Filed 4/27/22 (unmodified opn. attached)
CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
THE PEOPLE, D077945
Plaintiff and Respondent,
v. (Super. Ct. No. 37-2016-
00017229-CU-MC-CTL)
JOHNSON & JOHNSON et al.,
ORDER MODIFYING OPINION
Defendants and Appellants. AND DENYING REHEARING
NO CHANGE IN JUDGMENT
THE COURT:
It is ordered that the opinion filed herein on April 11, 2022, be modified
as follows:
On page 30, after the second sentence ending “Ethicon has waived its
claim of error,” add as footnote 10 the following footnote, which will require
renumbering of all subsequent footnotes:
10 Ethicon filed a petition for rehearing challenging our
determination that it waived its claim of error concerning
the trial court’s alleged failure to apply the correct legal
standard for omissions-based claims. We reject Ethicon’s
argument. Ethicon’s merits briefs purport to discuss the
circumstances under which an omissions-based claim may
be raised, but they do not set forth the proper legal
standard a court must employ when assessing such a claim.
Thus, Ethicon’s argument is waived. Even if Ethicon had
preserved its argument, our disposition of the case would
remain the same because, as we will soon discuss, the
argument fails on the merits.
There is no change in the judgment.
Appellant’s petition for rehearing is denied.
McCONNELL, P. J.
Copies to: All parties
2
Filed 4/11/22 (unmodified opinion)
CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
THE PEOPLE, D077945
Plaintiff and Respondent,
v. (Super. Ct. No. 37-2016-
00017229-CU-MC-CTL)
JOHNSON & JOHNSON et al.,
Defendants and Appellants.
APPEAL from a judgment of the Superior Court of San Diego County,
Eddie C. Sturgeon, Judge. Affirmed as modified.
O’Melveny & Myers, Charles C. Lifland, Jason Zarrow, Lauren F.
Kaplan, Stephen D. Brody, and Martha F. Hutton, for Defendants and
Appellants.
Horvitz & Levy, David M. Axelrad, and Scott P. Dixler for the
Advanced Medical Technology Association as Amicus Curiae on behalf of
Defendants and Appellants.
Barnes & Thornburg and Kevin D. Rising for the American
Urogynecological Society, the Society of Gynecologic Surgeons, the American
Association of Gynecologic Laparoscopists, and the Society of Urodynamics,
Female Pelvic Medicine and Urogenital Reconstruction as Amicus Curiae on
behalf of Defendants and Appellants.
California Appellate Law Group, Ben Feuer, and Julia Partridge for the
U.S. Chamber of Commerce and American Tort Reform Association as
Amicus Curiae on behalf of Defendants and Appellants.
Tucker Ellis, Mollie F. Benedict, and Peter L. Choate for the
Washington Legal Foundation as Amicus Curiae on behalf of Defendants and
Appellants.
Rob Bonta, Attorney General, Nicklas Akers, Assistant Attorney
General, Jon Worm, Adelina Acuña, Tina Charoenpong, Monica J. Zi, Gabriel
Shaeffer, and Daniel Osborn, Deputy Attorneys General, for Plaintiff and
Respondent.
I
INTRODUCTION
Johnson & Johnson, Ethicon, Inc., and Ethicon US, LLC (collectively,
Ethicon) appeal an adverse judgment following a bench trial. The trial court
levied nearly $344 million in civil penalties against Ethicon for willfully
circulating misleading medical device instructions and marketing
communications that misstated, minimized, and/or omitted the health risks
of Ethicon’s surgically-implantable transvaginal pelvic mesh products. The
court found Ethicon committed 153,351 violations of the Unfair Competition
Law (UCL) (Bus. & Prof. Code,1 § 17200 et seq.) and 121,844 violations of the
False Advertising Law (FAL) (§ 17500 et seq.), and it imposed a $1,250 civil
penalty for each violation.
1 Further undesignated statutory references are to the Business and
Professions Code.
2
Ethicon contends the judgment must be reversed because: (1) the trial
court applied the wrong legal standards when determining that Ethicon
violated the UCL and FAL; (2) substantial evidence did not support the
court’s findings that Ethicon’s medical device instructions and marketing
communications were likely to deceive doctors and patients; (3) the safe
harbor doctrine precluded findings of liability; (4) the civil penalties violated
Ethicon’s rights under the free speech clauses of the state and federal
constitutions; (5) the court abused its discretion by counting each deceptive
communication as a separate violation and setting $1,250 as the civil penalty
for each violation; and (6) the civil penalties violated Ethicon’s due process
rights and the excessive fines clauses of the state and federal constitutions.
We conclude the trial court erred in just one respect. In addition to
penalizing Ethicon for its medical device instructions and printed marketing
communications, the court penalized Ethicon for its oral marketing
communications—specifically, for deceptive statements Ethicon purportedly
made during one-on-one conversations with doctors, at Ethicon-sponsored
lunch events, and at health fair events. However, there was no evidence of
what Ethicon’s employees and agents actually said in any—let alone all—of
these oral marketing communications. Therefore, we conclude substantial
evidence did not support the trial court’s factual finding that Ethicon’s oral
marketing communications were likely to deceive doctors, and we amend the
judgment to strike the nearly $42 million in civil penalties that were imposed
for these communications.
We discern no other error and affirm the judgment as modified.
3
II
BACKGROUND
A
Stress Urinary Incontinence and Pelvic Organ Prolapse
Since the late 1990s, Ethicon has manufactured, marketed, and sold
pelvic mesh products intended to treat two conditions that can affect
women—stress urinary incontinence (SUI) and pelvic organ prolapse (POP).
SUI is a chronic condition characterized by urine leakage during
everyday activities such as laughing, coughing, sneezing, or exercising.
Approximately one third of women experience SUI at some point in their
lives. SUI is not life-threatening, but it can impair a patient’s quality of life
and limit the range of activities in which she can participate.
POP is a disorder whereby the muscles and tissue in the pelvis weaken
and cause pelvic organs to prolapse (i.e., descend) into, and sometimes
outside of, the vagina. Most patients who suffer from POP experience
pressure in the pelvis or vagina. It is difficult for some patients with POP to
urinate, have bowel movements, or engage in sexual intercourse.
SUI and POP can sometimes be treated through nonsurgical means.
For example, patients can perform pelvic floor exercises known as kegel
exercises to strengthen the muscles around the urethra. They can also insert
a device called a pessary into the vagina to stop urine leakage. POP can be
treated nonsurgically through the use of a pessary or a hormone estrogen
cream.
Non-mesh surgical methods can sometimes be used to treat SUI and
POP as well. SUI can be surgically treated through the Burch procedure,
whereby an incision is made into the abdomen and sutures are placed to
extend the neck of the bladder. POP can be surgically treated through a
4
native tissue repair whereby sutures are inserted to support the top of the
vagina.
B
Ethicon’s Pelvic Mesh Products
Starting in the 1990s, Ethicon began to manufacture and sell
surgically-implantable transvaginal pelvic mesh products for the treatment of
SUI and POP. All of Ethicon’s pelvic mesh products were (and are)
composed, at least in part, of a synthetic polypropylene mesh. When the
mesh functions as intended, it elicits an acute inflammatory response that
causes scar tissue to grow through the mesh’s pores and incorporates the
mesh into the patient’s body.
In 1998, Ethicon released TVT (tension-free vaginal tape), Ethicon’s
first pelvic mesh product for the treatment of SUI. TVT is a precut strip of
mesh that can be surgically inserted in the vagina and enclosed underneath
the midurethra like a sling. A midurethral sling pushes the urethra closed
when pressure is exerted (e.g., during a cough) to stop urine leakage. After
the release of TVT, Ethicon developed and sold additional iterations of
midurethral slings including the TVT-Obturator, TVT-Abbrevo, TVT-Exact,
and TVT-Secur. These products will be referred to as the SUI devices.
During the 2000s, Ethicon released pelvic mesh products to treat POP.
In 2002, it released Gynemesh PS, a flat sheet of mesh that a surgeon can
hand cut and implant in the pelvic floor to support the pelvic organs. After
the release of Gynemesh PS, Ethicon developed and sold various iterations of
pre-cut Gynemesh PS strips called Prolift, Prolift-M, and Prosima. These
products will be referred to as the POP devices.
5
C
FDA Regulation of Pelvic Mesh Implants
In 2008, the U.S. Food and Drug Administration (FDA) issued a public
health notification alerting health care providers about complications from
pelvic mesh implants used to treat SUI and POP. It stated the most frequent
complications were “erosion through vaginal epithelium, infection, pain,
urinary problems, and recurrence of prolapse and/or incontinence,” as well as
“bowel, bladder, and blood vessel perforation during insertion.” The
notification warned that, in some cases, “vaginal scarring and mesh erosion
[could lead] to a significant decrease in patient quality of life due to
discomfort and pain, including dyspareunia,” i.e., pain during sexual
intercourse. It advised that complications were “rare,” but could have
“serious consequences.”
In 2011, the FDA issued an update to its public health notification,
which focused specifically on complications relating to pelvic mesh implants
used to treat POP. The update stated, “surgical mesh for transvaginal repair
of POP [was] an area of continuing serious concern.” It stated the FDA had
determined that serious complications associated with surgical mesh for POP
repair were not rare—a change from the FDA’s earlier public health
notification. The update stated the most frequent complications were “mesh
erosion through the vagina (also called exposure, extrusion or protrusion),
pain, infection, bleeding, pain during sexual intercourse (dyspareunia), organ
perforation, and urinary problems.” The update identified “recurrent
prolapse, neuro-muscular problems, vaginal scarring/shrinkage, and
emotional problems” as other common complications. According to the
update, many of the complications required intervention, some of them
required repair surgeries, and some of them were incapable of being resolved.
6
Additionally, the update stated mesh POP repairs introduced risks that were
not present in non-mesh POP repairs, and mesh POP repairs did not improve
systematic results or quality of life compared to non-mesh POP repairs.
In 2012, the FDA ordered Ethicon to conduct post-market surveillance
studies for one of its SUI devices (TVT-Secur) and three of its POP devices
(Prolift, Prolift-M, and Prosima). Instead of conducting these post-market
surveillance studies, Ethicon stopped selling the products commercially.
Ethicon also changed the indication for its fourth POP device (Gynemesh PS)
from a transvaginal indication to an abdominal-only indication. Ethicon
continued selling its other SUI devices (TVT, TVT-Obturator, TVT-Abbrevo,
and TVT-Exact) up to and throughout the present lawsuit.
Ethicon’s competitors continued to sell pelvic mesh products for
transvaginal repair of POP, even after Ethicon stopped selling most of its
POP devices. However, in April 2019, the FDA concluded there was not a
reasonable assurance of safety and effectiveness for any commercially-
available pelvic mesh products intended for transvaginal repair of POP.
Therefore, the FDA ordered all remaining manufacturers of surgical mesh
intended for transvaginal repair of POP to stop selling and distributing such
products.
D
Ethicon’s Communications About Its Pelvic Mesh Products
During the relevant timeframe, Ethicon disseminated three categories
of communications giving rise to the violations at issue here: (1) Instructions
for Use (IFUs); (2) marketing communications directed to California doctors;
and (3) marketing communications directed to California patients.
The first category consists of IFUs. IFUs are packets of information
that accompany medical devices. They contain graphical depictions of the
7
device and information describing the device, the device’s indications and
contraindications, clinical performance results for the device, and adverse
reactions associated with the device, among other topics. IFUs accompanied
all of Ethicon’s pelvic mesh products.2
The second category consists of marketing communications directed to
doctors, which took a variety of forms. Ethicon sent sales representatives to
doctors’ offices with printed product brochures and sales aids for its products.
It recruited preceptors and key opinion leaders to discuss the products at
sponsored trainings, conferences, and professional education events.
Further, it advertised in medical journals, took health care professionals out
to meals, and sponsored booths at health fairs and other events.
The third category consists of marketing communications directed to
patients. Ethicon marketed its pelvic mesh products to patients through
printed brochures, counseling materials, mailers, and public relations events.
It advertised online to drive patient traffic to its promotional website, which
contained information about SUI, POP, and Ethicon’s products. Ethicon also
operated a telephone hotline and a Find-A-Doctor directory service, which
referred patients to doctors who could implant Ethicon’s products.
E
The Present Action
In 2016, the Attorney General filed an enforcement action against
Ethicon on behalf of the People of the State of California. The operative
complaint alleged Ethicon violated the UCL and FAL by disseminating
deceptive advertisements relating to its pelvic mesh products.
2 The IFUs for Ethicon’s products remained largely unchanged from the
launch of the products until 2015. At or about that time, a Canadian
regulatory agency requested that Ethicon amend the labeling for its products.
In response, Ethicon augmented the adverse events sections of its IFUs.
8
Specifically, the operative complaint alleged Ethicon’s IFUs and
marketing communications contained the following misstatements, half-
truths, and/or omissions: (1) they falsely stated the pelvic mesh products
were approved by the FDA when in fact they were cleared by the FDA under
section 510(k) of the Food, Drug, and Cosmetic Act (21 U.S.C. § 301 et seq.);
(2) they omitted known risks and complications associated with the products;
(3) they misrepresented the relative risks associated with the products
compared to non-mesh surgical treatment options; (4) they misrepresented
the severity and frequency of the risks that were disclosed; and (5) they
overstated the benefits and effectiveness of the products.
The operative complaint alleged Ethicon’s IFUs and marketing
communications violated the UCL and FAL. It requested injunctive relief,
civil penalties of $2,500 for each UCL violation occurring on or after October
17, 2008, and civil penalties of $2,500 for each FAL violation occurring on or
after October 17, 2009.3
F
The Statement of Decision and Judgment
After a nine-week bench trial, the trial court issued an extremely
thorough, 128-page statement of decision finding Ethicon liable for
153,351 UCL violations and 121,844 FAL violations.
At the outset of the statement of decision, the court found there were
serious, long-term risks and complications associated with Ethicon’s pelvic
3 The UCL has a four-year statute of limitations (§ 17208) and the FAL
has a three-year statute of limitations (Code Civ. Proc., § 338, subd. (h)).
However, the parties executed a tolling agreement, effective October 17,
2012. Thus, the earliest date Ethicon could be held liable for UCL violations
was October 17, 2008, and the earliest date it could be held liable for FAL
violations was October 17, 2009.
9
mesh products of which Ethicon was aware. In reaching this finding, the
court cited to, and credited, testimony from three experts called by the
Attorney General: (1) Dr. Bruce Rosenzweig; (2) Dr. Vladimir Iakovlev; and
(3) Dr. Michael Margolis.
Dr. Rosenzweig is a urogynecologist who has performed surgical
treatments for 325–350 women suffering from pelvic mesh complications. He
testified the mesh in Ethicon’s products has the following dangerous
properties: (1) it can elicit chronic foreign body responses (chronic
inflammation); (2) it can shrink and contract; (3) it can deform (rope, fray,
curl, and lose pore size or particles); (4) it can degrade; and (5) bacteria can
adhere to the mesh and produce a subclinical infection. He testified these
properties can cause chronic pain, dyspareunia, decreased sexual function,
partner pain (hispareunia), mesh exposure through the surface of the vagina,
mesh erosion into another organ, distortion and shortening of the vagina,
urinary problems, and urinary and bladder infections.
Dr. Iakovlev is an anatomical pathologist who has examined about 500
mesh explants including pelvic mesh explants. He testified pelvic mesh can
produce chronic inflammation, scarring and bridging fibrosis, scar
contraction resulting in mesh contraction, nerve growth around and through
the mesh, mesh exposure, and mesh erosion. He testified the mesh can also
degrade and fold, ball, or curl into itself.
Dr. Margolis is a urogynecologist who specializes in the treatment of
mesh complications. He has treated approximately 1,000 patients with mesh
complications and performed mesh explant surgeries on about 600 patients.
Ethicon manufactured 60 to 75 percent of the mesh products Dr. Margolis
has explanted from his patients. Dr. Margolis testified transvaginal mesh
products can produce complications including urinary dysfunction,
10
dyspareunia, hispareunia, severe chronic pain (including pelvic, vaginal, leg,
and groin pain), mesh erosion, infections, vaginal stiffening or distortion,
shrinkage or contracture of the mesh, bowel and defecatory dysfunction, and
fistulas. He also testified pelvic mesh cannot be fully explanted if four or
more weeks have passed since implantation. According to Dr. Margolis, mesh
can be impossible to explant after four weeks because it causes the formation
of scar tissue that cements the mesh in place.
The court also cited testimony from Ethicon’s own medical directors
showing that Ethicon’s mesh products carry risks of serious, long-term
complications. Dr. Piet Hinoul, Ethicon’s Global Head for Medical, Clinical,
and Preclinical Affairs, testified the mesh can produce chronic foreign body
reactions and biofilm infections, and the mesh can shrink or contract. He
testified complications associated with the SUI devices can include a lifelong
and recurrent risk of mesh exposure through the vagina and/or mesh erosion,
contracture of the tissue surrounding the mesh leading to chronic pain,
debilitating and life-changing chronic pain, chronic groin pain, chronic
dyspareunia, and pain to partner. He testified the POP devices carry the
same risks, and mesh shrinkage can distort the vaginal cavity and cause
interference with sexual intercourse. According to Dr. Hinoul, Ethicon knew
of all these risks when it launched its products.
Next, the court found Ethicon knowingly misstated or omitted these
risks in its IFUs. Broadly speaking, the misstatements and omissions
concerned: (1) the full range of complications associated with Ethicon’s
products; (2) the severity and duration of the complications; (3) the source of
the complications—i.e., whether they were unique to the products or typical
of pelvic surgeries generally; and (4) the necessity of mesh removal.
11
In particular, the court found the IFUs for the SUI devices were
misleading in the following respects: (1) the IFUs from 1998–2015 stated
there could be “transitory local irritation at the wound site and a transitory
foreign body response” resulting in mesh extrusion or exposure, and the IFUs
from 2015 onwards stated there could be mesh “extrusion, exposure, or
erosion,” but the IFUs did not disclose the risk of chronic foreign body
reaction or the lifelong risks of mesh exposure and erosion; (2) the IFUs from
1998–2015 stated “transient leg pain” could occur but did not disclose the risk
of chronic pain, and the IFUs from 2015 onwards stated the products could
cause acute or chronic pain but did not disclose the risk of debilitating or life-
changing pain; (3) the IFUs from 1998–2015 did not disclose the risks of
dyspareunia, mesh contraction, or pain to partner, and the IFUs from 2015
onwards did not disclose the risk of mesh contraction; (4) the IFUs from
1998–2015 stated that potential urinary dysfunction complications were just
like the risks presented by other incontinence procedures; and (5) the IFUs
from 1998–2015 did not reference the possible need for mesh removal or the
irreversibility of mesh complications, and none of the IFUs stated adverse
reactions may not resolve following mesh removal.
The court found the IFUs for the POP devices were deceptive as well.
It found they were deceptive because: (1) the IFUs from 2003–2012 identified
erosion and extrusion as complications, and the IFUs from 2015 identified
mesh extrusion, exposure, and erosion as complications, but none of the IFUs
disclosed that the risks of vaginal exposure and erosion were lifelong and
recurrent; (2) the IFUs from 2003–2012 identified pain as a complication,
some of the IFUs from 2003–2012 identified “transient leg pain” as a
complication, and the IFU from 2015 identified acute and/or chronic pain as a
complication, but none of the IFUs disclosed that the pain could be
12
debilitating and incapacitating; (3) certain IFUs from 2003–2012 did not
disclose the risk of dyspareunia or pain to partner; (4) certain IFUs from
2003–2012 did not disclose the risk of urinary dysfunction; and (5) the IFUs
from 2003–2012 did not reference the possible need for mesh removal, and
none of the IFUs stated that adverse reactions may not resolve following
mesh removal.
Additionally, the court found all of Ethicon’s IFUs were deceptive
because they stated the polypropylene mesh composing the products was not
subject to degradation or weakening by the action of tissue enzymes.
According to the court, the evidence showed that mesh can oxidize, or
degrade, resulting in cracking or fragmentation on the mesh surface.
The court found Ethicon’s marketing communications to doctors were
deceptive, too. The court found Ethicon’s printed marketing materials
excerpted, or referred doctors to, the incomplete list of risks in the IFUs
and/or they failed to disclose the full range of serious, long-term risks of
which Ethicon was aware. The court attached a violations appendix to the
statement of decision, which identified the deceptive quality or qualities of
each printed, doctor-focused advertisement that was admitted into evidence. 4
Further, the court found Ethicon’s sales representatives were trained to
convey deceptive and misleading information to healthcare professionals.
The court found Ethicon’s marketing communications to patients were
deceptive as well. It found each communication was deceptive for one or
4 In a footnote in its briefing, Ethicon implies that the court erred in
admitting certain marketing materials into evidence. “An appellant cannot
bury a substantive legal argument in a footnote and hope to avoid waiver of
that argument.” (Holden v. City of San Diego (2019) 43 Cal.App.5th 404,
419.) To the extent Ethicon suggests the court erred by admitting these
materials, Ethicon has waived its argument. (Id. at pp. 419–420.)
13
more of the following reasons: (1) it omitted severe and potentially
debilitating risks known to Ethicon and/or misleadingly stated the risks were
common to all pelvic surgeries; (2) it referred patients to additional product
information for a complete discussion of risks, but the additional information
was incomplete; and/or (3) it excerpted adverse event or risk information
from the incomplete IFUs. The violations appendix catalogued the way or
ways in which each patient-focused marketing communication was deceptive.
The court then found Ethicon actively concealed the product risks from
the public. For instance, the court found Ethicon rejected a suggestion made
by Dr. Axel Arnaud, one of Ethicon’s own medical directors, to amend the
Prolift IFU in 2005—a proposed amendment that would have disclosed that
Ethicon’s mesh could produce vaginal erosion and retraction resulting in
anatomical distortion of the vaginal cavity and interference with sexual
intercourse. The court found Ethicon also failed to implement a suggestion
made by Ethicon associate medical director Dr. Meng Chen to update the
IFUs in late 2008 or early 2009—a proposed update that would have removed
all references to the “transitory” nature of the risks concerning irritation and
foreign body response.5
The court found Ethicon also downplayed or undercut the FDA’s public
health notification and update for the purpose of concealing the risks
associated with Ethicon’s products. Ethicon instructed its sales
representatives to avoid initiating conversations with doctors about the
public health notification. Then, after the FDA issued its update finding
5 In an email to her colleagues, Dr. Chen stated she was unsure whether
the IFUs’ “very general statement” about the risk of a “transitory irritation”
and “transitory foreign body” response was “sufficient.” She stated that,
“from what [she saw] each day, these patient experiences [were] not
‘transitory’ at all.”
14
serious complications associated with surgical mesh for POP repair were not
rare, Ethicon paid consultants to author an article refuting the update.
Next, the court found the IFUs and marketing communications were
likely to deceive doctors and patients alike. It found doctors read and rely on
IFUs and marketing materials when counseling and treating patients.
Further, it found doctors were not generally familiar with the risks specific to
pelvic mesh products. The court found, in particular, that the recent advent
of the products meant many doctors did not learn about them during medical
school or their residency programs. The court also found Ethicon’s efforts to
undercut the FDA’s public health notification and update nullified whatever
information doctors may otherwise have acquired regarding the risks
associated with pelvic mesh products. Because the IFUs and marketing
communications were likely to deceive doctors and patients, the court found
Ethicon violated the UCL and FAL.
After finding that Ethicon’s IFUs and marketing communications were
likely to deceive doctors and patients, the court determined the number of
UCL and FAL violations. It reasoned the violation count should include all
“quantifiable instances of [Ethicon’s] circulation or dissemination of deceptive
messages”–i.e., it counted each IFU or marketing communication as a
separate violation. Employing this methodology, the court found Ethicon
committed 153,351 UCL violations and 121,844 FAL violations. The court
15
attached a penalty appendix to the statement of decision explaining its
calculations.6
The court then set the amount of each civil penalty at $1,250 per
violation—half the amount the Attorney General requested. The court
reasoned $1,250 per violation was warranted, in lieu of a lower amount,
because: (1) Ethicon’s misconduct was “grave” and “egregious,” as Ethicon
withheld crucial information about products that were permanently
implanted into patients, caused some patients “debilitating, chronic pain,”
and “destroy[ed] patients’ sexual, urinary and defecatory functions –
consequences that go to the very core of personal identity, dignity, and
quality of daily life”; (2) there were hundreds of thousands of violations (and,
according to the court, there were likely “far more violations” that were
excluded from the violations count); (3) Ethicon’s misconduct was persistent
6 The court calculated the number of statutory violations as follows:
1. IFUs–35,343 UCL violations and 31,000 FAL violations;
2. Printed marketing materials that Ethicon’s sales representatives
requested through an online portal to be distributed to doctors–41,277 UCL
violations and 27,115 FAL violations;
3. Printed marketing materials that were requested through Ethicon’s
public telephone hotline–4,792 UCL violations and 3,513 FAL violations;
4. Visits to Ethicon’s mesh product website and subpages–29,011 UCL
violations and 21,839 FAL violations;
5. Professional education and training presentations given to doctors
(e.g., lectures)–61 UCL violations and 50 FAL violations;
6. Sales representative detailing (e.g., sales representatives’ promotion
of Ethicon’s products during visits to doctors’ offices)–8,191 UCL violations
and 6,066 FAL violations;
7. Ethicon-sponsored meals (usually between sales representatives and
health care providers)–8,199 UCL violations and 6,029 FAL violations; and
8. Field marketing activities including health fairs, patient outreach
events, patient education presentations, public relations materials (PR kits),
and primary care provider outreach–26,477 UCL violations and 26,232 FAL
violations.
16
and spanned 17 years; (4) Ethicon knowingly misrepresented and concealed
the information at issue; and (5) the $344 million civil penalty award
represented less than one percent of defendant-parent company Johnson &
Johnson’s $70.4 billion net worth.7
At the request of the court, the parties submitted supplemental briefing
concerning the necessity of injunctive relief. After the submission of briefing,
the court declined to award injunctive relief for four reasons. First, Ethicon
amended the IFUs for its SUI products in 2015 and, in the process, remedied
many misleading statements contained therein. Second, Ethicon was already
in the process of amending its product labeling to comply with a 42-state
consent order entered as part of a separate legal proceeding. Third, the
current information in the public domain was sufficient to inform health care
providers of the risks of the pelvic mesh products. Fourth, an injunction
requiring Ethicon to update its labeling without FDA approval could subject
Ethicon to liability under federal law.
The court imposed $343,993,750 in civil penalties against Ethicon and
entered judgment for the Attorney General.
7 In the trial court, the parties executed a stipulation that treats all
three defendants the same for purposes of their ability to pay a civil penalty
award.
17
III
DISCUSSION8
A
Governing Laws
1
Unfair Competition Law
The Unfair Competition Law, or UCL, forbids unfair competition,
which is defined as “any unlawful, unfair or fraudulent business act or
practice and unfair, deceptive, untrue or misleading advertising and any act
prohibited by” the False Advertising Law. (§ 17200.) The UCL’s “ ‘purpose is
to protect both consumers and competitors by promoting fair competition in
commercial markets for goods and services.’ ” (Abbott Laboratories v.
Superior Court (2020) 9 Cal.5th 642, 651 (Abbott Labs).)
“ ‘In service of that purpose, the Legislature framed the UCL’s
substantive provisions in “ ‘broad, sweeping language’ ” ’ [citation] to reach
‘anything that can properly be called a business practice and that at the same
time is forbidden by law’ [citation]. ‘By proscribing “any unlawful” business
practice, “section 17200 ‘borrows’ violations of other laws and treats them as
unlawful practices” that the unfair competition law makes independently
actionable.’ ” (Abbott Labs, supra, 9 Cal.5th at pp. 651–652.) “However, the
law does more than just borrow. The statutory language referring to ‘any
unlawful, unfair or fraudulent’ practice (italics added) makes clear that a
8 We have considered the parties’ appellate briefs and amici curiae briefs
filed by interested third parties with our permission. Amici include the
Advanced Medical Technology Association; the American Urogynecological
Society, the Society of Gynecologic Surgeons, the American Association of
Gynecologic Laparoscopists, and the Society of Urodynamics, Female Pelvic
Medicine and Urogenital Reconstruction; the U.S. Chamber of Commerce and
American Tort Reform Association; and the Washington Legal Foundation.
18
practice may be deemed unfair even if not specifically proscribed by some
other law. ‘Because … section 17200 is written in the disjunctive, it
establishes three varieties of unfair competition—acts or practices which are
unlawful, or unfair, or fraudulent.’ ” (Cel-Tech Communications, Inc. v. Los
Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180 (Cel-Tech).)
UCL actions may be brought by the Attorney General, designated
public prosecutors, or persons who have suffered injury in fact and lost
money or property due to the unfair competition. (§ 17204.) “[T]he primary
form of relief available under the UCL to protect consumers from unfair
business practices is an injunction ….” (In re Tobacco II Cases (2009) 46
Cal.4th 298, 319 (Tobacco II).) “The purpose of such relief, in the context of a
UCL action, is to protect California’s consumers against unfair business
practices by stopping such practices in their tracks.” (Id. at p. 320.)
The Attorney General and other “authorized public prosecutors have an
additional tool to enforce the state’s consumer protection laws: civil
penalties. ‘Any person who engages, has engaged, or proposes to engage in
unfair competition shall be liable for a civil penalty not to exceed two
thousand five hundred dollars ($2,500) for each violation, which shall be
assessed and recovered in a civil action brought in the name of the people of
the State of California by the Attorney General’ ” or other specified public
prosecutors. (Abbott Labs, supra, 9 Cal.5th at p. 652, quoting § 17206,
subd. (a).) Civil penalties “are mandatory once a violation of [the UCL] is
established, and a penalty must be imposed for each violation.” (People v.
First Federal Credit Corp. (2002) 104 Cal.App.4th 721, 732 (First Federal).)
19
2
False Advertising Law
The False Advertising Law, or FAL, “broadly prohibit[s] false or
misleading advertising, declaring that it is unlawful for any person or
business to make or distribute any statement to induce the public to enter
into a transaction ‘which is untrue or misleading, and which is known, or
which by the exercise of reasonable care should be known, to be untrue or
misleading.’ ” (Nationwide Biweekly Administration, Inc. v. Superior Court
(2020) 9 Cal.5th 279, 306 (Nationwide), quoting § 17500.) The FAL is
“ ‘designed to protect consumers from false or deceptive advertising.’ ” (Id. at
p. 305; see Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 331 [“The
UCL and false advertising law are both intended to preserve fair competition
and protect consumers from market distortions.”].)
“Like the choice of the term ‘unfair’ in the UCL, the governing
substantive standard of the FAL—prohibiting advertising that is ‘untrue or
misleading’ [citation]—is set forth in broad and open-ended language that is
intended to permit a court of equity to reach any novel or creative scheme of
false or misleading advertising that a deceptive business may devise.”
(Nationwide, supra, 9 Cal.5th at p. 308.) “[T]he FAL prohibits ‘ “not only
advertising which is false, but also advertising which[,] although true, is
either actually misleading or which has a capacity, likelihood or tendency to
deceive or confuse the public.” [Citation.] Thus, to state a claim under either
the UCL or the false advertising law, based on false advertising or
promotional practices, “it is necessary only to show that ‘members of the
public are likely to be deceived.’ ” ’ ” (Ibid.)
FAL actions may be brought by the Attorney General, designated
public prosecutors, or “any person who has suffered injury in fact and has lost
20
money or property” as a result of a violation of the FAL. (§ 17535.) The trial
court may enjoin FAL violators. (Ibid.) Similar to the UCL, the Attorney
General and other public prosecutors may seek civil penalties not to exceed
$2,500 for each violation of the FAL. (§ 17536, subd. (a).)
The remedies and penalties provided for in the UCL and FAL generally
are cumulative to each other and to remedies and penalties available under
other laws. (§§ 17205, 17534.5.) Thus, conduct that violates both the UCL
and FAL can result in separate penalties of up to $2,500 for each UCL
violation and for each FAL violation. (See People v. Toomey (1984) 157
Cal.App.3d 1, 22 [the UCL and FAL “allow for cumulative remedies,
indicating a legislative intent to allow … double fines”].)
B
The Trial Court Applied the Correct Legal Standards
Ethicon’s primary contention on appeal is that the trial court applied
the wrong legal standards under the UCL and FAL. Ethicon argues the court
erred in three respects: (1) by failing to consider whether the IFUs and
doctor-focused marketing communications were misleading from the
perspective of doctors, as opposed to members of the public; (2) by not
applying the legal standard governing omissions-based claims; and (3) by
failing to consider whether Ethicon’s misstatements, half-truths, and
omissions were material. We address these arguments in turn.
1
Target Audience Standard
i
“To prevail on a claim under the fraudulent prong of the Unfair
Competition Law ‘based on false advertising or promotional practices,’ the
plaintiff must ‘ “show that ‘members of the public are likely to be
21
deceived.’ ” ’ [Citations.] An advertisement or promotional practice is likely
to deceive if it includes assertions that are (1) untrue, or (2) ‘ “true[, but are]
either actually misleading or which [have the] capacity, likelihood or
tendency to deceive or confuse the public.” ’ ” (Shaeffer v. Califia Farms, LLC
(2020) 44 Cal.App.5th 1125, 1135 (Shaeffer).) The FAL “substantively
overlap[s]” with the fraudulent prong of the UCL and the “burden under
these provisions is the same: To prevail on a claim under the false
advertising law, [the plaintiff] must show that ‘ “ ‘members of the public are
likely to be deceived ….’ ” ’ ” (Id. at p. 1136; see also Chapman v. Skype Inc.
(2013) 220 Cal.App.4th 217, 226 [for claims under “ ‘the UCL or the false
advertising law, based on false advertising or promotional practices, “it is
necessary only to show that ‘members of the public are likely to be
deceived’ ” ’ ”] (Chapman).)
In assessing the likelihood of deception, the challenged advertisement
or practice is typically viewed “through the eyes of the ‘reasonable
consumer’—that is, the ‘ordinary consumer acting reasonably under the
circumstances….’ ” (Shaeffer, supra, 44 Cal.App.5th at p. 1135.)
However, “ ‘[w]here the advertising or practice is targeted to a particular
group or type of consumers, either more sophisticated or less sophisticated
than the ordinary consumer, the question whether it is misleading to the
public will be viewed from the vantage point of members of the targeted
group, not others to whom it is not primarily directed.’ ” (In re Vioxx Class
Cases (2009) 180 Cal.App.4th 116, 130 (Vioxx), quoting Lavie v. Procter &
Gamble Co. (2003) 105 Cal.App.4th 496, 509–510 (Lavie).)
The primary evidence of likelihood of deception is the challenged
advertisement or practice itself. (People v. Overstock.com, Inc. (2017) 12
Cal.App.5th 1064, 1080–1081 (Overstock.com); Brockey v. Moore (2003) 107
22
Cal.App.4th 86, 100.) Additionally, courts should “examine the knowledge
base of the targeted consumer in assessing whether, under the
circumstances, the conduct or advertisement is likely to deceive the targeted
consumer.” (Patricia A. Murray Dental Corp. v. Dentsply International, Inc.
(2018) 19 Cal.App.5th 258, 272, 273–275 (Dentsply) [considering dentists’
professional knowledge when determining whether medical device directions
were likely to deceive dentists]; accord Vioxx, supra, 180 Cal.App.4th at
p. 130, fn. 14 [conduct may be an “unfair business practice when directed
toward consumers” and “not an unfair practice when directed toward a
financially sophisticated business with [specialized] knowledge”].)
ii
Ethicon claims the court did not apply the target audience standard
because it failed to assess whether Ethicon’s IFUs and doctor-focused
marketing communications were deceptive from the perspective of doctors, as
opposed to members of the general public. In particular, Ethicon asserts the
court did not consider doctors’ knowledge or expectations when analyzing
whether the IFUs and advertisements were likely to deceive.
Even the most cursory review of the statement of decision discloses the
trial court applied the correct target audience standard. Under a heading
captioned “Statement of Applicable Law,” the statement of decision recited
the correct legal standard and stated the trial court’s role was to “determine
[the] likelihood of deception from the standpoint of the target audience.”
Then, over the course of dozens of pages, the statement of decision applied
that legal standard to the facts and, ultimately, determined the IFUs and
marketing materials were likely to deceive doctors.
For instance, the trial court considered the knowledge base of doctors to
whom the IFUs and marketing communications were directed. It found
23
“many physicians practicing today” did not learn how to implant mesh in
medical school or their residency programs because pelvic mesh products
were not launched until the 1990s. The court found the scientific literature
on pelvic mesh products did not fill in doctors’ knowledge gap because doctors
labor under busy schedules and struggle to keep up-to-date with the scientific
literature. Further, the court noted several defense witnesses, including
surgical specialists and urogynecologists, were unaware of complications
unique to pelvic mesh products apart from vaginal erosion and exposure—
even though these complications were “well-known to the company from
launch.” For all these reasons, the court rejected Ethicon’s contention that it
could not “be liable for hiding serious and long-term mesh risks in its IFUs
and marketing materials because doctors already knew these risks.”
The court then found doctors “read the IFU[s] and use manufacturer
marketing material as a source of information in making treatment
decisions.” In support of this finding, the court cited a written discovery
response from Ethicon admitting IFUs were one of its “primary means for
distributing printed information about its medical devices ….” It cited
deposition testimony from Dr. Hinoul, who stated Ethicon expects doctors to
rely on the warnings, complications, and adverse events listed in IFUs to
counsel patients, and a “surgeon should be able to solely rely on the IFU.”
The court also cited the testimony of Dr. Charles Nager, a defense expert and
urogynecologist, who testified that professional journal advertisements and
sales marketing drove the use of pelvic floor mesh kits among doctors.
Further, the court noted that doctor witnesses for both parties claimed they
relied on IFUs and believed other doctors did the same.
Next, the court considered the text of each IFU and printed marketing
communication in meticulous detail. It analyzed the text of the IFUs and
24
determined they were likely to deceive doctors because they misstated or
omitted: (1) the range of complications associated with mesh; (2) the severity
or duration of the complications; (3) the source of the complications; and/or
(4) the potential irreversibility of the complications. The court also
catalogued the deceptive qualities of each printed doctor-focused marketing
communication in a voluminous appendix.
Finally, the court found “doctors were likely to be deceived by
[Ethicon’s] deceptive marketing, both in the IFUs and throughout their other
marketing materials.” (Italics added.) The court reiterated this finding
throughout the statement of decision. It “conclude[d] that the People of the
State of California (‘Plaintiff’) ha[d] proven by a preponderance of the
evidence that [Ethicon] deceptively marketed [its] pelvic mesh products in the
state of California and that [its] marketing was likely to deceive reasonable
doctors and reasonable lay consumers.” (Italics added.) It found Ethicon
“deceptively marketed its [SUI] and POP mesh devices through a
combination of false statements, misleading half-truths, and omissions that
were likely to deceive doctors ….” (Italics added.) Elsewhere in the statement
of decision, the court determined Ethicon’s “misleading half-truths and
omissions … were likely to deceive physicians in violation of the UCL and
FAL.” (Italics added.)
As these findings and conclusions make abundantly clear, the trial
court correctly applied the target audience legal standard.
iii
Ethicon advances three counter-arguments in support of its claim that
the trial court failed to consider whether the IFUs and marketing
communications were deceptive from the perspective of their target audience.
25
First, they cite Lavie, supra, 105 Cal.App.4th at page 508, a case in
which our colleagues in the First District Court of Appeal determined that
the usual “standard to be applied in assessing whether … conduct or [an]
advertisement violates the UCL is whether it is ‘likely to deceive’ the
[reasonable] consumer”—not a “least sophisticated consumer” standard that
presumably would make it easier for a UCL plaintiff to prove liability. After
reaching this conclusion, the Lavie court opined that “ ‘[l]ikely to deceive’
implies more than a mere possibility that the advertisement might
conceivably be misunderstood by some few consumers viewing it in an
unreasonable manner. Rather, the phrase indicates that the ad is such that
it is probable that a significant portion of the general consuming public or of
targeted consumers, acting reasonably in the circumstances, could be misled.”
(Ibid.) Ethicon claims the trial court erred because “it did not mention the
‘significant portion’ requirement at all.”
The trial court did not err. The Lavie court’s reference to a “significant
portion of the general consuming public or of targeted consumers” did not
establish a new, standalone requirement for a plaintiff to prove UCL liability.
(Lavie, supra, 105 Cal.App.4th at p. 508.) Rather, it characterized the
circumstances under which a defendant’s conduct or advertisement is likely
to deceive the general public or the target audience. As previously discussed,
the trial court repeatedly cited and applied this legal standard.
In any event, a court’s “failure to ‘discuss’ a particular standard does
not imply it applied an incorrect standard. Error on appeal must be
affirmatively shown by the record, and ‘[w]e presume the trial court knew
and properly applied the law absent evidence to the contrary.’ ” (J.H. v. G.H.
(2021) 63 Cal.App.5th 633, 644 (J.H.); see Committee for Responsible
Planning v. City of Indian Wells (1989) 209 Cal.App.3d 1005, 1011 [appellant
26
did not establish that trial court applied wrong standard where minute order
did “not state the court’s reasons” for denying motion].) Thus, the mere fact
the statement of decision did not discuss Lavie’s “significant portion”
language does not establish that the trial court necessarily erred.
Second, Ethicon claims the court erroneously believed Ethicon could be
held liable for failing to disclose all risks associated with its pelvic mesh
products, even if doctors were already aware of the risks. In support of this
argument, Ethicon relies on the following sentence plucked from the
statement of decision: Ethicon “knew that it was required to include all risks
reasonably associated with the device in the IFUs, whether already known to
doctors or not.” Ethicon claims this statement, divorced from its context,
proves the court did not consider the knowledge and experience of doctors
when it assessed whether Ethicon violated the UCL and FAL.
Ethicon’s citation is selective and misleading. Immediately prior to the
sentence just discussed, the court referred to an earlier section of the
statement of decision in which the court found a “manufacturer is expected to
include all adverse reactions reasonably associated with the use of the device
in the IFU.” In support of this finding, the court cited a memorandum from
the director of the FDA’s Office of Device Evaluation (ODE), in which the
director instructed ODE reviewers and industry members that the adverse
reaction sections in IFUs should include “all adverse reactions reasonably
associated with the use of the device ….” The court also supported its finding
with a citation to testimony from one of the Attorney General’s witnesses,
former FDA Commissioner Dr. David Kessler, who referenced the ODE
memorandum just discussed, and opined that–in his view–federal regulations
governing device labeling did not permit device manufacturers to omit
adverse events merely because they were commonly known to practitioners.
27
Given this context, it is clear the court was not purporting to
summarize or apply state law when it said Ethicon was required to include
all risks in its IFUs. Nor was it suggesting that, as a matter of state law,
doctors’ knowledge and experience was irrelevant when assessing whether
the IFUs and marketing communications were likely to deceive doctors.
Rather, it was merely noting, in passing, its understanding that federal
regulations and the FDA’s guidance on device labeling required all adverse
events to be disclosed as a matter of federal law. Immediately after making
this tangential observation, the court conducted the analysis demanded by
state law. The court’s brief reference to Ethicon’s ostensible duties under
federal law—a fleeting aside that the court did not focus on anywhere else in
the 128-page statement of decision—does not establish that the court applied
the wrong standard when assessing Ethicon’s liability under state law.9
Third, Ethicon argues that certain findings in the trial court’s order
denying injunctive relief prove the court did not apply the correct legal
standard in the statement of decision. In its injunctive relief order, the court
found “there [was] sufficient current information in the public domain to
inform physicians of the current risks of defendants’ products.” According to
Ethicon, this finding is irreconcilable with the statement of decision and
proves the court applied the wrong legal standard.
We disagree. Certainly, the injunctive relief order does not expressly
state that the trial court applied the wrong legal standard when it assessed
Ethicon’s liability in the statement of decision. Nor is that the only
conceivable inference that can be drawn from the injunctive relief order, or
even the most reasonable one. On the contrary, there are many other
9 We offer no opinion as to whether federal law requires that medical
device manufacturers disclose all adverse events in their IFUs.
28
rational explanations for why the trial court could have found that Ethicon’s
IFUs and marketing communications were likely to deceive doctors during
the statutory liability period that ended in 2018, while also finding that there
was sufficient current information in the public domain to warrant the denial
of injunctive relief in June 2020.
On the eve of trial, the FDA ordered all manufacturers of surgical mesh
intended for transvaginal POP repair to stop selling and distributing their
products. Surely, this sweeping action drew public scrutiny to the safety and
effectiveness of pelvic mesh products. The present litigation itself—a high-
profile case involving a $344 million judgment issued against a multi-billion
dollar company—likely brought significant attention to these issues as well.
Further, the present case is not the only legal matter concerning the
deceptive nature of Ethicon’s IFUs and marketing communications. Shortly
before the court issued its statement of decision, Ethicon settled with
government officials from 42 other jurisdictions to resolve allegations that
Ethicon inadequately disclosed the risks of its pelvic mesh products. This
settlement likely generated awareness about the risks and complications
associated with Ethicon’s pelvic mesh products, too.
Simply put, the statement of decision and the trial court’s order
denying injunctive relief are easily reconcilable, and the injunctive relief
order contains no express or implied indication that the trial court applied
the wrong legal standard when it rendered the statement of decision.
2
Omissions Standard
Next, Ethicon contends the trial court applied the wrong legal standard
because it “failed to mention—let alone apply—the standard for omissions
claims.” Ethicon’s argument fails for several reasons.
29
As an initial matter, Ethicon faults the trial court for failing to apply
the legal standard governing omissions-based claims, but it does not clearly
identify the legal standard it thinks the trial court should have applied. By
failing to adequately develop its argument, Ethicon has waived its claim of
error. (See Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th
939, 956 [“ ‘ “When an appellant fails to raise a point, or asserts it but fails to
support it with reasoned argument and citations to authority, we treat the
point as waived.” ’ ”]; Sevidal v. Target Corp. (2010) 189 Cal.App.4th 905, 928
[failure to develop legal argument waives appellate challenge].)
In the alternative, Ethicon’s argument fails because, as previously
noted, the court’s mere failure to discuss a standard does not compel a
conclusion that the court applied the wrong standard. (See J.H., supra, 63
Cal.App.5th at p. 644.) On the contrary, “[i]t is a basic presumption indulged
in by reviewing courts that the trial court is presumed to have known and
applied the correct statutory and case law in the exercise of its official
duties,” absent an affirmative showing to the contrary. (Keep Our Mountains
Quiet v. County of Santa Clara (2015) 236 Cal.App.4th 714, 741.)
Finally, Ethicon’s argument fails on the merits. A fraudulent or
deceptive omission is actionable if it is “contrary to a representation actually
made by the defendant, or an omission of a fact the defendant was obliged to
disclose.” (Daugherty v. American Honda Motor Co., Inc. (2006) 144
Cal.App.4th 824, 835; see Collins v. eMachines, Inc. (2011) 202 Cal.App.4th
249, 255 (Collins) [“fraud or deceit encompasses the suppression of a fact by
one who is bound to disclose it, or the suppression of a fact that is contrary to
a representation that was made”].) In other words, omissions-based claims
can be pure-omissions claims or partial-misrepresentation claims.
30
In assessing whether an omission is fraudulent or deceptive, courts
typically consider whether the omission satisfies one or more of the four
factors set forth in LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 336. As
this court explained in LiMandri:
“There are ‘four circumstances in which nondisclosure or
concealment may constitute actionable fraud: (1) when the
defendant is in a fiduciary relationship with the plaintiff;
(2) when the defendant had exclusive knowledge of material facts
not known to the plaintiff; (3) when the defendant actively
conceals a material fact from the plaintiff; and (4) when the
defendant makes partial representations but also suppresses
some material facts.’ ”
(LiMandri, at p. 336; see Collins, supra, 202 Cal.App.4th at p. 255 [applying
the LiMandri factors to determine whether a failure to disclose constituted
actionable fraud or deceit]; Hodsdon v. Mars, Inc. (9th Cir. 2018) 891 F.3d
857, 863 [synthesizing state law and concluding an omission is actionable if,
among things, it satisfies one of the LiMandri factors].)
The court considered, and issued findings, pertinent to the third
LiMandri factor—that is, whether Ethicon actively concealed material facts.
It found Ethicon took “active, willful measures for nearly twenty years to
suppress information and conceal serious risk and complication information
from physicians and patients.” In particular, it found Ethicon knew all along
that its SUI devices could lead to a variety of complications, yet it “willfully
hid harmful information about the company’s devices” to avoid negative
public reaction. Further, it found Ethicon undertook “marketing efforts
focused on downplaying and rebutting the FDA’s notices” regarding pelvic
mesh products, including paying consultants to author an article to refute the
notices.
The court also considered, and rendered findings, relevant to the fourth
LiMandri factor—that is, whether Ethicon made partial representations and
31
concealed material facts. The statement of decision is replete with such
findings, but a few illustrative examples prove the point. The court found
“[d]efendants’ marketing to both patients and doctors consistently and
repeatedly touted mesh’s benefits while misrepresenting, downplaying, and
concealing its potential for serious, long-term complications.” It reasoned
that “[b]y only disclosing an incomplete list of risks that only tells half the
story—the benign half—[Ethicon’s] IFUs misled consumers about the whole
picture of possible mesh risks.” Further, it found Ethicon’s marketing
materials included “misleadingly incomplete” risks discussions and
“refer[red] to misleadingly incomplete IFUs for product and risk information.”
For all these reasons, we conclude Ethicon has failed to carry its
burden of establishing that the trial court applied the wrong legal standard
when assessing the Attorney General’s omissions-based claims.
3
Materiality Standard
Finally, Ethicon claims the court applied the wrong legal standard
because it “ignored California’s materiality requirement.”
As previously noted, the governing standard in a false advertising case
is whether “ ‘ “ ‘members of the public are likely to be deceived.’ ” ’ ”
(Nationwide, supra, 9 Cal.5th at p. 308.) If the challenged advertisement is
likely to deceive, it is actionable “without individualized proof of deception,
reliance and injury.” (Massachusetts Mutual Life Ins. Co. v. Superior Court
(2002) 97 Cal.App.4th 1282, 1288; see Prata v. Superior Court (2001) 91
Cal.App.4th 1128, 1137 [“The Legislature considered [the UCL’s] purpose so
important that it authorized courts to order restitution without
individualized proof of deception, reliance and injury if necessary to prevent
the use or employment of an unfair practice.”], italics omitted.)
32
In false advertising cases, the concept of materiality can be relevant
when a court considers whether the named plaintiff in a private action has
standing to assert a claim. (See, e.g., Chapman, supra, 220 Cal.App.4th at
pp. 228–230.) A class representative in a private action must prove he or she
actually relied on the deceptive advertising to have standing under the
UCL.10 (Tobacco II, supra, 46 Cal.4th at pp. 326–328.) Within this context,
“ ‘a presumption, or at least an inference, of reliance arises wherever there is
a showing that a misrepresentation was material. [Citations.] A
misrepresentation is judged to be “material” if “a reasonable man would
attach importance to its existence or nonexistence in determining his choice
of action in the transaction in question” [citations], and as such materiality is
generally a question of fact unless the “fact misrepresented is so obviously
unimportant that the jury could not reasonably find that a reasonable man
would have been influenced by it.” ’ ” (Id. at p. 327.)
The question of materiality can also arise when a court must determine
whether class treatment is warranted in a private action seeking restitution
under the UCL or FAL. (See, e.g., Downey v. Public Storage, Inc. (2020) 44
Cal.App.5th 1103, 1115 [“[W]here plaintiffs seek to certify a class aimed
solely at recovering restitution under the unfair competition law or false
advertising law and define the members of the class as anyone who
purchased the good or service to which the advertisement pertains, those
plaintiffs must prove … the deception was material.”].) In such cases,
materiality can tend to show a classwide presumption of reliance—a
10 Previously, the UCL “authorized ‘any person acting for the interests of
itself, its members or the general public’ [citation] to file a civil action for
relief. Standing to bring such an action did not depend on a showing of injury
or damage.” (Californians for Disability Rights v. Mervyn’s, LLC (2006) 39
Cal.4th 223, 228.)
33
presumption that, in turn, can assist a plaintiff to establish the well-defined
community of interest necessary to obtain class certification. (See Tucker v.
Pacific Bell Mobile Services (2012) 208 Cal.App.4th 201, 228 [“ ‘[I]f the issue
of materiality or reliance is a matter that would vary from consumer to
consumer, the issue is not subject to common proof, and the action is properly
not certified as a class action.’ ”]; Weinstat v. Dentsply International, Inc.
(2010) 180 Cal.App.4th 1213, 1223, fn. 8 [reversing class decertification order,
in part, because “[t]he safety of the [defendant’s product] would be material
to any [consumer]” and, thus, “[t]here [were] no individual issues concerning
the nature and extent of [the] material misrepresentations”].)
The parties have not referred us to any legal authorities in which
materiality has been considered in a government enforcement action filed by
the Attorney General or another public prosecutor to obtain civil penalties on
behalf of the People. Nor have we uncovered such authority after conducting
our own review of the case law. But, assuming without deciding that a
materiality standard is implicit in the likelihood of deception standard
applicable in all fraudulent and deceptive advertising cases, Ethicon has
failed to establish that the court misapplied the materiality standard.
Ethicon’s argument is based solely on the court’s alleged failure to
discuss materiality. However, as we have explained, we must presume the
court applied the correct legal framework in the absence of a contrary
indication in the record. (J.H., supra, 63 Cal.App.5th at p. 644; Keep Our
Mountains Quiet, supra, 236 Cal.App.4th at p. 741.) Because Ethicon points
us to no contrary indication, we presume the court did not err.
Further, it is apparent from the appellate record that the trial court
believed Ethicon’s misstatements and omissions were material. The court
found Ethicon misrepresented and concealed “serious risk and complication
34
information,” including “medically significant” information that affected
medical decision-making. The court found Ethicon’s misconduct “had real
consequences for real people.” It found that, as a result of Ethicon’s
deception, doctors were unable to “factor [the risks] into their patient
counseling and treatment decisions,” or to “provide the information necessary
to inform and counsel their patients.” According to the court, Ethicon
“depriv[ed] physicians of the ability to properly counsel their patients about
the risks and benefits of undergoing surgery to have a synthetic product
permanently implanted in their bodies, and depriv[ed] patients of the ability
to make informed decisions about their own care.”
As these findings demonstrate, the trial court believed Ethicon’s
misstatements and omissions were extremely significant. It found, and we
agree, that they had real, serious, and long-lasting consequences—sometimes
tragic and permanent consequences—for patients. While the trial court may
not have uttered the precise word “materiality,” the concept of materiality
was unquestionably implicit in the court’s findings. On this basis as well, we
discern no legal error.
C
Substantial Evidence Supported Most of the Court’s Findings
Regarding Likelihood of Deception
The trial court found Ethicon’s IFUs and marketing communications
were likely to deceive doctors and patients regarding the scope, duration,
severity, source, and potential irreversibility of the complications associated
with Ethicon’s pelvic mesh products. Ethicon contends there was insufficient
evidence to support these findings.
As we will explain, we reject Ethicon’s argument in large part. In
essence, Ethicon asks this court to assume the role of trier of fact and replace
many of the trial court’s findings with Ethicon’s preferred findings. This we
35
will not do. However, we agree with Ethicon on one point: there was
insufficient evidence concerning the content of thousands of oral marketing
communications that were penalized by the trial court. Because there was
insufficient evidence to establish the content of these communications, we
conclude substantial evidence did not support the court’s finding that
Ethicon’s oral marketing communications were likely to deceive doctors.
1
Substantial Evidence Review
We apply a substantial evidence standard of review to the trial court’s
factual findings, including the court’s findings that Ethicon’s IFUs and
marketing communications were likely to deceive their target audiences.
(Overstock.com, supra, 12 Cal.App.5th at p. 1079; People ex rel. Bill Lockyer v.
Fremont Life Ins. Co. (2002) 104 Cal.App.4th 508, 520 (Fremont).)
“[W]hen ‘a finding of fact is attacked on the ground that there is not
any substantial evidence to sustain it, the power of an appellate court begins
and ends with the determination as to whether there is any substantial
evidence contradicted or uncontradicted which will support the finding of
fact.’ [Citations.]” [Citation.] [A defendant] raising a claim of insufficiency of
the evidence assumes a “daunting burden.” ’ ” (Overstock.com, supra, 12
Cal.App.5th at p. 1079.) “ ‘The substantial evidence standard of review is
generally considered the most difficult standard of review to meet, as it
should be, because it is not the function of the reviewing court to determine
the facts.’ ” (Alper v. Rotella (2021) 63 Cal.App.5th 1142, 1148.)
“The test ‘is simply whether there is substantial evidence in favor of the
respondent. If this “substantial” evidence is present, no matter how slight it
may appear in comparison with the contradictory evidence, the judgment
must be upheld.’ ” (Overstock.com, supra, 12 Cal.App.5th at p. 1079.) “The
36
usual meaning of ‘substantial evidence’ is ‘evidence that is “of ponderable
legal significance,” “reasonable in nature, credible, and of solid value,” and
“ ‘substantial’ proof of the essentials which the law requires in a particular
case.” ’ ” (Cal. Renters Legal Advocacy and Education Fund v. City of San
Mateo (2021) 68 Cal.App.5th 820, 852.)
2
Substantial Evidence Supported the Finding that
Ethicon’s IFUs Were Likely to Deceive Doctors
Ethicon claims substantial evidence did not support the trial court’s
finding that its IFUs were likely to deceive doctors. It attacks the court’s
finding in two ways—first, by claiming doctors do not read or rely on IFUs
when counseling and treating patients; and second, by arguing that doctors’
education, training, and experience precluded a finding that they were likely
to be deceived by Ethicon’s IFU’s.
i
We begin with Ethicon’s assertion that doctors do not review or rely on
IFUs to counsel and treat patients. Contrary to Ethicon’s claim, ample
evidence established that doctors review and rely on IFUs for these purposes.
Some of Ethicon’s own witnesses testified to this fact. For instance,
Ethicon medical director Dr. Martin Weisberg testified in deposition that he
depends on IFUs, reviews them to properly warn his patients, and reads
them to “learn about [a] product” and make sure he uses a product “the way
that it’s designed to be used.” Dr. Piet Hinoul, Ethicon’s Global Head for
Medical, Clinical, and Preclinical Affairs, testified a “surgeon should be able
to solely rely on [an] IFU,” and Ethicon expects doctors to rely on warnings,
complications, and adverse events listed in IFUs. Ethicon medical director
Dr. David Robinson testified Ethicon expects surgeons to rely on IFUs to
accurately disclose product risks. Moreover, defense expert Dr. Karyn Eilber
37
testified IFUs are a helpful source of information about mesh. Ethicon even
provided a discovery response stating IFUs were “[o]ne of [its] primary means
for distributing printed information about its medical devices ….”
The Attorney General’s witnesses also rendered testimony from which
it can reasonably be inferred that doctors read and rely on IFUs.
Dr. Margolis testified that when he was a practitioner, he personally
reviewed the IFU for one of Ethicon’s SUI devices to learn how to explant the
device. Further, Dr. Rosenzweig testified that one of the purposes of an IFU
is to “describe for doctors … the adverse events that are associated with [a]
medical device.”
Ethicon cites testimony from certain of its witnesses to suggest IFUs
are used, if at all, merely to refresh a doctor’s memory about a device’s
implantation procedure after a treatment decision has been made. We
acknowledge there was evidence from which the trial court could have found
that doctors read IFUs for this limited purpose only. But the court rejected
that position and instead found that doctors read and rely on IFUs to make
treatment decisions and counsel patients.
When reviewing this finding, our task is “to determine whether there is
any substantial evidence, contradicted or uncontradicted, to support the
[judgment]. [Citation] If there is substantial evidence which supports the
disputed finding, the judgment will be upheld even though substantial
evidence to the contrary also exists and the trier of fact might have reached a
different conclusion had it believed other evidence.” (Lobo v. Tamco (2014)
230 Cal.App.4th 438, 442.) Applying this standard of review, we conclude
substantial evidence supported the court’s finding that doctors read and rely
on IFUs when making treatment decisions and counseling their patients.
38
ii
Next, Ethicon contends the IFUs were not likely to deceive doctors
because doctors already knew—based on their education, training, and
experience—the full range of complications that were misstated or omitted in
the IFUs, the severity and duration of the complications, and the possible
need for mesh removal. We reject this contention, and conclude there was
substantial evidence to support the trial court’s contrary finding that the
IFUs were likely to deceive doctors about these issues.
As noted, the primary evidence in deciding whether an advertisement
is likely to deceive is the text of the advertisement itself—or, in this case, the
IFU. (Overstock.com, supra, 12 Cal.App.5th at pp. 1080–1081.) The text of
the IFUs supports the court’s finding that the IFUs were likely to deceive
doctors. As discussed above, witnesses called by both parties testified doctors
read and rely on IFUs to learn about the full range of adverse events and
complications associated with medical devices.
However, it is undisputed that at least a subset of Ethicon’s IFUs (the
IFUs accompanying the SUI devices from 1998–2015, and the IFUs
accompanying certain POP devices from 2003–2012) did not identify the full
range of complications associated with Ethicon’s pelvic mesh products—
including, at minimum, pain, dyspareunia, hispareunia, and urinary
complications. The simple fact that witnesses from both parties testified they
expect IFUs to list the full range of complications associated with medical
devices, yet at least some of the IFUs for Ethicon’s pelvic mesh products did
not list the full range of complications for those products, gives rise to a
strong inference that these IFUs were likely to deceive doctors.
The trial court found Ethicon’s IFUs were likely to mislead doctors
about the duration of the complications associated with its pelvic mesh
39
products as well–a finding that is well-supported by the evidence. In some
cases, the IFUs stated the complications were merely transitory, when in fact
they could be chronic. For instance, some IFUs (the IFUs accompanying the
SUI devices from 1998–2015, and the IFUs accompanying POP devices from
2003–2012) stated the devices could cause “transitory local irritation,” a
“transitory foreign body response,” and “transient leg pain,” when in fact—as
the defense witnesses conceded—the products were known to cause chronic
foreign body responses or chronic and debilitating pain. These inaccuracies
suggest the IFUs were likely to deceive doctors about the duration of
complications associated with Ethicon’s pelvic mesh products.
In other cases, Ethicon’s IFUs were deceptive insofar as they noted that
some complications may not resolve. For example, the IFUs for the SUI
devices and the POP devices from 2015 onwards stated that complications
such as pelvic pain or pain with intercourse “may not resolve.” These
statements may be accurate, or at least unlikely to deceive doctors, when
read in isolation. However, the IFUs containing these statements did not
disclose that other chronic complications—such as hispareunia or mesh
extrusion or exposure—may not resolve over time. The fact the IFUs
disclosed the chronic nature of some chronic complications, while omitting
the chronic nature of other complications, is additional evidence the IFUs
were likely to deceive doctors.
Further, the court found all of the IFUs were likely to deceive because
they were silent about the possibility that mesh implants may need to be
removed (the IFUs prior to 2015), or they stated that the mesh may need to
be removed and revision surgeries may be needed to treat complications (the
IFUs from 2015 onwards). As the court explained, none of the IFUs stated
that the mesh implants may not be able to be removed, or that complications
40
associated with Ethicon’s products may not resolve through revision
surgeries. We conclude the court reasonably inferred this finding from the
text of the IFUs. The likelihood of deception was particularly strong for the
IFUs in effect from 2015 onwards. By stating the mesh may need to be
removed and revision surgeries may need to be performed, these IFUs gave a
misleading impression that the mesh could be removed and revision surgeries
could treat the mesh complications, even though that was not always true.
As noted, we must also consider the knowledge base of the consumer
when assessing the likelihood of deception where, as here, the challenged
advertisement or practice is directed to a particular audience—in this case,
doctors. (Dentsply, supra, 19 Cal.App.5th at pp. 273–275.) Significant
portions of the statement of decision focused on whether doctors’ education,
training, and experience precluded them from being deceived by Ethicon’s
IFUs. (See ante Part III.B.1.) Ultimately, the court rendered findings that
doctors were likely to be deceived by Ethicon’s IFUs, notwithstanding their
education, training, and experience. For the following reasons, we conclude
substantial evidence supported these findings.
First, there was substantial evidence that many practicing doctors went
to medical school or completed their residency programs before Ethicon
released its pelvic mesh products. Therefore, they did not learn about the
complications associated with Ethicon’s pelvic mesh products in medical
school or in their residency programs. For instance, one of the Attorney
General’s experts, Dr. Margolis, testified he did not learn how to explant
mesh in medical school or his residency program because Ethicon’s products
had not been released yet. Defense expert Dr. Nager added, “people who may
have trained many, many years ago are not familiar with the most—best
procedures to treat prolapse.”
41
Second, substantial evidence was elicited that the medical literature,
journals, studies, and other sources of information may not, in practice,
apprise doctors of the risks associated with pelvic mesh. In a presentation
designed for Ethicon’s sales representatives, Ethicon stated, “[C]linicians are
very busy people [and] it can be difficult for them to stay current with all of
the new literature that is published. ... [¶] In many cases, [we] are providing
physicians with information that they may not otherwise have read about or
learned because of time constraints.” Thus, Ethicon’s own internal
documents showed that Ethicon viewed itself as many doctors’ first and
primary source of information regarding pelvic mesh products.
Other witnesses testified there was a dearth of high-quality studies
concerning pelvic mesh complications. For instance, Dr. Rosenzweig testified
the “overwhelming majority” of existing mesh studies were concerned with
efficacy—i.e., whether mesh works—not mesh complications. He added that
“[t]here [were] no … long-term randomized control trials where safety [of
mesh was] the primary endpoint.”
Defense expert Dr. Eilber corroborated Dr. Rosenzweig’s testimony on
this point. She co-authorized a study that reviewed evidence about the
efficacy and safety of mesh products used to treat SUI and POP. As part of
the study, she and her co-authors searched for articles concerning outcomes
and complications of transvaginal mesh used to treat SUI and POP from
January 2010 to September 2018. According to Dr. Eilber, the search
revealed the “vast majority” of mesh studies were not relevant to the
outcomes and complications of transvaginal mesh. When testifying about the
article, Dr. Eilber conceded that a lot of the studies included only small
patient populations and most studies on mesh complications did not consist of
42
high-quality evidence; as a result, the complication rate of transvaginal mesh
insertion was, in Dr. Eilber’s view, “not known as well as it could” have been.
Third, there was substantial evidence that doctors may not necessarily
learn about the complications associated with transvaginal pelvic mesh
products from their own experiences treating patients. According to defense
expert Dr. Rosenblatt, Obstetrics and Gynecology (OB/GYN) physicians who
specialize in female pelvic medicine and reconstructive surgery (FPMRS),
also known as urogynecologists, usually have a higher level of training than
general OB/GYN physicians and may be more familiar with the literature on
pelvic mesh surgeries than general OB/GYN physicians. However, FPMRS
specialization is not a requirement for a physician to implant Ethicon’s
products. Thus, in practice, general OB/GYN physicians—who typically lack
the specialized training and knowledge base of urogynecologists—routinely
implant Ethicon’s pelvic mesh products.
Further, defense expert Dr. Eilber testified that patients with mesh
complications do not always return to the doctor who implanted the mesh.
From this testimony, it can be inferred that an implanting doctor may not
become aware of certain types of complications, or any complications, that
their own patients may experience post-implantation.
Fourth, there was evidence from which it could be reasonably inferred
that the FDA was not fully aware of the range and prevalence of
complications associated with pelvic mesh products during the statutory
liability period. In its 2008 public health notification, the FDA listed certain
complications associated with mesh used to treat SUI and POP, but it
omitted other complications associated with the transvaginal placement of
mesh—namely, pain to partner and mesh contraction. For the limited set of
complications identified in the public health notification, the FDA stated that
43
it believed the complications were “rare.” Further, the FDA did not disclose
that mesh removal may not be possible.
It was not until three years later, in 2011, that the FDA released an
update advising doctors that complications associated with transvaginal
pelvic mesh used to treat POP were “not rare,” and that mesh “may expose
patients to greater risk” than non-mesh repair. In the update, the FDA
added new risks that were not previously disclosed in the 2008 public health
notification—specifically, mesh contraction and pain to partner. Further, the
FDA added new guidance indicating that “[c]omplete removal of mesh may
not be possible ….” In our view, the FDA’s evolving advice regarding the
range, frequency, and potential irreversibility of pelvic mesh complications
gives rise to a reasonable inference that, at minimum, these issues were not
so patently obvious and widely-known in the medical community that doctors
could not have been misled by Ethicon’s intentional misstatements, half-
truths, and omissions.
In its appellate brief, Ethicon cites evidence that doctors, especially
those who perform mesh implantation surgeries, are familiar with the range
and severity of pelvic mesh complications, as well as treatment options for
such complications. According to Ethicon, this evidence—which largely
consists of testimony from Ethicon’s experts—conclusively established that
Ethicon’s IFUs were unlikely to deceive doctors.
However, the trial court strongly discredited Ethicon’s experts and
found they suffered from conflicts of interest that biased their opinions. The
court noted that one of Ethicon’s experts was a former preceptor for Ethicon
who trained doctors to use the SUI devices. It found that another defense
expert had been a paid consultant for Ethicon and other mesh manufacturers
for more than 16 years. And it found that yet another defense expert had
44
been a paid consultant for mesh manufacturers including Ethicon for more
than 18 years, and that he had received millions of dollars from these
relationships. “Venerable precedent holds that, in a bench trial, the trial
court is the ‘sole judge’ of witness credibility. [Citation.] The trial judge may
believe or disbelieve uncontradicted witnesses if there is any rational ground
for doing so. [Citation.] The fact finder’s determination of the veracity of a
witness is final.” (Schmidt v. Superior Court (2020) 44 Cal.App.5th 570, 582.)
Further, our responsibility when reviewing a challenged finding is not
to assess which party’s evidence was more persuasive, or even whether we
would have reached the same finding as the trier of fact if we were standing
in its shoes. Instead, our role is to examine whether there was substantial
evidence, controverted or uncontroverted, to establish the finding rendered by
the trier of fact. (See In re Travis C. (2017) 13 Cal.App.5th 1219, 1225.)
Given the limited nature of our review, we conclude the trial court did not err
in finding that Ethicon’s IFUs were likely to deceive doctors.
We are relying exclusively on the evidence in the record as the basis for
our determination that the trial court’s factual findings were proper, as of
course we must. (See State Farm Fire & Casualty Co. v. Jioras (1994) 24
Cal.App.4th 1619, 1625 [“When a factual conclusion is attacked as lacking
evidentiary support, our power is limited to determining whether the record
contains substantial evidence, contradicted or uncontradicted, to support the
decision.”].) However, we note for the record that our determination is
broadly consistent with appellate decisions from other jurisdictions in which
courts have assessed the misleading effects of Ethicon’s IFUs, the knowledge
base of doctors who implant Ethicon’s pelvic mesh products, and whether
doctors could reasonably be deceived by Ethicon’s misleading IFUs.
45
For example, Kaiser v. Johnson & Johnson (7th Cir. 2020) 947 F.3d 996
(Kaiser) concerned a patient who received a Prolift implant and experienced
irreversible pelvic pain, bladder spasms, and pain during intercourse. She
filed a product liability suit against Ethicon pursuant to Indiana’s product
liability statute, alleging defective product design and failure-to-warn
theories. (Id. at p. 1006.) After trial, a jury returned a verdict for the
plaintiff on both theories and the plaintiff was awarded $10 million in
compensatory damages and $10 million in punitive damages. (Id. at p. 1007.)
On appeal, Ethicon claimed the jury erred in finding that Prolift
“expose[d] the user or consumer to a risk of physical harm to an extent
beyond that contemplated by the ordinary consumer who purchase[d] the
product with the ordinary knowledge about the product’s characteristics
common to the community of consumers.” (Kaiser, supra, 947 F.3d at
pp. 1008, 1014–1015.) It argued that “an ordinary pelvic-floor surgeon would
be aware of the possibility of all relevant risks,” and “surgeons could have
learned more about Prolift’s risks from medical literature.” (Id at pp. 1014,
1015, italics in original.) But the Seventh Circuit Court of Appeals rejected
this contention, reasoning that “a reasonable jury could conclude that Prolift
created risks beyond the expectations of ordinary pelvic-floor surgeons.” (Id.
at p. 1014.) It cited the trial testimony of physicians (including
Dr. Rosenzweig, a witness called by the Attorney General in the present case)
who stated that they were unaware of all of the risks associated with Prolift
and the permanency of pelvic mesh complications. (Id. at pp. 1014–1015.)
The Seventh Circuit Court of Appeals also described the Prolift IFU as
“brief” and “inadequate” because the IFU failed to warn doctors “about
Prolift’s potential for permanent pelvic pain and sexual dysfunction,” or “the
frequency, severity, or permanence of Prolift’s side effects.” (Kaiser, supra,
46
947 F.3d at pp. 1015, 1016.) The court concluded that, “[g]iven the limited
scope of the warnings in Prolift’s Instructions for Use, a reasonable jury could
conclude that Ethicon breached its duty to warn surgeons of its risks.” (Id. at
p. 1016.) On this basis, the court affirmed the jury’s finding that Ethicon was
liable on a failure-to-warn theory. (Id. at pp. 1015–1017.)
Similarly, in Hrymoc v. Ethicon, Inc. (N.J. Super. Ct. App. Div. 2021)
467 N.J. Super. 42 (Hrymoc), certification granted October 19, 2021, 085547,
a patient suffered severe medical complications after receiving a Prolift
implant. She sued Ethicon under New Jersey’s products liability law and a
jury returned a verdict in her favor on design defect and failure-to-warn
theories of liability. (Id. at pp. 199–200.) The Hrymoc court reversed the
judgment for a reason not relevant to the current appeal. But in the course of
doing so, it opined that the jury reasonably found Ethicon’s failure to warn
was the proximate cause of the patient’s injuries. (Id. at pp. 216–220.)
In relevant part, the New Jersey appellate court rejected Ethicon’s
claim that the patient’s surgeon “relied solely on medical literature, the
patient’s presentation, and his own training and experience,” rather than the
Prolift IFU, when he recommended the device to the patient. (Hrymoc,
supra, 249 A.3d at pp. 218–219.) As the court explained, there was evidence
that the patient’s surgeon reviewed the IFU to learn about Prolift. (Ibid.)
According to the court, there was also evidence that Ethicon omitted known
material risks from the Prolift IFU, including “mesh contraction, chronic
pain, vaginal distortion, dyspareunia, and the need for additional surgery,”
and there was evidence that the surgeon was “not aware of all the material
risks of patient harm known by Ethicon at the time of plaintiff’s surgery.”
(Id. at pp. 218, 219.) Thus, the court concluded that Ethicon’s “failure to
provide adequate warnings to [the implanting surgeon] was reasonably found
47
to be a substantial factor in not alerting plaintiff about the risk of permanent
and life-changing complications, depriving her of the opportunity to avert the
‘medical catastrophe’ that occurred.” (Id. at p. 220.)
Hammons v. Ethicon, Inc. (Pa. Super. Ct. 2018) 190 A.3d 1248
(Hammons) also involved the adequacy of Ethicon’s Prolift IFU. In an all-too-
familiar story, a patient received a Prolift implant and thereafter experienced
recurrent pain, pain during intercourse, incontinence, and recurrent
prolapse. (Id. at pp. 1255–1256.) She sued Ethicon for products liability
under Indiana’s product liability statute on multiple theories including a
failure-to-warn theory. (Id. at p. 1256.) After trial, a jury returned verdict in
favor of the plaintiff and awarded her $5.5 million in compensatory damages
and an additional $7 million in punitive damages. (Id. at p. 1258.)
The Pennsylvania appellate court affirmed the judgment and rejected
Ethicon’s claim that the patient failed to present evidence that Prolift’s
inadequate warnings caused her injuries. (Hammons, supra, 190 A.3d at
pp. 1269–1274, 1291.) Viewing the evidence in favor of the patient, the court
determined that, “at the time of Prolift’s product launch in March 2005,
Ethicon was aware of serious risks caused by Prolift but failed to make these
risks clear in its indications for use (‘IFU’) and patient brochures. (Id. at
pp. 1270–1271; id. at p. 1271 [“The IFU and brochures failed to disclose the
full extent of the risks posed by Prolift—risks that Ethicon knew about prior
to the March 2005 product launch.”].) The court cited evidence showing that
“Ethicon’s warnings were inadequate because they failed to convey Prolift’s
full risk profile, namely ‘all the known complications, their severity, their
frequency.’ ” (Id. at p. 1272.) Additionally, the court cited evidence that
“physicians are ‘dependent on the information that is provided by the
manufacturer for the long-term risks or for the risks that are connected to
48
th[e] device.” (Id. at p. 1273.) Based on these findings, and others, the court
concluded that “Ethicon failed to provide adequate warnings to [the surgeon]
about the risks of Prolift, and that [the surgeon] neither knew nor should
have known independently about these risks.” (Id. at p. 1273, italics added.)
Finally, Carlino v. Ethicon, Inc. (Pa. Super. Ct. 2019) 208 A.3d 92
(Carlino) involved a patient who received a TVT implant and sued Ethicon
for products liability after experiencing mesh exposure, recurrent pain in her
vagina, and pain during intercourse. The jury found in favor of the patient,
and she and her husband were awarded $3.5 million in compensatory
damages and $10 million in punitive damages. (Id. at p. 101.) The
Pennsylvania appellate court affirmed the judgment and rejected Ethicon’s
challenge to the punitive damages award. (Id. at pp. 120–123.)
In upholding the punitive damages award, the Carlino court cited
evidence that the TVT device “pose[d] a high risk of catastrophic injury to
patients” and Ethicon should have, but did not, warn about the “risks of
serious injuries, and about the severity, frequency, or permanency of those
injuries.” (Carlino, supra, 208 A.3d at pp. 121–122.) According to the court,
“Ethicon knowingly understated the risks of the TVT in all six versions of the
IFU published between 2000 and 2015. The IFU’s adverse reactions section
… failed to acknowledge new information Ethicon was obtaining from
treaters and its own researchers on adverse effects associated with the TVT.
[Citation.] In addition, Ethicon consistently and misleadingly informed
physicians that the TVT produced few adverse results and was intentionally
evasive about common complications.” (Id. at p. 122.) As the court explained,
“Ethicon knew that the TVT could cause permanent vaginal and muscular
pain and sexual dysfunction, because of its mesh weight, pore size, pore
collapse, and particle loss. Despite this knowledge, Ethicon promoted the
49
TVT for patients who sought to fix SUI, knowingly understated the risks of
the TVT in its IFU, and consistently misled physicians that the TVT produced
few adverse results.” (Id. at pp. 123, italics added.)
The Kaiser, Hrymoc, Hammons, and Carlino decisions arose in other
jurisdictions and the plaintiffs’ claims in those cases were predicated on legal
theories and trial records different than those presented here. However, each
decision reveals a similar narrative: Ethicon disseminated IFUs that were
likely to deceive doctors because the IFUs falsified or omitted the full range,
severity, duration, and cause of complications associated with Ethicon’s
pelvic mesh products, as well as the potential irreversibility and catastrophic
consequences of those complications. The statement of decision and the
appellate record in the present case tell precisely the same story.
Viewing the evidence in the light most favorable to the People, as the
prevailing party, we conclude there was substantial evidence to support the
trial court’s factual finding that Ethicon’s IFUs were likely to deceive doctors.
3
Substantial Evidence Supported the Findings Regarding Ethicon’s Written
Marketing Communications, But Not its Oral Marketing Communications
Next, Ethicon asserts there was insufficient evidence to support the
court’s findings that its marketing communications were likely to deceive
doctors. Ethicon claims the evidence did not show that doctors read and rely
on marketing communications. Additionally, it argues there was insufficient
evidence to support a finding that its marketing communications included
50
one or more deceptive statements or omissions.11 We disagree with
Ethicon’s first argument; however, we accept Ethicon’s second argument in
part.
i
As noted, Ethicon claims its marketing communications were not likely
to deceive doctors because doctors do not read or rely on marketing
communications when deciding how to counsel and treat patients.
Substantial evidence elicited at trial established otherwise.
According to testimony from Scott Jones, a former member of Ethicon’s
Global Strategic Marketing Department, medical professionals—not
patients—are the main audiences for Ethicon’s marketing efforts. When
Ethicon conducts these marketing efforts, it provides physicians with
material information regarding its products, including the benefits and risks
of its products. As previously noted, Ethicon itself stated its sales
representatives “provid[e] physicians with information they may not
otherwise have read about or learned because of time constraints.”
The evidence showed these marketing efforts impacted doctors’
decisions whether to procure and implant Ethicon’s pelvic mesh products.
For example, Jones testified that “doctors had to be convinced that your
product was the best option to then recommend to patients ….” When
questioned whether Ethicon’s professional education events were relevant to
the commercial performance of Ethicon’s products, he said: “[P]rofessional
11 Ethicon technically argues that the trial court abused its discretion in
calculating the civil penalty award because the court assumed without
sufficient evidence that each marketing communication included a deceptive
misstatement or omission. However, in substance, Ethicon challenges the
sufficiency of the evidence supporting the court’s finding that each marketing
communication was likely to deceive. We construe Ethicon’s argument
according to its substance.
51
education events definitely had an impact. I think, doctors had to feel
comfortable with the product, in terms of knowing that it was safe and
effective and how to use the device. [¶] Obviously, if they felt comfortable that
it was the right device and that it would get the outcomes they need[ed] for
their patients, that would result in them using the device or procedure with
their patients.”
Defense expert and former Ethicon preceptor Dr. Nager also testified
that Ethicon’s industry training courses were “driving the use of mesh kits.”
He added that industry marketing drove product use among doctors because
“[t]here were advertisements about the available mesh kits to treat pelvic
organ prolapse. It was … present in [the] journals and … representatives …
would go to physicians’ offices and market the mesh kits.”
Additionally, defense expert Dr. Eilber testified that a sales
representative for a medical device is a source of information to which she
personally would turn if she was unfamiliar with a medical device.
Collectively, this evidence established that Ethicon’s marketing
communications impacted doctors’ decisions to procure and implant Ethicon’s
pelvic mesh products.
ii
Next, we turn to Ethicon’s claim that the court improperly assumed,
without sufficient supporting evidence, that Ethicon’s marketing
communications were likely to deceive doctors.
In addressing this argument, we divide Ethicon’s marketing
communications into two categories: (1) written communications; and (2) oral
communications. In the former category we include: the printed marketing
materials that Ethicon’s sales representatives requested through an online
portal to be distributed to physicians; the printed marketing materials that
52
were requested through Ethicon’s public telephone hotline; Ethicon’s mesh
product website and subpages; professional education and training
presentations given to physicians; and certain field marketing activities
including PR kits and primary care provider outreach.12 In the latter
category, we include sales representative detailing; Ethicon-sponsored meals
between sales representatives and doctors; and one field marketing activity—
health fairs.
With respect to Ethicon’s written marketing communications, we
conclude the trial court did not improperly assume that the communications
were deceptive. On the contrary, the court prepared a 23-page violations
appendix cataloguing the precise manner by which each and every written or
online marketing communication was likely to deceive doctors. 13
However, we reach a different conclusion with respect to Ethicon’s oral
marketing communications. We are unable to find evidence in the record
establishing the content of any of Ethicon’s oral marketing communications,
let alone each of the thousands of communications that were penalized here.
The People have not provided us with any citations to the record sufficient to
establish the content of these communications. In fact, the only evidence on
this topic of which we are aware supports Ethicon’s argument. The People’s
12 We acknowledge Ethicon sometimes made oral representations in the
course of providing these written marketing communications to doctors.
However, we categorize them as written marketing communications—not
oral marketing communications—because the court found the written
marketing communications themselves were deceptive.
13 To the extent Ethicon challenges the sufficiency of the evidence
pertaining to each printed or online marketing communication, we are unable
to assess the merits of the argument because Ethicon has not included each
printed or market communication in the appellate record, nor has it made
arguments specific to each such communication.
53
forensic accountant—who developed the methodologies underpinning the
trial court’s violations calculation—conceded he did not know whether any
particular sales representative detailing activity was mesh-related; whether
mesh was discussed during Ethicon’s meals with health care providers; or
what Ethicon’s employees and agents even said during health fairs.
In its statement of decision, the trial court cited evidence that Ethicon’s
sales representatives “were trained and coached to deliver the same
consistent messages that pervade[d] the company’s print materials and IFUs
….” According to the court, this “evidence establishe[d] that [Ethicon’s] sales
representatives were trained to and did convey deceptive or misleading
information to the healthcare professional customers they detailed in the
field, such that [the] [c]ourt [could] infer that [each] mesh-related sales
conversation gave rise to a violation.”
Certainly, there was evidence showing that Ethicon trained its sales
representatives to convey uniform marketing messages. For instance, former
Ethicon sales manager Michelle Garrison testified that Ethicon’s sales
representatives went through a uniform training procedure; had access to the
same marketing materials; were trained on how Ethicon’s mesh devices are
implanted; were trained about the risks and complications relating to
Ethicon’s devices; were trained on how to respond when doctors asked
questions about complications; were trained on messages to convey for new
products; and were trained they could direct physicians to IFUs for
information about product risks and complications. She also agreed Ethicon’s
marketing techniques were intended to “provide uniformity to the
information that sales reps would be giving to doctors ….”
However, unlike the trial court, we conclude the uniform nature of
Ethicon’s sales representatives training does not, standing alone, give rise to
54
a reasonable inference that every single one of Ethicon’s thousands of oral
communications with doctors included false or misleading statements. The
mere fact a sales representative may have been trained in a particular way—
even in a manner that promoted the disclosure of misleading information—
reveals little, if anything, about the content of any particular conversation
that may have occurred many months or years later. Further, there is no
evidence—at least none of which we are aware of—suggesting Ethicon’s sales
representatives read or recited a uniform script, Ethicon’s IFUs, or Ethicon’s
printed marketing materials during their oral communications with doctors.
Simply put, there was no evidence of the actual substance of any of
Ethicon’s oral communications with doctors, let alone all of them. Further,
there was insufficient evidence from which a court could reasonably infer
that each one of Ethicon’s oral communications with doctors, or any of them,
included a false or misleading statement that was likely to deceive doctors.
In the absence of such evidence, the trial court erred in finding that Ethicon’s
oral marketing communications violated the UCL and FAL.
We hasten to add that there is nothing inherently less problematic
about a false or deceptive statement that is spoken aloud, as opposed to one
that has been memorialized in writing. In an appropriate case, where the
content and deceptive nature of the oral statement is established, the speaker
may be held liable for violating the UCL or FAL. (See People v. Dollar Rent-
A-Car Systems, Inc. (1989) 211 Cal.App.3d 119, 128–129 [the FAL’s
prohibition against false or misleading advertising “extends to the use of false
or misleading oral statements”].) We merely conclude there was insufficient
evidence in this case regarding the substance of Ethicon’s oral marketing
communications; thus, there was insufficient evidence that these
communications were likely to deceive their target audiences.
55
Accordingly, we modify the judgment to strike the portion of the award
imposing civil penalties based on Ethicon’s oral marketing communications
with doctors. In particular, we strike the portion of the judgment imposing
civil penalties for the following activities and communications: sales
representative detailing (8,191 UCL violations and 6,066 FAL violations; or
$17,821,250 in penalties); Ethicon-sponsored meals (8,199 UCL violations
and 6,029 FAL violations; or $17,785,000 in penalties); and health fairs
(2,575 UCL violations and 2,505 FAL violations; or $6,350,000 in penalties).
As amended, the judgment awards civil penalties to the People in the amount
of $302,037,500.14
4
Substantial Evidence Supported the Finding that
Ethicon’s Marketing Was Likely to Deceive Patients
The trial court also found Ethicon disseminated false and misleading
marketing communications that were likely to deceive patients. Ethicon
argues its communications were not misleading—an argument we construe
as a sufficiency of the evidence challenge. So construed, the argument is
meritless.
In its statement of decision, the court found Ethicon’s marketing
communications were likely to deceive patients because they: (1) included
misleading or incomplete discussions of the risks associated with Ethicon’s
products; (2) referred the reader to the incomplete risk, adverse events, and
14 We calculate this amount as follows: $343,993,750 (the civil penalties
ordered by the trial court) minus $17,821,250 (the portion of the civil
penalties attributable to sales representative detailing) minus $17,785,000
(the portion of the civil penalties attributable to Ethicon-sponsored meals)
minus $6,350,000 (the portion of the civil penalties attributable to health
fairs) equals $302,037,500.
56
safety information contained in the product IFUs; and/or (3) excerpted the
incomplete risk and adverse event information from the product IFUs.
Substantial evidence supported the court’s findings.
To take one illustrative example, a TVT patient brochure in circulation
in 2008 (court exhibit 10210) touts the benefits of TVT, proclaiming the
device to be “clinically proven, safe and effective” for the treatment of SUI. It
assures the patient “[t]here should be very little discomfort after the
procedure.” Then, at the very end of the brochure, it states (under a heading
that reads “What are the risks?”) as follows: “All medical procedures present
risks. As with all procedures of its type, there’s a risk of injury to the bladder
and surrounding organs. For a complete description of risks, see the attached
product information.”
Far from providing a complete description of risks, the product
information attached to the brochure sets forth a significantly truncated
description of warnings and adverse reactions. It states the patient may
experience certain side effects such as transient leg pain lasting 24–48 hours
or post-operative bleeding or infection. But this incomplete risk discussion
omits virtually all of the most severe risks associated with the TVT device—
including mesh exposure through the vagina, mesh erosion, tissue
contracture leading to chronic pain, debilitating and life-changing chronic
pain, chronic groin pain, chronic dyspareunia, and pain to partner. By listing
a small handful of the TVT device’s risks and then proclaiming the list to be
complete, the advertisement paints a distorted and overly-rosy picture of the
safety of the TVT device. The court did not err in finding this misleading
advertisement, and others like it, were likely to deceive patients.
Ethicon contends its marketing communications were not likely to
deceive patients because doctors in California have a duty to disclose to their
57
patients the potential of death, serious harm, and other complications
associated with a proposed procedure, as well as “ ‘such additional
information as a skilled practitioner of good standing would provide under
similar circumstances.’ ” (Daum v. SpineCare Medical Group, Inc. (1997) 52
Cal.App.4th 1285, 1301–1302, quoting Cobbs v. Grant (1972) 8 Cal.3d 229,
244–245.) In other words, Ethicon claims its communications were not likely
to deceive patients because doctors have a legal duty to disclose the risks
associated with implantation of Ethicon’s products and to obtain their
patients’ informed consent in connection with this disclosure.
Substantial evidence supported the court’s finding that Ethicon’s
marketing communications were likely to deceive patients, notwithstanding
the legal duties owed by doctors. Obviously, doctors must be adequately
informed of the risks of a medical device to effectively disclose those risks to
patients. As Ethicon sales manager Michelle Garrison testified, “if [Ethicon
is] not communicating [the product complications] to the doctor, the doctor
may not be able to communicate that to the patient. ... The doctor needs to
be properly informed.”
However, as previously discussed, Ethicon willfully and intentionally
promulgated deceptive messages to doctors about the risks and complications
associated with its products. Because doctors themselves were likely to be
deceived by Ethicon’s IFUs and marketing communications, the trial court
reasonably found Ethicon’s marketing communications were likely to deceive
patients notwithstanding the legal duties doctors owe to their patients.
D
The Safe Harbor Defense Does Not Apply
Ethicon asserts the FDA authorized, or at minimum permitted, certain
IFUs and marketing communications upon which the People’s claims were
58
based. According to Ethicon, the FDA’s conduct established a safe harbor
that barred the Attorney’s General’s claims. For reasons we will explain, no
such safe harbor existed.
1
Overview of the Safe Harbor Defense
Under the safe harbor defense, “[s]pecific legislation may limit the
judiciary’s power to declare conduct unfair [under the UCL]. If the
Legislature has permitted certain conduct or considered a situation and
concluded no action should lie, courts may not override that determination.
When specific legislation provides a ‘safe harbor,’ plaintiffs may not use the
general unfair competition law to assault that harbor.” (Cel-Tech, supra, 20
Cal.4th at p. 182.) Stated another way, the Attorney General or another UCL
plaintiff may “not ‘plead around’ an ‘absolute bar to relief’ simply ‘by
recasting the cause of action as one for unfair competition.’ ” (Ibid.)
There is some disagreement among courts as to whether legislation
alone can create a safe harbor or whether executive action can give rise to a
safe harbor as well. (Compare Krumme v. Mercury Ins. Co. (2004) 123
Cal.App.4th 924, 940, fn. 5 [“only statutes can create a safe harbor”], with
Davis v. HSBC Bank Nevada, N.A. (9th Cir. 2012) 691 F.3d 1152, 1165–1167
[regulations can create safe harbor].) We assume for purposes of this appeal,
without deciding, that executive conduct can create a safe harbor. We also
assume, without deciding, that the safe harbor concept applies to UCL claims
based on FAL violations and fraudulent or unlawful business practices, not
merely claims based on unfair business practices. (See De La Torre v.
CashCall, Inc. (2018) 5 Cal.5th 966, 986 [assuming without deciding that safe
harbor defense applied to unlawful business practice claims] (De La Torre).)
59
2
The FDA Did Not Create a Safe Harbor for Communications
Related to the POP Products
i
The Medical Device Amendments of 1976 (MDA), Pub. L. No. 94-295,
90 Stat. 539 (MDA) “directs the FDA to divide medical devices into three
classes based on the level of risk they present, and it provides for different
regulation of each class. [Citation.] Class I, the lowest-risk category,
comprises products such as bandages and tongue depressors. Class I devices
are subject to ‘general controls’ such as labeling requirements. [Citation.]
Class II devices are those for which general controls ‘are insufficient to
provide reasonable assurance of ... safety and effectiveness.’ [Citation.] In
addition to being subject to general controls, Class II devices are subject to
‘special controls’ such as “performance standards, postmarket surveillance, ...
recommendations, and other appropriate actions as the [FDA] deems
necessary’ to ensure safety and effectiveness. [Citation.] Class III devices,
the highest-risk category, are devices that cannot be determined to provide a
‘reasonable assurance of ... safety and effectiveness’ under Class I or II
controls, and that either are marketed as life-supporting devices or pose an
unreasonable risk of illness or injury.” (In re Bard IVC Filters Product
Liability Litigation (9th Cir. 2020) 969 F.3d 1067, 1070 (Bard).)
“Class III devices are generally subject to premarket approval by the
FDA. [Citation.] Premarket approval is a rigorous process that requires the
manufacturer to submit a detailed application including studies of the
device’s safety and effectiveness. [Citations.] The FDA may approve the
device only if has ‘reasonable assurance’ that the device is safe and effective.
[Citation.] [¶] By contrast, Class I and II devices are generally subject to a far
less rigorous process referred to as section ‘510(k) approval,’ [citation], which
60
requires the manufacturer to show only that the device is ‘substantially
equivalent’ to an existing Class I or Class II device. [Citations.] To grant
approval, the FDA must find that the device ‘has the same technological
characteristics as the predicate device,’ or, if the device has different
technological characteristics, that it ‘is as safe and effective as a legally
marketed device, and ... does not raise different questions of safety and
effectiveness than the predicate device.’ ” (Bard, supra, 969 F.3d at p. 1070.)
The SUI and POP products are medical devices. They went through
the section 510(k) clearance process and, during the relevant timeframe, they
were designated as Class II devices. During the clearance process for the
Prolift and Prolift+M devices, the FDA informed Ethicon it was unable to
determine whether the devices were substantially equivalent to an existing
legally marketed predicate device due to certain “deficiencies” in Ethicon’s
submissions to the FDA. The FDA also noted that the draft IFUs for Prolift
and Prolift+M did “not adequately address issues of usability and potential
adverse events,” and it ordered Ethicon to add adverse events to the IFUs,
including “hematoma, urinary incontinence, urinary retention/obstruction,
void dysfunction, pain, infection, adhesions, wound dehiscence, nerve
damage, recurrent prolapse, contracture, and procedure failure.” It also
ordered Ethicon to develop a patient brochure addressing the risks and
benefits of POP treatment options. Thereafter, Ethicon added most of the
adverse events identified by the FDA into the IFUs for Prolift and Prolift+M.
ii
On appeal, Ethicon contends the FDA effectively wrote and approved
the IFUs for the Prolift and Prolift+M devices. According to Ethicon, the
FDA’s alleged drafting and approval of the IFUs created a safe harbor that
shielded Ethicon from liability for the content of the IFUs.
61
The FDA’s limited review of the draft Prolift and Prolift+M IFUs—a
review undertaken as part of the section 510(k) clearance process—did not
create a safe harbor. “To forestall an action under the unfair competition
law, another provision [or executive action, per our stated assumptions] must
actually ‘bar’ the action or clearly permit the conduct.” (Cel-Tech, supra, 20
Cal.4th at p. 183; Klein v. Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342,
1379 [“to qualify for the ‘safe harbor’ rule, the defendant must show that a
statute ‘explicitly prohibit[s] liability for the defendant’s acts or omissions’
[citation] or ‘expressly precludes an action based on the conduct’ ”].)
The FDA’s conduct during the clearance process did not clearly
sanction or approve the final IFUs for non-510(k) purposes. “ ‘[T]he 510(k)
process is focused on equivalence, not safety.’ … These determinations
simply compare a post–1976 device to a pre–1976 device to ascertain whether
the later device is no more dangerous and no less effective than the earlier
device.’ ” (Medtronic, Inc. v. Lohr (1996) 518 U.S. 470, 493; accord Kaiser,
supra, 947 F.3d at p. 1018 [in products liability case, trial court properly
excluded evidence that FDA cleared Prolift because the section 510(k)
clearance process and FDA safety review serve different purposes].)
Indeed, former FDA Commissioner Dr. Kessler testified the FDA’s
“clearance [of Ethicon’s] pelvic mesh devices [was] not a finding that the
labeling [was] complete, accurate and not misleading.” As Dr. Kessler
explained, the FDA “did not authorize [Ethicon] to exclude certain adverse
events from [its] labeling.” In fact, the FDA even instructed Ethicon its
“substantial equivalence determination [did] not mean that [the] FDA ha[d]
made a determination that [its] device[s] complie[d] with other requirements
of the [Food, Drug, and Cosmetic] Act or any Federal statutes and regulations
administered by other Federal agencies.” The FDA also advised Ethicon it
62
“must comply with all the [Food, Drug, and Cosmetic] Act’s requirements,
including … labeling” requirements.
Because product safety and labeling were not the focus of the FDA’s
section 510(k) clearance process, we conclude the FDA did not clearly
sanction Ethicon’s IFUs as lawful for all purposes when it cleared the Prolift
and Prolift+M devices, or when it requested that Ethicon supplement its
deficient draft IFUs as part of the section 510(k) clearance process.
3
The FDA Did Not Create a Safe Harbor for Communications
Related to the SUI Products
Ethicon asserts a safe harbor defense regarding the IFUs and patient
brochures for its SUI devices as well. It claims that, in September 2011, the
FDA convened an advisory committee to consider issues relating to the use of
surgical mesh for the treatment of SUI and POP. An executive summary
prepared in advance of the meeting stated the advisory committee would
consider, among other subjects, whether special controls were needed for SUI
mesh products such as improvements in physician and patient labeling.
After the meeting, the FDA did not order additional special controls.
According to Ethicon, the FDA’s inaction established a safe harbor for the
SUI device labeling.
Ethicon is mistaken. At most, the FDA failed to declare Ethicon’s
conduct unlawful. But “[t]here is a difference between (1) not making an
activity unlawful, and (2) making that activity lawful. ... Acts that the
Legislature [or agency] has determined to be lawful may not form the basis
for an action under the unfair competition law, but acts may, if otherwise
unfair, be challenged under the unfair competition law even if the Legislature
[or agency] failed to proscribe them in some other provision.” (Cel-Tech,
supra, 20 Cal.4th at p. 183; see De La Torre, supra, 5 Cal.5th at p. 987 [a
63
“lack of proscription is not enough” for a safe harbor].) Because the FDA’s
mere inaction did not clearly permit the IFUs and brochures at issue, Ethicon
has failed to establish a safe harbor defense for those communications.
E
Ethicon Has Not Proven Violations of its Speech Rights
Next, Ethicon argues the trial court “punished” it for engaging in
speech protected by the free speech clauses of the federal and state
constitutions. According to Ethicon, the “court’s holding that all of Ethicon’s
communications about its pelvic-mesh devices violated California law cannot
withstand First Amendment scrutiny.”
The First Amendment states, “Congress shall make no law ... abridging
the freedom of speech....” (U.S. Const., 1st Amend.) “Although by its terms
this provision limits only Congress, the United States Supreme Court has
held that the Fourteenth Amendment’s due process clause makes the
freedom of speech provision operate to limit the authority of state and local
governments as well.” (Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 951
(Kasky); McIntyre v. Ohio Elections Comm’n (1995) 514 U.S. 334, 336, fn. 1.)
It is undisputed Ethicon’s IFUs and advertisements were commercial
speech. “Under the First Amendment, commercial speech is entitled to less
protection from governmental regulation than other forms of expression.”
(People ex rel. Gascon v. HomeAdvisor, Inc. (2020) 49 Cal.App.5th 1073, 1085
(HomeAdvisor).) Generally, it is subject to scrutiny under a test articulated
in Central Hudson Gas & Elec. v. Public Serv. Comm’n (1980) 447 U.S. 557
(Central Hudson). Under the Central Hudson test, regulation of speech is
permissible if it: (1) seeks to implement a substantial governmental interest;
(2) directly advances the asserted governmental interest; and (3) is not more
extensive than is necessary to serve that interest. (Id. at pp. 564–566.)
64
Although commercial speech is generally protected under the First
Amendment, “commercial speech that is false or misleading is not entitled to
First Amendment protection and ‘may be prohibited entirely.’ ” (Kasky,
supra, 27 Cal.4th at p. 953.) Indeed, “ ‘[i]t is well settled that false
commercial speech is not protected by the First Amendment and may be
banned entirely.’ ” (Osmose, Inc. v. Viance, LLC (11th Cir. 2010) 612 F.3d
1298, 1323, italics added; see Castrol Inc. v. Pennzoil Co. (3d Cir. 1993) 987
F.2d 939, 949 [“false commercial speech is not protected by the First
Amendment”].) “ ‘With regard to misleading commercial speech, the United
States Supreme Court has drawn a distinction between, on the one hand,
speech that is actually or inherently misleading, and, on the other hand,
speech that is only potentially misleading. Actually or inherently misleading
commercial speech is treated the same as false commercial speech, which the
state may prohibit entirely. [Citations.] By comparison, “[s]tates may not
completely ban potentially misleading speech if narrower limitations can
ensure that the information is presented in a nonmisleading manner.” ’ ”
(HomeAdvisor, supra, 49 Cal.App.5th at p. 1085, italics added.)
Article I, section 2, subdivision (a) of the state constitution contains a
constitutional free speech guarantee as well, stating: “Every person may
freely speak, write and publish his or her sentiments on all subjects, being
responsible for the abuse of this right. A law may not restrain or abridge
liberty of speech or press.” (Cal. Const., art. I, § 2, subd. (a).) “The state
Constitution’s free speech provision is ‘at least as broad’ as [citation] and in
some ways is broader than [citations] the comparable provision of the federal
Constitution’s First Amendment.” (Kasky, supra, 27 Cal.4th at pp. 958–959.)
But, “[i]n construing the free speech provision [of the state constitution],
California courts have usually drawn the boundaries between noncommercial
65
speech and commercial speech, and between protected and nonprotected
commercial speech, with an eye to the analogous boundaries under the First
Amendment.” (People v. Superior Court (J.C. Penney Corp., Inc.) (2019) 34
Cal.App.5th 376, 391 (J.C. Penney); accord In re Morse (1995) 11 Cal.4th 184,
200, fn. 4 [“we see no reason why … misleading advertisements would be
protected commercial speech under the California Constitution”].)
As noted, Ethicon contends the court “punished” it for engaging in
speech protected by the free speech clauses of the state and federal
constitutions. Ethicon claims certain statements the court found deceptive
were supported by credible scientific evidence and subject to legitimate
scientific debate; therefore, the speech was merely potentially misleading—
not actually or inherently misleading. According to Ethicon, such potentially
misleading speech falls within the purview of the federal and state free
speech clauses.
Although Ethicon contends that certain statements in its IFUs and
advertisements were merely potentially misleading, Ethicon overlooks a key
aspect of the statement of decision. The court rendered express factual
findings that the IFUs and marketing materials included literal falsehoods—
—findings Ethicon has not challenged on appeal for lack of substantial
evidence. (See Transgo, Inc. v. Ajac Transmission Parts Corp. (9th Cir. 1985)
768 F.2d 1001, 1022 [applying substantial evidence review to finding that
defendants’ speech was misleading for First Amendment purposes]; POM
Wonderful, LLC v. F.T.C. (D.C. Cir. 2015) 777 F.3d 478, 499–500 [same].)
For example, the court found the “IFUs contained false statements
about mesh’s properties,” including a statement the mesh possessed a bi-
directional elastic property allowing adaptation to various stresses
encountered in the body. It found the IFUs included “false statements” that
66
mesh does not degrade. And it found the marketing materials included
literal falsehoods because they referred to incomplete product information as
a complete description of risks. Because the trial court rendered
unchallenged factual findings that the IFUs and marketing materials
contained false statements, the IFUs and marketing materials at issue were
not subject to constitutional free speech protections. (Kasky, supra, 27
Cal.4th at p. 953.)15
Ethicon’s free speech argument fails for another reason. Even if we
were to conclude Ethicon’s statements were subject to constitutional
protection, that is the beginning–not the end–of the analysis. If commercial
speech is lawful and not misleading, the constitutionality of any restraint on
such speech must then be assessed under the multi-step Central Hudson
inquiry. Under that test, we must consider the purpose for the speech
restriction, as well as the closeness of the fit between the means used and the
goal sought to be achieved by the restriction. (Central Hudson, supra, 447
U.S. at pp. 564–566; see Thompson v. Western States Medical Center (2002)
535 U.S. 357, 367 [a court asks “as a threshold matter whether the
commercial speech concerns unlawful activity or is misleading. ... If the
speech concerns lawful activity and is not misleading … [it] next ask[s]
‘whether the asserted governmental interest is substantial.’ ”], italics added.)
15 In its briefs, Ethicon implies that some of the court’s falsity findings
may be incorrect. For example, it states there is “scientific dispute” and
“debate” concerning whether its mesh degrades. But we do not construe this
vague and passing statement—or others like it—as a substantial evidence
challenge to the court’s express findings that “mesh does degrade,” Ethicon
“knew of this surface degradation six years before the 1998 launch of their
first TVT product,” and, therefore, Ethicon’s IFUs were false insofar as they
stated the mesh “is not ‘subject to degradation or weakening by the action of
tissue enzymes ….’ ”
67
Ethicon does not try to apply this analysis to the statements the court
found deceptive. It does not discuss the government’s ostensible interests in
regulating its speech, whether the restriction promotes those interests, or
whether the restriction is more extensive than is necessary to serve those
interests. By failing to provide legal analysis on these issues, Ethicon has
waived its free speech arguments. (Vo v. City of Garden Grove (2004) 115
Cal.App.4th 425, 447–448 [plaintiffs waived claim that ordinance violated
customers’ right to privacy by failing to discuss why, “if the privacy interest
both exist[ed] and [was] invaded, the governmental interest sought to be
advanced [did] not make the [ordinance] constitutionally permissible”];
accord J.C. Penney, supra, 34 Cal.App.5th at pp. 398–399 [although FAL
regulated defendants’ protected commercial speech, demurrer based on free
speech defense was improper given that the record did not permit an
evaluation of the validity of the regulation under the Central Hudson test].)
F
The Trial Court Did Not Err in Calculating the Civil Penalty Award
Ethicon contends the trial court abused its discretion in calculating the
civil penalty award in several respects. For reasons we will explain, we
discern no abuse of discretion in the calculation of the award.
1
Legal Standards Governing Civil Penalties
The UCL and FAL each contain an identical provision regarding the
assessment of civil penalties. Both statutes state as follows:
“The court shall impose a civil penalty for each violation of this
chapter. In assessing the amount of the civil penalty, the court
shall consider any one or more of the relevant circumstances
presented by any of the parties to the case, including, but not
limited to, the following: the nature and seriousness of the
misconduct, the number of violations, the persistence of the
68
misconduct, the length of time over which the misconduct
occurred, the willfulness of the defendant’s misconduct, and the
defendant’s assets, liabilities, and net worth.” (§§ 17206,
subd. (b), 17536, subd. (b).)
“The amount of the penalty depends in the first instance on the number
of violations committed.” (People ex rel. Kennedy v. Beaumont Investment,
Ltd. (2003) 111 Cal.App.4th 102, 127 (Beaumont).) The UCL and FAL do not
specify what constitutes a single violation, so courts must decide what
amounts to a violation on a case-by-case basis. (Id. at p. 128.)
The trial court has “broad discretion” when it determines the
appropriate civil penalty in a given case. (Nationwide, supra, 9 Cal.5th at
p. 326; see First Federal, supra, 104 Cal.App.4th at p. 729 [the UCL and FAL
set forth “six relevant factors a court may consider in determining an
appropriate penalty, and the court is authorized to impose a penalty based on
evidence as to any one or more of the enumerated factors”].) “[A]lthough the
civil penalties under the UCL and the FAL ‘may have a punitive or deterrent
aspect, their primary purpose is to secure obedience to statutes and
regulations imposed to assure important public policy objectives. ... The
focus of [both] statutory scheme[s] is preventative.’ ” (Nationwide, at p. 326;
see First Federal, at p. 732 [“Civil penalties, like punitive damages, are
intended to punish the wrongdoer and to deter future misconduct.”].)
“We review the trial court’s imposition of … civil penalties under an
abuse of discretion standard. [Citation.] Under this standard, ‘[w]e do not
reweigh the evidence or substitute our notions of fairness for the trial court’s.
[Citations.] “To merit reversal, both an abuse of discretion by the trial court
must be ‘clear’ and the demonstration of it on appeal ‘strong[.]’ ” ’ ” (People v.
JTH Tax, Inc. (2013) 212 Cal.App.4th 1219, 1250 (JTH).) An abuse of
discretion exists when a trial court rules “ ‘in an arbitrary, capricious or
69
patently absurd manner that result[s] in a manifest miscarriage of justice.’ ”
(Francheschi v. Franchise Tax Bd. (2016) 1 Cal.App.5th 247, 256–257.)
“ ‘[T]he trial court’s discretion in setting civil penalties generally will be
upheld.’ ” (Overstock.com, supra, 12 Cal.App.5th at p. 1088.)
2
Calculation of Violations
The trial court counted each deceptive IFU and marketing
communication as a separate violation of the UCL and FAL. In adopting this
methodology, the court reasoned each IFU and marketing communication
was “designed to drive future sales of the product, and thus relate[d] to
[Ethicon’s] opportunity for gain.” The court also noted its calculation was
likely an undercount of the deceptive communications Ethicon circulated
during the liability period.16
On appeal, Ethicon argues the trial court should have calculated the
violations by using a per-day violation count or, alternatively, a figure tied to
the rate of reoperation for women who received pelvic mesh implants.
Relying on People v. Superior Court (Olson) (1979) 96 Cal.App.3d 181 (Olson),
Ethicon contends the court abused its discretion by adopting a per-
communication methodology to calculate the total number of violations.
Olson and its progeny do not support Ethicon’s argument.
In Olson, a real estate agent placed an advertisement containing
misstatements in Southern California newspapers on eight occasions. (Olson,
supra, 96 Cal.App.3d at p. 196.) The District Attorney filed an action against
16 The court found its calculation was likely an undercount because, for
certain gaps of time, Ethicon did not have internal company data necessary
for the Attorney General’s forensic accountant to calculate the number of
deceptive IFUs and marketing communications that Ethicon disseminated.
These gaps of time were omitted from the violations count.
70
the agent alleging UCL and FAL violations, and seeking civil penalties. (Id.
at pp. 184–185.) The trial court found both statutes were unconstitutional
(either facially or as applied to the agent), granted summary judgment for the
agent, and ordered that, in the event of an appellate reversal, the agent could
be liable only for one statutory violation for each day the advertisement
appeared in a single edition of a newspaper. (Id. at pp. 186–188.)
In a writ proceeding, the Court of Appeal concluded the trial court’s
constitutional rulings were erroneous and ordered vacatur of the summary
judgment ruling. (Olson, supra, 96 Cal.App.3d at pp. 195, 199.) With respect
to the number of statutory violations, the court rejected the People’s claim
that the number of violations must be based on “the number of persons to
whom the representations were made so that the number of violations
resulting from a false advertisement in a newspaper may theoretically be
equated with the circulation of the paper.” (Id. at p. 198.) It reasoned the
circulation of the advertisement in just one newspaper (the Los Angeles
Times) could result in a civil penalty exceeding two and a half billion dollars
per statute—an outcome that would violate due process. (Ibid.)
On the other hand, the Court of Appeal rejected the trial court’s bright
line rule that “dissemination of a false or deceptive advertisement through a
single edition of a newspaper can constitute but one violation of each statute
as a matter of law.” (Olson, supra, 96 Cal.App.3d at p. 198.) Instead, it
determined “a reasonable interpretation of the statute in the context of a
newspaper advertisement would be that a single publication constitutes a
minimum of one violation with as many additional violations as there are
persons who read the advertisement or who responded to the advertisement
by purchasing the advertised product or service or by making inquiries
concerning such product or service. Violations so calculated would be
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reasonably related to the gain or the opportunity for gain achieved by the
dissemination of the untruthful or deceptive advertisement.” (Ibid.)
Subsequent decisions interpreting Olson have concluded that, in
appropriate circumstances, total circulation can be a reasonable method to
determine the number of statutory violations. In People v. Morse (1993) 21
Cal.App.4th 259 (Morse), the People filed a civil enforcement action against
an attorney who mailed false and misleading solicitations to homeowners
offering to assist them in the recording of homestead declarations. The trial
court granted summary adjudication for the People and ordered the attorney
to pay civil penalties based on the number of solicitations he mailed, rather
than the number of people who received them or responded to them. (Id. at
pp. 272–273.) The Court of Appeal approved the trial court’s methodology for
calculating violations, reasoning that—unlike the “mass appeal at issue with
the newspaper advertising in Olson”—the attorney targeted his
individualized mail campaign to homeowners and designed his solicitations
to be noticed and read. (Id. at pp. 273, 274.) The court opined that “[u]nder
these circumstances, it is reasonable to assume that the Legislature
contemplated a penalty for each direct mailing.” (Id. at p. 274.)
In JTH, supra, 212 Cal.App.4th 1219, the People filed a UCL and FAL
action against a tax preparation and loan service company based, in part, on
the company’s false and misleading television and newspaper
advertisements. The trial court found the company liable, ordered it to pay
civil penalties, and determined the number of violations based on a
percentage of the gross circulation figures for the advertisements (using
Nielsen ratings for the television advertisements). (Id. at pp. 1226, 1252.)
The Court of Appeal concluded the trial court did not abuse its discretion
when calculating the number of violations. (Id. at pp. 1249–1255.) It noted,
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among other things, that the company directly mailed its advertisements to
customers and viewed its advertisements as “a particularly effective outlet
for reaching its target audience.” (Id. at p. 1255.) Further, the court noted
that Olson itself suggested the People’s burden of proof should not “ ‘be so
onerous as to undermine the effectiveness of the civil monetary penalty as an
enforcement tool.’ ” (Id. at p. 1251.) On these bases, the Court of Appeal
rejected the company’s argument that the number of violations must be tied
to the number of persons who actually saw the advertisements.
In accordance with these authorities, we conclude the trial court did not
abuse its discretion by calculating the number of violations based on the
number of IFUs or marketing communications that contained a false or
misleading statement. Like the deceptive statements at issue in Morse and
JTH, and unlike those in Olson, Ethicon’s deceptive IFUs and marketing
communications were substantively targeted to well-defined groups of people.
The IFUs were specifically directed to doctors who were considering whether
to implant Ethicon’s device or were preparing to do so—often, though not
always, to urogynecologists and surgical specialists. And Ethicon’s
marketing communications were explicitly written to appeal to those same
doctors, or to prospective patients who were suffering from SUI or POP.
Further, Ethicon’s IFUs and marketing communications were sent,
displayed, or made available only to those same limited audiences, not the
broader general public. For example, Ethicon purposefully disseminated its
marketing communications in mediums designed to reach the eyes of doctors,
including by sponsoring presentations at specialized medical conferences
attended by doctors and placing advertisements in medical journals read
predominately by doctors. Similarly, Ethicon steered its marketing
communications directly to prospective patients who were likely to be
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receptive to such communications (and Ethicon’s products more generally).
Ethicon provided patient brochures to doctors who were already implanting
or likely to implant its products—all with the aim that those brochures would
be left in doctors’ office waiting rooms for patients to read them or take them
home. Further, Ethicon even relied on Internet users’ individualized online
search histories to send them online advertisements about its products.
Given the highly-targeted nature of Ethicon’s communications, we
conclude the trial court reasonably found each IFU and marketing
communication represented a gain or opportunity to gain for Ethicon. For
the same reason, we conclude the court did not exceed the bounds of its
discretion when determining the number of violations.17 (JTH, supra, 212
Cal.App.4th at pp. 1249–1255; Morse, supra, 21 Cal.App.4th at pp. 273–274.)
17 One category of violations that received considerable attention in the
parties’ briefs and at oral argument was printed marketing communications
such as product brochures. The trial court adopted the methodology of the
People’s forensic accountant to calculate the number of violations arising
from such materials. The forensic accountant, in turn, calculated the number
of violations based on an estimate of the total number of printed marketing
materials that were ordered by Ethicon sales representatives and sent into
the state to be distributed to health care providers and ultimately patients.
On appeal, Ethicon complains the forensic accountant’s calculations
were inflated because he extrapolated one salesperson’s history to the entire
sales staff and failed to account for brochures that were ordered but not
distributed, and he never took these factors into account in calculating the
number of violations associated with the brochures.
We agree it would have been desirable for the expert to have made an
effort to have calculated this differential, but on this record, we find no abuse
of discretion. In discovery responses, Ethicon itself admitted it had no “way
to determine how many such items were actually distributed,” and it had not
been able to determine the “exact number of copies of printed materials that
had been sent to California.” Additionally, Ethicon has never suggested a
method to discount the expert’s calculation in either the trial court or on
appeal, and in the statement of decision there was no factual finding that
Ethicon’s printed materials went undistributed.
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3
Amount of Penalties Per Violation
The trial court assessed a civil penalty of $1,250 per violation. It
considered and rendered findings pertaining to the factors set forth in the
UCL (§ 17206, subd. (b)) and FAL (§ 17536, subd. (b)) when setting $1,250 as
the per-violation penalty. In particular, it found: the nature and seriousness
of the misconduct was “grave” because Ethicon misrepresented the benefits
and risks of pelvic mesh products that can cause debilitating, chronic pain for
patients and destroy (sometimes permanently) their sexual, urinary, and
defecatory functions; Ethicon circulated “hundreds of thousands” of deceptive
communications; Ethicon knowingly persisted in its misconduct despite
internal and external calls for change; Ethicon’s misconduct spanned 17
years; and the total award was less than one percent of defendant-parent
company Johnson & Johnson’s $70.4 billion net worth.
Ethicon challenges the amount imposed for each civil penalty on
grounds that each IFU and marketing communication “was different–in what
was said, in what context, to whom, etc.–and each had a different capacity for
harm.” Due to these purported differences, Ethicon claims the court abused
its discretion by imposing the same civil penalty per violation. We disagree.
Although the IFUs and marketing communications at issue may have
differed in their particulars, all of them (with the exception of those specified
above, ante Part III.C.3) shared the same defining features: each contained
misstatements, half-truths, and/or omissions regarding the risks of Ethicon’s
pelvic mesh products, and each was likely to deceive California doctors and/or
patients. As the trial court put it, there was a “common theme that [ran]
throughout all of [Ethicon’s] marketing …[.] [T]he company concealed from
consumers the most serious and long-term risks resulting from the device.”
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Given that all of the IFUs and marketing communications pertained to the
same products, shared the same or similar deceptive traits, and were likely to
deceive their target audiences, the court did not exceed its discretion by
imposing the same civil penalty amount for each violation.
Ethicon also asserts the trial court abused its discretion because $1,250
was too much to impose for each violation. According to Ethicon, $1,250 was
too large because Ethicon’s communications—not its pelvic mesh products—
were the focus of the lawsuit, and Ethicon’s communications themselves did
not harm patients. Further, Ethicon claims a lower penalty was warranted
because Ethicon “vetted its warnings internally and externally,” and,
according to Ethicon, the court found that Ethicon violated only one prong of
the UCL (the fraudulent prong). Once again, we disagree with Ethicon.
Ethicon’s effort to distinguish between its communications, on the one
hand, and its pelvic mesh products, on the other hand, is mere semantics.
The communications were made for the purpose of marketing and/or
providing information about Ethicon’s products, and they misrepresented the
safety and risks associated with Ethicon’s products. The products discussed
therein were implanted into patients and, in many cases, resulted in medical,
physical, and emotional turmoil that lasted years or for the rest of patients’
lives. The court did not abuse its discretion in considering the subject matter
of Ethicon’s communications, or the dire harm flowing from those deceptive
communications, when assessing the nature and seriousness of Ethicon’s
misconduct. (See Fremont, supra, 104 Cal.App.4th at p. 529 [court did not
abuse its discretion when imposing civil penalties because “[t]he offenses
were serious in that they impacted the financial security” of the victims].)
The other considerations raised by Ethicon do not suggest an abuse of
discretion either. On the contrary, the fact Ethicon internally vetted its IFUs
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and marketing communications tends to support the trial court’s finding that
Ethicon’s deceptive misstatements and omissions were knowing and
intentional, not the product of mere negligence. That factor weighs in favor
of a higher per-violation award, as opposed to a lower per-violation award.
Further, Ethicon did not violate the UCL in just one way, as it claims.
Rather, Ethicon violated the UCL in at least two ways—first, it committed
fraudulent business acts; and second, it violated the FAL. Although the same
conduct gave rise to the trial court’s findings of UCL liability, there were at
least two independent statutory bases for the court’s finding of UCL liability.
These considerations aside, the trial court carefully considered each of
the nonexclusive statutory factors guiding its exercise of discretion. It
weighed the seriousness, severity, duration, and persistence of Ethicon’s
misconduct, as well as Ethicon’s culpability, the number of statutory
violations committed, and the financial condition of Ethicon’s parent
company. Based on all these factors, the court assessed civil penalties of
$1,250 per violation—half the amount requested by the Attorney General. In
doing so, the court acted within the bounds of its broad discretion.
G
The Civil Penalties Did Not Violate Ethicon’s Due Process Rights
Ethicon contends the trial court violated its due process rights by
imposing a civil penalty award of $344 million (which we have reduced to
approximately $302 million). Ethicon argues its due process rights were
violated because it did not have fair notice that its conduct would be
punishable or fair notice of the potential severity of the civil penalty award.
Ethicon’s contention that it did not have notice of the potential for
punishment is based on arguments we have previously found to be without
merit. For instance, Ethicon repeats its claim that the trial court interpreted
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the UCL and FAL in an unprecedented way—e.g., by requiring Ethicon to
warn consumers of all risks associated with its products regardless of
consumers’ existing knowledge or consideration of whether Ethicon’s
communications would deceive consumers. Ethicon also repeats its claim
that the FDA authorized certain of the IFUs at issue, such that Ethicon did
not have notice its conduct could lead to liability. However, we have already
rejected these assertions. (See ante Parts III.B.1 and III.D.2.) Ethicon’s due
process argument fails for the same reasons.
Ethicon’s due process argument fares no better to the extent Ethicon
contends it lacked fair notice of the severity of the punishment. Ethicon
claims—with no additional analysis—that it lacked notice of the potential
severity of the punishment because the civil penalties imposed here were
larger than any other civil penalty that has been imposed under the UCL or
FAL and upheld on appeal in a reported decision.
Ethicon may well be correct that the civil penalties imposed here are
the largest to date under the UCL and FAL, at least among those penalties
discussed in reported appellate decisions. Nonetheless, that fact alone does
not mean that Ethicon was deprived of notice regarding the potential severity
of its punishment. Certainly, none of the other appellate decisions upholding
civil penalty awards under the UCL and FAL “suggest that the amounts
awarded [in those cases] were somehow in the outer limit of penalties that
may properly be imposed.” (Overstock.com, supra, 12 Cal.App.5th at p. 1090.)
Additionally, the size of the civil penalty award here is, in no small part, due
to Ethicon’s dissemination of thousands of deceptive statements for years on
end. (Ibid. [rejecting claim that civil penalties awarded under UCL and FAL
were excessive merely because they were larger than penalties upheld in
other cases]; Sweeney v. San Francisco Bay Conservation and Development
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Commission (2021) 62 Cal.App.5th 1, 20–21 [rejecting claim that penalty was
excessive “simply because it represented [the government entity’s] ‘highest
penalty ever’ ”]; see United States v. Dish Network L.L.C. (7th Cir. 2020) 954
F.3d 970, 980 [“Someone whose maximum penalty reaches the mesosphere
only because the number of violations reaches the stratosphere can’t
complain about the consequences of its own extensive misconduct.”].)
Several additional factors undermine Ethicon’s argument that it was
deprived of notice regarding the potential severity of its punishment. The
UCL and FAL expressly define the maximum amounts a violator can be
punished per violation—$2,500. (§§ 17206, subd. (a); 17536, subd. (a).) The
Legislature enacted these provisions decades ago, giving Ethicon clear notice
of the possible per-violation punishment of each statute. (See Stats. 1965,
ch. 827, § 1, pp. 2419–2420 [adding section 17536 to the FAL]; Stats. 1972,
ch. 1084, § 2, p. 2021 [adding predecessor to section 17206].) And, as
discussed, judicial authorities have long discussed the broad discretion courts
possess when it comes to defining and calculating the number of UCL and
FAL violations. (E.g., Beaumont, supra, 111 Cal.App.4th at pp. 127–128.)
The Attorney General even gave Ethicon direct notice of the potential
punishment it faced—long before the statutory liability terminated in 2018.
During the Attorney General’s investigation of Ethicon, the Attorney General
and Ethicon entered into a tolling agreement effective October 17, 2012. At
least as of this date, Ethicon was on direct notice that it could be held liable
for its communications and practices. At that time, Ethicon could have
altered its communications and practices to avoid this outcome or, at least, to
minimize the amount of the potential civil penalty award. It did not do so.
For all these reasons, we conclude Ethicon had notice of the
punishment it could face for circulating false or misleading communications.
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H
The Civil Penalties Did Not Violate the Excessive Fines Clauses
Ethicon’s final argument is that the civil penalties violate the
prohibitions against excessive fines enshrined in the Eighth Amendment to
the federal constitution and article I, section 17 of the state constitution.
When we consider whether a fine is excessive, “we accept the trial
court’s factual findings unless clearly erroneous and determine de novo
whether the fine is excessive.” (Overstock.com, supra, 12 Cal.App.5th at
p. 1091; Lent v. Cal. Coastal Com. (2021) 62 Cal.App.5th 812, 857
[“ ‘ “[F]actual findings made by the [trial court] in conducting the
excessiveness inquiry, of course, must be accepted unless clearly
erroneous.” ’ ”].) “To decide whether the fine [is] constitutionally
disproportionate, we consider: ‘(1) the defendant’s culpability; (2) the
relationship between the harm and the penalty; (3) the penalties imposed in
similar statutes; and (4) the defendant’s ability to pay.’ ” (Overstock.com, at
p. 1091.) Consideration of these factors compels a conclusion that the award,
as we have amended it on appeal, is not excessive.
With regard to the first factor, Ethicon argues it was not particularly
culpable because it believed in good faith that its labeling and marketing
were not misleading, and that it was complying with the law. But the trial
court found to the contrary. It found Ethicon took “active, willful measures
for nearly twenty years to suppress information and conceal serious risk and
complication information from physicians and patients.” Further, it found
Ethicon knowingly and willfully abused the trust of consumers, as Ethicon’s
misconduct “depriv[ed] physicians of the ability to properly counsel their
patients about the risks and benefits of undergoing surgery to have a
synthetic product permanently implanted in their bodies, and depriv[ed]
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patients of the ability to make informed decisions about their own care.”
Worse still, the court found that even after Ethicon amended its IFUs, the
IFUs “still misleadingly omitted, and omit to this day, a number of risks
associated with [Ethicon’s] pelvic mesh products ….” According to the trial
court, Ethicon’s misconduct was “egregious.” These findings—which are not
clearly erroneous—suggest Ethicon’s culpability was extremely high.
The second factor, which considers the relationship between the harm
and the penalty, also weighs against a finding of excessiveness. Ethicon
claims the award was excessive because Ethicon’s products worked for many
patients and product complications were typically “minor and easily
addressed.” However, Ethicon harmed all consumers by depriving their
doctors of material information necessary to counsel patients and forcing
patients to make potentially life-altering decisions about their health and
well-being based on this same false or incomplete information. Further, an
especially unlucky subset of patients experienced more severe harm. After
electing to receive a surgical implantation of Ethicon’s products based on
false or incomplete information, these patients suffered debilitating and
chronic complications that, according to the trial court, “literally cannot be
undone.” These findings are not clearly erroneous.
Regarding the third factor, the parties refer us to just one other
supposedly similar statute—21 U.S.C. § 333, subd. (f)(1)(A), which limits the
civil penalties available for violations of federal statutes and regulations
governing medical devices to $1 million. To the extent this lone statute is
relevant to the analysis, it counsels in favor of a finding of excessiveness. On
the other hand, we note that the civil penalty imposed here is just half of
what the trial court could have levied under the UCL and FAL (§§ 17206,
subd. (a); 17536, subd. (a))—and half of what the Attorney General requested.
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The final factor in assessing excessiveness is the defendant’s ability to
pay. This factor weighs strongly against a finding of excessiveness. Per the
parties’ stipulation, the trial court found that defendant-parent company
Johnson & Johnson had a net worth of more than $70.4 billion. The civil
penalty imposed by the trial court ($343,993,750) and the amended civil
penalty award ($302,037,500) each constitute less than one half of one
percent of Johnson & Johnson’s net worth. Given these figures, it is apparent
that Ethicon has ample ability to pay the civil penalty award.
Not all of the excessiveness factors point in the same direction. But the
totality of the factors—namely, Ethicon’s extremely high degree of
culpability, the severe harm resulting from Ethicon’s misconduct, and
Ethicon’s undisputed ability to pay—demonstrate that the amended civil
penalty award is not excessive. Based on these factors, we conclude the
amended civil penalty award is constitutionally permissible.
IV
DISPOSITION
The judgment is modified as follows: the civil penalties awarded to the
People are reduced from $343,993,750 to $302,037,500. The judgment is
affirmed as modified. The parties are to bear their own appellate costs.
McCONNELL, P. J.
WE CONCUR:
HALLER, J.
IRION, J.
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