Johnson & Johnson is facing tens of thousands of product liability lawsuits, involving, among other things, its antipsychotic drug Risperdal, opioids, vaginal mesh, and talcum powder. Here, Stanford Law Professor Nora Freeman Engstrom, a tort law and complex litigation expert, and Diana Garnet Li, a student in the Stanford Law School Class of 2021, discuss the mounting product liability exposure facing the multinational giant—and how these cases may develop.
In recent weeks, Johnson & Johnson is much in the news. Why?
Currently, J&J is facing a flood of litigation on several fronts. What’s happening is quite neatly summed up in the chart below:
Number of Cases Against J&J, as Reflected in J&J’s 10-Q Filings
|July 2, 2017||July 1, 2018||June 30, 2019|
|Risperdal – suits allege that the antipsychotic medication causes breast growth in boys||13,800||13,500||13,400|
|Pelvic mesh – suits allege that the surgical product inserted into women causes chronic pain and incontinence||55,000||54,000||27,700|
|Talc – suits allege that talc products, chiefly shower-to-shower (a feminine hygiene product) and baby powder, cause cancer||4,800||10,600||15,500|
That’s not all. As of June 2019, J&J and its subsidiary, Janssen Pharmaceuticals, have (along with numerous others) been named in more than 2,000 lawsuits brought by state and local governments related to its opioid products. And, earlier this year, J&J agreed to pay $1 billion to resolve thousands of lawsuits claiming that J&J sold defective hip implants that left patients unable to walk and in searing pain. Even after that settlement, some 4,500 such suits remain pending. It’s a lot of lawsuits, and these suits have understandably piqued the attention of investigators, regulators, shareholders, and journalists.
What’s happening in the Risperdal litigation?
As the table above indicates, over 13,000 suits have been filed, contending that Risperdal causes breast growth in boys. Just last week, a jury awarded $8 billion in punitive damages to Nicholas Murray related to Murray’s use of the drug. When he was a child, Murray, now aged 26, was prescribed Risperdal for autism-related symptoms, and he consequently developed breasts, an incurable condition known as gynecomastia. Murray’s lawyers argued that J&J marketed Risperdal for unapproved, off-label use, without warning about its side effects—effectively prioritizing profits over the protection of patients.
That’s a gigantic sum for one plaintiff. Do you expect that the $8 billion will hold up?
We don’t. J&J has vowed to appeal, and we expect that, at the least, the punitive damage award will be slashed in post-trial maneuvering. In the 2003 case of State Farm Mutual Auto Insurance Co. v. Campbell, the Supreme Court held that “few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process.” The punitive-to-compensatory-damages ratio in Murray’s case is a whopping 11,765-to-1 ($8 billion in punitive damages as against $680,000 that Murray was previously awarded in compensatory damages). Given State Farm’s command, we expect to see a sharp downward shift in the damages determination. Still, the $8 billion award is meaningful. The jury saw and evaluated the evidence, and it determined that J&J behaved egregiously in its marketing of this medication. That determination will likely have ripple effects as the litigation matures.
What’s the situation in the opioid litigation?
J&J is one of several defendants named in scores of suits by states, cities, counties, municipalities, and tribal governments concerning the opioid crisis. Indeed, J&J had the dubious distinction of being the first company to go to trial, as it faced off against the state of Oklahoma for its alleged misdeeds in the Sooner State. That trial, which started in May and wrapped up in August, culminated with a $572 million judgment against the company. In particular, the court found that J&J engaged in a deceptive marketing campaign designed to convince Oklahoma doctors and the public that opioids were safe and effective for the long-term treatment of chronic, non-malignant pain. According to the court, this “false, misleading, and dangerous marketing” caused “exponentially increasing rates of addiction [and] overdose deaths.” While the $572 million judgment (which J&J has appealed) was far lower than the $17 billion that Oklahoma had initially sought—and, it appears, the figure is destined to shrink, as the judge acknowledged earlier this week that he made a $107 million error in the calculation of damages—the court’s factual findings were unequivocal, detailed, and damning.
The Oklahoma judgment was also just the beginning. Earlier this month, J&J and two Ohio counties (Cuyahoga and Summit) reached a tentative $20.4 million settlement that removes J&J from the first federal opioid lawsuit, which is scheduled to kick off next week in Cleveland. Meanwhile, earlier this week, news broke that J&J has offered to pay roughly $4 billion to resolve the more than 2,000 opioid lawsuits pending against the company. The precise contours of J&J’s offer—and whether it will be palatable to the many states, cities, counties, and municipalities locked in litigation with J&J—are, as yet, uncertain.
What is going on with the pelvic mesh litigation?
J&J and its subsidiary, Ethicon, face thousands of suits for pelvic mesh—synthetic material surgically implanted in women whose pelvic organs have sagged or who suffer from stress urinary incontinence. Federal suits have been swept into an MDL in West Virginia (MDL 2327), while many cases continue to be filed in state courts, where plaintiffs have notched impressive victories. Notably, J&J has reportedly lost nine of eleven mesh lawsuits tried in Pennsylvania state courts, including a $120 million verdict ($100 million in punitives), an $80 million verdict ($50 million in punitives), and a $41 million verdict ($25 million in punitives). J&J is appealing. Beyond that, California’s Attorney General has taken J&J to trial, seeking nearly $800 million in civil penalties for allegedly downplaying the risks of its pelvic mesh products. According to the State’s lawyer: “J&J marketed their mesh as safe and effective, quick and easy . . . but J&J knew the truth was otherwise.” That trial, which started in July, wrapped up on September 16, 2019. A verdict is expected in another two to four weeks. Meanwhile, earlier this week, J&J announced that it has agreed to fork over $117 million to resolve claims lodged by forty-one states and the District of Columbia—though that deal won’t affect the California trial or the thousands of lawsuits lodged by individual plaintiffs.
What about talc?
The story involving talc is much the same. As of June 2019, J&J was facing 15,500 cases related to its talcum powder products, and this number has been ticking upward. Of particular note is a July 2018 verdict ordering J&J to pay $4.69 billion (including $4.14 billion in punitive damages) to 22 women and their families who claimed that asbestos in J&J’s talcum powder products caused the women’s ovarian cancer. J&J is appealing that verdict. J&J also faces regulatory scrutiny linked to talc’s sale, as the DOJ and SEC are reportedly investigating whether J&J lied about possible cancer risks.
When it comes to talc, J&J is also facing some very bad publicity. Most notably, an explosive Reuters report recently charged that, for roughly three decades (from 1971 through the early 2000s), J&J knew that its powders sometimes tested positive for asbestos, a notorious carcinogen which causes grievous, latent harm. But, while “company executives, mine managers, scientists, doctors and lawyers fretted over the problem,” the contamination wasn’t disclosed to regulators or the public.
In numerous cases you highlight above, J&J is getting hit with large punitive damage judgments. What are punitive damages? Are they unusual?
Punitive (sometimes called “exemplary”) damages are highly unusual—and understanding that fact is key to putting the nine- and ten-figure judgments above in context. Some states don’t permit punitive damages at all. In those states that do permit punitives, they are tightly regulated. Unlike compensatory damages, punitive damages are awarded to punish, not to compensate. For that reason, they are only permissible when the defendant has done something that, in the judge’s and jury’s eyes, merits punishment. States vary some on what the punitive damage threshold is or ought to be, but a common formulation is that punitive damages are only appropriate when, in the view of the factfinder, the defendant’s conduct is “deplorable” or “outrageous, because of the defendant’s evil motive or his reckless indifference to the rights of others.” If that standard is not met, punitive damages cannot be awarded.
Beyond that, empiricists have carefully studied the actual award of punitive damages, and these empiricists have found that punitive damages are exceptional. Punitive damages are awarded in only 2% to 3% of all civil trials and, on those rare occasions when punitive damages are awarded, dollar values tend to be modest—a median of around $84,000 (in today’s dollars).
Furthermore, as the Supreme Court has recently observed, “the median ratio of punitive to compensatory awards has remained less than 1:1.” These facts paint a clear picture: The kind of punitive damages doled out in recent trials against J&J are far from the norm.
Is the flood of litigation facing J&J indicative of a tidal wave of tort litigation in general?
No. Just as the punitive damages assessed against J&J do not indicate that punitive damages are generally exploding or out of whack, J&J’s litigation troubles are not traceable to a “litigation explosion” gripping the United States more generally. There is no litigation explosion. The evidence suggests that tort litigation in the U.S. is actually down, not up. The best statistic here is this one: According to data maintained by the National Center for State Courts, in 1993, about 10 in 1,000 Americans filed tort suits annually, whereas, by 2015, only 2 in 1,000 Americans initiated such filings. As the Wall Street Journal has put it: there is a “nationwide ebb in lawsuits.” The downward trend extends beyond filings: Damages are down, not up. Trial rates are down, not up. And plaintiff win rates in federal civil cases have also declined in recent decades. We cannot say why J&J is bucking the above trends, but we can say, with some confidence: What we see vis-à-vis J&J is highly anomalous.
Nora Freeman Engstrom is a Professor and Deane F. Johnson Faculty Scholar at Stanford Law School, where she specializes in tort law, legal ethics, and complex litigation. Diana Garnet Li is in the Stanford Law School class of 2021.