May 30, 2006

Court to Hear Philip Morris Smoking Case Appeal

WASHINGTON (Reuters) - The U.S. Supreme Court said on Tuesday that it would hear Philip Morris USA's appeal of a ruling that upheld a $79.5 million punitive damages award to an Oregon smoker's widow.

The justices agreed to review an Oregon Supreme Court ruling that rejected a constitutional challenge by the unit of Altria Group Inc. to the punitive damages awarded to Mayola Williams, whose husband died of lung cancer in 1997.

Jesse Williams had smoked Marlboro cigarettes for more than 40 years and eventually smoked three packs a day. After his death, his widow sued Philip Morris for fraud and negligence.

In 1999, a jury awarded Williams $821,000 in compensatory damages, which was reduced under state law to $521,000, and $79.5 million in punitive damages.

In 2003, the U.S. Supreme Court set aside the award and sent the case back for more review in light of its ruling that punitive damages must be reasonable and proportionate to the harm suffered.

The Oregon Supreme Court again upheld the award. It said Philip Morris and other tobacco companies had engaged in a decades-long scheme to deceive smokers even when they knew cigarettes were dangerous.

In its appeal to the U.S. Supreme Court, Philip Morris argued the state court was wrong to rule the tobacco company's "highly reprehensible" conduct can override the requirement that punitive damages by reasonable related to the harm.

Second, Philip Morris argued the Oregon Supreme Court was wrong to rule that the jury can be permitted to punish the tobacco giant for harms suffered by every Oregonian who smoked its cigarettes.