J&J questions fairness of hip implant trial, $1 billion verdict

Wed Dec 7, 2016 10:30am EST
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By Erica Teichert

(Reuters) - Johnson & Johnson (JNJ.N: Quote) will challenge the fairness of a trial that produced a verdict of $1 billion in damages against the company last week over allegations of design flaws in its Pinnacle hip implant.

Although legal experts think J&J faces an uphill battle, both they and investors believe the Texas jury's penalty, the largest product liability verdict so far this year, is unlikely to stand.

In the two-month trial, five separate people from California argued that design flaws in the metal-on-metal implant made by J&J subsidiary DePuy Orthopaedics caused tissue death, bone erosion and other injuries.

It is the second large verdict against J&J in the Pinnacle implant litigation, which has been consolidated before U.S. District Court Judge Edward Kinkeade in Texas. In July, another jury awarded six Texas plaintiffs $500 million. Both cases were so-called bellwethers, intended to gauge the value of claims for more than 9,000 other pending implant cases.

J&J said in a statement it was confident in its appeal prospects and would not settle. It also said it stood by the safety of its product.

Last Thursday's verdict has had little impact on J&J stock. Les Funtleyder, a portfolio manager with ESquared Asset Management, said investors assume large health products companies will occasionally be sued and lose and that the costs are ultimately manageable.

J&J said it will ask Kinkeade to reduce or throw out the jury award before appealing to the 5th U.S. Circuit Court of Appeals in New Orleans. According to the company, the multi-plaintiff format stacked the deck against it by parading a series of victims in front of the jury and exaggerating the number of complaints about the implant.

The company won the first bellwether trial in a case involving a single plaintiff in 2014. The next is scheduled for September 2017, and Kinkeade has not decided how many plaintiffs will be involved in that trial.   Continued...

Alex Gorsky, CEO of Johnson & Johnson, speaks at the Boston College Chief Executives Club luncheon in Boston, Massachusetts September 11, 2015.   REUTERS/Brian Snyder