In a staggering verdict, a Texas jury recently awarded over $1 billion against Johnson & Johnson (“J&J”) and its subsidiary DePuy Orthopaedics Inc. (“DePuy”) (collectively referred to as “Defendants”) to six California plaintiffs who claimed the companies’ Pinnacle hip system’s Ultamet metal-on-metal implant caused metallosis, tissue death, bone erosion and other serious injuries.
Presently there are 9,000 plus lawsuits consolidated in a Multi-District Litigation or “MDL” presided over by U.S. District Court Judge Ed Kinkeade in the Northern District of Texas. This latest verdict was the result of the third bellwether test trial addressing the Pinnacle hip system, the first two of which had differing results. J&J won the first trial in 2014, but lost the second trial earlier this year when another Texas jury returned a $502 million verdict against J&J, which was later reduced to $150 million pursuant to Texas Civil Practices and Remedies Code Section 41.008(b) which caps exemplary damages. After the second trial, J&J moved to stay additional trials pending the resolution of the appeal of the second trial. J&J argued that several pieces of critical but inflammatory and prejudicial evidence were presented to the jury in addition to several other issues that the defendants wanted resolved by the Fifth Circuit prior to proceeding on with the rest of the cases. The Court ruled against the stay noting that the next trial would involve Plaintiffs from California, “rather than Texas or Montana like the previous bellwether trials, and will therefore present different legal and evidentiary rulings.” (Dkt. 665) The Court also pointed out that both sides agreed to this particular bellwether process to be supported and directed by the court. This is an important take away for future litigation. First, it is important, indeed imperative, to make any objections in a timely manner in order to preserve them. Second, it is very important when selecting the bellwether process to consider the different and unique legal theories presented in each unique case.
The third bellwether case began on October 3, 2016. The Defendants raised concerns early on about the process of the trial. In fact, Defendants filed six mistrial motions during the trial, which included Defendants’ arguments that Plaintiffs had improperly referred to a 2007 deferred-prosecution agreement. The Defendants made the same argument in the second trial and moved to seal a federal monitor’s report related to the agreement afterward, but the mistrial motions in the second trial were similarly unsuccessful. (Confidentiality Order, Document #28-161006-017R.) This agreement with the U.S. Department of Justice involved allegations that from 2000-2006, DePuy paid surgeons through consulting agreements to encourage them to use its implant devices. The transactions at issue were referred to during the trial and in front of the jury as “illegal bribes” much to the dismay, and understandable frustration of the Defendants. Although the Defendants argued that reference to this agreement was in violation of the court’s previous order against introducing testimony regarding criminal activity, the Court disagreed.
However, it looks as though the importance of the 2007 deferred prosecution agreement cannot be understated, as it appears to have influenced the jury during deliberations.
Within the instructions to the jury, the Court explained that there were “six separate cases, involving ten plaintiffs.” The Court also instructed the jury to “give separate consideration to each claim and each party in each case. Although there are ten plaintiffs, it does not follow that if one is successful as to a particular claim, the others should prevail on that claim too. You must decide each plaintiff’s case solely on the evidence that applies to that plaintiff.” (Court’s Charge to the Jury, MDL Docket No. 3:11-MD-2244-K (emphasis added).
Within the Charge, the Court also asked the jury the following question:
(b) Is there a reasonable relationship between the amount of punitive damages and Plaintiff’s harm, or between the amount of punitive damages and potential harm to Plaintiff that DePuy Orthopaedics Inc. knew was likely to occur because of its conduct….
In addition, the Court instructed, “Punitive damages may not be used to punish DePuy Orthopaedics, Inc. for the impact of its alleged misconduct on persons other than Plaintiff.” Id.
What is clear from the jury’s written answers to the Court’s Charge is that the jury lumped plaintiffs together based on whether they had two hips replaced or one.
According to the Court’s Charge, the jury was tasked with awarding damages to each plaintiff based on the following categories: (1) past and future physical pain and loss of enjoyment of life, (2) past and future disfigurement, (3) past and future physical impairment, (4) past and future mental suffering, inconvenience, grief, anxiety, humiliation and/or emotional distress, and (5) past medical expenses.
For categories 1 through 4, the jury awarded plaintiffs who had one hip replaced $1 million per category, i.e., $500,000 for past physical impairment and $500,000 for future physical impairment, and so on. The jury awarded plaintiffs who had two hips replaced $1.5 million per category, i.e., $750,000 for past physical impairment and $750,000 for future physical impairment, and so on. The numbers for each of the plaintiffs in their respective “one hip vs. two hips” grouping were identical, regardless of the amount of past medical expenses listed under the fifth category. In sum, the jury awarded the two groups of plaintiffs the same compensatory damages, $4 million and $6 million, regardless of that specific plaintiff’s proven medical expenses or evidence regarding that plaintiff’s individualized pain and suffering.
What can we learn from this? First, it is important to simply recognize that after a lengthy trial a jury may well be exhausted and overwhelmed by the information, such that when it came time to make a decision, it was easier for the jury to lump the plaintiffs together than re-hash the individual claims. It is always important to remember to try in instructions and verdict forms to make the jury’s job as easy as possible. Second, the jury instructions provide that the jury “must determine the liability of each Defendant to each Plaintiff separately…. In deciding on the amount of damages, consider only Plaintiff’s claimed losses.” Third, Defendants must advocate clear instruction on this point because it appears the Court did not reiterate this point to the jury nor the importance of assessing each plaintiff’s individual claims. The jury award itself provides very little insight into how another jury might decide a subsequent case (the next such case is set for trial in September 2017) or even how to value remaining claims for purposes of a global settlement.
In addition, it appears that the jury awarded the plaintiff spouses the same amounts notwithstanding, again, the difference in evidence or testimony pursuant to their specific plaintiff. Id.
Lastly, the jury awarded each plaintiff $84 million and each plaintiff spouse $125,000 in punitive damages. This is particularly interesting because $84 million is the exact amount of the 2007 deferred settlement agreement as referenced above. Perhaps a coincidence, but it seems unlikely.
Will This Punitive Damage Award Stick?
In 1996 the United States Supreme Court, in BMW of North America v. Gore, 517 U.S. 559 (1996), invalidated a state-court punitive damages award and instructed lower courts to evaluate punitive damages awards based on certain criteria: (1) degree of reprehensibility; (2) disparity between the actual or potential harm suffered by the plaintiff and the punitive damage award; and (3) the difference between the punitive damages awarded and the civil penalties authorized or imposed in comparable cases. Id. at 575. Seven years later in in State Farm Mut. Auto Ins. Co. v. Campbell, 538, U.S. 408 (2003), the Supreme Court reversed a $145 million punitive damages award after finding that, although there would be no “bright line ratio” to calculate the appropriate award of punitive damages, “single-digit multipliers are more likely to comport with due process, while still achieving the State’s goals of deterrence and retribution….” Id. at 425. The Court also explained that a “higher ratio might be necessary where the injury is hard to detect or the monetary value of non-economic harm might have been difficult to determine.” Id. at 425. (Emphasis added.)
Since 2003, the California Supreme Court has weighed in on the topic, finding a 10:1 ratio between compensatory and punitive damages to be the maximum award constitutionally permissible. Simon v. San Paolo U.S. Holding Co. Inc., 35 Cal. 4th 1159 (2005) (10:1); see also Johnson v. Ford Motor Co., 35 Cal. 4th1191 (2005) (reduction to 3:1 was without justification); Roby v. McKesson, 47 Cal. 4th 686 (2009) (1:1 appropriate). But see Bullock v. Philip Morris USA, Inc., 198 Cal. App. 4th 543, 571 (2011) (holding that a 16:1 ratio was justified in light of the extreme reprehensibility of the conduct at issue).
Just this past summer, the California Supreme Court against stated, “Absent special justification, ratios of punitive damages to compensatory damages that greatly exceed 9 or 10 to 1 are presumed to be excessive and therefore unconstitutional.” Nickerson v. Stonebridge Life Ins. Co., 63 Cal. 4th 363, 367, 371 P.3d 242, 244 (2016) (analyzing a jury verdict on a breach of contract and bad faith action that awarded plaintiff $35,000 in damages for emotional distress and $19 million in punitive damages).
The Court also explained that
[a]lthough the Gore guideposts overlap to some extent with questions juries are generally asked to consider in fixing punitive damages awards, the question for courts applying the guideposts is not whether the jury’s “verdict is unreasonable based on the facts.” (Gober v. Ralphs Grocery Co. (2006) 137 Cal.App.4th 204, 214, 40 Cal.Rptr.3d 92.) Rather, as in other contexts in which courts review civil and criminal sanctions for constitutional excessiveness, courts applying the Gore guideposts make an independent determination whether the amount of the award exceeds the state’s power to punish. (Ibid.; see Cooper Industries, supra, 532 U.S. at pp. 433–440, 121 S.Ct. 1678, citing cases.) Should a reviewing court conclude that the jury’s punitive damages award is excessive, the remedy is not to set the award aside—as the court would if it determined that the jury’s decision making process was tainted by bias or prejudice (see, e.g., Weathers v. Kaiser Foundation Hospitals (1971) 5 Cal.3d 98, 110, 95 Cal.Rptr. 516, 485 P.2d 1132) or by confusion about the question to be answered (see, e.g., Pease v. Beech Aircraft Corp. (1974) 38 Cal.App.3d 450, 465, 113 Cal.Rptr. 416)—but to reduce the award to constitutional limits (Simon, supra, 35 Cal.4th at p. 1187, 29 Cal.Rptr.3d 379, 113 P.3d 63).
Nickerson v. Stonebridge Life Ins. Co., 63 Cal. 4th 363, 375 (2016).
Based on recent California case law, if the trial court decides to let the verdict stand as delivered, the Fifth Circuit Appellate Court’s ruling on a potential J&J/DePuy appeal will depend on whether (1) the punitive damage award exceeds the state’s power to punish, thereby warranting a remittitur of the judgment, and/or (2) whether the jury’s decision making process was tainted by bias, passion or prejudice, thereby requiring a new trial.
Here, the jury awarded $4 million in compensatory damages to those plaintiffs who had one hip replaced, and $6 million to those plaintiffs who had two hips replaced. The jury then awarded $84 million in punitive damages across the board. Accordingly, the ratio of punitive to compensatory damages is 21:1 and 14:1 respectively. Both figures are well above the 10:1 ratio that California law has deemed acceptable. It is important to note that California does not place a legal “cap” on damages in this situation, which presents a different situation from Texas law’s limitation on the second bellwether verdict.
In addition, based on the uniformity of the awards, it appears that the jury did not decide each individual plaintiff’s damages based on the evidence and testimony presented on behalf of that specific plaintiff. Specifically, there is an argument to be made that the jury’s access to the information about the 2007 deferred prosecution agreement heavily influenced their decision and infected the overall jury verdict, especially given the instruction that “Punitive damages may not be used to punish DePuy Orthopaedics, Inc. for the impact of its alleged misconduct on persons other than Plaintiff.”
If J&J/DePuy can successfully argue that this evidence, and other evidence like it tainted the jury’s decision making with prejudice and bias, there is a shot at having this verdict overturned entirely. However, this question may be answered sooner rather than later by the appeals related to the second bellwether trial.
What Does This Mean For Pending Litigation?
Because these trials are test cases intended to gauge the value of the remaining 9,000 other pending hip implant cases, J&J/DePuy is at the mercy of the plaintiffs if the Fifth Circuit continues trying these cases without appellate intervention.
The past two bellwether trials certainly set the tone for the next trial evaluating the claims of ten plaintiffs from New York which is scheduled to start in September 2017. Ideally, there will be a ruling on the appeals from the second bellwether case so that there is some definitive direction as to certain inflammatory pieces of evidence such as the 2007 deferred prosecution agreement that seemingly set the price of punitive damages in the third bellwether trial. In any case, it is not only instructive to see how the court handles these types of cases, but also a reminder to always appreciate the impact one bellwether has on the others in the MDL.