Sued for $17 Billion, ordered to pay 1/34th of that. In State court, by The State.
I don't know if that counts as a "landmark ruling", but maybe it will. We'll have to wait and see if anyone else crashes up on the rocks.
I don't know if that counts as a "landmark ruling", but maybe it will. We'll have to wait and see if anyone else crashes up on the rocks.
Otherwise I think we’ll just keep being surprised by corporate amorality, over and over again.
Jobs, capital assets, and technology are preserved. I fail to see how this is a disadvantage. Volkswagon should have been hit with a $1 trillion dollar fine, and for every shareholder and executive to be completely wiped out.
the IP part may have some value though. it would be interesting to see what would happen if every successful judgment resulted in all relevant patents going to the public domain. play funny business with a certain pharmaceutical and it becomes a generic ahead of schedule.
I suspect "make an example out of 'em" style punishments are just not very effective. if every few years a big company gets a back-breaking fine, it would make for some good news stories, but it would also be pretty easy to design a portfolio resilient against these outcomes.
if I could wave a magic wand and set up the system exactly how I wanted, I would implement pretty much the opposite. moderate fines (maybe 1.5-2x the illicit gains) with a very high rate of conviction. raise the salary of prosecutors and investigators until you get people who can make it happen. I believe this would not only be more effective, but much more fair.
Fines aren’t going to work, I think that is pretty clear, as many others have said. They are very much an instrument of ‘make an example of ‘em’ aren’t they?
I bet that when a large bank thinks about their ‘worst case scenario’, they are thinking about Lehman Brothers, not a mega fine. Being a senior executive in a company that got corp-deathed is surely career ending.
So it'd be very much like an ordinary death penalty, then, with dependents left behind in a worse position. Well, fortunately it would also mean you shouldn't work for a bad company the same way you shouldn't assist criminals generally, in that you can share in the blame.
Think of the poor workers is such a poor argument as any worker can be laid off or fired at a moment's notice.
They know that at worst they’ll have a small hit on quarterly profits, but stocks won’t change and nothing serious will happen because nobody wants to hurt those poor job creators.
think about speeding. a speeding ticket is a meaningful amount of money to most people (usually well over $100 in the us); in some states (eg Virginia) speeding turns into a criminal offense if you are going 20+ over. and yet, most people still speed sometimes and a sizeable chunk of drivers speed almost all the time. on the other hand, speed camera tickets give a $40-50 fine but they get you every time you go 12+ over the limit as you pass the camera. almost no one exceeds the limit by more than 10mph in photo enforced zones. the fine is much lower, but the consistent enforcement makes it much more effective.
Still collateral damage in the form of private savings being wiped out, but you can bet this won't happen more than once before the rest of the capitalist class wises up.
Jail time for board members and executives is probably also effective.
If a corporate "death penalty" becomes a thing in the USA, large, profitable companies will shift their main business overseas to other, less risky countries. They may still sell their products to US consumers, but it becomes very difficult for the US courts to shut down a company that isn't officially in the US. The best they can do is forbid that company from doing business in the US.
Civil forfeiture seems like no big deal, I dunno what the issue would be here.
The real indicator is share-price being up 2% after the ruling. The investors think J&J got off easy.
The market has already priced in what it anticipates the future judgements will be (but that expectation may be wrong; for instance it could be $0—in which case GPs only if there are no future judgements is literally correct—but there may turn out to be substantial future judgements.)
If the market had already priced in all future events, the price would never move.
I don't think that holds. Let's say we all knew everything about the future, and we all use it to instantaneously and perfectly compute The Right Price for every security. We all know that this stock will pay out a total of $X in dividends over the next Y years before the company goes out of business, and what all the future prices will be. Time moves forward, we pass a dividend payment. I think the price of the stock has to fall?
What % of profits made by J&J in Oklahoma? Presumably the risk is that other states could decide that this could be a good way to get income too?
If you extrapolate and assume similar settlements in 49 other states, that would come out to 250% of their annual profits. Which may not happen, but the point is that 3% should be viewed in some kind of perspective.
Easy relative to the (amount weighted?) balance of probability. The stock price doesn't speak to whether they got off easy or hard relative to what's just.
J&J was only 1% of the market for these types of drugs, and also this;
> Oklahoma wanted J&J to help it address the epidemic for the next 30 years by funding addiction treatment and prevention programs.
> Balkman said in his written ruling that the award covered only one year of addressing the crisis because Oklahoma did not demonstrate the time and costs needed beyond that.
So it’s worth considering the amount that J&J was fined in that context.
It does give a good roadmap for how to sue and win against J&J though.
EDIT: There might be a way to use this case as a basis for collateral estoppel, meaning that J&J would have a harder time disputing the liability (since they were decided to be liable in this case) but I'm not sure if that applies across state lines.
I've never heard of someone making this argument successfully.
No, because:
(1) trial (as opposed to appellate) court rulings have almost no weight as precedent, and
(2) state court rulings on state law issues have almost no weight as precedent for courts in other states applying different state laws, and
(3) precedent doesn't allow or bar states or other litigants from pursuing cases, it just impacts the expected results.
IMO, the fine is appropriate because J&J was an inappropriate scapegoat in the first place — the damage they did is nothing compared to Purdue, for example.
J&J isn't being scapegoated, they just decided to roll the dice and take it to trial.