In 1977, after an electrical fire destroyed the Beverly Hills Supper Club in Southgate, Kentucky, killing 165 people, a plaintiffs’ lawyer named Stanley Chesley came up with a novel way to recover money for the families of the victims. The fire made it impossible to know which company had made the aluminum wiring for the building, so Chesley sued every wiring company in the country, on the grounds that they all bore some blame because aluminum wiring was inherently dangerous. It worked: the plaintiffs wound up with about $50 million, most of which came, by definition, from companies that had nothing to do with the fire.
Monday’s verdict against Johnson & Johnson – an Oklahoma state court judge ordered the company to pay $572 million for its role in the state’s opioid crisis – bears more than a passing resemblance to that old Kentucky case. States, cities and counties are suing any company that ever had anything to do with opioids no matter how marginal their role was in creating the opioid crisis. There are, at present, some 2,000 suits pending.
In the Oklahoma case, the state attorney general, Mike Hunter, sued three companies: Teva Pharmaceutical Industries Ltd., Purdue Pharma Inc. and J&J. Teva and Purdue settled before the trial, which left J&J to, in effect, serve as a stand-in for the industry.
But J&J is a lousy stand-in. It made two kinds of opioid-based pain relievers. One was a patch. It’s nearly impossible to extract fentanyl from a patch. The other was a pill that, unlike other companies’ pills, couldn’t be crushed and snorted. You could just as easily make the case that, with these drugs, J&J was actually trying to address the opioid crisis. The two products together barely had 1 percent of the market. (J&J also had a company called Janssen that made the raw material for opioids that they sold to the manufacturers, who then sold and marketed the drugs.)
Tellingly, to make their case, the plaintiffs’ lawyers relied far more on documents from other companies than J&J’s own documents and emails. Usually, in these kinds of cases, there’s at least one smoking gun – a seemingly incriminating document that the plaintiffs’ lawyers can use to great effect. Not in this case.
Not surprisingly, immediately after the verdict on Wednesday, J&J said it would appeal. Partly, of course, that’s because it doesn’t believe it did anything wrong. But it is also because it believes the law that was used to bring the case – Oklahoma’s “public nuisance law” – is being misapplied. As my Bloomberg Opinion colleague Noah Feldman noted, “A public nuisance is normally something like a smokestack belching pollution onto your land, or maybe loud music.”
In a brief it filed with the court in late July, J&J wrote that if this interpretation of the public nuisance statute were allowed to stand, it would “threaten to jettison traditional product-liability rules and impose virtually boundless liability whenever the State – or a private plaintiff – alleges that commercial activity caused diffuse harm.”
All over the country, lawsuits have been filed accusing opioid manufacturers and distributors of having violated public nuisance laws. Although three state courts – in Connecticut, Delaware and North Dakota – have ruled these cases invalid, in most other jurisdictions, the cases are chugging along. A small, privately-held company like Purdue Pharma lacks the financial might to fight them all.
But Johnson & Johnson – with $81 billion in revenue last year and $20 billion in net profit – has plenty of money. And because it feels so aggrieved, it has no intention of rolling over for these lawsuits. That’s why it decided to go to trial in Oklahoma instead of settling along with the other companies.
And thus the unintended irony: Presumably, the plaintiffs wanted J&J in the opioid litigation because its pockets are much deeper than companies like Purdue Pharma and Teva. It happens all the time: “deep pocket jurisprudence,“ the Iowa Supreme Court labeled the practice in 2014. But in this case, J&J is going to use those deep pockets to turn the tables on the plaintiffs. It will use its financial and legal muscle to argue in various appeals courts that the opioid crisis, terrible though it is, is not a public nuisance in the legal sense. If it succeeds in getting this verdict overturned in Oklahoma – and I think it has a decent chance – it will likely have a domino effect on all the other cases predicated on local public nuisance laws.
In which case, going after a company that had among the least to do with the crisis could end up letting the real bad actors off the hook.
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