March 20, 2006

Court allows $50 mln award vs Philip Morris

By James Vicini

WASHINGTON (Reuters) - The U.S. Supreme Court declined to review on Monday a $50 million punitive damages award against Altria Group Inc's Philip Morris unit in the case of a longtime smoker who was diagnosed with lung cancer and then died.

The lawsuit against the tobacco company had been filed in California state court by Richard Boeken, who said he smoked two packs of Marlboro cigarettes a day for decades. Diagnosed with lung cancer in 1999, he was 57 when he died in 2002.

A jury in Los Angeles awarded Boeken a record $3 billion in punitive damages and $5.5 million in compensatory damages. The trial judge then reduced the punitive damages award to $100 million.

A California appeals court last year further reduced the punitive damages award to $50 million, and both Philip Morris and Boeken's widow appealed to the Supreme Court.

Philip Morris told the high court it cannot be held liable under state law for failing to provide additional warnings about the dangers of smoking, beyond what is required under the federally mandated warning labels on cigarette packs.

The Federal Cigarette Labeling and Advertising Act pre-empts such state law claims, it said. The lawsuit cited the product liability theory, known as the "consumer expectations test," that cigarettes were more dangerous than consumers realized, despite the warnings on each pack.

Philip Morris also said the $50 million punitive damages award to a single plaintiff was "unconstitutionally excessive." The company's appeal was supported by the Chamber of Commerce business group.

Attorneys for Boeken's widow agreed the Supreme Court should review the punitive damages judgment because of conflicting lower court rulings on what constitutes "gross excessiveness." The federal pre-emption issue may also be worthy of Supreme Court review, they said.

Her attorneys said in a separate appeal that the Supreme Court should clarify that a defendant's illicit profit and misconduct represented an important factor in reviewing awards of punitive damages.

They challenged the presumption stemming from a 2003 Supreme Court ruling that punitive damages compared to compensatory damages can never exceed a 10-to-1 ratio. They said larger ratios may be necessary to deter intentional, repetitive and reprehensible misconduct.

The Supreme Court rejected both appeals without any comment or recorded dissent.