Last week the U.S. Supreme Court decided an important case for those of us who practice civil litigation, or who are involved in civil suits for money damages. In Phillip Morris USA v. Williams Estate, a case from Oregon, the Supreme Court overturned a $79.5 million award of punitive damages against a tobacco company. That opinion raises the question of how Maryland law handles such claims.
The majority opinion in a 5-4 decision indicates that the estate of a deceased smoker convinced a jury that the cigarette manufacturer was responsible for the decedent’s death, and awarded $821,000 in damages to compensate the family. As Oregon law allowed, the jury was also allowed to consider whether additional damages should be awarded to punish the defendant for its conduct. The lawyers for the plaintiffs were allowed to argue that punitive damages should punish the defendant not only for the harm to them, but to all Oregon smokers. The majority held that this was an unconstitutional violation of the right of the defendant not be deprived of property without due process, and held that the State court must come up with a way to instruct the jury so that it does not punish for harm done to persons other than the plaintiffs in that particular case.
The law in Maryland and other states allows for two types of damages in an appropriate case, compensatory damages to make the plaintiff whole for the harm proven to have been done, and punitive or “exemplary” damages to punish the defendant for his (or its) conduct. For example, in a personal injury case compensatory damages may include such things as medical bills, loss of earnings, or pain and suffering. Punitive damages, if available in the particular type of case, may also be awarded where the fact finder believes the conduct is bad enough to make an additional award appropriate. There has been much litigation in the Supreme Court and other courts which has established generally that the amount of punitive damages must bear some reasonable relationship to the harm caused.
Maryland law, at least since its highest court decided Owens-Illinois v. Zenobia in 1992, has very restrictive rules about when a jury can even consider whether to award punitive damages. That case involved a claim for injury from exposure to asbestos. The Court held that the plaintiff must prove “actual malice” on the part of the defendant before punitive damages can be awarded. In the products liability context, that means actual knowledge of a defective product and deliberately disregarding known risk of harm to others. Such malice must be proven by clear and convincing evidence, a standard higher than the usual civil standard of “more likely than not.”
Zenobia made it clear that in a typical negligence or breach of contract case, punitive damages simply cannot be recovered. Even in the drunk driving case, where the claim is one of negligence, such damages cannot be awarded. Actual malice means ill will, spite, or hate, and it is only in cases involving intentional wrong doing that the issue of punitive damages even makes it to the jury. Thus such awards are typically only seen in cases such as fraud or other intentional wrongdoing.
Persons who bring suits for injury thus need to be mindful that no matter how much they feel wronged by the defendant’s conduct, unless these special circumstances are met they can only recover what damage they can prove for the harm sustained. The Supreme Court appears to be moving even further toward restricting such awards.