Only $50 Million


Yesterday the U.S. Supreme Court declined to hear Philip Morris' appeal of a $50 million punitive damage award in a case brought by a California man, Richard Boeken, who got lung cancer after smoking Marlboros for decades and died shortly after the verdict at the age of 57. That award, set by a state appeals court, was modest compared to the $3 billion the jury had in mind, and it fell within the 9-to-1 ratio between punitive and compensatory damages the Supreme Court seems to favor as an upper limit. An Oregon tobacco case where the ratio is about 152 to 1 is a more likely candidate for Supreme Court review.

My own view is that the Boeken's widow should not get the $50 million in punitive damages or the $5.5 million in compensatory damages (or the $26 million in interest), for the simple reason that her husband knew smoking might kill him but chose to do it anyway. No amount of outrage about Philip Morris' artful evasions can change that basic fact.

Putting aside the assumption-of-risk issue, this case highlights some of the problems with punitive damages. To begin with, they are explicitly intended to punish bad behavior, which is usually the function of the criminal justice system, as opposed to compensating victims of the bad behavior, which is supposedly the focus of the civil justice system. Hence it does not really make sense that the plaintiffs are the ones who get the money, which is essentially a fine by another name. More important, defendants do not receive the same protections they would if they faced criminal prosecution. In addition to a lower standard of proof and fewer procedural safeguards, there is no statutorily specified limit to the punishment, which is why the Supreme Court has gotten into the business of second-guessing punitive damage awards, finding that they violate the 14th Amendment's guarantee of due process when they get too high.

At the same time, as Justice Antonin Scalia has emphasized, any ceiling (such as the 9-to-1 guideline) is bound to be arbitrary. Maybe the problem is that fines should be imposed according to laws that establish upper limits in advance, instead of being set by jurors who pull a number out of thin air to express their indignation.