Prescription drug products liability litigation and punitive damages preemption.

• Author: Lasker, Eric

In Wyeth v. Levine, the Supreme Court held that FDA-approval of the brand name prescription drug Phenergan did not preempt state common law claims seeking compensatory damages for injuries allegedly caused by the drug. (1) The holding was informed by the fact that Congress, in enacting the Food, Drug, and Cosmetic Act ("FDCA"), "did not provide a federal remedy for consumers harmed by unsafe or ineffective drugs" and instead "[e]vidently ... determined that widely available state rights of action provided appropriate relief for injured consumers." (2) This reasoning--that allegedly injured plaintiffs should have judicial recourse to compensation has been a consistent theme in Supreme Court arguments opposing preemption of state tort claims involving FDA-approved products. (3)

Levine did not address the separate question whether a brand name prescription drug manufacturer may be subject to punitive damages under state law related to the marketing of an FDA-approved drug. However, the question of punitive damages preemption in prescription drug litigation has arisen post-Levine in the context of state tort reform statutes that bar punitive damages against FDA-compliant drug manufacturers absent evidence that the manufacturer had defrauded the FDA. In this context, most courts have followed the Supreme Court's reasoning in Buckman v. Plaintiff, Legal Committee (4) and have held that punitive damages claims are preempted because the required showing of fraud on the FDA would impermissibly frustrate the federal statutory scheme in which the FDA is granted plenary power to police such misconduct. (5) While these opinions are limited on their face to the particular state statutes under which they arise, the rulings have a potential national impact, both because of: (1) choice of law rules that call for the application of a defendant manufacturer's home state law to punitive damages claims arising from injuries taking place in other states; and (2) the legal reasoning supporting the preemption holdings in some of these cases, which would apply more broadly to punitive damages awards in prescription drug product liability litigation even in the absence of state tort reform statutes.

The broader significance of this emerging body of prescription drug punitive damages preemption case law is demonstrated in a recent opinion secured by Novartis Pharmaceutical Corporation ("NPC") in one of the cases being defended in the Aredia[R] and Zometa[R] MDL products liability litigation. (6) In Zimmerman v. Novartis Pharmaceutical, a Maryland plaintiff brought suit against NPC (headquartered in New Jersey), alleging that her doctor's prescription of the FDA-approved drugs Aredia[R] and Zometa[R] for prevention of skeletal complications associated with her metastatic breast cancer to bone had caused a jaw condition known as osteonecrosis of the jaw. Applying the Second Restatement's "significant relationship" standard, the court held that while Maryland law governed the plaintiffs claims for compensatory damages arising from her use of the drugs and injury in Maryland, New Jersey law governed the plaintiffs claim for punitive damages because the alleged defendant misconduct at issue took place in New Jersey. (7) The court then held that plaintiffs claim for punitive damages was preempted by a New Jersey state statute that bars punitive damages in claims involving FDA-approved drugs absent evidence that the defendants had engaged in fraud on the FDA. (8)

In this article, we analyze the Zimmerman court's reasoning in support of both the choice-of-law and preemption parts of its ruling and then discuss what Zimmerman may portend for the broader application of preemption to punitive damages claims involving FDA-approved prescription drugs throughout the country.

1. The Zimmerman Court's Punitive Damages Preemption Analysis

   Zimmerman was originally filed in the middle district of Tennessee, where the Aredia[R] and Zometa[R] MDL is situated, and was remanded to the district court of Maryland for case-specific pretrial proceedings and trial on July 27, 2011. On December 20, 2011, NPC filed a motion to preclude punitive damages in Zimmerman, arguing that the plaintiffs claim for punitive damages was preempted because it was governed by New Jersey's statutory limitation on punitive damages in prescription drug product liability litigation. In opposition, the plaintiff argued that her punitive damages claims should be governed by the law of her home state, Maryland, which has no statutory protection for sellers of FDA-approved drugs. Alternatively, the plaintiff argued that if New Jersey law did apply, her claim for punitive damages arose under New Jersey state common law, not the statutory fraud on the FDA exception, and that Wyeth v. Levine accordingly required that NPC's preemption defense be rejected. The court held in favor of NPC on both counts, and the plaintiffs claim for punitive damages was precluded.

   1. Application of the Rule of Depecage to the Choice of Law Analysis

      Mrs. Zimmerman's jaw injury arose in Maryland and was allegedly caused by her doctor's prescription and her use of Aredia[R] and Zometa[R] in Maryland. Based upon these facts, the parties agreed that Maryland law governed the issues of liability and compensatory damages. The parties disagreed on what law applied to the plaintiffs claim for punitive damages. The plaintiff argued that the application of Maryland law to her liability and compensatory damages claim required that Maryland law also apply to her punitive damages claim. NPC argued that the court should conduct a separate "significant relationship" analysis for the issue of punitive damages and that, because the plaintiffs allegations of NPC misconduct focused on actions taken at NPC's headquarters, New Jersey law should be applied. (9) The court agreed with NPC.

      The court first explained that "[t]he 'significant relationship' approach allows for 'depecage,' such that a court can apply different state laws to different issues in a single case--i.e., liability, compensatory damages, and punitive damages." (10) As explained in the Restatement (Second) of Conflicts of Law [section] 146 (1971), under the significant relationship test, "the local law of the state where the injury occurred determines the rights and liabilities of the parties, unless, with respect to the particular issue, some other state has a more significant relationship." (11) Although the rule of depecage is often overlooked, NPC has successfully relied on this rule in numerous other cases in the Aredia[R] and Zometa[R] litigation to secure a separate choice of law analysis for punitive damages claims brought by plaintiffs allegedly injured by the drugs in a number of states. (12)

      Turning then to the choice-of-law analysis with respect to punitive damages, the court recognized that the default rule under the Second Restatement is that courts apply the "the law of the state where the injury occurred, unless some other state had a more significant relationship to the litigation." (13) The court held, however, that NPC had successfully overcome this default rule on the issue of punitive damages. (14) The court began by analyzing the contacts that each state had to the conduct at issue in the plaintiffs' punitive damages claim. The court explained that "the place where the injury occurred, Maryland, is 'simply fortuitous' with respect to punitive damages as 'it bears little relation to the occurrence and the parties with respect to the particular issue.'" (15) The court found that all of the other contacts favored application of New Jersey law. The court noted that NPC's "primary place of business is in New Jersey and the corporate decisions with respect to labeling and packaging of Aredia and Zometa took place in New Jersey." (16) The court further noted that NPC's "New Jersey business activities, including its interactions with the FDA, form the foundation of Plaintiffs' claim for any punitive damages award." (17)

      The court then addressed the other elements of the "significant relationship" test relating to the relevant state interests and party expectations. The court found that these factors likewise supported the application of New Jersey law. The court explained that "New Jersey has made a policy decision on how to impose punitive damages, and has an interest in its citizens being governed by those provisions." (18) The court concluded that NPC, "having its principal place of business in New Jersey, has a justified expectation of being subject to New Jersey law for punitive damages" and that "[t]he justified expectations of the Plaintiff are met as she will be compensated under [her home state's] law." (19) Further, the court found that "[t]he basic policy underlying punitive damages is to punish and deter the Defendant, whose conduct occurred in New Jersey, thus the interests of the tort field are enhanced through consistent application of New Jersey law." (20)

      Because New Jersey had the most significant relationship to the plaintiffs punitive damages claim, the court held that the punitive damages claim was governed by New Jersey law.

   2. Preemption Analysis

      Under New Jersey law, the imposition of punitive damages in product liability actions against drug manufacturers is governed by the New Jersey Product Liability Act. (21) Section 2A:58C-5(c) provides that "[p]unitive damages shall not be awarded if a drug or device ... which caused the claimant's harm was subject to premarket approval ... by the federal Food and Drug Administration ... and was approved." This statutory protection is subject to the following exception: "where the product manufacturer knowingly withheld or misrepresented information required to be submitted under the agency's regulations, which

      information was material and relevant to the harm in question, punitive damages may be awarded." (22) The next question for the Zimmerman court was whether this...