Here's my interpretation:
IANAL, but I worked for one for 5 years.
The judgment against defendants on the negligence count is affirmed.
Defendants are still "guilty." They will be paying the 130,000 for therapy and treatment, or whatever it was to begin with.
The judgment against Watchtower on the cause of action for punitive damages is reversed...
This whole sentence sounds weird and is poorly written, but here's what it sounds like to me, and I don't think it's good news. It is my opinion that this means that Watchtower actually won in reversing the punitive damages.
...with directions to enter judgment for Watchtower on punitive damages.
The decision of the court was to find in favor of the Watchtower on punitive damages. If Watchtower was to be required to pay punitive damages, it would have been a judgement for the plaintiff, not Watchtower. The sentence reads "...enter judgement for Watchtower." Watchtower was trying to have the punitive damages reversed on appeal, and the judgment was in their favor. (The punitive damages were the ones that rose to the millions of dollars amount, FYI)
The parties are to bear their own costs on appeal.
This last sentence is self explanatory.
Again, I am not a lawyer, but this is how I am interpreting it based off my experience.