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Philip Morris Owes $20 Million in Punitives But Skirts Sanction

Jan. 19, 2021, 8:43 PM

A $20.7 million punitive damages verdict against Philip Morris USA Inc., awarded to a smoker’s estate along with a $6.25 million compensatory award, meets the criteria for constitutionality, but the company won’t have to pay a court sanction for raising yet another legal challenge in the case, the Eleventh Circuit ruled Tuesday.

The appeals court declined to sanction Philip Morris for vexatious litigation “at this time,” but said further delay in the long-running Florida case is “unacceptable.”

A prior Eleventh Circuit decision in the case didn’t bar Philip Morris from contesting the amount of the award, the court said.

The suit, brought originally by smoker Judith Berger, is one of the last in federal court from the Engle v. Liggett Group Inc. decertified class action, which spawned thousands of individual cases in Florida, the court said. About two thousand cases remain to be tried in state courts there, according to a recent filing in another case.

Berger alleged she first smoked at 13 and went through a pack and a half per day by the age of 20, according to the court. After years of trying to quit, she stopped smoking after being diagnosed with chronic obstructive pulmonary disease in 1998. She sued Philip Morris, and her estate proceeded with her case after she died.

A jury found in her favor on both “intentional” and non-intentional tort claims. But the trial court granted Philip Morris’s request for judgment as a matter of law on the intentional tort claims—fraudulent concealment and conspiracy to fraudulently conceal—and vacated the punitive award, which was based on those claims.

In the case’s first trip to the U.S. Court of Appeals for the Eleventh Circuit, the judges reversed that ruling and reinstated the punitive award. Back in the trial court, Philip Morris argued the punishment was unconstitutionally excessive.

No so, the Eleventh Circuit said here, affirming the lower court on that issue. Three legal “guideposts” show the award doesn’t violate due process, the appeals court said.

Berger’s estate showed reprehensibility, and Philip Morris didn’t contest that issue, Judge Beverly B. Martin said for the court.

The approximately 3.3-to-1 ratio of punitive damages to compensatories is less than a constitutionally allowable 4-to-1 ratio, she said.

And civil penalties are often three times the compensatory award in comparable cases in Florida, she said.

Judges Kevin C. Newsom and Elizabeth L. Branch also served on the panel.

The case is Berger v. Philip Morris USA, Inc., 11th Cir., No. 19-14074, 1/19/21.

To contact the reporter on this story: Martina Barash in Washington at mbarash@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com

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