Massachusetts Supreme Judicial Court Affirms Punitive Damages Award Against Philip Morris USA Inc. In Spite of Master Settlement Agreement Release

Troutman Pepper

Troutman Pepper

[co-author: Michael Jordan]

On Wednesday, the Massachusetts Supreme Judicial Court upheld a jury’s award of $10 million in punitive damages in a wrongful-death case against Philip Morris USA Inc. (“PM USA”), rejecting the tobacco company’s argument that such relief was precluded by the 1998 master settlement agreement between the Massachusetts Attorney General, PM USA, and other attorneys general and tobacco manufacturers.[1]

In 2017, plaintiff Pamela Laramie—the widow of Fred Laramie—sued PM USA under Massachusetts’s wrongful death statute, alleging that the company had breached the implied warranty of merchantability by manufacturing, selling, and distributing defectively designed cigarettes that caused Fred Laramie’s death. A jury agreed and awarded the widow $10 million in compensatory damages and $10 million in punitive damages.

On appeal, PM USA asserted that the plaintiff could not recover punitive damages because of the 1998 settlement agreement, in which the Massachusetts Attorney General agreed to release PM USA and other tobacco manufacturers from certain claims related to the manufacture, sale, and distribution of tobacco in exchange for monetary and injunctive relief. Although the agreement did not release claims against the tobacco manufacturers for solely private or individual relief for separate and distinct injuries, the agreement included a broad release for claims brought on behalf of the general public.[2] PM USA argued that claims for punitive damages serve the public interest rather than the individual interest, and thus fall into the latter category.  Indeed, as an appellate court in New York has observed, “punitive damages claims are quintessentially and exclusively public in their ultimate orientation and purpose,” as they are intended “not to compensate the injured party but rather to punish the tortfeasor and to deter the wrongdoer and others similarly situated from indulging in the same conduct in the future.”[3]

The Massachusetts Supreme Judicial Court disagreed. In adopting a different approach, the court found that punitive damages can “also serve to vindicate a personal right,” including “compensating claimants for the legal costs and emotional injuries and punishing and deterring actual and potential wrongdoers.” Accordingly, the court found that punitive damages were not precluded by the prior agreement, because the punitive damages sought were not intended to remedy a harm to the general public, but instead a harm “specifically inflicted on the plaintiff’s husband, Laramie.”

Moving forward, litigants in suits concerning tobacco products must be attentive to how Massachusetts and other jurisdictions define and characterize the goals of “punitive damages” in considering whether they might be recoverable.

[1] Laramie v. Philip Morris USA Inc., Slip Op. SJC-13070 (Mass. Sept. 15, 2021).

[2] Specifically, the agreement released all claims for “past conduct . . . in any way related . . . to (A) the use, sale, distribution, manufacture, development, advertising, marketing or health effects of, (B) the exposure to, or (C) research, statements, or warnings regarding Tobacco Products” brought by ‘each Settling State’ as well as, among others, “persons or entities acting in a parens patriae, sovereign, quasi-sovereign, private attorney general, . . . or any other capacity . . . (A) to the extent that any such person or entity is seeking relief on behalf of or generally applicable to the general public . . . as opposed solely to private or individual relief for separate and distinct injuries.” Id. at 8–9 (quoting Master Settlement Agreement (Nov. 1998)).

[3] Fabiano v. Philip Morris Inc., 54 A.D.3d 146, 150 (Sup. Ct. N.Y. 2008).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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