Thursday, March 31, 2016

After big verdicts: Has Johnson & Johnson lost its way? //NJ LawJournal

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After big verdicts: Has Johnson & Johnson lost its way? //NJ Law Journal
by Charles Toutant and Max Mitchell // NJ Law Journal

Plaintiffs lawyers haven been winning a steady stream of big products liability verdicts against Johnson & Johnson recently, and some have suggested the company's size makes it a bigger target for litigation—and also more willing to take cases to trial.

All the litigation hasn't kept Wall Street from taking a liking to Johnson & Johnson—several brokerages upgraded their ratings on the company's stock in recent weeks, including Goldman Sachs, which changed its prognosis for Johnson & Johnson to "neutral," after rating it "sell" for 14 months. But the heavy burden of litigation facing the company may have some questioning the company's direction and management.

On March 17, a federal jury in Dallas ordered the company to pay $502 million to five plaintiffs who claimed the company's Pinnacle artificial hips failed prematurely. And on Feb. 22, a state jury in Missouri returned a $72 million verdict in the case of a woman whose death from ovarian cancer was linked to long-term use of Johnson & Johnson's talcum powder products. The company is expected to appeal both verdicts.

On another front, Johnson & Johnson's Janssen Pharmaceuticals has been hit with plaintiff verdicts in three of the four cases tried before Philadelphia juries in the past year concerning a tendency by antipsychotic drug Risperdal to cause male users to develop breasts. The company has seen verdicts of $500,000, $2.5 million and $1.75 million in those cases. Also in Philadelphia, the company was hit with verdicts of $12.5 million in January and $13.5 million in February over its pelvic mesh products. And in the fall, the company faces the first trial in multidistrict litigation in Philadelphia of 217 suits claiming that Tylenol causes liver damage.

In addition, on March 29, the New Jersey Appellate Division upheld an $11.1 million verdict against Johnson & Johnson subsidiary Ethicon Inc. in the first bellwether pelvic mesh trial in New Jersey state court.

Erik Gordon, who studies drug companies as an assistant professor at the University of Michigan's Ross School of Business, said he sees a departure from the vow by Johnson & Johnson's founders to put patients' interests ahead of those of stockholders.

"J&J seems to have changed from a company that lived its famous credo of putting patients first to a company that puts 'hit the sales numbers' first and cites the credo, with feeling, when it is in a public relations mess related to allegedly defective products," Gordon said.

The root cause of the verdicts lies in the conduct of Johnson & Johnson, said Shanin Specter of Kline & Specter in Philadelphia, who recently tried two pelvic mesh cases against the company to verdict for a total of $26 million in jury awards.

"Johnson & Johnson is being told by juries that they have acted negligently and recklessly more than any other company in the United States," Specter said. "Their internal documents demonstrate that they are a company that has lost its way, and they are putting sales over safety."
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