Is $23.6 billion too much in punitive damages?
To the great chagrin of R. J. Reynolds Tobacco Company, a Florida jury awarded a smoker’s widow a mind-boggling $23.6 billion in punitive damages. Tobacco executives complain that the amount is disproportionate. What’s really contrary to common sense, though, is not the size of the penalty, but that a single person and her lawyers should receive it.
Cynthia Robinson’s husband, Michael Johnson Sr., had been a frequent smoker since the age of 13 and died of tobacco-related causes in 1996 after ten months of suffering. He was 36 years old. In Cynthia Robinson v. R. J. Reynolds Tobacco Company, Robinson alleged that R. J. Reynolds’s false advertising and marketing of a dangerous product make the company responsible for the death of her husband.
The jury agreed. After 18 hours of deliberation over two days, on July 18 they awarded the plaintiff $23,623,718,906.62 in punitive damages in addition to a $16.8 million award for pain and suffering, which had already been announced.
“First time I heard ‘millions,’” Robinson said during a CNN interview. “I didn’t know it was ‘b,’ with a ‘b,’ billions. And I still can’t believe it.”
Neither can R. J. Reynolds, whose leaders promise to challenge the decision.
“This verdict goes far beyond the realm of reasonableness and fairness, and is completely inconsistent with the evidence presented,” said J. Jeffery Raborn, vice president and assistant general counsel for R. J. Reynolds. “We plan to file post-trial motions with the trial court promptly, and are confident that the court will follow the law and not allow this runaway verdict to stand.”
The Robinson suit, filed in 2008, originated with the earlier Engle v. Liggett Group Inc. class-action lawsuit on behalf of about 8,000 Floridians. In 2000, a jury awarded $145 billion to the Engle plaintiffs. Because the Florida supreme court ultimately overturned the verdict in 2006, that mind-numbing amount of money was never dispersed to the plaintiffs.
The Florida supreme court decision left the door open for the plaintiffs to pursue individual suits, which were dubbed “Engle progeny.” Several thousand Engle-progeny suits were filed, but only a little more than 100 made it to court. Over 65 percent of these have been decided in favor of the plaintiffs, said Christopher Chestnut, one of the lawyers who represented Robinson. The punitive-damages award for the Robinson case is far and away the greatest for any of the Engle-progeny cases so far.
To understand just how large this award is, consider that 87 of the 191 countries listed by the World Bank — 45.5 percent of the world’s countries — have annual GDPs of less than $23.6 billion. That sum is also about $600 million more than George Soros’s net worth. The $16.8 million awarded to Robinson for pain and suffering is only 0.07 percent as large as the punitive-damages award.
The canonical justification for such large punitive-damages awards is that it takes tremendous expenses to deter multibillion-dollar corporations from engaging in behavior that is profitable but irresponsible. During the closing arguments in the Robinson case, R. J. Reynolds lawyers inadvertently made this point themselves by announcing that a mere $100-million judgment would not affect their behavior. That strategy backfired when the jury decided to charge them a vastly greater amount, Chestnut said.
Given the scale of the company’s alleged misbehavior, the plaintiff may have had a case that R. J. Reynolds deserved the hefty penalty. Chestnut said that the company had, after all, lied about its product — not only in advertising, but also to Congress — and added poisonous chemicals to tobacco to make cigarettes more addictive.
“If tobacco were an individual person and they did this to someone else, it would be first-degree murder. It would likely warrant life in prison,” Chestnut said to National Review Online. “But companies don’t go to jail. The only way to punish a company who kills people for profits is to hit them in the pockets.”
Chestnut said he hopes that the punitive awards from the Robinson case, together with the threat of future punitive awards, will motivate the tobacco industry to produce safer cigarettes that contain fewer additives, which could save an enormous number of lives over the long term.
Assuming that the plaintiff is right about both the scale of R. J. Reynolds’s wrongdoing and the expected social benefits of punishing it, such a large penalty may indeed be warranted. Even so, it’s unclear why the money should go entirely to Chestnut’s client and his firm.
If the purpose of punitive awards is purely punitive, there is no reason that the money extracted from the defendant should make the already compensated plaintiff a billionaire. The awards would be equally punitive if they were distributed among charities, applied toward reducing the national debt, or dropped into the sea. Also, some fraction of the money might be necessary to encourage people to bring such high-stakes suits in the first place — but surely not all of it.
In our system, punitive-damages awards occupy a strange “quasi-criminal” role, one that seems to combine civil-justice and criminal-justice purposes. They are frequently likened to criminal punishment, which raises the question of why they are not pursued in criminal courts. Is their role to adjudicate between persons (including corporate entities) or to punish criminal behavior? It’s odd that it should do both.
Conservatives should have no principled objections to harsh punishment of companies that engage in dishonest or otherwise unethical business practices. They may yet be wary about a system that carelessly mingles criminal and civil processes, and doles out billions arbitrarily.
— Spencer Case is a philosophy graduate student at the University of Colorado and a National Review intern. He is a U.S. Army veteran of Iraq and Afghanistan and an Egypt Fulbright alumnus.