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Mammoth Wyeth Verdict Faces Judgment of Its Own

A Texas jury's $1 billion award will be watered down and may also whip up the waters of tort reform.

The likelihood that Texas law will cut a jury's $1 billion damage award against drugmaker

Wyeth

(WYE)

last week won't go unnoticed by advocates of state and national tort reform, a favorite cause of President George W. Bush that may soon see some results.

If, as expected, the state's existing formula capping punitive damages is upheld in the case of the Texas woman who took a now-banned diet drug and later died of primary pulmonary hypertension, the award set by a Beaumont jury could drop to a fraction of the original figure. That finding could serve as an example to other states seeking to limit punitive damages, and could bolster support for national changes in litigation already under way.

Bush last week reiterated his hopes for Congressional intervention in "a legal system that is fraught with frivolous and junk lawsuits that make it harder to form businesses, make it less desirable to risk capital."

The Senate and several state legislatures are taking up the cause.

Texas, where Bush was governor before assuming the presidency in 2000, is one of about 27 states that limit or are considering capping the amount paid out in legal fees or damages for some types of litigation, part of a growing movement to curb business liability in both individual and class action lawsuits.

Tort reform is in the works on both the federal and state level, with Senate majority leader Bill Frist (R., Tenn.) saying this week that a key Senate vote on class-action lawsuits is slated for early June. That vote would reverse the defeat of an earlier version of the bill, which last year failed to clear the upper house by one vote after a similar bill passed in the House of Representatives.

Several states, including Missouri, Iowa and Oklahoma, are considering caps for some legal damages or lawyers' fees, particularly in cases of medical malpractice. State supreme courts in Oregon, Alabama, Illinois, New Hampshire and Washington, however, have found aspects of their states' laws unconstitutional. In Mississippi, Haley Barbour, the newly-elected governor and former top Republican National Committee official, is pushing to lower the amount a jury can award for pain and suffering damages, saying it will help the state's business climate..

While the $1 billion verdict in the Wyeth case was one of the largest awards ever recorded in the nation, the estate of Cynthia Cappel-Coffey, 41, will likely face a cap on the money paid out by the New Jersey drugmaker. The state law allows judges to set aside the limits in certain cases, but an attorney for Wyeth said the company would fight any such effort as part of its appeal to reverse the verdict altogether. Cappel-Coffey died last year of primary pulmonary hypertension, four years after she used the diet drug Pondimin, part of the fen-phen diet drug cocktail pulled off the market in 1997 after numerous reports it caused heart and lung damage.

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Under Texas law, punitive damages are capped at twice the economic damages, usually lost wages and medical care, and an additional $750,000. Several states, most notably California, have caps on damage awards, though some restrict those limits to medical malpractice cases.

The Texas cap is now an accepted part of the Texas legal landscape, said University of Texas law professor David Armstrong.

"It was controversial at the time it was passed, but I haven't heard about it since," he said. "A trial judge can adjust

a damage award. There's nothing questionable about its enforcement -- awards are automatically adjusted to comply."

As president, Bush is pushing a similar agenda. Last week, in a lunchtime speech to the Newspaper Association of America, he said a more balanced legal system that embraced tort and medical liability reform would lower health care costs and bolster a competitive business environment. "There must be tort reform," he said. "There's a proper role for tort reform at the federal government."

He may get his wish, particularly with class-action lawsuits, which critics say are often tried in "magnet courts," county-level courts they claim have a bias toward plaintiffs and attract a disproportionate share of class-action cases. Critics say many suits are brought by lawyers looking to collect high fees, generally 20% to 30% of the total damages.

The Senate is scheduled to consider the Class Action Fairness Act in early June, which would move these suits to federal courts -- a move that critics of class action say will level the playing field.

Matt Webb, vice president of the United States Chamber of Commerce's Institute for Legal Reform, said national courts are better equipped to handle complex class-action cases and have rules for hearing such cases that would discourage lawyers from bringing weaker cases to court.

"It's one of the few pieces of legal reform that has a pretty good chance of passing this year," Webb said.

Compromises and deal-making give backers of the revised bill cause for optimism, Webb said. He said about 62 senators have indicated they will support the bill when it comes to a vote, and that Senate majority leader Frist has made it a legislative priority.

"It doesn't shut off access to the courts for anybody," he said. "It says that if you're going to bring a large interstate class action, it would probably be better in federal court."