Janssen Pharmaceuticals Inc., a unit of Johnson & Johnson, has been embroiled in a mass tort MDL in Philadelphia for its anti-psychotic drug, Risperdal, for almost a year now. So far in 2015, the juries have split – three in favor of plaintiffs one in favor of the defense, and the issue that appears to have divided the juries is causation.
More interesting than the widely reported courtroom antics, and even the ultimate resolutions of these matters, is how choice of law principles were utilized to dismiss the punitive damages claims. Last month, Judge Arnold New explained his decision to bar punitive damages in nearly all of these pending claims, holding that each case must subscribe to the law of the state in which the alleged punitive conduct occurs. Specifically, New applied New Jersey law to preclude punitive damages in the Risperdal cases.
Judge New’s decision was prefaced upon the facts that Johnson & Johnson is principally located and incorporated in New Jersey, and all of the allegedly wrongful conduct occurred in New Jersey. All of “[t]his evidence, when read together, shows the decisions concerning the development and marketing of Risperdal were made in New Jersey, where the various directors and supervisors worked, and these decisions were communicated to staff members at meetings and presentations at various locations, including restaurants and venues in Pennsylvania,” New said. It followed that New Jersey law was applied to the MDL. The New Jersey Product Liability Act bars the imposition of punitive damages in cases involving drugs approved by the FDA, such as Risperdal, unless the drug manufacturer misrepresented facts to or withheld information from the FDA. New dismissed the Risperdal punitive damages claims on summary judgment, holding that plaintiffs could not seek punitive damages because they lacked evidence of misrepresentation to or withholding of information from the FDA.
Interestingly, this decision and written opinion follows a May 2015 decision out of the Eastern District of Pennsylvania that reached the opposite conclusion in a suit filed after Tylenol allegedly caused the death of a Florida consumer. Significant to the difference in the two opinions is the interpretation of a 2011 Pa. Superior Court case, Daniel v. Wyeth Pharmeceuticals, Inc. Judge New placed significance on the Daniel court’s statement that, in the punitive damages context, the most critical element in the choice of law analysis is the place where the alleged punitive conduct occurred. Judge Stengel writing for the Eastern District was not similarly persuaded by this language, and instead engaged in more of a balancing of all factors to reach a different conclusion.
Judge Stengel in the Tylenol litigation found that although New Jersey is where Johnson & Johnson is headquartered and where marketing decisions were made, Alabama had the most significant interest in that case because that is where the product was purchased, ingested, warned about product risks, and where the plaintiff was treated and ultimately died. Alabama law was therefore applied, which allows for uncapped damages.
Choice of law is not only useful to bar punitive damages, but depending on the state, can preclude entire actions. For instance, on October 1st, Judge New issued an opinion recommending affirmance on appeal of his decision to dismiss 13 additional cases on the basis that Michigan, as opposed to Pennsylvania, law applied. In Re Risperdal Litigation, 2015 Phila. Ct. Com. Pl. LEXIS 254 (Phila. CCP October 1, 2015). The Michigan Product Liability Act offers defendants complete immunity if “the drug was approved for safety and efficacy by the United States food and drug administration, and the drug and its labeling were in compliance with the United States food and drug administration’s approval at the time the drug left the control of the manufacturer or seller.” Mich. Comp. Laws § 600.2946(5). In Michigan, a plaintiff filing a products suit against a pharmaceutical manufacturer must prove both intentional misrepresentation to the Food and Drug Administration (FDA) and that the drug would not have been approved, or the FDA would have withdrawn approval for the drug if the information were accurately submitted. In this regard, New stated that “plaintiffs have not produced any evidence to show the FDA would not have approved Risperdal in 1993, or would have withdrawn Risperdal from the market, if the information was accurately submitted.” In recommending affirmance, New pointed out that a clear conflict exists between Michigan and Pennsylvania product liability law as to, inter alia, whether a plaintiff can recover against a pharmaceutical manufacturer for fraud, breach of express warranty, negligent design defect and failure to warn. While the Michigan Products Liability Act prohibits such claims, Pennsylvania law is less clear. Given that the alleged injury, marketing, advertising, warnings and ingestion occurred in Michigan, New applied Michigan law and recommended the appellate court do the same to bar those cases from proceeding.
The appeals that follow these decisions will flesh out Pennsylvania choice of law analysis. In the meantime, it remains evident that choice of law is an important tool in the product liability defense arsenal. Regardless of where your next product case pops up, raising this issue may help reduce, or even eliminate exposure.