In my last post about recent developments in American aggregate opioid litigation, I teased about a future segment documenting a fantastic conversation with Professor Elizabeth Chamblee Burch. This post delivers that promise. Professor Burch is Fuller E. Callaway Chair of Law at the University of Georgia School of Law and an expert in complex litigation, mass torts, multidistrict litigation, and civil procedure.
Readers can access her impressive scholarly contributions on these topics here.
As Professor Burch elucidates in her research, the United States civil justice system has witnessed the waning of class certification cases and, concomitantly, the rise of multidistrict litigation (MDL) to resolve high-stakes, aggregate civil disputes.
This trend includes the massive national multidistrict litigation currently pending in the United States District Court for the Northern District of Ohio (Opioid MDL). Unlike class certification litigation, which is governed by Federal Rule of Civil Procedure 23, the MDL process is subject to the 1968 Multidistrict Litigation Act.
Pursuant to that statute, the Chief Justice of the United States Supreme Court appoints a panel of seven federal judges (MDL Panel). The MDL Panel has the power to transfer groups of cases, which are pending across various federal district courts and involve a common question of fact, to a single federal district court. That court then coordinates and conducts consolidated pre-trial proceedings. On December 12, 2017, the MDL Panel issued an order transferring all the pending federal opiate cases to the Northern District of Ohio and assigned them to Judge Dan A. Polster. The docket currently includes upward of 1,500 consolidated opioid lawsuits. Meanwhile, approximate three dozen non-MDL opioid cases have been filed in state courts throughout the country.
Oklahoma’s March 2019 $270 million settlement of its state court claims against Purdue Pharma led considerable speculation concerning that settlement’s potential impact on the Opioid MDL litigation and state court cases. West Virginia’s $37 million settlement with drug distributor McKesson Corporation last week induced similar attention. In that litigation, West Virginia had accused McKesson, which ranks as the sixth-largest corporate revenue-generator in the country with a reported $208 billion in earnings in 2018, of, among other things, distributing approximately 100 million doses of prescription opioids to the State’s 1.8 million residents over a five-year period during which the State’s drug overdose deaths increased by 67 percent. The American Enterprise Institute estimated that the opioid crisis costs West Virginia, which suffers the highest drug overdose rate in the nation, $9.1 billion a year or $4,985 annually per-capita. The considerable discrepancy between West Virginia’s crushing opioid-related economic burden and the $37 million McKesson settlement provoked Senator Joe Manchin to release a statement entitled Sweetheart Settlement With McKesson Sells Out West Virginia, in which he characterized the deal as “horrific” and “disgraceful.”
The media has enthusiastically reported about the amount and nature of these early state settlements and their potential import vis-à-vis the thousands of still-pending cases. Scant attention, however, has been devoted to the proverbial elephant in the room: the threshold question of whether non-class aggregate litigation is the best—or even an adequate—mechanism to make the opioid plaintiffs whole given the notable systemic pathologies that have historically attended to such cases. For example and as Professor Burch’s research has examined, MDL judges appoint the same cadre of seasoned plaintiffs’ attorneys to a “steering committee” to conduct pre-trial discovery, argue motions, and speak on behalf of all of the plaintiffs (and their chosen counsel) throughout the MDL proceedings. The courts also well-compensate those lead attorneys for performing these duties through common benefit fees, which are funded by non-lead plaintiffs’ counsel. While lead attorneys “must act as fiduciaries to all plaintiffs, . . . critics claim that those lawyers have engaged in self-enriching acts: by offering lead lawyers’ red-carpet treatment on fees in return for favorable terms elsewhere, defendants can take advantage of lead attorneys’ control over settlement negotiations to strike deals that benefit the leaders and the defendant, but not the claimants.”
In addition to critiquing MDL repeat player self-dealing, Professor Burch queries whether it is appropriate for state officials to outsource public interest litigation to private contingency-fee counsel in the first instance. She has also explored the significant separation of powers concerns that are implicated by public attorneys’ inclusion of prospective remedies in MDL settlement agreements.
I began my conversation with Professor Burch by asking her to weigh in on these and other MDL idiosyncrasies in the context of the Opioid MDL.
Jennifer Oliva: Given that the plaintiffs’ attorneys appointed to serve as lead counsel on the Opioid MDL are repeat player contingent-fee attorneys, most of whom previously served as lead counsel on other high-profile mass tort MDLs, do you believe that an Opioid MDL global settlement is likely to represent a fair and adequate deal for the individual claimants?
Elizabeth Burch: One can never read the tea leaves about what is going to happen in future litigation but, to the extent that the past is any predictor of the same, I agree that [the involvement of repeat player, private contingency-fee plaintiffs’ attorneys] is a significant issue. We can debate the merits of hiring contingency-fee attorneys to work on behalf of state Attorneys General or county or city attorneys in these cases. The upside is that these lawyers have a lot of expertise and have been doing this kind of litigation for a long time. The downside is that these attorneys only get paid if there is a significant amount of money involved in the disputes. For example, when you look back on the tobacco litigation from a public health standpoint, the winding down of the tobacco industry through bankruptcy would not have been the worst thing in the world. And yet, the negotiation of the tobacco Master Settlement Agreement (MSA), which was all about the money, made the states beholden to the tobacco industry for significant payments over a considerable number of years. The MSA effectively permitted the tobacco companies to achieve cartel-like status and protection from the states. The lesson learned is that anytime you have public Attorney Generals playing a prospective regulatory role in this sort of public interest litigation, we should be concerned.
Such behavior also raises separation of powers issues because, to the extent that we care about prospective regulatory remedies, the enactment of those remedial provisions should be left to the legislature. So aggregate litigation that involves prospective regulation comes with built in inter-governmental branch conflicts. Conflicts compound, of course, when the public lawyers responsible for these cases and their settlement hire private contingency-fee attorneys to work on behalf of their constituents. And it does not there end. There is yet another layer of conflicts here due to the involvement of the repeat player plaintiffs’ attorneys, who have served as lead attorneys in past aggregate litigation and, therefore, are not operating on a blank slate. In sum, I do not have a lot of confidence in what a settlement will ultimate accomplish in these cases. It is important to note, however, that there have been encouraging recent developments in the opioid cases. For example, the New York Attorney General recently brought suit against the Sackler family.
JO: Thank you for such a terrific segue. In that connection, what do you think about the states’ strategy to name the Sackler family members as defendants? Do you think they did so in response to Purdue Pharma’s threat to file bankruptcy to resolve the company’s opioid litigation?
EB: The decision to name the Sacklers as defendants is really interesting. At the onset of the opioid litigation, I had heard scuttlebutt that certain judges were trying to get the parties to explore a mandatory class action. At the time, that was absurd because there is no possible way that you could have certified the opioid litigation as a class action. Among other things, you have disparate claims, there is no limited fund, and the plaintiffs are seeking not just injunctive or declaratory relief but significant monetary damages. At this point, it is very interesting to see the evolution of the opioid litigation to name the Sackler family members as defendants in particular state cases, which is potentially responsive to Purdue Pharma’s threats to declare bankruptcy to resolve the aggregate federal and state opioid litigation that the company currently faces.
With regard to the Opioid MDL, the most important thing to look at is what has happened in the past in similarly-situated litigation and the deals that the lead plaintiffs’ attorneys previously negotiated in those cases. On the one hand, it is impossible to say how the claimants actually fare in these cases because the data on pay-out rates for claimants is really hard to obtain. But, in the deals that I have reviewed in my research, I see the lead plaintiffs’ attorneys negotiating with the defendants for the “common benefit fee,” which immediately raises a red flag because those plaintiffs’ attorneys are divorcing their fees from their clients’ outcomes and, as a result, all kinds of mischief can and does happen. So there is reason for concern here.
JO: Judge Polster, who, as stated above, was assigned by the MDL panel to oversee the consolidated federal opioid cases, pushed the parties to reach a prompt global settlement and publicly announced that his goal was to avoid trials. The Opioid MDL cases, however, have not yet settled and the first two bellwether cases are currently scheduled to go to trial this Fall. Do you think that Judge Polster has learned from these set-backs or adjusted his approach in response to parties’ seeming resistance to enter into a prompt global settlement?
EB: My forthcoming book, Mass Tort Deals: Backroom Bargaining in Multidistrict Litigation, takes a hard look at what judges do in this space. I do not believe that Judge Polster is learning in the Opioid MDL as much as he is adjusting. This is not Judge Polster’s first time presiding over an MDL. In fact, he was very pro-settlement when he oversaw the Gadolinium contrast dye products liability litigation. So, his push for settlement in the opioid litigation is nothing new. He may have gone further here by actually referring to the very first conference that he conducted with the parties as a settlement conference, which is something that I had never seen before. That stated, he adopted a similar posture in the contrast dye litigation, during which he proposed a “baseball-style arbitration,” which I am unfamiliar with but he described as very effective at producing settlements. The point is, Judge Polster is not operating on a blank slate. He has a formed set of opinions of what should happen in these cases.
JO: Your article, Judging Multidistrict Litigation, “turn[s] a critical lens on judicial power” in MDLs. Your discussion about MDL judges’ incentives to flex their power to broker deals was particularly fascinating. Do you think that Judge Polster will continue to try to nudge the Opioid MDL parties toward a global settlement?
EB: Absolutely. Judges are very effective in their nudges. In the data set that I’ve been looking at, over half of the judges that presided over non-class products liability MDLs took some steps to nudge plaintiffs into settlements. And over half of those judges publicly endorsed private MDL settlements without conducting any evaluation equivalent to Federal Rule of Civil Procedure 23 to ascertain whether the deals were fair, reasonable, and adequate. Judges take all kinds of measures to try and encourage plaintiffs to settle and to goad non-settling plaintiffs into the settlement. I think it is troubling. A lot of academics say that the solution to these non-class MDLs is to try to make them look more like Rule 23 class actions and to have judges get more involved in the settlement and take on a more information-forcing role but I think that MDL judges are already playing that role and it may operate to the plaintiffs’ detriment.
JO: Your research has also explored whether MDL plaintiffs are adequately represented by lead counsel. As you know, certain groups of plaintiffs, including Native American tribes and infants suffering neonatal abstinence syndrome (NAS) moved the court to create a separate track for their opioid-related claims but their requests were denied. It seemed fair for counsel for the tribes and NAS infants to be concerned about whether their clients are adequately represented by lead counsel in the Opioid MDL. Did you find it unusual that the court refused these claimants’ requests for a separate track or was that decision consistent with what you have seen in prior cases?
EB: This is absolutely consistent with what has happened in past MDLs. As a general matter, the lead attorney steering committee gets to decide which claims to work up and not to work up and where to invest their money and not to invest their money. So, if you are a plaintiff in the majority, maybe that is not so bad. But, if your claims are unique or individualized, it is problematic. And we have to assume that there are a lot of these type of plaintiffs on the Opioid MDL because in order to have an MDL all you need is a single common question of fact. You do not need common questions to predominate or anything like that. And, yet, if you are a plaintiff that does not have an attorney that is on the steering committee and, therefore, at the decision-making table, you have no control whatsoever over what happens. You do not know what is happening behind the scenes in negotiations. And you would think that those lead lawyers would have a fiduciary duty to keep non-lead counsel in the loop and informed about what is going on but whether that actually occurs depends on the individuals who been selected to serve on the steering committee as lead counsel. My understanding is that the attorneys representing the tribes and the NAS infants in the Opioid MDL are not getting adequate information and do not have a seat at the table. Their position is that their clients’ unique set of interests are being disserved by the lead lawyers.
JO: Purdue Pharma’s recent $270 million settlement with Oklahoma received a lot of media attention and provoked considerable speculation regarding its potential impact on both the Opioid MDL and the other ongoing state cases. In fact, Oklahoma is scheduled to proceed to trial against the two remaining defendants, Johnson & Johnson and Teva Pharmaceutical, in state court later this month. Do you think that either Johnson & Johnson or Teva will reach a pre-trial settlement with Oklahoma?
EB: That’s the key question because once you start to settle, it sets off a trend. The credible threat of trial is what drove the Purdue settlement. Folks start to think, well, if it worked for Oklahoma, maybe it will work for us: let’s schedule a trial date and stick to it.
JO: I’m going to wrap up by asking you an admittedly overbroad and unfair question for our readers. In your view, what is the best possible outcome in the Opioid MDL and what is the worst possible outcome?
EB: It is difficult to say. I certainly hope that we get to see some bellwether MDL trials before the parties reach any global settlement and that critical information is released to the public. The thing that worries me the most here is the possibility that everything remains secret and is shrouded under the privilege of a private settlement. One of the best roles that litigation can play is the production of information. To the extent that the end result here is not information production, it is harder to argue that the litigation played a vital role. So, the worst case scenario is that there is an early global settlement and parties hold a big press conference and exchange money but the public does not get any additional information and the settlement does not provoke any meaningful change. The best possible outcome is that information is provided to the public and we see real meaningful change in terms of a decrease in the overdose death rate and fewer individuals suffering opioid use disorder. We also need to ensure that individual patients are getting the medications that they really need. I have heard from several of the women who were injured by vaginal mesh and are in considerable pain that they are no longer able to obtain their pain medication due to the crackdown on opioid prescribing. So, the best case scenario would be actual, meaningful reform coupled with the ability of people who really need these prescriptions to be able to obtain them.