1024px-Surgical_Instruments_01About a month ago, we reported on a Delaware trial court decision reducing a $75 million punitive award to $7.5 million in a transvaginal mesh case. Last week, in what we believe to be the first appellate decision in one of these cases, the Fourth Circuit upheld a verdict of $250,000 in compensatory damages and $1.75 million in punitive damages.

The decision in Cisson v. C.R. Bard, Inc. implicates a number of issues that may arise with some frequency in punitive damages cases.

The facts of the case are not particularly relevant. Suffice it to say that Bard’s device was implanted into the plaintiff’s body to treat pelvic organ prolapse.  After the device was implanted, the plaintiff experienced a variety of symptoms, and the device ultimately was removed.

The plaintiff sued, alleging various causes of action under Georgia law. The case was ultimately moved to the Southern District of West Virginia as part of a multidistrict litigation involving tens of thousands of claims against several different manufacturers. This was the first case in the MDL to go to trial.  The plaintiff prevailed on her claims for design defect and failure to warn, and the jury awarded $250,000 in compensatory damages and $1.75 million in punitive damages.  The district court denied Bard’s post-trial motions, and the Fourth Circuit affirmed.

Bard raised a number of evidentiary and instructional issues that, with one exception, don’t bear on punitive damages. The exception has to do with the district court’s exclusion of evidence that Bard complied with the 510(k) process for marketing of medical devices that are substantially equivalent to ones that were in existence in 1976.  Relying on Georgia case law holding that compliance with federal or state regulations negates the mental state necessary for imposition of punitive damages, Bard contended that its compliance with the 510(k) process was highly relevant to punitive damages.

The Fourth Circuit rejected this argument, reasoning that while compliance with safety regulations may well be relevant to punitive damages, the 510(k) process is “something less than a safety requirement.” To the contrary, it said, “the decision to pursue 510(k) clearance was a choice to minimize the burden of compliance, potentially cutting in favor of punitive damages” (emphasis added).

I’m no expert on the medical device regulatory regime, but the notion that the 510(k) process is not designed to ensure device safety strikes me as quite improbable. And I have to wonder why that shouldn’t be up to a jury to decide in any event.  Particularly because punitive damages are stigmatizing, there should be a heavy presumption in favor of allowing defendants to introduce any evidence that is even conceivably exculpatory.  If bifurcation or limiting instructions are necessary to prevent the evidence from affecting the jury’s resolution of issues as to which the evidence is irrelevant or more prejudicial than probative, due process mandates that the court provide those procedures rather than exclude the evidence outright.

After rejecting the rest of Bard’s new trial arguments, the Fourth Circuit turned to the argument that the $1.75 million punitive award was unconstitutionally excessive. The court indicated that Bard had not contended that the punitive award was disproportionate to the degree of reprehensibility of its conduct and instead had limited its argument to the ratio guidepost, asserting that a 7:1 ratio is per se unconstitutional under State Farm.  Having been given an easy target to shoot at, the Fourth Circuit had no trouble hitting it, pointing out that the Supreme Court consistently has refused to impose a bright-line ratio that a punitive award may not exceed.

Ordinarily, at this point I’d criticize the court for failing to appreciate that a 7:1 ratio can be constitutionally permissible in one mass tort case only if the same ratio could be imposed in all of the other cases without the resulting aggregate punishment being grossly excessive—as we have explained in posts about a $70 million verdict in a hemorrhoid staple case, the Delaware transvaginal mesh case, a hip implant case against Wright Medical Technology, and the Actos litigation against Takeda.

But this case may be different. Georgia’s punitive damages statute provides that “[o]nly one award of punitive damages may be recovered in a court in this state from a defendant for any act or omission if the cause of action arises from product liability, regardless of the number of causes of action which may arise from such act or omission.”

It is not clear whether the reference to “in a court in this state” should be taken literally to prevent a verdict in the court of another state from counting even when the case is governed by Georgia law.  Presumably, the Georgia General Assembly intended to prevent serial punitive awards for harms to Georgia residents regardless of where the cases are tried.  Certainly, I would expect that to be Bard’s position in the next case involving a Georgia plaintiff.  But for that reason, Bard couldn’t argue to the courts in this case that the punitive damages must bear a more modest ratio to the compensatory damages in order to avoid excessive multiple punishment.

Finally, the Georgia statute provides that 75% of any punitive award—after deduction of reasonable attorneys’ fees and costs—must be paid to the State. The plaintiff challenged the statute under the Takings Clause.  The Fourth Circuit rejected her argument, observing that insofar as the General Assembly created a property interest in punitive damages by enacting the punitive damages statute—a questionable assumption, I might add—it was entitled to define the scope of that interest within the same statute.

Although at first blush, this holding might appear to be pro-defense, split-recovery statutes have the potential to result in the imposition of higher absolute amounts of punitive damages. If juries are aware of the statutes—as a result of either media coverage or, heaven forbid, jury instructions—they might ratchet up their awards both to enrich the state fisc and to ensure that the plaintiff gets what they consider to be an adequate amount from the pot.