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  • 09.09.2012 California Court Approves 16:1 Punitive Damage Award

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Court Upholds Big Award In Smoker's Case

A state appeals court upheld $13.8 million in punitive damages against Philip Morris on Wednesday for the addiction and death of a 45-year cigarette smoker, saying the company's decades of concealment and lies about the dangers of its products were "extremely reprehensible."

In a 2-1 ruling, the Second District Court of Appeal in Los Angeles affirmed a verdict by a Los Angeles County jury in the case of Betty Bullock of Newport Beach (Orange County). Bullock had started smoking cigarettes Marlboros in 1956, at age 17, and quit in 2001 after she was diagnosed with lung cancer, two years before her death.

Her suit accused Philip Morris of defrauding her by deceptively marketing an addictive and lethal product in the years before the government required warning labels on cigarette packages.

Jurors awarded Bullock $850,000 in 2002 for medical costs, pain and suffering, and $28 billion in punitive damages for fraudulent conduct, the largest individual verdict in the nation's history. The trial judge cut the punitive award to $28 million and it was further reduced in a retrial after the U.S. Supreme Court set constitutional limits on punitive awards against businesses.

The company responds
Philip Morris argued that the punitive damages should be limited to $850,000, matching the jury's award of compensation. The company is likely to seek review from the state Supreme Court.

"We continue to believe that the damage amount is unconstitutionally excessive," said Steve Callahan, spokesman for Philip Morris USA.

Michael Piuze, lawyer for Bullock and her daughter, Jodie, who took over the case after her mother died, said his client would be "glad that the case is one step closer to being over."

The case is one of a handful of California verdicts against cigarettes companies, which were protected from liability by state law between 1988 and 1998 and have blocked most smoking cigarettes-related suits in federal court since 2002.

Punitive damages are meant to punish defendants for malicious or fraudulent conduct. After the initial verdict in Bullock's case was set aside, a new jury awarded $13.8 million in 2009 in punitive damages, about 16 times the amount of compensation for her losses.

Seeking award limits

Philip Morris argued that the amount violated U.S. Supreme Court rulings that said punitive damages should normally be limited to nine times compensation - or to an amount equal to compensation when those damages are substantial - and that excessive awards violate property rights.

The appeals court majority said $850,000 in compensation isn't a "substantial" award against a multibillion-dollar corporation, and the 9-1 limit doesn't apply to defendants whose conduct is egregious.

The court described Philip Morris' extensive efforts from the 1950s onward to deny the dangers of smoking cigarettes to its customers and the government - contradicting the company's own research - and to make cigarettes online more addictive and advertise them aggressively to youths as well as adults.

The damage award is justified by "the extreme reprehensibility of Philip Morris' misconduct, including the vast scale and profitability of its course of misconduct," Justice H. Walter Croskey said in the majority opinion.

Dissenting Justice Patti Kitching said $850,000 was a substantial amount of compensation and the punitive damages should be no more than nine times that sum, or $7.65 million.