As published on Legal Newsline:

CINCINNATI (April 20, 2020) – Facing a string of damaging rulings by the judge overseeing sprawling litigation against them, some of the nation’s leading retail pharmacy chains resorted to the equivalent of a Hail Mary pass: They sought extraordinary intervention by a higher court to halt what they contended was an abuse of the law.

It worked. In a short but strongly worded decision, a three-judge panel on the U.S. Court of Appeals for the Sixth Circuit rebuked District Judge Dan Polster for violating federal rules of procedure by allowing plaintiffs to add significant new claims to their lawsuits over opioid sales more than 18 months after a deadline had passed, and refusing to consider the pharmacies’ motions to dismiss.

Multidistrict litigation is a procedural device designed to streamline pretrial evidence-gathering and other activity, the appeals court ruled, “not some kind of judicial border country, where the rules are few and the law rarely makes an appearance.”

Defendants have long complained that MDL judges tend to discard the rules if they get in the way of mass settlements, leaving companies little choice but to pay off plaintiffs or risk bankruptcy. But appeals courts rarely respond to mandamus petitions, preferring to allow litigation to play out at the trial court level before entertaining appeals.

“This is the first successful mandamus petition that I am aware of in an MDL,” said Andrew Trask, an appellate lawyer of counsel with Shook Hardy & Bacon. “It really helps to set the terms of the debate.”

In the decision written by Judge Raymond Kethledge, a George W. Bush appointee, the court criticized Judge Polster for allowing Cuyahoga and Summit counties in Ohio to amend their complaints and add so-called dispensing claims in addition to claims the companies failed to police their wholesale operations against bogus prescriptions.

The counties had disavowed such claims until long after a 2018 deadline passed, preferring to sue the pharmacy chains as distributors. Changing the claims after millions of pages of discovery had been produced was a clear violation of the Federal Rules of Civil Procedure, Judge Kethledge wrote in an opinion joined by Judges Richard Griffin and Eugene Siler, also Republican nominees.

“Not a circuit court in the country, so far as we can tell, would allow a district court to amend its scheduling order under these circumstances,” the decision says.

That may be true, but the offense doesn’t rise to a level that appeals courts would normally address in a mandamus ruling, said Adam Zimmerman, a professor who teaches mass torts at Loyola Law School in Los Angeles. Petitioners must show the judge made a clear error of law, the damage can’t be reversed on appeal and the issue is of overwhelming importance, Zimme

The orders the pharmacies sought to block are similar to others judges issue routinely in MDLs, Zimmerman said, even if defense attorneys have been protesting them for years. Groups like Lawyers for Civil Justice have long sought in vain to modify the rules for MDLs to allow defendants to pursue interlocutory appeals of judicial orders before cases proceed into expensive discovery or trial, for example.

Mandamus “is a very blunt instrument to deal with managing the type of things people routinely complain about,” Zimmerman said.

It could be a winning strategy here, however. Defense attorneys routinely complained about similar abuses in class actions, where judges would overrule their requests and steamroller cases toward settlement, knowing most companies can’t afford to risk bankruptcy by taking even a questionable class action to trial.

Gradually they succeeded in convincing conservative judges like Richard Posner to take up their concerns in mandamus petitions. The most famous example is known as Rhone-Polenc Rorer, in which Posner decertified a class action on a mandamus petition, saying defendants “may not wish to roll these dice” by risking a $25 billion trial verdict before seeking to appeal.

Congress ultimately approved Rule 23(f) of the Federal Rules of Civil Procedure, allowing interlocutory appeals in class actions. And the U.S. Supreme Court has significantly tightened the rules in class actions in recent years with decisions like Wal-Mart v. Dukes, which requires plaintiff lawyers to come up with more proof of their allegations at the beginning of a case before judges can certify a class.

The Sixth Circuit decision in the opioid MDL only bears on that federal judicial district and might even be dismissed by some as the pro-corporate screed of three Republican judges.

“It’s just a shot across the bow,” said Trask.

But the reasoning is legally sound and touches on problems with the MDL procedure that many attorneys and scholars have been discussing for years, he said.

“This is the first time you’ve really had that statement from a court,” said Trask.

Zimmerman agreed, although he said it remains to be seen if the decision is “a blip or maybe part of a comprehensive strategy that might lead to substantive change.”

One area where the Sixth Circuit’s reasoning will give defendants significant help is in determining the true value of the claims in an MDL. Plaintiff lawyers use television advertising and other tactics to recruit thousands of clients for lawsuits over pharmaceuticals and other products, deliberately bundling questionable claims with ones that might succeed to negotiate richer settlements and fees for themselves.

If the judge overseeing pretrial procedures in an MDL refuses to entertain motions to dismiss or take seriously other complaints by the defendants, the cases can quickly become so expensive that companies make a purely business decision to settle.

“The overriding issue in MDL practice from a defendant’s standpoint is trying to figure out the percentage of claims that are worthless,” Trask said. “Getting firm scheduling orders and motions to dismiss are good tools for getting at the value of claim.”

Categories: Opioid crisis