SAN FRANCISCO (CN) — Global consulting firm McKinsey & Company must face multidistrict litigation seeking to hold it accountable for its part in fueling a nationwide opioid crisis with aggressive marketing strategies, after a federal judge found it cannot use jurisdictional grounds to escape liability.
McKinsey is accused of devising strategies for its client, Oxycontin maker Purdue Pharma, that boosted sales of high-dose pills with deceptive messaging to doctors that downplayed the risks of addiction.
The plaintiffs are private citizens, city governments, Native American tribes, school districts, and children with neonatal abstinence syndrome from opioid exposure in the womb. They are from 19 states: Alaska, Arizona, Colorado, Hawai’i, Indiana, Kentucky, Louisiana, Maryland, Mississippi, Montana, New Mexico, Oklahoma, Oregon, Tennessee, Utah, Virginia, Washington, West Virginia, and Wisconsin, and the cases have been consolidated into a multidistrict litigation.
The plaintiffs argued that McKinsey consultants conducted extensive research that helped Purdue carry out a targeted marketing plan to increase sales.
“McKinsey’s documents contain email after email describing its consultants riding along with Purdue’s sales team visiting doctors, including in Tennessee, Maryland, Indiana, Louisiana, and other states where McKinsey claims it did not work. For example, Purdue arranged to have a McKinsey consultant spend a day working with a sales representative in Tennessee,” a recent court filing says. “Don’t think McKinsey didn’t know the consequences of its field research and doctor targeting. McKinsey analyzed those, too, developing a method for Purdue to identify abuse and diversion hot spots — but without ever acting to address them. McKinsey knew exactly the places it was targeting and where the harms of its work impacted communities.”
U.S. District Judge Charles Breyer, who is overseeing the sprawling case, sided with the plaintiffs in a ruling Thursday.
“Plaintiffs have established that McKinsey committed intentional acts directed toward the subject states,” he wrote. “McKinsey performed numerous acts directed at the subject states. These acts included creating granular analyses of market attractiveness of the subject states, creating target lists of prescribers in the subject states, working alongside Purdue sales representatives in the subject states, and working with Purdue to implement sales strategies in the subject states.”
In its bid to fend off negligence, fraud, public nuisance, and state consumer protection claims, McKinsey claimed it never manufactured, distributed or sold prescription painkillers in any of these states, nor has it ever interacted with any of the plaintiffs, “much less made any representations to them about opioids.”
Accordingly, “McKinsey is not subject to expansive nationwide personal jurisdiction in the same way that other defendants in other opioid-related litigation may be," the company said.
In rejecting that argument, Breyer wrote, “McKinsey effectively contends that it can help Purdue develop and manage strategies to increase opioid sales in the subject states, but that it cannot be subject to jurisdiction when those strategies result in increased opioid sales that cause harm in the subject states.”
The judge determined the plaintiffs showed more than random negligence. “To the contrary, plaintiffs plausibly allege that McKinsey’s actions significantly contributed to the wide-ranging harms that have affected the subject states,” he wrote. "McKinsey is more akin to an advertising agency that advised a manufacturer on how to sell boilers to residents of specific states, despite knowing that the boilers carried a significant risk of exploding. There is no random or attenuated chain of contacts here. Plaintiffs have plausibly alleged that McKinsey intentionally and purposefully directed contacts at the subject states for several years.”
He also found the plaintiffs had adequately asserted that McKinsey's methods to increase opioid sales caused foreseeable harm because their consultants delivered presentations to Purdue that mentioned prescribers' concerns about opioid abuse, and even worked with Purdue to “counter emotional messages from mothers with teenagers that overdosed in [sic] OxyContin.”
Breyer’s ruling allows the litigation to move forward, though McKinsey will likely try to get it dismissed on the merits.
Attorneys for the parties did not respond to requests for comment by press time.
The decision comes just as the firm announced it had reached an agreement to settle lawsuits brought by school districts and local governments. The details of the agreement have not been made public, but the parties expect to have an update for Breyer at a hearing in December.
McKinsey also admitted no wrongdoing as part of a nearly $600 million settlement with 47 states, the District of Columbia and five territories last year.
Read the Top 8
Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.