In Major Precedent for Drugmakers, Federal Court Precludes Punitives Under New Jersey Law

September 5, 2012

Extending a string of cases in which punitive damages claims have been dismissed in the Aredia/Zometa litigation, Novartis Pharmaceuticals Corporation secured dismissal of a plaintiff’s punitive damages claim in the U.S. District Court for the District of Maryland because the court applied New Jersey law.  Zimmerman v. Novartis Pharm. Corp., No. 8:08-cv-02089-RWT (D. Md. Sept, 5, 2012).  Judge Roger W. Titus’s opinion in Zimmerman is of national importance because it goes beyond just finding that New Jersey law applies and thus the punitive damages claim fails.  Applying McDarby v. Merck & Co., 949 A.2d. 223 (N.J. Super. Ct. App. Div. 2008), appeal dismissed as improvidently granted, 200 N.J. 267 (2009), Judge Titus’s opinion provides a 22-page independent preemption analysis of the New Jersey punitives statute in light of Buckman v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001).

The first part of the opinion is straightforward: the case was filed in federal court in Tennessee and so Tennessee choice-of-law rules apply.  Tennessee applies the “significant relationship” test, as well as the principle of depeçage, which permits the application of different states’ law to different issues.  The two states with a potential interest in the matter were Maryland (the plaintiff’s home state, and where the relevant medical treatment was given) and New Jersey (where Novartis is headquartered).  The court found that Maryland as a locale was “simply fortuitous” with regard to punitive damages, because the factors in the case relevant to plaintiff’s claims for punitive damages—Novartis’s decisions about labeling and packaging and its interactions with FDA—all took place in New Jersey.  Thus the court applied New Jersey law.

New Jersey allows punitive damages in pharmaceutical cases only when the plaintiff shows that the manufacturer “knowingly withheld or misrepresented” relevant information to the FDA.  In McDarby, an intermediate state appellate court held that this exception was preempted by the U.S. Supreme Court’s decision in Buckman.  The Zimmerman court did not, however, simply defer to McDarby’s interpretation of New Jersey law, but independently analyzed whether the exception in the New Jersey statute was preempted.  The court found that it was.  The court framed the question before it as “whether New Jersey’s statutory immunity provision for punitive damages is preempted by federal law because it requires a jury to speculate as to whether Novartis misrepresented material information that was required to be submitted under the FDCA and applicable regulations.”  The court took on that question “reluctantly,” but did so because plaintiff’s counsel insisted that it would seek punitive damages even if New Jersey law were applied.

The court found that there was no presumption against preemption for the relevant portion of the New Jersey statute, because it directly implicates a federal agency’s own standards, as confirmed by Buckman.  The court further found that even if the presumption against preemption did apply, the plaintiff’s claim for punitive damages would be preempted by the Food, Drug, & Cosmetic Act.  Specifically, there was implied conflict preemption, because applying the New Jersey statute’s exception would be “an obstacle to the FDCA regulatory scheme and FDA enforcement prerogatives.”  A state-law jury sitting in judgment of whether a manufacturer breached a disclosure duty owed to the FDA, would interfere in areas that are FDA’s exclusive prerogative to control because it would “require[] a fact finder to make a determination that a federal law leaves exclusively to the agency.”  The court further found that the punitive damages claim would require the finder of fact “to determine what was required to be submitted to the FDA, whether it was submitted to the FDA and, whether the FDA would have made a different approval decision had it been provided with the correct or missing information.”  All of this is, however, “the exclusive province of the FDA” and is therefore preempted.