Busy Mass Tort Court Revises Punitive Damages Rule

The Philadelphia Court of Common Pleas, a busy mass tort jurisdiction, to say the least, has continued to tinker with its mass tort general rules, last week issuing General Court Regulation No. 2012-03, amending the protocols for cases in the mass tort program.

The biggest change was to allow punitive damages in some pharmaceutical cases subject to the approval of the Complex Litigation Center coordinating judges, Judge Sandra Mazer Moss and Judge Arnold L. New. The Court said it continues to review recommendations concerning
punitive damages and will likely further amend this rule. But until a final version is established, the following procedure was adopted: Punitive damage claims may be litigated in pharmaceutical mass tort cases provided that the Coordinating Judges, following appropriate motion practice by defense counsel at least 60 days in advance of trial, rule that there are sufficient requisite proofs to support the claim going to trial.

Philadelphia is of course the home base of MassTortDefense, and we have posted on the evolving rules before.  Other than a few outliers, the defense bar had generally supported the continuation of the deferral of punitive damages because this practice furthered the Court’s stated goal of meeting the American Bar Association’s suggested standards for the disposition of cases. Deferral of punitive damages claims in these cases can remove a major obstacle to settlement of mass tort litigation and open the way for the prompt resolution of the damage claims of many thousands of injured plaintiffs. 

Furthermore, when mass tort claims involve pharmaceutical and medical device defendants that market life-saving or life-enhancing products, additional policy considerations support deferral. Drugs and devices are subject to comprehensive regulation by the FDA. Absent extraordinary circumstances, a defendant that has complied with the FDA requirements should not be deemed to have engaged in punishable conduct with the potential for repeat sanctions.

We will keep an eye on this one for you.
 

Tort Reform Continues in Arizona

As always at MassTortDefense we are happy to note tort reform victories.

Earlier this month Arizona Governor Brewer signed legislation limiting punitive damage awards in product liability defect suits in the state.

The bill, H.B. 2503, was passed by wide margins in both chambers of the state legislature earlier in the Spring.  It states that punitive damages generally cannot be awarded in a civil suit in Arizona when a product is designed, manufactured, packaged, labeled, sold, or represented in relevant and material respects in accordance with a federal agency's approval, clearance, or determination.

The legislation does not exempt punitive damages if the company that sells a product does so after a final order is given from a government agency to withdraw or recall the item from the market.

Supporters had indicated that the measure was important to discourage the practice of seeking punitive damages simply as a lever to force a defendant to settle, as insurance typically does not cover punitives. Businesses that manufacture products in compliance with all relevant health and safety standards should not be held liable for punitive damages in product liability cases. Laws like this one give clients the security to be innovative. When creating new products, businesses can be assured that by complying with mandated guidelines they will not be subject to unjust punitive sanctions. 

 

Busy Mass Tort Court Revamps Procedures

Our readers recognize that Philadelphia (home base for MassTortDefense) is a hot-bed of mass tort activity, administering those cases through a Complex Litigation Center.  Now comes important news that the Honorable John W. Herron, Administrative Judge of the Trial Division of the Philadelphia Court of Common Pleas, recently issued an order that will alter and impact the handling of mass tort cases in this busy jurisdiction.

General Court Regulation No. 2012-01 represents the first general overhaul of the Complex Litigation Center’s practices in many years. The order  will revise and streamline the conduct of mass tort litigation in Philadelphia in a number of ways.   More on that in a minute.  What is also significant is the reason for the changes.  The order notes the pronounced upward trend in mass tort filings in this court, and the fact that the court’s disposition rate has not kept pace with filings; thus, a significant backlog has developed.  The order notes the impact of past policy which invited the filing of cases from other jurisdictions.  A "dramatic increase in these filings" occurred after the court’s leadership invited claims from other jurisdictions. In 2009, when published comments were offered encouraging the filing of claims in Philadelphia, out-of-state filings rose to 41%, and in 2011 reached 47%.

So, in response, Judge Herron’s order:

  • ends reverse bifurcation in all mass tort cases,
  • significantly limits the consolidation of non-asbestos cases,  unless agreed by all parties,
  • requires the deferral of all punitive damage claims,
  • requires, except upon showing of exigent circumstances, all discovery to take place in Philadelphia,
  • re-emphasizes mediation of cases,
  • limits expediting of cases based on exigent medical or financial reasons until the backlog of pending cases has been resolved, unless otherwise agreed by a majority of the defendants.

The Honorable Arnold New will be reassigned as a Coordinating Judge of the Complex Litigation Center. Judge New is an experienced and respected member of the Philadelphia Court of Common Pleas, having served on the bench for more than 20 years. He currently administers another of the Court’s innovative programs, the Commerce Program. To ensure a smooth transition, Regulation No. 2012-01 provides that Judge New will act as Co-Coordinating Judge of the Complex Litigation Center, sitting in tandem with the Honorable Sandra Mazer Moss. Judge Moss will assume senior status as of December 31, 2012, at which time Judge New will thereupon serve as the sole Coordinating Judge of the Complex Litigation Center and its Mass Tort Program.

The order advises that the court will entertain additional suggestions from the bar, and will open a comment period in November, 2012, to allow interested parties the opportunity to address the new procedures and to suggest any further changes that may be needed. 

There is little doubt that this court's Complex Litigation Center faces a daunting task in handling a large number of cases involving complex and sophisticated claims and defenses, while seeking to resolve them both fairly and efficiently.  Time will tell,  but the new procedures ordered by Judge Herron should improve the functioning of the Complex Litigation Center, and the ongoing process of review and comment invited by the order will allow interested parties the opportunity to see that the Center keeps moving in the right direction.
 

 

Huge Asbestos Verdict Vacated After Judge Recusal

A Mississippi state court late last month vacated the huge $322 million jury verdict in an asbestos case against Union Carbide Corp. See Union Carbide Corp. et al. v. Brown, No. 2006-196(Circuit Court of Smith County, Ms. 12/27/11).

The asbestos lawsuit in Smith County was filed by plaintiff Thomas Brown Jr., who alleged he worked in the state’s oil fields from 1979 to the mid-1980s and was diagnosed with asbestosis. He claimed that he had been exposed to asbestos when mixing drilling products manufactured by Union Carbide.

A state court jury found the defendants liable under defective design and failure to warn claims, awarding $22 million in compensatory damages and $300 million in punitives, probably the largest asbestos verdict for a single plaintiff in the history of the grandfather of mass torts. Later, the state Supreme Court disqualified the trial judge after information surfaced that the judge's parents had brought asbestos lawsuits.

As profiled by the U.S. Chamber of Commerce's Institute for Legal Reform, the new judge appointed to handle the matter granted the defendant's motions to set aside the verdict.  Plaintiff's counsel had argued that the recusal didn’t justify throwing out the verdict.

 

Alleged Chemical Release Did Not "Speak for Itself"

Contractors working at a refinery who were allegedly exposed to chemical fumes cannot rely on the venerable res ipsa loquitur theory because their claimed injuries may have had other causes. See Pearson v. BP Products North America Inc., 10-40442 (5th Cir., 11/10/11).

As a precaution due to Hurricane Rita, BP Products North America decided to shut down all of its Texas City Refinery.  before starting up again, BP decided to audit, evaluate, and “turn around” each of the units at the Refinery on an individual basis before resuming production. To complete the turnaround, BP used independent contractors for most of the work.

Plaintiffs were among the 450 contractors working on the turnaround when, one night in 2007, they 
began smelling an odor "unlike those one usually smells in a refinery."  None of the hundreds of monitors and detectors designed to detect the release of any harmful gases was triggered. The
foremen stopped work and allowed any worker to be examined at a local hospital; about one hundred workers went. Upon medical examination, no workers were found to have any exposure injuries that required hospital admission or required them to miss work.

Nevertheless, one hundred plaintiffs filed suit in the Southern District of Texas, claiming injuries from the incident. Ten workers' claims were consolidated for trial. None of these Trial Plaintiffs’ experts could identify the alleged odor’s source or its cause. The closest thing to proof that the Trial
Plaintiffs marshaled was that the gas was carbon disulfide was a mask worn by one of the Trial Plaintiffs was found to have had exposure to carbon disulfide. But, the laboratory technician who tested the mask admitted that the mask had not been appropriately maintained for proper scientific study.

BP moved for judgment as a matter of law, which the district court denied, and the claims were submitted to the jury. As part of the jury’s charge, the district court instructed the jury that it could infer the Appellant’s/BP's negligence through the doctrine of res ipsa loquitur. The jury returned a verdict for the Trial Plaintiffs and awarded approximately $325,000 in compensatory damages
amongst the ten Trial Plaintiffs and also $100 million in punitive damages ($10 million per Trial Plaintiff). The district court entered final judgment for the Trial Plaintiffs but vacated the jury’s award of punitive damages because the Trial Plaintiffs failed to prove gross negligence, as required under Texas law.  Already, red flags should be flying, as clearly the punitives claim should never have gone to the jury, and yet the ability to argue it would have inflamed the emotion of the jury, contaminating the compensatory award.

BP timely appealed. (Seven Trial plaintiffs settled, leaving the three for this opinion to handle.) BP argued that it was improper for the district court to have instructed the jury on res ipsa loquitur and that absent that instruction, Appellees could not show that it was negligent. Under Texas law, res ipsa loquitur, meaning “the thing speaks for itself,” is used in certain limited types of cases when the circumstances surrounding the accident constitute sufficient evidence of the defendant’s
negligence to support such a finding.  Res ipsa loquitur is applicable only when two factors are present: (1) the character of the accident is such that it would not ordinarily occur in the absence of negligence; and (2) the instrumentality causing the injury is shown to have been under the management and control of the defendant.  Res ipsa loquitur is simply a rule of evidence by which negligence may be inferred by the jury; it is not a separate cause of action from negligence.

 Importantly, the Texas Supreme Court had already noted in a chemical release case that a res ipsa instruction was inappropriate because escaping gas in the vicinity of a complex chemical plant could be due to an unexpected and unforeseeable mechanical failure or it could be due to negligence. The instrumentality causing the injury could have been in the control of the owner of the refinery or the contractors turning around the unit.

Here, none f the Appellants’ experts could identify where the odor came from or whether it was even from BP’s property. The Appellees had shown neither that the character of the accident was one that would not usually occur absent negligence nor that the injury-causing instrumentality was in BP’s control. In such circumstances, the district court should not have instructed the jury on res ipsa loquitur. Without a res ipsa instruction, the Appellees could not meet their burden of proof as to negligence. Judgment reversed.

 

MDL Court Rules on Availability of Punitive Damages in Gulf Oil Spill Litigation

The MDL court overseeing the claims arising from the 2010 Gulf of Mexico oil spill has ruled that plaintiffs can seek punitive damages against allegedly responsible parties in economic loss and property damage suits. In Re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico on April 20, 2010, No. 2:10-md-02179 (E.D. La., 8/26/11).

Readers may recall that this MDL consists of hundreds of consolidated cases, with thousands of claimants, arising from the April 20, 2010 explosion, fire, and sinking of the Deepwater Horizon  mobile offshore drilling unit, which resulted in the release of millions of gallons of oil into the Gulf of Mexico before it was finally capped approximately three months later. In order to efficiently  manage this complex MDL, the court consolidated and organized the various types of claims (e.g., personal injury, environmental, property, and economic damages) into several “pleading bundles.”  One such pleading bundle includes all claims for private or non-governmental economic loss and property damages.  There are in excess of 100,000 individual claims encompassed within this bundle.

The court recently ruled on several pending motions to dismiss the claims by this sub-group of plaintiffs, but let's focus on the punitive damages claims. The court's analysis began with the Oil Pollution Act of 1990: the OPA is silent as to the availability of punitive damages. So the issue became whether plaintiffs who could assert general maritime claims pre-OPA enactment could still plausibly allege punitive damages under general maritime.  The court concluded they could.

First, punitive damages have long been available at common law, and the common-law tradition of punitive damages extends to maritime claims. The court reasoned that Congress had not occupied the entire field of oil spill liability in light of the OPA provision preserving admiralty and maritime law, “except as otherwise provided.” OPA does not mention punitive damages; thus, while punitive damages are not available under OPA, the court did not read OPA’s silence as meaning that punitive damages are precluded under general maritime law. The MDL court observed that Congress knows how to proscribe punitive damages when it intends to, as it did in the commercial aviation exception under the Death on the High Seas Act, 46 U.S.C. § 30307(b) (“punitive damages are not recoverable”).
 

Second, the court saw nothing to indicate that allowing a claim for punitive damages in this context would frustrate the OPA liability scheme. All claims against the allegedly Responsible Party must comply with OPA’s procedure, regardless of whether there is also cause of action against the Responsible Party under general maritime law. However, the behavior that would give rise to punitive damages under general maritime law–gross negligence–would also break OPA’s limit of liability. See 33 U.S.C. § 2704(a). Thus, the imposition of punitive damages under general maritime law would not, according to the court, circumvent OPA’s limitation of liability.

Finally on this issue, the court noted that some courts had held that the Trans-Alaska Pipeline Authorization Act (“TAPAA”), which provided “the liability regime governing certain types of Alaskan oil spills, imposing strict liability but also capping recovery,” did not restrict the availability of punitive damages.  OPA, like TAPAA, creates a liability regime governing oil spills, imposes strict liability on the Responsible Parties, includes liability limits, and is silent on the issue of punitive damages.

Thus, the court concluded, the OPA does not displace general maritime law claims for those plaintiffs who would have been able to bring such claims prior to OPA’s enactment. 


 

Tort Reform Advances In Tennessee

Readers know that tort reform is an important issue we have posted on before, at the federal and state level.  Latest update: Tennessee recently enacted reform legislation that will, among other things, limit the amount of non-economic damages that plaintiffs can recover in civil lawsuits.

Specifically, the Tennessee Civil Justice Act of 2011 was signed into law by Gov. Bill Haslam earlier this month. 

The new law limits venue to the county where the events constituting the cause of action occurred, where the business has its principal office, or where its registered agent of record is located.

Prior law included punitive damages in calculating the bond amount, set a maximum appeal bond at $75 million, and did not address the possibility that obtaining the bond could render an appellant bankrupt or insolvent. The amended law facilitates the appeal of a trial court verdict by lowering the maximum amount of a bond from $75 million to the greater of (i) $25 million or (ii) 125% of the judgment amount. In determining the bond amount, the court will now not consider or include punitive damages, unless there is evidence of the appellee dissipating assets. The law also gives the court discretion to take other actions or set other terms, if obtaining the bond would render the appellant insolvent or bankrupt.

Prior state law had no cap on non-economic damages. The new law places a cap of $750,000 on the non-economic damages incurred by an injured plaintiff, damages like pain and suffering.  A few exceptions are provided, such as no cap in intentional torts, or when the defendant was under the influence of alcohol or illegal drugs and his or her judgment was substantially impaired, or when a defendant intentionally falsified, destroyed or concealed records to avoid liability.

Prior state law did not have caps on punitive damages. Under the new act, punitive damages must be proven by clear and convincing evidence and are capped at 2x compensatory damages or $500,000, whichever is greater. There are limited instances when the defendant's liability is not limited by the caps: (i) if the defendant intended to injure the plaintiff, (ii) if the defendant was under the influence of alcohol or illegal drugs and his or her judgment was substantially impaired, and (iii) if the defendant intentionally falsified, destroyed or concealed records to avoid liability.  Moreover, no punitive damages may be assessed against the manufacturer of a drug or device who was in compliance with applicable laws and regulations, unless the manufacturer withheld material information from regulators or misrepresented that information to the regulators.

The new law provides additional protections for non-manufacturer product sellers. No product liability action may be commenced or maintained against any seller, other than the manufacturer, unless the seller exercised substantial control over that aspect of the design, testing, manufacture, packaging or labeling of the product that caused the alleged harm for which recovery of damages is sought, or the seller altered or modified the product, and the alteration or modification was a substantial factor in causing the harm for which recovery of damages is sought; or the seller gave an express warranty which was breached.

Also, the seller of a product other than the manufacturer would not be liable for punitive damages, unless the seller exercised substantial control over that aspect of the design, testing, manufacture, packaging or labeling of the product that caused the harm for which recovery of damages is sought; the seller altered or modified the product and the alteration or modification was a substantial factor in causing the harm for which recovery of damages is sought; or the seller had actual knowledge of the defective condition of the product at the time he supplied the same.

Under the new Act, the state court of appeals would hear appeals from orders of trial courts granting or denying class action certification if a notice of appeal is filed within 10 days after entry of the order. All proceedings in the trial court would be automatically stayed pending the appeal of the class certification ruling.

District Court Upholds Punitives in Surprising Decision

In a surprising and somewhat questionable decision, the U.S. District Court for the Northern District of Ohio recently upheld a jury verdict awarding punitive damages with a ratio of more than 6-1 between punitive and compensatory damages. Cooley v. Lincoln Electric Co., No. 1:2005-cv-17734 (N.D. Ohio, 3/7/11).

The case was part of the welding fumes mass tort.  Plaintiff Curt Cooley used welding rods at work and home for about 40 years. After being diagnosed with a form of manganese poisoning, Cooley  sued several welding rod manufacturers, alleging that defendants knew that inhaling welding fumes presented a risk of irreversible neurological injury but failed to adequately warn of the risk.

The overwhelming majority of welding rod verdicts have been for defendants, but here a jury returned a verdict for plaintiffs, awarding $787,000 in compensatory damages, after reduction for the allocated plaintiff's comparative fault of 37%, and $5 million in punitive damages.

In post-trial motions, defendants moved, inter alia, for reduction of the punitive damages. In BMW
of North America, Inc. v. Gore
, the Supreme Court articulated three guideposts for lower courts to use in evaluating whether a punitive damages award is excessive. These guideposts are: (1) “the degree of reprehensibility” of defendants’ conduct; (2) “the disparity between the harm or potential harm suffered by [Cooley] and his punitive damages award;” and (3) “the difference between this remedy and the civil penalties authorized or imposed in comparable cases.”  The court here seemed overwhelmed by the first factor and gave insufficient weight to the second and third.

In State Farm Mutual Automobile Ins. Co. v. Campbell, the Supreme Court articulated five criteria for evaluating the degree of reprehensibility: (1) “the harm caused was physical as opposed to economic;”  (2) “the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others;” (3) “the target of the conduct had financial vulnerability;” (4) “the conduct involved repeated actions or was an isolated incident;” and (5) “the harm was the result of intentional malice, trickery, or deceit, or mere accident.”

The trial court found that the first two criteria allowed the jury to find a high degree of  reprehensibility. Here, the harm to Cooley was physical, but not fatal. Yet, the court rejected defendants' argument that this factor is not as strong as it is in cases where a person died as a result of a defendant's conduct.  The court concluded  that the jury was entitled to conclude defendants knew manganese in welding fumes could cause permanent neurological injury, but chose to give an inadequate warning.

The second guidepost looks to the mathematical relationship between compensatory and
punitive damages. The trial court stressed that the Supreme Court has avoided imposing a bright-line ratio between compensatory and punitive damages, and ignored the numerous cases questioning high single-digit multipliers, which are less likely to comport with due process. The trial court rejected the observation that for some defendants the ratio was close to 9-1. The jury awarded $1.25 million in compensatory damages, but assigned 37% fault to Cooley,
reducing the compensatory award to $787,500. It awarded punitive damages in the total amount of
$5 million, allocated among the defendants as: ESAB, $1.75 million; Hobart, $1.75 million; Lincoln, $750,000; and BOC, $750,000. Using a logical approach, the ratios are as follows: ESAB, 8.9:1; Hobart, 8.9:1; Lincoln, 3.8:1; and BOC, 3.8:1. But, if, instead, the ratio is not calculated for each individual defendant, the overall ratio is still $5 million divided by $787,500, or 6.3:1. The court was persuaded by the fact that all of these ratios, using either of these different approaches, are single-digit.  The court also found that the reprehensible conduct supported a higher ratio.

The court went on to twist the next factor - the comparison of punitives to compensatories-  right around.  It noted that whether viewed as $1.25 million or $787,500, the compensatories were "not large considering Cooley’s circumstances."   For example, Cooley testified he is depressed and
impotent, which are symptoms of manganese poisoning. All things considered, the jury’s award of
compensatory damages was "relatively conservative, making for a low denominator in the ratio." And since the denominator was "conservative" and "low," the higher ratio when compared to punitives was permitted.  However, the same jury that found punitive damages level conduct, found plaintiff 37% at fault, and awarded all of the damages it thought were appropriate to fully compensate the plaintiff.  This is not a case where the multiplier was high because the  compensatory damages are merely a nominal sum in recognition of an injury difficult to quantify in monetary terms.  As the court noted, this case involves a significant injury, and the jury awarded what it awarded.  The court seemed to be approaching the line of substituting its assessment of damages for the jury's, and upholding the punitive award because the compensatory award was too "conservative."

Defendants also argued that the punitive damages award was excessive because, using the factor of comparison to other fines and penalties, civil penalties under OSHA would be limited to approximately $70,000, the maximum fine per violation. The court rejected this because OSHA has never found a violation or fined defendants, and thus "analysis of this issue is necessarily speculative."  In fact, the comparison is not just to actual fines assessed, but to potential fines in order to give the court an idea of how the legislature and society would assess a penalty for the conduct alleged. If it was is unclear whether OSHA would treat the conduct in plaintiff's workplace as a single violation subject to a maximum fine of $70,000, as defendants argued, or impose a fine separately for pieces of the conduct, as plaintiff argued, the issue should have been decided, not pushed aside.

Finally the court rejected any relevance to any aspect of the punitive damages ratio analysis of the fact that Cooley's injury might have been avoided had he read a warning or a Material Safety Data Sheet, particularly those sent in the last decade of his career. This was only relevant to comparative fault for compensatory damages, said the court. But, in reality, it should have been considered a major factor in the reprehensibility analysis.

 

 

Wisconsin Enacts Tort Reform

A Superbowl win. An upset of the previously undefeated No. 1 college basketball team.  Wisconsin is on a roll.  But of greatest interest to our readers is, late last month, Wisconsin's Governor Scott Walker (R) signed into law new tort reform legislation in that state.  The bill is regarded as the most extensive set of changes to Wisconsin's civil litigation system in decades.  Tort reform as a vehicle to improve Wisconsin's business climate was a campaign theme for the governor in the last election, and the reform bill was one of the first agenda items for the new legislature in January.  Republican majorities had been elected in both the state Senate and the Assembly last fall.

The Act contains several provisions that will affect plaintiffs and defendants in product liability  litigation.

  • Punitive damages received by the plaintiff may not exceed twice the amount of any compensatory damages recovered by the plaintiff or $200,000, whichever is greater.
  • The law establishes a higher legal standard for recovering punitive damages, as the plaintiff must prove that the defendant either acted with intent to cause injury to a particular person or persons or that the defendant knew that the action of the defendant that resulted in injury to one or more persons was practically certain to result in injury to one or more persons. 
  • The act adopts a Daubert-like standard for experts. The expert testimony must be based
    upon sufficient facts or data, the testimony must be the product of reliable principles and methods, and the witness must have applied the principles and methods reliably to the facts of the case.
  • With respect to strict liability claims, the bill borrows the definition of defect from the  Restatement (Third) of Torts.  A product is defective in design if the foreseeable risks of
    harm posed by the product could have been reduced or avoided by the adoption of a reasonable alternative design by the manufacturer and the omission of the alternative
    design renders the product not reasonably safe.   
  • In an action for damages caused by a manufactured product based on a claim of strict liability, evidence of remedial measures taken subsequent to the sale of the product is not admissible for the purpose of showing a manufacturing defect in the product, a defect in the design of the product, or a need for a warning or instruction, but may be used to show a reasonable alternative design that existed at the time  the product was sold.
  • The law creates a rebuttable presumption that the product is not defective if it complied with relevant standards under federal or state law.
  • The act also modifies the market share or “risk contribution’’ theory that Wisconsin adopted in the lead paint litigation. The new law reaffirms the general rule that manufacturers, distributors, and sellers of a product may be held liable for damages only if the injured party proves that the specific product that caused the injury was manufactured, distributed, sold or promoted by the defendant.  The only exception is when a claimant can prove all of the following:
    1. That no other lawful process exists for the claimant to seek any redress from any other person for the injury or harm.
    2. That the claimant has suffered an injury or harm that can be caused only by a manufactured product chemically and physically identical to the specific product that
    allegedly caused the claimant’s injury or harm.
    3. That the manufacturer, distributor, seller, or promoter of a product manufactured, distributed, sold, or promoted a complete integrated product, in the form used by the claimant or to which the claimant was exposed, and that meets all of the following criteria:
            a. Is chemically and physically identical to the specific product that allegedly caused the claimant’s injury or harm.
            b. Was manufactured, distributed, sold, or promoted in the geographic market where the injury or harm is alleged to have occurred during the time period in which the specific product that allegedly caused the claimant’s injury or harm was manufactured, distributed, sold, or promoted.
          c. Was distributed or sold without labeling or any distinctive characteristic that identified the manufacturer, distributor, seller, or promoter.
          d.  The action names, as defendants, those manufacturers of a product who collectively manufactured at least 80 percent of all products sold in this state during the relevant
    production period.  

 

  • The law permits defendants to claim damages for frivolous claims,  that is, for actions undertaken solely for the purpose of harassing or maliciously injuring another.
  • Regarding comparative fault in an action by any person to recover damages for injuries caused by a defective product based on a claim of strict liability, if the injured party’s percentage of total causal responsibility for the injury is greater than the percentage resulting from the defective condition of the product, the injured party may not, based on the defect in the product, recover damages from the manufacturer, distributor, seller, or any other person responsible for placing the product in the stream of commerce.

A good model for other states considering tort reform.

More than any ad campaign, a civil justice system that is equitable and reliably predictable signals to employers that a state is truly open for business. Particularly in light of recent liability-expanding state court decisions, the new reform package enacted by Wisconsin will help convince employers that it’s a new day in the Badger State, according to the American Tort Reform Association

 

Supreme Court Passes On Chance to Clarify Punitive Damages Issue

We posted before about an important punitive damages issue, hoping the Supreme Court would take a look.  However, last week the Court declined to review the federal appeals court decision ordering a re-trial on punitive damages. Wyeth LLC v. Scroggin, U.S., No. 09-1123, review denied 6/21/10.

The case involves a woman who allegedly developed cancer after taking hormone therapy drugs. (The FDA continues to approve the drugs as safe and effective.) The plaintiff contended that Wyeth was negligent in failing to include a stronger warning on its label, and that she would not have taken the drug if the warning had been stronger. The district court conducted a bifurcated trial
before a single jury, with liability determined first and punitive damages determined second. In the first phase, the jury found for plaintiff and awarded $2.7 million in compensatory damages. In the second phase, the same jury determined that defendant was liable for punitive damages of $19.4 million. Wyeth LLC v. Scroggin, 554 F.Supp.2d 571 (E.D. Ark. 2008). On appeal, the U.S. Court of Appeals for the Eighth Circuit overturned the punitive damages award, ruling that the award was tainted by the admission of improper evidence during the punitive damages phase of the trial. But rather than ordering an entirely new trial, the appeals court ordered a partial new trial limited to punitive damages only. Scroggin v. Wyeth, 586 F.3d 547 (8th Cir.2009).

We would argue that the Seventh Amendment prohibits such partial retrials limited to punitive damages. The Seventh Amendment “right to trial by jury” has long been understood to constitute those jury trial rights that existed under the English common law when the Seventh Amendment was adopted in 1791. At common law there was no practice of setting aside a verdict in part. If the verdict was erroneous as to any issue, a new trial was directed as to all issues, so that all related issues could be decided by a single jury. Where the issue to be re-tried is related to issues already decided by the first jury, partial re-trials create a danger that the second jury will be confused when told that some issues have already been decided. Moreover, there is considerable empirical evidence suggesting that permitting partial re-trials regarding punitive damages exacerbates the unpredictability of punitive damages awards.

Chief Justice John G. Roberts Jr. took no part in the consideration or decision of the petition.
 

Court Should Review Punitive Damages Re-Trial Issue

Readers concerned about punitive damages law have their eyes on Wyeth LLC v. Scroggin.  The case involves a woman who allegedly developed cancer after taking hormone therapy drugs. (The FDA continues to approve the drugs as safe and effective.) The plaintiff contends that Wyeth was negligent in failing to include a stronger warning on its label, and that she would not have taken the drug if the warning had been stronger. The district court conducted a bifurcated trial
before a single jury, with liability determined first and punitive damages determined second. In the first phase, the jury found for plaintiff and awarded $2.7 million in compensatory damages. In the second phase, the same jury determined that defendant was liable for punitive damages of $19.4 million. Wyeth LLC v. Scroggin, 554 F.Supp.2d 571 (E.D. Ark. 2008). On appeal, the U.S. Court of Appeals for the Eighth Circuit overturned the punitive damages award, ruling that the award was tainted by the admission of improper evidence during the punitive damages phase of the trial. But rather than ordering an entirely new trial, the appeals court ordered a partial new trial limited to punitive damages only. Scroggin v. Wyeth, 586 F.3d 547 (8th Cir.2009).

Wyeth is seeking Supreme Court review of the denial of its request for an entirely new trial.  Permitting a tort plaintiff to preserve his compensatory damages award at the same time that he pursues punitive damages before a separate jury is unfair to defendants, and it is likely to lead to increases in punitive damages awards. Partial retrials limited to punitive damages violate jury trial rights protected by the Seventh Amendment. The Petition for Cert here, 78 USLW 3566 (3/16/10), describes in detail the sharply conflicting views of the federal appeals courts regarding the circumstances under which partial retrials in jury cases are consistent with the Seventh Amendment, both generally, and specifically with respect to partial retrials confined to punitive damages. It is fair to say some lower courts have struggled to apply the Seventh Amendment standards set forth in Supreme Court precedent, and that the appeals courts have adopted divergent and irreconcilable approaches.

The Washington Legal Foundation submitted an amicus brief on this issue. In its brief urging the Supreme Court to grant review, WLF argued that the Seventh Amendment prohibits such partial retrials limited to punitive damages. WLF argued that the Seventh Amendment “right to trial by jury” has long been understood to constitute those jury trial rights that existed under the English common law when the Seventh Amendment was adopted in 1791. At common law there was no practice of setting aside a verdict in part. If the verdict was erroneous as to any issue, a new trial was directed as to all issues, so that all related issues could be decided by a single jury. Where the issue to be re-tried is related to issues already decided by the first jury, partial retrials create a danger that the second jury will be confused when told that some issues have already been decided.  WLF has argued that in this case the principal issue at any retrial on punitive damages (whether defendant acted sufficiently culpably in failing to provide stronger cancer warnings to merit a punitive award) is substantially similar to an issue decided in the first trial (whether it acted sufficiently culpably in failing to provide stronger cancer warnings to merit an award of compensatory damages).  The similarity of the two issues creates a significant danger of jury confusion, and the Seventh Amendment requires the plaintiff either to accept $2.7 million as her total compensation or to retry her entire case before a new jury.

WLF notes that considerable empirical evidence suggests that permitting partial retrials regarding punitive damages exacerbates the unpredictability of punitive damages awards. Moreover, the evidence suggests that permitting such partial retrials is a considerable disadvantage to tort defendants, who on average are likely to face larger monetary judgments than if a single jury considers all related tort claims.

Court Sets Aside Punitive Damages in Toxic Tort Case

The federal court in a toxic tort case has set aside the jury's punitive damages award. Garner v. BP Products North America, 2010 WL 1049794 (S.D.Tex.)(3/16/10).

The plaintiffs and over 100 other individuals filed suit against the defendant asserting that the defendant released an unidentified toxic substance into the atmosphere at its refinery causing personal injuries to workers. Several workers were transported to local hospitals where they were examined, treated, and released. At the time, the plaintiffs were employees of various sub-contractors at the site. In the trial of the first group of plaintiffs, a jury found for plaintiffs and went on to find that the conduct of the defendant was such that punitive damages should be awarded. It awarded punitive damages of $10 million to each plaintiff.

The punitive damages, inter alia, were challenged on post-trial motions. Under Texas law, in order to recover exemplary damages, the plaintiffs must establish at least gross negligence. The statute requires that the evidence pass both an objective and subjective test. The objective test requires a showing of an extreme risk of harm-- one that involves both high probability and high potential severity of an occurrence. Here, the trial court found the evidence failed to establish a legal connection between the event at issue and a known and extreme risk. The nature of refinery work is such that workers are subject to a variety of toxic odors at all times. The defendant, its employees and contractors, are generally aware of the potential hazards that exists in a refinery.  A disconnect existed here, however, said the court, because while there may have been some probability that a worker will be exposed to a toxic substance, the evidence did not support the high potential severity side of the test. Most of the exposures are minor and not harmful.

Nor did the evidence show a high probability of exposure from the same source. The source here was never identified, and in the prior releases or spills at the site, injuries were not always associated with each event and there was no showing of a recurring source.

Also missing from the equation, said the court, was the element of specific intent. The statute requires that the plaintiff establish a “specific intent” by clear and convincing evidence.  Specific intent requires more than a showing that a defendant had an awareness of the possibility of a spill or release. See Diamond Shamrock Refining Co. v. Hall, 168 S.W.3d 164, 171 (Tex.2005). It requires a showing that a defendant ignored the obvious or known risk and took no precautions that would minimize or arrest the harm anticipated. Id. at 171-72. The evidence showed that the defendant implemented safety precautions, such as requiring each worker to wear a monitor to detect the most toxic chemicals present at the refinery. And, there was evidence that monitors were installed and operational on the ground as well as on the towers in the refinery.

Therefore, the court concluded, as a matter of law, that gross negligence was not proved by clear and convincing evidence, and thus the jury's exemplary damage award must be set aside.

New Punitive Damages Book Worth A Look

For those readers of MassTortDefense who confront issues of punitive damages in their practice, a recently released book is worth a look:  DRI's Punitive Damages: A State-by-State Compendium (2009).

The book is a new compendium of the law of all fifty states, the District of Columbia and all Canadian provinces regarding punitive damages. This publication also contains a number of articles focused on recent trends in this area of the law. The book outlines each state’s law and procedure regarding punitive damages. Topics include: Leading cases and statutes in each state; the level of conduct required to trigger an award of punitive damages; product liability causes of action for which punitive damages are recoverable; special rules applicable to particular types of products, classes of products, or defendants; pleading requirements; bifurcation/
phasing procedures; limits of permissible discovery; state-specific defenses; and post-trial procedures.

Your humble blogger served as Co-Managing Editor/Atlantic Region Editor (but no royalties are involved!)

Use of Company Conduct Evidence to Prove Liability or Punitive Damages

As due process considerations have taken their more appropriate place in the law of punitive damages, see BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996), trial courts have struggled with the intersection of traditional product liability law and new rules on evidence necessitated by such due process concerns. 

For example, plaintiffs frequently seek to use evidence of other allegedly similar conduct and allegedly substantially similar accidents, injuries, incidents for liability related issues such as notice and defect.  In Philip Morris USA, Inc. v. Williams, 127 S.Ct. 1057 (2008), however, the Court confirmed a significant constitutional principle limiting punitive damages awards: the Due Process Clause prohibits juries from basing punitive damages awards even in part upon the desire to punish a defendant for harm to persons that are not before the court. 

Williams arose from an Oregon trial wherein a jury awarded $821,000 in compensatory damages and $79.5 million in punitive damages against cigarette manufacturer Philip Morris. At trial, the plaintiff’s attorney had urged the jury to punish Philip Morris for alleged harm to smokers other than the plaintiff by referring to the defendant’s market share and the number of smokers not only in the state of Oregon, but nationwide, who had allegedly contracted a smoking-related illness in the last 40 years. The Supreme Court held that the Due Process Clause forbids a jury from assessing punitive damages to punish a defendant for injury that it inflicts upon non-parties or “strangers” to this litigation. While a jury may consider the actual or potential harm to non-parties in the narrow context of determining “reprehensibility” of the conduct, which in turn is one of the factors relevant to an analysis whether the punitive damages award is excessive or not, it may not punish the defendant for the impact of its alleged misconduct on other people, who may bring lawsuits of their own in which other juries can resolve their claims.

The Supreme Court cautioned state courts that they must make sure that the “jury will ask the right question, not the wrong one.”  That is, evidence regarding alleged injuries of those not before the court must be used solely to judge the reprehensibility of the conduct, not to assess damages for the harm caused to those strangers. While the Court commented on the Oregon court’s refusal to give a jury instruction clarifying this distinction, it noted generally that state courts cannot authorize any procedures that create an unreasonable and necessary risk of any such confusion occurring. When evidence is introduced or argument made that risks this confusion, the state court must take steps to protect against that risk. 

Another such conflict was seen in the recent Montana case involving the trial court's exclusion of a car seat manufacturer's evidence of regulatory compliance.  Malcolm v. Evenflo Co., 2009 WL 2917799 (Mont., September 14, 2009).  The state supreme court ruled that while the evidence should have been excluded from the jury's consideration of liability for compensatory damages, the evidence should have been admitted for purposes of assessing punitive damages.  It let stand the compensatory award, but vacated the punitive damages award.

The case arose from a motor vehicle accident during which plaintiff's decedent  rode in the back of an SUV in the OMW model 207 child seat. A northbound motorist swerved into plaintiff Malcolm's lane and forced Malcolm off the road. The vehicle rolled three times, traveled down a steep incline, and stopped in a ditch.  The left belt hook of the OMW broke off during the rollover. The seat belt slipped out from the open-ended belt hook on the opposite side of the seat. The forces of the accident ejected the OMW from the vehicle, which resulted in death, according to plaintiffs.

The theory at trial was strict liability in tort, design defect theory. The Malcolms claimed that the Evenflo OMW model 207 infant child safety seat constituted a defectively designed product that failed even though they had used the seat in a reasonably anticipated manner. The Malcolms pointed to the OMW's open-ended belt hook design that might have prevented the injury. The Malcolms contended that Evenflo could have manufactured the OMW using an allegedly  feasible superior alternative design that required the vehicle's seatbelt to be routed through an enclosed seat belt tunnel even when the seat was used without the base. The Malcolms also sought punitive damages. The Malcolms alleged that Evenflo “continued selling the defective product in conscious, deliberate and intentional disregard of the danger presented.”

Evenflo contended that the OMW model 207 was not defective in any way. Evenflo argued that the severity of the forces involved in the accident were the sole cause of the death. Evenflo argued that the “tremendous forces” that occurred during the rollover forced open the rear passenger door, which was immediately adjacent to Tyler's child seat. Evenflo posited that Tyler's car seat came into direct contact with the ground as the Suburban rolled. Evenflo argued that the contact caused the seat to detach from the seat belt system and ultimately fly out the open door.

The National Highway Traffic and Safety Administration (NHTSA) requires that all child restraint systems comply with the minimum requirements of Federal Motor Vehicle Safety Standard 213. See 49 C.F.R. § 571.213 (2009). NHTSA required Evenflo to conduct internal testing of the OMW to determine if it complied with the FMVSS 213 standards, which it did. NHTSA and Transport Canada, the Canadian testing agency, conducted random audit FMVSS 213 tests in addition to Evenflo's internal testing.

The first issue was the basic products issue: Evenflo argued that the trial court erred when it excluded any evidence that the OMW model 207 complied with FMVSS 213. Evenflo contended that the fact that the OMW model 207 passed 341 tests performed under FMVSS 213 was highly relevant to the claim that the model 207 was defective and unreasonably dangerous.

Evenflo noted that the standard would be admissible in a negligence case, and  there is no reason why such highly relevant evidence should not be used in strict products liability cases. Thus, Evenflo urged the Court to adopt the Restatement (Third) of Torts: Products Liability § 4 (1998). Section 4 provides that compliance with an applicable regulation is admissible in connection with liability for defective design. Evenflo noted that a majority of jurisdictions hold that compliance with product safety regulation is relevant and admissible on the question of defectiveness, even if it is not necessarily controlling.

The four-justice majority reiterated this court's adherence to “well-settled, decades-old principles of strict liability” that consider irrelevant a manufacturer's reasonableness and level of care. The court declined to adopt the Restatement (Third) of Torts: Products Liability, §4.  Montana thus continues to be one of those few states that cling to the now-discredited "bright line" verbal distinction between cases asserting strict liability in tort and those grounded in negligence theory. (This Court had previously distinguished strict liability from negligence when it rejected the “state of the art” defense, for example, because it raises issues of reasonableness and foreseeability --concepts fundamental to negligence law.)  It still argues that any attempt to inject so-called negligence principles into strict liability law would somehow sever Montana's strict products liability law from the core principles for which it was adopted.  The focus in design defect cases must be on “the condition of the product,” rather than “the manufacturer's conduct or knowledge."  And the way to do this, apparently, is to exclude relevant, material, probative evidence that the product passed regulatory muster.

On the punitive damages issue, Evenflo argued that the trial court's decision to exclude evidence of the OMW model 207's compliance with FMVSS 213 prevented it from introducing evidence bearing on its state of mind. A defendant's state of mind is a “key element” in assessing punitive damages, and the car seat maker should have been able to present evidence of its regulatory compliance. 

The trial court had concluded that the OMW model 207's compliance with FMVSS 213 had “absolutely no bearing at all upon the reprehensibility of the conduct of Evenflo.” But the supreme court could not sustain the verdict on punitives in light of the court's decision to exclude evidence that might show why Evenflo acted as it did, or failed to act, when the jury considered whether to award punitive damages. Evidence of Evenflo's good faith effort to comply with all government regulations, including FMVSS 213, would be evidence of conduct inconsistent with the mental state requisite for punitive damages.

Interestingly, the supreme court noted that while here a new jury here could consider evidence of the OMW model 207's compliance with FMVSS 213 for the purposes of determining whether Evenflo acted with actual fraud or actual malice, generally the Montana system provides for the presentation of evidence regarding liability for compensatory damages and punitive damages to the jury in a single proceeding. Thus, bifurcation is disfavored, and the trial courts must ordinarily trust that the jury will heed the court's instructions as to how to evaluate the evidence presented.

One dissenting justice would have also reversed the compensatory damages. He differed from the majority on how the trial was conducted and saw it as improperly biased against Evenflo. Two other dissenters agreed with the majority on the compensatory damages but would have sustained the punitive award, arguing that Evenflo's inability to present evidence of its compliance with regulations did not prejudice the company.

Punitive Damages Claim Against Patch Maker Found Preempted

A federal court has found that federal law preempts a state law that allows plaintiffs to seek punitive damages from the makers of defective drug products if the drug company knowingly withheld information from the Food and Drug Administration. Grange v. Mylan Laboratories Inc., 2008 WL 4813311 (D.Utah 10/31/08).

Plaintiffs’ estate sued over an allegedly defective drug patch. Defendants sold the Fentanyl Patch, which is applied directly to the skin to deliver fentanyl, a strong pain medicine. Doctors prescribe the Fentanyl Patch to relieve chronic moderate to severe pain. The patch should be worn for seventy-two hours and is supposed to deliver the medicine at a regulated rate. Plaintiff alleged that due to a design and/or manufacturing defect, some Fentanyl Patches contain and deliver fentanyl in amounts far in excess of what is advertised. Plaintiff alleged that defendants knew that the Fentanyl Patch was defective, but did not warn of the potential risk of overdose.

Defendants moved to dismiss the claims for punitive damages. A Utah statute, Utah Code Ann. § 78B-8-203, completely bars punitive damages for harm caused by FDA approved drugs. But that statute has an exception for cases where a plaintiff can show that a defendant withheld information from the FDA. Plaintiffs, of course, alleged that the exception applied here. But defendants contended that this exception is preempted by federal law.

As the court noted, this statutory limitation on liability for punitive damages does not apply if it is shown by clear and convincing evidence that the drug manufacturer knowingly withheld or misrepresented information required to be submitted to the Federal Food and Drug Administration under its regulations, which information was material and relevant to the claimant's harm. Defendants contended that the statutory exception amounts to a de facto “fraud on the FDA” claim, which is preempted by federal law.

In support of this argument, defendants relied on Buckman Co. v. Plaintiff's Legal Comm'n., 531 U.S. 341, 348 (2000), which held that state law fraud-on-the-FDA claims conflict with, and are therefore impliedly preempted by, federal law. The Buckman Court gave two primary reasons for this holding. First, allowing state law claims of fraud on the FDA would interfere with the FDA's objectives and judgment. See id. at 350-51. Second, such claims could cause the FDA to face a deluge of unnecessary information in the approval process by drug companies attempting to avoid state law liability, jamming up the regulatory system.

The court decided that the decision in Buckman did not directly reach the issue presented here. In this case, unlike in Buckman, the state statute does not predicate liability on fraud on the FDA, but rather would allow certian damages based on such fraud. The question of whether this type of statute is preempted, said the court, has created a split of authority. Compare Garcia v. Wyeth-Ayerst Labs., 385 F.3d 961 (6th Cir.2004)(extending Buckman's logic to a statute similar to Utah's), with Desiano v. Warner-Lambert & Co., 467 F.3d 85, 97 (2d Cir.2006)(same Michigan statute was not preempted by Buckman), affirmed sub nom, Warner-Lambert Co., LLC v. Kent, 128 S.Ct. 1168 (2008)(4-4 vote).

Despite a mention of the so-called presumption against preemption, the court found that the Sixth Circuit's decision in Garcia was more persuasive here. The chief problems that Buckman sought to counteract are present whenever a plaintiff, as a prerequisite to collecting damages, is required to put on evidence that there was what amounts to fraud on the FDA. When such evidence is considered, state courts are essentially second-guessing the FDA, and drug companies, nervous about state litigation, will have an incentive to flood the FDA with information. To the extent that the Utah law allows for an exception in cases where a plaintiff puts on his or her own independent evidence of information being withheld from the FDA, this statute was found to be preempted. There is no preemption, however, in a situation where a plaintiff invokes the Act to seek punitive damages in cases where the FDA itself has found that there was fraud in the application process.
 

California Supreme Court Grants Review Of Punitive Damages Decision

The ongoing saga that is Philip Morris USA Inc. v. Williams continues to reverberate through the lower courts. California's Supreme Court recently granted Ford Motor Co.'s petition to review an appeals court's July 2006 decision awarding $82.6 million to a woman left paralyzed by a 2002 rollover crash. Buell-Wilson v. Ford Motor Co., S-163102 (Cal. S.Ct. July, 2008), see here. But the Court deferred merits briefing on the issues until after the U.S. Supreme Court's next decision in Williams. One of the central issues in that case is the constitutional barrier to using punitive damages in product liability cases to punish companies for harm allegedly inflicted on those other than the plaintiffs.

The Ford case was brought by a woman left a paraplegic in 2002 allegedly after her Ford Explorer rolled over several times when she claims she swerved to avoid an object that fell from another vehicle onto the road. At trial, plaintiff claimed that the vehicle's design was dangerously unstable and prone to rollover; plaintiff also alleged the vehicle roof was inadequately supported and defectively weak. The jury found a design defect and a crash-worthiness design defect in the roof. The jury awarded the plaintiff (and spouse) more than $368 million, two-thirds of which was punitive damages. The judge in the case reduced the award to about $150 million. The California appeals court further reduced the total damages to $82.6 million -- $55 million in punitives -- in July, 2006.

Ford sought review, arguing the significant risk that the jury thought it could, and in fact did, punish Ford on behalf of people other than the plaintiff. Ford cited arguments from the plaintiff such as the one that went, “They go ahead and release the Bronco II in 1983 ... knowing it will roll over and kill or catastrophically injure many people, which it has.” Ford insisted in its petition for state Supreme Court review that the plaintiffs should not have been allowed to present any evidence of defects in the Bronco II sport utility vehicle model, which was not involved in the rollover case at bar. The jury thus may have gone ahead and punished the company for others allegedly harmed in Ford rollover accidents.

The grant of the petition notes that the case presents the following issues: (1) What procedural protections are required by Philip Morris USA v. Williams, 127 S.Ct. 1057, which held that due process requires that a jury not award punitive damages to punish for harm to third parties; and under what circumstances can those constitutional rights be deemed forfeited? (2) Are punitive damages prohibited in product liability cases where the manufacturer’s design conforms to governmental safety standards and industry standards and custom, and there is a “genuine debate” about what the law requires? (3) Is the amount of the punitive damage award in this case unconstitutionally excessive and arbitrary?

The court ordered briefing deferred pending the next decision of the United States Supreme Court in Philip Morris USA, Inc. v. Williams, No. 07-1216, cert. granted June 9, 2008. In the previous appeal of Williams, 127 S.Ct. 1057, the Court confirmed a significant constitutional principle limiting punitive damages awards: the Due Process Clause prohibits juries from basing punitive damages awards in part upon the desire to punish a defendant for harm to persons that are not before the court. Williams arose from an Oregon trial wherein a jury awarded $821,000 in compensatory damages and $79.5 million in punitive damages against cigarette manufacturer Philip Morris. At trial, the plaintiff’s attorney had urged the jury to punish Philip Morris for alleged harm to smokers other than the plaintiff by referring to the defendant’s market share and the number of smokers not only in the state of Oregon, but nationwide, who had allegedly contracted a smoking-related illness in the last 40 years. The Supreme Court held that the Due Process Clause forbids a jury from assessing punitive damages to punish a defendant for injury that it inflicts upon non-parties or “strangers” to this litigation. While a jury may consider the actual or potential harm to non-parties in the narrow context of determining “reprehensibility” of the conduct, which in turn is one of the factors relevant to an analysis whether the punitive damages award is excessive or not, it may not punish the defendant for the impact of its alleged misconduct on other people, who may bring lawsuits of their own in which other juries can resolve their claims. The Court cautioned state courts that they must make sure that the “jury will ask the right question, not the wrong one.” That is, evidence regarding alleged injuries of those not before the court must be used solely to judge the reprehensibility of the conduct, not to assess damages for the harm caused to those strangers. While the Court commented on the Oregon court’s refusal to give a jury instruction clarifying this distinction, it noted that state courts cannot authorize any procedures that create an unreasonable and necessary risk of any such confusion occurring. When evidence is introduced or argument made that risks this confusion, the state court must take steps to protect against that risk.


In both Williams and the Ford case, the lower courts have ignored the Supreme Court’s directive, asserting that the defendants had somehow waived their due process rights by not proposing jury instructions that explicitly and exactly anticipated the precise language of the Supreme Court decision that had not yet been issued. But the U.S. Supreme Court and now the California high court both seem unconvinced by plaintiffs’ waiver arguments.

Parties Spar Over Possible Bifurcation In Mirapex MDL

Pfizer and the other defendants in the Mirapex litigation are seeking a bifurcated trial plan. In motions filed with the U.S. District Court for the District of Minnesota, where MDL-1310 is based, the defendants asked for separate liability and punitive damages phases. Defendants raised the legitimate concern that the jury may be swayed by financial considerations when determining liability.

In this litigation, plaintiffs allege that the drug causes a compulsive urge to gamble. The plaintiffs claim that Mirapex triggered compulsive behaviors, and that the defendants knew the risks but failed to properly study the effects or warn patients. As is so often the case, a label change (in February 2006) seems to have prompted litigation.

Defendants assert that bifurcation is warranted because evidence of defendants' finances is irrelevant to the issues of liability; introduction of such evidence during the liability phase would be unduly prejudicial. Bifurcation is thus necessary to prevent unfair prejudice to defendants during the liability determination. The motions note that the 8th Circuit has recognized bifurcated trial plans in a number of settings. Indeed, bifurcation is a common feature of pharmaceutical mass torts.

Plaintiffs oppose the proposal, arguing that the issue of liability and punitive damages are somehow “intertwined.” Meaning, of course, that they would like for the jury to consider the company’s financials when judging its conduct. Plaintiffs insist on a single trial where the fact finder considers “all the evidence at once.” To the extent some of that evidence should not be considered on the issues of liability, plaintiffs propose that the jury could be instructed to consider the financial information only in the proper context.

MassTortDefense has posted on the importance of proper trial plans here. The Mirapex motions present perhaps the most basic form of bifurcation or trial plan issue.  The timing of the punitive damages issues in class actions or other complex aggregated litigation can become highly complex and controversial. The questions as to punitive damages may include: a) whether they can be awarded; b) if so, whether as a lump sum, as a multiplier of individual compensatory damages, or on a per class member basis, c) whether they can be tried before individual liability as to specific class members, or as to absent class members, or non-bellwether plaintiffs has been decided; d) whether they can be awarded before the actual amount of compensatory damages has been determined; and e) how punitive damages are allocated among class members or the aggregated plaintiffs if not determined on a per plaintiff basis. State Farm Mutual Auto Insurance Co. v. Campbell, 538 U.S. 408 (2003). See In re Simon II, 407 F.3d 125 (2d Cir. 2005); Beck v. Boeing Co., 60 Fed. Appx. 38 (9th Cir. 2003); Allison v. Citgo Petroleum Corp., 151 F.3d 402 (5th Cir. 1998); Johnson v. Ford Motor Co., 35 Cal.4th 1191,113 P.3d 82 (Cal. 2005) (rejecting aggregate disgorgement); Engle v. Liggett Group, Inc., 945 So.2d 1246, 1265 (Fla. 2006); In re Chevron Fire Cases, 2005 WL 1077516, at *14-15 (Cal. App. May 6, 2005); Colindres v. QuitFlex Manufacturing, 235 F.R.D. 347, 378 (S.D. Tex. 2006).

Punitive damages are designed to punish a defendant for egregious conduct and deter future reprehensible conduct on the part of the defendant or others. Particularly in the context of juries unchecked by proper legal instructions and unorthodox trial plans that prematurely address the punitive damages issue, they constitute a serious litigation threat to product sellers today. In aggregated litigation, such damages have the potential to lead to crippling verdicts, and thus the threat of punitive damages may coerce “blackmail” settlements.

In recent years, the United States Supreme Court has identified a variety of constitutional limits on punitive damage awards. Specifically, such awards cannot be arbitrary punishments and cannot be grossly excessive. In Philip Morris USA v. Williams, 127 S.Ct. 1057 (2007), the Court confirmed a significant constitutional principle limiting punitive damages awards: the Due Process Clause prohibits juries from basing punitive damages awards in part upon the desire to punish a defendant for harm to persons that are not before the court. Williams arose from an Oregon trial wherein a jury awarded $821,000 in compensatory damages and $79.5 million in punitive damages against cigarette manufacturer Philip Morris. At trial, the plaintiff’s attorney had urged the jury to punish Philip Morris for alleged harm to smokers other than the plaintiff by referring to the defendant’s market share and the number of smokers not only in the state of Oregon, but nationwide, who had allegedly contracted a smoking-related illness in the last 40 years. The Supreme Court held that the Due Process Clause forbids a jury from assessing punitive damages to punish a defendant for injury that it inflicts upon non-parties or “strangers” to this litigation. While a jury may consider the actual or potential harm to non-parties in the narrow context of determining “reprehensibility” of the conduct, which in turn is one of the factors relevant to an analysis whether the punitive damages award is excessive or not, it may not punish the defendant for the impact of its alleged misconduct on other people, who may bring lawsuits of their own in which other juries can resolve their claims. The Court cautioned state courts that they must make sure that the “jury will ask the right question, not the wrong one.” That is, evidence regarding alleged injuries of those not before the court must be used solely to judge the reprehensibility of the conduct, not to assess damages for the harm caused to those strangers. While the Court commented on the Oregon court’s refusal to give a jury instruction clarifying this distinction, it noted that state courts cannot authorize any procedures that create an unreasonable and necessary risk of any such confusion occurring. When evidence is introduced or argument made that risks this confusion, the state court must take steps to protect against that risk.

One implication of the Court’s emphasis on avoiding misuse of evidence of harm to “strangers” clearly relates to the employment of reverse-bifurcated trial plans in aggregated cases, in particular trial plans in which the entitlement and amount of punitive damages (by ratio or dollar amount) is set in an early phase of the trial, well before the jury has considered whether the vast bulk of the plaintiffs have actually been injured by the alleged conduct of the defendant. E.g., In re Tobacco Litigation, 624 S.E.2d at 740 (W. Va. 2005)(holding that an aggregated, reverse-bifurcated punitive damage multiplier trial before adjudication of any affirmative defense would not be per se invalid). Some state courts favor this approach because it puts pressure on defendants to settle by creating the risk of a huge punitive damages burden before it has even been established whether many or most of the plaintiffs have any compensatory damages. Such a trial plan clearly creates an unnecessary and unreasonable risk of a due process violation under Williams, one that a simple jury instruction about the distinction between entitlement and reprehensibility cannot hope to address adequately. See, e.g., In re Simon II Litig., 407 F.3d at 138 (“In certifying a class that seeks an assessment of punitive damages prior to an actual determination and award of compensatory damages, the district court’s Certification Order would fail to ensure that a jury will be able to assess an award that, in the first instance, will bear a sufficient nexus to the actual and potential harm to the plaintiff class, and that will be reasonable and proportionate to those harms.”); Allison v. Citgo Petroleum Corp., 151 F.3d at 417–418 (stating that “because punitive damages must be reasonably related to the reprehensibility of the defendant’s conduct and to the compensatory damages awarded to the plaintiffs, . . . recovery of punitive damages must necessarily turn on the recovery of compensatory damages”); Southwestern Ref. Co. v. Bernal, 22 S.W.3d at 433 (“Under the [trial plan], the jury would decide punitive damages for the entire class without knowing the severity of the offense or the extent of compensatory damages, if any, for each of the 885 plaintiffs…. the modified trial plan is … prejudicial because it fails to ensure that punitive damages have some understandable relationship to compensatory damages and are not grossly out of proportion to the severity of the offense for each of the 885 plaintiffs.”).

Federal Court Tosses Punitive Damages Award in HRT Case

A federal district court has thrown out a jury award of more than $27 million in punitive damages awarded to a Little Rock, Ark. woman who developed breast cancer allegedly as a result of taking hormone replacement therapy. In re: Prempro Products Liability Litig. (Scroggin v. Wyeth, et. al.), MDL No. 1507-WRW, 4:04CV01169.  Plaintiff Donna Scroggin developed breast cancer and had a double mastectomy, and blamed the hormone drugs she allegedly took for 11 years to combat menopausal symptoms. Defendants noted their products have carried a label warning of a heightened risk of breast cancer at all relevant times. In February, a federal jury returned a verdict in favor of Scroggin in her lawsuit against drug makers Wyeth and Upjohn, awarding her $2.75 million in compensatory damages and $27 million in punitive damages.

In an opinion July 8th on post-trial motions, Judge Wilson, of the E.D. of Arkansas, threw out the punitive damages award, finding he should not have permitted certain key testimony from a former Food and Drug Administration official, Dr. Suzanne Parisian. She had testified as the plaintiff's regulatory expert. The Court concluded, as defendants had asserted, that Dr. Parisian testified to a bottom line conclusion without sufficient explanation, failed to provide expert analysis, testified beyond limitations established by pretrial orders, testified in areas beyond her expertise, and invaded areas that required no expert testimony. Specifically, the expert failed to provide convincing testimony that Wyeth's actions had violated FDA regulations in any way that would warrant a punitive award.

In a part of the ruling particularly useful for readers of MassTortDefense, the judge said the expert did little more than read select portions of exhibits without providing further comment. Contrary to plaintiff’s position during the Daubert hearing, and during the punitive damages stage, Dr. Parisian, generally, did not give the jury the tools they need to look at those documents, or to understand them in the context of a regulatory background -- she simply read the documents to the jury. He hadn’t admitted such “so that [the expert] could simply engage in recitation of those exhibits; jurors are capable of reading documents.” Ironically, on cross-examination, Dr. Parisian, on at least one occasion, took the position that the document “speaks for itself.”

If an expert does nothing more than read exhibits, is there really any point in her testifying as an expert? The Court said “no.” As was seen during the punitive damages stage, the use of the “regulatory expert” to deal with large volumes of conduct documents is subject to abuse. MassTortDefense has seen this same technique in asbestos, in tobacco, in other pharma cases. The expert here did not explain the documents, provide summaries, or tie them in to her proposed regulatory testimony. Dr. Parisian did not provide analysis or expertise. Instead, improperly, she was a mere document delivery device.

The promised expert testimony simply was not delivered, said the Court, “so I should have struck this testimony at the time.”  Without Parisian's testimony, plaintiff had not presented sufficient other evidence to meet the clear and convincing standard required for punitive damages. The Court said plaintiff tried to present evidence of what, out of context and at first blush, might be considered questionable practices (e.g., alleged ghostwriting, countering negative press, etc.), but all this fell far short of establishing a submissible jury issue on punitives.

Supreme Court Reduces Punitive Damages Award in Exxon Valdez Case

The U.S. Supreme Court has issued an opinion reducing the amount of the award of punitive damages against Exxon Mobil Corp. related to the 1989 Exxon Valdez oil spill – from $2.5 billion to just $507 million, an amount equal to the compensatory damages in the case. Exxon Shipping Co. v. Baker, 2008 WL 2511219 (U.S., June 25, 2008).

In a 5-3 decision, the Court found that a 1-to-1 ratio of compensatory to punitive damages was appropriate in the case, in which more than 32,000 fishermen and Alaska native citizens sought remedies after the tanker accident spilled approximately 11 million gallons of oil into Prince William Sound. At Phase I of the trial, the jury found Exxon and the ship’s Captain Hazelwood reckless (and thus potentially liable for punitive damages) under instructions providing that a corporation is responsible for the reckless acts of employees acting in a managerial capacity in the scope of their employment. In Phase II, the jury awarded compensatory damages to some of the plaintiffs; others had settled their compensatory claims. In Phase III, the jury awarded $5,000 in punitive damages against Hazelwood and $5 billion against Exxon. The punitive issue has yo-yoed between the District Court and the Ninth Circuit, which eventually in December 2006, reduced the award to $2.5 billion, saying ExxonMobil’s conduct was not intentional and that the rate of punitive damages to actual economic harm exceeded what was appropriate under recent Supreme Court precedent.

Supreme Court View

The Court addressed several issues:

1. Because the Court was equally divided on whether maritime law allows corporate liability for punitive damages based on the acts of managerial agents, it left the Ninth Circuit's opinion undisturbed in this respect (the Ninth Circuit found that ExxonMobil was not exempt from punitive damages).

2. The Clean Water Act's water pollution penalties do not preempt punitive-damages awards in maritime spill cases. Nothing in the statute points to that result, and the Court had rejected similar attempts to sever remedies from their causes of action. There is no clear indication of  congressional intent to occupy the entire field of pollution remedies, nor is it likely that punitive damages for private harms will have any frustrating effect on the CWA's remedial scheme.

3. The punitive damages award against Exxon was excessive as a matter of maritime common law. In the circumstances of this case, the award should be limited to an amount equal to compensatory damages.

And it is this last point likely of most interest to readers of MassTortDefense. Since maritime
law falls under federal jurisdiction, the Court served as a common law court in the case. Rather than the constitutional due process analysis seen in recent punitive damages decisions, see, e.g., State Farm Mut. Automobile Ins. Co. v. Campbell, 538 U.S. 408, the approach was one of fashioning federal common law, giving observers, perhaps, some insight into the Court’s views of punitive generally.


The Court observed that one of the real problems with punitive damages is the stark unpredictability of punitive awards. Courts ought to be concerned with fairness and consistency, and the available punitive damages data suggest that the spread between high and low individual awards is unacceptably large. The spread in state civil trials is especially great, and the outlier cases subject defendants to punitive damages that dwarf the corresponding compensatories. These ranges might be acceptable if they resulted from honest efforts to reach a generally accepted optimal level of penalty and deterrence in specific cases involving a wide range of circumstances, but evidence suggests that is not the case.

The unpredictability of high punitive awards is in tension with their punitive function because of the implication of unfairness that an eccentrically high punitive verdict carries. A penalty should be reasonably predictable in its severity, so that even Justice Holmes's proverbial “bad man” can look ahead with some ability to know what the stakes are in choosing one course of action or another. And a penalty scheme ought to threaten defendants with a fair probability of suffering in like degree for like damage. Justice Souter thus argued that reducing punitive damages actually will better allow them to achieve their goal of acting as a deterrent and a punishment – by making them more predictable.


The Court was skeptical that verbal formulations are adequate insurance against unpredictable outlier punitive awards, and the option of setting a hard-dollar punitive cap was rejected because there is no “standard” tort or contract injury, making it difficult to settle upon a particular dollar figure that would be appropriate across the board. The most promising alternative was to peg punitive awards to compensatory damages using a ratio. This is the approach used in many states and in analogous federal statutes allowing multiple damages.

Based on studies of thousands of cases as to what punitive awards were appropriate in circumstances from the most blameworthy down to the least blameworthy conduct, from malice and avarice to recklessness to gross negligence, compensatory award exceed the punitive award in most cases. Accordingly, the Court found that a 1:1 ratio is a fair upper limit in maritime cases such as this.

Though the decision technically dealt only with maritime liability, some are hailing it as a reasonable way to assess punitive damages generally, particularly on a company that did not intentionally harm the environment. Time will tell whether the decision could have an effect far beyond federal maritime law, cabining unpredictable punitive damages (the way Metro-North Commuter R. Co. v. Buckley, 521 U.S. 424 (1997) impacted medical monitoring claims in the states).