• State High Court Ponders Award In Cigarette Lawsuit
  • A multimillion-dollar award from Philip Morris to the estate of a Salem woman will hinge on a narrow legal point argued Monday in the Oregon Supreme Court.

    At stake is a 2002 jury award of $150 million in punitive damages against the cigarette maker, later reduced by the trial judge to $100 million, and then reversed in 2006 by the Oregon Court of Appeals.

    On a 5-4 vote, the appeals court upheld a verdict of fraud and negligence against Philip Morris, and an award of $169,000 in compensatory damages to the family of Michelle Schwarz, who died of lung cancer in 1999 at age 53.

    Schwarz's family argued in Multnomah County Circuit Court that Philip Morris had fraudulently marketed its low-tar Merit brand, which Schwarz switched to in 1976, as safer than regular cigarettes.

    But the appeals court ruled the jury should not have considered the harm to individuals outside Oregon in deciding the amount of punitive damages.

    The appeals court ordered new proceedings in circuit court to determine only those damages, but the case was appealed to the Oregon Supreme Court.

    A lawyer representing the Schwarz family, Maureen Leonard of Portland, said Monday that "more reprehensible conduct (by Philip Morris) justifies higher punitive damages."

    "It is important that a jury be given full instruction on particular kinds of evidence," she told the Supreme Court. "I think it's an issue triggered by evidence."

    A lawyer representing Philip Morris, Bill Gary of Eugene, said he doubted there was any real confusion by the jury — and that the Court of Appeals did the right thing.

    "I think it's demonstrably clear it would not have been different," he said. "The instructions that the process gave were the instructions that the plaintiffs (Schwarz family) proposed."

    Philip Morris is a unit of Altria Group Inc.

    Even if the full amount is eventually upheld, Oregon law gives 60 percent of an award for punitive damages into a state fund for crime victims.

    The Schwarz case is the second of two Oregon cases against big cheap cigarettes that have attracted national attention.

    The first case was finally settled March 31, when the U.S. Supreme Court declined to hear Philip Morris' appeal of a $79.5 million award in punitive damages to Mayola Williams of Portland. Her husband, Jesse, died in 1997 at age 67 after smoking cigarettes more than three packs of Marlboros a day for more than 40 years.

    With interest, the amount on the original 1999 award grew to about $145 million. Williams also was awarded compensatory damages of $800,000.

    Oregon appellate courts upheld the punitive-damages award four times. But the U.S. Supreme Court returned it in 2003 and 2007 for review under its new standards for punitive damages.

    Philip Morris argued that the award far exceeded what the U.S. Supreme Court has suggested as a ratio between punitive damages and damages intended to compensate for losses. But the nation's high court never ruled on whether the amount in the Williams case was excessive.

    The Court of Appeals decision in the Schwarz case was issued three years before the Williams case was concluded.