The Supreme Court issued a one sentence order today dismissing the appeal of an $80 million punitive damages verdict in a tobacco case against Philip Morris. There are stories on the decision here and here. The plaintiff’s actual damages were $800,000.
Business interests hoped that the Court would use the case to set a firm limit on punitive damages. The Court did not, however, apparently accepting the Oregon Supreme Court’s finding that Philip Morris’ conduct was "extraordinarily reprehensible."
The practical effect of the ruling is that it will weaken defense arguments that punitive damages are limited to a single digit ratio compared to the plaintiff’s actual damages. Here, the actual-punitive ratio was about 100 to 1. This makes it hard for a defendant in a case with a modest actual damages award to argue that its punitive exposure is capped no matter how bad its conduct was. I like the flexibility that the decision leaves courts to evaluate punitive damages awards.