Missouri Court Reduces Huge Jury Award Based on Lack of Personal Jurisdiction

On June 23, 2020, the Missouri Court of Appeals rendered its decision in Ingham v. Johnson & Johnson, et al. No. ED107476, (Mo. Ct. App. E.D., 2020.) Johnson and Johnson appealed the trial court’s verdict awarding $550 million dollars in compensatory damages ($25 million per plaintiff) and $4.4 Billion dollars in punitive damages for injuries sustained by 22 plaintiffs after using Johnson & Johnson products. The punitive damages were split proportionally between Johnson & Johnson Consumer Companies, Inc. (“JJCI”), and its parent company, Johnson & Johnson.

The Court ultimately upheld the award of punitive damages, citing several instances where Plaintiffs alleged Johnson & Johnson knew their product was harmful yet continued to market and sell the products to the public. The Court stated that “because Defendants are large, multi-billion dollar corporations, a large amount of punitive damages are necessary to have a deterrent effect in this case.”

However, personal jurisdiction determinations were key in reducing the overall amounts of both actual and punitive damages in the case.

Both Johnson & Johnson and JJCI were incorporated and headquartered in the state of New Jersey. As a result, general personal jurisdiction, normally exercised over a corporation when the corporation’s place of incorporation or its principal place of business is in the forum state, was not applicable in this case. Instead, Plaintiffs sought to establish specific personal jurisdiction, which depends on the minimum contacts Johnson & Johnson and JJCI had established with the state of Missouri. The Court’s inquiry focused on “whether the defendant purposefully availed itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws.”

Plaintiffs had initially argued that linking non-resident claims with those of Missouri residents sufficed to establish specific personal jurisdiction over the defendants. The Missouri Appellate Court rejected this argument, relying on the recent U.S. Supreme Court decision in Bristol-Myers Squibb Co. v. Superior Court of California, 137 S. Ct. 1773 (2017), which held that “each individual out-of-state plaintiff in an action must demonstrate a connection between the forum and the specific claims at issue.”

To examine specific personal jurisdiction in keeping with Bristol-Myers, the Court divided the 22 plaintiffs into three categories depending on their state of residence and where the alleged injury occurred. Jurisdiction was not contested as it pertained to the five Missouri plaintiffs who had purchased and used the product at issue in Missouri. Specific personal jurisdiction was challenged regarding15 non-resident plaintiffs who had used a product associated with JJCI and two non-resident plaintiffs who had only used a Johnson & Johnson product. The use of the product associated with JJCI was deemed crucial because that company had a contract with another corporation that agreed to manufacture, produce, and label the JJCI product out of a  facility located in Union, Missouri.

Using Bristol-Myers as a guide, the Court concluded that JJCI was subject to the specific personal jurisdiction of the trial court with respect to the 15 non-resident plaintiffs who had used a JJCI product produced in Union, MO. The Court found “JJCI’s activities with Pharma Tech Industries firmly connect JJCI’s activities in Missouri to the specific claims of the non-resident plaintiffs.” However, the Court reversed the trial court on the issue of whether specific personal jurisdiction was proper as to the two non-resident plaintiffs who had only used a Johnson & Johnson product that did not have similar ties to Missouri.

The Court then considered whether specific jurisdiction of the 15 non-resident plaintiffs applied to Johnson & Johnson, the parent company of JJCI. Ultimately, it held that Johnson & Johnson and JJCI were two separate and distinct legal entities and that Johnson & Johnson did not meet the standards for piercing the corporate veil between the two entities. The Court noted that Johnson & Johnson did not completely dominate its subsidiary and that JJCI was not created for an improper purpose. The agency theory, which applies when the court “attributes specific acts to the parent corporation because of the parent’s authorizations of those acts,” did not apply because no evidence was produced to show any impropriety on the part of the two companies. Therefore, the activities of JJCI could not be imputed to Johnson & Johnson, and the Court found the 15 non-residents who had used only a JJCI product could not establish specific personal jurisdiction over Johnson & Johnson.

Finally, the Court found that the two non-resident plaintiffs who had only used a Johnson & Johnson Baby product could not establish specific personal jurisdiction over JJCI and Johnson & Johnson. Furthermore,  the 15 non-residents who had used Shimmer could not establish personal jurisdiction over Johnson & Johnson by way of piercing the corporate veil between the two companies.

As a result, both the actual damages and punitive damages were reduced “because any judgment entered without personal jurisdiction over a party is void.” Actual damages for JJCI were reduced from $550 million to $500 million, reflecting the loss of the two non-resident plaintiffs. Actual damages for Johnson & Johnson were reduced to $100 million to reflect the loss of all 17 non-residential plaintiffs. The punitive damages were reduced to $900 million for JJCI and $715,909,091 for Johnson & Johnson, reflecting the “proportional loss” of non-resident plaintiffs from the suit.

The Court’s opinion in Ingham offers some clarification on better defining personal jurisdiction in the state of Missouri and guiding litigation in the future. Personal jurisdiction will continue to be a primary concern for companies included in asbestos lawsuits filed in Missouri courts despite plaintiffs who never lived in the state or suffered any harm in the state. Missouri and neighboring Illinois are no strangers to what has been described as forum shopping in toxic tort litigation.

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