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• Jury awards punitive damages to smoker's daughter 

A jury on Monday recommended that cigarette maker Philip Morris USA should pay $13.8 million in punitive damages to the daughter of a longtime smoker who died of lung cancer.

The panel voted 9-3 in favor of Bullock's daughter Jodie Bullock, who is now the plaintiff in the case. Betty Bullock died of lung cancer in February 2003. She had sued Philip Morris in April 2001, accusing the company of fraud and product liability. A jury in 2002 recommended Philip Morris pay a record $28 billion in punitive damages to Bullock, but a judge later reduced the award to $28 million.

In 2008, the 2nd District Court of Appeal reversed the jury's decision and remanded the case for a new trial over the punitive damages. Philip Morris said the $28 million remained excessive.

However, the original jury recommended the tobacco company pay Bullock $750,000 in damages and $100,000 for pain and suffering, a verdict that still stands.

In a statement, Richmond, Virginia-based Altria Group Inc., which owns Philip Morris, said any amount given to Bullock's daughter is unwarranted. . . .

Plaintiff's attorney Michael Piuze said the jury's verdict amounted to a "slap on the wrist for Philip Morris."

"I liked it better when it was $28 billion," said Piuze, who represented Betty Bullock after she filed the lawsuit. "She wanted me to beat the crap out of Philip Morris, and we did it once."

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• The Bloom Is Off the Rose for Tobacco Claims 

Last month, a Los Angeles jury awarded $13.8 million in punitive damages to the daughter of Betty Bullock, a smoker who had sued Philip Morris USA Inc. before she died of cancer. It was a huge loss -- for the plaintiff.

Just seven years before, a different jury in the same case had awarded a record $28 billion in punitives. Philip Morris appealed that blow, and eventually a California appellate court ordered a retrial, leading to the much diminished result of Aug. 24.

What happened between 2002 and last month? Bullock's lawyer, Los Angeles solo practitioner Michael Piuze, did not return calls seeking comment. But Charles Tauman, president of the plaintiff-friendly Tobacco Trial Lawyers' Association, said he had spoken to Piuze, who "felt that the jury that he had was of a different character than the one ... in the original Bullock case. He felt they were harsher and less willing to be sympathetic."

Lawyers on both sides of smoker cases say Piuze's experience is unique only in the magnitude of the lost award. Hard statistics on recent personal injury lawsuits against tobacco companies are difficult to come by, but the anecdotal evidence about punitive damages is growing. Jurors today are less willing to impose severe punishment than jurors just a decade ago.

Lawyers point to changed practices and fading memories, as well as limits on punitives imposed by the U.S. Supreme Court. The major tobacco companies altered their marketing practices following the 1998 master settlement agreement with most states. Younger jurors never knew or retain only dim memories of an era when cigarette packages didn't feature dire health warnings and tobacco executives played down the dangers of their products.

"They're not the evil empire anymore," said Madelyn Chaber . . .

By the time Chaber retried that case in 2007, she found herself in what she called "an entirely different world." Jurors voted for just $250,000 in punitive damages against R.J. Reynolds and rejected punitives against Philip Morris.

"The jury was basically: 'This is old news -- we've heard this and everybody knows it's dangerous,' " Chaber said.

Also, Philip Morris (now part of Altria Group Inc.) is a "changed company," said Murray Garnick

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• Jury awards punitive damages to smoker's daughter 

A jury on Monday recommended that cigarette maker Philip Morris USA should pay $13.8 million in punitive damages to the daughter of a longtime smoker who died of lung cancer.

The panel voted 9-3 in favor of Bullock's daughter Jodie Bullock, who is now the plaintiff in the case. Betty Bullock died of lung cancer in February 2003.

She had sued Philip Morris in April 2001, accusing the company of fraud and product liability. A jury in 2002 recommended Philip Morris pay a record $28 billion in punitive damages to Bullock, but a judge later reduced the award to $28 million.

In 2008, the 2nd U.S. District Court of Appeal reversed the jury's decision and remanded the case for a new trial over the punitive damages. Philip Morris said the $28 million remained excessive.

However, the original jury recommended the tobacco company pay Bullock $750,000 in damages and $100,000 for pain and suffering, a verdict that still stands. . . .

"After hearing weeks of improper arguments and evidence that violated state and federal law on punitive damages, the jury still managed to reject plaintiff's patently unreasonable request," said Murray Garnick, Altria Client Services senior vice president, speaking on behalf of Philip Morris. "Even so, we believe that any punitive damages award is unwarranted based on the facts in this case and that this award is unconstitutionally excessive."

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After hearing weeks of improper arguments and evidence that violated state and federal law on punitive damages, the jury still managed to reject plaintiff's patently unreasonable request. Even so, we believe that any punitive damages award is unwarranted based on the facts in this case and that this award is unconstitutionally excessive.
Murray Garnick, Altria Client Services senior vice president, speaking on behalf of Philip Morris, on the $13.8 M Bullock judgment.

Some of us looked at it as an opportunity to deter this behavior. I don't find $13.8 million to be much of a deterrent.
Matt Reed, 37, of Burbank one of the three dissenting Bullock jurors, who believed Philip Morris should pay a higher amount than the verdict.

• BULLOCK v. PHILIP MORRIS (PDF) 

We conclude that Philip Morris has shown no error with respect to its liability for fraud and products liability, but that the refusal of Philip Morris’s proposed instruction not to impose punishment for harm caused to nonparties to the litigation was error. We therefore affirm the judgment as to the finding of liability, the award of compensatory damages, and the finding that Philip Morris was guilty of oppression, fraud, or malice, and reverse the judgment as to the amount of punitive damages, with directions to conduct a new trial limited to determining that issue. We also hold that the court had no authority to award attorney fees as a sanction against Piuze and reverse the sanctions order.

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• Case Information: Bullock v. PM USA, Inc. 

After the Williams case was decided, the California Supreme Court remanded the case for further proceedings in light of Williams. (Click here to read briefing and articles related to the : Philip Morris USA v. Mayola Williams case decided by the United States Supreme Court on February 20, 2007.) The Court of Appeal then ordered supplemental briefing, which was followed by an order inviting answers from the parties and assorted amici curiae to three questions regarding implementation of the Williams decision. All briefing is completed, and oral argument took place on December 12, 2007. The Court of Appeal issued its opinion on January 30, 2008. (Click here to read the opinion.)

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• Bullock v. Philip Morris - - California Court of Appeal reverses $28 million punitive damages award 

We blogged here about this pending appeal involving the intersection of California law and the U.S. Supreme Court's decision in Philip Morris v. Williams. This afternoon, the Court of Appeal (the Second Appellate District, Division Three) issued a published opinion reversing the $28 million punitive damages award and remanding the case for a new trial on the amount of punitive damages. The same court had previously approved the $28 million award, but the U.S. Supreme Court vacated that decision and remanded for reconsideration in light of Williams. . . .

here's the Court of Appeal's summary of its disposition:

"We conclude that Philip Morris has shown no error with respect to its liability for fraud and products liability, but that the refusal of Philip Morris's proposed instruction not to impose punishment for harm caused to nonparties to the litigation was error. We therefore affirm the judgment as to the finding of liability, the award of compensatory damages, and the finding that Philip Morris was guilty of oppression, fraud, or malice, and reverse the judgment as to the amount of punitive damages, with directions to conduct a new trial limited to determining that issue."

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• Calif. Supremes Wait for Smoke to Clear Over Punitive Damages ($$) 

If the U.S. Supreme Court can provide guidance, why not let it?

On Wednesday, at the urging of tobacco giant Philip Morris USA Inc., the California Supreme Court put on hold a major punitive damages case to await a ruling by the nation's highest court on identical issues.

The state court's 6-0 vote freezes for now an April 21 appellate court ruling that OK'd a $28 million punitive damages award against Virginia-based Philip Morris -- an amount 33 times greater than the compensatory damages in the case. . . .

Philip Morris' attorneys at Arnold & Porter want the punitive damages reduced or dismissed, but asked the California Supreme Court to await the findings of the federal court in Philip Morris USA Inc. v. Williams, 05-1256.

The higher court granted certiorari on May 30 to decide whether the Oregon Supreme Court was justified in affirming an award of $79.5 million in punitive damages to a longtime smoker, which was about 100 times the compensatory damages. . . .

Both the Oregon court and Los Angeles' 2nd District Court of Appeal in the California case had found the tobacco manufacturer's conduct so reprehensible that it justified punitive damages in excess of a single-digit ratio.

In both cases, 45-year smokers Jesse Williams of Oregon and Betty Bullock of California died of lung cancer.

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• BULLOCK v. PHILIP MORRIS Appeal (PDF) 

We conclude that the refusal of Philip Morris’s proposed jury instructions on punitive damages was proper and hold that the extreme reprehensibility of Philip Morris’s conduct justifies a ratio of punitive damages to compensatory damages significantly greater than a single-digit. . . .

There was more than sufficient evidence to demonstrate that Philip Morris knew that the consensus among scientific and medical professionals was that cigarette smoking caused lung cancer and other serious diseases and that smokers suffered lung cancer and other diseases at rates far greater than nonsmokers. Philip Morris knew that cigarettes contained many carcinogens. Despite that knowledge, Philip Morris and other cigarette manufacturers for many years conducted a public campaign designed to obscure and deny the truth. Philip Morris falsely asserted that there was no consensus in the scientific and medical community concerning the adverse health effects of smoking and that the relationship between smoking and health was unknown. Philip Morris assured its customers that if it learned that any cigarette ingredient caused cancer it would remove that ingredient, and falsely stated that it did not believe that smoking was hazardous. Philip Morris repeatedly asserted that more research was needed and that it was diligently pursuing that research, but avoided sponsoring any research that would reveal the hazards of smoking and went to great lengths to avoid disclosing its own toxicological data. Rather than remove nicotine from its cigarettes as it had the ability to do, Philip Morris added urea to its cigarettes to enhance the effect of nicotine so as to further exploit its customers’ addiction and gain new customers. Its customers included individuals such as Bullock who first began to smoke as youths before July 1, 1969, attracted in part by an aggressive advertising campaign in television and in print and other media that was particularly appealing to youths.

The harm caused by Philip Morris’s misconduct was physical rather than economic because the evidence tends to show that Bullock suffered a debilitating and terminal illness, lung cancer, as a result of Philip Morris’s fraudulent scheme. The first reprehensibility factor listed by the court in State Farm, supra, 538 U.S. at page 419, “whether: the harm caused was physical as opposed to economic,” therefore weighs in favor of high reprehensibility. The second factor, “whether . . . the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others” (ibid.), also weighs in favor of high reprehensibility because the evidence tends to show that Philip Morris knew that many smokers would suffer death or serious injury as a result of smoking but, for pecuniary gain, sought to convince its customers and the public in general that the health concerns were unfounded. . . .

Finally, Bullock was only one of many smokers affected by Philip Morris’s nationwide efforts to disseminate misleading information and create a false controversy concerning the adverse health effects of smoking. The evidence shows that Philip Morris earned over $5.2 billion in operating income from domestic sales of tobacco products in 2001 alone, and earned approximately $100 billion cumulatively, in 2001 dollars, in operating income from 1967 to 2001. Philip Morris acknowledged that it earned “billions of dollars in profits.” Those large figures presumably resulted in no small part from Philip Morris’s misconduct. We therefore conclude that the vast “scale and profitability” of the course of misconduct (Johnson, supra, 35 Cal.4th at p. 1206) weighs in favor of high reprehensibility. . . .

Because each of the four factors weighs in favor of high reprehensibility and in light of the vast “scale and profitability” of its actions, we conclude that Philip Morris’s misconduct was extremely reprehensible. . . .

California’s interests in punishment and deterrence are very strong in light of the extreme reprehensibility of Philip Morris’s misconduct. Moreover, Philip Morris’s persistent efforts to mislead the public about the health hazards of smoking despite its understanding that smoking was hazardous show that “strong medicine is required to cure the defendant’s disrespect for the law.” . . .

Philip Morris contends its obligations under the MSA reduce the need for punishment and deterrence. Philip Morris contends its substantial and continuing payment obligations under the agreement and the MSA’s prohibition of some of the same types of conduct on which its liability in this case is based are deterrent measures, and argues that “there is little, if anything, left to deter.” We disagree. . . .

With respect to the MSA, we conclude that Philip Morris’s agreement not to engage in certain conduct is neither punishment nor an effective deterrent and does not reduce the need for punishment and deterrence, as we have stated. . . .

In summary, we conclude that Philip Morris’s conduct was extremely reprehensible, that the approximately 33-to-1 ratio of punitive damages to compensatory damages is not constitutionally excessive in light of the extreme reprehensibility of the misconduct, including the vast “scale and profitability” of the course of misconduct, and that those considerations together with Philip Morris’s financial condition justify the $28 million punitive damages award for purposes of the due process clause. We therefore reject Philip Morris’s contention that the award is constitutionally excessive.

• Calif. Appeals Court Stretches Punitives Precedent, Upholds $28M Award Against Philip Morris 

A California appellate court has defied -- or at least stretched -- precedent by upholding a $28 million punitive damages award against a major tobacco company, an amount 33 times greater than the compensatory damages.

Friday's 2-1 ruling by Los Angeles' 2nd District Court of Appeal acknowledged that the nation's and state's highest courts have declared single-digit ratios between punitives and compensatories generally satisfactory, but nonetheless found the hefty award justified by Philip Morris USA Inc.'s "extremely reprehensible" behavior.

"Philip Morris' persistent efforts to mislead the public about the health hazards of smoking despite its understanding that smoking was hazardous," Justice H. Walter Croskey wrote, "show that 'strong medicine is required to cure the defendant's disrespect for the law.'"

Justice Joan Dempsey Klein concurred. But Justice Patti Sue Kitching dissented in part, saying the punitive damages constituted "a grossly excessive punishment" that violates the due process clause of the Fourteenth Amendment. . . .

"Philip Morris' considerable wealth and ability to pay many times the amount awarded supports our conclusion that a $28 million award is not excessive," Croskey wrote. . . .

John Sorrells, a Washington, D.C.-based spokesman for Philip Morris, would only say "there are issues that need review and we will seek that review from the California Supreme Court."

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Philip Morris' persistent efforts to mislead the public about the health hazards of smoking despite its understanding that smoking was hazardous show that 'strong medicine is required to cure the defendant's disrespect for the law.
Justice H. Walter Croskey, writing for the Los Angeles' 2nd District Court of Appeal majority decision which upheld the $28M Bullock award.

• Smoker Accepts Reduced Tobacco Settlement 

A woman with lung cancer will accept a reduced $28 million punitive damage judgment against cigarette maker Philip Morris but will appeal a judge's decision to slash a jury's original $28 billion award, her attorney said Tuesday.

Superior Court Judge Warren L. Ettinger failed to properly state his reason for settling on the $28 million figure, said Michael Piuze, attorney for 64-year-old Betty Bullock. . .

"It's not an either-or kind of thing," he said, adding that his firm has had success in pursuing the strategy of accepting a reduced judgment and then appealing the reduction.

Piuze suggested that a reduction to $450 million -- a punitive-to-compensatory damages ratio of more than 500-to-1 -- would have been more appropriate.

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• In L.A., Smoker Gets $28 Billion, Er, Million 

This is the kind of story where you really have to watch for typos. The difference between $28 billion and $28 million is just one letter, a single keystroke. But otherwise, it's a big deal. One might say the judge reduced the $28 billion award by $27.972 billion. Most people would round off $27.972 billion to $28 billion. You can't do that here because it would make it look like the judge cut the $28 billion by $28 billion, which would make the award nothing. But we checked--and $28 million is not nothing. But next to $28 billion, it just looks like nothing. In fact it's one-tenth of 1% of $28 billion. . .

From another perspective, $28 billion is more than the market capitalization of British American Tobacco, Loews or R.J. Reynolds Tobacco Holdings, the other big tobacco companies. Philip Morris itself has a net worth of $85.5 billion. $28 billion dollars would be about a third of that net. But $28 million--that's just three one-hundredths of 1%. Which is nothing, unless you start with billions, as here.

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• Philip Morris to Appeal Verdict Reduced to $28 Mln (Update3) 

Philip Morris Cos. will appeal a reduced $28 million award to a dying smoker, bringing to six the number of West Coast multimillion-dollar verdicts on appeal by the world's largest cigarette company.

Los Angeles Superior Court Judge Warren Ettinger yesterday slashed a record $28 billion jury award to Betty Bullock, 64, who is dying of lung cancer, to $28 million. He refused to overturn the verdict, saying the company's ``reprehensible'' conduct warranted punitive damages. Philip Morris said the verdict was ``inconsistent with the facts and the law'' and will appeal. . .

The judge's ruling ``will come as a relief to investors,'' wrote Merrill Lynch & Co. analyst Martin Feldman in a report, though it should ``be tempered by the fact that the tobacco industry to date has not won any claims in California on appeal.''

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• Philip Morris to Appeal Verdict Reduced to $28 Mln (Update1) 

Philip Morris Cos. will appeal a reduced verdict of $28 million in a lawsuit brought by a dying smoker, bringing to six the number of multimillion dollar awards on appeal by the world's largest cigarette company.

Los Angeles Superior Court Judge Warren Ettinger yesterday slashed a record $28 billion jury award to Betty Bullock, 64, who is dying of lung cancer, to $28 million. He refused to overturn the verdict, saying the company's ``reprehensible'' conduct warranted punitive damages. Philip Morris said the verdict was ``inconsistent with the facts and the law'' and will appeal.

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• Judge Slashes Huge Award in Smoking Case 

A Los Angeles judge Wednesday slashed a record punitive damages verdict against Philip Morris Cos. to $28 million, a hefty sum but a shadow of the $28 billion originally ordered by the jury.

Declaring the jury award to 64-year-old Betty Bullock, a longtime smoker with lung and liver cancer, "legally excessive," Superior Court Judge Warren L. Ettinger ruled that $28 million "is a reasonable sum to be awarded against Philip Morris in these circumstances."

But in his seven-page ruling, Ettinger denied two other motions by Philip Morris: a request to either order a new trial or to discard the jury's verdict and declare the company not liable.

In rejecting the motions, Ettinger said Philip Morris had mounted almost no defense to claims that it had conspired with other cigarette makers to conceal the risks and addictiveness of smoking.

"During the course of the trial, the plaintiff called world-famous experts who established that it had been known since the 1950s that cigarette smoke caused lung cancer; that nicotine was a highly addictive drug; and that executives of Philip Morris were aware of these facts," the ruling said.

"Plaintiff also proved that with this knowledge, Philip Morris constantly lied to its customers. Their executives continued on a course claiming there was 'no certainty' that their product caused disease or was addictive," Ettinger wrote. "They made such claims to the public, to the Congress and to the media.... Philip Morris offered NO EVIDENCE refuting or denying any of these facts."

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During the course of the trial, the plaintiff called world-famous experts who established that it had been known since the 1950s that cigarette smoke caused lung cancer; that nicotine was a highly addictive drug; and that executives of Philip Morris were aware of these facts. . . Plaintiff also proved that with this knowledge, Philip Morris constantly lied to its customers. Their executives continued on a course claiming there was 'no certainty' that their product caused disease or was addictive. . . They made such claims to the public, to the Congress and to the media.... Philip Morris offered NO EVIDENCE refuting or denying any of these facts.
LA Superior Court Judge Warren L. Ettinger, in his Bullock award ruling.

[The Bullock verdict was] inconsistent with the facts and the law that should have governed this case.
William S. Ohlemeyer, Philip Morris vice president and associate general counsel.

• Philip Morris $28 Bln Verdict Cut to $28 Mln by Judge (Update4) 

A $28 billion jury award against Philip Morris Cos. was slashed to $28 million by a judge who refused to throw out a sick smoker's case, saying the company's ``reprehensible'' conduct warranted punitive damages.

The original award to Betty Bullock, 64, who is dying of lung cancer, was the largest punitive damage award to an individual in the U.S. Los Angeles Superior Court Judge Warren Ettinger said he will order a new trial on punitive damages if Bullock rejects the reduced award. He cut the award because its 33,000-to-1 ratio of punitive to compensatory damages was ``legally excessive.'' . .

``It eliminates any near-term financial risk associated with the case,'' said David Adelman, an analyst with Morgan Stanley, which does investment banking work for Philip Morris. ``It shows how ridiculous the original jury verdict was.''

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It shows how ridiculous the original jury verdict was.
David Adelman, an analyst with Morgan Stanley, which does investment banking work for Philip Morris, on Judge Ettinger's reduction of the Bullock award.

The jury found, with substantial evidentiary support, that Philip Morris's conduct was reprehensible and that a substantial award of punitive damages is necessary to have a deterrent effect upon the defendant.
Los Angeles Superior Court Judge Warren Ettinger.