Court granted certiorari today in one case of interest to the business
Default—Independent and Adequate State Grounds—Punitive Damages.
Procedural Default—Independent and Adequate State Grounds—Punitive Damages.
In Philip Morris USA v. Williams, 127 S. Ct. 1057 (2007), the Supreme
Court vacated a $79.5 million punitive damages award imposed by an Oregon jury
against Philip Morris USA. The Court held that the trial judge had violated
Philip Morris’s due process rights by refusing its request to instruct the jury
that punishment could be imposed only for harm suffered by the plaintiff, not
for injuries the company allegedly inflicted upon those not party to the
litigation. The Court remanded the case to the Oregon Supreme Court with
instructions to “apply” the constitutional standard set forth in its opinion. On
remand, however, the Oregon court “adhered to” the vacated judgment and affirmed
the punitive damages award, holding that Philip Morris had procedurally
defaulted under state law and had therefore forfeited its claim of federal
constitutional error. Today, the Supreme Court granted certiorari to decide
whether it was proper for the Oregon court to “interpose—for the first time in
the litigation—a state-law procedural bar” that, Philip Morris argues, “is
neither firmly established nor regularly followed.”
The issue in
this case is of great importance to the business community. The decision in
Williams I confirmed a significant constitutional principle—that due
process “forbids a State to use a punitive damages award to punish a defendant
for injury that it inflicts upon nonparties.” 127 S. Ct. at 1063. That holding
is a vital protection for defendants against the threat of arbitrary or
duplicative punishment. The latest iteration of the case, Williams II,
will decide how robust the Court’s original holding is.
Supreme Court’s willingness to avoid applying the holding by invoking a
procedural bar it had not previously addressed is a stark but not atypical
example of some lower courts’ resistance to the Supreme Court’s punitive damages
jurisprudence in general and the holding of Williams I in particular.
As numerous amici pointed out in briefs submitted in support of
certiorari, a number of state courts—including the high courts of California,
Louisiana, and West Virginia— have declined to follow Williams in the
year since it was decided, citing a variety of state-law justifications or
narrow interpretations of the decision under federal law. Another important
punitive damages decision, State Farm Mutual Automobile Insurance Co. v.
Campbell, 538 U.S. 408 (2003), has received similar treatment.
for certiorari argued that, like several other lower court decisions in this
area, the Oregon Supreme Court’s decision is pretextual—i.e., designed
to avoid application of constitutional principles established by the United
States Supreme Court. In opposing certiorari, respondent argued that the
procedural rule cited by the Oregon court is firmly established in state law and
was clearly violated by Philip Morris. Oregon courts are the final arbiters of
state law, and respondent argued that the Supreme Court may not disturb their
procedural rulings. The decision in this case will signal how deferential the
Supreme Court intends to be to state courts in this context.
Mayer Brown is
counsel of record to petitioner Philip Morris USA. Absent extensions, which are
likely, amicus briefs in support of the petitioner will be due on July 31, 2008,
and amicus briefs in support of the respondent will be due on September 2, 2008.
Any questions about this case should be directed to Lauren Goldman (212 506
2647) in our New York office.
also represents the petitioner in the only other case in which the Court granted
plenary review today, Fitzgerald v. Barnstable School Comm., No.
07-1125, which presents the question of whether Title IX’s implied right of
action precludes Section 1983 constitutional claims to remedy sex discrimination
by federally funded educational institutions.
In addition to
granting review in the cases noted above, the Supreme Court today also invited
the Solicitor General to file a brief expressing the views of the United States
in the following case of interest to the business community:
Corporation Retirement Accumulation Pension Plan v. West, No. 07-663. The
pending petition for certiorari presents two questions: first, whether an ERISA
plan’s failure to use a “whipsaw calculation” when determining the value of lump
sum distributions to early retirees constitutes a statutory violation cognizable
under ERISA § 502(a)(1); and second, whether a plan administrator’s reasonable
interpretation of an ambiguous term of an ERISA plan can be rejected by a court
under the principle of contra proferentem when the plan grants the
administrator discretion to interpret the plan’s terms.
Court also announced the October argument calendar. As Chief Justice Roberts
revealed at least week’s D.C. Circuit Judicial Conference, the Court—in a break
from recent practice—has scheduled three, rather than two, arguments per day on
most of the days on which it will hear oral argument. According to the Chief
Justice, scheduling more arguments earlier in the Term will reduce the crush of
cases that frequently arises toward the end of the Term.