Speaker 1: Next litigation is coming to a head in federal court.
Speaker 1: What is this legal fight about? Who is likely to win?
Speaker 1: And when will it play out? This is a Votes
Speaker 1: in Verdicts Brief.
Speaker 2: Welcome to this Vote in Verdicts podcast hosted by Bloomberg Intelligence,
Speaker 2: part of Bloomberg's research development. With five hundred analysts and
Speaker 2: strategists working across all major world markets, our coverage includes
Speaker 2: over two thousand equities and credits, as well as outlooks
Speaker 2: on more than ninety industries and one hundred market indices, currencies,
Speaker 2: and commodities. In this podcast series, we talk about the
Speaker 2: intersection of business policy and the law. My name is
Speaker 2: Justin Teresi and I'm a litigation analyst with Bloomberg Intelligence
Speaker 2: covering antitrust issues.
Speaker 1: And I'm Holly from and analyst covering US litigation and
Speaker 1: policy in the industrial and consumer space.
Speaker 2: Our Votes and Verdicts Brief series highlights one of our
Speaker 2: research reports on the Bloomberg terminal, giving listeners a quick
Speaker 2: takeaway to help grasp a key litigation or policy topic. Today,
Speaker 2: my colleague colleague is going to talk about neck litigation,
Speaker 2: So Holly Neck cases against Abbott and Recket's me Johnson
Speaker 2: number about one thousand right now. So far only three
Speaker 2: cases have been tried, but together they've resulted in verdicts
Speaker 2: of over a half billion dollars. Can you give us
Speaker 2: a little bit more information about what these cases are about?
Speaker 1: Sure? Thanks, Justin. So, Abbit and Record are manufacturers recks
Speaker 1: meets Johnson our manufacturers of cow's milk based formula Similac
Speaker 1: and enpmel, and those are formulas for preterm infants. The
Speaker 1: claims are that the formula cause it is an intestinal
Speaker 1: disease called necrotizing enterrocolitis or neck. Neck is a devastating
Speaker 1: disease that could lead to lifelong complications. It's alleged studies
Speaker 1: show that babies fed cow's milk based formula have an
Speaker 1: elevated risk of neck as compared to babies fed exclusively
Speaker 1: human breast milk diets. The companies say their products don't
Speaker 1: cause neck. Instead, they say human breast milk is protective
Speaker 1: against neck. As you mentioned, a little over one thousand
Speaker 1: lawsuits have been filed. Half of them are in federal
Speaker 1: court and consolidated before a judge in Illinois, and the
Speaker 1: other half are in various state courts.
Speaker 2: So, Holly, three cases have gone a trial, one in
Speaker 2: Illinois and two in Missouri with very different outcomes. Can
Speaker 2: you explain those verdicts and give your take on why
Speaker 2: those verdicts have been just so different?
Speaker 1: Sure? So these were all state court trials. The first
Speaker 1: case to go to trial was in Illinois against me Johnson.
Speaker 1: That was the Watson case. It was brought by a
Speaker 1: mother who alleged her baby developed neck after drinking the
Speaker 1: company's en pim milk formula and died from his injuries.
Speaker 1: The trial resulted in a jury verdict in March that
Speaker 1: awarded Watson sixty million dollars. The next case that went
Speaker 1: to trial was the Margot Gill case, which was on
Speaker 1: behalf of the baby that developed neck and brain damage
Speaker 1: allegedly as a result of drinking Abbot's pre term for me.
Speaker 1: The case was tried in Saint Louis City, Missouri, which
Speaker 1: is a historically plaintif friendly jurisdiction. That case resulted in
Speaker 1: a roughly five hundred million dollar verdict, four hundred million
Speaker 1: of that was for punitive damages. The next case to
Speaker 1: go to trial also in Saint Louis City, Missouri, which
Speaker 1: was the Elizabeth Whitfield case. That was against both Abbott
Speaker 1: and me Johnson, and that resulted in a defense verdict.
Speaker 1: So why the difference. First, let's talk about the Illinois
Speaker 1: Missouri planef verdicts. One was for sixty million and one
Speaker 1: was for five hundred million. So there's a huge discrepancy
Speaker 1: in the amount the jury awarded. And why is that Well,
Speaker 1: two reasons. First, the plaintiff into a gill, which was
Speaker 1: the five hundred million dollar verdict alleged brain damage, and
Speaker 1: so that added to alleged damages for lifelong healthcare costs.
Speaker 1: So compensatory damages alone was about one hundred million, which
Speaker 1: by the way, was roughly the amount the amount plaintiffs requested,
Speaker 1: and putitives are typically a multiple of the compensatory awards.
Speaker 1: So here the jury awarded four times the compensatory awards
Speaker 1: and punitive damages, and that's why that number was so
Speaker 1: high five hundred million dollars. Sadly, the infant in the
Speaker 1: Watson case, which was the case in Illinois, that infant died,
Speaker 1: so it was a wrongful death case. The verdict there
Speaker 1: was for sixty million, so unlike the plaintiff and guilt,
Speaker 1: there were no future medical costs that could be sought,
Speaker 1: which could have added to the jury award. And secondly,
Speaker 1: as I mentioned, the Watson case was a wrongful death case.
Speaker 1: Prior to August twenty twenty three, the state of Illinois
Speaker 1: did not allow punitive damages for wrongful death cases, so
Speaker 1: it was just about compensatory damages. That law, by the way,
Speaker 1: has changed, so cases on the books as of August
Speaker 1: twenty twenty three generally can seek punitive damages.
Speaker 2: Got it, So some really big numbers here for plaintiffs
Speaker 2: when they're striking. But do you have any insight as
Speaker 2: to why the last verdict out of Missouri though Whitfield case,
Speaker 2: Why do you think that was a defense verdict? Yeah?
Speaker 1: So we had said this case would be tougher for
Speaker 1: the plaintiff to prove, namely because the plaintiff named the
Speaker 1: hospital as a defendant, the hospital where the infant was treated,
Speaker 1: in addition to me, Johnson and Abbott the manufacturers. So
Speaker 1: we thought that would complicate things. And generally, and I
Speaker 1: have no scientific proof for this, but generally I think
Speaker 1: a jury is less likely to find my ability against
Speaker 1: a local hospital than two manufacturers they may have never
Speaker 1: heard of before. So right away we thought the optics
Speaker 1: of this case were very different than the first two cases. Also, importantly,
Speaker 1: and perhaps more significantly, the court allowed the defense to
Speaker 1: bring up the plaintiff mother's at marijuana use. There wasn't
Speaker 1: a lot of testimony and evidence about it, but what
Speaker 1: little evidence there was was damaging. So, for example, there
Speaker 1: was testimony that the mother smoked pot a few times
Speaker 1: a day during her pregnancy. There was also a medical
Speaker 1: report that was introduced during the trial, and i was
Speaker 1: a report of one of the mother's prenatal visits, and
Speaker 1: the healthcare provider made a note on the form that
Speaker 1: she noticed a powerful odor of pot when she entered
Speaker 1: the room where a plaintiff's mother was waiting. So when
Speaker 1: the mother testified to the jury that she would never
Speaker 1: have used formula had she been worn it would cause neck,
Speaker 1: it may have been a tough pill for the jury
Speaker 1: to swallow, given that the mother testified that she smoked
Speaker 1: pot relatively frequently, or there was testimony that she smoked
Speaker 1: pot relatively frequently during her pregnancy and assumed or ignored
Speaker 1: all the risks inherent in that. And finally, during closing,
Speaker 1: the planet's attorney requested six billion dollars in damages and
Speaker 1: that may have turned the jury off. So we don't
Speaker 1: think that case is necessarily representative of future cases. But
Speaker 1: we also not know not every case will be tried
Speaker 1: in the Missouri court, which is traditionally plain and friendly.
Speaker 2: All right, really some interesting stuff. It seems like there's
Speaker 2: really case specific things happening in each of these. But
Speaker 2: I think a broader question why were these cases brought
Speaker 2: in Missouri? And why do you think there's any significance
Speaker 2: to that if any of the cases being brought there?
Speaker 1: Right, So there were the two cases that were brought
Speaker 1: in Missouri. An important part of personal injury cases is
Speaker 1: bringing the case in the right forum, and for plaintiffs,
Speaker 1: that generally is this Missouri court if you can get it.
Speaker 1: But in order for the cases to stay out of
Speaker 1: federal court, there must be lack of diversity of citizenship
Speaker 1: between the parties, which means means every defendant must be
Speaker 1: from a different state from every plainiff. So with the
Speaker 1: case of gil that was the five hundred million dollars verdict,
Speaker 1: she was from Illinois, defendant Abbott was from Illinois, So
Speaker 1: that destroys diversity, which means the case stays in state court.
Speaker 1: But The reason Gill was able to get jurisdiction in
Speaker 1: state court in Missouri instead of Illinois is because the
Speaker 1: hospital where the baby was treated was in Missouri, and
Speaker 1: she named two sales reps from Missouri, so the court
Speaker 1: found that it had jurisdiction and the cases were properly
Speaker 1: venued there. And in the Whitfield case, which is the
Speaker 1: other Missouri case that resulted in the defense verdict, the
Speaker 1: plaintiff is from Missouri and the defendants are from Illinois,
Speaker 1: so you would say there is diversity. Right, this goes
Speaker 1: to federal court. But the way the plantiff is able
Speaker 1: to stay in state court is that she named the
Speaker 1: hospital in Missouri where plantiff was treated, and because she
Speaker 1: is from Missouri and the hospitals from Missouri that destroyed diversity,
Speaker 1: so at stayed in state court. Got it?
Speaker 2: Got it? So so much going on in every case.
Speaker 2: So I'm sure folks are listening to the scratching their
Speaker 2: heads and saying, you know, are there any key dates
Speaker 2: to look out for now if you're an investor concerned
Speaker 2: to about this litigation, what's coming next?
Speaker 1: Yeah, So there's a hearing coming up in federal cases
Speaker 1: on so called Dowbert motions, which are motions to bar
Speaker 1: plaintiff's experts. Plaineiffs can't prove this type of case without
Speaker 1: an expert, so these are very important motions. If plaintiff's
Speaker 1: experts are barred, the cases like we get dismissed unless
Speaker 1: the court allows plainiffs to introduce a new expert, and
Speaker 1: they generally don't do that. I expect that you'll see
Speaker 1: epidemiologists testifying. Those are people who study the incidents of
Speaker 1: disease and population. I expect to see someone who testifies
Speaker 1: as to the potential mechanism or the way they think
Speaker 1: the formula causes neck, and perhaps someone who testifies to
Speaker 1: animal studies I've been done, and a final medical expert
Speaker 1: on general causation. So there's a hearing in March, and
Speaker 1: we expect the court will issue a decision before the
Speaker 1: first trial in early May. And in that decision, the
Speaker 1: court will decide whether to allow all, some, or none
Speaker 1: of the plainiff's experts to testify.
Speaker 2: All right, at any insight at the court might rule
Speaker 2: on that.
Speaker 1: Well, we know the experts we are allowed to testify
Speaker 1: in state court in the Watson Gillen Widfield case. Otherwise,
Speaker 1: those cases wouldn't have on to jury, but that doesn't
Speaker 1: mean they'll be allowed to testify in federal court. It's
Speaker 1: typically harder to get experts admitted in federal court as
Speaker 1: opposed to state courts, even in state courts that supposedly
Speaker 1: follow Dabert standard. So we saw in cases against manufacturers
Speaker 1: of Zantac overclaims that drug caused cancer, the federal court
Speaker 1: handling consolidated proceeding dismissed the plane of experts. On the
Speaker 1: other hand, the Delaware State Court, which was here in
Speaker 1: tens of thousands of cases, also allowed that experts to testify,
Speaker 1: even though it also Delaware also follows the Dawbert standard.
Speaker 1: That ruling is now an appeal, but generally federal court
Speaker 1: is tougher than state court. So I've said the companies
Speaker 1: may fare better in federal court, though I haven't opined
Speaker 1: on the Dabret motion set. I have yet to see
Speaker 1: the Dabort briefing.
Speaker 2: Okay, okay, So last question for you in this holid,
Speaker 2: the FDA put out a consensus statement in October seeing
Speaker 2: absent human breast milk feeding preterm infants. This formula is
Speaker 2: this is the standard of care, and there's no conclusive
Speaker 2: evidence this formula causes cancer. Do you think that statement
Speaker 2: changes the outcome of any future cases?
Speaker 1: I think it does and it does. First, the FDA's
Speaker 1: statement may be deemed hearsay, so it may need an
Speaker 1: exception to come into trial. When the defense tried to
Speaker 1: introduce this evidence in the Whitfield case, the judge deny
Speaker 1: the request on grounds of lack of timeliness. The judge
Speaker 1: did not rule on whether it was hearsay or not,
Speaker 1: so I expect to see some kind of motion on
Speaker 1: that in federal court should these cases get to trial. Secondly,
Speaker 1: we've seen other cases where a regulatory body has said
Speaker 1: something is safe and the jury still finds liability. So,
Speaker 1: for example, in litigation against Buyer's Monsanto over claims weed
Speaker 1: killer Roundup causes cancer, the EPA, which is the agency
Speaker 1: charged with registering pesticides like Roundup, has repeatedly said the
Speaker 1: product doesn't cause cancer, and that conclusion was allowed in
Speaker 1: at trial and the jury still found for plainness. But
Speaker 1: then you have the thailanyl autism cases. The claims there
Speaker 1: were that ingestion of thailanyl during pregnancy causes the babies
Speaker 1: to develop autism. In those cases, the Court asked the FDA,
Speaker 1: which is the agency that decides labeling of food and
Speaker 1: drugs like tailan al, the court asks the FDA if
Speaker 1: it thinks an autism warning on the label as a probe.
Speaker 1: The FDA didn't put in a formal statement, but referred
Speaker 1: the Court to its prior conclusion that it doesn't cause autism.
Speaker 1: The court held Delbert hearings and dismissed the experts. It's
Speaker 1: not clear to what extent, if any of that influenced
Speaker 1: the court's decision anyway, but the Court was certainly aware
Speaker 1: of it, as I presume the Court will be made
Speaker 1: aware of the fday's decision here.
Speaker 2: Okay, great excellent overview of the issues here, Holly, thanks
Speaker 2: so much, and that's today's brief. For our full report
Speaker 2: on the topic and all of our research, please visit
Speaker 2: BI laws on the Bloomberg terminal. And most of all,
Speaker 2: thanks to you the listener for tuning in. This was
Speaker 2: Votes and Verdicts.