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Fines of More Than $300 Million Properly Imposed on Johnson & Johnson—C.A.
Opinion Says Federal Ban on Excessive Fines Is Not Breached
By a MetNews Staff Writer
Div. One of the Fourth District Court of Appeal held yesterday that a judgment imposing more than $300 million in civil penalties against health care giant Johnson & Johnson and its subsidiary Ethicon does not violate the federal constitutional prohibition on excessive fines.
San Diego Superior Court Judge Eddie C. Sturgeon levied fines against the companies in the amount of $344 million under the Unfair Competition Law (“UCL”) and the False Advertising Law (“FAL”) based on circulating misinformation in connection with Ethicon’s surgically-implantable transvaginal pelvic mesh products. The appeals court affirmed the judgment except for a component that amounted to nearly $42 million based on oral statements to doctors at lunch events and health fairs.
“However, there was no evidence of what Ethicon’s employees and agents actually said in any—let alone all—of these oral marketing communications,” Presiding Justice Judith McConnell wrote, directing that the judgment be pared.
Addressing the excessive fines prohibition in Art. I, §17, she said:
“Per the parties’ stipulation, the trial court found that defendant-parent company Johnson & Johnson had a net worth of more than $70.4 billion. The civil penalty imposed by the trial court ($343,993,750) and the amended civil penalty award ($302,037,500) each constitute less than one half of one percent of Johnson & Johnson’s net worth. Given these figures, it is apparent that Ethicon has ample ability to pay the civil penalty award.”
She declared that “the totality of the factors” that are taken into account in determining if a fine is excessive—”namely, Ethicon’s extremely high degree of culpability, the severe harm resulting from Ethicon’s misconduct, and Ethicon’s undisputed ability to pay”—indicate that the fine passes constitutional muster.
The action was filed by the Office of Attorney General in 2016. A nine-week trial took place before Sturgeon who issued a 128-page decision in which he found 153,351 violations of the UCL 121,844 breaches of the FAL.
Except as to the oral communications to doctors, McConnell found, substantial evidence supported the civil penalties Sturgeon imposed, at $1,250 per violation.
The case is People v. Johnson & Johnson, D077945.
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