Punitive Damages

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Today’s post is an update to our post from just a few weeks ago regarding McWilliams v. Novartis AG, No. 2:17-CV-14302 (S.D. Fla.). At that time, the court denied summary judgment on plaintiff’s failure to warn claims, but applying New Jersey law dismissed plaintiff’s claim for punitive damages. Since the case involves an FDA-approved prescription drug, having found that New Jersey law applied to the punitive damages claim, the decision to dismiss seems very straightforward to us because according to the New Jersey Products Liability Act (“NJPLA”):

Punitive damages shall not be awarded if a drug or device or food or food additive which caused the claimant’s harm was subject to premarket approval or licensure by the federal Food and Drug Administration.

N.J. Stat. Ann. § 2A:58C-5. But plaintiff didn’t think that was where the story should end, so she filed a motion for reconsideration. Look before you leap. Be careful what you ask for. You don’t always get what you want. Whatever adage you want to use, the bottom line is still no punitive damages.

Plaintiff’s argument was solely focused on the exception to the NJPLA’s ban on punitive damages for prescription drugs. That exception says that the prohibition on punitive damages does not apply “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.” N.J. Stat. Ann. § 2A:58C-5. In its decision last month, the court held that plaintiff had not argued that the exception applies and so the court did not have to address it. McWilliams v. Novartis AG, 2018 U.S. Dist. LEXIS 113862, *22 n.3 (S.D. Fla. Jul. 9, 2018).

In her motion for reconsideration, plaintiff pointed to a footnote in her opposition to the motion for summary judgment in which she did argue that she had adduced evidence of information withheld from or misrepresented to the FDA that made whether the exception applied a triable issue of fact. McWilliams v. Novartis AG, 2018 WL 3637083, *2 (Jul. 31, 2018). That footnote also stated plaintiff’s belief that “punitive damages under New Jersey law are not preempted.” Id. (citations omitted).

The court agreed that it had not considered plaintiff’s argument regarding the punitive damages exception and so granted plaintiff’s request to consider it. Id. And upon considering it, promptly concluded that it was indeed preempted.

If we’re talking about a misrepresentation to the FDA, we’re talking about fraud-on-the-FDA, so we’re talking about Buckman. It feels like a direct line to us. An express even. No stops, twists, turns, or curves. The exception to the punitive damages ban in the NJPLA is a fraud-on-the-FDA claim and Buckman says those are not allowed.  The federal circuit courts that have considered the issue (in the context of similar provisions of Michigan and Texas law) are split with the Fifth and Sixth Circuits finding the exception preempted and the Second Circuit not. Compare Garcia v. Wyeth-Ayerst Labs., 385 F.3d 961 (6th Cir. 2004) and Lofton v. McNeil Consumer & Specialty Pharmaceuticals, 672 F.3d 372 (5th Cir. 2012) with Desiano v. Warner-Lambert & Co., 467 F.3d 85 (2d Cir. 2006), aff’d by equally divided court, 552 U.S. 440 (2008). We discuss the split in more detail here, and we’re guessing we don’t need to tell you on which side of the issue we come down.

Fortunately the court in this case was persuaded that the punitive damages exception is “substantially the same” as fraud-on-the-FDA and therefore preempted by Buckman – noting that that was in fact the position of the majority of courts to have considered the issue. McWilliams, 2018 WL 3637083, *3. Another notch on the Garcia/Lofton side of the divide.

It can sometimes be difficult for us here at the DDL Blog to address “mixed bag” cases. We are quite clear that we are a defense side blog. Love us or hate us – we don’t pull punches. We hoard and covet preemption and learned intermediary wins and treat each one like the gem that it is. We collect and pile up class action denials, no duty cases, and Lone Pine orders. We have scorecards, and cheat sheets and surveys all designed to celebrate defense victories and assist in creating more defense victories. So, when faced with a case that only goes half way, we are left a bit deflated. It’s sort of like seeing a movie where you say the special effects were amazing, but the story – not so much. You can’t trash the movie because there was something decent. But you also aren’t giving it two thumbs up (you know, the standard movie rating before it became based on tomatoes). If a decision is all bad, we trounce it. If a decision is all good, we praise it. If it’s somewhere in the middle, we talk about it.

That about sums up our take on McWilliams v. Novartis AG, 2018 U.S. Dist. LEXIS 113862 (S.D. Fla. Jul. 9, 2018). It is a failure to warn case concerning a drug used to treat leukemia. Id. at *2. Plaintiff suffered a stroke after using the drug to treat his chronic myeloid leukemia for a little over 2 years. Id. at *3. Defendant moved for summary judgment on the grounds of preemption, adequacy of the warning, lack of proximate causation, and no punitive damages under the law of New Jersey. The court denied the first three and granted the motion on punitive damages.

As to preemption, defendant moved that the case should be dismissed based on impossibility preemption arguing that there was clear evidence that the FDA would have rejected a warning on the risk of stroke if defendant had proposed one. In support of its argument, defendant noted multiple occasions on which the issue of arterial and vascular occlusive events was raised with the FDA before the date of plaintiff’s stroke:

  • In 2011, Defendant proposed adding peripheral artery occlusive disease to the Medication Guide and the Adverse Reaction section of the label and the FDA rejected the proposal.
  • Twice in 2013 before plaintiff’s stroke, Defendant told the FDA of labeling revisions required by Canada regarding cerebrovascular events.
  • Later in 2013, the FDA required another drug in the same class to add a boxed warning that included language that “similar rates of serious vascular events have not been observed in several other drugs of this class.”

Id. at *5-6. We view that as a pretty well-documented history of FDA regulatory rejection or inaction related directly to the risk at issue. Perhaps most compelling to us was the fact that when the FDA added a “serious vascular events” warning to another product it specifically said defendant’s product (as one of the others in the class) didn’t have the same risk profile. That feels like clear evidence that the FDA would have rejected that warning if proposed by defendant. The court reasoned that just because the FDA changed one label doesn’t mean that it would not have change another. Id. at *11-12. But that misses the language the FDA used distinguishing the drug that required the warning and the others that did not.

Unfortunately for the defendant in this case, the court compared its regulatory history to the histories set forth in the cases cited where clear evidence was found and concluded that the others had more extensive histories. But is that the correct analysis? Perhaps the evidence of rejection has been stronger in other cases, but that doesn’t make the evidence in the current case any less clear.

Moving on to the actual warning itself, defendant’s first argument was that the risk of stroke was not known or knowable during the time period that plaintiff took the drug. Defendant argued that there were no article or published reports of patients experiencing strokes while taking the drug until 2 adverse events were noted in 2013. Id. at *16. Plaintiffs on the other hand argue that Canadian regulators provided defendant of information regarding an association between the drug and atherosclerotic disease in 2012. That’s not the same thing as strokes, but it was enough for the court to find a disputed issue of fact. Id. at *16-17.

Defendant also challenged proximate cause arguing that plaintiff could not prove that his prescriber would not have prescribed or would have stopped the prescription if he received a different warning. Id. at *17. As evidence of this, defendant relied on the prescriber’s testimony that he continues to prescribe the drug today. Id. Plaintiff countered with the prescriber’s testimony that when he prescribes today he does so “with careful warning.” The court concluded that because the prescriber has now changed his warning to patients, causation remains in dispute. Id. at *19.

That leaves plaintiff’s punitive damages claim which turned on choice of law. Plaintiff is a Florida resident, was prescribed the drug in Florida, and suffered his stroke in Florida. Defendant is a New Jersey corporation. Florida allows claims for punitive damages in prescription drug cases. New Jersey does not. See N.J.S.A 2A:58C-5 (no punitive damages for drugs and devices that are approved by the FDA). There’s a clear conflict. Florida uses the significant relationship test to resolve conflicts. McWilliams, at *23. Which means the court has to decide which state has the most significant relationship to the particular issue. Id.

We are all familiar with the assumption in most personal injury cases that the law of the place of injury applies. And that used to be the beginning, middle, and end of the inquiry. Until about a decade ago, the argument that defendant’s domicile should control for punitive damages didn’t have much support.  It is in defendant’s home state that the conduct that allegedly serves as the basis for punitive damages takes place. While the drug was marketed to doctors in Florida, “the alleged sales and marketing strategies originated from [defendant’s] New Jersey headquarters, and plaintiffs have not identified any way in which those strategies were implemented differently in Florida than any other state.” Id. at *26. According to the Restatement (Second) of Conflict of Laws, when the issue under consideration is about deterrence or punishment, the place where the conduct took place may have the dominant interest. Id. at *25. Since punitive damages are “designed to deter and punish” the defendant rather than compensate the plaintiff that means New Jersey has the more significant relationship and its law applies.

In this case that means no punitive damages. But as we’ve mentioned before, one of the reasons we don’t spend much time on choice of law is the rulings are double-edged and can easily be turned to apply the law of states we don’t like. As we said at the outset, this is a mixed bag case so we’ll take from it what we can get. Good news for New Jersey drug and device companies sued in other states.

We’ve seen the latest affirmance of largely identical verdicts in a consolidated MDL trial in Campbell v. Boston Scientific Corp., ___ F.3d ___, 2018 WL 732371 (4th Cir. Feb. 6, 2018).  We’re not discussing Campbell’s merits today.  For present purposes, suffice it to say that the consolidation- and punitive damages-related rulings aren’t that much different from Eghnayem v. Boston Scientific Corp., 873 F.3d 1304 (11th Cir. 2017), about which we blogged, here.

More generally, both of those cases, as well as the course of the Pinnacle Hip litigation described in several of our prior posts as well as in In re Depuy Orthopaedics, Inc., 870 F.3d 345 (5th Cir. 2017) (“Pinnacle Hip”) (which we discussed, here), illustrate an adverse trend in MDLs.  That trend is to replace the traditional (if anything in MDL practice can be called traditional) bellwether trials with consolidated multi-plaintiff trials including allegations of punitive damages.  We’ve already expressed our jaundiced view towards consolidated product liability trials as inherently prejudicial against defendants, for a variety of reasons discussed in that post.  For obvious reasons, facing punitive damages is likewise not favorable to a defendant in a trial.

As our prior consolidation post discussed at some length, defendants saddled with consolidated trials in personal injury cases used to have reason to expect appellate relief.  Identical or nearly identical verdicts were considered evidence that the jury was either unable to keep multiple individual cases straight or overwhelmed by all the factual evidence, or both.  However, the recent Campbell decision, added to other recent events, makes us believe that the ability to obtain such relief has never been more questionable.

Hence, we offer an idea that has been percolating here ever since the decision in Pinnacle Hip.  We mentioned it at last December’s ACI Drug and Medical Device Litigation conference, and it was received as a good idea by most defense counsel we talked to, so here goes….

Only you can prevent multi-plaintiff consolidated punitive damages trials.

We recognize that such trials cannot always be prevented – this idea wouldn’t have worked in Campbell, for example − but MDL defendants should seriously consider limiting their so-called “Lexecon waivers,” to the extent they are willing to give them at all.

What does that mean?

Basically, Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998), held that MDL judges can’t try cases transferred to them from another judicial district under the MDL statute, 28 U.S.C. §1407.  They can try cases properly filed in the same judicial district and then transferred to them as related cases (what happened in Campbell), but all other MDL trials require a Lexecon waiver of trial in the original transferor court.

The Fifth Circuit made clear in the Pinnacle Hip decision that a Lexecon waiver, like any other waiver, must be “clear and unambiguous” to be effective. Id. at 351.  Thus, we think it would be a good idea for MDL defendants to tailor any future Lexecon waivers so that they apply only to single-plaintiff trials, and exclude punitive damages.  As for consolidation, a Lexecon waiver excluding consolidation simply preserves the manner in which cases have been tried, including MDL bellwethers, for decades or longer.  As for punitive damages, bifurcating out such allegations has been commonplace in asbestos litigation, and has been employed in other mass torts as well, such as opt out cases in the Diet Drug litigation.

Even if courts seem less inclined to recognize it, everyone on the defense side knows how prejudicial multi-plaintiff consolidations and punitive damages allegations are during trials. To the extent possible, defendants should consider self-help, in the form of limited Lexecon waivers, to prevent such prejudicial procedures.

This post is from the non-Dechert side of the blog.

While the recent Pennsylvania Superior Court Risperdal decision is not a defense victory, it is certainly not as favorable for plaintiffs as they are making it out to be. While several issues were presented for appeal in Stange v. Janssen Pharms., Inc., 2018 Pa. Super. LEXIS 11 (Pa. Super. Jan. 8, 2018), the most important one was whether the trial court was incorrect in applying New Jersey law to plaintiff’s punitive damages claim. While plaintiffs are characterizing the decision as answering that question in the affirmative, what the court really said was maybe.

In the consolidated In re Risperdal litigation pending in the Philadelphia Court of Common Pleas, the coordinating judge granted defendants’ motion for summary judgment on punitive damages finding that the law of New Jersey, defendant’s principal place of business, applied and that under the New Jersey Product Liability Act, punitive damages are precluded in cases involving FDA approved products. Id. at *32-33. In opposition to defendants’ motion, plaintiffs argued the law of the case doctrine or in the alternative that the court should apply Pennsylvania law instead. Id. Their law of the case argument was based on the judge’s decision in three prior Risperdal cases to apply the punitive damages law of plaintiff’s home state. Id. at *35n.6. The trial court ruled that those cases were separate cases and therefore law of the case did not apply or if they were considered the same case as In re Risperdal, the same judge made all four rulings and a judge is entitled to revisit his earlier rulings “without running afoul of the law of the case doctrine.” Id. (citation omitted).

With that ruling in place, the Stange case went to trial with no punitive damage claim. Stange is a resident of Wisconsin which is where he was prescribed Risperdal and treated for his alleged injury, gynecomastia. Unlike New Jersey, Wisconsin does not have a bar on punitive damages for FDA approved products. Under Wisconsin law, however, punitives would be capped at twice the amount of any compensatory damages or $200,000, whichever is greater. Id. at *42. So, there is a clear conflict of law.

On appeal, plaintiffs argued that the trial court’s global ruling on punitive damages was improper because Pennsylvania law on choice of law requires an analysis of which state has the greatest relationship and interests in each individual plaintiff’s case and that that analysis supports applying plaintiff’s home state’s punitive damages law. Id. at *33. Plaintiffs did not argue for application of Pennsylvania punitive damages law on appeal. Id. at *43n.8. Defendants argued that plaintiffs’ choice of law argument had been waived because it was first raised in plaintiffs’ motion for reconsideration of the global punitive damages ruling. Id. at *37. The Superior Court, however, found plaintiffs’ arguments preserved. In the context of their law of the case doctrine argument which urged the court to follow its earlier decision to apply plaintiff’s home state law, plaintiffs “argued more generally that the law of the plaintiffs’ various home states should apply to punitive damages.” Id. at *39.

So, what the Superior Court concluded was that the choice of law analysis was not waived and that a choice of law analysis as between New Jersey and Wisconsin needed to be undertaken:

the trial court only considered whether New Jersey or Pennsylvania law should apply, not the law of the individual plaintiff’s home state. We agree with Stange that it is necessary to remand for the trial court to allow Stange to develop an individual record on choice-of-law as it relates to his unique circumstances and to set out the facts and state interests important to his particular case.

Id. at *45. Nowhere in the decision does the court make any finding with regard to what the outcome of the choice of law analysis should be on remand, only that the analysis needs to be done. There is nothing prohibiting the trial court from reaching the conclusion in Stange that it did in In re Risperdal globally – that New Jersey has the more significant relationship and interests on the punitive damages claim. Indeed, having reached that decision once already we struggle to understand how the facts of any particular case will impact the court’s analysis. For the underlying substantive claims, most choice of law analyses will favor plaintiff’s home state – where he was prescribed, where he suffered his injury, where he was treated. But the alleged corporate misconduct giving rise to the claims for punitive damages occurred in New Jersey. It is there that the company developed the Risperdal labeling and its marketing and sales strategy and from there that it had communications with the FDA. Id. at *44.  So, even on a case-by-case basis, there is ample support for a finding that in a failure to warn case, the proper focus for purposes of a choice of law analysis on punitive damages is the place where the alleged corporate misconduct occurred.

So we think plaintiffs are celebrating a bit prematurely. The Stange decision may have removed the foil and even loosened the wire cage, but the cork remains in place.

As we noted at the outset, punitive damages choice of law was not the only issue on appeal and so we make passing mention of two other noteworthy aspects of the case. First, defendants challenged the trial court’s admission of certain expert testimony on the grounds it did not meet Frye standards. Id. at *8-9.  The Stange, court however erroneously applied the novelty limitation from Trach v. Fellin, 817 A.2d 1102 (Pa. Super. 2003) – that Frye only applies to the most “novel” of scientific testimony. That narrow interpretation was rejected by the Pennsylvania Supreme Court in Betz v. Pneumo Abex LLC, 44 A.3d 27 (Pa. 2012), a case not cited in Stange.

Second, it was agreed that Wisconsin law governed the substantive claims in the case. While examining the issue of proximate cause on failure to warn, specifically whether plaintiff had carried his burden of proving a different warning would have changed plaintiff’s prescribing physician’s decision to prescribe, the court applied the learned intermediary rule which has never been adopted by any appellate court (only trial courts, which have split) under Wisconsin law. Id. at *22n.4 (no conflict between Pennsylvania and Wisconsin law on the scope of learned intermediary doctrine). We’ll add it to our learned intermediary “head count.”

 

 

Defense hacks. Homers. Biased. These are just a few of the labels we have applied to the authors of this Blog. While we recognize our leanings and strive to offer something more than just cheering a decision for the defense and jeering a decision for the plaintiff, we do see some cases as having an obvious right result, no matter how long it takes to get there. However, just because a case is from a “bad” jurisdiction does not mean that all the decisions will be bad. In Johnson & Johnson v. Fortenberry, No. 2015-CA-01369-SCT, 2017 Miss. LEXIS 421 (Miss. Oct. 19, 2017), the geriatric plaintiff was prescribed defendant’s antipsychotic medication for about two years before developing a mild oral tardive dyskinesia (something that had appeared with the second medication plaintiff had been on). This was the third medication that plaintiff took for her severe psychosis and it apparently worked well for her. Her prescribing physician was well aware of the risk of tardive dyskinesia with every antipsychotic at the time, considering that the medication had a lower risk of tardive dyskinesia and other extrapyramidal symptoms according to both the medical literature and defendant’s marketing materials. After pending for twelve years, the case went to trial in a notorious plaintiff-friendly jurisdiction before a similarly known judge. Plaintiff proceeded at trial on failure to warn and negligent misrepresentation theories and won a sizable compensatory verdict, although punitive damages did not go to the jury. An appeal and cross-appeal followed.

As we often do, we will focus on the parts of the decision that seem more relevant to us. First, the warnings claim. You may have already guessed that we think this should have been a slam dunk for the defense. You would be right. In addition to what we noted above about the prescriber’s knowledge and plaintiff’s medical course, the prescriber testified that specifically warned plaintiff and her daughter-caregiver (who later pursued the suit for plaintiff’s estate) of the risk of tardive dyskinesia and other extrapyramidal symptoms. Id. at *8. His awareness of the risk was consistent with the thorough warnings for tardive dyskinesia in the FDA-mandate class labeling for all antipsychotics, which he considered to be consistent with his understanding of the risk from other sources. Id. at **9-11. For plaintiff, the prescriber stood by his decision to prescribe the drug, noting “the psychotic symptoms which are terrible and unremitting and lead to very bad outcomes. And those are much more certain than the risks of possible side effects.” Id. at *19. Plaintiff attacked the class labeling as “cookie cutter” and the prescriber’s self-professed understanding of the risk as influenced by the marketing for the drug. Id. at **20-21.

The first question on appeal was whether the label itself was sufficient to warn of the risk of tardive dyskinesia. This was not a close call, as the “label unequivocally communicated the risk of tardive dyskinesia associated with the use of all antipsychotic drugs, including Risperdal.” Id. at *18. In addition, the prescriber “specifically testified that he considered the language of the Risperdal label adequate to warn him of the risk of tardive dyskinesia in Risperdal users at the time he prescribed it to Taylor.” Id. at **18-19. It does not appear that the plaintiff, despite an array of willing expert, had much to say about the adequacy of the label itself. This may have never featured in the trial court, but there would have been an obvious problem with saying that the defendant needed to change the class labeling to avoid liability—implied preemption. In this situation, the drug’s manufacturer could not have taken an independent action to change the already robust class labeling. That did not come up on appeal because the plaintiff argued that marketing undercut the actual content of the label. However, the Mississippi Products Liability Act limits the inquiry to the label itself and the Mississippi Supreme Court was unwilling to allow marketing evidence to be considered. Id. at **21-23. Thus, after fifteen years, an obviously flawed warnings claim—we have not even mentioned the obvious lack of proximate cause—went away.

The negligent misrepresentation claim was another matter, as marketing evidence counted. As an initial matter, the parties agreed that the focus on such a claim for a prescription drug was on the representations to the prescribing physician. From the summary of the evidence at trial, it does not appear that there was a specific representation ever made to the plaintiff’s prescriber that was proven to be false and relied upon in connection with plaintiff’s care. Instead, generic evidence purportedly showing that the manufacturer marketed the drug as having less of risk of tardive dyskinesia and other extrapyramidal symptoms than other drugs was not tied to the prescriber’s decisions with plaintiff. Id. at **26-32. There was no evidence that he saw any of the marketing pieces that plaintiff contended were misleading or acknowledged a specific representation that misled him.

Instead, plaintiff offered a less direct chain of purported proximate cause: 1) prescriber testimony that “I just remember the information about it, and I assume marketing as well as reading about it – I can’t always differentiate because I read journals and things, too – but all the information identified it as atypical and having fewer EPS side effects”; 2) his view from all sources was that the risk of tardive dyskinesia was lower with Risperdal than lower than with older antipsychotics; 3) that he probably would have prescribed another, unspecified medication if he believed the risk of tardive dyskinesia with Risperdal was actually equal to an older antipsychotic; and 4) expert testimony that plaintiff would not have developed tardive dyskinesia if she had been prescribed one of two other antipsychotic medications instead of switching to Risperdal. Id. at **26 & 33-37. For the court, this was enough to raise a jury question as to whether the marketing materials provided to the prescriber misrepresented “that the tardive dyskinesia risk was low and materially lower than the tardive dyskinesia risk from Haldol”—the drug plaintiff was initially prescribed, but not one of the drugs plaintiff’s expert said would have avoided her injury—whether the prescriber relied on such a misrepresentation, and whether it proximately caused plaintiff’s injury. Id. at **38-39.

Here are some problems with that analysis. For the same reason that an adequate pleading of a misrepresentation claim needs to include the who, what, where, and when of the representation, it is hard to see how a plaintiff can establish a misrepresentation without something more specific than what plaintiff offered here. Moreover, where the general representations to the prescriber were perceived as being consistent with what he understood from the medical literature and other sources, there does not seem to have been reliance on any misrepresentation. Any reliance also did not seem to result in the prescription to plaintiff, as the prescriber’s impression from medical literature also would have needed to have been different to affect the prescribing decision. Plaintiff’s evidence on proximate cause also did not seem to match up because the prescriber did not say he would have prescribed one of the two medications that plaintiff’s expert testified would have avoided her injury. That all does not sound like plaintiff established enough to get to a jury on a negligent misrepresentation claim, but, like we said, we might be a bit biased.

Part of why plaintiffs like misrepresentation claims is that they tend to be a better vehicle for punitive damages than failure to warn claims. Here, despite the broad evidence admitted on marketing, which plaintiff contended showed intent to justify punitive damages, the trial court did not let punitives go to the jury. Along the way, the court excluded the defendant’s guilty plea to allegations of improper marketing after plaintiff’s last prescription. Id. at *64. That is a correct decision, but still deserves some recognition. In Mississippi, the trial is supposed to evaluate all the evidence to see if a punitive damages claim should go to the jury. Id. at **65-66. Because the trial judge did that, the Mississippi Supreme Court affirmed. That deserves a little credit too.

 

It was over 32 years ago that we graduated from the University of Chicago Law School.  The three years in Hyde Park were a punishing experience.  There was one class in particular when Prof. Richard Epstein used the Socratic method to pummel our intellect and ego. By the end of the exercise, we were a puddle of incoherence.  The class was called Advanced Torts.  It is a bit funny that we today practice a form of Advanced Torts, even though Prof. Epstein long ago exposed our idiocy in the field.  But all is forgiven, if not quite forgotten, and we are grudgingly grateful for the hard lessons learned at his feet (from his vigorous kicking away at our preconceptions).  One of the things that Epstein did in that class was rip into the N.Y. Times v. Sullivan decision.  That case is usually thought of as one of the crown jewels of First Amendment jurisprudence, as it furnishes almost absolute protection to the press.  Basically, newspapers and other press media can skate past libel liability, no matter how false their publications, unless the press published with “actual malice” –  knowing the statement was false or acting in reckless disregard.   Epstein’s point was that while it was nice for the press that they would defend against most libel claims successfully, the state of mind inquiry was intrusive and complex, and the stakes involved, which could include punitive damages, were frighteningly high.  Such uncertainty and expense are not in society’s interest.  It sounds like heresy, but a simple standard of falsity, plus a cap on damages, would probably result in better outcomes and would certainly cabin discovery madness.

 

It occurs to us that punitive damages in mass tort cases suffer from the same, ahem, defect. Punitive damages require jurors to read the minds of corporate defendants, looking for bad intent or reckless disregard.  Conduct and documents that would otherwise be out of bounds for discovery and would never be paraded before the jury become fair game if punitive damages are available.  Moreover, due process considerations be damned, courts seem to permit jurors to flip around punitive damage figures in the tens or hundreds of millions of dollars as if they were nickels.  There is no consistency to the process.  One case might get halted by a judge who applies Daubert to preclude junk science, while another judge waves virtually the same case by and a jury socks the defendant with a $110 million verdict.  Or perhaps you have heard of jurors who conclude that the product did no real harm to a plaintiff, but are still sufficiently miffed at the company to award punitive damages.  It isn’t right. It makes no sense.  It probably won’t survive judicial scrutiny.  But the craziness happens.  No wonder our system of civil litigation looks like jackpot justice.  Pull the handle, watch wheels of inconsistent evidentiary rulings, inflammatory arguments, and jury lunacy spin, and see if the result is a shower of money.  If one pull comes up empty, never mind, keep pulling.  Whether or not you think the game is rigged, any rational defendant dragged into the courtroom casino knows it is a sucker’s game.  Better to pay a settlement and find the exit.

 

It turns out that we are hardly the only ones to rue the unfairness of punitive damages in mass torts.  A recent paper from the Cornell Law School  Legal Studies Research Paper Series (No. 17-33) by Cornell Law Professor James A. Henderson, Jr., “The Impropriety of Punitive Damages in Mass Torts,” dissects the issue nicely.   Other academics (think of Kip Viscusi) have exposed the wrongheadedness of punitive damages in mass torts, but Patterson’s paper is particularly compelling and timely.  He shows that punitive damages in mass torts are capricious, unfair, and unpredictable.  The joint justifications for punitive damages are retribution and deterrence.  But the retribution for any limited case at issue loses all sense of scale, and there is zero evidence that mass tort punitive damages actually improve corporate conduct or make anyone safer.  The problem is that the triggers for punitive damages, vague words such as “outrageous” that are meant to suggest “different levels of heinousness,”  are unclear to the point where jurors can do pretty much whatever they want.  That latitude is especially pernicious in the context of mass torts, where aggregation of claims is not just procedural, but substantive.  That is, the mass-ification of torts almost always prejudices the defendant by eroding defenses that would typically make the difference in a one-on-one case.  For certain industries, or whenever the government is involved, the law cheerfully dispenses with such niceties as fault, reliance, and causation.

 

Henderson takes us through some of the newer, non-traditional mass torts, such as asbestos, tobacco, lead paint, firearms, and no-injury economic loss cases where corporate defendants have been stripped of procedural and substantive defenses.  We’ve worked on a couple of these species of cases, and can vouch for the accuracy of Henderson’s analysis.  We’re by no means asbestos lawyers, but we once handled a couple of asbestos cases as a favor to a client.  We still occasionally bolt upright in the middle of the night, sweating from our memories of the asbestos docket call.  The client never manufactured anything with asbestos, but some of its products were later taken by a downstream manufacturer that placed some asbestos into the product before unleashing the products upon the populace.  The downstream manufacturer had shallow pockets, so the asbestos plaintiff lawyers added our client to the latest wave of defendants.  We proved to the plaintiff lawyer that our client had nothing to do with the asbestos, and the plaintiff lawyer shrugged and named some ludicrous figure for us to settle and get out of the case.  Sure – and then we’d be added to the asbestos sucker lists and face never-ending litigation.  We wanted to file a motion, but the insanity of the asbestos litigation “program” was that no defense motions would be considered until trial was only 30 days away.  Who wants to face that kind of brinksmanship?  Have you ever heard of the abomination called “near beer”?  Well, asbestos litigation is “near law.”  In fact, it is hardly law at all.  Rather, it is a system of taxing an unloved industry.

 

Viewing corporate conduct with hindsight, and assuming that corporations know everything and dwell purely on the bottom line, jurors are quick to reach for the spanking paddle.  That spanking means millions of dollars.  Risk averse corporate managers, and insurers worried about bad faith liability for failing to settle within policy limits, more often than not succumb to settlement blackmail.  The possibility of stratospheric punitive damages is simply a risk not worth taking.

 

Here are some other points that Henderson makes about punitive damages in mass tort cases:

 

  • Multiple successive punitive damages awards for the same alleged conduct are unfair to defendants.   (Maybe you could tell the jury that your company was already punished by another jury – but do you really want to do that?)
  • Any retribution is typically suffered by innocent, powerless shareholders, not the faulty managers.  Big surprise: expressing moral outrage toward corporations is unrealistic.
  • Punitive damages can deplete assets to the prejudice of later-filing plaintiffs.
  • Punitive damages are utterly unnecessary.  Large compensatory awards are more predictable and internalize social costs better than random punitive awards.

 

To quote a historical figure who clearly and devilishly believed in punishment, what is to be done?  Henderson mentions some marginal changes.  One idea is to require more specific triggers for punitive damages, such as criminal conduct (with a higher burden of proof).  Another idea, already existing in rare enlightened jurisdictions, is to let judges decide the amount of punitive damages.  It is well past time for courts to limit evidence of harm to that which was actually visited upon the particular plaintiff.  Henderson also discusses the possibility of limiting punitive damages to one case, which then creates a trust fund out of which later plaintiffs take their share.  But all of this is nibbling around the edges.  Henderson alludes to legislative changes, but seems pessimistic that our elected solons will ever risk displeasing a plaintiffs’ bar that is clever and promiscuous when it comes to slinging cash contributions to their favorite candidates.  That leaves the problem in the hands of judges, who will need to toss some troublesome precedents in the dustbin of history and start emphasizing the justice over the jackpot.

 

Henderson’s paper is clearly written and well-argued, and replaces our crankiness with a surfeit of citations.  It is well worth reading.

 

 

This post comes from the Cozen O’Connor side of the blog.

We’ve been following the Pinnacle MDL closely through the last two bellwether trials, starting with the news coming out of the second bellwether trial of particularly curious and prejudicial evidence being presented to the jury. Given that evidence, we expected a plaintiffs’ victory, an expectation that was borne out with a whopping $498 million verdict. It raised an immediate question: “What will the Fifth Circuit do?”

Well, we’re on our way to finding out. The defense recently filed their opening appellate brief. While it features the controversial evidentiary rulings, much more is in play. If you would like to take a look for yourself, here is the brief.  Below are some of the key issues, along with a quick description of the defense’s arguments:

Design Defect Claim against DePuy (Brief at 20-29): Claim that all metal-on-metal hip implants are defective is not viable under Texas law because a wholly different product cannot serve as a safer design; design claim is preempted because the FDA approved metal-on-metal hip implants; and design claim fails under Restatement (Second) of Torts 402A comment k (adopted in Texas), which recognizes that products like implantable devices are unavoidably unsafe and therefore not defective if properly made and warned about.

Continue Reading Briefing Underway in Appeal of Half-Billion-Dollar Verdict in Pinnacle MDL

This post is from the non-Reed Smith side of the blog.

We’ve put it off long enough – time to deal with the awful decision in C.R. Bard v. Cisson, __ F.3d __, 2016 WL 158814 (4th Cir. Jan. 14, 2016).  When we posted our 2015 Top Ten, we noted that we were watching Cisson because it had the potential to be among our top or bottom 10 of 2016.  Well, the top is definitely off the table and while it’s still early, the bottom is certainly in the running.

A quick background of the case.  Cisson is an appeal from the first trial in the massive Pelvic Mesh MDL.  Plaintiff underwent implantation of defendant’s pelvic mesh device and began experiencing pain.  Two years later, she had surgery to remove the device, but the “arms” of the device could not be removed.  Id. at *1.  In 2013, defendant won summary judgment on many of plaintiff’s claims leaving only design defect and failure to warn to proceed to trial.  Id. at *2.  The trial resulted in a plaintiff verdict, including a sizeable punitive damages award.  Id. at *1.

Continue Reading Fourth Circuit Flubs Admissibility of 510k Clearance

Back in 2009 – when the blog was still a Bexis/Herrmann operation – we wrote a catch-all punitive damages post entitled (oddly enough) “On Punitive Damages.”  That post identified and briefly discussed a variety of punitive damages-related issues, including what amount of increased risk is enough to justify an award of punitive damages under applicable state-law standards.  We pointed out a couple of Restatement sections, Restatement (Second) of Torts §§500, 908, that defined “recklessness” for punitive damages purposes in relation to a “high degree of risk.”

That’s an interesting question, because a product that increases the possibility of death or serious injury due to some particular risk from one in a zillion to two in a zillion has doubled the relative risk – but in absolute terms the increase is tiny.

Ever since that post we’ve been meaning to come back and examine that punitive damages issue in greater detail.  Today we finally get around to it.  Because doing the job right would require research well beyond prescription medical products, we looked for research help, and enterprising (pun intended) Reed Smith associate Kevin Hara stepped up to handle the initial spadework.  To put the question in the affirmative, can we defeat punitive damages, even where a relative increase in serious risk is high, where the absolute increase in risk remains minuscule?  What increase in the risk of injury enough to warrant sending punitive damages to the jury?  Is a one in 10,000, one in 5000 risk significant enough?  How about one in 1000?  One in 100?

Continue Reading Punitive Damages – How Much Increased Risk Is Enough?

We have not posted for a while—that day job can really get in the way sometimes—so we agreed to tackle the ridiculously long decision in Christiansen v. Wright Med. Tech. Inc., MDL No. 2329, 1:13-cv-297-WSD, 2015 U.S. Dist. LEXIS 115601 (N.D. Ga. Aug. 31, 2015), as a bit of penance.  This act may be appropriate given the recent Day of Atonement and, much like long Yom Kippur services during a fast, the decision drags on, repeats itself, has some highs and lows, and maybe induces some confusion and a touch of a headache.  While we are not looking for a scapegoat, some of the reasoning for why the issues were presented how they were presented and why they were decided is lost on the reader, at least this reader.  (Much like the original meaning of Azazel, to where/whom the original scapegoat was to be sent by Aaron.  Or maybe not at all like that.)  As a combination Daubert and summary judgment order on a bellwether case from an MDL for a product, a metal-on-metal hip implant, for which there is considerable litigation on similar products made by other manufacturers, there will likely to attempts to extend various parts of this decision to other cases.  So, we will resort to the dreaded use of subheadings in discussing it.

Background

Plaintiff had a left hip replacement in 1995 with a device that used a ceramic femoral ball, a polyethylene liner, and a metal acetabular shell.  In 2006, plaintiff had her right hip replaced with the defendant’s product, which utilized a ball and cup each made of cobalt-chromium with no liner.  In 2012, plaintiff started experiencing pain in her right hip and, within a week, had a revision surgery where the defendant’s product was explanted (and presumably something else was implanted).  All three surgeries were done by Dr. Lynn Rasmussen, who happened to have been consulting with defendant on designing hip implants in between the second and third surgeries.  In doing the third surgery, Dr. Rasmussen observed what he called “metallosis” (sometimes “metalosis” in the records and briefs), but did not send any explanted tissue or material for pathological evaluation.  Plaintiff sued under a range of product liability theories based on the risk of “metallosis.”  Thereafter, plaintiff named at least ten experts to weigh in on causation and defect in some form or other, most of whom relied to some degree on Dr. Rasmussen’s characterization of what he saw—and defendant filed a bunch of Daubert motions.  Plaintiff filed a “motion for partial summary judgment” that preemption and the learned intermediary doctrine did not apply to her claims and, at the court’s request, the defendant filed a motion for summary judgment on all the claims that plaintiff did not drop.  An affiliated defendant also filed for summary judgment on different grounds.  There were some other motions we are ignoring, but everything was addressed in one big decision.

Continue Reading Making Sense of the Daubert and Summary Judgment Orders in A Metal-on-Metal Hip Implant Bellwether Case