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You Be the Judge: Boeken v Philip Morris Incorporated1
Facts: In the mid-1950s, Richard Boeken began smoking Marlboro cigarettes at the age of 10.
Countless advertisements, targeted at boys aged 10 to 18, convinced him and his friends that the
“Marlboro man” was powerful, healthy and manly. Eventually, Richard changed to “Marlboro Lite”
cigarettes but continued smoking into the 1990s, when he was diagnosed with lung cancer. He filed suit
against Philip Morris, the cigarettes manufacturer, for fraud and other torts. He died of cancer before
the case was concluded.
Evidence at trial demonstrated that by the mid-1950s, scientists uniformly accepted that cigarette
smoking caused lung cancer. However, about the same time, Philip Morris and other tobacco companies
began a decades-long campaign to convince the public that there was substantial doubt about any link
between smoking and illness. The plaintiffs also demonstrated that tobacco was physically addictive,
and that Philip Morris added ingredients such as urea to its cigarettes to increase their addictive power.
Boeken testified that in the late 1960s he saw the Surgeon General warnings about the risk of smoking
but trusted the cigarette company’s statements that smoking was safe. By the 1970s he tried many
times, and many cures, to stop smoking but always failed. He finally quit just before surgery to remove
part of his lung but resumed after the operation.
The jury found Philip Morris liable for fraudulently concealing that cigarettes were addictive and
carcinogenic. It awarded Boeken $5.5 million in compensatory damages, and also assessed punitive
damages—of $3 billion. The trial judge reduced the punitive award to $100 million. Philip Morris
appealed.
You Be the Judge: Was the punitive damage award too high, too low or just right?
Argument for Philip Morris:
The court should substantially reduce the $100 million punitive award because it constitutes an
"arbitrary deprivation of property".. The Supreme Court has indicated that punitive awards should not
exceed compensatory damages by more than a factor of nine. The jury awarded Mr. Boeken $5.5
million in compensatory damages, which means that punitive damages should absolutely not exceed
$49.5 million. We argue that they should be even lower.
Cigarettes are a legal product, and our packages have displayed the Surgeon General's health
warnings for decades. Mr. Boeken's death is tragic, but his cancer was not necessarily caused by
Marlboro cigarettes. And even if cigarettes did contribute to his failing health, Mr. Boeken chose to
smoke throughout his life, even after major surgery on one of his lungs.
Argument for Boeken: The Supreme Court says that "few" cases may exceed the 9-to-1 ratio, but that
"the precise award in any case must be based upon the facts and circumstances of the defendant's
conduct and the harm to the plaintiff." Phillip Morris created ads that targeted children, challenged
clear scientific data that its products caused cancer and added substances to its cigarettes to make them
more addictive. Does it get worse than that?
As for harm to the plaintiff, he died a terrible death from cancer. Philip Morris cigarettes kill
200,000 American customers each year. The defendant's conduct could not be more reprehensible.
Philip Morris' weekly profit is roughly $100 million dollars. At a minimum, the court should keep the
punitive award at that figure. But we ask that the court reinstate the jury's original $3 billion award.
Question: On what theory did Boeken sue Philip Morris?
Question: How did he claim Philip Morris committed fraud?
Answer: He claimed that Philip Morris advertised its product in a misleading way knowing that
Question: Boeken testified that he read the Surgeon General’s warning about smoking in the
1960’s, so how can he argue fraud?
1 127 Cal. App.4th 1640, 26 CalRptr.3d 638, California Court of Appeals, 2005.
Answer: The court held that although Boeken read the warning, he relied on the statements made
Question: Why did the court hold that these facts justified such a large award of punitive
damages?
Answer: Because it held that Philip Morris would not have achieved the same level of economic
Question: $100 million is a lot of money!
Answer: Yes it is—but the court noted that the deterrent effects of punitive damages will not be
Business Torts
Tortious interference with business relations involves the defendant harming an existing contract or a
prospective relationship that has a definite expectation of success.
Tortious interference with a contract exists only if the plaintiff can establish the following four
elements:
• There was a contract between the plaintiff and a third party;
• The defendant knew of the contract;
• The defendant improperly induced the third party to breach the contract or made performance of
the contract impossible; and
• There was injury to the plaintiff.
“Tortious interference with a prospective advantage” is an awkward name for a tort that is simply a
variation on interference with a contract. The difference is that, for this tort, there need be no contract;
the plaintiff is claiming outside interference with an expected economic relationship. Obviously, the
plaintiff must show more than just the hope of a profit.
Case: Carvel v Noonan2
Facts: For decades, Carvel sold its ice cream only through franchised stores. However, a decline in
revenues caused the company to begin selling its product in supermarkets. That effort expanded
quickly, but many of the franchised stores (franchisees) went out of business. Franchisees filed suit,
claiming tortious interference with a prospective advantage. In particular, the plaintiffs argued that
Carvel undersold them in supermarkets, and issued coupons only redeemable there. The case reached
New York’s highest court.
Issue: Had Carvel committed tortious interference with a prospective advantage?
Holding: Judgment for Carvel. In the words of the court:
The franchisees' tort claim is that Carvel unlawfully interfered with the relationships between the
franchisees and their customers. The franchisees do not claim that the customers had binding
contracts that Carvel induced them to breach; they allege only that, by implementing its
supermarket program, Carvel induced the customers not to buy Carvel products from the
franchisees. The juries have found that Carvel did so induce customers, and the question for us is
whether that inducement was tortious interference under New York law.
Inducing breach of a binding agreement and interfering with a nonbinding "economic relation" can
both be torts, but that the elements of the two torts are not the same. Where there has been no
breach of an existing contract, but only interference with prospective contract rights, however,
2 3 N.Y.3d 182, 785 N.Y.S.2d 359, 818 N.E. 2d 1100 New York Court of Appeals, 2004
plaintiff must show more culpable conduct on the part of the defendant. The implication is that, as
a general rule, the defendant's conduct must amount to a crime or an independent tort.
The franchisees’ claim that Carvel used wrongful economic pressure fails for two reasons. First, it
is ill-founded because the economic pressure that must be shown is not, as the franchisees assume,
pressure on the franchisees, but on the franchisees' customers. All Carvel did to the franchisees'
customers was to make Carvel goods available in supermarkets at attractive prices. Second,
Carvel’s activities do not amount to the sort of extreme and unfair "economic pressure" that might
be "wrongful." The crux of the franchisees' complaint is that Carvel distributed its products
through competitive channels, to an extent and in a way that was inconsistent with the
franchisor-franchisee relationship. The relationship between franchisors and franchisees is a
complex one. It does not preclude all competition; and the extent to which competition is allowed
should be determined by the contracts between the parties, not by courts or juries seeking after the
fact to devise a code of conduct.
Question: On what theory did the franchisees sue Carvel?
Question: What must a plaintiff prove to win on this theory?
Answer: The plaintiff must prove that (1) it had a definite and reasonable expectation of obtaining
Question: What does “economic advantage” mean?
Question: How does this tort differ from tortious interference with contract?
Answer: The primary difference is that in tortious interference with contract the plaintiff had—
Question: What are the elements of tortious interference with contract?
Answer: (1) There was a contract between the plaintiff and a third party, (2) the defendant knew
Question: In the Carvel case, what was the basis for the plaintiffs’ claim of economic advantage?
Answer: The plaintiffs were Carvel franchisees—owners of Carvel-branded stores that sold
Question: What did Carvel do to upset the plaintiffs?
Answer: Carvel started to sell its products through other retail outlets such as supermarkets
Question: Did the court agree that this conduct amounted to tortious interference with prospective
advantage?
Answer: No, for two reasons:
(1) Carvel did not exert any wrongful economic pressure on a third-party—in this case,
(2) Carvel’s activities were not extreme and unfair, merely competitive. The relationship
Lanham Act
The Lanham Act prohibits false statements in commercial advertising or promotion.
Multiple Choice Questions
1. Jane writes an article for a newspaper reporting that Ann was arrested for stealing a car. The story is
entirely false. Ann is not a public figure. Which of the following torts has Jane committed?
(a) Ordinary slander
(b) Slander per se
(c) Libel
(d) None of the above
2. Refer to Question 1. If Ann decides to sue, she ____ have to show evidence that she suffered an
injury. If she ultimately wins her case, a jury ____ have the option to award punitive damages.
(a) will; will
(b) will; will not
(c) will not; will
(d) will not; will not
3. Sam sneaks up on Tom, hits him with a baseball bat, and knocks him unconscious. Tom never saw
Sam coming. He wakes up with a horrible headache. Which of the following torts has Sam
committed?
(a) Assault
(b) Battery
(c) Both A and B
(d) None of the above
4. Imagine a case in which a jury awards compensatory damages of $1 million. If this is not a
maritime case, a jury would rarely be allowed to award more than ____ in punitive damages.
(a) $1 million
(b) $3 million
(c) $9 million
(d) $10 million
(e) $25 million
5. Al runs a red light and hits Carol's car. She later sues, and claims the following losses:
$10,000—car repairs
$10,000—medical expenses
$10,000—lost wages (she could not work for two months after the accident)
$10,000—pain and suffering
If the jury believes all of Carol's evidence and she wins her case, how much will she receive in
compensatory damages?
(a) $40,000
(b) $30,000
(c) $20,000
(d) $10,000
(e) $0
Case Questions
1. Lou DiBella was an executive responsible for programming boxing shows on HBO cable network.
DiBella signed Bernard Hopkins, the then–middleweight world boxing champion, to participate in
a fight televised by HBO. After DiBella’s departure from the network, he and Hopkins entered into
an agreement in which Hopkins paid $50,000 for DiBella’s promotional services. Months later,
Hopkins publicly accused DiBella of taking bribes and “selling” spots in HBO fights, calling him
greedy, filthy, and unethical. DiBella sued Hopkins for libel. What did DiBella have to prove to be
successful in his claim?
Answer: Based on DiBella v. Hopkins, 403 F.3d 102 (2d Cir.), cert. denied, 546 U.S. 939 (2005).
The district court found for DiBella. It found he was a public figure by virtue of his success in
2. You are a vice-president in charge of personnel at a large manufacturing company. In-house
detectives inform you that Gates, an employee, was seen stealing valuable computer equipment.
Gates denies the theft, but you believe the detectives and fire him. The detectives suggest that you
post notices around the company, informing all employees what happened to Gates and why. This
will discourage others from stealing. While you think that over, a phone call from another
company’s personnel officer asks for a recommendation for Gates. Should you post the notices?
What should you say to the other officer?
Answer: These are difficult problems, which a manager must think through carefully. Negative
statements can lead to a defamation lawsuit. If you have irrefutable proof that Gates did steal, you
are probably on safe ground. But if you doubt your ability to prove his theft, you must be very
3. Caldwell was shopping in a K-Mart store, carrying a large purse. A security guard observed her look
at various small items such as stain, hinges, and antenna wire. On occasion she bent down out of
sight of the guard. The guard thought he saw Caldwell put something in her purse. Caldwell
removed her glasses from her purse and returned them a few times. After she left, the guard
approached her in the parking lot and said that he believed she had store merchandise in her
pocketbook but was unable to say what he thought was put there. Caldwell opened the purse, and
the guard testified he saw no K-Mart merchandise in it. The guard then told Caldwell to return to
the store with him. They walked around the store for approximately 15 minutes, while the guard
said six or seven times that he saw her put something in her purse. Caldwell left the store after
another store employee indicated she could go. Caldwell sued. What kind of suit did she file, and
what should the outcome be?
Answer: Caldwell sued for false imprisonment. The jury found in her favor, and the Court of
Appeals affirmed. Caldwell v. K-Mart, 306 S.C. 27, 410 S.E.2d 21, 1991 S.C. App. LEXIS 135
(S.C. Ct. App.1991). From this evidence, a finder of fact could draw various inferences about
4. Tata Consultancy of Bombay, India, is an international computer consulting firm. It spends
considerable time and effort recruiting the best personnel from India’s leading technical schools.
Tata employees sign an initial three-year employment commitment, often work overseas, and agree
to work for a specified additional time when they return to India. Desai worked for Tata, but then
quit and formed a competing company, which he called Syntel. His new company contacted Tata
employees by phone, offering more money to come work for Syntel, bonuses, and assistance in
obtaining permanent resident visas in the United States. At least 16 former Tata employees left
their work without completing their contractual obligations and went to work for Syntel. Tata sued.
What did it claim, and what should be the result?
Answer: Tata sued for interference with contractual rights. The United States District Court
granted summary judgment for Syntel, but on appeal the Court of Appeals reversed. The court
5. Pacific Express began operating as an airline in 1982. It had routes connecting western cities with
Los Angeles and San Francisco and by the summer of 1983 was beginning to show a profit. In
1983, United Airlines tried to enter into a cooperative arrangement with Pacific in which United
would provide Pacific with passengers for some routes so that United could concentrate on its
longer routes. Negotiations failed. Later that year, United expanded its routes to include cities that
only Pacific had served. United also increased its service to cities in which the two airlines were
already competing. By early 1984, Pacific Express was unable to compete and sought protection
under bankruptcy laws. It also sued United, claiming interference with a prospective advantage.
United moved for summary judgment. Comment.
Answer: The U.S. District Court gave summary judgment for United, and the Court of Appeals
affirmed. Pacific Express, Inc. v. United Airlines, Inc., 959 F.2d 814, 1992 U.S. App. LEXIS 5139
(9th Cir. 1992). The primary issue was whether United was genuinely trying to compete, which it
Discussion Questions
1. The Supreme Court limits punitive damages in most cases to nine times the compensatory damages
awarded in the same case. Is this a sensible guideline? If not, should it be higher or lower?
2. You have most likely heard of the Liebeck v. McDonalds case. Liebeck spilled hot McDonald's
coffee in her lap, and suffered third degree burns. At trial, evidence showed that her cup of coffee
was brewed at 190 degrees, and that, more typically, a restaurant's "hot coffee" is in the range of
140 to 160 degrees.
A jury awarded Liebeck $160,000 in compensatory damages and $2.7 million in punitive damages.
The judge reduced the punitive award to $480,000, or three times the compensatory award.
Comment on the case, and whether the result was reasonable.
3. With a national debt in the trillions, people are desensitized to "mere" billions. Stop for a moment
and consider$1 billion dollars. If you had that sum, invested it conservatively, and got a 5% return,
you could spend roughly $1 million dollars a week for the rest of your life without reducing your
principal.
This chapter described three lawsuits with jackpot punitive damages awards. The jury award was
$10 billion in Texaco v. Pennzoil, $5 billion in the Exxon Valdez case and $3 billion in Boeken v.
Philip Morris. Is there any point at which the raw number of dollars awarded is just too large?
Was the original jury award excessive in any of these cases? If so, which one(s)?
4. Many retailers have policies that instruct employees not to attempt to stop shoplifters. Some store
owners fear false imprisonment lawsuits and possible injuries to workers more than losses related
to stolen merchandise.
Are these "don't be a hero" policies reasonable? Would you put one in place if you owned a retail
store?
5. The Supreme Court has defined public figures as those who have “voluntarily exposed
themselves to increased risk of injury by assuming an influential role in ordering society.”
When deciding whether someone is a public figure, courts look at whether this person has
received press coverage, sought the public spotlight, and has the opportunity to publicly
rebut the accusations. Some have argued that social media makes anyone with a public
Facebook profile or a certain number of Twitter followers a public figure. Do you agree?
Should the Court revisit the definition of “public figure” in light of social media?
