When thousands of local governments like the city of Dayton sued the opioid industry, one of the messiest questions was how any multi-billion settlements would be divided up.
On Wednesday, a path was laid out for how this could happen.
U.S. District Judge Dan Aaron Polster, based in Cleveland, approved a novel and never-done-before “negotiation class” — essentially a detailed framework for how the different companies being sued could reach settlements with local governments who blame the industry for fueling a national public health crisis.
This framework — first proposed earlier this summer — could set the stage for massive and historic settlements that would divvy out funds not only to the 2,000 local governments who are suing but with all 30,000 plus local governments in the U.S.
This includes the city of Dayton, which filed suit in 2017.
One of the hold ups in reaching a settlement is that defendants are reluctant to pay out a massive settlement if they would still vulnerable to paying more lawsuits to other parties. The legal framework approved Wednesday lets the defendants — opioid makers, distributors, and pharmacies — each settle as globally as possible.
The attorneys built an online tool at opioidsnegotiationclass.info that shows what would happen with a hypothetical $1 billion gross settlement for counties and cities, to show what the proportions would look like. Under the allocation formula, this would mean a hypothetical $2.8 million settlement to Montgomery County, which would have to decide how to use. By comparison, Greene County would get a hypothetical $521,966.
The settlement money from the different companies will almost certainly be much more than the $1 billion hypothetical.
Purdue Pharma, the maker of OxyContin, is alone working on a tentative settlement for as much as $12 billion, which was announced Wednesday, though the Purdue settlement would come through bankruptcy and not through this negotiating class framework.
On Wednesday, the Sackler family said in a statement that it “supports working toward a global resolution that directs resources to the patients, families and communities across the country who are suffering and need assistance.”
Attorneys for the negotiation class, Jayne Conroy, of Simmons Hanly Conroy LLC, and Chris Seeger, of Seeger Weiss LLP, said in a statement that Polster’s approval of the negotiation class means the American community “has been given a level-playing field—and an official legal structure—to vote on proposals to resolve the national opioid litigation. And that’s unequivocally good news.”
They said the decision “clears the way for all towns, cities, and counties in our country to not only negotiate with the opioid industry but to use their joint bargaining power to secure the resources they need to fund addiction, recovery, and prevention efforts in their own neighborhoods.”
The stakes are high. The national public health crisis created by the opioid epidemic has left 400,000 dead and thousands of others in recovery or grieving those lost. The crisis has inundated governments with costs to police, fire, EMS, foster care, as well as costs from loss of workforce. These settlements are local and state governments’ big chance to recoup some of those massive costs.
A set of designated class reps would be charged with overseeing and making recommendations with regard to the settlement. Cities and counties would join any approved settlement unless they affirmatively opt out.
Money would be divided up based on a detailed formula looking at things like population and how much a community was impacted. A supermajority would need to approve any settlement.
One aspect of the negotiation class action that is fundamentally different from a settlement class action lawsuit is that class members have to decide whether they are in or are they out before they get a dollar figure on the settlement.
Ohio Attorney General Dave Yost, however, said this negotiating class process approved by Polster “is fundamentally flawed because it binds people to buy a pig in a poke.”
“Every community has to make a determination whether they’re in or out before they even know what the deal is. Local governments will have to make a big decision,” Yost said. “And if they do nothing, that is their big decision – they’re in, whether it’s good, bad or ugly.”
Yost in August filed a brief arguing settlement money should come in a single action by the state on behalf of all its resident and that trials against opioid makers should have been delayed until the state’s complaint went to trial.
Associated Press contributed to this story.
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