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Judge Summons Drug C.E.O.s for Talks on Sweeping Opioid Settlement Opioid Settlement Talks Stumble With Trial Set for Monday
(about 7 hours later)
CLEVELAND — A mayor of a small West Virginia city brought to its knees by opioids and representatives of large cities and counties left reeling by the epidemic are gathering in federal court here on Friday to sit side by side with chief executives from the country’s largest drug distributors. Along with four state attorneys general, they were summoned by Judge Dan A. Polster, who is trying to wrest a far-reaching, last-minute agreement to resolve thousands of lawsuits before the start of the first trial on Monday. CLEVELAND —
The distributors — AmerisourceBergen, Cardinal Health and McKesson — along with other companies are trying to strike a megadeal that would release them not only from the immediate trial, brought by two Ohio counties, but the rest of the cases. Most of the cases are being supervised by Judge Polster, but several hundred are percolating in just about every state court. After a long day of negotiations on Friday between major drug industry corporations and thousands of local governments and states suing over the companies’ role in the opioid epidemic, talks ended with the parties — even among the plaintiffs — still far apart.
There are many more drug industry defendants, including the pharmacy chains Walmart, Rite Aid and CVS, in the far-flung web of litigation. But with Purdue Pharma’s tentative deal caught up in a lengthy bankruptcy court review, the six corporate defendants in this trial could be the first in the national opioid litigation to reach a so-called global settlement. Plaintiffs’ lawyers say they hope such a deal would have a domino effect on the remaining defendants, encouraging them to reach a comprehensive deal too. “We worked hard to put together a $48 billion deal that would give immediate relief to our states and we’re deeply disappointed that the cities and counties refuse to go along with that deal,” said Josh Stein, the attorney general for North Carolina.
Four people familiar with the settlement discussions characterized them as “fluid.” While parties had been talking about a deal worth nearly $50 billion, lawyers for thousands of small governments whose cases are before Judge Polster said they wanted more money, the timeline for payments to shorten and specific guarantees on how those funds would be distributed. And Herbert H. Slatery, the attorney general for Tennessee, said that in his state, four people had died that day. “When we delay things it has real consequences in the lives of people,” he said.
The six defendants appearing at Judge Polster’s request include the three giant drug distributors; a small distributor; Teva, which makes generic drugs; and Walgreens, the pharmacy chain. The day began with the chief executives of three major drug distributors among those summoned to the federal courthouse in Cleveland by Judge Dan A. Polster, who was attempting to wrest a last-minute, comprehensive settlement to resolve thousands of cases filed by cities and counties as well as those filed by state attorneys general in state court.
Officials from New York City, Boston, Chicago, Nashville, Broward County, Fla., Delaware County, Pa., and Huntington, W. Va., are in the courthouse as are the attorneys general from Tennessee, North Carolina, Pennsylvania and Texas. Judge Polster is presiding over the first federal opioid trial, set to begin on Monday, involving two Ohio counties. With the trial looming, the talks had been gathering in intensity in recent days. Adding to the pressure-cooker atmosphere was the specter of 12 jurors, sworn in by the judge on Thursday, in anticipation that opening statements would begin as scheduled. Inexorable moves such as these can often prod the sides to the desired result: settlement.
The parties either did not respond to messages or declined to comment. It was unclear at day’s end how far apart the sides were, and informal discussions would continue over the weekend.
As fevered negotiations continued in Cleveland hotel rooms and on cross-country conference calls, Judge Polster on Thursday swore in 12 jurors, in anticipation that opening statements would begin as scheduled on Monday. Inexorable moves such as these can often prod the sides to the desired result: settlement. Friday’s extraordinary sessions included top executives from the distributors, AmerisourceBergen, Cardinal Health and McKesson; state attorneys general from Texas, Pennsylvania, North Carolina and Tennessee; lawyers for more than 2,300 opioid lawsuits filed by cities, counties and tribes nationwide; and delegates from cities large and small that have been devastated by the two-decade-long epidemic. More than 400,000 people have died in that time.
Also in court were executives representing Walgreens, the pharmacy chain; Teva, the Israeli-based manufacturer of generic drugs; and Henry Schein Medical, a small drug distributor.
The harsh words on Friday night from the attorneys general exposed the sharp divide between two powerful groups of plaintiffs, the states and the local communities.
“It’s regrettable that they think it’s us,” said Joe Rice, the lead lawyer for thousands of cities, counties and tribes whose cases are consolidated under the judge’s supervision. He instead criticized the distributors for proposing a deal that was short on money and took too long to unfold.
The attorneys general said that they had been inclined to accept the deal, which would be paid out over 18 years. It would include $22 billion in cash from the distributors, $3 billion in delivery services and $23 billion worth of generic medicine from Teva.
Companies reached for comment either declined to do so or did not respond to messages.
Paul Farrell, another lawyer on the team for local governments, said that discussions with Walgreens, which is being sued for its role as a distributor of opioids to its own pharmacies, “were not fruitful.”
The case at the center of Monday’s trial was brought by two Ohio counties, Cuyahoga and Summit, although the negotiations contemplated a settlement that would resolve thousands of other cases around the country. The Ohio trial is considered a powerful litmus test for all the parties.
There are many more other drug industry defendants, including the pharmacy chains Walmart, Rite Aid and CVS, in the far-flung web of litigation. But now that Purdue Pharma’s tentative deal is caught up in a lengthy bankruptcy court review, a global settlement would be the first in the national opioid litigation.
Plaintiffs’ lawyers say a wide-ranging settlement could have a domino effect on the remaining defendants, encouraging them to reach a comprehensive deal too.
But people familiar with the state of play on Friday in Cleveland suggested that the existing obstacles could lead to a much narrower outcome, with only the Ohio cases settling, rather than a global resolution.
One sticking point, said some members of the local governments’ legal team, was that the distributors would not estimate the losses suffered by West Virginia communities, saying that the state itself had already settled with the three distributors for about $73 million.
A signature tension in the talks to date is how to allocate any money from the settlement. Local governments are wary of ceding that power to the states, mindful that much of the money from the Big Tobacco settlement ended up in general funds for legislatures, rather than being disbursed to local communities.
Mr. Farrell said that “the attorneys general are deciding among themselves how to allocate the money.”
People familiar with the negotiations also said that a major stumbling block was a dispute over fees for the private lawyers.
But Mr. Rice dismissed that assertion with a wave of his hand. “We have agreed that the attorneys’ fees will be established by the court,” he said, a process that had been established in earlier mass litigations like the Volkswagen cases. He characterized the fees as “in single digits.” Typically, plaintiffs’ lawyers work on contingency fees for roughly 25 percent to one-third of a settlement.
Another issue in the talks is public transparency: If the companies reach a settlement, plaintiffs’ lawyers want to ensure that records of what transpired during the years of one of the country’s greatest public health crises are unsealed.Another issue in the talks is public transparency: If the companies reach a settlement, plaintiffs’ lawyers want to ensure that records of what transpired during the years of one of the country’s greatest public health crises are unsealed.
People knowledgeable about the negotiations said that a sticking point was the fees for the private lawyers who represent the small governments. To prepare for the trial and the cases at large, which has taken years, lawyers from 21 law firms have taken over 450 depositions, compiled millions of documents, and spent millions of dollars on expert witness reports and data analysis, said a person familiar with the processes. Throughout the day, parties caucused in separate rooms on two floors, as negotiators, including Judge Polster shuttled among them.
Friday is unfolding as a dynamic, daylong exercise in “shuttle diplomacy.” The day began with a brief gathering of the parties in Judge Polster’s courtroom, after which they decamped to separate rooms. Clusters of lawyers and public relations managers paced back and forth, muttering in hallways, cellphones glued to their ears. They would have jaunty expressions, radiating confidence, but then a phone would ring and faces would abruptly turn dour. Then another phone would ring.
Judge Polster’s special masters — litigation experts who, from the outset of the filings, have had daily responsibilities marshaling the cases and acting as liaisons to the judge — will move among the rooms, working offers and counteroffers, and reporting back. A lawyer said that the judge himself had, on occasion, been stepping into the caucus rooms. Steve Williams, the mayor of Huntington, W. Va., a small city staggered by opioids, seemed frustrated.
As of Thursday evening, no one familiar with the discussions could predict with confidence whether Friday will conclude with a deal or a directive for opening statements to begin Monday morning. “We put drug dealers in the alleys in jail, and there are these drug dealers sitting here in board rooms and now we’re just talking about money? We’re angry in Huntington,” Mr. Williams said. “If there was not a single tablet distributed again and not another gram of heroin, we would still be dealing with the aftereffects for four decades.”
In January, 2018, Judge Polster held an initial gathering of these parties in his courtroom. There were only several hundred opioid cases on his docket then — there are now more than 2,300 — and the assembly was intended to give the parties and the judge himself a foreshadowing of what was at stake. At that time, mayors, county executives and chiefs of police showed up, to offer the judge a ground’s-eye view of their communities’ devastation by opioids. Several recounted bitter family experiences.
One executive there that day was Mayor Steve Williams of Huntington, W. Va., who is expected to be in court Friday. His city of 48,000 was featured in the Oscar-nominated documentary “Heroin(e)” and is often described as the epicenter of the opioid epidemic.
He stood against a hallway window, watching as groups of lawyers milled about. “I’m fighting drug dealers in white coats,” he said quietly. “We need the resources to clean up this mess and make sure it never happens again.”