June 24, 2010

Oregon Supreme Court Reverses $100 Million Punitive Damages Award Against Philip Morris

Here's a case that proves the adage, "If at first you don't succeed, try, try again."

As readers of this blog will recall, Philip Morris was unable to persuade the Oregon Supreme Court to overturn a $79.5 million punitive damages award in the Williams case, even after the U.S. Supreme Court had seemingly ruled in Philip Morris' favor.

In Schwarz v. Philip Morris, the Oregon Supreme Court has ordered a new trial for nearly the same error at issue in Williams: a defect in the jury instructions on the question of imposing punitive damages for harm to nonparties. In Schwarz, as in Williams, the Oregon Supreme Court ruled that the trial court properly rejected Philip Morris' proposed instruction because it was not "accurate in all respects" as required by Oregon law. But the Schwarz court agreed with Philip Morris that the trial court erred by giving the jury an standard pattern instruction that improperly allowed the jury to use evidence of harm to others in arriving at its punitive damages verdict.

The ruling is a big win for Philip Morris. The jury in Schwarz had awarded $169,000 in compensatory damages and $150 million in punitive damages, reduced to a mere $100 million by the trial court. As a result of the Supreme Court's decision, the compensatory damages award will stand, but the issue of punitive damages will be retried.