For the third time, the Supreme Court was poised to review a $79.5 million punitive damages award imposed by an Oregon jury allegedly to punish Philip Morris for fraud. The case’s previous journey to the Supreme Court resulted in an order that the Oregon Supreme Court apply a newly articulated standard that juries cannot award punitive damages to the plaintiff arising from injuries that may have been inflicted on people not party to the litigation.
The Oregon Supreme Court, however, reaffirmed the punitive damages award without determining whether it had been based on improper consideration of third-party injuries. It ruled that the company had procedurally defaulted under state law and forfeited its federal constitutional claims. State procedural rulings are normally not reviewable by the U.S. Supreme Court.
The issue initially accepted for review was whether a state court may ignore the Supreme Court’s order relating to the federal constitutional claim, and raise – for the first time in this case -- a state procedural issue to dispose of the appeal. The decision in this case will affect many more cases than punitive damages appeals – it will affect any case that is overturned on appeal with instructions to correct a constitutional problem. It is a fundamental constitutional conflict between the U.S. Supreme Court and state supreme courts over how far the states can go to avoid federal requirements. In a similar case years ago, Alabama tried to interpose procedural objections to a Supreme Court ruling prohibiting the disclosure of the membership of the NAACP in 1959, but the Court rejected that state’s ploy.
The NAM filed an amicus brief arguing that Oregon's decision based on the jury instruction ignored a variety of other trial practices that might improperly allow consideration of nonparty harm. For example, defense counsel can raise objections to the admission and use of evidence or arguments relating to nonparty harm. In addition, Oregon's denial of relief misinterpreted the Supreme Court's earlier decision and did not provide an independent and adequate ground for upholding the damages award.
Even though the Supreme Court had received briefs and heard oral arguments for this appeal, on March 31 it dismissed the writ of certiorari as having been improvidently granted. Unfortunately, as a consequence, the Oregon Supreme Court’s decision stands.