Amicus Curiae Brief — Philip Morris USA v. Williams

Supreme Court of the Gnited States

e

PHILIP MORRIS USA,

Petitioner,

Vv.

MAYOLA WILLIAMS,

Respondent.

°

On Writ Of Certiorari To The

Supreme Court Of Oregon

¢

BRIEF OF AMICUS CURIAE

TRIAL LAWYERS FOR PUBLIC JUSTICE

IN SUPPORT OF RESPONDENT

°

ARTHUR H. BRYANT MICHAEL V. CIRESI

TRIAL LAWYERS FOR PUBLIC ROBERTA B. WALBURN*

JUSTICE ROBINS, KAPLAN, MILLER &

555 12th Street CirEsSI!I L.L.P.

Suite 1620 2800 LaSalle Plaza

Oakland, CA 94607 _ 800 LaSalle Avenue

(510) 622-8150 Minneapolis, MN 55402

(612) 349-8500

LESLIE A. BRUECKNER

TRIAL LAWYERS FOR PUBLIC ‘*Counsel of Record

JUSTICE

1825 K Street, N.W.

Suite 200

Washington, DC 20006

(202) 797-8600

Counsel for Amicus Curiae

Trial Lawyers for Public Justice

COCKLE LAW BRIEF PRINTING CO. (800) 225-6964

OR CALL COLLECT (402) 342-2831

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TABLE OF CONTENTS

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TABLE OF AUTHORITIES. ................ccsceseeseseseecessceeseeees ili

INTEREST OF AMICUS CURIAE ...........cccceeeeesseeeereees 1

SUMMARY OF ARGUMENT ...........cccceereeceeeetererseneeeeees 2

DTT TIIIIT E seictencecscintnincesosnocsasesesessovscbesswcscosasosbesonsenenss 3

I. THE TOBACCO INDUSTRY HAS EVADED

LIABILITY FOR DECADES BY ABUSING

THE LEGAL PROCESS AND CONCEALING

EVIDENCE - AND THE RESULT HAS BEEN

A PUBLIC HEALTH CATASTROPHE ..............

A. General Patton Goes to Court...............:.00+

1. The First Wave of Personal Injury Liti-

Be 1 RIOD soci sniceetuteah tthe tn eicinseiiakigeetileaseaics

C. The Tobacco Industry’s Wrongdoing Con-

SE acpepeintnsegeishincantctasntuninlbipencetntniierintatioun

D. The Public Health Catastrophe ..................

Il. THE AWARD OF PUNITIVE DAMAGES IN

THIS CASE FITS WITHIN THIS COURT'S

PRIOR JURISPRUDENCE .............cccecceserereeesees

li

TABLE OF CONTENTS -— Continued

Page

A. Petitioner’s Evasion of Liability Must Be

Taken Into Account to Achieve Punish-

ment and Deterrence..................scceeseeeeeeeeees 22

There Is No “Mathematical Bright Line”

for Punitive Damages................c.ssecssssseeeeees 25

The Harm to Nonparties Is Particularly

Relevant in This Case Given Petitioner’s

Decades of Wrongdoing ..................ssecseeeeeees 27

Eo connereneenssenpineprvecnepadersaipoanregneperdannsmenmvennins 30

TABLE OF AUTHORITIES

Page

CASES

BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996) ....passim

Cipollone v. Liggett Group, Inc., 505 U.S. 504 (1992) .. 9, 13

Ciraolo v. City of New York, 216 F.3d 236 (2d Cir.),

cert. denied, 531 U.S. 993 (2000) ..............eeeceeeseeeeees 23, 24

City of Newport v. Fact Concerts, Inc., 453 U.S. 247

ETT indindeatss lied heuscininbssded acpi ceadaedeianitteadidaalaiaiabedhiaiitdlindatiaasalpescisiadiiebii 22

Clark v. United States, 289 U.S. 1 (1933).............ccceeeeeeees 15

Cooper Indus., Inc. v. Leatherman Tool Group, Inc.,

RIC Se ee ey ar nen Sor 25

FDA v. Brown & Williamson Tobacco Corp., 539

es Se isn oh. ceniadictictncitsitidenbneadenghiadtninisdgdeubciantiosen 21

Green v. American Tobacco Co., 409 F.2d 1166 (5th

Cir. 1969), cert. denied, 397 U.S. 911 (1970)................... 6

Green v. American Tobacco Co., 391 F.2d 97 (5th

I a al 6

Green v. American Tobacco Co., 304 F.2d 70 (5th

I I Sciatic taiach inact onicliscinsdeatnaienelitlaites isd iaciasdeidieatn ie eile eb tat ined: bate 6

Haines v. Liggett Group, Inc., 814 F. Supp. 414 |

aE: DUNNE dtitnininescscbnideestatetinshanedeuindemsteniidiibies 4,5,9,11

Lartigue v. R.J. Reynolds Tobacco Co., 317 F.2d 19

(5th Cir.), cert. denied, 375 U.S. 865 (1963).................... 7

Mathias v. Accor Economy Lodging, Inc., 347 F.3d

ee NE Ce cacnnhtsnichaicbisacaidipecnssaatdsbantins 22, 23, 24

Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1

SE asibintdiatinitiddneareinancibendthtatietatnenibibianindiindnilineduitipissatesined 22, 26

Ross v. Philip Morris & Co. Ltd, 328 F.2d 3 (8th Cir.

NIT coinssdicipadatabeninuadddiedindecbebetintiiabsilumighdniteteminstadiitinabhinte 7

iv

TABLE OF AUTHORITIES — Continued

Page

State Farm Mut. Auto. Ins. Co. v. Campbell, 538

Ge hcccninntintcintasiiciguidciniehnnebabniniipiciaidvenainiiiins passim

Thayer v. Liggett & Myers Tobacco Co., 1970 U.S.

Dist. LEXIS 12796 (D. Mich. 1970) ...........ccccccecceeceeesesees 7

TXO Prod. Corp. v. Alliance Res. Corp., 509 US.

CRS RE GAR CREF Re Bed ANOS OAS eae Je 26, 27

United States v. Philip Morris USA, Inc., No. 99-

2496 (D.D.C. filed Aug. 17, 2006)... ..........ccceeccceeeeeeeees 15

Williams v. Philip Morris Inc., 127 P.3d 1165 (Or.

ED csctctatdncsnccssinectsditvabectatcnieinssslsisibbeinictoamedouniide passim

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

FEE, TERN aricersesscccciccnimeauinniinintapiibttaaindediidiis 11, 18, 25, 28

STATUTES

Ss Be TI, I tccsccccnbcdedersncecocsigsbocsideniantmieion 30

SO eee TI, BR Tae sctndcitccnntniiondrecdndndecvindsstniipindediiadpina 30

MISCELLANEOUS :

Gary S. Becker, Crime and Punishment: An Eco-

nomic Approach, 76 POL. ECON. 169 (1968).................. 24

Michael V. Ciresi, Roberta B. Walburn & Tara D.

Sutton, Decades of Deceit: Document Discovery in

the Minnesota Tobacco Litigation, 25 Ww.

MITCHELL L. REV. 477 (1999) ........cccccecessosecesscereeees passim

Thomas C. Galligan, Jr., Augmented Awards: The

Efficient Evolution of Punitive Damages, 51 LA.

Res D.. BCRP nent ccisssiccctensinssncansstptaiatincninpncticeaamiiames 24

Vv

TABLE OF AUTHORITIES — Continued

Donald W. Garner, Cigarette Dependency and Civil

Liability: A Modest Proposal, 53 S. CAL. L. REv.

CITE adicathisiahiiilbtiniteninsidiesennsnabaiseabcieinttpinegiatsicnendeen

Richard D. Hurt & Channing R. Robertson, Prying

Open the Door to the Tobacco Industry’s Secrets

About Nicotine: The Minnesota Tobacco Trial, 280

i ai alae ertcliencteminciendbananends

A. Mitchell Polinsky & Steven Shavell, Punitive

Damages: An Economic Analysis, 11 Harv. L.

ee CAD ctntuiinenbinicrandininanpenepcinneniantepteanenesineee

Robert L. Rabin, A Sociolegal History of the Tobacco

Tort Litigation, 44 STAN. L. REV. 853 (1992) ....... 4,

James S. Todd et al., The Brown and Williamson

Documents: Where Do We Go From Here? 274

6 REUSE SS ae Cees ee

William E. Townsley & Dale K. Hanks, The Trial

Court’s Responsibility to Make Cigarette Disease

Litigation Affordable and Fair, 25 CAL. W. L.

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INTEREST OF AMICUS CURIAE'

Trial Lawyers for Public Justice (“TLPJ”) is a national

public interest law firm that marshals the skills and

resources of trial lawyers to create a more just society.

TLPJ has pioneered cases advancing consumers’ rights,

preserving the environment, upholding civil rights and

liberties, and safeguarding the civil justice system.

TLPJ seeks to vindicate individual rights by holding

wrongdoers accountable for their misconduct. Punitive

damages are a vital weapon in this effort. If punitive

damages awards are arbitrarily restricted, without allow-

ing for flexibility as warranted by the facts of each case,

the purposes these damages are meant to serve — to

punish unlawful conduct and deter its repetition — will be

thwarted. That is particularly true in an exceptional case

such as the present, where the Petitioner and other

tobacco companies, working together, have carried out an

extended campaign of fraud and deceit, with disastrous

consequences for the publichealth. .

In addition, Michael V. Ciresi and Roberta B. Wal-

burn, counsel for amicus, represented the State of Minne-

sota and Blue Cross and Blue Shield of Minnesota in

litigation against the tobacco industry from 1994 through

1998. The Minnesota tobacco litigation included an inten-

sive discovery effort, which led to the production of ap-

proximately 35 million pages of industry documents. See

generally Michael V. Ciresi, Roberta B. Walburn & Tara D.

Sutton, Decades of Deceit: Document Discovery in the

Minnesota Tobacco Litigation, 25 WM. MITCHELL L. REV.

’ No counsel for a party in this case authored this brief in whole or

in part, and no person, other than the undersigned amicus and its

counsel, has made a monetary contribution to the preparation and

submission of this brief. Both parties have consented to the filing of

briefs amicus curiae in this case. Letters of consent are on file with the

Clerk of the Court.

2

477 ( 1999). Many of these documents, which detail dec-

ades of intentional wrongdoing, were exhibits in the case

presently before this Court.

These documents — and the long-standing fraudulent

conduct of Petitioner — present a compelling paradigm for

a large award of punitive damages. Accordingly, TLPJ

submits this amicus brief in support of respondent.

SUMMARY OF ARGUMENT

Litigation against the tobacco industry began in 1954.

The industry faced a collective crisis — a great cancer scare

~— that threatened its existence. Together, the tobacco

companies, including Petitioner Philip Morris USA

(“Philip Morris”), fought back with a campaign of deceit

and deception. Part of that campaign was waging a war of

attrition in courtrooms around the nation, abusing the

legal process and concealing evidence.

For year after year, decade after decade, individual

smokers sued tobacco companies, including Petitioner. The

industry beat them back with aggressive, no-money-

spared litigation. For decades, the industry paid not one

penny, by way of judgment or settlement.

While the tobacco industry’s unblemished winning

streak remained intact, the industry kept its internal

company documents -— damning evidence that directly

refuted its litigation positions — hidden away. For example,

while the battleground in the early cases was whether

smoking caused cancer, by the 1950s virtually the entire

industry recognized the causal link, according to industry

documents. But it took more than 40 years of litigation,

until the late 1990s, for millions of pages of these industry

documents to be disclosed.

Because Petitioner was able to evade accountability

for so long, it was not forced to bear the costs of its trans-

gressions. There was no financial incentive, as there

typically is through tort law, for Petitioner to change its

conduct, and so its wrongdoing continued. Thus, as re-

cently as August 2006, the federal judge presiding over the

3

U.S. Department of Justice (“DOJ”) tobacco litigation

found that Petitioner and the industry engaged in a 50-

year scheme in violation of racketeering laws — “with little,

if any, regard for individual illness and suffering . . . or the

integrity of the legal system” — and further found that the

racketeering continues to this day.

With this history, the award of punitive damages in

this case — which amounts to little more than 2% weeks of

Petitioner’s profits — fits within this Court’s jurisprudence.

If ever there was a defendant whose conduct demonstrates

the necessity of this Court “consistently rejectling) the

notion that the constitutional line is marked by a simple

mathematical formula” for punitive damages, BMW of N.

Am., Inc. v. Gore, 517 U.S. 559, 582 (1996) — this is that

defendant. This defendant also demonstrates the need to

assess the impact of the defendant’s similar — in fact,

identical — conduct on nonparties. In sum, this case, and

its extraordinary facts, demonstrate that flexibility in the

due process analysis is essential to achieve the purposes of

punitive damages — to punish and to deter.

ARGUMENT

I. THE TOBACCO INDUSTRY HAS EVADED

LIABILITY FOR DECADES BY ABUSING THE

LEGAL PROCESS AND CONCEALING EVI-

DENCE - AND THE RESULT HAS BEEN A

PUBLIC HEALTH CATASTROPHE

A. General Patton Goes to Court

[T]he aggressive posture we have taken regarding

depositions and discovery in general continues to

make these cases extremely burdensome and ex-

pensive for plaintiffs’ lawyers, particularly sole

practitioners. To paraphrase General Patton, the

way we won these cases was not by spending all

of [RJR]’s money, but by making that other son of

a bitch spend all of his.

4

Memorandum from R.J. Reynolds Tobacco attorney (Apr.

29, 1988), quoted in Haines v. Liggett Group, Inc., 814

F. Supp. 414, 421 (D.N.J. 1993).

1. The First Wave of Personal Injury Liti-

gation

In the early 1950s, several scientific studies linking

smoking and lung cancer were published. This caused a

public sensation and a great cancer scare. In response, in

December 1953, the leaders of the tobacco companies —

including the president of Philip Morris — met in New

York’s Plaza Hotel to formulate a plan of action, as de-

tailed in an industry document from that time. Hill &

Knowlton, Background Material on the Cigarette Industry

Client (Dec. 15, 1953), http//egacy.library.ucsf.edu/tid/

wyb42c00.* This was the first meeting of the industry

executives in years, as “criminal convictions” under

antitrust laws had led them to keep their distance. Jd. But

with the death toll from lung cancer at 25,000 a year and

rising, the “very existence” of the tobacco industry was

threatened. Robert L. Rabin, A Sociolegal History of the

Tobacco Tort Litigation, 44 STAN. L. REV. 853, 858 (1992).

As a result of the Plaza Hotel meeting, the industry —

including Philip Morris — published a full-page advertise-

ment in newspapers around the country on January 4,

1954, titled “A Frank Statement to Cigarette Smokers.”

J.A. 202a-04a. The “Frank Statement” was the symbolic

kickoff of the industry’s decades of deceit:

¢ The “Frank Statement” raised doubts about

the causal link between smoking and disease:

“For more than 300 years tobacco has given sol-

ace, relaxation, and enjoyment to mankind. At

? This tobacco document and the others cited herein are posted in

full text by the Legacy Tobacco Documents Library, a digital library

established by the University of California, San Francisco Library and

the American Legacy Foundation (which was created as a result of the

Master Settlement Agreement between state attorneys general and the

tobacco industry).

5

>

one time or another during those years critics

have held it responsible for practically every dis-

ease of the human body. One by one these

charges have been abandoned for lack of evi-

dence.”

¢ The “Frank Statement” propounded misrep-

resentations and false promises: “We accept an

interest in people’s health as a basic responsibil-

ity, paramount to every other consideration in

our business. We believe the products we make

are not injurious to health. We always have and

always will cooperate closely with those whose

task it is to safeguard the public health.”

¢ The “Frank Statement” announced the crea-

tion of the Tobacco Industry Research Commit-

tee, later re-named the Council for Tobacco

Research, which the industry proclaimed would

conduct research under the direction of “a scien-

tist of unimpeachable integrity,” but which in

fact served as a foundation of the industry’s con-

spiracy.

That same year, 1954, the first personal injury cancer

case was filed against the tobacco industry. Rabin, supra,

at 857. The industry dug in. For decades, the companies

worked together to counter claims against cigarettes and

preserve their market. (The Oregon Supreme Court

decision in this case is replete with references to industry-

wide cooperation. Williams v. Philip Morris Inc., 127 P.3d

1165, 1168-70 (Or. 2006)). The industry’s self-proclaimed

General Patton-style of litigation took hold: aggressive,

scorched-earth tactics, no offers of settlement (not “a

penny,” in the words of Philip Morris’s general counsel),’

and concealment of internal documents evidencing the

industry’s admissions that its product caused*death and

disease.

This was a strategy “unique in the annals of tort

litigation.” Rabin, supra, at 857. “From the beginning, the .

* See Haines, 814 F. Supp. at 421 n.13.

6

cigarette companies decided that they would defend every

claim, no matter what the cost, through trial and any

possible appeals.” Jd.

In the early years of litigation, the battleground was

causation: did cigarette smoking cause lung cancer (and

was that foreseeable)? A few early cases that persevered to

trial illustrate the dominance of the causation issue and

the industry’s war of attrition:

_ © Green v. American Tobacco: This case wound

through 12 years of litigation, two trials, five appeals,

and two unsuccessful petitions for certiorari to this

Court. Rabin, supra, at 861. In the first trial, eight

physicians testified for each side — 16 in all. Green v.

American Tobacco Co., 304 F.2d 70, 72 (5th Cir. 1962).

The jury found that the plaintiff’s lung cancer was

caused by smoking but no liability on the ground that

the defendant could not have reasonably foreseen that

cigarettes caused cancer. Jd. at 71-72.

In the second trial, the judge ruled that a breach

of implied warranty required that defendant’s ciga-

rettes “endanger any responsible segment of the gen-

eral public.” Green v. American Tobacco Co., 391 F.2d

97, 101-02 (5th Cir. 1968). This led, once again, to “a

forensic battle of experts.” Jd. at 103. Defense experts

testified that “[n]obody knows the cause” of lung can-

cer. Jd. This appears to have been the decisive issue.

See Green v. American Tobacco Co., 409 F.2d 1166,

1167 (5th Cir. 1969) (Coleman, J., dissenting) (defen-

dant evaded liability “by convincing a lay jury in a

swearing match among super-scientists that such a

product may somehow be reasonably safe for personal

consumption by the general public.”), cert. denied, 397

U.S. 911 (1970). Again, there was a verdict for defen-

dant, which was upheld by the Fifth Circuit. Id.

Even years before the Green litigation ended,

however, the industry’s internal documents already

demonstrated widespread acknowledgement that

smoking caused cancer.

7

¢ Lartigue v. R.J. Reynolds Tobacco and Lig-

gett and Meyers Tobacco: Again, causation played

a determinative role. The trial record filled 20 vol-

umes, “most of it devoted to medical opinion.” Lar-

tigue v. R.J. Reynolds Tobacco Co., 317 F.2d 19, 22

(5th Cir.), cert. denied, 375 U.S. 865 (1963). The jury

heard details of the plaintiff’s “long medical history”:

measles, pertussis, diphtheria, malaria, influenza,

chronic tonsillitis, pyorrhea, gonorrhea, tertiary

syphilis, rheumatism, and “all of his teeth pulled.” Jd.

The tobacco companies argued “that, except for rheu-

matism, all of these ills aggravate and are suspected

causes of cancer.” Jd. As remarkable as these argu-

ments are by today’s standards — and by the defen-

dants’ contemporaneous but secret documents at the

time of the trial — they apparently swayed the jury.

Thus, the trial judge stated that the jury “simply de-

cided the plaintiff had failed to prove the causal con-

nection between his smoking and his lung cancer... .”

Id. at 23. The Fifth Circuit affirmed. Jd.

* Ross v. Philip Morris: This case lasted 10 years,

from 1954 through 1964. At trial, six physicians testi-

fied for Philip Morris that cigarettes did not cause the

plaintitf’s throat Cancer, with some also testifying

that alcohol was a suspected cause. Ross v. Philip

Morris & Co. Ltd., 328 F.2d 3, 5 (8th Cir. 1964). Thus,

Philip Morris hid its internal knowledge of the causal

connection between smoking and cancer and blamed

alcohol, with trial evidence that included plaintiff's

“history of indulgence, heavy at times, in alcoholic

liquor” and arrests for driving while intoxicated. /d.

The general verdict for Philip Morris was affirmed on

appeal. Jd.

One more case from the first wave of litigation dem-

onstrates the frustration ~ and inability — of a trial judge

in trying to control the industry’s litigation conduct. The

case of Thayer v. Liggett & Myers Tobacco Co., 1970 U.S.

Dist. LEXIS 12796 (D. Mich. 1970), ended in a jury verdict

8

~— Se

for defendant. Afterwards, the trial court — disturbed by

the defendant’s “overwhelming superiority in resources”

and “insatiable appetite for procedural advantage” —

detailed the abuses. Jd. at 18, 19. Among other things, the

court noted that the defendant was evasive in discovery,

id. at 5-6, 9-10; “confidently risked tactics” knowing that

the plaintiff “could not afford the luxury of a mistrial,” id.

at 18, and obtained a sweeping protective order, “on

grounds which later proved largely illusory,” to isolate

plaintiff’s counsel. Jd. at 16; see also id. at 10-14. Mean-

while, defense counsel freely engaged in extensive coop-

eration with other industry attorneys. Jd. at 15 & n.8, 16,

17 n.10, 101-02.

The court concluded:

The court is convinced that the magnitude of the

impact of the disparity in resources between

these parties, plus the sophisticated and calcu-

lated exploitation of the situation by the defen-

dant, approaches a denial of due process which

would compel the granting of a new trial.

This question, unfortunately, is now moot be-

cause plaintiff cannot afford further proceedings.

Id. at 59.

2. The Second Wave of Personal Injury

Litigation

- The second wave of personal injury suits against the

tobacco industry began in the 1980s. Rabin, supra, at 854.

The industry’s theme shifted to arguing that the hazards

of smoking were common knowledge and that smokers

were exercising their “freedom of choice” — and assuming

the risk. Jd. at 870. In short, the industry seamlessly

shifted its battle cry from “smoking doesn’t cause cancer”

to “everybody knows.” “Everybody,” that is, except the

9

tobacco industry, which continued to assert that it was

“not proven” that smoking caused any disease.‘ )

' The most notable case in the second wave of litigation

was the Cipollone suit in New Jersey, which led to the first

meaningful discovery of tobacco industry documents.

Ciresi et al., supra, at 486. The result was the first verdict

for a plaintiff. The judgment, however, was reversed in

part on the issue of preemptivn, and remanded for further |

proceedings. Cipollone v. Liggett Group, Inc., 505 U.S. 504

(1992).

Following this Court’s decision, the Cipollone plain-

tiffs, after a decade of litigation, consented to a voluntary

dismissal with prejudice. See Haines, 814 F. Supp. at 417

n.4. The New Jersey plaintiffs’ attorneys — recognized at

the time as “the leading law firm” in tobacco litigation —

also moved to withdraw from related tobacco cases, citing

the “unreasonable financial burden.” Jd. at 418, 425. In 10

years, not a single of the firm’s cases had been resolved on

the merits. Jd. at 421 n.14.

Given this record, no lawyer was willing to take over

these cases. Jd. at 425. This was a familiar theme. As two

other attorneys from the era wrote:

The reality for most cigarette disease victims and

their families is that they cannot find a lawyer to

handle their case, no matter how hard they

look.... [B)y making the cost of litigation so

high, the cigarette manufacturers have closed

* As late as 1998, Geoffrey C. Bible, chief executive officer of Philip

Morris, testified that “everybody in the world believes smoking causes

disease.” But when asked if he believed smoking causes disease, Bible

testified, “I don’t know.” Bible further testified:

Q. Do you know how many have died as a result of smok-

ing?

A. How many people have died?

Q. Died.

A. I don’t know if anybody has died. I just don’t know, no.

Ciresi et al., supra, at 485 n.34. :

10

the courthouse doors to most people who have

gotten sick or died from using their products.

They have done this by resisting all discovery

aimed at them.... They have done it by getting

confidentiality orders attached to the discovery

materials they finally produce, ... forcing each

plaintiff to reinvent the wheel. They have done it

by taking exceedingly lengthy oral depositions of

plaintiffs and by gathering ... every scrap of pa-

per ever generated about a plaintiff, from cradle

to grave. And they have done it by taking endless

depositions of plaintiffs, expert witnesses, and by

naming multiple experts of their own for each

specialty, such as pathology, thereby putting

plaintiffs’ counsel in the position of taking nu-

merous expensive depositions or else not know-

ing what the witness intends to testify at trial.

And they have done it by taking dozens and doz-

ens of oral depositions, all across the country, of

trivial fact witnesses, particularly in the final

days before trial.

William E. Townsley & Dale K. Hanks, The Trial Court’s

Responsibility to Make Cigarette Disease Litigation Af-

fordable and Fair, 25 Cau. W. L. REv. 275, 276-77 (1989).

Other plaintiffs’ attorneys from this time described

similar tactics: “[T]he Defendants then began noticing

depositions and subpoenaing witnesses for depositions

virtually all over the United States. Defendants deposed

anyone and everyone remotely connected with Plaintiff,

including childhood friends, former spouses, former

spouses of family members, neighbors and store owners in

the neighborhood where Plaintiff lived,” id. at 297; “|T)he

cigarette company defendants took 107 depositions, many of

out-of-state persons, and used only two of them at trial,” id.

at 299; “Elementary school records from the 1930s from a

small town in Kentucky were obtained. When an objection

1l

was made, the explanation was that he might have had a

health course in the elementary grades.” Id. ° '

In the end, this round of litigation concluded with the

tobacco industry’s undefeated record intact. After almost

40 years of litigation, and 300 cases filed since the 1950s,

there still was not a single judgment — or penny paid — to

plaintiffs. Haines, 814 F. Supp. at 428 n.31.

3. The Attorneys General Litigation

The third wave of tobacco litigation began in 1994.

Ciresi et al., supra, at 487-88. This era included new types

of cases, including class actions. But the major break-

through came in the attorneys general litigation, when

Mississippi and then Minnesota were the first states to file

suits to recoup the costs of medical care for smokers. Jd.

Soon the industry and its counsel were facing not individ-

ual smokers but attorneys general across the nation. The

damages claims measured well into the billions of dollars.

And discovery battles were forcing the production of

millions of documents that had never before seen the light

of day, disclosing the industry’s secret acknowledgement of

the health hazards of smoking, the intentional manipula-

tion of nicotine, and marketing to — and addicting — youth

to replace smokers who died. Id. at 479.

The industry could no longer maintain its “no settle-

ment” strategy. In 1997 and 1998, the tobacco industry

entered into settlement agreements, first with four indi-

vidual states and then a Master Settlement Agreement

with the remaining 46 states. The settlement agreements

provided for the payment of billions of dollars to the

states. In addition, there was an array of non-monetary

relief. This included restrictions on the advertising,

* In addition, “One strange tactic has emerged in cancer cases. The

cancer type is always accused of being some strange, nonsmoking type.”

Id. at 303. Compare, in the present case, Williams v. Philip Morris Inc.,

48 P.3d 824, 829 n.4 (Or. Ct. App. 2002) (“Williams I”) (“Defendant's

experts testified that Williams had an extremely rare form of cancer

that is not related to smoking.”).

12

marketing, and promotion of cigarettes (prohibiting

targeting youth, banning the use of cartoons, banning

billboards, etc.). The settlements also provided for dissolu-

tion of tobacco industry trade groups. See generally Na-

tional Association of Attorneys General Projects: Tobacco,

http://naag.org/issues/issue-tobacco.php.

And the settlement agreements provided for the

public release of millions of pages of previously secret

tobacco company documents.

B. The Tobacco Documents

1. The Concealment

Industry lawyers were well aware that disclosure of

their documents would change results in courtrooms. For

example, in 1970, David Hardy of Shook, Hardy & Bacon,

longtime counsel to tobacco companies and one of Peti-

tioner’s law firms in the district court, J.A. 18a, detailed

his fears about the industry’s documents:

Fundamental to my concern is the advantage

which would accrue to a plaintiff able to offer

damaging statements or admissions by persons

employed or whose work was done in whole or in

part on behalf of the company defending the ac-

tion. A plaintiff would be greatly benefited by

evidence which tended to establish actual knowl-

edge on the part of the defendant that smoking is

generally dangerous to health, that certain in-

gredients are dangerous and should be removed,

or that smoking causes a particular disease. This

would not only be evidence that would substan-

tially prove a case against the defendant company

for compensatory damages, but could be consid-

ered as evidence of willfulness or recklessness suf-

ficient to support a claim for punitive damages.

The psychological effect on judge and jury would

undoubtedly be devastating to the defendant.

Letter from David Hardy to DeBaun Bryant, Brown &

Williamson Tobacco Corp. (“Brown & Williamson”) 3-4

~

13

(Aug. 20, 1970), http:/Megacy.library.ucsf.edu/tid/tjc72d00

(emphasis added).

After the disclosures in Cipollone, the next documents

breakthrough came in 1994, in quite a different manner. A

paralegal working for a tobacco law firm took and distrib-

uted several thousand pages of internal documents. These

were so explosive that The Journal of the American

Medical Association (“JAMA”) devoted virtually an entire

issue to them, stating that the documents “make clear how

the tobacco industry has been able to avoid paying a penny

in damages and how it has managed to remain hugely

profitable from the sale of a substance long known by

scientists and physicians to be lethal.” James S. Todd et

al., The Brown and Williamson Documents: Where Do We

Go From Here? 274 JAMA 256, 256 (1995).

And these documents were only the beginning. Next

came the massive discovery effort in Minnesota.

It was an effort that no individual personal-injury

plaintiff could have undertaken. Industry counsel fought

disclosure at virtually every turn. There were word games,

with defense counsel objecting to countless terms in

document requests (for example, “addictive,” “target levels

of nicotine,” and “document destruction policies”). Ciresi et

al., supra, at 490. There were shell games. Philip Morris,

for example, shielded scientific documents with its foreign

affiliates, such as its INBIFO center in Cologne, Germany,

“a locale where we might do some of the things which we

are reluctant to do in this country.” Philip Morris U.S.A.

Inter-Office Correspondence, H. Wakeham to C.H. Gold-

smith (Apr. 7, 1970), http:/legacy.library.ucsf.edu/tid/

rzq24e00; see also Williams, 127 P.3d at 1169 (Petitioner

' conducted research in its European laboratory and was

“careful to avoid preserving records of the results in this

country.”); Ciresi et al., supra, at 494-98.°

* One document illustrating Philip Morris’s attempt to conceal

documents abroad is a handwritten note by the company’s research

director, which stated:

(Continued on following page)

14

There were countless motions to compel. One battle —

over production of the industry’s document indices — lasted

16 months, with eight orders in the trial court, unsuccess-

ful appeals by the industry to the Minnesota appellate

courts, and a petition for certiorari to this Court, which

was denied. At first, industry attorneys claimed that they

had no relevant indices. Later, industry attorneys ac-

knowledged their existence — indeed, one company stated

that it spent $90 million on its indices — but claimed they

were protected by the attorney-client or work product

doctrines. When the indices finally were produced, then-

President Clinton called them a “road map” that “could

improve significantly the ability of public health experts,

scientists, state and federal officials, and the public to

search through industry documents.” Ciresi et al., supra,

at 490-94.

But the most intense discovery effort in the Minnesota

litigation - with more than 20 trial court orders, multiple

appeals, and another unsuccessful petition for certiorari to

this Court — was waged over documents that industry

attorneys withheld on claims of attorney-client and work

product protection. Jd. at 499, 555-57. Many documents

withheld on claims of privilege were authored by scientists

but laundered through lawyers to conceal industry knowl-

edge of health hazards. Jd. at 507, 509, 512. Philip Morris,

for example, listed on its Minnesota privilege log more

than 5,000 documents either authored by or received by its

top-ranking scientists. Jd. at 507.

Ultimately, more than 39,000 documents listed on the

industry's privilege logs were ordered produced, with the

1. Ship all documents to Cologne... .

2. Keep in Cologne.

3. OK to phone & telex (these will be destroyed.)....

6. If important letters or documents have to be sent, please

send to home -— I will act on them and destroy.

Handwritten notes by Thomas Osdene, http:/Megacy. library. ucsf.edu/tid

/iyu53e00. In his deposition, Osdene pled the Fifth Amendment. Ciresi

et al., supra, at 495.

15

trial court — ruling on privilege claims by categories

because of the sheer volume of withheld documents —

finding that the documents were not privileged in the first

instance or were discoverable under the crime-fraud

exception. Jd. at 552-57; see also Clark v. United States,

289 U.S. 1, 15 (1933) (“The privilege takes flight if the

relation is abused.”)’

All together, approximately 35 million pages of docu-

ments were produced in the Minnesota litigation. Ciresi et

al., supra, at 479. Philip Morris alone produced more than

six million pages in Minnesota — compared with only about

140,000 pages in all the previous years of litigation. Jd. at

489. Another company, Brown & Williamson, produced

more than four million pages in Minnesota — and only

1,350 pages in prior litigation. Id.

2. The Industry Admissions

When finally disclosed, the words of tobacco execu-

tives themselves provided an extraordinary window into

the industry’s long-standing fraudulent conduct. As the

Oregon Supreme Court stated:

[T]here can be no dispute that Philip Morris’s

conduct was extraordinarily reprehensible.

Philip Morris knew that smoking caused serious

and sometimes fatal disease, but it nevertheless

spread false or misleading information to suggest

to the public that doubts remained about that is-

sue. It deliberately did so to keep smokers smok-

ing, knowing that it was putting the smokers’

health and lives at risk, and it continued to do so

for nearly half a century.

William, 127 P.3d at 1177.

” Other courts have also found that the tobacco industry abused

claims of privilege. See United States v. Philip Morris USA, Inc., No. 99-

2496, at 1473-77 (D.D.C. filed Aug. 17, 2006) (“DOJ Final Opinion”)

(citing cases).

16

The impact the documents would have had on the

early litigation — if the industry’s secrets had been dis-

closed or if the industry had taken public and litigation

positions consistent with its documents — is evident from

an examination of even a few documents.

a. Causation

While the courtroom battles in the early litigation

were being fought over whether smoking caused cancer,

the tobacco companies themselves had already secretly

acknowledged the causal link.

One document captures the admissions of the entire

industry, as early as 1958. That year, three scientists from

the British-American Tobacco Group (“BAT”) visited the

United States to learn “the extent to which it is accepted

that cigarette smoke ‘causes’ lung cancer.” H.R. Bentley et

al., Report on Visit to U.S.A. and Canada 2 (1958), http://

bat.library.ucsf.edu/tid/jrc54A99. Their itinerary showed

visits to most of the American tobacco industry, including

Philip Morris. Jd. at 1. When they returned, the scientists

wrote a trip report, stating:

With one exception ... the individuals whom we

met believed that smoking causes lung cancer if

by “causation” we mean any chain of events

which leads finally to lung cancer and which in-

volves smoking as an indispensable link.

Although there remains some doubt as to the

_ proportion of the total lung cancer mortality

which can be fairly attributed to smoking, scien-

tific opinion in U.S.A. does not now seriously

doubt that the statistical correlation is real and

reflects a cause and effect relationship.

Id. at 2, 8 (emphasis added).*

* The 1958 trip report was admitted into evidence in the present

case and was cited by the Oregon Supreme Court. Williams, 127 P.3d at

1169; see also Ex. 28.

17

But it would take more than 40 years — until 2000,

after the disclosure of this trip report and millions of other

damning documents — for Philip Morris to publicly admit

that smoking caused cancer and other diseases. DOJ Final

Opinion 327.° Indeed, in the present case, Philip Morris

maintained through trial that it was not proven that

smoking caused cancer. See J.A. 52a.

The refusal to admit that smoking caused disease was

driven by the industry’s legal strategy. One document,

written by a top attorney with BAT’s American affiliate

discussed the sentiment in chilling fashion:

If we admit that smoking is harmful to “heavy”

smokers, do we not admit that BAT has killed a

lot of people each year for a very long time?

Moreover, if the evidence we have today is not

significantly different from the evidence we have

five years ago, might it not be argued that we

have been “willfully” killing our customers for

this long period? Aside from the catastrophic civil

damage and governmental regulation which

would flow from such an admission, I foresee se-

rious criminal liability problems.

Draft Memorandum, New Strategy on Smoking & Health,

J.K. Wells, Brown & Williamson, para. 4 (1980), http://

legacy. library.ucsf.edu/tid/edz95a00.”°

Similarly, Philip Morris’s research director acknowl-

edged in 1961 that cigarettes contained many carcinogens,

but “[iJnternal company memoranda ... suggested that it

could not admit those facts publicly because of adverse

legal consequences.” Williams, 127 P.3d at 1169.

* Even to this day, however, Philip Morris “has never told its

customers on its cigarette packaging or in onserts that it agrees that

smoking causes cancer and other diseases in smokers. Its packages

merely direct smokers to its website address.” DOJ Final Opinion 328.

* In its brief, Petitioner criticizes the Oregon Supreme Court for

comparing its conduct to manslaughter. Pet’r Br. 43. As demonstrated

by the above document, however, criminal liability was a serious

concern in the industry.

18

b. Addiction

By the second wave of tobacco litigation, the industry’s

theme was “freedom of choice.” Privately, however, the

industry recognized that this defense would be compro-

mised by any admission that its customers were addicted.

One Tobacco Institute document, written on the eve of

the second wave of litigation in 1980, summed up the

effect of such an admission, stating, “Shook, Hardy re-

minds us, I’m told, that the entire matter of addiction is

the most potent weapon a prosecuting attorney can have

in a lung cancer/cigarette case. We can’t defend continued

smoking as ‘free choice’ if the person was ‘addicted.’”

Memorandum from P. Knopick to W. Kloepfer 2 (Sept. 9,

1980), http:/Mlegacy. library. ucsf.edu/tid/ciu91f00.""

The industry’s secret documents also described the

purposeful manipulation of nicotine to exploit its addictive

qualities. See, eg., Richard D. Hurt & Channing R.

Robertson, Prying Open the Door to the Tobacco Industry’s

Secrets About Nicotine: The Minnesota Tobacco Trial, 280

JAMA 1173, 1178 (1998) (“Perhaps the most surprising

finding in the document review was the evidence of indus-

try-wide efforts spanning 3 decades to alter the chemical

form of nicotine to increase the percentage of freebase

nicotine delivered to smokers.”); see also Williams, 127

P.3d at 1169 (Petitioner “spent considerable effort discov-

ering ways to deliver the optimal dose of nicotine in each

cigarette. ...”).

But Petitioner did not admit addiction publicly until

2000. DOJ Final Opinion 327." Once again, legal strategy

drove industry conduct on this critical public health issue.

-

" The Tobacco Institute acted on behalf of Petitioner, Williams I, 48

P.3d at 834 n.13, and this document was admitted into evidence in the

present case. Ex. 110.

* Philip Morris, however, still does not admit addiction in its

product labeling. Jd. In addition, Philip Morris removed the statement

that “Smoking Is Addictive” from cigarette packs after buying brands

from a competitor in 1999, even though the company agreed that the

statement was “correct and material.” Jd. at 1608.

19

C. The Tobacco Industry’s Wrongdoing Con-

tinues

The tobacco industry’s decades of deceit are not only a

matter of historical import. The past wrongdoing contin-

ues to kill thousands of smokers (such as respondent, who

began smoking in the early 1950s as the industry conspir-

acy took hold. See Williams, 127 P.3d at 1168). In addition,

the wrongdoing itself continues.

Thus, while Petitioner argues that it has changed its

ways and that there will not be “any repetition of the

conduct at issue here,” Pet’r Br. 39-40, a blistering rebuke

came just one month after Petitioner wrote these words. In

August 200€. the district court in the DOJ tobacco litiga-

tion found that the industry — including Petitioner -

“violated and continue to violate” the Racketeer Influenced

and Corrupt Organizations Act (“RICO”) and that “[t/here

is a reasonable likelihood that Defendants’ RICO viola-

tions will continue in most of the areas in which they have

committed violations in the past.” DOJ Final Opinion 1,

1606.

~This order was entered after seven years of litigation,

the production of millions more pages of documents, and a

bench trial of nine months. Jd. at 3. The court founda

“overwhelming evidence,” id. at 2, and summarized the

industry’s scheme as follows:

[O]ver the course of more than 50 years, Defen-

dants lied, misrepresented, and deceived the

American public, including smokers and the

young people they avidly sought as “replacement

smokers,” about the devastating health effects of

smoking and environmental tobacco smoke, they

suppressed research, they destroyed documents,

they manipulated the use of nicotine so as to in-

crease and perpetuate addiction, they distorted

* Philip Morris immediately announced that it would seek

appellate review. See http://altria.com/media/press_release/03_02_pr_

2006_08_17_01.asp.

20

the truth about low tar and light cigarettes so as

to discourage smokers from quitting, and they

abused the legal system in order to achieve their

goal — to make money with little, if any, regard

for individual illness and suffering, soaring

health costs, or the integrity of the legal system.

Id. at 1500-01.

Repeatedly, the court cited the industry’s abuse of the

legal system, stating that, “At every stage, lawyers played

an absolutely central role in the creation and perpetuation

of the Enterprise and the implementation of its fraudulent

schemes.” Id. at 4. The court found that these actions

furthered the RICO enterprise’s goals, which included

“avoiding or, at a minimum, limiting liability for smoking

and health related claims in litigation.” Jd. at 1526.

The court also detailed the industry’s manipulation of

nicotine, finding that “[djefendants have designed their

cigarettes to precisely control nicotine delivery levels and

provide doses of nicotine sufficient to create and sustain

addiction.” Jd. at 515. Again, this is an issue of continuing

significance. A study published shortly after the DOJ

decision, for example, reported that nicotine yields rose an

average of almost 10% from 1998 to 2004. See David

Brown, Nicotine Up Sharply in Many Cigarettes, WASH.

Post, Aug. 31, 2006, at Al (citing study by the Massachu-

setts Department of Public Health). An increase of 12%,

above the average, was reported for Petitioner’s Marlboro

cigarettes — the choice of two-thirds of high school smok-

ers. Id.

“ The court in the DOJ action awarded a variety of injunctive

relief, including the dissemination of corrective health statements and

the maintenance of websites and depositories for industry documents.

However, the court found that a number of significant remedies -

including a national smoker cessation program costing billions of

dollars — were not available because of the limitation of relief under

RICO. Id. at 3.

21

D. The Public Health Catastrophe

With the tobacco industry unscathed for so long in the

courtroom, there was no incentive — as there typically is

through tort law — for the industry to pay for the harms it

caused and to change its conduct. Even now, with the

industry losing some cases, the relief awarded to date has

been scarcely comparable to the harm wreaked. The result

of this unchecked wrongdoing is a public health catastro-

phe.

As this Court wrote in 2000, cigarette smoking is “one

of the most troubling public health problems facing our

Nation today....” FDA v. Brown & Williamson Tobacco

Corp., 539 U.S. 120, 125 (2000). Cigarettes kill — often

“long and painful deaths,” in the words of the Food and

Drug Administration (“FDA”) — when used as intended. Jd.

at 135. Citing FDA documentation, this Court recited the

litany of statistics. One in three regular smokers dies from

cigarette-caused disease. Jd. That amounts to more than

400,000 deaths each year in the United States from

tobacco-related illnesses, including cancer, respiratory

illnesses, and heart disease. Jd. at 127-28. (With approx-

mately half of the domestic market share, Philip Morris

products cause 200,000 of those deaths. See Tr. Vol. 14-A at

57.) Tobacco use is the leading cause of preventable death

in the United States, killing more people than AIDs, car

accidents, alcohol, homicides, illegal drugs, suicides, and

fire — combined. 539 U.S. at 135.

One commentator, writing in 1980, stated, “A striking

irony emerges when one considers that the industry that

markets the most dangerous product sold in America is

the only industry that has been completely sheltered from

the storm of twentieth-century product liability.” Donald

W. Garner, Cigarette Dependency and Civil Liability: A

Modest Proposal, 53 S. CAL. L. REV. 1423, 1424 (1980).

A “striking irony,” perhaps, but not happenstance.

Cigarettes became “the most dangerous product” in part

because the tobacco industry was not held accountable in

court. Now, as the industry’s past finally begins to catch

22

up with it, the full panoply of remedies ~ including puni-

tive damages — is necessary to achieve justice.

Il. THE AWARD OF PUNITIVE DAMAGE IN THIS

CASE FITS WITHIN THIS COURT’S PRIOR

JURISPRUDENCE

A. Petitioner’s Evasion of Liability Must Be

Taken Into Account to Achieve Punishment

and Deterrence

This Court has repeatedly recognized that the central

purposes of punitive damages are to punish the defendant

and to deter future wrongdoing. State Farm Mut. Auto.

Ins. Co. v. Campbell, 538 U.S. 408, 416 (2003) (punitive

damages “are aimed at deterrence and retribution.”); Gore,

517 U.S. at 568 (“Punitive damages may properly be

imposed to further a State’s legitimate interest in punish-

ing unlawful conduct and deterring its repetition.”). The

goal of deterrence applies not only to the defendant but to

others as well. Pacific Mut. Life Ins. Co. v. Haslip, 499

U.S. 1, 19 (1991) (approving a jury instruction that puni-

tive damages protect the public by deterring “‘the defen-

dant and others from doing such wrong in the future.’”);

City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 266-67 -

(1981) (punitive damages intended “to punish the tortfea-

sor” and “to deter him and others from similar extreme

conduct.”).

Clearly, if a defendant engages in a long campaign of

fraud and deceit, that must be taken into consideration

when it is finally caught. Otherwise, with the prospect of

extraordinary profits from unpunished conduct, neither

punishment nor deterrence will be achieved.

Judge Posner embraced this analysis in Mathias v.

Accor Economy Lodging, Inc., 347 F.3d 672 (7th Cir. 2003),

a decision affirming an award of punitive damages that

was 37.2 times compensatory damages. Judge Posner

wrote:

23

The award of punitive damages in this case thus

serves the additional purpose of limiting the de-

fendant’s ability to profit from its fraud by escap-

ing detection and (private) prosecution. If a

tortfeasor is “caught” only half the time he com-

mits torts, then when he is caught he should be

punished twice as heavily in order to make up for-

the times he gets away.

347 F.3d at 677.

Mathias was a case involving bedbugs in a hotel, with

evidence that defendant's conduct was “willful and wan-

ton.” Jd. at 675. Judge Posner rejected defendant’s argu-

ment that State Farm imposed a “single-digit-ratio rule.”

Id. at 676. Instead, Judge Posner wrote, “We must con-

sider why punitive damages are awarded and why the

Court has decided that due process requires that such

awards be limited.” Jd. Thus, Judge Posner noted that

defendant concealed its wrongdoing and that other hotel

guests had been “endangered.” Jd. at 678. Judge Posner

also took note of defendant’s tactics of “investing in devel-

oping a reputation intended to deter plaintiffs,” including

“mountling] an extremely aggressive defense against suits

such as this and by doing so to make litigating against it

very costly. .. .” Id. at 677.”

Judge Calabresi adopted a similar analysis in Ciraolo

v. City of New York, 216 F.3d 236 (2d Cir.) (Calabresi, J.,

concurring), cert. denied, 531 U.S. 993 (2000). Judge

Calabresi noted that one goal of the tort system “is to

ensure that actors bear the costs of their activities” and

that a rational actor “will make some sort of formal or

informal, spoken or unspoken, cost-benefit analysis ... to

determine if a particular activity is worth its price.” Jd. at

243. The system breaks down, however, if the actor is not

held responsible for the costs of his actions. Jd. This is the

'* Judge Posner stated that “modest stakes” were an additional

disincentive to sue. Jd: In the tobacco litigation, while the potential

damages are much greater than a case involving bedbugs, so too are the

litigation costs.

24

case when a tortfeasor conceals wrongful conduct. Jd. This

is also the case when not all tort victims bring suit (due to,

among other things, “the time, effort, and stress associated

with bringing a lawsuit.”). Jd. at 243-44. Judge Calabresi

wrote:

This idea is far from new. Many years ago, in an in-

fluential article that was in part responsible for his

receipt of the Nobel Memorial Prize in economics,

Professor Becker pointed out that charging a thief

the cost of what he had stolen would not ade-

quately deter theft unless the thief was caught

every time. Since thieves will not always be caught,

they must be penalized by more than the cost of

the items stolen on the occasions on which they are ~

caught. This “multiplier” is essential to render

theft unprofitable and properly to deter it... . More

recently, scholars have recognized that punitive

damages can serve the same function in tort law.

Id. at 244 (emphasis in original), citing Gary S. Becker,

Crime and Punishment: An Economic Approach, 76 POL.

EcON. 169 (1968); Thomas C. Galligan, Jr., Augmented

Awards: The Efficient Evolution of Punitive Damages, 51

LA. L. REv. 3 (1990), and A. Mitchell Polinsky & Steven

Shavell, Punitive Damages: An Economic Analysis, 11

Harv. L. REv. 870 (1998).

Judges Posner and Calabresi both recognized that the

assessment of punitive damages is not an exact science. As

Judge Posner wrote in Mathias, “The judicial function is to

police a range, not a point.” 347 F.3d at 678. Similarly,

Judge Calabresi wrote in Ciraolo:

Such a calculation would rarely be precise. A

rough estimate, however, would not be more

unlikely than many other estimates that courts

currently ask juries to make. Thus, juries are

routinely required to estimate the monetary

value of a plaintiff’s pain and suffering, or of the

loss sustained by a family as a result of a wrong-

ful death, a sum that “defies any precise mathe-

matical computation.”

216 F.3d at 246 n.7 (citations omitted).

25

_ This Court cited Judge Calabresi’s concurrence and

supporting literature and discussed the issue of “defen-

dant’s evasion of liability” in Cooper Indus., Inc. v.

Leatherman Tool Group, Inc., 532 U.S. 424, 438-40 (2001).

The Court expressed concern that “juries do not normally

engage in such a finely tuned exercise of deterrence

calibration.” Jd. at 439. This analysis, however, was in the

context of whether a jury award of punitive damages was

a finding of fact that implicated the Seventh Amendment,

not whether economic deterrence analysis could be used to

assess punitive damages. Thus, this Court indicated that

the economic efficiency approach might be “attractive ...

as an abstract policy matter” and further stated that a

defendant’s “‘morally offensive conduct’” might be an

additional consideration. Jd. at 339-40 (citations omitted);

see also Polinsky & Shavell, supra, at 907 n.120 (if a

reprehensible act “is purely intentional, overdeterrence

cannot occur.”).

In the present case, unless Petitioner’s repeated

misconduct — including concealment of documents estab-

lishing legal liability — is taken into account, neither

punishment nor deterrence will be achieved. Petitioner

was able to conceal its wrongdoing until the release of its

internal documents, decades into its fraud. Yet the puni-

tive damages award of $79.5 million in this case amounts

to only a little more than 2% weeks of Petitioner’s profits.

Williams I, 48 P.3d at 841. Unless this award is upheld,

the message to Petitioner — and other industries — will be

to conceal wrongdoing and avoid legal liability, at all costs.

B. There Is No “Mathematical Bright Line” for

Punitive Damages

The purposes of punitive damages can be achieved in

this case, and the punitive damages award affirmed,

within the parameters of this Court’s three “guideposts.”

See Gore, 517 U.S. at 574-75. Two of the guideposts — the

degree of reprehensibility (“[p]erhaps the most important

indicium of the reasonableness of a punitive damages

26

award,” id. at 575) and sanctions for comparable miscon-

duct (manslaughter in this case) — overwhelmingly sup-

port the award. Petitioner focuses on the third guidepost,

the ratio of punitive to compensatory damages.

But this Court has repeatedly stated that there is no

“mathematical bright line” for a punitive damages award.

See, e.g., State Farm, 538 U.S. at 424-25 (“[Wle have been

reluctant to identify concrete constitutional limits on the

ratio between harm, or potential harm, to the plaintiff and

the punitive damages award....We decline again to

impose a bright-line ratid which a punitive damages

award cannot exceed.”); Gore, 517 U.S. at 582 (“[WJe have

consistently rejected the notion that the constitutional line

is marked by a simple mathematical formula... .”);

Haslip, 499 U.S. at 18 (“We need not, and indeed we

cannot, draw a mathematical bright line. .. .”).

This case presents a paradigm for exceeding a single-

digit ratio, given the magnitude of Petitioner’s wrongdoing

and the resulting consequences. Certainly, if an award of

526 times actual damages can be affirmed in TXO Prod.

Corp. v. Alliance Res. Corp., 509 U.S. 443 (1993), a case

that involved slander of title for oil and gas rights and not

the slightest physical harm to a single person, an award of

97 times actual damages should be affirmed in the present

case. As the plurality stated in TXO, “[Wle do not consider

the dramatic disparity between the actual damages and

the punitive award controlling in a case of this character.”

Id. at 462 (citing factors including “malicious and fraudu-

lent” conduct, “the amount of money potentially at stake,”

“the bad faith of petitioner,” and “the fact that the scheme

employed in this case was part of a larger pattern of fraud,

trickery and deceit.”).”*

Thus, even taking a restrictive view, this case is, in

the words of the majority in State Farm, one of the “few

‘* The comparison with TXO is similarly favorable if the reference

is to “possible harm to other victims that might have resulted if similar

future behavior were not deterred.” Jd. at 460.

27

awards exceeding a single-digit ratio” to satisfy due

process. 538 U.S. at 425.”.

C. The Harm to Nonparties Is Particularly

Relevant in This Case Given Petitioner’s

Decades of Wrongdoing

This case also underscores the necessity of a case-by-

case approach in evaluating the effect of a defendant’s

conduct on nonparties. Without the flexibility to assess

each case on its own facts — and, in this case, take into

account the harm to thousands of identically-situated

Oregonians — the purposes of punitive damages cannot be

achieved.

This Court has recognized the relevance of harm to

nonparties when justified by the facts. For example, the

plurality in TXO noted that evidence of defendant's “al-

leged wrongdoing in other parts of the country” is “[u)nder

well settled law ... typically considered in assessing

punitive damages.” 509 U.S. at 462 n.28.

In State Farm, this Court’s concern was “dissimilar

acts”:

The [Utah] Courts awarded punitive damages to

punish and deter conduct that bore no relation to

the Campbells’ harm..A defendant's dissimilar

acts, independent from the acts upon which li-

ability was premised, may not serve as the basis

for punitive damages. A defendant should be

" The ratio issue is of even less consequence under the analyses of

the three justices who dissented in State Farm. See State Farm, 538

U.S. at 429 (Scalia, J., dissenting) (“[T]he Due Process Clause provides

no substantive protections against ‘excessive’ or ‘unreasonable’ awards

of punitive damages.”); id. at 429 (Thomas, J., dissenting) (“‘1 continue

to believe that the Constitution does not constrain the size of punitive

damages awards.’”) (citations omitted); id. at 439 (Ginsburg, J.,

dissenting) (“Even if 1 were prepared to accept the flexible guides

prescribed in Gore, I would not join the Court’s swift conversion of those

guides into instructions that begin to resemble marching orders.”).

28

punished for the conduct that harmed the plain-

tiff, not for being an unsavory individual or busi-

ness.

538 U.S. at 422-23 (emphasis added). But State Farm

recognized that similar wrongful acts are relevant, stating,

for example, that, “Although evidence of other acts need not

be identical to have relevance in the calculation of punitive

damages, the Utah court erred here because evidence

pertaining to claims that had nothing to do with a third

party lawsuit was introduced at length.” Jd. at 423-24

(emphasis added).

Here, Petitioner’s “other” wrongful acts were not only

similar, but identical, to the acts that harmed respondent.

As the Oregon Supreme Court stated, “[T)he jury could

consider whether Williams and his misfortune were

merely exemplars of the harm that Philip Morris was

prepared to inflict on the smoking public at large.” Wil-

liams, 127 P.3d at 1175. The Oregon Supreme Court also

specifically found that Philip Morris’s conduct did harm

other smokers.”

The relevance of harm to nonparties is of particular

importance here because of Petitioner’s success in conceal-

ing its wrongdoing and evading liability to other smokers.

Evidence of Petitioner’s litigation conduct was before the

jury in this case. See Pet’r Br. 2 (evidence included “litiga-

tion positions”). In addition, the Oregon Court of Appeals

recognized the concealment of industry documents, stating

that, “The extent of defendant’s actions did not become

clear until judicially-required releases of documents

occurred in the 1990s.” Williams I, 48 P.3d at 840. There

* The Oregon Supreme Court rejected Petitioner’s arguments that

its fraud did not injure nonparties, stating, “In essence, Philip Morris is

claiming that one cannot reasonably infer that anyone was actually

fooled by its 40-year advertising campaign directed to thousands of

Oregonians. .. . Philip Morris’s own conduct belies its protestations. As

a for-profit corporation, it would not spend over 40 years of time, effort,

and money to deceive people, unless it thought it was succeeding.”

Williams, 127 P.3d at 1171 n.1. ;

29

can be little doubt that had those documents been released

earlier, the litigation results would have been dramatically

different. Industry counsel recognized this; as attorney

David Hardy wrote, the effect would “undoubtedly be

devastating.” Letter from David Hardy, supra.

This is not to say, however, that Petitioner should be

punished for “hypothetical claims.” See State Farm, 538

U.S. at 423 (“Due process does not permit courts, in the

calculation of punitive damages, to adjudicate the merits

of other parties’ hypothetical claims....”). Nonparties’

claims are not being adjudicated, and nonparties are not

being awarded damages. Instead, it is Petitioner’s own

conduct that is at issue. Indeed, Petitioner concedes that

harm to nonparties may be considered, but only to deter-

mine where “within a confined range” — i.e., a single-digit

ratio — the punitive damages award should fall. Pet’r Br.

22. Among other things, however, Petitioner’s argument

ignores this Court’s repeated admonitions that there is no

“mathematical bright line.””

Petitioner also raises the specter of multiple punish-

ment for the same conduct. Here is a company that en-

gaged in decades of deceit, killing thousands upon

thousands, but, because of its abusive litigation tactics,

has scarcely been touched by damages awards to smokers.

See, e.g., Pet’r Br. 13 (“[I)n the more than 50-year history

of smoking-and-health litigation, only two individual cases

have ever gone to trial in Oregon: the other claims were

either voluntarily withdrawn, not pursued, or dismissed

during motion practice.”). Nevertheless, Petitioner cries

wolf and argues that it is “in danger of being punished

* See also Gore, 517 U.S. at 603 (Scalia, J., dissenting) (“[A] person

cannot be held liable to be punished on the basis of a lawful act. But if a

person has been held subject to punishment because he committed an

unlawful act, the degree of his punishment assuredly can be increased

on the basis of any other conduct of his that displays his wickedness,

unlawful or not.”) (emphasis in original).

30

repeatedly for the same harms.” Pet’r Br. 8. A 50-year

history belies that claim.”

And while industry documents are now available to

potential plaintiffs, many thousands of smokers are long

dead and for many reasons cannot, contrary to Petitioner’s

recommended jury instruction in this case, “bring lawsuits

of their own.”

CONCLUSION

Amicus respectfully submits that our legal system

must empower justice in the present case through a

jurisprudence of punitive damages that accomplishes the

purposes of punishment and deterrence. The judgment of

the Oregon Supreme Court should be affirmed.

Respectfully submitted,

ARTHUR H. BRYANT . MICHAEL V. CIRESI

TRIAL LAWYERS FOR PUBLIC ROBERTA B. WALBURN*

JUSTICE ROBINS, KAPLAN, MILLER &

555 12th Street CIREsS! L.L.P.

Suite 1620 2800 LaSalle Plaza

Oakland, CA 94607 800 LaSalle Avenue

(510) 622-8150 Minneapolis, MN 55402

(612) 349-8500

LESLIE A. BRUECKNER

TRIAL LAWYERS FOR PUBLIC ‘*Counsel of Record

JUSTICE

1825 K Street, N.W.

Suite 200

Washington, DC 20006

(202) 797-8600

September 2006

*” The threat of multiple punitive awards is also checked by an

Oregon statute that takes into account “[t}he total deterrent effect of

other punishment imposed upon the defendant as a result of the

misconduct, including, but not limited to, punitive damage awards to

persons in situations similar to the claimant’s....” Or. Rev. Stat.

30.925(2Xg); see also Or. Rev. Stat. 31.730(3).