If you're a defendant in a drug or device lawsuit in Arizona court, you have a good chance of avoiding punitive damages. That's because Arizona has a statute, a good one. It exempts manufacturers, including drug and device manufacturers, from liability for punitive damages if their product is designed, made and labeled under an FDA approval or clearance:
A manufacturer, service provider or seller is not liable for exemplary or punitive damages if . . . [t]he product alleged to have caused the harm was designed, manufactured, packaged, labeled, sold or represented in relevant and material respects according to the terms of an approval, conditional approval, clearance, license or similar determination of a government agency.
Az. Rev. Stat. Ann. § 12-689(A)(1) (emphasis added).
Note our emphasis on "clearance." It's important. It means that, in device cases, the statute's exemption extends, without argument, beyond devices approved under the Premarket Approval process to also include devices cleared under Premarket Notification 510(k).
Taylor v. Boston Scientific Corp., 2020 U.S. Dist. LEXIS 140781 (D. Az. Aug. 4, 2020), is an Arizona case that involves a medical device cleared under 510(k). So the statutory exemption to punitive damages should apply. The plaintiff, however, claimed that it did not apply because of one of its exceptions. That exception is triggered if the manufacturer, upon a determination by the FDA, withheld or misrepresented information material to the approval of the product. Specifically, it states that the exemption from punitive damages does not apply if the manufacturer:
intentionally, and in violation of applicable regulations as determined by final action of the government agency, withheld from or misrepresented to the government agency information material to the approval or maintaining of approval of the product, activity or service, and the information is relevant to the harm that the claimant allegedly suffered.
Az. Rev. Stat. Ann. § 12-689(B)(2).
This is, in essence, a fraud on the FDA exception. But it has one important additional element. The FDA itself must have determined that the manufacturer made material misrepresentations or omissions. It's not something that the plaintiff can try to independently prove at trial.
This requirement doomed the Taylor plaintiff's request for punitive damages from the start. She alleged no facts to suggest that this exception applied, in particular to suggest that the FDA had made such a determination. Instead, she appears to have simply recited the language of the statute's exception. As we all know, "formulaic recitations of the elements," along with allegations "devoid of factual support," are insufficient to survive a motion to dismiss. Taylor, 2020 U.S. Dist. LEXIS 140781, at *14. And so the court dismissed her request for punitive damages at the pleadings stage. Id.
This isn't the first time we've seen courts apply Arizona's statutory exemption to dismiss requests for punitive damages. We talked about it here and here. It is about as strong a statutory exemption as you'll see. And it's why drug and device manufacturers in Arizona courts have a good chance of never seeing a punitive damages phase at trial. And trust us, that's something that you don't want to see.
Originally published by Reed Smith, August 2020
This article is presented for informational purposes only and is not intended to constitute legal advice.