Court Upholds (Again) $20 Million Punitive-Damages Verdict Against Phillip Morris

In what may be one of the last Engle progeny cases to reach the Eleventh Circuit, the court again upheld an award of punitive damages against the tobacco company defendant, rejecting Phillip Morris’s argument that the award—which was over 3 times the amount of compensatory damages awarded to the individual plaintiff—was unconstitutionally excessive in violation of due process.

Cote I

The latest decision, in Cote v. Philip Morris USA, Inc., No. 19-14074 (Jan. 19, 2021) (Cote II), comes more than six years after a jury awarded the individual plaintiff $6.25 million in compensatory damages and $20.7 million in punitive damages—and more than two years after the Eleventh Circuit’s first decision in the case reinstated the punitive-damages award. In that opinion (which we wrote about here), the court reversed the district court’s grant of Phillip Morris’s motion for judgment as a matter of law on the two intentional-tort claims and accordingly remanded “the case to the district court for the entry of judgment in Plaintiff’s favor on [the intentional tort] claims … and for reinstatement of the jury’s corresponding punitive damages award.” Cote v. R.J. Reynolds Tobacco Co., 909 F.3d 1094, 1110 (11th Cir. 2018) (“Cote I”).

On remand, the district court did just that, amending the judgment to include the jury’s $20.7 million punitive-damages award. Phillip Morris, however, filed three motions contesting the judgment, one of which argued that the punitive-damages award was unconstitutionally excessive in violation of due process. The district court denied the motion, and Phillip Morris appealed.

The Guideposts

The Eleventh Circuit affirmed, analyzing the award under the three “guideposts” set out by the Supreme Court in State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408 (2003). Each of these guideposts—the reprehensibility of the defendant’s conduct, the ratio of punitive damages to actual harm suffered, and the civil penalties authorized in comparable cases—indicated that the award was not unconstitutionally excessive.

Phillip Morris’s appellate arguments focused primarily on the second guidepost, the ratio of punitive to compensatory damages. Although the 3.3-to-1 ratio at issue was less than the “quadruple damages” ratio that State Farm noted “might be close to the line of constitutional impropriety,” Phillip Morris argued that it nevertheless was excessive for two reasons, both of which the court rejected.

First, the court dismissed as based on dicta Phillip Morris’s argument that a “substantial” compensatory damages award warrants “a lesser ratio, perhaps only equal to compensatory damages.” Not only is this language from State Farm dicta, but it also is followed immediately by the caution that each case “must be based upon the facts and circumstances of the defendant’s conduct and the harm to the plaintiff.” 528 U.S. at 425. The court therefore declined to impose a “bright-line” rule “requiring a 1-to-1 ratio whenever a defendant asserts that the compensatory damages are ‘substantial.’”

Second, the court rejected Phillip Morris’s comparisons of the award here to those in other Engle-progeny cases. Previous cases finding awards with 3-to-1 ratios excessive were not determinative because, among other differences, those cases were against R.J. Reynolds Tobacco Co., not Phillip Morris. Conversely, the court refused to impose a ceiling based on the 2-to-1 ratio recently affirmed by the Eleventh Circuit in Kerrivan v. R.J. Reynolds Tobacco Co., 953 F.3d 1196 (11th Cir. 2020). As the court explained, “We are aware of no reason why two decisions in other Engle-progeny cases (there are thousands) as to the excessiveness of punitive damages in those cases should govern here.”

Aggregate Impact of Engle Progeny

Although the affirmance of yet another Engle­-progeny verdict may not seem remarkable, two footnotes in Cote II offer some interesting insight into the progress of these cases. In footnote 2, the court noted the district court’s statement that Phillip Morris’s filing of post-trial motions “served no other purpose than to delay payment of the judgment” and may warrant remedial sanctions. Although the court declined to issue sanctions, it did “agree with the District Court’s admonition that further delay is not acceptable.” Later in the opinion, the court also clarified that its opinion in Cote I did not preclude Phillip Morris’s constitutional challenge to the punitive damages award, because that issue was not before the court in that appeal.

And, in footnote 5, the court discussed Phillip Morris’s arguments on the impact of the punitive damages awards in the Engle-progeny cases taken together, regardless of the guideposts’ application in individual cases. First, further punitive damages are not necessary for deterrence or punishment. Second, any punitive-damages award must be low enough such that the aggregate amount of punitive damages in all Engle litigation is not unconstitutionally excessive. Conceding that these arguments were rejected in, and therefore foreclosed by, Kerrivan, Phillip Morris nevertheless maintained them to “preserve its position for potential further review,” presumably en banc or before the Supreme Court.

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