I talked about this in a post the other day. A jury last week awarded $23.6 billion in punitive damages against RJ Reynolds in one of the thousands of Engle cases in Florida. I said that dollar amount would likely never hold up on appeal.
Well, sure enough, some legal experts have weighed in, saying it can’t possibly hold up, but it may not matter, because it might signal future huge punitive damages against RJR.
“Nobody thinks the $23 billion is going to remain,” said Richard Daynard, a law professor at Northeastern University and the chair of its Tobacco Products Liability Project.
Because of constitutional guarantees of due process, the Supreme Court has shown a reluctance to allow punitive damages that are far out of line with compensatory damages in the same case, he said. The court’s general guideline is that the ratio of punitive to compensatory damages should be below 10:1.
However, the compensatory damages in the case were roughly $16 million, which means, Daynard says, there could still be punitive damages up to $150 million.
“I worked with juries for several decades, and I cannot put my mind on what they are doing, but the Florida jury (in awarding a huge sum) seems to be sending a message,” said Duke’s Vidmar. “This is a statement from the jury that this was an outrageous behavior by the tobacco companies.
One thing I saw in this article, and something I have wondered about, is how much the tobacco industry has actually paid out in the Engle cases. The original class-action award was $145 billion, which was overturned by the Florida Supreme Court 8 years ago. Since then, RJ Reynolds has paid out $114 million in 15 resolved cases. Another $180 million in damages are held up on appeal.
I also mentioned this in my my earlier post. These huge damages I think — eventually — will force RJ Reynolds to simply settle with the remaining defendants. Obviously $23.6 billion isn’t going to happen, but constant, never-ending $20 million here and $20 million there is going eat away at RJ. Might be better to just settle and get rid of the legal uncertainty.
“You’re going to have a lot more cases where juries could find themselves similarly outraged,” he said. “The reluctance of the tobacco companies to settle these cases, thinking they can handle the cases as a matter of course, may be a mistake,” Daynard said.