Williams v. RJ Reynolds Tobacco Company

The State of Oregon need not be a party to a claim, or hold an interest in a claim, because its right to a 60% share of punitive damages results from the operation of law, and not from any claim it is involved with. Thus, because the state's right to 60% of punitive damages does not constitute a claim, it is not a "released claim" subject to the Master Settlement Agreement.

Williams was a smoker of cigarettes purveyed by RJ Reynolds Tobacco Company (RJ Reynolds). In 1997 Williams died of smoking-related causes. Williams' estate sued RJ Reynolds for fraud, negligence, and later, punitive damages. Williams’ estate and the state brought suit again against RJ Reynolds for its failure to pay 60%, per ORS 31.735, of the $79.5 million in punitive damages awarded against them in 1999. Williams and the state appealed the trial court's judgment that neither party was entitled to its 60% share of the punitive damages because the state released its statutory right when it entered into a settlement agreed to the Master Settlement Agreement (MSA). The Oregon Supreme Court held that the states statutory right was not a "released claim," as defined in the MSA. In reaching this conclusion, the Court asked whether the provision in question was ambiguous, and the nature of the state's interest when it agreed to the MSA relative to Williams claim. In this case, the state need not be a party to a suit because its claim to punitive damages arose as an operation of law. Moreover, as to whether or not the state's claim was a "released claim," the Court concluded that the MSA only released claims "directly or indirectly based on, arising out of or in any way related" to tobacco related claims. Reversed and remanded