As reported on Legal Newsline:
CLEVELAND, Aug. 14 – Soon after the first of nearly 2,000 opioid lawsuits by cities and counties flooded into his Ohio courtroom, U.S. District Judge Dan Polster laid out an ambitious plan to wrap them up within a year.
“People aren’t interested in depositions, and discovery, and trials,” he said during a January 2018 hearing over the multidistrict litigation concentrated in his court. “My objective is to do something meaningful to abate this crisis and to do it in 2018.”
So how’s Judge Polster doing so far?
After more than 18 months of litigation, he’s not much closer to his goal than when he started. Despite his earlier vow, he’s presided over extensive pretrial depositions and discovery, and the first trials involving two Ohio counties are scheduled to begin in October.
The only meaningful action affecting how opioids are distributed to flow out his courtroom so far is a modest agreement by pharmacy benefit managers to discourage doctors from prescribing large doses of opioids to pain patients.
All the rest – Judge Polster’s plan “to dramatically reduce the number of opioids that are being disseminated, manufactured and distributed” and to make sure “the pills go to the right people and no one else” – remain unaccomplished. And now critics, including most of the nation’s state attorneys general, say Judge Polster could wind up doing more harm than good if he approves a proposal by private lawyers to force some 40,000 cities and counties into a yes-or-no vote on a planned allocation of opioid litigation proceeds before any money is actually on the table.
“This is nothing that’s ever been done before and nobody’s sure if it will work or how,” said Elizabeth Burch, a professor at the University of Georgia Law School whose recent book, “Mass Tort Deals,” explains how judges overseeing multidistrict litigation have sometimes coerced plaintiffs and defendants into settlements that benefit lawyers more than their clients.
The problems with Judge Polster’s approach, as well as with the idea of allowing thousands of cities and counties use public nuisance law to address the opioid crisis, were on full display during an Aug. 6 hearing over the proposed “negotiating class.” Representatives of the attorneys general of Ohio and Texas, as well as lawyers for defendant distributors and several Ohio cities, told the judge that the proposal conflicts with well-established federal law and U.S. Supreme Court precedent governing class actions.
Under the proposal, every city and county would be asked to accept a prearranged formula for allocating opioid money before any settlement has been struck, with a 75% supermajority vote at the end to approve the settlement amount but not the underlying structure of the deal.
A Clinton appointee who spent 16 years as a federal prosecutor, Judge Polster has plenty of experience negotiating plea deals and he’s overseen several large MDL settlements. He handled an MDL over whether a pet treatment “dispersed” over the pet’s entire body or only on the spot it was applied by ordering defendants to perform a few tests, then have the plaintiffs challenge those findings.
The plaintiffs agreed but appealed when things didn’t go their way. Polster had whittled their four claims down to one, seemingly complaining at one point, “It’s taken an hour, I now understand the plaintiffs’ case.”
But he appeared to have only a limited knowledge of class action procedure during the recent hearing on the negotiating class.
At one point he seemed confused about a basic element of any class action: the treatment of absent class members, so called because they don’t participate directly in settlement discussions and may not even be aware of them. Attorney Sonja Winner of Covington & Burling, arguing for distributor McKesson Corp., said absent class members could object under Rule 23 of the Federal Rules of Civil Procedure governing class actions because required prerequisites including similarity among the claims could not be met.
As Winner was explaining the conflict, Judge Polster interjected: “They’re not absent, they’re in,” apparently thinking class members who don’t opt out are no longer absent, a misreading of the law. Later he dismissed criticism that many of the 40,000 potential class members might not vote, leaving their fate in the hands of bigger cities and counties.
“In any election, I know it’s determined by who chooses to vote and who doesn’t,” the judge snapped.
From the beginning, Judge Polster has made it clear he wants a settlement before trial. That’s not the role of MDL judges under the law, however. Federal law allows judges to consolidate lawsuits with similar claims in a single court for more efficient pretrial discovery and other activities that can be conducted on a common basis.
But then the cases are supposed to be remanded to their original courts for trial. Only about 3% of MDL cases are actually remanded, Burch said, with the rest being settled or dismissed at the MDL court level.
“If the parties reach a settlement along the way then that is their choice – the judge shouldn’t prohibit or inhibit them from doing that,” Burch said. “But also the judge shouldn’t force the parties into settlement.”
There are large barriers in the way of settlement, meanwhile. As a federal judge, Polster only has jurisdiction over federal lawsuits. Lawsuits by the states in their respective state courts are completely beyond his control. The states argue they have both the most powerful claims and the sovereign authority to distribute any money they obtain from the opioid industry as they see fit.
Private lawyers came up with the idea of recruiting counties as cities as plaintiffs in part to make sure opioid money was available for local use, in contrast with how state legislators have appropriated most of the $260 billion flowing from the 1997 tobacco settlement. But cities and counties are considered political subdivisions of the states, with no separate sovereignty under the federalist system.
Depending on the state, legislators may be able to stand in the shoes of the cities and counties and command them to settle or dismiss their cases. The main constituency that would lose under that scenario are private lawyers, who represent nearly all the cities and counties under contingency fee contracts that could generate billions of dollars in fees.
Judge Polster at one point acknowledged the conflict between the states and the plaintiffs in his court.
“You can say there shouldn’t be any of these lawsuits” by cities and counties, he said. “The corollary is the AG represents the people of Ohio and these cases should be dismissed.”
But the judge has rejected all requests to dismiss the lawsuits, which defendants say are based on an incorrect application of public nuisance law and seek to hold them liable for selling a tightly regulated and legal drug. At another point in the hearing, the judge seemed to suggest he wouldn’t approve a settlement that steered money to elected state legislators, saying “that idea isn’t going to fly.”
One of the most powerful tools a MDL judge possesses to encourage settlement is the bellwether trial, which can establish the strengths and weaknesses of each side’s case as well as the value a jury puts on claims. But critics, including Prof. Burch, say bellwethers have flaws, including the fact they can include plaintiffs that have been cherry-picked by either side, or don’t represent the full complexion of the litigation.
“When you only have jurisdiction over Ohio cities and counties, you’re not going to get a representative sample,” Burch said. “You’re not going to find out whether North Dakota’s ruling on nuisance law stands.”
Judge Polster did recognize one glaring conflict when he prohibited private attorneys who represent both cities and states from participating in the hearing over the proposed negotiation class. But the judge appointed those same attorneys to the plaintiffs’ executive committee last year, including Joe Rice of Motley Rice, which represents Alaska, New Hampshire, Maryland and several other states. Other lawyers and firms on the plaintiffs’ executive committee that represent cities and states include Don Barrett, Mark Lanier, Elizabeth Cabraser, Baron & Budd and Morgan & Morgan.
If he approves the negotiation class as expected, Judge Polster says he will appoint independent counsel to represent the tens of thousands of cities and counties that haven’t sued but will belong to the class. But he hasn’t addressed another central conflict in the mechanism: The money would flow to counties, and it would be up to the cities within them to negotiate their own shares, even though the same lawyers often represent both sides of this potentially contentious dispute.
The judge also doesn’t seem to be concerned about a question defendant companies brought up during the hearing, which is how he can promise them a global release of claims when he doesn’t have jurisdiction over hundreds of lawsuits in state court.
“To my knowledge, no settlement has been negotiated and yet he’s offering this broad release,” Burch said.
At the January 2018 hearing and again on Aug. 6, Judge Polster expressed in nearly identical words frustration at the number of lawsuits he was being asked to oversee. In last week’s hearing, Judge Polster said it was unrealistic to try some 2,000 cases and a global settlement was the only solution.
“Why is the federal judiciary trying to address a 20-year social epidemic, why is it in this branch and not the other two?” he asked. “I understand the question.”