by Jeffrey White, Center for Constitutional Litigation
editor's note:the following is the fifth in a five part series on Philip Morris v. Williams.
Philip Morris asks the Court to make two drastic changes in the due process limits on punitive damage. First, the company wants to impose a maximum ratio between punitive and compensatory damages. Secondly, Philip Morris would require juries to consider only the harm caused to the individual plaintiff when deciding the appropriate amount of punitive damages. The Association of Trial Lawyers of America, as amicus curiae, urges the Court to reject these limitations on state court awards.
I.THE COURT SHOULD NOT ADOPT A SPECIFIC MULTIPLIER OF COMPENSATORY DAMAGES AS A CONSTITUTIONAL CAP ON AWARDS OF PUNITIVE DAMAGES.
The Court has consistently rejected the notion of a mathematical bright line that would define constitutionally excessive punitive damages in all cases. The rigid ratio ceiling suggested by Philip Morris departs from the traditional proportionality test under the Due Process Clause. Punitive damages, the Court has repeatedly stated, must be in proportion to the harm defendant has caused, not necessarily with the amount of compensatory damages awarded.
The compensatory award often does not reflect the actual harm inflicted by the defendant. Wrongful deaths, for example, are notoriously undercompensated because of statutory limitations on damages recoverable. For example, awards for the wrongful death of a child or a stay-at-home mother, reflecting only the economic loss to the family, do not reflect the enormity of the harm. Alabama allows no compensatory damages at all in wrongful death cases; punitive damages make up the entire award. For this reason, courts have looked to the proportionality of the punitive award to the harm, not to the compensatory award.
Secondly, the Court has long recognized that states are entitled to wide latitude in fashioning rules for punitive damages that serve as fair but effective punishment and deterrence of misconduct that threatens the health and safety of their citizens. There are many paths to this goal. Some states have imposed a maximum ratio to compensatory damages in certain types of cases. Others limit punitive damages to an absolute monetary sum or the profits defendant gained from its misconduct or a percentage of the defendant's worth. States can address these policy decisions with far greater precision than this Court's substantive due process rulemaking. A one-size-fits-all limit invites the very arbitrariness that this Court has sought to avoid in punitive damages cases, and it violates the principles of federalism that have informed this Court's decisions in this area.
Finally, to impose a predictable ceiling on punitive damages would undermine their deterrent purpose. A company that can predict the maximum punishment for its misconduct can simply add it to the price of its goods or services. Instead of punishing and deterring the marketing of dangerous products, predictable punitive damages would simply become a cost of doing business.
II.THE DUE PROCESS CLAUSE DOES NOT PROHIBIT A JURY FROM CONSIDERING ALL OF THE EFFECTS OF THE DEFENDANT'S MISCONDUCT WITHIN THE STATE IN CALCULATING AN AWARD OF PUNITIVE DAMAGES.
Philip Morris urges the Court to prohibit juries from considering harm the defendant has caused to persons other than the individual plaintiff in a case. This, the company argues, would prevent it from being punished multiple times for the same misconduct because other victims may bring their own lawsuits seeking punitive damages.
Oregon's law is not unusual. Every state that permits punitive damages allows juries and judges to take into account whether the defendant's illegal conduct harmed or threatened harm to other people. Many states, including Oregon, have taken steps to protect defendants against the perceived unfairness of multiple punitive awards. In fact, Oregon provides two levels of protection for defendants. When deciding the amount of punitive damages, juries are required to consider the deterrent effect of punitive damages already awarded in previous similar cases. In addition, Oregon requires that judges on post-trial motions to reduce the amount of damages consider any punitive damages the defendant has already paid for the same misconduct. It is one of the advantages of our system of federalism that states can fashion procedures they deem most fair and effective. The Due Process Clause certainly does not command that all states must adopt the rule advocated by Philip Morris.
Moreover, hiding from the jury the scope of the harm caused by the defendant undermines the purpose of punitive damages. The Court has emphasized that the key factor is the reprehensibility of the misconduct. Obviously a state has a legitimate interest in punishing a company that has intentionally defrauded one of its customers. But mass marketing that fraud to thousands or even millions of consumers deserves much greater punishment. Over the course of 50 years of tobacco litigation, cigarette companies have rarely paid out even compensatory damages, not because their conduct has been innocent, but because the industry's aggressive litigation strategy has been successful. If punitive damages are to serve as a deterrent, juries and judges must be able to impose sufficient punishment to deter a company that has evaded accountability for its illegal conduct. The rule Philip Morris proposes would guarantee that punitive damages would never be commensurate with the scope of the harm caused by such defendants.