We’ve been following the post-trial proceedings in Allen v. Takeda Pharmaceuticals North America, Inc., a product-liability action involving the diabetes drug Actos. The case garnered headlines earlier this year when the jury awarded an astounding $9 billion in punitive damages against the two defendants.
On August 28, the district court in the Western District of Louisiana issued a ruling denying the defendants’ motion for judgment as a matter of law (JMOL) on liability for punitive damages and other issues. Despite the suggestion of some news reports that the defendants are now on the hook for the $9 billion, the district court has not yet ruled on the defendants’ separate motion for a new trial under Rule 59, which argues among other things that the punitive damages are excessive.
In this post, I want to address a significant flaw in the district court’s reasoning concerning the defendants’ challenge to punitive liability. Although the error did not affect the decision’s outcome, the issue arises in other cases with some frequency and could make a difference in this case on appeal.
The district court held that, in arguing insufficiency of the evidence, the defendants were bound by the liability standard set forth in the jury instructions and had waived the right to invoke the seemingly more demanding standard set forth in case law cited in their post-trial brief. This was error, because the Supreme Court has made clear that parties may argue for JMOL based on legal standards that they did not seek to have included in the jury instructions.
In Allen, the jury was instructed without objection that it could award punitive damages if it found that the defendants engaged in “wanton and reckless” conduct—defined as conduct that “demonstrates conscious indifference and utter disregard of its effect upon the health, safety, and rights of others and is deemed so outrageous as to allow an award.”
In their post-trial brief seeking JMOL under Rule 50(b), the defendants argued—quoting from case law—that “the New York standard for imposing punitive damages is a strict one,” that “New York permits punitive damages only in singularly rare cases,” and that the plaintiff must prove “exceptional” misconduct implying “a criminal indifference to civil obligations” in order to establish punitive liability. The district court refused to consider these cases, stating:
The current effort to, at this late date, argue a different and heightened standard or at least different language under New York law than the one to which the plaintiffs were held at trial comes too late; to the extent that the Defendants’ argument represents a request to have these newfound standards applied to the facts of this case, the request was waived for failure to assert it in a timely fashion.
Concerned that the Fifth Circuit might apply plain error review, the district court stated that in a footnote that it deemed the evidence sufficient even under this higher standard.
When a party fails to object to a jury instruction, it waives the ability to seek a new trial on the ground that the instruction was erroneous (absent a finding of plain error). The Supreme Court held in City of St. Louis v. Praprotnik, however, that “the failure to object to an instruction does not render the instruction the ‘law of the case’ for purposes of appellate review of the denial of a directed verdict or judgment notwithstanding the verdict.”
This rule makes perfect sense. When a court considers an argument that a party is entitled to judgment as a matter of law, it evaluates the sufficiency of the evidence independent of the verdict. Indeed, the party advancing the argument contends that the issue should not have been submitted to the jury for resolution at all, because a reasonable jury could have reached only one decision under the correct legal standard. There is thus no reason to hold that the failure to argue for a particular legal standard in the jury instructions waives the right to invoke that standard in a motion for JMOL under Rule 50 or in an appeal from the denial of such a motion.
Of course, the filing of a pre-verdict motion for JMOL under Rule 50(a) is a prerequisite to the filing of post-verdict motion for JMOL under Rule 50(b). A court may appropriately find waiver if the pre-verdict motion omits arguments altogether or lulls the opposing party into failing to submit certain evidence. In Allen, the district court acknowledged that defendants did move under Rule 50(a) for JMOL on punitive liability, and did not hold that the motion was insufficient to preserve the arguments raised in the Rule 50(b) motion.
As long as a party’s Rule 50(a) motion raises the arguments that are presented in the post-verdict motion and does not cause the plaintiffs to limit their evidence, the moving party should be free to articulate the applicable legal standards more precisely—and even more favorably—in its post-verdict motion. In this case, the difference between the punitive-liability standard set forth in the jury instructions and standard contended for in the Rule 50(b) motion could not possibly have changed how plaintiffs presented their case.