Reconceptualizing Split-Recovery Statutes: Philip Morris USA V. Williams‪.‬

Many believe that punitive damage awards have spiraled out of control. In 2002, a California jury awarded $28 billion in punitive damages to a 64-year-old woman with lung cancer. (1) In 2000, a Florida jury awarded $145 billion in punitive damages to a class of Florida smokers. (2) These are not isolated decisions; they represent a pattern of extraordinarily high punitive damage awards handed down by juries. (3) States have responded to these excessive awards in three ways. Some have barred punitive damages altogether, (4) others have adopted a cap on such awards, (5) and still others have implemented split-recovery statutes. (6) Of these three responses, the split-recovery system is functionally and constitutionally unique. (7) Often coupled with more searching judicial review of multiple punitive damage awards, (8) this framework shifts a portion of the punitive damage award to society. Last Term, in Philip Morris USA v. Williams, (9) the Supreme Court held that the Due Process Clause of the Fourteenth Amendment prohibits state juries from punishing a defendant for harm caused to in-state nonparties (potential plaintiffs not before the court), even as the Court reaffirmed a punitive damage framework requiring those same juries to take these harms into account when determining the conduct's reprehensibility. (10) By firmly closing the door to recovery for harms to nonparties--a door left ajar in State Farm Mutual Automobile Insurance Company v. Campell (11)--the Court finally articulated a comprehensive and coherent approach to third-party harms in punitive damage cases. In doing so, however, the Court called into question the primary justification for the split-recovery, multiple punitive-damage review system that states began implementing in the 1980s in response to inflated awards.