Opioid suit is latest brought by Calif. county with help from contingency fee attorneys

SAN JOSE, Calif. (Legal Newsline) - Santa Clara County in California has filed a lawsuit against five of the largest opioid manufacturers, marking at least the 10th time the county, which recently was among a group of government entities that earned a $1.15 billion verdict against the paint industry, has partnered with private law firms.

In the complaint Santa Clara and Orange counties filed on May 21 in Orange County Superior Court, they allege that Purdue Pharma, Cephalon, Janssen Pharmaceuticals, Endo Health Solutions and Actavis violated California's false advertising and unfair competition laws and created a public nuisance.

They say the drug manufacturers knew that opioids were ineffective, addictive and unsafe for long-term use but persuaded doctors to prescribe them in order to expand the market and boost their profits.

Santa Clara Assistant County Counsel Danny Chou explained that their primary goal is to make sure people understand the risks and benefits of drugs like OxyContin and Percocet before taking them.

"I think it's pretty clear that there is an opioid abuse and addiction crisis in this country," Chou said. "Unfortunately, Santa Clara hasn't escaped it.

"In looking at the issue, you realize that doctors and patients weren't getting complete and accurate information. They were being deceived about the risks and benefits of these drugs, and they were being deceived by the companies that were producing them."

Civil Justice Association of California President Kim Stone, however, spoke out against the lawsuit, contending that there are several problems with the counties' claims. She finds the false advertising charge "interesting," since opioids are regulated by the U.S. Food and Drug Administration. Plus, she says, patients can only access the drugs if they see a doctor and get a prescription.

"False advertising is supposed to be like, buy this product, and you will lose weight," Stone said. "But no, it actually doesn't help you lose weight. The idea that drug companies could successfully manipulate highly trained doctors to en masse prescribe medicines that don't work, or are dangerous and addictive - it seems to me like that would be hard to prove."

Stone described the public nuisance claim as dangerous, claiming prosecutors use the law in place of product liability - as seen in County of Santa Clara v. Atlantic Richfield Co., the lawsuit Santa Clara County and nine other California counties and cities brought against five former lead paint manufacturers in 2000.

In January, Santa Clara Superior Court Judge James Kleinberg issued his final statement of decision, holding the five paint companies, which will likely appeal, liable for $1.15 billion to replace or maintain lead paint in millions of homes in California. Similar lead paint/public nuisance suits had failed around the country.

Santa Clara County and the other governmental entities were represented by the plaintiffs firm Motley Rice in that case.

A list provided by the Santa Clara County Counsel's Office shows seven other lawsuits in which the county contracted with a private firm on a contingency fee. They are:

-County of Santa Clara v. Bristol-Myers Squibb Co., No. 1-12-CV-224091 (Santa Clara Super. Ct.);

-State of California v. Office Depot, Inc., No. 2:12-cv-09952-R-CW (C.D. Cal.);

-County of Santa Clara v. Merck & Co., Inc., No. 1:2006cv04163 (N.J. Super. Ct.), coordinated as part of In Re Vioxx Products Liability Litigation, MDL No. 1657 (E.D. LA);

-County of Santa Clara v. Astra USA, Inc., No. C-05-03740-WHA (N.D. Cal.);

-County of Santa Clara v. SmithKline Beecham Corporation, No. 5:10-cv-00832-JW (N.D. Cal.), coordinated as part of In re: Avandia Marketing, Sales Practices and Products Liability Litigation, No. 07-md-01871-CM R, MDL No. 1871 (E.D. Penn);

-City and County of San Francisco v. Microsoft Corp., No. 04-cv-03705, coordinated as part of In Re Microsoft Corp. Antitrust Litigation, MDL No. 1332 (D. Md.); and

-The People of the State of California v. Philip Morris, Inc., No. 980864 (San Francisco Super. Ct.).

The county partnered with outside counsel on another lawsuit filed this year in Santa Clara Superior Court against Amoroso Co., a real estate firm.

Representing the county in the opioid suit are Robinson Calcagnie Robinson Shapiro Davis; Cohen Milstein Sellers & Toll; and Hagens Berman Sobol Shapiro.

"Defendants needed to create a sea-change in medical and public perception that would permit the use of opioids for long periods of time to treat more common aches and pains, like lower back pain, arthritis, and headaches," the 105-page complaint says.

"Opioid makers Purdue, Janssen, Endo, Cephalon, and Actavis, through a common, sophisticated, and deeply deceptive marketing campaign that continues to the present, set out to, and did, reverse the popular and medical understanding of opioids."

Santa Clara and Orange counties argue that this campaign was successful, as sales of OxyContin alone increased from $800 million in 2006 to $3.1 billion in 2010. However, that doesn't mean a lawsuit should've been filed, Stone says.

"Generally, if you make a product and there's something wrong with the product, then you use product liability law to sue the manufacturer," Stone said. "But in this case, there is no allegation that there's anything wrong with their product.

"Because prosecutors can't meet the requirements of product liability law to sue the drug manufacturers, they have to use public nuisance law, which is kind of a Wild West area of law. It's not well developed and there's a lot more room for creative or attenuated legal theories."

Stone also said that by hiring private firms on a contingent fee basis, this allows the counties to "engage in a risky lawsuit that's going to be hard to prove without having to spend any money upfront."

The California Supreme Court resolved the issue over hiring contingency fee counsel in the lead paint case, ruling in 2010 that it is appropriate for governmental entities to retain private counsel as long as the entities exercise control over the case.

In one of Santa Clara's earliest cases, in 1996, The People of the State of California v. Philip Morris Inc., Santa Clara County joined a group of California cities and counties in suing Philip Morris for marketing its products despite evidence that cigarettes had negative health effects.

Later, in the mid-2000s, Santa Clara County was involved in City and County of San Francisco v. Microsoft Corp., alleging Microsoft engaged in anti-competitive behavior.

County of Santa Clara v. Astra USA, et al., alleged several drug manufacturers overcharged for prescription drugs;

County of Santa Clara v. Merck & Co. Inc., alleged Merck misrepresented and concealed drug Vioxx's health risks.

Chou contends that Santa Clara County's action against businesses is not a new development. For example, he says, San Francisco was one of the first entities to pursue tobacco litigation. Many other cities and counties have also joined Santa Clara County in filing these types of lawsuits on behalf of the public's interest.

"Sometimes there are big problems that warrant government intervention," Chou said. "In those situations, oftentimes there is no one else who can do it. Local government entities fill an important role in that... and also, it's part of their duty to act on behalf of their citizens and to identify issues that are facing them."

Chou adds that these types of lawsuits are not unique to California. Just a few weeks after Santa Clara and Orange counties filed their lawsuit against the five opioid manufacturers, the City of Chicago filed a similar lawsuit against the same defendants.