Welcome

Justices Sticking to Punitive Damage Limits After J&J Case (2)

June 4, 2021, 8:48 AM; Updated: June 4, 2021, 4:46 PM

U.S. Supreme Court precedent limiting punitive damages appears to be safe after the justices left in place a $1.6 billion award against Johnson & Johnson in a blockbuster cancer lawsuit.

The justices may be “content with precedent on the subject” and how lower courts are applying it, said attorney Anthony Michael Sabino, who also teaches business law at St. John’s University.

The pharmaceutical giant invoked earlier Supreme Court rulings in the dispute over damages awarded by a Missouri jury to a woman claiming its iconic baby powder was tainted with cancer-causing asbestos.

J&J said the punitive award in Johnson & Johnson v. Ingham was so out of sync with the $650 million in compensatory damages that it violated its due process rights. J&J pointed to previous decisions suggesting anything much more than a 1:1 ratio of punitive to compensatory was constitutionally suspect.

The public, and the justices themselves, have been debating when it is appropriate to overturn longstanding precedent, particularly after the Supreme Court agreed to take up an abortion dispute that could threaten rights at the heart of the landmark 1973 decision in Roe v. Wade.

One-Size-Fits-All

The Supreme Court has long distinguished between compensatory damages—meant to make someone whole—and punitives—meant to punish and deter harmful behavior.

In a series of cases starting in the 1990s, the court has said there are due process limits on the amount of punitive damages in what would otherwise constitute excessive punishment.

In 1996, the court said in BMW v. Gore that it wasn’t “possible to draw a mathematical bright line between the constitutionally acceptable and the constitutionally unacceptable that would fit every case.”

By 2004, the court clarified in State Farm v. Campbell that “few awards exceeding a single-digit ratio between punitive and compensatory damages” will satisfy due process. It added that where compensatory damages are “substantial,” a 1:1 ration might be the outermost limit.

Since then, those seeking to avoid substantial punitive damages have urged courts to place more restrictions on them, said Allison Zieve, director of the Supreme Court Assistance Project at the consumer protection group Public Citizen.

In doing so they’ve argued that “the ratios are more firm than the Supreme Court suggested,” Mayer Brown’s Evan Tager, who has helped reduce punitive damage awards for clients “over $3.5 billion in the aggregate,” according to his firm bio.

But Tager says a one-size-fits all approach doesn’t work for punitive damages, particularly in mass tort litigation where other mechanisms like administrative fines could accomplish the goals of punishment and deterrence.

Overturning Precedent

University of California, Irvine law professor Rick Hasen said the application of the Supreme Court’s precedent in this area has been “mixed” in both state and federal courts. Some courts have found a way around the guidance, he said. Others “have read it more religiously.”

The Supreme Court has shied away from the issue recently, Tager said. In doing so, it has declined to intervene in cases where courts have both agreed and refused to reduce punitive damages.

American Tort Reform Association President Sherman Joyce said there’s a need for greater clarity from the U.S. Supreme Court.

“These issues aren’t going away,” Joyce said.

But the court’s decision on June 1 not to intercede in the J&J case despite the “breathtaking” amount of punitive damages there suggests the court may want to leave the law where it is, despite its mixed application by lower courts, Tager said.

Hasen noted, however, that if the BMW and State Farm cases were decided today, they’d probably come out the other way with the Supreme Court leaving it to the states to limit punitive damages.

He pointed to State Farm, which split the court along non-ideological lines, with Justices Antonin Scalia, Clarence Thomas, and Ruth Bader Ginsburg in dissent.

For their part, Scalia and Thomas were skeptical of the court’s use of substantive due process to limit jury awards. Substantive due process, which Scalia called “springboards for judicial lawmaking,” protects certain unenumerated constitutional rights—here the right to be free from excessive punitive damages.

Hasen said he can see several of the current conservatives agreeing with that position.

Ginsburg dissented on different grounds, saying the question of whether to limit punitive damages, particularly in state court cases, should be left to the states. Hasen thinks that would be an appealing position for the court’s remaining liberal justices.

The only justice in the majority in State Farm that is still on the court is Stephen Breyer, Hasen noted.

Bigger Things

Sabino agreed that the J&J case provided the court with a decent opportunity to clarify the law surrounding punitive damages. There were, however, several reasons that could have prompted it not to do so.

Justices Samuel Alito and Brett Kavanaugh recused themselves from the case for financial, professional, or personal reasons, meaning the justices didn’t have a full bench to consider the issue.

The case also presented two additional significant issues unrelated to punitive damages, including when it’s proper to combine separate cases for consideration and whether Missouri was the best place to bring the lawsuit.

Moreover, even if the justices are unhappy with the precedent, there are reasons to think they might leave it in place, Hasen said—namely that the court can’t frequently overturn precedent without undermining its legitimacy.

That’s something the justices will have to grapple with when considering an abortion case next term in Dobbs v. Jackson Women’s Health Organization.

There are “only so many bullets you can shoot when it comes to overturning precedent,” Tager said. Perhaps they are “focusing on bigger things.”

(Updates with comments from Sherman Joyce, of the American Tort Reform Association.)

To contact the reporter on this story: Kimberly Strawbridge Robinson in Washington at krobinson@bloomberglaw.com

To contact the editors responsible for this story: Seth Stern at sstern@bloomberglaw.com; John Crawley at jcrawley@bloomberglaw.com

To read more articles log in.

Learn more about a Bloomberg Law subscription.