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Article published Oct 8, 2003
Supreme Court restores sense to punitive damage awards

The U.S. Supreme Court acted this week to restrain huge jury awards and bring lawsuit windfalls back into some relationship to the actual facts of the case.The case on which the court ruled was brought by the family of Jesse D. Williams, an Oregon smoker who died of lung cancer. The family sued cigarette manufacturer Philip Morris and won $800,000 in actual damages and $79.5 million in punitive damages.The Supreme Court overturned the punitive damages and sent it back to the lower court to have the amount reconsidered. The court insisted that there are limits to punitive damages.Americans can be grateful that the court is sticking by the rule it set in April when it overturned another jury jackpot in an automobile insurance case.Then, the court stated that punitive damages should be related to the amount of actual damages. If the punitive damages are more than 10 times the amount of actual damages involved, it may violate the due process clause of the Constitution.In the Oregon case, the punitive damages were more than 99 times the actual damages. The award had been reduced by the trial judge to $32 million, but that is still 40 times the amount of actual damages. The court also overturned punitive damages that were 13 times the actual damages in another case.These rulings and the restraint they will impose on lawsuits restore sense and perspective to these verdicts. They force courts to look at the actual circumstances of the case and the amount of genuine damage done in setting an amount of punitive damages.No longer can plaintiffs and their lawyers go after huge jackpots that have no relation to the facts of the case.Plaintiffs' lawyers have been successful in getting outrageously large verdicts by playing up the wealth of corporations, telling juries the verdict had to be high enough to make the company feel the pain of the loss. The court banned that tactic as it restored the connection between actual and punitive damages.We all pay for huge jury verdicts. Wepay through the increased cost of goodsand services. Those verdicts drive up the cost of insurance and even health care. They are a drag on the economic health of the nation.The justices have correctly pointed out that it is unconstitutional for the courts to irrationally deprive a defendant of his property. In restoring a rational standard to lawsuits, they have also moved to protect consumers and the economy.