Updated: The end came today years after Jesse Williams died. It was a decade after a large verdict and years after many appeals and many briefs.  Today, the U.S. Supreme Court ended the Oregon smoker case, Williams v. Philip Morris, by refusing further review.

The end was somewhat anticlimactic, as the Court simply dismissed as improvidently granted its prior decision to review the case again. That means that the Oregon Supreme Court opinion stands, and Philip Morris must pay the judgment to the family.

While it was a small part of the overall effort, I take pride in my pro bono amicus work on this case. Last brief filed on behalf of retired Oregon Supreme Court justices can be found here. That’s also, I suppose, part of the whole full disclosure thing, as I can hardly claim objectivity when it comes to Philip Morris.

It’s a great day for the Williams family and their legal team. They deserve this win, even if it took years to make the point.

David Sugerman

Add one more thing to the list of casualties of the economic meltdowns. Oregon Chief Justice Paul DeMuniz announced Friday that Oregon courts will go to part-time operations at least through June.  A reprint of the press release is here: oregon-judicial-department-closure-press-release-20091

It’s easy to shrug the shoulders and treat this as one of those things. That would be a mistake. When our court system can’t function full time, it must make choices of which cases get heard.

The closure will put off all manner of cases, including divorce and custody proceedings, landlord tenant problems, civil cases for consumers and employees, and business disputes. If things get worse, we can expect to see criminal cases get delayed or dismissed.  An underfunded and poorly functioning judicial system is one of those key indicators of the stability of a society. When funding prevents courts from operating, problems previously solved through the courts go unchecked. This is not a pretty thing when it goes on for a long time.

The problem is exacerbated by our recent initiative cycle.  Some readers may recall that in a race to the bottom, the Oregon Legislature proposed an initiative on mandatory prison sentences. The Legislature put its mandatory sentencing measure on the ballot as an alternative to the absolute stinker pushed by the profoundly irresponsible Kevin Mannix. While the Mannix measure was much, much worse, the voter-approved measure saddled our State, our prisons, our criminal justice system, and our judiciary with huge unfunded costs.  To be fair, this isn’t the cause of the current crisis, but it surely doesn’t help things.

Let’s hope that we get clear of this crisis quickly. For my part, I want to add my appreciation for the men and women who serve in the judicial department. They’re on the front lines of tough problems that no one else wants, and they’re being bled dry by our current woes. The closures will result in staff and pay reductions. Most are a tribute to civil service, as they work hard and don’t make a lot in return. They deserve our thanks for soldiering on in tough times.

David Sugerman

Here is a preplexing piece from the L.A. Times editorial page on the recent U.S. Supreme Court argument in Philip Morris v. Williams.  The Times editorial writers refer to the Oregon Supreme Court’s decision resting on “spurious state-law grounds.” Full disclosure: I represent amici in the case, so I am not impartial.

While they link to and quote from the transcript of hearing, the Times writers quote selectively from it. For example, they omit Justice Breyer’s description of 28 published appellate court opinions in which Oregon courts have cited the operative state-law rule. (Tr. 14-unofficial transcript). They ignored Philip Morris’ concession at oral argument that Philip Morris does not question the good faith of the Oregon Supreme Court, or Justice Stevens’ observation that it the Oregon Supreme Court was acting in good faith. (Tr. 20).  So how, exactly, did the L.A. Times editorial board determine that the state law grounds were “spurious?”

It’s easy to turn a phrase. Tempting, too. But by its words, the Times has done a grave disservice to the Oregon Supreme Court and the rule of law.

One other thing: The editorial suggests that the Court should place limits on punitive damages through this case. What the Times and all advocates of absolute limits cannot explain is why it would be wise to tell miscreants exactly how much they will pay for their misconduct.

Here is what I mean.  The single best illustration comes from the Ford exploding  Pinto gas tank case many years ago. There, Ford employees figured out that they could make a lot of money by not spending a very small amount on safety measures that would prevent gas tank fires. They did a cost-benefit analysis, and a California jury properly punished them many times over their profit for their outrageous misconduct.

If the Court puts an absolute limit on punitive damage amounts, it will allow every bean counter with a calculator to precisely calculate how much profit it will make by engaging in misconduct. It simply eliminates the deterrent effect of punitive damages.  That’s a bad outcome for this case, and bad policy for the cases that come after.

David Sugerman

Here’s the transcript of oral arugment in the U.S. Supreme Court yesterday. As I represent former members of the Oregon Supreme Court as amici (”friends of the court”), I’ll be interested in seeing the opinion.

David Sugerman

With the help of my good friends Scott Shorr and Bob Udziela, I recently co-authored this amicus brief in the U.S. Supreme Court case of Philip Morris v. Williams.  We provided the brief on behalf of Retired Oregon Supreme Court Justices Leeson, Linde, Roberts and Unis.

The brief focuses on whether the Oregon Supreme Court correctly applied Oregon law in affirming a large punitive damage award against Philip Morris. It was a thrill working with Scott and Bob. More so because of the distinguished group of judges that we represented.

We did the brief pro bono, which means for “the good.” That’s to say, it’s a unpaid volunteer effort to help the Court understand some of the fine details of Oregon law. Snarky admission: I am way short on love for the tobacco industry.

While I’ll never see a dime for my work assisting to hold them accountable for their outrageous misconduct, I take pride in having been in the fight.

David Sugerman

Catching up some more…can one blogger ever go on vacation?! Here’s a neat piece from the Oregon Supreme Court on Bill Sizemore, racketeer.  It’s a court opinion, so a lot of it is in legalese. But there are sections worth lifting from Justice Balmer’s opinion for the unanimous court:

“A jury found that defendants–a political action committee and a nonprofit corporation controlled by the same individuals–engaged with others in a pattern of racketeering activity, as defined in ORICO, by forging signatures to qualify two ballot measures for the 2000 general election and by filing false statements with the state from 1998 through 2000 concerning their expenditures and contributions. The jury also found that defendants’ illegal conduct injured plaintiffs–two labor organizations–that spent substantial amounts of money opposing the ballot measures. The jury determined that plaintiffs had suffered damages of approximately $840,000….”

The Court goes on to explain that a jury found that an enterprise that included Bill Sizemore engaged in racketeering. Mr. Sizemore–for those who don’t know–makes a living submitting poorly written and confusing initiatives to Oregon voters.  Turns out he does this by way of fraud and forgery.

As the Court explained, Sizemore’s group, Oregon Taxpayers United and the rest of the defendants, did not, “challenge the jury’s findings that they did, in fact, forge sponsorship and petition signatures or that OTU-EF submitted false reports to the Attorney General regarding its charitable activities.” Instead, the defendants made a number of technical arguments that the Oregon Supreme Court rejected.

So maybe now Bill Sizemore, Racketeer, becomes the name rightfully attached to all these horrible-idea initiatives. For years, I’ve had a sense that some people were using the Oregon initative process in inappropriate ways. But it’s only as a result of this case that I’ve come to understand that Oregonians are being played by a bunch of corrupt racketeers who are intent on hijacking our initiative system.  There ought to be a law.

Kudos to the people who pursued this case and shined a light on Bill Sizemore, Racketeer. The legal team handling the challenge includes a number of friends who should be proud of their great work for Oregonians. Two of the lawyers, Mike Morris and Gene Mechanic, are old friends who do top-flight work.  It’s particularly gratifying to see that they nailed Bill Sizemore, Racketeer. Maybe this is a lesson to Bill Sizemore, Racketeer that his days of pushing his corrupt agenda on us are coming to a close.

You can be a part of saying no more to Bill Sizemore, Racketeer.  Next time you see a petitioner circulating one of those initiative petitions, be sure to ask whether Bill Sizemore, Racketeer is involved.  And if he is, tell them that we don’t do business with Bill Sizemore, Racketeer.  And then don’t sign. Because I imagine that you agree that there’s no place in Oregon for Bill Sizemore, Racketeer.

David Sugerman

Those of us who handle wage and hour cases learned yesterday that the Oregon Supreme Court issued a major decision denying employees the right to collect wages. In the case, Gafur v. Legacy Good Sam Hospital, workers who did not get mandatory rest breaks sued to collect unpaid wages.

Oregon law provides that employees get 10 minutes of rest for every four hours worked, and no pay may be deducted for the rest break. The employees argued that Oregon’s rest break rules means that they should have been paid 10 minutes’ wages when they were denied rest breaks. The logic to the argument is sound, in that for employees time is money. So if you’re not allowed to take the time provided to you, you should at least get the money.

But logic and law don’t always mesh. The Court got there by finding that the regulations are for health and safety and don’t create an entitlement to pay.

The other interesting thing is that the State Bureau of Labor and Industries–”BOLI”–filed an amicus, or friend of the court, brief that supported the employees. So the employees had both logic and BOLI on their side. Neither swung it with the Court.

The last interesting point is that the Court–as is common–was unanimous in its decision. At least two of the Oregon Supreme Court justices had significant background representing employees before they became judges. And most of the rest of the court had substantial experience representing the State–here BOLI. But as is common with our court, the judges’ pre-appointment backgrounds proved to be poor predictors of the outcome. This is one of those other measures of judicial integrity and judicial independence–two critically important features of our courts.

I can say as much, even though I believe the Court got it wrong. No doubt this is because I represent employees in wage claims and see these issues through a partisan filter.

David Sugerman

So the mainstream press picked up on the fact that the Oregon Supreme Court has decided a major case against Philip Morris and one in its favor.  But the story that is republished on MSNBC includes a law professor’s odd view of irony.

Here’s the excerpt:

“Ben Zipursky, a Fordham University School of Law professor who specializes in product liability, said it was ironic the ruling [in favor of Philip Morris on the Lowe medical monitoring case] came from the same court that recently affirmed a nearly $80 million punitive damages award against tobacco giant Philip Morris after it was struck down by the U.S. Supreme Court.

“‘This is the very court that has most aggressively ruled against Philip Morris,’ Zipursky said.”

So what’s ironic?

I mean, as one of the trial lawyers on the losing side of Lowe v. Philip Morris, I can say that I disagree with the Court’s ruling. But irony? Nah, prof., you got the wrong. Taken together, the two cases demonstrate that Philip Morris–and everyone else–gets a fair shake in front of the Oregon Supreme Court.

When I’m In trial and my opponent objects to evidence, I thank the trial judge whether the judge rules in favor of me or my opponent.  I do the same thing when the trial judge rules on my objections.  An opponent once accused me of thanking the court when I lost so that I would confuse the jury about whether I was winning or losing. I was amused that anyone thought I was that clever. But the reality is that through the response, “Thank you, Your Honor,” we acknowledge–win or lose–that judges maintain authority.  In that spirit, I would say that the Court in Lowe ruled in favor of Philip Morris and the rest of the industry. Regardless of what any law professor thinks, there wasn’t a shred of irony involved.

David Sugerman

Today, the Oregon Supreme Court held that Oregon smokers could not compel tobacco companies to fund medical tests that would help with early detection of smoking-related diseases. The case–Lowe v. Philip Morris–is important in a few ways.

First, by way of full disclosure, I was one of the lawyers representing Patricia Lowe, the smoker who sought to create a medical monitoring fund. While we did not win the case, I had the distinct pleasure and privilege of working on the case with my friends and colleagues, Bill Gaylord, Jim Coon, Chuck Tauman and Ray Thomas.

On a political level, the case is important because the Oregon Supreme Court demonstrated that sometimes–like in this case–Philip Morris wins in Oregon, and sometimes Philip Morris loses. That provides a powerful rebuttal to those who claim that Oregon courts are unfair to Philip Morris.

But the other thing is that the lawyers who pursued this case dared to advance the radical proposition that Oregon courts should provide a means of limiting harm and protecting those who are wrongfully endangered by dangerous products. For reasons that it articulated with clarity, the Oregon court declined to do adopt that proposition in this case. So be it. (That’s not a knock on the Court; rather, it’s an acknowledgment of its role, power and authority in our beloved state.)

Update 2 May 2008: Here’s the story reported in The Oregonian and on Oregonlive.com. Jim Coon, lead for smokers on the appeal, did his usual great job of explaining the case.

In the end, it comes to this–at least to my way of thinking:  Patricia Lowe, the smoker who bravely pursued this case, tried to do something that would make a difference by creating a program for medical screening that would limit the harm. Next time Philip Morris or its friends at the Chamber of Commerce complain about injury lawsuits, please remember this case. And then ask the complainers about their vision of alternatives, as they apparently don’t want to fund injury prevention.

David Sugerman

It may have been inevitable. Late last week, the Oregon Supreme Court released its opinion in Goddard v. Farmers Insurance. Oregon court watchers have been waiting for this opinion. It addressed whether under federal due process restrictions, a punitive damage award against Farmers Insurance was too high.

It’s a long opinion. Here’s the link: www.publications.ojd.state.or.us/S053405.htm

It’s a complicated case that spans more than 20 years. My friend and colleague, Bill Barton, represented the estate in this case that featured more twists and turns than any in recent memory. The short version is that a drunk driver, Mr. Munson, killed Marc Goddard back in 1987. Farmers insured the drunken Mr. Munson. When the Goddard family sued, Farmers had the opportunity to pay its policy to protect Mr. Munson, but refused to do so.

The underlying automobile case went to trial, and the jury awarded substantially more than the $100,000 policy limits that were in place to protect Mr. Munson. That was bad.
That failure exposed Mr. Munson to profound problems because the Goddard family could collect more the excess from Mr. Munson. Farmers’ refusal to settle created a bad faith claim. The Goddard estate pursued that claim on assignment, standing in Mr. Munson’s shoes against Farmers. And that bad faith claim resulted in a multi-million dollar punitive damage award. Ain’t that a mouthful?

Anyway, all sorts of bad stuff came out in the trial against Farmers about how they had multiple opportunities to protect their insured, Mr. Munson, by paying the policy limits, and they refused. The jury socked it to Farmers. Farmers appealed claiming that the multi-million dollar punitive damage award violated Farmers’ federal constitutional due process rights.

With the remaking of U.S. Supreme Court, the due process rights of corporate interests have ascended to a position of prominence. The linchpin of the corporate due process analysis rests upon the bizarre notion that when a corporation engages in wrongdoing, it is entitled to know how much financial exposure its misconduct creates. It has become one of those axioms repeated so often by the U.S. Supreme Court and conservative commentators that no one stops to examine how the emperor has no clothes.

Because it’s problematic, to be kind. What the U.S. Supreme Court has decreed is that every corporation should be able to perform a cost-benefit analysis on misconduct. For those old enough to remember, this sounds vaguely familiar, doesn’t it? As in the Ford Pinto–one of the landmark cases of U.S. product safety litigation. In that case, Ford executives chose to not recall the exploding Pinto to modify its dangerous gas tank because–they reasoned–they would lose more money by the recall and retrofit campaign than they would if they had to defend an expected number of death claims from fiery explosions.

Bad conduct by any measure. And the jury that heard that evidence used a multi million dollar punitive damage award to teach the people at Ford that they can’t choose profit over safety.

As the Court in Goddard pointed out, they were applying federal constitutional law as they distilled it from U.S. Supreme Court opinions. So I suppose it’s important to clarify that the problems emanate from the D.C. Supremes, as opposed to Salem. Cold comfort, unfortunately.

And with all that lengthy background (sorry!), it’s now easy to explain how this hurts consumers. The bright-line punitive damage limit gives every corporate wrongdoer the ability to do math to figure out whether or not they will be penalized for misconduct. This is not exactly the best way to make sure that corporations act fairly. Instead, it encourages misconduct with limits.

The only saving grace of Goddard is that the Oregon court reserved an exception for extreme misconduct, which can still lead to higher punitive damages. They had to say that, actually, as they recently decided Williams v. Philip Morris, affirming a substantial punitive damage award for the tobacco giant’s outrageous misconduct. Still, it’s easy to see the future here. Short of profound fraud that causes death, a corporation’s misconduct will expose it to punitive damages of no more than four times the amount of actual damages awarded to an injured person.

So corporate wrongdoers, “Come on down!” Just crank out the numbers, and you’ll always know how bad you can be.

David F. Sugerman