The U.S. Supreme Court’s recent 5-4 ruling in Philip Morris USA v. Williams, overturning a $79.5 million punitive damages award in favor of the widow of a deceased smoker, received an understandably upbeat reception from the nation’s business community. Yet, for reasons I examine below, the decision is not an unmitigated disaster for plaintiffs seeking to recover punitive damages.
The Court’s central holding in Philip Morris was that a defendant’s due process rights are violated if a jury assesses punitive damages to punish a defendant for having caused harm to persons other than the plaintiff. According to the majority opinion, “the Constitution’s Due Process Clause forbids a State to use a punitive damages award to punish a defendant for injury that it inflicts upon nonparties or those whom they directly represent, i.e., injury that it inflicts upon those who are, essentially, strangers to the litigation.”
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