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Punitive Damages Are Alive And Well In Oregon

Punitive damages are determined by juries in Oregon.  Despite recent efforts in some states to limit the scope of punitive damages available to litigants in court cases, the Oregon Courts have consistently allowed large punitive damage awards, if the jury has evidence to conclude that the conduct was sufficiently reprehensible.  In this regard, the Oregon Courts give great deference to the jury’s determination of what is appropriate.  They will not independently overrule the jury because they have come to a different conclusion about what is appropriate.  Although the evidence in support of punitive damages must be clear and convincing, the standard of proof “relates how a jury weighs the evidence, not to how a trial court assesses the capability of the evidence to establish facts.”  See Faber v. Asplundh Tree Expert, 106 Or App 601, 606, 810 P2d 384, rev den, 312 Or 80 (1991).  Also see Bolt v. Influence, Inc. 333 Or 572, 578 n 2, 43 P3d 425 (2002).

 

In the case of Williams v. Philip Morris, 340 Or 35, 127 P3d 1165 (2006).  This was a case in which the plaintiff was a smoker who died of lung cancer.  His widow sued the defendants for wrongful death.  In following the directions of the United States Supreme Court, and in applying the Oregon standard on punitive damages, the Court concluded that the punitive damage award was consistent with Oregon law and due process under the 14th Amendment to the United States Constitution.  The Court reviewed evidence of the decedents’ reliance upon the representations of the defendant regarding the safety of cigarette use and evidence of similar conduct directed against other parties throughout the country, in examining the award of punitive damages.  Given the reprehensible nature of the conduct, the Court felt that the jury had sufficient evidence to award the full measure of punitive damages set forth in the verdict.  Philip Morris asked the United States Supreme Court to reduce the Oregon jury award for punitive damages.  In April, 2009 the United States Supreme Court let stand a $79.5 million punitive damage award.  The underlying damages were $800,000 in non-economic damages, and $21,485 in economic damages.  In this case, punitive damages were 79 times non-economic damages and economic damages combined.

In Groth v. Hyundai Precision, 209 Or App 781, 149 P3d 333 (2006), the Oregon Court allowed a jury award of $8.3 million dollars in the face of an underlying economic damage award of $1.9 million and $500,000 non-economic damages.  In this case, a machinist was killed operating a Hyundai V5 vertical industrial lathe.  There was evidence from which the jury could conclude that the defendant’s knew it was foreseeable that pieces of metal could come loose from inside the lathe, during the machining process, and with enough force to penetrate a retaining door.  The jury further concluded that the defendants also knew that operators were expected to stand in front of the window on the retaining door.

In the case of Schwarz v. Philip Morris, Inc, 206 Or App 20, 135 P3d 409 (2006), an Oregon jury awarded $150 million in punitive damages in the face of a compensatory damage award of $168,000.  Plaintiff argued that the manufacture and sale of low tar cigarettes did not meet the consumer expectation test in Oregon.  In other words, the allegation was that the product was defective and dangerous to an extent beyond that which an ordinary consumer would have expected.  The jury agreed and awarded punitive damages.  The case was remanded by the Oregon Supreme Court on the issue of punitive damages only, because the jury may have been confused about whether it could to punish the defendant for its acts in other states.  The Court was careful to note that, while an Oregon jury is not entitled to punish the defendant for harm caused out of state, the jury is allowed to consider defendant’s out of state conduct on the issue of reprehensibility and deliberateness.  See Estate of Michelle Schwarz v. Phillip Morris, Inc., 348 Or 442, 235 P3d 668 (2010).

Finally, two recent cases illustrate further the willingness of Oregon courts to uphold punitive damage awards by the jury, even in the face of constitutional challenges.  On the issues of the amount of punitive damages that may be allowed in Oregon, the Court in Hamlin v. Hampton Lumbar Mills, Inc., 349 Or 526, _____P2d_____ (2011) held that the single digit ratio between punitive damages and compensatory damages may be exceeded when the compensatory damages are small or insubstantial.  In this case, the Court found constitutional an award of $175,000 in punitive damages when the compensatory damage was merely $6,000 (a ratio of almost 30:1).

Similarly, the Oregon Supreme Court in the case of Strawn v. Farmers, 350 Or 336, ____ P3d ____(2011), and upon reconsideration 350 Or 521, ____P3d____(2011), allowed a $8,000,000 punitive damage award in the face of a $900,000 compensatory damage award, in connection with Farmers Insurance system wide reduction of medical expenses (PIP) in the auto setting (a ratio of almost 9:1 in a larger case).

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