Plaintiffs who received metal-on-metal hip implants, suffered complications, and required revision surgery, received jury verdict of $502 million against the manufacturer and its parent company. The District Court applied Texas’ statutory exemplary-damages cap, which reduced the $360 million punitive award to $9.6 million. On appeal, the U.S. Fifth Circuit held that: (i) metal-on-plastic hip implants were viable alternative design, (ii) design defect claims were not preempted, (iii) reasonable jury could conclude that warnings did not adequately warn patients, (iv) court had personal jurisdiction over manufacturer’s parent corporation, and (v) there was sufficient evidence to support the jury’s findings against the parent on non-manufacturer seller and voluntary undertaking theories, but (vi) evidence that parent corporation’s non-party subsidiary paid bribes was inadmissible character evidence, and (vii) defendants were entitled to new trial based on attorney misconduct.  More particularly:

Rejecting the defendants’ argument that Metal-on-Plastic is a different product, not an alternative Metal-on-Metal design: “Defendants claim to have identified two relevant functional distinctions between Metal-on-Metal and Metal-on-Plastic: (a) Metal is more durable than plastic and, therefore, more suitable to younger patients who often seek not just pain relief but also the ability to resume an active lifestyle; and (b) Metal remedies osteolysis by eliminating plastic debris entirely. Neither purported distinction, however, shows Metal-on-Plastic to be an ‘entirely different product’. To the first: Durability is a distinction in degree rather than kind. All hip implants — plastic, metal, or ceramic — are designed with the twin goals of minimizing wear debris and affording maximal longevity…. The question then is whether plastic substantially impairs the hip implant’s utility along the durability axis. And though defendants presented evidence that metal was an ‘attractive option’ for younger patients, plaintiffs presented contrary evidence that cross-linked plastic was preferable ‘a hundred times out of a hundred’ and that it outperformed metal along the survivorship dimension by a wide margin….  As for reduction of osteolysis, plaintiffs rightly observe that cross-linked polyethylene was intended to do the same thing. The question then is whether the risk of osteolysis from cross-linked Metal-on-Plastic substantially reduces Metal-on-Metal’s utility, and the record says not.”

Rejecting Federal Preemption, the Court observed that “Metal-on-Metals were sold before 1976 and have traditionally been treated as pre-amendment class III devices that can be brought to market through the 510(k) process. Ultamet followed that route in December 2000, when defendants characterized the product as a substantial equivalent of Ultima, one of J & J’s eventually recalled Metal-on-Metals. In 2013, shortly after the FDA issued a proposed order requiring that all Metal-on-Metals receive Pre-Market Approval, defendants chose to remove Ultamet from the market. The FDA finalized its order three years later and has not since granted PMA to any MoMs having a structure resembling Ultamet’s. Defendants suggest plaintiffs’ theory of liability—that MoMs are “categorically defective”—flouts the FDA’s considered judgment that MoMs should not be banned outright but rather regulated, and should remain available, as class III medical devices. That theory fails at two levels. First, plaintiffs’ burden was to show only that Ultamet was defective, not that all Metal-on-Metals were. And because Ultamet was off the market before the trial, the verdict cannot have thwarted the FDA’s objectives in that narrow respect. Defendants reply that plaintiffs’ only colorable theory at trial covered the Metal-on-Metal interface writ large. Maybe so, but defendants’ position assumes, without any support, that our obstacle-preemption inquiry looks through the verdict and judgment to the arguments that lie beneath them. This seems unlikely, as it is the judgment, and not the parties’ assertions, that carries binding effect and the attendant power to disrupt the federal regulatory scheme. But even under defendants’ look-through inquiry, it is not the case that plaintiffs’ theory reached all possible Metal-on-Metals. All would agree that, despite the sweeping language with which plaintiffs presented their case, their claims were impliedly limited to presently available technologies and the adverse health effects they allegedly engender.  This seemingly pedantic point is fatal to defendants’ preemption argument. The FDA effectively withdrew all Metal-on-Metals from the market with its February 2016 final rule and left open a single door in the form of PMA. Arguably, the final rule contemplates the possibility that every Metal-on-Metal then on the market would (and perhaps should) fail PMA. That the FDA chose not to ban Metal-on-Metals as a class proves no more than that it wished to give manufacturers an opportunity to create Metal-on-Metals not contemplated by plaintiffs’ theory of liability. Unless and until the FDA actually grants PMA to an extant Metal-on-Metal that carries the risks that made Ultamet defective, defendants cannot prove that even plaintiffs’ theory of liability obstructs the FDA’s regulatory objectives.”

With respect to Personal Jurisdiction over the parent corporation: “Plaintiffs need only show that J&J delivered the product that injured them into the stream of commerce with the expectation that it would be purchased by or used by consumers in the forum state.  J&J insists that it cannot be subject to personal jurisdiction because DePuy — its executives, engineers, and salespeople — and not J&J, played the principal role in developing and selling the Ultamet. Preliminarily, it cannot be, as J&J suggests, that nonmanufacturing parents categorically lie beyond the stream of commerce no matter the nature of their contributions. Personal jurisdiction does not turn on labels or relative connection to the forum. Instead, we look to the relationship among the defendant, the forum, and the litigation. Minimum-contacts analysis is more ‘realistic’ than ‘mechanical’, turning on matters of ‘substance’ rather than ‘form’.  Recognizing that a nonmanufacturing parent will sometimes lie within the stream (even where the corporate veil remains intact), we conclude that J&J’s marketing and sales role crosses the necessary threshold.  J&J’s role in Ultamet’s design, promotion, and sale demonstrates that J&J significantly contributed to the product’s placement into the stream of commerce. On design, the record suggests J&J (a) merged DePuy with another subsidiary that developed Ultamet’s precursor Ultima, (b) integrated the design teams, and (c) transferred a helpful patent to DePuy. On marketing and sale, J&J (a) reviewed, edited, and approved DePuy’s Pinnacle ads, product brochures, journal articles, public statements, and representations to regulators promoting Pinnacle Metal-on-Metals; (b) provided substantial funding for certain of DePuy’s promotional activities; (c) independently promoted Metal-on-Metals via a satellite telecast to physicians all over the country, including Texas, and a website, hipreplacement.com, which referred visitors to Texas surgeons and allowed Texas residents to have Ultamet-related information mailed directly to them; (d) referred to the product as its own; (e) granted DePuy market clearance to manufacture, use, and sell Ultamet worldwide; (f) placed its logo on the packaging of the product as received in Texas; and (g) monitored Texas surgeon-consultants promoting Ultamet. Also, DePuy generated considerable revenue for J&J’s subsidiary Medical Device & Diagnostic. Finally, although it is neither necessary to nor determinative of the jurisdictional question, we note that both the district court and jury found, under Texas tort law, that J&J was a seller of Ultamet. This combination of factors — collectively showing that J&J participated in developing Ultamet, greenlighted its sale worldwide, held the product out as its own, independently promoted the product, exercised ultimate controlling authority over the product’s design and promotion, and derived revenue from its sale — is sufficient to show that J&J was a link in the stream-of-commerce chain.”

Nevertheless, the verdict was reversed and vacated due to the plaintiff’s attorney’s conduct: “The district court allowed these repeated references to Hussein and the DPA because defendants had supposedly ‘opened the door’ by eliciting testimony on their corporate culture and marketing practices. This justification is strained, given that J&J owns more than 265 companies in 60 countries, and the Iraqi portion of the DPA addresses conduct by non-party subsidiaries.  The Rules of Evidence do not simply evaporate when one party opens the door on an issue….  Lanier tainted the result by inviting the jury to infer guilt based on no more than prior bad acts, in direct contravention of Rule 404(b)(1)….  Lanier coupled his impermissible references to Saddam Hussein with hearsay allegations of race discrimination….  As with Hussein, reference to a “filthy … racial email” resurfaced once more during Lanier’s closing argument, in his explanation of why J&J had participated in Ultamet’s design and knew of its defects.  Plaintiffs again suggest defendants placed their character in issue by describing DePuy as an employee-friendly workplace.  But even if that were so, the letter is valid impeachment only if introduced to prove the matter asserted: that racism infected DePuy’s workplace culture. That is impermissible hearsay….

“Now, to the question whether Lanier, knowingly or unknowingly, misled the jury in representing repeatedly that the Morreys had neither pecuniary interest nor motive in testifying. The facts speak pellucidly: The pre-trial donation check, Morrey Jr.’s expectation of compensation, and the post-trial payments to both doctors are individually troubling, collectively devastating.  Consider first the check to St. Rita’s. In December, Lanier and Morrey Sr. met at the latter’s house, they discussed the contents of his testimony, and Lanier made a donation to a charity of Morrey Sr.’s choosing, all before trial. Plaintiffs had already designated Morrey Sr. as a non-retained expert who might testify, and they had been priming the jury for his appearance as early as opening statements. Once it was ‘formally’ decided that Morrey Sr. would testify, Lanier’s failure to disclose the donation, and his repeated insistence that Morrey Sr. had absolutely no pecuniary interest in testifying, were unequivocally deceptive.  In his defense, Lanier asserts the date of the donation ‘confirms it was a “thank you” for time spent with plaintiffs’ counsel rather than a promise by [Lanier] to make a charitable contribution in exchange for Dr. Morrey’s testimony.’ Before interrogating this story, let us speak plainly: Lawyers cannot engage with a favorable expert, pay him ‘for his time’, then invite him to testify as a purportedly ‘non-retained’ neutral party. That is deception, plain and simple. And to follow that up with post-trial ‘thank you’ check merely compounds the professional indiscretion.”

 

In re DePuy Pinnacle Hip Implant Lit., No.16-11051, 2018 WL 1954759 (5th Cir. April 25, 2018).