May 16, 2019 / 8:34 PM / 2 months ago

Purdue finally gets a judge to toss state AG’s opioids case. Does it matter?

(Reuters) - Purdue Pharma could not have asked for more than it got from Judge James Hill of Mandan, North Dakota, in a ruling this week to toss fraud and nuisance and fraud claims by state Attorney General Wayne Stenehjem.

Judge Hill converted Purdue’s dismissal motion into a motion for summary judgment so he could consider evidence beyond North Dakota’s complaint. Then he thoroughly gutted all of the AG’s theories, siding with Purdue on all of the arguments we’ve seen opioid defendants assert – mostly without success – in the sweeping litigation accusing pharmaceutical makers and distributors of sparking an epidemic of opioid abuse by falsely marketing prescription products.

His conclusions on federal preemption and causation, in particular, echo defense arguments in dismissal filings across the country. Judge Hill ruled that all of North Dakota’s state-law claims were preempted because the Food and Drug Administration regulates Purdue’s labeling. The FDA, he said, decided not to change the labeling on Purdue’s products to reflect allegations that its opioids were being abused, so North Dakota cannot claim the company’s marketing was fraudulent under state law. The judge also found that the AG had not shown that Purdue’s actions led directly to any of North Dakota’s expenditures to deal with the crisis.

“The connection between the alleged misconduct and the prescription depends on multiple, independent intervening events and actors,” Judge Hill wrote. “The state’s effort to hold one company to account for this entire, complex public health issue oversimplifies the problem.”

The North Dakota AG said in a statement that he will appeal Judge Hill’s ruling, which, he pointed out, contrasts with rulings by almost every court to have considered the same questions.

Hill is indeed the first state trial judge to dismiss a state AG’s opioids case. As the North Dakota AG pointed out in his statement, defense wins in the opioid litigation have been few and far between: Last year, a state judge in Connecticut tossed (2019 WL 423990) New Haven’s suit against Purdue; and in January a Delaware judge dismissed (2019 WL 446382) the state AG’s nuisance claims (though he allowed the AG to move forward with fraud allegations).

Meanwhile, as you know, the Cleveland federal judge overseeing the nationwide opioids MDL refused to dismiss (2018 WL 6628898) any bellwether claims by two Ohio counties headed for trial this fall and a state judge in Oklahoma denied summary judgment to Johnson & Johnson and Teva in that state AG’s case, which is set for trial later this month.

So, in that context, will the North Dakota decision affect opioid cases elsewhere? Can one state court ruling, however lopsided, impact litigation against opioid defendants by more than 40 state AGs and more than 1,500 cities and counties?

I think it can, but I’ll first offer you the contrary argument, courtesy of former Connecticut Attorney General George Jepsen, now in private practice at Shipman & Goodwin. Jepsen launched Connecticut’s suit against Purdue Pharma law year when he was still the state AG. He told me that even if the North Dakota Supreme Court affirms Judge Hill, North Dakota’s claims were too small to make a difference in the sweep of opioid litigation.

“North Dakota’s case was very insignificant in the larger scheme of things,” Jepsen said. And if you needed proof that the North Dakota ruling won’t stop state AGs from asserting claims against opioid defendants, you got it Thursday: Five new states – Iowa, Kansas, Maryland, West Virginia and Wisconsin – filed suits accusing Purdue of deceptive marketing of its prescription opioids. That brings the grand total of state AGs targeting Purdue to 44.

Opioid plaintiffs are counting on the sheer volume of claims to force defendants into settling, despite defense arguments that their claims don’t fit the law on nuisance or consumer fraud. As Jepsen said, plaintiffs haven’t lost much of their leverage just because a trial judge in North Dakota tossed one case.

But I suspect that the opioid defendants believe the North Dakota decision boosts their leverage in settlement negotiations. A lawyer for one wing of the Sackler family, which owns Purdue Pharma, said as much in a phone interview with me on Thursday. Maura Monaghan of Debevoise & Plimpton represents four members of the Sackler family. Her partner Mary Jo White has already said that the Sacklers want to reach a global settlement of claims against them and Purdue. Monaghan told me that the North Dakota decision “is something that plaintiffs’ lawyers should take into account” as they assess the value of their claims.

It’s important, Monaghan said, that Judge Hall converted Purdue’s dismissal motion into a motion for summary judgment. That meant not only that he weighed evidence outside of the pleadings, including the FDA’s decisions on revising opioid labeling, but also that the judge did not presume the truth of the state’s allegations. Judge Hall’s ruling for Purdue, she said, means that opioid plaintiffs face real risk when judges test their allegations against evidence.

The state judge overseeing the Oklahoma AG’s case ruled differently on summary judgment – but even division in the lower courts works in defendants’ favor. Purdue, to be sure, has said it may have to enter bankruptcy in the face of opioid litigation. But other defendants have hinted that they’re prepared to prolong the litigation into state and federal appellate courts. The North Dakota decision will embolden defendants that don’t want to settle until appeals courts have evaluated plaintiffs’ theories. You can be sure that Judge Hall’s ruling is going to be cited in many, many defense briefs before the megabillion-dollar opioid case is over.

One ruling, obviously, isn’t going to slow the bullet train of opioid litigation. But the North Dakota ruling just might nudge the case onto a different track.

The views expressed in this article are not those of Reuters News.

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