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LAFAYETTE, La. — (Mealey’s) Takeda Pharmaceutical Co. Ltd. and Eli Lilly and Co. will not get a new trial in the first Actos bladder cancer multidistrict litigation bellwether case, but a Louisiana federal judge on Oct. 27 reduced the $9 billion punitive damages verdict to $36.87 million (In Re: Actos [Pioglitazone] Products Liability Litigation, MDL Docket No. 2299, No. 11-md-2299, Terrence Allen, et al. v. Takeda Pharmaceuticals North America, Inc., et al., No. 12-64, W.D. La.).
(Opinion available. Document #28-141106-008Z.)
In April, a jury in the U.S. District Court for the Western District of Louisiana found that Takeda and Lilly negligently failed to warn doctors and patients about the risk of bladder cancer from the diabetes drug and that Actos was a substantial contributing factor to plaintiff Terrence Allen’s bladder cancer. The jury also found that defendants acted with wanton and reckless disregard of the effects of their actions.
The jury awarded Terrence Allen $1.15 million in compensatory damages and $325,000 in compensatory damages to Allen’s wife, Susan. Takeda was found 75 percent liable to the Allens and Lilly 25 percent liable.
Takeda makes Actos; Lilly was a former co-marketer.
Compensatories Down In Stipulation
The jury ordered Takeda to pay $6 billion in compensatory damages and Lilly to pay $3 billion.
In August, Judge Rebecca F. Doherty denied the defendants’ post-trial motion for judgment as a matter of law, deferring her ruling on a motion for a new trial and reduction or remittitur of punitive damages.
The defendants did not appeal the compensatory damages as excessive and stipulated to compensatory damages of $945,000 for Terrence Allen and $325,000 for Susan Allen.
‘Passion And Prejudice’
In their motion for a new trial and reduction of punitive damages, the defendants said the latter was unconstitutional under the due process clause of the U.S. Constitution. They argued that the jury acted out of passion and prejudice and suggested that if warranted at all, punitive damages should only equal the compensatory damages awarded.
Reviewing the evidence in the 11-week trial, Judge Doherty said the defendants failed to prove that the jury was motivated by passion or prejudice or that a new trial is required.
However, Judge Doherty found that the punitive damage awards were excessive and violated the due process clause and that the defendants are entitled to a remedy. The judge noted that multiple rulings by the U.S. Supreme Court and the Fifth Circuit U.S. Court of Appeals on punitive damages have not produced a clear rule on punitive damages that can be applied to the facts of the Allen case.
At several points in her 101-page ruling, Judge Doherty invited higher courts to “provide greater clarity and guidance for the lower Courts in this area of the law.”
Punitive Damage Factors
In arriving as her punitive damage figure, Judge Doherty said she considered the following factors:
Judge Doherty said she found that the jury’s punitive damages awards were not unreasonable given the evidence presented of “a high degree of reprehensibility of the Defendants’ conduct and the need to adequately deter such conduct in the future.”
However, the judge also found that the compensatory-to-punitives ratio of 1:5,424 for Takeda and 1:8,136 for Lilly “cannot withstand the more objective proportionality analysis under the now existing jurisprudence.”
Maximum Recovery Rule
Applying the Fifth Circuit’s “maximum recovery rule” and the requirements of the Seventh Amendment, the judge awarded what she determined is the “maximum amount allowed by the substantive prong of the Due Process Clause under the facts of this case.” She said that although there are 4,000 Actos bladder cancer cases in the multidistrict litigation, the jury’s verdict was in only one case.
“Therefore, this Court finds, for all the reasons noted above, that a ratio of 1:25 (in whole) of compensatory damages to punitive damages, creating an award of punitive damages against Takeda in the amount of $27,656,250.00, and a punitive damages award against Lilly in the amount of $9,128,750.00, totaling $36,875,000.00 should flow.”
“Because the jury awarded punitive damages in excess of this amount, the Court finds the punitive damages awards made by the jury must bow to the weight of the Due Process Clause,” the judge wrote.
Judge Doherty said it is noteworthy that the sums represent 1/1,120th of the 2013 stipulated net worth of Takeda and Lilly, 1/656th of the total reported Actos sales, 1/224th of the total punitives awarded by the jury and about 1/49th of the $1.82 billion one-year reduction in Actos sales after the drug’s label included a bladder cancer warning.
The judge sAid the ratio of 1:25 is “large enough to accomplish the jury’s clear aim: to send a message to the Defendants that their wrongdoing must stop and must not be repeated when reviewed within the financial realities at play.”
“Constitutionally, it also places the Defendants squarely on notice that, should they return to this type of behavior in the future, they are at risk of substantial punitive damage awards, which could be adopted in those future case brought under States’ laws which allow punitive damages for which specific causation liability might be found.”
Takeda, Lilly Will Still Appeal
In an Oct. 28 statement, Takeda said Judge Doherty’s reduction of punitive damages is “a step in the right direction,” but said it still believes a damage award “of any amount is not justified based on the evidence presented in this trial.” It said it will still appeal.
In an Oct. 27 statement, Lilly said the evidence does not support the jury’s verdict and it will appeal.
The Allen trial included references to missing defense documents. Judge Doherty previously found that Takeda spoliated evidence and that the company acted in bad faith in failing to preserved documents relevant to litigation.
Takeda may face adverse inference instructions in future trials. It also must pay for plaintiff costs for the sanctions motion and for plaintiff costs in trying to find missing evidence.
In addition, Takeda must continue efforts to recover deleted or destroyed evidence and report to the court on a regular basis.
Other Bellwethers On Hold
Judge Doherty has previously stayed all other bellwether trials pending an expected appeal of the Allen verdict.
Actos is an oral prescription drug prescribed to help reduce blood glucose in patients with type 2 diabetes.
Takeda is represented by Sara J. Gourley and Sherry A. Knutson of Sidley Austin in Chicago, J.E. McElligott Jr. and Davidson, Meaux, Sonnier, McElligott, Fotenot, Gideon & Edwards in Lafayette and Bruce R. Parker of Venable in Baltimore.
Allen is represented by Richard J. Arsenault of Neblett, Beard & Arsenault in Alexandria, La., and Paul J. Pennock of Weitz & Luxenberg in New York.
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