This matter comes before the Court on the petition of Appellant Ortho-McNeil-Janssen Pharmaceuticals, Inc., for rehearing of this Court's opinion in State ex rel. Wilson v. Ortho-McNeil-Janssen Pharmaceuticals, Inc., Op. No. 27502 (S.C.Sup.Ct. filed Feb. 25, 2015). We grant the petition, dispense with further briefing, and file a substituted opinion, which is attached to this order.
Justice KITTREDGE.
Appellant Ortho-McNeil-Janssen Pharmaceuticals (Janssen) is a pharmaceutical company that manufactures the antipsychotic drug Risperdal. Risperdal is among a class of drugs prescribed primarily for the treatment of schizophrenia. The Attorney General of South Carolina believed that Janssen had violated the South Carolina Unfair Trade Practices Act (SCUTPA)
The matter proceeded to trial. A jury rendered a liability verdict against Janssen on both claims. The trial court rejected Janssen's defenses, including the statute of limitations, finding that both claims were timely. The trial court imposed civil penalties against Janssen for both claims totaling $327,073,700 based on 553,055 separate violations of SCUTPA in connection with its deceptive conduct in the sales and marketing of Risperdal.
Janssen appeals. Because this is an action at law, our review of factual challenges is limited to determining whether there is any evidence to support the verdict. As for properly preserved questions of law, our review is plenary. We affirm the liability judgment on the labeling claim but modify the judgment to limit the imposition of civil penalties to a period of three years from the date of the tolling agreement, which is essentially coextensive with the three-year statute of limitations, subject to an additional three months by virtue of the time period between the January 24, 2007, tolling agreement and the filing of the Complaint on April 23, 2007. We further remit the civil penalties on the labeling claim to $22,844,700. We affirm the liability judgment on the DDL claim, but remit those civil penalties to $101,480,000. Accordingly, we affirm in part, reverse in part, and remand for entry of judgment against Janssen in the amount of $124,324,700.
A brief summary of the Food and Drug Administration's (FDA) regulatory authority over the pharmaceutical industry and the evolution of antipsychotic drugs provides a helpful backdrop to the facts of this case. "In the 1930's, Congress became increasingly concerned about unsafe drugs and fraudulent marketing, and it enacted the Federal Food, Drug, and Cosmetic Act (FDCA)."
The FDA new drug approval process includes specific procedures through which warning labels are drafted, approved, and required to be included in the packaging of manufactured drugs. A drug label "must contain a summary of the essential scientific information needed for the safe and effective use of the drug," and the label "must be informative and accurate and neither promotional in tone nor false or misleading in any
After a new drug application has been approved, the drug's sponsor has continuing duties to the FDA to ensure the long term efficacy and safety of the approved drug. For example, once drugs are approved by the FDA, the drug's sponsor is required to review, and report to the FDA, all "adverse drug experience"
Some have expressed a growing concern regarding the pharmaceutical industry's reticence to disclose negative clinical data, and the impact this has on the public health and welfare. Indeed, it has been stated that:
Christine D. Galbraith, Dying to Know: A Demand for Genuine Public Access to Clinical Trial Results Data, 78 Miss. L.J. 705, 710 (2009).
"The FDA's premarket approval of a new drug application includes the approval of the exact text in the proposed label." Wyeth, 555 U.S. at 568, 129 S.Ct. 1187 (citing 21 U.S.C. § 355 (2006); 21 C.F.R. § 314.105(b) (2008)). Subsequent to approval of the new drug application, a drug manufacturer must submit a supplemental application to the FDA in order to effect any changes in the drug label. Id. (citing 21 U.S.C. § 355 (2006); 21 C.F.R. § 314.105(b) (2008)). "There is, however, an FDA regulation that permits a manufacturer to make certain changes to its label before receiving the agency's approval." Id. (emphasis added).
Id. (quoting 21 C.F.R. §§ 314.70(c)(6)(iii)(A), (C)).
Following FDA approval of a new drug (or a new indication for an existing drug), pharmaceutical companies may begin to market the drug, subject to federal regulations. See, e.g., 21 C.F.R. § 203.2 (2014) ("The purpose of this part is . . . to protect the public health...."). Typical pharmaceutical marketing strategies include both direct sales calls (i.e., visits to prescribing doctors to distribute literature and samples) and academic writings and speaking events led by healthcare professionals.
Risperdal (risperidone) is an antipsychotic drug primarily used to treat schizophrenia. Schizophrenia is a chronic, debilitating mental illness that affects approximately 1% of the population. Following onset, schizophrenia is a lifelong, incurable disease, and treatment almost always involves the use of an antipsychotic drug. Between the 1950s and 1990s, medical practitioners prescribed typical antipsychotics such as Thorazine (chlorpromazine), Prolixin (fluphenazine), Haldol (haloperidol), Loxitane (loxapine), and Mellaril (thioridazine) to treat schizophrenia. Although effective, these typical antipsychotics posed a number of negative side effects, including involuntary muscle movements and tardive dyskinesia, a long-lasting movement disorder.
By the 1980s, clozapine was being investigated for the treatment of schizophrenia on the theory that it might be more effective and cause fewer movement disorders than typical antipsychotics. Clozapine was termed an "atypical antipsychotic" because it affected a different part of the brain than the older, typical antipsychotics. The medical community soon discovered that clozapine, too, had negative side effects, including agranulocytosis—a dramatic and sometimes deadly decrease in white blood cell count. Thus, in spite of its efficacy in treating the symptoms of schizophrenia, clozapine
In 1994, Janssen introduced Risperdal in the United States as the second atypical antipsychotic drug on the market. In the first several years Risperdal was on the market, it steadily captured market share from typical antipsychotics, despite costing ten times as much. From 1994 to 1996, Risperdal held a unique place in the market—it was promoted as being more effective than the older, typical antipsychotics, without the dangerous side effects associated with clozapine. In 1996, Eli Lilly (Lilly) introduced a third atypical antipsychotic drug to the market: Zyprexa. Zyprexa was dramatically successful when it hit the market, and Lilly and Janssen competed to capture the antipsychotic market.
Spurred by this fierce competition, Janssen developed a marketing strategy to distinguish Risperdal and protect its market share. By 1998, Janssen was promoting Risperdal as having a lower risk of weight gain and a lower metabolic risk profile than Zyprexa.
In 1997, Janssen commissioned a clinical trial (Trial 113) designed to establish Risperdal's superiority over Zyprexa as to metabolic side effects, including weight gain and diabetes. In 1999, the results of Trial 113 were not what Janssen desired, as the study concluded that there was no difference between Risperdal and Zyprexa in terms of long-term weight gain or the onset of diabetes mellitus.
By August 2000, Janssen also received results from two epidemiological studies. One study was based on a review of the records of patients treated with atypical antipsychotics in a New England insurance database (ERI study). The ERI study showed that Risperdal patients developed diabetes mellitus
In May 2000, the FDA asked sponsors of atypical antipsychotic drugs to submit a comprehensive review of all clinical data pertaining to metabolic side effects. In response, Janssen did not disclose the results of the Trial 113 study but disclosed only the favorable results from its own HECON study, affirmatively indicating to the FDA that no long-term trials pertaining to metabolic side effects had taken place. The FDA's review was not thwarted by Janssen's efforts, as the FDA's investigation prompted it to request that product labeling for all atypical antipsychotic medications, including Risperdal, include a warning about hyperglycemia and diabetes.
Janssen was concerned that the FDA-mandated label warning would result in a substantial loss of Risperdal market share. Notwithstanding the Trial 113 and ERI study results suggesting an association between Risperdal and diabetes, in October 2000, Janssen's Associate Director of Central Nervous System Medical Affairs wrote an email to her colleagues urging that Janssen must avoid Risperdal being "lumped in to [sic] the atypical class for diabetes.... [W]e need to work hard on a strategy to avoid risperdal being thought of as a diabetes-inducing medication. Instead, when worried about diabetes, we want doctors to prescribe Risperdal."
Janssen then determined it would take control of how the message surrounding the new diabetes warning would be communicated. Janssen officials' strategy was to "soften the blow" through what is known in the industry as a Dear Doctor Letter (DDL). The inspiration came from a DDL that Lilly sent to prescribers, informing them that the entire class of atypical antipsychotics was now subject to a new "class label" for diabetes and hyperglycemia. A senior vice president for Janssen's parent company wrote in an internal email that "Lilly's DDL is pretty clever. How much commercial liability
On November 10, 2003, Janssen disseminated a DDL, which did not include the text of the new diabetes/hyperglycemia warning, but stated:
To put it mildly, the November 2003 DDL contained false information.
Additionally, in training its employees on the labeling update, Janssen communicated to its field sales team that Risperdal had a "0%" increased diabetes risk compared to placebo. This was part of the message communicated to physicians in DDL follow-up visits with physicians.
Meanwhile, by January 2004, Janssen had updated the Risperdal label to include the new diabetes/hyperglycemia warning. Janssen determined that the negative sales impact had been minimal because of its deceptive efforts in the November 2003 DDL. In other words, the November 2003 DDL worked, as far as Janssen was concerned, in protecting its market share.
Thereafter, in April 2004, the FDA's Division of Drug Marketing Advertising and Communications (DDMAC)
The FDA also determined that the scientific studies referenced in the DDL "do not represent the weight of the pertinent scientific evidence" nor did the DDL accurately describe the results of the cited studies. As a result of the FDA's warning, Janssen issued a corrective letter in July 2004, acknowledging that the November 2003 DDL "omitted material information about Risperdal, minimized potentially fatal risks, and made misleading claims suggesting superior safety to other atypical antipsychotics without adequate substantiation, in violation of the [FDCA]."
As to Risperdal's label, Janssen did not update the label to include a boxed warning regarding the risk of stroke, cardiac arrest, and sudden death in the elderly until February 2005, and no warning about hyperprolactinemia appeared in the label until August 2008.
In April of 2007, the Attorney General of South Carolina filed a state law claim against Janssen, seeking civil penalties under SCUTPA. The State pursued two claims against Janssen, one in connection with the Risperdal label (the labeling claim) and the second concerning the November 2003 DDL (the DDL claim). Following a twelve-day trial, the jury returned a verdict on liability in favor of the State, finding that Janssen's actions with respect to both the labeling and DDL claims were willful violations of SCUTPA.
After dismissing the jury, the trial court separately considered evidence and arguments during a two-day hearing to determine the appropriate penalty for Janssen's SCUTPA violations. The trial court issued an order assessing penalties against Janssen of $152,849,700 for the labeling claim and $174,224,000 for the DDL claim, for a total penalty of $327,073,700. This appeal followed. This case was transferred from the court of appeals to this Court pursuant to Rule 204(b), SCACR.
The SCUTPA was modeled after the Federal Trade Commission Act, which provides "[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful." 15 U.S.C. § 45(a)(1). SCUTPA "declares unfair or deceptive acts or practices in trade or commerce unlawful." Singleton v. Stokes Motors, Inc., 358 S.C. 369, 379, 595 S.E.2d 461, 466 (2004) (citing S.C.Code Ann. § 39-5-20(a) (2002)). "An unfair trade practice has been defined as a practice which is offensive to public policy or which is immoral, unethical, or oppressive." deBondt v. Carlton Motorcars, Inc., 342 S.C. 254, 269, 536 S.E.2d 399, 407 (Ct.App.2000) (citing Young v. Century Lincoln-Mercury, Inc., 302 S.C. 320, 326, 396 S.E.2d 105, 108 (Ct.App.1989), aff'd in part, rev'd in part on other grounds, 309 S.C. 263, 422 S.E.2d 103 (1992)). "A deceptive practice is one which has a tendency to deceive." Id. "Whether
The terms "unfair" and "deceptive" are not defined in SCUTPA; rather, in section 39-5-20(b) of the Act, the legislature directs that in construing those terms, the courts of our state "will be guided by" decisions from the federal courts, the Federal Trade Commission Act (FTCA), and interpretations given by the Federal Trade Commission (FTC). Thus, South Carolina has been guided by federal law, which recognizes the public interest involved and requires a showing of a "tendency to deceive." See State ex rel. McLeod v. Brown, 278 S.C. 281, 285, 294 S.E.2d 781, 783 (1982) (quoting U.S. Retail Credit Assoc., Inc. v. FTC, 300 F.2d 212, 221 (4th Cir.1962)) ("`It is in the public interest generally to prevent the use of false and misleading statements in the conduct of business . . . [and] actual deception need not be shown; a finding of a tendency to deceive and mislead will suffice.'") (ellipsis in original). In State ex rel. McLeod, we followed the "Fourth Circuit Court of Appeals['] [holding] that the requisite capacity to deceive could be found without evidence that anyone was actually deceived." Id. at 285, 294 S.E.2d at 783 (citing Royal Oil Corp. v. FTC, 262 F.2d 741 (4th Cir.1959)).
SCUTPA provides for both civil actions brought by private citizens and enforcement actions brought by the Attorney General on behalf of the State. S.C.Code Ann. §§ 39-5-50(a), -110(a), -140(a) (1985). While the only section of SCUTPA at issue in this case is an enforcement action brought by the Attorney General, we note the distinction between the two types of actions. In an action brought by a citizen under section 39-5-140(a) of the South Carolina Code, there is a requirement beyond the tendency to deceive element that the person suffer an "ascertainable loss of money or property, real or personal, as a result of the use or employment by another person of an unfair or deceptive method, act or practice." Thus, SCUTPA requires that a private claimant suffer an actual loss, injury, or damage, and requires a causal connection between the injury-in-fact and the complained of
Conversely, in an enforcement action brought by the Attorney General, there is no actual impact requirement. See S.C.Code Ann. § 39-5-50(a). The Attorney General "may recover on behalf of the State a civil penalty of not exceeding five thousand dollars per violation." S.C.Code Ann. § 39-5-110(a). "The legislature intended . . . [SCUTPA] to control and eliminate the large scale use of unfair and deceptive trade practices within the state of South Carolina." Noack Enters. v. Country Corner Interiors of Hilton Head Island, Inc., 290 S.C. 475, 477, 351 S.E.2d 347, 349 (Ct.App.1986) (quotations and citations omitted).
We note at the outset of our analysis that the State did not file this case because of concern with Risperdal's efficacy as an atypical antipsychotic.
Janssen raises a number of issues in their appeal. Many assignments of error are an attempt to relitigate factual
Janssen claims that various portions of the State's opening and closing arguments were inflammatory and unduly prejudicial and thus warrant a new trial. Specifically, Janssen claims that the State invited the jury to impose liability on the basis of Janssen's size and commercial success by repeatedly referring to Janssen's profits from selling Risperdal and claiming that Janssen put "profits over safety."
We find that Janssen's arguments on appeal are procedurally barred. Although Janssen noted a generalized "continuing objection" at the outset of trial, apparently believing it could make a more specific after-the-fact objection to any alleged improper argument or evidence, such an approach is wholly inconsistent with our law requiring a contemporaneous objection. See Young v. Warr, 252 S.C. 179, 200, 165 S.E.2d 797, 807 (1969) ("[T]he proper course to be pursued when counsel makes an improper argument is for opposing counsel to immediately object and to have a record made of the statements or language complained of and to ask the court for a distinct ruling thereon." (citing Crocker v. Weathers, 240 S.C. 412, 424, 126 S.E.2d 335, 340 (1962))). This rule is designed to enable the trial court to timely address and remedy a founded objection. See Herron v. Century BMW, 395 S.C. 461, 465, 719 S.E.2d 640, 642 (2011) ("`Issue preservation rules are designed to give the trial court a fair opportunity to rule on the issues, and thus provide us with a platform for meaningful appellate review.'" (quoting Queen's Grant II Horizontal Prop. Regime v. Greenwood Dev. Corp., 368 S.C. 342, 373, 628 S.E.2d 902, 919 (Ct.App.2006))). Here, absent a contemporaneous objection identifying the particular comments complained of and the basis for the objection, Janssen has waived its right to complain about this issue on appeal. Webb v. CSX Transp., Inc., 364 S.C. 639, 655, 615 S.E.2d 440, 449 (2005) (holding that the failure to contemporaneously
Moreover, Janssen's "continuing objection" at trial concerning the propriety of counsel's statements to the jury was limited to relevance, which is an entirely different basis than the inflammatory/unduly prejudicial argument that Janssen now advances on appeal. Thus, even generously construing Janssen's pre-trial objection as sufficient to preserve the objection, Janssen's claim is nonetheless procedurally barred from appellate review because Janssen argues a different basis on appeal than was argued at trial. State v. Dunbar, 356 S.C. 138, 142, 587 S.E.2d 691, 694 (2003) ("A party may not argue one ground at trial and an alternate ground on appeal." (citing State v. Prioleau, 345 S.C. 404, 411, 548 S.E.2d 213, 216 (2001); State v. Benton, 338 S.C. 151, 157, 526 S.E.2d 228, 231 (2000))).
Janssen's claims of error are without merit in any event. Janssen relies on our holding in Branham v. Ford Motor Co., 390 S.C. 203, 701 S.E.2d 5 (2010), in urging this Court to order a new trial. In Branham, the plaintiff's attorney strayed beyond the parameters of permissible jury argument and sought punitive damages for the damage caused to non-parties. Id. at 235, 701 S.E.2d at 22. We ordered a new trial, holding that "[t]he closing argument invited the jury to base its verdict on passion rather than reason.... [and] denied [defendant] a fair trial." Id. We find that Branham is readily distinguishable from this case. Here, counsel for the State directly linked the elements of SCUTPA to Janssen's
Janssen argues that the admission of several DDMAC letters was reversible error because the letters constitute inadmissible hearsay and should also have been excluded under Rule 403, SCRE. Once again, we find that Janssen has not preserved these assignments of error for appellate review.
Janssen argues that the State's SCUTPA claims fail as a matter of law because the State failed to show that Janssen's unfair and deceptive conduct had an adverse impact within South Carolina. We disagree, for the conflicting evidence presented a jury question as to whether Janssen had violated SCUTPA. Concerning the "adverse impact" legal argument, we reject Janssen's attempt to ascribe an injury-in-fact element in an individual claim to an Attorney General directed claim.
The provisions of SCUTPA allow three types of enforcement actions: (1) lawsuits initiated by the Attorney General seeking injunctive relief; (2) lawsuits by the Attorney General seeking civil penalties; or (3) lawsuits by private parties who have suffered ascertainable losses. S.C.Code Ann. §§ 39-5-50, -110, -140; see also Michael R. Smith, Note, Recent Developments Under the South Carolina Unfair Trade Practices Act, 44 S.C. L. Rev. 543, 543-44 (1993) (discussing generally various provisions of SCUTPA). Although this case is an appeal from a lawsuit by the Attorney General seeking civil penalties, we note some important distinctions between
To recover actual damages under SCUTPA, a private claimant must suffer an actual loss, injury, or damages, and the claimant must demonstrate a causal connection between the injury-in-fact and the complained of unfair or deceptive acts or practices. S.C.Code Ann. § 39-5-140(a). Additionally, a private party may recover treble damages if the unlawful acts at issue are determined to be willful or knowing. Id. On the other hand, where the Attorney General files suit on behalf of the State, he is not required to show any injury-in-fact to recover a civil penalty.
Indeed, the "in the public interest" aspect of an Attorney General SCUTPA claim mirrors one of the underlying purposes of the FTCA—namely, "to make clear that the protection of the consumer from unfair trade practices, equally with the protection of competitors and the competitive process, is a concern of public policy." Statement of Basis and Purpose, Unfair or Deceptive Advertising and Labeling of Cigarettes in Relation to the Health Hazards of Smoking, 29 Fed. Reg. 8324, 8349 (1964). As the Federal Trade Commission has stated, most enforcement actions are brought "not to second-guess the wisdom of particular consumer decisions, but rather to halt some form of seller behavior that unreasonably creates or takes advantage of an obstacle to the free exercise of consumer decisionmaking." Federal Trade Commission, Policy Statement on Unfairness (Dec. 17, 1980) [hereinafter Unfairness Policy Statement], available at https://www.ftc.gov/ public-statements/1980/12/ftc-policy-statement-unfairness.
Thus, Janssen misconstrues the legislature's manifest purpose in providing for an Attorney General directed claim, for a SCUTPA action brought by the State is to protect the citizens of South Carolina from unfair or deceptive acts in the conduct of any trade or commerce.
We find ample support in the record that the State presented sufficient evidence for the SCUTPA claim to go to the jury. Although we reject Janssen's effort to impose an
Janssen claims that the trial court erred in excluding the testimony of Dr. William Wecker, an expert statistician whose testimony, according to Janssen, would have shown that Janssen's representations in the Risperdal label and the November 2003 DDL had no impact on any prescribing physicians. The import of Dr. Wecker's testimony would have been that, notwithstanding Janssen's false representations, the community of prescribing physicians was well aware of the risks and side effects of Risperdal.
We are again presented with an issue that was not properly preserved for appellate review. When the trial court filed its order on February 25, 2011, excluding the testimony of Dr. Wecker on relevancy grounds, Janssen waited until March 21, 2011, to make an offer of proof of his testimony. The offer of proof came too late. TNS Mills, Inc. v. S.C. Dep't of Rev., 331 S.C. 611, 628, 503 S.E.2d 471, 480 (1998) (noting that a failure to make a proffer of what an excluded witness's testimony would have been precludes appellate review); see also Greenville Mem'l Auditorium v. Martin, 301 S.C. 242, 244, 391 S.E.2d 546, 547 (1990) ("An alleged erroneous exclusion of evidence is not a basis for establishing prejudice on appeal in absence of an adequate proffer of evidence in the court below." (citations omitted)).
On the merits, for the reasons discussed in the previous section, we would not find reversible error in any event. We do acknowledge there was evidence presented, which otherwise tended to support Janssen's thesis that its deceptive conduct had no effect on the community of prescribing physicians,
Janssen argues that the liability verdict and the penalty award impermissibly restrict its right to free speech. We disagree.
Again, Janssen has not preserved this issue for review. Although Janssen requested a First Amendment jury instruction and raised the issue in its motion for JNOV, Janssen failed to raise any First Amendment issues in its motion for a directed verdict. Janssen's failure to raise this issue in its motion for a directed verdict precludes any appellate review. In re McCracken, 346 S.C. 87, 93, 551 S.E.2d 235, 238 (2001) ("[S]ince only grounds raised in the directed verdict motion may properly be reasserted in the jnov motion, and since no grounds were raised in the directed verdict motion, no jnov claim is preserved for our review." (citing Duncan v. Hampton Cnty. Sch. Dist. # 2, 335 S.C. 535, 545, 517 S.E.2d 449, 454 (Ct.App.1999))).
There is no error in any event, for the First Amendment does not bar imposition of liability on Janssen for violating SCUTPA. Janssen relies on the false premise that its conduct was not unfair and deceptive. While commercial speech is entitled to First Amendment protections, the Constitution does not erect a blanket shield insulating commercial speech from liability in all circumstances. In this regard, we find Janssen's reliance on Sorrell v. IMS Health Inc., ___ U.S. ___, 131 S.Ct. 2653, 180 L.Ed.2d 544 (2011), is misplaced. The Supreme Court of the United States held in Sorrell that "[s]peech in aid of pharmaceutical marketing . . . is a form of expression protected by the Free Speech Clause of the First Amendment." Id. at 2659. Sorrell, however, does not deal
Indeed, it is a well-settled proposition that "[t]he government may ban forms of communication more likely to deceive the public than to inform it, or commercial speech related to illegal activity." Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm'n of N.Y., 447 U.S. 557, 563-64, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980) (internal citations omitted). The State correctly notes that commercial speech is not protected by the First Amendment unless it concerns lawful activity and is not misleading. Johnson v. Collins Entm't Co., 349 S.C. 613, 624, 564 S.E.2d 653, 659 (2002).
Here, the jury found that Janssen's acts were unfair or deceptive, and thus unlawful under SCUTPA. In an action at law tried to a jury, the jury's factual findings will not be disturbed unless a review of the record discloses that there is no evidence that reasonably supports the jury's findings. City of North Myrtle Beach v. E. Cherry Grove Realty Co., 397 S.C. 497, 502, 725 S.E.2d 676, 678 (2012). The record is replete with evidence that reasonably supports a finding that Janssen's conduct was unfair and deceptive. Thus, we conclude Janssen may not avail itself of the protections of the First Amendment to shield itself from its deceptive conduct and false representations.
Janssen argues that the trial court erred by failing to charge the jury on federal law regarding "unfairness" and instead looking to South Carolina law to define the term. We disagree and reject the premise that the jury charges on unfairness and the tendency to deceive standard are creations of state law; they are rooted in federal law.
Modeled after the language of the Federal Trade Commission Act (FTCA),
We find no reversible error in the trial court's failure to charge the precise verbiage of section 45(n) of the FTCA. We do not discern the wide chasm between the federal and state definitions of "unfair" that Janssen urges. The FTC has issued "Policy Statements" that provide guidance on the statutory terms. For example, in the Policy Statement on Deception, the FTC reviewed case law and Commission decisions and noted that "deception cases" may include representations or omissions in connection with the sale of a product "without adequate disclosures." Policy Statement on Deception, supra. FTC guidance further instructs that "there must be a representation, omission, or practice that is likely to mislead the consumer" and that "the act or practice must be considered from the perspective of the reasonable consumer." Id. The FTC has additionally issued a Policy Statement on Unfairness, which acknowledged that the concept of "unfairness is one whose precise meaning is not immediately obvious." Policy Statement on Unfairness, supra. FTC guidance provides the following general characteristics of an unfair practice claim: "(1) whether the practice injures consumers;
The jury instruction was in substantial accord with the FTC guidance. Janssen makes the argument that there was no tendency to deceive (or likelihood of causing consumer injury) because the intended audience of its representations was the medical community, and further because the medical community knew or should have known the truth, Janssen must be absolved of any liability. Janssen's argument is not without merit, for the context surrounding a practice or representation is a weighty consideration. See Policy Statement on Deception, supra ("[A] practice or representation directed to a welleducated group, such as prescription drug advertisement to doctors, would be judged in light of the knowledge and sophistication of that group.") Janssen essentially seeks a categorical rule that insulates a pharmaceutical company from SCUTPA liability for misrepresentations made to prescribing physicians, a sophisticated group. We decline to recognize such a rule.
This "sophisticated audience" argument was vetted by the parties and charged to the jury in that the jury was required to assess the alleged unfair and deceptive practice in light of the "facts and circumstances surrounding what someone's done" and "in the context of the circumstances surrounding the making of the statement or the doing of the act."
In construing the charge as a whole, as we must, we conclude it properly defined an unfair trade practice in accordance
Janssen claims that the State's labeling claim was barred by SCUTPA's regulated activity exemption. We hold that Janssen has failed to preserve this issue for appellate review. However, even if we were to reach the merits, we would find that Janssen is not entitled to avail itself of the regulated activity exemption.
SCUTPA expressly provides that it is inapplicable to "[a]ctions or transactions permitted under laws administered by any regulatory body or officer acting under statutory authority of this State or the United States." S.C.Code § 39-5-40(a) (1985). "This exception exempts an entity from liability where its actions are lawful or where it does something required by law, or does something that would otherwise be a violation of the Act, but which is allowed under other statutes or regulations." Dema v. Tenet Physician Servs.-Hilton Head, Inc., 383 S.C. 115, 123, 678 S.E.2d 430, 434 (2009) (quotations omitted). Janssen argues that, after approval of a proposed label, the FDA both authorized and required the use of that approved label. Thus, Janssen argues that FDA approval of the label triggers SCUTPA's regulated activity exemption and prohibits any claim in connection with the sufficiency of the label.
Initially, Janssen fails to identify any specific trial court rulings claimed to constitute error. Because of this, Janssen's
However, even if Janssen had properly preserved this issue, we note that Janssen was not entitled to avail itself of this SCUTPA provision. Wyeth makes clear that "a central premise of federal drug regulation [is] that the manufacturer bears responsibility for the content of its label at all times." 555 U.S. at 570-71, 129 S.Ct. 1187. "[The manufacturer] is charged both with crafting an adequate label and with ensuring that its warnings remain adequate as long as the drug is on the market." Id. at 571, 129 S.Ct. 1187 (citing 21 C.F.R. § 201.80(e); 21 C.F.R. § 314.80(b); 73 Fed. Reg. 49605). Wyeth clearly rejects the notion that a manufacturer's decision not to include a stronger warning is authorized by the FDA—absent evidence that the FDA affirmatively considered and rejected the stronger warning after being supplied with an evaluation or analysis of the specific dangers presented. Id. at 572-73, 129 S.Ct. 1187. The very purpose of the "changes being effected" corollary to the FDCA authorizes manufacturers to strengthen the warnings on a label without FDA approval, as long as the manufacturer files a supplemental new drug application. Id. at 568, 129 S.Ct. 1187; 21 C.F.R. § 314.70(c)(6)(iii)(A), (C) (2013). Indeed, the United States Supreme Court in Wyeth noted that "Congress enacted the FDCA to bolster consumer protection against harmful products. Congress did not provide a federal remedy for consumers harmed by unsafe or ineffective drugs in the [FDCA]. Evidently, it determined that widely available state rights of action provided appropriate relief for injured consumers." Id. at 574, 129 S.Ct. 1187. Accordingly, Janssen cannot shield
Janssen claims that the trial court erred by granting the State's motion for a directed verdict on the statute of limitations on the labeling claim and the DDL claim. We disagree concerning the DDL claim and affirm, but agree in part with Janssen regarding the labeling claim. The statute of limitations bars the labeling claim insofar as the trial court imposed civil penalties for violations that occurred more than three years prior to the parties' tolling agreement. Because of the ongoing nature of Janssen's deceptive conduct, we affirm the judgment on the labeling claim but limit the imposition of civil penalties to a three-year period, coextensive with the statute of limitations, subject only to the additional period of time between the tolling agreement and the filing of the Complaint.
At the close of all of the evidence, the State moved for a directed verdict as to Janssen's statute of limitations defense, arguing that Janssen failed to present any evidence that the Attorney General's office had actual or constructive notice of Janssen's unlawful conduct prior to the commencement of the three year statute of limitations.
As to the DDL claim, the trial court found that claim was not barred by the statute of limitations because there was no evidence that the false or misleading nature of the DDL could have been discovered before the DDMAC issued its warning letter to Janssen in April 2004, which was within the timeframe of the tolling agreement. As to the labeling claim, the trial court found that because Janssen took affirmative steps to prevent disclosure of unfavorable clinical trial results that revealed the serious degree of risks associated with Risperdal, the statute of limitations was equitably tolled during the period of time in which Janssen knew, but failed to disclose and shielded from public knowledge, the true degree of risks associated with Risperdal. The trial court found the labeling claim likewise was not barred by the statute of limitations, and awarded a civil penalty for each of the of 509,499 Risperdal "sample boxes" distributed in South Carolina from 1998 through the date of the Complaint, April 23, 2007, each of which included the drug label in the sample packaging.
Janssen argues this was error and that both claims are barred by the statute of limitations because the State had actual or constructive knowledge of the claims before January 24, 2004. Specifically, as to the DDL claim, Janssen contends that the claim was discoverable from the face of the DDL itself, and therefore, the statute of limitations began to run at the time the DDL was mailed in November 2003. As to the labeling claim, Janssen contends that claim is barred because
We first address the DDL claim. SCUTPA provides for a three-year statute of limitations. S.C.Code Ann. § 39-5-150 (1985). Under the discovery rule, the three-year clock starts ticking on the date the injured party either knows or should have known by the exercise of reasonable diligence that a cause of action arises from wrongful conduct. Dean v. Ruscon Corp., 321 S.C. 360, 363, 468 S.E.2d 645, 647 (1996) (citation omitted). We have carefully reviewed the record in light of the appropriate standard of review, and we agree with the trial court. As a matter of law, the only reasonable conclusion supported by the evidence at trial was that the existence of a claim, i.e. the deceptive and unfair nature of Janssen's conduct in disseminating the DDL, could not have reasonably been discovered prior to April 2004 when the FDA issued the Warning Letter to Janssen.
We turn to the labeling claim. The procedural dilemma we confront is that the statute of limitations issue concerning the labeling claim was resolved at trial through principles of equitable tolling. A determination in equity is not proper for a directed verdict motion insofar as determining what matters should be submitted to the jury. It was therefore
Clearly, much of the labeling claim accrued more than three years prior to the January 24, 2007 tolling agreement. The risks associated with atypical antipsychotics, like Risperdal, were becoming well known by the late 1990s. The State's experts testified that the Risperdal label was inadequate as early as 1994 when Janssen began marketing the drug. By all accounts, in the early 2000s, evidence of the risks was pervasive.
Nevertheless, the labeling claim presents ongoing violations of SCUTPA that continued after January 24, 2004 and during the three-year-period prior to the tolling agreement. In requesting that the entire labeling claim be dismissed as time barred, Janssen assumes, wrongly so, that its ability to successfully invoke the statute of limitations to bar the labeling claim prior to January 24, 2004, ends the labeling claim altogether. We reject Janssen's position, for Janssen misapprehends the statute of limitations and the concept of continuous accrual of this SCUTPA cause of action. The
Aryeh v. Canon Bus. Solutions, Inc., 55 Cal.4th 1185, 151 Cal.Rptr.3d 827, 292 P.3d 871, 880 (2013) (quotations and citations omitted) (distinguishing the continuous accrual doctrine from the continuing violation doctrine, which involves a single injury that is the product of a series of small harms, any one of which is not actionable on its own). See Estate of Livingston v. Livingston, 404 S.C. 137, 147-48, 744 S.E.2d 203, 209 (Ct.App.2013) (finding a new statute of limitations begins to run after each separate injury, and therefore statute of limitations barred only claims falling outside the three-year time period and did not bar claims occurring within that time), cert. granted, No. 2013-001505 (S.C.Sup.Ct. filed Oct. 24, 2014); see also Hogar Dulce Hogar v. Cmty. Dev. Comm'n of Escondido, 110 Cal.App.4th 1288, 2 Cal.Rptr.3d 497, 502 (2003) ("When an obligation or liability arises on a recurring basis, a cause of action accrues each time a wrongful act occurs, triggering a new limitations period." (citation omitted)); cf. Anonymous Taxpayer v. S.C. Dep't of Rev., 377 S.C. 425, 440-41, 661 S.E.2d 73, 81 (2008) (finding that, under the facts presented, the particular claim alleged by plaintiff constituted
Indeed, the language of SCUTPA itself contemplates that an unlawful method, act, or practice may result in multiple statutory violations, and it is the violations themselves that cause the statute of limitations to begin to run. S.C.Code Ann. § 39-5-110(a) ("If a court finds that any person is willfully using or has willfully used a method, act or practice declared unlawful by § 39-5-20, the Attorney General ... may recover on behalf of the State a civil penalty of not exceeding five thousand dollars per violation." (emphasis added)). We adopt the view that aligns with legislative intent as reflected in section 39-5-110, a common sense approach recognizing that the SCUTPA statute of limitations begins to run anew with each violation. Thus, where a claim involves a series of ongoing violations, recovery is limited to a period coextensive with the applicable statute of limitations.
In sum, we agree with the State regarding the DDL claim, for we find that claim, in the exercise of reasonable diligence, could have been discovered no earlier than April 2004 when the FDA issued its warning letter to Janssen. However, we agree with Janssen concerning the labeling claim insofar as civil penalties were awarded for violations occurring from 1998 until January 24, 2004 (three years prior to the tolling agreement). Under these facts, it was error to award the State civil penalties for violations in connection with the labeling claim outside the statute of limitations. An award for civil penalties within the statute of limitations was proper.
Janssen argues that both the labeling claim and the DDL claim are preempted by federal law. Specifically, Janssen argues the labeling claim is barred by implied conflict preemption and that the DDL claim is barred by the express preemption provision of the FDCA, 21 U.S.C. § 337(a) (2006). We disagree.
When "Congress has `legislated . . . in a field which the States have traditionally occupied,' we `start with the
"In 1962, Congress amended the FDCA and shifted the burden of proof from the FDA to the manufacturer." Wyeth, 555 U.S. at 567, 129 S.Ct. 1187. "Before 1962, the [FDA] had to prove harm to keep a drug out of the market, but the amendments required the manufacturer to demonstrate that its drug was safe for use under the conditions prescribed, recommended, or suggested in the proposed labeling before it could distribute the drug." Id. (quotations and citations omitted). "In addition, the amendments required the manufacturer to prove the drug's effectiveness by introducing substantial evidence that the drug will have the effect it purports or is represented to have under the conditions of use prescribed, recommended, or suggested in the proposed labeling." Id. (quotations and citations omitted). "As [Congress] enlarged the FDA's powers to protect the public health and assure the safety, effectiveness, and reliability of drugs, Congress took care to preserve state law." Id. (quotations and citations omitted). "The 1962 amendments [to the FDCA] added a saving clause, indicating that a provision of state law would only be invalidated upon a direct and positive conflict with the FDCA." Id. (quotations and citations omitted). "Consistent with that provision, state common-law suits `continued unabated despite . . . FDA regulation.'" Id. (quoting Riegel v. Medtronic, Inc., 552 U.S. 312, 340, 128 S.Ct. 999, 169 L.Ed.2d 892 (2008) (Ginsburg, J., dissenting)).
Based upon Wyeth, we find that the State's DDL claim is not expressly preempted by federal law. Additionally, we find that Janssen has not preserved their implied conflict preemption claim for appellate review. Even assuming Janssen's argument regarding implied preemption is not procedurally barred, however, we find it to be without merit.
Janssen argues that the State's claim regarding the DDL relies on a single piece of evidence—the April 2004 DDMAC warning letter characterizing Janssen's DDL as "false and misleading." As such, Janssen asserts the DDL claim is based solely on a violation of the FDCA, which provides no private right of action. Janssen thus concludes that this "federal claim" is preempted and may not be maintained. Because Janssen's argument is based on a false premise, we disagree.
It is true that the State pursued a SCUTPA claim based on the November 2003 DDL. It is also true that the State introduced the April 2004 DDMAC warning letter as evidence in support of its DDL claim. It is not true that the sole evidence establishing the false and misleading nature of the DDL comes from the subsequent April 2004 DDMAC warning letter. Janssen not only views the DDL claim myopically, but conflates the concepts of evidence and claims. There was substantial additional evidence relating to the deception surrounding the November 2003 DDL, much of which is noted above. For example, the State presented evidence that, scientific proof to the contrary, Janssen's Risperdal sales strategy specifically sought to differentiate Risperdal from competing drugs by emphasizing that Risperdal caused less weight gain relative to other atypical antipsychotics such as Zyprexa.
Moreover, the State presented internal emails between Janssen executives, one of which included discussion of Janssen's desire to gain market share over competitors by avoiding being subjected to a class labeling requirement as to diabetes/hyperglycemia. Yet another email indicated that at least one Janssen scientist supported glucose screening and monitoring for Risperdal patients, but that such a position was "not the company line." Janssen's broad, aggressive, and deceptive marketing strategy resulted in the discrete DDL claim. In short, the record is replete with evidence beyond the 2004 DDMAC warning letter to support the State's DDL claim. Further, at the end of trial, the jury was charged with determining several factual issues, each of which was based solely on the provisions of SCUTPA, and the trial judge
Janssen argues that the State's labeling claim is barred by implied conflict preemption. Janssen failed to raise the doctrine of implied conflict preemption in its motion for summary judgment or its initial directed verdict motion at the close of the State's case-in-chief. Accordingly, this argument was waived because it was not asserted in Janssen's initial motion for directed verdict.
Additionally, Janssen's argument on appeal is substantively different than the argument below. Before the trial court, Janssen moved for a directed verdict, arguing that the Wyeth "exception to preemption" did not apply since the State failed to establish that Janssen could have, and should have, updated the Risperdal label without prior FDA approval. Given this purported failure of proof, Janssen argued that the State's labeling claim was preempted. The trial court rejected Janssen's argument and found that Wyeth was controlling. In contrast, Janssen now argues that the State's SCUTPA claims sought to impose labeling requirements different from those required by the FDA, and thus, according to Janssen, the doctrine of implied conflict preemption bars the State's claims. This argument, however, is not preserved for appellate review. See Dunbar, 356 S.C. at 142, 587 S.E.2d at 694 ("A party may not argue one ground at trial and an alternate ground on appeal." (citing Prioleau, 345 S.C. at 411, 548 S.E.2d at 216; Benton, 338 S.C. at 157, 526 S.E.2d at 231)).
Further, we reject Janssen's argument that Wyeth is inapposite because this case involves an enforcement action by the Attorney General on behalf of the State. Regardless of whether a state-law enforcement action is brought by a private individual or an attorney general on behalf of a state, Wyeth makes clear that federal labeling standards are "a floor upon which States could build" and noted the FDA's agency position that, "in establishing minimal standards for drug labels, it did not intend to preclude the states from imposing additional labeling requirements." Id. at 577-78, 129 S.Ct. 1187 (quotations omitted). Rather, "[f]ailure-to-warn actions, in particular, lend force to the FDCA's premise that manufacturers, not the FDA, bear primary responsibility for their drug labeling at all times." Id. at 579, 129 S.Ct. 1187. Indeed, "federal law does not give drug manufacturers an unconditional right to market their federally approved drug at all times with the precise label initially approved by the FDA." Id. at 583, 129 S.Ct. 1187 (Thomas, J. concurring in the judgment). Janssen's claim is without merit.
Having affirmed the trial court concerning Janssen's liability in connection with both the labeling claim and the DDL claim, we turn now to the penalty award.
SCUTPA allows the Attorney General to recover on behalf of the State a civil penalty of up to $5,000 per violation. S.C.Code Ann. § 39-5-110(a). Undoubtedly, Janssen's deceptive conduct relating to Risperdal warrants a civil penalty, and because the civil penalty award under section 39-5-110(a) is within the discretion of the trial court, we review the trial court's penalty award under an abuse of discretion standard. State ex rel. McLeod v. C & L Corp., Inc., 280 S.C. 519, 528, 313 S.E.2d 334, 340 (Ct.App.1984) ("The party challenging a discretionary ruling of the trial court has the burden of showing a clear abuse of discretion."); accord Vanderbilt Mortg. & Fin., Inc. v. Cole, 230 W.Va. 505, 740 S.E.2d 562, 566 (2013) (holding a trial court's award of civil penalties pursuant to state statute will not be disturbed on appeal unless it clearly appears the trial court abused its discretion).
The State argued, and the trial court agreed, that the distribution of each sample box containing the deceptive labeling, each DDL, and each follow-up sales call to the DDL by a Janssen representative constituted a separate SCUTPA violation. The trial court adopted a multi-factor test used by
Janssen challenges the penalty award on numerous grounds, including the argument that the total penalty, in excess of $327,000,000, is excessive. We agree with Janssen in part. There are certain factors common to the labeling and DDL claims. First, Janssen's deceit was substantial. In order to maintain its market share, Janssen's furtive efforts to mislead prescribing physicians about the risks and side effects associated with Risperdal were reprehensible and in callous disregard for the health and welfare of the public. Janssen's desire for market share and increased sales
We agree in part with Janssen that its conduct likely had little impact on the community of prescribing physicians. The
The trial court assessed a $300 civil penalty against Janssen for each Risperdal "sample box" distributed to South Carolina prescribers from 1998 through the date of the Complaint, April 23, 2007, for a total of 509,499 violations. As discussed, we reverse the civil penalties awarded for conduct that occurred prior to January 24, 2004, for that part of the State's labeling claim is barred by the statute of limitations. Based on the record, during the period of time from February 2004 until the filing of the Complaint in April 2007, Janssen made 20,575 visits to prescribing physicians in South Carolina and distributed 228,447 sample boxes containing deceptive labeling.
Janssen challenges the penalty award of $300 per sample box on numerous grounds, including the argument that the penalty is excessive. We agree and find the $300 penalty per sample box excessive. Based on the totality of the circumstances and consideration of the Reader's Digest factors, we remit the penalty to $100 per sample box, for a civil penalty of $22,844,700.
Janssen mailed 7,184 DDLs to South Carolina physicians in November 2003. The trial court considered each letter a separate violation and imposed a penalty of $4,000 per letter,
Janssen challenges the penalty award on numerous grounds, including excessiveness. While the question presented is close, we cannot say that the trial court abused its discretion in assessing the $28,736,000 penalty associated with the 7,184 DDLs. A $4,000 penalty per each DDL is indeed substantial. But Janssen's deceit, as described above, was also substantial. The DDL was especially egregious, for it represented not mere nondisclosure but a corporately sanctioned decision to affirmatively lie and an attempt to mislead the medical community. We affirm the civil penalty of $28,736,000 penalty associated with the 7,184 DDLs.
Janssen's misconduct in the more than 36,000 followup visits may be similarly viewed, for the follow-up visits were designed to continue the false DDL narrative. Nevertheless, a penalty of $4,000 per follow-up visit is excessive as a matter of law under the circumstances. We find in most instances, these were follow-up calls to the same prescribing physicians who received the DDL in the mail. In fact, in many instances there were multiple calls to the same physicians. We remit the penalty to $2,000 per follow-up sales call, for a penalty of $72,744,000. When combined with the penalty for the DDL mailing, the total penalty assessed against Janssen for the DDL claim is $101,480,000.
The combined civil penalty for the labeling and DDL claims is $124,324,700.
Janssen also raises a number of constitutional challenges to the trial court's penalty order. First, Janssen claims that the $327 million penalty violates the Excessive Fines Clause of the Eighth Amendment to the U.S. Constitution and Article 1, Section 15 of the South Carolina Constitution. Second, Janssen claims that the penalty award violates due process because
"The touchstone of the constitutional inquiry under the Excessive Fines Clause [of the U.S. Constitution] is the principle of proportionality: The amount of the forfeiture must bear some relationship to the gravity of the offense that it is designed to punish." United States v. Bajakajian, 524 U.S. 321, 334, 118 S.Ct. 2028, 141 L.Ed.2d 314 (1998); see also Medlock v. One 1985 Jeep Cherokee VIN 1JCWB7828FT129001, 322 S.C. 127, 132, 470 S.E.2d 373, 377 (1996) (adopting the federal "instrumentality" standard in the context of civil forfeitures for purposes of South Carolina's "excessive fines" analysis). The Court will only find a violation of the Excessive Fines Clause if the penalty is "grossly disproportional to the gravity of a defendant's offense." Bajakajian, 524 U.S. at 334, 118 S.Ct. 2028 (emphasis added). "The Ninth Circuit and other federal courts have consistently found that civil penalty awards in which the amount of the award is less than the statutory maximum do not run afoul of the Excessive Fines Clause." United States v. Mackby, 221 F.Supp.2d 1106, 1110 (N.D.Cal.2002) (citing cases from the First Circuit, Ninth Circuit, and D.C. Circuit). This is so because legislative pronouncements regarding the proper range of fines "represent the collective opinion of the American people as to what is and is not excessive. Given that excessiveness is a highly subjective judgment, the courts should be hesitant to substitute their opinion for that of the people." United States v. 817 N.E. 29th Drive, Wilton Manors, Fla., 175 F.3d 1304, 1309 (11th Cir.1999) (citing Bajakajian, 524 U.S. at 336, 118 S.Ct. 2028).
We find that the penalty in this case, now substantially reduced, bears a rational relationship to the gravity of Janssen's conduct in perpetuating a marketing scheme in South Carolina designed to be unfair and deceptive under our law. Furthermore, the penalty awards per violation are within the range set by the legislature in enacting SCUTPA. Accordingly, the penalty award is not grossly disproportionate to Janssen's pattern of unfair and deceptive behavior, and, thus, we hold that the award does not violate the Excessive
The Due Process Clause of the U.S. Constitution "places a limitation upon the power of the states to prescribe penalties for violations of their laws." St. Louis, Iron Mt. & S. Ry. Co. v. Williams, 251 U.S. 63, 66, 40 S.Ct. 71, 64 L.Ed. 139 (1919). States, however, "still possess a wide latitude of discretion in the matter, and ... their enactments transcend the limitation only where the penalty prescribed is so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable." Id. at 66-67, 40 S.Ct. 71 (citations omitted); see also Shipman v. Du Pre, 222 S.C. 475, 480, 73 S.E.2d 716, 718 (1952) (embracing the Williams standard).
Given the evidence that demonstrates Janssen's pattern of unfair and deceptive behavior, we find that the penalties in this case are not violative of the Due Process Clause. We decline to set forth a bright-line rule or ratio to delineate what level of penalties are appropriate, instead undertaking a case-by-case determination based on the severity of the underlying conduct. While the penalty award against Janssen is quite large, the penalty must be analyzed in context in view of the clear legislative intent of SCUTPA to deter unfair and deceptive behavior in the conduct of trade and commerce in South Carolina. When all factors are considered, we find that the penalty award does not violate the Due Process Clause.
And finally, we comment on the amicus curiae brief filed by the South Carolina Chamber of Commerce. The Chamber seeks clarity from this Court to provide a predictable and favorable business climate in this state. The Chamber is especially distressed by the $327 million penalty, which it
Our decision today is faithful to objective legal principles, legislative intent in SCUTPA and the rule of law. Moreover, we have set forth clear guidance for the business community, the Bench and the Bar for determining what conduct is actionable under SCUTPA and what factors bear on the determination of an appropriate penalty—precisely the type of clarity the Chamber seeks.
Based on the statute of limitations, we reverse the judgment on labeling claim to the extent the trial court awarded civil penalties for conduct prior to January 24, 2004. We otherwise affirm as modified the judgment on the labeling claim and remit the civil penalty to $22,844,700. We affirm the liability judgment on the DDL claim, but remit those civil penalties to $101,480,000. We remand to the trial court for entry of judgment in the amount of $124,324,700.
TOAL, C.J., BEATTY and HEARN, JJ., concur.
PLEICONES, J., dissenting in a separate opinion.
Justice PLEICONES, dissenting.
With great respect for the majority's thorough treatment of these complex issues, I dissent from those portions of its opinion addressing: (1) the timeliness of the labeling claim; and (2) the reduction of the DDL penalty award.
I agree the Attorney General knew or should have known prior to January 24, 2004 that he may have had a SCUTPA claim against Janssen based, in part, on research indicating
My disagreement is with the majority's application of the continuous accrual doctrine. I would not apply the doctrine in this appeal because doing so does not affirm the statute of limitations ruling to the extent the trial judge found the pre-January 24, 2004 labeling claim timely and permitted that claim to go to the jury. In my opinion, we may invoke our authority to affirm on any ground appearing in the record only when the result is to affirm the trial judge's ruling in toto. See Rule 220(c), SCACR. Here, the effect of applying the continuous accrual doctrine is only a partial affirmance. Further, we have no way of knowing whether the jury's liability determination was based on conduct outside the limitations period since we cannot know whether this jury would have found a SCUTPA violation had it considered only Janssen's labeling conduct after January 24, 2004. I do not agree that reducing the amount of the penalty for the labeling claim cures the prejudice to Janssen given the unreliability of the jury's liability determination. Thus, I respectfully submit we should not apply the continuous accrual doctrine
Accordingly, I would reverse the jury's finding of liability because the labeling claim is barred by the statute of limitations. I would also reverse the trial judge's labeling claim penalty because the claim is untimely.
As for the reduction of the DDL penalty award, I would find the trial judge did not abuse his discretion in awarding $174,224,000 based on Janssen mailing 7,184 deceptive DDLs and following up with 36,372 sales calls to sanction the deception already perpetrated. See State ex rel. McLeod v. C & L Corp., 280 S.C. 519, 528, 313 S.E.2d 334, 340 (Ct.App.1984) (reviewing the award of civil penalties under an abuse of discretion standard). As for Janssen's contention that the follow-up sales calls were made to the same prescribing physicians who had already received the DDL, I would find the trial judge properly considered this argument and exercised his discretion in finding Janssen's culpability (Reader's Digest
Ultimately, the trial judge was in the best position to evaluate Janssen's conduct, the degree of culpability, the duration of Janssen's conduct, Janssen's active concealment of Risperdal's side effects to South Carolina health care providers, Janssen's awareness of its deceptive conduct, Janssen's ability to pay, and the actual impact, if any, resulting from Janssen's deceptive conduct. See Reader's Digest Ass'n, 662 F.2d at 967. Based on the trial judge's articulation of the Reader's Digest factors and his proper consideration of those factors, I would find Janssen has not shown the court abused its discretion in awarding a $174,224,000 civil penalty for the DDL claim, an amount within the limits set forth in SCUTPA. See Wallace v. Timmons, 237 S.C. 411, 421, 117 S.E.2d 567, 572 (1960) (stating that in reviewing a trial judge's decision under an abuse of discretion standard, this Court may not substitute its judgment simply because it might have reached a different conclusion had it been in the trial judge's place). Therefore, I would affirm the trial judge's penalty award of $174,224,000 as to the DDL claim.
21 C.F.R. § 314.80(a) (2014).
