Damages against corporations are cut, yet people get sent to jail for 30 years for petty theft

The Supreme Court’s Crusade: Fairness for the Powerful – by ADAM COHEN/NY Times

When Jesse Williams died of lung cancer, his widow sued Philip Morris, claiming it misled him about the danger of smoking. A jury agreed, awarding her $79.5 million in punitive damages. The Oregon Supreme Court affirmed the award, calling Philip Morris’s decades of deception “extraordinarily reprehensible.”

The United States Supreme Court is hearing arguments in the case next week, and the broader business community has joined Philip Morris in asking the court to sharply reduce the damages. They are relying on a controversial line of recent cases in which the court struck down punitive damages awards that it deemed “excessive.”

The Philip Morris case will tell us a lot about the John Roberts court, which may be the most pro-business court in decades. It is a test of whether the court will abandon its conservative principles to be activist and “rights-making” when the party that needs help is a large corporation. It will also reveal whether the court will continue on its current disturbing path of giving corporations more protection from excessive punishment than it gives to people.

The court began its punitive damages crusade in 1996, in the case of a man who sued BMW for failing to tell him that the new car he bought had been damaged and repainted. The man won $4,000 in compensatory damages and $2 million in punitive damages. The Supreme Court set aside the punitive damages award as so “grossly excessive” that it violated due process, but the court declined to lay out any clear standards for when an award was too high.

In 2003, in a fraud case against State Farm Insurance by a policyholder, the court struck down $145 million in punitive damages. It held that the award was excessive since compensatory damages were only $1 million. That 145-to-1 ratio was unacceptable. Due process generally required, the court held, a “single-digit ratio” between punitive and compensatory damages.

These rulings are remarkably “activist” by all the traditional measures. They take a vaguely worded constitutional guarantee — that no one shall be deprived of property without “due process of law” — and translate it into a right that is not at all apparent from the words’ plain meaning. They attempt to turn the guarantee into a precise mathematical formula. And they substitute the judges’ worldview for that of elected officials. If Oregonians believe punitive damages are too high, their legislature can impose a legal cap.

These activist decisions, which give corporations valuable constitutional privileges, relied on the votes of conservative justices, who are supposedly skeptical of “judge-made” rights. Justices Sandra Day O’Connor and Anthony Kennedy provided key votes for BMW. Justice Kennedy wrote the State Farm “single-digit ratio” opinion, and Justice O’Connor and former Chief Justice William Rehnquist joined it.

The contrast with the court’s decisions on punishment of human wrongdoers is stark. In 2003, the court considered the sad case of Leandro Andrade, a father of three who was given a minimum of 50 years in prison under California’s tough “three strikes” sentencing law, for shoplifting $153.53 worth of videotapes from Kmart. He argued that his prison term violated the Eighth Amendment. The Supreme Court — in a majority joined by Justices O’Connor and Kennedy and Chief Justice Rehnquist — could find nothing excessive in the punishment.

Based on the Constitution’s words, Mr. Andrade certainly had a stronger case than BMW or State Farm. The Eighth Amendment expressly bars “cruel and unusual punishments,” which might reasonably be interpreted to cover imprisoning a man from age 37 to 87 for stealing $153.53. The companies claimed only that the punitive damages awards violated their “due process” rights, a far greater textual stretch.

On the issue of what is “excessive” punishment, Mr. Andrade’s claim is also stronger. It is hard to see how it is excessive to make Philip Morris, whose market capitalization is $166 billion, pay a mere $79.5 million for “extraordinarily reprehensive” and lethal conduct, but not excessive to make Mr. Andrade spend what is likely to be the entire second half of his life in prison for a petty theft.

The question of whether there should be constitutional limits on punitive damages has proved difficult to resolve, and it has caused divisions in both the court’s liberal and conservative blocs. (It is one of the very few issues in which John Paul Stevens votes with corporations and Antonin Scalia votes against them.) Whatever the court decides, it should develop a constitutional theory of excessive punishment that covers human and corporate wrongdoers equally, as the Duke Law School Professor Erwin Chemerinsky and others have urged.

The current doctrines make no sense, least of all by the standards of conservative constitutional interpretation. Conservatives like to talk about the “framers’ intent.” The framers were deeply concerned about excessive punishment, and set forth their views on it in the Eighth Amendment. They would be perplexed that the high court they created believes their Constitution permits a father to remain in jail for 50 years for petty theft, but does not tolerate taking a fraction of the wealth from a company that kills people.