Women win US$4.69-billion lawsuit

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Johnson & Johnson (J&J) slipped as investors began to assess the potential long-term costs to the company of the legal saga surrounding its talc products.

On Thursday, a jury ordered the company to pay US$4.69 billion to women who claimed asbestos in the products caused them to develop ovarian cancer, marking the sixth-largest product-defect verdict in U.S. history.

The award — US$4.14 billion in punitive damages and US$550 million to compensate 22 women and their families — was a drag on J&J shares, which fell 0.7 per cent to US$126.83 at 10 a.m. in New York, even as major market indexes were little changed. The shares closed down 1.42 per cent at US$125.93 on Friday.

The verdict by jurors in St. Louis city court came in the first test of plaintiffs’ claims of an asbestos-ovarian cancer link in use of J&J’s iconic baby powder. The asbestos cases are part of more than 9,000 claims alleging J&J’s talc products cause cancer.

The company will appeal, Carol Goodrich, a spokeswoman, said in an email. The verdict “was the product of a fundamentally unfair process that allowed plaintiffs to present a group of 22 women, most of whom had no connection to Missouri, in a single case all alleging that they developed ovarian cancer,’’ she said.

That each plaintiff and her family members were awarded US$25 million for their losses “irrespective of their individual facts, and differences in applicable law, reflects that the evidence in the case was simply overwhelmed by the prejudice of this type of proceeding,’’ Goodrich added.

Investors are likely to increase their focus on the talc cases on the heels of the large award for the plaintiffs, Credit Suisse analyst Vamil Divan said. Divan said he is confident J&J can absorb “even relatively large payments” to resolve the cases.

The company’s products don’t contain asbestos, and don’t cause ovarian cancer, Goodrich said. She predicted the verdict would be reversed. “The multiple errors present in this trial were worse than those in the prior trials which have been reversed.”

J&J “will appeal till the cows come home, or until all the plaintiffs die,” the plaintiffs’ lawyer Mark Lanier said in an interview on Thursday. J&J should pull its talc-based products from the market, or “mark it with a serious warning,” he said.

The women also sued a unit of Imerys, which supplied the talc to J&J. Imerys Talc America settled before trial on confidential terms. The company agreed to pay at least US$5 million to settle the claims, according to two persons familiar with the matter.

While the largest verdict in a U.S. jury trial so far this year will grab the headlines, the jury’s decision that asbestos in J&J’s baby powder caused the women’s ovarian cancer may be a bigger, long-term concern, said Jean Eggen, a Widener University law professor who teaches about mass-tort cases.

“This was a new theory, and the jury lined up behind it,” Eggen said. “That may be a harbinger of things to come, and there are many more ovarian cancer cases than asbestos cases tied to the powder.”

J&J knew its talc products were contaminated with asbestos and kept this information from reaching the public, Lanier, the plaintiffs’ lawyer, told jurors in closing arguments. J&J sought to protect the image of baby powder as “their sacred cow,’’ he said.

The company “rigged’’ tests to avoid showing the presence of asbestos, Lanier said. If a test showed the presence of asbestos, J&J sent it to a lab the company knew would produce different results, he told the jurors.

J&J denied any contamination with asbestos or any rigged testing. The accusations of suppressing or ignoring tests didn’t make sense, said Peter Bicks, the company’s trial counsel, in Wednesday’s closings.

J&J “hired the best labs in the country year after year after year’’ to test for asbestos, he said. “Then, someone at J&J decides to expose babies to asbestos? Why all the testing?’’ Mineral traces in the talc aren’t proof of asbestos contamination, Bicks said. These fibres aren’t asbestos but harmless mineral fragments, he said.

The talc wasn’t harmless, plaintiff Toni Roberts, 61, said in an interview after the verdict. Roberts was diagnosed with ovarian cancer in 2014. She is receiving chemotherapy in Roanoke, Va., but described it as palliative. “None of the treatments are working for me,” she said. “I’m terminal.”

Roberts has two children and two grandchildren, with a third due in December. “But I’m not likely to be here,” she said. While she was happy to be part of a winning team, she said, “This is not how I wanted my life to conclude.”

After the punitive damages were announced, plaintiffs, their family members and their lawyers gathered around the jurors, hugging them and thanking them. “God bless you,” many plaintiffs said tearfully.

One juror, Evan Klene, a 24-year-old financial analyst, said the jury tried “to understand the totality of what these women went through.”

He faulted J&J’s defence regarding asbestos. “We felt the asbestos expert for the plaintiffs was much stronger than the defence’s,” Klene said.

He said the US$4.14 billion in punitive damages was derived from a formula which included the annual revenue from baby powder (US$70 million), along with the number of years talc has been an issue.

Most of the women in the St. Louis trial used baby powder, but others used Shower-to-Shower, another of J&J’s talc-based products. J&J sold the product to Valeant Pharmaceuticals International Inc. in 2012. Valeant now faces suits over the body powder.

The women who sued, whose jobs range from school bus driver to executive director of a job-retraining program, come from states including Pennsylvania, California, Arizona and New York. Six of the women have died, so their families pressed wrongful-death claims against J&J.

More than half of the 95-seat courtroom at closing arguments on Wednesday was occupied by plaintiffs and their relatives. Some wiped away tears as Lanier discussed their ailments.

Listening to the plaintiffs’ accounts of their cancers was “gut-wrenching,’’ Bicks told jurors on Wednesday. “But sympathy aside, the plaintiffs have not come anywhere close to proving their case.’’

The lawsuits were initiated by lawyer advertising, Bicks said. The trial was “an attempt to use sympathy in pursuit of a big payday from a deep-pockets defendant.’’

J&J has faced multiple trials in St. Louis over ovarian cancer claims, losing four of the first five to go to trial. Two of those plaintiffs’ verdicts, one for US$72 million and the other for US$55 million, have been erased on appeal on jurisdictional grounds. The other two are on appeal, facing the same challenges from J&J.

The company has had a better record with judges than juries in the ovarian cancer cases.

A separate plaintiffs award, for US$417 million by a Los Angeles jury in August, was reversed by the trial judge who decided evidence didn’t support the verdict.

A New Jersey judge in 2016 stalled lawsuits in that state by tossing two cases set for trial, also finding a lack of scientific evidence.

— Bloomberg News