The plaintiff won a $1.65 million compensatory award plus $10 million in punitive damages, in Merrick v. Paul Revere Life Ins. Co., 2007 U.S. App. LEXIS 20959 (9th Cir. Aug. 31, 2007). The principal issue on appeal was whether the jury was properly instructed on punitive damages in light of Philip Morris USA v. Williams, 127 S. Ct. 1057 (2007) — specifically, whether the jury was properly instructed as to the relevance of injury to non-parties. There was a critical threshold issue, however. The appellants’ opening brief argued for judgment as a matter of law on the punitive damages issue, but they had failed to move under Rule 50 for a JMOL on this issue. Therefore, it was unappealable on that ground. In their reply brief, the appellants conceded the point and asked the Court to construe their argument as an appeal of their Rule 59 motion for a new trial, which did raise the punitive damages arguments. But the Ninth Circuit is a strict adherent to the rule that: ‛Generally, issues raised for the first time in a reply brief are considered waived.“ Nonetheless, given the absence of prejudice to the appellee (the argument was the same under Rule 59 as under Rule 50), the Court exercised its discretion to entertain the punitive damages issue. One major difference, however, was the differing standard of review under Rule 59 as opposed to Rule 50: ‛Whereas a properly presented Rule 50 question is reviewed de novo, we give ‘great deference’ to the trial court's denial of a motion for a new trial, and will reverse ‘for a clear abuse of discretion only where there is an absolute absence of evidence to support the jury's verdict.’“

Under Philip Morris USA v. Williams, the jury may consider the defendants’ conduct as to non-parties on the issue of reprehensibility, but not in calculating its damages award. That is, as construed by the Ninth Circuit in Merrick, a plaintiff may offer evidence of harm to other victims to show the reprehensibility of a defendant's conduct in this case, but ‛may not go 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." 127 S.Ct. at 1063-64. Where there is a ‛significant“ risk that the jury might do so — a risk generated, for example, by ‛the sort of evidence that was introduced at trial or the kinds of argument the plaintiff made to the jury“ —a court, upon request, must "provide some form of protection" to assure that juries "are not asking the wrong question." Id. at 1064, 1065.

The defendants in Merrick had proffered a misleading jury instruction, asking the District Judge to charge the jury that: ‛In deciding whether or in what amount to award punitive damages, you may consider only the specific conduct by Defendants that injured Plaintiff.“ That was clearly wrong, because it would have precluded the jury’s consideration of such evidence on the issue of reprehensibility. That did not, in the Ninth Circuit’s view, waive the defendants’ right to a proper jury instruction:

The punitive damages instruction [as given] stated that "[y]ou may in your discretion award such damages, if, but only if, you find by a clear & convincing evidence that said defendant was guilty of oppression fraud or malice in the conduct upon which you base your finding of liability." The verdict form further asked whether the insurer "act[ed] with oppression, fraud, or mailice [sic], express or implied, in its dealings with plaintiff such to justify an award of punitive damages." At most, these instructions address liability for punitive damages but do not prevent the jury from setting an amount of damages that includes direct punishment for harm to others.... A jury instruction, like that presented here, that allows (or does not preclude) direct punishment for nonparty harm runs afoul of this prohibition and invites precisely the improper jury speculation — -as to, for example, the number of nonparty victims or the extent of their injury — that Williams sought to avoid....

More important, the instructions given did not provide the jury with clear direction regarding the proper and improper uses of Merrick's "bad company" evidence.... [T]he jury was permitted to consider this evidence when determining the reprehensibility of the insurers' actions toward Merrick, but it could not directly punish the defendants for harm to victims other than Merrick. When evidence is admissible for a limited purpose, the opponent is entitled to a limiting instruction admonishing the jury not to use the evidence for a forbidden purpose. Fed. R. Evid. 105.... No such instruction issued here. In light of Williams' statement that it is "constitutionally important for a court to provide assurance that the jury will ask the right question, not the wrong one," 127 S. Ct. at 1064 (emphasis added), we conclude that the instruction issued in this case was inadequate

New trial ordered on punitive damages only.