Oregon Supreme Court Affirms Award In Smoker’s Case Against Philip Morris USA: Company Will Seek Further Review

RICHMOND, VA (February 2, 2006) - The Oregon Supreme Court today affirmed a $79.5 million punitive damages jury verdict against Philip Morris USA. The company contends the award, which is 152 times the compensatory judgment, is grossly excessive and bears no reasonable relation to the compensatory judgment in violation of the U.S. Supreme Court’s decision in State Farm v. Campbell. In that landmark 2003 decision, the U.S. Supreme Court imposed limitations on the imposition of punitive damages and stated that, in cases involving substantial actual or compensatory damages, punitive damages generally should not exceed the amount of compensatory damages.

In October 2003, the U.S. Supreme Court granted review of the case, directed the Oregon Court of Appeals to vacate its June 2002 opinion and ordered reconsideration of the case in view of State Farm. However, the Oregon Court of Appeals, and now the state’s Supreme Court, rejected the U.S. Supreme Court’s holdings regarding punitive damages.

“Because this decision violates the rules set forth in State Farm, Philip Morris USA will once again seek review of this case by the U.S. Supreme Court,” said William S. Ohlemeyer, Philip Morris USA vice president and associate general counsel.

The lawsuit, known as the Williams-Branch case, was brought on behalf of the family of Jesse Williams, a longtime smoker who died of cancer. In 1999, the jury awarded $821,000 in compensatory or actual damages, which were reduced under state law to $521,000. The trial court reduced the punitive damages award to $32 million, but in a June 2002 ruling the Oregon Court of Appeals reinstated the original $79.5 million punitive damage award.

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