Philip Morris USA v. Williams (05-1256), Weyerhauser Co. v. Ross-Simmons Hardwood Lumber Co. (05-381), Lawrence v. Florida (05-8820) and order list

February 22, 2007 Supreme Court Update

Greetings, Court Fans!
The Court returned Tuesday with a splash, releasing an opinion most of you probably have already heard about – Philip Morris USA v. Williams (05-1256), involving an $80 million punitive damages award against the tobacco company. While the case represents a victory (for now) for Philip Morris, the 5-4 opinion isn't necessarily as revolutionary as the headlines have made it appear. Here are the details: After Williams died of lung cancer, his estate claimed that Philip Morris had deceived him into thinking that smoking was safe, and an Oregon jury agreed, awarding the estate about $800,000 in compensatory damages and almost $80 million in punitives. On appeal, Philip Morris argued that Williams' counsel had improperly asked the jury to think about "all the other Williamses" whom the company had deceived in Oregon, and that the trial court should have instructed the jury that it could not punish Philip Morris for misconduct toward anyone but Williams. The Oregon court disagreed, holding that the Constitution does not bar a jury from punishing a defendant for harm to nonparties. It also rejected a second argument by the company, that the award was "grossly excessive" under the Supreme Court's recent decisions (BMW v. Gore and State Farm v. Campbell, among others) limiting punitive damage awards under the Due Process Clause.
The Court took both questions but reached only the issue of punishment for harm to nonparties. The majority, led by Justice Breyer (with the Chief and Justices Kennedy, Souter and Alito) held that the Due Process Clause bars states from using punitive damages to punish defendants for their actions regarding "strangers to the litigation" (here, other smokers who could sue Philip Morris in their own right). The majority characterized this as an issue of the "procedures" used to award punitive damages, in that: a defendant is deprived of the chance to present every available defense; the question of damages necessarily becomes speculative and arbitrary; and there is no way that a defendant can have "fair notice" of the penalties it may face. So the jury could not punish Philip Morris for any harm it caused to people other than Williams. That said (and here is where the majority opinion gets mushy), evidence of harm to others still can be relevant. The jury can consider "evidence of actual harm to others," not to punish a defendant, but to gauge how reprehensible its conduct was – the idea being that conduct that harmed or threatened the general public is particularly egregious (and therefore merits more punishment). Courts must guide juries in making these determinations so that defendants do not face an unreasonable risk that the juries will punish them directly for harm to nonparties. So now the Oregon Supreme Court has to go back and figure out whether the verdict runs afoul of these standards.
To which the four dissenters said, in essence, "Good luck with that." Justice Stevens saw no reason to rule out punishment for harm to nonparties, since punitive damages are meant to be retributive; in any event, he wrote regarding the majority's distinction between punishing and measuring reprehensibility, "[t]his nuance eludes me." Justice Ginsburg (joined by Justices Scalia and Thomas) noted that the Oregon courts faithfully followed Gore and State Farm and had done nothing to contradict the majority's new reprehensibility-only rule. They would have disposed of the case on procedural grounds, since in their view Philip Morris had not preserved all the claims considered by the majority. Finally, Thomas wrote to express his long-held view that the Constitution simply has nothing to say about the size of punitive damage awards.
One more note on the decision: Contrary to what you may have heard, the Court did not set aside the $80 million award – it merely sent the case back for Oregon to review the verdict under the new rule. And the Court passed on the second question, whether the $80 million award was "grossly excessive" under Gore and State Farm, because its ruling on the first question may lead to a new trial. But if the Oregon Supreme Court follows the lead of Justice Ginsburg, it might simply apply the majority's new rule, find that everything at the trial court was proper, and rest on its own ruling that the verdict was not excessive. So Philip Morris may yet be back with a second cert petition next term, and of course there's no guarantee they'll succeed.
The second case from Tuesday was far less contentious. In Weyerhauser Co. v. Ross-Simmons Hardwood Lumber Co. (05-381), a unanimous Court held that a plaintiff claiming that a rival has engaged in predatory bidding – aiming to shut rivals down by bidding up prices beyond where they can compete – has to show two things: (1) bidding that leads to below-cost pricing (i.e., prices causing the bidder to run at a loss) and (2) a "dangerous probability" that the rival can recoup its losses later. Justice Thomas's opinion for the Court is heavy on economic theory (if you're into "monopsonies," have at it), but the upshot is that the Court simply applied its 1993 predatory pricing rule from Brooke Group v. Brown & Williamson to a case of predatory bidding. Ross-Simmons, a sawmill, claimed that Weyerhauser had driven it out of business by bidding up the prices of sawlogs to an unprofitable level. It won at trial, but the trial court did not require it to pass the Brooke Group test. The Ninth Circuit agreed with the trial court, holding that predatory pricing and predatory bidding were conceptually distinct problems, but the Court thoroughly rejected its reasoning and reversed. And because Ross-Simmons conceded that it could not make a Brooke Group showing, its predatory-bidding theory can't sustain its jury verdict.
Lastly, Lawrence v. Florida (05-8820) brought us yet another decision interpreting the one-year limitations period for filing a federal habeas corpus petition under the Antiterrorism and Effective Death Penalty Act ("AEDPA"). Under AEDPA, the limitations period begins running when the prisoner's conviction becomes final, but is tolled while any "application for State post-conviction or other collateral review" is pending. The question: whether a petition for cert to the U.S. Supreme Court for review of the State court decision tolls the limitations period. The short answer: no. The five-Justice majority, led by Justice Thomas, emphasized the State in "State post-conviction or other collateral review," explaining that those proceedings are no longer pending once the State's highest court has acted. A petition for cert is a separate federal proceeding that does not toll the limitations period. This determination is congruent with the Court's prior holding that a prisoner need not file a cert petition in order to exhaust his state remedies before filing a federal habeas petition. Finally, a decision allowing tolling during the pendency of a cert petition would encourage the filing of non-meritorious petitions merely to extend the time for filing a federal habeas petition. (The Court's decision couldn't possibly have been influenced by a desire to avoid reviewing those petitions . . . right?)
Justice Ginsburg penned the dissent (joined by Justices Stevens, Souter, and Breyer). The dissenters emphasized that direct review always has been interpreted to encompass a cert petition. Thus, it makes little sense to consider such a petition a "separate" federal action – it is merely the continuation of the underlying State application for post-conviction relief. Further, where Congress has sought to exclude from the tolling period the time when a cert petition is pending, it has done so expressly – as it did in the death penalty context. Moreover, the majority's result leads to anomalous results. It will encourage duplicative litigation in that any prisoner wishing to seek cert also will have to file a federal habeas petition to preserve his right to do so. And, in the situation in which the prisoner has prevailed in state court and it is the State that petitions for cert, the prisoner still would have to file a prophylactic federal habeas petition in order to preserve his ability to do so, even though it is not clear a court would have jurisdiction over such a petition. Lastly, the majority's notion that prisoners will be spurred on to file frivolous cert petitions to toll the limitations period is nonsensical – prisoners are presumably driven to get relief at the earliest possible time, not to extend their time in jail by making fruitless filings.
The Court also released an order list Monday in which it granted cert in two more cases, which will be heard next Term. The new cases are:
New York State Board of Elections v. Torres (06-766): This case presents a long list of questions, which boil down to whether a state has the authority to use either a convention or a primary to select nominations for state trial judges. We've paraphrased where we can: (1) In American Party of Texas v. White, the Court held that . . . that a State may require intraparty competition to be resolved either by convention or primary. Did the Second Circuit run afoul of White by mandating a primary in lieu of a party convention for the nomination of candidates for New York State trial judge? (2) What is the appropriate scope of First Amendment rights of voters and candidates within the arena of intraparty competition, and particularly where the State has chosen a party convention instead of a primary as the nominating process? (a) Did the Second Circuit err, as a threshold matter, in applying this Court's decision in Storer v. Brown and related ballot access cases, which were concerned with the dangers of "freezing out" minor party and non-party candidates, to internal party contests? (b) If Storer does apply, did the Second Circuit run afoul of Storer in holding that voters and candidates are entitled to a "realistic opportunity to participate" in the party's nomination process as measured by whether a "challenger candidate" could compete effectively against the party-backed candidate? (3) Did the Second Circuit err in preferring the First Amendment rights of voters and candidates [over those of parties] by first determining that New York's convention system severely burdened those rights and then subjecting the party's rights to strict scrutiny review?
Logan v. United States (06-6911): This case is an in forma pauperis case, so the petition is hard to find. But here's the question presented as framed by the government's opposition: Petitioner's prior state convictions for misdemeanor battery did not result in the deprivation of his civil rights, and thus his civil rights have never been "restored." The question presented is whether those convictions were nonetheless exempt from consideration as prior convictions under the Armed Career Criminal Act on the ground that petitioner's civil rights should be regarded as "restored" within the meaning of 18 U.S.C. 921(a)(20).
We'll be back shortly with summaries of the Court's two decisions from Wednesday. Until then, thanks for reading!
Ken & Kim
From the Appellate Practice Group at Wiggin and Dana
For more information, contact Kim Rinehart, Ken Heath, Aaron Bayer, or Jeff Babbin at 203-498-4400