Punitive Damages Redux: How Many Times Does Oregon Get to Punish Big Tobacco?

Abstract

This article previews the issues and arguments in Phillip Morris USA v. Williams, on the Supreme Court docket for the 2008-09 Term. After nine years of litigation and three trips to the United States Supreme Court, the Court is now asked to determine whether the Oregon state court acted properly on remand from the Court’s 2007 decision concerning constitutional standards for state jury instructions on punitive damages.

The central question the Court will address is whether the Oregon court, on remand from the Supreme Court’s most recent decision clarifying constitutional standards for jury instructions on punitive damages, may apply a state procedural rule to foreclose the defendant’s ability to obtain a new trial applying those constitutional requirements.

Philip Morris’s third trip to the United States Supreme Court on appeal from the Oregon courts turns on a rather arcane point of Oregon state law involving jury instructions. At the heart of this case, however, is the fundamental question of how state courts are required to respond when the United States Supreme Court issues an opinion and then remands the case to state court for further disposition in light of its pronouncements.

Substantially at issue is whether the Oregon Supreme Court properly interpreted and applied the Supreme Court’s directions on remand from its decision in Williams II. Philip Morris contends that the Oregon Supreme Court disobeyed the U.S. Supreme’s Court remand instructions. Mrs. Williams, on the other hand, contends that the Oregon Supreme Court did act appropriately on remand, did follow the Supreme Court’s directions, and that Philip Morris (in essence) simply does not like the outcome.It is perhaps easier to suggest what the Williams III opinion will not decide.

The Court will not be articulating any new constitutional standards governing jury instructions relating to punitive damages, nor will the Court be describing any constitutional limitations on such jury instructions. There will be no discussion of harm-to-other instructions, or reprehensibility instructions. And, the Court most certainly will not be discussing any constitutional standards for assessing the excessiveness of punitive damage awards, because that patently is not at issue in this appeal.

Instead, the Court merely has to decide whether the Oregon Supreme Court followed its directions on the remand from Williams II. Because the Supreme Court frequently decides and remands cases back to state courts for further disposition, this Williams III appeal may provide a basis for the Supreme Court to clarify ground rules that state courts must follow concerning Supreme Court decisions after remand.

At the heart of this litigation is Philip Morris’s contention that when the Supreme Court decides a federal constitutional claim, then on remand the state court must attend to that federal constitutional standard as a first matter. The competing argument, pressed by Mrs. Williams, is that state courts are at liberty to consider state law issues first, and if those state law issues are dispositive, then there is no need to address the alleged constitutional defect.

It remains to be seen how broadly or narrowly the Court will cabin this debate. On the one hand, the Court may narrowly decide this case if it concludes that pursuant to Williams II, Mrs. Williams had a right to request a review of the proposed jury instructions based on Oregon’s “clear and correct in all respects” requirement, and that the state court could consider this argument before any federal constitutional claim. This would be the most constrained application of Williams II, and any Court holdings pursuant to such a construction would most likely be limited to this particular case and Oregon’s idiosyncratic jury instruction rule.

On the other hand, the Supreme Court could use this appeal as a broader opportunity to discuss the obligations of state courts on remand, and to provide clarifying principles governing when and how state courts must consider and apply new constitutional standards announced in Supreme Court decisions.

In this regard, the U.S. Supreme Court might opine the extent to which it believes that the Oregon courts strayed off the federal reservation in order to preserve a state jury instruction requirement.What hangs in the balance, of course, is whether Philip Morris will finally get a new trial, or finally be liable for what has grown to $145 million in punitive damages.