In a post last month, we reported on a district court’s rulings on motions in limine in the first bellwether hip implant trial against Wright Medical Technology Incorporated. The case subsequently went to trial, and last week a federal jury in Atlanta returned a jaw-dropping verdict of $1 million in compensatory damages and $10 million in punitive damages.
The jury found that the plaintiff’s hip implant was defectively designed and that the defendant negligently misrepresented how long the device would last. In addition, the jury found that, in marketing the hip implant, the defendant demonstrated knowing and reckless indifference to the rights of others—the standard for imposition of punitive damages under the applicable state law (Utah).
As the case proceeds through the post-trial motions and a likely appeal to the Eleventh Circuit, the defendant can be expected to raise several arguments, including, possibly, some relating to the rulings on the motions in limine discussed in our prior post. I would also anticipate that it will challenge the sufficiency of the evidence of knowing and reckless indifference and also contend that both the compensatory and the punitive damages are excessive.
Without having attended the trial or read the transcript, I can’t comment on the compensatory damages other than to say that they strike me as high, given the nature of the plaintiff’s injuries described in media accounts of the verdict.
But I do have some thoughts on the punitive damages. To begin with, even if this were an isolated case, the $10 million exaction strikes me as excessive under the guideposts announced by the Supreme Court in BMW and refined in State Farm—the degree of reprehensibility of the conduct, the ratio of punitive to compensatory damages, and the legislatively established penalties for comparable conduct.
The conduct for which the defendant was held liable does not appear to be anywhere close to the high end of the reprehensibility spectrum, and the 10:1 ratio of punitive to compensatory damages runs far afoul of the guidelines the Supreme Court set forth in State Farm. Under those guidelines, when the compensatory damages are “substantial,” as they undeniably are here, a ratio in the neighborhood of 1:1 marks the line of constitutional reasonableness, barring exceptional circumstances. Finally, as best I can tell, Utah does not have an administrative penalty for false advertising; it simply allows consumers who prove a violation of the truth in advertising statute to collect the greater of actual damages or $2,000 in statutory damages. The latter is a far cry from $10 million.
Moreover, the punitive award in this case shouldn’t be viewed in isolation. There are hundreds of other cases pending against Wright Medical. As we explained in a prior post, the principle underlying the Supreme Court’s decision in Philip Morris v. Williams dictates that a $10 million punitive award in the case of a single plaintiff can be defensible as punishment for the harm suffered by that plaintiff only if similar punishment could be imposed in all of the other cases arising out of the same conduct without the aggregate punishment being excessive. Yet no one could seriously maintain that a punishment in the billions of dollars would be warranted for the conduct at issue here.
Even putting aside the prospect of punishment for the same conduct in other cases, the $10 million punishment is demonstrably excessive when considered from a different perspective. As we pointed out in a another post, a punitive award can be deemed to violate the prohibition against extraterritorial punishment articulated in BMW if, when multiplied by the total number of states or, to be even more precise, the reciprocal of the relevant state’s share of the market (or of the total population), the resulting amount would be excessive. Here, Utah’s population is 0.9 percent of the population of the United States, so multiplying the punitive award by the reciprocal of that figure (108) yields an aggregate nationwide punitive award of $1.08 billion, Again, because no one can credibly argue that a nationwide punishment of that amount is justifiable under these circumstances, it follows that a $10 million exaction exceeds the amount that Utah permissibly may impose to advance its interests in deterrence and retribution.
I would certainly hope that, in light of the foregoing considerations, the district court will substantially reduce the punitive damages—if it does not throw them out entirely. But if the court nonetheless upholds a disproportionate amount of punitive damages, this case could be fodder for amicus briefs in the Eleventh Circuit.