Johnson & Johnson has no further avenues for challenging a $344 million judgment in California after the U.S. Supreme Court refused to hear an appeal of the case, which J&J and other said was based upon an unconstitutionally vague consumer-protection status.
The Supreme Court last month denied certiorari in the case, in which California accused J&J of flooding the state with misleading marketing materials intended to encourage women to receive surgical implants of its Ethicon pelvic mesh devices. The judgment reflected more than 100,000 alleged violations of the state’s Unfair Competition and False Advertising Laws, which provide for fines of up to $2,500 per violation.
The whopping penalty drew briefs in opposition from the U.S. Chamber of Commerce and other groups that said the California law was so vague that it is impossible for companies to know in advance what type of behavior will subject them to liability. The law imposes penalties for “unfair” marketing or “misleading” advertising, without defining what those terms mean.
“What started out as a tightly circumscribed injunctive relief statute has transformed into a legislative behemoth, authorizing potentially massive civil liability even when a defendant’s conduct does not violate existing state statutes or judicial decisions …even when a defendant or potential defendant has zero notice of its potential liability,” said the Washington Legal Foundation in an amicus brief urging the Supreme Court to hear an appeal.
The California Supreme Court refused to review the judgment last July. In its Supreme Court petition, J&J said the whopping penalty reflected a “dangerous trend” in which state attorneys general – often in partnership with private lawyers – target companies with claims based on vague unfair and deceptive acts and practices (UDAP) laws that bypass traditional procedural protections. California pursued its claims on its own.
“Businesses have a right, at minimum, to notice of when their statements will trigger hundreds of millions of dollars in civil penalties, and predictability and consistency in how those penalties are applied,” J&J said in its Nov. 10 filing. Defendants “struggle to predict their exposure.”
The Supreme Court takes up only a tiny percentage of the cases requesting review each year, and last year rejected a closely watched petition by Bayer AG over another blockbuster California judgment over Roundup weedkiller. Johnson & Johnson based its request on what it described as violations of its fundamental constitutional right to due process and fair notice of the penalties it might face if it violates California law.
At trial, J&J called surgeons who testified they knew about the risks and the company’s statements were not deceptive. San Diego Superior Court Judge Eddie Sturgeon nevertheless held that Ethicon’s materials didn’t disclose the full severity of risks and were likely to deceive doctors.
The judge counted every printed piece of information the state estimated to have reached California, regardless of whether they were delivered, read or relied upon by anyone, J&J said. The court estimated more than 50,000 pieces were shipped into the state between 2008 and 2011, for example, based on one sales representative’s ordering patterns that were extrapolated to the rest of the team statewide.