The Supreme Court has an opportunity to constrain anti-federalist state courts.
Just over a year ago, Johnson & Johnson announced that it was discontinuing the sale of its well-known talc-based baby powder in North America. A flood of lawsuits in plaintiff-friendly U.S. courts was washing away the pharmaceutical and consumer-products giant’s profits from selling the powder.
The lawsuits, which claim an ovarian cancer risk, are premised on junk science: federal regulators at the Centers for Disease Control and Prevention and Food and Drug Administration have long resisted tort lawyers’ calls to list talcum powder as a cancer risk, and a January 2020 study in the Journal of the American Medical Association supported this judgment with evidence gathered from more than 250,000 American women for 11 years. That hasn’t stopped lawyers pushing their unscientific theory in court.
Not all of those cases have paid off. Many juries have reviewed the evidence and found in favor of Johnson & Johnson. But the sheer volume of cases is sizable, which shouldn’t be a surprise: in a country of 330 million, many women get ovarian cancer; and because J&J’s baby powder was once ubiquitous, almost all those women can claim to have used the manufacturer’s product. Some juries, understandably sympathetic, have ruled on cancer-stricken plaintiffs’ behalf.
One such case, with a judgment exceeding $2 billion, may soon be argued before the U.S. Supreme Court if the justices decide to hear it. They should. Though outsize jury verdicts are legion in America’s litigation lottery, it’s relatively rare for the nation’s high court to take product-liability cases, largely because state rather than federal law governs such claims under longstanding judicial precedent. But this case is not only big but also involves core issues that the Supreme Court does have a significant interest in policing in the state courts. A runaway court in one state can impose significant costs on other states, thus interfering with the federal Constitution’s design.
The state with the runaway court in this case is Missouri. Though J&J is headquartered in New Jersey, plaintiffs’ lawyers centered on St. Louis, the venue for two-thirds of the early talcum-powder liability filings. That’s because The Lou is known for friendly juries, and Missouri is known for lawsuit-friendly judges happy to bundle cases together and add out-of-state plaintiffs to in-state litigation. The $2 billion case before the court involved 22 different plaintiffs, 15 of whom were out-of-state.
Federal law has a mechanism for handling multiple similar cases in a single piece of litigation: the class-action lawsuit. Such lawsuits are themselves prone to abuse, but they’re also limited to certain types of cases, in which legal claims and injuries are very similar. In general, cases alleging that a product caused health problems in consumers—such as the suits against Johnson & Johnson—can’t be combined into class actions. Each individual case may involve different proofs of product usage, health profiles, ailments, and the like. Juries are unlikely to be able to tease out these distinctions. That appears to be precisely what happened in the mashed-together Johnson & Johnson case. Though the facts involving the 22 plaintiffs varied, the jury awarded each one an identical $25 million award.
Notice that the jury’s $25 million per-plaintiff verdict in the J&J case amounts to “only” $550 million in damages. The total award is more than $2 billion only because the judge allowed the jury to tack on $1.6 billion in “punitive” damages to the total sum. Courts have long allowed such awards to punish conduct seen as particularly egregious and to deter bad behavior. In practice, however, such awards operate as a pro-damage ratchet: if several juries determine that a defendant accused of misconduct is not liable, one jury’s large punitive award effectively overrides the other juries’ judgments. In multiple cases, the Supreme Court has emphasized that overreaching punitive-damage awards can offend constitutional norms.
Finally, there’s the fact that most of the plaintiffs in St. Louis are out-of-state. The Supreme Court has long held that businesses that ship their products across state lines subject themselves to the jurisdiction of courts in states where those wares are sold. It’s fair enough to subject a big multinational corporation to Missouri courts for injury claims arising in Missouri, or from Missouri residents. But the Supreme Court has recently clawed back state courts’ ability to entertain suits from out-of-state plaintiffs against out-of-state defendants. Allowing plaintiffs’ lawyers to “shop” their cases to the country’s lowest-common-denominator jurisdictions—like St. Louis for Johnson & Johnson—effectively turns the Constitution’s federalism principles on their head. By assuming jurisdiction over claims arising outside its borders, Missouri is arrogating to itself regulatory power over the other 49 states.
America’s “tort tax” is significantly higher than all U.S. corporate income taxes—and roughly three times as costly, as a percentage of the economy, as Western Europe’s. One case can’t fix this problem, and much of the heavy lifting necessarily falls to Congress, not the Supreme Court. But the practice of gathering dissimilar cases in a single bundle—with out-of-state plaintiffs suing out-of-state defendants in a state-court forum, and with hefty punitive damages thrown into the mix—is just the sort of case to which the Supreme Court should give a close look.
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