Every city, town and county in the United States could receive a payout in a settlement with the largest makers, distributors and retailers of prescription opioids, if a judge approves an innovative proposal made Friday in an Ohio federal court by lawyers for hundreds of local governments.
The plan, which legal experts describe as “novel” and “unorthodox,” could potentially expand the number of municipalities and counties eligible for compensation in the federal litigation from 1,650 to about 24,500 and open the way for a comprehensive national opioid settlement with the pharmaceutical industry.
“We have an epidemic caused by pills that have wheels, and different areas of the country get targeted at different points in time,” said Joe Rice, one of the lead lawyers, explaining a major obstacle to settlement in the rapidly accumulating cases. “So if you solve the problem in New York City, it doesn’t get addressed in Albany. And everyone recognizes this is a national issue.”
The goal behind this proposal is to sweeten the incentive for the defendants to negotiate a settlement in earnest, something they have largely resisted. If all municipalities are included in a settlement, the reasoning goes, these companies would not have to fear future lawsuits from local governments.
In the last year and a half, court cases against the pharmaceutical industry have continued to pile up, mostly brought by small governments seeking compensation for the costs they have incurred for providing medical and emergency services to people struggling with addiction as well as adequate law enforcement and other expenses.
For the sake of expedience, a vast majority of those cases — 1,967 to date — have been collected in one federal court, in what is known as a multi-district litigation.
The new proposal must be approved by Judge Dan Aaron Polster, the federal judge in Cleveland who is presiding over the litigation. Judge Polster has long said that his goal is a comprehensive settlement that offers meaningful solutions, both immediate and long term, to the damage wrought by opioids.
A spokesman for Purdue Pharma, an opioid manufacturer, said in response to the proposal: “The company is committed to working with all parties toward a resolution that helps bring needed solutions to communities and states to address this public health crisis. We continue to work collaboratively within the MDL process outlined by Judge Polster,” referring to the acronym for the multi-district litigation.
Other companies could not immediately be reached. Johnson & Johnson, which manufactures opioids, did not respond to requests for comment.
What makes resolution of the litigation particularly urgent is that the harm from opioids, including overdose deaths, is still continuing as the cases move through the court process. But the legal challenges are daunting.
The benefit for municipal plaintiffs is straightforward. There is no certainty that they could recover anything on their own. Here, the funds to abate the deadly crisis would be guaranteed and delivered more swiftly than if the municipalities pursued their own cases.
To determine what each municipality would receive, the lead plaintiffs’ lawyers have created an interactive map that will immediately show each participant their expected share of any proposed settlement. The lawyers created the map using federal data pinpointing distribution of prescriptions as well as opioid overdoses and deaths nationwide.
The map is anticipated to be made public if Judge Polster approves the new proposal. A hearing is scheduled for later this month.
“I think this plan is a really clever way to get a handle on the opioid settlement negotiations,” said Howard Erichson, who teaches complex litigation at Fordham Law School and has been an outspoken critic of other large-scale agreements.
The plan would create a “negotiation class” consisting of every municipality in the country. If a local government does not opt out up front, it is presumed to have opted in. Even as negotiations are underway, plaintiffs would be free to keep pressing their cases to trial, traditionally understood to be a necessary stick to prod everyone to the table. The first trial in the federal litigation is relatively imminent, now set for late October.
According to the proposal, all plaintiffs would vote on any settlement offer. To be accepted, 75 percent of the voters would have to approve. If that supermajority were reached, the agreement would be binding on all participating localities.
Even so, any settlement would still need judicial approval.
What distinguishes this structure and makes it novel is that, typically, a settlement is offered to members in a class-action suit only after it is agreed upon by the lawyers. Members of the class action can then vote to accept it or litigate on their own.
This plan gives participants more upfront voice and opportunity for scrutiny, Mr. Erichson noted.
“What’s brilliant and beautiful about this plan is that it provides an extra layer of protection against unfair settlement,” he said.
Some legal observers expressed reservations about the plan, because even if it were successful, it would not cover lawsuits by the states themselves.
“There’s still an 800-pound gorilla waiting outside — the state attorneys general,” said Elizabeth Burch, a law professor at the University of Georgia who has closely followed the litigation.
The state cases, such as the current trial in Oklahoma against Johnson & Johnson, are not in the proposal because they are not in federal court. The plan also doesn’t invite potential plaintiffs from among other types already in the federal litigation, such as tribes, unions and hospitals, as well as babies born with neonatal abstinence syndrome. But the municipal cases do represent the bulk before Judge Polster.
Samuel Issacharoff, who as a legal adviser to the lead plaintiff lawyers was an architect of the proposal, said it builds on models from asbestos trust settlements and, more recently, the National Football League’s fund for retired players with concussion injuries, a case in which he was involved.
Mr. Issacharoff noted that in this litigation, the plaintiffs are not individuals but governmental entities. He dismissed comparisons to the Big Tobacco settlement: That was not the result of a class action but a consortium of state attorneys general.