Smoker's widow seeks $79.5M award at Supreme Court

WASHINGTON -- A cigarette maker and a smoker's widow squared off for the third time at the Supreme Court on Wednesday over a $79.5 million punitive damages award, but the real battle was between the justices and their counterparts on Oregon's high court.

Twice before, the Supreme Court has struck down the judgment against Altria Group Inc.'s Philip Morris USA and ordered the Oregon court to take another look at the case. Each time, the Oregon high court has upheld the award to Mayola Williams, the widow of a longtime smoker of Philip Morris' Marlboro brand.

In its latest appeal, Philip Morris contended the Oregon judges were essentially thumbing their noses at the Supreme Court. "We're here today because the Oregon court failed to follow this court's decision," Philip Morris' lawyer, Stephen Shapiro, told the justices.

Justice Stephen Breyer, who sided with Philip Morris in its last round, was more skeptical of the cigarette maker's arguments Wednesday.

At first, Breyer said, "I thought this was a runaround. I'm not sure I think that now."

At the same time, however, the justices worried that state courts could ignore Supreme Court rulings on constitutional issues.

"How do we guard against making constitutional decisions which are simply going to be nullified by some clever device?" Justice David Souter asked.

Robert Peck, Williams' lawyer, tried to allay the concern. "There was no sandbagging here," Peck said. "The Oregon Supreme Court did not act in bad faith."

The case has bounced around appellate courts since 1999, when Williams convinced a jury that Philip Morris should be held accountable for misleading people into thinking cigarettes were not dangerous or addictive.

Williams' husband, Jesse, was a janitor in Portland who started smoking during a 1950s Army hitch and died in 1997, six months after he was diagnosed with lung cancer.

She was awarded $800,000 in actual damages. The punitive damages -- intended to punish a defendant for its behavior and deter a repeat -- are about 99 times greater. A state court previously cut the compensatory award to $521,000.

The value of the award has climbed to more than $145 million because of accrued interest, the company said. Sixty percent of it would go to an Oregon crime victims fund. If Philip Morris wins, a new trial would result.

The Oregon high court made its first decision in 2002, refusing to hear an appeal from Philip Morris.

Then the U.S. Supreme Court rejected the judgment of nearly $80 million, saying in another case that damages generally should be held to no more than nine times actual economic damages. It declined, however, to make that a firm rule.

Next, the Oregon Supreme Court upheld the punitive damages, citing "extraordinarily reprehensible" conduct by Philip Morris officials.

Then came the U.S. Supreme Court's second take on the case. In 2007, the court said in a 5-4 decision that jurors may punish a defendant only for harm done to someone who is suing, not other smokers who could make similar claims.

The state court was told to reconsider the award in the context of instructions for the trial jury that Philip Morris proposed and the trial judge rejected.

In January, the Oregon court said there were other defects in the instructions that violated Oregon law, and supported the trial judge's decision not to give the proposed instructions to the jury.

The arguments Wednesday were only about whether the Oregon Supreme Court in essence ignored the U.S. high court's directive. The justices previously declined to decide whether the amount of the judgment is constitutionally permissible.

But late in Wednesday's session, Chief Justice John Roberts suggested the court could end the back-and-forth with Oregon by taking on the broader constitutional issue.

If the other justices agree to that, the court most likely would order both sides to submit written arguments and then schedule another argument session in March or April.

The case is Philip Morris USA v. Williams, 07-1216.