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From Products Liability Law Daily, August 6, 2013

$1.8 million in punitive damages awarded in hormone therapy drug case

By Susan Lasser, J.D.

A patient who developed breast cancer while taking the hormone medication therapy drug, Prempro, was awarded punitive damages in the amount of $1,769,932.04 by a federal district court in Connecticut (Fraser v. Wyeth, Inc., August 5, 2013, Arterton, J.). Following a three-and-a-half-week jury trial in the patient’s action against the drug’s manufacturer, the jury returned a verdict in favor of the patient and her husband, unanimously finding that the evidence at trial warranted an award of punitive damages in addition to an award of compensatory damages. Under Connecticut law, once a jury determines that punitive damages should be awarded to a plaintiff, the court is required to determine the amount of the award. The court ruled that the Connecticut Products Liability Act (CPLA) incorporated the common law cap on punitive damages and, therefore, the patient (and her husband) were entitled to a punitive damages award of no more than their litigation expenses less taxable costs in their action against the drug maker.

Background. The patient, Margaret Fraser, and her husband, Joseph Fraser, claimed that through its manufacture and marketing of the hormone therapy medication Prempro, the drug maker, Wyeth, Inc., violated the CPLA through failure to warn; strict products liability; negligent failure to test, study or investigate; and negligent misrepresentation. The plaintiffs also asserted that Wyeth breached implied and express warranties; violated the Connecticut Unfair Trade Practices Act; and was liable for Joseph’s loss of consortium. The court dismissed the breach-of-warranty and CUTPA claims on Wyeth’s summary judgment motion, and a verdict was reached on April 18, 2012, finding Wyeth liable on all of the remaining claims. The jury awarded Ms. Fraser $3,750,000 in compensatory damages and Mr. Fraser $250,000 in loss of consortium damages. The jury also found that punitive damages should be awarded against Wyeth, the amount as to be determined by the trial court pursuant to state statute. The parties presented different interpretations of Conn. Gen. Stat. § 52-240b, the punitive damages provision of the CPLA, to the court.

Punitive damages provision under the CPLA. The patient and her husband argued that they were entitled to a punitive damages award of twice the amount of compensatory damages, and that the court should use a multi-factor test in reaching this determination. Wyeth countered that the CPLA provision incorporated the common law rule that punitive damages are capped at attorney’s fees and costs; that the patient had waived her right to recover punitive damages in the amount of attorney’s fees and costs; that she had failed to submit sufficient evidence to support her claim for attorney’s fees and costs; that there was insufficient evidence to support an award of punitive damages; and that even if a punitive damages award was supported by the evidence, the constitutional requirements of due process dictated an award of $0 punitive damages.

The court noted that Connecticut has long recognized the common law rule that “punitive damages serve primarily to compensate the plaintiff for his injuries and, thus, are properly limited to the plaintiff’s litigation expenses less taxable costs.” Wyeth contended that the statutory provision at issue incorporated the common law rule, and that the patient’s punitive damages should, therefore, be capped at reasonable litigation expenses. According to the court, the CPLA is silent as to whether §52-240b abrogated or subsumed Connecticut’s common law limitation on punitive damages. Moreover, no Connecticut appellate court had addressed the issue, and several Connecticut Superior Court decisions had reached opposite conclusions on the matter, the court observed.

Based on an analysis of §52-240b by a federal district court in Connecticut (Izzarelli v. R.J. Reynolds Tobacco Co., 767 F. Supp. 2d 324 (D. Conn. 2010), on appeal at No. 11-3865 (2d Cir. 2011)), the trial court predicted that the Connecticut Supreme Court would rule that the statute did not abrogate the common law cap on punitive damages. The federal district court based its determination on the fact that the legislature had rejected proposed legislation that would have awarded punitive damages “in addition to attorney’s fees” and laid out a multi-factor test for calculating punitive damages. In addition, that court concluded that the common law limitation on punitive damages was consistent with the make-whole legislative purpose of the CPLA to limit punitive damages awards in product liability actions. Therefore, the trial court in Ms. Fraser’s case concluded that the CPLA incorporated the common law cap on punitive damages, entitling her and her husband to a punitive damages award of no more than their litigation expenses less taxable costs in this action.

Litigation expenses. The Frasers argued that because the court determined that the common law cap on punitive damages applied to the award of punitive damages under §52-240b, they were entitled to a total award of $2,598,658.97, representing attorney’s fees according to the terms of their contingency fee agreement and the costs incurred during the course of the litigation. Wyeth argued that the Frasers had waived their right to punitive damages because they failed to submit evidence of their litigation expenses in the first round of post-trial briefings on punitive damages; that the Frasers could not collect attorney’s fees because their contingency fee agreement was void; and that the Frasers’ evidence in support of their costs was insufficient to support an award.

The court, however, rejected Wyeth’s waiver argument, finding that the Frasers’ had requested the right to provide evidentiary support of their litigation expenses, which was incompatible with a finding of waiver. The court said it would consider the records provided by the Frasers when determining a punitive damages award.

In addition, as evidence of their litigation expenses related to reasonable attorney’s fees, the Frasers submitted their contingency fee agreement, which provided for a one-third contingency fee in the event that they recovered a judgment and an additional 16.667 percent fee if the judgment were appealed and their attorney agreed to defend the appeal. The trial court noted that the Connecticut Supreme Court has upheld the calculation of punitive damage awards based on contingency fee agreements. The court determined that Wyeth lacked standing to challenge the validity of the Frasers’ contingency fee award in the context of calculating the punitive damages to be awarded, and it concluded it would consider the contingency fee in setting the amount of punitive damages to be awarded. This consideration included assessing the reasonableness of the contingency fee agreement as well.

The court determined that the Frasers’ contingency fee agreement providing for a 33.33 percent contingency fee was reasonable in light of the Connecticut statutory provision stating that a contingency fee of 33.33 percent was the maximum fee to which an individual could agree when executing a waiver under that provision. The court found no reason to depart from that fee on the basis of substantial unfairness, but it rejected the Frasers’ added 16.667 percent award of appellate fees which was part of the contingency fee agreement. The court expressed serious concerns regarding the propriety of a fee agreement providing for a 16.667 percent appellate fee in addition to the 33.33 percent fee of $1,333,333.33, particularly in light of the statutory instruction that fees greater than 33.33 percent were contrary to the public policy of Connecticut. Therefore, the court refused to award punitive damages in excess of the 33.33 percent fee set out in the Frasers’ contingency fee agreement.

The court also accepted most of the costs submitted by the Frasers’ attorneys. The court noted that Connecticut courts do not require specific documentation of costs and fees in order to award punitive damages based on litigation expenses, and it could consider any evidence the Frasers offered for the purpose of calculating the costs related to the litigation.

Amount of award. The court concluded that an award equal to the full amount of permissible attorney’s fees and costs proved by the Frasers was appropriate, as it was sufficient but not greater than necessary, to achieve the purpose of making the “plaintiff whole.” The court awarded punitive damages in the amount of $1,769,932.04, which included $1,333,333.33 in attorney’s fees, representing a 33.33 percent fee based on the $4,000,000 award of compensatory damages, pursuant to the Frasers’ contingency fee agreement, and other costs.

The case number is 3:04cv1373 (JBA).

Attorneys: Christopher W. Goode (Bubalo Rotman, PLC), Gregory J. Bubalo (Bubalo Goode Sales & Bliss, PLC), Manish Indravadan Shah (Ury & Moskow, LLC) for Margaret B. Fraser. Adrienne D. Gonzalez (Kaye Scholer, LLP), Catherine B. Stevens (Quinn Emanuel Urquhart & Sullivan, LLP), Daniel L. Cendan (Freshfields Bruckhaus Deringer US LLP), Eric M. Falkenberry (DLA Piper US LLP), James I. Glasser (Wiggin & Dana), Jane Elizabeth Bockus (Cox Smith Matthews Incorporated), Kathy A. Cochran (Wilson Smith Cochran Dickerson), Kelly A. Evans (Snell & Wilmer LLP), Matthew V. Johnson (Williams & Connolly), Michael R. Klatt (Gordon & Rees, LLP), Michele A. Roberts (Skadden, Arps, Slate, Meagher & Flom), and Spring Catherine Potoczak (Porzio, Bromberg & Newman, PC) for Wyeth, Inc.

Companies: Wyeth, Inc. and Wyeth Pharmaceuticals Inc.

MainStory: TopStory DamagesNews DrugsNews ConnecticutNews

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