Next litigation is coming to a head in federal court. What is this legal fight about? Who is likely to win? And when will it play out? This is a Votes in Verdicts Brief.
Welcome to this Vote in Verdicts podcast hosted by Bloomberg Intelligence, part of Bloomberg's research development. With five hundred analysts and strategists working across all major world markets, our coverage includes over two thousand equities and credits, as well as outlooks on more than ninety industries and one hundred market indices, currencies, and commodities. In this podcast series, we talk about the
intersection of business policy and the law. My name is Justin Teresi and I'm a litigation analyst with Bloomberg Intelligence covering antitrust issues.
And I'm Holly from and analyst covering US litigation and policy in the industrial and consumer space.
Our Votes and Verdicts Brief series highlights one of our research reports on the Bloomberg terminal, giving listeners a quick takeaway to help grasp a key litigation or policy topic. Today, my colleague colleague is going to talk about neck litigation, So Holly Neck cases against Abbott and Recket's me Johnson number about one thousand right now. So far only three cases have been tried, but together they've resulted in verdicts
of over a half billion dollars. Can you give us a little bit more information about what these cases are about?
Sure? Thanks, Justin. So, Abbit and Record are manufacturers recks meets Johnson our manufacturers of cow's milk based formula Similac and enpmel, and those are formulas for preterm infants. The claims are that the formula cause it is an intestinal disease called necrotizing enterrocolitis or neck. Neck is a devastating
disease that could lead to lifelong complications. It's alleged studies show that babies fed cow's milk based formula have an elevated risk of neck as compared to babies fed exclusively human breast milk diets. The companies say their products don't cause neck. Instead, they say human breast milk is protective against neck. As you mentioned, a little over one thousand
lawsuits have been filed. Half of them are in federal court and consolidated before a judge in Illinois, and the other half are in various state courts.
So, Holly, three cases have gone a trial, one in Illinois and two in Missouri with very different outcomes. Can you explain those verdicts and give your take on why those verdicts have been just so different?
Sure? So these were all state court trials. The first case to go to trial was in Illinois against me Johnson. That was the Watson case. It was brought by a mother who alleged her baby developed neck after drinking the company's en pim milk formula and died from his injuries. The trial resulted in a jury verdict in March that
awarded Watson sixty million dollars. The next case that went to trial was the Margot Gill case, which was on behalf of the baby that developed neck and brain damage allegedly as a result of drinking Abbot's pre term for me. The case was tried in Saint Louis City, Missouri, which is a historically plaintif friendly jurisdiction. That case resulted in a roughly five hundred million dollar verdict, four hundred million
of that was for punitive damages. The next case to go to trial also in Saint Louis City, Missouri, which was the Elizabeth Whitfield case. That was against both Abbott and me Johnson, and that resulted in a defense verdict. So why the difference. First, let's talk about the Illinois Missouri planef verdicts. One was for sixty million and one was for five hundred million. So there's a huge discrepancy in the amount the jury awarded. And why is that Well,
two reasons. First, the plaintiff into a gill, which was the five hundred million dollar verdict alleged brain damage, and so that added to alleged damages for lifelong healthcare costs. So compensatory damages alone was about one hundred million, which by the way, was roughly the amount the amount plaintiffs requested, and putitives are typically a multiple of the compensatory awards.
So here the jury awarded four times the compensatory awards and punitive damages, and that's why that number was so high five hundred million dollars. Sadly, the infant in the Watson case, which was the case in Illinois, that infant died, so it was a wrongful death case. The verdict there was for sixty million, so unlike the plaintiff and guilt, there were no future medical costs that could be sought,
which could have added to the jury award. And secondly, as I mentioned, the Watson case was a wrongful death case. Prior to August twenty twenty three, the state of Illinois did not allow punitive damages for wrongful death cases, so it was just about compensatory damages. That law, by the way, has changed, so cases on the books as of August twenty twenty three generally can seek punitive damages.
Got it, So some really big numbers here for plaintiffs when they're striking. But do you have any insight as to why the last verdict out of Missouri though Whitfield case, Why do you think that was a defense verdict? Yeah?
So we had said this case would be tougher for the plaintiff to prove, namely because the plaintiff named the hospital as a defendant, the hospital where the infant was treated, in addition to me, Johnson and Abbott the manufacturers. So we thought that would complicate things. And generally, and I have no scientific proof for this, but generally I think a jury is less likely to find my ability against a local hospital than two manufacturers they may have never
heard of before. So right away we thought the optics of this case were very different than the first two cases. Also, importantly, and perhaps more significantly, the court allowed the defense to bring up the plaintiff mother's at marijuana use. There wasn't a lot of testimony and evidence about it, but what little evidence there was was damaging. So, for example, there was testimony that the mother smoked pot a few times
a day during her pregnancy. There was also a medical report that was introduced during the trial, and i was a report of one of the mother's prenatal visits, and the healthcare provider made a note on the form that she noticed a powerful odor of pot when she entered
the room where a plaintiff's mother was waiting. So when the mother testified to the jury that she would never have used formula had she been worn it would cause neck, it may have been a tough pill for the jury to swallow, given that the mother testified that she smoked pot relatively frequently, or there was testimony that she smoked pot relatively frequently during her pregnancy and assumed or ignored
all the risks inherent in that. And finally, during closing, the planet's attorney requested six billion dollars in damages and that may have turned the jury off. So we don't think that case is necessarily representative of future cases. But we also not know not every case will be tried in the Missouri court, which is traditionally plain and friendly.
All right, really some interesting stuff. It seems like there's really case specific things happening in each of these. But I think a broader question why were these cases brought in Missouri? And why do you think there's any significance to that if any of the cases being brought there?
Right, So there were the two cases that were brought in Missouri. An important part of personal injury cases is bringing the case in the right forum, and for plaintiffs, that generally is this Missouri court if you can get it. But in order for the cases to stay out of federal court, there must be lack of diversity of citizenship between the parties, which means means every defendant must be
from a different state from every plainiff. So with the case of gil that was the five hundred million dollars verdict, she was from Illinois, defendant Abbott was from Illinois, So that destroys diversity, which means the case stays in state court.
But The reason Gill was able to get jurisdiction in state court in Missouri instead of Illinois is because the hospital where the baby was treated was in Missouri, and she named two sales reps from Missouri, so the court found that it had jurisdiction and the cases were properly venued there. And in the Whitfield case, which is the other Missouri case that resulted in the defense verdict, the plaintiff is from Missouri and the defendants are from Illinois,
so you would say there is diversity. Right, this goes to federal court. But the way the plantiff is able to stay in state court is that she named the hospital in Missouri where plantiff was treated, and because she is from Missouri and the hospitals from Missouri that destroyed diversity, so at stayed in state court. Got it?
Got it? So so much going on in every case. So I'm sure folks are listening to the scratching their heads and saying, you know, are there any key dates to look out for now if you're an investor concerned to about this litigation, what's coming next?
Yeah, So there's a hearing coming up in federal cases on so called Dowbert motions, which are motions to bar plaintiff's experts. Plaineiffs can't prove this type of case without an expert, so these are very important motions. If plaintiff's experts are barred, the cases like we get dismissed unless the court allows plainiffs to introduce a new expert, and they generally don't do that. I expect that you'll see epidemiologists testifying. Those are people who study the incidents of
disease and population. I expect to see someone who testifies as to the potential mechanism or the way they think the formula causes neck, and perhaps someone who testifies to animal studies I've been done, and a final medical expert on general causation. So there's a hearing in March, and we expect the court will issue a decision before the first trial in early May. And in that decision, the court will decide whether to allow all, some, or none of the plainiff's experts to testify.
All right, at any insight at the court might rule on that.
Well, we know the experts we are allowed to testify in state court in the Watson Gillen Widfield case. Otherwise, those cases wouldn't have on to jury, but that doesn't mean they'll be allowed to testify in federal court. It's typically harder to get experts admitted in federal court as opposed to state courts, even in state courts that supposedly follow Dabert standard. So we saw in cases against manufacturers of Zantac overclaims that drug caused cancer, the federal court
handling consolidated proceeding dismissed the plane of experts. On the other hand, the Delaware State Court, which was here in tens of thousands of cases, also allowed that experts to testify, even though it also Delaware also follows the Dawbert standard. That ruling is now an appeal, but generally federal court is tougher than state court. So I've said the companies may fare better in federal court, though I haven't opined on the Dabret motion set. I have yet to see the Dabort briefing.
Okay, okay, So last question for you in this holid, the FDA put out a consensus statement in October seeing absent human breast milk feeding preterm infants. This formula is this is the standard of care, and there's no conclusive evidence this formula causes cancer. Do you think that statement changes the outcome of any future cases?
I think it does and it does. First, the FDA's statement may be deemed hearsay, so it may need an exception to come into trial. When the defense tried to introduce this evidence in the Whitfield case, the judge deny the request on grounds of lack of timeliness. The judge did not rule on whether it was hearsay or not, so I expect to see some kind of motion on that in federal court should these cases get to trial. Secondly, we've seen other cases where a regulatory body has said
something is safe and the jury still finds liability. So, for example, in litigation against Buyer's Monsanto over claims weed killer Roundup causes cancer, the EPA, which is the agency charged with registering pesticides like Roundup, has repeatedly said the product doesn't cause cancer, and that conclusion was allowed in at trial and the jury still found for plainness. But
then you have the thailanyl autism cases. The claims there were that ingestion of thailanyl during pregnancy causes the babies to develop autism. In those cases, the Court asked the FDA, which is the agency that decides labeling of food and drugs like tailan al, the court asks the FDA if it thinks an autism warning on the label as a probe. The FDA didn't put in a formal statement, but referred the Court to its prior conclusion that it doesn't cause autism.
The court held Delbert hearings and dismissed the experts. It's not clear to what extent, if any of that influenced the court's decision anyway, but the Court was certainly aware of it, as I presume the Court will be made aware of the fday's decision here.
Okay, great excellent overview of the issues here, Holly, thanks so much, and that's today's brief. For our full report on the topic and all of our research, please visit BI laws on the Bloomberg terminal. And most of all, thanks to you the listener for tuning in. This was Votes and Verdicts.