Editor’s Note: Dick Scruggs, the attorney who brought down Big Tobacco, draws a parallel between cigarette and opioid litigation in this piece written for a law publication.
Is the rising spate of opioid litigation comparable to the litigation that resulted in the mega-billion dollar settlement with Big Tobacco? The answer is, sort of. This article highlights the similarities and differences in these two public health initiatives.
Recap of tobacco
As a refresher, the Tobacco litigation was a legal action by state attorneys general, public health advocates and outside counsel to recover smoking-related health costs and to reform the marketing practices of the Tobacco Industry. The principal defendants were the five tobacco companies which accounted for nearly all of the cigarette sales in the United States.
Mississippi filed the first suit in May 1994, followed by Minnesota, West Virginia, and Florida. Early successes in those suits prompted more than 40 states and territories to join the fight over the following two years. In early 1996 Liggett Group (L&M) settled, dispelling the myth of Tobacco’s solidarity and invincibility and prompting a dozen more states to join the litigation. In June 1997 a global settlement was reached with the remaining companies, an agreement that made them pay $368.5 billion to the states and the federal government. It also severely curtailed the marketing of tobacco products, especially advertising appealing to minors.
The global settlement fell apart a year later when Congress failed to pass enabling legislation. The settlement was restructured several months later, however, so as to eliminate federal involvement. In the resulting “Master Settlement Agreement,” the amount was reduced to approximately $ 206 billion for 46 states, with another approximately $40 billion for four states who had separately settled in the interim.
States’ legal theories
The states’ respective legal theories varied, but nearly all contained counts for consumer fraud, public nuisance, restitution and unjust enrichment. Some states, like Florida, asserted Civil RICO claims. In general, however, the operative theories were equitable claims or consumer protection claims that only an attorney general had standing to bring.
Most states made strategic choices to bring their suits in state courts and assert only claims based in state law. There was a feeling among the states’ counsel that federal courts (after 12 years of business-friendly judicial appointments under Presidents Reagan and Bush) would not be receptive to litigation that threatened a large industry. Since states themselves are not considered “citizens” for purposes of diversity jurisdiction, the tobacco companies could not remove the cases to federal court.
Although the scientific case had largely been made that cigarettes caused lung cancer, heart disease and high levels of general morbidity, quantifying the medical dollar cost of smoking was a daunting challenge. Luckily for the states, researchers at the University of California had independently developed reliable statistical methods to determine the “tobacco-attributable fraction” of overall health care costs. The Industry furiously attacked the use of statistical models for assessing legal damages, but the credentials, scientific rigor and peer review of the work of the team at Cal generally withstood the Industry’s evidentiary challenges.
Of considerable help to the states (and visa versa) was the FDA’s 1995 initiative to class cigarettes as drugs (nicotine delivery devices) and thereby assert jurisdiction over cigarette manufacturing. This effort was an existential threat to the Tobacco Industry because FDA jurisdiction would likely have meant the banning of cigarettes. While not formally connected to the states’ suits, the FDA’s action added to the public sense that Big Tobacco was in trouble.
The states’ suits also got huge boosts from leaked internal documents and testimony from corporate insiders. The so-called “Brown and Williamson” documents were a treasure trove of smoking guns (pun unavoidable). One of these, penned by a former corporate General Counsel, boasted that the Tobacco Industry “was in the business of selling nicotine, an addictive drug useful in the treatment of stress mechanisms.”
As portrayed in the Academy Award-nominated movie “The Insider,” Dr. Jeffrey Wigand, a former tobacco company Vice-President of Research, provided documents and testimony that his company was lacing cigarettes with ammonia compounds and other dangerous chemicals to “boost the bioavailability” of nicotine. Dr. Wigand’s revelations were the subject of two 60 Minutes segments and a Pulitzer Prize-winning story for the reporters at The Wall Street Journal.
Of arguably greater significance were serendipitous factors without which the tobacco litigation would likely not have succeeded:
–Mississippi Attorney General Mike Moore, at the time President of the National Association of Attorneys General, commanded the respect of the other state AG’s, many of whom joined the litigation on the strength of Moore’s recommendation.
–The “mainstream media” seemingly held a grudge toward Big Tobacco for past bullying and threats of ruinous lawsuits. The states’ lawyers often got favorable press even when they fouled up. On the other hand, revelations and documents embarrassing to the Industry usually got front page coverage.
Care in selecting co-counsel
–In Mississippi and other states represented by the same private lawyers, great care was taken in the selection of co-counsel. Political affiliation and prestige were important factors in selecting a legal team. Big Tobacco had cultivated powerful law firms and politicians in every state, such that it was crucial to neutralize the Industry’s ability to undermine the litigation through vexing legislation and cronyism.
— As it turned out, the personal relationships between AG Moore and the author with President Clinton, FDA Commissioner David Kessler, Presidential Adviser Dick Morris, and Senate Majority Leader Trent Lott proved to be key serendipitous factors in starting and nurturing the negotiations that led to the settlement.
Experienced and well-healed lawyers
–The value of the litigation experience and financial resources of many of the outside firms retained by the states cannot be overstated. Most of these firms agreed to contingency-like contracts where they carried all expenses and charged no fees unless there was a recovery.
So, how does the Opioid litigation compare?
Insufficiently mature to perfectly compare
First off, the Opioid litigation is not yet sufficiently mature to make an unequivocal comparison with Tobacco. The writer of this article, moreover, has no special insight into the strategy and planning of the Opioid initiatives. Still, given the commonalities of outside counsel, legal theories, and political and attitudinal factors, it is possible to make some cautious comparisons with the Tobacco litigation:
Like the Tobacco suits, the principal parties plaintiff are governmental entities: Thus far, seven states, thirteen counties; five cities; and at least one large Indian nation (The Cherokee Nation in Oklahoma) have filed suit. There is also a parallel non-governmental class action pending in Arkansas. The profusion of county and municipal plaintiffs (and a tribal nation) is different from Tobacco, where only a few governmental subdivisions sued when their state attorneys general refused to join the litigation.
Multiplicity of defendants
Whereas there were only five principal defendants in Tobacco who accounted for nearly all cigarette sales, there are at least 20 opioid manufacturers and 13 distributors sued to date. The plethora of defendants complicates strategy for both the plaintiffs and defendants. Big Tobacco was highly unified in its legal, political and public relations strategies, even after Liggett broke ranks an settled. It is unclear how unified the Opioid defendants will become.
Similarly, it is unclear how unified the Opioid plaintiffs are or might become. Whereas in Tobacco Mississippi Attorney General Moore, Arizona’s Grant Woods and Florida’s Bob Butterworth, along with their unified legal teams were the putative center of gravity among the state attorneys general, it is unclear whether Mr. Moore and Mr. Woods, despite their past success and reputation, will have the same valence in the Opioid litigation. At this stage, the litigation sounds more like musicians warming up than an orchestra playing a symphony.
Consumer protection and equitable theories
Like the Tobacco suits, the Opioid plaintiffs assert claims sounding in state consumer protection statutes and equitable principles (rather than tort), the latter theories being predominantly claims for public nuisance, restitution and unjust enrichment.
These equitable, non-tort-based claims are the most threatening to the Opioid defendants, in this author’s judgment, because they do not hinge on fault, but rather on who should pay when the public is damaged by the conduct of a legal business. These non-fault-based equity claims enable the states to say, “so what” to the Industry’s defensive claims that the FDA preemptively regulated opioids and that their addiction warning labels were ipso facto sufficient.
New “diversion” theory
Unlike Tobacco, many of the Opioid plaintiffs are asserting claims for “diversion,” charging that the defendants breached duties to secure the distribution chain from diversion of large quantities of opioid-containing prescription drugs to criminals. The diversion theory was not used in the Tobacco litigation and seems to be unique to the Opioid cases. The Cherokee Nation asserts only diversion claims against the Opioid distributors–curiously leaving the manufacturers out of their litigation entirely.
The essence of the Opioid claims is that the manufacturers and distributors of opiate-containing drugs fostered the explosion in the abuse of all types of addicting drugs–whether manufactured by a defendant or resorted to by addicted patients when their prescribed drugs became legally unavailable. Having allegedly caused the epidemic, the plaintiffs want the manufacturers and distributors to pay for the enormous governmental costs of treatment and law enforcement.
The defenses asserted by the Opioid defendants prominently include federal “preemption” by dint of FDA approval of opioids and the labels/warnings accompanying their sale. This is similar to the argument made by the Tobacco industry that the Federal Cigarette Labeling Act preempted state-based claims that cigarette warnings were insufficient. In addition to preemption and the standard technical objections to the specificity of the states’ factual pleadings, the Opioid defendants challenge factual causation, i.e., that there’s a causal connection between the defendants’ opioids and the epidemic of drug abuse sweeping the nation. Causation will be an issue for the states unless they develop statistical or other methods of linking opioids with the epidemic of general drug abuse.
Tobacco lawyers now going after Opioid defendants
It is significant that the states have retained many of the key lawyers from the Tobacco litigation. Former Mississippi Attorney General Mike Moore, who originated and led the Tobacco litigation, now represents Mississippi and Ohio. Former Arizona Republican Attorney General Grant Woods is another leader from the Tobacco wars. Law firms like Motely-Rice of South Carolina and Nix-Patterson of Texas were leaders in the Tobacco litigation. These and other firms bring experience and deep pockets to the Opioid cases. (Ironically, The Cherokee Nation is represented by William Ohlemeyer of the Boies-Schiller firm, who formerly defended Big Tobacco and was Associate General Counsel of Altria Group [formerly Phillip Morris]).
The Opioid defendants likewise have retained Tobacco and mass tort-experienced lawyers in addition to the usual blue-chip firms. Shiela Birnbaum of Quinn Emanuel, who is defending Purdue Pharma, is a particularly able and experienced mass tort litigator who also has a vision for resolutions.
Importantly, it is not yet clear how the states and governmental plaintiffs will calculate damages. Governmental entities undoubtedly bear heavy costs in law enforcement and medical treatment resulting from the opioid epidemic. It seems more than a stretch, however, to claim that all of the costs of law enforcement are related to illegal opioids, or that all government-borne health care costs are opioid-related. After all, there are other addicting drugs that might not follow from the use of opioids, such as methamphetamine, barbiturates and benzodiazepines.
This issue was addressed in Tobacco (as discussed above) through the use of statistical models comparing the health costs of smokers with those of non-smokers, controlling for other factors that drive health expenditures such as obesity, alcohol and risky lifestyles. Whether it is feasible with similar statistical methods to derive an opioid-attributable-fraction of law enforcement and medical costs is not apparent. Perhaps the states will prove-up damages in other ways?
Empty chair potential
A related uncertainty is whether all potentially liable Opioid defendants have been joined in the suits. In Tobacco, there were only five well-known companies who sold cigarettes. In contrast, there are at least 20 opioid manufacturers and a dozen distributors sued so far. While there are overlaps in Opioid defendants among the different suits, the lack of uniformity creates the potential for “empty chair” defenses where the missing defendant gets blamed by the others for causing the problem. This seems to be a vulnerability in The Cherokee Nation’s suit against only distributors.
Equally sympathetic press
It is likely that the “mainstream media” will be sympathetic to the states’ litigation. Given the daily headlines of drug company price gouging and false advertising, of drug-related violence and overdoses resulting in the deaths of increasing numbers of young Americans, Big Pharma is not a very appealing defendant. Moreover, unlike Big Tobacco, the manufacturers and distributors of opioid-containing drugs have been heavily sanctioned by federal and state regulators. (Purdue Pharma has already paid more than $600 million and pleaded guilty to misbranding the opioid drug OxyContin by falsely touting it as less addictive than rival products.) These factors could create a de facto presumption of liability.
Long before the first state Tobacco case was filed, the states’ lawyers conducted extensive opinion research better to inform their legal claims and strategy. Public attitudes about Tobacco, litigation in general, and many other relevant issues were polled and focus-grouped. The Tobacco industry had for years conducted extensive attitudinal research about smoking and health. Presumably, the lawyers for both sides of the Opioid litigation have similarly conducted opinion surveys and have shaped their strategies accordingly.
In conclusion, the success of the Opioid cases will depend upon whether the plaintiffs can muster sufficient legal, political and public relations pressure to force a settlement. That will not likely happen without a perceptibly higher degree of coordination among the plaintiffs and their outside counsel. The plaintiffs should already be discussing and agreeing on what it is that they want the Industry to do (other than pay lots of money). The Industry is not likely (and would be foolish) to settle piecemeal on ad hoc terms.
In the meantime, the plaintiffs must develop a methodology for reliably estimating the dollar cost to the public of the opioid epidemic. This will be harder for the Opioid plaintiffs than in Tobacco, where there were only five defendants who sold all the cigarettes. Preferably, the plaintiffs should enlist the scientific community to develop a Tobacco-similar statistical model that also controls for costs attributable to addicting non-Opioid-containing drugs, such as methamphetamines, barbiturates and benzodiazepines.
The defendants, on the other hand, should also decide upon a unified legal, political and public relations strategy. In Tobacco (save Liggett) the largest four defendants had developed very concerted and sophisticated responses on each of these fronts. The Tobacco Industry was not quick, however, in realizing that the essential claims were non-tort-based equity claims where warnings and risk assumption were legally insufficient. Fault was not important in a case for unjust enrichment–only who should pay as between the general public and the Industry whose otherwise legal products caused the epidemic.
Bottom line, it’s too early to pick winners and losers.
Dick Scruggs is an American former A6A naval aviator and prominent trial lawyer who represented the state of Mississippi against the tobacco companies in the 1990s.
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