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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.