The Opioid Litigation is Ridiculous

Why States and Localities are Suing Big Pharma in Tandem, Plus Some Shakespeare

America is a country quite literally founded on opium-fueled dreams. “Thomas Jefferson planted poppy at Monticello,” and John Adams “gossiped that Alexander Hamilton owed his eloquence to a ‘bit of opium in his mouth.’” Our first multi-millionaire made his fortune pumping opium into China in the early 1800s. And an “astounding range” of our cultural and educational institutions — from the Guggenheim to Harvard — are funded by the Sacklers, who made their billions pumping opioids into America. 

But if you’re awake to the deeper issues at play in the American opioid crisis — the brutality of capitalism as applied to healthcare, the futility of regulatory paternalism when federal agency-approved drugs end up fueling demand for cartel heroin — you might see its related litigation as one big, lucid nightmare. 

We live in a world that mistakes data possession for understanding, which means you’ve likely had the crisis explained to you in numbers: the 400,000 deaths from opioid-related overdoses since 1999; the 2,600 localities suing big pharma opioid manufacturers, distributors, and retailers in Judge Polster’s multi-district litigation (MDL); the multimillion-dollar judgments; and the billion-dollar global settlement talks, each fraught with the anxieties of government officials who know — in truly laugh-cry fashion — that there’s little way to ensure that big pharma isn’t also deceptively marketing the value of its own settlement offers, or that Purdue isn’t spending an “unusually large” $23.8 million notifying potential creditors in its bankruptcy case to propagandize the allure of speedier resolution.  

I’m sorry about the numbers: I know that the briefest exposure to a low dosage of opioid crisis-related data can produce powerful fact fatigue. But wide awake are the Americans who have lost or live in fear of losing a loved one to an overdose, each of whom are disturbed to find the billion-dollar settlements they read about in the news neither represent — nor are likely to recompense — them directly as plaintiffs. 

“Few, if any, families who lost breadwinners, caregivers, doting grandparents or promising children would probably get a penny from an opioid settlement. People struggling with addiction won’t be compensated for lost jobs, shattered families or time spent in jail. And those paying for addiction treatment won’t be reimbursed for money they’ve turned over — often many times — in a bid to rescue a loved one from opioids.”
— Melissa Healy, The Los Angeles Times

And wide awake are those attuned to the reality that the races of those dying have often determined whether a public health or punitive approach is used to respond to their struggle. Comparing the public health-bent media coverage of infants born with neonatal abstinence syndrome today against the radicalized “crack baby” headlines of the eighties generates a fair amount of cognitive dissonance — one rivaled only by the fact that states spend less than 3% of their big tobacco settlement winnings on tobacco-related health causes, and there exist no guarantees that states will spend their opioid settlement winnings any better. 

If you feel sleepy just thinking about this “elephantine mass”of opioid lawsuits today, that’s by design. We’re supposed to dream of lucrative settlements with big pharma, in order to stay narcoleptic against the terrifying reality that we’re suing them in part because our federal regulators — who unlike corporations are tasked to protect us and not shareholders — prioritized profit over public health at pivotal moments, and looked away as the black market started boiling over in earnest.

If our 400,000 lives lost kept us in the state of vigilance they deserved, however, we’d eventually the ask the question that should jolt us all awake:

If preventable drug overdoses can claim more American lives than the Vietnam, Iraq, and Afghanistan wars did abroad, is our government by and for the health of its people, or for profit? 

This is how the opioid crisis — particularly its litigation — functions as a byzantine tower of political Babel. Its mystique derives from the ability to trick you into thinking that you’re missing something for finding it so ridiculous. 

But you aren’t ridiculous. The opioid crisis is ridiculous. And the articles here at the Opioid Settlement Tracker are your after-hours, underground tour of that ridiculous tower, which isn’t so imposing once viewed from inside. 

You ready to climb? 

 

TWO LINES OF LITIGATION, BOTH ALIKE IN DIGNITY
IN THIS FAIR INFOGRAPHIC, WHERE WE LAY OUR SCENE

 

- Romeo & Juliet, Act 1, Prologue (adapted)

 

First, a tip for understanding the onslaught of opioid-related media coverage: when you hear about opioid lawsuits, settlements, or judgments in the news, they likely pertain to one of these three categories of opioid litigation:

“Unlike class actions, which are conducted under strict rules, MDLs often proceed in a more unstructured way with judges who are theoretically only in charge of pretrial proceedings, issuing rulings that make it financially impossible for defendants to do anything but settle.”
— Daniel Fisher, Legal News Line

  1. The multi-district litigation (MDL) in federal court. MDLs are an alternative to, and not a type of, class action, and are used to procedurally streamline cases with similar questions of facts. The opioid MDL lassoes together 2,600 suits filed by plaintiff cities, counties, and tribes against dozens of big pharma defendants. 

    1. If you’ve heard about Ohio’s Cuyahoga and Summit counties before, that’s because Judge Dan A. Polster, who sits at the opioid MDL’s helm, selected them as plaintiffs for the first bellwether trial that was originally scheduled for October 21, 2019. Just a few hours before opening statements were scheduled to begin, all defendants — except Walgreens — settled. As a result, the counties’ trial against remaining retailers has been postponed to November 9, 2020. Several other local government plaintiffs are scheduled for bellwether trials throughout 2020. (To see the full opioid litigation timeline, click here.)

  2. State attorney general (AG)-led suits in state courts. Here, plaintiffs are U.S. states. Each state’s case is spearheaded by its AG, who uses the state’s special status in the Constitution as a “sovereign entity” to sue big pharma defendants for violations against its residents. There is no single judge at the helm of these state actions. But Judge Polster, as many good MDL judges do, actively encourages collaboration between state AGs and localities to facilitate global settlement negotiations. 

  3. Federal and state criminal prosecutions of opioid-related defendants, ranging from big pharma corporations to individual doctors and pill mills. 

HERDING CATS

In an October 2019 order, Judge Polster describes (A) and (B) this way:

“[T]he undersigned is working to coordinate the Opiate MDL with parallel state-court litigation. This includes 89 cases brought by State Attorneys General. Of course, just as a City-Plaintiff often lies within a County-Plaintiff, each of these also lies within a State-plaintiff. This simple fact makes both litigation and settlement even more difficult.”

“Forty-eight states, plus Puerto Rico and the District of Columbia, have brought suit in state court against the same Opiate MDL Defendants. The only states that have not sued are Michigan and Nebraska. There are 89 suits pending because several states brought more than one lawsuit; for example, Ohio has one case pending against opioid manufacturers, and another against opioid distributors.”

I often wonder if Judge Polster has nightmares of herding cats. The global settlement from the 1998 big tobacco Master Settlement Agreement (MSA) was the product of cooperation between 46 state AGs and big tobacco defendants. Any global settlement that’d result from our opioid litigation would require cooperation between big pharma defendants, 48 state AGs in (B), and the local governments in (A) above. Local governments, the comparative runts of the government litter, began suing big pharma in 2014, before state AGs began filing their opioid suits. But certain states lionize their elevated, Constitutional statuses as sovereign entities to argue “that they are better positioned to strike large settlements with drug companies” in order to bolster their entitlement to direct receipt of funds. To them, the localities involved in the federal MDL “advance claims that belong to the State in an effort to commandeer moneys that rightfully should be distributed across the state” — presumably by the states and states alone.

Legally speaking, Judge Polster can neither merge (A) and (B), nor force their plaintiffs to get along. Federal courts can’t usually enjoin state-court proceedings; MDLs can’t lasso in litigation originating in state courts; and parens patriae actions, because they aren’t class actions, can’t be removed to the federal court system. Judge Polster can, however (and pending Sixth Circuit review), quite literally create a novel litigation device — a negotiation class — to round up each of the 34,500 localities in the U.S. for the purposes of allowing localities to argue shoulder-to-shoulder with state AGs, regardless of whether they’ve already filed opioid suits. “Few took the state actions seriously when there was only one or a handful of states suing the tobacco industry,” after all. So the negotiation class, as a type of “enforcement joinder,” works to facilitate a global opioid settlement by dangling the prospect of “obtain[ing] global peace with all potential regulators” as its carrot.

The negotiation class was created in part to reassure pharma defendants that any settlements reached will bind the local governments who haven’t sued them yet, “and prevent them from filing a case.” But plaintiffs like it, too. Fewer than 2% of those 34,500 localities opted out to “go it alone” in separate suits against big pharma — a rate Professor Deborah Hensler of Stanford Law School finds “notable” given the device’s “atypical[ity]”:  

“Where we see class actions with large numbers of opt-outs there are usually one or a few [very knowledgeable] lawyers who … believe strongly that their clients will secure better outcomes through litigation or settlement outside the class action and therefore advise them to opt out. … That the opt-out rate here is so low suggests to me that there aren’t many lawyers out there who believe that is the case here.”

 

FROM ANCIENT GRUDGE BREAK TO NEW MUTINY

“To sue, or not to sue: that is the question: 
Whether ‘tis nobler for localities to suffer
The slings and arrows of big pharma’s outrageous fortune, 
Or to take arms alongside litigating states, 
And by opposing states’ misspending, abate the crisis?”
— Hamlet, Act 3, Scene 1 (amended)

You might be wondering why local governments are suing alongside states in the opioid litigation at all.

There’s an inherent sense of hierarchical messiness to state and local opioid lawsuits proceeding in tandem. The obsessive-compulsive among us might imagine the field of government plaintiffs as a table littered with disassembled Matryoshka dolls, with localities — otherwise nested Babushkas — rejecting the coverture of their containing states. (A discussion of opioid suits filed by federally recognized Native American tribes, sovereign entities who shouldn’t have been included in the MDL at all, is so saucy that it deserves its own article.)  

Judge Polster thinks localities are suing because of “the legacy of the tobacco settlement, when most of the $200 billion that was paid by tobacco manufacturers did not go toward reducing smoking and treating lung cancer” and was used instead for “other state purposes.” 

Much has been written about the lessons we ought to learn from our big tobacco MSA. One lesson governments have ostensibly internalized, based on the intensity of their bickering about it, is that how settlement winnings are spent depends quite a bit upon which level of government controls its pursestrings. 

But we’re continuing to learn this lesson in hard ways. Big tobacco settlement administration retrospectives reveal that states have been spending just 2.7% of the MSA proceeds they receive each year on their originally intended causes (e.g., smoking treatment and prevention). “[N]o states are spending even the recommended minimum allocation for tobacco control proposed by the Centers for Disease Control and Prevention.” And very, very few cities and counties receive any of that $246 billion from big tobacco, “despite the fact that cities, counties, and other local units of government (who run hospitals, ambulances, and outreach services) incurred significant financial losses as a result of tobacco’s adverse health consequences.” In fact, states are able to allocate the majority of their MSA proceeds to expenses “counter-productive to tobacco control,” like the $41 million North Carolina used to support the economic development of tobacco farmers. 

As a result, we know that “it is simply untrue that states generously pass along to cities the resources earned from plaintiff’s-side litigation.” So, localities file suit in this crisis because officials at every level of government, and not just state AGs, “want[] to make sure that whatever deal is struck gets the money to where they want it to go.” 

And justice would entitle localities to have their say. Because “West Virginia Uses OxyContin Settlement Money to Build Gym” isn’t a fictional, futuristic headline from the Onion, but a real one from 2012.

 

WHERE CIVIL LITIGATION…

I once asked a settlement administration attorney if there was anything actually preventing state AGs from misappropriating opioid settlement funds as they did their big tobacco monies. I will never forget his response:  

“Settlement terms are only binding on the conscience of the sovereign.” 

The reference to sovereignty here is legally deliberate, not merely poetic. Sovereignty is what affords states the ability to sue using parens patriae standing, which is as paternalistic as your rusty Latin makes it sound. It’s the right to sue that allowed states to go after big tobacco in the nineties, and allows them to sue big pharma today, to recover against corporate defendants for harm inflicted to their “quasi-sovereign interest” in the health and well-being of their “residents in general.”

Federal, state, and tribal governments are constitutionally recognized sovereign entities. This special designation in our American system of government allows federal and state governments to function, at least conceptually speaking, as co-equals. (The respect for tribal sovereignty is an entirely different story.)

Welcome to the age of millennial legal analysis. (This is a meme.)

Cities and counties — “unlike states — are not formal ‘sovereigns,’” and “[f]ederal courts have consistently held that cities may not sue as parens patriae.” It matters not that localities are also suing to protect the health and well-being of their residents as states are, or “assert nearly identical claims” to those of states. It also doesn’t matter whether localities “bear the brunt of the damage related to a national, hot-button topic,” as they often do during public health crises. As mere “political subdivisions” of the state, cities and counties “have to tough it out like ordinary plaintiffs” to establish federal standing the old-fashioned (Lujan) way. And their “inability to sue as parens patriae makes it difficult … to bring a straightforward public-interest suit based on a harm that has been visited on [their] residents.” For if cities and counties can’t pigeonhole their lawsuits into a legal fiction — “namely, that the harm being inflicted on citizens is injuring the city as a body corporate” — they must “forego a lawsuit entirely.”

This sovereignty-based distinction between states’ and local governments’ rights to sue in this opioid litigation is the exact type of thing that seems too academic to matter until it isn’t. Because here, it’s precisely what allows the law to assume that states’ reasons for seeking abatement funds will also guide the intent of their legislatures as they decide how to spend it.

“Unfortunately, we on the litigation side, we can only recover funds. We don’t appropriate funds. We didn’t get to control how the tobacco money was used, and there have been a lot of complaints about it.”
— Joe Rice, co-lead counsel for local government plaintiffs, to Law 360
“I don’t know why the legislature … think[s] they’re smarter than and know a community better than people who are actually in the community and work with the issues each and every day. The state basically needs to keep their hands off of dollars that are needed here to address our epidemic. And we know how to invest those dollars better than they do.”
— Lorain County Commissioner Matt Lundy 

As we know from big tobacco, though, there’s a strong chance that executives’ and legislatures’ priorities will diverge. States continue to receive and misspend their annually distributed proceeds from the $246 billion big tobacco Master Settlement Agreement (MSA), which omitted express terms requiring the money to be spent on public health-related causes. But even if it had, the terms alone couldn’t have commandeered the individual states to spend settlement funds a particular way. A state’s executive branch — via its AG — may recover funds, but appropriations “are almost always made by a … legislature.”

It is this inter-branch punt that makes “subsequent funding allocations for public health initiatives … difficult to implement, both politically and procedurally,” as the power to gatekeep settlement monies is central to a legislature’s own sense of sovereign power. Case in point: the $572 million opioid crisis-related judgement Oklahoma’s AG won against Johnson & Johnson last year, which was later reduced to $465 million due to a judicial “math error.” With big tobacco’s failures in mind, the court issued a plan that “set forth specific allocation” of the resources that’d earmark roughly $200 million to create the National Center for Addiction Studies and Treatment at Oklahoma State University. The Oklahoma state legislature responded by “quickly pass[ing] a unanimous bill reasserting its appropriations jurisdiction over attorney general settlements,” requiring future settlements to be deposited into the state treasury. An Oklahoma state judge called for mediation between the various state leaders. Though the meeting resulted in a deal that’d funnel settlement winnings into an “opioid lawsuit settlement fund” that “shall only be for the abatement of the nuisance related to the opioid crisis,” the state legislature retained its power to make “specific appropriations” — a tug-of-war that aptly illustrates the schism that occurs when a sovereign state procures a settlement in its executive capacity while lacking the political will in its legislature to ensure that it’s spent on the very interests it aims to vindicate.

Thus, the sovereignty-based considerations supplying parens patriae standing rights to states at the recovery stage ought not also force us to assume that states’ sovereign consciences are also good at the appropriations stage. Insofar as parens patriae standing doctrine encourages us to conflate our faith in a sovereign’s deservedness of settlement money with our state legislature’s ability to spend it well, the doctrine upholds a system that allows states to spend opioid settlement funds in violation of both the letter and spirit of their enabling agreements, provided that their legislatures’ political priorities allow for it. Most importantly: it also fails to do any favors for those on the ground.

 

…MAKES CIVIL HANDS UNCLEAN

The road to spending hell is lined with tempting conflicts of interest even for the most pious of sovereign consciences. 

First, states’ parens patriae suits, unlike class actions (their “procedural sibling”), are not required to obey the Federal Rules of Civil Procedure, which allows them to “evade virtually all of the class action hurdles … erected by Congress and the Supreme Court.” Chief among these hurdles for our purposes is something called Rule 23(a), which requires representatives in class actions to “fairly and adequately protect the interests of the class,” and courts to “assiduously inspect class action counsel.”

Judges do “sh[y] away from questioning the adequacy” of parens patriae representation by state AGs, likely because the “public quality” of most parens patriae suits works to relax their otherwise ever-present concerns about representative fidelity. The doctrine’s historical, sovereignty-based origins do have the effect of imbuing state AGs with “somewhat of a façade of constitutional adequacy,” while state AGs’ “responsibility to the public interest,” plus the “absence of a contingency fee arrangement,” together suggest that they are “less likely than private lawyers to have incentives that substantially diverge from the class they purport to represent.”

“Indeed, the core precedent defining [parens patriae] doctrine from the turn of the century illustrated the problem during the industrialization of the economy: regional pollution and rights to clean air and waterways could not have been adequately redressed on an individual level, even though individuals might have had private claims.”
— Margaret H. Lemos, "Aggregate Litigation Goes Public"

This halo effect can be a useful thing. Parens patriae standing doctrine is, after all, a type of procedural privilege that empowers states to “win recoveries through parens patriae that individual citizens often could not win on their own,” provided that those individual harms become “widespread enough to implicate the state’s interest in the welfare of its citizens.” The doctrine is what helped states circumvent big tobacco’s and big pharma’s defenses against individual lawsuits — that each smoker, prescription drug user, or intermediary was aware of the risks of use — and demand recompense from an industry too rich to be disincentivized by individual lawsuits. And the big tobacco MSA — the product of 46 separate parens patriae actions against an industry powerful enough to flout federal and state laws — can thus accurately be described as “one of the most successful uses of the civil judicial system to right a wrong that wasn’t being addressed in the congressional process.”

FACT

Had the big tobacco Master Settlement Agreement (MSA) been paid out at once, states would have received a surge of capital “roughly equal[ing] the economic output of Austria.”

But parens patriae doctrine also “has maximum force where the individual harms may otherwise go unredressed” by Congress, which results in uses “parasitic on the interests of individual citizens’” under the guise of the “common good.” And these parasitically derived monies do have the tendency to create “interesting, unintended consequence[s].” The MSA’s 25-year terms naturally conditioned proceeds “on the continuing economic health of the cigarette makers” and their cigarette sales. By installing itself into state budgets as a predictable source of income for the next quarter century, the MSA “align[ed] the economic interests of the states with the economic interests of the tobacco companies.” So when Philip Morris lost a class action suit in Illinois, the judge ordered it to post a $12 billion bond. The company balked, stating it’d be driven into bankruptcy if made to pay the full amount. Officials from 33 states submitted an amicus brief asking the Illinois judge to reduce the bond. And the bond was halved — a decision “cheered by states awaiting their share of Philip Morris’s $2.6 billion payment.” 

Make no mistake: big pharma views the “[l]arge,” “unmet need[s]” of the “vulnerable, underserved and stigmatized patient population suffering from substance abuse, dependence[,] and addiction” as an “attractive market,” one where its overdose reversal drugs may function as a “complementary” product and “strategic fit” to prescription opioids on the market today. Purdue has “long considered” becoming a public trust, and has pondered “whether it might make money treating addiction” since 2014. The Democratic and Republican Attorneys General Associations both received hundreds of thousands of dollars from big pharma opioid companies as recently as 2019. Given that parens patriae doctrine explicitly prevents states from using it to sue in a “proprietary capacity,” at what point will the state’s litigatory capitalization of harm — via their reallegation of individuals’ harms as their own — render the sovereign’s conscience bad?

The battle over how to spend global settlement winnings has already begun, and whether abatement actually occurs on the ground will depend both on the political integrity of state legislatures and the ability of local and state executives to recognize a bad deal when they see it.

The power to prevent our spending nightmares from reoccurring exists squarely in our willingness to recognize the forces that wish for, and benefit from, us reliving them again. So as the costs of this crisis propagandize speedy settlement far better than big pharma’s defense attorneys can, pay close attention to the governments who fall prey to the allure of ill-considered settlement offers, like those that condition settlement money on continued sales.

And states ought to set aside their sovereignty-based entitlements to negotiate alongside their localities in good faith. The “core lesson” of the big tobacco litigation, after all, was that plaintiff governments are “most effective” when acting in concert, but that “serious settlement terms” emerge only after plaintiff governments were “substantially united.”