Amicus Curiae Brief — Philip Morris USA v. Williams

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| FILED

No. 05-1256 JUL 28 250%

In the Supreme Court of the Cinkeresenacs |

PHILIP MORRIS USA, PETITIONER

MAYOLA WILLIAMS, RESPONDENT

On Writ Of Certiorari

To The Supreme Court Of Oregon

BRIEF FOR THE NATIONAL ASSOCIATION OF

MANUFACTURERS, THE PHARMACEUTICAL

RESEARCH AND MANUFACTURERS OF AMERICA,

THE AMERICAN CHEMISTRY COUNCIL,

AND BUSINESS ROUNDTABLE

AS AMICI CURIAE IN SUPPORT OF PETITIONER

JAN S. AMUNDSON GENE C. SCHAERR

QUENTIN RIEGEL Counsel of Record

National Association of STEFFEN N. JOHNSON

Manufacturers JEFFREY M. ANDERSON

1331 Pennsylvania Ave., N.W. Winston & Strawn LLP

~ Washington, D.C. 20004 1700_K Street, N.W.

(202) 637-3000 Washington, D.C. 20006

(202) 282-5000

CONAN P. GRAMES

DIANE BIERI LINDA T. COBERLY

Pharmaceutical Research & Winston & Strawn LLP

Manufacturers of America 35 West Wacker Drive

950 F Street; N.W., Suite 300 Chicago, Illinois 60601

Washington, D.C. 20004 (312) 558-5600

(202) 835-3400

Counsel for Amici Curiae

[Additional counsel on inside cover]

Eiertirtser cena REELS eer INT alee

WALSON-EPES PRINTING CO., INC. — (202) 789-0096 — WASHINGTON, D.C. 20001

DONALD D. EVANS

American Chemistry Council

1300 Wilson Blod.

Arlington, Virginia 22209

(703) 741-5000

MARIA GHAZAL

Business Roundtable

1717 Rhode Island Ave., N.W.,

Suite 800

Washington, D.C. 20036

(202) 496-3268

Speen

QUESTIONS PRESENTED

Although this Court granted review of two questions,

amici curiae will address only the following question:

Whether due process permits a jury to punish a defendant

based on alleged harm to non-parties, where the named

plaintiff has not satisfied the requirements for proceeding in

a class action format or otherwise established that she and

the non-parties have such common interests that any

judgment as to her should have preclusive effect in future

actions involving the non-parties.

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TABLE OF CONTENTS

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EELS OTT EL OLN i

I TI aaa iesieesecevectncoeeecrnevinnnpeesnsersrernntones iv

INTRODUCTION AND INTERESTS OF AMICI

a a SEERA DEE IE 1

al 2

SUINMIGABRY OF ATRGUINGTINT occas escscecevececsscvescccscvcsvssocecsccsvvesees 3

I a 4

1. The Presentation Of Punitive Damages Claims

Often Violates This Court’s Admonition Against

Allowing Punitive Damages Litigation To Become

“A Platform To Expose And Punish” A

Company’s Or Industry’s “Perceived Deficiencies”

In-Its Dealings With Third Parties. ...............:scecceseeeseesees 5

A. Juries Are Often Asked To Base Punitive

Awards On Harm To Third Parties. ........................... 6

B. Such Requests Are Often Coupled With

Explicit Or Implicit Pleas That Juries Must

Assume A Leading Role In Regulating The

Conduct Of Corporate Defendants And, In

Many Cases, Entire Industries. ...............:.cccsccseeeeseeetes 8

Il. Allowing Jurors To Punish Or _ Regulate

Defendants Based Upon Alleged Harm To Third

Parties Violates Both Historical And

Contemporary Conceptions Of Procedural Due

PIII, axsvtcinenennciatetantnindsinsensnertviccmianinebimeennitnabinenetitias 14

A. Punishing A Defendant For Alleged Harm To

Third Parties Violates Due Process When The

Named Plaintiff's Claim Is Not Genuinely

Representative Of The Third Parties’ Claims. ......... 15

- iii

B. Allowing Plaintiffs To Recover Punitive

Damages For Harms To Non-Parties Without

Demonstrating That Their Claims Are

Genuinely Representative Of The Non-Parties’

Claims Also Deprives Defendants Of

Reasonable Notice Of The Law’s

TURGREIPTRRGERG, xccncrescocrenesseneyenvpemeaneseneqnsnccianscapsnntalnioned 27

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TABLE OF AUTHORITIES

Page(s)

CASES:

Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997) ..........:+0.-22

Andrews v. AT&T Co., 95 F.3d 1014 (11th Cir. 1996) .............. 25

Ayres v. Cooper, 58 U.S. (17 How.) 591 (1854).........2:c-cceseeceeeees 18

BMW of North Am. v. Gore, 517 U.S. 559 (1996)............. 9, 24, 27

Barnes v. American Tobacco Co.,

Fg ee 22

Beatty v. Kurtz, 27 U.S. (2 Pet.) 566 (1829)..........ccccceceeseeeeeeeenees 17

Blonder-Tongue Labs., Inc. v. University of lll. Found.,

ae re ee rc crcncecsscccncsnenscscssemmncsszrresesmnescestmacseneeesen 22

Bogosian v. Gulf Oil Corp.,

561 F.2d 434 (3d Cir. 1977) ...........scccccesssessssererseeses soseeseservene 22

Broussard v. Meineke Discount Muffler Shops, Inc.,

ee 23, 25

BuckmanCo. v. Plaintiffs’ Legal Comm.,

ee ee Se ee rtesinestrnsincerensnesepssenscncccesecncccensncoapatensenenesans 12

Buell-Wilson v. Ford Motor Co., 2006 WL. 2002858

(Cal. Ct. App. July 19, 2006).......... ondeninathdgeinasesigeecetbamneamupeaien 12

Castano v. American Tobacco Co.,

OS PSG TEE CB Cie. BGBB) .nccccccccseccscccscrsccescrsecssessossscece 22, 25

Coil v. Wallace, 24 N.J.L. 291 (1854)........cccccecescecseseseeerensenserenes 20

Conzelmann v. Northwest Poultry & Dairy Prods. Co.,

Crawford v. Washington, 541 U.S. 36 (2004) ........ccecceseecereesereees 16

Discart v. Otes, 30 Seld. Society 137

ee 17

Dohany v. Rogers, 281 U.S. 362 (1930) ..s..ccssssssssssseseee sssseee 15-16

Ex parte Lange, 85 U.S. (18 Wall.) 163 (1873)..............sceceeeseeee 24

Foster v. Scoffield, 1 John. 297 (N.Y. Sup. Ct. 1806) ...........0:0+. 20

Ganssly v. Perkins, 30 Mich. 492 (1874) ........ccccccsscesceeseeereeseees 21

Geier v. American Honda Motor Co.,

gg 8, aT 12

General Tel. Co. v. Falcon, 457 U.S. 147 (1982) -sceccssscessoee 22. 23

Goldberg v. Kelly, 397 U.S. 254 (1970) .........cccccccssseeceeeeseeees 15, 16

Hansberry v. Lee, 311 U.S. 32 (1940) .........cccccceceeceseseeeenesens 21, 23

Hawaii v. Standard Oil Co., 405 U.S, 251 (1972)........ccsseeseeeseees 25

Healy v. Beer Institute, Inc., 491 U.S. 324 (1989) ..00......ceeceeeeee 13

Honda Motor Co. v. Oberg, 512 U.S. 415 (1994) .....0......e0e. 14, 26

In re Brand Name Prescription Drugs Antitrust Litig., zs

er Gee Ce i ccrcctenscantecsnsetccnsectesennmnsscncsntenten 24

In re Bridgestone/Firestone, Inc.,

yp Ee 13

Lindsey v. Normet, 405 U.S. 56 (1972) ......tscccccsceeseseererseeeeseneneees 15

McArthur v. Scott, 113 U.S. 340 (1885).........:cccccceceseeeeserennereeeers 19

Murray's Lessee v. Hoboken Land & Improvement Co.,

oe A 14, 15

Ownbey v. Morgan, 256 U.S. 94 (1921) .......:cecceceseeresesserensnerereees 15

Phelin v. Kenderdine, 20 Pa. 354 (1853) .......c.ccecccssseseeseesseseeeneees 20

Phillips Petroleum Co. v. Shutts, 472 US. 797 (1985).........21, 23

Richards v. Jefferson County, 517 U.S. 793 (1996)...........-0000-0+0 22

Roginsky v. Richardson-Merrell, Inc.,

Le 24

Schlesinger v. Reservists Comm. to Stop the War,

SS STS SESE Ee ore 29

Silkwood v. Kerr-McGee Corp., 464 U.S. 238 (1984) ...... 12, 29-30

Smith v. Swormstedt, 57 U.S. (16 How.) 288 (1853) ....... 4,17,18

Sprague v. General Motors Corp.,

a a a re Ga Fe crerceenscreccerstinmeremneeemnncn 23

State Farm Mut. Auto. Ins. Co. v. Campbell,

a Ga eR ecrc sce cnscsnessnsnctatenensemenenntnecsceensscnamenti passim

Stevenson v. Belknap, 6 lowa 97 (1858) .............c.ccesssesserseneeenes 20

Supreme Tribe of Ben-Hur v. Cauble,

a OD, I Ga rcccccengnnsennennmenmescansqcenseemasecsnenemnscennen 19, 23

TXO Prod. Corp. v. Alliance Res. Corp.,

es Gi trcncestntenictrencinteenenegpesemienmennrensentetonen 14

United States v. Oregon Lumber Co.,

Be Ce Be Cr ccetenscccnepseasenpstzssrmtenpctnesnstmnanincenemsssemann 24

Village of Hoffman Estates v. Flipside, Hoffman Estates,

Belg TO CA Sa ctrtrcrrnrstenstetrneenmiememenneeen 27

Wallace v. Adams, 204 U.S. 415 (1907) .........cccccessseceeseneecersneeres 19

Washington v. Glucksberg, 521 U.S. 702 (1997) ..........cccecceseeses 14

Weaver v. Bachert, 2 Pa. 80 (1845) ...............csccecsssseesseeeeereneensees 20

West v. Randall, 29 F. Cas. 718 (C.C.D. R.L. 1820).............. 16-17

Western Union Tel. Co. v. Pennsylvania,

ee, Oe I cseinteetictniiecienitiarnttinincinipentinccciininemesenmmutts 24

Williams v. ConAgra Poultry Co.,

re Pe Ges ee ctesceencmsnsintenemecsenemneineenatanannees 25

Williams v. Philip Morris, Inc., é

48 P.3d 824 (Or. App. 2002) A a. eNO ae 25

Wood v. Dummer, 30 F. Cas. 435 (C.C.D. Me. 1824).............. ae

STATUTES AND RULES:

FD a is re Sti nercterentcciinceniicnttncpnttpentecnnmnsinnsintinagnianiesinel 22

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MISCELLANEOUS:

ABA Section of Litigation, Survey of State Class

PT lt RE 28

Thomas B. Colby, Beyond the Multiple Punishment

Problem: Punitive Damages as Punishment for

Individual, Private Wrongs, 87 Minn. L. Rev. 583

William Glaberson, $8 Million Award to Widow

Punishes Tobacco Company, N.Y. Times

Se A TE erctcriertntinrinceaienseitnintanenintnestedesennetinnasiins 11

William Glaberson, Punitive Award Sought for

Smoker's Widow, N.Y. Times (Jan. 8, 2004), at B3.............. 11

Alex Kozinski, The Case of Punitive Damages v.

Democracy, Wall St. J. Jan. 19, 1995), at A18 ...........cceneeees 9

A. Mitchell Polinsky & Steven Shavell, Punitive

Damages: An Economic Analysis, 111 Harv. L.

SP Ie escnnesssnrencentesacuensestemensenstemmnstnnnncemteastessnensenn 29

Punitive Award Asked of Jury in Tobacco Suit,

Pe tied: HEINE Ws, SEEGER De csncvcinscnsenetnssetsentcnpmmnesncqnentesmennnens 11

W. Kip Viscusi, Regulation Through Litigation (2002).............. 13

W. Kip Viscusi, The Social Costs of Punitive Damages

Against Corporations in Environmental and Safety

a Sa Be, Ba I cetccttceniccettctemnnnne 29

Stephen C. Yeazell, From Group Litigation to Class

Action, Part I: The Industrialization of Group

Litigation, 27 UCLA L. Rev. 514 (1980) ..............cccccceceeseeees 17

INTRODUCTION AND INTERESTS OF AMICI CURIAE

This case illustrates a practice, all too common in modern

civil litigation, in which plaintiffs’ lawyers urge juries to use

punitive damage awards to “send a message” to corporate

defendants — not only for the conduct at issue in the case at

hand, but for alleged harms to third parties whose claims

were not tried to the jury. These appeals, moreover, are

made without satisfying the requirements for class action

suits, adopted in virtually every jurisdiction, or establishing

by other means that the non-parties have such a common

interest with the named plaintiff that a judgment on the

named plaintiff's claim should have preclusive effect in

future cases brought by the non-parties. In addition, juries

are often told that federal and state regulatory agencies have

failed to provide adequate protection against corporate

wrongdoing, and that the jurors must do the job that the

government failed to do. As a result, punitive-damages

claims all too often devolve into a kind of quasi-class-action

litigation, undertaken with the purpose and effect of

displacing (or at least second-guessing) the regulatory

regimes established by elected public officials.

Amici Curiae are associations of corporations, and their

most senior officers, representing some of the largest sectors

of the nation’s economy. They believe that allowing punitive

damages for harm to non-parties is not only bad for

American businesses, their employees, and the customers

they serve, but also inconsistent with historical practice

under the common law and contemporary practice under the

class action procedures of every State. Such awards deprive

defendants of their property without notice and an

opportunity to be heard, in violation of core principles of

procedural due process.?~

' No counsel for a party authored this brief in whole or in part,

and no person or entity other than the amici, their members, or their

counsel, made a monetary contribution to the preparation or

A more complete statement of interest of each amicus is

set forth in Appendix A to this brief.

STATEMENT

Like most cases in which punitive damages are sought,

this case arises from a tragic event—the death of Jesse

Williams, who smoked cigarettes for about 47 years. Pet.

App. 2a. Respondent, Williams’ widow, sued petitioner for

negligence and fraud, alleging that Williams’ death resulted

from his reliance on petitioner's campaign to undercut public

information about the risks of smoking. The jury found that

Williams was 50 percent responsible for his own injury.

Nevertheless, it found petitioner liable for negligence and

fraud and awarded respondent $21A85.80 in economic

damages and $800,000 in non-economic damages.

Respondent also sought punitive damages based in large

part on respondent's suggestion in closing argument that

petitioner's alleged misconduct must have harmed

thousands of other smokers—three or four percent of all

smokers in Oregon. Respondent, however, adduced no

evidence that could support a finding that anyone other than

Williams . actually relied on _ petitioner's alleged

misrepresentations or that those misrepresentations actually

caused injuries to any other person. Accordingly, to ensure

that the jury could not award damages based on unproven

injuries to non-parties, petitioner requested an instruction

directing the jury that it was ““not to punish the defendant

for the impact of its alleged misconduct on other persons,

who may bring lawsuits of their own in which other juries

can resolve their claims and award punitive damages for

those harms, as such other juries see fit.” Pet. App. 17a-18a.

The court refused to give this instruction, and the jury

returned a $79.5 million punitive award. The Oregon

Supreme Court ultimately affirmed the award in its entirety,

submission of the brief. Pursuant to Rule 37.3(a), petitioner and

respondent have filed with the Court a blanket consent for all amici.

holding that it was wholly proper for the jury to impose

punitive damages for harms to non-parties. Id. at 20a-21a.

SUMMARY OF ARGUMENT

I. The Oregon Supreme Court's decision illustrates an

all-too-frequent tendency of punitive-damages litigation to

become, contrary to this Court’s admonition, “a platform to

expose, and punish, the perceived deficiencies” of a

defendant's or industry’s operations “throughout the

country.” State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S.

408, 420 (2003). That is because, in too many cases, trial

courts allow plaintiffs to recover punitive damages from

defendants based on unadjudicated allegations of harm to

non-parties. Indeed, trial courts allow plaintiffs to recover

such damages without satisfying the requirements of a class

action or otherwise establishing that the non-parties have

such a common interest with the plaintiff that a judgment in

her case would be binding in later cases brought by the non-

parties.

Such practices effectively circumvent the rule that “[d]ue

process does not permit courts, in the calculation of punitive

damages, to adjudicate the merits of other parties’ hypotheti-

cal claims.” Id. at 423. In some cases they also violate tlve rule

prohibiting States from regulating conduct outside their

jurisdictions. Id. at 421. And they often have significant

ripple effects because a single large punitive damages award

typically serves as a bellwether for settlement — dramatically

increasing the leverage of those who seek to impose quasi-

regulatory demands on entire industries.

Il. Both traditional and contemporary notions of due

process prohibit imposing punitive darnages for harms to

non-parties whose claims the defendant has not had a

meaningful opportunity to contest. To be sure, the law has

long permitted plaintiffs whose claims are representative of

others’ claims to recover on behalf of the group. For as long

as representative actions have existed, however, courts have

required named plaintiffs to establish that the others whom

they seek to represent have such a common interest with the

named plaintiff that the judgment on behalf of the class

representative may fairly be given preclusive effect in future

cases. As the Court stated in Smith v. Swormstedt, where “a

few are permitted to sue * * * on behalf of the many, care must

be taken that persons are brought on the record fairly representing

the interest or right involved, so that it may be fully and honestly

tried.” 57 US. (16 How.) 288, 303 (1853) (emphasis added).

Today, this basic sense of fairness is reflected in the class

action rules of virtually every State. Those rules require

plaintiffs to satisfy requirements such as commonality and

typicality to ensure that defendants are not deprived of a

hearing on issues that require individualized determinations.

But even if a class action were not the exclusive means of

recovering for harm to non-parties (which is the most

reasonable inference to be drawn from the cle ss action rules),

the requirements for representation may not be dispensed

with altogether. To allow a plaintiff to recover damages for

alleged class-wide wrongs without establishing that her

claims are truly representative of the class, or that the other

requirements for representative actions are _ satisfied,

deprives the defendant of any opportunity for an effective

defense. Such a practice also threatens to subject defendants

to multiple liability for the same wrongs, because non-parties

who later bring their own claims are not barred from

recovering by the rules of claim preclusion that would apply

if the earlier suit had been certified as a class action.

ARGUMENT

The decision below illustrates why juries may not be

allowed to impose punitive damages based on alleged harm

to non-parties. Part 1 of this brief describes the various ways

in which plaintiffs’ lawyers, with the blessing of trial courts,

use punitive damage claims to convert ordinary civil cases

into quasi-class-action litigation, often in an attempt to

impose sweeping regulation on entire industries. Part Il

explains how this practice deprives civil defendants of their

opportunity to defend themselves against the non-parties’

claims and subjects them to the risk of multiple liability for

the same conduct -— in violation of due process.

I. The Presentation Of Punitive Damages Claims Often

Violates This Court’s Admonition Against Allowing

Punitive Damages Litigation To Become “A Platform

To Expose And Punish” A Company’s Or Industry’s

“Perceived Deficiencies” In Its Dealings With Third

Parties.

This Court has previously explained that “[d]ue process

does not permit courts, in the calculation of punitive

damages, to adjudicate the merits of other parties’

hypothetical claims against a defendant.” State Farm, 538

US. at 423. But that is precisely what the Oregon courts

allowed the jury to do in this case. The trial judge refused to

instruct the jury that it was not allowed to punish petitioner

for alleged harms to non-parties. And respondent's counsel

took full advantage, seeking a punitive damages award

based on the theory that three or four percent of all smokers

in Oregon would get cancer from smoking Marlboros. See

Pet. 2. Indeed, in closing argument respondent's counsel

expressly appealed to the jury to punish petitioner for those

alleged harms: “It’s fair to think about how many other Jesse

Williams[es] in the last 40 years in the State of Oregon there

have been. It’s more than fair to think about how many more

are out there in the future.” Ibid.

As explained below, such tactics are all too common in

modern punitive-damages litigation. Sometimes, as in this

case, the plea is overt. Other times it is less direct. But in

either case the result violates this Court’s admonition that

_punitive-damages litigation must not become merely “a

platform to expose, and punish, the perceived deficiencies of

(the defendant's or the industry’s] operations throughout the

country.” State Farm, 538 U.S. at 420.

A. Juries Are Often Asked To Base Punitive Awards

On Harm To Third Parties.

One of the most common means by which plaintiffs’

counsel attempt to obtain large punitive awards is by directly

invoking alleged harms to parties not before the court.

Indeed, in many cases plaintiffs’ counsel neglect not only to

prove any damages to these non-parties, but to prove that

they are similarly situated to the plaintiff in any critical

respect. Examples are collected in Appendix B to this brief.

GMAC v. Baymon, an insurance case, is illustrative. See

App. 3a. There the plaintiff sued GMAC for fraud, claiming

that she was overcharged by $762 for automobile insurance.

Plaintiff's counsel exhorted the jury to do justice for the

“600,000 other Menola Baymon{s] in Humphreys County, in

Sunflower County, in Holmes County, in Memphis,

Tennessee, and everywhere else in this country.” Ibid. The

jury awarded just $35,000 in compensatory damages, but

tacked on a $5 million punitive damages award.

Similarly, in Bullock v. Philip Morris USA, Inc., App. 4a,

another smoking-and-health case, the plaintiff's counsel

appealed to the jury to impose punitive damages based on

the allegation that for every smoker who sues Philip Morris,

28,000 die from smoking. The jury obliged, awarding $28

billion in punitive damages —$1 million for each of the 28,000

people referenced in the plaintiff's closing argument.

Likewise, in Diamond v. General American Life Insurance

Co., App. 5a, a. case involving an insurer’s interpretation of a

five-year limitation on disability benefits, the plaintiff was

allowed to introduce evidence that the insurer had identified

a total of 58 policyholders (including the plaintiff) with large

potential claims and attempted to buy out their policies at

discounts. Plaintiff's counsel repeatedly referred to the 57

other policyholders in seeking punitive damages, and the

jury imposed a punitive award of $58 million—exactly 58

times the amount of the compensatory award. As the trial

court recognized, the jury “almost to a certainty” arrived at

—

its punitive award by multiplying $1 million by ‘e

policyholders whose alleged harms were not proven at trial

and adding $1 million for the plaintiff. App. 6a. Even so, the

court let $18 million of the punitive award stand.

A similar appeal to the jury was made in Brown v. Borg

Warner, a recent asbestos case. See App. 3a. There the

plaintiff, a mechanic, brought suit seeking recovery for harm

from exposure to asbestos in disc brakes. The plaintiff did

not seek to establish the similarity of any non-party’s claims

to his own, let alone to certify a class. Nonetheless, his

counsel’s appeal for punitive damages was based on harm to

non-parties who supposedly suffered similar injuries: “[if]

the Borg Warner Corporation and the asbestos industry

turned its back on safety and closed its eyes on the health of

others, then it is your duty and responsibility to award a

substantial amount of exemplary damages” not only for

“William: Brown individually, but [for] all the William

Browns * * * out there doing their job.” App. 4a.

The plaintiff's counsel then emphasized the same point in

a manner calculated to result in the largest possible punitive

award: “And let me assure you, ladies and gentlemen, that

your voice will be heard. It will be heard in Chicago by the

Borg Warner Corporation. It will be heard by an industry

and it will be heard by all the William Browns of the world,

and by all the corporations that would turn their back and

close their eyes to the safety and welfare of the working

people.” Ibid.

’ City of Modesto v. Tle Dow Chemicai Company, provides

yet another illustration of this practice. See App. Ila. There,

a city sued makers of perchloroethylene, a dry cleaning

agent, and makers of dry cleaning equipment, alleging that

perchloroethylene was defective and that the defendants

were responsible for contaminating city water. During its

appeal for punitive damages, the city repeatedly invited the

jury to punish the defendants for contaminating wells

nationwide. In so doing, the city invoked a single study

suggesting that 7 to 10 percent of wells nationwide contain

some level of perchloroethylene:

What would a responsible corporation do if they learned

that their product was in 10 percent of the wells in the

country? * * *

If you know that your product has caused a problem of

that magnitude, you can’t blame it on a mom-and-pop

dry cleaner. That couldn’t do something all over the

country. * * *

[T]hey acted in conscious disregard of cities like Modesto

and other communities throughout the country.

After all, if we’re talking about 10 percent of the wells in

America, you're talking about the water supply for very

large numbers, probably millions of people.

Ibid. The city, of course, had not even attempted to prove

that the defendants were responsible for the presence of

perchloroethylene in other communities’ wells, let alone that

such contamination was unlawful or harmed anyone. But

that did not stop the jury from imposing $175 million in

punitive damages on top of a $3.2 million compensatory

award. As the jury’s foreman told the press: “We wanted to

send a message that this product should be taken off the

market.” See Dennis Pfaff, Jury Orders $175 Million to Be Paid

by Chemical Firms, San Francisco Daily J. (June 14, 2006), at 2.

These are just some of the myriad cases in which jurors —

have been invited and allowed to base punitive awards on

unadjudicated allegations of harm to non-parties. See

Appendix B.

B. Such Requests Are Often Coupled With Explicit Or

Implicit Pleas That Juries Must Assume A Leading

Role In Regulating The Conduct Of Corporate

Defendants And, In Many Cases, Entire Industries.

In arguing for punitive damages, plaintiffs’ lawyers

generally (though not always) adhere to the letter of this

Court's ruling in State Farm that States have no “legitimate

concern” in allowing juries to “impos[e] punitive damages to

punish a defendant for unlawful acts committed outside of

the State’s jurisdiction.” 538 U.S. at 421; see also BMW of

North Am. v. Gore, 517 U.S. 559, 571 (1996). Nonetheless,

plaintiffs’ counsel frequently achieve the same result—and

thereby also obtain damages for harms to third parties—by

inviting jurors to serve as regulators of the entire industry of

which the defendant is a part. This is yet another way in

which punitive-damages litigation becomes a “platform” to

punish a company’s or an industry’s “operations throughout

the country.” State Farm, 538 US. at 420.

1. As the City of Modesto case confirms, counsel seeking

punitive damage awards often explicitly encourage juries to

award punitive damages at such a level as to take a product

“off the market.” Indeed, as Judge Kozinski has observed:

[JJurors across the country are regularly urged to impose

punitive damages large enough to “send a message” to

the defendant and others similarly situated. ***

Interviews with jurors in case after case reveal that they

have taken these admonitions to heart and have imposed

punitive damages to “teach ‘em a lesson” or “send a

message.” *** The message juries send is basically

“Stop.” Implicit in this.is a judgment that the conduct in

question is not merely tortious, meaning that those

engaging in it should pay compensation when someone

gets injured, but so wrongful that it should be abandoned

altogether.

Alex Kozinski, The Case of Punitive Damages v. Democracy,

Wall St. J. (Jan. 19, 1995), at A18.

Our research confirms Judge Kozinski’s observations.

For example, in a typical case involving a claim that the drug

Pondimin (sometimes used in a combination called “fen-

phen”) was unreasonably dangerous, plaintiffs’ counsel told

the jury:

You are more powerful right now than I'll ever be. You

are more powerful than anyone in this room, in this city,

in this state, or in this nation with regard to what you can

say to a huge drug company and how you can get them

to change. ***

[Y]ou are the voice of this community, this county, this

state, this nation. * * * [YJou have the ability to make huge

changes in the pharmaceutical industry and to make a

huge change in this company. Send them a message.

Your verdict is going to be read by their CEO and by

their board of directors, and by boards of directors of

every pharmaceutical company in the world.

Batson v. Wyeth, App. 9a-10a. The jury obliged, awarding

$25.35 million in punitive damages on top of a $3.9 million

award of compensatory damages.

2. Other times juries are expressly invited to use punitive

damages as a vehicle for establishing standards of conduct

applicable to entire industries. For example, the plaintiff's

counsel in Brown (discussed above) told the jury: “when you

award exemplary damages, you establish standards of

conduct, standards of decency, standards of corporate

accountability, standards of corporate responsibility” for the

disc brake industry. App. 4a.

Similarly, some plaintiffs’ lawyers openly appeal to jurors

to “send a message” to “others in the industry,” to “warn

[them] as to what the standards should be” (Sunburst Sch.

Dist. No 2. v. Texaco, App. 14a), or to “change the way this

insurance is done” (GMAC v. Baymon, App. 3a). See also

Flores v. Borg-Warner Corp., App. 15a (“send a message that

the people of Corpus Christi, Texas are not gonna put up

with this kind of behavior from Borg-Warner or from any

other corporation”). Indeed, some such appeals to juries

border on attempts to invite jurors to punish legal behavior.

As the plaintiffs’ counsel told the jury in a smoking-and-

health case resulting in a $145 billion award of punitive

damages: “Legal don’t make it right.” Engle v. Liggett Group,

Inc., App. 8a.

In making such appeals, moreover, plaintiffs’ lawyers

often assert to juries that the existing regulatory regimes

established through democratic means are inadequate or

corrupt arid that jurors must step into the vacuum. At the

trial level in State Farm, for example, the plaintiff's attorneys

argued: “The only regulators of insurance companies are

jurors like you. * * * [YJou are the regulators. We do not have

objective and effective regulators of the insurance industry.”

App. lla. And in another typical case, plaintiff's counsel

convinced a jury to return a $60 million punitive damages

award against an auto maker by arguing: “[N]Jobody else is

going to stop this. *** The government's not going to do

anything. The only way to stop the kind of misconduct that

you've heard about in this case *** is with the amount of

your punitive damages verdict. * * * You are the regulators.”

Rodriguez v. Suzuki Motor, App. 10a (emphasis added).

Similarly, in Frankson v. Brown & Williamson Tobacco

Corp., App. 9a, the plaintiff's counsel told the jury: “We're

going to ask you to send a message to the defendant * * * and

not just the defendant, but the tobacco industry and to

corporate America as well.” William Glaberson, Punitive

Award Sought for Smoker’s Widow, N.Y. Times (Jan. 8, 2004), at

B3. He added: “You have the power, and if you don’t do it,

who will? Not President Bush. Not Governor Pataki. Not

Judge Kramer [the trial judge].” Punitive Award Asked of Jury

in Tobacco Suit, N.Y.L.J. (Jan. 8, 2004), at 1. The jury obliged,

returning $350,000 in compensatory damages and $20 million

in punitive damages. William Glaberson, $8 Million Award to

Widow Punishes Tobacco Company, N.Y. Times (Jan. 10, 2004),

at B1; see also Lopez v. American Home Prods., App. 12a

(awarding $45 million in punitive damages on top of a $11.6

million compensatory award, based on an appeal to “send a

message to this country,” “a message to Washington”).?

Given these tactics, it is no wonder that runaway punitive

damage awards have enabled plaintiffs’ lawyers to exploit

juries as “an unauthorized regulatory medium.” Silkwood v.

Kerr-McGee Corp., 464 US. 238, 283 (1984) (Powell, J.,

dissenting). Indeed, the specter of a huge punitive damage

award is often the most powerful weapon at the disposal of

plaintiffs’ lawyers engaged in coordinated efforts to use the

civil justice system to promote regulatory ends ~ including

restrictions on tobacco, guns, and other products — that they

have failed to achieve through the democratic process.

2 Juries, moreover, have issued some of the largest punitive

damage award in cases where the defendant's conduct was in strict

compliance with federal regulations. For example, in Buell-Wilson

v. Ford Motor Co., 2006 WL 2002858 (Cal. Ct. App. July 19, 2006),

juries awarded $369 million and $98 million in punitive damages

against Ford and DaimlerChrysler, respectively, notwithstanding

the auto makers’ compliance with pertinent National Highway

Traffic Safety Administration standards. Such awards threaten to

subvert the regulatory systems established by elected officials and

expert administrative agencies. Imposing punitive damages for

quasi-regulatory purposes (e.g., to induce a civil defendant to take

its product off the market) thus implicates not only due process but

also principles of preemption. Cf. Buckman Co. v. Plaintiffs’ Legal

Comm., 531 U.S. 341 (2001) (state fraud-on-the-FDA claim was

preempted by the Medical Devices Amendments of 1976); Geier v.

American Honda Motor Co., 529 U.S. 861 -(2000) (federal motor

vehicle regulations preempted state-law defective design claims

predicated on the failure to install airbags).

3 As one commentator has noted, “[t]he advent of litigation about

products such as tobacco, guns, and lead paint [in the mid-1990s]

went well beyond the historical interactions of regulation and

litigation that have been of concern in the literature. No longer was

the issue one of litigation creating incentives that overlapped with

those resulting from regulation. Rather, litigation was being used

as the financial lever to force companies to accept negotiated

3. The regulatory effect of large punitive awards is~

magnified by consolidated proceedings, such as multidistrict

litigations, where plaintiffs wield tremendous pressure in

settlement negotiations. As Judge Easterbrook has observed:

“Aggregating millions of claims on account of multiple

products manufactured and sold across more than tén years

makes the case so unwieldy, and the stakes so large, that

settlement becomes almost inevitable—and at a price that

reflects the risk of a catastrophic judgment as much as, if not

more than, the actual merit of the claims.” In re Bridgestone/

Firestone, Inc., 288 F.3d 1012, 1015-1016 (7th Cir. 2002).

Moreover, a single large punitive damages award often

serves as a bellwether for settlement proceedings, vastly

enhancing the leverage of the plaintiffs’ lawyers in extracting

quasi-regulatory demands from a company or industry.

Through the settlement process, the regulatory effect of a

single state jury’s award is projected outside the state’s

borders, such that the “ practical effect” is to “control conduct

beyond the boundaries of the State,” Healy v. Beer Institute,

Inc., 491 U.S. 324, 336 (1989), notwithstanding State Farm and

the cases on which it relied. See 538 U.S. at 421.

Like limiting punitive damage awards to a single-digit

multiple of compensatory damages, making clear that juries

are prohibited from punishing defendants for unproven

harm to non-parties would prevent juries from assuming an

unauthorized and anti-democratic role as nationwide

regulators of product design and business behavior.

regulatory policies as part of the litigation. Thus litigation led to

regulation, but not regulation that went through the usual rule-

making process as a result of careful analysis by government

regulatory agencies subject to their legislative mandates. Rather,

the parties in the lawsuit negotiated regulatory changes as part of

the package to end the litigation.” W. Kip Viscusi, Regulation

Through Litigation 3 (2002).

II. Allowing Jurors To Punish Or Regulate Defendants

Based Upon Alleged Harm To Third Parties Violates

Both Historical And Contemporary Conceptions Of

Procedural Due Process.

Historical and contemporary conceptions of due process

give this Court ample tools for responding to this problem.

This Court has emphasized “from its first due process cases[]

[that] traditional practice provides a touchstone for

constitutional analysis.” Honda Motor Co. v. Oberg, 512 US.

415, 430 (1994). More specifically, the “Nation’s history, legal

traditions, and practices *** provide the crucial guideposts

for responsible decisionmaking that direct and restrain [this

Court's] exposition of the Due Process Clause.” Washington

v. Glucksberg, 521 U.S. 702, 721 (1997) (quotations and citation |

omitted). Moreover, where a practice is so aberrational as to

depart from the “settled usages and modes of proceedings

existing in the common and statute law,” Murray's Lessee v.

Hoboken Land & Improvement Co., 59 U.S. (18 How.) 272, 277

(1855), this Court will not hesitate to find that it violates due

process. In short, “history and ‘widely shared practice’ are

“a guide to determining whether a particular state practice so

departs from an accepted norm as to be presumptively

violative of due process.” TXO Prod. Corp. v. Alliance Res.

Corp., 509 U.S. 443, 457 (1993) (plurality opinion); see Oberg,

512 US. at 421 (“abrogation of a well-established common-

law protection against arbitrary deprivations of property

raises a presumption that [a State’s] procedures violate the

Due Process Clause”).

As shown below, neither traditional nor contemporary

notions of procedural due process permit the imposition of

punitive damages for alleged harms to non-parties where

(a) the defendant has not had a fair, meaningful opportunity

to contest, conclusively, the claims of those non-parties, or

(b) the defendant lacks adequate notice that it could be

punished for alleged harm to third parties. Indeed, when the

Court in State Farm noted that “[d]ue process does not permit

courts, in the calculation of punitive damages, to adjudicate

the merits of other parties’ hypothetical claims against a

defendant” (538 U.S. at 423), it was expressing a rule of law

deeply rooted not only in the common law, but also in the

contemporary practice of every American jurisdiction.

A. Punishing A Defendant For Alleged Harm To Third

Parties Violates Due Process When The Named

Plaintiff's Claim Is Not Genuinely Representative

. Of The Third Parties’ Claims.

It has long been settled that due process entitles civil

defendants to an “opportunity to answer,” Murray's Lessee,

59 U.S. (18 How.) at 280; a “right to be heard” on the claims _

asserted against them, Ownbey v. Morgan, 256 U.S. 94, 111

(1921); and a chance to “present every available defense,”

Lindsey v. Normet, 405 U.S. 56, 66 (1972). The means by which

these rights are protected may vary somewhat with “the

nature of the proceeding and the character of the rights

which may be affected by it.” Dohany v. Rogers, 281 U.S. 362,

369 (1930). But in all cases they must be protected. As the

Court put it in Goldberg v. Kelly: “The fundamental] requisite

of due process of law is the opportunity to be heard.” 397

U.S. 254, 267 (1970) (quotations omitted).

Here, however, petitioner was denied any reasonable

“opportunity to be heard” on the alleged harms to the

thousands of unidentified Oregon smokers on which the jury

based its punitive award. Respondent did not call any of

these non-parties as witnesses at trial; she did not give notice

of their identities at any point before trial; and she did not

attempt to show that they had such a commonality Of interest

with her that any judgment in the case should be binding on

those parties in later cases. In such circumstances, petitioner

could not fairly investigate, much less refute, the named

plaintiff's allegations of harm to these non-parties.

Allowing a jury to punish petitioner for these harms

without giving it an adequate opportunity to be heard, and ~

without procedures to ensure that any judgment will have a

preclusive effect in future litigation, is a flat violation of due

process. “In almost every setting where important decisions

turn on questions of fact, due process requires an opportun-

ity to confront and cross-examine adverse witnesses.”

Goldberg, 397 U.S. at 269; accord, e.g., Crawford v. Washington,

- 541 U.S. 36 (2004). Yet petitioner had no opportunity to test

the claims of its alleged victims, and thus no “reasonable

opportunity to be heard and to present [its] ** * defense” as

to those claims. Dohany, 281 US. at 362.

That is not to say that punishing defendants for harm to

absent persons is always unconstitutional. The law has long

permitted plaintiffs to bring representative suits on behalf of

others similarly situated, enabling the named plaintiff to

recover damages based in part on harms to others. However,

for as long as the law has allowed such suits, it has insisted

that the named plaintiff's claims be genuinely representative

of the non-parties’ claims and that there be such a

commonality of interest that a judgment in the initial case

will have preclusive effect in subsequent litigation involving

those same non-parties. As we now show, neither historic

nor contemporary practice allows the imposition of damages

(punitive or otherwise) based on harms to non-parties where

these conditions have not been satisfied.

1. Historic Practice. It was the general rule in equity that

“all persons materially interested” in a case “ought to be

made parties to the suit, however numerous they may be.”

West v. Randall, 29 F. Cas. 718, 721 (C.C.D. R.1. 1820) (Story,

Circuit Justice). Equity made an exception, however, where

“the parties are very numerous, and the court perceives, that

it will be almost impossible to bring them all before the court;

or where the question is of general interest, and afew may

sue for the benefit of the whole; or where the parties form a

part of a voluntary association for public or private purposes,

and may be fairly supposed to represent the rights and

interests of the whole.” Ibid.

Thus, Justice Story approved a representative suit against

a “class” of defendants where “[t]here is no complaint * * *

that the defendants now before the court do not represent

effectually the interests adverse to the plaintiffs.” See Wood

v. Dummer, 30 F. Cas. 435, 439 (C.C.D. Me. 1824) (Story,

Circuit Justice). And the Court in Beatty v. Kurtz, 27 US. (2

Pet.) 566, 579, 585 (1829), held that the trustees of a religious

congregation could sue “in behalf of themselves and the

members of the said church” because they belonged to a

“voluntary society” and were bound with the non-parties by

a “common interest” in the subject-matter of the suit, namely,

the ownership and use of church property.

Throughout the nineteenth century, this Court repeatedly

reaffirmed the necessity of proper representation both to

ensure that the legal and factual issues in the case are fully

and adequately litigated and to justify giving any judgment

preclusive effect as to non-parties.

The leading case was Smith v. Swormstedt, 57 U.S. (16

How.) 288 (1853). It involved a dispute between the northern

and southern branches of the Methodist Episcopal Church

over rights to the “Book Concern,” the denomination’s

publishing business operated for the benefit of its ministers.

The complainants filed suit on behalf of themselves, the

constituent conferences of the southern branch, and all 1,500

ministers associated with the southern branch, against two

agents of the Book Concern, other members of the northern

* The early American practice mirrored the practice in English

courts. See Discart v. Otes, 30 Seld. Society 137, at xxxvii (No. 158,

P.C. 1309) (1914) (holding that “a single complainant should argue

the case” for “all similar complaints”); see generally Stephen C.

Yeazell, From Group Litigation to Class Action, Part I: The

Industrialization of Group Litigation, 27 UCLA L. Rev. 514, 515 (1980)

(explaining that, historically, “[common] interest has acted as a

lowest common denominator” for representative actions).

branch, and the 3,800 ministers associated with the northern

branch. See id. at 300.

The defendants asserted that a representative suit was

inappropriate, but the Court disagreed. “The rule is well

established,” the Court observed, “that where the parties

interested are numerous, and the suit is for an object

common to them all, some of the body may maintain a bill on

behalf of themselves and of others; and a bill may also be

maintained against a portion of a numerous body of

defendants, representing a common interest.” Id. at 302.

Nonetheless, the Court also emphasized the importance

of strict adherence to the traditional requirements for

representative suits. Rehearsing Justice Story’s discussion of

such suits, the Court explained that because “the rights of the

several persons may be separate and distinct,” “there must

be a common interest or a common right, which the bill seeks

to establish or enforce.” Ibid. Moreover, the Court cautioned

that where “a few are permitted to sue and defend on behalf

of the many, * * * care must be taken that persons are brought on

the record fairly representing the interest or right involved, so that

it may be fully and honestly tried.” Id. at 303 (emphasis added).

The Court thus approved the use of a representative suit

where there were “some fifteen hundred persons represented

by the complainants, and over double that number by the

defendants,” each side promoting adverse claims to a single

fund. Ibid. But the suit could proceed—and non-parties

could be bound by the resulting judgment—only because

“[t]he legal and equitable rights and liabilities of all being

before the court by representation, and especially where the

subject-matter of the suit is common to all, there can be very

little danger but that the interest of all will be properly

protected and maintained.” I[bid.

This Court’s insistence upon common interests and

genuine representation is also highlighted by an earlier

decision, Ayres v. Cooper, 58 U.S. (17 How.) 591 (1854). There

the Court observed that a_ representative suit was

inappropriate where “|ijt is difficult to see any interest or

estate in common among these severa! defendants, that

would authorize the rights of the absent parties to be

represented in the litigation by those upon whom process has

been served.” And in McArthur v. Scott, 113 U.S. 340 (1885),

the Court held that a plaintiff could not be bound by a prior

judgment in a representative suit contesting a will where the

plaintiff's interest (under the terms of the will) was not

represented in that suit. “[W]here a suit is brought by or

against a few individuals as representing a numerous class,

that fact must be alleged of record, so as to present to the

court the question whether sufficient parties are before it to

properly represent the rights of all.” Id. at 395. Because the

bill in equity did not identify the plaintiff as a potential

beneficiary under the will, the Court concluded that “the

verdict and decree were entered without any real contest,

and that the heirs at law, whose interest it was to set aside

the will, in fact controlled both sides of the controversy.” Id.

at 394, 395.

This linkage of genuine representation and inclusion in

the judgment persisted into the twentieth century and,

indeed, persists today. In Wallace v. Adams, 204 U.S. 415, 425

(1907), for example, the Court stated that “it is undoubtedly

within the power of a court of equity to name as defendants a

few individuals who are in fact the representatives of a large

class having a common interest or a common right—a class

too large to be all conveniently brought into court~and

make the decree effective not merely upon those individuals,

but also upon the class represented by them.” And in

Supreme Tribe of Ben-Hur v. Cauble, 255 U.S. 356, 367 (1921),

the Court explained that “[i]f the federal courts are to have

the jurisdiction in class suits to which they are obviously

entitled, the decree when rendered must bind all of the class

properly represented.” Of course, binding the non-parties

was essential to make the decree “effective” and to avoid

“conflicting judgments.” [bid.

Traditional practice in state courts considering punitive

damage awards likewise reflects this Court’s concerns about

the fairness of representative litigation to parties and non-

parties alike. As one scholar has noted: “Historically, * **

punitive damages, even when regarded as punishment, were

consciously limited to the amount necessary to punish the

defendant for the wrong done, and the harm caused, to the

individual plaintiff only.” See Thomas B. Colby, Beyond the

Multiple Punishment Problem: Punitive Damages as Punishment

for Individual, Private Wrongs, 87 Minn. L. Rev. 583, 628 (2003)

(emphasis added).

For example, the court in Phelin v. Kenderdine, 20 Pa. 354,

362 (1853), upheld an award of punitive damages to a father

who established a claim for the seduction of his daughter,

but agreed with the defendant that “the jury [could] not

award to the father any part of the damages which belong to

the daughter.” See also Stevenson v. Belknap, 6 lowa 97, 101

(1858) (holding that both father and daughter could recover

punitive damages but that each was limited to “damages

resulting to the plaintiff alone, and not to another”); Coil v.

Wallace, 24 NJ.L. 291, 314-315 (1854) (holding that each

victim in a seduction case was entitled to a separate punitive

damages award “not flagrantly excessive or disproportionate

to the injury”). The courts in these cases understood that the

damage to the father was of a different kind than the damage

to his daughter, and that the interests of father and daughter

were insufficiently common, such that he could not fairly

represent her. Accordingly, even though a single act by a

single defendant resulted in harm to both father and

daughter, those harms were distinct and neither victim could

recover for the harms done to the other.5

* Other courts have even imposed evidentiary restrictions to ensure

that juries could not punish defendants for alleged harms to

persons not before the court. E.g., Weaver v. Bachert, 2 Pa. 80, 82

(1845) (explaining that the defendant could not “be doubly exposed

to vindicatory damages”); Foster v. Scoffield, 1 John. 297, 299 (N.Y.

2. Contemporary Practice. The historic practice of requiring

that the plaintiff have a genuinely common interest with any

non-parties for which she seeks recovery has continued since

the adoption of the Federal Rules of Civil Procedure in 1938.

Just two years after promulgation of the Rules, this Court

held in Hansberry v. Lee, 311 U.S. 32, 45-46 (1940), that a non-

party whose interests were not adequately represented by

the named plaintiff in a prior representative suit could not be

bound by the judgment in that suit.

The plaintiffs in Hansberry sued to enjoin the defendants

from breaching a restrictive covenant that forbade the sale of

certain property to African-Americans. The defendants

challenged the covenant on the ground that it had not been

approved by the requisite number of property owners, but

the state court held that litigation of that issue was foreclosed

by a prior decision in a suit brought by a property owner, ‘in

behalf of herself and other property owners in like situation,”

to enforce the covenant. Id. at 39.

This Court reversed, holding that the African-Americans

seeking to invalidate the covenant had not been adequately

represented by the parties who earlier sought to enforce that

covenant (that is, they lacked a common interest), and thus

could not be bound by the decision in the earlier suit. [hid.

Holding a non-party to a judgment obtained by parties

whose “substantial interests are not necessarily or even

probably the same as those whom they are deemed to

represent, does not afford that protection to absent parties

which due process requires.” ibid. As the Court later stated,

citing Hansberry: “the Due Process Clause of course requires

that the named plaintiff at all times adequately represent the

interests of the absent class members.” Phillips Petroleum Co.

Sup. Ct. 1806). As the Michigan Supreme Court explained the

general rule: “The foundation of exemplary damages ** * rests on

the wrong done willfully to the complaining party, and not to

wrong done without reference to that party.” Ganssly v. Perkins, 30

Mich. 492, 495 (1874).

v. Shutts, 472 U.S. 797, 812 (1985); accord Richards v. Jefferson

County, 517 U.S. 793, 798 (1996); Blonder-Tongue Labs., Inc. v.

University of Ill. Found., 402 U.S. 313, 329 (1971).

Modern practice under Rule 23 and its state-law analogs

reflects this Court's insistence on a common interest between

a representative plaintiff and the nonparties she seeks to

represent. To prosecute a class action under these rules, the

named plaintiff must demonstrate not only that “there are

questions of law or fact common to the class,” but also that

her claims are “typical” of the non-parties’ claims and that

she will “fairly and adequately protect the interests of the

class.” Fed. R. Civ. P. 23(a); see also Amcher. Prods,, Inc. v.

Windsor, 521 U.S. 591, 613 (1997) (descr*Uing the “threshold

requirements” for class certification). To that end, this Court

has held that “a class representative must be part of the class

and possess the same interest and suffer the same injury as —

the class members,” and that the requirements of Rule 23(a)

“effectively limit the class claims to those fairly encompassed

by the named plaintiff's claims.” General Tel..Co. v. Falcon,

457 US. 147, 156 (1982) (quotations omitted). Moreover,

even where class treatment of some issues is appropriate, the

law may require individualized treatment of others,

including damages. See Fed. R. Civ. P. 23(c)(4); Bogosian v.

Gulf Oil Corp., 561 F.2d 434, 456 (3d Cir. 1977).6

6 Even where a plaintiff satisfies due process and the requirements

of Rule 23(a), it may not be appropriate to certify a class. Under

Fed. R. Civ. P. 23(b)(3), for example, the court must further “find|[]

that the questions of law or fact common to the members of the

class predominate over any questions affecting only individual

members, and that a class action is superior to other available

methods for the fair and efficient adjudication of the controversy.”

This standard will rarely if ever be satisfied in the context of

smoking-and-health litigation. See, e.g., Barnes v. American Tobacco

Co., 161 F.3d 127 (3d Cir. 1998); Castano v. American Tobacco Co., 84

F.3d 734 (5th Cir. 1996).

The commonality and typicality requirements also ensure

that named plaintiffs’ claims genuinely represent non-

parties’ claims. Falcon, 457 U.S. at 157 n.13 (describing the

requirements as “guideposts for determining whether ***

the named plaintiff's claims and the class claims are so

interrelated that the interests of the class members will be

fairly and adequately protected in their absence”). If the

named plaintiff's claim is typical of the non-parties’ claims,

and if the other requirements for representation are satisfied,

proof of the named plaintiff's claim will establish the

common elements of the non-parties’ claims, and a defense to

the named plaintiff's claim will serve as a defense to the non-

parties’ claims. In short, “as goes the claim of the named

plaintiff, so go the claims of the class.” Broussard v. Meineke

Discount Muffler Shops, Inc., 155 F.3d 331, 340 (4th Cir. 1998);

Sprague v. General Motors Corp., 133 F.3d 388, 399 (6th Cir.

1998). Only if this is true—if the named plaintiff satisfies all

requirements for a representative suit—will the defendant

have had a fair opportunity to be heard on all the claims

asserted against it.

Moreover, only if the named plaintiff's claim is genuinely

representative of the non-parties’ claims can the parties and

non-parties alike be bound by the judgment. This Court has

made clear that non-parties are bound by judgments in

representative suits only where their interests were fairly

represented. See Shutts, 472 U.S. at 812; Hansberry, 311 US. at

41; Ben-Hur, 255 U.S. at 367. The defendant has as much

interest as do the non-parties in the preclusive effect of any

judgment rendered in a representative suit, and compliance

with Rule 23 ensures that litigation will finally resolve all of

the representative claims as to parties and non-parties alike.

Absent compliance with Rule 23, however, the defendant

faces a real prospect of multiple liability for the same injuries.

If the jury awards punitive damages to one plaintiff based in

part on alleged injuries to non-parties, and if the judgment

on that jury’s verdict is not binding on those non-parties, the

defendant may be subject to liability in future lawsuits by the

non-parties seeking compensatory and punitive damages of

their own. See In re Brand Name Prescription Drugs Antitrust

Litig., 123 F.3d 599, 608-609 (7th Cir. 1997) (Posner, J.) (“A

plaintiff's award of punitive damages is not limited by

awards made to previous plaintiffs complaining of the same

act of the defendant”); Roginsky v. Richardson-Merrell, Inc., 378

F.2d 832, 839 (2d Cir. 1967) (Friendly, J.) (“We know of no

principle whereby the first punitive award exhausts all

claims for punitive damages and would thus preclude future

judgments”).

Exposure to such duplicative liability violates the due

process principle that “in civil cases *** no man shall be

twice vexed for one and the same cause.” Ex parte Lange, 85

U.S. (18 Wall.) 163, 168-169 (1873); accord United States v.

Oregon Lumber Co., 260 U.S. 290, 301 (1922). As the Court

explained in Western Union Tel. Co. v. Pennsylvania, 368 US.

71, 75 (1961), a property owner “is deprived of due process of

law if he is compelled to relinquish [his property] without

assurance that he will not be held liable again in another

jurisdiction or in a suit brought by a claimant who is not

bound by the first judgment.”

The Court in State Farm was well aware of this problem.

That is no doubt why it stated that punishment based on

non-parties’ “hypothetical claims” was improper because it

would “create[] 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 obtains.”

538 U.S. at 423; see also Gore, 517 U.S. at 593 (Breyer, J.,

concurring) (“Larger damages might also ‘double count’ by

including in the punitive damages award some of the ***

damages that subsequent plaintiffs would also recover”).

Compliance with the requirements of representative

actions is thus essential to recovery for harms to non-parties,

to ensure both full and fair litigation of the issues and final

resolution of the representative claims. As this Court has

recognized, “Rule 23 provides specific rules for delineating

the appropriate plaintiff-class, establishes who is bound by

the action, and effectively prevents duplicative recoveries.”

- Hawaii v. Standard Oil Co., 405 U.S. 251, 266 (1972). Only

upen the named plaintiff's showing that her claim is truly

representative of non-parties’ claims can a court be confident

that the defendant will have an opportunity to present every

defense available to those claims. And only upon such a

showing can the defendant and non-parties alike be certain

that the judgment will preclude subsequent litigation of the

same issues. As the Eighth Circuit put it in a recent decision,

“[p]unishing systematic abuses by a punitive damages award

in a case brought by an individual plaintiff ** * deprives the

defendant of the safeguards against duplicative punishment

that inhere in the class action procedure.” Williams v.

ConAgra Poultry Co., 378 F.3d 790, 797 (8th Cir. 2004).

3. Here, there has been no finding that respondent's

fraud claim is genuinely representative of any non-party’s

claim or that class-wide treatment is otherwise appropriate.

Indeed, respondent did not bring this suit as a class action,

and for good reason. Fraud claims such as hers rarely are

suitable for class treatment, because individualized issues of

reliance, causation, and damage are not readily susceptible to

generalized proof. E.g., Castano, 84 F.3d 745; Broussard, 155

F.3d at 341-342; Andrews v. AT&T Co., 95 F.3d 1014, 1025

(11th Cir. 1996).

Ts conclude that petitioner was responsible for harm to

other smokers in Oregon, the jury would have had to find, by

clear and convincing evidence, not only that petitioner made

material misrepresentations, but also that all those smokers

(1) were aware of the alleged misrepresentations, (2) actually

and justifiably relied on those misrepresentations, and

(3) suffered physical injuries that were actually caused by

their reliance on the misrepresentations. See Conzelmann v.

Northwest Poultry & Dairy Prods. Co., 225 P.2d 757, 764-765

(Or. 1950) (defining the elements of common-law fraud);

Williams v. Philip Morris, Inc., 48 P.3d 824, 830 (Or. App.

2002). These are highly individualized issues of fact that

depend on the circumstances of each alleged victim's case;

they are not readily susceptible to class-wide proof.

For all these reasons, a plaintiff who could not properly

represent non-parties in a class action, and who could not

bind them in subsequent litigation, should not be permitted

to recover punitive damages based on alleged harm to them.

This conclusion comports with “traditional practice” for at

least two centuries (Oberg, 512 U.S. at 430), and it ensures

that juries and courts, in calculating punitive damages, will

not adjudicate “other parties’ hypothetical claims against a

defendant,” State Farm, 538 U.S. at 423. Because respondent

did not meet the settled requirements for representing third

parties, petitioner did not have an adequate opportunity to

defend against those claims, and imposition of punitive

damages based on those claims violated due process.

4. None of this is to say that a defendant's conduct

toward non-parties is wholly irrelevant to the calculation of

punitive damages. As this Court has said, because “repeated

misconduct is more reprehensible than an_ individual

instance of malfeasance,” the existence of repetitive conduct

may be relevant as long as courts “ensure the conduct in

question replicates the prior transgressions.” Ibid (emphasis

added). The fact that a defendant has engaged in similar

conduct toward others likewise may be relevant to whether

the defendant acted intentionally—also an _ issue of

reprehensibility. /bid. Thus, in appropriate cases, evidence

of prior misconduct may well be admissible on the issue of

punitive damages.

But this simply underscores the importance of adequate

instructions to ensure that a jury’s proper consideration of

prior conduct in the reprehensibility analysis does not lead to

improper punishment for that conduct. As this Court has

recognized, “[p]unitive damages pose an acute danger of

arbitrary deprivation of property,” in part because “[jjury

instructions typically leave the jury with wide discretion in

choosing amounts.” Oberg, 512 U.S. at 432. There is no

guarantee, of course, that a jury will follow an instruction not

to punish a defendant for harms to non-parties. But in the

absence of such an instruction, the risk is great that a jury will

in fact punish a defendant for the wrong reasons. Cf. State

Farm, 538 U.S. at 422 (“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 occurred”). The failure of the courts below to provide for

such instruction was unconstitutional.

B. Allowing Plaintiffs To Recover Punitive Damages

For Harms To Non-Parties Without Demonstrating

That Their Claims Are Genuinely Representative Of

The Non-Parties’ Claims Also Deprives Defendants

Of Reasonable Notice Of The Law’s Requirements.

The lower court's decision to allow the jury to punish

petitioner for harm to third parties also violated the core due-

process principle that a defendant is entitled to adequate

notice of the conduct for which it may be punished. As this

Court has held, “[e]lementary 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.” Gore, 517 US. at 574. A State does

not provide adequate notice that defendants may be liable

for alleged harms to non-parties where the named plaintiff is

not required to satisfy the requirements for class certification

or otherwise to demonstrate that her claim is genuinely

representative of non-parties’ claims. Nor does a defendant

receive adequate notice of liability where a jury is permitted

to act as regulators of industry-wide practice.

1. This Court has recognized that “businesses, which face

economic demands to plan behavior carefully, can be

expected to consult relevant legislation in advance of action.”

Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455

U.S. 489, 498 (1982). Just as businesses are presumed to

consult “relevant legislation” that restricts their activities, so

too may they rely on laws and procedural rules that limit the

scope of their potential liability.

The States’ class action rules require plaintiffs te satisfy

extensive requirements before allowing them to recover for

injuries to a class of non-party plaintiffs. See ABA Section of

Litigation, Survey of State Class Action Law—2005 (2005).

Oregon is no exception. Much like the Federal Rules of Civil

Procedure, Oregon’s rules provide that “[o]ne or more

members of a class may sue or be sued as representative

parties on behalf of all only if,” among other things:

e “joinder of all members is impracticable” ;

e “[t}here are questions of law or fact common to the

class”;

e “[t}he claims or defenses of the representative parties

are typical of the claims or defenses of the class”; and

e “(t]he representative parties will fairly and adequately

protect the interests of the class.”

Or. R. Civ. P.32A. “[I]n addition, the court [must] find[] that

a class action is superior to other available methods for the

fair and efficient adjudication of the controversy,” in light of

factors such as “ [t]he extent to which questions of law or fact

common to the members of the class predominate over any

questions affecting only individual members.” Rule 32B.

Moreover, where a class proceeding is appropriate only as to

“particular claims,” “[e]ach subclass must separately satisfy

all requirements” except numerosity. Rule 32G.

A defendant such as petitioner, charged with notice of

these rules, will understand that its ability to challenge the

propriety of a class action turns on the factors outlined

above. Absent a rule that permits individual plaintiffs to

recover for harms to non-parties by complying with other

procedures, however, no defendant would reasonably infer

that it could be subjected to liability for harms to non-parties

where a plaintiff does not comply with the class action rules

(or at least substantively equivalent rules).

Put another way, the class action rules provide minimum

requirements for recovering damages for non-parties’ harms,

and the only reasonable inference to be drawn from Oregon's

class action rules is that a civil defendant will be subjected to

class-wide liability “only if’ (Rule 32A) the plaintiff satisfies

those requirements. This is especially so in light of the body

of precedent, discussed in Part II.A., holding that multiple

claims against a defendant may be resolved in a single case

only if the named plaintiff has satisfied the requirements for

a representative action.

2. Businesses also lack adequate notice that juries in cases

brought by individual plaintiffs will displace governmental

authorities as regulators of corporate conduct. “Punitive

damages, unrelated to compensation for any injury or

damage sustained by a plaintiff, are ‘regulatory’ in nature

rather than compensatory.” Silkwood, 464 U.S. at 274-275

(Powell, J., dissenting). Ordinarily, regulation is a task

committed by statute to government agencies that are

broadly aware-of the risks and benefits of corporate conduct

and thus are able to calculate the level of punishment

necessary to deter future misconduct without over-deterring

and adversely affecting the market generally.”

By contrast, juries in individual tort suits are charged

with resolving only specific disputes between “adversaries

asserting specific claims or interests peculiar to themselves.”

Schlesinger v. Reservists Comm. to Stop the War, 418 US. 208,

221 n.10 (1974). Jurors hear only the facts presented by the

parties — subject to rules of evidence that limit the scope of

the parties’ presentations—and they have no legal mandate

(let alone the capacity) to undertake a broader investigation

of circumstances beyond the case. This lack of ability to

? See A. Mitchell Polinsky & Steven Shavell, Punitive Damages: An

Economic Analysis, 111 Harv. L. Re’. 869, 878-881 (1998); W. Kip

Viscusi, The Social Costs of Punitive Damages Against Corporations in

Environmental and Safety Torts, 87 Geo. L.J. 285, 322-327 (1998).

gather information stands “in sharp coi.trast to the political

processes in which the [legislature] can initiate inquiry and

action, define issues and objectives, and exercise virtually

unlimited power by way of hearings and reports, thus

making a record for plenary consideration and solutions.”

Ibid. In sum, juries “may be competent to determine and

assess compensatory damages,” but “are unlikely, *** to

have even the most rudimentary comprehension of what

reasonably must be done to assure the safety of *** the

public.” Silkwood, 464 U.S. at 285 (Powell, J., dissenting).

For all these reasons, no co1apany can be considered to be

“on notice” that a jury will be allowed to displace elected

officials as the principal regulators of its business. For this

reason too, it is a violation of due process for a trial court to

refuse a jury instruction telling the jury that it is not to

punish a defendant for alleged harm to third parties.

zx eet

Private suits for punitive damages should not be used “as

a platform to expose, and punish, the perceived deficiencies

of [the defendant's or the industry’s] operations throughout

the country.” 538 US. at 420. This Court should enforce that

principle here by clarifying that juries considering punitive

damages must, at the option of the defendant, be instructed

that they may not punish the defendant for unproven harms

to non-parties.

CONCLUSION

The judgment below should be reversed.

JAN S. AMUNDSON

QUENTIN RIEGEL

National Association of

Manufacturers

1331 Pennsylvania Ave., N.W.

Washington, D.C. 20004

(202) 637-3000

CONAN P. GRAMES

DIANE BIERI

Pharmaceutical Research &

Manufacturers of America

950 F Street, N.W., Suite 300

Washington, D.C. 20004

(202) 835-3400

DONALD D. EVANS

American Chemistry Council

1300 Wilson Blud.

Arlington, Virginia 22209

(703) 741-5000

Respectfully submitted.

GENE C. SCHAERR

Counsel of Record

GTEFFEN N. JOHNSON

JEFFREY M. ANDERSON

Winston & Strawn LLP

1700 K Street, N.W.

Washington, D.C. 20006

(202) 282-5000

LINDA T. COBERLY

Winston & Strawn LLP

35 West Wacker Drive

Chicago, Illinois 60601

(312) 558-5600

MARIA GHAZAL

Business Roundtable

1717 Rhode Island Ave.,

N.W. Suite 800

Washington, D.C. 20036

Counsel for Amici Curiae

JULY 2006

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APPENDIX A

The National Association of Manufacturers (“NAM”) is

the oldest and largest industrial trade association,

representing small and large manufacturers in every

industrial sector and in all 50 States. The NAM’s mission is

to enhance the competitiveness of manufacturers by shaping

a legislative and regulatory environment conducive to

economic growth and to increase understanding among

policymakers, the media, and the public about the vital role

of manufacturing in America’s economic future. Many of the

NAM’s members would face enormous financial risk if, as

the court below held, juries could punish corporate

manufacturers for alleged harm to non-parties without even

establishing that those parties are similarly situated to the

named plaintiffs. The resulting liability could well bankrupt

many manufacturers. At a minimum, it would severely

discourage the development, manufacture, and sale of a wide

range of products.

The Pharmaceutical Research and Manufacturers of

America (“PhRMA”) is a voluntary, nonprofit association

that represents more than 100 of the country’s leading.

pharmaceutical research and biotechnology companies.

PhRMA’s members discover, develop, and manufacture

products—including prescription medicines—that allow

millions of patients worldwide to live longer, healthier, and

more productive lives. In 2005, PhRMA’s members alone

annually invested some $39.4 billion in discovering and

developing new medicines. PhRMA’s members are among

the most frequent victims of arbitrary punitive damage

verdicts, and of appeals by plaintiffs’ lawyers to punish

corporate defendants for unproven harm to non-parties.

Such practices deter the development and drive up the cost

of potentially life-saving medicines— medicines that have

passed the most rigorous and extensive safety testing in the

world and secured United States Food and Drug

Administration (“FDA”) approval before going to market.

The American Chemistry Council (“ACC”) represents

the leading companies engaged in the business of chemistry,

a $550 billion enterprise and a key element of the nation’s

economy. ACC members apply the science of chemistry to

make innovative products and services that make the lives of

people throughout the country and abroad better, safer, and

healthier. ACC is committed to improving environmental,

health, and safety performance through Responsible Care®;

common sense advocacy designed to address major public

policy issues; product testing; and health and environmental

research, Many ACC memvers can be, and have been,

subjected to punitive damages awards based on unproven

harm to non-parties. The threat of such awards deters ACC

members from engaging in nationwide practices that achieve

economies of scale and other efficiencies needed to provide

special benefits to consumers and maintain uniform quality

across their operations. i

The Business Roundtable is an association of chief

executive officers of leading U.S. corporations with millions

of shareholders and a combined workforce of more than 10

million employees in the United States. Member companies

comprise nearly a third of the total value of the U.S. stock

market and represent nearly a third of all corporate income

taxes paid to the federal government. Since 1972, Business

Roundtable has been devoted to examining policy issues

affecting the U.S. economy and developing positions that

reflect sound economic and social principles. Business

Roundtable has an interest in ensuring that the Court is fully

informed about the manner in which current punitive

damages procedures—and in particular the practice of

allowing juries to punish corporate defendants for unproven

harm to non-parties — conflict with established historical and

contemporary practice and thus violate the Due Process

Clause. .

APPENDIX B

Examples of Appeals to Juries for Punitive Damages

1. GMAC v. Baymon, No. 95-0072 (Humphreys County,

Miss. Cir. Ct. 1997), rev'd, 732 So. 2d 262 (Miss. 1999).

The plaintiff sued GMAC for breach of contract and

fraud, claiming that she was overcharged by $762 for

collateral protection insurance on her vehicle. During closing

argument, the plaintiff's counsel asked the jury to think

about “the other victims just like [the plaintiff],” whom he

described as “working people on the economic edge,

struggling, predominantly *** African-Americans.” Tr.

889:26-29, 967:19-23. Plaintiff's counsel then urged the jury to

award punitive damages for the “600,000 other Menola

Baymon’s in Humphreys County, in Sunflower County, in

Holmes County, in Memphis, Tennessee, and everywhere

else in this country.” Counsel told the jury: “You can change

the way this insurance is done *** [t]he way people are

ripped off across the country, you can stop it.” Tr. 967:13-15,

968:19-24, 970:4-6. The jury awarded $35,000 in

compensatory damages and another $5 million in punitive

damages, 143 times the compensatory award.

' 2. Brown v. Borg Warner Corp., No. 95-1922 (El Paso, Tex.

County Ct. 1998), aff'd, No. 08-98-00213-CV (Tex. App.

1999) (unpublished).

The plaintiff sought recovery for harm from exposure to

asbestos in disc brakes. During closing argument, his

counsel asked the jury to award punitive damages:

Ladies and gentlemen, if you feel that what happened to

William Brown was a unique situation, if you feel that he

was the only mechanic who breathed that dust, if you feel

that he was the only worker that was abused by

corporate irresponsibility, if you feel that he is the only

victim, then perhaps exemplary damages are

inappropriate. * * *

But if you feel like I do and if you feel that the evidence

said that the Borg Warner Corporation and the asbestos

industry ignored for decades knowledge about asbestos

and that the Borg Warner Corporation and the asbestos

industry turned its back on safety and closed its eyes on

the health of others, then it is your duty and

responsibility to award a _ substantial amount «a

exemplary damages. * * *

And it’s your responsibility, not to William Brown

individually, but to all the William Browns * * * out there

doing their job. It is your responsibility to those people.

****

And let me assure you, ladies and gentlemen, that your

voice will be heard. It will be heard in Chicago by the

Borg Warner Corporation. It will be heard by an

industry and it will be heard by all the William Browns of

the world, and by all the corporations that would turn

their back and close their eyes to the safety and welfare of

the working people. * * *

[W]hen you award exemplary damages, you establish

standards of conduct, standards of decency, standards of

corporate accountability, standards of corporate

responsibility.

Tr. 34. The jury awarded $200,000 in punitive damages.

Bullock v. Philip Morris, USA, Inc., No. BC249171 (Los

Angeles County, Cal. Super. Ct. 2005), aff'd, 138 Cal.

App. 4th 1029 (Cal. Ct. App. 2006), pet. for rev. filed, No.

$143850 (Cal. May 31, 2006).

At trial in a case brought by a smoker against Philip

Morris, the plaintiff introduced evidence that cigarette

smoking injures thousands of people throughout the state

and the nation, and counsel referred to this evidence in his

opening statement and closing argument. RT 948, 1354-1355,

4119-4122, 4191-4192. Specifically, counsel argued that for

every smoker who sues Philip Morris, 28,000 people have

died from cigarette smoking; and he urged the jury to punish

Philip Morris for each death.

During closing argument, counsel told the jury:

Less than 3,000 people died in the Twin Towers terrorist

attack. When I say “less than,” that sounds really weird

because what an unbelievable human toll; but in the

terms we are talking about here, just so we can bring this

down, that’s a 30-day toll in California alone right now

from smoking cigarettes. |

Philip Morris is a resourceful foe. Never, ever think

Philip Morris is done or cornered or has no options ever.

Picture this, please: Special Forces in the desert, after a lot

of work and effort, they corner bin Laden. “I won't do it

again. 1 won't do it any more.” I could go back in history

to bigger worse people and bigger worse atrocities, but

think about the concept of what you heard today, that

after an evildoer, a wrongdoer, is run to the ground, all

that person has to say is, “Oh, okay. I won't do it any

more.” * * *

And the last thing the judge mentioned is that the

punitive damages have to bear a reasonable relationship

to the damages sustained by Betty Bullock, whatever that

means. And, of course, that is stuff that lawyers,

appellate lawyers, and judges and appellate judges talk

about, but that’s not today.

138 Cal. App. 4th at 1058 nn.19-20.

In addition to $850,000 in compensatory damages, the

jury awarded $28 billion in punitive damages, amounting to

$1 million for each of 28,000 people mentioned by plaintiff's

counsel.

4. Diamond v. General Am. Life Ins. Co., No. CV96-02277

(Maricopa County, Ariz. Super. Ct. 1999).

The plaintiff sued General American for failure to pay

disability benefits. At trial, the plaintiff was allowed to

introduce evidence that General American had identified 58

policyholders with large potential claims and attempted to

buy out their policies. Plaintiff's counsel told the jury in

opening statement that they should punish General

American “for what [it] did to all of the people whose faces

you don’t see in this courtroom but whose lives have been as

affected [as plaintiff's], if not worse.” 2 Tr. 73-74. During

closing argument, plaintiff's counsel made _ repeated

references to the “hit list” of other alleged victims. 12 Tr. 57,

58, 77. The jury awarded the plaintiff $58 million in punitive

damages—exactly 58 times the amount of compensatory

damages. As the trial court recognized, it appeared “almost

to a certainty” that the jury arrived at its punitive damage

figure by multiplying $1 million by the 58 policyholders.

App. at 57 (June 3, 1999 Order).

5. Aguilar v. Ashland Oil Co., JCCP No. 2967 (Los Angeles

County, Cal. Super. Ct. 1998), rev’d, No. B128469 (Cal.

Ct. App. 2000) (unpublished).

The plaintiffs sued Ashland Oil Company and other

chemical companies for injuries arising from their exposure

to organic solvents and other chemicals at their workplace.

The plaintiffs alleged that the chemical manufacturers failed

to warn them about health risks associated with their

products. The jury found the defendants liable and awarded

the plaintiffs more than $25 million in compensatory

damages.

The trial court began the punitive damages phase by

instructing the jury that it should “make an example of

[defendants] to the whole world.” RT 3902. Plaintiffs’

counsel then argued that the purpose of the jury’s punitive

award should be “to say, corporate America, you can’t do

this anymore * ** [y]ou’ve got to start doing the right thing

and since they did not do the right thing and * ** since they

had a conscious disregard, you, ladies and gentlemen, must

do the right thing for them.” RT 3923-3924.

After these closing arguments, the court again addressed

the jury:

How much money is it going to take to send home a

message to five of the biggest corporations in the world

that this isn’t going to be done anymore. *** So pick a

figure and say, let’s send a notice out to the world, this is

the price in Los Angeles County. * * * Now, do you want

to set any example for the world? It is not just the people

here, or the people in Los Angeles County or the State of

California or the United States, it is world wide. These

people sell chemicals every place, you see. Do we want

to send a message that this conduct will not countenance

[sic] in the least in Los Angeles Counties [sic]? That is

your decision. *** Every chemical manufacturer in the

United States that makes these chemicals is going to see

this decision and say, boy, we better be very careful on

hw we distribute this product, we better go the extra

mile. If we don’t, you know, we are going to get burned.

RT 3935-3942. The jury awarded the plaintiff $760 million in

punitive damages.

6. McKendry v. General Am. Life Ins. Co., No. CTV 96-0754

(D. Ariz. 1999).

The plaintiff sued General American for bad faith in

connection with its decision to terminate his long-term

disability benefits. In asking for punitive damages, plaintiff's

counsel told the jury:

[Rlight now, you are probably the eight most

knowledgeable people about how disability insurance

should be operated, and shouldn't be operated. Probably

the eight most knowledgeable in this state, even more

knowledgeable than adjusters who maybe work in the

field, because you have seen evidence from the top to the

bottom about how the system work.

You know if—if Senator McCain wanted to pass a law

that would address the kind of issue you heard, he’d

—

have to hold hearings, and he’d have to caucus with his

supporters and other people in the Senate. And even if it

was his top legislative priority, there’s a good chance he

would never get anything passed to address this

problem.

And if Judge Rosenblatt wanted to do something, there’s

really not anything that he can do. And our—in our

government, our system puts that power in your hands

for a brief period of time. And then you lose the power

again, and you may never get that kind of power to

influence the way the world works ever again.

Tr. 1912. Plaintiffs’ counsel also discussed harms to non-

parties, arguing:

So you've got the harm that was done to Steve [the

plaintiff], you’ve got the harm that was done to the other

57 people targeted, you've got the harm to the other

people in this book of business who the *** witnesses

said were treated the same way, and you’ ve got the harm

to other ** * insureds, and you have the harm to people

insured by [other companies], who wind up having their

claims handled in the [same] way.

Tr. 1915. The jury awarded the plaintiff $17 million in

punitive damages, more than 48 times the compensatory

award.

7. Engle v. Liggett Group, Inc., No. 94-08273 (Dade County,

Fla. Cir. Ct. 2000), rev’d, 853 So. 2d 434 (Fla. Dist. Ct.

App. 2003), aff'd in part and rev'd in part, 2006 WL

1843363 (Fla. July 6, 2006).

The plaintiffs sued several tobacco companies for injuries

allegdly caused by smoking. During closing argument,

plaintiffs’ counsel told the jury: “And let's tell the truth

about the law, before we all get teary-eyed about the law.

Historically, the law has been used as an instrument of

oppression and exploitation. * * * If you admit that you sell a

product that causes cancer—] admit my product causes

cancer —and if you also admit it’s also addictive, get out of

the business. That's the only moral, ethical, religious, decent

judgment to make ***. If you sell a product which causes

cancer and which is addictive, stop selling it. Stop selling it,

because you know it’s doing unbelievable harm to your

fellow Americans. *** [The defendants say] [i]t’s a legal

product. It’s a legal product. Legal don’t make it right.

Legal don’t make it right.” 853 So. 2d at 459-460.

8. Frankson v. Brown & Williamson Tobacco Corp., 781

NY.S.2d 427 (Kings County, N.Y. Sup. Ct. 2004), aff'd

sub nom. Frankson v. Philip Morris Inc., 2006 WL

1851266 (N.Y. App. Div. July 5, 2006).

In another smoking case, plaintiff's counsel asked the

jury “to send a message to the defendant * * * and not just the

defendant, but the tobacco industry and to corporate

America as well.” William Glaberson, Punitive Award Sought

for Smoker's Widow, N.Y. Times (Jan. 8, 2004), at B3. Counsel

continued, “You have the power, and if you don’t do it, who

will? Not President Bush. Not Governor Pataki. Not Judge

Kramer.” Punitive Award Asked of Jury in Tobacco Suit,

N.Y.L.j. (Jan. 8, 2004), at 1. The jury awarded the plaintiff $20

million in punitive damages, -nearly 60 times the

compensatory award.

9. Batson v. Wyeth and Wirt v. Wyeth, Nos. 99CV0306 &

99CV0307 (Coos County, Ore. Cir. Ct. 2000).

The plaintiffs in these cases alleged that the

pharmaceutical Pondimin (sometimes included in the

combination known as “fen-phen”) was unreasonably

dangerous. During closing argument, counsel told the jury:

There’s been a lot of times in this case that I have kind of

felt sorry for you. The testimony, although you've

listened to it well, has sometimes been a little bit boring,

and sometimes been a little bit tedious, but right now I

envy you. You are more powerful right now than I'll

ever be. You are more powerful than anyone in this

10a

room, in this city, in this state, or in this nation with

regard to what you can say to a huge drug company and

how you can get them to change.

My faith, ladies and gentlemen, in the jury system is

whole, it is complete. I believe that as you sit here today,

that you are the voice of this community, this county, this

~ state, this nation. I believe that as you sit here today, you

sit upon the shoulders of every man and every woman

that ever sat in that seat before. I believe that you sit

upon the shoulders of giants. I believe that you have the

ability to make huge changes in the pharmaceutical

industry and to make a huge change in this company.

Send them a message.

Your verdict is going to be read by their employees. Your

verdict is going to be read by their CEO and by their

board of directors, and by boards of directors of every

pharmaceutical company in the world.

Tr. 195-197. The jury awarded $25.35 million in punitive

damages.

10. Rodriguez v. Suzuki Motor Co., No. 902-08691 (St. Louis,

Mo. Cir. Ct. 1995), rev'd, 936 S.W.2d 104 (Mo. 1996).

The plaintiff sued an auto maker for injuries resulting

from the rollover of a sport-utility vehicle. Plaintiff's counsel

argued to the jury: “[YJour job *** is to stop that line of

victims from growing anymore, * * * to stop that indifference,

*** It needs to be stopped right now, right here, before

somebody else loses their life or gets maimed like [the

plaintiff] has been.” Counsel continued: “[N]Jobody else is

going to stop this. *** The government's not going to do

anything. The only way to stop the kind of misconduct that

you've heard about in this case *** is with the amount of

your punitive damages verdict. * * * You are the regulators.”

The jury awarded the plaintiff $60 million in punitive

damages.

lla

11. Campbell v. State Farm Mut. Auto. Ins. Co. (Salt Lake

County, Utah Dist. Ct. 1996), aff'd in part and rev'd in

part, 65 P.3d 1134 (Utah 2001), rev’d, 538 U.S. 408 (2003).

The plaintiff sued State Farm for bad faith, fraud, and

intentional infliction of emotional distress in connection with

State Farm's failure to settle a lawsuit within the policy

limits. During closing argument, counsel told the jury: “The

only regulators of insurance companies are juries like you.

You are the ones that hear, investigate and listen to the

evidence and impartially make decisions regarding the

actions of insurance companies.* * * Why are you important?

Because you are the regulators. We do not have objective

and effective regulators of the insurance industry.” J.A.

3217a-3218a (No. 01-1289). The jury awarded $145 million in

punitive damages, on top of a $2.6 million compensatory

award.

12. City of Modesto v. Dow Chem. Co., Nos. 999345 &

999643 (San Francisco County, Cal. Super. Ct. 2006).

The City of Modesto, California sued dry cleaners,

makers of perchloroethylene, and makers of dry cleaning

equipment, alleging that perchloroethylene was defective

and that the defendants had contaminated city water.

During closing argument, the City’s counsel argued: “What

would a responsible corporation do if they learned that their

product was in 10 percent of the wells in the country? * * * If

you know that your product has caused a problem of that

magnitude, you can’t blame it on a mom-and-pop dry

cleaner. That couldn’t do something all over the country. “

Tr. 6630:25-26, 6631:6-9 (May 23, 2006).”

Later in the argument, counsel told the jury: “[T]Jhey

acted in conscious disregard of cities like Modesto and other

communities throughout the country. After all, if we’re

talking about 10 percent of the wells in America, you’re

talking about the water supply for very large numbers,

probably millions of people.” Tr. 7017:7-12 (May 31, 2006).

12a

“In the last analysis,” counsel concluded, “this is really

about corporate accountability. *** There’s a problem in a

world without consequences where adults, and in this case

corporations, aren’t held to standards that every one of us are

held to every day, and that problem is that the very things

we have laws to deter are ignored. * * * Whatever you do, it

will be a message. Make sure that it’s a message to these

defendants that says never again, and that’s the right thing to

do.” Tr. 8079 (June 13, 2006). The jury awarded $3.2 million

in compensatory damages and another $175 million in

punitive damages.

13. Lopez v. Am. Home Prods., No. 99-07-37725-CV (Jim

Wells County, Tex. Dist. Ct. 2001).

The plaintiff alleged that fen-phen caused certain adverse

health effects. In asking the jury for punitive damages, her

counsel argued: “I think an adequate amount of damage, an

adequate amount of punishment, a message to Washington,

New Jersey and Pennsylvania would be $107. million if her

heart was damaged by 10 percent.” Tr. 194-196 (Apr. 2,

2001). The jury awarded $45 million in punitive damages.

14. Gunderson v. Sandoz Pharms. Corp., No. 94-CI-04680

(Jefferson County, Ky. Ciz. Ct. 2004), aff'd in part,

Sandoz Pharms. Corp. v. Gunderson, 2005 WL 2694816

(Ky. Ct. App. Oct. 21, 2005).

The plaintiff sued the manufacturer of the medication

Parlodel, alleging that it had caused the decedent's death. In

support of a request for punitive damages, plaintiff's counsel

argued: :

A lot of times when I sit back and you guys, too,

probably, and you watch the news, or you read the

newspaper * ** about corporate misconduct or corporate

misdeeds, and you say, well, you know, there’s nothing I

can do about it, there’s nothing I can do about it, but as a

collection of 12 people, there’s a heck of a lot you can do

about it. Collection of you all together looking at the

13a

facts and deciding it based upon the facts and the law

that the judge gives you, then you can make a real

statement. *** [I]f you’re going to deter people that

operate out of Switzerland all over the world, then

you ve got to decide how in the world do we do it.

The jury awarded the plaintiff $11.3 million in punitive

damages. .

15. Ingram v. Liberty Nat'l Life Ins. Co., No. CV-96-62

(Chambers County, Ala. Cir. Ct. 2002), rev’d on other

grounds, 887 So. 2d 222 (Ala. 2004).

The plaintiff in this case sued Liberty National for fraud,

suppression, deceit, wantonness, civil conspiracy, bad faith,

and conversion in connection with the sale of an insurance

policy. In closing argument, the plaintiff's counsel told the

jury: “Might as well throw seven million to put a heart into

this bunch over here. *** I] hope and pray that y’all will

make it worth that for the rest of the people in Chambers

County, that this will stop. It will have effects all over

Alabama and everywhere else that they've got agents.” Tr.

759-760. The jury awarded the plaintiff $200,000 in

compensatory damages and another $3 million in punitive

damages.

16. Coffey v. Wyeth, No. E-167,334 (Jefferson County, Tex.

2004).

In this fen-phen case, plaintiffs’ counsel asked the jury,:

“How many times do you have to pick up newspapers and

keep reading over and over again, the drugs on the market

had to be taken off because they’re dangerous, or because

some black box warning has to be given because they’re

dangerous, after years of being on the market.” Tr. 120-121.

Counsel then suggested that “[t]he number ought to be over

what they made off selling this drug and going through all

the shenanigans that they went through, significantly over it.

Because only then will they say, oops, this is not a profitable

l4a

way to do things.” Tr. 134. The jury awarded $900 million

in punitive damages.

“17. Cook v. Rockwell Int'l Corp., No. 90-CV-00181 (D. Colo.

2006).

The plaintiffs sued for nuisance, alleging that the

defendants had caused radioactive contamination of their

properties, decreasing their value. Plaintiff's counsel asked

the jury to “tell Rockwell, to tell Dow, corporate America,

even DOE, this will not be tolerated anymore in our

communities. Stop the wrongdoing. Stop the lying for once

in 50 years, give the neighbors some justice.” Tr. (Jan. 21,

2006). The jury awarded $200 million in punitive damages.

18. Sunburst Sch. Dist. No. 2 v. Texaco Inc., No. CDV-01-

179(a) (Cascade County, Mont. Dist. Ct. 2004).

A group of 75 Montana landowners sued Texaco seeking

damages for the effects of a gasoline pipeline leak that

occurred in 1955 at a now-defunct refinery. Texaco sought to

introduce evidence that it had cooperated with Montana's

Department of Environmental Quality to investigate and

remediate the site, but the triatcourt excluded the evidence.

See Kathleen A. Schultz, Texaco to Appeal Sunburst Ruling,

Great Falls (Mont.) Tribune (Aug. 20, 2004). In closing

argument, plaintiffs’ counsel urged the jury to “send a

message” to “others in the industry,” to “warn [them] as to

what the standards should be.” Tr. 3082, 3107 (Aug. 18,

2004). The jury awarded $25 million in punitive damages.

See Schultz, supra.

19. Avco Corp. v. Interstate Sw. Ltd., No. 29,385 (Grimes

County, Tex. 278th Dist. Ct. 2005), appeal docketed, No.

15-05-00860-CV (Tex. App.).

In this commercial fraud case relating to the manufacture

of allegedly defective aircraft parts, plaintiff's counsel asked

the jury to impose a large punitive damages award because

“[t]hey afte not going to redesign this crankshaft based upon

your verdict. They are not going to do anything. * * * They

15a

are still excusing it.” Tr. 82-85 (Feb. 15, 2005). The jury

awarded the plaintiff $86.4 million in punitive damages,

more than 20 times the compensatory award.

20. Flores v. Borg-Warner Corp., No. 98-4954-G (Nueces

County, Tex. 319th Dist. Ct. 2002), aff'd, 153 S.W.3d 209

(Tex. App. 2004), pet. for rev. granted, No. 05-0189 (Tex.

Apr. 21, 2006).

The plaintiff sued Borg-Warner for damages arising from

his use of brake pads thai contained asbestos. His counsel

urged the jury to “send a message ‘hat the people of Corpus

Christi, Texas are not gonna put up with this kind of

behavior from Borg-Warner or from any other corporation.”

Tr. 21. The jury awarded $50,000 in punitive damages.

21. Lovett v. Wyeth, No. 97-665 (Van Zandt County, Tex.

294th Dist. Ct. 1999).

In the first fen-phen case tried to a jury, plaintiff's counsel

told the jury: “You have unbelievable power. A jury has the

most power of any non-elected government entity, because

you have the power to tell this company that they did wrong

and that they should pay for it. You have the power to try to

get their attention. ** * So when you get back there and you

deliberate on this case, keep that in mind, that you have the

power in this first fen-phen case in the history of our country,

you have the power to tell them you had better do it right the

next time.” Tr. 109-111. The jury awarded the plaintiff $20

million in punitive damages.

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This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.