Amicus Curiae Brief — Philip Morris USA v. Williams

FILED

18

YU! 28 2006

No. 05-1256 © THE CLERK

IN THE

Supreme Court of the Anited

PHILIP Morris USA,

Petitioner,

Vv.

MAYOLA WILLIAMS,

Respondent.

On Writ of Certiorari to the

Supreme Court of Oregon

BRIEF OF THE

WASHINGTON LEGAL FOUNDATION AND

ALLIED EDUCATIONAL FOUNDATION AS

AMICI CURIAE IN SUPPORT OF PETITIONER

DANIEL J. POPEO ARVIN MASKIN *

PAUL D. KAMENAR KONRAD L. CAILTEUX

WASHINGTON LEGAL DAVID R. SINGH

FOUNDATION WEIL, GOTSHAL & MANGES

2009 Massachusetts Avenue, NW 767 Fifth Avenue

Washington, D.C. 20036 New York, N.Y. 10153

(202) 588-0302 (212) 310-8000

July 28, 2006 * Counsel of Record

EEEE———EEEE——EEEEE

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

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QUESTIONS PRESENTED

1. Whether due process permits a jury to punish a

defendant for the effects of its conduct on non-parties.

2. Whether, in reviewing a jury’s award of punitive

damages, an appellate court’s conclusion that a defendant’s

conduct was highly reprehensible and analogous to a crime

can “override” the constitutional requirement that punitive

damages be reasonably related to the plaintiff's harm. '

' In their brief, amici curiae will focus primarily on the first

question.

iii

TABLE OF CONTENTS

QUESTIONS PRESENTED ..0......cssssessssecesssecsssesessesssseesssesss

TABLE OF AUTHORITIES .........cccsscsssccssssosscosssssscossscssesses iv

INTEREST OF THE AMICI CURIAE wocecsssssessssesssesssecsseessves 1

STATEMENT OF THE CASE onec.essessssssssessssssssecsssssseessscesses 3

SUMMARY OF ARGUMENT.......ccscsssssssssscssssecssecsssssssensess 7

a 8

I. DEFENDANT’S RIGHT TO PROCEDURAL DUE

PROCESS WAS VIOLATED IN THIS CASE

BECAUSE THE JURY WAS NOT PROPERLY

INSTRUCTED ON WHAT IT MAY CONSIDER

WHEN REACHING A PUNITIVE DAMAGES

I biinisiesentncesnannncimcacincincenniingininiinintbinibianrnsseinineel 8

A. Philip Morris Has An Independent Right To

ET 8

B. Philip Morris’ Right To Procedural Due

Process Was Violated Because The Trial

Court Failed To Instruct The Jury Regarding

The Factors That Could And Could Not Be

Considered Under State Farm. .................ccecceeeeee 1]

C. There Is No Legitimate, Constitutional Basis

For Not Instructing The Jury Regarding The

State Farm Restriction That Punitive

Damages Should Not Be Based On Harm To

TID sithseciepsipsiaiesthibiniidiiipchinnininniqmeniliandidiineninits 13

D. The Trial Court Violated Philip Morris’

Right To Procedural Due Process In

Instructing The Jury That It Was Free To

Award Damages Up To $100 Million ................ 16

ENTITY svicceaincsutcintahtannpeniiivatinnsandicpdibienpionnteinsandeotitonien 18

iv

TABLE OF AUTHORITIES

Page(s)

CASES

Amchem Prod. Inc. v. Windsor, 521 U.S. 591 (1997) .......«. 12

BMW of N. America, Inc. v. Gore,

OF CR Se Ca cceciecitaintisenianiitianiiaiaioamaian passim

Cooper Industrial, Inc. v. Leatherman Tool

Goma Bib, TIS UTE, GOS Ga ceccevicinccensmnstatestadstiaaiaans l

Harris v. New York, 401 U.S. 222 (1971)........ccccccceceeseeees 15

Marshall v. Lonberger, 459 U.S. 422 (1983) .....00ccccccceeeee 15

Minneapolis, St. P. & S.S.M. Railway v.

REGU, TED UF. Fae COPTED titcincnicninscssnensiiiaeaniamaiaa 10

Miranda v. Arizona, 384 U.S. 436 (1966) ....sccccseccsseesseeeeee- 15

Pacific Mut. Life Ins. Co. v. Hastlip,

TED. 9 Cai ep icnccicicsinitsintntniasscsanintasnmmin sseseonsess 1,8,11

Philip Morris U.S.A., Inc. v. Williams,

SUSE. G8 CID wcecteccactcssiniariiscsnniaisiitiidiidsnmeaeiaaio 6

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

Campbell, 538 U.S. 408 (2003) .0......ccccceceeeeseeeeeeee passim

Tennessee Vv. Street, 471 U.S. 409 (1985)... cecceeseees 14, 15

1XO Prod. Corp. v. Alliance Resources

Carp, Fae US. GED (POF B resestnitasscatatveisisanscsiasisaiitneain 1,9

White v. Ford Motor Co., 312 F.3d 998 (9th Cir. 2002)..... 10

Williams v. Philip Morris, Inc.,

yak ® 6) of | ay See 3, 4, 5, 6

Williams v. Philip Morris, Inc.,

FZ P36 Z56 GN AGD. MO ecscsecerconscsscittinesidiaisimaamiaa 6

Vv

TABLE OF AUTHORITIES

Page(s)

STATUTES, REGULATIONS AND RULES

ESS 5

EET a 12

MISCELLANEOUS

A. Raitz & E. Greene, Determining Damages: The

“Influence of Expert Testimony on Jurors’ Decision

Making, 14 Law and Human Behavior 385 (1990)....... 17

Arvin Maskin, et al., A Punitive Damages Primer:

Legal Principles and Constitutional Challenges,

(Washington Legal Foundation 1994)...........0....cccceeee l

Christine J. Imre, A Punitive Damages Primer: Post-

State Farm Strategies, (Washington Legal

a on l

Don Rushing, et al., Anchors Away. Attacking

Dollar Suggestions for Non-Economic Damages

in Closings, (Defense Counsel Journal, July 2003) ....... 17

Gretchen B. Chapman & Brian Bornstein, 7he More

You Ask For, the More You Get: Anchoring in

Personal Injury Verdicts, 10 Applied Cognitive

ER 17

John Malouff & Nicola A. Schutte, Shaping Juror

Attitudes: Effects of Requesting Different Damage

Amounts in Personal Injury Trials, 129 J. Soc.

TET AT 17

vi

TABLE OF AUTHORITIES

Stephen M. Turner, et al., Punitive Damages

Explosion: Fact or Fiction? (Washington Legal

Foundation Working Paper No. 50, 1992) .................

Theodore B. Olson and Theodore J. Bourrous, The

Constitutionality of Punitive Damages

(Washington Legal Foundation Legal

INUIT CITE itn epsineienitentiesinnisianenneeemneteneniedanentéen

Thomas B. Colby, Beyond the Multiple Punishment

Problem: Punitive Damages as Punishment for

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

Eh EA on

Victor E. Schwartz, et al., Multiple Imposition of

Punitive Damages: The Case For Reform,

(Washington Legal Foundation Working Paper

I Oe

Victor E. Schwartz, Punitive Damages: Should the

Constitution of the United States Provide

Boundaries (Washington Legal Foundation Legal

TNR He akcicienpinicinesiittinsdtinniiainmnenmnbinisnmiiaa

Page(s)

~— 2

INTEREST OF AMICI CURIAE

The Washington Legal Foundation (“WLF’”) is a non-

profit public interest law and policy center based in

Washington, D.C., with supporters nationwide. WLF

regularly appears before federal and state courts promoting

economic liberty, free enterprise principles, and a limited

and accountable government. WLF’s Legal Studies Division

also publishes monographs and other publications on these

topics.

In particular, WLF has devoted substantial resources

over the years through litigation and publishing to promote

civil justice reform, including tort reform and opposing

excessive punitive damages and attorneys’ fee awards. WLF

appeared as amicus curiae in State Farm Mut. Auto. Ins. Co.

v. Campbell, 538 U.S. 408 (2003); Cooper Indus., Inc. v.

Leatherman Tool Group, Inc.; 532 U.S. 424 (2001); BMW of

N. America, Inc. v. Gore, 517 U.S. 559 (1996); Honda Motor

Co., Ltd. v. Oberg, 512 U.S. 415 (1994); TXO Prod. Corp. v.

Alliance Resources Corp., 509 U.S. 443 (1993); and Pacific

Mut. Life Ins. Co. v. Haslip, 499 U.S. 1 (1991).

In addition, WLF has published numerous articles

regarding punitive damages. See, e.g., Christine J. Imre, A

Punitive Damages Primer: Post-State Farm Strategies,

(Washington Legal Foundation 2004); Arvin Maskin, et al.,

A Punitive Damages Primer: Legal Principles and

Constitutional Challenges, (Washington Legal Foundation

' Pursuant to this Court’s Rule 37.6, amici state that no counsel for

any party authored this brief in whole or in part, and no person or

entity, other than amici and their counsel, made a monetary

contribution to the preparation and submission of this brief.

2

1994); Victor E. Schwartz, et al., Multiple Imposition of

Punitive Damages: The Case For Reform, (Washington

Legal Foundation Working Paper No. 50, 1992); Stephen M.

Turner, et al., Punitive Damages Explosion: Fact or Fiction?

(Washington Legal Foundation Working Paper No. 50,

1992); Victor E. Schwartz, Punitive Damages: Should the

Constitution of the United States Provide Boundaries

(Washington Legal Foundation Legal Backgrounder, 1989);

Theodore B. Olson and Theodore J. Boutrous, 7he

Constitutionality of Punitive Damages (Washington Legal

Foundation Legal Backgrounder 1989). Excessive and

unpredictable punitive damages are ultimately harmful to the

economy, workers and consumers.

The Allied Educational Foundation (AEF) is a non-

profit charitable and educational foundation based in New

Jersey. Founded in 1964, AEF is dedicated to promoting

education in diverse areas of law, including law and public

policy. AEF has appeared as amicus curiae before the U.S.

Supreme Court in numerous cases as co-amicus with WLF

that are relevant to this case, including State Farm Mut.

Auto. Ins. Co. v. Campbell, BMW of N. Am. Inc. v. Gore, and

Pacific Mut. Life Ins. Co. v. Haslip.

WLF and AEF believe that they can bring a broader

« perspective on the issues presented in this case which will

assist the Court in deciding this case in such a way as to give

clearer guidance to courts on the imposition of punitive

damages awards.

By letters filed with the Clerk of the Court, the

parties have consented to the filing of this brief.

3

STATEMENT OF THE CASE

Amici curiae are, in the interest of brevity, omitting

any detailed statement of the facts of this case. Amici adopt

by reference the statement of facts set forth in Petitioner’s

Brief.

In short, Jesse Williams was a lifelong smoker of

Marlboro cigarettes, a brand of cigarettes manufactured by

Philip Morris. Throughout his life, Williams was repeatedly

warned—by his parents and wife, among others—of the

dangers associated with smoking cigarettes. Still, he

continued smoking for over 45 years and was diagnosed with

lung cancer in 1996. Williams died one year later, and his

widow (“plaintiff”) sued Philip Morris. Williams v. Philip

Morris Inc., 127 P.3d 1165, 1168 (Or. 2006).

In her complaint, plaintiff alleged that Philip Morris

was negligent because it (1) sold cigarettes that it knew or

should have known were addictive and caused causer; (2)

manipulated the contents of cigarettes in order to maintain

and enhance their addictive effects; (3) failed to test

cigarettes in ways likely to link smoking with human disease

and; (4) failed to manufacture a safer cigarette. Plaintiff also

alleged that Philip Morris engaged in fraud by denying that a

link between smoking and cancer had been scientifically

established. /d.

During closing arguments at trial, plaintiff's counsel

repeatedly encouraged the jury to punish Phillip Morris not

only for harm allegedly to Williams, but also to masses of

other, unidentified people:

In Oregon, how many people do we see

outside, driving home, coming to work, over

4

the lunch hour smoking cigarettes? For every

hundred, cigarettes that they smoke are going

to kill ten through lung cancer. * * *

When you determine the amount of money to

award in punitive damages against Philip

Morris . . . [i]t’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. * * *

Pet. Cert. at 2. Philip Morris thus sought the following

instruction in an attempt to protect against an

unconstitutional punitive damages award:

The size of any punishment should bear a

reasonable relationship to the harm caused to

Jesse Williams by the defendant’s punishable

conduct. Although you may consider the

extent of the harm suffered by others in

determining what that reasonable relationship

is, you are not to punish the defendant for the

impact of its alleged misconduct on other

persons, who may bring lawsuits of their own

and award punitive damages for those harms,

as those other juries see fit.

Williams, 127 P.3d at 1175. The trial court rejected this

proposed jury instruction and instead told the jury that it was

free to award punitive damages up to $100 million, the

amount of punitive damages that plaintiff requested in her

complaint. The instruction omitted any mention of the

source of, or rationale for, this immense figure. /d.

5

The jury found for the plaintiff on fraud and

negligence and awarded punitive damages only for the fraud

count of $79.5 million (over 95 times the compensatory

damages verdict of $821,485).’ The trial court later held that

the punitive damages award was excessive under federal

standards and reduced the punitive damages award to $32

million, still 39 times the compensatory damages verdict. /d.

at 1171.

Philip Morris appealed to the Oregon Court of

Appeals, which rejected Philip Morris’ argument that the

trial court should have given an instruction regarding harm to

non-parties, and reinstated the jury’s $79.5 million punitive

damages award. Philip Morris sought review in this Court,

arguing that the Court of Appeals decision was inconsistent

with State Farm Mut.l Auto. Ins. Co. v. Campbell, 538 U.S.

48 (2003) in numerous respects, including that the United

States Constitution required the trial court to instruct the jury

that any punitive damages award must bear a reasonable

relationship to the harm caused to Williams himself, as

? Notably, the jury found that Jesse Williams was 50 percent

contributorily negligent for the damages that he sustained, the

same damages he sustained as a result of the fraud or

misrepresentation count. 127 P.3d at 1171 ("As to the negligence

claim, the jury found Williams 50% responsible for the

damages."). While the amount of the compensatory damages

awarded was not reduced by 50 percent, due to the finding of

liability on the fraud count, as it otherwise would be under

Oregon’s comparative negligence law, O.R.S. § 31.600, amici

submit that the finding by the jury that Williams was responsible

for 50 percent of the damages he suffered nevertheless further

demonstrates the excessiveness of the punitive damages award in

this Case.

6

opposed to non-parties, such as past, present, and future

Oregon consumers. This Court remanded the case to the

Oregon Court of Appeals so that it could reconsider whether

the restoration of the $79.5 million punitive damages award

was proper in light of State Farm. Philip Morris U.S.A., Inc.

v. Williams, 540 U.S. 801 (2003).

On remand, the Oregon Court of Appeals rebuffed

Philip Morris’ claims of instructional error, holding that it

was consistent with State Farm for the jury to punish Philip

Morris for harm to non-parties. Accordingly, the Court of

Appeals reinstated the jury’s $79.5 million damages award,

and Philip Morris appealed yet again to the Oregon Supreme

Court. Williams v. Philip Morris, Inc., 92 P.3d 236 (Or.App.

2004).

The Oregon Supreme Court affirmed, ruling that the

$79.5 million punitive damages award comports with due

process because, in its view, State Farm does not prohibit

courts from punishing a defendant for similar wrongdoing to

non-parties, although plaintiff presented no evidence that any

other non-party, much less masses of Oregonians, relied on

fraudulent statements by Philip Morris in deciding to

continue smoking. Williams, 127 P.3d at 1175. Moreover,

the Oregon Supreme Court ruled that- Philip Morris’

wrongdoing was “extraordinarily” reprehensible, i.e., it fell

within the definition of criminal conduct, and that the State

Farm and Gore limitations on the ratio between punitive

and compensatory damages thus did not apply. /d. at 1179.

7

SUMMARY OF ARGUMENT

This Court’s jurisprudence regarding punitive

damages has implicitly recognized that defendants have a

constitutional right to procedural due process that is separate

and independent from any substantive due process right they

may possess. In order to protect Philip Morris’

constitutional right to procedural due process, the trial court

should have instructed the jury on the constitutional

constraints on punitive damages this Court recognized in

BMW of N. America, Inc. v. Gore, 517 U.S. 559 (1996) and

State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408

(2003), including the Court’s directive that punitive damages

award must bear a reasonable relationship to the actual

injuries a plaintiff suffered and that it must not punish a

defendant for harm to non-parties. Instead, the trial court

refused to give this instruction or anything comparable and

instructed the jury that it was free to award any amount of

punitive damages up to $100 million, the amount sought in

plaintiff's complaint. Indeed, the jury was impermissibly

allowed to base its award on speculative damages to non-

parties, namely Oregonians who smoke regardless of their

reason for doing so, effectively converting the case into a

class action without the procedural safeguards required for

such actions.

With no meaningful guidance, nearly unconstrained

discretion, and few procedural safeguards to assure the

similarity of harm afflicted upon non-parties, the jury found

for the plaintiff on her fraud claim and awarded $79.5

million in punitive damages. The trial court recognized that

this award was inconsistent with federal law and it reduced

the punitive damages award to $32 million, still 39 times the

compensatory damages. The Oregon Court of Appeals,

8

however, reinstated the $79 million punitive damages award.

To protect the constitutional nghts of Philip Morris and other

defendants at risk of being punished by runaway juries, the

Court should vacate the judgment, order a new trial, and

direct the trial court to give the jury meaningful instructions

on how to apply the limits to punitive damages set forth in

Gore and State Farm.

ARGUMENT

I. DEFENDANT’S RIGHT TO PROCEDURAL

DUE PROCESS WAS VIOLATED IN THIS

CASE BECAUSE THE JURY WAS NOT

PROPERLY INSTRUCTED ON WHAT IT MAY

CONSIDER WHEN ASSESSING A PUNITIVE

DAMAGES AWARD

A. Philip Morris Has An Independent Right

To Procedural Due Process

In assessing punitive damages, defendants have a

constitutional right to procedural due process that is separate

from: any substantive due process rights. Here, Philip

Morris’ procedural] due process nghts were violated when

the trial court refused to instruct the jury about

constitutionally impermissible considerations in determining

the amount of punitive damages post-State Farm.

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

(1991), this Court upheld the constitutionality of jury

instructions that provided the jury with little guidance due to

the existence of a comprehensive post-verdict check on the

jury’s discretion. In Haslip, the Alabama tnal court’s

instructions told the jury little more than that the purpose of

punitive damages was to punish the defendant and to deter

9

the defendant and others from engaging in such conduct in

the future. /d. at 19. The instructions thus left the jury with

“significant discretion in its determination of punitive

damages.” /d. Nevertheless, this Court upheld the

constitutionality of these instructions because of Alabama’s

procedures for post-verdict review of punitive damages

awards. /d. at 20-24.

Since Haslip, however, this Court has subsequently

determined that the constitutionality of a punitive damages

award is not merely a question of the size of the award, as is

considered in a substantive due process analysis, but is also a

question of whether the jury factored illegitimate, -

unconstitutional considerations into its determination.

Indeed, Justice Kennedy recognized this in TXO Prod. Corp.

v. Alliance Res. Corp., explaining that “[w]hen a punitive

damages award reflects bias, passion, or prejudice on the part

of the jury, rather than a rational concern for deterrence and

retribution, the Constitution has been violated, no matter

what the absolute or relative size of the award.” 509 U.S.

443, 467 (1993) (Kennedy, J., concurring in part and

concurring tn judgment).

More recently, a majority of this Court also implicitly

recognized that a defendant has an _ independent

constitutional right to have a jury instructed regarding

limitations on its use of evidence admitted in the case. In

State Farm, this Court mandated that “{a] jury must be

instructed . . . that it may not use out-of-state conduct to

punish a defendant for action that was lawful in the

jurisdiction where it occurred.” 538 U.S. at 422 (emphasis

added). Such an instruction would not be required by the

Constitution if post-verdict review could always provide a

sufficient constraint on a jury’s discretion. Indeed, it has

10

long been established that, if a jury does in fact base its

determination on improper considerations, post-verdict

remittitur cannot cure such constitutional infirmity. See

Minneapolis, St. P. & S.S.M. Ry. v. Moquin, 283 U.S. 520,

521 (1931) (holding, in a different context, that remittitur

cannot cure a verdict that was the result of a jury’s “passion

and prejudice’’).

Although decided before State Farm, the Ninth

Circuit reached a similar conclusion in White v. Ford Motor

Co., 312 F.3d 998 (9th Cir. 2002), holding that post-verdict

review of the size of a damages award cannot cure a verdict

that was based on improper considerations. In White, the

appellate court ordered a new trial on punitive damages

because the trial court refused to instruct the jury that it may

not punish the defendant for its out-of-state actions. /d. at

1019-20. In its decision, the court noted that “[a] punitive

damages award that encompasses a _ defendant’s

extraterritorial conduct may be unconstitutional even if the

size of the award itself, as compared to compensatory

damages, is not outside the bounds of due process.” /d. at

1016.

Because the jury might have considered inappropriate

factors in reaching its decision, the Ninth Circuit sent the

case back to the jury with orders that the jury receive more

specific instructions from the trial court on what it was

allowed to consider in reaching a punitive damages award.

Id. at 1020. Like this Court, the Ninth Circuit understood

that the only way to fully ensure defendants’ procedural due

process rights is to protect them in the first instance by

properly instructing a jury.

11

B. Philip Morris’ Right To Procedural Due

Process Was Violated Because The Trial

Court Failed To Instruct The Jury

Regarding The Factors That Could And

Could Not Be Considered Under State

Farm

Since Haslip was decided 15 years ago, the Court has

recognized significant constitutional restraints on the award

of punitive damages beyond just the amount. These

limitations include restrictions on the types of evidence and

arguments that can provide a predicate for punitive damages.

See, e.g., Gore, 517 U.S. at 573-74 (juries should not be

allowed to consider either a defendant’s lawful out-of-state

conduct or overall wealth in determining the amount of

punitive damages to award a plaintiff); State Farm, 538 U.S.

at 423 (juries are not allowed to punish a defendant for harm

to non-parties because “[p]unishment on these bases creates

the possibility of multiple punitive damages awards for the

same conduct; for in the usual case nonparties are not bound

by the judgment some other plaintiff obtains’’).

Logic dictates that the failure. to instruct the jury

regarding these constitutional constraints, and in particular

the State Farm rule that juries should not adjudicate and

punish for the claims of non-parties, violated Philip Morris’

right to procedural due process. Indeed, it would be wholly

inconsistent for the Court to recognize such constitutional

constraints, on the one hand, but not require juries to even be

informed of the constraints, on the other. As such, this Court

should find that procedural due process entitled Philip

Morris to a jury instruction on the State Farm rule that

punitive damages must be reasonably related to plaintiff's

12

actual compensatory damages and not harm afflicted on non-

parties.

In fact, this Court has previously mandated that a jury

be given instructions regarding the proper use of evidence in

determining punitive damages. This Court ruled in State

Farm that a jury must be instructed that it “may not use

evidence of out-of-state conduct to punish a defendant for

action that was lawful in the jurisdiction where it occurred.”

Id. at 422. Post-State Farm, there is simply no rational

reason for this Court to require lower courts to instruct juries

on one limit on their power to punish (i.e., that they may not

punish for harms incurred outside the forum state), but not

require instructions regarding a logically indistinguishable

limit (i.e., that they may not punish for harm to non-parties

and instead must apportion the punitive award relative to the

size of plaintiffs compensatory damages); it would be

wholly inconsistent to hold otherwise.

Moreover, permitting the jury to punish Philip Morris

for supposedly similar harm to non-parties is analogous to

allowing classwide punishment with none of the procedural

safeguards provided for such actions. See Fed. R. Civ. P.

23. In the class action context, this Court has recognized the

importance of requiring the class representative to prove the

typicality of their claim and the predominance of common

questions of law and fact. See, e.g., Amchem Prod. Inc. v.

Windsor, 521 U.S. 591, 623-25 (1997). These safeguards are

in place in part to ensure that the efficiency of the class

action procedure does not come at the expense of providing a

defendant a fair opportunity to defend itself against claims of

liability.

13

The Oregon Supreme Court’s holding that juries may

consider harm to non-parties implicates the same due process

concerns at issue in the class action context. A rule allowing

juries to punish a defendant for harm and future harm to non-

parties, as suggested by the Oregon Supreme Court, would

essentially allow a plaintiff to obtain class relief without

having to make any evidentiary showing that common

questions of law and fact predominate, or why individual

defenses peculiar to certain non-parties do not predominate.

Here, the jury may have impermissibly punished Philip

Morris for harm to non-parties without plaintiff having to

prove that any of the non-parties heard and relied on false

statements by Philip Morris in deciding to smoke. What

makes this process even more unfair to Philip Morris is that

the jury’s determination would have no res judicata effect on

non-parties, who would remain free to bring claims against

Philip Morris in the future, and to seek even punitive

damages for the same conduct.

C. There Is No Legitimate, Constitutional

Basis For Not Instructing The Jury

Regarding The State Farm Restriction That

Punitive Damages Should Not Be Based On

Harm To Non-Parties

While this Court has held that a jury can consider the

scope of the harm created by the defendant’s overall conduct

(including harm to non-parties) in evaluating the

reprehensibility of the specific acts that harmed the plaintiff

in a particular case, see, e.g., Gore, 517 U.S. 559, 574 n.21

(1996), the Court has also held that a jury may not punish a

defendant for harm it allegedly caused a non-party. See, e.g.,

State Farm, 538 U.S. at 423 (“[d]ue process does not permit

courts, in the calculation of punitive damages, to adjudicate

I

the merits of other parties’ hypothetical claims against a

defendant under the guise of the reprehensibility analysis

....). A contrary rule would risk cumulative punishments

for the same conduct and run afoul of the Constitution. /d.

(cautioning that punishing a defendant for harm caused to a

nonparty “creates the possibility of multiple punitive

damages awards for the same conduct, for nonparties are not

normally bound by another plaintiff's judgment”). |

Without an instruction that any punitive damages

award must bear a reasonable relationship to this particular

plaintiff's compensatory damages (e.g., this plaintiff suffered

because of Philip Morris’ alleged actions against her), the

jury in this case may not have appreciated the subtle, yet

significant, distinction between considering harm to non-

parties to gauge the reprehensibility of Philip Morris’

conduct toward plaintiff, and punishing Philip Mornis for

alleged wrongdoing afflicted on nonparties. In such

situations, where there is a danger that evidence admissible

for one purpose may be considered by the jury for an

illegitimate, unconstitutional purpose, courts have required

limiting instructions to be given to juries. See, e.g., Thomas

B. Colby, Beyond the Multiple Punishment Problem:

Punitive Damages as Punishment for Individual, Private

Wrongs, 87 Minn. L. Rev. 583, 676 (2003) (“it is a familiar

principle that, when evidence is admitted for one purpose,

but would violate the Constitution for the jury to consider it

for a different purpose, the court should instruct the jury not

to consider the evidence for the impermissible purpose”).

Indeed, this Court has often required limiting

instructions where it would violate the Constitution if

evidence considered for an admissible purpose was

considered for an improper purpose. See, e.g., Tennessee v.

15

Street, 471 U.S. 409, 414-15 (1985) (holding that the

Confrontation Clause is not violated by the introduction of

the confession of an accomplice for the nonhearsay purpose

of rebutting the defendant’s testimony that his own

confession was coercively derived from the accomplice’s

statement, but only if the jury is instructed not to consider

the confession for the truth of the matter asserted); Marshall

v. Lonberger, 459 U.S. 422, 438 n.6 (1983) (“Introduction of

the defendant’s prior conviction did not pose a sufficient

danger of unfairness to the defendant . . . in part because

such evidence was accompanied by instructions limiting the

jury’s use of the conviction to sentence enhancement”);

Harris v. New York, 401 U.S. 222, 224 (1971) (holding that

the state may introduce statements elicited from a defendant

in violation of Miranda v. Arizona, 384 U.S. 436 (1966), for

the purpose of impeachment, so long as the jury is instructed

that such evidence may not be considered for the purpose of

determining guilt).

Although Tennessee, Marshall, and Harris all

involved criminal defendants, the need for a limiting

instruction in the civil punitive damages context is no less

compelling. See State Farm, 538 U.S. at 417 (noting that

although punitive damages in civil cases are intended to

serve the same purpose as criminal penalties, “defendants

subjected to punitive damages in civil cases have not been

accorded the protections applicable in a _ criminal

proceeding”). Philip Morris’ proposed instruction that any

punitive damages award must bear a reasonable relationship

to plaintiff's compensatory damages in this case and not

punish Philip Morris-for harm to non-parties is analogous to

the limiting instructions that this Court has required in other

contexts. Accordingly, it should have been given to the jury,

particularly in light of plaintiff's counsel’s urging of the jury

16

to consider speculative damages to thousands of other

current and future smokers in the State of Oregon, regardless

of their reason for smoking.

D. The Trial Court Violated Philip Morris’

Right To Procedural Due Process In

Instructing The Jury That It Was Free To

Award Damages Up To $100 Million

Although the Court in both Gore and State Farm

declined to recognize any “rigid benchmark” that a punitive

damages award may not surpass, Gore, 517 U.S. at 581 and

State Farm, 538 U.S. at 425, in State Farm the Court

unambiguously admonished that, in practice, “few awards

exceeding a single-digit ratio between punitive and

compensatory damages, to a significant degree, will satisfy

due process.” State Farm, 538 U.S. at 424-25. Here, the

court instructed the jury that it was free to award punitive

damages up to $100 million without even knowing the

amount of compensatory damages the jury would award.

Logically, it was inconsistent with procedural due process

for the trial court to have instructed the jury that it could

impose a particular punitive damages award without any

knowledge of what the compensatory damages award would

be.

Furthermore, Philip Morris was prejudiced by the

suggestion of a $100 million dollar limit on punitive damage

because this gave the jury a reference point which likely

significantly influenced the punitive damages award.

Numerous scientific studies regarding dollar suggestions for

damages have confirmed what cognitive researchers have

labeled an “anchoring effect.” These studies have

established a linear relationship between the dollar

at

17

Suggestions and subsequent awards. Put simply, a larger

request yields a greater award. See Don Rushing, et al.,

Anchors Away: Attacking Dollar Suggestions for Non-

Economic Damages in Closings, (Defense Counsel Journal,

July 2003); John Malouff & Nicola A. Schutte, Shaping

Juror Attitudes: Effects of Requesting Different Damage

Amounts in Personal Injury Trials, 129 J. Soc. Psychol. 491

(1989); Gretchen B. Chapman & Brian Bornstein, The More

You Ask For, the More You Get: Anchoring in Personal

Injury Verdicts, 10 Applied Cognitive Psychol. 519 (1996).

One study even found that nearly half of mock jurors

selected a damages award that exactly matched the amount

requested, demonstrating the power of the anchoring effect.

A. Raitz & E. Greene, Determining Damages: The Influence

of Expert Testimony on Jurors’ Decision Making, 14 Law

and Human Behavior 385 (1990).

Making matters worse, the trial court further

compromised Philip Morris’ right to nrocedural due process

by not informing the jury about the source of the $100

million figure: plaintiff's own complaint. Had the jury been

so informed, it may have at least inferred that the number

was just a self-serving demand and given less weight to the

figure. Thus, not only did the trial court instruct the jury that

it could award a punitive damages award that may well be in

excess of constitutional limits, given the amount of

compensatory damages awarded in this case, but it

compounded its errors by failing to inform the jury of the

source of the figure. Thus, the figure may have seemed to

carry the imprimatur of the trial court, compounding the

anchoring effect in this case.

18

CONCLUSION

For the foregoing reasons, and those presented by the

Petitioner, the judgment below should be reversed.

Respectfully submitted,

Daniel J.Popeo Arvin Maskin*

Paul D. Kamenar Konrad L. Cailteux

WASHINGTON LEGAL David R. Singh

FOUNDATION WEIL, GOTSHAL &

2009 Massachusetts Ave., N.W. MANGES LLP

Washington, D.C. 20036 767 Fifth Avenue

(202) 588-0302 New York, N.Y. 10153

(212) 310-8000

*Counselof Record

Dated: July 28, 2006