Cross-posted at’s WLF contributor site

“It only took two atomic bombs to force the Japanese to surrender.” 

Saber rattling from a military leader or despotic strongman? Nope, a pithy quote by Nevada plaintiffs’ lawyer Will Kemp to a Bloomberg reporter (full story here) in the wake of his clients being awarded $162.5 million in punitive damages in a suit against medical product manufacturers Teva and Baxter Healthcare. 

This is the second massive punitive award against the companies related to the same injuries, the first being $500 million imposed by a jury in May 2010.

A third bomb could drop this week as another jury deliberates on punitive damages after finding Baxter and Teva at fault in a separate but related trial.

There is no denying the gravity of the injuries suffered: the plaintiffs contracted hepatitis C after having general anesthesia injected through contaminated syringes at an endoscopy center. The anesthetic, Propofol, was approved by the Food & Drug Administration for a single use, and the vials were clearly labeled as such. The endoscopy center medical staff ignored the warnings, and reused vials repeatedly.

Those individuals most directly at fault – the medical personnel involved in the injections – were rightly held accountable for their negligence. The settlement money they provided, however, paled in comparison to what creative plaintiffs’ lawyers could extract from the companies who produced the Propofol. But how could the lawyers overcome the clear, unequivocal “SINGLE USE ONLY” warning and FDA’s approval of the product for such a use? By severely warping the concept of “foreseeable misuse” from product liability law.

Here’s how the argument goes: First, Teva and Baxter packaged Propofol in bottles that contained more than one anesthetic dose. Second, because they knew that a doctor or nurse would have some Propofol left over in the bottle after first use, they would be tempted to reuse the bottle.  Finally, because Teva and Baxter should have known this, their failure to do more to stop negligent reuse by doctors and/or their failure to switch to smaller bottles exposes them to civil liability.

Plaintiffs’ lawyers have worked this twisted theory to perfection in three trials so far.  In the most recent trial, Bloomberg reported, the lawyers also did their best to inflame the jury’s passions against the companies, reciting the defendants’ 2010 sales figures and urging them not to let the companies off with a “bargain-basement fine.” They also implored jurors to send a message: “They’ve got to be able to hear this verdict in Israel or this will never stop,” referring to the location of Teva’s headquarters.

The atomic bomb analogy referenced above was Mr. Kemp’s way to say that Teva and Baxter should immediately settle all the other hepatitis C suits filed against them. The total liability exposure is potentially massive, with as many as 50,000 patients possibly contaminated by the negligently administered anesthesia.

A fair reading of product liability law and basic principles of causation would lead an appellate court to completely overturn these verdicts. And at a minimum, a proper application of state and federal precedents on due process limits to punitive damage awards should result in a vast reduction of these awards. Former U.S. Attorney Gregory Brower, along with Snell & Wilmer colleagues, focused on the latter point in a September 2010 WLF Legal Backgrounder.

But can the defendants really expect fair or proper review of these outrageous decisions? The American Tort Reform Foundation designates the county in which the cases are being tried, Clark County, as America’s #6 Judicial Hellhole®. Businesses struggling to bring the next profitable, life-enhancing product to market, as well as their employees, should watch these cases with anxious anticipation. If Teva and Baxter are left on the hook for billions in damages for someone else’s clear negligence, no company is safe.