Duluth, Superior, St. Louis County opioid lawsuits plod ahead slowly
Even as pharmaceutical companies begin to own up and settle legal claims against them, local government units continue to wait in line for their share of the damages.
The attorneys of St. Louis County, and the cities of Duluth and Superior were among the first government officials in the Northland to file suit against manufacturers and distributors of opioid drugs.
St. Louis County Attorney Mark Rubin led the way in March 2018, alleging a “widespread campaign of unfairly, deceptively and fraudulently marketing and promoting opioids” in violation of Minnesota law.
The lawsuits aim to recoup the some of the considerable expenses the Twin Ports and St. Louis County have incurred due to the crisis brought on by the proliferation of the addictive and often deadly painkillers.
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But those claims are awash in a sea of litigation, with more than 2,600 local government units nationwide pursuing similar compensation and many of the defendant pharmaceutical players seeking bankruptcy protection.
"When the lawsuits started, none of the manufacturers had filed for bankruptcy, and so all of them were included in the big multi-district litigation that the county and the city are part of that's headquartered at a federal court in Cleveland," Assistant St. Louis County Attorney Nick Campanario said.
But as individual defendants entered bankruptcy, the claims against the companies shifted from the federal court in Cleveland to whatever bankruptcy court is handling the respective proceedings, such as New York in the case of Purdue Pharma, Campanario explained.
"The cases in Cleveland are still in a holding pattern with regard to the county and the city," Campanario said.
A case involving a couple Ohio counties was slated to go forward first toward the end of last year, but the parties reached a settlement just before the trial was about to begin, and Campanario said it resulted in no movement for other plaintiffs, including the county.
The two Ohio counties, Cuyahoga and Summit, received $326 million in their settlement, but Camapanario noted that they had the benefit of being first in line and likely reaped a financial reward of unequaled scale to what subsequent litigants can expect.
A second case was to have gone to trial in late fall, but the COVID-19 pandemic has sidelined those proceedings.
As for any ongoing behind-the-scenes negotiations, Campanario said: "There is a gag order in place that prevents everyone from discussing settlement discussions in the Cleveland case. So, I can't say anything about that."
Duluth City Attorney Rebecca St. George declined to comment on the ongoing litigation, but Mayor Emily Larson provided a statement.
"The litigation landscape has a lot of moving parts, including the MDL (multi-district litigation), numerous bankruptcies, and various settlement discussions," she said. "The city is actively monitoring these processes and will continue to advocate for a resolution that can best address the significant harm the residents of the city and the region have experienced due to the actions of the defendant, opioid manufacturers and distributors.”
Yet, some of the suits are already beginning to pay dividends.
Purdue Pharma, the developer of OxyContin, pleaded guilty in November to paying illegal bonuses to physicians who prescribed large quantities of the drug. The company had already agreed to plead guilty to civil and criminal charges as part of an $8.3 billion settlement with the Justice Department.
It will likely take quite a while for any of that money to flow into local coffers, however, cautioned Campanario.
He explained that Purdue likely will develop a bankruptcy reorganization plan, which creditors will then be allowed to vote for or against.
"That plan should spell out how they propose to treat all of the claims, including the claims by the county and the city and all the other government units within the next few months. That's what I've seen reported," Campanario said.
Meanwhile, new claims continue to mount, with Walmart most recently pulled into the legal fray, as the U.S. Justice Department seeks billions of dollars in damages from the company for allegedly dispensing controlled substances unlawfully.
Campanario sees parallels between the opioid litigation and the cases brought against tobacco companies in the past.
"But there is at least one major difference in that almost everyone seems to recognize that any money that is generated by the opioid lawsuits should be used not just for any old thing, but rather for opioid-related problems and trying to solve or improve them," he said. "I think that's an improvement on what happened in the tobacco litigation."
While Campanario expressed confidence that local governments will eventually receive a share of damages from the opioid litigation, he doesn't predict it will be a financial windfall.
"Of course, it's not going to be enough, given the scope of the problem and the amount of money that these companies can afford to pay without being tipped underwater and into bankruptcy," he said. "In Purdue, you can look at the nominal amount of the settlement that's been agreed to. But will those dollars be paid out in 100-cent dollars? Probably not. So, we'll have to see what that looks like."