Reply Brief — Johnson & Johnson, et al., Petitioners v. California

No. 22-447

IN THE

Supreme Court of the United States

________________

JOHNSON & JOHNSON, a New Jersey Corporation;

ETHICON, INC., a New Jersey Corporation;

AND ETHICON US, LLC,

v.

Petitioners,

STATE OF CALIFORNIA,

________________

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO

THE CALIFORNIA COURT OF APPEAL

________________

REPLY BRIEF FOR PETITIONERS

________________

Robert M. Loeb

Geoffrey C. Shaw

Sarah H. Sloan

ORRICK, HERRINGTON &

SUTCLIFFE LLP

1152 15th Street, NW

Washington, DC 20005

E. Joshua Rosenkranz

Counsel of Record

Naomi J. Scotten

ORRICK, HERRINGTON

& SUTCLIFFE LLP

51 West 52nd Street

New York, NY 10019

(212) 506-5000

jrosenkranz@orrick.com

Counsel for Petitioners

i

TABLE OF CONTENTS

Page

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

INTRODUCTION .................................................... 1

ARGUMENT ............................................................ 2

I.

The Court Should Grant Certiorari To

Clarify That Robust Fair Notice

Requirements Apply To UDAP Statutes.......... 2

II. California Law Failed To Provide Fair

Notice Of The Severity Of The Penalty. ........... 5

III. Certiorari Is Warranted Because The

Question Presented Is Of Recurring

Nationwide Significance. ................................ 10

CONCLUSION ...................................................... 11

ii

TABLE OF AUTHORITIES

Page(s)

Cases

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

517 U.S. 559 (1996)................................................9

Citizens United v. Fed. Election

Comm’n,

558 U.S. 310 (2010)..............................................10

Dep’t of Legal Affs. v. Rogers,

329 So.2d 257 (Fla. 1976) ......................................3

F.C.C. v. Fox Television Stations, Inc.,

567 U.S. 239 (2012)............................................3, 5

Giaccio v. State of Pa.,

382 U.S. 399 (1966)................................................8

Grayned v. City of Rockford,

408 U.S. 104 (1972)................................................8

Kolender v. Lawson,

461 U.S. 352 (1983)................................................8

State ex rel. Nixon v. Telco Directory

Publ’g,

863 S.W.2d 596 (Mo. 1993) ....................................3

Papachristou v. Jacksonville,

405 U.S. 156 (1972)............................................3, 8

People v. Dollar Rent-A-Car Sys., Inc.,

259 Cal. Rptr. 191 (Ct. App. 1989) ........................7

People v. JTH Tax, Inc.,

151 Cal. Rptr.3d 728 (Ct. App. 2013) ....................8

iii

People v. Morse,

21 Cal. App. 4th 259 (1993) ...................................7

People v. Overstock.com, Inc.,

219 Cal. Rptr.3d 65 (Ct. App. 2017) ......................7

People v. Superior Court (Olson),

157 Cal. Rptr. 628 (Ct. App. 1979) ........................7

People v. Toomey,

203 Cal. Rptr. 642 (Ct. App. 1984) ........................7

People v. Witzerman,

105 Cal. Rptr. 284 (Ct. App. 1972) ........................7

Sessions v. Dimaya,

138 S. Ct. 1204 (2018)....................................3, 4, 5

Shaeffer v. Califia Farms, LLC,

258 Cal. Rptr. 3d 270 (Ct. App.

2020) .......................................................................5

State Farm Mut. Auto. Ins. Co. v.

Campbell,

538 U.S. 408 (2003)................................................6

Vill. of Hoffman Estates v. Flipside,

455 U.S. 489 (1982)............................................2, 3

Winters v. New York,

333 U.S. 507 (1948)................................................2

Yee v. Escondido,

503 U.S. 519 (1992)..............................................10

Statutes

Cal. Bus. & Prof. Code § 17200...................................5

Cal. Bus. & Prof. Code § 17206(a) ..............................6

Cal. Bus. & Prof. Code § 17500...................................6

iv

Cal. Bus. & Prof. Code § 17536(a) ..............................6

Other Authorities

Br. for Petitioner, Dimaya, 138 S. Ct.

1204 (No. 15-1498), 2016 WL

6768940 ..................................................................4

INTRODUCTION

Courts in California and across the country are

refusing to enforce meaningful due process protections in UDAP enforcement actions. Instead, they

draw selectively from this Court’s fair notice opinions

and apply a less exacting vagueness standard. This

Court should grant certiorari and hold that more robust scrutiny is required.

Rather than defending this limited scrutiny, Respondent argues that the applicable due process

standard is largely irrelevant: the lenient standard

states have applied in UDAP cases is practically the

same as the criminal standard. BIO 18-19. That is not

accurate, and this suggestion that the standard does

not matter only introduces additional uncertainty.

This Court should clarify that the applicable standard

is an important threshold question, and that UDAP

actions are subject to meaningful fair notice protections.

Applying the correct fair notice standard would

require vacatur of the penalties at issue here. The

award was based on each document or statement

deemed “likely to deceive” consumers. Yet the California trial court imposed penalties for two categories of

documents that could not possibly qualify: (1) every

print marketing material shipped to California, regardless of whether it was distributed to the public;

and (2) every third-party newsletter or hospital mailing circulated, regardless of whether they contained

any information from Ethicon. See Pet. 13-15, 22.

When a company’s statements do not reach the public,

they have no capacity to deceive anyone at all. And

2

Respondent’s brief does not offer a single example of

a case imposing penalties in like circumstances. This

Court should grant the Petition and hold that there

was no fair notice here.

Respondent also argues that this is a fact-bound

California issue, with no broader consequences. BIO

13-17, 19-20. That is not accurate. As described in the

Petition and elaborated by amici, UDAP statutes

have been instruments of state overreach nationwide.

Recognizing a robust fair notice standard and enforcing it in this case will go a long way toward curbing

excessive and arbitrary outcomes in UDAP enforcement actions.

ARGUMENT

I.

The Court Should Grant Certiorari To

Clarify

That

Robust

Fair

Notice

Requirements Apply To UDAP Statutes.

This Court should grant certiorari to clarify that

UDAP statutes—which give states enormous discretion to penalize businesses for public statements—are

subject to meaningful fair notice scrutiny.

This Court has not yet addressed the civil vagueness standard governing UDAP statutes, and its precedent does not provide a clear answer. The Court has

at times stated that there is “greater tolerance” for

vagueness in civil laws. Vill. of Hoffman Estates v.

Flipside, 455 U.S. 489, 498-99 (1982); see Winters v.

New York, 333 U.S. 507, 515 (1948). Yet the Court has

also stated that some types of civil statutes are subject to more exacting fair notice scrutiny. See, e.g.,

3

F.C.C. v. Fox Television Stations, Inc., 567 U.S. 239,

253-54 (2012) (protected speech); Sessions v. Dimaya,

138 S. Ct. 1204, 1213 (2018) (deportation). Because

UDAP enforcement actions generate massive civil

penalties and risk chilling protected speech, rigorous

scrutiny is appropriate. See Pet. 19. Most courts evaluating due process challenges in UDAP actions have

nevertheless applied a very limited due process fair

notice review. See Pet. 19-20.

Respondent does not defend the weak fair notice

standard on the merits. Instead, Respondent suggests

that the choice between standards does not matter:

the Court has used “remarkably similar” language in

civil and criminal cases. BIO 18-19. But this argument only highlights the need for review. Far from

treating the standards as interchangeable, state

courts have repeatedly relied on this Court’s precedent in applying “less restrictive” vagueness scrutiny

to UDAP statutes. E.g., State ex rel. Nixon v. Telco Directory Publ’g, 863 S.W.2d 596, 600 (Mo. 1993) (discussing Hoffman Estates, 455 U.S. at 498-99, and

giving these laws “greater leeway” under the fair notice test); Dep’t of Legal Affs. v. Rogers, 329 So.2d 257,

264 (Fla. 1976) (discussing Papachristou v. Jacksonville, 405 U.S. 156 (1972)). Respondent’s suggestion

that the standards are essentially the same contradicts these cases and introduces additional uncertainty in need of clarification.

Moreover, the notion that the difference between

standards is negligible cannot withstand scrutiny.

This Court has treated the applicable vagueness

standard as an important threshold determination.

Two separate opinions addressed this question in

4

Dimaya. There, Justice Gorsuch characterized the

weaker civil standard as a “feeble” and “emaciated

form of review,” and found that it lacked any constitutional basis. Dimaya, 138 S. Ct. at 1229, 1231 (Gorsuch, J., concurring in part and concurring in the

judgment). Further, the United States—rather than

treating vagueness standards as interchangeable—

argued that a “less searching” standard applies in

civil proceedings. See Br. for Petitioner at 17, Dimaya,

138 S. Ct. 1204 (No. 15-1498), 2016 WL 6768940.

Whether deemed “feeble,” “emaciated,” or “less

searching,” the weakest version of due process scrutiny—currently being applied to UDAP statutes—has

been treated very differently from the criminal standard in practice.

In addition to suggesting that the due process

standards are interchangeable, Respondent asserts

that the standard is not outcome-determinative in

this case. BIO 17-18. According to Respondent, Ethicon had “ample notice” of how its violations would be

counted. BIO 17. But what notice is “ample” is the

parties’ core dispute. In its Petition and further below,

Ethicon details why notice was lacking here. In short,

no one would think that a statute punishing statements “likely to deceive” consumers would assign penalties for statements that never reached consumers.

Pet. 24; infra 6-8. Defining what notice is “ample”—

by identifying the correct fair notice standard—is the

critical threshold question. 1

1 Respondent argues that it is “not at all clear” that the

standard was outcome-determinative in other UDAP cases. BIO

5

Respondent also urges denial of this Petition because the California Court of Appeal did not specifically address the degree of fair notice scrutiny

applicable to UDAP statutes. BIO 18. But Ethicon

preserved the underlying fair notice challenge, see infra 9-10, and the applicable legal standard is a threshold question of law. Moreover, there is no need for

further percolation, and this Court is already deeply

familiar with fair notice standards. See Pet. 17-19;

Fox Television Stations, 567 U.S. 239; Dimaya, 138 S.

Ct. 1204. The lines have been drawn, and this Court

should grant certiorari to enforce constitutional limits

on UDAP enforcement actions.

II. California Law Failed To Provide Fair

Notice Of The Severity Of The Penalty.

In this case, California courts held for the first

time that a defendant can be punished for making

statements “likely to deceive” consumers in marketing materials that never reach consumers. Pet. 24-27.

Ethicon lacked fair notice of this nonsensical rule, and

this Court’s intervention is critical to enforcing basic

due process limits.

As described in the Petition (at 24-25), California’s UDAP statutes prohibit “untrue or misleading”

statements made “before the public.” Cal. Bus. & Prof.

Code §§ 17500, 17200. Misleading statements are

those that are “likely to deceive” consumers. Shaeffer

v. Califia Farms, LLC, 258 Cal. Rptr. 3d 270, 277 (Ct.

19 & n.8. None of those state courts addressed a similar challenge to penalties, however, so it is not clear why the outcomes

in those different cases matter here.

6

App. 2020). Businesses are penalized for each “violation” of these laws—though the statutes do not define

“violation” or describe how to count them. Cal. Bus. &

Prof. Code §§ 17206(a), 17500, 17536(a). California

courts previously provided some limited guidance,

counting as violations only misleading marketing materials transmitted to consumers and thus theoretically capable of misleading them. Pet. 25-26. No more.

Here, the trial court assessed penalties for materials not proven to have reached the public. This applies to two categories of documents that triggered

penalties: (1) every Ethicon mesh print marketing

material shipped to California, regardless of whether

the document was distributed to consumers; and (2)

every third-party newsletter or hospital mailing circulated, regardless of whether the documents contained any information from Ethicon. See Pet. 13-15,

22. Businesses facing such untethered liability may

now elect silence—or overwarning—to avoid this extreme exposure. See Pet. 38; AdvaMed Amicus Br. 1416. This arbitrary punishment “furthers no legitimate

purpose” and is inconsistent with due process. See

State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S.

408, 417 (2003).

Respondent claims that Ethicon had fair notice,

because “[a]nyone reading the statutes and relevant

precedent” would “reasonably conclude” that a “percommunication methodology” for counting violations

could be appropriate. BIO 13-14. But the word “communication”—as Respondent uses it—presupposes

that the marketing materials are shared and received. Print marketing materials discarded by sales

representatives, which are never distributed, are not

7

“communications” in this sense under the statute or

common parlance. See Pet. 25. Thus, notice that the

trial court might employ a “per-communication”

counting method would not provide fair notice of the

penalties at issue here.

Respondent cannot offer a single case imposing

penalties in like circumstances. In Respondent’s lead

case, for example, the defendant was punished based

on the number of “highly individualized solicitations”

that were actually mailed to the public. People v.

Morse, 21 Cal. App. 4th 259, 272-73 (1993) (cited at

BIO 13-16). Respondent’s remaining cases fall into

the same pattern: the violation counts are based on

statements transmitted to consumers. See BIO 13. 2

These cases offer no notice that businesses may be

punished for communications not proven to have

reached the public.

According to Respondents, the burden is nevertheless on defendants to exclude materials not sent to

consumers from the violation count—otherwise “individualized proof” of violations would be required. BIO

2 See People v. Dollar Rent-A-Car Sys., Inc., 259 Cal. Rptr.

191, 198-99 (Ct. App. 1989) (violations for contracts, oral representations, and repair invoices transmitted to consumers); People v. Overstock.com, Inc., 219 Cal. Rptr.3d 65, 85 (Ct. App. 2017)

(violations based on number of days communications could be

viewed online); People v. Toomey, 203 Cal. Rptr. 642, 656-57 (Ct.

App. 1984) (approving “‘per victim’ basis of calculating violations”); People v. Witzerman, 105 Cal. Rptr. 284, 291 (Ct. App.

1972) (same); People v. Superior Court (Olson), 157 Cal. Rptr.

628, 639 (Ct. App. 1979) (finding that “a single publication constitutes a minimum of one violation with as many additional violations as there are persons who read the advertisement or who

responded to the advertisement” (emphasis added)).

8

16. But Ethicon’s Petition is not seeking an evidentiary rule requiring individualized proof. Other courts

have at least attempted to tether violation counts to

the statute without imposing that requirement. See

People v. JTH Tax, Inc., 151 Cal. Rptr.3d 728, 757-58

(Ct. App. 2013) (approving violation-counting based

on “a fraction of circulation as a proxy for readership”). There was no such discounting here. 3 Ethicon

was found categorically liable for all materials

shipped to California—regardless of whether those

materials reached consumers. Ethicon lacked fair notice of those penalties.

Putting aside the merits, Respondent offers a

number of reasons for ignoring the questions presented. According to Respondent, any responsibility

for this issue lies with the State of California. BIO 14.

But the California Supreme Court declined review of

Ethicon’s fair notice challenge. Id. As a result, only

this Court’s review can cure the State’s unconstitutional new rule. Nothing about this request is extraordinary. To the contrary, this Court has repeatedly

granted certiorari to evaluate whether state or local

laws are impermissibly vague. E.g., Kolender v. Lawson, 461 U.S. 352 (1983); Grayned v. City of Rockford,

408 U.S. 104 (1972); Papachristou, 405 U.S. 156;

Giaccio v. State of Pa., 382 U.S. 399 (1966).

Respondents also argue that the issue is factbound. BIO 13. But the question is purely legal:

Whether due process allows California’s UDAP

3 Because the trial court did not discount violations this

way, the constitutionality of the counting method described in

JTH is not at issue here.

9

statutes to punish as violations materials not proven

to reach consumers. In any event, the problem goes

far beyond this case. Vague UDAP statutes are pervasive, subject to extreme state overreach, and have

resulted in enormous and unpredictable penalties nationwide. Pet. 29-39; see infra 10-11. Enforcing due

process limits here is an important first step toward

imposing guardrails on these arbitrary deprivations

of property.

Finally, Respondent argues waiver. BIO 12-13.

Ethicon repeatedly preserved this challenge, however. Ethicon argued to the California Court of Appeal

that it lacked fair notice of the “severity of the penalty.” C.A. Opening Br. 69 (citing BMW of N. Am., Inc.

v. Gore, 517 U.S. 559, 574 (1996)). It explained that

this was in part because “no California court had used

a total-circulation counting methodology in the circumstances here.” C.A. Reply Br. 53. Respondent argues that the due process argument was not framed

as a violation-counting issue until Ethicon’s reply.

BIO 13 n.6. Violation-counting was always front-andcenter, however: Ethicon’s opening brief argued extensively that the violation counting method violated

state law. See, e.g., C.A. Opening Br. 61-66. The reply

simply made clear that the same issue was part of the

constitutional problem.

Ethicon timely petitioned the California Supreme

Court for review on the ground that “due process prohibits the imposition of more than $300 million in

penalties for conduct that Defendants had no notice

violated the law.” Pet. for Rev. 7. It explained that this

problem included the violation-counting methodology.

Pet. for Rev. 35. That is exactly what Petitioners

10

argue here. And contrary to Respondent’s assertion

(BIO 12-13), it does not matter whether Petitioners

refined their due process claim as the case developed.

Petitioners are “not limited to the precise arguments

they made below,” so long as the “federal claim is

properly presented.” Citizens United v. Fed. Election

Comm’n, 558 U.S. 310, 330-31 (2010) (quoting Yee v.

Escondido, 503 U.S. 519, 534 (1992)). Petitioners preserved the question presented for review.

III. Certiorari Is Warranted Because The

Question Presented Is Of Recurring

Nationwide Significance.

Respondent argues that these nationwide issues

are largely irrelevant, because only California’s statutes are at issue here. BIO 19-20. Granting certiorari

and adopting a robust fair notice standard would affect cases across the country, however, by giving

courts a tool to curb arbitrary and unpredictable

UDAP enforcement. It does not matter that some

UDAP laws have slightly different provisions or different enforcement mechanisms. See BIO 20. Regardless of the exact statutory scheme, a robust fair notice

standard will give defendants everywhere an important tool to protect their constitutional rights.

This Court’s review is vitally needed. Across the

country, UDAP statutes provide states nearly unfettered discretion to award civil penalties for “misleading” statements in marketing materials, and to

determine the size of the award. Pet. 29, 31-32.

“[W]hat began as a relatively modest statutory regime

… has morphed into a broad scheme authorizing the

pursuit of civil penalties … for past conduct based on

11

vague terms, without even a gesture towards fair notice.” WLF Amicus Br. 3; see id. at 8-13; Pet. 30-31,

37.

This “broad, sweeping liability [is] untethered to

traditional tort principles.” AdvaMed Amicus Br. 8.

“Unconstrained by any requirement of proving harm,”

states “seek arbitrarily large damages awards by creatively transforming a single allegedly unethical business practice into thousands or millions of individual

‘violations.’” Chamber Amicus Br. 3. This practice is

widespread and growing, with penalties reaching astronomical levels. Pet. 31-33; Chamber Amicus Br. 46; WLF Amicus Br. 17-20; NAM Amicus Br. 7-9. The

unpredictable risks of UDAP enforcement deter innovation and compromise all levels of investment, research, and development. AdvaMed Amicus Br. 12-13.

Respondent contends that “there are compelling

policy reasons for a false advertising statute to deviate from traditional tort principles.” BIO 20. But the

underlying justification for UDAP laws does not permit state overreach with respect to UDAP enforcement. See NAM Amicus Br. 14 (“The Court need not

choose which path a state takes, but can require them

to act rationally and predictab[ly] when it inflicts

punishment.”). Ethicon’s Petition is not asking for a

ruling that UDAP statutes are facially unconstitutional. It is simply asking for meaningful constitutional limits on enforcement of these broad statutes.

CONCLUSION

For the foregoing reasons, the Petition should be

granted.

12

Respectfully submitted,

Robert M. Loeb

Geoffrey C. Shaw

Sarah H. Sloan

ORRICK, HERRINGTON

& SUTCLIFFE LLP

1152 15th Street, NW

Washington, DC 20005

Date January 30, 2023

E. Joshua Rosenkranz

Counsel of Record

Naomi J. Scotten

ORRICK, HERRINGTON

& SUTCLIFFE LLP

51 West 52nd Street

New York, NY 10019

(212) 506-5000

jrosenkranz@orrick.com