Punitive Damages. Evidence of both reprehensibility and malice was sufficient to support $4M punitive award where defendant knowingly placed dangerous product in the market.

Drake v. Allergan, Inc., No. 2: 13-cv-234 (D. Vt. May 22, 2015).

WILLIAM K. SESSIONS, III, District Judge. Allergan argues that is entitled to judgment as a matter of law on the issue of punitive damages because the evidence was insufficient to support the jury's verdict. The Court disagrees.

The Vermont Supreme Court's jurisprudence on punitive damages, by its own concession, "has not been a model of clarity." Fly Fish Vermont Inc. v. Chapin Hill Estates, 2010 VT 33, ¶ 18, 187 Vt. 541, 996 A.2d 1167. Plaintiffs seeking punitive damages must prove two elements: 1) "wrongful conduct that is outrageously reprehensible" and 2) malice, "defined variously as bad motive, ill will, personal spite or hatred, reckless disregard, and the like." Id. ¶ 18.

Thus, the Plaintiffs were required to prove that Allergan's conduct was outrageously reprehensible and that Allergan acted with malice. It is clear that in this case the Plaintiffs do not allege — nor could they prove — that Allergan had any ill will, personal spite, or hatred towards the Drakes individually. The question then is whether the Plaintiffs proved that Allergan's conduct was outrageously reprehensible and demonstrated a "bad motive" or "reckless disregard" sufficient to constitute malice in the state of Vermont.

Defining the contours of a standard for reckless disregard sufficient to warrant a finding of malice proved to be somewhat slippery for the Vermont Supreme Court. On the one hand, the court had held that in order to qualify for punitive damages the conduct at issue must be more than simply wrongful or unlawful. Fly Fish, 2010 VT 33, ¶ 19. And conduct evincing a "mere reckless disregard of the plaintiff's rights" or "a reckless disregard of the right of others" is likewise insufficient. Id. ¶¶ 19-20 (discussing Brueckner v. Norwich University, 730 A.2d 1086 (Vt. 1999) and Bolsta v. Johnson, 848 A.2d 306 (Vt. 2004) (internal quotation omitted)). The court noted that there must be some kind of bad motive on top of the tort because a threshold of reckless disregard, without more, would be so flexible it could become virtually unlimited in its application. Fly Fish, 2010 VT 33, ¶¶ 20-21.On the other hand, the Vermont Supreme Court had long-recognized the notion of malice arising from acting with a wanton disregard for great harm. Id. ¶ 23.

When defining the line between "reckless, wanton, or heedless misconduct" sufficient to warrant punitive damages and "mere reckless disregard" the Vermont Supreme Court held:

the culpability necessary for an award of punitive damages based on reckless or wanton misconduct requires evidence that the defendant acted, or failed to act, in conscious and deliberate disregard of a known, substantial and intolerable risk of harm to the plaintiff, with the knowledge that the acts or omissions were substantially certain to result in the threatened harm.

Id. ¶¶ 19, 21, 25. This is the measure by which reckless misconduct reaches the point of actual malice sufficient to support an award of punitive damages. Id. ¶ 25.

There are some circumstances, however, in which no reckless disregard analysis was necessary to find malice when there was either an element of bad motive by definition or otherwise demonstrable malice present. For example, the Vermont Supreme Court explained that an attorney who intentionally misappropriated money from a widowed plaintiff and lied about it in DeYoung v. Ruggiero, 2009 VT 9, ¶ 27, 185 Vt. 267, 971 A.2d 627, was egregious enough that malice could be inferred. Fly Fish, 2010 VT 33, ¶ 29.

In DeYoung the court noted that "malice may arise from deliberate and outrageous conduct aimed at securing financial gain or some other advantage at another's expense, even if the motivation underlying the conduct is to benefit oneself rather than harm another." DeYoung, 2009 VT 9, ¶ 27. The defendant's admitted motive in DeYoung was to enrich himself and promote the interests of his company, which the court found "in and of itself demonstrates a bad motive." Id. ¶ 29. It is not necessary to find an intention to do harm to find malice. Id. The court also included dicta suggesting that punitive damages should be available against companies that "knowingly [place] dangerous products into the market, hoping that people [will] not get hurt" while ignoring a great risk of harm to increase profits. Id. The court later explained that malice could be inferred in situations like the one DeYoung presented without an analysis of recklessness. Fly Fish, 2010 VT 33, ¶ 22.

The other cases in which the court described finding demonstrable malice involved, for example, fraud, Follo v. Florindo, 2009 VT 11, 185 Vt. 390, 970 A.2d 1230, a campaign of terror motivated by sectarian and racial bias, Shahi v. Madden, 2008 VT 25, 183 Vt. 320, 949 A.2d 1022, and filing a false mechanic's lien on property in an effort to extort right-of-way concessions from owners who had no prior business with the company and owed nothing, Wharton v. Tri-State Drilling & Boring, 2003 VT 19, 175 Vt. 494, 824 A.2d 531.

Wrongful and Outrageously Reprehensible Conduct. The evidence was sufficient to support the jury's conclusion that Allergan's promotional activities were outrageously reprehensible, especially in light of the Plaintiffs' evidence regarding the promotion of higher doses. The jury could have reasonably concluded that Allergan's conduct was outrageously reprehensible because Allergan did more than simply promote an off-label use. Allergan promoted the use of doses that it knew were risky in order to increase profits. A reasonable jury could have felt morally outraged by a corporation's desire to put its bottom line above children's health, safety, and even lives.

Malice. Evidence presented by the Plaintiffs reasonably suggested that Allergan was motived by financial gain and knowingly encouraged risky doses despite the real possibility that children could be injured. Even if malice cannot be inferred on this evidence, the Plaintiffs presented sufficient evidence from which a jury could find that Allergan's promotional campaign was undertaken "in conscious and deliberate disregard of a known, substantial and intolerable risk of harm to the plaintiff, with the knowledge that the acts or omissions were substantially certain to result in the threatened harm." Fly Fish, 2010 VT 33, ¶ 25. The jury could have found that Allergan was aware of the risks of high doses but promoted them anyway in order to reap greater profits.

Thus the Court finds that the Plaintiffs' evidence was sufficient to support the jury's award of punitive damages.