A California Court of Appeal has issued the first appellate decision in this state to provide a detailed application of the limitations on punitive damage awards adopted by the U.S. Supreme Court in State Farm v. Campbell (April 2003). Following the dictates of the Supreme Court's decision, the California court has ordered the reduction of a punitive damage award against Philip Morris, Inc. from $25 million to $9 million.
In the underlying litigation, plaintiff Patricia Henley sought damages from Philip Morris for permanent bodily injury she sustained from 35 years of smoking Marlboro cigarettes. At the conclusion of the trial, the jury returned a verdict awarding Henley compensatory damages for her injuries of $1.5 million, with additional punitive damages of $50 million. Philip Morris moved for a new trial, with the result that the trial judge reduced the punitive damage award to $25 million. A series of appeals followed. The Court of Appeal initially affirmed the judgment, including the $25 million in punitives. Following the U.S. Supreme Court's decision in the Campbell case, the California Supreme Court remanded the case again to the Court of Appeal for review of the punitive damage award in light of the Campbell standards. Applying that analysis in detail, the appellate court has determined that the punitive component of the judgment must be reduced to $9 million. If plaintiff does not accept that reduction, a new trial must be held on the punitive damage issue.
The Court of Appeal summarized the U.S. Supreme Court's involvement with punitive damage issues:
* * * Because civil punitive damage awards present a significant risk of arbitrary punishment exceeding that of which the defendant had fair notice, the Supreme Court has undertaken to 'constitutionalize' the field by adopting a variety of substantive and procedural safeguards against excessive awards. Among the procedural safeguards is the requirement, which we assume applies to the present case, that appellate scrutiny of punitive awards be governed by a 'de novo' standard of review. (Campbell, supra, at p. 1520; cf. Cooper Industries, Inc. v. Leatherman Tool Group, Inc. (2001) 532 U.S. 424, 431, 436 (Cooper Industries).)In determining the sustainability of a punitive award the constitutional “guideposts” to be considered are (1) the degree of the defendant’s culpability, i.e., the reprehensibility of his or her conduct, (2) the ratio between the punitive award and the harm to the victim caused by the defendant’s actions, and (3) the sanctions imposed in other cases for comparable misconduct. (Campbell, supra, at p. 1520; Cooper Industries, supra, 532 U.S. 424 at pp. 447-448; see Gore, supra, 517 U.S. at p. 575.)
Applying each of the "guideposts," the Court of Appeal determined that Philip Morris' conduct in producing and marketing cigarettes was indeed reprehensible but that the $25 million award could not withstand a comparison to the degree of actual harm done to Henley. Because the conduct was deemed so reprehensible, however, the court opted to approve an actual-to-punitive damage ratio on the high end of what the U.S. Supreme Court suggested is constitutionally permissible.
In light of Campbell we do not believe the 17-to-1 ratio reflected in the present judgment can withstand scrutiny. As we read that case, a double-digit ratio will be justified rarely, and perhaps never in a case where the plaintiff has recovered an ample award of compensatory damages. Indeed, where a plaintiff has been fully compensated with a substantial compensatory award, any ratio over 4 to 1 is “close to the line.” (Campbell, supra, 123 S.Ct. at p. 1525.) Nonetheless we believe a higher ratio (6 to 1) is justified here by the extraordinarily reprehensible conduct of which plaintiff was a direct victim. There is no reason to believe that the compensatory damages were inflated so as duplicate elements of the punitive award. Moreover, as we have noted, plaintiff’s injuries were not merely economic, but physical, and nothing done by defendant mitigated or ameliorated them in any respect.
The decision in Henley v. Philip Morris, Inc. (Sept. 25, 2003), Case No. A086991, can be found at these links in PDF and Word formats.
The decision includes useful reminders for appellate attorneys. For example, up front in its opinion at the head of the summary of facts, the Court incorporates a useful reminder that no matter how wrong the appellant believes the trial court was, an appellate court is obliged bend over backward to affirm the lower court's decisions, particularly on factual issues, if it possibly can:
We begin with a fundamental principle overlooked by defendant: “A judgment or order of the lower court is presumed correct. All intendments and presumptions are indulged to support it on matters as to which the record is silent, and error must be affirmatively shown. This is not only a general principle of appellate practice but an ingredient of the constitutional doctrine of reversible error.” (9 Witkin, Cal. Procedure (4th ed. 1997) Appeal, § 349, p. 394.) Thus in ascertaining the underlying facts for purposes of appellate analysis, the reviewing court “must consider the evidence in the light most favorable to the prevailing party, giving him the benefit of every reasonable inference, and resolving conflicts in support of the judgment.” (Id. at § 359, p. 408, italics in original.)
Additionally, much of the 60-page decision is taken up with explaining why the Court of Appeal finds that Philip Morris must be deemed to have waived a number of the arguments it tried to present on appeal. In a case in which an appeal is likely -- and tobacco suits are an extreme example -- the attorney(s) presenting the case at trial needs to be conscious of "making the record" for appeal, by raising objections promptly in order to preserve issues for later review and by making offers of proof when the trial court declines to permit a line of evidence to come in. While the appellate court in this case seems to have been skeptical of most of Philip Morris' arguments on their merits (so that the outcome might have been the same in any event), it never had to reach those merits as to several potential defenses, because trial counsel did not take the steps needed to preserve those defenses for appeal.
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