The ESTATE OF Michelle SCHWARZ, Deceased, by and through her Personal Representative, Paul Scott SCHWARZ, Petitioner on Review,
v.
PHILIP MORRIS INCORPORATED, a foreign corporation, Respondent on Review.
Supreme Court of Oregon.
*669 Maureen Leonard, Portland, argued the cause and filed the briefs for petitioner on review. With her on the briefs were Robert K. Udziela, D. Lawrence Wobbrock, Charles S. Tauman, and Richard A. Lane.
William F. Gary, Harrang Long Gary Rudnick P.C., Eugene, argued the cause and filed the briefs for respondent on review. With him on the briefs were Sharon A. Rudnick and Susan D. Marmaduke.
W. Eugene Hallman, Pendleton, filed a brief for amicus curiae Oregon Trial Lawyers Association.
*670 Before DE MUNIZ, Chief Justice, and DURHAM, BALMER, WALTERS, and KISTLER, Justices.[**]
WALTERS, J.
The Due Process Clause of the Fourteenth Amendment[1] prohibits a jury from imposing punitive damages to punish a defendant directly for harm caused to nonparties. However, a jury may consider evidence of harm to others when assessing the reprehensibility of the defendant's conduct and the appropriate amount of a punitive damages verdict. Philip Morris USA v. Williams,
I. FACTS AND PROCEDURAL POSTURE
In 2000, plaintiff, the husband and personal representative of decedent Michelle Schwarz, brought this action against defendant, Philip Morris. Plaintiff asserted three claims for relief based on allegations of negligence, strict product liability, and fraud in the manufacture, marketing, and research of defendant's brand of low-tar cigarettes. At trial in 2002, plaintiff adduced the following evidence.
Michelle Schwarz began smoking cigarettes in 1964 when she was 18 years old. She attempted to quit smoking numerous times but was unable to do so. In 1976, defendant introduced a new product, Merit cigarettes, to the market for tobacco products. Advertisements for the new brand touted that the cigarettes contained less tar than existing "full-flavor" cigarettes but still tasted like the full-flavor brands. Out of a belief that "low tar and nicotine filters are better for you," decedent switched from a full-flavor brand that defendant manufactured to its low-tar Merit brand. After switching brands, decedent continued to smoke the same quantity of cigarettesapproximately one pack per daybut subconsciously altered her method of smoking. She took longer puffs, inhaled the smoke more deeply, and held it longer in her lungs. In 1999, at the age of 53, decedent died from a brain tumor that was the result of metastatic lung cancer.
The method of smoking that decedent had adopted after switching to defendant's low-tar brand was consistent with the behavior of smokers generally. Persons addicted to nicotine in cigarettes tend to develop a certain "comfort level" of nicotine, and, when smoking cigarettes that contain less nicotine, those smokers are likely to "compensate"that is, adjust subconsciously the manner in which they smokein order to achieve that "comfort level." Compensation causes smokers of low-tar cigarettes to inhale the same levels of tar, the primary carcinogen found in cigarettes, as they would ingest by smoking a full-flavored brand. Defendant was not only aware of that phenomenon, that awareness played a major role in the development of its low-tar brand. A primary purpose of defendant's decision to bring low-tar cigarettes to market was to give smokers what one tobacco executive labeled a "crutch," that is, a product that enabled smokers to rationalize continued indulgence of a habit that they otherwise would consider to be deadly.
*671 Defendant's behavior with respect to the development and marketing of low-tar cigarettes was but one iteration of a larger pattern of deceiving smokers and the rest of the public about the dangers of smoking. See Schwarz,
Plaintiff offered expert testimony on the substantial harm that that pattern of fraud and deception had imposed on others not party to the litigation in this case. Each year, in the United States, there are approximately 400,000 deaths attributable to cigarette smoking, and approximately 15 million Americans have died from cigarette smoking in the last century.
At the close of evidence, the trial court gave the jury the following instruction on punitive damages, tailored on Uniform Civil Jury Instruction (UCJI) 75.05A (Oct 1997) (the uniform jury instruction):
"To recover punitive damages, [plaintiff] must show by clear and convincing evidence that defendant Philip Morris
"has shown a reckless and outrageous indifference to a highly unreasonable risk of harm and has acted with a conscious indifference to the health, safety, and welfare of others[.]
"Clear and convincing evidence is evidence that makes you believe that the truth of the claim is highly probable.
"If you decide that the defendant has acted as claimed by the plaintiff, you have the discretion to award punitive damages.
"Punitive damages, if any, shall be determined and awarded based on the following:
"(1) The likelihood at the time that serious harm would arise from the defendant's misconduct;
"(2) The degree of the defendant's awareness of that likelihood;
"(3) The profitability of the defendant's misconduct;
"(4) The duration of the misconduct and any concealment of it;
"(5) The attitude and conduct of the defendant upon discovery of the misconduct;
"(6) The financial condition of the defendant; and
"(7) The total deterrent effect of other punishment imposed on the defendant as a result of the misconduct, including, but not limited to, punitive damages awards to persons in situations similar to the claimant's and the severity of criminal penalties to which the defendant has been or may be subjected.
"The amount of punitive damages you award may not exceed $300,000,000.00."
At the time of trial, the United States Supreme Court had not yet indicated that the constitution required any particular instruction on punitive damages. Indeed, the leading punitive damages cases at that time had arisen in the context of post-verdict judicial review of jury awards. See, e.g., Cooper Industries, Inc. v. Leatherman Tool Group, Inc.,
Defendant acknowledged that the uniform jury instruction correctly stated Oregon law, and that, as a descriptive matter, courts in Oregon and elsewhere had tended to reserve for themselves the gate-keeping function of ensuring that punitive damages awards were constitutional. However, defendant argued that the uniform jury instruction was incomplete. In order to be an adequate instruction, defendant asserted, the instruction also must inform the jurors of the limits that the constitution places on the jury's discretion to award punitive damages. Specifically, defendant asserted that the uniform jury instruction was incomplete because it "allow[ed] the finder of fact to award or calculate punitive damages based on harms to persons other than Michelle Schwarz."
To rectify the problem it perceived, defendant offered its proposed instruction 41, which provided:
"You are not to impose punishment for harms suffered by persons other than the plaintiff before you."
As an alternative to proposed instruction 41, defendant also offered its proposed instruction 42, which provided:
"You are not to punish a defendant for the impact of its conduct on individuals in other states."
When defendant advanced its request for those instructions, it stated that it was
"incorporat[ing] the argument [it] already made [when objecting to the uniform jury instruction] that Philip Morris can't be punished in this case based on harms to others. Harms to others can be considered in terms of the reprehensibility of Philip Morris's conduct, but we cannot be punished for harms suffered by people who, themselves, could sue because inevitably it would result in over punishment."
Without supplementation to the uniform jury instruction, defendant contended, "we're really inviting the jurors to make an unconstitutional ruling and only have the court be a check on it."
The trial court declined to give defendant's requested instructions, in part on the basis that "when I tell them who the plaintiff is and who the defendant is, I think the jury is going to limit their findings to those two entities." The trial court also overruled defendant's objection to the adequacy of the uniform jury instruction, reasoning that instructing the jury on the factors that enter into a constitutional determination "may confuse or mislead them." Instead, the court stated that the constitutionality of a punitive damages award "is more of a legal determination" for the court to make after a jury has returned a verdict.
In a special verdict, the jury found defendant liable on all three claims for relief asserted. However, on the negligence and strict product liability claims, the jury apportioned 49 percent of the fault to plaintiff. The jury awarded $118,514.22 in economic damages, $50,000 in noneconomic damages, and punitive damages on each of plaintiff's three claims: $25 million on the negligence claim, $10 million on the strict product liability claim, and $115 million on the fraud claim, for a total punitive damages award of $150 million. Defendant made a post-verdict motion to reduce the punitive damages award. The trial court ruled that that award was "grossly excessive" and, without apportionment among the claims, reduced the punitive damages award to a total of $100 million.
Defendant appealed and plaintiff cross-appealed. Defendant asserted 21 assignments of error. Relevant to the issue before this court, defendant assigned error to the trial court's refusal to include defendant's proffered instructions.[2] Plaintiff sought reinstatement *673 of the jury's total punitive damages award.
A divided Court of Appeals sitting en banc vacated the punitive damages award. The majority held that the trial court had erred in refusing to give defendant's requested instruction that "[y]ou are not to punish a defendant for the impact of its conduct on individuals in other states." Schwarz,
"[a] defendant should be punished for the conduct that harmed the plaintiff, not for being an unsavory individual or business. Due process does not permit courts, in the calculation of punitive damages, to adjudicate the merits of other parties' hypothetical claims against a defendant under the guise of the reprehensibility analysis[.]"
Id. at 423,
The Court of Appeals divided over whether the instruction that defendant had proffered accurately stated the law. Schwarz,
II. DEFENDANT'S CLAIM OF INSTRUCTIONAL ERROR
In this court, defendant asserts two interrelated objections to the trial court's rulings on jury instructions: that the court erred in failing to give either of its proffered instructions 41 and 42, and that the court erred in giving the uniform jury instruction without informing the jury of the purposes for which the jury could consider harm to nonparties.[3] Oregon law recognizes
"two different types of error respecting jury instructions: (1) error in the failure to give a proposed jury instruction, and (2) error in the jury instructions that actually were given. See Bennett v. Farmers Ins. Co.,332 Or. 138 , 152-53,26 P.3d 785 (2001) (so indicating)."
Williams v. Philip Morris Inc.,
A. Refusal to Give Defendant's Proposed Instructions
With respect to the first of the errors asserted by defendanterror in the failure to give its proposed jury instructionsOregon *674 law entitles a party to have a proffered instruction given only if that instruction correctly states the law and engages the pleadings and the evidence. Hernandez,
"How can we know whether a jury, in taking account of harm caused others under the rubric of reprehensibility, also seeks to punish the defendant for having caused injury to others? Our answer is that state courts cannot authorize procedures that create an unreasonable and unnecessary risk of any such confusion occurring. In particular, we believe that where the risk of that misunderstanding is a significant onebecause, for instance, of the sort of evidence that was introduced at trial or the kinds of argument the plaintiff made to the jurya court, upon request, must protect against that risk. Although the States have some flexibility to determine what kind of procedures they will implement, federal constitutional law obligates them to provide some form of protection in appropriate cases."
Id. at 357,
Plaintiff contends that the instructions that defendant proffered were inaccurate, incomplete, and misleading because the instructions not to "punish" defendant for harms suffered by nonparties or for the impact of its conduct on nonparties, without saying more, directed the jury not to use evidence of such harm or impact for any purpose. Plaintiff asserts that a complete, accurate, and correct instruction "would have told the jury that the evidence [of harm to others] was relevant to reprehensibility, but it could not be used to increase the amount of punitive damages in order to punish directly for harm to others." To illustrate that point, plaintiff notes that, since the Supreme Court's decision in Williams II, the Oregon State Bar Committee on Uniform Civil Jury Instructions has developed a uniform civil jury instruction that captures the Court's ruling. UCJI 75.02B (Nov 2009) states:
"Evidence has been received of harm suffered by persons other than the plaintiff as a result of the defendant's conduct. This evidence may be considered in evaluating the reprehensibility of defendant's conduct. However, you may not award punitive damages to punish the defendant for harm caused to persons other than the plaintiff."[4]
Defendant argues that each of the instructions that it proffered were accurate statements of the law and that, particularly when considered in the context of the uniform jury instruction that the trial court gave, its proffered instructions communicated to the jury the distinction between the proper and improper use of evidence of harm to others. Defendant notes that the uniform jury instruction told the jury that it had *675 discretion to award punitive damages if it found that defendant
"ha[d] shown a reckless and outrageous indifference to a highly unreasonable risk of harm and ha[d] acted with a conscious indifference to the health, safety, and welfare of others."
(Emphasis added.) Thus, defendant asserts, the court did instruct the jury that it could consider harm to others in its analysis of the reprehensibility of defendant's conduct.
As noted, a proposed instruction must be complete and accurate in all respects. Hernandez,
"The parties to any jury case are entitled to have the jury instructed in the law which governs the case in plain, clear, simple language. The objective of the mold, framework and language of the instructions should be to enlighten and to acquaint the jury with the applicable law. Everything which is reasonably capable of confusing or misleading the jury should be avoided. Instructions which mislead or confuse are ground for a reversal or a new trial."
Williams et al. v. Portland Gen. Elec.,
The distinction that the Supreme Court has created between constitutionally permissible and impermissible uses of evidence of harm to others is a fine one that easily may be lost. See Williams II,
It is of course true that, under Oregon law, no party is required to request a jury instruction that advances the other party's theory of the case. So, for instance, a plaintiff's proposed instructions would not be incomplete simply because they failed to inform the jury that the defendant had asserted an affirmative defense. But the Court of Appeals overstated that principle when it observed that no party is required to request a jury instruction that "advances the use of evidence in a way that benefits the party's adversary." Schwarz,
B. Error in Giving Uniform Jury Instruction
We next consider defendant's argument that the trial court erred in giving the uniform jury instruction. As a threshold matter, plaintiff argues that the rules of appellate procedure preclude this court from reaching that argument.
ORAP 9.20(2) defines the scope of this court's discretion to consider questions on review. It provides, in part, that unless the court otherwise limits the questions before it on review, "the questions before the Supreme Court include all questions properly *676 before the Court of Appeals that the petition or the response claims were erroneously decided by that court." Plaintiff petitioned for review in this court, and defendant submitted a response to the petition. In that response, defendant did not present the issue of the accuracy of the uniform jury instruction. Therefore, plaintiff contends, defendant abandoned the argument it now urges.
Defendant acknowledges that it did not include a question about the adequacy of the uniform jury instruction in the eight supplemental questions that it listed in its response to plaintiff's petition for review. Nonetheless, defendant asserts, ORAP 9.20(2) recognizes additional authority for this court to "consider other issues that were before the Court of Appeals." In this case, the question whether defendant took the necessary steps to place the accuracy of the uniform jury instruction properly before the Court of Appeals is a close one.
Although the record plainly reveals that, at the trial court level, defendant objected and took proper exception to the uniform jury instruction, defendant's opening brief to the Court of Appeals did not raise the uniform jury instruction issue as a discrete claim. In that brief, defendant asserted as its sixteenth assignment of error:
"The trial court erred by instructing the jury solely on the Oregon statutory factors for assessing punitive damages without also providing defendant's proposed instructions on constitutional limits."
In the preservation section of its opening brief, defendant noted that it had objected in the trial court to the uniform jury instruction and, in the argument section, defendant asserted that, as a result of omissions in that instruction, the court had given the jury "a roadmap to error." Plaintiff understood defendant's sixteenth assignment of error to assert that the trial court had erred in failing to give defendant's proposed instructions 41 and 42. As to the giving of the uniform jury instruction, plaintiff, in his answering brief, argued that defendant "ha[d] waived any challenge to this instruction." In a reply brief, defendant disputed that characterization and asserted that "[t]he trial court also erred in giving instructions [on punitive damages] that were affirmatively misleading."
In Dunlap v. Dickson,
Turning to the merits of defendant's argument, we observe that, when this case was tried, neither Campbell nor Williams II had been decided. We therefore understand the reason for the trial court's failure to instruct the jury on the law regarding evidence of harm to nonparties. Nevertheless, we must acknowledge that omission and the fact that the trial court did, in giving the uniform jury instruction, permit the jury to consider evidence of harm to nonparties in assessing punitive damages. In giving the uniform jury instruction, the court informed the jury:
"To recover punitive damages, [plaintiff] must show by clear and convincing evidence that defendant Philip Morris
*677 "has shown a reckless and outrageous indifference to a highly unreasonable risk of harm and has acted with a conscious indifference to the health, safety, and welfare of others.
"* * * * *
"Punitive damages, if any, shall be determined and awarded based on the following:
"(1) The likelihood at the time that serious harm would arise from the defendant's misconduct;
"(2) The degree of the defendant's awareness of that likelihood[.]"
Plaintiff contends that the jury would have understood from that instruction the fine distinction that the law makes; namely, that evidence of harm to others may be used only in the assessment of reprehensibility and not to impose direct punishment for harm to nonparties. Plaintiff asserts that the other general instructions that the court gave focused the jury's attention on damage to the named plaintiff and prevented a misunderstanding of the punitive damages instruction that the court gave. We do not agree. The jury could have understood the uniform jury instruction to permit it to use evidence of harm to others in arriving at its punitive damages verdict and, without an explicit statement of the impermissible use of that evidence, such as that included in UCJI 75.02B (Nov 2009), the instruction was incomplete and unclear. The trial court erred in giving the uniform instruction.
III. REMEDY
The question of appropriate remedy remains. Plaintiff argues that, notwithstanding any error in jury instruction, this court may affirm the jury's verdict if, upon "careful appellate weighing," that verdict accords with the limits that substantive due process places on the punitive damages award. See Clemons v. Mississippi,
Plaintiff's argument has its draw. However, the Oregon Constitution makes plain that this court does not have the authority in the first instance to make its own factual determination of the appropriate punitive damages award that should be imposed in light of defendant's conduct and the harm that it caused decedent: "In all civil cases the right of Trial by Jury shall remain inviolate." Or. Const., Art. I, § 17. This court has interpreted that provision to create a right for litigants to have "a jury determine all issues of fact[.]" Lakin v. Senco Products, Inc.,
*678 As a final matter, defendant asserts that common law and state constitutional law require a retrial of the entire case on remand. Defendant points to a case in which this court held that, as a matter of general fairness, "[i]n the ordinary two-party personal-injury case" the same jury that determined fault should consider the question of damages. Maxwell v. Port. Terminal R.R. Co.,
In summary, we hold that the trial court erred in its instructions to the jury on punitive damages. We vacate the punitive damages award and remand this case to the trial court for a new trial limited to the question of punitive damages.
The decision of the Court of Appeals is affirmed. The judgment of the circuit court is affirmed in part and reversed in part, and the case is remanded to the circuit court for further proceedings.
NOTES
Notes
[**] Gillette, J., did not participate in the decision of this case. Linder, J., did not participate in the consideration or decision of this case.
[1] The Fourteenth Amendment to the United States Constitution provides, in part:
"No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law[.]"
[2] Defendant's other assignments of error covered numerous aspects of the trial, including:
"challenges to the denial of motions for directed verdicts for defendant on plaintiff's claims, challenges to the trial court's decision to give or not to give certain jury instructions regarding those claims, [and] a challenge to the court's failure to grant a mistrial[.]"
Schwarz,
[3] We decline to reach the other questions that defendant listed in its response to plaintiff's petition for review and briefed in this court.
[4] The Committee on Uniform Civil Jury Instructions also has developed a uniform instruction on the proper use of evidence of a defendant's out-of-state conduct in the imposition of punitive damages. UCJI 75.02A (Nov 2009) states:
"Evidence has been received of conduct by the defendant occurring outside Oregon. This evidence may be considered in evaluating the reprehensibility of the defendant's conduct in Oregon if the out-of-state conduct is reasonably related to the conduct of the defendant directed toward the plaintiff in Oregon.
"You may not award punitive damages against the defendant based on evidence of out-of-state conduct that was lawful in the state where it occurred. Further, when considering reprehensibility, you may not consider conduct of the defendant, wherever it might have occurred, that is not similar to the conduct upon which you found the defendant liable to the plaintiff."
[5] The court cited former ORAP 10.15(2) (1988) as a description of its discretion to reach the issue. That rule was nearly identical to the current ORAP 9.20(2).
[6] Defendant also argues, citing Clark v. Strain et al.,