E-Alert Case Updates

Maryland District Court Applies New Jersey Law to Deny Punitive Damages Claim against Pharmaceutical Drug Manufacturer on Grounds of Obstacle Preemption

Stacy Zimmerman v. Novartis Pharmaceuticals Corporation
United States District Court for the District of Maryland, No. RWT 08cv2089
by Jhanelle Graham, Law Clerk
Semmes, Bowen & Semmes (www.semmes.com)

In Stacy Zimmerman v. Novartis Pharmaceuticals Corporation, the United States District Court for the District of Maryland precluded punitive damages against Defendant, Novartis Pharmaceuticals Corporation, for selling FDA-approved drugs that allegedly caused a condition known as osteonecrosis of the jaw.

This pharmaceutical products liability lawsuit involves the drugs Aredia and Zometa, both of which were approved by the United States Food and Drug Administration (“FDA”) and were sold by Novartis. On December 5, 2007, Plaintiff, Stacy Zimmerman, as personal representative of the estate of her deceased mother, Phyllis Newman, filed a products liability suit against Novartis in the United States District Court for the Middle District of Tennessee. Novartis is a Delaware corporation with its principal place of business in New Jersey. Ms. Newman, a resident of Maryland, was diagnosed with metastatic breast cancer to the bone. To treat the disease, Newman was prescribed and received Aredia and Zometa—two (2) FDA-approved bisphosphonate drugs for the treatment of patients with hypercalcemia of malignancy (a potentially fatal elevation of calcium in the blood), as well as multiple myeloma and breast cancer that has metastasized to bone. Allegedly, as a result of her use of these drugs, Newman developed osteonecrosis of the jaw. In the amended complaint, Zimmerman asserted strict liability and negligence claims against Novartis in connection with the manufacturing, distribution, promotion, testing, labeling and selling of Aredia and Zometa.

On August 14, 2008, the United States District Court for the Middle District of Tennessee transferred the case under 28 U.S.C. § 1404 to the United States District Court for the District of Maryland. Novartis filed a Motion to Preclude Punitive Damages on December 9, 2011. On May 30, 2012, the Maryland district court heard arguments on this motion. First, the district court observed that New Jersey and Maryland laws differ with respect to punitive damages. Because the case was filed in Tennessee, the choice of law rules of Tennessee applied. The court reasoned that because Tennessee relies upon the Restatement (Second) of Conflict of Laws “significant relationship” approach, a Maryland court could apply Maryland law to the issues of liability and compensatory damages and New Jersey law to the issue of punitive damages if New Jersey had a more significant relationship to Zimmerman’s punitive damages claim than Maryland. In this case, the Maryland court found that New Jersey had a more significant relationship to the issue of punitive damages than Maryland because: (1) the place where the injury occurred—in this case, Maryland—was “simply fortuitous” with respect to punitive damages as “it bears little relation to the occurrence and the parties with respect to the particular issue.” Restatement (Second) of Conflicts of Law § 145 cmt. e (1971); Meng v. Novartis Pharmaceuticals Corp., Nos. L-7670-07MT, L-6072-08MT, 2009 WL 4623715 at *2 (N.J. Super. Law Div. November 23, 2009); (2) Novartis’s primary place of business was in New Jersey and the corporate decisions with respect to labeling and packaging of Aredia and Zometa took place in New Jersey; and (3) the place where the relationship, if any, between the parties is centered also supports application of New Jersey law because Novartis’s New Jersey business activities, including its interactions with the FDA, form the foundation of Plaintiff’s claim for any punitive damage award. See Meng, 2009 WL 4623715, at *4.

Next the Maryland district court addressed the issue of preemption, citing to Buckman v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001). The court determined that Zimmerman’s claim implicated a type of implied conflict preemption known as obstacle preemption because New Jersey, like many states engaging in tort reform, recently enacted a statutory immunity provision that generally prevents a plaintiff from recovering punitive damages in a pharmaceutical products liability case if that drug manufacturer complied with FDA regulations. Here, the FDA approved Aredia and Zometa, and the agency did not make any finding that Novartis did not comply with its federal statutorily-mandated disclosure obligations. Zimmerman’s claim for punitive damages under New Jersey’s statutory immunity provision posed an obstacle to the Food, Drug and Cosmetics Act (FDCA) regulatory scheme because it required a fact finder to make a determination that a federal law left exclusively to the agency. The Maryland court stated that, as in Buckman, the FDA has exclusive authority to decide whether a drug is safe and effective enough to be approved for sale in the United States and the flexibility to decide whether and what type of enforcement claim to bring against a drug manufacturer that breaches the disclosure duty. Thus, because the New Jersey statute predicates punitive damages on whether a jury finds Novartis violated the FDCA and applicable regulations, the court concluded that the New Jersey statute created an obstacle to the FDA’s ability to effectively police compliance. See N.J. Stat. Ann. § 2A:58C–5(c) (West 2012).

Because New Jersey’s statutory immunity provision attempted to legislate in an area of significant federal concern, the court determined that the statute could not “enjoy the presumption of validity.” Alternatively, even if the claim were not obstacle preempted, the court noted that the presumption against preemption does not apply to a fraud on the FDA claim as it applies to traditional tort claims implicating health and safety matters. Specifically, the district court concluded that such a presumption would not apply to that part of Zimmerman’s claim which, by virtue of New Jersey law, conditions any recovery of punitive damages on a showing that a defendant-drug manufacturer “knowingly withheld or misrepresented information required to be submitted under the [FDA’s] regulations, which information was material and relevant to the harm in question.” N.J. Stat. Ann. § 2A:58C–5(c) (West 2012). For these reasons, the United States District Court for the District of Maryland denied Zimmerman’s claim for punitive damages against Novartis.