Law.com reports here on a Texas verdict awarding $32 million in compensatory damages and $120 million in punitive damages to a company that makes software for apartment management companies, against a client who allegedly allowed a third-party to pirate the software.

Mayer Brown’s Guideposts blog has a nice tribute to Andy Frey, who retired from that firm at the end of 2020.  It’s no exaggeration to say that Andy had more influence on the development of punitive damages law over the past 40 years than any other lawyer.  

Andy argued four punitive damages cases in the Supreme Court, all of which had a profound impact on the development of modern punitive damages law: Browning-Ferris v. Kelco, Honda v. Oberg, BMW v. Gore, and Philip Morris v. Williams.

I had the pleasure of working with Andy on several occasions, starting with the Lockheed Litigation cases in the late 1990s.  He consulted with our firm on on those appeals, always offering creative suggestions and exploring new ideas for moving the boundaries of the law in this area.  The California Court of Appeal ultimately reversed a $380 million punitive damages award in one of those appeals, which marked the beginning of my focus on this practice area.

Congratulations Andy and best wishes for a happy retirement.

Law 360 reports that a Texas intermediate appellate court has affirmed a jury’s award of $9.8 million in compensatory damages and $50 million in punitive damages. The defendant caused a fatal collision while intoxicated.

Reuters reports that the Missouri Supreme Court has declined to review the intermediate appellate decision that reduced a $4.14 billion punitive damages award to $1.62 billion. You can read our coverage of the Court of Appeal decision here. Not surpisingly, J&J says it plans to file a cert. petition, as reported by Law.com. With a total judgment in excess of $2 billion, how could they not?

Punitive damages are primarily an American concept.  They are permitted only to a very limited extent (if at all) in most other countries.  In recent years, South Korea started to dip its toes in the waters, permitting punitive damages for willful patent infringement and products liability cases.  Now they are proposing to expand the availability of punitive damages to all cases in which the defendant is a business.  

If adopted, the law will permit punitive damages upon a showing of intentional or grossly negligent conduct.  Korea is also considering a law to expand the use of class actions, which are currently limited to securities cases.  Both proposals are described in more detail here.

The Korea Herald reports that the Korean business community is opposing both proposals, saying they will increase expenses for businesses and benefit only lawyers and not consumers, citing the U.S. legal system as an example.

Even if the law is adopted, don’t expect to see news reports of California-style punitive damages awards coming out of Korea.  The proposed law would limit punitive damages to five times actual damages.

Back in 2018 we reported on this Missouri verdict awarding $550 million in compensatory damages and $4.14 billion in punitive damages against Johnson & Johnson. The case involved 22 plaintiffs who claim they developed ovarian cancer as a result of using J&J’s Baby Powder and Shower-to-Shower products.

In this opinion issued today, the Missouri Court of Appeals affirms the bulk of that award, except for some portions attributable to out-of-state plaintiffs, whose claims should have been dismissed for lack of personal jurisdiction.  After subtracting those amounts, the court affirmed the remaining $500 million in actual damages and $1.62 billion in punitive damages.

Before reaching any punitive damages issues, the court rejected various arguments Johnson & Johnson raised to attack the entire judgment, including Johnson & Johnson’s arguments that the plaintiffs’ scientific evidence was unreliable and contrary to overwhelming scientific consensus. The court concluded that the validity of the scientific evidence was an issue properly decided by the jury.

On punitive damages, the court first rejected Johnson & Johnson’s argument that the plaintiffs failed to present clear and convincing evidence of willful, wanton, or malicious conduct, as required by Missouri law for imposing punitive damages.  The opinion discusses a variety of internal J&J communications, dating from the 1970s through the 2000s, in which the company expressed concern about the possibility of asbestos contamination in talc and discussed methods for reducing it.  The company also discussed possible alternatives to talc and evaluated the cost of switching to those alternatives.  Finally, the company lobbied other manufacturers and the FDA to adopt a testing method which they believed would not be able to detect trace amounts of asbestos.

Based on this evidence, the court concluded that the jury could have reasonably inferred that “motivated by profits, defendants disregarded the safety of consumers despite their knowledge the talc in their products caused ovarian cancer.” 

There seems to be a disconnect between the court’s conclusion and the evidence recited.  The court does not actually mention any evidence that Johnson & Johnson knew asbestos-contaminated talc products could cause ovarian cancer.  To the contrary, the opinion mentions that public health agencies found insufficient evidence to conclude cosmetic talc causes ovarian cancer, and several epidemiological studies found no association between cosmetic talc and ovarian cancer.  If that’s true, then how can the court conclude that Johnson & Johnson knew its products would cause ovarian cancer?  The opinion does not explain.

The absence of such evidence caused California courts to conclude Johnson & Johnson could not be subject to punitive damages for the same course of conduct.  In 2017, a Los Angeles jury awarded $417 million in a case with similar allegations, but the trial court vacated the punitive damages award and the Court of Appeal affirmed that decision, as reported here. 

The Missouri Court of Appeal acknowledges that decision but distinguishes it on the ground that the plaintiffs in the California case did not present evidence about Johnson & Johnson influencing the industry to adopt its preferred testing method.  That distinction, however, fails to address the core holding of the California decision: the plaintiffs could not show Johnson & Johnson knew that contaminated talc presented a risk of ovarian cancer.

Turning to the amount of punitive damages, the court noted that the jury separately awarded punitive damages against two related corporate entities: Johnson & Johnson (“J&J”) and Johnson & Johnson Consumer Companies Inc. (“JJCI”). After subtracting the amounts attributable to the out-of-state plaintiffs, the jury’s awards amounted to $716 million against J&J and $900 million against JJCI.  Those amounts were 1.8 times and 5.7 times the amount of compensatory damages against each defendant, respectively.  The court found those ratios were justified by the extreme reprehensibility of the conduct at issue.

The court acknowledged that U.S. Supreme Court’s statement that a ratio of one-to-one may be the outermost limit of due process in cases involving substantial compensatory damages awards.  But the court concluded that due process permits larger ratios in this case because the defendants are “large, multi-billion dollar corporations.”  That holding would seem to conflict with the U.S. Supreme Court’s holding in State Farm v. Campbell that an otherwise unconstitutional award cannot be upheld based on the wealth of the defendant. 

Nor surprisingly, Johnson & Johnson has already said it plans to take the case to the Missouri Supreme Court.  (See NY Times story here.)

One of the largest punitive damages awards in recent years has been reversed by the Texas Court of Appeals. 

Last summer a Texas state court jury awarded a total of $706.2 million, including $470.8 million in punitive damages, in a lawsuit claiming that title insurer Amrock misappropriated trade secrets from tech firm HouseCanary, Inc.  Yesterday the entire judgment was reversed due to an error in the jury instructions on the liability issues.  Blooomberg Tech has the story here.

The JD Supra Blog features this post by attorneys at Butler Snow offering advice based on recent jury verdicts in punitive damages cases: “Recent cases highlight strategies to defeat punitive damages even when compensatory liability may be difficult to avoid.”

Earlier this month a jury in federal court in Missouri awarded $15 million in compensatory damages and $250 million in punitive damages to a peach farm that alleged its orchards were damaged by Bayer’s weedkiller Dicamba. 

Dicamba was made by Monsanto, which Bayer acquired in 2018.  This litigation is unrelated to litigation involving the weedkiller Roundup, also made by Monsanto. 

Bayer plans to challenge this verdict on appeal, per Reuters.

FiercePharma reports that a Philadelphia trial court has reduced the $8 billion punitive damages award against Johnson & Johnson to $6.8 million.  The case involves J&J’s alleged failure to warn about the potential side effects of the anti-psychotic drug Risperdal.

According to the story, the court found that the punitive damages award was grossly disproportionate to the compensatory damages award of $680,000.  Johnson & Johnson says it still plans to appeal the award as reduced.  No doubt the plaintiffs will also appeal from the reduction of the award.