Products Liability Law Daily Punitive damages award in excess of $20M against Philip Morris survives constitutional challenge
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Wednesday, January 20, 2021

Punitive damages award in excess of $20M against Philip Morris survives constitutional challenge

By Pamela C. Maloney, J.D.

Jury’s punitive damages award of $20.7 million against the tobacco company was not unconstitutionally excessive and did not violate due process.

Based on evidence of Philip Morris’s reprehensible conduct, the U.S. Court of Appeals for the Eleventh Circuit ruled that a jury’s award of $20.7 million in punitive damages to the estate of a worker who died from chronic obstructive pulmonary disease (COPD) caused by decades of smoking cigarettes was not unconstitutionally excessive. The Eleventh Circuit also found that the ratio of punitive to compensatory damages was justified by the tobacco company’s conduct and reflected the treble multiplier sanctioned by the Florida Supreme Court in similar civil cases (Cote v. Philip Morris USA, Inc., January 19, 2021, Martin, B.).

A former cigarette smoker, who developed COPD after decades of smoking, filed a complaint against several tobacco companies, including Philip Morris, setting forth claims for negligence, strict liability, fraudulent concealment, and conspiracy to conceal. The case proceeded to a bifurcated jury trial against Philip Morris. The jury returned a verdict for the former smoker, awarding her $6.25 million in compensatory damages and $20,760,000 in punitive damages. After trial, the court granted Philip Morris’s motion for judgment as a matter of law on the smoker’s fraudulent concealment and conspiracy-to-conceal claims and vacated the $20.7 million punitive damages award. On appeal, the Eleventh Circuit reversed the trial court’s order granting Philip Morris summary judgment on the intentional tort claims and remanded the matter for reinstatement of the jury’s punitive damages award (Cote I) [see Products Liability Law Daily’s January 18, 2019 analysis]. In response to this ruling, Philip Morris filed three motions before the trial court, one of which argued that the punitive damages award should either be vacated or reduced because it was unconstitutionally excessive in violation of due process. The district court denied all three motions and determined that the punitive damages award met the guidelines established by the U.S. Supreme Court for analyzing whether such an award was unconstitutionally excessive [see Products Liability Law Daily’s September 16, 2019 analysis]. Philip Morris appealed.

Effect of Cote I. The Eleventh Circuit recognized that as a preliminary matter, it must decide whether its decision in Cote I barred Philip Morris from arguing that the punitive damages award was unconstitutionally excessive. Under the mandate rule, the district court was free to address, as a matter of first impression, those issues not disposed of on appeal. Nothing in Cote I addressed the issue of whether the punitive damages award was unconstitutionally excessive because the issue of the punitive damages award was taken out of the case before it came before the Eleventh Circuit in Cote I. Thus, the district court was free to address the constitutionality of the punitive damages award on remand. Accordingly, the decision in Cote I did not bar Philip Morris from raising the issue on appeal.

Reprehensibility. The degree of reprehensibility of a defendant’s conduct is the first and most important guidepost to be considered by a court in deciding whether a jury’s punitive damages award is unconstitutionally excessive. In reviewing the five factors developed to assist the court in making this determination, the Eleventh Circuit found that Philip Morris’s actions were reprehensible and, thus, that the award was not unconstitutionally excessive. Specifically, the appellate court found that: (1) the smoker had suffered physical harm-severe COPD-from her addiction to cigarettes; (2) Philip Morris had demonstrated indifference to the health and safety of others by working to suppress information that its products were addictive, by engaging in a massive and effective campaign of disinformation aimed at instilling false doubt about scientific research linking smoking to deadly diseases, and by deliberately targeting young people; (3) Philip Morris’s conduct had involved repeated actions, not an isolated incident, that began in the early 1950s and continued for decades; and (4) the harm to the smoker was the result of intentional malice, trickery, or deceit. Only one factor-the financial vulnerability of the victim-was not argued before, or addressed by, the appellate court, and, thus, was not considered by it as part of its determination that the award was not unconstitutionally excessive.

Ratio.With respect to the second guidepost, the Eleventh Circuit ruled that in light of the reprehensible facts and circumstances of this case, the 3.3-to-1 ratio of punitive to compensatory damages was proper and not unconstitutionally excessive. In so holding, the appellate court rejected Philip Morris’s argument that a 1-to-1 ratio should be required whenever compensatory damages were "substantial," explaining that the U.S. Supreme Court has expressly declined to adopt any bright line ratio. The appellate court also rejected the argument that the findings of excessiveness in two other Engle-progeny cases involving ratios of close to 3-to-1 dictated a similar finding in this case. The cited cases involved R.J. Reynolds, not Philip Morris, and involved different plaintiffs and different facts and circumstances with regard to a tobacco company’s conduct and harm.

Civil penalties. The final guidepost, which considered the difference between punitive damages awarded by the jury and civil penalties authorized or imposed in comparable cases, also weighed in favor of finding the punitive damages award in this case constitutional. The 3.3-to-1 ratio in this case was remarkably close to the treble multiplier that had been recognized by the Florida Supreme Court in comparable civil cases brought under Florida law.

The case is No. 19-14074.

Attorneys: Kenneth S. Byrd (Lieff Cabraser Heimann & Bernstein, LLP) for Judith Berger. Samuel Issacharoff (New York University School of Law) for Bernard Cote. Geoffrey Michael (Arnold & Porter Kaye Scholar, LLP) for Philip Morris U.S., Inc.

Companies: Philip Morris U.S., Inc.

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