Philip Morris loses $80M damages appeal

Quick Vote

Should Obama let GM and Chrysler go bankrupt?

• Yes, they’ve been given enough chances
• No, they’re too big to fail
• Give them one more shot and then think about it

or View results

WASHINGTON (CNN) -- The Supreme Court dismissed an appeal by Altria Group Inc.'s Philip Morris USA over $79.5 million in punitive damages awarded to the widow of a longtime Oregon smoker.

The top court did not decide the merits of the dispute, but in a one-sentence ruling Tuesday said the appeal was dismissed as "improvidently granted." Altria's (MO, Fortune 500) Philip Morris in its appeal had argued that the Oregon Supreme Court in upholding the award had defied an earlier U.S. Supreme Court ruling in the case.

The case stemmed from a lawsuit filed by Mayola Williams, whose husband died of lung cancer in 1997 after smoking for more than 40 years.

Williams said her husband, a public-school janitor in Portland who smoked as many as three packs a day of Philip Morris' Marlboro cigarettes, had believed the decades of tobacco industry assurances that smoking did not pose a health threat.

In 1999, a jury awarded Williams $821,000 in compensatory damages, which was reduced under state law to $521,000, and $79.5 million in punitive damages. With interest, the award has grown to more than $145 million, the company has said.

The U.S. Supreme Court initially set aside the award in 2003 in view of its ruling that generally limited punitive damages to no more than nine times the compensatory damages.

The Oregon Supreme Court then upheld the award and ruled that the company's reprehensible conduct warranted such a large verdict.

The U.S. Supreme Court in 2007 overturned the award for a second time. It ruled that it was unconstitutional for juries to impose damages to punish a defendant for the harm done to those who are not parties in the lawsuit.

The Oregon Supreme Court in 2008 again upheld the $79.5 million award. It ruled that the proposed jury instructions by Philip Morris were flawed under state law, and the company thus forfeited its claim of federal constitutional error.

Phillip Morris again appealed to the Supreme Court and said the state court had ignored the Supreme Court's instructions.

The Supreme Court heard arguments in the case on Dec. 3. By dismissing the appeal and saying the appeal should not have been granted, the justices left intact the award against the tobacco company.