In April of this year, a federal jury in Lafayette, Louisiana slammed Japanese pharmaceutical company Takeda with a $9 billion punitive damage verdict. Punitive damages, which are designed to deter and punish the Defendant’s conduct, are not awarded in every trial, and differ from compensatory, or actual damages (examples include pain and suffering, mental anguish, disability, and medical expenses, among other damages). In order to recover punitive damages, the Plaintiff must prove that the Defendant’s conduct was egregious or malicious. Because punitive damages are not frequently awarded, the jury in this federal court case intended to send a strong message to Takeda.
The jury in this case determined that Takeda hid cancer risks of their Actos diabetes medicine in the first U.S. trial of its kind, according to Bloomberg.com.
Takeda is Asia’s largest drug maker. It began battling claims against the Actos drug after it stopped development of another drug intended to aid diabetes patients when research uncovered that it may be linked to liver damage. More than 2,700 lawsuits against Actos have been consolidated in that same Louisiana federal court.
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According to Bloomberg, the $9 billion verdict—the seventh-largest in U.S. history and possibly the largest single award over a drug maker’s mishandling of a product—is likely to be reduced. Of the ten largest punitive verdicts awarded against corporations, all were either reversed or substantially reduced. U.S. Supreme Court case law has held that punitive verdicts must be proportional to the awards of actual damages that underlie them. In State Farm Mutual Insurance Co. v. Campbell, 538 U.S. 308 (2003), the Court held that the ratio of punitive damages to actual damages must, generally, not exceed a single-digit ratio. In limited cases, however, the Court has held that punitive damage awards that are ten times the actual damages would be permissible.
Florida statutes place caps on the amount of punitive damages a jury can award depending on the facts and circumstances of the particular case. Usually, the cap is only three times the amount of actual damages awarded to each claimant, or $500,000, except when the Judge or jury determines that the Defendant specifically meant to harm the Plaintiff at the time of the Plaintiff’s injury (and that that the Defendant’s actions actually did harm the Plaintiff). Unless that uncommon finding occurs, one of the caps applies. Florida law also requires that the Plaintiff must establish, by clear and convincing evidence, its entitlement to punitive damages. “‘Clear and convincing evidence’ is evidence that is precise, explicit, lacking in confusion, and of such weight that it produces a firm belief or conviction, without hesitation, about the matter in issue.” Fla. Standard Jury Instruction 404.13. The greater weight of the evidence is often called “tipping the scales” – a Judge or jury must be convinced by 51% that the Plaintiff’s evidence was more persuasive, and is the standard that must be met when proving the Plaintiff’s actual amount of punitive damages.
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Therefore, recovering a punitive damages award requires specific evidence that must meet specific burdens. When those burdens are met, the jury usually awards punitive damages to send a message to the Defendant that their behavior was more than unacceptable. (Please note that in federal cases such as the one against Takeda, whether punitive damages need to be proved by a preponderance of the evidence or clear and convincing evidence also depends on the standards applicable to the underlying claim for relief, according to the Manual of Model Civil Jury Instructions, 5.5, Punitive Damages).
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