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correct size blogAs the opioid epidemic continues to grip the country more and more state and local governments have turned to the courts in an effort to stem the tide of addiction.  These efforts include seeking monetary damages to help recover the tremendous costs already expended and future costs, necessary to adequately respond to this public health crisis.  The current court battle can be compared to that of the “big-tobacco” lawsuits and subsequent settlement made in the 1990s.  And, many are hoping the opioid lawsuits end with a result similar to the big-tobacco lawsuits where a settlement trust fund will be set up and funded by those responsible for this public health crisis.

While states and local governments are free to file their own claims in state courts and proceed individually, over 1,900 opioid cases filed in the federal courts have been included in a legal procedure known as Multidistrict Litigation (“MDL”).

The MDL is designed to speed the process of handling complex civil actions involving one or more common questions of fact in cases pending in different districts.  Cases subject to MDL have all pretrial proceedings and discovery handled by a single judge in one court.  Typically the goal of MDL is to create some kind of global settlement for all cases, thus eliminating the costly and burdensome need of trying each case individually.

Opioid lawsuits brought by states and local governments across the country have been centralized with Judge Polster in the Northern District of Ohio and are collectively known as “MDL 2804.”  Staying true to the purpose of MDL, Judge Polster from the very beginning has urged all parties to come to a swift and comprehensive global settlement agreement.  To that end, attorneys’ representing local governments have offered a novel plan of creating a Negotiating Class to help expedite settlement talks.

While many local governments support the idea of the Negotiation Class proposal for fear settlement funds will be mismanaged by state legislators, much like the big-tobacco settlement, some state Attorneys General and defendants have opposed the idea.  And, on June 25, 2019, Judge Polster held a hearing to listen to some of those concerns.

The outcome of that hearing was to allow Plaintiff representatives until July 9, 2019, to amend the proposal to take into consideration comments and suggestions received from all interested parties.  A response to the amendments is due July 23, 2019, with a hearing on the matter scheduled for August 6, 2019, at 10 a.m., where Judge Polster will likely make a decision on the proposed Negotiation Class.

Below is a short overview of the proposal in its current form.  Should this proposal be approved there will be timelines placed on your municipality to take certain actions that could limit your rights to recovery, including opting-out of the proposed agreement.

Creation of a single “Negotiating Class”

Under the plaintiff’s proposed plan, all 24,500 local governments across the country would be automatically included in a single Class, termed the Negotiating Class.  Any government entity, however, would have the ability to opt-out of the class designation and be free to file their own suit or pursue their own claim, much like any class action suit.  However, those who opt-out will be ineligible to participate in any negotiation or vote on any proposed settlements.

Negotiating Class Representatives

The Negotiating Class members would be represented at settlement negotiations by a handful of local governments currently involved with the MDL, and which include some of the largest municipalities and counties in the country.  As currently proposed, there are 39 members in the Negotiation Class Representatives.  Four of those members are New Jersey Local governments, including; Bergen County, Camden County, Essex County, and Jersey City.

The benefit of Negotiation Class Representatives for defendants is that it allows them to negotiate with a smaller cohesive group representing all of the country’s local governments, rather than needing to negotiate with individually with each local government or smaller classes.  Plaintiffs – local governments – benefit from this type of plan as it allows them to better pool their negotiation power and provides a way for local governments to recover without having to hire their own representation to bring their own claims; a much more cost efficient alternative.

Negotiating Class Approval of Proposed Settlements

Any time a proposed settlement has been reached between a defendant and Negotiation Class Representatives, the proposed settlement would need to be voted and approved by a supermajority of the Negotiation Class before it could be presented to the court for approval.  Prior to voting on any proposed settlement, all members of the Negotiating Class would be able to see the number of funds that would be allocated to their county.

To be binding, 75% of each of the following categories must approve a proposed settlement:

  • 75% of the total number of municipalities and counties that have filed suit as of June 14, 2019 (“litigating entities”). This number is based on all individual Class members who had suits on file regardless of size so that each voting entity has one vote;
  • 75% of the total population of all municipalities and counties that have filed suit as of June 14, 2019. For this computation, the vote of the municipality or county is weighted according to its population, with each person in a voting municipality and each person in a voting county equal to one vote. Thus, by way of example, if a county votes yes and has a population of 20,000, and a municipality within the county votes yes and has a population of 10,000, the county’s vote is weighted as 20,000 votes in favor, and the municipality’s vote is recorded as 10,000 votes in favor. The population for each jurisdiction is drawn from the 2010 Census data and is presented on the litigation website, Opioidsnegotiationclass.com. The data will be updated once the 2020 Census figures become available. Many individual residents in this category will be counted twice, once as a resident of a municipality, and once as a resident of a county;
  • 75% of the total population of all cities and counties that have not filed suit as of June 14, 2019. For this computation, the vote of the municipality or county is weighted according to its population, with each person in a voting municipality and each person in a voting county equal to one vote. Thus, by way of example, if a county votes yes and has a population of 20,000, and a municipality within the county votes yes and has a population of 10,000, the county’s vote is weighted as 20,000 votes in favor, and the municipality’s vote is recorded as 10,000 votes in favor;
  • 75% of the total population of all cities and counties that have not filed suit as of June 14, 2019. For this computation, each person in a voting municipality and each person in a voting county is the equivalent of one vote. The population for each jurisdiction is drawn from the 2010 Census data and is presented on the litigation website, com. The data will be updated once the 2020 Census figures become available. Many individual residents in this category may be counted twice, once as a resident of a municipality, and once as a resident of a county;
  • 75% of the litigating entities, weighted by their settlement fund allocations as shown on the Allocation Lookup Tool to be posted at Opioidsnegotiationclass.com; and,
  • 75% of the non-litigating entities, weighted by their settlement fund allocations as shown on the Allocation Lookup Tool to be posted at Opioidsnegotiationclass.com.

Allocation of Settlement Funds

When a settlement with any defendant is reached funds are allocated to counties based on a prescribed formula using three factors – (1) the number of persons suffering opioid use disorder in the county, (2) the number of opioid overdose death that occurred in the county, and (3) the amount of opioids distributed within the county.   Once allocated to counties is it left up to the county and each municipality within that county to reach an agreement on how the funds will be shared.

The proposal also provides for a mechanism to be used in the case of a county and municipality failing to come to some agreement to how funds will be shared.  If there is no agreement a Special Master will divide the funds based on historical data of how counties and municipalities have split funding of government functions potentially relevant to opioid abatement.

Contact: Frank Marshall, Esq., League Staff Attorney, FMarshall@njlm.org or 609-695-3481 x137.