WASHINGTON (Legal Newsline)- The U.S. Supreme Court's decision Monday to hear for the third time a case involving a $79.5 million punitive damages award to a smoker's widow could set the stage for a judicial showdown, a former Oregon chief justice told Legal Newsline.

The tussle between the nation's high court and the Oregon Supreme Court is over a case involving a Portland woman whose husband died of cancer in 1997, after smoking Marlboros for 42 years.

Former longtime Oregon Supreme Court Chief Justice Edwin Peterson said in a telephone interview that the U.S. justices just may use the Oregon case "as a vehicle to more fully develop the law on punitive damages."

He noted for the last 15 to 20 years the laws surrounding punitive damages have been "in an state of uncertainty."

"The Supreme Court of the United States may also be concerned that the Supreme Court of Oregon is not following the law laid out in its earlier decisions," said Peterson, who teaches pre-trial civil litigation at Willamette University College of Law in Salem, Ore.

Peterson served on Oregon's high court from 1979 through 1993.

In the case against Altria Group Inc.'s Philip Morris USA unit, a Multnomah County jury awarded Mayola Williams $821,485 in actual damages and $79.5 million in punitive damages.

The cigarette maker appealed and the U.S. Supreme Court remanded the case back to the state court on constitutional grounds.

The Oregon justices stuck to their judicial guns and upheld their original decision, ignoring the U.S. Supreme Court's ruling, citing that their ruling followed state law.

Richmond, Va.-based Philip Morris, the world's largest cigarette maker, appealed the case again to the U.S. high court after the Oregon Supreme Court left the entire award intact.

The U.S. Supreme Court overturned the award in 2003 following its pattern of ruling that punitive damages should generally be no more than nine times the size of compensatory damages.

But in its ruling, the Oregon Supreme Court said Philip Morris could not challenge the verdict because it failed to comply with state court procedural rules regarding jury instructions in the case.

Attorneys for Philip Morris USA say the state justices have acted in defiance.

"The Oregon Supreme Court's defiance of this court's directive should not be countenanced," Philip Morris said in the appeal. "The Oregon Supreme Court had no authority either to disobey the clear instructions of this court or to conjure up state-law procedural grounds for the judgment."

Because the case has lingered in the courts, the award, including interest accrued since the judgment, could cost Philip Morris as much as $145 million.

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

From Legal Newsline: Reach reporter Chris Rizo by e-mail at chrisrizo@legalnewsline.com.