CINCINNATI (CN) — Prescription opioid manufacturers and distributors argued before a Sixth Circuit panel Tuesday that a so-called negotiation class of state and local governments created by a federal judge is unconstitutional.
The class was approved by U.S. District Judge Dan Polster in September 2019 as a means of allowing government entities across the country to get a share of any potential settlement proceeds from a national, multidistrict litigation over the opioid crisis.
Based in the Northern District Court of Ohio, the 2018 suit is one of several across the country that seeks to hold prescription drug companies accountable for the prescription opioid epidemic.
Three distributors and an opioid manufacturer were dismissed from the case when a $260 million settlement was reached in October 2019, but at least a portion of the multidistrict litigation is set for trial in November.
Tuesday’s arguments were conducted via videoconference. Attorney Sonya Winter of the San Francisco-based firm Covington and Burling LLP represented the opioid defendants, and said the “invention” of a negotiation class by Judge Polster violated Rule 23 of class action procedures.
Winter told the Sixth Circuit panel that the creation of the negotiation class would distract the trial court and “divert everybody’s time and attention away” from discovery and other proceedings.
U.S. Circuit Judge Karen Moore, a Bill Clinton appointee, interrupted the attorney and said her clients or the plaintiff government entities could simply choose not to participate in negotiations and avoid being distracted.
Winter replied that factual findings made by the trial court could influence the negotiation class regardless of her clients’ participation.
Senior U.S. Circuit Judge David McKeague, appointed by George W. Bush, asked Winter about the findings made by Judge Polster in his ruling to certify the negotiation class, and why she felt they were harmful to her clients.
“The district court,” the attorney answered, “made a very cursory set of findings that addressed … the predominance problem … and issues like what would be required to prove certain RICO claims against us.”
She added, “We certainly take issue with those findings. They were not based on any evidentiary record or any other kind of record. It was basically the court just reviewing the pleadings and purporting to make these determinations.”
Several cities that are plaintiffs in the sprawling litigation also argued to overturn the district court’s institution of a negotiation class, and were represented on Tuesday by attorney Kevin Russell.
Russell told the panel that Supreme Court precedent in the 1997 case Amchem Products v. Windsor precludes the “degree of judicial inventiveness” shown by Polster in the creation of the class.
“The class representatives go into these negotiations disarmed, just as in Amchem, but it’s even worse here,” the attorney said. “We are forced to make an opt-out decision based on very incomplete information before the negotiations even began in earnest.”
“It seems unseemly now to be challenging something that you didn’t take advantage of your opportunity to opt out,” Judge Moore said.
“We have the right to enjoy the benefits of a proper class action,” Russell answered. “We think that this [class] seriously disadvantages absent class members in order to provide defendants strategic advantages that they demanded in condition for engaging in serious negotiations. And we just don’t think the district court has the authority to eliminate opt-out rights.”
Attorney Samuel Issacharoff represented the other plaintiffs on Tuesday, and was asked by Judge McKeague at the outset of his arguments why the lower court had to invent a new class to facilitate negotiations.
“There are 34,000 municipal and county entities in the United States,” the attorney answered, “and it is well-established through judicial practice that the plaintiffs do better if they can offer global peace to the defendants.”
Issacharoff told the panel the practice of using negotiation classes has been “percolating up” through the lower courts and is “a mechanism designed for an unusually … sophisticated group of entities that are accustomed to working through democratic processes of voting.”
McKeague pressed the attorney about whether the negotiation class is designed to help the plaintiffs do better and, if so, why the drug manufacturers did not mention it during their arguments.
“It is to empower the plaintiffs in negotiation,” Issacharoff answered.
Moore interjected and asked Issacharoff about Russell’s argument that the class structure gives the defendants a strategic advantage.
“I think that’s just flat wrong,” he replied. “This doesn’t give defendants power. It gives them the capacity to know with whom they are negotiating.”
“Neither of the appellants,” the attorney concluded, “mention that at the conclusion of the negotiation class process … all the mechanisms of Rule 23(b) are still in place and all class members are protected through the courts.”
McKeague admitted near the end of the arguments that he was “troubled” by the district court’s decision to create the negotiation class, and specifically the implication that it gives the plaintiffs an advantage during negotiations.
“I think every class action makes the plaintiffs more powerful as a group,” Issacharoff replied. “Rule 23(d) empowers the court to innovate, to conduct the action, and … is an open-ended invitation to create mechanisms that draw class members into participation.”
U.S. Circuit Judge Eric Clay, another Clinton appointee, also sat on the panel. No timetable has been set for the court’s decision.