Johnson & Johnson ordered to pay $417M
MICHAEL BALSAMO
LOS ANGELES — A Los Angeles jury on Monday ordered Johnson & Johnson to pay $417 million to a woman who claimed in a lawsuit that the talc in its iconic baby powder causes ovarian cancer when applied regularly for feminine hygiene.
The lawsuit was brought by a California woman, Eva Echeverria, who alleged Johnson & Johnson failed to adequately warn consumers about the potential cancer risks of talcum powder.
Echeverria developed ovarian cancer as a “proximate result of the unreasonably dangerous and defective nature of talcum powder,” Echeverria said in her lawsuit.
Echeverria’s attorney, Mark Robinson, said his client hoped the verdict would lead Johnson & Johnson to include additional warnings on its products.
“Mrs. Echeverria is dying from this ovarian cancer and she said to me all she wanted to do was to help the other women throughout the whole country who have ovarian cancer for using Johnson & Johnson for 20 and 30 years,” Robinson said.
“She really didn’t want sympathy,” he added. “She just wanted to get a message out to help these other women.”
Johnson & Johnson spokeswoman Carol Goodrich said in a statement that the company will appeal the jury’s decision. She says while the company sympathizes with those impacted by ovarian cancer, she says science supports the safety of Johnson’s baby powder.
A St. Louis, Mo., jury in May awarded $110.5 million to a Virginia woman who was diagnosed with ovarian cancer in 2012.
She had blamed her illness on her use for more than 40 years of the company’s talcum powdercontaining products.
Besides that case, three other jury trials in St. Louis reached similar outcomes last year — issuing awards of $72 million, $70.1 million and $55 million, for a combined total of $307.6 million.
Goodrich said the company is preparing for additional trials in the U.S. and will continue to defend the product’s safety.
Something has gone awry with the Phillips Curve.
It has been roughly flat since 2008, which has some economists worried as it points to stagnant wages, imperilled bottom lines for companies and a stubborn economic slack that — despite massive stimulus efforts — isn’t being eaten up. So what’s the Phillips Curve? It is a model that economists use to describe the inverse relationship between the level of unemployment and the rate of inflation. In short, when more people are working, prices tend to rise.
“The Phillips Curve is central to macroeconomic modelling and the Bank of Canada, the Federal Reserve and any other large central bank uses this as a core component in its forecasting models to capture excess capacity. It’s key to any standard monetary outlook,” TD economist Brian DePratto said.
Economist William Phillips initially studied the inverse relationship between wage increases and unemployment between 1861 and 1957. Phillips found that wages rise when employment rises to attract workers, who can afford to be more discerning. The curve was later adapted to note an inverse relationship between unemployment and inflation — prices rise, when falling unemployment lifts wages, to accommodate rising costs.
“As workers have more choices, they demand higher wages — and, at the same time — business who pay more in wages will raise prices to protect their bottom line. ‘More employment causes more inflation’ is how the theory has worked since the Second World War,” TD economist Michael Dolega said. Until now. Whereas historically, the curve was a curve — with an X axis for unemployment and a Y axis for inflation — sloping downwards as unemployment rises, it’s now a mostly flat line.
That’s a problem for central bankers and policy makers, and it suggests bad news.
Canada’s jobless rate has fallen to 6.3 per cent, its lowest since October 2008, but inflation has lagged. From 1996 to 2008, TD noted, headline inflation averaged 1.8 per cent, roughly in line with the Bank of Canada’s recently-renewed 2 per cent mandate. Since the crash of January 2009 to present, headline inflation has averaged just 1.5 per cent, despite the benchmark interest rate dropping to record lows for much of that same period.
The current trend sets a “possibly very low limit to how far unemployment can fall without inflation starting,” James Forder, economics professor at Oxford, said.
That combination of low inflation and a falling jobless rate is odd, Dolega said. “Typically, inflation accelerating suggests economic slack is being absorbed and resources are rising in cost with more demand.”
Gustavo Indart, economics professor at the University of Toronto, said the flattening of the curve most likely results from a domestic unemployment figure that doesn’t capture global labour market competition. Prices aren’t increasing as a result of rising employment “because wages aren’t increasing.”
A report from TD notes that before 2009, wage growth held at around 3.5 per cent year-over-year, however it’s been stuck around 1 per cent ever since.
Ranjit Dighe, economics professor at the State University of New York, said the trend holds true across advanced economies. “Falling unemployment has yet to translate into big wage gains for workers. This could be because of weaker unions, increased worker anxiety due to globalization or low employment-to population ratios,” he said.
TD also called these the effects of low bargaining power. Workers can’t push for better pay after years of globalization, automation and declining union density.
DePratto said it could pose special risks to Canada. “Take, for instance, Canada’s high household debt levels. We note the way to reduce that burden is for incomes to climb quickly, you’d expect that in a higher growth economy but there are definitely concerns.”
A common reason given for low inflation is an influx of cheap goods, mainly from China, holding back prices. But DePratto said this explanation fails to explain why prices for services haven’t increased, since you can’t import them. And it explain why inflation stalled after 2008, considering the price effects of China’s 2001 entry into the WTO had mostly faded by then.
Another common explanation is that e-commerce, which has lower overhead costs, is keeping prices low. But digital retail sales still only account for about 2 per cent of total retail spending, TD says.
Whatever the cause, the flattening of the curve may impede the central bank’s ability to plan. “(It) means (governor) Stephen Poloz has a much harder job,” DePratto said.