WASHINGTON—The Supreme Court on Tuesday overturned a nearly $80-million verdict intended to punish the Philip Morris tobacco company for endangering the lives of smokers, and set limits on how jurors can decide to make big companies pay for wrongdoing.

The court’s 5-4 narrowly written decision said that an Oregon court had improperly let juries calculate the harm done to many in deciding the damages paid to an individual.

The court ruled that the constitution’s due process clause forbids a state to use punitive damages to punish a company for injury that it inflicts upon others who are “essentially, strangers to the litigation,” according to the majority opinion written by Justice Stephen Breyer.

The case was seen at the beginning of the term as one of the most important business decisions the court under the new Chief Justice John Roberts would make, and it was clearly a victory for Phillip Morris and other big companies. It continues the reasoning in the court’s recent rulings that punitive damages—aimed at punishing a company and deterring future wrongdoing—must be proportionate to the wrong committed.

But in sending the case back to Oregon courts for further litigation, the justices sidestepped a decision that industry had most wanted: whether to set a solid cap on how much could be awarded for punitive damages, perhaps based on a specific ratio to the actual damages done to the individual who brought the suit.

So both sides in the case found something to like.

“This is a really important case for the business community, and a big win,” said Robin Conrad, senior vice president of the National Chamber Litigation Center of the US Chamber of Commerce. She said it would be valuable to insurance companies, auto makers, pharmaceutical manufacturers and others who have been hit with huge punitive damages awards in recent years.

But Robert Peck, the Washington lawyer who represented the Oregon smoker’s widow who brought the suit, said the decision “slays a dragon that didn’t exist.” He contended that the jury didn’t calculate its large award on the number of other victims but on the company’s profitability, and predicted that the Oregon courts will “reaffirm” that they “did the right thing.”

It is unclear exactly how the jury decided how much money to award in the case, and confusion at the Supreme Court oral arguments foreshadowed the justices’ ultimate decision. “Isn’t perhaps the better course to send this back to them ... .” suggested Justice David Souter, who voted with the majority to do just that.

The case involved Jesse Williams, a Portland janitor who smoked at least two packs of Marlboros every day for 45 years, and died of lung cancer in 1996. Phillip Morris, now owned by Altria Group, had denied during that time that its cigarettes were addictive and at trial, lawyers for his estate told the jury to consider the damage done to other smokers in Oregon.

The lawyer for Williams’ widow, Mayola, told the jury to “think about how many other Jesse Williamses in the last 40 years in the state of Oregon there have been.”

The jury awarded Mayola Williams $821,000 in compensation, then tacked on the $79.5 million punitive award. (Not all states allow punitive awards; in Oregon, 60 percent of the award goes to the state, Peck said.)

The nearly 100-1 ratio of punitive damages to compensatory damages is far outside the “single-digit” ratio the Supreme Court has suggested in previous cases, but a firm limit has never been set.

The majority opinion issued Tuesday agreed with Williams that the jury could hear evidence of harm to others to show that a company’s conduct was reprehensible, which could increase the punitive damages award.

But Breyer wrote a “jury may go no further than this and use a punitive damages verdict to punish a defendant directly on account of harms it is alleged to have visited on nonparties.”

Dissenting justices said they missed the logic.

The majority “relies on a distinction between taking third-party harm into account in order to assess the reprehensibility of the defendant’s conduct—which is permitted—from doing so in order to punish the defendant ‘directly’—which is forbidden,” wrote Justice John Paul Stevens. “This nuance eludes me.”

The case was sent back to the Oregon Supreme Court, which earlier had upheld the large punitive award. Breyer wrote that the application of the court’s standard may “lead to the need for a new trial, or a change in the level of the punitive damages award.” (The Washington Post)

PHILIPPINE stocks rose for a second day. Philippine Long Distance Telephone Co. (PLDT) gained after the company said it will spend more on expansion this year.

AYALA Land Inc. (ALI), the property development arm of the Ayala Group, said it will borrow 30 percent or roughly P4.9 billion of its P16.2 billion total capital expenditure this year.

SM Prime Holdings Inc. (SM Prime) reported a net income of P5.45 billion last year, up 10 percent from 2005, the company said Wednesday. Its operating revenues grew 21 percent at P13.2 billion in the same comparable period.

WASHINGTON—The Supreme Court on Tuesday overturned a nearly $80-million verdict intended to punish the Philip Morris tobacco company for endangering the lives of smokers, and set limits on how jurors can decide to make big companies pay for wrongdoing.

Ayala Corp. grossed P395.375 million from the sale of 145,000 shares in Globe Telecom Inc. at P1,355 each on February 12, 2007 and another 145,000 at P1,375 each on February 13, 2007. The sale reduced AC’s holdings in its telecom unit to 45,042,252 shares, or 34.10 percent as of January 13, 2007 from 45,332,252 shares on September 1, 2006.