As published on Legal Newsline:
CLEVELAND, March 23, 2021 (Legal Newsline) – As multidistrict litigation swamps federal courts, the judge overseeing the multibillion-dollar opioid MDL demonstrated why plaintiff lawyers love the strategy so much: Because it is extremely effective at extracting settlements from the companies they sue.
At a hearing earlier this month, U.S. District Judge Dan Aaron Polster repeatedly told lawyers for Walmart and other national pharmacy chains that the companies risked bankruptcy if they refused to pay tens of billions of dollars to settle their cases and insisted on going to trial instead.
“I don’t want to do this,” Judge Polster said at the hearing, which was ostensibly about setting several representative or bellwether cases for trial around the country to test whether the plaintiff theories have merit. ”I don’t want to do any of these other trials, but again, the pharmacists aren’t giving me a lot of choice.”
Then, in a more direct warning to the lawyers before him, the judge said it was implausible the companies would actually fight the claims against them in court.
“I can’t imagine that the defendants’ strategy is to try hundreds of these. I mean, if that happens, the only one left will be Walmart,” Judge Polster said. “There will be a monopolist. I can see why they want it, but I don’t see why the others would.”
Judge Polster left no question since he took control of the opioid MDL in December 2017 that he wanted the defendants to settle before trial and, as he said at the first hearing, “do something meaningful to abate this crisis.” At the March 10 hearing with the pharmacy defendants, he praised Johnson & Johnson and the three main distribution companies for entering negotiations with state attorneys general and reportedly agreeing on a $26 billion settlement.
The pharmacy chains tried mediating claims but abandoned the effort over disagreements about the amount of money they should pay for unproven claims that they caused a public nuisance by filling opioid prescriptions written by licensed practitioners. The plaintiffs claim the pharmacies violated “red flags” contained in Drug Enforcement Administration guidelines that should have alerted them to suspicious prescribing patterns.
Walmart challenged the basis of those so-called dispensing claims in a preemptive lawsuit against the Justice Department that a federal judge dismissed earlier this year.
“I think candidly everyone knows the dollar amounts that the distributors and J&J are paying,” Judge Polster told lawyers for the pharmacies. “All right. That’s there. It seems to me that’s the benchmark.”
The judge also rejected complaints by defense lawyers that he was “gerrymandering” the trial schedule by excluding large regional chains and local pharmacies, some of whom are accused of being the primary offenders in the opioid crisis. National chains are the main target of the opioid claims, because they have the deepest pockets, but they successfully obtained records for the Ohio lawsuits against them from a state database that shows exactly where each suspicious prescription was filled. The pharmacies hope that data shows the “red flag” prescriptions identified by plaintiff experts mostly flowed through smaller stores.
Judge Polster nevertheless signaled he would restrict upcoming bellwether trials to the major chains. Kaspar Stoffelmayr, a lawyer for the pharmacy defendants, asked why the judge would exclude Giant Eagle, which has a large presence in Ohio where Judge Polster is planning on overseeing a trial.
“Giant Eagle is pretty local,” the judge replied. “I don’t think you should be cluttering these trials up with too many defendants.”
Rite Aid’s lawyer, Kelly Moore, complained that her client operated in only 18 states. After more discussion, the judge said, “I don’t know what to do about these local players, candidly.”
The back-and-forth demonstrates what has become the typical pattern in MDLs. Congress authorized the procedure for gathering similar lawsuits before a single federal judge to streamline discovery and other common pretrial work. But the MDL soon became a mechanism for aggregating hundreds or thousands of lawsuits in a single court to pressure defendants to settle. The number of MDL cases in federal courts recently crossed the 1 million mark, representing more than 60% of the federal civil docket excluding certain administrative cases.
Most MDL judges see the process not as a way to prepare cases for trial, but as a way to end them through settlement. Judge Polster has stated that since the beginning of the opioid MDL and he left no room for interpretation at the hearing with pharmacy defendants. He described trials on the merits as little more than tools to bring the defendants to the bargaining table, although he once acknowledged that they could actually hinder settlement in the sprawling opioid litigation, since a victory by either side would make it harder to achieve a global resolution.
Judge Polster’s trial jurisdiction only extends to Ohio, so he is planning on a bellwether trial involving two Ohio counties later this year.
“If the defendants win, the defendants are going to say `at least we said there is no liability. We are not going to pay anything,’” the judge said. “If the plaintiffs win, then, every county in the country is going to say, `you know, our case is just as strong as Trumbull and Lake Counties, and we want that much if not more’ and be impossible to resolve.”
Ultimately, the judge said, trials would be a draining exercise in futility.
“I don’t want to do this,” he said. “It is a huge amount of work for me” and the special master coordinating pretrial activity.
“Plaintiffs’ lawyers are laying out all this time and money on the if-come. It is a staggering amount so far, but I understand that,” he said. “Defendants all have tons of money.”