Never Underestimate Your Opponent

Tuesday, January 3, 2017

“Never underestimate your opponent.”  This is good advice, whether you’re playing golf, checkers, or suing someone. Letting your guard down because you assume the other side isn’t up to the task of beating you can be a recipe for disaster in the courtroom. That’s why our law firm’s trial preparation is so thorough. You can’t take anything for granted, and we don’t.

A defendant, especially a large corporate defendant, can believe a self-representing adverse party will be like the lamb led to the slaughter, especially when it comes to motions practice — when the corporation typically asks a trial judge to dismiss the entire action before it even gets to trial. We highly recommend that plaintiffs do no take on big companies for big amounts by themselves, but it happens sometimes.  On occasion, rarely, things actually work out well for the plaintiff.

A recent example is that of chemist Julio Perez, who was fired after he complained to his former employer’s management it was engaging in deceptive practices when it published information about a potential new drug, thereby misleading shareholders, according to Corporate Counsel. Perez, a whistleblower, with a PhD in chemistry but whose first language is not English, won a jury verdict in August of 2016 and is expected to emerge from litigation with about $5 million in damages.

Here are the salient facts and issues:

  • Perez started working for New York based Progenics Pharmaceuticals in 2004. At the time the company sought to bring Relistor, a treatment for constipation caused by opioids like morphine, to market.
  • Progenics contracted with Wyeth Pharmaceuticals (now part of Pfizer) to perform clinical trials on Relistor in 2005 in hopes it would be approved by the U.S. Food and Drug Administration. Perez was a chemists working on Relistor making about $130,000 a year.
  • A press release issued by Progenics and Wyeth in 2008 stated the tablet version of Relistor in clinical trials showed “positive activity” and that company management was “pleased by the preliminary findings.”
  • Two months later Perez obtained a confidential PowerPoint presentation created by Wyeth which, in his opinion, showed a much less positive picture of the tablet’s effectiveness and the results actually discouraged further clinical trials.
  • Perez believed Progenics, a publicly traded company, was misleading investors. He wrote a memo to the head of his department and Mark Baker, the general counsel at the time and now the CEO, accusing the company of “committing fraud against shareholders, since representations made to the public were not consistent with the actual results of the clinical trial.”
  • Baker immediately went to Perez’ office to confront him about how he obtained what should have been confidential material. Perez wasn’t in his office at the time so his computer was confiscated and his access to the company’s servers was revoked.
  • Later that day Progenics’ chief financial officer met with Perez and asked him how he obtained the Wyeth report. Perez, being very sensible, said he wanted to speak with his lawyer. The following morning Perez was fired and he was escorted from the building in a “humiliating” ordeal, as he described it.
  • It appears Perez never went to government officials with his concerns. Progenics and Wyeth have never been sued for fraud concerning the press release or Relistor.

Like many of those reporting possible wrongdoing, Perez has paid a steep price for his actions:

  • He eventually was offered another job but it was from a start-up that wanted him to move and accept stock instead of an annual salary.
  • Perez wrote in a court filing that since he’s been unable to find suitable work at his educational and professional level, he “lives frugally” and “drives a 1993 Toyota Corolla.” He hasn’t had medical insurance since 2010, after his company COBRA coverage ran out.
  • It is typical for whistleblowers to be cut off from their former co-workers or “blacklisted” or industry shunned. We have represented whistleblowers who feel entirely cut out of their prior industry, and it is typical for prospective employers to check the internet to see if a job applicant has filed a lawsuit against some other company.

This failure to replace lost income is normally a problem for a fired plaintiff, but Perez was arguably better off without a new job, as he had to spend a lot of time and energy on the lawsuit.

The same day the trial ended, jurors gave a verdict for Perez and awarded him $1.6 million in back pay, then another $2.7 million in front pay to cover him through his next job (or possibly retirement). After interest is added, the total award will be about $5 million.

Progenics argued during the lawsuit it didn’t do anything wrong and it was Perez who broke the rules. Progenics stated the press release was truthful, Perez misunderstood the report, and he was fired because he misappropriated confidential information and refused to tell them how he got it, not because of Perez’ accusations. The report was widely circulated.

In hindsight Progrenics, made several major mistakes.

  • It acted very quickly and very harshly. The faster and harsher the employer’s punitive stance towards the former employee, the easier it is for a plaintiff to show retaliation was the motive.
  • Despite the fact Perez didn’t leak the information outside the company or make accusations to anyone else, he was quickly fired.
  • Management took a defensive position. Instead of investigating Perez’ claims, it investigated Perez. This is a major typical corporate mistake.
  • The company has never wavered from its claim the plaintiff was fired for obtaining the Wyeth report. Even if that’s true, given the nature of Perez’ allegations and how severe the punishment, that was a weak position for the company to take in front of a jury. Most jurors would see that as a technical breach while the plaintiff was trying to do the right thing.
  • Perez cross-examined Baker and it didn’t go well for Baker. Despite the fact he was a very experienced attorney who was once a partner in a major law firm, Baker came off as angry, condescending, and disrespectful to Perez.  Baker ended up with a scolding by the judge, which probably alienated the jury. The trial judge, on the other hand, described Perez as one who “presented as a credible witness, trying his best to relate information in a truthful, accurate and straightforward manner.”
  • Given their relative strength and power, the jury saw Perez as David going up against Progenics, a corporate Goliath.
  • Perez had a fairly low bar to cross at trial. To prevail, Perez only had to show he had a reasonable belief Progenics misled shareholders, not that they actually did so or intended to do so.
  • Unlike the vast majority of cases, this one didn’t settle. Baker may have taken the case too personally since he was an important actor in the case and later the CEO of the company during litigation. He may have failed to see Progrenics’ potential vulnerabilities and weaknesses at trial. What happened during settlement negotiations is unknown, but Baker may have felt a settlement would be seen as a black mark personally and he felt his actions were correct.

Progrenics may have lost the Perez battle, but it’s winning the Relistor war. The FDA approved Relistor tablets in 2016 and it received a $50 million payment from Valeant Pharmaceuticals, which is licensed to sell Relistor. If the drug sells well, Progenics is in line to get far more money. The company has also moved its offices from the suburbs to 1 World Trade Center tower in Lower Manhattan.

While representing yourself in a major lawsuit is not a good idea, this case shows even a major corporation backed by a large law firm can make mistakes, fall into traps, and make a plaintiff’s difficult path — from firing to a favorable jury verdict — worthwhile.

Conclusion

If you are the victim of wrongful termination, whistleblower retaliation, or other retaliation, including for reporting employer misconduct, refusing to engage in misconduct, or giving or threatening to give information to a newspaper or a federal, state, or local government regulatory body, then please call us at 609-683-7400, or contact our office to arrange for a near-term and reduced fee initial consultation in our Central Jersey offices located in Kingston, NJ. We will listen to your facts, explain the law, and help you create a pathway to economic and social justice that is just right for you.  Call today.  You will be glad you did.