conduct that risks harm to many is likely more reprehensible than conduct that risks harm to only a few. And a jury consequently may take this fact into account in determining reprehensibility.

The Oregon Supreme Court’s decision, SCOTUS said, “permitted direct punishment for harm to others, without limiting the use of such harm to determine reprehensibility.”

SCOTUS vacated the Oregon Supreme Court’s judgment and remanded “so that the Oregon Supreme Court can apply the standard we have set forth.” SCOTUS did not consider Philip Morris’ substantive due process argument that the punitive damages award was “grossly excessive,” ominously noting that “the application of [the proper procedural due process] standard may lead to the need for a new trial . . . .”

“May” lead to a new trial? The pundits — together with a substantial number of garden variety dumbass law geeks such as myself — read Williams and almost universally concluded there was no way the Oregon Supreme Court could avoid vacating the punitive damages award and ordering a new trial.

Today, the Oregon Supreme Court proved us all wrong. See Williams v. Philip Morris Inc.

SCOTUS instructed the Oregon Supreme Court to reconsider its earlier decision and apply the “correct” constitutional standard. The Oregon court concluded that it didn’t really need to do that shit after all. Why not? Well, because there was an entirely separate and independent state law basis for rejecting Philip Morris’ proposed jury instruction on punitive damages, that’s why not!

A trial judge can fuck up in two ways regarding jury instructions: (1) by failing to give an instruction; and (2) by giving an incorrect instruction. The only alleged error that Philip Morris preserved for appeal was the judge’s refusal to give the proposed punitive damages instruction.

Under Oregon law, “[a]n appellate court will not reverse a trial court’s refusal to give a proposed jury instruction, unless the proposed instruction was ‘clear and correct in all respects, both in form and in substance, and * * * altogether free from error.'” (Emphasis added.) The Oregon Supreme Court went through Philip Morris’ punitive damages instruction in detail and concluded that it misstated Oregon law on punitive damages in two respects wholly unrelated to the issue that SCOTUS addressed. Thus, “even assuming that proposed jury instruction . . . clearly and correctly articulated the standard required by due process, it contained other parts that did not state the law correctly. Accordingly, the trial court did not err in refusing to give it.”

“zOMG WTF,” Philip Morris exclaimed. “At no time before now did the plaintiff EVER argue that our jury instruction misstated Oregon punitive damages law! She WAIVED that issue years ago!!!1!1!”

Not so, responded the court:

[T]he plaintiff need not have made any objection at all in order for the trial court to have been legally justified in rejecting the instruction, if it did not correctly state the law. The correctness of the instruction, in light of the factual record that both parties had a full opportunity to develop, was purely a legal issue, and the burden was on defendant to offer a legally sufficient instruction. If defendant did not do so, then there was a legally correct justification for the trial court’s decision to refuse the proffered instruction. Under such circumstances, the trial court’s ruling should be sustained.

In other words, “Tough titty, Philip Morris.” That’s some pretty unusual stuff right there! In states where I’ve practiced, appellate courts will find a waiver of a jury instructions issue at the drop of a hat. Not so in Oregon, apparently.

And so the Oregon Supreme Court let the $79.5 million punitive damages award stand yet again.

Under the rule of SCOTUS review known as the adequate and independent state ground of decision doctrine, Philip Morris’ procedural due process attack on the punitive damages award is likely dead. However, Philip Morris can go back to SCOTUS and request review of the substantive due process issue SCOTUS declined to decide the last time.

Bottom line: this case still has a long way to go, but it’s nice to see the good guys win a battle for a change.

Update: Appellate practice guru Howard Bashman considers this case “an unattractive vehicle for U.S. Supreme Court review on the substantive due process question of the unconstitutional excessiveness of punitive damages” for reasons he discusses here. He also offers some sage advice to n00b attorneys “pondering how far you should twist the law in your client’s favor in proposed jury instructions[.]”

More: Eric Turkewitz did me the honor of posting a link to this here entry on his outstanding New York Personal Injury Law Blog. That surely warrants some reciprocity, so please check out Mr. Turkewitz’s analysis of Williams here.

Still More: Jeremy Rosen over at the California Punitive Damages blog asserts that the adequate and independent state ground doctrine might not insulate the Oregon Supreme Court’s latest ruling from SCOTUS review after all.  Personally, I doubt that the state law ground on which the Oregon Supreme Court based its ruling qualifies as “plainly untenable” or “without any fair or substantial support” for purposes of the SCOTUS case cited in Mr. Rosen’s entry, but Mr. Rosen is quite correct in saying that SCOTUS will “have the last word” on that issue.