North Carolina Federal Magistrate Says New Jersey Law Should Govern Punitive Damages in Pharmaceutical Case

December 16, 2011

A Magistrate Judge in the U.S. District Court for the Eastern District of North Carolina recommended that the motion of Novartis Pharmaceuticals Corporation (“NPC”) to apply New Jersey law to the issue of punitive damages be granted.  Brown v. Novartis Pharm. Corp., No. 7:08-CV-00130-FL (E.D.N.C. Dec. 16, 2011) (hereinafter “Mem.”).  The plaintiffs were residents of North Carolina and filed a product liability lawsuit in Tennessee federal court for personal injuries allegedly caused by Zometa and Aredia, medications typically prescribed by oncologists to patients with multiple myeloma or whose cancer has metastasized to bone.  Plaintiffs and NPC, which has its principal place of business in New Jersey, agreed that North Carolina law governs plaintiffs’ failure to warn and other claims.  NPC contended that New Jersey law governs plaintiffs’ demand for punitive damages, however, while plaintiff argued in favor of North Carolina punitive damages law.

Because the plaintiffs in Brown filed their lawsuit in federal court in Tennessee, the Magistrate Judge applied Tennessee choice of law rules.  Mem. at 2-3.  Tennessee applies the “most significant relationship” test outlined in Restatement (Second) Conflict of Laws and recognizes the principle of depecage.  Id. at 2-3.  Using this test, the Magistrate Judge concluded that New Jersey has the most significant interest regarding punitive damages.  Id. at 5.

The Magistrate Judge agreed with the reasoning of the U.S. District Court for the Western District of North Carolina, which also applied Tennessee choice of law rules to conclude that New Jersey punitive damages law should govern another case involving the same medications at issue here.  As the Memorandum explained, “Plaintiffs have given the Court no reason to deviate from the well-reasoned order issued in our sister district to the west under substantially similar circumstances.”  The Magistrate Judge went on to note that “the additional factors listed in the Restatement § 6 also support application of New Jersey law in the instant matter, in particular (d) the protection of justified expectations; (e) the basic policies underlying the particular field of law; and (f) certainty, predictability, and uniformity of result.”  Id.  As such, the Magistrate recommended the application of New Jersey law.