An October 12 Legal Pulse post, Jury Piles Punitive Damages on Drug Maker for Injuries Caused by Medical Malpractice, discussed two breathtaking punitive damage awards imposed by Las Vegas, Nevada juries on Teva and Baxter Healthcare for infection-related injuries caused directly by physician malpractice. The first two punitive damage awards were $500 million and $162.5 million.
Yesterday, the jury in a third case which earlier this week had found Teva and Baxter liable for failing to do more to stop physicians from re-using an anesthetic which was clearly labeled SINGLE USE, imposed punitive damages of $90 million. Blommberg has a complete report of the verdict here.
Cross-posted at Forbes.com’s WLF contributor site
“It only took two atomic bombs to force the Japanese to surrender.“
Saber rattling from a military leader or despotic strongman? Nope, a pithy quote by Nevada plaintiffs’ lawyer Will Kemp to a Bloomberg reporter (full story here) in the wake of his clients being awarded $162.5 million in punitive damages in a suit against medical product manufacturers Teva and Baxter Healthcare.
This is the second massive punitive award against the companies related to the same injuries, the first being $500 million imposed by a jury in May 2010.
A third bomb could drop this week as another jury deliberates on punitive damages after finding Baxter and Teva at fault in a separate but related trial.
There is no denying the gravity of the injuries suffered: the plaintiffs contracted hepatitis C after having general anesthesia injected through contaminated syringes at an endoscopy center. The anesthetic, Propofol, was approved by the Food & Drug Administration for a single use, and the vials were clearly labeled as such. The endoscopy center medical staff ignored the warnings, and reused vials repeatedly. Continue reading
As long as your business is in great financial condition, due process doesn’t really apply to you, so says a California appellate court this week. In Bullock v. Philip Morris, the court upheld a punitive damage award which was sixteen times larger than the compensatory award. The court found that the reprehensibility of the tobacco company’s conduct in the 1950s, coupled with their relative financial resources, permitted the trial court to determine that in addition to $850,000 in compensatory damages, the plaintiff would recover $13.8 million in punitive damages. To say this is excessive would be an understatement, but it’s also in direct contradiction to existing U. S. Supreme Court precedent.
In almost every instance, punitive damages cannot exceed compensatory damages by more than a single digit ratio, the Supreme Court declared in State Farm Mut. Automobile Ins. Co. v. Campbell, 538 U.S. 408 (2003). While declining to create an artificial, specific bright-line rule, the Court held in that case that a key part of analyzing any punitive damage award is the ratio between the compensatory damages and the punitive damages, and that “in practice, few awards exceeding a single-digit ratio…will satisfy due process.” Id. at 425. In addition, two other guideposts are relevant: the reprehensibility of the defendant’s misconduct and the difference between punitive damages and civil penalties authorized or imposed in comparable cases. The dissenting judge in Bullock did not take issue with the majority’s determination that the misconduct was reprehensible compared to other cases, and there are no comparable penalties or cases on point. Continue reading
Those who argue that America’s civil justice system imposes needlessly high costs on free enterprise routinely cite punitive damages, and the random way that juries impose them, as one of the worst offenders. But the amounts of compensatory damages imposed in either private lawsuits or in enforcement actions by the government are often eye-popping in their own regard. Judges and juries impose many of these non-punitive damages pursuant to federal statutes. Some laws, such as the Sherman Antitrust Act and the Racketeer Influenced and Corrupt Organizations Act, allow or require damages to be trebled. Others set damages at a fixed amount, such as $10,000 per violation, which add up rapidly in such areas of the law as environmental and food and drug.
Defendants’ attempts to argue that excessive statutory damages violate their constitutional rights have not found any success, as compared to challenges to punitive damages, on which the Supreme Court has imposed due process limitations under the BMW, State Farm, and Philip Morris line of cases. On July 7, a federal district court judge in Boston took the unprecedented step of dramatically reducing statutory copyright damages in a closely-watched digital music file piracy case, Sony BMG v. Tenenbaum. Judge Nancy Gertner applied the rationale of the Supreme Court’s punitive damages cases to cut the damage award.
Businesses might find this result very promising. But as prominent copyright attorney and blogger Ben Sheffner points out in a new Washington Legal Foundation Legal Backgrounder, American enterprises should view the ruling as a double-edged sword, one which defendants like Mr. Tenenbaum or even other businesses can deploy in business-vs.-business litigation. Continue reading
WLF Litigation Updates:
New Commentaries From The Legal Pulse:
R. Ben Sperry, Washington Legal Foundation Fellow & law student, George Mason University School of Law
A principled civil justice system allows plaintiffs to seek redress for actual harms. However, this does not mean courts have free rein to impose punitive damages upon defendants in an arbitrary manner.
The U.S. Supreme Court has recognized and defined this principle in a series of rulings. Many State Supreme Courts have been reluctant in applying it, though. For instance, in State Farm v. Campbell, the U.S. Supreme Court ruled that the 145:1 ratio of punitive to compensatory damages the Utah courts imposed on State Farm was an unconstitutional violation of their Due Process rights. The decision suggested that an “application of the [relevant] guideposts to the facts of this case… likely would justify a punitive damages award at or near the amount of compensatory damages.” The Utah Supreme Court seemingly thumbed its nose at this decision, though, choosing to impose a punitive award nine times greater than the compensatory damages.
Thus, we must applaud the Oregon Supreme Court’s recent ruling in Schwarz v. Philip Morris because the justices firmly protected the rights of a defendant which is regularly vilified in the public and even in some courts. Continue reading
Capitalizing on the excitement surrounding the looming vacancy on the Supreme Court, three activist groups today used an advertisement in the Washington Post to offer a biting criticism of the Supreme Court’s “corporate-biased” practices.
Unfortunately, despite appearing in a publication of high repute, the ad by Alliance for Justice, MoveOn.Org, and People For The American Way is light on facts and heavy on unsubstantiated criticism.
Consider its claim that the Supreme Court has allowed corporations to “dodg[e] liability for faulty medical devices.” The quotation alludes to Riegel v. Medtronic in which the eight justice majority declared that federal law preempts state common-law claims. This opinion does not represent a renegade court; rather, it is in keeping with The Medical Device Amendments, drafted in 1976, which expressly allow federal preemption. Federal preemption is not a whim of the Supreme Court, but the will of the people as represented by our legislators in Congress.
Or consider the ad’s claim that the Court is led by “the radical right … Justices Roberts and Alito.” It is true that John Roberts is the Chief Justice, but it is also true that Roberts was confirmed with a good deal of bipartisan support—something a true “radical” could certainly not have achieved. Continue reading