In the Oregon case, Mayola Williams, widow of Jesse Williams, a Portland janitor who died of lung cancer in 1996, sued Philip Morris, maker of Marlboros, the brand of cigarette her husband had smoked for 45 years. The jury awarded Williams $821,000, then added a $79.5 million punitive award. Philip Morris, which is now owned by Altria Group, had denied that its cigarettes were addictive, and lawyers for Williams' estate had told jurors to consider the damage done to other smokers in Oregon in their verdict.

In Tuesday's ruling, the justices countered that the Oregon court should not have allowed consideration of any harm done to smokers, except Williams.

Justice Stephen G. Breyer, writing for the majority, said the Constitution bars courts from using punitive awards to penalize companies for injuries they inflict upon others who are "essentially, strangers to the litigation."

Robert S. Peck, the Washington lawyer who represented Mayola Williams, told the Washington Post that the Supreme Court decision "slays a dragon that didn't exist," and predicted that further litigation in Oregon would "reaffirm" the jury's punitive verdict. Peck noted that contrary to the justices finding, the jury had based the award on Philip Morris' profitability and not on the number of victims harmed by smoking.

Exactly how the jury reached the award amount remains unclear and that uncertainty was a key factor in the decision of the high court to overturn the punitive award and send the case back to Oregon for further litigation.

Despite the court's refusal to use the case to set a firm limit on how much can be awarded in punitive damages, as some in the business community had hoped, Tuesdays ruling is being viewed as not only a victory for Philip Morris, but for corporations weary of what they view as run-away punitive awards in state courts.

The New York Times reports that in a note to investors, Christopher R. Growe, an analyst at A. G. Edwards and Sons hailed the ruling as "a positive," that "effectively limits the size of punitive damages in future cases."

Roberts and Bryan were joined in the majority opinion by Justices Anthony M. Kennedy, David H. Souter and Samuel A. Alito. Justices John Paul Stevens, Ruth Bader Ginsburg, Antonin Scalia and Clarence Thomas dissented.

Writing for the minority, Stevens said he had no doubt that earlier Supreme Court decisions limiting punitive awards were correct, but said the Oregon case was different because that state's supreme court had "faithfully applied the reasoning in those opinions to the egregious facts disclosed by this record...no procedural error even arguably justifying reversal occurred at the trial in this case."