Punitive Phase Starts in Genentech Trial

Fresh from their $300-million compensatory award victory last week, attorneys for City of Hope National Medical Center urged jurors Monday to punish Genentech Inc. for its “reprehensible behavior” in depriving the Duarte-based hospital of royalties.

In opening arguments in Los Angeles County Superior Court, attorney Morgan Chu did not specify how much City of Hope was seeking in the punitive-damages portion of the trial.

A jury last week found that Genentech acted with malice or fraud in failing to honor a 1976 contract, which produced the first biotech drug, human insulin.

Chu called on the jurors to “be the conscience of the community” and to weigh the South San Francisco biotech company’s substantial wealth, noting twice its $5.8-billion net worth.

“It is a mind-boggling number,” he said.

Genentech’s attorney, Susan Harriman, said in her opening statement that the $300-million award was punishment enough.

She told the jurors to consider that some of Genentech’s key executives early on were no longer with the firm. “No amount of punitive damages can change the conduct of those persons,” she said.

In pretrial motions earlier in the day, Harriman sought to bar City of Hope from presenting evidence of “reprehensible behavior” in the punitive-damages phase of the trial. Judge Edward Kakita denied that motion.

But Kakita also ruled that City of Hope could not present speculative testimony about what might have happened with research or other activities if the hospital had received the unpaid royalties from Genentech. Because of that ruling, City of Hope is likely to withdraw some witnesses.

The punitive-damages part is expected to proceed swiftly, lasting perhaps a couple more days.

There is no cap on what jurors can award in punitive damages, but attorneys say the amounts should be in relation to the compensatory damages and not jeopardize the survival of the company.

Shares of Genentech rose $2.32 on Monday to $34.85 on the Big Board.