June 23, 2020

Missouri Court of Appeals affirms $1.62 billion punitive damages award against Johnson & Johnson in talc case

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.)