In case you missed it, the internet is buzzing with the news of a massive $9 billion jury verdict that was handed down on Monday, April 7, 2014. Terrence Allen filed his lawsuit against Takeda Pharmaceuticals North America after being diagnosed with bladder cancer. Mr. Allen took the type-2 diabetes drug, Actos, from 2006 until 2011 before discovering what doctors had been saying about the drug for years, that is, medical evidence had linked Actos to an increased risk of cancer. During the two month trial, the plaintiff put on evidence showing that Takeda was aware of this cancer risk seven years before patients were warned. In addition, some evidence tended to show that Takeda destroyed documents relating to the sale of Actos. This lawsuit is one of more than 2,700 Actos lawsuits which have been filed. Because of the large number of cases, the lawsuits have been consolidated through a process known as multidistrict litigation. Mr. Allen’s success is a good sign for the thousands of other plaintiffs who are alleging injuries and hoping to settle their cases in the coming months.
Jury Verdict Up in the Air: How Much is Too Much?
While this $9 billion award sends a clear message, “big business cannot place profits before the health of Americans,” legal experts say that is unlikely to stand. General Counsel for Takeda has stated the company’s intent to “vigorously challenge this outcome through all available legal means.” The monetary award gave the plaintiff $1.475 million in compensatory damages as well as $3 billion in punitive damages from Eli Lilly and $6 billion in punitive damages from Takeda. In the past, the United States Supreme Court has held that punitive damages should not be greater than a single-digit multiplier of compensatory damages. This means that the punitive damages should not be more than nine times the compensatory damages. If this formula were applied to the Actos verdict, then it would mean the punitive damages should be no more than $13.275 million ($1.475 x 9 = $13.275).
Plaintiff’s attorneys and trial lawyers have been critical of limitations on punitive damages because juries are the great equalizer between ordinary citizens and monolithic institutions such as big business and government. In Allen v. Takeda Pharmaceuticals North America, the jury as the finder of fact determined that $9 billion was the amount of money that would fulfill the purposes of punitive damages, namely, to punish Takeda for its past conduct and deter similar conduct in the future. Presumably the jury based its punitive damages on the $16 billion in sales that Actos has earned since its release in 1999. In addition, e-mails between Takeda executives revealed that the drug was “vital to the company’s survival” which could have led jurors to believe that the company was more concerned about its economic interests than the affect their product would have on consumers.
Tort Reform: Wolf in Sheep’s Clothing
Punitive damages such as the $9 billion awarded in the Actos case appear to be shocking and big businesses use these figures to push tort reform through state legislatures. However, when these verdicts are placed in context, their shock value is diminished and their utility is highlighted. Take Takeda for example, the company had net assets worth $23.7 billion in 2013, it had net sales of $16.6 billion in 2013, and it has earned $16 billion from the sale of Actos since 1999. In addition, the cost of the punitive damages award will be spread out by the company over the course of years or even decades. Given the size of the company, its worth, and its ability to spread the cost of any award, the $9 billion jury verdict does not look so shocking.
The danger of limiting punitive damages and other similar tort reform measures is that they prevent juries from performing the very duties required of them by law. In the case of punitive damages, the jury has the duty of determining the defendant’s culpability and then tailoring the amount of an award to that culpability. Imposing an arbitrary ceiling on punitive damages has the effect of preventing the jury from fulfilling its duty and also undermines the very purposes of such an award, that is, punishment and deterrence. Caps on damages create a similar problem. In cases where damages awards are capped, the jury has the duty of determining the amount of money that will compensate the plaintiff but caps arbitrarily reduce that amount to the point where it is under compensatory. Under compensatory means that defendants do not have to pay for all of the harm that they caused. In short, under compensatory means unfair.
Consider the example of an individual who becomes paralyzed following an auto accident. In such a case, the potential for substantial medical bills, lost earning capacity, and pain and suffering is apparent. A jury could find that pain and suffering alone account for millions of dollars in damages. Consider this, the jury awards $5 million for pain and suffering, but the state has a law capping pain and suffering damages at $500,000. In this example, the defendant who is at fault for the auto accident which caused the plaintiff to become paralyzed would receive a 90% ($4.5 million) discount on the amount of pain and suffering he is required to pay. The result is clear: injustice and unfairness.
Think about the situation: the plaintiff receives compensation for expenses he has incurred and expenses he is expected to incur but his pain and suffering is discounted by 90%. Pain and suffering awards embody all those extra costs and daily difficulties that are very real but sometimes difficult to quantify. For instance, how much should the plaintiff be compensated for the fact that he is unable to walk, unable to work the same job, unable to perform daily activities that many of us take for granted, and unable to play to his favorite sports. Instead of receiving a judgment which would provide the plaintiff with the resources he needs to live a happy and healthy life, his judgment is arbitrarily reduced to an amount which barely (if at all) covers the new costs associated with his paralysis.
Consumers need to be aware of the dangerous tort reform trend that is sweeping the nation. Informative documentaries such as “Hot Coffee” provide a good picture of the many ways that big businesses are chipping away at individual rights. Consumer watchdogs are right to view groups like the American Tort Reform Association (ATRA) with suspicion. A review of the ATRA’s corporate backers shows a laundry list of companies that have caused some of the greatest crises of the modern era: tobacco giant Phillip Morris and Exxon the company whose tanker the Exxon Valdez spilled millions of gallons into the ocean polluting the Alaskan shoreline. It is likely that proponents of tort reform such as the ATRA will argue that $9 billion jury verdict is shocking but don’t be fooled.
d’Oliveira & Associates is working with Actos attorneys who are filing bladder cancer lawsuits. Feel free to call our law firm at 1-800-992-6878 or contact us online for a free, no obligation case evaluation and there are no legal fees unless a settlement or award is obtained.