Opioid lawyers say settlement may hinge on forcing plaintiffs into class action

By Dan Fisher | Sep 28, 2018

NAPA, Calif. (Legal Newsline) - A settlement binding all potential plaintiffs may be the only practical way of ending nearly 2,000 lawsuits against manufacturers, distributors and retailers of addictive opioid painkillers, said plaintiff lawyers attending a conference on opioid litigation this week.

Some 1,200 lawsuits are gathered in the court of U.S. District Judge Dan Aaron Polster in Ohio under federal rules on multidistrict litigation. Another 500 lawsuits are proceeding in state courts around the country, and President Trump has called for the federal government to join in with its own lawsuits.

Smaller defendants could be facing bankruptcy from the wave of litigation and even the largest defendants such as McKesson, CVS and Wal-Mart will likely resist any settlement that doesn’t put an end to the threat of further lawsuits, said participants in a Tuesday panel at HarrisMartin’s MDL Conference in California. One panelist said Polster’s MDL court will likely have to invoke Rule 23 of the Federal Rules of Civil Procedure, under which judges can certify a class of all plaintiffs suffering the same injury. 

The court may even have to go as far as declaring a mandatory class under Rule 23(b)(1), in which plaintiffs can’t opt out of the class to pursue claims on their own, one lawyer said. Francis McGovern, one of three special masters overseeing settlement negotiations in the federal MDL, is investigating the possibility of forming a mandatory class, that lawyer said, but “the problem is there’s not a whole lot of law that supports it.”

Lawyers participating in the panel requested anonymity because of a strict gag rule Judge Polster has imposed on all parties in the MDL. People familiar with the settlement process said the judge rebuked plaintiff lawyers for leaking earlier this month after Bloomberg reported that one of the smaller defendants, Endo Pharmaceutical, has tried to negotiate a separate peace

Forcing all plaintiffs to join in a settlement would be highly unusual in mass tort litigation like this unless the defendants are in imminent danger of going bankrupt, said Elizabeth Burch, a professor at the University of Georgia Law School. In that case, a court might declare mandatory participation to ensure that all claimants get a fair share of the insolvent company’s assets, she said.

“Unless a defendant is on the verge of bankruptcy, I would have deep-seated concerns about the use of a mandatory class action,” Burch said in emailed comments. “Absent circumstances like those, a mandatory class would tread far too heavily on the autonomy of individual states and counties to decide what’s best for them.”

The MDL process was originally designed to coordinate pretrial activities including discovery and depositions for a set of federal lawsuits with similar allegations. Once that is finished, the MDL judge is supposed to remand the individual lawsuits back to their original court for trial. Over time, the MDL process has evolved into a substitute for the class action, with the vast majority of MDLs being resolved with all or most of the plaintiffs agreeing to the terms of a global settlement.

Judge Polster initiated the opioid MDL in January by telling the parties his goal was a settlement and “people aren’t interested in depositions, and discovery, and trials.” He was forced to back down from that as plaintiffs and defendants failed to negotiate terms and agreed on a series of bellwether trials to help identify the strengths and weaknesses of each side’s case and potential damage numbers. In May, Judge Polster said he reluctantly agreed to litigate some cases “but it’s not a substitute or replacement in any way” for settlement.

“The litigation can only get resolved if there is a total global resolution that includes not only the folks that have sued but every other potential government entity that could sue,” said one participant at the HarrisMartin conference. A settlement “has to encompass all 3,069 counties in this country and who knows how many cities” and other governmental organizations, that person said.

Defendants and plaintiff lawyers working under contingency fee contracts may want to wrap up the litigation in a single settlement that would pay billions to the plaintiffs and billions in legal fees, but the mechanics will be challenging. For one thing, the defendants are extremely varied, from manufacturers accused of misleading doctors with false advertising claims that opioids were non-addicting, to distributors accused of failing to alert the government to suspicious order patterns, to retail pharmacies who allegedly facilitated abuse and diversion. 

All have specific defenses, including arguments every pill was sold under a doctor’s prescription and the Drug Enforcement Administration was the only entity that possessed complete knowledge of the amounts of pills shipped and where they were delivered.

The plaintiffs also have strong internal divisions. States can pursue their lawsuits in their own state courts, giving them a strategic advantage over plaintiffs in the federal MDL. The Justice Department can sue for repayment of Medicare and Medicaid expenditures, potentially siphoning off much of the money private lawyers are hoping to win for their city and county clients. 

And some plaintiffs are already agitating for a way out of the MDL. Lawyers who are trying to form class actions on behalf of children affected by Neonatal Abstinence Syndrome are asking for their cases to be removed from the MDL and placed before a specialized panel of judges, saying “only government, hospital and third-party payors are at the table in negotiating a settlement” in the MDL.

Plaintiff lawyers are investing huge sums in the opioid litigation, with as many as 250 lawyers working full-time on the federal MDL alone, conference participants said. Law firms are being hit with capital calls of $250,000 apiece to fund the coordinated efforts, including preparing for bellwether trials scheduled to begin in September 2019. Fact discovery is to end Jan. 30, with expert witness reports due by the end of February. The defendant companies are expected to turn over 500 million pages of documents, with only a fraction of those in the hands of plaintiff lawyers so far. 

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Mckesson Corporation U.S. District Court for the Northern District of Ohio University of Georgia

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