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We have a soft spot in our heart for the more technical, lawyerly parts of what we do.  Any nimrod on the street can lob in his or her two cents on freedom of speech or search and seizure, but it takes a legal craftsman to talk sensibly about choice of law, or jurisdictional or procedural issues.  Sometimes we here on the blog approach such issues warily. We feel the need for circumspection, since we do not know which side of the issue we might want to argue in some future case.  At the same time, the likelihood of repeat transactions, where you could be on either side of the transaction, should theoretically push rules toward a rational middle-ground.

On choice of law, we tend to favor the notion that liability issues should be governed by the law of the plaintiff’s residence.  That is where the alleged treatment and injury occurred, and those factors are important in any choice of law analysis.  Such a rule also imposes some limit on blatant forum-shopping by plaintiffs.  Further, such a rule also makes aggregation (class actions, consolidation) less likely because the different plaintiffs will have different laws applying to their claims. Class actions are no longer much of a threat in personal injury cases, but we still find the vexing presence of varying state laws to be occasionally useful. But what law should apply to punitive damages?

In Williams v. Novartis Pharmaceuticals Corp., 2014 U.S. Dist. LEXIS 55352 (S.D. Ohio April 21, 2014), we are treated to a rational choice of law analysis.  It is yet another Aredia-Zometa case.  Some day, Hollingsworth or one of the luminaries on that defense team will be able to author an entire hornbook on all of the issues that have cropped up in that litigation.  Williams was actually a couple of cases, both originally filed in the United States District Court for the District of Columbia.
The cases ended up in the Southern District of Ohio, but the parties agreed that the original filing meant that the District of Columbia’s choice of law rules  applied.  (As we have mentioned before, that procedural wrinkle could conceivably incite forum-shopping.)   The parties also agreed that Ohio law governed the plaintiffs’ claims with respect to issues of liability and compensatory damages, because the plaintiffs were Ohio residents.  Where the parties parted company was on choice of law for punitive damages.

The defendant filed a motion to find that punitive damages were unavailable. We, of course, would grant that motion the moment after the clerk stamped it, but actual courts feel the need to entertain some analysis and argument. The plaintiffs sought punitive damages based on alleged corporate misconduct. The defendant argued that New Jersey law applied and, because the drugs are FDA-approved, and because the FDA has made no finding of fraud or misrepresentation, New Jersey law foreclosed punitive damages. The plaintiffs argued that Ohio law applied, and that genuine issues of material fact foreclosed dismissal of the claims for punitive damages.

The court determined which law applied by analyzing the competing “governmental interests” and determining which state had the most significant relationship to the issue. Courts generally consider four factors: “(a) the place where the injury occurred; (b) the place where the conduct causing the injury occurred; (c) the domicile, residence, nationality, place of incorporation and place of business of the parties; and (d) the place where the relationship is centered.” Williams, 2014 U.S. Dist. LEXIS 55352 at *4. The New Jersey and Ohio statutes governing punitive damages in pharmaceutical cases are similar, but not identical. Both rule out punitive damages for drugs approved by the FDA. Yay. But both also contain an exception allowing for punitive damages in cases of“fraud-on-the-FDA.” Boo. Then again, courts in both states have held that these statutory exceptions are impliedly preempted by the federal Food, Drug and Cosmetic Act when FDA has not found that the defendant obtained approval through fraud or misrepresentation. Yay.

The plaintiffs in Williams argued that juries in New York and Florida, in two other cases involving A-Z, found that the defendant withheld material information from the FDA. The answer to that is: (1) so what, and (2) so what. First, a “fraud-on-the-FDA” would be viable, if ever, only if the FDA itself makes a finding that the drug manufacturer engaged in fraud or misrepresentation. A random jury finding in a random jurisdiction must not be permitted to supplant a federal regulatory scheme. Second, what part of Buckman preemption do plaintiffs fail to understand?

To our eyes, it makes no difference whether New Jersey or Ohio law governs punitive damages. Under either regime, the plaintiffs’ punitive damages should go nowhere. But the plaintiffs said they spotted a difference. Whereas New Jersey law broadly prohibits an award of punitive damages if the drug is FDA-approved, Ohio grants immunity from punitive damages only if the drug was also “manufactured and labeled in relevant and material respects” in accordance with the terms of the FDA approval. Id. at *5. The plaintiffs argued that there are genuine issues of material fact concerning whether the defendant complied with the relevant FDA manufacturing and labeling requirements. Care to take a guess how the plaintiffs sourced those issues of material fact? The plaintiffs pointed to that noted expert in fact-and-fault-finding, Dr. Parisian.

Typical. Unfortunately, the plaintiffs failed to cite to any particular portion of Dr. Parisian’s testimony.   Also typical.  Dr.
Parisian’s expert testimony is often an exercise in saying everything and nothing simultaneously.

Even assuming that Dr. Parisian actually said something concrete and specific (besides the usual litany that the company did not follow Quality Systems, did not tell the FDA and doctors everything, and promoted the product with a tad too much vigor) the plaintiffs did not manage to allege that the defendant “failed to manufacture the drugs in accordance with the terms of the FDA approval, or that the labels on the drugs varied in any material way from the labels approved by the FDA.”  Id. at * 11.   Rather, the plaintiffs’ allegations focus on the defendant’s “conduct prior to obtaining FDA approval, and on its failure to comply with post-marketing requirements.  Such allegations are akin to claims of ‘fraud-on-the-FDA,’ and would be impliedly preempted.”  Id.

But just in case it really did matter whether New Jersey or Ohio law applied, the plaintiffs lost there, too.  The alleged corporate misconduct giving rise to the claims for punitive damages occurred in New Jersey, where the company had its principal place of business.  It is there that the company “allegedly failed to conduct adequate clinical trials, failed to disclose material information the FDA, and made decisions about the warnings that would be placed on the drug labels.”  Id. at *14.  The court held that when “a plaintiff seeks punitive damages against a manufacturer in a products liability case based on a ‘failure to warn’ theory, the focus, for purposes of choice-of-law analysis, needs to be on the place where the
defendant’s alleged corporate misconduct occurred.”  Id. at *18-19.  That rule makes sense on policy grounds, inasmuch as the company had a “justified expectation” that New Jersey law would govern the question of whether punitive damages are warranted for its conduct within that state, and application of New Jersey law to the issue of punitive damages would promote certainty, predictability, and uniformity of result.  Id. at *20.  As alluded to above, that uniformity can sometimes have troublesome consequences – but not here.

Yay for New Jersey.  Several of the scriveners on this blog grew up in New Jersey.   The place gets a bum rap.  But any place that was the home of Frank Sinatra, Bruce Springsteen, Chelsea Handler, Stephen Crane, David Chase, Patti Smith, Grover Cleveland, the Football Giants, the world’s best tomatoes, and a statute that puts the kibosh on punies has plenty of cause for pride.