We need punitive damage awards to protect public health

Too many U.S. companies make products that harm public health: oil producers, opioid makers, vape outfits and tobacco giants to name a few. For too long, we as a society have viewed the sale of these products as routine. We have accepted that companies aggressively market a deadly product because that’s what successful businesses do.

And too often, these large corporations go about their nefarious business with near impunity. Legislation and regulation are tamed by lobbying and regulatory capture. For example, the Food and Drug Administration (FDA) has proposed to force tobacco companies to lower the amount of nicotine in their cigarettes to make them non-addictive. The industry is resisting, preparing to litigate and may succeed in blocking the measure — if not in court, then through deft political maneuvers.

So, how do we stop this relentless pursuit of profits without regard to public health? While corporations often view lawsuits as the cost of doing business, massive public-health litigation with real teeth — meaning large punitive-damage awards from juries — is the one thing that gets their attention. Verdicts awarding large sums in damages send a message to shareholders and the public that the products these companies produce and their negative impact are not socially acceptable. And because the timing and amount of punitive awards are unpredictable, companies cannot easily budget for them as a cost of doing business.

Consider the litigation against Johnson & Johnson (J&J) over the talc in its baby powder, which was sometimes contaminated with asbestos. For years, J&J appeared to follow the tobacco playbook, downplaying the public-health consequences of its product. Yet, earlier this year, after a multibillion dollar punitive-damages award, the company announced that it would switch from talc-based to corn-starch-based baby powder worldwide. The litigation stopped the misbehavior.

And consider another example. Recently, lawyers from the Public Health Advocacy Institute at Northeastern University in Boston, where I work, joined with two private law firms to represent the family of Barbara Ellen Fontaine, who died of cancer at age 60 after smoking for more than four decades. In September, a Massachusetts jury ordered Philip Morris USA to pay more than $8 million in compensatory damages and $1 billion in punitive damages for causing Fontaine’s lung cancer and death. It was the first billion-dollar punitive-damage verdict in the state’s history. This verdict, which Philip Morris called “clearly excessive” and vowed to fight, has obviously gotten the company’s attention.

Fontaine became hooked when she was just 15. The company could have lowered nicotine levels to make its products non-addictive decades ago. Instead, it went on making lethal cigarettes — despite knowing cigarettes kill about half a million Americans every year. As argued in Fontaine’s case, she smoked Marlboro and Parliament cigarettes, which Philip Morris still sells with basically the same formulations it used when she smoked them — the company has not made them safer.

But if punitive-damage awards are to have the desired impact on corporate misconduct, they must be supported by the public against their inevitable corporate critics. Corporations argue that naive jurors are being manipulated and duped. Yet, the jury in the Fontaine case was highly educated and included, among others, a Ph.D., a Ph.D. candidate, a microbiologist and a banker. They heard how deeply addictive nicotine is, that Philip Morris made its products to feed addiction and that it is still doing so today.

Another criticism is that punitive-damage awards are simply a windfall for suing parties. Or, as the U.S. Chamber of Commerce argued recently, that such awards harm the companies — and by extension our economy and society. True, punitive awards do harm some companies — those that continue to misbehave. But they help our economy, by reducing preventable medical costs and lost productivity, while making our society healthier.

If we’re going to change corporate actions that damage public health, we need punitive awards that cause corporate miscreants to sit up and take notice. Multibillion-dollar companies can simply shrug off six- or seven-figure verdicts — but not so a ten-figure verdict.

In these cases, juries are allowed to — and, in my view, must — consider a company’s wealth when imposing punitive awards. In the Fontaine case, the jurors took an entirely rational approach to finding an amount that would both “punish and deter” Philip Morris. Indeed, punitive-damage awards in public-health cases are a way to change bad corporate conduct. They don’t tear down our society, they make it better.

Richard A. Daynard is president of the Public Health Advocacy Institute at Northeastern University in Boston. He is also the university distinguished professor of law at Northeastern University.