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June 14, 2019

Innovative class action approach in opioid litigation would create a beneficial and coordinated negotiating class on behalf of communities nationwide

by: Joseph F. Rice

More than 175 Americans are lost every day to the opioid epidemic, making it one of the most devastating man-made disasters of modern time. For all counties and municipalities, one life lost to the opioid epidemic is one too many, not to mention the overwhelming impact on their community’s children, first responders, coroners and their overall infrastructure.

Subsequently, this opioid litigation is one of the most urgent, complex and challenging litigations to ever go through U.S. courts. From the moment the National Prescription Opiate Litigation MDL (a consolidated multidistrict litigation) was formed, Judge Dan Polster of the Northern District of Ohio made it clear that he wanted swift, just and fair resolution. Since then, the opioid litigation has moved quickly ahead and discovery continues at a rapid pace, with a bellwether trial scheduled to start October 21.

With the volume of filed cases (more than 1,800), which comprise just 10% of the nation’s counties and cities, a structure and process is needed to provide all counties and cities nationwide, filed and unfiled, with a collective and powerful voice in the litigation, and create a pre-established mechanism through which plaintiffs can consider and have a vote in potential settlements with defendants.

The proposed Negotiating Class Action, which was filed today with Judge Polster, would create a Class for the sole purpose of negotiating and potentially settling with defendants engaged in nationwide opioids manufacturing, sales or distribution. The Class will unify cities and counties into a single negotiating entity to maximize their collective bargaining power, and ultimately provide an end to opioid litigation for settling with defendants. Clearly the States are in a position to speak quickly and powerfully. However, it is not clear in most jurisdictions if a resolution with the State ends the inquiry. In order to provide closure to a defendant that wishes to resolve “the opioid litigation” they must have a way to get releases from all entities with claims. The Class provides for the creation of a mechanism through which plaintiff communities and non-litigating communities will have their voice heard during any settlement negotiations including a vote when it comes to adopting a settlement, but it also gives a closure opportunity to defendants.

Complex and historic litigation calls for equally creative and innovative solutions. The proposed Negotiating Class is a novel approach that brings many benefits for all involved. If Judge Polster grants final approval, this will be a major step forward toward productive negotiation and, ultimately, another step closer to the best litigation outcome possible – a comprehensive resolution with nationwide reach to match the nationwide crisis.

Why a Negotiating Class is Needed

As mentioned, only approximately 10% of county, cities and other local municipalities have filed litigation against opioid manufacturers, distributors and/or pharmacies. That leaves thousands of communities that could still currently file against opioid defendants at any time in the future. However, at this stage of the litigation, and with the proposed class, all municipalities have to be included whether they have already filed or not. Is it not a strong enough message to the defendants that the elected officials in 2,500 governmental entities, both within the MDL and for the states, have stepped up to challenge their conduct? The people through their elected officials have spoken. It is time to find a common way forward to address the epidemic.

Any global resolution needs to account for the entire country and the impact of the opioid epidemic on every community. Until now, there hasn’t been a workable structure and process through which the governmental entities can have a voice and vote in any settlement negotiations, and defendants haven’t had confidence that the litigation could be fully resolved nationwide if they settle with any one State, entity or group.

In my settlement and negotiation experience, and in ongoing discussions with plaintiffs and defendants as co-lead of the national MDL and chair of the negotiating committee, the obstacles toward productive resolution are clear – with litigation so extensive and complex, and with so many counties and municipalities that have not filed litigation, there is a need for a more coordinated voice and body with which to negotiate with defendants. In order to offer a settlement, defendants need to understand the total universe, both geographically and financially, of whom they are negotiating with to have confidence that the settlement will resolve the litigation with all counties and states at once, with no lingering concern over additional litigation that could be filed. The State Attorneys General who are fighting this same battle also need to know they are supported by the local governments and the people on Main Street USA.

Without this structure and process, counties and cities who bear a significant share of the brunt of the consequences of the opioid crisis and local response, will find themselves years down the road stalled in a morass of litigation and potentially dealing with multiple bankruptcy courts, with no productive global resolution in sight. Main Street USA as we know it today cannot survive the delay and continued epidemic.

How the Negotiating Class Would Work

Represented by Class Representatives, including some of the largest Cities and Counties in the country, Negotiating Class members would be involved as potential settlements are brought to the group, with a pre-established voting procedure already in place and a clear understanding of the percentage of a county’s allocation in advance.

Class members are defined as all counties, parishes, and boroughs; and all incorporated places, including without limitation cities, towns, villages, and municipalities, as defined by the United States Census Bureau.

Even cities and counties with state court-filed actions are members of this Negotiating Class, with the option to opt-out. However nothing in this class interferes with their proceeding in State court for litigation, trial or independent negotiations.

Voting Process: When a defendant brings a proposed settlement to the Class, class members would vote through a website as to whether they support the settlement overall. To approve any settlement, the class would have to have 75% of members voting in favor (also called a “supermajority”).

There will be six voting pools for both litigating entities (those that have filed lawsuits as of June 14, 2019) and non-litigating entities.

  • By each individual municipality (“member”) in the class
  • By U.S. Census population
  • By allocation (as shown on the Settlement Allocation map and calculator to be posted on the Negotiation Class website and the default census spend data)

Allocation Percentages: a Settlement Allocation Map and Calculator will become available if the Class is granted approval that allows class members to calculate their portion of any proposed settlement. These calculations are based on a hypothetical settlement figure of 1 billion dollars. Additionally, a common fund would be established to cover any Class member costs and attorneys’ fees.

The Map shows in dollars the pro-rata share for each county, utilizing a three-part formula that reflects the level of opioids-related harm by using the three metrics for which existing, reliable, detailed and objective data are available for each county: 

  1. morphine milligram equivalent (MME) data,
  2. overdose deaths, and
  3. opioid use disorder cases.

Sources for the allocation data are detailed in Section VIII of the accompanying Memorandum.

The formula weighs these three factors essentially equally: a third of each and is the product of prolonged and intensive research, analysis and discussion by and among members of the court-appointed Plaintiffs’ Executive Committee and Settlement Committee and their retained public health and health economics experts. Each County class member and its constituent City class members would decide the internal allocation of the county level award among themselves. They may elect to use a pre-existing mechanism, such as their system of allocating sales taxes or other revenues between the County and its Cities. In the event they could not agree, a court-appointed neutral party would resolve or adjudicate the allocation with the final default being the Census data described in the agreement.

Why the Proposed Negotiating Class Action is Novel

Unlike typical litigation and settlements where a group of attorneys negotiate with a defendant, and only after that is preliminarily approved by the Court, is it presented to the Class. Here the Class members would become part of the negotiations. The Class would exist and would be known but, there is currently no named defendant for the class or a settlement offer on the table. This is not a litigation class. It would be a voluntary opt-out Class, if approved. However, if a county or municipality opts-out, they may not vote on any proposed settlement, may not collect any money or benefit from a settlement and would have to negotiate or litigate on their own.

To my knowledge this proposed procedure has never been used before in this context; however, the use of a coordinated litigation device to represent the common interests of cities and counties is not new. For example, the National League of Cities has represented the collective interests of its members in litigation, including in the Supreme Court. See National League of Cities v. Usery, 426 U.S. 833 (1976); National League of Cities v. Brennan, 419 U.S. 1321 (1974). The proposed Negotiation Class seeks to achieve the same benefits of collective representation of common interests in negotiating the best practicable resolution of the cities and counties’ claims.

What the Proposed Negotiating Class is Not

I want to be clear, we do not currently have a settlement offer and this Class was not created for any one defendant. It also does not affect the prosecution of existing actions filed against opioids manufacturers, opioids distributors, or pharmacies by Class members, or any state litigation. The claims brought by Attorneys General are separate and will proceed. This Class is intended to support the efforts of the Attorneys General, all of whom share the desire to promptly and effectively address this epidemic.

This Negotiating Class also does not change the trial track of any State or municipality case. In the MDL we continue to aggressively prepare for the upcoming bellwether trials scheduled in Cleveland, Ohio on Oct. 21 for Summit and Cuyahoga counties.

What’s Next Related to the Proposed Negotiating Class?

There will first be a presentation to Judge Polster on the merits of the proposed class. After that, we anticipate the court taking action on the proposed class very quickly.

  • If Judge Polster approves the class, a formal notice will go out to all class members nationwide, filed or unfiled. That will begin a 60-day period in which each class member can decide to participate, opt out or to object to some feature of the proposed class. Only those seeking not to participate must file an opt-out form.
  • After the 60-day notice period, a final hearing will be held. If the Court approves the class, the Court will also file an order making clear who is in and who is out of the class.
  • Once the class exists, a defendant that wishes to negotiate with the class as a whole can do so through the Negotiating Class process, with the settlement proposal submitted for Class approval or rejection according to the 75% approval requirement. Finality and closure from all non-State governmental entities will be available and can be coupled with a States’ resolution for total peace from all governmental claims. 

To read the filing and for more information, visit the www.opioidnegotiationclass.com.

My hope is that all counties and municipalities will strongly consider the benefits of being a Class member and the benefits it can bring their community. I, along with other members of the PEC are here to answer any questions that local leaders may have about this Negotiating Class. Again it is an innovative approach that can help to bring innovative and fair settlement offers from defendants that would help to alleviate the devastation that our local communities are suffering from the alleged deceptive marketing and fraudulent distribution of highly addictive opioids.

Download all filed documents.