Usually, when a defendant gets a punitive award reduced to the same amount as the compensatory damages, it considers that a victory. But while such a reduction recently saved Johnson & Johnson $15 million, I don’t think that it should be satisfied with the result.
Kaiser v. Johnson & Johnson is one of tens of thousands of cases alleging that a pelvic mesh device marketed by J&J was defective. In what the district court described as “a close case,” a jury awarded the plaintiffs $10 million in compensatory damages and $25 million in punitive damages.
The district court denied J&J’s challenges to the sufficiency of the evidence, rejected its evidentiary and instructional arguments, and refused to disturb the $10 million compensatory award—even though it was higher than awards in cases involving more severe injuries, greater than compensatory awards in other cases involving the same medical device, and more than the plaintiffs’ counsel requested.
But the court deemed the amount of punitive damages to be a bridge too far, ordering a remittitur to $10 million—i.e., a 1:1 ratio to the compensatory damages. While the court was surely right that a punitive award of $25 million in a case like this one is grossly excessive, it never grappled with whether a $10 million exaction is likewise excessive.
The Supreme Court explained in State Farm v. Campbell that a punitive award that is greater than necessary to accomplish a state’s interest in punishment and deterrence “furthers no legitimate purpose and constitutes an arbitrary deprivation of property.” It follows that “punitive damages should only be awarded if the defendant’s culpability, after having paid compensatory damages, is so reprehensible as to warrant the imposition of further sanctions to achieve punishment or deterrence.”
In a “close case” like this one, in which the compensatory damages are higher than in cases involving more serious injuries, higher than in cases involving the same medical device, and higher than the high end of the range requested by plaintiffs’ counsel, there should be a strong presumption that the compensatory damages alone suffice to punish and deter.
And that presumption should be all the stronger in light of the undisputed evidence that J&J’s total profit from sales of the device in the plaintiffs’ home state of Indiana was only $150,000. The compensatory damages alone removed that total profit 66 times over. From J&J’s perspective, every penny of the outsized compensatory award more than suffices to punish and deter.
And to put the icing on the cake, this was not a one-off case, but rather part of a massive MDL. There already have been other punitive awards against J&J, which need to be taken into account in determining whether additional punitive damages serve any valid purpose.
As my colleagues and I have pointed out in many prior posts, a punitive award in one of multiple cases involving the same product or conduct—which is constitutionally limited to punishing for the harm suffered by the plaintiff—can be sustainable only if the same amount could be imposed in every other case without the aggregate punishment being excessive.
Applying that rule here, if $10 million in punitive damages were imposed in each of the tens of thousands of other cases brought against J&J, the aggregate punishment would be in the hundreds of billions of dollars. Not only is such an aggregate punishment self-evidently excessive, but anything close to it would deter medical device makers and other businesses from even trying to bring salutary products to market.
In the early days of punitive damages, ratios were generally below 1:1. The addition of a small amount of punitive damages was meant to signal that the jury found the defendant’s conduct to be especially opprobrious. A punishment the same size as the compensatory damages was fairly rare and generally reserved for circumstances in which the compensatory damages were insufficient to fully compensate the injured party.
Although times have changed, the original approach remains appropriate for situations in which a vast number of plaintiffs allege injury arising from the same product or course of conduct. In a case like this one, in which the compensatory damages were already 66 times the defendant’s profit from the sale of its product in the plaintiffs’ State and where large numbers of other plaintiffs are pursuing the same claim, a punitive award that is a small fraction of the compensatory damages would fully suffice. Anything more “furthers no legitimate purpose and constitutes an arbitrary deprivation of property.”