CINCINNATI (Legal Newsline) - A central question went unanswered as the U.S. Court of Appeals for the Sixth Circuit heard arguments over a never-before-used “negotiation class” for settling opioid litigation: Why is it needed?
The novel procedure was approved earlier this year by U.S. District Judge Dan Polster, the judge overseeing federal multidistrict opioid litigation, as a possible solution to the problem created by private lawyers who recruited nearly 2,000 cities, counties and other public entities as plaintiffs against the opioid industry. While this mass of plaintiffs was large enough to force defendants to the negotiating table – Judge Polster’s clearly stated goal from the beginning – it left tens of thousands of potential plaintiffs who needed to be part of any settlement if defendants were to obtain global peace.
Judge Polster’s solution was the “negotiation class,” a new procedure designed by academics at Harvard Law School and argued by Samuel Issacharoff, a professor at NYU Law School. Instead of approving a class of all potential claimants and litigating their case in one procedure, the negotiation class would encompass some 40,000 cities and counties for the sole purpose of negotiating a settlement that they would have to approve by a 75% vote.
In oral arguments before a three-judge panel of the Sixth Circuit today, Issacharoff was repeatedly asked why a new procedure was needed when the federal rules of civil procedure provide for class actions both for litigating and settling cases.
“What was inadequate about either a litigation class or a settlement class?” asked Judge David McKeague. “Why did he have to invent a new procedure?”
Instead of answering the question directly, Issacharoff said the problem is that with more than 30,000 potential plaintiffs, a conventional class action would pose significant problems including “self-appointed representatives” and lawyers who have a financial incentive to negotiate a settlement that rewards themselves at the expense of the larger class. The negotiation class puts power back in the hands of class members by requiring a supermajority of them to approve any agreement, Issacharoff said, making it likely they will achieve a better result.
“You can probably tell I am troubled by this,” Judge McKeague continued, saying he wasn’t in favor of “judicial inventiveness.” “To me, empowering the plaintiffs in negotiations is giving them an advantage they didn’t have.”
Defendants led by opioid distributors oppose the negotiation class, even though as approved they have no obligation to participate in it. Sonya Diane Winne, representing the defendants, said the proposed class mechanism isn’t authorized under Rule 23 of the Federal Rules of Civil Procedure governing class actions.
Since defendants don’t have to participate in the class, asked Judge Karen Nelson Moore, “what findings of the court are harmful to you?”
Winne said even though the negotiation class isn’t binding, the judge’s findings and reasoning could be adopted by other courts unless the proposal is rejected by the appeals court.
Attorneys general of at least 12 states also opposed the negotiation class, along with the U.S. Chamber of Commerce, Lawyers for Civil Justice and municipalities in South Carolina, Delaware, Ohio, Pennsylvania, Texas and other states. Some 500 of those municipalities opted out of the class, leaving tens of thousands that are theoretically included in potential settlement negotiations. Under the procedure approved by Judge Polster, those class members can reject a proposed settlement, but they can’t opt out of the procedure and pursue their own cases now that the deadline has passed.