Public Nuisance or Not? Opioids Litigation Roundup

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By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She is currently writing a book about textile artisans.

Over the last decades, more than 500,000 Americans died from opioid overdoses. Litigation continues to wend its away through both federal and state courts, with plaintiffs seeking to hold culpable parties liable for their role in the epidemic.

In August, the Sackler family largely succeeded in their strategy of protecting their personal financial assets, as well as secured indemnity against future legal claims, when Judge Robert Drain approved the bankruptcy plan of Purdue Pharma, over the strenuous objections of some state attorneys general and the U.S. Bankruptcy Trustee. Relying on the services of corporate legal powerhouse Davis, Polk, & Wardwell, the Sacklers succeeded in getting the case heard in Drain’s court, where they banked they would get a most sympathetic hearing for their claims than they may have faced in other federal courtrooms.Such ‘venue shopping’ is common in the bankruptcy process, and now that the horse has bolted the barn and is well into the next county, Congress is debating ‘reforming’ the bankruptcy process (see this Yves post for further details, ‘Catastrophic Injustice’: Judge OKs Purdue Pharma Bankruptcy Plan Shielding Sacklers).

I’m not holding my breath, as it seems the trend for legal ‘reforms’ during my lifetime has been, to put it simply, to make it more difficult for ordinary people to seek legal redress in courts. When coupled with the increasingly business-friendly tilt of the bench, these statutory changes mean that plaintiffs often don’t even get into court in the first instance. Even in the unlikely event that they muster sufficient resources to prevail at trial, they see favorable verdicts overturned on appeal – or at minimum, drastically circumscribed. The tilt, by the way, is by no means a Trumpian or even a Republican phenomenon, as Democratic judicial appointees are also reliably business-friendly, and are almost exclusively drawn from the white shoe and corporate bar -and legal academia, rather than public defenders or the plaintiffs’ bar.

Recent days have seen developments on the opioids litigation front in four actions scattered around the country, each of which I’ll discuss here. More than 3000 cases are now underway or pending against drugmakers, distributors, and pharmacies.

California Judge Dismisses Lawsuit

Early in November, a California court dismissed claims against four drugmakers including Johnson & Johnson and Teva Pharmaceuticals,  on a public nuisance claim. In this case as in others pending, plaintiffs argued that under state law, the defendants argued that companies created a ‘public nuisance’ by overstating the benefits of opioids and underplaying risks.  In a bench trial – before a judge, rather than a jury – Judge Peter Wilson of Orange County State Superior Court ruled that “There is simply no evidence to show that the rise in prescriptions was not the result of the medically appropriate provision of pain medications to patients in need,” according to The New York Times in Opioid Makers Win Major Victory in California Trial.

Oklahoma Bench Verdict Overturned on Appeal

Last week, the Oklahoma Supreme Court – the state’s highest court  – voted 5-1 to overturn a $465 million judgment rendered against Johnson & Johnson in 2019 (see Judge Issues $572 Million Verdict Against J & J in Oklahoma Opioids Trial: Settlements to Follow?) The award also followed a bench trial –  and the size of the judgement was regarded as particularly significant, as it was handed down by a judge, suggesting that juries would be disposed to even higher damages awards. The damages award only covered a one-year abatement plan, even though plaintiffs had sought $17 billions to fund at least twenty years of abatement measures. Juries tend to be more sympathetic to victims and consequently award more damages; these judgements are frequently scaled back significantly on appeal, especially as the United States Supreme Court has in a series of cases outlined  constitutional limits on punitive damages awards, largely limiting them to a single-digit multiplier of economic damages.

Many other pending claims are also based on public nuisance arguments, which is a matter of state law.  The New York Times recently ran a pessimistic assessment of the outlook for such cases, suggesting that the California and Oklahoma decisions represent a significant setback for opioids plaintiffs, The Core Legal Strategy Against Opioid Companies May Be Faltering:

The rulings could well be ominous indicators for upcoming trials. Jury trials are underway in New York and Ohio. A federal judge’s decision is pending in West Virginia. More trials are on the runway.

…
Broadly speaking, public nuisance laws, which date to the 12th century in England, bar actions that interfere with rights commonly enjoyed by the public. Just about every state has a public nuisance law; the opioid cases unfolding in federal court apply each state’s statute. In recent years, state nuisance laws have been employed, with mixed results, against manufacturers of guns, paint and vaping devices and have been an increasingly common cudgel against environmental hazards and in climate change litigation.

In the opioid cases, thousands of state and local governments and tribes are arguing that companies in the pharmaceutical supply chain — manufacturers, distributors and retail pharmacies — created a “public nuisance” by impeding the public’s health.

In pragmatic terms, the approach appears both bold and sensible. According to [Adam Zimmerman, a law professor who teaches mass litigation at Loyola Law School in Los Angeles] many state public nuisance laws do not include a statute of limitations, which would restrict the time available to take legal action. The amount of money that can be recovered can be far greater than that exacted in a more conventional tort claim. And in some states, one defendant can be held liable not only for the damages it created but for those of other defendants as well.

The remedy in a public nuisance lawsuit is called abatement: A defendant found liable has to take corrective action and must usually pay substantially to prevent future harm. A polluter must clean up a river, for instance. Indeed, the Oklahoma attorney general’s office worked up a voluminous allocation proposal that sought to have opioid manufacturers pay for years of addiction treatment and education programs.

What is turning out to be difficult, however, is establishing an incontrovertible link between a “public nuisance” and the discrete actions of so many types of companies that provide a federally approved medication prescribed by doctors and which are supposed to be monitored by state and federal agencies.

Pharmacy Trial Winds Down  in Ohio

Now while the California and Ohio decisions are significant, two swallows do not a summer make. Lawyers  made closing arguments Monday in Ohio in the first trial against pharmacy chains, consolidating suits brought by states and local governments seeking to hold CVS, Walgreens, and Walmart liable for their role in the opioids epidemic. Counsel for Lake and Trumbull counties argued that the companies created a public nuisance by failing to stop excessive amounts of addictive pain pills from overwhelming the counties or by prevent spurious prescriptions from being filled. The companies had responsibilities that extended beyond merely taking money and filling any prescription.

This jury trial is being heard in the courtroom of Judge Dan Polster, who has presided over the multidistrict litigation concerning opioids claims (see, e.g.,  Four Companies Settle Just Before Bellwether Opioids Trial Was to Begin Today in Ohio) and will be closely watched as a bellwether of what juries might decide in future opioids litigation. Polster had earlier ruled that public nuisance claims could proceed.

Trial Begins in Washington State

On Monday, a bench trial began in Washington state, against drug distributors AmerisourceBergen, Cardinal Health, and McKesson, with more than $95 billion at stake. The state claims that the companies violated Washington consumer protection laws by failing to create and monitor tracking systems to prevent illegitimate sales and distribution of opioids.

Thus far, the U.s. legal system has not exactly covered itself in glory in securing justice for opioids victims. For starters, litigation is just so slow, with seven years having passed from when some cases were initially filed. The COVID-19 pandemic has certainly exacerbated this problem, by shuttereing or otherwise restricting federal and state court operations.

Nevertheless, both the California and Oklahoma decisions don’t bode well for plaintiffs seeking to hold those who profited from sales or distribution of opioids accountable for the opioids epidemic. This problem of achieving some form of ‘justice’ for opioids victims extends beyond one particular bankruptcy judge. Alas, I’m afraid that any ‘reform’ movement will be swamped by those who think that the current system is neither faulty nor existing statutory frameworks, whether federal or state, deficient. We don’t seem to believe in holding people, let alone corporations, accountable anymore for the messes they make.

I hope the ongoing Ohio and Washington lawsuits may prove me wrong on this score. But then the inevitable appeals will follow and who knows where they might lead. I feel like I’m sitting down to a performance of Die Walküre or perhaps Siegfried, having only heard Das Rheingold. These lawsuits are far from over and the fat lady has only begun to sing.