They don’t call the California Superior Court in Los Angeles “The Bank” for nothing. Late last month, a jury held Johnson & Johnson liable for $70 million in compensatory damages and $347 million in punitive damages in a case brought by an individual plaintiff who alleges that her terminal ovarian cancer was caused by using J&J’s talcum powder.

Putting aside J&J’s argument that the science does not establish a causal connection between talcum powder and ovarian cancer, and without denigrating the pain and suffering that the plaintiff has experienced in the ten years since she received her diagnosis, an award of $70 million in compensatory damages strikes me as shockingly high.

Although California courts are notoriously lax about reining in high awards of non-economic damages, this one seems so far off the charts as to suggest that the jury was animated by passion and prejudice. The punitive award, which is surely among the highest ever returned in California, reinforces that perception.

My sense, therefore, is that the trial court will feel obliged to either grant a new trial (assuming that it does not grant JNOV) or at least substantially reduce each award.

Assuming that the trial court does reduce the compensatory damages (rather than granting an unconditional new trial on passion-and-prejudice grounds), it could elect to reduce the punitive damages commensurately to retain the roughly 5:1 ratio employed by the jury and then review the reduced award for excessiveness under state law and the Due Process Clause.

Or it could simply compare the original amount of punitive damages to the reduced amount of compensatory damages in conducting its evaluation of the excessiveness of the punitive damages.

Either way, a very drastic reduction of the punitive damages would be called for—again, assuming that the court does not require a new trial because of the jury’s evident passion and prejudice.

How should the judge decide on the extent of the reduction? The first question is whether any significant amount of punitive damages is necessary at all in light of the deterrent effect of the compensatory damages.

As I pointed out in this post quoting a recent decision of the Tenth Circuit, the core responsibility of a reviewing court is to “decide whether the particular award is greater than reasonably necessary to punish and deter.  The Supreme Court has instructed [courts] to go ‘no further’ if a ‘more modest punishment’ for the ‘reprehensible conduct’ at issue ‘could have satisfied the State’s legitimate objectives’ of punishing and deterring future misconduct.”

This inquiry requires the court to consider whether and to what extent the award of compensatory damages already serves the functions of punishment and deterrence. In the talcum powder litigation, because the compensatory damages far outstrip the gain to J&J from the alleged failure to warn the plaintiff in this case, they do serve those functions.

Assuming that the trial court nonetheless concludes that some non-nominal amount of punitive damages is necessary for deterrence and punishment, how is the court to determine the permissible amount?

In a “one-off” case, the answer entails a relatively straightforward (if somewhat subjective) application of the three BMW guideposts.  But in a case like this one, which is one of roughly 4,800 cases raising the same claims, a more nuanced inquiry is required.

As my colleagues and I have explained in multiple prior posts, including this one about two earlier talcum powder verdicts against J&J, to avoid excessive multiple punishment, the court must limit the punitive damages to an amount that if awarded to every other plaintiff would not be excessive in the aggregate.

Such an approach would dictate reducing the punitive award by several orders of magnitude. Though the resulting apportioned punitive award might seem “small” standing alone, it bears remembering that for much of their history punitive damages were generally a fraction of the compensatory damages—not a multiple of them.  And as the Supreme Court pointed out in Exxon Shipping Co. v. Baker, even in the past few decades the median ratio of punitive to compensatory damages has been just over 0.6:1.

In sum, this case presents many significant issues regarding the fair administration of punitive damages. We will endeavor to report on developments as they occur.