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Rose v. Brown & Williamson Tobacco Corp.9/29/2005
, this court did not find Sladick to be controlling in the instant case.
For the reasons set forth above, this court adopted the rule, set forth in Greenbaum, that the burden of proof for punitive damages in a negligent design case is the same as the burden of proof for compensatory damages in a negligent design case. In a negligence action, prima facie entitlement to compensatory damages must be established by a fair preponderance of the evidence. (Rinaldi & Sons, Inc. v. Wells Fargo Alarm Service, Inc., 39 NY2d 191, 196 .) Therefore, the court denied defendants' motion to instruct the jury that entitlement to punitive damages must be established by clear and convincing evidence.
Defendants' Motion to Exclude Evidence of Their Financial Condition From The Punitive Damages Phase of the Trial
At the second phase of the trial, defendants Phillip Morris USA Inc. and Brown and Williamson Tobacco Corporation moved to preclude all evidence of their profits and financial status. The court denied their motion.
Defendants raised three separate arguments to support their motion. First, they contended that due process principles prohibit consideration of a defendant's wealth as a factor in determining the amount of a punitive damages award; second, they contended evidence of a corporation's wealth and financial status has no relevance to the question of the appropriate amount of punitive damages; and third, they argued that the probative value of any such evidence is greatly outweighed by its prejudicial effect on the jury. Defendants further requested that, if the court should allow plaintiffs to introduce financial evidence, the jury be instructed that it may not proportion its award to defendants' financial conditions, or otherwise enhance the award based on their wealth.
As to their first argument, defendants cited three United States Supreme Court cases for the principle that the constitution forbids juries from using a corporate defendant's financial status in determining the amount of punitive damages. (State Farm Mutual Automobile Insurance Co. v. Campbell, 538 US 408 ; Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 US 424 ; BMW of North America, Inc. v. Gore, 517 US 559 ). While these cases place certain due process limitations on the size of punitive damages awards, none of them goes so far as to foreclose consideration of a defendant's financial status in determining the amount of a punitive damages award.
In Gore, the Supreme Court reviewed a punitive damages award against a defendant national automobile distributor which had failed to disclose to the purchaser that it had repainted the car plaintiff bought (Gore, 517 US at 562-563). The court found that, where the plaintiff had only suffered $4000 worth of actual damages, a $2 million punitive damage award was grossly excessive and violated the Due Process Clause of the Fourteenth Amendment. At the outset of its analysis, the Supreme Court noted that:
Punitive damages may properly be imposed to further a State's legitimate interests in punishing unlawful conduct and deterring its repetition. . . . Only when an award can fairly be categorized as 'grossly excessive' in relation to these interests does it enter the zone of arbitrariness that violates the Due Process Clause of the Fourteenth Amendment.
(Id. at 568.) To determine whether an award violates due process, the Court articulated three guideposts:
he degree of reprehensibility of the [conduct in question]; the disparity between the harm or potential harm suffered by [plaintiff] and his punitive damage award; and the difference between this remedy and the civil penalties
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