A U.S. court crackdown on punitive damages resulted in the second consecutive year of declines and reversals of earlier verdicts. Punitive damages in the 50 biggest verdicts fell to $1.6 billion in 2007 from $1.8 billion in 2006 and $5 billion in 2005, according to data compiled by Bloomberg. A pivotal U.S. Supreme Court decision last year will aid in appeals and help reduce future awards, companies' lawyers say. The court said defendants can't be punished for harming anyone not included in a case, such as other customers.
          Punitive damages are added to compensation for actual injuries, to punish a defendant for behavior that goes beyond negligence, such as willful or malicious conduct.
          In 2003, the U.S. Supreme Court ruled punitive damages usually should be no more than nine times actual damages. A 1-to-1 ratio may be reasonable if the compensatory award is large, the justices said. The court allowed exceptions for especially egregious conduct, and judges have upheld punitive awards above the 9-to-1 ratio. The Philip Morris case reduces the exceptions. The ruling came in the company's appeal in a suit filed by the family of Jesse Williams, a retired school janitor who died at 67 of lung cancer in 1997. An Oregon jury awarded $821,485 in compensatory damages and $79.5 million in punitives over his death, a ratio of 97 to 1. The trial judge cut the punitive award to $32 million. An appeals court restored it to the full amount.
          Philip Morris appealed. It said the family's lawyer urged the jury to "think about how many other Jesse Williams in the last 40 years in the state of Oregon there have been," the Supreme Court said. The trial judge refused the company's request to tell jurors not to award punitives for harm to people who weren't part of the case. The tobacco company won at the Supreme Court in a 5-4 vote last February, with Chief Justice John Roberts and justices Stephen Breyer, Anthony Kennedy, David Souter and Samuel Alito in the majority.
          "A punitive damages award based in part on a jury's desire to punish a defendant for harming nonparties amounts to a taking of property from the defendant without due process," the court said in a ruling written by Breyer. Plaintiffs can show the company harmed others to prove it deserves punishment, the court said. "A jury may not go further and use a punitive damages verdict to punish a defendant directly for harms to those nonparties," it added.
          The Philip Morris decision threatens any punitive-damage award that didn't include a jury instruction against punishing people not included in the case, said attorney Scott Nealey of Lieff Cabraser Heimann & Bernstein, LLP. He won a $50 million punitive verdict against DaimlerChrysler in Los Angeles last year, indicating the Supreme Court decision has not cut off such damages entirely. Nealey said his jury was told to punish only for harm to his clients, the family and estate of a man run over by a truck he had just stepped out of.