George Frazza

GEORGE FRAZZA - J&J General Counsel (1979-1997)

George Frazza is Of Counsel to the firm Patterson, Belknap, Webb & Tyler. Mr. Frazza joined in 1997 after more than 30 years with Johnson & Johnson where he held the positions of Corporate Secretary (1975-1978), Vice President and General Counsel (1979-1997) and member of Johnson & Johnson's Executive Committee (1987-1996). In 1982, he was a key member of the five-person committee that guided the company through the crises arising out of the Tylenol poisoning, with responsibility for the company's relationships with the FBI, FDA and the media. He is a past co-chair of the American Arbitration Association's large Complex Case Program and has been serving since 1997 as an arbitrator in a number of commercial disputes conducted under AAA and ICC rules. He is a past president of the Association of General Counsel (an organization comprised of the chief legal officers of Fortune 100 companies), and a former editor of The Business Lawyer. Mr. Frazza has served as a member of the New York Stock Exchange's Legal Advisory Committee. He is a Trustee of the Robert Wood Johnson Foundation and Atlantic Legal Foundation, and a director of the National Center for State Courts.

The 1982 Tylenol Murders

In the hours following the first notice of the Tylenol murders, Johnson & Johnson decided to go public with everything it knew about the poisoning. J&J General Counsel George Frazza stated:

"Johnson & Johnson decided it was going to communicate and be active... We were determined to find out what the facts were and, whether we liked them or not, communicate them without gloss to our constituencies."

Analysis of over 8 million Tylenol capsules tested found that 75 contained cyanide.

October 1982 statement regarding the Tylenol murders lawsuits:

The suits are being defended, said George S. Frazza, chief counsel for Johnson & Johnson, which is pleased with its success in restoring consumer confidence and is proud of its product. "It was clear this was a tampering act done at the store shelf level, and that the product was not at fault," he said.

Actually, the evidence clearly shows the tampering was not done at the store shelf level, and the product, specifically the capsule, was at fault.

ABA Rule 3.6

In 1983, the American Bar Association added Rule 3.6, entitled “Trial Publicity” to the Model Rules of Professional Conduct. In adopting Rule 3.6, the ABA directly rejected the Goodwin Committee’s recommendation of using a “clear and present danger” standard for curtailing a lawyer’s speech, and instead included a lower standard prohibiting attorneys from speaking to the press when the “lawyer knows or reasonably should know” that it will have a substantial likelihood of materially prejudicing an adjudicative proceeding.

Rule 3.6 did not define “substantial likelihood” but did provide examples of statements that would violate the Rule in section 3.6(b). The identified statements included statements addressing:

(1) the character, credibility, reputation or criminal record of a party, suspect in a criminal investigation or witness, or the identity of a witness, or the expected testimony of a party or witness;

(2) in a criminal case or proceeding that could result in incarceration, the possibility of a plea of guilty to the offense or the existence or contents of any confession, admission, or statement given by a defendant or suspect or that person's refusal or failure to make a statement;

(3) the performance or results of any examination or test or the refusal or failure of a person to submit to an examination or test, or the identity or nature of physical evidence expected to be presented; (commonly violated by govt. attorneys who reveal to the media that a suspect refused to submitt to a lie-detector test)

(4) any opinion as to the guilt or innocence of a defendant or suspect in a criminal case or proceeding that could result in incarceration; (violated by govt. lawyers who frequently and falsely stated they believed James Lewis was guilty of the Tylenol murders)

(5) information that the lawyer knows or reasonably should know is likely to be inadmissible as evidence in a trial and that would, if disclosed, create a substantial risk of prejudicing an impartial trial; or

(6) the fact that a defendant has been charged with a crime, unless there is included therein a statement explaining that the charge is merely anaccusation and that the defendant is presumed innocent until and unless proven guilty.

In response to the Gentile decision, the ABA revisited the issue of trial publicity and, in August 1994, approved a number of amendments to Rule 3.6. The revised Rule 3.6 provides:

(a) A lawyer who is participating or has participated in the investigation or litigation of a matter shall not make an extrajudicial statement that the lawyer knows or reasonably should know will be disseminated by means of public communication and will have a substantial likelihood of materially prejudicing an adjudicative proceeding in the matter.

(b) Notwithstanding paragraph (a), a lawyer may state:
(1) the claim, offense or defense involved and, except when prohibited bylaw, the identity of the persons involved;

(2) information contained in a public record;

(3) that an investigation of a matter is in progress;

(4) the scheduling or result of any step in litigation;

(5) a request for assistance in obtaining evidence and information
necessary thereto;

(6) a warning of danger concerning the behavior of a person involved, when there is reason to believe that there exists the likelihood of substantial harm to an individual or to the public interest; and

(7) in a criminal case, in addition to subparagraphs (1) through (6):
(i) the identity, residence, occupation and family status of the accused;
(ii) if the accused has not been apprehended, information necessary to aid in apprehension of that person;
(iii) the fact, time and place of arrest; and
(iv) the identity of investigating and arresting officers or agencies and the length of the investigation.
(c) Notwithstanding paragraph (a), a lawyer may make a statement that a reasonable lawyer would believe is required to protect a client from the substantial undue prejudicial effect of recent publicity not initiated by the lawyer or the lawyer's client. A statement made pursuant to this paragraph shall be limited to such information as is necessary to mitigate the recent adverse publicity.

(d) No lawyer associated in a firm or government agency with a lawyer subject to paragraph (a) shall make a statement prohibited by paragraph (a).

The new Rule 3.6 removes the examples of statements identified in the previous 3.6(b), that could have a substantial likelihood of materially prejudicing a proceeding. The six identified statements were removed from the text of the rule and included in the commentary.

The commentary to Rule 3.6 further advises that an additional factor in determining prejudice is the nature of the proceeding involved. Criminal jury trials will be most sensitive to extrajudicial speech, while civil trials may be less sensitive. Further, non-jury hearings and arbitration proceedings may be even less affected. While Rule 3.6 still places limitations on prejudicial comments in these cases, the commentary noted that the likelihood of prejudice may differ depending on the type of proceeding.

While the revised Rule 3.6 maintains the “substantial likelihood of material prejudice” standard, it attempted to clarify the scope of lawyers covered by the Rule 3.6. Rule 3.6 now applies not only to a lawyer who “is participating or has participated in the investigation or litigation of a matter” but also to any lawyer associated in a firm or government agency with a lawyer who is participating or has participated in the investigation or litigation of a matter. This vicarious association provision extends the reach of the Rule 3.6 limitations on speech.

There are situations in which a client may decide to respond proactively to a crisis by making public statements which could be used against it in litigation. For example, a company that sells consumer products that appear to have caused injury may decide that it must preserve consumer confidence by promptly taking action to prevent further harm and to reimburse victims for their expenses. Attorneys are not typically lead spokesmen in such situations, but they are part of the team evaluating and advising clients of the legal risks involved. A well-known example of this is the recall of Tylenol in 1982, and more recently the Odwalla Juice recall in 1996.

a. Tylenol Cyanide Tampering

In the fall of 1982, seven people who had taken Tylenol died from cyanide contained in the capsules. In the hours following the first news of the crisis, Johnson & Johnson made the decision to go public with everything it knew about the poisoning. Johnson & Johnson’s General Counsel, George Frazza, has stated that Johnson & Johnson decided it “was going to communicate and be active. . .We were determined to find out what the facts were and, whether we liked them or not, communicate them without gloss to our constituencies.”19

Johnson & Johnson also decided to recall immediately all of its Tylenol capsules. Analysis of the over eight million (8,000,000) recalled capsules revealed that seventy-five (75) contained cyanide. During the course of the investigation of the cyanide tampering, the FBI, FDA and law enforcement agencies determined that the cyanide was not introduced into the bottles at the factory and that the cyanide was most likely the result of tampering with the capsules during distribution. Having been cleared of any direct cause of the cyanide poisoning, Johnson & Johnson’s decision to champion better safety standards and packaging of pharmaceutical products helped to divert media scrutiny away from Tylenol and toward the need for increased safety requirements and standards in the pharmaceutical industry.20

New York : After the General Motors Verdict -- Is Our Liability System a Friend or Foe of Capitalism?

Our next speaker, on the other side -- he used to be General Counsel of Johnson & Johnson -- is George Frazza who is now with Patterson, Belknop, Webb & Tyler.

MR. FRAZZA: Thank God John didn't introduce me as I was last week, as "the former George Frazza" --

[Laughter.]

MR. FRAZZA: Well, David echoes the standard dictum of many including Robert Reich. That is that the litigation system superimposes on a very weak regulatory climate or nonexistent regulatory climate and provides checks and balances to regulate properly economic conduct, as David has espoused.

I come from a background of the pharmaceutical industry and health care industry - a very rigorously regulated industry - and I think virtually everyone will agree that our regulations on pharmaceuticals and medical devices are the most stringent in the world by far.

So we start off with a situation where we are in a regulated industry. You could argue whether the automotive industry is sufficiently regulated, but that is a political issue and society has to deal with that in both the legislature and the administrative agencies. But take for a minute the pharmaceutical industry, which as you know is one of the biggest actors in this product liability system. There are hundreds of thousands of product liability cases brought against pharmaceutical manufacturers -- oral contraceptives, NSAIDS, the non-steroidal stuff and so forth.

Okay, David, we'll grant that -- there should be an alternative system that keeps an eye on all of these people. But what kind of system do we have and what kind should we have?

One, it should have predictability, a certain modicum of predictability, and I submit that the system is the most unpredictable in the world because you could have 15 oral contraceptive cases, win 14, and then in the 15th there's $300 million of punitive damages award. Rare, agreed. But if you are in Hurricane on the shore nobody tells you, well, these hurricanes are rare.

Is that thrown into the calculus when you decide what drugs to manufacture? It absolutely is. Oral contraceptives weathered it because it was a large drug and a very profitable drug, so you tuck away some money for the aberrations. A typical aberration was that the FDA told us to put on the warning label, "Oral contraceptives may cause blood clots which could be fatal." Awoman had a disabling stroke. She said that warning was inapplicable to her because they didn't say that you could have a disabling stroke which may not be fatal. The court held there are fates worse than death -- you should have told her about this and we paid through the nose.

Now did that regulate the conduct? Yeah. We went back and tinkered with the package insert, which is now as long as "War and Peace", and which nobody reads, incidentally. They put in something about disabling strokes and we went on about our business. Did that have any impact on anything?

The second thing is the quality of this system that rides herd out there, this vigilante system which keeps an eye on these weak regulatory agencies. The regulation is often by way of anecdote. It is often retrospective rather than prospective. There is often a disconnect between real science and junk science, and as I said, normally the actors in this drama are very sensible, intelligent people who are often not equipped scientifically to handle the very arcane issues that are put before them. I am not saying that drug companies do right in every case. I am not saying that they don't cut corners. But who is the judge here?

The third area is the emotion. These are emotional situations. All of economic activity is risk and benefit. We make this decision when we get in a car. We know that if you ride in the front seat it's the "death seat," right? You look at the statistics. You know that. Everybody should ride in the back except the driver. But we don't; we choose to take that risk.

There are risks and benefits in everything. These NSAIDS, they are helping people with arthritis now. We know they will kill about 16,000 people a year. The FDA knows it. The pharmaceutical companies know it. The doctors know it -- whatever. When those people are killed, the people go into court and you have an exercise. And in that exercise the drug company may win, it may lose, it may pay punitive damages, or it may pay nothing. My question is, does it significantly impact on the conduct of that manufacturer? Is it really what it says it is, a superimposed regulatory system to keep these people honest? I submit that it does not, and that it fails miserably in that.

I will switch from the pharmaceutical industry to the automotive industry because we are supposed to talk about the G.M. case, which I am not terribly familiar with. But I do know that right after the G.M. case you had the Ford Bronco case, which was a turnover, and Ford paid I think $390 million and I think it was reversed by the trial judge. But because it was a turnover and the roof, which complied with all of the standards that people think are not strong enough, wasn't crushproof enough, they paid that money.

Now Ford has tried about eight of those cases. They have won four; they have lost four. You go to the Ford engineer and you say to them, "How do I design this car?" He said, "Well, you have got to properly balance risk-benefit." "Well, I do. What do you mean by that? What standards do I have?" "Well, you got to make the roof a little stronger." "But if I make the roof a little stronger, that is more weight. That means it is going to turn over a little faster." "Well, I don't know. Two, you got to meet consumer expectations." "Well, what are consumer expectations?"

The point is that Ford, scratching its head here, says, "how am I going to design this car?" And what Ford does, really, in the real world, is sit down, try to design the car to the best of their ability and hope that the amount of verdicts such as the GM verdict and such are that they can weather. And if they can't weather them, the price of the car will go up.

Now, maybe I am not familiar with the automotive industry, and I don't know whether the regulations are as pervasive as they are in the pharmaceutical industry, but I do know that persistently that year-in and year-out, juries second-guess experienced, detached, objective and dedicated regulators. And the only rule you can go by when you put a pharmaceutical out is what the FDA tells you.

So I submit to you that Litigation has very little positive economic effect on the actions of pharmaceutical companies. It encourages timidity. It encourages people to take drugs that aren't very profitable off the market, because the game, frankly, isn't worth the candle. We never had an IUD case at all until the Dalkon Shield came along. We didn't make Dalkon Shield. And then after Dalkon Shield came, we had a whole corps of plaintiffs lawyers who understood the business, and started to file the cases. We pulled the device off the market, period. It wasn't worth it.

You go to your board and you say, hey, how much is this? Well, we sold 13 million last year. Well, we won most of these cases, yeah. If you lose one, what do you think you lose? Well, we will probably lose 4 or 5 million bucks. Fourteen million bucks, pull it. And that is the real world.

And, so, therefore, I take very sharp issue with the idea that the jury system, really is an effective governor of corporate conduct. Thank you.

[Applause.]

AMERICAN FRAUD and The Tylenol Murders