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 Although legal experts think J&J faces an uphill battle, both they
and investors believe the Texas jury's penalty, the largest product
liability verdict so far this year, is unlikely to stand.
In the two-month trial, five separate people from California argued
that design flaws in the metal-on-metal implant made by J&J
subsidiary DePuy Orthopaedics caused tissue death, bone erosion and
other injuries.
It is the second large verdict against J&J in the Pinnacle implant
litigation, which has been consolidated before U.S. District Court
Judge Edward Kinkeade in Texas. In July, another jury awarded six
Texas plaintiffs $500 million. Both cases were so-called
bellwethers, intended to gauge the value of claims for more than
9,000 other pending implant cases.
J&J said in a statement it was confident in its appeal prospects and
would not settle. It also said it stood by the safety of its
product.
Last Thursday's verdict has had little impact on J&J stock. Les
Funtleyder, a portfolio manager with ESquared Asset Management, said
investors assume large health products companies will occasionally
be sued and lose and that the costs are ultimately manageable.
J&J said it will ask Kinkeade to reduce or throw out the jury award
before appealing to the 5th U.S. Circuit Court of Appeals in New
Orleans. According to the company, the multi-plaintiff format
stacked the deck against it by parading a series of victims in front
of the jury and exaggerating the number of complaints about the
implant.
The company won the first bellwether trial in a case involving a
single plaintiff in 2014. The next is scheduled for September 2017,
and Kinkeade has not decided how many plaintiffs will be involved in
that trial.
These results "perfectly illustrate the distortions and confusion
inherent in multi-plaintiff trials and underscore the extent of the
legal errors that have been repeated," said J&J defense lawyer John
Beisner.
But several legal experts said such a challenge faced long odds.
Lynn Baker, a professor at the University of Texas School of Law,
noted trial judges are normally given great leeway in managing their
cases and multi-plaintiff trials were a long-established means of
clearing dockets faster.
"I would not expect J&J to succeed on a claim that they were
prejudiced by the multi-plaintiff bellwether format," she said.
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J&J also said the judge allowed plaintiffs' lawyers to present
inflammatory and prejudicial testimony to the juries, raising
bribery accusations against the company and claims that the
metal-on-metal implants could cause cancer.
University of Richmond School of Law Professor Carl Tobias said an
appeals court was unlikely to overturn the verdict on such grounds
though. "Unless there is clear prejudice on the part of the jury,
you’ve got to defer to the factfinder," he said.
But even without showing its trial was unfair, the professors said
J&J's case was strong for having the $1 billion award reduced on the
grounds that it is excessive.
Kinkeade cut the $500 million July verdict to $151 million.
Andrew Bradt, a professor at University of California Berkeley
School of Law, noted the U.S. Supreme Court has held punitive
damages should be no more than 10 times compensatory damages. The
$1.041 billion award was mainly punitive, with just $32 million in
compensatory damages.
Bradt said the final award could be even lower than $320 million,
since the high court has also said punitive damages awards should be
closely tied to plaintiffs' injuries rather than as a broader
deterrent.
(Reporting By Erica Teichert; Editing by Anthony Lin and Grant
McCool)
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