Instead, the Oregon Supreme Court avoided applying the US Supreme Court's federal constitutional analysis and announced that it was upholding the $79.5 million award solely on state law grounds.
"It is truly a game of gotcha that just nullifies the defendant's due process rights," Philip Morris's lawyer Stephen Shapiro told the justices.
Williams' lawyer Robert Peck countered that the US Supreme Court's order was conditional and that the Oregon high court had relied on a 92-year-old state law rule supporting its decision.
Mr. Peck said state courts retain the flexibility to identify a procedure under state law to address the due process issue raised by the US Supreme Court.
Justice Stephen Breyer said that his thinking about the case had evolved. He said when the appeal was first presented he considered the Oregon high court's actions a "run-around." He added, "I'm not sure I think that now."
Later in the argument, Justice Breyer asked why the Oregon high court hadn't raised the state law issue earlier in the case "and saved everybody a lot of trouble."
Justice Antonin Scalia asked if Peck was arguing that the Supreme Court's remand order to the Oregon court was in error. He added, "If you say it's in error, my next question is going to be is it up to a state court to sit in judgment about whether our remand orders are in error or not?"