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Thursday, November 21, 2019

New York scores January trial date for its opioid lawsuit

Attorneys & Judges

Nov 7, 2019

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A New York judge has scheduled a Jan. 20 trial for opioid lawsuits by New York State and two counties, setting a short timeline for the companies to settle or face potentially crippling liability.

In an order yesterday, Suffolk County Judge Jerry Garguilo split the cases into two phases, starting with a trial to determine whether the defendant companies are liable for causing the opioid crisis. After that, depending on the verdict, a second trial will determine how much the companies must pay in damages. The trials, if they take place, could influence the outcomes of similar lawsuits by more than 50 cities and counties consolidated in Judge Garguilo’s court. 

The order places New York near the front of the line among the states seeking trial dates for cases against Johnson & Johnson, Wal-Mart, McKesson and other companies involved in the manufacturing and distribution of opioids. It also places tremendous pressure on companies to negotiate settlements, with the first to capitulate typically getting the best terms. 

That was the outcome of the bellwether cases in federal multidistrict litigation set for trial last month in Ohio, which ended with all defendants settling for some $330 million, $81 million of which will go to their private lawyers. Johnson & Johnson settled in early October for $20.5 million. Distributors including McKesson and Cardinal held out to the day before trial and then settled for $260 million. 

The original defendant in the New York cases, Purdue Pharma, will likely be absent on Jan. 20 along with its controlling Sackler family, thanks to a six-month stay of litigation ordered yesterday by U.S. Bankruptcy Judge Robert Drain, who is overseeing Purdue’s reorganization. Garguilo said he will honor the bankruptcy stay, although he may allow discovery to proceed.

Judge Garguilo’s order affects only lawsuits by New York and Suffolk and Nassau counties but the results of a trial, if it occurs, will likely influence how lawsuits by 50 or so other New York cities and counties proceed. In his order, the judge said he was bifurcating the trial to eliminate “the veritable tsunami” of pretrial motion practice related to damages. If a jury finds no liability, he said, all that other work can be spared. 

The defendant companies argued liability and damages can’t be so neatly separated, since a crucial component of both inquiries is causation. Plaintiffs argue the opioid industry engaged in a broad conspiracy to convince physicians to prescribe painkillers excessively, which caused patients to become addicted to the drugs and when they couldn’t obtain them, illegal heroin and fentanyl. 

The defendants have argued, mostly unsuccessfully, that the chain of causation was broken by the independent prescribing decisions of physicians and that they can’t be ordered to pay damages related to the use of illegal drugs they never sold.

While defendant companies have won two of the three cases decided so far, Johnson & Johnson’s $570 million loss in Oklahoma highlights the risks of going to trial. The settlement process has been contentious and complex, however, as municipal plaintiffs in the federal MDL are mostly represented by private lawyers hoping to collect as much as 25% of any settlement in fees. The states are represented by a mix of private and government attorneys and are pursuing their lawsuits in state courts because federal courts have no jurisdiction over them. 

That has led to tension between state attorneys general and lawyers for their political subdivisions including a high-profile dispute between Ohio AG Dave Yost and U.S. District Judge Dan Polster, who is overseeing the federal MDL. Yost tried and failed to halt the bellwether trials involving Cuyahoga and Summit counties, which ended in settlement.

Defendants could probably settle the Suffolk and Nassau County cases for hundreds of millions of dollars. But they will find it harder to settle with New York, which is seeking billions of dollars to pay for drug treatment programs and past expenses associated with opioid addiction and misuse. 

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Organizations in this Story

Purdue Pharma L.PCardinal HealthMcKesson CorporationJohnson & Johnson

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