An Unlikely Divorce: The Split Between Actual and Punitive Damages

Last Monday, July 24th, a federal jury in Chicago ordered drugmaker AbbVie Inc. to pay $150 million solely in punitive damages for fraudulently misrepresenting the risks of its testosterone replacement drug AndroGel.[1] This lawsuit began when Jesse Mitchell, an Oregon-based Plaintiff, sued AbbVie Inc., an Illinois-based company, in 2014 after Mitchell suffered a heart attack in 2012 blaming his five-year use of AndroGel as the cause.[2]

Mitchell alleged AbbVie Inc. launched a national campaign for AndroGel that “purposefully downplayed, understated and outright ignored” the serious health risks posed to consumers.[3] The federal jury determined AbbVie Inc. was not negligent or strictly liable for Mitchell’s heart attack;[4] instead, it found the company falsely marketed the drug and awarded punitive damages to send a punishing message to the drugmaker.

For years, the general rule has been that punitive damages cannot be awarded without compensatory or actual damages.[5] In limited circumstances, this rule does not apply when there is a specific statute in place expressly stating that punitive damages may be awarded even when actual damages are absent.[6]

Based on this general rule, AbbVie Inc. does not expect the punitive damages award to stand and will likely appeal the decision.[7] In the past, the Seventh Circuit has upheld this rule, agreeing “Illinois courts have held ‘where actual damages are not recoverable, there can be no award for punitive damages.’”[8] This means the Seventh Circuit may be revisiting the issue soon, which could expand the limited exception currently in place. If so, this may “encourage plaintiffs and their lawyers to bring on more cases and pursue them even more aggressively.”[9]

[1] Tim Bellon, U.S. Jury Finds AbbVie Liable for Misrepresentation in AndroGel Verdict, Reuters, (Jul. 24, 2017), https://www.reuters.com/article/us-abbvie-androgel-idUSKBN1A92D9. AndroGel was approved by the U.S. Food and Drug Administration in 2000 to treat approximately 5 million American men who had difficulty producing testosterone. LauraAnn Wood, AbbVie Owes Man $150M for Hiding Drug’s Effects, The Chicago Daily Law Bulletin, (Jul. 25, 2017) http://www.chicagolawbulletin.com/Articles/2017/07/25/150M-AbbVie-payout-7-25-17.

[2] Id. (citing Jesse Mitchell, et al., v. AbbVie Inc., et al., 14 CV 9178) (noting “this is the first response to over 6,000 pending lawsuits that have been consolidated in federal court in Chicago.”)

[3]  Wood, supra note 1.

[4] Id.

[5] Among the cases that agree with this rule are: Hackett v. Smelsey, 77 Ill. 109 (1875); Kemner v. Monsanto Co., 217 Ill.App.3d 188 (1991); Golin v. Rukavina, 209 Ill. App. 3d 547, (1st Dist. 1991); Sorkin v. Blackman, Kallick & Co., 184 Ill.App.3d 873 (1st Dist. 1989); Tonchen v. All–Steel Equipment Co., 13 Ill.App.3d 454 (2d Dist. 1973); Ecker v. Big Wheels, Inc., 136 Ill.App.3d 651 (1st Dist. 1985); Lowe v. Norfolk & Western Ry. Co., 96 Ill.App.3d 637 (5th Dist. 1981); and In re Application of Busse, 124 Ill.App.3d 433 (1st Dist. 1984).

[6] See Jacob A. Stein, Stein on Personal Injury Damages Treatise § 5:18 (3d ed. 2017) (noting a “punitive award may stand in the absence of actual damages where there has been a constitutional violation” such as a § 1983 civil rights claim.

[7] Lisa Schencker, AbbVie Must Pay $150 Million Over Testosterone Drug, Jury Decides, The Chicago Tribune, (Jul. 24, 2017), http://www.chicagotribune.com/business/ct-abbvie-androgel-decision-0725-biz-20170724-story.html (quoting Adelle Infante, spokeswoman for AbbVie Inc.).

[8] Rice v. Nova Biomedical Corp., 38 F.3d 909, 919 (7th Cir. 1994) (citing Shrout v. McDonald’s System, Inc., 90 Ill.App.2d 60 (1967)).

[9] Bellon, supra note 1 (quoting Carl Tobias, law professor at the University of Richmond).