The ongoing saga that is Philip Morris USA Inc. v. Williams continues to reverberate through the lower courts. California’s Supreme Court recently granted Ford Motor Co.’s petition to review an appeals court’s July 2006 decision awarding $82.6 million to a woman left paralyzed by a 2002 rollover crash. Buell-Wilson v. Ford Motor Co., S-163102 (Cal. S.Ct. July, 2008), see here. But the Court deferred merits briefing on the issues until after the U.S. Supreme Court’s next decision in Williams. One of the central issues in that case is the constitutional barrier to using punitive damages in product liability cases to punish companies for harm allegedly inflicted on those other than the plaintiffs.

The Ford case was brought by a woman left a paraplegic in 2002 allegedly after her Ford Explorer rolled over several times when she claims she swerved to avoid an object that fell from another vehicle onto the road. At trial, plaintiff claimed that the vehicle’s design was dangerously unstable and prone to rollover; plaintiff also alleged the vehicle roof was inadequately supported and defectively weak. The jury found a design defect and a crash-worthiness design defect in the roof. The jury awarded the plaintiff (and spouse) more than $368 million, two-thirds of which was punitive damages. The judge in the case reduced the award to about $150 million. The California appeals court further reduced the total damages to $82.6 million — $55 million in punitives — in July, 2006.

Ford sought review, arguing the significant risk that the jury thought it could, and in fact did, punish Ford on behalf of people other than the plaintiff. Ford cited arguments from the plaintiff such as the one that went, “They go ahead and release the Bronco II in 1983 … knowing it will roll over and kill or catastrophically injure many people, which it has.” Ford insisted in its petition for state Supreme Court review that the plaintiffs should not have been allowed to present any evidence of defects in the Bronco II sport utility vehicle model, which was not involved in the rollover case at bar. The jury thus may have gone ahead and punished the company for others allegedly harmed in Ford rollover accidents.

The grant of the petition notes that the case presents the following issues: (1) What procedural protections are required by Philip Morris USA v. Williams, 127 S.Ct. 1057, which held that due process requires that a jury not award punitive damages to punish for harm to third parties; and under what circumstances can those constitutional rights be deemed forfeited? (2) Are punitive damages prohibited in product liability cases where the manufacturer’s design conforms to governmental safety standards and industry standards and custom, and there is a “genuine debate” about what the law requires? (3) Is the amount of the punitive damage award in this case unconstitutionally excessive and arbitrary?

The court ordered briefing deferred pending the next decision of the United States Supreme Court in Philip Morris USA, Inc. v. Williams, No. 07-1216, cert. granted June 9, 2008. In the previous appeal of Williams, 127 S.Ct. 1057, the Court confirmed a significant constitutional principle limiting punitive damages awards: the Due Process Clause prohibits juries from basing punitive damages awards in part upon the desire to punish a defendant for harm to persons that are not before the court. Williams arose from an Oregon trial wherein a jury awarded $821,000 in compensatory damages and $79.5 million in punitive damages against cigarette manufacturer Philip Morris. At trial, the plaintiff’s attorney had urged the jury to punish Philip Morris for alleged harm to smokers other than the plaintiff by referring to the defendant’s market share and the number of smokers not only in the state of Oregon, but nationwide, who had allegedly contracted a smoking-related illness in the last 40 years. The Supreme Court held that the Due Process Clause forbids a jury from assessing punitive damages to punish a defendant for injury that it inflicts upon non-parties or “strangers” to this litigation. While a jury may consider the actual or potential harm to non-parties in the narrow context of determining “reprehensibility” of the conduct, which in turn is one of the factors relevant to an analysis whether the punitive damages award is excessive or not, it may not punish the defendant for the impact of its alleged misconduct on other people, who may bring lawsuits of their own in which other juries can resolve their claims. The Court cautioned state courts that they must make sure that the “jury will ask the right question, not the wrong one.” That is, evidence regarding alleged injuries of those not before the court must be used solely to judge the reprehensibility of the conduct, not to assess damages for the harm caused to those strangers. While the Court commented on the Oregon court’s refusal to give a jury instruction clarifying this distinction, it noted that state courts cannot authorize any procedures that create an unreasonable and necessary risk of any such confusion occurring. When evidence is introduced or argument made that risks this confusion, the state court must take steps to protect against that risk.

In both Williams and the Ford case, the lower courts have ignored the Supreme Court’s directive, asserting that the defendants had somehow waived their due process rights by not proposing jury instructions that explicitly and exactly anticipated the precise language of the Supreme Court decision that had not yet been issued. But the U.S. Supreme Court and now the California high court both seem unconvinced by plaintiffs’ waiver arguments.