ORDER DENYING MOTION TO APPLY NEW JERSEY LAW TO REQUEST FOR PUNITIVE ) DAMAGES (Docs. 29-29-15)
Defendant Novartis Pharmaceutical Corporation has filed a motion to apply New Jersey law to plaintiff Chris Hill's request for punitive damages. Having reviewed the pleadings of record and all competent and admissible evidence submitted, the Court denies the motion.
II. FACTS AND PROCEDURAL BACKGROUND
On June 29, 2006, plaintiff Chris Hill ("Plaintiff") filed her complaint in San Joaquin Superior Court against defendants Novartis Pharmaceutical Corporation and Does 1 through 20, inclusive, asserting two causes of action for strict products liability and negligence. Plaintiff alleged as follows:
"01. Plaintiff CHRIS HILL is a citizen of the State of California . . . . A doctor prescribed h[er] Zometa. [She] took this medication from May or June of 2003 until October of 2004. As a result, [s]he suffered osteonecrosis of the jaw and was diagnosed in January of 2005. [¶] 02. Defendant NOVARTIS PHARMACEUTICAL CORPORATION ('Novartis') is a Delaware corporation with its principal place of business located at One Health Plaza, East Hanover, New Jersey 07936-1080. [¶] 04. During all times relevant hereto, NOVARTIS was in the business of manufacturing, marketing, distributing, promoting, testing, labeling and selling Zometa." Plaintiff further alleged:
"07. Taking Zometa increases the risk of osteonecrosis of the jaw, including the maxillar (bone) . . . . Novartis made labeling changes in September and October of 2003, but these changes were inadequate to warn consumers and remain so to this date. [¶] 09. . . . Plaintiff was taking Zometa in a reasonably foreseeable manner. [¶]
10. Zometa reached [her] without a substantial change in condition. [¶] 11. [She] was not aware of and reasonably could not have discovered the specific danger of severe osteonecrosis associated with the use of Zometa. [¶] . . . [¶] 14. To this day, NOVARTIS has not warned dentists across the nation of this danger or how to monitor and treat patients who took Zometa as prescribed. Therefore, the Plaintiff . . . seeks imposition of punitive damages . . . ."
On July 18, 2006, defendant Novartis Pharmaceutical Corporation (hereinafter referred to as "Defendant") removed the action to this Court pursuant to 28 U.S.C. §§ 1441(a) and 1446(a).
On January 6, 2012, Defendant filed its motion to apply New Jersey law, vice California law, to Plaintiff's request for punitive damages. On February 6, 2012, Plaintiff filed her opposition to Defendant's motion. On February 20, 2012, Defendant filed its reply to Plaintiff's opposition.
"To determine the applicable substantive law, a federal court sitting in diversity applies the choice-of-law rules of the forum." Narayan v. EGL, Inc., 616 F.3d 895, 898 (9th Cir. 2010) (citing Fields v. Legacy Health Sys., 413 F.3d 943, 950 (9th Cir. 2005)). When two states are potentially interested in having their laws applied, California courts employ a governmental interest analysis to determine possible conflicts of lawfor issues not governed by contractual choice of law provisions. Smith v. Cimmet, 199 Cal.App.4th 1381, 1495, 132 Cal.Rptr.3d 276 (2011); see Bernhard v. Harrah's Club, 16 Cal.3d 313, 316, 128 Cal.Rptr. 215, 546 P.2d 719 (1976) (superseded by statute on other ground as stated in Cory v. Shierloh, 29 Cal.3d 430, 434, 174 Cal.Rptr. 500, 629 P.2d 8 (1981)); Hurtado v. Superior Court, 11 Cal.3d 574, 580-81, 114 Cal.Rptr. 106, 522 P.2d 666 (1974). "The first step in the governmental interest analysis is to determine whether the applicable rules of law of the potentially concerned jurisdictions materially differ. If there is no material difference, there is no choice-of-law problem and the court may proceed to apply California law." Frontier Oil Corp. v. RLI Ins. Co., 153 Cal.App.4th 1436, 1465, 63 Cal.Rptr.3d 816 (2007) (citing Washington Mutual Bank, FA v. Superior Court of Orange County, 24 Cal.4th 906, 919, 103 Cal.Rptr.2d 320, 15 P.3d 1071 (2001) (Briseno)) (internal citations omitted).*fn1 "If the applicable rules of law differ materially, the court proceeds to the second step, which involves an examination of the interests of each jurisdiction in having its own law applied to the particular dispute. If each jurisdiction has an interest in applying its own law to the issue, there is a 'true conflict' and the court must proceed to the third step. In the third step, known as the comparative impairment analysis, the court determines which jurisdiction has a greater interest in the application of its own law to the issue or, conversely, which jurisdiction's interest would be more significantly impaired if its law were not applied. The court must apply the law of the jurisdiction whose interest would be more significantly impaired if its law were not applied." Id. at 1456 (citing Kearney v. Salomon Smith Barney, Inc., 39 Cal.4th 95, 107-108, 45 Cal.Rptr.3d 730, 137 P.3d 914 (2006) and Briseno, supra, 24 Cal.4th at 919-20).
A. Step 1: The applicable laws of California and New Jersey differ materially as to punitive damages -- Having reviewed the pleadings of record and all competent and admissible evidence submitted, the Court first finds the applicable laws of California and New Jersey differ materially as to punitive damages.In California, punitive damages are available in any action for breach of a non-contractual obligation -- including products liability actions (see Grimshaw v. Ford Motor Company, 119 Cal.App.3d 757, 174 Cal.Rptr. 348 (1981); Toole v. Richardson-Merrell Inc., 251 Cal.App.2d 689, 60 Cal.Rptr. 398 (1967)) -- "where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice[.]" Cal. Civ. Code, § 3294, subd. (a). California statutes limit the amount of punitive damages that may be awarded for certain causes of action. See, e.g., Cal. Civ. Code, § 3426.3, subd. (c) (limiting punitive damages for misappropriation of trade secrets to twice compensatory damages)). However, punitive damages awards in products liability actions are not statutorily limited, although, as with any award of punitive damages, they are nonetheless subject to the Due Process Clause of the Fourteenth Amendment (State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003); see Roby v. McKesson Corp., 47 Cal.4th 686, 712, 101 Cal.Rptr.3d 773, 219 P.3d 749 (2009)) and the limitation they be sufficient to "deter future misconduct by the defendant" without being "so disproportionate to the defendant's ability to pay that the award is excessive[.]" Adams v. Murakami, 54 Cal.3d 105, 110-12, 284 Cal.Rptr. 318, 813 P.2d 1348 (1991).
The New Jersey Punitive Damages Act (NJPDA), like California Civil Code § 3294, provides for punitive damages "only if the plaintiff proves, by clear and convincing evidence, that the harm suffered was the result of the defendant's acts or omissions, and such acts or omissions were actuated by actual malice or accompanied by a wanton and willful disregard of persons who foreseeably might be harmed by those acts or omissions." N.J. Stat. Ann. § 2A:15-5.12, subd. (a). But in contrast to California, New Jersey limits punitive damages "in any action in an amount in excess of five times the liability of the defendant for compensatory damages or $350,000, whichever is greater," N.J. Stat. Ann. § 2A:15-5.14, subd. (b) (emphasis added). In addition, the New Jersey Products Liability Act (NJPLA, N.J. Stat. Ann. §§ 2A:58C-1 to -7) prohibits punitive damages where "a drug . . . which caused the claimant's harm was subject to premarket approval or licensure by the federal Food and Drug Administration [FDA] . . . and was approved or licensed," N.J. Stat. Ann. § 2A:58C-5, subd. (c). The NJPLA does provide an exception for punitive damages, but only "where the product manufacturer knowingly withheld or misrepresented information required to be submitted under the [FDA]'s regulations, which information was material and relevant to the harm in question," a burden of proof different than the burden imposed under section 3294.*fn2 Id. The parties do ...