Zimmerman v. Novartis Pharms. Corp.

• Decision Date: 05 September 2012
• Docket Number: Case No. RWT 08cv2089.
• Citation: 889 F.Supp.2d 757
• Parties: Stacy ZIMMERMAN, personal representative of Phyllis Newman, Plaintiff v. NOVARTIS PHARMACEUTICALS CORPORATION, Defendant.
• Court: U.S. District Court — District of Maryland

889 F.Supp.2d 757

Stacy ZIMMERMAN, personal representative of Phyllis Newman, Plaintiff

v.NOVARTIS PHARMACEUTICALS CORPORATION, Defendant.

Case No. RWT 08cv2089.

United States District Court, D. Maryland.

Sept. 5, 2012.

Charles Patrick Flynn, Michael K. Radford, Flynn And Radford Attorneys PC, Brentwood, TN, Michael M. Ain, Ain And Stein LLC, Rockville, MD, Robert G. Germany, Jackson, MS, for Plaintiff.

Katharine Ruth Latimer, Joe G. Hollingsworth, Philip Marshal Busman, Rebecca Anne Womeldorf, Robert Eric Johnston, Hollingsworth LLP, Washington, DC, for Defendant.

MEMORANDUM OPINION

ROGER W. TITUS, District Judge.

This pharmaceutical products liability lawsuit involves the drugs Aredia and Zometa, both of which were approved by the United States Food and Drug Administration (“FDA”) and are sold by defendant Novartis Pharmaceuticals Corporation. This matter is before the Court on Defendant's Motion to Preclude Punitive Damages. As explained below the Defendant's motion will be granted.

BACKGROUND

On December 5, 2007, Plaintiff, Stacy Zimmerman, as personal representative of the estate of her deceased mother Phyllis Newman, filed a products liability suit against Defendant, Novartis Pharmaceutical Corporation, in the United States District Court for the Middle District of Tennessee. Novartis is a Delaware corporation with its principal place of business in New Jersey. Ms. Newman was a resident of Maryland, as is her personal representative.

In the amended complaint, Plaintiff asserted strict liability and negligence claims against Novartis in connection with the manufacturing, distribution, promotion, testing, labeling and selling of Aredia and Zometa, two FDA approved bisphosphonate drugs which were approved for the treatment of patients with hypercalcemia of malignancy (a potentially fatal elevation of calcium in the blood), multiple myeloma, and breast cancer that has metastasized to bone. Ms. Newman, who was diagnosed with metastatic breast cancer to bone, was prescribed and received Aredia and Zometa in Maryland. As a result of her use of these drugs, she allegedly developed a jaw condition known as osteonecrosis of the jaw.

On August 14, 2008, the United States District Court for the Middle District of Tennessee transferred the case under 28 U.S.C. § 1404 to this Court. On September 22, 2008, the Judicial Panel on Multidistrict Litigation issued a conditional transfer order transferring the case from this Court back to the Middle District of Tennessee for coordinated pretrial proceedings. On July 27, 2011, the Middle District of Tennessee advised the panel that coordinated pretrial proceedings have been completed and that the case should be remanded back to this Court.

Defendant filed a Motion to Preclude Punitive Damages on December 9, 2011. On December 20, 2011, Plaintiff filed her Response and on January 3, 2012, Defendantfiled its Reply. On May 30, 2012, this Court heard arguments on this motion.

DISCUSSION

I. CHOICE OF LAW

New Jersey and Maryland laws differ with respect to punitive damages. Because this case was filed in Tennessee, the choice of law rules of that state apply. In determining the substantive law to apply in tort cases, Tennessee applies the Restatement (Second) of Conflict of Laws “significant relationship” approach. Under the “significant relationship” approach, this Court can theoretically apply Maryland law to the issues of liability and compensatory damages and New Jersey law to the issue of punitive damages. In the present case, the threshold issue is whether New Jersey has a more significant relationship to Plaintiff's punitive damages claim than Maryland. Here, the Court finds that New Jersey has a more significant relationship to the issue of punitive damages than Maryland in light of Novartis' contacts with New Jersey and the Restatement's § 6 principles.

A. New Jersey and Maryland laws differ with respect to punitive damages.

The issue before the court is whether New Jersey or Maryland law governs the issue of punitive damages. But before embarking on a choice of law analysis, courts generally analyze whether there is in fact a difference.

Under Maryland law, a plaintiff must show more than mere negligence to recover punitive damages in connection with a products liability action. See ACandS, Inc. v. Godwin, 340 Md. 334, 360, 667 A.2d 116, 128 (1995). More specifically, to recover punitive damages a plaintiff must establish “actual malice” through clear and convincing evidence. See Owens–Illinois, Inc. v. Zenobia, 325 Md. 420, 601 A.2d 633, 653 (1992).¹ In contrast to Maryland law, New Jersey law, has enacted legislation that immunizes drug and device manufacturers like Novartis from punitive damages if the drug at issue was approved by the FDA, “or is generally recognized as safe and effective pursuant to conditions established by the [FDA] and applicable regulations, including packaging and labeling regulations.” SeeN.J.S.A. § 2A:58C–5(c). The only way for a plaintiff to circumvent New Jersey's statutory restrictions on punitive damages awards against drug manufacturers is by a particularized showing that “the manufacturer knowingly withheld or misrepresented information required to be submitted under the agency's regulations, which information was material and relevant to the harm in question.” Id. Even if a plaintiff could make such a showing under New Jersey law, any award would be capped at $350,000 or five times the compensatory damages award, whichever is greater. Id. § 2A:15–5.14b.²

Because Maryland allows for the recovery of non-capped punitive damages upon clear and convincing evidence of actual malice, and New Jersey generally immunizes drug and device manufacturers from punitive damages and limits recovery to $350,000 or five times the compensatory damages award, the laws of New Jersey and Maryland are different, thus necessitatinga decision on which law is to be applied.

B. Because this case was filed in Tennessee, the choice of law rules of that state apply.

A federal district court sitting in diversity applies the substantive law of the state in which it sits. Erie R. Co. v. Tompkins, 304 U.S. 64, 78–79, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). As part of that principle, the federal court must also apply that state's choice of law principles. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). However, when cases are transferred from another district, the transferee court applies the law of the state in which the transferor court is located. See Van Dusen v. Barrack, 376 U.S. 612, 639, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964) (“[W]here the defendants seek transfer, the transferee district court must be obligated to apply the state law that would have applied if there had been no change of venue. A change of venue under § 1404(a) generally should be, with respect to state law, but a change of courtrooms.”). The present case was filed in a Federal District Court in Tennessee and transferred here twice; thus, as the transferee court, this Court must apply Tennessee's choice of law principles.

C. Under Tennessee's “significant relationship” choice of law rule, New Jersey law governs the issue of punitive damages.

In determining which state's substantive law to apply in a tort case, Tennessee's choice of law rules adopt the “significant relationship” approach contained in the Restatement (Second) of Conflict of Laws. See Hataway v. McKinley, 830 S.W.2d 53, 59 (Tenn.1992) (holding that the “most significant relationship” approach of Restatement (Second) of Conflict of Laws is the best-reasoned rule for resolving conflicts questions in tort cases and will be adopted and applied to all cases applying Tennessee choice of law principles).

1. Under the “significant relationship” approach, this Court can theoretically apply Maryland law to the issues of liability and compensatory damages and New Jersey law to the issue of punitive damages.

The parties agree that under the Restatement (Second) of Conflict of Laws “significant relationship” approach, Maryland law governs the issues of liability and compensatory damages. Yet Plaintiff asserts that under the “significant relationship” approach, once this Court finds Maryland law governs compensatory damages and liability, this Court must also find that Maryland law governs punitive damages. This Court disagrees.

The “significant relationship” approach allows for “depecage,” such that a court can apply different state laws to different issues in a single case— i.e. liability, compensatory damages, and punitive damages. SeeRestatement (Second) of Conflicts of Law § 146 (1971) (“the local law of the state where the injury occurred determines the rights and liabilities of the parties, unless, with respect to the particular issue, some other state has a more significant relationship”) (emphasis added); id. § 145 cmt. d (“courts have long recognized that they are not bound to decide all issues under the local law of a single state.”); Brown v. Novartis Pharmaceuticals Corp., No. 08–cv–00130–FL, 2011 WL 6318987 at *2 (E.D.N.C. Dec. 16, 2011) (“The Restatement and Tennessee choice of law jurisprudence allow for depecage, the application of different state's laws to different issues in a case”); see also Aguirre Cruz v. Ford Motor Co., 435 F.Supp.2d 701, 706 (W.D.Tenn.2006) (applying Tennessee choice of law principles to hold that although Tennessee residents purchased the vehicle in Tennessee and the crash occurred in Mexico, Michigan law on punitive damages applies because “[d]efendants' principal place of business and the place where the alleged misconduct occurred has the most significant relationship to the issue of punitive damages”); Talley v. Novartis Pharmaceuticals Corp., No. 08–cv–361–GCM, 2011 WL 2559974 (W.D.N.C. June 28, 2011) (holding that under Tennessee choice of law principles North Carolina law applied to the case generally, but New Jersey punitive damages law applied...