Only $50 Million
Jacob Sullum | March 22, 2006, 10:49am
Yesterday the U.S. Supreme Court declined to hear Philip Morris' appeal of a $50 million punitive damage award in a case brought by a California man, Richard Boeken, who got lung cancer after smoking Marlboros for decades and died shortly after the verdict at the age of 57. That award, set by a state appeals court, was modest compared to the $3 billion the jury had in mind, and it fell within the 9-to-1 ratio between punitive and compensatory damages the Supreme Court seems to favor as an upper limit. An Oregon tobacco case where the ratio is about 152 to 1 is a more likely candidate for Supreme Court review.
My own view is that the Boeken's widow should not get the $50 million in punitive damages or the $5.5 million in compensatory damages (or the $26 million in interest), for the simple reason that her husband knew smoking might kill him but chose to do it anyway. No amount of outrage about Philip Morris' artful evasions can change that basic fact.
Putting aside the assumption-of-risk issue, this case highlights some of the problems with punitive damages. To begin with, they are explicitly intended to punish bad behavior, which is usually the function of the criminal justice system, as opposed to compensating victims of the bad behavior, which is supposedly the focus of the civil justice system. Hence it does not really make sense that the plaintiffs are the ones who get the money, which is essentially a fine by another name. More important, defendants do not receive the same protections they would if they faced criminal prosecution. In addition to a lower standard of proof and fewer procedural safeguards, there is no statutorily specified limit to the punishment, which is why the Supreme Court has gotten into the business of second-guessing punitive damage awards, finding that they violate the 14th Amendment's guarantee of due process when they get too high.
At the same time, as Justice Antonin Scalia has emphasized, any ceiling (such as the 9-to-1 guideline) is bound to be arbitrary. Maybe the problem is that fines should be imposed according to laws that establish upper limits in advance, instead of being set by jurors who pull a number out of thin air to express their indignation.
independent worm | March 22, 2006, 11:47am | #
Jennifer, I think that's exactly right. There's a reason why companies aren't allowed to make false claims about their products, nor to conceal known, harmful effects from the public.
People quickly say "well you chose to use that product, so let the chips fall where they may."
But they don't say "well, you chose to manufacture that product, and when you figured out it could kill people, instead of warning them and letting THOSE chips fall where THEY may, you lied to prevent that happening."
I'm not going to get into the factual debate about who said what or when. A jury found that it happened, and that's all I really know. Yes, they can be fooled, but lawyers aren't magic wands. If we were, all cases would end in a draw, since the lawyer-magic emanating from both sides would cancel each other out, and the jurors wouldn't know what to think.
As to Ron's assertion about how the plaintiff shouldn't get the money, well.... they were the ones who were harmed, so if not them, then who?
Oh, and if you make that the rule, that plaintiffs don't get it, guess who's next in line? The state! You betcha! And if you think lawsuits are out of control now, you ain't Spitzer'd nothing yet. Implement that rule, and half the citizens of America will be public employees. The police will wear solid gold boots and carry diamond studded night sticks. In the name of national security. And no, even with all that extra money it'd rake in, the govt won't lower your taxes any.
Gene | March 22, 2006, 2:31pm | #
Some quotes from those who actually heard the evidence:
"The very conduct that injured Boeken was directed at all smokers in the United States, repeated over many years with knowledge of the risk to human life and health, and is probative of intentional deceit. The national marketing of a defective product, knowing that ordinary consumers expect it to be less hazardous, knowing that thousands of people will die due to their addiction, is probative of a willful and conscious disregard of the danger to human life. . . .
"[T]he extreme reprehensibility of increasing addictiveness by manipulating additives, gaining smokers by fraud, and marketing a product that is more dangerous than ordinary consumers expect, knowing that serious physical injury and death will result in many smokers, does justify a ratio of at least 9 to 1. We round off the figure at $50 million."
-- California Supreme Court, in the Boeken appeal. (April, 2005)
http://caselaw.findlaw.com/data2/californiastatecases/B152959A.DOC
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"Effective deterrence involves more than just prohibiting conduct, and requires changing mindsets. Philip Morris has, in the past, demonstrated a willingness and ability to achieve its ends by creative means, and the Court cannot predict what those means might in the future be for a corporation with enormous resources profiting from the sale of a life threatening product. Philip Morris can, of course, continue to lawfully sell its product, but it must do so with a mindset far different from that evidenced by its corporate history to date, Such a sea change may have began to occur at Philip Morris, but, in the exercise of independent judgment in light of all the evidence at trial, the Court finds that deterrence in the form of substantial punitive damages is both necessary and proper to prevent Philip Morris's return to the old mindset or its crafting of ever-more ingenious ways to generate wealth through tortious means. . .
"Philip Morris correctly argues that "[t]he likelihood of future damage awards may also be considered" in assessing the reasonableness of a punitive damages award. . . . Given the evidence presented at trial here, and the fact that Philip Morris refused to accept even a scintilla of responsibility for the harm it has done to Richard Boeken and other similarly situated consumers of its products, the Court does not doubt that Philip Morris will continue to incur large punitive damages awards in California and elsewhere. Given the law that a party is fully liable for injuries to another when that party's tortious misconduct constitutes a substantial contributing factor to the injury suffered, it appears highly likely that future juries will continue to hold Philip Morris liable for large compensatory awards, even when they believe the plaintiff's conduct (choice to smoke) also constitutes a substantial factor contributing to the injuries. In this setting, when Philip Morris refuses to accept any responsibility, moral or otherwise, it is easy to see how juries will predictably find the company deserving of substantial punishment.
"If Philip Morris continues to make the argument, attempted with this jury, that even though its highest executives may have lied to the American public about the risks of cigarettes, it bears absolutely no moral or legal responsibility for the deaths of people who consumed its products, because every consumer should have known from the outset that the executives were not truthful, then, in this Court's view based on the evidence examined through weeks of trial, Philip Morris is entirely correct that it will continue to incur substantial future compensatory and punitive damage awards by other juries."
-- Superior Court Judge Charles W. McCoy, in his ruling which cut the Boeken jury's damage award from $3B to $100M, and denied Philip Morris' request for a retrial, Aug. 9, 2001.
http://www.tobacco.org/Documents/010806boeken.html
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"If you are deliberately getting kids addicted, then don't you DARE try to use 'individual responsibility' as a defense. . . . .
"Then I thought about how many people these guys have killed. And I thought $3 billion doesn't even begin to do justice for all the evil they've done."
-- Boeken jusror Peter Brosnan, in a letter to Elizabeth Whelan (June, 2001)
