The US Supreme Court threw out a US$79.5 million award that a jury had ordered a cigarette maker to pay to a smoker's widow, a ruling that could bode well for other businesses seeking stricter limits on big-dollar verdicts.
The 5-4 decision on Tuesday was a victory for Altria Group Inc's Philip Morris USA, which contested an Oregon Supreme Court decision upholding the jury's verdict.
Yet the decision did not address a key argument made by Philip Morris and its supporters across a wide range of businesses -- that the size of the award was unconstitutionally large. They had hoped the court would limit the amount that can be awarded in punitive damage cases.
Instead, Justice Stephen Breyer wrote in his majority opinion that the award to Mayola Williams could not stand because a jury may punish a defendant only for the harm done to the person who is suing, not to others whose cases were not before it.
"To permit punishment for injuring a nonparty victim would add a near standardless dimension to the punitive damages question," Breyer said.
The company had argued that the jury was encouraged to punish Philip Morris for health problems suffered by every Oregonian who smoked its cigarettes.
Chief Justice John Roberts and justices Samuel Alito, Anthony Kennedy and David Souter, joined with Breyer.
Dissenting were justices Ruth Bader Ginsburg, Antonin Scalia, John Paul Stevens and Clarence Thomas. Ginsburg said Tuesday's ruling made punitive damages law even more confusing.
Jesse Williams died of lung cancer in 1997 at the age of 67. He had smoked two packs a day of Philip Morris-made Marlboros for 45 years.
His widow argued that the jury award was appropriate as it punished Philip Morris for a decades-long "massive market-directed fraud" that misled people into thinking cigarettes were not dangerous or addictive.
She won compensatory damages of US$800,000 and punitive damages of US$79.5 million in the fraud lawsuit she filed against Philip Morris. A state court previously cut the compensatory award to US$500,000, which is unaffected by Tuesday's ruling.
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