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United States Supreme Court Strikes Down Punitive Damage Award Against Phillip Morris

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Yesterday, the United States Supreme Court dealt a blow to consumers and businesses who present punitive damage claims to deter future harmful conduct. In a sharply divided opinion, the Supreme Court held that a Plaintiff cannot seek punitive damages to punish a corporation by suggesting actions against non-parties to a lawsuit should play a role in the size of the punitive damage award. A Plaintiff can present evidence of other bad conduct in order to show the reprehensibility of that conduct. However, a plaintiff cannot take this showing further and suggest that the jury consider harm done to others in determining the size of the punitive damage award.

According to the majority opinion of the Supreme Court,

In our view, the Constitution’s Due Process Clause forbids a State to use a punitive damages award to punish a defendant for injury that it inflicts upon nonparties or those whom they directly represent, i.e., injury that itinflicts upon those who are, essentially, strangers to the litigation.

The Court decision seems to back away from an important rationale justifying an award of punitive damages. In my opinion, punitive damages not only punish the wrongdoer, but also discourage future bad conduct. If the Supreme Court intended to prevent Plaintiffs from urging the jury to use punitive damages as a way to prevent future harm and deter bad conduct, then I believe the Court made a serious error. If, however, the Court only meant to clarify the manner and method punitive damage evidence may be presented to the jury and did not limit a party’s ability to urge punitive damages as a tool to prevent and deter future wrongful conduct, then perhaps the decision is palatable. I cannot believe that the United States Supreme Court would prevent a party from arguing deterrence and prevention as a justification for punitive damage awards. However, we may not know the true extent of this decision for quite some time after other courts have interpreted these questions.