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April 24, 2006

California Court of Appeals Upholds $28 Million Punitive Damages Award Against Philip Morris

In Bullock v. Philip Morris USA, Inc., 2006 Cal. App. LEXIS 562 , 2006 WL 1044161 (Cal. Ct. App. Apr. 21, 2006)[Dockets B164398 & B169083], the plaintiff, Betty Bullock, sued Philip Morris after she was diagnosed with lung cancer after 45 years of smoking, from 1956, when she was 17 years old, until 2001.  The jury awarded her compensatory damages of $850,000, $100,000 of which was for pain and suffering, and $28 billion in punitive damages. The trial judge denied the defendant’s motion for a new trial on condition that the plaintiff agree to a reduction of the punitive damages award to $28 million.  The California Court of Appeal, Second District, affirmed.   

The court found no prejudicial error with respect to the counts for intentional misrepresentation, false promise, and fraudulent concealment.  The court also held that each of those theories supported the award of punitive damages against Philip Morris.  The court evaluated the punitive damages award pursuant to the constitutional guidelines established in State Farm Mut. Automobile Ins. Co. v. Campbell, 538 U.S. 408 (2003) and BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996).  The court concluded that the evidence weighed “in favor of high reprehensibility and in light of the vast ‘scale and profitability’ of its actions, that Philip Morris’s misconduct was extremely reprehensible.”  The ratio of punitive damages to compensatory damages in the case was 33 to 1.  While the ratio significantly exceeded a single digit ratio set as a guidelines by the Supreme Court, the California Court of Appeals held that it was justified, given the degree of reprehensibility of Philip Morris’s conduct.

April 24, 2006 | Permalink

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