Amicus Curiae Brief — Johnson & Johnson, et al., Petitioners v. California

No. 22-447

IN THE

Supreme Court of the United States

______________________

JOHNSON & JOHNSON, ET AL.,

Petitioners,

v.

STATE OF CALIFORNIA,

Respondent.

______________________

On Petition for a Writ of Certiorari to the

Court of Appeal of California

_______________

BRIEF OF AMICI CURIAE OF

THE NATIONAL ASSOCIATION OF

MANUFACTURERS, AMERICAN TORT

REFORM ASSOCIATION, AND

PHARMACEUTICAL RESEARCH AND

MANUFACTURERS OF AMERICA

IN SUPPORT OF PETITIONERS

_______________

Philip S. Goldberg

Counsel of Record

Cary Silverman

SHOOK, HARDY &

BACON L.L.P.

1800 K Street, N.W.

Washington, D.C. 20006

(202) 783-8400

pgoldberg@shb.com

Counsel for Amici Curiae

[Additional Counsel Listed on Inside Cover]

Linda E. Kelly

Erica Klenicki

Michael A. Tilghman II

THE NAM LEGAL CENTER

733 10th Street, N.W.

Suite 700

Washington, D.C. 20001

(202) 637-3100

Counsel for National Association of Manufacturers

H. Sherman Joyce

Lauren Sheets Jarrell

AMERICAN TORT REFORM ASSOCIATION

1101 Connecticut Ave N.W., Suite 400

Washington, D.C. 20036

Counsel for American Tort Reform Association

James C. Stansel

Melissa B. Kimmel

PHARMACEUTICAL RESEARCH AND

MANUFACTURERS OF AMERICA

950 F Street N.W., Suite 300

Washington, D.C. 20004

Counsel for Pharmaceutical Research

and Manufacturers of America

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES .................................. ii

INTEREST OF AMICI CURIAE ........................... 1

INTRODUCTION AND

SUMMARY OF ARGUMENT .......................... 2

REASONS FOR GRANTING THE WRIT ............ 5

I.

The Court Should Grant Certiorari to Place

Rational Boundaries on the Unpredictable

and Near Limitless Imposition of

“Per Violation” Civil Penalties ........................ 5

II. The Court Should Provide a Constitutional

Backstop to Determine When the Lack of

Clarity Under UDAP Laws Leads to

Arbitrary Punishment ..................................... 10

A. States Must Provide Notice of Conduct

that is Subject to Punishment ................ 10

B. The Court Should Place Rational Bounds

on “Per Violation” Civil Penalties ........... 14

III. The Court Should Provide Consistency

between Safeguards Governing Arbitrary

and Excessive Punishment in Other Areas

and Civil Penalties .......................................... 18

A. Proportionality Between Punishment and

Harm is Key to Addressing the Stark

Unpredictability of Punitive Damage

Awards and Evaluating Excessiveness .. 18

B. Proportionality is Central to the Court’s

Excessive Fines Clause Jurisprudence .. 21

CONCLUSION ....................................................... 23

-i-

TABLE OF AUTHORITIES

Cases

Page

Austin v. United States, 509 U.S. 602 (1993) ..... 21, 22

BMW of N. Am., Inc. v. Gore,

517 U.S. 559 (1996).............................................. 19

Browning-Ferris Indus. v. Kelco Disposal, Inc.,

492 U.S. 257 (1989).............................................. 22

California ex rel. Lockyer v. Fremont Life Ins. Co.,

104 Cal. App. 4th 508 (Cal. Ct. App. 2002)........... 6

Exxon Shipping Co. v. Baker,

554 U.S. 471 (2008).............................................. 20

Grayned v. City of Rockford, 408 U.S. 104 (1972) ... 10

Honda Motor Co. v. Oberg, 512 U.S. 415 (1994) ...... 19

In re Zyprexa Prods. Liab. Litig.,

671 F. Supp.2d 397 (E.D.N.Y. 2009) .................. 7-8

Kolender v. Lawson, 461 U.S. 352 (1983) ................. 11

Lanzetta v. New Jersey, 306 U.S. 451 (1939) ........... 11

Ortho-McNeil-Janssen Pharm., Inc. v. State,

432 S.W.3d 563 (Ark. 2014) ................................... 8

Pacific Mut. Life Ins. Co. v. Haslip,

499 U.S. 1 (1991).................................................. 19

Sessions v. Dimaya, 138 S. Ct. 1204 (2018) ............. 21

State v. United Parcel Serv., Inc.,

942 F.3d 554 (2d Cir. 2019) ................................. 18

State ex rel. McGraw v. Johnson & Johnson,

704 S.E.2d 677 (W. Va. 2010) ................................ 8

- ii -

State ex rel. Wilson v. Ortho-McNeil-Janssen

Pharm., Inc., 777 S.E.2d 176 (S.C. 2015),

cert. denied, 136 S. Ct. 824 (2016) ..................... 8, 9

State Farm Mutual Auto. Ins. Co. v. Campbell,

538 U.S. 408 (2002).............................................. 20

Timbs v. Indiana, 139 S. Ct. 682 (2019) .................. 22

TXO Prod. Corp. v. Alliance Res. Corp.,

509 U.S. 443 (1993)......................................... 18-19

United States v. Bajakajian, 524 U.S. 321 (1998) ... 22

Wakefield v. ViSalus, Inc.,

51 F.4th 1109 (9th Cir. 2022) .............................. 21

Statutes and Regulations

15 U.S.C. § 45 ................................................ 11, 12, 15

15 U.S.C. § 49 ............................................................ 11

15 U.S.C. § 53 ............................................................ 11

15 U.S.C. § 57 ............................................................ 11

15 U.S.C. § 1194 ........................................................ 17

15 U.S.C. § 1264 ........................................................ 17

15 U.S.C. § 2069 ........................................................ 16

86 Fed. Reg. 68,244 (Dec. 1, 2021)............................ 17

87 Fed. Reg. 1,070 (Jan. 10, 2022)............................ 15

87 Fed. Reg. 15,839 (Mar. 21, 2022) ......................... 17

Cal. Bus. & Prof. Code § 17200 ................................ 10

Cal. Bus. & Prof. Code § 17206 .......................... 13, 16

Cal. Bus. & Prof. Code § 17207 ................................ 13

Cal. Bus. & Prof. Code § 17500 ................................ 16

- iii -

Cal. Health & Safety Code § 18021 .......................... 17

Cal. Pub. Util. Code § 4457 ....................................... 17

Consumer Product Safety Improvement Act of

2008, Pub. L. No. 110-314

(amending 20 U.S.C. § 2069) ............................... 16

Me. Rev. Stat. Ann. tit. 5, § 209 .......................... 12-13

R.I. Laws Ch. 21-329

(amending R.I. Gen. Laws § 6-13.1-8)................. 13

Wheeler-Lea Act of 1938, Pub. L. No. 75-447, § 3,

52 Stat. 111 (1938) (codified as amended at

15 U.S.C. § 45(a)(1))............................................. 11

Other Authorities

Dorsey D. Ellis, Jr., Fairness and Efficiency in

the Law of Punitive Damages,

56 S. Cal. L. Rev. 1 (1982) ................................... 19

Fed. Trade Comm’n, News Release, FTC Charges

Twitter with Deceptively Using Account Security

Data to Sell Targeted Ads, May 25, 2022,

https://www.ftc.gov/news-events/news/pressreleases/2022/05/ftc-charges-twitter-deceptivelyusing-account-security-data-sell-targeted-ads ... 15

Fed. Trade Comm’n, Notice of Penalty Offenses,

https://www.ftc.gov/enforcement/penaltyoffenses (last visited Dec. 14, 2023) .................... 12

Oliver Wendell Holmes, The Path of the Law,

10 Harv. L. Rev. 457 (1897) ................................. 20

John Calvin Jeffries, Jr., A Comment on the

Constitutionality of Punitive Damages,

72 Va. L. Rev. 139 (1986)..................................... 19

- iv -

George L. Priest, Punitive Damages and Enterprise Liability, 56 S. Cal. L. Rev. 123 (1982) ...... 19

Daniel Siegal, Breaking Down J&J and

California's $1B Pelvic Mesh Trial,

Law360, July 12, 2019 ........................................ 3-4

Daniel Siegal, Calif. Tells Judge J&J Must Pay

$800M for Mesh Marketing, Law360,

Sept. 26, 2019......................................................... 4

Victor E. Schwartz & Cary Silverman, The Rise of

"Empty Suit" Litigation. Where Should Tort Law

Draw the Line?, 80 Brook. L. Rev. 599 (2015) ...... 7

S. Rep. No. 74-1705 (1936)........................................ 11

Cary Silverman & Jonathan L. Wilson,

State Attorney General Enforcement of

Unfair or Deceptive Acts and Practices Laws:

Emerging Concerns and Solutions,

65 U. Kan. L. Rev. 209 (2017) ..................... passim

-v-

INTEREST OF AMICI CURIAE1

The National Association of Manufacturers

(NAM), American Tort Reform Association (ATRA),

and Pharmaceutical Research and Manufacturers of

America (PhRMA) submit this brief as amici curiae

in support of Petitioners. Amici share a collective

concern that state attorneys general and courts have

imposed civil penalties under state unfair or deceptive acts and practices (UDAP) laws in an unpredictable and excessive manner that violates the constitutional rights of defendants.

The NAM is the largest manufacturing association in the United States, representing small and

large manufacturers in every industrial sector and in

all 50 States. Manufacturing employs more than

12.9 million men and women, contributes $2.77 trillion to the U.S. economy annually, has the largest

economic impact of any major sector, and accounts

for nearly two-thirds of all private-sector research

and development in the Nation. The NAM is the

voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs

across the United States.

ATRA is a broad-based coalition of businesses,

corporations, municipalities, associations, and professional firms that have pooled their resources to

promote reform of the civil justice system with the

1 Counsel of record for all parties received timely notice of

amici’s intent to file this brief and have consented to its filing.

No counsel for any party authored this brief in whole or in part,

and no person or entity other than amici and their counsel contributed funds for its preparation or submission.

-1-

goal of ensuring fairness, balance, and predictability

in civil litigation. ATRA files amicus curiae briefs in

cases involving important liability issues.

PhRMA is a voluntary, nonprofit association representing the country’s leading research-based

pharmaceutical and biotechnology companies.2

PhRMA’s mission is to advocate public policies encouraging innovation in life-saving and liveenhancing new medicines. PhRMA’s member companies are devoted to inventing medicines that allow

patients to live longer, healthier, and more productive lives, and they have led the way in the search for

new cures. PhRMA’s members make significant contributions to serve the collective goals of enhancing

and lengthening human life. Since 2000, PhRMA

members have invested more than $1 trillion in the

search for new treatments and cures.

INTRODUCTION AND

SUMMARY OF ARGUMENT

This case is emblematic of the subjective and arbitrary manner in which states impose civil penalties

under their UDAP laws, which are vague with respect to the conduct that can give rise to a violation

and the amount of penalties the state will impose.

The total civil penalty here could have been $2,500,

$2,500,000, $250,000,000, or $2,500,000,000; California law provides no objective standards. As a result, the State was able to impose hundreds of millions of dollars in civil penalties related to medical

devices and risk communications already subject to

extensive federal oversight. Granting the Petition

PhRMA’s members are listed at www.phrma.org/about#

members (last visited Dec. 6, 2022).

2

-2-

would allow the Court to provide bounds for when

punishment from aggregating per violation civil penalties becomes constitutionally infirm.

The lack of notice as to the legality of conduct under UDAP laws, unpredictability of the penalty, and

lack of proportionality between the size of the fine

and objectivity and severity of the alleged deception

raise constitutional concern. In this case, California’s

attorney general brought an action against manufacturers of pelvic mesh medical devices, which were

used to treat stress urinary incontinence and pelvic

organ prolapse. At the time, the Food and Drug Administration (FDA) categorized these devices as

Class II medical devices, meaning that their design

and labeling—including benefit-risk information—

were cleared by the FDA. In addition, the FDA studied mesh devices and provided guidance to manufacturers on their risk communications. Nevertheless,

the State alleges Petitioner marketed its mesh products in ways it believed minimized or omitted certain

risks in violation of California’s Unfair Competition

Law (UCL) and False Advertising Law (FAL). Both

statutes provide that the State can seek up to $2,500

per violation, but neither statute provides guidance

for what constitutes a violation and how violations

can be aggregated. State attorneys general and

courts have nearly limitless discretion, creating the

due process concerns evidenced in this case.

Here, the attorney general computed the statute’s

per violation provision to seek nearly $1 billion in

penalties, presumably to maximize its litigation leverage.3 Faced with the threat of such liability, many

3 See Daniel Siegal, Breaking Down J&J and California's

$1B Pelvic Mesh Trial, Law360, July 12, 2019 (reporting the

-3-

companies opt to settle regardless of the merits of

the claims. Petitioner defended its marketing activities, and the trial court imposed a lower, but still

stunning, sum of $344 million based on 153,351 violations of UCL and 121,844 violations of the state’s

FAL. The California Court of Appeal affirmed after

remitting the civil penalty to $302 million. The California Supreme Court denied review.

The arbitrary way this fine was calculated at each

stage highlights the constitutional concerns here.

Neither the State’s nor court’s calculations had anything to do with whether a communication was likely

to deceive a real person. For example, the court

counted each printed piece of marketing paper estimated to have been shipped to California as a separate violation, regardless of whether the piece was

actually sent to and read by a doctor or potential patient. The court added separate violations based on

the circulation of each healthcare provider newsletter, speculating that the publication could have

passed on misleading information on the Petitioner’s

pelvic mesh products, even if it did not. The court included additional violations for each instruction

sheet included in a product’s package and each conversation that hypothetically occurred between a

sales representative and healthcare provider at certain events.4 Then, the court counted many violastate sought civil penalties totaling $960 million in a pretrial

brief); see also Daniel Siegal, Calif. Tells Judge J&J Must Pay

$800M for Mesh Marketing, Law360, Sept. 26, 2019 (indicating

the state requested $800 million at trial).

4 This was the only portion of the civil penalty eliminated by

the Court of Appeal, which drew the line at punishing a company for communications that may have never occurred.

-4-

tions twice, as the State sought civil penalties under

two different, overlapping statutes, the UCL and

FAL.

The court failed to tie the fines to concrete communications between Petitioner and California doctors or potential patients, whether they were likely

to be misled, or whether patients experienced complications rather than benefited from the devices.

Entities engaging in lawful commerce, particularly of

mass-marketed items, must not be left to the arbitrary whims of state officials enforcing vague laws

untethered from how objective or severe the consumer deception or risk they are alleging. Petitioner has

a due process right to have fair notice of the conduct

that gives rise to civil penalties and the scope of the

potential punishment.

Amici respectfully urge the Court to grant certiorari to provide constitutional boundaries on a state’s

imposition of civil penalties. The Court should require states to provide fair notice of the scope of civil

penalties they can impose and, consistent with the

Court’s punitive damages and Excessive Fines

Clause jurisprudence, ensure such fines are rooted in

predictability and proportionality.

REASONS FOR GRANTING THE WRIT

I. The Court Should Grant Certiorari to Place

Rational Boundaries on the Unpredictable

and Near Limitless Imposition of “Per Violation” Civil Penalties

California’s and many other states’ UDAP laws

provide little notice as to the degree of punishment a

state can inflict when it alleges that a marketing

practice could deceive consumers. As here, when

-5-

states impose civil penalties by arbitrarily aggregating “per violation” fines, it raises serious due process

concerns that are ripe for this Court’s review.

UDAP laws can provide a state with a valuable

way to protect consumers by seeking injunctions to

stop unfair or deceptive business practices before

they cause harm and, when consumers have lost

money, obtain restitution. See generally Cary Silverman & Jonathan L. Wilson, State Attorney General Enforcement of Unfair or Deceptive Acts and

Practices Laws: Emerging Concerns and Solutions,

65 U. Kan. L. Rev. 209, 240 (2017). These laws also

authorize an attorney general to request that a court

punish companies that violate the law and deter others from engaging in similar conduct by seeking civil

penalties. See id. Many of these state laws, including

California’s UCL, allow an attorney general to seek,

and a court to impose, a civil penalty for any practice

that may mislead someone, even if a business did not

intend to deceive the public, actually mislead consumers, or cause any loss. See id. at 240-41 (citing

California ex rel. Lockyer v. Fremont Life Ins. Co.,

104 Cal. App. 4th 508, 516-17 (Cal. Ct. App. 2002)).

Maximum civil penalties under UDAP laws range

from $1,000 to $50,000 for each violation with about

half of state laws set in the $1,000 to $5,000 range

and the other half set at $10,000 or more. See id. at

241 (compiling statutes). No matter what level a legislature sets as the statutory maximum, when a

court, at the behest of a state attorney general, aggregates civil penalties “for each violation,” they can

reach extraordinarily high sums. There is no guidance or limit for how states can aggregate per incident violations, subjecting manufacturers and other

-6-

entities that mass market their products to arbitrary

and excessive civil penalties. Attorneys general may

seek civil penalties for each product sold, marketing

letter sent, sales call or meeting held, advertisement

published or aired, or the estimated circulation or

viewership of an advertisement. See id. at 242. The

government has complete subjective discretion.

Today, UDAP litigation increasingly serves as a

substitute for traditional product liability lawsuits.

Rather than have the burden of showing that a

product’s design, instructions, or warnings rendered

the product defective and caused a personal injury,

these suits can simply allege that a product was not

as safe as consumers were led to believe. See generally Victor E. Schwartz & Cary Silverman, The Rise of

"Empty Suit" Litigation. Where Should Tort Law

Draw the Line?, 80 Brook. L. Rev. 599, 628-30 (2015)

(discussing use of UDAP laws to bring private claims

based on unmanifested defects).

Indeed, federal courts have expressed concern

that aggregating state civil penalties under UDAP

laws raise “serious constitutional and other questions.” See In re Zyprexa Prods. Liab. Litig., 671 F.

Supp.2d 397, 462 (E.D.N.Y. 2009). In Zyprexa, Mississippi’s Attorney General had sought a $10,000 civil penalty for each of almost one million estimated

Zyprexa prescriptions filled in his state, alleging the

medication was improperly marketed for off-label uses and did not fully disclose potential risks. See id. at

402. The district court refused to inflict the maximum civil penalty amount absent evidence showing

how many patients were harmed, rather than benefited, from the medication. See id. at 458-59. Imposing the per violation civil penalties sought, the court

-7-

observed, would result “in a multibillion dollar cumulative penalty grossly disproportionate” to both the

state’s injury and the company’s alleged misconduct.

Id. at 463. “[C]ourts cannot be used as an engine of

an industry’s unnecessary destruction,” Judge Jack

B. Weinstein cautioned. Id. at 463-64.

This unpredictable aggregation of per violation

civil penalties also occurred in state attorneys general actions alleging that the manufacturer of

Risperdal, which treats schizophrenia and bipolar

disorder, did not adequately disclose risks. See State

ex rel. McGraw v. Johnson & Johnson, 704 S.E.2d

677, 684 (W. Va. 2010) (seeking a civil penalty for

each promotional booklet mailed and sales call); Ortho-McNeil-Janssen Pharm., Inc. v. State, 432

S.W.3d 563, 570 (Ark. 2014) (seeking civil penalty

under a deceptive practices act for each letter sent to

a doctor plus civil penalties for each prescription

filled under the state’s Medicaid fraud statute); State

ex rel. Wilson v. Ortho-McNeil-Janssen Pharm., Inc.,

777 S.E.2d 176 (S.C. 2015), cert. denied, 136 S. Ct.

824 (2016) (seeking civil penalties for each sample

box, letter to doctor, and follow-up call). Each of

these actions resulted in millions of dollars in total

civil penalties, often untethered to any concrete risk

of harm. State supreme courts in West Virginia and

Arkansas reversed the lower court’s judgments on

grounds unrelated to the amount of the civil penalty,

while the South Carolina Supreme Court ruling

highlighted the lack of any standards for imposing

such fines. Wilson, 777 S.E.2d at 204-05.

In the South Carolina litigation, the trial court

imposed $327 million in civil penalties based on aggregating 553,055 separate violations of the state’s

-8-

deceptive practices act. See id. at 204. The South

Carolina Supreme Court found that the manufacturer’s conduct likely had “little impact” on physicians

who prescribed the medication and an “absence of

significant actual harm.” Id. at 204. Nevertheless, it

allowed the finding of liability to stand while addressing the excessiveness of the judgment. Specifically, the state high court remitted the $327 million

civil penalty to about $124 million by eliminating alleged violations that occurred beyond the statute of

limitations, reducing the penalty imposed for each of

509,499 sample boxes distributed to physicians containing allegedly misleading labeling from $300 to

$100 per box, and reducing the penalty imposed for

each of 36,000 follow-up visits with doctors from

$4,000 to $2,000 since most of these visits involved

the same doctors who received letters or samples in

the mail. See id. at 204. It left undisturbed a $4,000

civil penalty imposed for each letter to a doctor, calling the excessiveness of the fine a “close” question.

Id. The court offered no explanation as to why the

civil penalties arbitrarily selected by the trial court

were excessive, but not the remitted amounts.

Adding to the unpredictability of UDAP penalties

is that, in some instances, state attorneys general

bring UDAP enforcement actions through outside

counsel. See Silverman & Wilson, 65 Kan. L. Rev. at

217-24 (documenting examples). The use of private

lawyers working for the state on a contingency-fee

basis infuses a profit motive into the litigation and

may further drive a state to seek the highest level

and greatest number of per violation civil penalties

possible, even when not grounded in the facts. Although California did not use private counsel here,

the potential for private firms to profit from pushing

-9-

past rational limits of government civil penalties increases the need for the Court to articulate constitutional bounds in this case.

II. The Court Should Provide a Constitutional

Backstop to Determine When the Lack of

Clarity Under UDAP Laws Leads to Arbitrary Punishment

The Court should grant review to establish constitutional principles that states can use to ensure

their civil penalties are objective and rational. As the

examples below show, governments can incorporate

measures that promote predictability into the statute, while effectively protecting consumers. However,

when state law provides unlimited discretion that

leads to arbitrary punishment, this Court can provide a constitutional backstop.

A. States Must Provide Notice of Conduct

that is Subject to Punishment

It is imperative for states to provide businesses

with fair notice of violations, particularly when businesses are subject to civil penalties for any conduct a

state attorney general views as an “unfair” or “deceptive” practice. See Cal. Bus. & Prof. Code § 17200; see

also Silverman & Wilson, 65 U. Kan. L. Rev. at 209.

Without clarity as to the violation and potential penalty, these laws provide substantial subjective discretion to state attorneys general that is prone to arbitrary punishment.

As this Court has recognized, vague laws may

“trap the innocent by not providing fair warning” of

unlawful conduct and lend themselves to arbitrary

and discriminatory application. See Grayned v. City

of Rockford, 408 U.S. 104, 108-09 (1972); see also

- 10 -

Kolender v. Lawson, 461 U.S. 352, 361-62 (1983)

(recognizing that entrusting law enforcement with

“full discretion” to interpret a law that fails to establish standards is unconstitutionally vague because it

encourages arbitrary enforcement). Before the government takes a person’s life, liberty, or property,

due process requires the government to provide notice of what behavior is or is not permissible. See

Lanzetta v. New Jersey, 306 U.S. 451, 453 (1939).

The federal law on which states modeled their

UDAP statutes incorporates safeguards that provide

notice of unlawful conduct and the potential civil

penalties, but these elements were omitted from

most state unfair and deceptive practices acts. When

Congress empowered the Federal Trade Commission

(FTC) to declare unlawful all “unfair or deceptive

acts or practices in commerce,” it recognized the difficulty in specifying particular prohibited business

conduct. Wheeler-Lea Act of 1938, Pub. L. No. 75447, § 3, 52 Stat. 111 (1938) (codified as amended at

15 U.S.C. § 45(a)(1)). To alleviate concern that the

government could apply this vague prohibition arbitrarily, Congress placed the power to determine unfair practices in a nonpartisan Commission. See Silverman & Wilson, 65 U. Kan. L. Rev. at 213 (exploring legislative history). Congress intended that the

FTC’s power under the Act be primarily “preventative and cooperative, not penal.” Id. (quoting S. Rep.

No. 74-1705, at 1 (1936)). To advance this goal, Congress empowered the FTC to immediately stop deceptive practices and seek restitution for consumers,

see 15 U.S.C. §§ 49(b), 53(b), 57(b), but reserved civil

penalties for situations in which a business had fair

notice of a violation. See 15 U.S.C. § 45(l), (m).

- 11 -

Federal law authorizes the FTC to seek civil penalties when a business had “actual knowledge or

knowledge fairly implied on the basis of objective circumstances” that its conduct is unfair and deceptive.

Id. § 45(m)(1)(A). This actual-knowledge requirement

is met after the FTC determines in a proceeding that

a company’s conduct is unfair or deceptive and the

FTC

issues

a

cease-and-desist

order.

Id.

§ 45(m)(1)(B).5 The Commission may also establish

“actual knowledge” by sending a business a “Notice

of Penalty Offenses” that specifies the conduct that

the Commission has determined through administrative orders is unfair or deceptive in violation of the

Act. See Fed. Trade Comm’n, Notice of Penalty Offenses,

https://www.ftc.gov/enforcement/penaltyoffenses (last visited Dec. 14, 2023). Only after a

business has actual knowledge of a violation and

continues the illegal conduct may the FTC seek civil

penalties.

Unlike federal law, California law and most other

UDAP laws permit the attorneys general to immediately seek civil penalties. See Silverman & Wilson,

65 Kan. L. Rev. at 214. Certain states, though, do

provide fair notice similar to the FTC. In Maine, for

example, the attorney general must ordinarily give a

business at least ten days’ notice before bringing an

action seeking a temporary or permanent injunction

or restitution for consumers. See Me. Rev. Stat. Ann.

tit. 5, § 209. Maine law authorizes a civil penalty of

up to $10,000 for each violation of the terms of an in5 The FTC can also seek civil penalties when a business vio-

lates a Commission order. See 15 U.S.C. § 45(l). This order provides notice that continuation of certain conduct is subject to

fines.

- 12 -

junction. Id. As a result, businesses operating in

Maine not only have notice that the government

views their conduct as violating the law, but they

have an opportunity to address this concern before

being punished and are aware of the consequences of

failing to do so.6 In California, however, the state

may seek civil penalties of up to $2,500 per violation

immediately and, if a business violates an injunction,

the government can seek additional civil penalties of

up to $6,000 for each day the prohibited conduct continues. See Cal. Bus. & Prof. Code §§ 17206(a),

17207(a).

Further, about half of state consumer protection

laws limit civil penalties to knowing, willful, or intentional violations. See Silverman & Wilson, 65

Kan. L. Rev. at 241 n.216 (compiling statutes). By

contrast, California authorizes the state to impose

civil penalties regardless of whether the violation

stemmed from a known violation or a practice that,

only in retrospect, was found to have the potential to

mislead consumers. “Willfulness” is just one of many

factors that a court may consider when assessing the

amount of the civil penalty for each violation of the

UCL. See Cal. Bus. & Prof. Code § 17206(b).7

6 Rhode Island eliminated a similar safeguard in 2021. See

R.I. Laws Ch. 21-329 (amending R.I. Gen. Laws § 6-13.1-8 to

strike language limiting availability of civil penalty to violations of the terms of an injunction).

7 Section 17206(b) provides: “In assessing the amount of the

civil penalty, the court shall consider any one or more of the

relevant circumstances presented by any of the parties to the

case, including, but not limited to, the following: the nature and

seriousness of the misconduct, the number of violations, the

persistence of the misconduct, the length of time over which the

- 13 -

State attorneys general and other government

agencies can also provide notice of conduct that it

considers unfair or deceptive through rulemaking.

Many UDAP laws provide attorneys general with

rulemaking authority, allowing them to specifically

prohibit certain conduct. See, e.g., Silverman & Wilson, 65 Kan. L. Rev. at 212 n.18 (compiling statutes).

Rulemaking can provide the business community

with notice that certain practices are considered unfair or deceptive, and provide guidance regarding

how civil penalties will be determined, before subjecting them to punishment.

This case provides an opportunity for the Court to

consider whether a UDAP law, used by the government to impose hundreds of millions of dollars in civil penalties, violates due process when a defendant

did not have notice that its conduct violated the statute or of the consequences of a violation.

B. The Court Should Place Rational Bounds

on “Per Violation” Civil Penalties

As the examples above show, and this case illustrates, governments aggregate violations in a multitude of ways, resulting in a total civil penalty that is

arbitrary and unpredictable. States can provide fair

notice of the consequences of a UDAP violation, just

as governments do in other contexts. The Court need

not choose which path a state takes, but can require

them to act rationally and predictability when it inflicts punishment.

misconduct occurred, the willfulness of the defendant's misconduct, and the defendant's assets, liabilities, and net worth.”

- 14 -

An option that states can use, as seen under the

FTC Act and Maine law, is to impose civil penalties

for each day that a business violates an injunction or

otherwise continues conduct that it knows violates

the statute. The FTC Act defines “each violation” as

permitting the FTC to seek a civil penalty for “each

day” that the company continues violating the Act.

15 U.S.C. § 45(m)(1)(C). “Each day” of continued

noncompliance is a “separate violation.” Id.; see also

15 U.S.C. § 45(l) (providing that “[e]ach separate violation of [an FTC order] shall be a separate offense,

except that in a case of a violation through continuing failure to obey or neglect to obey a final order of

the Commission, each day of continuance of such

failure or neglect shall be deemed a separate offense”). While the FTC can seek, and has obtained,

large civil penalties (in addition to relief for injured

consumers), the fines are tethered to conduct that a

company knows is a violation of the Act and the

number of days a defendant has violated an injunction, rule, or order.8 See, e.g., Fed. Trade Comm’n,

News Release, FTC Charges Twitter with Deceptively

Using Account Security Data to Sell Targeted Ads,

May 25, 2022 (announcing settlement including $150

million civil penalty for violating 2011 FTC order).

States can also compute “each violation” for civil

penalty purposes based on an estimate of how many

people the practice actually misled or harmed, even

if the UDAP law authorizes a state attorney general

8 The maximum civil penalty under the FTC Act is $46,517

for each violation, a level substantially higher than under the

California law. See 87 Fed. Reg. 1,070, 1,070 (Jan. 10, 2022)

(providing notice of 2022 inflation-adjusted civil penalties for

unfair and deceptive practice violations).

- 15 -

to prevent harm before it occurs. Punishment should

be closely tied to the number of people the defendant

likely misled or injured, not the number of pieces of

paper sent to a state or the circulation of a newsletter regardless of whether it included an alleged misstatement.

In addition, states can adopt an upper limit on

the aggregation of “per violation” penalties. UDAP

laws, including California’s UCL and FAL, provide

for a civil penalty “not to exceed” a certain amount

per violation, but lack any upper limit on the total

civil penalty. Cal. Bus. & Prof. Code §§ 17206(a),

17500. Other state and federal laws include a safeguard against unlimited punishment. Several federal

laws that provide for civil penalties, including those

regulating consumer product safety, set a maximum

civil penalty for a series of related violations. For example, Congress increased the maximum civil penalty for “each such violation” of the Consumer Product

Safety Act (CPSA) from $5,000 to $100,000 in 2008.

See Consumer Product Safety Improvement Act of

2008, Pub. L. No. 110-314, § 217 (amending

20 U.S.C. § 2069(a)(1)). But that law also includes a

maximum civil penalty “for any related series of violations” that Congress increased from $1,250,000 to

$15,000,000. See id.9 The Federal Hazardous Substances Act (FHSA) and the Flammable Fabrics Act

(FFA) have an identical civil penalty provision, in-

9 In addition, the CPSA reserves civil penalties for “know-

ing” violations and ties violations to “each consumer product

involved.” 15 U.S.C. § 2069(a)(1).

- 16 -

cluding a statutory maximum.

§§ 1194(e)(1), 1264(c)(1).10

15

U.S.C.

Many federal laws governing transportation safety also include a maximum civil penalty for a related

series of violations, which provide notice to businesses of the potential size of a civil penalty and helps

avoid civil penalties that, in the aggregate, reach unconstitutional levels. See 87 Fed. Reg. 15,839, 15,846(Mar. 21, 2022) (setting inflation-adjusted levels for

civil penalties for violations of several statutes enforced by the Department of Transportation).

Of course, states are perfectly capable of setting

similar limits on aggregate civil penalties. In fact,

California does so in other areas. See, e.g., Cal.

Health & Safety Code § 18021 (providing a civil penalty for knowing violation of a mobile home construction safety law of up to $1,000 per violation, defined

as each manufactured home or mobile home, “except

that the maximum civil penalty may not exceed one

million dollars ($1,000,000) for any related series of

violations occurring within one year from the date of

the first violation”); Cal. Pub. Util. Code § 4457(a)

(providing a civil penalty for violations of federal

pipeline safety standards of not more than $1,000 for

each day of a violation, or failure to file the report or

respond to a directive, but not to exceed $200,000 for

“a single violation or related series of violations”).

When legislatures fail to set aggregate maximumauthorized civil penalties, or permit states to double

10 The inflation adjusted maximum civil penalty for viola-

tions of the CPSA, FHSA, and FFA is $120,000 for each violation and $17,150,000 for any related series of violations, in

2022. See 86 Fed. Reg. 68,244 (Dec. 1, 2021).

- 17 -

count violations under multiple statutes for one set

of actions, courts must step in. See State v. United

Parcel Serv., Inc., 942 F.3d 554, 599-600 (2d Cir.

2019).

This Court should grant certiorari to consider

constitutional bounds for aggregating “per violation”

civil penalties when state laws, due to their vague

terms, allow governments to inflict arbitrary and

unanticipated punishment.

III. The Court Should Provide Consistency between Safeguards Governing Arbitrary and

Excessive Punishment in Other Areas and

Civil Penalties

Fair notice, predictability, and proportionality between the harm and penalty are hallmarks of this

Court’s jurisprudence evaluating the constitutionality of punishment. The Court should grant review so

that it can draw from the constitutional principles it

has applied in the contexts of punitive damages and

civil forfeitures to place similar bounds on the aggregation of “per violation” civil penalties.

A. Proportionality Between Punishment

and Harm is Key to Addressing the Stark

Unpredictability of Punitive Damage

Awards and Evaluating Excessiveness

When punitive damages became increasingly unpredictable, this Court stepped in to provide meaningful bounds to safeguard due process. This case

provides the Court with the opportunity to offer

comparable guardrails or “guideposts” to determine

when a civil penalty crosses the constitutional line.

As Justice Sandra Day O’Connor recognized, before the 1960s, punitive damages were “rarely as- 18 -

sessed” and usually “small in amount.” TXO Prod.

Corp. v. Alliance Res. Corp., 509 U.S. 443, 500-01

(1993) (O’Connor, J., dissenting) (citing Dorsey D.

Ellis, Jr., Fairness and Efficiency in the Law of Punitive Damages, 56 S. Cal. L. Rev. 1, 2 (1982)). By the

1980s, punitive damage awards had risen dramatically in size and frequency, particularly in product

liability claims. See John Calvin Jeffries, Jr., A

Comment on the Constitutionality of Punitive Damages, 72 Va. L. Rev. 139, 142 (1986); George L.

Priest, Punitive Damages and Enterprise Liability,

56 S. Cal. L. Rev. 123, 123 (1982). After observing

that punitive damages had “run wild” in Pacific Mutual Life Insurance Co. v. Haslip, 499 U.S. 1, 18

(1991), the Court adopted a series of due process protections and found that awards could be unconstitutionally excessive. See Honda Motor Co. v. Oberg,

512 U.S. 415, 420 (1994).

In BMW of North America, Inc. v. Gore, the Court

provided three “guideposts” for determining whether

a punitive damages award is unconstitutionally excessive. 517 U.S. 559, 575-85 (1996). These guideposts include (1) the degree of reprehensibility of the

defendant’s conduct; (2) the ratio of actual damages

to punitive damages; and (3) a comparison to civil or

criminal penalties that could be imposed for comparable misconduct. See id. Indeed, the Court recognized that proportionality between the harm inflicted

on the plaintiff and the punishment is “perhaps [the]

most commonly cited indicium of an unreasonable or

excessive punitive damages award.” Id. at 580.

The Court later indicated that punitive damage

awards that are exponentially higher than the actual

harm to the plaintiff (the ratio between punitive and

- 19 -

compensatory damages) are presumptively unconstitutional. See State Farm Mutual Auto. Ins. Co. v.

Campbell, 538 U.S. 408, 425 (2002) (“[F]ew awards

exceeding a single-digit ratio between punitive and

compensatory damages, to a significant degree, will

satisfy due process.”). In State Farm, the Court also

instructed that punitive damages should be tied to

harm the plaintiff experienced and not imposed

based on “hypothetical claims” of others. See 538

U.S. at 423. The “wealth of a defendant,” the Court

found, “cannot justify an otherwise unconstitutional

punitive damages award.” Id. at 427 (citing Gore, 517

U.S. at 585).

More recently, this Court considered punitive

damages in Exxon Shipping Co. v. Baker, 554 U.S.

471 (2008). There, the Court identified “[t]he real

problem” of punitive damages as their “stark unpredictability.” Id. at 499. Finding that current approaches that courts use to review outlier awards are

often inadequate or ineffective, the Court looked to

its experience in the realm of criminal sentencing,

where it found quantified limits necessary to rein in

“relatively unguided discretion.” Id. at 505. As this

Court observed, “a penalty should be reasonably predictable in its severity, so that even Justice Holmes’s

‘bad man’ can look ahead with some ability to know

what the stakes are in choosing one course of action

or another.” See id. at 502 (quoting The Path of the

Law, 10 Harv. L. Rev. 457, 459 (1897)). The Court’s

ruling, while decided under federal maritime law, is

rooted in the principle that penalties must contain a

degree of consistency and predictability.

Each of these decisions offers principles that curb

unfettered judicial discretion to impose punishment

- 20 -

and has provided businesses with fair notice of the

consequence of their conduct. Today, our country has

become “filled with more and more civil laws bearing

more and more extravagant punishments,” Sessions

v. Dimaya, 138 S. Ct. 1204, 1229 (2018) (Gorsuch, J.,

concurring in part and concurring in the judgment),

which has led to courts “ grappl[ing] with the constitutionality of statutory damages [or penalty] awards

challenged in the aggregate,” Wakefield v. ViSalus,

Inc., 51 F.4th 1109, 1121 (9th Cir. 2022), without the

benefit of guidance from the Supreme Court like the

Court has provided in the punitive damages context.

The Court should grant certiorari to bring a

measure of consistency between these two means of

imposing punishment.

B. Proportionality is Central to the Court’s

Excessive Fines Clause Jurisprudence

The Court can also draw from its Excessive Fines

Clause jurisprudence, which provides lessons that

apply directly to state-imposed civil penalties. These

rulings similarly instruct that penalties that are disproportionate to the offense and unconnected to any

injury are constitutionally impermissible.

The Eighth Amendment provides that “excessive

bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.”

The Excessive Fines Clause is “intended to prevent

the government from abusing its power to punish.”

Austin v. United States, 509 U.S. 602, 607 (1993).

Although the Court has not subjected punitive damages to the Excessive Fines Clause and has instead

relied on due process for constitutional safeguards in

that context, its rulings indicate that the Excessive

- 21 -

Fines Clause prohibits arbitrary and excessive civil

penalties imposed by state governments. In Browning-Ferris Indus. v. Kelco Disposal, Inc., the Court

defined a “fine” based on historical considerations as

a “payment to a sovereign as punishment for some

offense.” 492 U.S. 257, 265 (1989). That definition

includes civil penalties under UDAP laws.

This Court’s recent jurisprudence reaffirms that

the Excessive Fines Clause applies to civil forfeitures

imposed by state governments that are “at least partially punitive.” Timbs v. Indiana, 139 S. Ct. 682,

690 (2019) (citing Austin, 509 U.S. at 609-10). The

question is not whether the statute is civil or criminal, but whether the sanction, even if it serves more

than one purpose, constitutes “punishment.” Austin,

509 U.S. at 610; see also Timbs, 139 S. Ct. at 689.

This provision prohibits a government from imposing

a civil penalty that is “grossly disproportionate to the

gravity of a defendant’s offense” and “bears no articulable correlation to any injury suffered by the

Government.” United States v. Bajakajian, 524 U.S.

321, 334, 340 (1998).

The civil penalty of over $300 million here meets

this criteria. It was imposed by the government. The

fine, at least arguably, is grossly disproportionate to

the offense of marketing a medical device that provided medical benefits to many patients and whose

risk communications were made with FDA oversight,

even if in the mind of the California Attorney General some of the materials did not disclose all of the

risk information he would have preferred. The basis

of the “per violation” penalty has no correlation to

any likelihood any person was actually deceived, but

is instead based largely on materials that may not

- 22 -

have even reached doctors or consumers, let alone

influenced or harmed them. The laws giving rise to

this civil penalty scream for judicial scrutiny.

This case offers an opportunity for the Court to

consider how principles of fair notice and proportionality apply to state government civil penalties and to

provide constitutional standards that prevent arbitrary, unpredictable punishment.

CONCLUSION

For these reasons, amici curiae respectfully request that this Court grant the Petition.

Respectfully submitted,

Philip S. Goldberg

Counsel of Record

Cary Silverman

SHOOK, HARDY & BACON L.L.P.

1800 K Street, N.W., Suite 1000

Washington, D.C. 20006

(202) 783-8400

pgoldberg@shb.com

Counsel for Amici Curiae

Linda E. Kelly

Erica Klenicki

Michael A. Tilghman II

THE NAM LEGAL CENTER

733 10th Street, N.W.

Suite 700

Washington, D.C. 20001

(202) 637-3100

- 23 -

Counsel for National Association of

Manufacturers

H. Sherman Joyce

Lauren Sheets Jarrell

AMERICAN TORT REFORM ASSOCIATION

1101 Connecticut Ave N.W.,

Suite 400

Washington, D.C. 20036

Counsel for American Tort Reform

Association

James C. Stansel

Melissa B. Kimmel

PHARMACEUTICAL RESEARCH AND

MANUFACTURERS OF AMERICA

950 F Street N.W., Suite 300

Washington, D.C. 20004

Counsel for Pharmaceutical Research

and Manufacturers of America

Dated: December 15, 2022

- 24 -