Amicus Curiae Brief — Warner-Lambert Co. v. Wakefield, Individually and as Personal Representative, Trustee, and of the Estate of Wakefield

MOTION FILED (4)

APR 4 - 2005 |

No. 04-1047

IN THE

Supreme Court of the United States

WARNER-LAMBERT CoO., ef ai.,

Petitioners,

Mary Rose WAKEFIELD,

Respondent.

On PETITION FOR-A WRIT-OF CERTIORARI .-

TO THE OKLAHOMA Court OF CiviL APPEALS

MOTION OF THE CHAMBER OF COMMERCE

OF THE UNITED STATES OF AMERICA AND

BUSINESS ROUNDTABLE FOR LEAVE TO FILE A

BRIEF AS AMICI CURIAE IN SUPPORT OF

PETITIONERS AND BRIEF AMICI CURIAE

Rosin S. ConRAD Bert W. REIN

NATIONAL CHAMBER Counsel of Record

LITIGATION CENTER, INC. JOHN E. BARRY

1615 H Street, N.W. WILEY REIN & FIELDING LLP

Washington, D.C. 20062 1776 K Street, N.W.

(202) 463-5337 Washington, D.C. 20006

(202) 719-7000

Attorneys for Amici Curiae

Chamber of Commerce of the United States of America

and Business Roundtable

193630 cel

COUNSEL PRESS

(800) 274-3321 * (800) 359-6859

The Chamber of Commerce of the United States of

America (the “Chamber”) and Business Roundtable (the

‘“Roundtable”) hereby move pursuant to Supreme Court

Rule 37.2(b) for leave to file the attached amici curiae brief

in support of Warner-Lambert Company’s and Pfizer Inc.’s

petition for a writ of certiorari to the Oklahoma Court of

Civil Appeals. Amici are filing this motion because consent

to the filing of this brief was granted by counsel for

Petitioners but denied by counsel for Respondent.

The Chamber is the nation’s largest federation of

business companies and associations, with an underlying

membership of more than 3,000,000 businesses and

professional organizations of every size and in every sector

and geographic region of the country. Because the fair

administration of punitive damages long has been a concern

of the business community, the Chamber regularly files

amicus briefs in punitive damages cases. It is the Chamber’s.

experience that the lower courts routinely have been

misapplying and effectively nullifying the principles

identified by this Court in BMW of North America, Inc. v.

Gore, 517 U.S. 559 (1996), and clarified in State Farm

Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408

(2003).

The Roundtable is an association of the chief executive

officers of approximately 150 member companies with a

combined workforce of more than 10 million employees in

the United States and about $4 trillion in revenues.

The executives who created the Roundtable believed that the

U.S. economy would be healthier, there would be less

unwarranted intrusion by government into business affairs,

and the interest of the public would be better served if the

business sector were to play an active and effective role in

public affairs. The Roundtable’s participation as amicus is

consistent with its overall goal of representing the views of

its membership before all branches of government on

important matters affecting the business sector.

Amici are concerned that the Oklahoma Court of Civil

Appeal’s approval of a $10 million punitive damages award

against the manufacturer of a nationally distributed, federally

regulated and approved product exemplifies the continued,

erroneous application of Gore and State Farm in the critically

important field of products liability law, not only because

the lower court completely abdicated its responsibility to

prevent the assessment of punitive damages based on out-

of-state conduct that was beyond the constitutional authority

of Oklahoma to regulate, but because the lower court failed

to perform the searching scrutiny required to ensure that a

jury-imposed sanction comports with due process limitations

on proportionality. Amici are uniquely positioned to assist

the Court in this case because their members are subject to,

and directly affected by, a tort system that threatens

manufacturers and sellers of federally regulated and

nationally distributed products with ruinous liability, and they

have a fundamental interest in the articulation and :

enforcement of rules that promote reasoned and properly

guided decision-making by judges and juries alike.

Accordingly, the Chamber and the Roundtable

respectfully request that this Court grant leave to file the

attached amici curiae brief.

Respectfully submitted,

RoBINn S. CONRAD Bert W. REIN

NATIONAL CHAMBER Counsel of Record

LITIGATION CENTER, INC. JOHN E. BARRY R

1615 H Street, N.W. WILEY REIN & FIELDING LLP

Washington, D.C. 20062 1776 K Street, N.W. ae

(202) 463-5337 Washington, D.C. 20006

(202) 719-7000

Attorneys for Amici Curiae Chamber of Commerce

of the United States of America and

Business Roundtable

eee eee

i

TABLE OF CONTENTS

Page

TABLE OF CITED AUTHORITIES ......-.---- il

INTEREST OF AMICICURIAE .......++++++5: l

REASONS FOR GRANTING THE PETITION .... 3

1. Certiorari Should Be Granted Because The

Lower Court Flouted This Court’s Rulings By

Affirming A $10 Million Punitive Damages

Award That Considered Out-Of-State Sales

Absent Any Showing That Such Sales Were

wen cb eeew obs eeneawewe 4

ll. Certiorari Should Be Granted Because,

Contrary To This Court’s Precedents, The

Lower Court Failed To Conduct Any

Meaningful De Novo Review In Response To

Petitioners’ Arguments That The $10 Million

Punitive Damages Award Was Excessive .. . 14

‘e) . & RL: 6. re oe 20

il

TABLE OF CITED AUTHORITIES

Page

Cases

Allied-Signal, Inc. v. Director, Division of Taxation,

oe es re rere eae 1]

BMW of North America, Inc. v. Gore,

eee Re i” Be ee eae passim

Buckman Co. v. Plaintiffs’ Legal Committee,

og ek | ee era rae 12, 13

Cooper Industries, Inc. v. Leatherman

Tool Group, Inc.,

332 U.S. 424 (2001) .......... ere rere (14, 15

Honda Motor Co. v. Oberg,

Pee ee er ics ho aeh see ea ee 4,16

Juzwin v. Amtorg Trading Corp.,

718 EF. Sepp. 1233 (D.N.J. 1969) 2.2. cee nne. 1]

Ex Parte Lange,

hie ee) OB ES ys ree 1]

Roginsky v. Richardson- Merrell, Inc.,

51m Fae Oe CEO OM. TGGT) on cc eda cence 11,17, 19

State Farm Mutual Automobile

Insurance Co. v. Campbell,

EE Ae: Oe CE ho os oe eae eee passim

ili

Cited Authorities

Page

TXO Prodution Corp. v. Alliance Resources Corp.,

509 U.S. 443 (1993) .... 6. ee eee eee eens 17

Western Union Co. v. Pennsylvania,

368 U.S. 71 (1961) .. ccc cscs arses enrenes 10-11

State Statutes

Okla. Stat. tit. 23, §§ 9.1(A)(1)-(2) ‘eS 5 wire 5

Okla. Stat. tit. 23, § 9.1(C)(1)(c) v0) 3 ree 5, 10

Okla. Stat. tit. 23, § 9.1(C) (2002) .....- +--+. eee 5

Miscellaneous

John Calvin Jeffries, Jr., A Comment on the

Constitutionality of Punitive Damages,

72 Va. L. Rev. 139 (1986) ...---- eee ee eeee 11

INTEREST OF AMICI CURIAE

The Chamber of Commerce of the United States of America

(the “Chamber”) is the nation’s largest federation of business

companies and associations, with an underlying membership

of more than 3,000,000 businesses and professional

organizations of every size and in every sector and geographic

region of the country.' Because the fair administration of punitive

damages long has been a concern of the business community,

the Chamber regularly files amicus briefs in punitive damages

cases.

The Business Roundtable (the “Roundtable”) is an

association of the chief executive officers of approximately

150 member companies with a combined workforce of more

than 10 million employees in the United States and about

$4 trillion in revenues. The executives who created the

Roundtable believed that the U.S. economy would be healthier,

there would be less unwarranted intrusion by government into

business affairs, and the interest of the public would be better

served if the business sector were to play an active and effective

role in public affairs. The Roundtable’s participation as amicus

is consistent with its overall goal of representing the views of

its membership before all branches of government on important

matters affecting the business sector.

Amici have a particular concern with widespread and

growing efforts to impose punitive damages in products liability

cases involving nationally distributed products based on a

manufacturer’s single design or labeling decision (or similar

course of action) which is alleged to have affected all end users

indiscriminately. These efforts threaten massive and potentially

crippling punitive damage impositions as individual juries are

' A motion for leave to file an amici curiae brief is attached hereto.

Pursuant to Supreme Court Rule 37.6, amici curiae declare that no

counsel for any party to this case authored this brief in whole or in part

and that no entity or person, other than amicus the Chamber, its members,

and its counsel, made any monetary contribution to the preparation or

submission of this brief.

2

repeatedly requested not only to “punish and deter” the same

alleged misconduct, but to assess punitive awards based in whole

or in part on the totality of alleged injury caused by that

misconduct. If unchecked, the mere threat of such overlapping

punitive damages awards violates Constitutional due process

standards by impairing defendants’ positions in financial markets

and compromising their ability to defend even before liability

is adjudicated. In the current punitive damages environment,

unproven allegations that a product is implicated in a mass tort

are enough to cause severe economic disruption for the

manufacturer, pushing down stock prices, disrupting contractual

relationships with third parties, and raising borrowing costs.

In BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996)

and State Farm Mutual Automobile Insurance Co. v. Campbell,

538 U.S. 408 (2003), this Court articulated due process

guideposts and limitations on punitive damages awards,

including extraterritoriality limitations, which have somewhat

ameliorated the problem presented by runaway punitive

damages. It is amici’s experience, however, that state reviewing

courts often have misapplied and effectively nullified the Gore

and State Farm principles.’ Indeed, on appeal from the trial

court’s judgment, Respondent appears to have succeeded in

persuading the Oklahoma Court of Civil Appeals that the

principles announced in Gore and State Farm should be limited

to the unique facts of those cases. Thus, amici seek to have this

Court reinforce the Gore and State Farm principles and to give

additional consideration to their specific adaptation in the

context of products liability cases, with particular attention to

the substantial potential that punitive damages awarded in such

> See Appellees’ Brief in Response at 27, Wakefield v. Warner-

Lambert Co., No. 99,086 (Okla. Dec. 29, 2003) (arguing that “Gore. . .

only applies to illegal conduct that resulted in a purely economic injury”

and State Farm “does not apply . . . because the [extraterritorial] conduct

penalized in that case bore no relation to the Campbells’ claims in

particular” (emphasis in original)).

sae. Sok tt i RN

3

cases will not only raise excessiveness concerns but unduly

burden interstate commerce.

REASONS FOR GRANTING THE PETITION

This case provides a paradigmatic vehicle for addressing

the issues raised by punitive damages in products liability cases.

It involves a product, Rezulin®, which was distributed nationally

by Petitioner Warner-Lambert Company under uniform design

specifications and labeling approved, as required by federal law,

by the Federal Food and Drug Administration (“FDA”).’

Notwithstanding that approval, Respondent (plaintiff below) was

permitted to challenge both the propriety of Warner-Lambert’s

distribution of the product and the adequacy of Warner-

Lambert’s labeling under Oklahoma’s general tort law standards.

The jury was allowed to assess whether Petitioners’ interactions

with the FDA in securing marketing approval warranted an _

imposition of punitive damages. The jury was further permitted

by Oklahoma law and urged by Respondent’s counsel to assess

punitive damages based on Petitioners’ alleged worldwide

profits from sales of Rezulin®. The $10 million punitive award

was indisputably based on these worldwide profits.

As shown below, the award clearly violated the territoriality

teachings of Gore and State Farm by sanctioning Petitioners’

sales activity outside Oklahoma without any finding that such

conduct was unlawful under the law of any other jurisdiction.

In addition, the award does not foreclose the pursuit of similar

awards based on the same conduct and the same alleged profits

by the many plaintiffs claiming Rezulin® injury in other States.

The jury’s $10 million punitive sanction, approximately

6.5 times the jury’s $1.55 million compensatory award, thus

raises issues of excessiveness under the standards set forth in

Gore and State Farm, as well as substantial, related questions

of cumulative burden on interstate commerce.

3 Petitioner Warner-Lambert Co. is a wholly owned subsidiary of

Petitioner Pfizer Inc.

4

It is vitally important that the Court clarify that lower courts

cannot endorse the imposition of multiple, excessive, and

duplicative sanctions arising out of the design and marketing of

nationally regulated and distributed products without any regard

to whether the defendant’s conduct (1) is unlawful in other

jurisdictions; or (2) has been (or should have been) punished

previously.* Accordingly, the petition for certiorari should be

granted to provide essential guidance on the proper application

of Gore and State Farm in the products liability field.

I. Certiorari Should Be Granted Because The Lower

Court Flouted This Court’s Rulings By Affirming A

$10 Million Punitive Damages Award That Considered

Out-Of-State Sales Absent Any Showing That Such

Sales Were Unlawful

The lower court’s affirmance of a $10 million punitive

damages award based on out-of-state sales of Warner-Lambert’s

FDA-approved drug Rezulin® squarely contravenes this Court’s

holdings in Gore and State Farm.

At the liability phase of the trial, there was no evidence

that Warner-Lambert’s conduct was motivated by personal

animus or otherwise specifically directed to the injured party.

Instead, the jury was presented with evidence bearing on the

inherent qualities of the product, alleged defects in the product

labeling, and Warner-Lambert’s allegedly wrongful conduct in

securing FDA approval. Following the presentation of the

evidence, the jurors were instructed under Oklahoma law, see

R. 3821, Tr. at 3228:5-7, to consider theories of negligence,

strict products liability based on defective design or labeling,

and deceit. R. 3821, Tr. at 3230:15-3240:15. The jurors were

further instructed that, if they returned a verdict for the plaintiffs,

* The last decision of this Court to address the application of due

process limitations to punitive damage awards in a products liability

case involving a defendant’s undifferentiated conduct in marketing a

federally regulated, nationally marked product was Honda Motor Co. v.

Oberg, 512 U.S. 415 (1994), a case that pre-dated the refinement of the

Court’s analytical approach in Gore and State Farm.

Se |

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2

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they were also required to determine whether plaintiffs had

established by clear and convincing evidence that “Warner-

Lambert Company acted in a reckless disregard of the rights of

others and/or acted intentionally and with malice towards

others.” R. 3821, Tr. at 3242:1-5.

The jury returned a verdict of $1.55 million in actual

damages, and further found “by clear and convincing evidence

that Warner-Lambert Company acted in reckless disregard of

the rights of others” and “acted intentionally and with malice

toward others,” R. 3823, Tr. at 3385:6-15, triggering the punitive

damages phase of the trial. Under Oklahoma law, the jury was

permitted to award punitive damages of the magnitude affirmed

below only if the jury (1) considered seven statutorily

enumerated factors that bear on a defendant’s level of culpability

and financial condition; (2) found by “clear and convincing

evidence that ... defendant has acted tatentionally and with

malice towards others;” and (3) further determined that, in the

circumstances presented, the appropriate measure of punitive

damages was an amount “not to exceed ... the increased

financial benefit derived by the defendant . . . as a direct result

of the conduct causing the injury to the plaintiff and other persons

or entities.” Okla. Stat. tit. 23, § 9.1(C) (2002). Neither the

Oklahoma statute nor the trial court judge, however, imposed

any geographical limitations on the jury’s consideration of the

foregoing criteria. Specifically, over Petitioners’ objections, R.

3823, Tr. at 3387:25-3389:20, the trial judge refused to provide

the jury with any guidance regarding the constitutional

limitations on their ability to impose a financial penalty based

on Petitioners alleged involvement in “misconduct” outside the

State of Oklahoma, on the alleged “profitability of the

misconduct,” or on the “financial benefit derived by [Petitioners]

... as a direct result of the conduct... .” Okla. Stat. tit. 23,

$§ 9.1(A)(1)-(2), (C) (1) (c) (2002).

Instead, the trial court judge read the jurors excerpts of the

Oklahoma statute verbatim, which included a general instruction

that the jury should consider “the profitability of the misconduct

6

to the defendant,” R. 3823, Tr. at 3402:1-2, and instructed them

that, using “sound reason,” they were permitted to consider and

award punitive damages in an amount less than or equal to

“the increased financial benefit derived by the defendant as a

direct result of the conduct that caused injury to the plaintiff,”

and to “grant the plaintiff punitive damages in such sum as you

reasonably believe will punish the defendant and be an example

to others.” R. 3823, Tr. at 3401:8-3402:23. Seizing upon this

opening, Respondent’s trial counsel made no effort to confine

her presentation to the financial consequences of Petitioners’

conduct in Oklahoma, but urged the jury to calculate Warner-

Lambert’s “financial benefit” based on the undifferentiated,

worldwide revenue figures reflected in Petitioners’ annual

reports:

If you find ... that this company acted not just

recklessly but with intent, then you may award either

twice the actual damages you have already awarded,

or the increased financial benefit to this company from

the drug Rezulin. That is what the [Oklahoma] statute

allows you, that’s what the Court has instructed you.

You can now look at how much money they made, profit,

profit, financial benefit from the drug Rezulin.

So if you look at the annual reports, you will see

that they had Rezulin profit in ‘97, ‘98 and ‘99. And

we know from what Dr. Maloney testified to that they

were looking at a greater than 30 percent profit margin

on this drug... .

So the profit, the financial profit . . . of this drug

to this company over these three vears is $600 million.

That's the profit from what they did. The profit from

Rezulin over the five weeks that Michael Wakefield took

the drug. ... in that five-week time period Warner-

Lambert Parke-Davis makes $21 million in profit on

the drug. ...

So when you look at the financial benefit, . . . just

the profit is a range of $21 million, which is the first

seca

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five weeks he’s on it... all the way to $600 million,

which is the three-year profit that this company made

off this drug. \t’s a little technical when you read the

annual reports, but if you have any question as to the

benefits, the increase in stock price, the increase in

income, the net sales or how much they earned on

Rezulin alone, go back and look at the annual

reports. ...

R. 3823, Tr. at 3409:17-3411:3 (emphases added).

It is difficult to overstate the due process concerns that

pervade a trial process that permits a lay jury to impose punitive

damages in a single tort case somewhere in the vast divide

between no recovery and $600 million based on worldwide

revenue figures. The trial court’s refusal to impose any

geographical limitation on the jury’s deliberations at the punitive

damages ph: _ invalidated the $10 million punitive damages

verdict, because notwithstanding that the jury’s finding of

compensatory liability was necessarily limited to a determination

that Petitioners’ conduct was wrongful solely under Oklahoma

law, the jury’s punitive damages calculation was permitted to

roam worldwide. Whatever relevance Warner-Lambert’s out-

of-state acts may have had to determining (1) Warner-Lambert’s

liability for actual damages; or (2) plaintiffs’ eligibility to recover

punitive damages,° the introduction of such evidence should

‘> In Gore, this Court observed that, though it was “error for the

jury to use the number of sales in other States as a multiplier in computing

the amount of its punitive sanction,” evidence of such sales “may be

relevant to the determination of the degree of reprehensibility of the

defendant’s conduct.” BMW of N. Am., inc. v. Gore, 517 U.S. 559, 574

n.21 (1996). In light of the Court’s subsequent observation in State Farm

that “as a general rule, .. . a State [does not] have a legitimate concern

in imposing punitive damages to punish a defendant for unlawful acts

committed outside of the State’s jurisdiction,” 538 U.S. at 421, it is

questionable whether the Court’s observation in Gore retains any vitality.

In any event, absent carefully drawn and enforced limiting instructions,

it is clear that evidence of out-of-state acts may influence a jury’s

mathematical calculation at the punitive damages phase of the trial.

8

have been policed carefully to ensure that it was not misused to

calculate the amount of the sanction to avoid expanding the

regulatory impact of a punitive damages award beyond the

State’s inherent authority to regulate. State Farm Mut. Auto.

Ins. Co. v. Campbell, 538 U.S. 408, 420-22 (2003). Here, it

was plainly improper to permit the jury to consider Petitioners’

sales of Rezulin® outside of Oklahoma in fixing the dollar

amount of the punitiv damages award.

In Gore, while reserving on the question whether there is

any circumstance in which “one State may properly attempt to

change a tortfeasor’s unlawful conduct in another State,”

BMW of North America, Inc. v. Gore, 517 U.S. 559, 573 n.20

(1996), this Court made clear that a State has no authority to

base a state law punitive damages award on a tortfeasor’s /awful

conduct 1n another State:

As the Alabama Supreme Court noted, neither the jury

nor the trial court was presented with evidence that

any of BMW’s out-of-state conduct was unlawful. . . .

The Alabama Supreme Court therefore properly

eschewed reliance on BMW’s out-of-state conduct,

... and based its remitted award solely on conduct that

occurred within Alabama. The award must be analyzed

in the light of the same conduct, with consideration

given only to the interests of Alabama consumers, rather

than those of the entire Nation.

Id. at 573-74 (footnote and citations omitted). The Court

reiterated and expanded upon this proposition in State Farm:

A State cannot punish a defendant for conduct that

may have been lawful where it occurred. . . . Nor, as a

general rule, does a State have a legitimate concern in

imposing punitive damages to punish a defendant for

unlawful acts committed outside of the State’s

jurisdiction. Any proper adjudication of conduct that

occurred outside Utah to other persons would require

their inclusion, and, to those parties, the Utah courts,

9

in the usual case would need to apply the laws of their

relevant jurisdiction.

538 U.S. at 421-22 (citations omitted). Thus, as Gore and State

Farm recognize, implicit in a state-by-state, case-by-case

approach to the adjudication of tort liability is the principle that

the law of one State cannot be invoked to punish a defendant

for the financial consequences of conduct that took place outside

of the State.

The State of Oklahoma has no conceivable, “legitimate

interest” in punishing conduct (let alone lawful conduct) that

occurs beyond its borders, and may not “use the punitive

damages deterrent as a means of imposing its regulatory policies

on the entire Nation.” Gore, 517 U.S. at 568, 585; see id. at 571

(“one State’s power to impose burdens on the interstate market

. .. 1S not only subordinate to the federal power over interstate

commerce, . . . but is also constrained by the need to respect

the interest of other States’’) (citations omitted); State Farm,

538 U.S. at 421 (noting that State laws cannot be permitted to

operate beyond State boundaries “without throwing down the

constitutional barriers by which all the States are restricted within

the orbits of their lawful authority and upon the preservation of

which the Government under the Constitution depends’”)

(citation omitted). Here, irrespective of the evidence that was

introduced at trial relevant to the FDA approval process for

Rezlin®, there was no attempt to demonstrate (let alone to ask

the jury to find) that Petitioners’ conduct was unlawful in any

State other than Oklahoma. Once the jury returned a verdict of

compensatory damages under Oklahoma law, however, there

was no effort to confine the broader financial implications of

the jury’s verdict to Petitioners’ conduct within Oklahoma.

Though Petitioners specifically raised these issues on appeal,

Appellants’ Brief in Chief at 26-28, Wakefield v. Warner-Lambert

Co., No. 99,086 (Okla. Nov. 7, 2003); Appellants’ Reply Brief

at 22-25, Wakefield v. Warner-Lambert Co., No. 99,086 (Okla.

Jan. 20, 2004), the Oklahoma Court of Civil Appeals brushed

Petitioners’ arguments aside with the conclusory and manifestly

10

erroneous observation that the punitive damages award did

“no[t] attempt[] to sanction Manufacturing Defendants for

conduct legal in other states.” Pet. App. at 18.

The lower court’s refusal to acknowledge the bright-line,

geographical limitations that bound punitive damages awards

in the wake of Gore and State Farm unfairly threatens product

manufacturers in at least four ways. First, because plaintiffs

outside of Oklahoma are not bound by its judgment, the lower

court’s approach creates a grave risk of excessive, multiple

punishments for the same conduct causing the exact same

harms.° It is fundamentally unfair to allow a plaintiff in an

individual case to collect punitive damages for conduct that

affects different parties in other states, while subsequent juries

in other states remain free to impose punishment for the very

same conduct. As this Court explained in the context of an

in rem action in which the Commonwealth of Pennsylvania

claimed entitlement to certain funds under its escheat statute, a

property owner “is deprived of due process of law if he is

compelled to relinquish it without assurance that he will not be

held liable again in another jurisdiction or in a suit brought by a

claimant who is not bound by the first judgment.” W. Union

° Ironically, the pertinent provisions of the Oklahoma statute

provide that “(t]he trial court shall reduce any award for punitive damages

... by the amount it finds the defendant ... has previously paid as a

result of all punitive damage verdicts entered in any court of this state

for the same conduct by the defendant.” Okla. Stat. tit. 23, § 9.1(C)(1)(c)

(2002) (emphasis added) (Pet. App. at 23-24). The court below failed to

address Petitioners’ argument that — consistent with these terms — the

Oklahoma statute limits the permissible scope of the jury’s consideration

to the impact of a defendant’s conduct in Oklahoma. Appellants’ Brief

in Chief at 27, Wakefield v. Warner-Lambert Co., No. 99,086 (Okla.

Nov. 7, 2003). Regardless of how the Oklahoma statute should be

interpreted as a matter of State law, however, the set-off provision only

protects Petitioners from duplicative punitive damage awards by other

Oklahoma courts. It does not relieve Petitioners from the threat of

punitive damage awards outside of Oklahoma that are based in whole

or in part on the same worldwide financial figures that were provided to

the Tulsa jury.

11

Co. v. Pennsylvania, 368 U.S. 71, 75 (1961). See also Ex Parte

Lange, 85 U.S. (18 Wall.) 163, 168-69 (1873) (describing

“the maxim” in civil cases “that no man shall be twice vexed

for one and the same cause”). That, however, is precisely the

situation when a jury in an individual case is permitted to impose

punitive damages that are unrelated to the injury to the plaintiff

on the theory that the defendant committed other bad acts against

individuals who are not before the court. See Rogimsky v.

Richardson-Merrell, Inc., 378 F.2d 832, 839-40 (2d Cir 1967)

(Friendly, J.) (describing multiple-punishment problem);Juzwin

v. Amtorg Trading Corp., 718 F. Supp. 1233, 1235-36 (D.N.J.

1989) (“multiple awards of punitive damages for a single

course of conduct violate the fundamental fairness requirement

of the Due Process Clause,” but there is no effective,

nationwide remedy absent “Supreme Court decision or national

legislation”). See also Allied-Signal, Inc. v. Director. Div. of

Taxation, 504 U.S. 768, 777-78 (1992) (State must apportion

taxes to the share of the income fairly attributable to the

taxpayers’ business within the State.).

Though the legal prohibition against multiple civil

punishments has deep roots, until recently the issue was largely

academic. In Roginsky — one of the first decisions to highlight

the “destructive synergism between traditional punitive damages

doctrine and modern mass tort litigation” (John Calvin Jeffries,

Jr., A Comment on the Constitutionality of Punitive Damages,

72 Va. L. Rev. 139, 141 (1986)) — Judge Friendly noted that

punitive damages had their genesis in intentional torts, in which

“usually there is but a single victim; a punitive recovery by him

ends the matter, except for such additional liability as may be

provided by the criminal law.” Roginsky, 378 F.2d at 838. That

paradigm, however, was completely eclipsed in the last half

century by the advent of mass tort litigation. See Jeffries, supra,

72 Va. L. Rev. at 141-43. In the case of a nationally distributed

product, “punitive damages may be repetitively invoked against

a single course of conduct in unfair and potentially ruinous

aggregation.” /d. at 139; see Roginsky, 378 F.2d at 839.

12

Second, by permitting the jury to assess punitive damages

based on out-of-state sales in the absence of any evidence that

such sales were unlawful in the jurisdictions in which they

occurred, the lower court failed to account for the fact that other

juries (or courts or regulators) considering precisely the same

conduct might conclude that Petitioners did nothing wrong or,

at least, that the conduct did not warrant punishment.’ Until it

was voluntarily withdrawn from the market by Petitioners,

Rezulin® was an FDA-approved drug that was widely used

with beneficial results for diabetes patients. E.g., R. 3797,

Tr. at 1778:25-1779:10; R. 3798, Tr. at 1836:9-25, Tr. at 1882:5-

19, Tr. at 1884:2-10. Because the judgment in an individual

case brought against a manufacturer that distributes its products

nationwide is not binding on anyone other than the plaintiff,

however, the lower court’s “punish for everything” approach

unfairly invites the repeated assessment of overlapping

“percentage of net profit” punishments with potentially

devastating consequences divorced from any rational notion of

deterrence.*

’ In opposition to Petitioners’ appeal below, Respondent baldly

asserted that Warner-Lambert’s “misconduct was illegal in every state,”

Appellees’ Brief in Response at 27, Wakefield v. Warner-Lambert Co.,

No. 99,086 (Okla. Dec. 29, 2003), but Respondent offered no record

support for this assertion because there is none.

* Further compounding the lower courts’ error, a major feature of

Respondent’s case-in-chief at trial was that Warner-Lambert had

committed a fraud on the FDA by withholding critical information during

the regulatory approval process and that, as a consequence, Warner-

Lambert had been permitted to market a drug that never should have

received federal approval in the first place. See, e.g., Pet. App. at 3;

R. 3821, Tr. at 3269:10-3285:17. As this Court made clear in Buckman

Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341, 348 (2001), however,

“state-law fraud-on-the-FDA claims conflict with, and are therefore

impliedly pre-empted by, federal law.” Even assuming that, post-

Buckman, it is permissible for a plaintiff to introduce alleged evidence

of fraud-on-the-FDA in support of state common law claims sounding

generally in strict products liability and deceit, it is impossible to reconcile

(Cont’d)

13

Third, by abdicating its constitutional responsibility to

impose appropriate limits on the jury’s discretion, the lower

court elevated the jury to the position of a de facto national

regulator, passing judgment on, and doling out punishment for,

the marketing of Rezulin® throughout the United States and

beyond. Though our legal system long has recognized a lay jury’s

competence to decide specific factual issues relating to the

claims of the parties before it, there is no basis for concluding

that a lay jury has the expertise and resources to act as a

super-regulator. In this case, the trial court’s refusal to instruct

the jury on the proper limitations of its role permitted the jury

to impose fact-bound judgments rendered pursuant to Oklahoma

law and the standards of the Tulsa community on Petitioners’

conduct in the world at large. Simply put, the jury was permitted

to sanction Petitioners for out-of-state sales in the absence of

(Cont'd)

Respondent’s reliance on national sales of an FDA-approved drug at

the punitive damages phase of the trial with the reasoning of Buckman:

State-law fraud-on-the-FDA claims inevitably conflict with

the FDA’s responsibility to police fraud consistently with

the Administration’s judgment and objectives. As a practical

matter, complying with the FDA’s detailed regulatory

regime in the shadow of 50 States’ tort regimes will

dramatically increase the burdens facing potential applicants

— burdens not ».ontemplated by Congress in enacting the

FDCA and the MDA....

[F]raud-on-the-FDA claims would also cause applicants to

fear that their disclosures to the FDA, although deemed

appropriate by the Administration, will later be judged

insufficient in state court. Applicants would then have an

incentive to submit a deluge of information that the

Administration neither wants nor needs. . . .

Id. at 350, 351. Here, in the absence of proper limiting instructions, the

jury effectively was permitted not only to consider Respondent’s fraud-

on-the-FDA theory under the rubric of Oklahoma law, but to punish

Petitioners under Oklahoma law for ‘financial benefits” obtained on a

nationwide (and, indeed, worldwide) basis.

14

any competent legal or evidentiary grounds for a reasoned

judgment about the lawfulness or unlawfulness of Petitioners’

conduct beyond Oklahoma’s borders.

Fourth, the unfaimess inherent in the lower court’s approach

is magnified by the burden that it imposes upon a corporate

defendant in an individual tort case to defend not only against

the underlying cause of action, but also against an amorphous

“smear campaign” that seeks to penalize the defendant for the

financial consequences of out-of-state conduct in the absence

of any showing that the extraterritorial conduct was unlawful.

Here, notwithstanding that the jury’s finding of compensatory

liability was based solely on the application of Oklahoma law,

the jury was permitted to impose punitive damages on Petitioners

based on sales of Rezulin® worldwide. This put Petitioners in

an impossible position because, though it is a plaintiff's burden

under Oklahoma law to prove a right to recover punitive

damages by clear and convincing evidence, once the trial court

allowed worldwide revenues into the equation there was no

effective way that Petitioners could rebut Respondent's

enormous, back-of-the-envelope punitive damages calculation.

By forcing the corporate defendants into this position, the trial

court tipped the litigation playing field dramatically and

unjustifiably in plaintiffs’ favor.

Il. Certiorari Should Be Granted Because, Contrary

To This Court’s Precedents, The Lower Court

Failed To Conduct Any Meaningful De Novo Review

In Response To Petitioners’ Arguments That The

$10 Million Punitive Damages Award Was Excessive

In Cooper Industries, Inc. v. Leatherman Tool Group, Inc.,

532 U.S. 424, 436 (2001), this Court held that appellate courts

must conduct a de novo review to ensure that a trial court’s

award of punitive damage comports with the three excessiveness

guideposts laid down in Gore: degree of reprehensibility, ratio,

and (where applicable) sanctions for comparable misconduct.

Gore, 517 U.S. at 575-85. The Court reiterated that mandate in

State Farm, observing that “[e]xacting appellate review ensures

15

that an award of punitive damages is based upon an application

of law, rather than a decisionmaker’s caprice.” 538 U.S. at 418

(internal quotation marks and citation omitted). In neither

Cooper Industries nor State Farm, however, did the Court

instruct lower courts as to the precise meaning of “exacting”

review in the context of determining whether the punishment is

commensurate with the Gore factors.

In the instant case, from all that appears on the face of the

decision below, the Oklahoma Court of Civil Appeals either

misapprehended or ignored the gravamen of Petitioners’

constitutional objections to the punitive damages award.

On appeal, Petitioners argued at length, among other things,

that (1) the trial court improperly permitted the punitive damages

award to be based on out-of-state sales in the absence of any

showing that such sales were unlawful; and (2) that the award

was excessive. Appellants’ Brief in Chief at 26-29; Appellants’

Reply Brief at 22-29. On the first point, Petitioners argued that

the jury should not have been permitted to “consider{] . . .

conduct that did of cause any injury, such as Warner-Lambert’s

sales to people who benefitted greatly from Rezulin and

experienced no ill effect,” and that because the jury was

permitted to reiy on “worldwide gross sales of Rezulin as the

measure of Warner-Lambert’s increased financial benefit, the

jury’s punitive award violated the statutory and constitutional

requirement that only the impact of the Defendant’s conduct in

Oklahoma may be considered in assessing punitive damages.”

Appellants’ Brief in Chief at 26-27. On the second point,

Petitioners argued that the punitive damages award was

obviously excessive because it was based on revenue figures

that had nothing to do with Oklahoma and disproportionate in

its own right. /d. at 28-29.

In response to these arguments — and notwithstanding

Respondent’s concession that the jury was “presented . . . with

a wide range of numbers to consider for punitive damages:

$600 million in worldwide sales to $21 million [in worldwide

sales] during just the five (5) weeks that Wakefield took

16

Rezulin,” Appellees’ Brief in Response at 27 — the court below

offered nothing more than a conclusory and manifestly erroneous

rebuttal:

Manufacturing Defendants do not specifically elucidate

how the result of this case violates either of these

principles, and we find it does not. The punitive

damages award in this case neither reflects a grossly

excessive award, nor attempts to sanction

Manufacturing Defendants for conduct legal in other

states.

Pet. App. at 18.

The lower court’s refusal to exercise any meaningful

supervisory role over the jury’s award resulted in a clear

miscarriage of justice. First, an appellate court cannot simply

rubber-stamp a punitive damages award in the absence of any

discernible evidence that the award comports with constitutional

norms. See Honda Motor Co. v. Oberg, 512 U.S. 415, 432 (1994)

(rejecting arguments that jury instructions provided defendant

with sufficient protection against arbitrary imposition of punitive

damages, and holding that appellate review is “one of the few

procedural safeguards which the common law provide[s] against

that danger’). Here, though the jury could not possibly have

reached the $10 million figure without considering the

“increased financial benefit derived by the defendant” (R. 3823,

Tr. at 3402:1-2, 15-20), the record was completely bereft of any

evidence that would have permitted the jury to tie the $10 million

to the “increased financial benefit” that Warner-Lambert derived

in Oklahoma. Beyond concluding that the jury’s award was

necessarily based on some consideration of the “increased

financial benefit” cap in the Oklahoma statute, any argument

about the basis for the jury’s calculation is purely speculative,

because the figure might as well have been pulled out of thin

air. See Gore, 517 U.S. at 593-94 (Breyer, J., concurring)

(“[C]Jourts properly tend to judge the rationality of judicial

actions in terms of the reasons that were given, and the facts

that were before the court, . . . not those that might have been

17

given on the basis of some conceivable set of facts. .. .”);

TXO Produc. Corp. v. Alliance Res. Corp., 509 U.S. 443, 486

(1993) (O’Connor, J., dissenting) (“[D]ue process does not

simply require that a particular result be substantively acceptable;

it also requires that it be reached on the basis of permissible

considerations.”).

Second, though this Court has not yet considered the

question, the proportionality concerns voiced in Gore and

State Farm are heightened where, as here, a case does not involve

a particularized course of conduct directed specifically at the

plaintiff, but a generalized course of conduct that resulted in

the widespread distribution of a product in interstate commerce.

In State Farm, the threat of duplicative punitive damage awards

was sharply reduced by virtue of the fact that, at the core,

plaintiffs’ case was about State Farm’s handling of an insurance

claim on its unique facts. 538 U.S. at 412-15, 419. In this case,

by contrast, the jury passed judgment under Oklahoma law on

the lawfulness of Warner-Lambert’s conduct in securing

regulatory approval and marketing an FDA-approved drug.

Warner-Lambert had no personal contact with the injured party

or his representatives until suit was commenced, and Warner-

Lambert’s conduct vis-a-vis the injured party was

indistinguishable from its conduct in designing and marketing

the product nationally.

Without impugning a successful tort plaintiff's entitlement

to recover compensatory damages, amici submit that the

historical rationale for allowing punitive damage awards (let

alone substantial awards) is largely if not entirely lacking in

cases like the one at bar. Historically, punitive damages were

typically reserved for cases involving intentional torts directed

at a single victim. Roginsky, 378 F.2d at 838. Furthermore,

because punitive damages are about deterrence and not

compensation, they are intended to “serve the same purposes as

criminal penalties,” State Farm, 538 U.S. at 417, at least partly

out of a concern that, if the defendant is not adequately punished

with civil liability, its conduct will escape any other government

18

sanction. Where mass torts in the products liability field are

concerned, however, these historical rationales collapse. As

Judge Friendly observed:

We have the gravest difficulty in perceiving how claims

for punitive damages in such a multiplicity of actions

throughout the nation can be so administered as to avoid

overkill. . . . We know of no principle whereby the first

punitive award exhausts all claims for punitive

damages and would thus preclude future judgments. . . .

* * *

While jurisprudes might comprehend why Toole in

California should walk off with $250,000 more than a

compensatory recovery and Roginsky in the Southern

District of New York and Mrs. Ostopowitz in

Westchester County with $100,000, most laymen and

some judges would have some difficulty in

understanding why presumably equally worthy

plaintiffs . . . elsewhere in the country should get less

or none.

* * *

[I]f we were sitting as the highest court of New York

we would wish to consider very seriously whether

awarding punitive damages with respect to the

negligent — even highly negligent — manufacturer and

sale of a drug governed by federal food and drug

requirements ... and the present vigorous attitude

toward enforcement, would not do more harm than

good. A manufacturer distributing a drug to many

thousands of users under government regulation

scarcely requires this additional measure for

manifesting social disapproval and assuring deterrence.

Criminal penalties and heavy compensatory damages,

recoverable under some circumstances even without

proof of negligence, should sufficiently meet these

19

objectives, and the other factors cited as justifying

punitive daniage awards are lacking.

Roginsky, 378 F.2d at 839-41. In cases that arise out of

generalized, undiffcientiated conduct that implicates the rights

of private parties nationwide, whatever freedom a State court

enjoys to invoke common law tort principles to regulate the

conduct of corporate actors within the State’s borders must be

tempered by the recognition that the State court is not operating

in a vacuum.

In such a case — and where, as here, “compensatory damages

are substantial” — amici respectfully submit that a punitive damages

ratio “equal to compensatory damages .. . can reach” — if not

substantially exceed — “the outermost limit of the due process

guarantee.” State Farm, 538 U.S. at 425. This is particularly so

because of the substantial direct and indirect burdens that the threat

of unrestrained, repetitive punitive damage awards impose on

interstate commerce. If individual State courts are permitted to

impose enormous financial penalties on product manufacturers by

punishing out-of-state conduct, the threat embedded in this unlawful

form of extraterritorial regulation will burden manufacturers’

activities nationwide. Furthermore, unless and until manufacturers

of nationally distributed products are provided with additional

safeguards against the runaway imposition of overlapping punitive

damage awards, manufacturers will be discouraged from bringing

beneficial products to market despite a federal regulatory

environment that recognizes that the benefits associated with certain

products outweigh the risks. The ratio decidendi reflected in the

decision below is not only intellectually divorced from the

traditional rationales that have been offered for the imposition of

extraordinary sanctions, but threatens to substitute corporate

destruction for corporate deterrence.

Third, Gore and State Farm teach that where compensatory

damages are substantial (here, $1.55 million), punitive damages

ordinarily should not exceed compensatory damages except in cases

of high!y reprehensible conduct. The State Farm Court emphasized

the “long legislative history, dating back over 700 years and going

20

forward to today, providing for sanctions of double, treble, or

quadruple damages” and indicated that, although such ratios

‘are not binding, they are instructive.” 538 U.S. at 425. “When

compensatory damages are substantial, then a lesser ratio,

perhaps only equal to compensatory damages, can reach the

outermost limit of the due process guarantee,” and ratios as high

as 4 to | are “close to the line of constitutional impropriety.” /d.

Here, the lower court’s affirmance of a 6.5 to | sanction should

not be permitted to stand not only because the award was

founded on constitutionally impermissible evidence of out-of-

state revenue, but because the lower court failed to conduct any

meaningful, de novo proportionality analysis. Even assuming

that there were some evidentiary basis to support the Oklahoma

jury’s heavy imposition on a federally regulated and approved

product (which there is not), Gore and State Farm plainly require

that a reviewing court do more than the Oklahoma Court of

Civil Appeals undertook to do in this case.

CONCLUSION

For all of the foregoing reasons and for the reasons set forth

in the petition, the Court should grant the petition on the

questions presented and reverse the decision of the Oklahoma

Court of Civil Appeals.

Respectfully submitted,

Rosin S. ConrAD Bert W. REIN

NATIONAL CHAMBER Counsel of Record

LITIGATION CENTER, INC. JOHN E. Barry

1615 H Street, N.W. WILeY REIN & FieLDING LLP

Washington, D.C. 20062 1776 K Street, N.W.

(202) 463-5337 Washington, D.C. 20006

(202) 719-7000

Attorneys for Amici Curiae Chamber of Commerce

of the United States of America

and Business Roundtable

Dated: April 4, 2005