BROWN, District Judge.
This matter comes before the Court on Defendant Novartis Pharmaceuticals Corporation's Motion (# 65) to Find that Punitive Damages Are Unavailable and/or to Apply New Jersey Law to the Issue of Punitive Damages. For the reasons that follow, the Court concludes New Jersey law applies to the issue of punitive damages, and, as a result, punitive damages are unavailable in this matter. Accordingly, the Court
Plaintiff Patricia Stromenger is an Oregon resident who was diagnosed with breast cancer in November 2001.
In January 2002 Plaintiff's cancer metastasized to her bones. Approximately one month later the Food and Drug Administration (FDA) approved the cancer drug Zometa as safe and effective to treat bone metastases from solid tumors.
In May 2002 after Plaintiff received a single dose of Zometa, Barry Taylor, D.D.S., extracted Plaintiff's root tip from tooth # 28. Plaintiff's tooth # 28 had been extracted previously from her right lower jaw.
In September 2002 Plaintiff was referred to Eric Dierks, D.D.S., an oral surgeon, for evaluation of Plaintiff's right lower jaw. Plaintiff advised Dr. Dierks that she had recently undergone a dental extraction and had developed an infection, which did not clear up after treatment with antibiotics. Plaintiff also reported her concern with ongoing swelling and drainage of her right mandible. Dr. Dierks diagnosed Plaintiff with acute osteomylitis of the jaw.
In August 2003 reports of osteonecrosis of the jaw (ONJ) in patients using bisphosphonates such as Zometa began to surface in medical literature. Also in August 2003 Defendant submitted a label change for Zometa to the FDA. Specifically, Defendant added the following paragraph to the "Adverse Reactions" section of the package insert:
Def.'s Mem. in Support of Mot. (# 32) for Summ. J., Ex. 13 at 3. The labeling revision was made available to the public in December 2003.
In January 2004 Dr. Dierks noted Plaintiff was "dealing with a Zometa related osteonecrosis [of the jaw] that has become secondarily infected."
In February 2004 Defendant updated the Zometa label to provide:
Def.'s Mem. in Support of Mot. (#32) for Summ. J., Ex. 16 at 12.
In March 2004 Dr. Lanier discontinued Plaintiff's monthly dose of Zometa based on Dr. Dierks's recommendation.
In May 2004 Dr. Dierks discussed with Plaintiff his "hope that she would go on to complete healing" because "the necrotic bone had been cleanly removed [in the April 2004 debridement]."
In June 2004 Plaintiff and Dr. Lanier discussed further bisphosphonate therapy. Dr. Lanier advised Plaintiff that she "needed to wait until she was completely healed and at that point [he] would reconsider reinstitution of bisphosphonate[s] ... on a quarterly basis."
In September 2004 Plaintiff and Dr. Dierks "discussed the fact that Zometa related osteonecrosis has no known cure and the timeline for its resolution is also unknown."
In November 2004 Plaintiff consulted Dr. Lanier and asked "[a] number of questions... regarding bisphosphonate osteonecrosis."
In January 2006 Plaintiff saw a television commercial discussing actions filed by individuals who allegedly developed ONJ as a result of taking Zometa. Plaintiff called her family attorney about the Zometa issue because that "was the first time she suspected that there was something wrong with the drug that was connected to [her] condition." Plaintiff's family attorney referred her to attorneys more familiar with the Zometa litigation.
On August 29, 2006, Plaintiff brought an action against Defendant in the Superior Court of New Jersey seeking compensatory and punitive damages on the ground that Zometa caused her to develop ONJ. Plaintiff brought claims for (1) defective design, (2) failure to warn, (3) breach of implied warranty, and (4) negligence, all in violation of N.J.S.A. 2A:58C-1 et seq. Plaintiff also brought a claim for violation of the New Jersey Consumer Fraud Act (NJCFA), N.J.S.A. 56:8-1 et seq., and a claim for punitive damages under the New Jersey Punitive Damages Act, N.J.S.A. 2A:15-5.9 and N.J.S.A. 2A:58C-1 et seq.
On October 13, 2006, Defendant removed the matter to the United States District Court for the District of New Jersey on the basis of federal-question jurisdiction.
At some point the Judicial Panel on Multidistrict Litigation (MDL) transferred the action under 28 U.S.C. § 1407 to the United States District Court for the Middle District of Tennessee.
Following discovery and briefing of dispositive motions in the MDL court, the MDL panel remanded the matter to the United States District Court for the District of New Jersey.
In April 2012 the United States District Court for the District of New Jersey transferred the matter to this Court.
On June 27, 2012, Defendant filed a Motion for Summary Judgment on the grounds that "[u]nder the statute of limitations operative in Oregon at the time of plaintiff's injury, Oregon Revised Statute § 30.905, plaintiff's product liability suit was untimely. Even under the amended version of Oregon Revised Statute § 30.905, effective January 1, 2004, her suit was untimely."
On October 22, 2012, 2012 WL 6649186, Magistrate Judge Dennis James Hubel issued Findings and Recommendation in which he recommended the Court deny Defendant's Motion for Summary Judgment. Defendant filed timely Objections.
On December 18, 2012, 2012 WL 6649585, this Court issued an Order adopting the Findings and Recommendation and denying Defendant's Motion for Summary Judgment.
On February 22, 2013, Defendant filed a Motion to Find that Punitive Damages are Unavailable and/or to Apply New Jersey Law to the Issue of Punitive Damages.
On April 9, 2013, the Court heard oral argument on Defendant's Motion and took the matter under advisement.
Defendant contends the Court should apply New Jersey's choice-of-law rules to resolve the conflicts-of-law issue because this matter was originally filed in New Jersey. Defendant relies on Ferens v. John Deere Co., 494 U.S. 516, 110 S.Ct. 1274, 108 L.Ed.2d 443 (1990), to support its contention.
Prior to Ferens the Supreme Court held when an action is transferred at the behest of the defendant under 28 U.S.C. § 1404, the transferee court must follow the choice-of-law rules of the transferor court. Van Dusen v. Barrack, 376 U.S. 612, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964). In Ferens the Supreme Court extended that rule to transfers initiated by plaintiffs absent circumstances that do not apply in this case. Ferens, 494 U.S. at 523, 110 S.Ct. 1274. See also Muldoon v. Tropitone Furniture Co., 1 F.3d 964, 966 (9th Cir.1993)(reversing district court's dismissal of the action applying California's statute of limitations on the ground that the matter was transferred from Illinois, and, therefore, the court should have applied Illinois law to the choice-of-law analysis). Plaintiff does not dispute New Jersey's choice-of-law rules apply.
The Court concludes pursuant to Ferens that it must apply New Jersey conflicts-of-law rules to determine whether Oregon or New Jersey law governs the issue of the availability of punitive damages in this matter.
The New Jersey Supreme Court has held that under New Jersey law "[t]he rights and liabilities of the parties with respect to an issue in tort are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties." P.V. ex rel. T.V. v. Camp Jaycee, 197 N.J. 132, 140, 962 A.2d 453 (2008). Specifically, under New Jersey conflicts law "[i]n an action for a personal injury, the local law of the state where the injury occurred determines the rights and liabilities of the parties, unless, with respect to the particular issue, some other state has a more significant relationship ... to the occurrence and the parties, in which event the local law of the other state will be applied." Id. at 142, 962 A.2d 453 (quotation omitted).
The New Jersey Supreme Court set out New Jersey's conflicts analysis as follows:
Id. at 144, 962 A.2d 453 (citations and quotations omitted). If an actual conflict exists in a personal-injury case, the law of the state in which the injury occurred is presumed to apply. Id. This presumption may be overcome, however, by a showing
New Jersey courts have made clear that when determining which law to apply to a case, "the law of one jurisdiction may apply to one issue in a matter and the law of a second jurisdiction to another," and "each issue must be analyzed separately." Grossman v. Club Med Sales, Inc., 273 N.J.Super. 42, 51, 640 A.2d 1194 (1994). Thus, the law that governs the right to punitive damages may differ from the law that governs liability and the measure of compensatory damages.
Defendant contends there is not an actual conflict between Oregon and New Jersey law related to the availability of punitive damages. In fact, Defendant contends punitive damages are not available under either Oregon or New Jersey law. In her Response to Defendant's Motion, Plaintiff does not explicitly address whether there is a conflict between Oregon and New Jersey law related to punitive damage. Plaintiff, however, appears to imply there is not a conflict because her arguments are limited to her assertion that both Oregon and New Jersey law allow for punitive damages under circumstances such as those in this case.
The parties' arguments focus on provisions of Oregon and New Jersey statutes related to personal-injury actions against drug manufacturers. Specifically, New Jersey statute provides:
N.J.S.A. § 2A:58C-5(c). Oregon statute provides:
Or.Rev.Stat. § 30.927(1) and (2). Defendant contends these provisions are functionally the same, and, therefore, there is not any conflict between Oregon and New Jersey law related to punitive damages. In her Response to Defendant's Motion, Plaintiff agrees the Oregon and New Jersey provisions are substantially the same and that there is not any conflict.
At oral argument the Court pointed out that even though neither party raises the issue, it appears to the Court that there is a conflict between Oregon and New Jersey law related to punitive damages. Specifically, New Jersey has a cap on punitive damages that provides "[n]o defendant shall be liable for punitive damages in any action in an amount in excess of five times the liability of that defendant for compensatory damages or $350,000, whichever is greater." N.J.S.A. § 2A:15-5.14. Oregon does not have a cap on punitive damages. In addition, Oregon Revised Statute § 31.735 provides "[u]pon the entry of a verdict including an award of punitive damages, the Department of Justice becomes a judgment creditor" of 70% of the award (60% to the Criminal Injuries Compensation Account and 10% to the State Court Facilities and Security Account). New Jersey does not have a similar provision.
As the Court noted, at least two courts in cases involving this Defendant have concluded under facts similar to those at issue here that there was an actual conflict between New Jersey law and the law of another state because New Jersey has a cap on punitive damages and the other state did not. See Hill v. Novartis Pharm. Corp., No. 1-06:-CV-00939-AWI-DLB, 2012 WL 967577 (E.D.Cal. Mar. 21, 2012), and Zimmerman v. Novartis Pharm. Corp., 889 F.Supp.2d 757 (D.Md. 2012).
In Hill the plaintiff filed an action in California state court against Novartis asserting claims for strict product liability and negligence. Specifically, the plaintiff alleged:
2012 WL 967577, at *1. The defendant removed the action to the United States
Id., at *2 (emphasis added; citations and quotations omitted). The court pointed out that
Id., at *3-4 (citations and quotations omitted). The court concluded California and New Jersey punitive-damages laws were in actual conflict:
Id., at *4 (citations and quotations omitted). The court, therefore, concluded an "actual" conflict between New Jersey and California law existed.
Similarly, in Zimmerman the plaintiff, a Maryland resident, filed an action against Novartis in the United States District Court for the Middle District of Tennessee asserting claims for strict liability and negligence in connection with the manufacturing, distribution, promotion, testing, labeling, and selling of Zometa and another bisphosphonate drug, Aredia. 889 F.Supp.2d at 759. The plaintiff sought compensatory and punitive damages. The court transferred the matter to the United States District Court for the District of Maryland, and the defendant filed a motion to preclude punitive damages. Applying law of conflicts of Tennessee, which, like New Jersey, employs the "most significant relationship test," the court concluded New Jersey law governed the issue of punitive damages. Id. at 777. In reaching its ultimate decision, the court found there was an actual conflict between New Jersey and Maryland law as to punitive damages. Specifically, the court concluded "[b]ecause Maryland allows for the recovery of non-capped punitive damages upon clear and convincing evidence of actual malice, and New Jersey generally immunizes drug and device manufacturers from punitive damages and limits recovery to $350,000 or five times the compensatory damages award, the laws of New Jersey and Maryland are different, thus necessitating a decision on which law is to be applied." Id. at 760-61.
As noted, Oregon does not have a cap on punitive damages, and New Jersey does. Pursuant to Hill and Zimmerman, the Court concludes there is an actual conflict between Oregon and New Jersey law related to punitive damages. Accordingly, the Court must perform a conflicts analysis to determine the law that applies to the issue of the availability of punitive damages.
As noted, New Jersey applies the "more significant relationship" test to determine the state law that should apply. Defendant cites numerous cases involving Zometa litigation in which courts have held the relevant conduct took place in New Jersey. Those courts recognized there is a presumption that the law of the place of the injury governs, but they concluded Novartis (the defendant in all of the cases cited by Defendant) overcame that presumption because New Jersey has a more significant relationship to the issue of punitive damages than the various plaintiffs' domiciles. Although the cases cited by Defendant involved injuries to plaintiffs that occurred in jurisdictions other than New Jersey, the courts all concluded Zometa's New Jersey business activities, including its interactions with the FDA, formed the foundation of the plaintiffs' claims for punitive damages. See, e.g., Zimmerman, 889 F.Supp.2d at 763-64. See also Brown v. Novartis Pharm. Corp., No. 7:08-CV-130-FL, 2012 WL 3066588, at *7 (E.D.N.C. July 27, 2012); Talley v. Novartis Pharm. Corp., No. 08-CV-361-GCM, 2011 WL 2559974, at *4 (W.D.N.C. June 28, 2011)("The record demonstrates that the corporate decisions at issue regarding labeling and packaging, occurred in New Jersey."); Deutsch v. Novartis Pharm. Corp., 723 F.Supp.2d 521, 525-26 (E.D.N.Y.2010)(plaintiffs were unable to set forth any evidence to show the corporate decisions that underlie their punitive-damages claims occurred anywhere other than in Novartis's corporate headquarters in New Jersey); Meng v. Novartis Pharm. Corp., Nos. L7670-07MT, L-6072-08MT, 2009 WL 4623715, at *2 (N.J.Super. Nov.
In Zimmerman the court reasoned:
889 F.Supp.2d at 761-62.
Although here Plaintiff's injury occurred in Oregon, punitive damages are not intended to compensate one for an injury but rather to deter and to punish bad conduct. Accordingly, the Court must consider factors other than the place where Plaintiff suffered her injury. As the court explained in Talley,
2011 WL 2559974, at *4.
The Court finds the cases cited by Defendant are well-reasoned and persuasive. Here Plaintiff has the same contacts as those set out in Talley, Deutsch, and Meng. As in those cases, Plaintiff's expectation of compensatory damages will be met because the parties agree Oregon law applies to the issues of liability and compensatory damages. In addition, because Defendant's principal place of business is in New Jersey and New Jersey is the state of Defendant's incorporation, Defendant's expectations of punishment or deterrence for bad acts will be met by the application of New Jersey law.
Accordingly, the Court concludes New Jersey law governs the availability of punitive damages in this matter.
As noted, N.J.S.A. § 2A:58C-5(c) provides:
N.J.S.A. § 2A:58C-5(c).
The parties dispute whether the exception
In McDarby two patients brought claims in New Jersey state court under New Jersey's Product Liability Act (PLA) (N.J.S.A. § 2A:58C-1 et seq.) and New Jersey's Consumer Fraud Act (CFA)(N.J.S.A.56:8-1) against the manufacturer of Rofecoxib, a prescription, nonsteroidal, anti-inflammatory drug. The plaintiffs alleged the defendant had inadequately warned of cardiovascular risks from that product. After a jury trial, the court awarded the first patient $15.7 million in compensatory and punitive damages, attorneys' fees, and costs and awarded the second patient $2.27 million consisting of $135 in compensatory damages and the remainder as attorneys' fees and costs. Id. at 20, 949 A.2d 223. The defendant appealed relying on the Supreme Court's decision in Buckman Co. v. Plaintiff's Legal Committee, 531 U.S. 341, 121 S.Ct. 1012, 148 L.Ed.2d 854 (2001). The defendant alleged, among other things, that the trial judge erred when she allowed the jury to consider punitive damages because that remedy was preempted. Id. at 88, 949 A.2d 223. The New Jersey Appellate Division
Plaintiff contends "the current vitality of McDarby is questionable" following the United States Supreme Court decision in Wyeth v. Levine, 555 U.S. 555, 129 S.Ct. 1187, 173 L.Ed.2d 51 (2009).
Plaintiff also points to various Zometa litigation decisions that did not involve application of New Jersey law. For example, Fussman v. Novartis Pharmaceuticals Corporation involved the application of North Carolina's punitive-damages law. 509 Fed.Appx. 215 (4th Cir.2013). That jurisdiction, unlike New Jersey, does not have a statute that precludes punitive damages in cases involving FDA-approved pharmaceutical products. Id., at 225. The court, therefore, examined the impact of Wyeth on North Carolina's common law rather than on New Jersey law. Id.
Similarly, in Forman v. Novartis Pharmaceuticals Corporation the court concluded the plaintiff could recover punitive damages under New Jersey law because a showing of fraud on the FDA was only one part of what the plaintiff had to prove to make out such a claim. 793 F.Supp.2d 598, 606-08 (E.D.N.Y.2011). In reaching that conclusion, however, the court was obligated to follow the Second Circuit's decision in Desiano v. Warner-Lambert & Co., 467 F.3d 85 (2d Cir.2006), and Desiano's narrow interpretation of Buckman. Id. The McDarby court, however, discussed and distinguished Desiano. In any event, Desiano is not binding on this Court, other courts have reached conclusions opposite to the Forman decision, and there is not any Ninth Circuit case adopting the Desiano court's narrow interpretation of Buckman. In fact, the court in Zimmerman concluded Forman was incorrectly decided on the ground that the Buckman preemption analysis does not change "simply because, under New Jersey law, this [p]laintiff must prove something in addition to noncompliance with a FDCA disclosure requirement to recover punitive damages" because "fraud on the FDA [is] a `critical element' of every punitive damages claim [under the New Jersey statute]." 889 F.Supp.2d at 777.
In addition, Defendant points to a number of cases decided after Wyeth that have rejected Plaintiff's argument that McDarby is no longer viable law, including a decision by the New Jersey state court handling the Zometa mass tort litigation. See Bessemer v. Novartis Pharm. Corp., No. MID-L-1835-08-MT. The Bessemer court noted in an April 30, 2010, Order:
Def.'s Mem. in Support of Mot. (# 65) to Find that Punitive Damages Are Unavailable, Ex. 2 at 38. In addition, the New Jersey Appellate Division held after Wyeth that the plaintiffs could not bring a claim for punitive damages because punitive damages are unavailable under the PLA when a drug has been approved by the FDA and the exception to the bar on punitive damages is preempted by federal law as set out in McDarby. Cornett v. Johnson & Johnson, 414 N.J.Super. 365, 405, 998 A.2d 543 (2010).
In Stanger v. APP Pharmaceuticals, LLC, the United States District Court for the District of New Jersey reached the same conclusion as the New Jersey state courts after Wyeth:
No. 09-05166(JAP), 2010 WL 4941451, at *4 (D.N.J. Nov. 30, 2010).
This Court finds the cases cited by Defendant are well-reasoned and the cases relied on by Plaintiff are distinguishable. Thus, the Court concludes the weight of authority in New Jersey courts and in courts interpreting New Jersey law holds McDarby is still good law and that plaintiffs, therefore, cannot bring claims for punitive damages when a drug has been approved by the FDA because punitive damages are unavailable under the NJPLA and the exception to the PLA is preempted by federal law.
Accordingly, the Court follows the reasoning of the McDarby court and, therefore, concludes Plaintiff may not bring a claim for punitive damages in this matter under the PLA and the exception to the PLA is preempted by the FDCA.
Plaintiff contends even if the Court concludes the statutory exception to the PLA's bar on punitive damages is preempted, Plaintiff may still recover punitive damages based on the "black-letter law of the Restatement (3d) of Torts and/or New Jersey's general punitive damages statute." The court in Bessemer, however, rejected both of these arguments. The plaintiffs in Bessemer asserted they, unlike the plaintiffs in McDarby and Buckman, did not rely solely on a claim that Novartis knowingly withheld or misrepresented information to the FDA. The plaintiffs pointed out that they were also asserting Novartis's failure to warn the dental community about the risk of ONJ constitutes punitive conduct unaffected by the FDA's approval of Zometa or that drug's warnings. The plaintiffs based their argument on the fact that the Restatement (3d) of Torts: Products Liability § 6, imposes a duty to warn the dental community; that this duty to warn is based on the Restatement and New Jersey tort law rather than the PLA; and that this duty to warn is unrelated to FDA approval and, therefore, is not preempted. The Bessemer court, however, pointed out that New Jersey courts have not adopted § 6 of the Restatement (3d) of Torts and that the only basis for awarding punitive damages is set out in the PLA. Def.'s Mem. in Support of Mot. (#65) to Find Punitive Damages Are Unavailable, Ex. 2 at 39. The court concluded because Zometa was approved by the FDA, punitive
Plaintiff also asserts if the Court concludes the exception in § 2A:58C-5(c) is preempted, Plaintiff may still recover punitive damages under New Jersey's general punitive-damages statute. Specifically, Plaintiff contends if the Court finds the exception to the punitive-damages provision in § 2A:58C-5(c) is preempted, then all of § 2A:58C-5(c) must also be preempted and Plaintiff must be allowed to recover punitive damages under New Jersey's general punitive-damages statute (N.J.S.A. § 2A:15-5.9-5.17). Plaintiff relies on N.J.S.A. § 1:1-10, which provides:
Plaintiff notes New Jersey courts have held pursuant to § 1:1-10 that the entire provision of a statute must fail if leaving a particular part of a provision in a statute while invalidating another part thwarts the legislature's intent. New Jersey Chapter, Am. Inst. of Planners v. New Jersey, 48 N.J. 581, 227 A.2d 313 (1967). Thus, Plaintiff contends invalidating the exception to the PLA while leaving the remainder of § 2A:58C-5(c) viable would thwart the legislature's intent. The Bessemer court, however, rejected this same argument:
Def.'s Mem. in Support of Mot. (# 65) to Find that Punitive Damages Are Unavailable, Ex. 2 at 40. The court, therefore, concluded the plaintiffs' claim for punitive damages was barred.
This Court finds the Bessemer court's reasoning to be well-supported and notes Plaintiff did not cite any authority that established a plaintiff may recover punitive damages under New Jersey law based on the Restatement (3d) of Tort's duty to warn, that New Jersey has adopted that provision of the Restatement (3d) of Torts or another means to permit an award of punitive damages in the context of a products-liability action involving a drug that was approved by the FDA, or that it would thwart the New Jersey Legislature's intent if the remainder of § 2A:58C-5(c) was enforced while the exception provided for was preempted.
The Court, therefore, concludes Plaintiff has not established she may assert a claim in this action for punitive damages under New Jersey law. Accordingly, the Court grants Defendant's Motion, applies New Jersey law to the issue of punitive damages, and concludes Plaintiff may not bring a claim for punitive damages in this matter.
In Defendant's Motion, in Plaintiff's Response, and at oral argument, the parties
For these reasons, the Court
IT IS SO ORDERED.