By dropping out of negotiation class action, Pittsylvania County eyes bigger payoff

Posted November 20th, 2019.

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By Caleb Ayers

Even with a slew of lawsuits against opioid manufacturers and distributors, abuse of opioids continues to be a major problem.

Between Danville and Pittsylvania County, there have been 99 visits to the emergency room for opioid overdoses from January to October this year, according to data from the Virginia Department of Health.

Under the recommendation from prosecuting counsel, Pittsylvania County is opting out of an unprecedented negotiation class against opioid providers and distributors. This will allow the county to continue to seek damages with the $50 million lawsuit they filed in Pittsylvania County Circuit Court in September 2018 against more than 20 companies involved in the manufacturing, distribution or pharmacy benefit managing of prescription opioids.

“By opting out of the negotiation class, we feel like Pittsylvania County’s chances of a larger recovery will be maximized,” said Edgar Spivey, an attorney with Norfolk-based Kaufman Canoles, who is part of the the county’s opioid litigation counsel. “That’s the core reason for the opt-out.”

The negotiation class was formed when Northern District Ohio United States District Judge Dan Polster, who is overseeing the federal cases, grouped every city and county in the entire United States with the goal of building a bigger base of plaintiffs for negotiating power and providing more total relief for the defendants. This is the first time that a negotiation class has ever been formed in this kind of case.

“The idea is that it would facilitate settlement,” said Deborah Hensler, a Stanford University law professor with extensive knowledge of class-action lawsuits.

“It’s a totally new, novel idea,” added Andrew Miller, senior litigation for Sanford Heisler and counsel for Pittsylvania County.

In the event of a settlement, the money would be distributed among the members of the negotiation based on three different factors: the amount of opioids distributed in a locality; the number of opioid deaths in a locality; and the number of people with opioid use disorder in that locality.

According to an allocation map from the case based on a hypothetical gross settlement of $1 billion, Pittsylvania County would receive a total of $88,331. So to receive the $50 million requested in the original suit, the total settlement would have to come in at just over $600 billion.

“The allocation model put forward as part of negotiation class treats Virginia localities unfairly as related to localities in other states,” Miller said.

Spivey and Miller are also advising other Virginia locality clients — Martinsville, Henry County, Page County, Giles County, Washington County, Dickinson County and the cities of Galax and Alexandria.

Henry County is in the same position as Pittsylvania County, but the Henry County attorney did not respond to requests for comment. Henry County would receive $156,761, according to the allocation map.

A lawsuit against opioid manufacturers and distributors by the city of Martinsville had already been sent back to state court.

Hensler said that there are a few procedures with similarities, but overall “there is no precedent for a negotiation class.”

Plaintiffs who opt-in would know the percentage of the total share that they would receive, but not the final number of the settlement. Then, if a settlement was reached, 75%, or “a supermajority” of the plaintiffs, would have to agree to the terms.

Another reason that localities are choosing to opt out is the absence of a confirmed settlement package for localities that remain in the class, Miller said. Every settlement between opioid manufacturers and distributors and localities so far has come outside of the negotiation class.

Since it is untested, the Ohio Sixth District Circuit Court of Appeals is currently looking at whether the negotiation class is actually a permissible procedure.

Even though states — which have also been filing separate lawsuits — are not technically included as plaintiffs in the negotiation class, attorney generals for many states, including Virginia’s Mark Herring, have voiced opposition to the negotiation class.

In a letter signed by Herring, attorney generals from across the country expressed concern that the negotiation class would delay potential settlements and “intrude upon state settlement allocation discussions and jeopardize the states’ ability to settle state enforcement actions.”

“The harms that the state have incurred [as a result of opioids] are different than the counties and cities within the state,” Miller said. “[The lawsuits] are separate and apart.”

The opioid epidemic has not discriminated against the young or the old, the rich or the poor, the educated or the uneducated, said Dr. Scott Spillmann, who works with the Virginia Department of Health as the district health director for the Pittsylvania/Danville and Southside Health Districts.

Along with other similar lawsuits from localities across the country, Pittsylvania County’s suit was sent to federal court in Ohio at the request of the defendants, who have requested cases be moved to federal courts in every case.

Miller said that he expects that Pittsylvania County’s case will eventually be moved back to a Virginia court, and he doesn’t see the county’s decision to opt out of the negotiation class to impact the timeline — which, as of now, is undetermined.

In its original lawsuit, Pittsylvania County is pursuing $50 million in compensation for increases in local revenue in areas such as law enforcement, health care, emergency medical services, and social services that stemmed from widespread abuse of opioids.

The lawsuit listed 11 causes of action against the defendants, including creating a public nuisance, violating the Virginia Consumer Protection Act, fraud, conspiracy and various forms of negligence.

“While defendants were reaping billions of dollars in profits from their wrongful conduct, Plaintiff has been required to allocate substantial public monies and resources to combat the opioid crisis in Pittsylvania County and deal with its fallout,” the lawsuit reads.

Miller said the cases brought by localities against opioid manufacturers all revolve around two primary goals: stopping the flow of drugs to save lives and compensating localities for the costs accrued as a result of the influx of opioids.

But localities aren’t just concerned with recovering expenses; they want help solving this problem, which is a legal term called abatement, Miller said.

However, different localities have been affected differently — with Spillmann saying that rural areas have felt more intense repercussions than their urban counterparts. This stratification is another reason that Miller and Spivey are encouraging their client localities to pursue their own cases.

There have been mass opt-outs in other states, including Texas, South Carolina, Pennsylvania and Nevada. Miller has advised that his client localities across the commonwealth, including Henry County and Martinsville, opt-out of the negotiation class.

The deadline to opt-out of the negotiation class is Friday.

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