December 5, 2011

Oregon Supreme Court rules against Philip Morris (again)

Believe it or not, the Williams case is still going.  For anyone who missed it, Williams is the case in which an Oregon jury awarded $821,500 in compensatory damages and $79.5 million in punitive damages.  The case bounced around in the appellate courts for years; the Oregon Supreme Court kept ruling against Philip Morris and the U.S. Supreme Court kept granting certiorari.  On the third trip to the U.S. Supreme Court, certiorari was dismissed after oral argument, leaving the judgment intact.

Philip Morris paid the plaintiffs in 2009.  That payment included 40 percent of the punitive damages award.  The plaintiffs only got 40 percent because Oregon has a split recovery statute that requires the defendant to pay 60 percent of any punitive damages award to the state (as discussed here.)

Philip Morris argued that it shouldn't have to pay the state in this case because Oregon gave up its right to collect further punitive damages from Philip Morris in 1998, when Oregon signed on to a master settlement between the states and the tobacco companies.  Philip Morris won that argument in the intermediate appellate court but, as reported by the Associated Press, the Oregon Supreme Court reversed and ordered Philip Morris to pay Oregon it's 60 percent share of the $79.5 million punitive damages award.

As a result of this decision and the California Supreme Court's denial of review in Bullock, Philip Morris's parent Altria Group Inc. will record a $119 million fourth-quarter charge, per this report in today's Wall Street Journal.