Supreme Court Ruling on Punitive Damages
The Supreme Court issued two 5-4 decisions this Tuesday. They indicate that new Chief Justice John Roberts may not be as adept at compromise as many had thought. When Roberts was nominated for the court, many praised his diplomatic and well-reasoned answers at his Congressional confirmation hearing.
The cigarette damages case is particularly interesting, and creates a difficult and contradictory due process analysis.
The Ruling in Phillip Morris USA v. Williams will hardly be praised by subsequent scholars for its clarity. It sets up a confusing analysis for evaluating punitive damages.
The original lawsuit was brought by a smoker's widow. Her husband, Jesse Williams smoked 2 packs a day for 45 years. He died of lung cancer 9 years ago.
In Oregon State court, a jury awarded the widow a record $79.5 million in punitive damages. The Oregon State Supreme Court upheld the verdict. Williams argued the cigarette industry committed "massive market-directed fraud" which misled the public. In response, the cigarette maker argued a jury can only punish Phillip Morris for damage done to the plaintiff, not all the other cigarette smokers.
Breyer authored the opinion, joined by Roberts, Alito, Kennedy, and Souter. Dissenting were Bader Ginsburg, Scalia, John Paul Stevens and Thomas. The most liberal judges were joined in the dissent by the most conservative judges.
The Court said that the constitutional right to legal due process under the 14th Amendment forbids the state court from using punitive damages to punish a defendant for damage done to others not a party to the litigation. But, due process allows the consideration of those harms. Contradictory right? As Breyer stated for the majority, "evidence of actual harm to non-parties can help to show that the conduct that harmed the plaintiff also posed a substantial risk of harm to the general public, and so was particularly reprehensible ... however, the jury may not go further and use punitive damages to punish a defendant directly on account of harms it is alleged to have visited on others."
The Supreme Court is asking lower courts to walk a difficult line here. Juries can consider damage done to other plaintiffs, but only as evidence of the harm done to the plaintiff in the present suit. It's a difficult test to implement. It may not have too great an impact though, because I don't think many states have a similar jury instruction process to Oregon. Does the Supreme Court have any business telling juries how to implement damages? After all, punitive damages are meant to punish and deter. In determining whether or not to punish, it seems you can take into account harms to others not involved in the suit. But, in terms of the amount, you can only take into account the damage done to the plaintiff.
Hopefully the new Chief Justice will begin to work towards better compromises in the future, to prevent this kind of awkward legal analysis. The nearly $80 million award did seem a bit extreme, and it was likely to get overturned. The Court could have done a better job implementing a workable test though.
Comments
To say that the Supreme Court interfered with due process guarantees is overly simplistic, and just wrong. Due Process doesn't just help the party we want to win the lawsuit, in this case it was shielding the defendant, Phillip Morris.
Though you might disagree with the ruling, it's a gross oversimplification to say that the "decision was delivered in accordance with [the] wishes of the business community". That's just wrong. The court does not get to rule on the size of awards, only the due process concerns of the 14th amendment as applied to the States, in this case Oregon.
While nobody would deny the fact that US Supreme Court in its history delivered some of important decision in the field of human rights (most recently in 2005 when it abolished capital punishment for juvenile offenders, Roper v Simmons), it has nevertheless a rich jurisprudence in delivering decision contrary to customary international human rights law and international humanitarian law. Just yesterday afternoon the Supreme Court refused to order the Pentagon to provide to a Guantanamo Bay detainee, Yemeni national Sharaf Al Sanani, information on why he is being held as an "enemy combatant." And this decision was adopted without any reasoning. Additionally, D.C. Circuit Court ruled on this Tuesday the federal courts had lost jurisdiction over habeas cases under the Military Commissions Act of 2006. Further, US Supreme court some years ago decided that is up to individual states determining whether a defendant facing the death penalty is mentally retarded and therefore ineligible for execution. Another question arises whether only US citizens are entitled to due process guarantees under US Constitution?
However, I do not think that the judgment is as flawed from a policy perspective as Jernej proposes. That the SC is often policy-motivated in its reasoning is not in doubt. That it is often complicit in trampling on substantive and procedural rights is also a fact. That the business community is likely to be happy with the judgment is also a fact, but not necessarily as sinister a fact as it might seem.
However, to my mind the purposes of damages awards are not to bankrupt the defendant in one clean sweep but to compensate the plaintiff for loss. There is no doubt that by misleading consumers tobacco companies have acted reprehensibly from a moral perspective. It is also clear that they have ensured that the FDA keeps well away from them through effective lobbying in Congress. Yet courts are not there to remedy any injustice perpetrated and to punish immoral acts where there is no legal basis to do so.
Nor do I think that the formulation is excessively convoluted. It is unfortunate that Justice Breyer chose wording that revolves around the extent to which the act is reprehensible, but the effect appears to be understandable in a slightly happier formulation: the fact that the advertising misled others may be admitted in evidence since it corroborates the argument that a reasonable man would have been misled by the behaviour of Phillip Morris.
We should be clear, the due process amendment works both ways. It shields citizens from certain intrusions by the state. In this case the SC said the way Oregon went about instructing its jury in determining punitive damages violated the Due Process Clause. That's not to say the amount was excessive, only the way the jury was told to consider the issues was flawed.
On remand, a jury could award a similar amount. Let's be honest though, does one widow really deserve $80 million? I have a hard time agreeing with the decision of the jury here. Even if you assume the tobacco companies are vile and should be punished, shouldn't the other smokers who died and were duped by the tobacco lobby get a share as well?
I find it humorous Jernej, that you are critical of the court's policy stance. By your logic the Court should go in line with Scalia and Thomas (who I know you must be a big fan of) and apply the law and constitution strictly, as the framers intended.
To conclude that corporate interests are writing supreme court opinions strikes me as overly pessimistic, and extreme.
American juries are the most generous in the world as far as I know. Could you imagine any European jury dishing out an $80 million dollar punitive award in this case? I can't, and I doubt you can give an example of one. The court was not criticizing the amount, only the way the jury was instructed to consider the evidence.
I'll go a step further and play devil's advocate. Why shouldn't corporations have a voice in government? They provide a valuable service in some cases don't they? Shouldn't at least part of the blame lie with consumers who choose cheap products or unhealthy products?
What I instead think is the case, is that a feeling of agrievement is prevailing among some people insisting that this case (and other dissimilar cases) have outcomes that do not suit their political stance. Hence, cases on, in my opinion, completely different and not related legal matters are interpreted as being part of a bigger plot from the judiciary which is then seen as a proxy for the political establishment.
In addition, the resent case on habeas corpus was not a Supreme Court case but a District Court case and does not point towards a political tendency in the Supreme Court.
Finally, I still struggle to see 'the missing link' between the various areas of law.
The legislator has a consistent record of shielding tobacco companies from administrative and judicial action. This notwithstanding the window of the law of delict cannot be closed. The courts have clearly come down against the tobacco corporations on the matter of the nexus between their actions and the harm to smokers. The SC, politicised or otherwise, simply objected to the extent to which one individual could benefit from the harm caused to other individuals as a matter of the law of delict and that the harm caused to third parties could be remedied in the proposed manner. Perhaps a creative tapestry of legal norms could lead to other conclusions but that would not serve the rule of law in this particular case.
Congress has nothing to do with this action. It was based on the law of Oregon.
The underlying tort claims (not delict, that's a Civil law concept) were negligence and deceit. It's no coincidence either that the lawsuit came from Oregon, one of the most progressive States. Many other states are not nearly so generous in awarding damages in these types of cases.
Justin, I'm not sure what you are referencing by saying the Supreme Court has a less-than-exemplary record in terms of human rights and international law. How so? That's just wrong. The Court interprets the constitution. I'll stand up for the court here. Though it gets a lot of criticism, its job is to interpret the constitution, first and foremost. I don't know of any human rights violations the Court has violated, or international law it may have disregarded. By it's very nature, international law is a vague concept, and one that can be easily manipulated to forward individual policy preferences in my view. Saying the court may have a less-than-exemplary record on those issues may sound nice, but without some concrete examples I'm going to have to call you out on that one. The Court applies the human rights as laid down in the Constitution. And those rights apply to Corporations as well as individuals.
I have been impressed overall with how well you Europeans seems to follow what goes on at the Court.
Anyway, the widow Williams will have to wait a bit longer for her award, as it may necessitate a retrial in Oregon. Make no mistake though, she was not going to get the whole $80 million. Her legal counsel stand to receive a large portion of that.
We Europeans follow the Supreme Court of the United States because it is the foremost national court that contributes to the development of international law in terms of Article 38 of the statute of the International Court of Justice. Saying that international law is by its very nature vague betrays a lack of knowledge of the subject. Jernej mentions some cases above. It is true that the SC’s job is to interpret the Constitution but the manner in which it is interpreted depends on what hierarchy of norms the court chooses to apply. In Europe the separation of powers could never trump human rights because that is a recipe for dictatorship. It is also true that there are temporal fluctuations in the extent of application of international law, sometimes over notably short periods of time and without a logical line of jurisprudential development. I haven’t researched this subject of late but I do feel that an article from a couple of years ago gives a general picture that remains relevant: JK Setear ‘A Forest with No Trees: The Supreme Court and International Law in the 2003-2004 Term’ (2004) in the University of Virginia Law School Public Law and Legal Theory Working Paper Series http://law.bepress.com/uvalwps/uva_publiclaw/art12
First, back to the Legislature. Congress does not come into play on this topic. They have at times endorsed crop subsidies for tobacco growers, but that is a wholly unrelated industry to the cigarette manufacturers.
Williams sued because her husband was misled about the nature of cigarette smoking under negligence and deceit. Those are State law concepts. Congress has talked a lot about tort reform in recent years, but those measures seem unlikely now that the democrats have gained a slim majority.
To say that Congress has shielded big Tobacco, is to ignore the hearings Rep. Waxman had about the harmful effects of smoking. This culminated in 1994 with the CEOs of the 7 major companies swearing under oath that nicotene was not addictive. This made them look like idiots of course, and went a long way towards alerting the public about the dangers of smoking.
I'll freely admit I'm not an expert on international law. However, it's a body of law which lacks enforcement mechanisms in many cases, and at least in my research area has been the subject of a great deal of exaggeration. I see it used quite often as a justification for protections. For example, a treaty may be ratified, and may be part of international law in some measure, but if it has not been incorporated into domestic law, it's not "the law" as such.
There is a far different attitude about international law in Europe, it part because Europe as a whole is a collection of smaller states, which are very close together. To manage commercial and other affairs efficiently, you need to have an effective means to deal with these relationships.
The problem is much different in the US, which operates as a Federal system, of which I see a number of potential parallels in the expanding EU.
I'm pleased we've been able to have such a lively discussion. Someone should take on the baton for next week, and we can take on another topic, and perhaps get more of our colleagues involved.