As published on Legal Newsline:

Public nuisance may be the most successful legal theory ever to have failed in court. States and municipalities this year negotiated $26 billion in settlements with the Big Three drug distributors and Johnson & Johnson – including $2 billion in fees for private plaintiff lawyers – based on the threat of winning even more if they convinced juries the companies created a “public nuisance” by selling legal products through government-licensed channels.

It’s a novel theory that seemed preposterous to many legal experts just a few years ago, and it’s still far from being accepted by courts. In a little-noticed decision in January, an Illinois judge threw out Cook County’s public nuisance claims against J&J and others, saying there were too many other players involved in the opioid crisis, from prescribers to illegal dealers, to hold manufacturers and distributors liable. (The court left intact other elements of the lawsuit based on misstatements and fraud.)

A New Jersey court rejected that state’s public nuisance claim against Purdue Pharma in 2019, calling it a product-liability lawsuit in disguise, while courts in Delaware, California and Connecticut have issued similar decisions. In one of the most powerful refutations of the public nuisance theory against the manufacturers of legal products, a North Dakota judge in 2019 threw out the state’s case against Purdue, saying “no North Dakota court has extended the public nuisance statutes to cases involving the sale of goods.” North Dakota appealed the decision to the state Supreme Court, but it has been stayed pending the resolution of Purdue’s bankruptcy.

Public nuisance litigation against gun makers, oil companies and lead-paint manufacturers also has largely failed so far. Several California municipalities won a $1.1 billion verdict against Sherwin-Williams and other paint companies in 2013, for example, but after the California Supreme Court refused to hear an appeal the defendants settled for $305 million in 2019 without admitting liability and setting aside the judicial ruling against them.

At the core of most defenses is the idea centuries of public nuisance law have restricted the action to cases over the misuse of property that affects the public, not the sale of products with harmful side effects.

The Illinois Supreme Court explained the risk of expanding public nuisance law in a 2004 decision upholding the dismissal of similar litigation against the gun industry. To hold it liable for the legal sale of firearms “would permit nuisance liability to be imposed on an endless list of manufacturers, distributors, and retailers of manufactured products,” the court said.

Despite this discouraging history, plaintiff lawyers appear to have hit pay dirt with opioids. Attorney Paul Farrell describes himself as “the original architect of the public nuisance claim in opioids,” and stands to collect a significant portion of the $2 billion in fees plaintiff lawyers negotiated for themselves in the $26 billion distributor settlement.

Farrell said the key to the nuisance argument in opioid cases is proving manufacturers and distributors engaged in illegal conduct. The word “illegal” is heavily disputed by defendants, but plaintiff lawyers say it means the companies violated Drug Enforcement Administration rules and standards requiring them to maintain systems to prevent opioids from winding up in the wrong hands. They cite the widespread abuse of prescription opioids as evidence those systems failed or never existed, and argue the lapse amounted to illegal behavior creating a public nuisance.

“If you accept the premise that manufacturers and distributors engaged in wrongful conduct that significantly interfered with public health, there is a public nuisance claim available,” said Farrell, who recently relocated from West Virginia to Puerto Rico to avail himself of tax benefits. “It may not be that a jury or judge decides that it’s a public nuisance,” he conceded.

The big problem with applying public nuisance law to the sale of legal products is “there’s no limiting principle,” said Donald Kochan, a professor at George Mason University’s Antonin Scalia Law School. Once courts decide to order opioid sellers to pay money to “abate” the public nuisance they supposedly created, he said, it’s open season on any product with harmful side effects.

“It is a multifront assault, not just on products but on other activities that are easily cast as not socially desirable, like selling fossil fuels,” Kochan said of public nuisance litigation. “If there’s a public health problem that requires some solution and you can identify a corporate actor about whom you can tell a good story about being a contributor to that problem, the courts are seen as a cheaper alternative than legislation.”

Though courts haven’t fully endorsed public nuisance, it can still be a powerful weapon for extracting settlements. Some courts are cautious about applying a legal theory with no limiting principle, Kochan said, but “no doubt there’s enough room for courts that wish to expand tort law to distinguish some of the cases.”

The judge in charge of federal multidistrict opioid litigation, U.S. District Judge Dan Aaron Polster, has repeatedly upheld plaintiff arguments that the public nuisance theory has merit, allowing the thousands of cases consolidated in his court to proceed toward settlement. His refusal to dismiss the claims, as other judges have done, applied enough pressure on the defendants to settle.

Critics of mass-tort procedure complain that wholesale settlements prevent new legal theories, like product public nuisance, from actually being tested in court in front of a judge or jury. Asked if it there was any chance a public nuisance claim would survive all the way through a trial and appeals, Kochan hedged.

“I wouldn’t put it in the never category,” he said. “It has never been fully denounced. It’s never been robustly denounced in a manner that would eliminate the possibility another case would be brought.”

Categories: Opioid crisis