OR Case Update: Punitive Damage Award of $25 Million Held Constitutional

Punitive damages have long been a hot topic of tort reform. In claims involving potential punitive damages, it is important to remember that there are a number of limitations on such awards. The following case is exemplary among punitive damage cases but provides a clear roadmap of how Oregon courts analyze punitive damage awards.

Claims Pointer: Under ORS 31.730, punitive damages must be proven by clear and convincing evidence by showing that the responsible party “acted with malice” or “reckless and outrageous indifference to a highly unreasonable risk of harm and acted with a conscious indifference to the health, safety and welfare of others.” Even if a jury awards punitive damages, the trial court must review the award and may reduce it if it is unreasonable. In this case, the Oregon Court of Appeals reviewed a punitive damage award of $25 million and determined that it was reasonable because the defendant cigarette company’s conduct was “extraordinarily reprehensible” and because the punitive damage award was not so disparate from compensatory damages and similar penalties to render it unconstitutionally excessive.

Estate of Michelle Schwarz v. Philip Morris USA, Inc., 272 Or App 268 (2015).

In 2002, a jury awarded the estate of Michelle Schwarz (Plaintiff) $168,514 in compensatory damages (economic and non-economic damages) and a combined $150 million in punitive damages after finding Philip Morris liable for fraud, product liability, and negligence for its marketing of a low-tar cigarette that ultimately caused the death of Michelle Schwarz (Schwarz). The trial judge reduced that amount to $100 million as permitted by ORS 31.730. Philip Morris appealed only the amount of punitive damages and the Oregon Supreme Court held that the trial court properly instructed the jury that it could consider harm to others caused by Philip Morris’s “reckless and outrageous indifference to a highly unreasonable risk of harm.” However, the Court held...

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