Philip Morris International Operations Center in Lausanne, Switzerland
BOSTON – A once-$1 billion verdict against Philip Morris that was reduced to $56 million has been slashed enough, the Massachusetts Supreme Court ruled in a case that asked it to impose stricter guidelines for punitive damages.
The case was filed on behalf of Barbara Fontaine, who died from lung cancer after smoking Marlboro and Parliament cigarettes. Added to the jury’s verdict of $8 million in compensatory damages was a whopping $1 billion in punitives, later reduced by the trial judge to about seven times the amount of compensatory damages.
Philip Morris argued it should have been taken down even lower, asking that the punitive damages amount should have matched the compensatory. And it asked that the court adopt a “clear-and-convincing” evidence standard for punitive damages.
“The extreme reprehensibility of Philip Morris’ conduct clearly justifies a punitive damages ratio toward the upper end of the single-digit range,” Justice Gabrielle Wolohojian wrote Wednesday.
“The compensatory damages award, while large, is not so substantial in comparison to the harm suffered as to require further remittitur… The remitted award serves the goals of punishing Philip Morris’ conduct and deterring similar future acts while comporting with due process.”
In its brief to the Supreme Court, Philip Morris said the trial court had failed to “institute critical safeguards to prevent a runaway punitive damages award,” noting that the original figure of $1 billion would have been the largest such verdict in state history. The record will remain $150 million in another tobacco case.
The company had asked that evidence of its financial state be excluded, but since punitive damages are intended to punish, jurors heard Philip Morris’ net earnings in 2021 were $7.7 billion. An award of $1 billion represented 48 days of net earnings.
Even plaintiffs lawyers asked when the verdict was announced that jurors return to reconsider what would be a “reasonable relationship to the compensatory damages.” U.S. Supreme Court guidance usually limits the ratio to no more than 9:1.
The trial judge had also refused to split the trial in two. Philip Morris requested a first trial for the issues of liability, compensatory damages and whether punitive damages should be awarded. A second trial would have determined how much.
“In considering bifurcation, the judge could consider that the revenue evidence would be only a small fraction of the evidence at trial, and that the jury would be instructed as to the limited use to which the evidence could be put,” Justice Wolohojian wrote.
“Finally, as we have already discussed at length, there is nothing in the record to suggest that evidence of Philip Morris’ revenue caused the jury to be swept away by emotion or to render a verdict that was not firmly rooted in the evidence.”
A “clear-and-convincing” evidence standard for punitive damages was requested by Philip Morris, but the Supreme Court found that nothing in federal or Massachusetts law supports it. Current law requires a showing of malicious, willful, wanton or reckless conduct or gross negligence.
“We are skeptical that punitive damages under the wrongful death statute expose a defendant to greater stigma than, for example, multiple damages imposed under (the state’s consumer protection law),” Wolohojian wrote.
“Regardless, reputational harm is not comparable to the types of consequences, such as civil contempt or the loss of parental rights, that we have held cannot be imposed without clear and convincing evidence.”
