Don’t expect plaintiffs to skip and
jump at today’s rulings.
Today, the returning Justices issued two important business law decisions. The first involved a "predatory buying" theory of antitrust liability. Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co., Inc., No. 05-381 (U.S. Feb. 20, 2007). The Court held, unanimously, that a plaintiff alleging predatory buying must show both that the competing buyer sold what it bought at a loss and that it stood a dangerous probability of recouping the loss later. The Court thus adopted the "predatory pricing" requirements of Brooke Group Ltd. v. Brown & Williamson Tobacco Co., 509 U.S. 209 (1993), for analogous predatory buying cases.
In the second decision, a 5-4 Court ruled that juries may not "directly" consider harm to non-parties in setting punitive damages. Philip Morris USA, Inc. v. Williams, No. 05-1256 (U.S. Feb. 20, 2007). The case involved claims that a cigarette company misled the plaintiff about the risks of smoking. The jury awarded less than $1 million in actual damages but $79.5 in punitives. The Court concluded:
In our view, the Constitution’s Due Process Clause forbids a State to use a punitive damages 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.
The majority emphasized juries may consider harm to non-parties in determining the "reprehensibility" of the defendant’s conduct but may not base the amount of its award "directly" on such injuries.
Blawgletter doesn’t know persactly what "cost" the plaintiff must price below (Weyerhaueser) or what "directly" considering harm to others means (Philip Morris) but does note that defendants won in both cases.
Note: The previous version of this post described the Philip Morris decision as 6-3. Our bad.