January 24, 2020

A $6.8 Million Band Aid

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Last October, I reported on the $8 billion punitive verdict returned by a Philadelphia jury against Johnson & Johnson in a case alleging that the company had failed to warn that its antipsychotic drug Risperdal could cause young men to develop breasts.

I expressed the view that a punishment of this size in an individual case is proof positive that the jury was animated by passion and prejudice and that a reduction of the punitive award would therefore be an inadequate remedy.

Regrettably, the trial court overlooked the fact that preposterous awards like this are indicative of a malfunctioning jury and instead merely reduced the punitive damages to $6.8 million—ten times the compensatory damages.

Putting aside this conceptual error, the court’s conclusion that a 10:1 ratio is constitutionally permissible is misguided for two reasons.

First, the court ignored the Supreme Court’s repeated admonition that a 1:1 ratio may mark the constitutional maximum when compensatory damages are substantial—as they are in this case. There are dozens of cases adhering to this 1:1 cut-off. Conversely, the number of cases in which courts have permitted a ratio of more than 2:1 or 3:1 when compensatory damages are this high is quite small, and the number of cases allowing ratios as high as 10:1 is minuscule.

Second, the court also failed to take into account the fact that there are roughly 13,600 other cases alleging injuries from use of Risperdal.

As my colleagues and I have explained in prior posts, a punitive award in an individual case cannot be constitutional unless every other plaintiff raising similar claims could receive the same amount of punitive damages without the aggregate being excessive punishment for the full effect of the allegedly wrongful conduct. A punitive award that fails this test runs afoul of the Supreme Court’s holding that juries may not punish defendants for harms suffered by non-parties because the award exceeds the portion of the punishment fairly allocable to the plaintiff’s injuries.

It should go without saying that a punitive award of more than $92 billion would be excessive punishment for failing to adequately disclose potential side effects from a drug that is meant to help people. Therefore, it should not be permissible for this one plaintiff to obtain a pro rata share of such an unconstitutional punishment.

J&J will have a lot of fish to fry in its appeal, so it remains to be seen whether it will challenge the amount of punitive damages. But if it does, we will report on the Pennsylvania Superior Court’s resolution of the issue.

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