CARSON CITY, Nev. (Legal Newsline) - The Nevada Supreme Court granted an opioid manufacturer’s request to halt the City of Reno’s lawsuit against it, saying state law may limit the power of cities to sue companies that are subject to state or federal regulation.
Endo Pharmaceuticals sought a writ of mandamus from the state’s highest court after a district judge ruled that a state law limiting the powers of cities didn’t apply to Reno’s lawsuit over the opioid crisis. Reno, like thousands of cities and counties nationwide, hired private lawyers to sue opioid distributors and manufacturers under theories of pubic nuisance and illegal marketing of the addictive drugs.
Those lawsuits have become a significant complication for plaintiff lawyers and state attorneys general struggling to close a $26 billion settlement with opioid distributors that requires political subdivisions, like cities, to sign off on the deal.
Endo challenged Reno’s right to sue under a common-law principle known as Dillon's Rule, which limits cities to powers expressly granted under the Nevada Constitution, state statute or city charter or which are essential and “not merely convenient but indispensable.” In 2015 the Nevada Legislature modified the rule to expressly authorize cities to take measures “necessary and proper to address matters of local concern.”
The district court denied Endo’s request, saying Dillon’s Rule applied only to ordinances and regulations, but even if it did apply, the lawsuit would fit under the “matter of local concern” exception. Endo appealed to the Nevada Supreme Court to intervene, saying Dillon’s Rule must place limits on litigation since other state laws give cities the power to file certain types of lawsuits.
The high court, in a July 29 decision by Chief Justice James Hardesty, agreed.
“The plain meaning of `power’ is broad enough to encompass lawsuits because the definition includes authorization to act and to alter rights, liabilities, and other legal relationships,” the court ruled. Interpreting the rule any other way would give Reno “an unfettered power to sue,” making the other provisions of state law superfluous.
The court remanded the case to decide whether the opioid litigation qualified as a “matter of local concern.” State law defines that as something that primarily affects people inside the city, isn’t within the jurisdiction of another governmental entity, and doesn’t concern a state interest that requires uniform regulation, business activities “subject to substantial regulation by a federal or state agency” or that would be preempted by state or federal law.