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   Supreme Court rejects $79.5 million tobacco award

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2/20/2007 12:00 pm

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Legal Ruling

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Entered 2/20/2007, Updated 2/20/2007

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NEW YORK (MarketWatch) -- The U.S. Supreme Court on Tuesday threw out a $79.5 million punitive damages award against Altria Group's Philip Morris USA unit, handing the food and tobacco titan its latest in a string of litigation victories. Shares of Altria (MO :altria group inc com News , chart, profile, more Last: 85.99-0.21-0.24% MO85.99, -0.21, -0.2% )were down 28 cents at $85.92 in afternoon trading. The company had appealed the case, known as Williams-Branch, to the high court after the Oregon Supreme Court upheld the punitive damages award early last year. The plaintiff, the wife of a dead smoker, had sued the company for fraud and negligence and, in 1999, won $800,000 in compensatory damages and $79 million in punitive damages - the largest fine ever awarded in the state. The trial judge later reduced the award to $32 million only to have an appellate court reinstate the original award. The case was then appealed to the U.S. Supreme Court, which set aside the Oregon appellate court's ruling and ordered it to reconsider the case. But in 2004, the Oregon Court of Appeal refused to reduce the $79.5 million award and the Oregon Supreme Court reaffirmed the decision. Philip Morris took the case back to U.S. Supreme Court, which heard oral arguments Oct. 31. In the 5-4 decision handed down Tuesday, the high court found the jury in the case was out to punish the company for harm it may have done to others besides the plaintiff. "A punitive damages award based in part on a jury's desire to punish a defendant for harming nonparties amounts to a taking of property from the defendant without due process," the court wrote. Further, "permitting such punishment would add a near standardless dimension to the punitive damages equation and magnify the fundamental due process concerns of this Court's pertinent cases -- arbitrariness, uncertai


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