Supreme Court, New York County, May 28, 2019

Levy Konigsberg, LLP (Jerome H. Block and Alexandria Awad of counsel) and Maune Raichle Hartley French & Mudd, LLC (Christian H. Hartley, Suzanne Ratcliffe and Margaret Samadi of counsel) for plaintiffs.

Kirkland & Ellis LLP (Robert "Mike" Brock, Barry E. Fields, Stacey G. Pagonis, Allison A. Ray and Kelli M. Mulder of counsel) and Patterson Belknap Webb & Tyler LLP (John D. Winter, Thomas P. Kurland and Louis M. Russo of counsel) for Johnson & Johnson and another, defendants.

On May 21, 2019, in phase I of the trial in this asbestos-related action, a jury found defendants Johnson & Johnson and Johnson & Johnson Consumer Inc. (collectively, J & J) liable {**64 Misc 3d at 459}for plaintiffs' injuries and awarded compensatory damages. The jury also found that J & J should be assessed punitive damages. The same jury in phase II of this trial will shortly determine the size of the punitive-damages award. Phase II will be conducted under section XXIV of the New York City Asbestos Litigation (NYCAL) Case Management Order (CMO).

Now before the court is the question of what evidence the jury may consider in phase II. Beyond the evidence admitted at phase I, plaintiffs have proposed a list of exhibits they wish to introduce. J & J categorically objects to the introduction of any new evidence at phase II. In the alternative, J & J has raised evidentiary objections to plaintiffs' proposed exhibits.

Whether new evidence may be introduced at the punitive-damages phase of a NYCAL action—and if so, the scope of the evidence the parties may introduce—is of first impression. The current action is the first case since 1994, and probably earlier, in which a NYCAL jury will be asked to determine a punitive-damages award at all.

This court has considered the parties' helpful arguments and submissions and announced its rulings on the record. The basis for some of those rulings is set forth in more detail below.^[FN1]

[1] J & J contends as a threshold matter that the only new evidence that may be introduced at phase II is evidence of J & J's financial condition in the form of the documents described in CMO § XXIV.B. (See NY St Cts Elec Filing [NYSCEF] Doc No. 765, J & J's phase II mem of law at 3-4.) This court disagrees.

Section XXIV of the CMO does not limit the scope of phase II to evidence already introduced at phase I. Rather, CMO § XXIV.C provides only that if the jury finds in phase I "that the plaintiff is entitled to punitive damages, then the jury shall determine the quantification of damages in Phase II," based on the "presentation of evidence, closing statements by counsel, and appropriate instructions by the Court."

Defendants rely on the fact that subdivision XXIV.B permits limited discovery into a defendant's financial condition. But that subdivision permits that discovery because a "defendant's ability to pay punitive damages is a factor to be considered by a jury" in phase II. Neither subdivision XXIV.B nor subdivision XXIV.C purports to limit the scope of phase II to the financial-condition evidence described in CMO § XXIV.B.

Additionally, New York law has historically permitted the parties to introduce "additional evidence as they see fit" at the punitive-damages phase of trial, so long as the evidence is relevant "on the question of the amount of damages to which plaintiffs are entitled." (James D. Vollertsen Assoc. v John T. Nothnagle, Inc., 48 AD2d 1007, 1007 [4th Dept 1975].)

To be sure, the parties should avoid lengthy and potentially duplicative presentations of evidence on punitive damages at phase II here, particularly in view of the long duration of phase I. But the need judiciously to streamline the parties' phase II presentations does not require wholesale preclusion of new evidence beyond financial condition.

Plaintiffs seek to present evidence of recent conduct and statements by J & J—that is, evidence dating from after Ms. Olson stopped using Johnson's Baby Powder in 2015—that assertedly shows J & J has continued to misrepresent and conceal {**64 Misc 3d at 461}the dangers presented by asbestos contamination of J & J's talc.^[FN2]

Defendants argue that the jury is categorically barred as a due-process matter from taking post-2015 evidence into account. Defendants also raise First Amendment and hearsay challenges to its admission. (See J & J mem of law at 5-7, 9-11.)

[2] This court concludes that plaintiffs may not present evidence of post-2015 conduct or statements by J & J in phase II of this trial. The jury may not award punitive damages to punish J & J for any harm that J & J inflicted on nonparties. And because J & J's post-2015 conduct could not and did not harm plaintiffs here, it is not probative regarding the reprehensibility of J & J's wrongful conduct that did harm plaintiffs.^[FN3]

A. The purpose of punitive damages is to punish the wrongdoer for the harm inflicted on a plaintiff.

Punitive damages are intended to "punish the tortfeasor and to deter this wrongdoer and others similarly situated from indulging in the same conduct in the future." (Ross v Louise Wise Servs., Inc., 8 NY3d 478, 489 [2007].) They are permitted when the wrongdoing at issue "evince[s] a high degree of moral turpitude and demonstrate[s] such wanton dishonesty as to imply a criminal indifference to civil obligations." (Id.)

Thus, the question is whether "the wrong is aggravated by evil motives," so that punitives should be allowed to "punish the wrongdoer for his misconduct and furnish a wholesome example." (Merrick v Four Star Stage Light., 60 AD2d 806, 807 [1st Dept 1978] [emphasis added].)

Punitive damages are therefore tied closely to a particular wrong for which a plaintiff seeks compensatory damages.^[FN4] A plaintiff may not plead punitive damages as a freestanding cause of action (see Jean v Chinitz, 163 AD3d 497, 498 [1st Dept 2018]); and a plaintiff may not obtain punitive damages if the compensatory claim to which those damages would relate has been dismissed (see Prote Contr. Co. v Board of Educ. of City of N.Y., 276 AD2d 309, 310 [1st Dept 2000]).

Applying these principles, the Court of Appeals and the Appellate Division, First Department, have held that a plaintiff{**64 Misc 3d at 462} may not obtain punitive damages for distinct wrongful conduct that postdates the period covered by a plaintiff's causes of action. (See Ross, 8 NY3d at 491; Juman v Louise Wise Servs., 3 AD3d 309, 310 [1st Dept 2004] [affirming dismissal of plaintiff's request for punitive damages based on defendant's post-1983 conduct, where plaintiff's claim of liability was based on defendant's conduct in 1966].)^[FN5]

B. Punitive damages may not be assessed for wrongdoing unrelated to the harm inflicted on a plaintiff.

By the same token, where, as here, the factfinder has determined that punitive damages should be assessed, the amount of punitive damages must be tied as well to the particular wrong the defendant committed.

This limitation is reflected in the language of New York's Pattern Jury Instructions, which suggest that trial judges should instruct the jury to "consider the nature and reprehensibility of what [defendant] did," including the character, motivation, and duration of defendant's wrongful conduct, the defendant's awareness of potential harm to others from its conduct, the scope of the actual harm resulting from that conduct, and "any concealment or covering up of the wrongdoing." (PJI 2:278.) Each of these factors—which the PJI phrases in the past tense—is tied to the particular wrongs a defendant committed against a plaintiff.

The U.S. Supreme Court has made clear that this requirement is one of constitutional dimension. In State Farm Mut. Automobile Ins. Co. v Campbell (538 US 408 [2003]), the Court reversed a punitive-damages award rendered by the courts of Utah, holding that the award violated the Due Process Clause of the U.S. Constitution.

The Court held that the Utah courts erred by awarding "punitive damages to punish and deter conduct that bore no relation to the [plaintiffs'] harm." (538 US at 422.) Due process requires instead that a defendant be punished only "for the conduct that harmed the plaintiff"—and that the need to {**64 Misc 3d at 463}determine the reprehensibility of a defendant's conduct for punitive-damages purposes does not license courts "to adjudicate the merits of other parties' hypothetical claims against a defendant." (Id. at 423.)

The Supreme Court extended this ruling in Philip Morris USA v Williams (549 US 346 [2007]). There, the Court reversed a punitive-damages award rendered by the courts of Oregon. The Court held that the award violated the Due Process Clause, because the award punished "a defendant for injury that it inflicts upon nonparties," individuals "who are, essentially, strangers to the litigation." (Id. at 353.)

The Court explained that defendants lack the necessary information to defend themselves properly against a punitive-damages claim based on harm to nonparties and that a jury and trial court lack the necessary standards to impose punishment for harm done to nonparties—thereby magnifying the due-process "risks of arbitrariness, uncertainty, and lack of notice" posed by punitive-damages awards. (549 US at 353-354.)

The Court did acknowledge in Philip Morris that a plaintiff could introduce evidence of actual or potential harm to nonparties for limited purposes. In particular, a defendant's conduct that "risks harm to many is likely more reprehensible than conduct that risks harm to only a few." (Id. at 357.) Thus, evidence that a defendant's conduct injured "nonparties can help to show that the conduct that harmed the plaintiff also posed a substantial risk of harm to the general public, and so was particularly reprehensible." (Id. at 355.)

The Court distinguished, though, between putting evidence before a jury that a defendant's wrongful conduct was especially reprehensible because it was broad in scope and [*3]risked harming many people, and permitting a jury to "use a punitive damages verdict to punish a defendant directly on account of harms it is alleged to have visited on nonparties." (Id.)

After Philip Morris, the Appellate Division, Second Department, vacated a punitive-damages award in a tobacco-related case, concluding that the plaintiffs' emphasis on the deaths that allegedly had been caused by defendant of thousands of other smokers besides the plaintiff could have led the jury improperly to "punish the defendants for harm caused to other smokers in New York." (Frankson v Brown & Williamson Tobacco Corp., 67 AD3d 213, 221-222 [2d Dept 2009].)

Similarly, state and federal courts around the country have emphasized after the Supreme Court's decisions in State Farm{**64 Misc 3d at 464} and Philip Morris that evidence regarding harm inflicted by a defendant's wrongdoing on nonparties should be admitted or given weight in the reprehensibility analysis only when that wrongdoing is part of the same course of conduct that injured the plaintiff, such that the evidence is being admitted to show the scope—and thus the degree of reprehensibility—of defendant's wrongs against the plaintiff.^[FN6]

C. J & J may not be assessed punitive damages for wrongdoing that could not have harmed the Olsons.

In this case, a number of exhibits plaintiffs seek to submit at phase II (listed at note 2) are inadmissible because they lack the necessary connection to the J & J wrongdoing that [*4]harmed Ms. Olson (and, as a result, her husband's loss of consortium).

This evidence consists chiefly of statements over the past year by J & J and its CEO that J & J's talcum-powder products are safe and asbestos-free. Plaintiffs contend this evidence shows that J & J is continuing to conceal and misrepresent the{**64 Misc 3d at 465} asbestos-related risks of using J & J's products and thus is relevant to J & J's culpability and the need for deterrence.

But introducing these 2018- and 2019-vintage statements does not—cannot—serve the purpose of establishing the scope and reprehensibility of the tortious J & J conduct that harmed the Olsons, since Ms. Olson stopped using Johnson's Baby Powder in 2015.

Instead, the statements at issue are relevant only to show that J & J has also, separately, harmed or risked harming other consumers between 2015 and now and should be punished for those distinct wrongs. But the Supreme Court has made clear that due process forbids awarding damages to punish a defendant for having inflicted harm on nonparties distinct from the harm done to the plaintiff: "A defendant should be punished for the conduct that harmed the plaintiff, not for being an unsavory individual or business." (State Farm, 538 US at 423.)

And although plaintiffs are correct to say that a core purpose of punitive damages is to deter a defendant from continuing to engage in wrongful conduct, deterrence "in the air, so to speak, will not do." (Pulka v Edelman, 40 NY2d 781, 782 [1976] [internal quotation marks omitted].) Rather, the wrongdoing for which the plaintiffs may seek punitive damages in deterrence is the course of conduct that harmed them—not acts that risked harming others only thereafter.

The court disagrees with plaintiffs' suggestion that this limitation will prevent plaintiffs from meaningfully asserting deterrence-related arguments to the phase II jury. Plaintiffs may seek to persuade the jury that evidence of J & J's continuing wrongdoing between 1953 and 2015 shows that a large punitive-damages award is necessary to deter J & J from engaging in similar wrongful conduct going forward.

Permitting plaintiffs to introduce evidence of J & J's allegedly wrongful conduct between 2015 and now will also invite the jury to punish J & J for potential or actual harm inflicted solely on strangers to this litigation. The Supreme Court's decisions in State Farm and Philip Morris make clear that this is not a permissible basis to award punitive damages.^[FN7]

{**64 Misc 3d at 466}Nor is the court is persuaded by the limited case law plaintiffs provided to support their position that the jury may hear evidence of post-2015 conduct.

Plaintiffs rely principally on Gomez v Cabatic (159 AD3d 62 [2d Dept 2018]). In Gomez, a jury found that a doctor's malpractice led to the death of plaintiff's decedent and awarded compensatory damages. The jury also awarded punitive damages for the doctor's postmortem destruction of notes about her treatment of the patient that might have contained information supporting plaintiff's malpractice claims. (Id. at 70-71.)

The Second Department affirmed the imposition of punitive damages for destroying the treatment notes. In so doing, though, the Court carefully connected this wrongful conduct to the harm done to plaintiff. The Court noted the jury had been instructed that it could award punitive damages only if it found that the doctor acted "deliberately, with knowledge of the plaintiff's [*5]rights and with the intent to interfere with those rights." (Id. at 73.) The Court further emphasized that it was not permitting punitive damages to be "awarded for conduct unconnected to the malpractice," but rather to punish the defendant's improper "attempt to evade liability for that malpractice" by destroying evidence. (Id. at 76-77.) The conduct for which punitive damages were awarded was an extension of the harm inflicted on the plaintiff, in particular.^[FN8]

Here, on the other hand, J & J's post-2015 statements necessarily could affect only individuals other than the Olsons. And the statements do not establish the degree of reprehensibility of the pre-2015 conduct that did harm the Olsons. This evidence thus lacks the connection to the defendant's tortious wrongdoing that existed in Gomez.^[FN9]

{**64 Misc 3d at 467}Plaintiffs also cite the U.S. District Court for the Middle District of Georgia's decision in In re Mentor Corp. Obtape Transobturator Sling Prod. Liab. Litig. (2015 WL 7863032, 2015 US Dist LEXIS 162029 [MD Ga, Dec. 3, 2015, Nos. 4:12-cv-176, 4:13-cv-42, 4:14-cv-117]). To the extent that In re Mentor stands merely for the proposition that post-injury actions can shed light on a defendant's state of mind during an injury-causing course of conduct (see 2015 WL 7863032, *2, 2015 US Dist LEXIS 162029, *8, citing Janssens, 463 So 2d at 256), that holding does not bear on the issue to be decided here, because the jury in this action already decided in phase I that J & J's state of mind was sufficiently culpable to warrant punitive damages.

To the extent that In re Mentor also concluded that admitting post-injury conduct more broadly was consistent with due process, because the conduct was "not dissimilar to or independent from the acts on which [p]laintiff's claims are based" (see 2015 WL 7863032, *2 n 2, 2015 US Dist LEXIS 162029, *8 n 2), this court simply disagrees. Even if J & J's pre- and post-injury acts were similar in kind, the fact that J & J's post-injury conduct could not have affected plaintiffs breaks the connection between the two categories of acts and renders, for due-process purposes, J & J's post-injury conduct independent of its pre-injury wrongdoing.^[FN10]

Since plaintiffs in this case may not present evidence to the jury at phase II regarding J & J's actions after 2015, the court {**64 Misc 3d at 468}excludes proposed exhibits 925, 925A, 929A, 929B, 929C, 930, 930A, 931, 931C, 934, 935, 938B, 950A, and 951A.

J & J contends that the Supreme Court's decision in State Farm forecloses plaintiffs from presenting "evidence of any conduct occurring outside of the geographic boundaries of New York," because State Farm putatively holds that "the Due Process clause limits a state court jury from considering conduct that occurs outside the geographic confines of the State's jurisdiction." (J & J mem of law at 6-7, quoting State Farm, 538 US at 421.) This decision does not sweep so broadly, however.

State Farm expressly states that when a defendant's out-of-state conduct has "a nexus to the specific harm suffered by the plaintiff," that conduct may be "probative when it demonstrates the deliberateness and culpability" of the defendant's in-state wrongdoing. (538 US at 422.)

In other words, evidence of out-of-state conduct—or conduct engaged in at a national level as part of nationwide company policy—may be introduced to show the degree of reprehensibility of the defendant's actions, if the acts that harmed the New York plaintiff were part of the defendant's broader course of wrongful conduct.

This distinction also tracks the basic teaching of Philip Morris that a plaintiff may not ask the jury to punish the defendant directly for harm inflicted on others but—to show the degree of reprehensibility of the conduct that harmed plaintiff—may submit evidence that the defendant risked harming others. (See Philip Morris, 549 US at 357.)

Plaintiffs seek to admit some J & J print and television advertisements that ran between the 1960s and 1990s, while Ms. Olson was using Johnson's Baby Powder. This evidence comprises proposed exhibit 148 (print ads) and proposed exhibits 420, 421, 422, and 425 (television commercials).

Plaintiffs sought to admit many of these advertisements in phase I; this court denied plaintiffs' request, in part because Ms. Olson had neither seen nor relied on advertisements in deciding to use (and continue using) Johnson's Baby Powder.

J & J now argues that absent Ms. Olson's reliance on J & J's advertisements, introducing [*6]those advertisements will improperly {**64 Misc 3d at 469}invite the jury to consider harm to other, dissimilar individuals and to "award damages for conduct that . . . affirmatively did not harm plaintiffs." (J & J mem of law at 9; see generally id. at 6-7, 8-9.)

But in phase I, plaintiffs persuaded the jury that J & J's wrongful failure to warn consumers of the risk of asbestos contamination of talcum powder despite possessing internal evidence of that risk was a substantial factor in causing Ms. Olson's mesothelioma. Plaintiffs may introduce J & J advertisements at phase II to show the degree of reprehensibility of that wrongful conduct.

The advertisements at issue are merely one form of what the jury found in phase I was J & J's wrongful failure-to-warn conduct in the relevant time period—i.e., J & J's concealment of the potential risks of using its talcum-powder products and false assurances to consumers that those products were entirely safe and beneficial. And the jury also found that J & J's failure-to-warn course of conduct had a nexus to the harm Ms. Olson suffered. This court concludes that the advertisements are not so dissimilar from the other forms of J & J's concealment and misrepresentation shown in phase I of this trial as to sever that nexus.

Plaintiffs may not use the print and television advertisements to urge the jury to punish J & J for harm done to other consumers. But the advertisements are admissible to show J & J's reprehensibility of its failure-to-warn conduct that the jury found harmed Ms. Olson and her husband.

The parties also duel over the court's forthcoming jury instructions. One issue is J & J's contention that due process requires this court expressly to tell the jury that it should award no punitive damages if it concludes that its phase I compensatory-damages award (here, $25 million) is sufficient. This court agrees that a jury may, in appropriate circumstances, award $0 in punitive damages. But the jury need not be expressly instructed in this case to that effect as a matter of due process. The existing PJI punitive-damages instruction—which takes into account the U.S. Supreme Court decisions on which J & J relies—does not create a sufficient risk of misinforming the jury regarding the minimum size of a punitive-damages award that due process requires J & J's desired modification to the language of PJI 2:278. In any event, it is law of the case from phase I that at least some punitive damages must be awarded. Plaintiffs persuaded the phase I jury to award punitive damages. Both sides may address in phase II only those arguments relating to the size of the award.

In Jones v Cruzan, referenced by plaintiffs, the court held that evidence of defendant's conduct immediately after the injury-causing incident was admissible only to show defendant's culpable state of mind during the incident itself. (See 33 P3d 1262, 1264 [Colo App 2001].) The Jones court also observed that "ordinarily, the acts of a wrongdoer occurring after the event creating liability are not material to the jury's assessment of punitive damages." (Id.)