Companies appeal verdict in hepatitis lawsuit

The lawyers for two drug companies that came out on the losing end of a half-billion-dollar verdict in the first trial related to the valley’s hepatitis outbreak want the judge who heard the case to block the award.

“On May 7, 2010, plaintiffs were awarded a $500 million jury verdict on punitive damages that is grossly excessive, unsupported by the evidence, and in violation of defendants’ due process rights,” Mark E. Tully and U. Gwyn Williams of Boston wrote in court papers.

Opposing attorney Robert Eglet replied that the “defendants’ hyperbole that this is an ‘astronomical’ punitive damages award should be recognized as blatant fear mongering designed to distract this court from the simple issues before it.”

Eglet represented plaintiff Henry Chanin, who contracted hepatitis C after undergoing a colonoscopy four years ago this month at one of three now bankrupt clinics run by Dr. Dipak Desai, who recently was named in a 28-count criminal indictment.

A jury awarded Chanin, the headmaster at The Meadows school in Las Vegas, and his wife, Lorraine, a combined
$505 million verdict in both compensatory and punitive damages.

The jury put Teva Parenteral Medicines Inc. on the hook for $356 million, and co-defendant Baxter Healthcare Corp. was liable for $144 million in punitive damages. Teva manufactured the sedative propofol, and Baxter distributed the drug.

The crux of the lawsuit was that the companies sold inadequately labeled
50-milliliter vials of the drug to small clinics despite evidence that the large vials were being used on multiple patients. Eglet in his opposition said Teva and Baxter were aware of at least 148 prior cases elsewhere in the United States of infection because of misuse and did nothing.

Tully in court papers said the Supreme Court of the United States “has held that grossly excessive or arbitrary punitive damages awards are violative of a defendant’s due process rights” and established three guideposts to help judges determine the constitutionality of such awards. They include consideration of the reprehensibility of the defendant’s conduct; the ratio of the punitive damages award to the actual harm inflicted on the plaintiff; and how the award compares with similar cases.

Tully in court papers asked district Judge Jessie Walsh to reduce the award to a “single digit” ratio over the $5 million compensatory award the jury granted. He argued the U.S. Supreme Court has said any punitive damages awards in excess of four times the compensatory award “might be close to the line of constitutional impropriety.”

Eglet disagreed, saying the defendants misrepresented how the jury arrived at the figure. When properly calculated, he argued, the ratio is 27 times for Teva and 11 times for Baxter.

Nevada law exempts product liability judgments from a cap on damages.

The defendants and critics of the jury award question the relationship between Eglet’s law firm, Mainor Eglet Cottle, and Walsh. Records show that firm and its attorneys contributed $40,000 to her 2008 judicial campaign. Eglet said the contributions are a “red herring” designed to discredit “a fine judge.”

Walsh was not assigned the case until late 2009, and not until the plaintiffs and defendants each objected to other judges being assigned the case.

Regarding the punitive damages awarded to the Chanins, Tully suggests $5 million is closer to being reasonable than is $500 million. Eglet countered by arguing the defense ignored a key factor in the judgment, the reprehensible conduct of the defendants.

Contact Doug McMurdo at dmcmurdo@reviewjournal.com or 702-224-5512 or read more courts coverage at lvlegalnews.com.