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June 19, 2007

This is one of a series of articles under the by line “Butler on Bad Faith” originally published in Mealey’s Litigation Report: Insurance Bad Faith, Vol. 21, #4, p. 32 (June 19, 2007).

[Editor’s Note: John V. Garaffa is a senior associate with the Law Firm of Butler Weihmuller Katz Craig LLP with offices in Miami, Mobile, Tallahassee, and Tampa. He devotes his practice to the litigation of property coverage issues. This commentary, other than the quoted material, are the author’s opinions; not his law firm’s, and not Mealey’s Publications. Copyright © 2007 by author. Responses are welcome.]

On February 20, 2007, the United States Supreme Court issued its much-anticipated second opinion in the negligence and fraud suit brought by the widow of Jesse Williams against Philip Morris.1 Mrs. Williams had asserted that the company had purposefully taken actions to obscure the dangers of smoking and, as a result, her husband was deceived into believing smoking was not harmful, a 47 year delusion that ultimately led to his illness and death.

The Oregon jury awarded Mrs. Williams $21,485.80 in economic damages, $800,000 in non-economic damages, and $79.5 million in punitive damages. While this windfall was no doubt exciting for Mrs. Williams, her counsel, their potential heirs and the State of Oregon2 the punitive damage award was 96.7 times the jury’s award of economic and non-economic damages. On its face, the enormity of the award seemed at odds with the Due Process protections established by the Supreme Court in BMW of North America, Inc. v. Gore and State Farm Mutual Automobile Insurance Co. v. Campbell.3

Following the verdict, the trial court reduced the punitive damages award on Due Process grounds. On appeal, the Oregon Court of Appeals reversed and remanded with instructions to enter judgment on jury verdict.4 The Oregon Supreme Court denied review.5 The U.S. Supreme Court granted Phillip Morris’s petition for a writ of certiorari6 and, not surprisingly, vacated the judgment, and remanded to the Oregon Court of Appeals for reconsideration in light of Campbell.7 In decisions that appear to reflect a novel view of the dictates of Campbell, the Oregon Court of Appeals reaffirmed its prior ruling and held that, in its opinion, under the guidance provided by the Supreme Court, the award was not excessive.8 The Oregon Supreme Court affirmed.9

The U.S. Supreme Court once again granted a petition for writ of certiorari by Phillip Morris.10 This time the Supreme Court’s grant of Certiorari identified two issues to be examined on appeal from the Oregon Court:

  1. Whether the Oregon courts deprived Philip Morris of due process by permitting the jury to punish Philip Morris for harms to non-parties.
  2. Whether, in considering a claim that a punitive award is unconstitutionally excessive, a court may disregard the constitutional requirement that punitive damages be reasonably related to the plaintiff’s harm whenever it concludes that
  • the jury could have found the defendant’s conduct to be highly reprehensible; and
  • the conduct could come within the statutory definition of a crime.

The stage appeared set for a decision that would clarify the constitutional limits on punitive damages and shed much needed light on the nuances of the Court’s earlier opinions. Unfortunately, instead of illumination, the Supreme Court’s decision leaves the parameters of Due Process protections against excessive punitive damages murkier than before.

In Gore and Campbell,11 the Supreme Court held that the Due Process Clause of the Fourteenth Amendment prohibits the imposition of grossly excessive or arbitrary punishments.12 The Court declined to provide a bright line concerning when a award would violate constitutional protections and instead provided “guideposts” for appellate courts to follow: (1) the degree of reprehensibility of the defendant’s misconduct;13 (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.14 Unfortunately, as the Oregon Supreme Court’s decision15 demonstrated, guideposts offer little constitutional protection when an appellate court has already determined where it wants to go.

In defense of its earlier decision that the jury’s award was constitutional, the Oregon appellate court concentrated on the first Gore guidepost, reprehensibility as the central consideration in evaluating a punitive damage award. It then found that, in assessing the reprehensibility of Philip Morris’s actions, the jury could properly consider that the defendant’s conduct caused or could have caused similar harm to other Oregonians. In an exercise of appellate fact-finding, the Oregon court declared “Philip Morris’ fraudulent scheme would have kept many Oregonians smoking past the point when they would otherwise have quit. Some of those smokers would eventually become ill; some would die. Philip Morris’s deceit thus would, naturally and inevitably, lead to significant injury or death.”

On appeal to the Oregon Supreme Court, Phillip Morris attacked the appellate court’s advocacy on behalf of Mrs. Williams. It pointed out that Mrs. Williams had presented no evidence that anyone else had been “deceived” by its purported conduct. Phillip Morris also noted that, even if such evidence had been presented at trial, the Campbell court had rejected the use of evidence of injury to others as a basis for punitive damages.

The Oregon Supreme Court rejected both the defendant’s complaint regarding the lack of evidence of harm to others and the apparent direction provided by the Campbell Court. It found that the evidence of harm to others could be considered in assessing the amount of punitive damages. While no evidence of such harm had been presented, the court ruled that the jury could “infer” such damage was occurring as Phillip Morris, a for-profit corporation, would not have spend over 40 years of time, effort, and money to deceive people, unless it thought it was succeeding.16 The Court distinguished Campbell’s rejection of evidence of harm to others as a basis of determining the amount of punitive damages. The Oregon Court noted that, in Campbell, the harm to others was objectionable because it committed outside Utah, while in this case, the Court was protecting presumptively deceived Oregonians.

Notwithstanding the Oregon Supreme Court’s appellate fact-finding, the fact remained that the punitive damage award before it was 96.7 times the jury’s award of economic and non-economic damages. The second Gore guidepost required the Oregon court to consider the ratio between the compensatory and punitive damage awards. The U.S. Supreme Court in Campbell held that a defendant’s punishment must be reasonable and proportionate to the amount of harm to the plaintiff and to the general damages actually recovered.17 The Court in Campbell also advised “Our jurisprudence and the principles it has now established demonstrate, however, that, in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process.18

Undaunted, the Oregon Court advised that “only chance” saved Philip Morris from a much higher compensatory damage award. The court found that actual damages, the cost to treat Mr. Williams, “could have ballooned ten times had the Plaintiff not died so quickly.”19 The court “reasoned” that it was proper to consider these potential damages and the inferred harm to other citizens when determining whether the punitive damage award meets constitutional muster and that, regardless of the actual damages, the extreme reprehensibility of the defendant’s behavior warranted the severe punishment of the jury’s award. In other words, in the Oregon Court’s view, reprehensibility alone can justify a compensatory/punitive damage ratio nearing triple digits. 

The United States Supreme Court reversed the decision of the Oregon court, finding that a punitive damage award based in part on the jury’s desire to punish the defendant for harm to non-parties amounts to a taking of property from defendant without due process. While this holding appears to strengthen the Due Process protections afforded by Campbell, the Majority’s discussion of the issue makes it clear that this protection is, at best, illusory.

Justice Breyer begins his opinion by stating that the Constitution’s Due Process Clause forbids a State to use a punitive damages award to punish a defendant for harm that it inflicts upon strangers to the litigation. This seems no more than common sense. As the Court notes, previous Supreme Court decisions have held that the Due Process Clause prohibits a State from punishing an individual without first providing that individual with “an opportunity to present every available defense.”20In this case, an argument for punitive damages based upon similar harm to other, unnamed Oregonians, presumes that the unknown victims were deceived in the same manner as Mr. Williams. William Morris was never given the opportunity to show that these phantom victims knew that smoking was dangerous and either were unaware or did not rely on William Morris’s alleged statements to the contrary.

Setting aside the Constitutional requirement that Phillip Morris be given an opportunity to defend its actions as to each alleged victim, the Court noted that the consideration of unnamed victims renders the resulting punitive damage award inherently speculative. Again, this seems to be common sense. Without proper proof, the jury has no idea how many alleged victims are at issue, whether they were injured, and whether their injury resulted from the actions of the defendant or from their own desire to smoke despite common knowledge of the dangers of that practice. This speculation serves to magnify the uncertainty and arbitrariness that have historically raised due process concerns with the award of punitive damages.21

If readers were to stop here, they would be forgiven for concluding that the Due Process Clause prohibits the jury from increasing the amount of a punitive damage award based upon the actual and potential harm to other, unnamed victims. They would be wrong.

In Phillip Morris, Mrs. Williams asserted that she was free to show harm to other victims because such evidence shows that the defendant’s alleged behavior is more reprehensible than it would be if the plaintiff were the sole victim of the defendant’s scheme. The Supreme Court agreed, finding that evidence of actual or potential harm to nonparties can help to show that the conduct that harmed the plaintiff also posed a substantial risk of harm to the general public and so was particularly reprehensible.

The problem with the Court’s discussion is that Phillip Morris was defending allegations that it had purposely taken actions to deceive Mr. Williams and that Mr. Williams was, in fact, deceived. There is no record that evidence regarding other victims was presented at trial. In effect, the Court holds that the jury may not punish a defendant based upon rank speculation as to actual or potential harm to unnamed and unknown victims as that violates Due Process. At the same time, the jury can engage in precisely the same speculation to determine whether the defendant’s conduct was reprehensible without violating Due Process.

The Court’s distinction ignores the fact that, under its prior decisions, the constitutionality of a punitive damage award is to be measured by reference to three guideposts: (1) the degree of reprehensibility (2) the ratio between the actual or potential harm suffered by the plaintiff (compensatory damage) and the punitive damages award; and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.22 While reprehensibility seems to be a prerequisite for any award of punitive damages, and the analysis of the final ratio between compensatory and punitive damages a useful final check on arbitrary awards, the Court’s earlier decisions have never clarified that relationship. As a consequence, decisions like that of the Oregon Supreme Court have seized upon reprehensibility as the most significant factor in weighing the constitutionality of the punitive damage award.

Thus, under the reasoning of the Oregon Court, a decision by the jury (or the appellate court) that the defendant’s conduct was particularly reprehensible will justify greatly enhanced punishment, notwithstanding the fact that the finding as to reprehensibility was based upon speculative harm to non-parties. Despite this reality, the Court cautions that a jury may not go further than a finding as to reprehensibility and may not use a verdict for punitive damages to punish a defendant directly on account of harm it is alleged to have done to nonparties.

The Court holds that the Due Process Clause requires states to provide assurance that juries are not asking the “wrong question”, in other words, seeking to punish for harm caused strangers rather than simply determining reprehensibility. The Court’s reasoning seems inexplicable in light of the practical effect of allowing the jury to speculate on reprehensibility. As the punitive damage award may be enhanced based upon reprehensibility, and that award will increase the punishment meted out to the defendant, the Court’s distinction is, at best, unclear.

Mrs. Williams urged the Court to uphold the Oregon Supreme Court’s decision on the grounds that it was actually based upon a finding of reprehensibility and not based upon punishment for actual or potential harm to unnamed parties. The Supreme Court disagreed. It noted that the Oregon Court had found the jury must be able to punish the defendant for harm to non-parties, stating that if “a jury cannot punish for the conduct, then it is difficult to see why it may consider it at all.”23 The Oregon Court also stated that “[i]t is unclear to us how a jury could ‘consider’ harm to others, yet withhold that consideration from the punishment calculus.”24 Given the role of reprehensibility in fashioning the punitive damage award, the Oregon Court’s decision begs for clear guidance from the Supreme Court on how reprehensibility can be used in a constitutional way.

The Supreme Court’s decision fails to provide that guidance. Instead, Justice Breyer merely responds, “We did not previously hold explicitly that a jury may not punish for the harm caused others. But we do so hold now. We do not agree with the Oregon Court’s second statement. We have explained why we believe the Due Process Clause prohibits a state’s inflicting punishment for harm caused strangers to the litigation.”25 For the first, time the reader may be inclined to feel sympathy for the Oregon Court whose decision is apparently reversed for its expression of the obvious question of how the jury can consider harm to others without unconstitutionally punishing the defendant for that harm.

One is left with the question of what the Supreme Court expects the lower courts to actually do. The Court states the question directly: “How can we know whether a jury, in taking account of harm caused others under the rubric of reprehensibility, also seeks to punish the defendant for having caused injury to others?” The Court’s response however could not be less helpful:

“Our answer is that state courts cannot authorize procedures that create an unreasonable and unnecessary risk of any such confusion occurring. In particular, we believe that where the risk of that misunderstanding is a significant one-because, for instance, of the sort of evidence that was introduced at trial or the kinds of argument the plaintiff made to the jury-a court, upon request, must protect against that risk. Although the States have some flexibility to determine what kind of procedures they will implement, federal constitutional law obligates them to provide some form of protection in appropriate cases.”

As the reprehensibility guidepost appears to authorize greater punishment for real or potential harm to others, what that protection could possibly be remains a mystery. The Court appears to be saying that a jury may not say “we are awarding $79.5 million in punitive damages because you harmed other, unnamed parties,” but it can say “we are awarding $79.5 million in punitive damages because your behavior was particularly reprehensible (because it harmed other, unnamed parties.)”26 Unless the reprehensibility guidepost has a different function than previously understood, in either case the punitive damage award will be increased to reflect unproved harm to others who were not parties to the dispute before the court.

The state courts now have the unenviable position of instructing the jury how to explain the increased punishment they award in a constitutionally “correct” way. In deference to the majority in Phillip Morris, this particular Gordian knot is not new. In Campbell, the U.S. Supreme Court approved consideration of the impact of defendant’s conduct on non-parties in the context of the reprehensibility guidepost. However, the Campbell Court cautioned that due process does not permit courts, in the calculation of punitive damages, to adjudicate the merits of other parties’ hypothetical claims against a defendant under the guise of the reprehensibility analysis.27

The dispute between Mrs. Williams and Phillip Morris is on its way back to the Oregon Courts. Will consideration of the majority’s new “standard” for the treatment of evidence of harm to unnamed non-parties lead the Oregon Court to conclude there is a need for a new trial, or a change in the level of the punitive damage award? Given the language of the Oregon Court’s earlier opinion, this seems, at best, a faint hope.

In its previous opinion, the Oregon Supreme Court made it clear that it believed the reprehensibility of the defendant’s conduct justified the full amount of the jury’s punitive damage award. The court held:

Again, we construe all facts in favor of plaintiff, the party in whose favor the jury ruled. Doing so, there can be no dispute that Philip Morris’s conduct was extraordinarily reprehensible. Philip Morris knew that smoking caused serious and sometimes fatal disease, but it nevertheless spread false or misleading information to suggest to the public that doubts remained about that issue. It deliberately did so to keep smokers smoking, knowing that it was putting the smokers’ health and lives at risk, and it continued to do so for nearly half a century.28

 Addressing the potential limitation on punitive damage awards imposed by the ratio between compensatory and punitive damages, the Oregon Court made it clear that it did not believe that guidepost offers any limitation at all when the defendant’s conduct is deemed “extraordinarily reprehensible.” The court held:

The Gore guideposts are not bright-line tests. See, e.g., Campbell, 538 U.S. at 425, 123 S.Ct. 1513 (“there are no rigid benchmarks that a punitive damages award may not surpass”); see also Gore, 517 U.S. at 582, 116 S.Ct. 1589 (“we have consistently rejected the notion that the constitutional line is marked by a simple mathematical formula”). In other words, the guideposts are only that-guideposts. Gore also referred to them as indicia. 517 U.S. at 575, 116 S.Ct. 1589 (reprehensibility is “most important indicium”); id. at 580, 116 S.Ct. 1589 (ratio is “second and perhaps most commonly cited indicium”); id. at 583, 116 S.Ct. 1589 (comparable sanctions “provides a third indicium for excessiveness”). Campbell specifically contemplated that some awards exceeding single-digit ratios would satisfy due process. See id. at 425, 123 S.Ct. 1513 (“in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process”). Single-digit ratios may mark the boundary in ordinary cases, but the absence of bright-line rules necessarily suggests that the other two guideposts-reprehensibility and comparable sanctions-can provide a basis for overriding the concern that may arise from a double-digit ratio.29

Given the strong feelings of the Oregon Supreme Court, it seems likely that the Oregon Court will simply craft a new opinion that is carefully drafted in terms of reprehensibility. It will take pains to cite those portions of the record that support its view that the jury properly entered an award that was based upon the defendant’s reprehensibility and declare that it is satisfied that the jury did not impermissibly punish William Morris for the alleged harm to others. It will again hold that the extreme reprehensibility of the defendant’s conduct provides a constitutional basis for the nearly triple-digit ratio between compensatory and punitive damages. Phillip Morris will again appeal. This time the question is likely to be:

Whether, in considering a claim that a punitive award is unconstitutionally excessive, a court may disregard the constitutional requirement that punitive damages be reasonably related to the plaintiff’s harm whenever it concludes that the jury could have found the defendant’s conduct to be highly reprehensible.

Perhaps then the Supreme Court, in its third opinion on this case, will rule on the constitutionality of an award where the ratio between compensatory and punitive damages approaches triple digits.

Coaxing Guidance from Phillip Morris

At the end of its opinion, the majority remands the case so that the Oregon Supreme Court can apply the “standard” the Court has devised regarding consideration of harm to others. It does not address whether the award is constitutionally “grossly excessive” because, in the Court’s words, “the application of this standard may lead to the need for a new trial, or a change in the level of the punitive damages award.” This observation only makes sense if the Court assumed that the amount of the award resulted from the desire to punish the defendant for harm to parties not before the Court. Given the Oregon Court’s stated view that reprehensibility alone warranted the full amount of the punitive damage award, this assumption seems to be without basis.

The Court’s decision appears to provide no useful guidance on how to treat evidence of harm to other parties so that the resulting punitive damage award does not include impermissible punishment for harm to non-parties. There may however be an interpretation that makes sense of the Court’s nuance. What if the Gore guideposts are not equal considerations? What if the guideposts are meant to be applied as successive steps of analysis?

If the guideposts are understood and applied in this way, the reviewing court would first consider reprehensibility to see if the jury’s determination concerning the need for punitive damages is justified. The appellate court will not use reprehensibility to judge the amount of punitive damages, but instead to determine whether punitive damages are warranted in any amount. Some support for this view is found on the Supreme Court’s earlier opinions. In Gore, the Supreme Court advised that the appellate court should presume a plaintiff has been made whole for his injuries by compensatory damages. According to the Court in Gore, punitive damages should only be awarded if the defendant’s culpability, after having paid compensatory damages, is so reprehensible as to warrant the imposition of further sanctions to achieve punishment or deterrence.30 In this exercise, all the members of the Supreme Court appear to agree that the jury’s consideration of harm to other unnamed parties is appropriate.

Following the reprehensibility analysis, the reviewing court would examine the ratio of compensatory to punitive damages. As the jury cannot constitutionally award compensatory damages for harm to others, the amount of actual compensatory damages awarded to the plaintiff should act as a constitutional anchor, limiting the arbitrary imposition of punitive damages that might otherwise be awarded as unconstitutional punishment for actual harm to parties not before the court. How high can those punitive damages go? As the Court stated in Gore: “Our jurisprudence and the principles it has now established demonstrate, however, that, in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process31

Justice Breyer’s opinion for the majority raises new doubts about the permissible role of purported injuries to non-parties in the calculation of punitive damage awards. If such damage is properly used to determine reprehensibility, and the degree of reprehensibility can be used to enhance the award, then harm to non-parties will, by definition, be used to punish the defendant. Nonetheless, the Court cautions that such punishment violates due process. The Court in Gore warned that due process does not permit courts, in the calculation of punitive damages, to adjudicate the merits of other parties’ hypothetical claims against a defendant under the guise of the reprehensibility analysis. Yet this is precisely what the majority’s opinion invites.

The Court declined to rule on the excessiveness of the award because the application of the Court’s new “standard” may lead to the need for a new trial, or a change in the level of the punitive damages award. This appears to signal that, left unchanged, the award violates due process. However, without further guidance from the Court on the proper application of its guideposts, that remains unclear.

A review of the dissenting opinions finds the Court itself is struggling with the meaning and application of its prior decisions. Justice Steven found the Oregon Court’s decision “faithfully applied the reasoning” in the Court’s earlier opinions on punitive damages “to the egregious facts” disclosed by the record. Justice Ginsburg, in a dissenting opinion joined by Justices Scalia and Thomas, found that the Oregon court properly affirmed an award based upon the reprehensibility of the defendant’s conduct. Justice Ginsburg further observed “I would accord more respectful treatment to the proceedings and dispositions of state courts that sought diligently to adhere to our changing, less than crystalline precedent.” Writing alone, Justice Thomas states that he does not agree that the Constitution constrains the size of punitive damages awards at all.

The record of Williams v. Phillip Morris illustrates the degree of confusion noted by Justice Ginsburg. As currently “understood,” the Court’s guideposts offer little guidance to lower courts and invite the very arbitrariness prohibited by the Constitution. Clarification of the seemingly ephemeral due process protections is overdue. In light of the Court’s new rule regarding punishment for harm to non-parties, it seems that the only way to guard against impermissible punishment is hold that the Gore guideposts should be applied as successive steps of analysis.

A finding as to reprehensibility should be the first step in the process. If the defendant’s behavior is extremely reprehensible, then an award of punitive damages is appropriate. The appellate court would then examine the ratio of compensatory to punitive damages. While it is clear that degrees of reprehensibility will affect the amount of punitive damages awarded, the amount of actual compensatory damages awarded to the plaintiff should act as a constitutional limitation on the arbitrary imposition of punitive damages that might otherwise be awarded as unconstitutional punishment for actual harm to non-parties. Consideration of other civil penalties, the third Gore guidepost, would act as an additional check on the arbitrary imposition of punitive damage. In light of existing precedent, awards exceeding a single-digit ratio between punitive and compensatory damages would appear to signal that the jury has exceeded the Constitution’s prohibition against punishment for real or presumed harm to non-parties.

The Supreme Court’s decision purports to create a “new standard” to protect defendants from unconstitutional punishment for perceived harm to non-parties. It is a standard that even some of the Court’s own members do not understand. No guidance is provided to lower courts that will have to implement it. As a practical matter, the Court’s opinion invites jurors and state appellate courts to engage in deceptive “reprehensibility” analysis when they desire to unconstitutionally punish a defendant for perceived harm to non-parties. It seems clear that, without further guidance, the extent of due process protections against arbitrary and excessive awards will remain “less than crystalline.” Unfortunately, after the Court’s opinion, that is the only thing that seems clear.

_____________

ENDNOTES 

  1. Philip Morris USA v. Williams, 127 S.Ct. 1057 (U.S. 2007).
  2. The most significant potential beneficiary of the punitive damage award was the State of Oregon. Under the terms of O.R.S. § 31.735 (1) (a), forty percent of a punitive damage award is paid to the Plaintiff. Sixty percent goes to the Criminal Injuries Compensation Account of the Department of Justice Crime Victims’ Assistance Section. The attorney for the prevailing party takes his or her share from the amount due the plaintiff. Regardless of the agreement between the plaintiff and his or her counsel, the attorneys share is limited to no more than 20 percent of the punitive damage award, or half the amount due the plaintiff.
  3. BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996). State Farm Mutual Automobile Ins. Co. v. Campbell, 538 U.S. 408 (2003). In Campbell the Supreme Court recognized the States’ legitimate interests underlying punitive damages, but found excessive awards of punitive damages do not further a legitimate state purpose and constitute an arbitrary deprivation of property in violation of the Due Process Clause of the Fourteenth Amendment. See also: John J. , Crossing the Line: Punitive Damages and the Supreme Court, Mealey’s Litigation Report – Insurance Bad Faith, Volume 16, Issue 2, May 15, 2002, and John J. and William R. Lewis, The Campbell Cap, Mealey’s Litigation Report – Insurance Bad Faith, Volume 17, Issue 2, May 21, 2003.
  4. Williams v. Philip Morris Inc., 48 P.3d 824, (Or.App.,2002).
  5. Williams v. Philip Morris, Inc., 61 P.3d 938 (Or., 2002).
  6. Philip Morris USA Inc. v. Williams, 540 U.S. 801 (2003).
  7. State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408 (2003).
  8. Williams v. Philip Morris Inc., 92 P.3d 126 (Or.App., 2004).
  9. Williams v. Philip Morris Inc., 127 P.3d 1165, (Or., 2006).
  10. Philip Morris USA v. Williams, 126 S.Ct. 2329, 164 L.Ed.2d 838, (U.S., 2006).
  11. BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996). State Farm Mutual Automobile Ins. Co. v. Campbell, 538 U.S. 408, (2003).
  12. See Campbell supra at 417, citing Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 42 (1991) . “To the extent an award is grossly excessive, it furthers no legitimate purpose and constitutes an arbitrary deprivation of property.” See also: John J. and Matthew W. Peaire, Anger and Punishment, Mealey’s Litigation Report – Insurance Bad Faith, Volume 16, Issue 18, January 22, 2003.
  13. In defining the reprehensibility portion of the test, the court distinguished between “purely economic harm” and “conduct involving personal injury or indifference to or reckless disregard for the health and safety of others.” Gore, 116 S.Ct. at 1599. The court also noted that purely economic harm is not as reprehensible, but that if done intentionally through affirmative actions it can warrant a severe penalty.
  14. Gore supra, at 575. See also: John J. and Eric W. Dickey, Detours: Campbell Stops at the Willow Inn, Mealey’s Litigation Report – Insurance Bad Faith, Volume 18, Issue 24, April 10, 2005.
  15. Williams v. Philip Morris Inc., 127 P.3d 1165, (Or. 2006).
  16. Williams v. Philip Morris Inc., 127 P.3d 1165, Fn 1 (Or. Feb 02, 2006).
  17. Campbell, supra at 426.
  18. Campbell, supra at 425.
  19. Williams v. Philip Morris Inc., 127 P.3d at 1180.
  20. Lindsey v. Normet, 405 U.S. 56, 66, (U.S, 1972).
  21. BMW of North America, Inc. v. Gore, 517 U.S. 559 (U.S. 1996), State Farm Mut. Automobile Ins. Co. v. Campbell, 538 U.S. 408 (U.S. 2003).
  22.  Gore supra, at 575.
  23.  Williams v. Philip Morris Inc., 127 P.3d at FN 3.
  24. Ibid.
  25. Philip Morris USA v. Williams, 127 S.Ct. supra at 1065.
  26. In his dissent, Justice Stevens notes his confusion with the implications of allowing the jury to consider harm to others for the purposes of reprehensibility. “While apparently recognizing the novelty of its holding, ante, at 1065, the majority relies on a distinction between taking third-party harm into account in order to assess the reprehensibility of the defendant’s conduct-which is permitted-from doing so in order to punish the defendant “directly”-which is forbidden. Ante, at 1064. This nuance eludes me. When a jury increases a punitive damages award because injuries to third parties enhanced the reprehensibility of the defendant’s conduct, the jury is by definition punishing the defendant-directly-for third-party harm.” Ibid at 1066.
  27.  State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. at 423.
  28. Williams v. Philip Morris Inc., 127 P.3d 1165, 1177 (Or., 2006).
  29. Williams v. Philip Morris Inc., 127 P.3d 1165, 1181 (Or., 2006).
  30. Gore, supra 517 U.S., at 576—577.
  31. Campbell, supra at 425.