States oppose opioids negotiation plan of cities, counties

“In my view, it’s the plaintiffs’ lawyers using local governments to hijack the sovereignty of the states and create ‘city states.’ But this is not the United City-states of America.” “We have a vision of the state attorneys general as being preferable because they’re insulated from money. But they’re not insulated from politics.”

Over the past 18 months, progress toward a settlement in the massive federal opioid litigation in northeastern Ohio has stalled, even as the costs of the crisis continue to mount.

Now, an inventive plan to jump-start negotiations, recently put forth by attorneys for the nearly 2,000 cities and counties that have brought cases, including Franklin, Summit and Cuyahoga counties and the city of Lakewood, faces attacks from an unlikely source. Pushback that could torpedo it is coming less from the corporate defendants than from the localities’ uneasy allies: the states.

It is a struggle over power, politics and money. And in an arena filled with outsized egos, the fight is also very much about who will get to claim credit for resolving a public health crisis that has killed more than 200,000 people since 1999 and sunk many more into debilitating addiction.

A hearing on the proposal is scheduled for Tuesday in Cleveland before the federal judge who is overseeing the cases, Dan Polster. The plan was devised to address a major sticking point: The defendants, including manufacturers that developed and made the drugs, Fortune 20 companies that distributed them and national pharmacy chains that sold them, want an end to the constant stream of lawsuits.

So attorneys for the plaintiffs suggested allowing all 34,000 towns, cities and counties in the country to vote on settlement offers. After an offer is approved, they will be bound by the outcome and can bring no further suits. All voting communities affected by the crisis would get a portion of the payout.

But a letter signed by a bipartisan coalition of 39 state attorneys general raises arguments that could topple the ambitious proposal and further slow talks. Rather than myriad cities and counties, they contend, it is the states, through law enforcement and regulatory authority, that can efficiently wrest a high-impact national agreement. They Polster Ohio Attorney General Dave Yost

maintain that the new plan goes behind the backs of the states pursuing cases brought by their attorneys general, who are elected or appointed. By contrast, local governments are using private lawyers, who work on contingency fees.

The states also fear that the plan would corral money for the cities and counties that the states should control.

And because this “negotiation class” is untested, they argue, it is likely to be appealed, delaying remedies for everyone.

“In my view, it’s the plaintiffs’ lawyers using local governments to hijack the sovereignty of the states and create ‘city states,’” said Ohio Attorney General Dave Yost, who filed a letter with the court that is critical of the plan. “But this is not the United City-states of America.”

The plaintiffs also intend their proposal to be a course correction to the Big Tobacco settlement, and a possible template for future resolutions in such publicwelfare areas as firearms, climate change and environmental pollution.

The 1998 Master Tobacco Settlement, which resulted in payouts of about $250 billion, was struck between five cigarette manufacturers and 46 states seeking reimbursement for their Medicaid programs for treating tobacco-related illnesses. But much of the money went to discretionary funds of state legislatures. Especially in the wake of the 2008 financial crisis, hefty amounts were redirected to balancing budgets and fixing potholes rather than to local smoking-prevention and -treatment programs.

Still bitter about those outcomes, communities whose coffers had been depleted by the opioid crisis decided to sign with private lawyers, circumventing the states.

Since 2013, when Chicago filed its opioid lawsuit, platoons of these private lawyers have taken more than 500 depositions, filed thousands of motions, read Yost through more than 50 million pages of documents and analyzed raw code from the federal Drug Enforcement Administration about pill distribution. At Polster’s direction, they have shared their trove of information with the states.

“None of the attorneys general complained while we were doing all that,” said Paul Geller, an attorney whose opioid clients include Los Angeles. “It kind of makes you wonder why seeking to organize for negotiation purposes all of a sudden crosses the line for them.”

Strictly speaking, the states, whose cases are in state court, have no say in the federal litigation. While all are suing some manufacturers, fewer are going after the deep-pocketed distributors, and fewer still have named pharmacy chains.

Ohio has two opioid cases pending in state court: one against manufacturers in Ross County, and the other against distributors in Madison County.

With the exception of some states, including Oklahoma, Massachusetts and New York, opioid litigation by many attorneys general lags behind the federal cases.

But mindful that concluding the federal litigation probably depends on concluding the state cases, and vice versa, Polster has regularly solicited input from the attorneys general.

The states bluntly say that the negotiation plan usurps a role that is properly theirs.

“We have a vision of the state attorneys general as being preferable because they’re insulated from money,” said Adam Zimmerman, who teaches complex litigation at Loyola Law School-los Angeles. “But they’re not insulated from politics,” he added, noting that the position is often a steppingstone to higher political office.

Yost, a Republican, and others argue that the cases should be resolved from the top down, not the bottom Adam Zimmerman of Loyola Law School-los Angeles

up. But each state’s relationship with local government, enshrined in its constitution and laws, varies. Funding sources for the diverse costs of the opioid crisis, whether local or state, also differ from state to state.

And so the states say they should disburse the money. The fly in that ointment is that many states preclude attorneys general from distributing settlement money because their legislatures control Paul Geller, an attorney whose opioid clients include Los Angeles, referring to the plaintiffs’ expenses

such funds.

Rather than approving the plaintiffs’ plan, Yost said, Polster could ascertain each state’s relationship with its municipalities. He could then encourage those with similar laws and interests to negotiate in groups. That process, Yost predicted, would be more streamlined than this proposal.

Elizabeth Burch, a law professor at the University of Georgia who closely follows the litigation, said, “If I were a defendant, I’d be very wary of dealing with the cities and counties, knowing that the state attorneys general were still gunning for me. I’d be more inclined to do a global deal with them that preempts the city and county cases.”

Yost said that if the states oversaw negotiations, private lawyers would still get paid; any settlement would include a separate money bucket for them. “But I think that’s a one-gallon bucket for washing the car, and they think it should be an oil tanker.”

There’s a love-hate relationship between the states and private lawyers, Yost said. Although a government’s use of private lawyers dates to early English common law, the biggest boost to that practice came during the tobacco litigation, when state attorneys general, strapped for resources, turned to them.

Some of those same lawyers are now in the opioid litigation, working for cities

and counties — and, indeed, a handful of states. Geller’s opioid clients include Maryland’s Montgomery County in federal court and the state of Maryland in state court.

Although that dual representation might prompt skepticism, Geller said that it served the interests of time and coordination because so much material overlaps.

At the outset of the litigation, Polster established two parallel tracks. One is to prepare for trial, the first of which is set for Oct. 21 in Cleveland and was brought by Summit and Cuyahoga counties.

The second is to pursue negotiation, to bring remedies as soon as possible. That track has sputtered along, mostly because the defendants have blamed each other, disputed liability and faulted the federal government’s role in overseeing the sale and distribution of drugs.

The concept for this negotiation group was developed by several law professors, who now have roles in the opioid litigation, and it was refined by the plaintiffs’ lawyers. (The group would not include other parties such as tribes and thirdparty payers.)

It uses an allocation map that shows each municipality what share to expect from a settlement, an amount calculated with federal data about pill distribution, opioid-related overdoses and deaths.

If Polster certifies the proposal, it is unclear whether the states or even the defendants can appeal.

The manufacturers’ motion says that they “take no position on whether the court should grant plaintiffs’ motion,” a possible indication of their willingness to negotiate.

But the distributors are fighting hard. The plaintiffs responded by saying, essentially, that the plan is not about the distributors; it is only about how to organize the plaintiffs. If the distributors do not like the plan, the plaintiffs’ lawyers wrote, “fine. Don’t negotiate with it. Don’t settle with it.”

Nonetheless, added Geller, who represents Los Angeles, “It’s time to try to land the plane.”