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New York Appellate Court Says State Settlement Bars Punitive Awards In Individual Lawsuits 

The court held that "punitive damages claims are quintessentially and exclusively public in their ultimate orientation and purpose." The court concluded that the interest in punitive damages was therefore "previously and appropriately represented by the State Attorney General" in a 1998 settlement brought on behalf of all of the people of the State.

"Philip Morris USA believes the appellate court reached the legally correct decision in barring an individual plaintiff from seeking punitive damages. The ruling still permits the award of compensatory damages in individual cases," said Murray Garnick

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FABIANO v. PHILIP MORRIS, ET. AL. (PDF) 

As is here relevant, that agreement expressly provided for the release of claims ~for past conduct . in any way related. . to (A) the use, sale, distribution, manufacture, development, advertising, marketing or health effects of, (B) the exposure to, or (C) research, statements, or warnings regarding, Tobacco Products," and defined claims expansively, specifically including within the definition ~punitive damages. . accrued or unaccrued." Also expansive was the Agreement's definition of those who were deemed to be releasing claims thereunder. Pursuant to the Agreement, releasors of claims included, in addition to the states, ~persons or entities acting in a parens patriae . private attorney general. . or any other capacity, whether or not any of them participate in this settlement" insofar as such persons or entities sought ~relief on behalf of or generally applicable to the general pUblic in such Settling State or the people of the State, as opposed solely to private or individual relief for separate and distinct injuries." . . .

While it is undoubtedly true that plaintiffs' private claims seeking compensation for personal injury could not have been prosecuted by the Attorney General ~within the parens patriae umbrella" (see Alfred L Snapp & Son, Inc. v Puerto Rico, 458 US 592, 600, 607 [1982]), the claim asserted by them for punitive damages is not similarly disqualified, for punitive damages claims are quintessentially and exclusively public in their ultimate orientation and purpose . . .

the courts of this State have been so adamant that punitive damages are "a social exemplary 'remedy,' [and] not a private compensatory remedy," that the imposition of such damages for private purposes has been held to violate public policy . . .

In view of the decidedly public nature of the interests properly vindicated by a punitive damages claim, plaintiffs' argument that the Master Settlement Agreement limits the preclusive effect of the ensuing judgment is manifestly without merit. While a judgment's preclusive effect may be limited by provisions in an underlying settlement agreement splitting a claim and specifically saving a severed portion of the claim from release (see e.g. Keith v Aldridge, 900 F2d 736, 740 [1990], cert denied sub nom Keith v Rice, 498 US 900 [1990]; and see Restatement [Second] of Judgments § 26 [1] [a] ), no such limitation applicable to claims for punitive damages is discernible from the Master Settlement Agreement. Indeed, the Agreement acknowledges the survival only of claims "for private or individual relief for separate and distinct injuries" and specifically releases claims "seeking relief on behalf of or generally applicable to the general public," expressly including within its enumeration of released claims, claims for "punitive damages . . . . accrued or unaccrued."

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f) Non-Admissibility. The settlement negotiations resulting in this Agreement have been undertaken by the Settling States and the Participating Manufacturers in good faith and for settlement purposes only, and no evidence of negotiations or discussions underlying this Agreement shall be offered or received in evidence in any action or proceeding for any purpose. Neither this Agreement nor any public discussions, public statements or public comments with respect to this Agreement by any Settling State or Participating Manufacturer or its agents shall be offered or received in evidence in any action or proceeding for any purpose other than in an action or proceeding arising under or relating to this Agreement.
Master Settlement Agreement

[T]he courts of this State have been so adamant that punitive damages are "a social exemplary 'remedy,' [and] not a private compensatory remedy," that the imposition of such damages for private purposes has been held to violate public policy.
NY Supreme Court Appellate Panel, in the Fabiano case. The definition of "punitive damages" as a social remedy would seem to render moot the Supreme Court's decision in Williams, that jurors were _not_ to consider the harm to others in deciding punitives.

• Design-Defect Theory Upheld in Tobacco Suit 

The daughter and husband of a woman who died of lung cancer can proceed with their lawsuit against Philip Morris and other tobacco companies under a design-defect theory and can seek punitive damages in New York state court.

Manhattan Supreme Court Justice Charles E. Ramos' decisions in Fabiano v. Philip Morris, 102715/04, to allow the plaintiffs' design-defect and punitive damages claims to go forward were contrary to the findings reached one week ago by Southern District of New York Judge Charles L. Brieant, in Mulholland v. Philip Morris, 05-9908. . . .

In rejecting the tobacco company's motion to dismiss in Fabiano, Justice Ramos said that "the evidence presented by plaintiffs raise issues of fact as to whether defendants acted unreasonably in designing cigarettes by refusing to adopt safer technology, on its claim for negligently designed product."

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