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California Appeals Court Reduces Punitive Damages in Smokers Case
Philip Morris USA Will Appeal To California Supreme Court
NEW YORK (September 22, 2004) - The California Court of Appeal today reduced from $100 million to $50 million a punitive damage award against Philip Morris USA in a case brought by a Los Angeles smoker. The company will ask the California Supreme Court to review today's decision in the case, known as Boeken v. Philip Morris USA.
"The company believes that a $50 million punitive damages award for an individual smoker on top of more than $5 million in compensatory damages is still wildly excessive and in irreconcilable conflict with the U.S. Supreme Courts landmark 2003 ruling in State Farm v. Campbell," said William S. Ohlemeyer, Philip Morris USA vice president and associate general counsel.
In August 2001, a Los Angeles jury awarded Richard Boeken $5.54 million in compensatory damages and $3 billion in punitive damages, which were subsequently reduced by the trial court to $100 million. Mr. Boeken, who had cancer, has since died.
State Farm addressed a number of constitutional limitations on punitive damage awards. Most notably, the decision established that, in cases with substantial actual damages (which the U.S. Supreme Court considered the $1 million compensatory award in that case), punitive awards should generally not exceed the amount of the compensatory award.
In the Boeken case, the punitive damages even as reduced by the appellate court are still more than nine times greater than the substantial $5.54 million in compensatory damages.
The Court of Appeal also denied the company's request to overturn the verdict and order a new trial.
"Philip Morris USA also believes the Court's refusal to reverse the liability verdict is incorrect on several key legal issues, and the Court should have granted the company's request for a new trial in this case," said Ohlemeyer.
Ohlemeyer said the decision conflicts with a 2002 California Supreme Court decision, known as Myers, that bars the introduction of evidence of alleged company misconduct that occurred during a 10-year period when state law prohibited tobacco lawsuits. In April 2004, the California Supreme Court's decision in Myers resulted in a reversal by the California Court of Appeal of a $21 million judgment on behalf of smoker Leslie Whiteley, a decision that Whiteley's attorneys did not further appeal.
During the Boeken trial, the trial court permitted the jury to hear evidence that is prohibited by the Myers decision, and failed to instruct the jury that it could not consider that evidence in reaching a verdict. In today's opinion, the Court of Appeal held that Philip Morris USA waived any objection to the trial court's consideration of evidence from the 10-year immunity period.
"For these and several other reasons, including what we believe to be the Court of Appeal's improper treatment of the Myers and punitive damages issues, Philip Morris USA intends to petition the California Supreme Court for review," said Ohlemeyer.
