(Reuters) - On Monday, as you’ve surely heard, Oklahoma state court judge Thad Balkman ruled after a months-long bench trial that Johnson & Johnson was responsible for stoking the state’s opioid abuse crisis. The judge determined that J&J’s “false and misleading” marketing of opioid products made the company liable under Oklahoma public nuisance law. He ordered J&J to pay $572 million to abate Oklahoma’s drug abuse crisis.
J&J, which has vehemently insisted that it is not to blame for opioid abuse, vowed to appeal, arguing in a press release that Judge Balkman’s ruling “disregards 100 years of precedent in public nuisance law, which traditionally has been applied to resolve property disputes, not lawsuits involving the sale of goods.” (The stock market, as my Reuters colleague Nate Raymond reported Monday, actually viewed Judge Balkman’s abatement assessment as a boon to J&J, sending the shares up 2% in extended trading after the decision was announced.)
J&J’s appeal will doubtless center on Oklahoma’s public nuisance law, wielded deftly by Oklahoma Attorney General Mike Hunter and outside counsel from Whitten Burrage and Nix Patterson. (The outside firms have considerable incentive to defend the decision, which specifies that the contingency fee agreement that entitles them to at least 25% of the abatement recovery is fair and reasonable.) But Judge Balkman’s opinion devotes almost as much legal analysis to a secondary J&J defense – and in an email statement to me, J&J suggested that we haven’t heard the last of it.
Johnson & Johnson’s backup argument, first asserted in the company’s May 24 trial brief is that it cannot be liable under state law for actions that are protected under the First Amendment of the U.S. Constitution. According to the company, all of the outside doctors, scientists and nonprofits that endorsed opioids as a treatment for chronic pain were exercising their First Amendment rights. So too, according to J&J, were company lobbyists advocating for drug laws to make it easier to prescribe opioids. Oklahoma, in J&J’s account, spun a conspiracy theory with J&J as the “kingpin” of a scheme to deceive the public about opioids. But the evidentiary foundation of the alleged conspiracy, the company said, is speech protected by the First Amendment.
The company made an even more sweeping case for First Amendment protection in its post-trial motion for judgment. In that filing, J&J argued that the First Amendment flat-out bars Oklahoma from using nuisance law to “penalize” the company for taking a strong position in ongoing debate over the safety and efficacy of prescription opioids.
“The state faults (J&J) for its participation and position in that debate, not just for how it marketed its own drugs but also for supporting medical research, sponsoring continuing medical education events, associating with nonprofit advocacy organizations and lobbying the government,” J&J wrote. “But the First Amendment forbids the government from using tort law to pick winners and losers in debates about matters of public concern.”
Oklahoma, in response, said J&J was trying to hide behind the First Amendment “to immunize (its) false and misleading statements.” But the Constitution, Oklahoma said, doesn’t protect false and misleading statements, as the U.S. Supreme Court held in 1975’s Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council (95 S.Ct. 1389).
Both J&J and Oklahoma argued that it did not matter whether J&J’s marketing was commercial or non-commercial speech. J&J said speech in the realm of public debate is protected either way; the state said false statements aren’t shielded by the First Amendment regardless of their context.
Judge Balkman, however, homed in on Supreme Court precedent upholding government restrictions on commercial speech. The high court has ruled in such cases as 1977’s Bates v. Arizona (97 S.Ct. 2691) and 1980’s Central Hudson Gas v. Public Service Commission of New York (100 S.Ct. 2343) that commercial speech is entitled to less First Amendment protection than non-commercial speech. J&J’s opioid marketing efforts, according to Judge Balkman, were not merely expressions of its position in a medical and scientific debate: They were intended to boost sales of opioids.
So, according to Judge Balkman, J&J is not entitled to First Amendment protection. The company, in his view, knew it was spreading misinformation about the risk of addiction to opioids. Its own scientific advisors, the judge said, cast doubt on the studies touted by the company’s sales representatives. Yet J&J persisted, according to Judge Balkman, in falsely and deceptively marketing its products to Oklahoma healthcare providers. In that context, he said, “The First Amendment of the United States Constitution does not prohibit imposing liability.”
As I said, J&J disputes Oklahoma’s evidence of false marketing, insisting that it presented healthcare professionals with scientific information about drugs under tight federal regulation. Those denials, of course, dovetail quite neatly with the company’s arguments that its marketing statements amounted to one side of a public debate on a matter of public health and are therefore protected by the First Amendment.
In an email statement responding to my query on whether the company would mount an appeal of Balkman’s First Amendment holding, J&J said, “”We will be working on our appellate papers and likely include elements from our past filings, such as Due Process and First Amendment arguments.”
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