This post is from the non-Reed Smith side of the blog.
It can be difficult to have a completely consistent position on choice of law issues. That’s because state law varies and sometimes you’ll find you are better served by the law of the forum state, other times by the law of the plaintiff’s home state, and sometimes by the law of the defendant’s home state. The issue, the facts, and the law all drive the parties’ preferences.
Typically, however, 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. But what law should apply to punitive damages? This is where things can get a little fuzzy. On punitive damages, the balance of interest between plaintiff’s residence and defendant’s residence is more even – making the analysis trickier and also affording more opportunity to craft an argument for the law of the state that is more defense-friendly.
So it should come as no surprise that there are quite a few DDL blog posts on cases in which New Jersey resident defendants argue that New Jersey law should apply for punitive damages. (See choice of law posts and punitive damages posts). Under the New Jersey Products Liability Act (NJPLA), punitive damages are generally prohibited in drug and device cases:
Punitive damages shall not be awarded if a drug or device. . . which caused the claimant’s harm was subject to premarket approval or licensure by the federal Food and Drug Administration . . . and was approved or licensed. . . . However, where the product manufacturer knowingly withheld or misrepresented information required to be submitted under the agency’s regulations, which information was material and relevant to the harm in question, punitive damages may be awarded.
N.J.S. §2A:58C-5(c). So, if the drug or device is approved – no punitive damages in New Jersey. The limited exception – misrepresentation to the agency – has been held to be preempted. See McDarby v. Merck & Co., 401 N.J. Super. 10 (2008). Based on this, in cases involving New Jersey defendants, there is often an argument that while the law of plaintiff’s home state should govern liability, New Jersey law should govern punitive damages. But what does a plaintiff do if his home state also does not allow punitive damages?
That was the dilemma that faced plaintiff in Baughn v. Johnson & Johnson, 2015 WL 4759151 (W.D. Wash. Aug 12, 2015). Plaintiff alleged he sustained injury from ingesting Levaquin. Id. at *1. His complaint asserted three claims: products liability under the Washington Product Liability Act (WPLA); fraud; and fraudulent concealment. Id. Defendant moved to dismiss plaintiff’s request for punitive damages and his fraud claims.
In Washington, punitive damages are only available if authorized by statute and the WPLA does not provide for punitive damages. Id. at *2. Nor does any statute authorize punitive damages for fraud claims. Id. Forced to concede the issue under Washington law, plaintiff decided to try his luck with New Jersey law – defendant’s home state. But, as stated above, while the NJPLA has a punitive damages provision – it provides for their exclusion. Therefore, the court concluded that there was no actual conflict between the laws of Washington and New Jersey on punitive damages – plaintiff could not recover under either state’s law. Id. at *2-3. Without an actual conflict, the court applied Washington law to dismiss the claim, but the result would have been the same under either.
While this may not be the only case where the plaintiff argued for the application of New Jersey punitive damages law – it certainly does not have much company. Plaintiff must have been trying to make a case under the NJPLA fraud-on-the-FDA exception (notwithstanding preemption) based on his fraud and fraudulent concealment allegations. But even putting preemption aside, plaintiff didn’t sufficiently plead those claims to withstand a Rule 12 challenge, let alone to serve as a basis for punitive damages. Plaintiff alleged the drug’s side effects were concealed and the warning label misled him and his prescribing physician. Id. at *3. However, the complaint does not contain the content of the alleged misrepresentations, when and where they were supposedly made, when and where they were supposedly relied upon, or to whom they were supposedly made. Further, plaintiff grouped the defendants together and did not specify each defendant’s role in the alleged fraud. Without particulars, the complaint does not comply with the heightened pleading standards for fraud. Id.
Plaintiff is being given the opportunity to amend his fraud claims but his punitive damages claims are dismissed with prejudice. We bet the next time we are talking about New Jersey punitive damages law, it won’t be plaintiff pushing for it.