by Deepak Gupta
Because lots of consumer protection statutes permit consumers to seek punitive damages, the Supreme Court's decisions limiting the availability of punitive awards can have a big impact on the enforcement of consumer rights and, more generally, on the ability of the civil law to deter bad corporate conduct. The Rehnquist Court, with a few exceptions (Justices Scalia, Thomas, and Ginsburg didn't go along), was very activist in curtailing what it saw as unconstitutionally excessive punitive damage awards. As a matter of substantive due process, the Court decreed in BMW v. Gore, punitive awards must be evaluated according to three "guideposts": the degree of reprehensibility of the conduct, the ratio between punitive and compensatory damages, and a comparison of the amount of punitive damages to any civil or criminal penalties that could be imposed for comparable misconduct. Following up in State Farm Mutual Auto. Ins. Co. v. Campbell, the Court divined a specific numerical limit in the Due Process Clause: few awards exceeding a "single-digit ratio" between punitive and compensatory damages generally will satisfy due process. The upshot is that, when it comes to proportionality, the constitutional limitations on civil damages against rogue corporations are a lot stricter than the limitations on the imprisonment of real people.
Today, the Roberts Court got its first chance to shape the Court's controversial jurisprudence in this area when it heard arguments in Phillip Morris v. Williams, a highly-anticipated case from Oregon involving punitive damages of $79 million in an individual tobacco case. The case is about whether juries can punish for harms to other people, the application of BMW and State Farm to the tobacco/personal injury context, and the extent to which the second "guidepost" trumps the rest. Or so everyone thought. Based on today's oral arguments, however, the case may end up turning on the meaning of a jury instruction that was never given. And the smart money seems to be on the case being sent back to the Oregon state courts for a clarification of exactly what it meant when it upheld the denial of that jury instruction. It seems likely the Court may end up ducking the bigger questions for now.
A lot has been written about this case already. Rather than add to it, I've rounded up links to the argument transcript, reactions to today's oral arguments by those who were in the courtroom, and some of the prior commentary. (I participated in a moot for the respondent's counsel, Bob Peck, last week, but I didn't make it down to the Court this morning to watch the arguments.)