Municipalities’ proposal to negotiate opioid settlements likely to gain approval, experts say

A proposed structure that would allow attorneys for local governments to negotiate and accept settlements for roughly 25,000 cities and counties would clear some of the most formidable hurdles on both sides to resolving lawsuits stemming from the opioid crisis, legal observers said.

There is "little downside" for drugmaker and manufacturer defendants to agree to a framework that would sweep nearly every municipality in the United States into a single class because the approach makes it "less likely that individual parties will be able to hold out," argued Loyola School of Law Professor Adam Zimmerman, adding it also gives plaintiffs obvious leverage.

Zimmerman also noted there already "may be some buy-in from defendants" because they "want a structured way to reach some significant settlement that gives peace to [them] and provides vitally needed funds to cash-strapped cities."

Several of the cities and counties not named in the proposal may have already agreed to the framework given the complicated nature of the approach, he added.

The development could also mean some of the defendants want to settle claims from the local municipalities, and there is a settlement "baked into the proposal," said UC Hastings School of Law Professor David Levine.

Nebraska-based plaintiffs' attorney David Domina, who represents a host of Native American tribes, agreed and said "it signals to me there has been enough conversations with defendants so that some [companies] have said, 'Who are you to negotiate for everybody?'"

"You can't get to serious discussions unless there are people you're talking to that can speak to everybody in the group," he said.

Roughly 40 municipalities, including the cities and counties of San Francisco and Los Angeles, have agreed to the first-of-its-kind proposal that seeks to allow lead plaintiffs' attorneys to broker and accept a settlement offer to parties that choose to participate in the "negotiating class," as plaintiffs' attorneys call it.

A supermajority of voters is required to approve the settlement in which local leaders will vote.

Although there is a committee of attorneys to engage in settlement discussions, reaching one has been difficult because they cannot foreclose on the possibility of local municipalities filing suit in the future, Levine added. This approach would allow lead attorneys to tentatively accept an offer on behalf of the 25,000 cities and counties, who would then vote to approve it.

Roughly 10% of local municipalities in the nation have filed suit against the opioid manufacturers and distributors at this point in the litigation.

The framework for the proposal was first suggested by Francis McGovern, who is one of three special masters overseeing settlement discussions.

U.S. District Judge Dan Polster of the Northern District of Ohio will consider the matter at a hearing on June 25. In re: National Prescription Opiate Litigation, 17-MD2804 (N.D. Ohio, filed Dec. 12, 2017).

Co-lead plaintiffs' attorney Joseph F. Rice wrote that the approach will "maximize [our] collective bargaining power" by unifying the cities and counties "into a single negotiating entity."

Cities and counties that have filed state court actions are also members of the proposed class. Rice wrote that "nothing in this class interferes with their proceedings" in litigation or independent negotiations.

A lawsuit brought by Oklahoma's attorney general against Johnson & Johnson is currently on trial after the state reached settlements worth $270 million with Purdue Pharma LP and $85 million with Teva Pharmaceutical Industries Ltd.

Several California counties, and the state, have lawsuits pending in state court.

The first of the federal test cases are scheduled for October in lawsuits brought by the Ohio counties of Cuyahoga and Summit.

Zimmerman said the proposal will be subject to the normal class certification process, primarily casting into doubt whether the plaintiffs have argued they have enough overlapping claims to proceed as a class.

"There are all these disparate issues," he said. "There are a lot of obstacles: it's super novel, it might not get all plaintiffs on board, and meeting all the other elements of class certification."

Calling the proposal a "strategic gambit" given increasingly difficult certification standards, Georgia School of Law Professor Elizabeth C. Burch predicted that Polster will be ultimately be inclined to approve the proposal because "he's pushed for a settlement all along."