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July 26, 2012 / Admin

Philip Morris owes $13.8 Million to plaintiff

The Second District Court of Appeal, sitting here in Los Angeles, recently upheld a punitive award of $13.8 million against Philip Morris in a suit alleging the corporation “defraud[ed the plaintiff by deceptively marketing an addictive and lethal product in the years before the government required warning labels on cigarette packages.”

The jury awarded the plaintiff, the late Betty Bullock of Newport Beach, $850,000 in compensatory damages, making the punitive award just over 16 times that award, which Philip Morris maintains is “constitutionally excessive.” At the same time, Philip Morris reported over $6.3 billion in profits in 2010, making the punitive part of the award approximately 0.0460% of its yearly profits last year.

The Supreme Court ruled in 1996 that punitive damage awards, intended to punish Defendants and deter similar conduct in the future, may violate Due Process if the award proves “grossly excessive.” (BMW, Inc. v. Gore, 517 U.S. 559, 562) In order to make that determination, the Supreme Court considers several factors, including but not limited to, the reprehensibility of the Defendant’s conduct, the ratio to actual damages and the financial position of the defendant (Id. At 589-593).

Philip Morris is expected to appeal the decision to the California Supreme Court.

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