Law360, Dallas (December 2, 2016, 9:52 PM EST) — Although a Texas federal jury hit Johnson & Johnson with a more than $1 billion verdict in the latest bellwether trial over the company’s Pinnacle hip implants, fruitful settlement talks aren’t likely to happen before the Fifth Circuit weighs in on J&J’s lengthy list of complaints about trial rulings, MDL experts say.
Pressure on J&J to find a way out of the thousands of remaining cases in the multidistrict litigation may be mounting after a jury on Thursday hit J&J and subsidiary DePuy Orthopaedics Inc. for a total of more than $1 billion in punitive damages and more than $32 million in compensatory damages to six hip implant recipients and some of their spouses. That followed a $502 million verdict in the second bellwether, later reduced to about $150 million, after a defense win in the first bellwether trial.
Yet a global settlement in the MDL is unlikely because J&J doesn’t think the bellwether trials have given it a fair estimate of what each plaintiff’s case is worth, lawyers say. J&J has said the verdicts in the two latest trials provide “no guidance on the merits of the overall Pinnacle litigation” because of what it has argued are deeply flawed and unfair procedural and evidentiary rulings from the MDL judge.
“It seems like a situation where you couldn’t be farther away from the parties both being in a position to have productive settlement discussions,” said John Sullivan of Cozen & O’Connor LLP. “I can’t imagine a less likely scenario for settlement than here.”
About 9,300 lawsuits involving the Pinnacle hip system’s Ultamet metal-on-metal implant have been filed in state and federal courts around the country, most of which are consolidated in an MDL presided over by U.S. District Judge Ed Kinkeade in Dallas.
Plaintiffs generally allege DePuy and J&J pushed to market a poorly designed product that injured them after friction between the device’s metal socket and metal ball head caused microscopic particles of metal to shed into their bodies. J&J has maintained it acted appropriately and responsibly in the development, testing and marketing of the Ultamet product.
The first bellwether trial, involving a single plaintiff from Montana, ended in a defense win. The second bellwether consolidated five plaintiffs from Texas, who won a $502 million verdict that was later reduced to about $150 million under a Texas law that caps punitive damages.
In the third bellwether, jurors deliberated for less than a day — following a two-month trial — before awarding each of six California plaintiffs between $4 million and $6 million in actual damages. The jury also found each plaintiff entitled to $84 million from DePuy and $84 million from J&J, bringing the total damages award to more than $1.04 billion.
Diane Lifton of Hughes Hubbard & Reed LLP said her immediate reaction to hearing about the $1 billion verdict or any verdict of comparable size is to look to see what evidence was in front of the jury and what the companies’ concerns are about that evidence.
“It suggests to me that there may be evidentiary concerns about what went before the jury,” Lifton said.
In both the second and third bellwether trials, evidentiary rulings prompted multiple mistrial motions from J&J and DePuy, which have suggested to the Fifth Circuit that Judge Kinkeade allowed a virtual free-for-all in the second trial, allowing in prejudicial and inflammatory evidence. The plaintiffs have told the Fifth Circuit the verdict in the second trial was a reflection of a jury holding companies accountable for prioritizing profits above patient safety, not the result of a flood of prejudicial evidence.
In July, the Fifth Circuit rejected J&J’s request for an expedited appeal of the second bellwether and the appellate court also declined J&J’s request to stop the MDL court from holding the third trial while the appeal was pending.
“I think until the appellate issues are resolved with respect to the evidence presented to the jury, it will be difficult to reach a global resolution of the cases,” Lifton said.
In the third trial, controversial evidence included the mention of an $84 million deferred prosecution agreement J&J entered to end an investigation into alleged kickbacks. That piece of evidence — and a witness’ subsequent testimony that J&J paid the settlement to make a “headache” go away — played a central role in the plaintiffs’ closing argument and appears to be directly reflected in the jury’s $84 million-per-plaintiff punitive damages award.
Sullivan said before it considers settling the MDL, J&J will want the Fifth Circuit’s take on whether evidence like the deferred prosecution agreement can be admitted during trial. The company has a valid concern that prejudicial evidence without a tangible relationship to the injuries sustained by the plaintiffs could unduly ratchet up a jury verdict, he said.
“It’s just a concern when you see a $1 billion verdict,” Sullivan said. “It’s hard not to seriously consider whether those issues did affect the verdict.”
Max Kennerly of Kennerly Loutey LLC, who represents plaintiffs in product liability and medical malpractice cases, brushed off the complaints about the bellwether trials as “bluster” from J&J that won’t ultimately stop the parties from settling the MDL. Even if it genuinely believes it was prejudiced at the bellwethers, the company should still act rationally, as it did when it reached a $2.5 billion global settlement related to DePuy’s ASR line of hip implants, he said.
“Johnson & Johnson always has an excuse for why they can’t begin reasonable settlement discussions,” Kennerly said. “They have an excuse for why they can’t settle the Ethicon mesh cases, an excuse for why they can’t settle the Risperdal cases and now an excuse for why they can’t settle the Pinnacle cases. It’s all bluster. At some point, they’ll either come to their senses, or their shareholders will make management come to their senses.”
Lawyers say even taking the splashy punitive award out of the picture, the jury verdict in the third bellwether still won’t serve as a strong platform to launch settlement talks.
The jury awarded $4 million to plaintiffs who had one hip implant, plus their individual medical bills, and awarded $6 million plus medical bills to plaintiffs who had two implants.
Lifton said that kind of result makes it impossible to discern which aspects of the plaintiffs’ individual circumstances affected the jury, so it’s difficult to use them as a basis for valuing the thousands of remaining cases.
“Another concern one might consider with these verdicts all being the same size is that a case involving more challenging facts can affect the outcome of a case with less significant damages — they all get taken along for the ride and it’s impossible to tease out what the jury’s reaction was to each part of the case and each scenario,” Lifton said. “That’s why you’ll hear arguments among the defense bar against these kinds of consolidated trials.”
Yet Michael Walsh of Strasburger & Price LLP said that although the compensatory damages awards to each plaintiff were probably too high, they are not so unreasonable that they can’t be the basis for the beginning of a settlement discussion — so long as the punitive awards remain off the table. The MDL docket is so massive, he said, the defense has to face the question of at what point do they try to clear it out and leave trials for cases they have a better chance of winning.
“Perhaps the prudent thing to be looking at is, it’s a big monster litigation and the numbers are huge — but this is not the first time we’ve seen this,” Walsh said. “I don’t know that the compensatory damages are so completely out of whack that there’s no expectation meaningful progress can be made in getting rid of some subset of cases.”
Still, the punitive damages award is part of the case, and juries in two trials have decisively found the companies liable for wrongdoing, Walsh said. With the punitive awards what they are, even if the trial judge did pare back the verdict before entering judgment, Walsh said, he “can’t see that there’s any number that would lead to settling the docket.”
While the gears of the appellate process grind, the parties are facing their next trial date. Judge Kinkeade set the fourth bellwether for September and has named 10 plaintiffs, each from New York, whose cases should be prepared for the trial.
J&J has said it will “continue to urge that no further trials be conducted until we receive appellate court guidance.”
But because the Fifth Circuit rejected the company’s request after the second bellwether, lawyers are skeptical the $1 billion plaintiffs’ verdict is enough to change the appellate court’s mind about putting future trials on ice.
“If the Fifth Circuit didn’t intervene before this trial, I see no reason why they would intervene after it either,” Kennerly said. “This trial didn’t raise any issues substantially different from the first trial. In my opinion, the size of the verdict doesn’t change that analysis.”
Walsh said he thinks the verdicts are sizable enough that they should have gotten the Fifth Circuit’s attention about potential problems with the bellwethers, but doesn’t expect to see the court stop future trials.
“If $500 million didn’t get their attention, $1 billion isn’t going to get their attention,” he said. “If it were $1 trillion, maybe.”
The patients are represented by W. Mark Lanier of The Lanier Law Firm, Richard Arsenault of Neblett Beard & Arsenault, Jayne Conroy of Simmons Hanly Conroy LLC and Khaldoun Baghdadi of Walkup Melodia Kelly & Schoenberger, among others.
DePuy and Johnson & Johnson are represented by Steve Quattlebaum of Quattlebaum Grooms Tull & Burrow PLLC, John Anderson of Stoel Rives LLP, Dawn Estes of Estes Thorne & Carr, Michael Powell and Seth Roberts of Locke Lord LLP and Stephen J. Harburg, John H. Beisner, Jessica Davidson Miller and Geoffrey M. Wyatt of Skadden Arps Slate Meagher & Flom LLP.
The MDL is In re: DePuy Orthopaedics Inc. Pinnacle Hip Implant Products Liability Litigation, case number 3:11-md-02244, in the U.S. District Court for the Northern District of Texas.
–Editing by Mark Lebetkin and Jill Coffey.