Jump to full article: Dow Jones via IWon, 2006-03-20
Intro: Altria Group Inc.'s (MO) (MO) Philip Morris USA (MO) unit Monday exhausted its appeals to overturn a $50 million punitive damages award from a deceased smoker lawsuit filed in California.
The U.S. Supreme Court rejected the tobacco company's appeal without comment. Philip Morris (MO) has already taken a 3 cent-a-share charge to cover the cost of the court award, and now faces the payment, plus interest.
Philip Morris (MO) had asked the high court to rule on whether the punitive damages award in the case was excessive, and whether the Federal Cigarette Labeling and Advertising Act prevented smokers from suing under a California state law that allows "consumer expectations" claims in product liability cases. But the justices, in a brief order, said they won't entertain either question
The $50 million in punitive damages is from a lawsuit brought by the now deceased Richard Boeken is in addition to $5.5 million in actual damages. Boeken's widow will receive the award. . . .
The 9-1 ratio of punitive damages to actual damages is at the outside edge of guidance the Supreme Court offered in its 2003 State Farm punitive damages decision. But Philip Morris (MO) argued the California award violated the precedent set by the State Farm opinion.
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It is simply untenable, after State Farm, to assert than an award producing a ratio of greater than 9:1 comports with due process in this case, especially in light of the substantial compensatory damages imposed.
Philip Morris, in its Boeken appeal to the US Supreme Court.
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