Court Upholds a Majority of Governments’ Claims Against Defendants
Local governments designated as Track 1 cases received a favorable ruling from U.S. District Court Judge Dan A. Polster when he adopted a majority of the report and recommendation (R&R) issued by Magistrate Judge David A. Ruiz in October. The ruling upheld most of the claims asserted by Summit County, Ohio and the City of Akron but, importantly, rejected the R&R’s dismissal of the County’s common-law public nuisance claim.
The R&R was the first major victory for the plaintiffs in the opioid multidistrict litigation (MDL) consolidated in Cleveland, Ohio. Judge Polster designated several different governmental entities as Track 1 cases to brief threshold legal issues that may assist in settlement negotiations or prepare the test cases for trial. The R&R was the first ruling from a court on motions to dismiss the bellwether Plaintiffs’ claims.
Judge Polster disagreed with the R&R’s recommendation to dismiss the Summit County’s common law public nuisance claim, concluding that the Ohio Product Liability Act did not abrogate the claim. The Court also held that the County’s statutory public nuisance claim is limited to injunctive relief. Moreover, the order adopted the dismissal of Akron’s drug-related nuisance claim for lack of standing, reasoning that the statute vested enforcement authority with counties, the State, and the Board of Pharmacy but not city governments.
Notably, Judge Polster upheld all other claims for relief, including the Plaintiffs’ claims under the Racketeer Influenced Corrupt Organization (RICO) Act, 18 U.S.C. § 1961, et. seq. This claim alleges that the manufacturer and distributor Defendants worked together to expand the opioid market and that there was a common understanding among all Defendants to ignore their obligations to report suspicious drug orders to effectuate that goal.
This ruling was a great result for the numerous lawsuits filed nationwide that have been consolidated in the MDL. We expect decisions to be issued on the other bellwether cases soon. This includes the State of Alabama, the counties of Cabell (West Virginia), Monroe, Michigan and Broward (all Florida), and the City of Chicago. Although claims for relief will necessarily vary across jurisdictions, many core issues common to all cases were decided in the Plaintiffs’ favor. Hopefully these cases will be decided on their merits by a jury rather than dismissed before discovery reveals the full nature of the Defendants’ conduct.
The Court ordered the Defendants to file their answers by Jan. 19, 2019.
One of the key legal theories asserted by the Plaintiffs in the opioid litigation is that manufacturers, distributors and pharmacies that dispensed opioids failed to halt, investigate and report suspicious orders that these entities suspected may have been diverted for non-medical purposes.
The Controlled Substances Act mandates that any registrant who distributes opioids to “design and operate a system to identify” suspicious orders to the DEA and prevent the illicit diversion of these drugs. Federal regulations explain that suspicious orders include “orders of unusual size, orders deviating substantially from a normal pattern, and orders of unusual frequency.” 21 C.F.R. § 1301.74(b). Despite the language illustrating when the reporting requirement is triggered, the lack of clear numeric thresholds has generated confusion in the litigation.
This confusion is currently being addressed in the discovery process where the MDL bellwether Plaintiffs (Summit and Cuyahoga counties, Ohio and the City of Cleveland) identified which particular orders shipped to their areas were suspicious as well as the criteria used to identify those orders. The Plaintiffs used three different methodologies to arrive at these figures. All estimates were based on raw measures of pills shipped to individual pharmacies in the region around Cleveland and Akron.
Methodology 1 identified monthly shipments that exceeded the amount shipped to a pharmacy in any of the preceding six months. This yielded the lowest estimate of 52,544 suspicious orders (or 5.4 percent of the total) between January 1996 and May 2018.
Methodology 2 removed the suspicious order months identified under the first methodology from the six-month period and flagged orders that exceeded the total in any non-suspicious month. This produced an estimate of 364,291 orders over the 22-year period, or 36 percent of all orders.
Methodology 3 assumed that once a pharmacy placed a suspicious order, it should have been halted and all subsequent orders treated as suspicious. This yielded the largest estimate of 875,055 orders or 86.4 percent of the total.
Because the figure of suspicious orders ranged between 5 percent and up to 86 percent, the Defendants argued that the flagged orders and the methodology were so convoluted that they are still unable to determine which orders the Plaintiffs contend were suspicious. The Plaintiffs responded that these methodologies are as accurate as possible without knowing which metrics the Defendants use to identify suspicious orders.
Special Master David R. Cohen was appointed by Judge Polster to adjudicate discovery disputes between the parties in the MDL. He issued Discover Order 12, which required the Plaintiffs to identify, by Dec. 31, 10 suspicious orders along with the date of shipment, name of the entity that placed the order, and the number and type of drugs shipped. The Plaintiffs are also required to explain in detail how they identified the orders, why the Defendants’ due diligence was insufficient, and why the “order was so suspicious that there was no amount of due diligence that could have removed every basis to suspect the customer was engaged in diversion.”
This order appears to be a compromise between the Defendants’ demand for the Plaintiffs to identify every illegitimate order that allegedly contributed to the opioid crisis and the need for the Plaintiffs to provide some tangible evidence of wrongdoing. Due to the complexities of this litigation, we expect to see more clarifying orders from Special Master Cogen as the discovery process unfolds.
The Beasley Allen Opioid Litigation Team
Because of the enormity of the opioid litigation, and Alabama’s personal involvement in the MDL, our firm has put together an “Opioid Litigation Team,” which includes these lawyers: Rhon Jones, Parker Miller, Ryan Kral, Rick Stratton, Will Sutton and Jeff Price. This team of lawyers represents the State of Alabama, the State of Georgia, and numerous local governments, as well as other entities in the MDL, and individual claims on behalf of victims.
These stories appear in the January 2019 issue of The Jere Beasley Report. For more like this or to subscribe, visit the Report online.