# Amicus Curiae Brief — Philip Morris USA v. Williams

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0249%3A06

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2007
- **Citation:** 549 U.S. 346

## Text

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IN THE

Supreme Court of the United States

PHILIP Morris USA,

Petitioner,

Vv.

MAYOLA WILLIAMS,

Respondent.

On Petition For A Writ Of Certiorari To
The Supreme Court Of Oregon

BRIEF OF THE PRODUCT LIABILITY
ADVISORY COUNCIL AS AMICUS CURIAE
IN SUPPORT OF PETITIONER

Of Counsel:

HUGH F. YOUNG, JR.

PRODUCT LIABILITY
ADVISORY COUNCIL, INC.

1850 Centennial Park Drive

Suite 510

Reston, VA 20191

(703) 264-5300

THEODORE J. BOUTROUS, JR.
Counsel of Record

THOMAS H. DuPREE, JR.

GIBSON, DUNN & CRUTCHER LLP

1050 Connecticut Avenue, NW

Washington, DC 20036-5306

(202) 955-8500

Counsel for Amicus Curiae

LIBRARY OF CONGRESS
LAY! LIBRARY

-~—— ——

QUESTION PRESENTED

This case involves a $79.5 million punitive damage
award to a single individual—the widow of a smoker—that is
more than 97 times the jury’s substantial award of compensa-
tory damages. Although this Court held in State Farm Mu-
tual Automobile Insurance Co. v. Campbell, 538 U.S. 408,
425 (2003), that “in practice, few awards exceeding a single-
digit ratio between punitive and compensatory damages, to a
significant degree, will satisfy due process”—and that where
“compensatory damages are substantial, then a lesser ratio,
perhaps only equal to compensatory damages, can reach the
outermost limit of the due process guarantee”—the Oregon
Supreme Court upheld the award in full, deeming Philip
Morris’s conduct so “reprehensible” as to “override” the con-
stitutional mandate of proportionality.

Amicus will address the question whether the Oregon
Supreme Court misapplied and effectively nullified the re-
quirement that a punitive damage award be reasonable and
proportionate to the compensatory damage award, in direct
conflict with this Court’s decisions in State Farm and BMW
v. Gore, 517 U.S. 559 (1996), as well as the decisions of fed-
eral courts of appeal and other state courts of last resort.

i
TABLE OF CONTENTS
: Page
QUESTION PRESENTED ...........:sesessceecesessesecneensenseennesennenees i
TABLE OF AUTHORITIEG..............::-:csecsressseceeeeeensensensens iii
INTEREST OF AMICUS CURIAE .........c-ccecsssesereesnseesnensnenes 1
STATEMENT ........c.-cccsssccvessnssssnessnsecsssenssescsessenssensonssesssesevese 2
SUMMARY Be I cinininnicnishsneenimontinisameiaiannasiin 3
SETS. LAER eee aN 5
IL THE RATIO REQUIREMENT IS
_ CRITICAL IN PRODUCTS CASEG...........-0s0-e-00+++ 5
‘IL THE DECISION BELOW CIRCUMVENTS
THE CONSTITUTIONAL LIMITS ON
PUNITIVE DAMAGES AND WORSENS
THE CONFUSION IN THE LOWER
a thihariictaieciiasiapsibcienasibiciecanincitittasiinilltniaensitininenneinhs 7
A. Review Is Warranted To Clarify That A
Finding Of Reprehensibility Cannot
“Override” The Constitutionally-
Mandated Ratio Requirement. ...................s000+ 7

B. The Oregon Court’s Approval Of A
97:1 Ratio Typifies The Confusion In
NE IIIIDN stiintectescisbicipsidinientcatiuasiamidetasitien 12

IT wntcrcinsittineiatisicicitininpsinaitsisstgstansdagmaininieaaniininiés 18

TABLE OF AUTHORITIES
Page(s)

Cases
BMW of North America, Inc. v. Gore,

ee es Be ctctettenicninninemicumnnan passim
Bocci v. Key Pharmaceuticals, Inc., 76 P.3d

669, modified, 79 P.3d 908

ee 14
Boerner v. Brown & Williamson Tobacco Co.,

394 F.3d 594 (8th Cir. 2005). .............cccceseceeseeeneeneeeeees 15
Buell-Wilson v. Ford Motor Co.,

No. GIC800836 (Cal. Super. Ct.

Ne Fe caiitenidariitaliviseghinenpigntincetoniemninanipenseneseaninl 6, 16
Bullock v. Philip Morris USA, Inc., 2006 WL

1044161 (April 21, 2006) ..0...........cccceessseeeeteeesensenseseenes 10
Campbell v. State Farm, 98 P.3d 409

(Utah 2004), cert. denied,

I tcncricscinrncsitinninsennsinnsnsintapinincnceniain 16
Carroll v. Otis Elevator Co., 896 F.2d 210

SIE Tere cceidneiidinintnisinndtidieiendiniueientindeteiiunpainivadeedia 6
Ceimo v. General Am. Life Ins. Co., 137 Fed.

PR ee 15
Clark v. Chrysler Corp., 436 F.3d 594

Sy SI iitccnacscttnsnnsensinssntsrenenseiendmmatmnqnanmnintunitns 15
Cooper Indus., Inc. v. Leatherman Tool Group,

ig Te es GN i rerccsseticatiartinsqrnenenmnnents 2,12

Hangarter v. Provident Life & Accident Ins.
Co., 2004 WL 1418017 (9th Cir. 2004) ...........cceccecceeees 14

iv

Honda Motor Co. v. Oberg, 512 U.S. 415

CI ercnecesscesntsnsenperesmmnsnenstetpemenassenmaneninaunnnsie 5,7, 11
Johnson v. Hugo’s Skateway, 974 F.2d 1408

ee 18
Jones v. Rent-a-Center, 281 F. Supp. 2d 1277

CE FD, FE ccesseseniectnterinsinntesncemcnepnictentenrementengeniasivi 14
Lakin v. Senco Prods., Inc., 987 P.2d 463

8 re 11
Mattison v. Dallas Carrier Corp., 947 F.2d 95

a ee ee oan 18
McClain v. Metabolife Int'l, Inc., 259 F. Supp.

2d 1225 (N.D. Alla. 2003)..........::.ccsssessssessssssserseseseeesenens 14
Mission Resources, Inc. v. Garza Energy Trust,

166 S.W. 3d 301 (Tex. Ct. App. 2005) ...0...cccccceseeseerere 11
Oberg v. Honda Motor Co., Litd., 888 P.2d 8

TDL EPUTED suctnictencepestnsaintctsieicetidhieremamnianinipiatininneptinieiiont 11
Pacific Mutual Life Insurance Co. v. Haslip,

Sy 1 cicintniinsienttenindintensnatiniibicmesintann 12,17
Parrott v. Carr Chevrolet, Inc., 17 P.3d 473

ECE Snteintinitgatittesinstinniiameenmnnt 11
Planned Parenthood of the

Columbia/Willamette Inc. v. American

Coalition of Life Activists, 422 F.3d 949

PIN I SE cstrincinerecsetrnsnnichinnnaiianiinbtiteiinannmmmmeniagl 10
Romo v. Ford Motor Co., 113 Cal. App. 4th 738

Se FI Bi crccacncactnierenintncntanpiniimivoingeitameannti 14
Simon v. San Paolo U.S. Holding Co., 35 Cal.

I 10
Solem v. Helm, 463 U.S. 277 (1983) .........cccseceseseseseeeseenereress 9

State Farm Mutual Automobile Insurance Co. v.
Campbell, 538 U.S. 408 (2003)..........-cecceseeeeeesees passim

7”

Superior Federal Bank v. Jones & Mackey

Constr. Co., 2005 WL 3307074

(Ark. Ct. App. Dec. 7, 2005) ..........cccccssersereeseseernesennsenes 11
United States v. Bajakajian, 524 U.S. 321

Sc dates pirelnttgtitpasnapenstnipignamnemmenenusetiel 6,9
Waddill v. Anchor Hocking, Inc., 78 P.3d 570

Ss A SEEN etertteencsencevpeansescenmasetntanccentneteneenae 14
Weems v. United States, 217 U.S. 349 (1910).............00c0-eee0ees 9
Williams v. ConAgra Poultry Co., 378 F.3d 790

ES a 15
Other Authorities
Stephen Breyer, Breaking the Vicious Circle:

Toward Effective Risk Regulation 59 (1992) .......-....-+0++ 6

Reid Hastie et al., Looking Backward in
Punitive Judgments: 20-20 Vision?, in Cass
R. Sunstein et al., Punitive Damages: How
Juries Decide 96 (2002) ...........-scesesserseenseeeeeserenserassensnnes 7

James A. Henderson, Jr., Design Defect
Litigation Revisited, 61 Cornell L. Rev. 541
SE aati atiibvisertptalininidintnciapianinsieensieicennesermmessamengsaneneees 7

James A. Henderson, Jr., Judicial Review of
Manufacturers’ Conscious Design Choices:
The Limits of Adjudication, 73 Colum. L.
iia eandareeancnnpunncnasnaneneies 7

Paul V. Niemeyer, Awards for Pain and
Suffering: The Irrational Centerpiece of our

Tort System, 90 Va. L. Rev. 1401 (2004)...........c0-ceceee 17
Restatement (Second) of Torts § 908 (1977) .........c-scesseeeee 16
W. Kip Viscusi, Corporate Risk Analysis: A

Reckless Act?, 52 Stan. L. Rev. 547 (2000) ...........0es000 6

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BRIEF OF THE PRODUCT LIABILITY
ADVISORY COUNCIL AS AMICUS CURIAE
IN SUPPORT OF PETITIONER

INTEREST OF AMICUS CURIAE!

The Product Liability Advisory Council, Inc. (PLAC) is
a non-profit association with 133 corporate members repre-
senting a broad cross-section of American and international
product manufacturers. These companies seek to contribute
to the improvement and reform of law in the United States
and elsewhere, with emphasis on the law governing the l-
ability of manufacturers of products. PLAC’s perspective is
derived from the experiences of a corporate membership that
spans a diverse group of industries in various facets of the
manufacturing sector. In addition, several hundred of the
leading product liability defense attorneys in the country are
sustaining (non-voting) members of PLAC. Since 1983,
PLAC has filed over 725 briefs as amicus curiae in both state
and federal courts, including this Court, presenting the broad
perspective of product manufacturers seeking fairness and
balance in the application and development of the law as it
affects product liability. A list of PLAC’s corporate mem-
bers is attached in the Addendum.

The questions presented by this case are not unique to
Philip Morris or the tobacco industry. Virtually all corpora-
tions are vulnerable to arbitrary and excessive punitive dam-
age awards when juries are not given adequate instructions,
and reviewing courts decline to enforce the due process
guideposts that help ensure reasonableness and proportional-
ity. Because plaintiffs routinely seek punitive damages in
product liability cases, the fair administration of punitive

! Pursuant to this Court’s Rule 37.3(a), letters of consent from all par-
ties to the filing of this brief have been filed with the Clerk. Pursuant to
Rule 37.6, PLAC states that this brief was not authored in whole or in
part by counsel for any party, and that no person or entity other than
PLAC or its counse! made a monetary contribution to the preparation or
submission of this brief.

2

civil sanctions is an issue of great importance to
manufacturers, and PLAC has filed amicus briefs in thi
Court’s three most recent decisions involving constituti
excessiveness challenges to punitive damage awards: BMW
of North America, Inc. v. Gore, 517 U.S. 559 (1996); Cooper
Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S.
424 (2001), and State Farm Mutual Automobile Insurance
Co. v. Campbell, 538 U.S. 408 (2003).

As set forth below, PLAC believes that the constitutional
limitations on such awards should be faithfully enforced, in-
cluding the requirement that the amount of any punitive
damage award bear a reasonable and proportionate relation-

ship to the amount of the compensatory damage award.
STATEMENT -

This case reflects the confusion in the lower courts over
the proper application of the ratio guidepost in punitive dam-
age cases. Respondent Mayola Williams, the widow of a
smoker, sued petitioner Philip Morris USA, asserting fraud
and negligence claims in connection with the death of her
husband from lung cancer. Petitioner’s Appendix (“Pet.
App.”) at la. An Oregon jury awarded respondent $821,485
in compensatory damages—including $800,000 in non-
economic damages—and $79.5 million in punitive damages.
Id. at 9a.

Although the trial court remitted the punitive damage
award as excessive under the federal constitutional guide-
posts, the Oregon Court of Appeals reinstated the award in
full, 48 P.3d 824 (Or. Ct. App. 2002), and the Oregon Su-
preme Court denied review. 61 P.3d 938 (Or. 2002). This
Court then granted certiorari, vacated the Court of Appeals’
judgment, and remanded for reconsideration in light of State
Farm. 540 U.S. 801 (2003). On remand, the Court of Ap-
peals again held that the full award must be reinstated, not-
withstanding the more rigorous State Farm standards. Pet.

App. 35a.

ti

3

The Oregon Supreme Court affirmed. The court ac-
knowledged that the 97:1 ratio of punitive to compensatory
damages exceeded the constitutional limits set forth in State
Farm, stating that the ratio “substantially exceed{s] the sin-
gle-digit ratio (9:1) that the Court has said ordinarily will ap-
ply in the usual case.” Pet. App. 31a. Nonetheless, the court
reasoned that Philip Morris’s allegedly high level of repre-

ibility sufficed to “overridfe]” the ratio guidepost, ex-
plainine: |

Single-digit ratios may mark the boundary in

ordinary cases, but the absence of bright-line

rules necessarily suggests that the other two

guideposts—treprehensibility and comparable

sanctions—can provide a basis for overriding

the concern that may arise from a double-digit

ratio.

Pet. App. 33a. Construing “all facts in the light most favor-
able to plaintiff,” the court concluded that “the jury’s $79.5
million punitive damage award against Philip Morris com-
ported with due process.” Jd. at 2a, 33a. The court also held
that Philip Morris was not entitled to a jury instruction pro-
viding, in prt, that “[t]he size of any punishment should bear
a reasonable relationship to the harm caused to [respondent’s
husband] Jesse Williams by the defendant’s punishable mis-
conduct.” Jd. at 17a.
SUMMARY OF ARGUMENT

The principle of proportionality—that a civil sanction
must be reasonable and proportionate to the harm committed
by the defendant—has a long pedigree in American constitu-
tional and common law. This principle is reflected and en-
shrined in this Court’s punitive damages jurisprudence. In
State Farm, the Court emphasized the importance of “en-
sur[ing] both reasonableness and proportionality” in assess-
ing punitive damages, holding that “courts must ensure that
the measure of punishment is both reasonable and propor-
tionate to the amount of harm to the plaintiff and to the gen-
eral damages recovered.” 538 U.S. at 426-28.

4

In the context of punitive damages, the proportionality
requirement is given force through the ratio guidepost, which
limits punitive damage awards a low multiple (or fraction) of
the compensatory damage award in all but the most unusual
cases. The ratio guidepost has particular importance in prod-
uct liability cases, which can involve large awards of com-
pensatory damages and where the jury is often asked to
award punitive damages against the backdrop of a complex
design decision, competing expert testimony, and a consumer
who was injured in the course of using the product. In such
circumstances, jurors may be swayed by bias or prejudice
against large, out-of-state corporations and be tempted to re-
ward a sympathetic plaintiff with a large award of punitive
damages.

The decision below runs roughshod over the ratio guide-
post, effectively rendering it a nullity. The Oregon Supreme
Court’s ratio analysis cannot be reconciled with this Court’s
decisions in State Farm and Gore, and directly conflicts with
the approach followed by other courts.

Review is warranted to clarify the proper application of
the ratio guidepost. The Oregon Supreme Court’s holding
that the ratio guidepost may be “overridden” any time a court
concludes that the defendant acted with a high level of repre-
hensibility has no basis in this Court’s punitive damages ju-
risprudence and, when coupled with the court’s holding that
the facts must be viewed in the light most favorable to the
plaintiff, drains the due process guideposts of any constrain-
ing force. Review is further warranted to dispel the confu-
sion surrounding State Farm’s holding that a 1:1 ratio may
be the constitutional maximum in cases where the compensa-
tory damages are “substantial,” and that where, as here, a
plaintiff recovers non-economic damages, a lower ratio is
required. See 538 U.S. at 426. Finally, this Court should
hold that juries must be instructed on the “reasonable rela-
tionship” requirement, just as it held in State Farm that juries
must be instructed on the territorial limitations the Constitu-
tion places on punitive damage awards.

5

ARGUMENT

This Court has repeatedly recognized that “punitive
damages pose an acute danger of arbitrary deprivation of
property.” State Farm, 538 U.S. at 416-17 (quotation omit-
ted). Punitive damage claims raise the danger that juries
“will use their verdicts to express biases against big busi-
nesses, particularly those without strong local
Honda Motor Co. v. Oberg, 512 U.S. 415, 432 (1994).

Because “‘elementary notions of fairness enshrined in
our constitutional jurisprudence dictate that a person receive
fair notice not only of the conduct that will subject him to
punishment, but also of the severity of the penalty that a State
may impose,”” the Due Process Clause “prohibits the imposi-
tion of grossly excessive or arbitrary punishments on a tort-
feasor.” State Farm, 538 U.S. at 416-17 (quoting Gore, 517
U.S. at 562, 574). The Court has held that excessiveness
should be determined by reference to three guideposts:
(1) the reprehensibility of the defendant’s conduct; (2) the
ratio between punitive and actual or potential damages; and
(3) the difference between the award and the civil penalties
_ authorized or imposed in comparable cases. State Farm, 538
US. at 418. “The[se] principles ... must be implemented
with care, to ensure both reasonableness and proportional-
ity.” Id. at 428.

Although the Oregon Supreme Court erred in applying
all three constitutional guideposts in this case, its approach to
the ratio requirement is particularly misguided and directly
conflicts with this Court’s decisions in Gore and State Farm,
as well as decisions of federal courts of appeal and other state
courts of last resort.

I. THE RATIO REQUIREMENT IS CRITICAL
IN PRODUCTS CASES.

The principle that punitive damages “must bear a ‘rea-
sonable relationship’ to compensatory damages has a long
pedigree,” dating back at least 700 years. Gore, 517 U.S. at
580-81. This Court has repeatedly “endorsed the proposition

6

that a comparison between the compensatory award and the
punitive award is significant,” id. at 581, most recently in
State Farm, where the Court emphasized that, as a matter of
due process, “courts must ensure that the measure of punish-
ment is both reasonable and proportionate to the amount of
harm to the plaintiff and to the general damages recovered.”
538 U.S. at 426 (empLasis added). See also United States v.
Bajakajian, 524 U.S. 321, 333 (1998) (criminal forfeiture
violated the Excessive Fines Clause in part because there was
no proportionality between the fine and the “harm caused” by
the offending conduct).

The ratio guidepost is particularly important in product
liability cases, where juries frequently award large amounts
of compensatory damages—often containing a substantial
non-economic component—-so that even a 1:1 ratio can result
in a severe sanction. See, e.g., Buell-Wilson v. Ford Motor
Co., No. GIC800836 (Cal. Super. Ct. Aug. 19, 2004) (up-
holding $75,000,000 in non-economic damages and a
$75,000,000 punitive damage award even though the vehicle
design complied with government safety standards and in-
dustry custom). Moreover, in many such cases the defen-
dant’s level of reprehensibility is low: the alleged defect is
not readily apparent, and the claim involves a reasonable dis-
agreement over a complex design judgment that the manufac-
turer made in good faith. Jurors in such cases are confronted
with deciding whether a product creates “too much risk” in
the context of individual cases involving tragic personal inju-
ries, using hindsight, on the basis of a highly technical record
and arcane and often conflicting opinion testimony from en-
gineers and scientists. See Stephen Breyer, Breaking the Vi-
cious Circle: Toward Effective Risk Regulation 59 (1992);
Carroll v. Otis Elevator Co., 896 F.2d 210, 215-16 (7th Cir.
1990) (Easterbrook, J., concurring).

As a result, jurors are not always well suited to make
judgments concerning punitive damages in product liability
cases. See W. Kip Viscusi, Corporate Risk Analysis: A
Reckless Act?, 52 Stan. L. Rev. 547, 586-90 (2000) (noting
that jurors often demonstrate bias against companies that en-

7

gage in risk-safety balancing); Reid Hastie et al., Looking
Backward in Punitive Judgments: 20-20 Vision?, in Cass R.
Sunstein et al., Punitive Damages: How Juries Decide 96,
108 (2002) (concluding that “hindsight bias is almost inevi-
table when jurors make punitive damages decisions”). See
also James A. Henderson, Jr., Judicial Review of Manufac-
turers’ Conscious Design Choices: The Limits of Adjudica-
tion, 73 Colum. L. Rev. 1531, 1534 (1973) (“courts are not
suited to the task of establishing specific product safety stan-
dards in the course of applying general reasonableness tests
to determine the adequacy of allegedly defective products”);
James A. Henderson, Jr., Design Defect Litigation Revisited,
61 Cornell L. Rev. 541 (1976).

The result is that product liability cases pose great dan-
ger that juries will “use their verdicts to express biases
against big businesses,” Oberg, 512 U.S. at 432. Faithful
application of the ratio guidepost helps ensure that any award
of punitive damages is reasonable and proportionate to the
harm to the plaintiff.

Il. THE DECISION BELOW CIKCUMVENTS
THE CONSTITUTIONAL LIMITS ON
PUNITIVE DAMAGES AND WORSENS THE
CONFUSION IN THE LOWER COURTS.

The petition in this case ably sets forth the reasons why
guidance from this Court is needed. This brief focuses more
narrowly on several specific ways in which the Oregon Su-
preme Court misapplied the ratio requirement, in direct con-
flict with decisions from this and other courts.

A. Review Is Warranted To Clarify That A

Finding Of Reprehensibility Cannot
“Override” The Constitutionally-Mandated
Ratio Requirement.

Under the Oregon Supreme Court’s approach, a court
need only pronounce conduct to be highly reprehensible and
any punitive damage award may be upheld—even those that
are grossly disproportionate to the compensatory damage

award. By holding that the “extraordinarily reprehensible”
behavior of the defendant, Pet. App. 33a, and the “extreme
and outrageous circumstances” of the case, id., can “over-
ride” the ratio requirement and save from unconstitutionality
a punitive damage award 97 times the amount of compensa-
tory damages awarded, the decision below effectively nulli-
fies the constitutional requirement of proportionality en-
shrined in the Due Process Clause and reflected in State
Farm and Gore. See Pet. for Cert. at 8-14.2

This Court has never suggested that the three due proc-
ess guideposts are independent factors in the sense that one
may offset or trump another. Rather, each guidepost operates
separately to cabin a punitive damage award to a constitu-
tionally acceptable level that reflects fair notice of the sever-
ity of the penalty that may be imposed. Consequently, al-
though reprehensibility may move the acceptable ratio within
the established range of proportional damages, it does not
render the ratio guidepost inapplicable, as the court below
held. The Oregon Supreme Court’s approach—allowing the
reprehensibility guidepost to trump considerations of ratio—
conflicts with Gore and with State Farm’s mandate that
“courts must ensure that the measure of punishment is both
reasonable and proportionate to the amount of harm to the
plaintiff and to the general damages recovered.” State Farm,
538 U.S. at 426 (emphasis added).

As Justice Breyer explained in his concurrence in Gore,
assessing the “reprehensibility” of a defendant’s conduct

2 As the petition explains, the wildly disproportionate award was the
result of the trial court’s authorizing the jury to punish Philip Morris for
alleged harms suffered by non-parties. See Pet. for Cert. at 14-22. State
Farm, however, squarely rejected this approach, explaining that “[djue
process does not permit courts, in the calculation of punitive damages, to
adjudicate the merits of other parties’ hypothetical claims against a de-
fendant under the guise of the reprehensibility analysis.” 538 U.S. at 423.
That is because “[p}junishment on these bases creates the possibility of
multiple punitive damages awards for the same conduct; for in the usual
case nonparties are not bound by the judgment some other plaintiff ob-
tains.” /d.

9

“provides little guidance on how to relate culpability to the
size of an award.” 517 U.S. at 590. Focusing on reprehensi-
bility and disregarding ratio, as the Oregon Supreme Court
did in this case, thus renders an excessiveness inquiry a
largely subjective exercise, particularly given that some
courts “make ‘reprehensibility’ a concept without constrain-
ing force.” Jd. Moreover, by concluding that the ratio
guidepost may be overridden in “high reprehensibility” cases,
the Oregon Supreme Court held it inapplicable in precisely
_those cases where the objective, constraining force of ratio
analysis is most necessary: those where the facts present a
particular danger that the jury may be swayed by bias or
prejudice, or otherwise be tempted to return a grossly exces-
sive and unconstitutional award.3

The Oregon Supreme Court’s approach jettisons one of
the most fundamental tenets of common law and constitu-
tional jurisprudence: the basic retributive requirement of pro-
portionality between punishments and wrongs. This Court
has long recognized this principle in a variety of contexts.
See, e.g., United States v. Bajakajian, 524 U.S. 321, 334
(1998) (“The amount of the [punishment] must bear some
relationship to the gravity of the offense that it is designed to
punish.”); Weems v. United States, 217 U.S. 349, 366-67
(1910) (declaring it “a precept of the fundamental law” as
well as “a precept of justice that punishment for crime should
be graduated and proportioned to offense”). As the Court
stated in Solem v. Helm, 463 U.S. 277, 284 (1983), “[t}he
principle that a punishment should be proportionate to the
crim* is deeply rooted and frequently repeated in common-
law jurisprudence.”

3 Im this regard, the Oregon Supreme Court’s decision to “construe all
facts in favor of plaintiff, the party in whose favor the jury ruled” for pur-
poses of reviewing punitive damages, Pet. App. 23a, is particularly mis-
guided. See Pet. for Cert. at 22-28. This approach permits a court, as the
_ Oregon court did here, to defer to the plaintiff's version of events, deem
the defendant to have engaged in “highly reprehensible” conduct based
on that skewed depiction, and then declare the ratio guidepost imapplica-
ble.

10

The Oregon Supreme Court’s decision also conflicts
with Ninth Circuit precedent establishing that reprehensibil-
ity cannot be used to override the ratio guidepost. In
Planned Parenthood of the Columbia/Willamette Inc. v.
American Coalition of Life Activists, 422 F.3d 949, 962 (9th
Cir. 2005), the court explained that this Court has provided
“a rough framework for evaluating whether there is a reason-
able relationship between the punitive damages award and
the actual or likely harm associated with the wrongful con-
duct.” In reducing a punitive damage award as grossly ex-
cessive and unconstitutional, the court recognized that the
reprehensibility analysis operates within the limits set by the
ratio guidepost. See id. (explaining that low ratio is appro-
priate “where there are significant economic damages and
punitive damages are warranted,” whereas a higher ratio may
be appropriate “[i]n cases with significant economic damages
and more egregious behavior” or “in cases where there are
insignificant economic damages but the behavior was par-
ticularly egregious”).

A recent decision from the California Court of Appeal
mirrors the Oregon court’s erroneous approach. In Bullock v.
Philip Morris USA, Inc., 2006 WL 1044161 (Apr. 21, 2006),
the court upheld a 33 to | ratio in a case involving an unde-
niably “substantial” compensatory damage award of
$850,000. The court held that “[a}lthough this ratio signifi-
cantly exceeds single digits, we conclude that the extreme
reprehensibility of Philip Morris’s misconduct ... justifies
the greater ratio.” /d. at *26. Relying on California Supreme
Court precedent, the court concluded that “‘extreme repre-
hensibility’ is a special justification that can overcome the
presumption against an award exceeding a single-digit ratio.”
Id. at *27 (citing Simon v. San Paolo U.S. Holding Co., 35
Cal. 4th 1159, 1182-83 (2005)). The dissent argued that the
majority had misapplied State Farm and the ratio guidepost,
Stating that “because [the plaintiff] received substantial com-
pensatory damages, the ratio of punitive damages to compen-
satory damages may be no more than 9 to 1.” Bullock, 2006
WL 1044161, at *30 (opinion of Kitching, J.).

11

Other courts have also adopted this misguided and incor-
rect approach. For example, the Texas Court of Appeals up-
held a punitive damage award 20 times the amount of signifi-
cant compensatory damages awarded for a trespass action.
Mission Res., Inc. v. Garza Energy Trust, 166 S.W. 3d 301
(Tex. Ct. App. 2005). Acknowledging the magnitude of the
ratio, the court nonetheless concluded that “[a}lthough the
harm suffered by appellees may have been compensated by
the jury’s award of damages, the highly unlawful nature of
{the defendant’s] conduct (it being a breach of contract, an
intentional tort, and felony theft) prevents this Court from
concluding that the ratio 20 to 1 was grossly excessive.” Id.
at 319. Similarly, the Arkansas Court of Appeals upheld a
punitive damages award more than 17 times the substantial
compensatory damages awarded for a defamation claim, ex-
plaining that the “conduct by appellant...is such that a
17.6-to-1 ratio is not breathtaking.” Superior Fed. Bank v.
Jones & Mackey Constr. Co., 2005S WL 3307074 (Ark. Ct.
App. Dec. 7, 2005).

Review is warranted to resolve these conflicts and to
correct the Oregon Supreme Court’s misapplication of Gore
and State Farm. In fact, since this Court reversed the Oregon
Supreme Court in Oberg more than a decade ago, and held
that the Fourteenth Amendment requires Oregon to provide
judicial review of punitive damage awards for excessiveness,
the Oregon Supreme Court has never reduced a punitive
damage award as unconstitutionally excessive. See Parrott v.
Carr Chevrolet, Inc., 17 P.3d 473, 487-90 (Or. 2001) (apply-
ing Gore, but approving an 87:1 ratio in light of the defen-
dant’s “particularly egregious acts”); Lakin v. Senco Prods.,
Inc., 987 P.2d 463, 476 (Or. 1999) (affirming $4 million pu-
nitive damage award in product liability action); Oberg v.
Honda Motor Co., Lid., 888 P.2d 8, 14 (Or. 1995) (on re-
mand) (upholding ratio in excess of 5:1 in product liability
action even where compensatory damages were more than
$900,000). Indeed, even though this Court reversed the Ore-
gon Supreme Court in Oberg and remanded for an exces-

12

siveness review, the lower court simply upheld its prior deci-
sion.
B. The Oregon Court’s Approval Of A 97:1

Ratio Typifies The Confusion In The Lower
Courts.

Although this Court has been “reluctant to identify con-
crete constitutional limits on the ratio,” State Farm, 538 U.S.
at 424, many lower courts have interpreted this reluctance as
a license to approve wildly disproportionate ratios that bear
little relation to the actual harm suffered by the plaintiff. The
decision below epitomizes this approach and thus presents an
excellent vehicle for this Court to clarify the proper applica-
tion of the ratio guidepost and ““help[ ] to assure the uniform
general treatment of similarly situated persons that is the es-
sence of law itself.”” Cooper Indus., Inc: v. Leatherman Tool
Group, Inc., 532 U.S. 424, 436 (2001) (quoting Gore, 517
US. at 587 (Breyer, J., concurring)).

1. By approving a 97:1 ratio, the decision below directly
conflicts with State Farm and Gore. In State Farm, the
Court held that “in practice, few awards exceeding a single-
digit ratio between punitive and compensatory damages, to a
significant degree, will satisfy due process.” 538 U.S. at 425.
The Court further recognized that in Pacific Mutual Life In-
surance Co. v. Haslip, 499 US. 1, 23-24 (1991), it had con-
cluded “that an award of more than four times the amount of
compensatory damages might be close to the line of constitu-
tional impropriety.” 538 U.S. at 425. The Court also empha-
sized that it had “cited that 4-to-1 ratio again in Gore,” and
“further referenced a long legislative history, dating back
over 700 years and going forward to today, providing for
sanctions of double, treble, or quadruple damages to deter
and punish.” Jd. (citing Gore, 517 U.S. at 581). Finally, the
Court held that where “compensatory damages are substan-
tial, then a lesser ratio, perhaps only equal to compensatory

can reach the outermost limit of the due process
guarantee.” 538 U.S. at 425.

13

As the court below conceded, a 97:1 ratio is excessive
and unconstitutional under this Court’s precedents. (If the
ratio is calculated using the statutorily-capped amount of
Compensatory damages, the ratio rises to 152:1.) As the Ore-
gon Supreme Court frankly acknowledged: “Either way, the
second Gore guidepost is not met. All arguable versions of
the ratios substantially exceed the single-digit ratio (9:1) that
the Court has said ordinarily will apply in the usual case.”
Pet. App. 31a.

Although State Farm did not categorically prohibit ratios
exceeding 9:1, the Court made clear that such awards were ~
reserved for a very limited class of cases. Ratios exceeding a
single-digit value, the Court explained, may comport with
due process where ““‘a particularly egregious act has resulted
in only a small amount of economic damages’” or where
“‘the injury is hard to detect or the monetary value of non-
economic harm might have been difficult to determine.’”
538 U.S. at 425 (quoting Gore, 517 U.S at 582). None of
those circumstances is present in this case.

2. Guidance is also needed as to how the ratio guidepost
should be applied in cases where, as here, the compensatory
damage award is substantial. Many courts, including the
court below, have either misapplied or outright ignored this
Court’s holding that where “compensatory damages are sub-
stantial, then a lesser ratio, perhaps only equal to compensa-
tory damages, can reach the outermost limit of the due proc-
ess guarantee.” State Farm, 538 U.S. at 425 (emphasis
added). Indeed, whereas the court below quoted this lan-
guage from State Farm, Pet. App. 30a, it proceeded to disre-
gard it in its ratio analysis—even though a compensatory
award of more than $800,000 is undeniably “substantial.”
Cf State Farm, 538 U.S. at 429 (noting that a $1 million
compensatory award is “substantial”’).

Here too, the Oregon court’s incorrect approach mirrors
the approach of other courts that have essentially jettisoned
this aspect of State Farm. As the Ninth Circuit has declared,
“State Farm’s 1:1 compensatory to punitive damages ratio is

14

not binding, no matter how factually similar the cases may
be.” Hangarter v. Provident Life & Accident Ins. Co., 373
F.3d 998, 1014-15 (9th Cir. 2004). See also McClain v. Me-
tabolife Int'l, Inc., 259 F. Supp. 2d 1225, 1231 (N.D. Ala.
2003) (explaining that “a red flag goes up” only if the award
exceeds a 9:1 ratio, and suggesting that any lower ratio “pre-
sumptively passes muster under the Due Process Clause”);
Jones v. Rent-A-Center, Inc., 281 F. Supp. 2d 1277, 1289
(D. Kan. 2003) (reasoning that State Farm “guides this court
to conclude that . . . a single-digit ratio likely is constitution-
ally permissible”).

This trend is especially apparent in several recent deci-
sions involving products, a number of which (like this case)
were vacated by this Court and remanded for reconsideration
in light of State Farm. For example, in Romo v. Ford Motor
Co., 113 Cal. App. 4th 738 (Cal. Ct. App. 2003), another
case GVR'd for reconsideration in light of State Farm, the
California Court of Appeal held that a 5:1 ratio was appropri-
ate in a defective design case, even though the compensatory
damage awards of approximately $5 million were undeniably
“substantial,” and even though a significant portion of the
compensatory awards reflected non-economic harm. The
court made clear that it did not consider itself “strictly con-
strained by the single-digit multiplier set forth in State
Farm,” id. at 763, let alone by this Court’s holding that a 1:1
ratio may be required where compensatory damages are sub-
stantial.

Similarly, in Waddill v. Anchor Hocking, Inc., 78 P.3d
570 (Or. Ct. App. 2003), the plaintiff was injured when her
fishbowl shattered. She sued the manufacturer, and was
awarded $100,000 in compensatory damages and $1 million
in punitive damages. Following a GVR from this Court, the
Oregon court declined to reduce the award to a 1:1 ratio, but
rather held that “the maximum constitutionally permissible
award in this case is four times the compensatory damages
for which defendant is responsible,” id. at 576, and imposed
a $400,000 sanction. - Likewise in Bocci v. Key Pharmaceuti-
cals, Inc., 76 P.3d 669, modified, 79 P.3d 908 (Or. Ct. App.

15

2003), the court upheld a 7:1 ratio following a GVR from
this Court.

The approach followed by the courts noted above con-
flicts with the approach followed by the Eighth Circuit. In
Boerner v. Brown & Williamson Tobacco Co., 394 F.3d 594,
602-03 (8th Cir. 2005), the court held that even though it
found the defendant’s conduct “highly reprehensible,” under
State Farm a \:1 ratio was the constitutional maximum given
the substantial compensatory damage award of $4 million.
The court explained that “[njotwithstanding the absence of a
simple formula or bright-line ratio, . . . . [flactors that justify
a higher ratio, such as the presence of an ‘injury that is hard
to detect’ or a ‘particularly egregious act [that] has resulted in
only a small amount of economic damages,’ are absent here.”
Id. at 603 (quoting Gore, 517 U.S. at 582). Similarly, in Wil-
liams v. ConAgra Poultry Co., 378 F.3d 790, 799 (8th Cir.
2004), the court explained that a “large compensatory award”
of $600,000 “is a lot of money” and accordingly reduced the
punitive damage award under State Farm to achieve a 1:1
ratio. See also Ceimo v. Gen. Am. Life Ins. Co., 137 Fed.
Appx. 968, 970 (9th Cir. 2005) (affirming remittitur to
achieve approximate ratio of 1:1); Clark v. Chrysler Corp.,
436 F.3d 594, 613-14 (6th Cir. 2006) (Kennedy, J., concur-
ring) (stating that “I believe that $235,629.13 is ... a sub-
stantial compensatory award” and therefore that a 1:1 ratio is
the constitutional maximum under State Farm).

This Court should grant review to confirm that the 1:1
ratio in cases where the compensatory damages are “substan-
tial” is a meaningful limitation on punitive damage awards.
Indeed, in many cases, even a |:1 ratio can result in an exces-
sive and unconstitutional sanction.

3. The Oregon court further misapplied State Farm in
refusing to reduce the ratio based on the fact that more than
97 percent of the award was in non-economic damages. Pet.
App. 29a (noting that “Plaintiff suffered relatively small eco-
nomic damages for Williams’s wrongful death—less than
$25,000”).

16

In State Farm, the Court held that a low ratio is war-
ranted where, as here, the compensatory damage award con-
tains a significant amount of non-economic damages. Ob-
serving that the compensatory award consisted of $1 million
in emotional distress damages, the Court explained that:

The compensatory damages for the injury suf-

fered here ... likely were based on a compo-

nent which was duplicated in the punitive

award. Much of the distress was caused by the

outrage and humiliation the [plaintiffs] suf-

fered at the actions of their insurer; and it is a

major role of punitive damages to condemn

such conduct. Compensatory damages, how-

ever, already contain this punitive element.

538 U.S. at 426 (citing Restatement (Second) of Torts § 908,
Comment F, p. 466 (1977) (“In many cases in which com-
pensatory damages include an amount for emotional distress,
such as humiliation or indignation aroused by the defendant’s
act, there is no clear line of demarcation between punishment
and compensation and a verdict for a specified amount fre-
quently includes elements of both’”)).

In this case, $800,000 of the jury’s $821,485 compensa-
tory award was in non-economic damages. Pet. App. 9a.
Because these considerations were then duplicated in the pu-
nitive award, a lower ratio was required.

Other courts have adopted the Oregon court’s incorrect
approach to non-economic damages. For example, in the
Utah Supreme Court’s decision on remand in State Farm it-
self, the court held that the presence of non-economic dam-
ages actually required an increase in the punitive damage
award. The court stated that it had “no difficulty concluding
that conduct which causes $1 million of emotional distress
and humiliation is markedly more egregious than conduct
which results in $1 million of economic harm.” Campbell v.
State Farm Mut. Auto. Ins. Co., 98 P.3d 409, 418 (Utah
2004), cert. denied, 543 U.S. 874 (2004); see also Buell-

Wilson (imposing $75,000,000 in compensatory d ‘n.ages,

17

largely for non-economic harm, and $75,000,000 in punitive
damages).

Non-economic damages are now plagued by the same
_ problems as punitive damages, such as inadequate guidance
to juries, lack of objective criteria against which to measure
outcomes, and the general absence of principled bases for
judicial review—all of which leads to radically varying and
arbitrary awards. See Paul V. Niemeyer, Awards for Pain
and Suffering: The Irrational Centerpiece of our Tort System,
90 Va. L. Rev. 1401, 1417 (2004) (“without rational criteria
or defined limits, the pain and suffering award becomes the
same arbitrary deprivation of property as were punitive dam-
age awards before” State Farm and Gore). Review is war-
ranted for this reason as well.

4. Finally, the Oregon Supreme Court held that the trial
court properly denied Phi’ip Morris’s request for a “reason-
able relationship” instruct »n on punitive damages. The pro-
posed instruction stated, in relevant part, that “(t]he size of
any punishment should bear a reasonable relationship to the
harm caused to Jesse Williams by the defendant’s punishable
misconduct.” Pet. App. 17a.

The proposed instruction was undeniably a correct
statement of law. See State Farm, 538 U.S. at 426; Gore,
517 U.S. at 581. Moreover, such an instruction would help
cabin a jury’s determination of punitive damages and reduce
the likelihood of the jury returning a grossly excessive and
unconstitutional award. See Haslip, 499 U.S. at 19 (citation
omitted) (warning that “unlimited jury discretion ...in the
fixing of punitive damages may invite extreme results that jar
one’s constitutional sensibilities”). In State Farm, this Court
held that juries must be instructed on the constitutionally-
imposed territorial \imitations on punitive damage awards,
explaining that “[a] jury must be instructed . . . that it may not
use evidence of out-of-state conduct to punish a defendant
for action that was lawful in the jurisdiction where it oc-
curred.” State Farm, 538 U.S. at 422 (emphasis added).
This Court should grant review and hold that juries must be

18

instructed on the peer eee iem ened “reasonable rela-
tionship” limitation as well.

Sin Chine Ritts Cate ieee ene
flicts with the approach followed by the Fourth Circuit. In
Johnson v. Hugo’s Skateway, 974 F.2d 1408, 1415, 1418 (4th
Cir. 1992) (en banc), the court beld Virginia’s punitive dam-
age charge unconstitutional because the jury was not required
to be instructed that punitive damages must be proportional
to compensatory damages. See also Mattison v. Dallas Car-
rier Corp., 947 F.2d 95, 109-10 (4th Cir. 1991) (jury impos-
ing punitive damages under South Carolina law must be in-
structed that “any penalty imposed should bear a relationship
to the nature and extent of the conduct and the harm
caused”).

CONCLUSION

As the decision below vividly demonstrates, the lower
courts are confused over how to apply the ratio guidepost.
This case presents an excellent vehicle for resolving these
important and recurring questions.

The petition for a writ of certiorari should be granted.

Respectfully submitted.
Of Counsel: THEODORE J. BOUTROUS, JR.
HUGH F. YOUNG, Jr. Counsel of Record
PRODUCT LIABILITY THOMAS H. DUPREE, JR.

ADVISORY COUNCIL, INC. GIBSON, DUNN & CRUTCHER LLP
1850 Centennial Park Drive 1050 Connecticut Avenue, NW

Suite 510 Washington, DC 20036-5306
Reston, VA 20191 (202) 955-8500
(703) 264-5300

Counsel for Amicus Curiae

May 1, 2006

[ i °
Pin

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CORPORATE MEMBERS OF
THE PRODUCT LIABILITY ADVISORY COUNCIL

3M

Altec Industries

Altria Corporate Services, Inc.
American Suzuki Motor Corporation
Amgen Inc.

Andersen Corporation
Anheuser-Busch Companies
Appleton Papers, Inc.

Arai Helmet, Ltd.

Astec Industries

BASF Corporation

Bayer Corporation

Bell Sports

Beretta U.S.A Corp.

BIC Corporation ey
Biro Manufacturing Company, Inc.
Black & Decker (U.S.) Inc.

BMW of North America, LLC
Boeing Company

Bombardier Recreational Products
BP America Inc.

Bridgestone Americas Holding, Inc
Briggs & Stratton Corporation
Bristol-Myers Squibb Company
Brown-Forman Corporation
CARQUEST Corporation
Caterpillar Inc.

Chevron Corporation

Continental Tire North America, Inc.
Cooper Tire and Rubber Company
Coors Brewing Company

Crown Equipment Corporation
DaimlerChrysler Corporation
Deere & Company

2a

The Dow Chemical Company

E & J Gallo Winery

E.I1. DuPont De Nemours and Company
Eaton Corporation

Eli Lilly and Company

Emerson Electric Co.

Engineered Controls International, Inc.
Estee Lauder Companies

Exxon Mobil Corporation

Ford Motor Company

Freightliner LLC

Genentech, Inc.

General Electric Company

General Motors Corporation
GlaxoSmithKline

The Goodyear Tire & Rubber Company
Great Dane Limited Partnership
Guidant Corporation

Harley-Davidson Motor Company

The Heil Company

Honda North America, Inc.

Hyundai Motor America

ICON Health & Fitness, Inc.

Illinois Tool Works, Inc.

International Truck and Engine Corporation
Isuzu Motors America, Inc.

Jarden Corporation

Johnson & Johnson

Johnson Controls, Inc.

Joy Global Inc., Joy Mining Machinery
Kawasaki Motors Corp., U.S.A.

Kia Motors America, Inc.

Koch Industries

Kolcraft Enterprises, Inc.

Komatsu America Corp.

Kraft Foods North America, Inc.
Lincoln Electric Company

3a

Magna International Inc.

Masco Corporation

Mazda (North America), Inc.

McNeilus Truck and Manufacturing, Inc.
Medtronic, Inc.

Mercedes-Benz of North America, Inc.
Merck & Co., Inc. Office of General Counsel
Michelin North America, Inc.

Microsoft Corporation

Mine Safety Appliances Company
Mitsubishi Motors North America, Inc.
Nintendo of America, Inc.

Niro Inc.

Nissan North America, Inc.
Novartis Consumer Health, Inc.
Novartis Pharmaceuticals Corporation
Occidental Petroleum Corporation
PACCAR Inc

Panasonic

Pentair, Inc.

Pfizer Inc.

Pharmacia Corporation

Porsche Cars North America, Inc.
PPG Industries, Inc.

Purdue Pharma L.P.

Putsch GmbH & Co.KG

The Raymond Corporation
Raytheon Aircraft Company
Remington Arms Company, Inc
Rheem Manufacturing

RJ Reynolds Tobacco Company
Sanofi-Aventis

Schindler Elevator Corporation
SCM Group USA Inc.

Shell Oil Company

The Sherwin-Williams Company
Smith & Nephew, Inc.

4a

St. Jude Medical, Inc.

Sturm, Ruger & Company, Inc.
Subaru of America, Inc.

Synthes (U.S.A.)

Terex Corporation

Textron, Inc.

Thomas Built Buses, Inc.

TK Holdings

The Toro Company

Toshiba America Incorporated
Toyota Motor Sales, USA, Inc.
TRW Automotive

Tyson Foods, Inc.

UST (U.S. Tobacco)

Vermeer Manufacturing Company
Volkswagen of America, Inc.
Volvo Cars of North America, Inc.
Vulcan Materials Company

Water Bonnet Manufacturing, Inc.
Watts Water Technologies, Inc.
Whirlpool Corporation

Wyeth

Yamaha Motor Corporation, U.S.A.
Yokohama Tire Corporation
Zimmer, Inc.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0249%3A06. Public record. Not legal advice.