Personal Finance Defined

(Reuters) – A federal appeals court, in a decision unsealed Wednesday, upheld the dismissal of a whistleblower lawsuit against Johnson & Johnson (NYSE:) as a sanction for the plaintiffs’ misuse of confidential records they obtained through related litigation.

The lawsuit, which accused J&J’s DePuy Orthopaedics unit of defrauding the federal government by marketing defective hip implants, was dismissed in December 2021.

J&J has denied wrongdoing.

U.S. Magistrate Judge Page Kelley in Boston found at the time that the plaintiffs, two British orthopedic surgeons who served as expert witnesses in mass tort litigation over the hip implants, violated court orders by using material from that litigation in their whistleblower lawsuit.

A unanimous three-judge panel of the 1st U.S. Circuit Court of Appeals ruled that Kelley’s decision was justified in light of evidence that the plaintiffs, Antoni Nargol and David Langton, wrongly used the confidential information and tried to cover their tracks. The information was shielded by a protective order in the mass tort litigation meant to prevent disclosure of J&J’s trade secrets.

“We accordingly find that the district court did not abuse its discretion in finding that (plaintiffs) had, once again, violated the protective orders and in imposing the weighty sanction of dismissal with prejudice,” Circuit Judge Lara Montecalvo wrote for the panel. Montecalvo was joined by Chief Judge David Barron and Circuit Judge Kermit Lipez.

Ross Brooks, a lawyer for the plaintiffs, said his clients were disappointed by the ruling and that “the record plainly shows that Drs. Nargol and Langton offered to prove their good faith compliance with the relevant court orders.”

J&J did not immediately have a comment.

J&J’s DePuy Orthopaedics Inc unit stopped selling its metal-on-metal Pinnacle hip implant devices in 2013 after the U.S. Food and Drug Administration strengthened its regulations on artificial hips.

The devices became the subject of more than 10,000 product liability lawsuits consolidated before a federal judge in Texas. After being hit with several adverse jury verdicts, J&J agreed to settle thousands of cases in 2019 for about $1 billion, though some are still pending.

Nargol and Langton were serving as expert witnesses for the plaintiffs in that litigation when they sued DePuy under the federal False Claims Act in 2012. They claimed the company marketed the defective hip implant devices to unsuspecting doctors, who were then reimbursed by government health insurance programs.

The case is United States ex rel Nargol et al v. DePuy Orthopaedics Inc et al, 1st U.S. Circuit Court of Appeals, No. 22-1047.

For plaintiffs: Ross Brooks of Brooks and Ross Morrison of Yankwitt

For J&J: Adam Tarosky of Nixon Peabody