TO: Honorable Mayor & Members of the North Port Commission
FROM: Peter D. Lear, CPA, CGMA, City Manager
TITLE: Discussion and Possible Action Regarding the City’s Potential Participation in the Negotiation Class for the National Opioid Litigation, In re: National Prescription Opiate Litigation, MDL No. 2804 (N.D. Ohio)
Recommended Action
Discussion and possible action regarding the City’s potential participation in the Negotiation Class for the national opioid litigation, In re: National Prescription Opiate Litigation, MDL No. 2804 (N.D. Ohio).
Background Information
Background of Litigation
Approximately 2,500 counties and cities across the United States have filed suit against manufacturers, distributors, and retailers of prescription opiate drugs seeking reimbursement for monies spent addressing the opioid crisis. All federal actions have been centralized into one case in Ohio, In re: National Prescription Opiate Litigation, MDL No. 2804 (N.D. Ohio).
Creation of Negotiation Class
The court has certified a Negotiation Class (“Class”) solely for the purpose of reaching a settlement. The Class includes all counties and cities in the United States, whether they have filed a lawsuit or not. The Class does not include state governments. As of the date of this staff summary, the Class includes 34,458 entities.
Causes of Action
In this Class, the Court certified two federal Racketeer Influenced and Corrupt Organizations Act (“RICO”) claims and two federal Controlled Substances Act (“CSA”) issues, finding that these claims are similar across the country and the Class.
These claims are asserted against 13 defendants: Pharmaceutical companies Purdue, Cephalon, Endo, Mallinckrodt, Actavis, Janssen, McKesson; and pharmacies Cardinal, Amerisource Bergen, CVS Rx Services, Inc., Rite-Aid Corporation, Walgreens, and Wal-Mart.
1. RICO -
The first RICO claim alleges that five defendants misled physicians and the public about the need for and addictiveness of prescription opioids, all in an effort to increase sales. The second RICO claim alleges that eight defendants ignored their responsibilities to report and halt suspicious opioid sales, all in an effort to artificially sustain and increase federally-set limits (quotas) on opioid sales.
2. CSA -
The CSA issues allege that the CSA required the defendants to create systems to identify, suspend, and report unlawful opioid sales, and that the defendants failed to meet those obligations.
The City’s Options
The City has received notice from the court that the City is a Class member. If the City would like to opt out of the Class, the City must provide notice by November 22, 2019. The City’s options are:
1. Participate in the Class -
If the City stays in the Class and a settlement is reached, the City will receive a share of the settlement funds and will give up its right to pursue its own lawsuit.
The City will not owe any costs or attorney’s fees, as the Class attorneys pay all costs up front and will be compensated from any settlement funds before the funds are disbursed to Class members.
2. Remove the City from the Class -
If the City removes itself from the Class, it will not receive a share of any settlement and it will retain its right to file its own lawsuit. Once removed from the Class, the City will not have an opportunity to rejoin.
Settlement Allocation
No settlement has been reached at this time, as the Negotiation Class is in its initial phase. The court has authorized 49 members to serve as the Class representatives. Among the Class representatives are Broward County, Escambia County, and County of Palm Beach, Florida. The Class representatives will attempt to negotiate a settlement on behalf of the Class. A statistical model has been created for the allocation of any settlement reached, utilizing data reflecting the weight of the opioid crisis in each jurisdiction.
Strategic Plan
Health & Public Safety; Efficient & Effective Government
Financial Impact
None at this time. If the City remains as a member of the Class, the City will bear no costs or attorney’s fees. Whether the Class litigation will settle is unknown.
Procurement
n/a
Attachments:
1. Class Action Notice
Prepared by: Amber L. Slayton, City Attorney
Department Director: Amber L. Slayton, City Attorney