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Court in the Act
27 May, 2009  
Smoke rings

Shades of Rolah McCabe … Batties beware … Philip Morris goes down in huge US$79 million punitive damages case in US … Valerie Perumalla chased down Peter Semmler QC, hoping he’d blow a bit of smoke her way


There’s been a hard fought but extremely satisfying win in the US for a deceased cancer stick consumer against Philip Morris, the biggest ciggie manufacturer in the country.

In a one line judgment the US Supreme Court dismissed the company’s appeal against the Oregon Supreme Court’s decision to award a cigarette smoker’s widow US$79.5 million in punitive damages for the smoking-related lung cancer death of her husband.

imageCompensatory damages stand at US$521,485, cut from the jury’s award of US$821,485 because of state law limitations on compensatory awards.

In Philip Morris USA Inc v Mayola Williams (pic) the Supreme Court said:

“The writ of certiorari is dismissed as improvidently granted.”

Mind you, it’s taken a dozen years of litigation to get to this point and it ain’t over yet.

The US Supreme Court had previously twice allowed Philip Morris’ petition for a writ of certiorari against the Oregon Supreme Court’s ruling, each time sending the case back to the state court.

School janitor Jesse Williams smoked Marlboros for 42 years before they got him in 1997 when he was 67.

The case was based around the company’s fraudulent assertion that its products were safe.

We went to long-time cigarette smoke litigator Peter Semmler QC at the Sydney bar for his insights and explanations about the latest Philip Morris case.

In 1992 Semmler helped pave the way for the introduction of laws in Australia that prevent people smoking in public places.

Liesel Scholem had been exposed to tobacco smoke while working at the NSW Department of Health. That’s right, the Department of Health.

Semmler argued that this exposure worsened her asthma and a jury ended up awarding damages of $85,000. He told Justinian:

“It resulted in a lot of buildings, airports, public places going smoke-free. Within days of that decision managers of public and office spaces had erected signs making people smoke outside.”

While the defendant was not a tobacco company, the industry had its lawyers in court. According to Semmler:

“The impression I got was that they were providing assistance to the Department of Health lawyers, scientific data and general assistance in the way they conduct the case.”

It’s comforting to know that Health lawyers hold hands with tobacco lawyers.

In 2001, Semmler acted for Marlene Sharp who successfully sued Port Kembla RSL after she got cancer of the larynx from exposure to environmental tobacco smoke while working as a bar maid.

imageThis was the first time in the world a plaintiff was awarded damages for contracting cancer as a result of exposure to environmental tobacco smoke. Semmler said:

“It was a nine week jury trial that was really very heavily contested by the defendant because they knew it would set a precedent for other people.”

(Pic. Semmler and Sharp in squeeze.)

In view of these historic triumphs what does Semmler make of Williams v Philip Morris?

“The trial judge in the Oregon trial court, which heard the case before a jury … refused the request by the tobacco company that a specific direction be given to the jury that they could not take into account, in awarding punitive damages, the harm caused to other smokers by their product.

The Oregon Supreme Court said, in effect, that because the proposed jury directions were contrary to state procedural law it was not prepared to set aside the US$79.5 million punitive damages award.”

For the third time, the US Supreme Court granted Philip Morris’ a right to appeal against the Oregon Supreme Court’s refusal to interfere with the punitive damages award, only to dismiss it a last time.

“The Supreme Court of the United States, after hearing all the arguments, simply, in a one-line judgment, dismissed the Philip Morris appeal.

My understanding is that the total bill could be something in the order of US$150 million, which even in tobacco company profit terms is quite a lot of money.”

imageIn fact, it sets a US record for an individual smoker case. Semmler added:

“Although they entertained all the arguments of the constitutionality of the punitive damages award, a lot of the business community in the United States were hopeful that the US Supreme Court would lay down strict guidelines about the circumstances in which punitive damages could be awarded in personal injury cases and whether the conduct in relation to non-parties could be taken into account and so on.

Corporate America was hoping that this decision would in effect confine punitive damages… It was a victory for the consumers in the US …

My personal view is that the decision is wonderful. I think it’s great to see the tobacco industry held to account in a way that has a financial impact on its bottom line.”

But it’s not finished yet. Philip Morris is likely to return to the lower court to argue that it should not have to pay 60 percent of the punitive award that under Oregon law goes to the state.

Semmler goes on:

“In this kind of litigation every point is taken by tobacco companies, they have almost unlimited resources to defend these cases.”

imageEven though in Australia we do not have these giant punitive damages verdicts Semmler believes that the best way forward is for state governments to do what state governments have done in the US – to sue the tobacco industry for the health care costs associated with treating those with tobacco related illness.

The cost to the community is enormous, but …

“I don’t think we’ve got the politicians with the gumption to pursue that kind of litigation because it would be hard fought, it would be protracted, it would be expensive.

But if you look at the American experience … where governments took that action, there were multi-billion dollar settlements, which yielded a lot of money from the tobacco industry that was put to very good use and I think that’s what should be happening here.

Really in the end, unless you have a deep pocketed litigation funder, the only way in my view to bring the tobacco companies to account is to have governments acting and the best way in the litigation context that they could do so is to sue for health care costs.”

Robert Peck, a Washington lawyer who represented Williams before the Supreme Court, was quoted by Bloomberg as saying:

“Tobacco litigation has been a war of attrition. This is testament to sticking to principle and pursuing a case to its end.”

Let’s hope the Rolah McCabe team draws strength from all this.

Valerie Perumalla reporting for Justinian