Media Backgrounder & Commentary:
 Oregon Court of Appeals Affirms Philip Morris's
Liability for Marketing a so-called "Light" Cigarettes in
Lung Cancer Wrongful Death Case;
But a 5-4 Majority Orders New Trial on Punitive Damages Due to
Trial Court's Failure to Include a Single Jury Instruction

Boston
May 17, 2006  

Contact:  Edward L. Sweda, Jr. or
Mark A. Gottlieb
617-373-2026
 media@tplp.org

See the Court's 5-4 Majority Decision and Dissent

 

Schwarz v. Philip Morris 

The Court of Appeals affirmed Philip Morris's liability for fraudulent marketing of so-called "light" cigarettes and the jury's decision to hold PM legally accountable for the damages suffered by its victims, the defrauded smokers.  In addition, the court did not disturb the jury's determination that Philip Morris's conduct in perpetrating that fraud was sufficiently reprehensible as to justify the imposition of punitive damages to punish and to deter such conduct in the future.  The remand for a new trial was based on a technical issue of the propriety of giving a single, one-sentence jury instruction.  The new trial will be limited to a determination by the jury of the AMOUNT of punitive damages.  Both sides are expected to appeal to the Oregon Supreme Court, which recently upheld a $79.5 million punitive damages award in the Williams v. Philip Morris trial. 

CASE BACKGROUND

 

The family of Michelle Schwarz brought a wrongful death action against Philip Morris after Schwarz's death from lung cancer.  Michelle Schwarz smoked Merit cigarettes for approximately 23 years.  She began smoking in the early 1960s when she was an 18-year-old nursing student. She tried to quit smoking several times after being urged by her family to do so, and eventually switched to Merit cigarettes in 1976 because she believed the lower-tar cigarettes would make it easier for her to quit smoking.  She was 53 years old when she died on July 13, 1999.  She had worked in her husband's medical office until his retirement in 1995 and then as a travel agent.

 

             

The Schwarz's Second Amended Complaint alleged that the Merit cigarettes sold to Michelle Schwarz were "defective and unreasonably dangerous in one or more of the following respects:

                        a. The cigarettes contained added ammonia to increase the effects of

                                    nicotine;

                        b. The cigarettes or their smoke contained altered pH so as to increase

                                    the effects of nicotine;

                        c. The cigarettes contained added sugars so as to increase the effects

                                    of nicotine; and

                        d. At the time defendant's light cigarettes were sold, the product was

                                    dangerous and in a condition not contemplated by the ultimate

                                    consumer in that it was manufactured, marketed, and sold as a

                                    less harmful alternative to ordinary cigarettes."

 

The Plaintiff' also alleged that Philip Morris is negligent for "selling so-called light cigarettes as a safer cigarette and as an alternative to cessation" and that the company "recklessly and/or intentionally made fraudulent misrepresentations about its tobacco products, including misrepresentations about adverse health effects, the addictive nature of its tobacco products, and their contents."

 

Philip Morris denied the Plaintiff's allegations at trial and claims that Michelle Schwarz knew the health risks and could have stopped smoking at any time.   Attorney John W. Philips in his closing argument argued that Michelle Schwarz was not deceived by Philip Morris and that she "took responsibility for her own decisions."  The jury disagreed and came back with verdict of $168,000 in compensatory damages and $150 million in punitive damages against Philip Morris. The trial judge reduced the punitive damages award to $100 million and left the compensatory award intact.  Philip Morris appealed on numerous grounds while the plaintiff appealed the reduction of punitive damages.

 

The Court of Appeals affirmed that the plaintiff met its burdens of proof in regard to the fraud claims surrounding "light" cigarettes; the negligence claims and the strict products liability claims and affirmed that none of these claims were preempted by the federal law known as the Federal Cigarette Labeling and Advertising Act. As such, it upheld the $168,000 compensatory damages award.

 

The Court reversed the $100 million punitive damages award based on due process considerations.  Under two leading U.S. Supreme Court cases (Gore and Campbell) , it is improper for juries to award punitive damages based on harm to individuals outside of the court's jurisdiction.  At trial,  Philip Morris proposed the following jury instruction: 

 

"You are not to punish a defendant for the impact of its conduct on individuals in other states."

 

Judge Roosevelt Robinson presided over the trial in Portland, Oregon.  He rejected this sentence when he provided the jurors with his instructions. 

 

This omission, according to the Court of Appeals, violated Philip Morris's Due Process rights and, therefore, the action was remanded back to the trial court for a new trial to determine the amount of punitive damages that Philip Morris will have to pay, not whether the cigarette giant will have to pay punitive damages.

 

Both sides are expected to appeal the decision to the Oregon Supreme Court. 

            

COMMENTARY
 

Mark Gottlieb, Director of the Tobacco Products Liability Project ("TPLP") at Northeastern University School of Law, emphasized that, "It is important to note that the basis for reversing the punitive damages award was not its size but rather a technical issue stemming from a one sentence jury instruction that a 5-4 majority of the Court believed should have been given.  To think that omission of the instruction prompted this jury to issue a mere $150 million punitive damages verdict on behalf of victims of Philip Morris's fraud and negligence all over the country would seem absurd. Perhaps the Oregon Supreme Court will agree that the failure to include the instruction was, at most, harmless error."

 

Edward L. Sweda, Jr., Senior Attorney for TPLP noted that, "Because of its long history of wrongdoing in Oregon, Philip Morris still faces the likelihood of having to pay substantial punitive damages in this case."

 

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TPLP is a project of the Tobacco Control Resource Center,
a Division of the Public Health Advocacy Institute, a 501(c)(3) non-profit organization.