Philip Morris USA V. Williams: Punitive Damages, Due Process, and the U.S. Supreme Court.(Instructor's Note)

By Schoen, Edward J.; Falchek, Joseph S. et al. | Journal of the International Academy for Case Studies, July-August 2009 | Go to article overview

Philip Morris USA V. Williams: Punitive Damages, Due Process, and the U.S. Supreme Court.(Instructor's Note)


Schoen, Edward J., Falchek, Joseph S., Lewis, Phillip A., Weidman, Stephanie, Hughes, Diane, Marmon, Richard, Journal of the International Academy for Case Studies


CASE DESCRIPTION

The primary subject matter of this case is the impact of recent United States Supreme Court decisions regarding the application of the Due Process Clause in determining punitive damages awards. Specifically, this case looks at the most recent decision in Philip Morris USA v. Williams (2007) of three significant Supreme Court decisions regarding punitive damages awards.

The case looks at the two previous Court decisions regarding the criteria used in determining punitive damages awards and the effect of those decisions on the final decision in this trilogy. Given new appointments to the U. S. Supreme Court, the case provides an opportunity to examine the impact of those changes on this recent decision.

All three decisions raise questions about the commitment of firms to ethical and socially responsible behavior given the restrictions to the size of punishments that may be levied against them when their behavior is found to fall below the recognized standards of "acceptable." This case would be appropriate for use in business law/legal environment of business, business marketing, or business ethics with a difficulty level of two or three depending on the course.

CASE SYNOPSIS

In Philip Morris USA v. Williams (2007), the United States Supreme Court decided that the Due Process Clause prohibits a state from using punitive damages awards to punish a defendant for injuries it inflicts upon non-parties, i.e. strangers to the litigation because such awards amount to a taking of property without due process, there being no fair notice of the severity of the penalty the state may impose (Philip Morris USA v. Williams, 2007). This decision is the third in the United States Supreme Court's recent forays into the constitutionality of punitive damages awards, but the first punitive damages case decided by the Court since the retirement of Justice O'Connor and the death of Chief Justice Rehnquist, and the addition of Justice Alito and Chief Justice Roberts to the Court (Murray, 2007).

The purpose of this paper is to examine how Philip Morris USA v. Williams fits into the trilogy of punitive damages decisions issued by the United States Supreme Court, to assess the impact of the Chief Justice Roberts and Justice Alito's joining the majority decision, and to determine the reach of the Due Process Clause in restricting punitive damages awards (Hamdini, 2006).

Careful discussion of the case should enable the students to better understand (1) the use of punitive damages in legal decisions; (2) the concept of Due Process; (3) the possible implications of these decisions of corporate behavior; (4) the significance of the composition and creation of majorities on the United Supreme Court.

INSTRUCTORS' NOTES

Supplemental Documentation and Information

Some quotes and information provided in the court records and decisions that further describe and clarify the arguments made are found below.

Regarding Ms. Williams' personal claims of negligence and fraud:

   Under 15 U.S.C. [section] 1334, the federally-imposed warning that
   appears on cigarette packages preempts all state regulation of the
   advertising and promotion of cigarettes that carry the warning.
   Further, in Cipollone v. Liggett Group, Inc., 505 U.S. 504, 524
   (1992), the United States Supreme Court ruled that preemption
   extends to state common law claims, precluding plaintiff from
   pursuing a claim based on fraudulent concealment of information
   concerning smoking and health. Hence plaintiff pursued alternative
   claims for negligence and fraud.

The trial court's reduction of the non-economic damages to $500,000.00 is based on Oregon statute:

ORS 18.560 provides in part: "(1) Except for claims subject to ORS 30.260 to 30.300 [the Oregon Tort Claims Act] and ORS chapter 656 [the Oregon Workers' Compensation Act], in any civil action seeking damages arising out of bodily injury, including emotional injury or distress, death or property damage of any one person including claims for loss of care, comfort, companionship and society and loss of consortium, the amount awarded for non-economic damages shall not exceed $500,000" (Williams v. …

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