J&J’s $4.7 billion court loss may fade and go unpaid

Bloomberg

A $4.7 billion jury verdict against Johnson & Johnson in July helped spark the company’s biggest annual share loss in a decade, spotlighting the potential cost of alleged health risks from its popular baby powder.
But investors may have overreacted when a St. Louis jury sided with 22 women who claimed asbestos in the powder caused their ovarian cancer. While the award was eye-popping — the sixth-largest ever in a product-defect case — J&J may pay far less, or nothing. No verdict of that size has survived appeal.
Indeed, of the 25 largest US jury awards, 23 were reversed, drastically cut or against defendants with few or no assets who couldn’t pay, according to data compiled by Bloomberg. The remaining two, including the one against J&J, are being appealed. Most such revisions are by judges overruling angry jurors or enforcing court-imposed
limits on punitive damages.
“It’s pretty common for judges to reduce enormous verdicts,” said Jean Eggen, who teaches mass tort law at Widener University in Philadelphia. Juries “sometimes can be somewhat arbitrary,” she said. “The civil system is set up so a judge can determine if it’s overvalued.”
Even if trial judges don’t intervene, defendants have more opportunities to knock down verdicts through multiple appeals that can lead to new trials or force plaintiffs to settle for far less. As a result, it’s become a truism in civil litigation that the larger the jury verdict, the more likely it is to be reduced or reversed.
To be sure, such lawsuits aren’t without risk for companies, especially in cases alleging defective products, where there may be hundreds or thousands of similar claims putting pressure on defendants to seek settlements.
“Even though a lot of times it’s vapor, a large verdict draws other cases,’’ said Victor Schwartz, who represents corporations and is general counsel for the American Tort Reform Association.
Since losing its first big talc-related verdicts in St. Louis in 2016, the number of such cases against J&J jumped to more than 11,700 from 1,400, and the company expects more. The number of trials set for this year will more than triple to at least 26 from just eight in 2018. While J&J disputes any link between its baby powder talc and cancer, it may have to cough up as much as $20 billion in settlements to resolve all the cases, according to Bloomberg Intelligence litigation analyst Holly Froum.

SHARE DROP
The $4.7 billion verdict in July, upheld by the trial judge in December, has been appealed by the company, which saw its shares tumble 7.6 percent in 2018. J&J probably will be able to win a reversal or reduce its liability in the long run, said David Logan, law professor at Roger Williams University in Bristol, Rhode Island.
“That’s real money,” Logan said. “This particular verdict will go down.” A big reason jury awards are so vulnerable is that they often include substantial punitive damages or awards for non-economic claims such as pain and suffering that “feed a narrative of jury craziness,” Logan said. These components have put verdicts in product-defect cases at risk.
Mark Lanier, the lawyer who won the J&J verdict in July, said he expects the award to survive on appeals because the punitive portion, at $4.14 billion, meets Supreme Court guidelines when divided among the 22 plaintiffs. “The award isn’t outrageous,” he said. “We ought to be OK.”
Still, judges routinely cut back punitive awards, and the “higher the verdict, the greater the level of scrutiny,” according to Bob Clifford, a Chicago-based plaintiffs’ attorney.