S051805, Opinion — Williams v. Philip Morris Inc.

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Argued and submitted September 11, 2007, court's decision in Williams v. Philip
Morris Inc., 340 Or 35, 127 P3d 1165 (2006), adhered to; decision of Court of
Appeals affirmed; judgment of circuit court reversed, and case remanded to
circuit court for further proceedings January 31, 2008

Mayola WILLIAMS,
Personal Representative of the Estate of
Jesse D. Williams, Deceased,
Respondent on Review,
v.

PHILIP MORRIS INCORPORATED,
nka Philip Morris USA Inc.,
Petitioner on Review,
and

RJ REYNOLDS TOBACCO COMPANY,
Fred Meyer, Inc.,
and Philip Morris Companies, Inc.,
Defendants.
(CC 9705-03957; CA A106791; SC S051805)
176 P3d 1255

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CJS, Damages § 188.

On remand from the United States Supreme Court .*

William F. Gary, of Harrang Long Gary Rudnick P.C.,
Eugene, argued the cause and filed the brief for petitioner on
review. With him on the brief were Sharon A. Rudnick, and
James E. Mountain, Jr.

James S. Coon, of Swanson, Thomas & Coon, Portland,
argued the cause and filed the responses for respondent on
review. With him on the responses were Raymond F.
Thomas, Portland, Robert S. Peck, Center for Constitutional
Litigation PC, Washington D.C., William A. Gaylord, of
Gaylord Eyerman Bradley PC, Portland, Charles S. Tauman,
Portland, Kathryn H. Clarke, Portland, and Maureen
Leonard, Portland.

Steven C. Berman, of Stoll Stoll Berne Lokting &
Shlachter P.C., Portland, filed the brief for amicus curiae
Oregon Trial Lawyers Association. With him on the brief was
David F. Sugerman, Portland.

Janet A. Metcalf, Assistant Attorney General, Salem, filed
the brief for amicus curiae State of Oregon. With her on the
brief were Hardy Myers, Attorney General, and Mary H.
Williams, Solicitor General.

Before De Muniz, Chief Justice, and Gillette, Durham,
Walters, and Linder, Justices .**

\* Philip Morris USA v. Williams, 549 US 346, 127 S Ct 1057, 1065, 166
L Ed 2d 940 (2007).

** Balmer and Kistler, JJ., did not participate in the consideration or decision
of this case.

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GILLETTE, J.

The court's decision in Williams v. Philip Morris Inc., 340
Or 35, 127 P3d 1165 (2006), is adhered to. The decision ofthe
Court of Appeals is affirmed. The judgment of the circuit
court is reversed, and the case is remanded to the circuit
court for further proceedings.

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# GILLETTE, J.

This matter is before us on remand from the United
States Supreme Court. Previously, this court held (among
other things) that certain federal constitutional limitations
constraining punitive damage awards did not require a trial
court to instruct a jury that it was not to use an award of
punitive damages to punish a defendant for harms to persons
who were not parties to the litigation. Williams v. Philip
Morris Inc., 340 Or 35, 51-54, 127 P3d 1165 (2006). On certi-
orari, the United States Supreme Court vacated that opinion
and remanded. Philip Morris USA v. Williams, 549 US 346,
127 S Ct 1057, 1065, 166 L Ed 2d 940 (2007). The Court con-
cluded that the Due Process Clause of the Fourteenth
Amendment prohibits the state from using punitive damages
to punish for harms to nonparties, and that states must pre-
vent punitive damages from being misused in that way. 549
US at __ , __ , 127 S Ct at 1063, 1065. On remand, we are
called upon to reconsider and reassess our earlier holding,
which arose in the context of the trial court's refusal to give a
particular proposed jury instruction that defendant had
requested. Having reconsidered and reassessed the issue, we
now conclude that the proposed jury instruction at issue here
also was flawed for other reasons that we did not identify in
our former opinion. We therefore reaffirm this court's prior
conclusion that the trial court did not err in refusing to give
the instruction. We otherwise reaffirm our prior opinion in all
respects.

Before we turn to the facts and procedural posture of
this particular case, we first summarize the legal context in
which it arose. The issues in this case revolve around federal
constitutional limitations on punitive damage awards. Those
constitutional limitations derive from the Due Process
Clause of the Fourteenth Amendment. See Philip Morris, 549
US at ___ , 127 S Ct at 1060; State Farm Mut. Automobile
Ins. Co. v. Campbell, 538 US 408, 416, 123 S Ct 1513, 155
L Ed 2d 585 (2003); BMW of North America, Inc. v. Gore, 517
US 559, 562, 116 S Ct 1589, 134 L Ed 2d 809 (1996) (all illus-
trating proposition). In those cases, the Supreme Court has
held that states legitimately may use punitive damages to
punish and to deter wrongdoing by defendants in tort cases.

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E.g., Philip Morris, 549 US at
›
, 127 S Ct at 1062. How-
ever, the Court also has held that the amount of punitive
damages that a jury awards cannot be arbitrary; the jury's
discretion must be limited. Otherwise, defendants will not
have adequate notice of potential sanctions, the punishments
may be arbitrary, and large punitive damage awards may
force one state's policy choices onto other states. Id. For those
reasons, the United States Constitution requires both proce-
dural and substantive limits on punitive damage awards. Id.

We turn to the facts of this case. The plaintiff,
Mayola Williams, is the widow of Jesse Williams, a smoker
who died of lung cancer. Plaintiff, as personal representative
of Jesse Williams's estate, sued defendant Philip Morris Inc.,
asserting that Philip Morris's fraud and negligence caused
Jesse Williams's death.

The parties do not dispute this court's prior overview
of the evidence offered at trial, which was presented in the
light most favorable to plaintiff. See Williams, 340 Or at 38-
43 (describing facts of case). Briefly, the evidence permitted
the jury to conclude that Philip Morris and other tobacco
companies had known of the carcinogenic dangers of smoking
since at least the 1950s. Id. at 41. Nevertheless, Philip
Morris, operating in conjunction with the rest of the tobacco
industry, carried out an extensive publicity campaign, from
the 1950s into the 1990s, to convince the public that doubts
remained about whether smoking actually was dangerous to
one's health. Id. at 40. No legitimate controversy existed
about whether smoking was harmful to health, although
Philip Morris and the rest of the tobacco industry strove to
persuade the public otherwise. Id. at 41-42 (issuing press
releases, cultivating opinion leaders, using advertising power
to seek favorable treatment from the media, etc.). Philip
Morris and the rest of the tobacco industry also fostered the
sham impression that they were themselves vigorously
investigating the health effects of smoking when, in actual-
ity, their research institution avoided doing research on that
question. Id. at 40-41.

The jury further could have concluded that this pro-
gram of disinformation succeeded in tricking Jesse Williams,
who smoked from the early 1950s until he died in 1997. He

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was highly addicted to nicotine, eventually smoking three
packs of cigarettes-primarily Philip Morris's Marlboro
brand-a day. Id. at 38. Williams resisted his family's efforts
to convince him to quit smoking, because he believed media
representations that the dangers of smoking were overstated
or nonexistent. See id. at 39 (presented with article about
dangers of smoking, Williams had found "published asser-
tions that cigarette smoking was not dangerous"); id. at 42
(Williams rejected arguments to quit, because "he had
learned from watching television that smoking did not cause
lung cancer"). When Williams was diagnosed with lung can-
cer, however, he asserted that the "cigarette people" had
betrayed him by "lying" to him. Id. at 39 (internal quotation
marks and citation omitted). Williams was dead within six
months after the cancer was discovered. Id.

Near the end of trial, the parties offered proposed
jury instructions. One instruction submitted by Philip Morris
was its proposed jury instruction No. 34, dealing with puni-
tive damages. Among other things, that instruction provided:

"The size of any punishment should bear a reasonable
relationship to the harm caused to Jesse Williams by the
defendant's punishable misconduct. Although you may con-
sider the extent of harm suffered by others in determining
what that reasonable relationship is, you are not to punish
the defendant for the impact of its alleged misconduct on
other persons, who may bring lawsuits of their own in
which other juries can resolve their claims and award puni-
tive damages for those harms, as such other juries see fit."

(The complete text of the instruction, which was three-and-a-
half pages long, is reprinted as an Appendix to this opinion.)

The trial court analyzed the proposed jury instruc-
tions line-by-line with the parties, during which time Philip
Morris argued that the consider-but-don't-punish part of pro-
posed jury instruction No. 34 was needed to ensure that this
plaintiff did not receive punitive damages that should be
awarded (if they were to be awarded at all) to other plaintiffs.
After the trial court had reviewed Philip Morris's proposed
jury instruction No. 34 together with plaintiff's proposed jury
instruction on punitive damages-the transcript of that part
of the trial court's analysis is 50 pages long-the trial court

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declined to give proposed jury instruction No. 34 as
proffered.1

The jury returned a verdict for plaintiff. The jury's
unadjusted award was $821,485.50 in compensatory dam-
ages and $79.5 million in punitive damages. The trial court,
among other things, reduced the punitive damage award to
$32 million. Williams, 340 Or at 44.

Plaintiff and Philip Morris both appealed. The Court
of Appeals reversed on plaintiff's appeal, concluding that the
trial court should not have reduced the punitive damages
award. Williams v. Philip Morris Inc., 182 Or App 44, 72, 48
P3d 824, adh'd to on recons, 183 Or App 192, 51 P3d 670
(2002). The Court of Appeals affirmed on Philip Morris's
cross-appeal, concluding that the trial court did not err in
refusing to give Philip Morris's proposed jury instruction
No. 34. 182 Or App at 63-64. This court denied review.
Williams v. Philip Morris Inc., 335 Or 142, 61 P3d 938 (2002).

The United States Supreme Court then granted cer-
tiorari, vacated the judgment of the Court of Appeals, and
remanded the case to the Court of Appeals for further consid-
eration in light of the Supreme Court's opinion in Campbell.
Philip Morris USA Inc. v. Williams, 540 US 801, 124 S Ct 56,
157 L Ed 2d 12 (2003). After an extended analysis on remand,
the Court of Appeals again reached the same conclusions
that it had reached in its earlier opinion. Williams v. Philip
Morris, Inc., 193 Or App 527, 530, 92 P3d 126 (2004). Specif-
ically, the court concluded that the $79.5 million punitive
damage award did not violate due process. Id. at 563. The
court also rejected Philip Morris's argument that the trial
court erred in refusing to give proposed jury instruction
No. 34. Id. at 555-57.

This court then allowed defendant's petition for
review, and affirmed the decision of the Court of Appeals.
Williams, 340 Or at 38. This court concluded, also after an
extensive analysis, that the $79.5 million punitive damage

1 That is, the trial court did not give proposed jury instruction No. 34 in the
form in which Philip Morris proffered it. The trial court did, however, incorporate
some concepts from Philip Morris's proposed jury instruction No. 34 into its final
instructions to the jury.

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award comported with federal due process. Id. at 54-64. As
pertinent to the present proceeding, this court also rejected
Philip Morris's argument that the trial court should have
given proposed jury instruction No. 34. Philip Morris had
argued that Campbell prohibited courts from " 'adjudi-
cat[ing] the merits of other parties' hypothetical claims
against a defendant,' " because of the " 'possibility of multiple
punitive damage awards for the same conduct[.]'" Id. at 52
(quoting Campbell, 538 US at 423). This court concluded,
however, that those quotations from Campbell were taken
out of context. "The [full] quote referred only to dissimilar
acts and dissimilar claims; the Court intended to prohibit a
punitive damage award from becoming a referendum on a
corporate defendant's general behavior as a citizen." Id. at 52
(emphasis in original). But, this court stated, "evidence of
similar conduct against other parties may be relevant to a
punitive damage award." Id. at 53 (emphasis in original).
Because proposed jury instruction No. 34 therefore incor-
rectly stated federal requirements of due process of law (at
least as this court understood it), this court concluded that
the trial court did not err in refusing to give the instruction.
Id. at 53-54.2

On certiorari, the United States Supreme Court
reached a different conclusion. Philip Morris USA, 549 US at
127 S Ct at 1057. The terms of the Court's decision are
,
important to understanding the issues presented to this
court. We therefore review that opinion in some detail.

After reviewing the procedural history of the case,
the Court summarized the limits that due process imposes on
punitive damages awards. Id. at 1060-63. Although the
United States Constitution requires both procedural and
substantive limits on punitive damage awards, id. at 1062, in
this case the Court only addressed the procedural limits. Id.
at 1063. As the Court explained, "the Constitution's Due
Process Clause forbids a State to use a punitive damages

2 Plaintiff also had argued, in the alternative, that the refusal to give proposed
instruction No. 34 was not error, because that instruction misstated other points of
law. Given this court's holding that the instruction was erroneous with respect to
federal due process law, however, this court did not need to address those alterna-
tive arguments. Now, in light of the remand from the United States Supreme
Court, we must consider those alternative reasons for affirmance.

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award to punish a defendant for injury that it inflicts upon
nonparties or those whom they directly represent, i.e., injury
that it inflicts upon those who are, essentially, strangers to
the litigation." Id. The Court identified three reasons for that
conclusion: First, a defendant cannot effectively defend
against claims of injuries to nonparties. Id. Second, permit-
ting a punitive damages award to punish for harm to nonpar-
ties "would add a near standardless dimension to the
punitive damages equation," with speculation about the non-
parties magnifying the risk of arbitrary treatment. Id. And,
third, the Court found that no authority existed to permit
using punitive damages to punish for harm to nonparties. Id.

That said, the Court also went on to acknowledge
that harm to nonparties (to the extent that it exists) may play
a role in the punitive damages calculus in the sense that it is
relevant to showing the degree of reprehensibility of a defen-
dant's conduct. Id. at 1063-64. The Court distinguished, how-
ever, between legitimate use of evidence of such harm to
establish reprehensibility and illegitimate use of that evi-
dence to punish defendant for harm it caused to nonparties.
As the Court explained:

"Evidence of actual harm to nonparties can help to show
that the conduct that harmed the plaintiff also posed a sub-
stantial risk of harm to the general public, and so was par-
ticularly reprehensible ***. Yet for the reasons given
above, a jury may not go further than this and use a puni-
tive damages verdict to punish a defendant directly on
account of harms it is alleged to have visited on nonparties."

Id. at 1064. The Court repeated the same point later in its
opinion:

"We have explained why we believe the Due Process Clause
prohibits a State's inflicting punishment for harm caused
strangers to the litigation. At the same time we recognize
that conduct that risks harm to many is likely more repre-
hensible than conduct that risks harm to only a few. And a
jury consequently may take this fact into account in deter-
mining reprehensibility."

127 S Ct at 1065 (citation omitted).

All in all, the Court concluded, the risks of unfair-
ness inherent in punitive damage awards mean that state

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courts must "provide assurance that juries are not asking the
wrong question, i.e., seeking, not simply to determine repre-
hensibility, but also to punish for harm caused strangers." Id.
at 1064. The Court noted that that distinction raised practi-
cal difficulties for reviewing courts, difficulties that should be
met by appropriate procedures:

"How can we know whether a jury, in taking account of
harm caused others under the rubric of reprehensibility,
also seeks to punish the defendant for having caused injury
to others? Our answer is that state courts cannot authorize
procedures that create an unreasonable and unnecessary
risk of any such confusion occurring. In particular, we
believe that where the risk of that misunderstanding is a
significant one-because, for instance, of the sort of evi-
dence that was introduced at trial or the kinds of argument
the plaintiff made to the jury-a court, upon request, must
protect against that risk. Although the States have some
flexibility to determine what kind of procedures they will
implement, federal constitutional law obligates them to
provide some form of protection in appropriate cases."

Id. at 1065 (emphases in original).

Having explained the general principles of law, the
Court then applied those principles to this case. "The instruc-
tion that Philip Morris said the trial court should have given
distinguishes between using harm to others as part of the
'reasonable relationship' equation (which it would allow) and
using it directly as a basis for punishment." Id. at 1064. The
Court reviewed this court's opinion in Williams, 340 Or at 35,
and concluded that that opinion permitted direct punish-
ment for harm to others, without limiting the use of such
harm to determine reprehensibility. 127 S Ct at 1064-65. For
that reason, the Court vacated this court's opinion and
remanded for further proceedings. The Court specifically
explained its conclusion, and the nature of the remand, as
follows:

"As the preceding discussion makes clear, we believe
that the Oregon Supreme Court applied the wrong consti-
tutional standard when considering Philip Morris' appeal.
We remand this case so that the Oregon Supreme Court can
apply the standard we have set forth. Because the applica-
tion of this standard may lead to the need for a new trial, or

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a change in the level of the punitive damages award, we
shall not consider whether the award is constitutionally
'grossly excessive.'"

Id. at 1065 (emphases added).

Under the Supreme Court's remand, then, it is our
task to apply the constitutional standard set by the Supreme
Court in our consideration of the sole issue raised by Philip
Morris, viz., whether the trial court erred in refusing to give
proposed jury instruction No. 34.3 As we shall explain, how-
ever, there is a preliminary, independent state law standard
that we must consider, before we address the constitutional
standard that the United States Supreme Court has
articulated.

A state court decision like the decision of the trial
judge in this case to refuse to give proposed jury instruction
No. 34 may be affirmed, without reaching the federal ques-
tion, ifthere is an independent and adequate state ground for
doing so. See, e.g., Osborne v. Ohio, 495 US 103, 123, 110 S Ct
1691, 109 L Ed 2d 98 (1990) (Ohio Supreme Court, applying
state law, had held that defendant had waived due process
challenge by failing to object to jury instructions at trial: "We
have no difficulty agreeing with the State that [defendant's]
counsel's failure to urge that the court instruct the jury on
scienter constitutes an independent and adequate state-law
ground preventing us from reaching [defendant's] due proc-
ess contention on that point."). We believe that this is such a
case, i.e., one resting on an independent and adequate state
ground for affirming the trial judge's ruling.4

Under Oregon law, there are two different types of
error respecting jury instructions: (1) error in the failure to
give a proposed jury instruction, and (2) error in the jury
instructions that actually were given. See Bennett v. Farmers

3 Defendant did not preserve any issue as to the instructions that the trial
court did give. See Williams, 340 Or at 54 (so explaining).

4 Put differently, we understand the Court's use of the phrase, "upon request,"
Philip Morris USA, 127 S Ct at 1065, to be an acknowledgment of the authority of
states to place reasonable procedural requirements on any request for instructions,
including requests like the one at issue here. Our treatment of this topic in the
pages that follow is based on that understanding, and on the belief that Oregon's
rule concerning the correctness of requested instructions is a reasonable allocation
of responsibility to parties to a jury trial.

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Ins. Co., 332 Or 138, 152-53, 26 P3d 785 (2001) (so indicat-
ing). As noted, Philip Morris failed to preserve for our review
any claim that the jury instructions actually given were erro-
neous. See Williams, 340 Or at 54 (unpreserved in Court of
Appeals). This case, therefore, involves only the failure to
give a proposed jury instruction.

In Oregon, there is a well-understood standard gov-
erning claims of error respecting a trial judge's refusal to give
a proffered instruction: An appellate court will not reverse a
trial court's refusal to give a proposed jury instruction, unless
the proposed instruction was "clear and correct in all
respects, both in form and in substance, and * * * altogether
free from error." Beglau v. Albertus, 272 Or 170, 179, 536 P2d
1251 (1975) (citations omitted); see also Hernandez v. Barbo
Machinery Co., 327 Or 99, 106, 957 P2d 147 (1998) ("there is
no error [in refusing to give a proposed instruction] if the
requested instruction is not correct in all respects"); Owings
v. Rosé, 262 Or 247, 258, 497 P2d 1183 (1972) ("The trial
court is not obliged to give an incorrect instruction, or to give
the correct portions of one which includes errors."). The effect
of that standard is to require that a party to litigation take
responsibility for the jury instructions that a trial court
either gives or refuses to give. That means that, in the case of
the refusal to give an instruction-and we repeatthat that is
all that is at stake here-the party seeking a particular
instruction must be correct respecting the rule of law stated
in the instruction. In this case, the United States Supreme
Court has opined that there is a risk that a jury will be con-
fused about how to take into account harm that the defen-
dant may have caused to others. A trial court must, "upon
request," protect against that risk. But, as with any other
request for an instruction, the question that we first must
address is whether the rest of Philip Morris's requested
instruction correctly stated Oregon law. It is not enough, for
example, to offer a proposed instruction that is correct in part
and erroneous in part, leaving the trial court to solve the
problem for itself. Beglau, 272 Or at 179. We also note, in
passing, that asking the court to give a multiple-page
instruction-essentially placing all the party's eggs in one
instructional basket-involves a significant danger that the
proffered instruction will be erroneous in some aspects. We

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turn to an examination of proposed instruction No. 34 in light
of the standard just discussed.

Proposed instruction No. 34 addressed a range of
issues relating to punitive damages, and plaintiff contends
that it was erroneous in a number of ways that are unrelated
to the issues addressed by the United States Supreme Court.
Among other things, plaintiff contends that proposed instruc-
tion No. 34 would have instructed the jury erroneously that
(1) the Oregon statutory factors that the jury must find in
order to justify a punitive damage award were discretionary,
when they are mandatory; and (2) one factor to be considered
in awarding punitive damages was Philip Morris's
"motiv[ation]" to make "illicit profits." As we will explain, we
agree with plaintiff on both points.

First, however, we must consider an initial objection,
because Philip Morris contends that plaintiff cannot now
raise those alternative reasons to affirm the trial court'sjudg-
ment. The trial court reviewed the proposed jury instructions
line-by-line, but Philip Morris claims that plaintiff failed to
make the additional objections to the trial court on which it
now relies. For that reason, Philip Morris asserts, the trial
court cannot be affirmed as having been "right for the wrong
reasons." We reject that argument, because the plaintiff need
not have made any objection at all in order for the trial court
to have been legally justified in rejecting the instruction, ifit
did not correctly state the law. The correctness of the instruc-
tion, in light of the factual record that both parties had a full
opportunity to develop, was purely a legal issue, and the bur-
den was on defendant to offer a legally sufficient instruction.
If defendant did not do so, then there was a legally correct
justification for the trial court's decision to refuse the prof-
fered instruction. Under such circumstances, the trial court's
ruling should be sustained.5

Finally, before we examine what proposed instruc-
tion No. 34 actually would have done, we examine what it

5 We also reject defendant's assertion that any further or different effort by it
respecting the instruction would have been "futile." The record throughout belies
that idea: The trial judge was solicitous of, and at pains to consider, the views of
both parties respecting instructions.

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appears that defendant intended the instruction to accom-
plish. Oregon law provides that, in product liability actions
(such as the present case), punitive damages should be
awarded (if at all) based on seven criteria. ORS 30.925(2),
which sets out that requirement, provides:

"Punitive damages, if any, shall be determined and
awarded based upon the following criteria:

"(a) The likelihood at the time that serious harm
would arise from the defendant's misconduct;

"(b) The degree of the defendant's awareness of that
likelihood;

"(c) The profitability of the defendant's misconduct;

"(d) The duration of the misconduct and any conceal-
ment of it;

"(e) The attitude and conduct of the defendant upon
discovery of the misconduct;

"(f) The financial condition of the defendant; and

"(g) The total deterrent effect of other punishment
imposed upon the defendant as a result of the misconduct,
including, but not limited to, punitive damage awards to
persons in situations similar to the claimant's * * *. "6

Proposed jury instruction No. 34 restated most of the
foregoing factors-often drastically. It provided:

"(2) The size of the punishment may appropriately
reflect the degree of reprehensibility of the defendant's con-
duct-that is, how far the defendant has departed from
accepted societal norms of conduct. Factors that you may
find to bear upon the degree of reprehensibility include:

"(a) The likelihood at the time that serious harm
would arise from the defendant's misconduct, beyond the
harms generally understood to inhere in cigarette smoking;

"(b) The degree of the defendant[']s awareness of that
likelihood;

"(c) The degree to which the defendant was motivated
by a desire to obtain illicit profits from its misconduct;

" The parties agreed at trial that the jury did not need to be instructed about
subsection (g), because no evidence had been presented on that point.

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"(d) The duration of the misconduct and any conceal-
ment of it;

"(3) In determining how much punishment is neces-
sary to achieve the goal of appropriate deterrence, you may
consider the extent to which the obligation to pay compen-
satory damages will suffice to cause defendant and others
to refrain from similar misconduct in the future.

"(4) Finally, you may also consider the defendant's
financial condition as part of the process of arriving at an
appropriate punishment. However, you may not punish the
defendant simply because it is large. Rather, the para-
mount consideration remains the degree of reprehensibility
of any misconduct and the extent of any harm caused by
such misconduct."

We turn to plaintiff's critique of that proposed
instruction. Plaintiff first argues that proposed jury instruc-
tion No. 34 incorrectly indicates that the statutory factors are
discretionary and nonexclusive "[f]actors that you may find to
bear * * * include" (emphasis added)-while ORS 30.925(2)
actually makes those factors mandatory and exclusive-
"shall be determined and awarded based upon the following
criteria." (Emphasis added.) Philip Morris offers no argu-
ment against plaintiff's proposed reading of the statute.

We agree with plaintiff that proposed jury instruction
No. 34 is defective in the way that plaintiff argues. ORS
30.925(2) uses the word "shall," which generally indicates
that something is mandatory. See, e.g., Preble v. Dept. of Rev.,
331 Or 320, 324, 14 P3d 613 (2000) (so noting). The legisla-
ture's instruction that any punitive damage award "shall be
determined and awarded based upon the following criteria"
thus limited the scope of the jury's authority to the list that
followed. Altering that list in a jury instruction (as defendant
proposed to do) would therefore fly in the face of the statute.
Defendant might have a constitutional right to a further
instruction of the kind suggested by the United States
Supreme Court in Williams, but nothing in that right
negated the trial court's duty to follow ORS 30.925(2) in all
other respects. To have given the instruction in the form prof-
fered by defendant thus would have been error under Oregon
law.

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Plaintiff also maintains that proposed jury instruc-
tion No. 34 misstates one of the statutory factors in ORS
30.925(2). While the proposed jury instruction would have
permitted the jury to consider "[t]he degree to which the
defendant was motivated by a desire to obtain illicit profits
from its misconduct," ORS 30.925(2)(c) actually directs the
jury to consider "[t]he profitability of the defendant's miscon-
duct." That is, proposed jury instruction No. 34 focuses on
motive or intent, while the statute instead focuses on out-
come. Again, to have given the instruction in the form prof-
fered by defendant would have been error under Oregon law.

On remand, Philip Morris makes no argument that
proposed jury instruction No. 34 accurately states the law in
thatrespect. In the prior briefing in this case, however, Philip
Morris had addressed that issue in part. As to the words
"illicit profits," Philip Morris had contended that those words
were necessary to "prevent[ ] the jury from relying on [Philip
Morris's] 'profits'-without regard to whether they were
derived from lawful or unlawful conduct-as an indirect way
of punishing lawful cigarette sales." In support, Philip Morris
cited Cooper Industries, Inc. v. Leatherman Tool Group, Inc.,
532 US 424, 441-42, 121 S Ct 1678, 149 L Ed 2d 674 (2001), in
which the Court stated that "it would be unrealistic to
assume that all of [defendant's] sales of [a competing prod-
uct] would have been attributable to its misconduct in using
a photograph of [plaintiff's product] in its initial advertising
materials." Id. at 442.

Again, we agree with plaintiff that Philip Morris's
justification fails, and proposed jury instruction No. 34 mis-
stated the law. While the statutory factor requires an exam-
ination of the profitability of the misconduct-an objective
fact-proposed jury instruction No. 34 instead focuses on
Philip Morris's subjective state of mind regarding profit-i.e.,
whether Philip Morris was "motivated by a desire" to profit
from misconduct. And, while ORS 30.925(2)(c) directs the
jury to consider all "profitability of the misconduct," the pro-
posed jury instruction permits the jury to consider only
"illicit profits from its misconduct" (emphasis added), thus
implicitly directing the jury to try to subdivide the profits
from misconduct into legal and illegal parts-a circular
inquiry, at best.

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We see no merit to Philip Morris's argument that the
jury instruction needed to refer to "illicit profits" to keep the
jury from considering lawful profits, because that simply
misreads the statutory factor. ORS 30.925(2)(c) does not
allow the jury to consider profitability generally-it instead
limits the jury's inquiry to a consideration of "the profit-
ability of the misconduct." (Emphasis added.) But, once the
profitability of the misconduct is identified, it makes no dif-
ference whether it was otherwise licit (not against law) or
illicit (against law). Either way, it was relevant to the jury's
inquiry.

We think that it follows from the foregoing analysis
that, even assuming that proposed jury instruction No. 34
clearly and correctly articulated the standard required by
due process, it contained other parts that did not state the
law correctly. Accordingly, the trial court did not err in refus-
ing to give it. Our previous conclusion to that effect is reaf-
firmed. And, because our ruling respecting the trial judge's
refusal to give proposed jury instruction No. 34 was correct, it
follows that the remaining aspects of the judgment against
defendant should be reaffirmed. That latter point is true, not
only because reconsidering the remaining aspects of the judg-
ment would lie outside the scope of the Supreme Court's
remand, but also because defendant has not advanced any
separate arguments for doing otherwise. We therefore reaf-
firm our previous decision in this case in all particulars.

The court's decision in Williams v. Philip Morris
Inc., 340 Or 35, 127 P3d 1165 (2006), is adhered to. The deci-
sion of the Court of Appeals is affirmed. The judgment of the
circuit court is reversed, and the case is remanded to the cir-
cuit court for further proceedings.

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# APPENDIX

The text of Philip Morris's proposed jury instruction
No. 34 reads as follows (emphases in original):

"DEFENDANT'S REQUESTED
JURY INSTRUCTION NO. 34

# "PUNITIVE DAMAGES - PRODUCTS LIABILITY

"I will now instruct you on punitive damages. If you
find that Marlboro cigarettes are a defective product or that
the defendant is guilty of negligence or fraud, you must con-
sider whether to award punitive damages.

"Punitive damages may be imposed only if the plain-
tiff has satisfied you by clear and convincing evidence that
the defendant, in engaging in the conduct that caused Jesse
Williams' death, has shown a reckless and outrageous indif-
ference to a highly unreasonable risk of harm and has acted
with a conscious indifference to the health, safety and wel-
fare of others.

"Clear and convincing evidence is evidence of such
weight and quality that, even when considered in light of any
conflicting evidence, leaves you with a firm conviction that
the truth of the matter in question is highly probable.

"You have the discretion to award, or not to award,
punitive damages. In the exercise of that discretion, you may
consider whether the imposition of punitive damages is nec-
essary to punish and deter similar misconduct by defendant
and others in the future.

"In considering punitive damages, I remind you that
the sale of cigarettes has in itself been at all times a lawful
activity in this State. You are not to punish the defendant on
account of the propensity of cigarettes to cause illness and
death for some of those who smoke them, or the defendant's
knowledge of that propensity, except to the extent that the
risks from smoking were not a matter of general public
knowledge but were known to and unlawfully misrepre-
sented by the defendant.

"In determining whether the defendant's conduct is
such as to subject it to punitive damages, you must not allow

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your decision to be influenced by the defendant's financial
condition, corporate status, or place of business.

"If you determine that some amount of punitive
damages should be imposed on the defendant, it will then be
your task to set an amount that is appropriate. This should
be such amount as you believe is necessary to achieve the
objectives of deterrence and punishment. While there is no
set formula to be applied in reaching an appropriate amount,
I will now advise you of some of the factors that you may wish
to consider in this connection.

"(1) The size of any punishment should bear a reasonable
relationship to the harm caused to Jesse Williams by
the defendant's punishable misconduct. Although you
may consider the extent of harm suffered by others in
determining what that reasonable relationship is, you
are not to punish the defendant for the impact of its
alleged misconduct on other persons, who may bring
lawsuits of their own in which other juries can resolve
their claims and award punitive damages for those
harms, as such other juries see fit.

# "[ALTERNATIVE]

"(1) You are not to punish the defendant for the
impact of its conduct on individuals in other
states.

"(2)
The size of the punishment may appropriately reflect
the degree of reprehensibility of the defendant's con-
duct-that is, how far the defendant has departed
from accepted societal norms of conduct. Factors that
you may find to bear upon the degree of reprehensibil-
ity include:

"(a) The likelihood at the time that serious harm
would arise from the defendant's misconduct,
beyond the harms generally understood to
inhere in cigarette smoking;

(b) The degree of the defendant[']s awareness of
that likelihood;

"(c) The degree to which the defendant was moti-
vated by a desire to obtain illicit profits from its
misconduct;

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'(d) The duration of the misconduct and any conceal-
ment of it;

"(3)
In determining how much punishment is necessary to
achieve the goal of appropriate deterrence, you may
consider the extent to which the obligation to pay com-
pensatory damages will suffice to cause defendant and
others to refrain from similar misconduct in the
future.

"(4)
Finally, you may also consider the defendant's finan-
cial condition as part of the process of arriving at an
appropriate punishment. However, you may not pun-
ish the defendant simply because it is large. Rather,
the paramount consideration remains the degree of
reprehensibility of any misconduct and the extent of
any harm caused by such misconduct."