Judge Issues $572 Million Verdict Against J & J in Oklahoma Opioids Trial: Settlements to Follow?

By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She is currently writing a book about textile artisans.

Monday, Cleveland County district court judge Thad Balkman issued a $572 million verdict against Johnson & Johnson (J & J) in an opioids trial in Oklahoma – the first of thousands of pending opioids lawsuits to go to trial.

The full decision may be found here.

The litigation addressed only one claim: that the defendant’s misleading marketing and promotion of opioids created a public nuisance.

J & J has said it will appeal.

The $572 million award is lower than expected and covers a one-year abatement plan; plaintiffs sought $17 billion to cover twenty years (or more) of abatement. This leaves open the question of whether the plaintiffs could return and ask for a future award.

As nondoc.com reported:

“I’ve opted not to read the entire 42-page judgment,” Balkman told a packed courtroom in Norman shortly before announcing the numbers in his verdict. “The opioid crisis is an eminent and menace to Oklahomans. My judgement includes findings of fact and conclusions of law that the state met its burden that the defendants Janssen and Johnson & Johnson’s misleading marketing and promotion of opioids created a nuisance as defined by 50 O.S. Sec. 1, including a finding that those actions compromised the health and safety of thousands of Oklahomans. Specifically, defendants caused an opioid crisis that is evidenced by increased rates of addiction, overdose deaths and neonatal abstinence syndrome in Oklahoma.”

Balkman said the opioid crisis is a “temporary public nuisance that can be abated.”

“As I just stated, the opioid crisis has ravaged the state of Oklahoma. It must be abated immediately. For this reason, I am entering an abatement plan that consists of costs totaling $572,102,028 to immediately remediate the nuisance,” Balkman said. “This is the amount of costs that I am constrained to order Janssen and Johnson & Johnson to pay based on the particulars of a nuisance claim and the evidence that was presented at trial.

“Whether additional programs and fundings are needed over an extended period of time, those are determinations to be made by our legislators and policy makers. In this moment and based on this record, this is what the court can and will do to abate the nuisance.”

Balkman noted that he still has jurisdiction over the case, and that he almost certainly will be asked to make additional rulings.

“So it impossible for me to make any further statements about the trial or my ruling other than what I have said today,” Balkman said.

Note that a judge, not a jury set the amount of damages to be awarded. A jury would almost certainly have awarded a higher payout by J & J  (although that hypothetical amount may then have been reduced after appeal).

The amount J & J must now pay the state of Oklahoma is significantly greater than the $270 million Purdue Pharma, the manufacturer of OxyContin owned by the Sackler family, and the $85 million Teva Pharmaceuticals, separately agreed previously to settle each’s respective Oklahoma claims. Additionally, Purdue and Teva also avoided incurring the costs of contesting a trial.

Next on the agenda: a more comprehensive jury trial in Ohio, slated for October. This action consolidates nearly 2000 claims, using the multidistrict litigation rules (MDL); Federal district court judge Dan Polster, who sits in the northern district of Ohio, presides over this pending litigation. (For further background and context, see my Opioid Lawsuits: DoJ Seeks to Participate in Settlement Talks.)

Thus far, Judge Polster’s clear preference for settlement hasn’t produced any. This Oklahoma decision may advance that agenda for the reasons outlined below – but only marginally.

I should mention that as Bloomberg reports in J&J Opioid Ruling Provides Clues to How Much Others Could Pay (1)

The two cases are in different types of courtrooms (state vs. federal); have different defendants (one drugmaker vs. the entire supply chain); and focus on different aspects of law (Oklahoma’s unique public nuisance law vs. multiple legal theories, including racketeering).

I also want to mention that the Department of Justice is separately pursuing potential claims against doctors and other health care professionals, using data analytics to identify and prosecute alleged violators, according to the WSJ, Investigators Use New Strategy to Combat Opioid Crisis: Data Analytics. I won’t discuss this issue here, but may return to it in a future post.

What Would a Reasonable Settlement Be?

Part of the litigation game – especially when a defendant faces massive potential liability – is for the parties to figure out what a reasonable settlement amount would be. Sometimes, it’s necessary to test position in court and determine how a judge or jury values a particular claim before the parties can agree on a figure each side can live with.

Note that each party has considerable incentive to settle, for by so doing, the litigant can avoid the expense, and uncertainty, of litigation. And despite what you might think from reading the press, very few lawsuits proceed to trial; most actions are settled long before (albeit, often following considerable expensive legal manoeuvring, and sometimes on the very eve of trial).

So, we should consider the Oklahoma ruling to be the first data point, one which allows the parties some insight as to the value of their claims.

And today we see on the back of the J & J ruling, if not for J & J itself, but for other exposed parties, a clear push for settlement. Purdue Pharma, has reportedly offered between $10bn and $12bn to settle more than 2000 pending lawsuits against it, according to the BBC, Purdue Pharma ‘offers up to $12bn’ to settle opioid cases:

NBC, which first reported the news, said the settlement would involve the Sacklers giving up ownership of Purdue.

The firm said in a statement: “While Purdue Pharma is prepared to defend itself vigorously in the opioid litigation, the company has made clear that it sees little good coming from years of wasteful litigation and appeals.

“Purdue believes a constructive global resolution is the best path forward, and the company is actively working with the state attorneys general and other plaintiffs to achieve this outcome.”

Despite this obvious incentive to settle, as Bloomberg reports, considerable practical obstacles still loom:

Oklahoma Attorney General Mike Hunter’s highly visible involvement in the J&J case illustrates the leveraging power of a single, large plaintiff in negotiating settlements.

By contrast, the multi-district case is being litigated by private plaintiffs’ law firms retained by cities and counties. Those firms won’t be able to negotiate settlements at a state level, which means they probably can’t count on deals like the ones Hunter was able to reach with drugmakers Purdue Pharma LP (for $270 million) and Teva Pharmaceutical Industries Ltd. (for $85 million).

Judge Dan Aaron Polster will preside over the Ohio case, which consolidated thousands of suits into one bellwether, or test, case. The outcome of the bellwether will determine whether the individual parties will negotiate some kind of settlement or continue fighting the patchwork of legal claims on behalf of cities, counties, and Native American tribes. Polster has urged all parties in the massive case to work toward individual settlements.

“Defendants would rather be negotiating with states, and this gives states settlement leverage that cities and counties don’t have,” Noll said.

In Oklahoma, the plaintiff is the state, while the next case is being brought by two counties in Ohio that serve as the lead plaintiffs representing some 2,000 similar suits that have been lumped together in the U.S. District Court for the Northern District of Ohio.

The Bottom Line

J & J shares rallied somewhat Monday’s decision, suggesting the amount  Judge Balkman ordered to be paid was less than expected. Whether the pending MDL claims  will be settled before the Ohio trial starts in October remains to be seen, given the considerable practical obstacles.  The Oklahoma decision provides the first hard data point, but  I expect this movie to continue to run: the various parties have so many competing interests, not to mention the billions of dollars that are at stake.

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17 comments

  1. bob

    What Would a Reasonable Settlement Be?

    There is no way to determine what a reasonable settlement would be. The tail on opioid addiction lasts decades.

    This is just lawyer speak. Nothing about what any of this has cost family’s, communities, local, state and federal government. It’s just a discussion of the stakeholders positions of A) the lawyers who will split the settlement money and B) the drug dealers who get a liability waver going forward.

    This is a giant scam, whatever the settlement numbers work out to. Everyone will be worse off, except the “reasonable” people getting what they want and running away happy after. The rest of us will be dealing with this for a very long time.

    Reply
  2. John Zelnicker

    Jerri-Lynn – Thank you for keeping us updated on the progress of these lawsuits. The pharmaceutical drug dealers need to be held accountable for the damage they have caused. The claim that OxyContin was not addictive, or less so than other opioids, was laughable to anyone who had some experience with them.

    There have been three prosecutions locally of doctors who were giving out opioids like candy, even letting nurses write the scrips so the “patients” could be moved through the process more quickly.

    I was a patient of one of those doctors (back problems, including surgery) for a while a couple of years before he was prosecuted, lost his license, and had to do some time in prison (IIRC). He seemed to follow most of the rules (and wrote all scrips himself), but was easily persuaded to increase a patient’s dosage. Fortunately, I stopped taking opioids before things got hot.

    Reply
    1. Ian Perkins

      “The claim that OxyContin was not addictive … was laughable.”
      And the regulators most certainly should have laughed at it. Non-addictive opioid painkillers have been a holy grail of the pharma industry for over a hundred years. Any claim to have discovered one should have been subject to intensive scrutiny. Extraordinary claims demand extraordinary evidence.
      Yet no regulators appear to have been charged with anything.

      Reply
    2. Wukchumni

      Was hiking with a friend who’s a dentist and has been practicing for about 35 years now, and he told me that essentially no opioids are being Rx’d anymore, and then gave me a litany of past customers that had the dog eat their medicine, or it accidentally fell out of the car en route back home, or etc, etc. They all were quite eager for replacement meds.

      He told me that he stopped prescribing them not too long after they came out, when he saw the effects of the drug, and the wanton desire for more.

      Reply
  3. Adam1

    Unless it comes with several decades of jail time and confiscation of all private property obtained with ill begot gains (that’s what we’d hand a major heroin dealer) then it’s not a reasonable settlement.

    J&J the company didn’t do anything. It’s just a legal, non-person thing. The criminals are the people running it and they need to be the ones held liable.

    Don’t get me wrong. J&J as a company needs to help fix this mess, but we can’t let the real criminals slither into the night and drift off on their yachts drinking champagne bought with money taken from ruined families and communities.

    Reply
  4. PKMKII

    For context, J&J’s net income for 2018 was $15.29 billion. So this particular verdict represents 3.74% of J&J’s annual net income.

    Reply
    1. WJ

      I wish that in such cases one could sue for “x% of company’s net income as calculated over past y years” instead of a dollar amount. I think dollar amounts become misleading when you begin dealing with such scale. But people understand what it means to lose 10% of your profits whether you make 100 dollars or 10 billion dollars.

      Reply
  5. Annieb

    To get the full extent of Purdue’s criminality, read “American Overdose.” While reading it, I thought that this opioid epidemic began and developed in a similar fashion to the subprime mortgage fiasco with the same type of warnings, collusions and criminal fraud. Huge profits for the corporate criminals. And , tragically, the resulting human consequences, financial ruin in the one case and death in the other.

    Reply
      1. Jerri-Lynn Scofield Post author

        Thanks for the suggestion. I’ll look out for it the next time I’m in a bookstore.

        Reply
  6. shinola

    A question for any legal-eagles that might read this article:

    What is the strategy behind the Sacklers’ offer which seems to include “giving up” their stake in Perdue? An attempt to “get the hell out of Dodge” before someone goes after their personal fortunes? Is there some legal theory that this would absolve them of any personal liability?

    Reply
  7. notabanktoadie

    In a healthy society, i.e. one with economic justice*, the demand for drugs would be small since there would be little need to escape reality per:

    Give strong drink to him who is perishing,
    And wine to him whose life is bitter.
    Let him drink and forget his poverty
    And remember his trouble no more.

    Open your mouth for the mute,
    For the rights of all the unfortunate.
    Open your mouth, judge righteously,
    And defend the rights of the afflicted and needy.
    Proverbs 31:6-9 [bold added]

    *Which certainly would not include government privileges for private credit creation, i.e. for the banks and the rich, the most so-called credit worthy of what is then, in essence, the PUBLIC’S credit but for private profit.

    Reply
  8. DonCoyote

    Johnson & Johnson Pledges To Push Uppers For Couple Decades To Even Things Out (The Onion)

    Gorsky also assured Johnson & Johnson’s business partners the stimulants it plans to produce will be every bit as addictive as opioids and accompanied by an equally widespread misinformation campaign.

    I think they forgot to mention that that’s where $544 million of the $572 million settlement will go–back to J&J to produce, market, and distribute the uppers.

    Reply
  9. mrtmbrnmn

    Perdue Pharma and the Sackler Crime Family are going to meet the same fate as every Corporate cannibal and Wall Street outlaw. Nothing is going to happen except they will go through some tricky legal contortions (mostly secret), pay what will look like a huge financial penalty (but will probably turn into a giant tax write-off) and live happily ever after. Can’t say the same for their countless victims ’til the end of time. They are murderous drug dealers right up there with the Medellin and Sinaloa Cartels. If there were any Justice, which there clearly ain’t, they should already have a date set for the guillotine.

    Reply
    1. JBird4049

      I thought the Wealthy are our betters; I’m thinking giving them some rides in tumbrels gratis for their contributions to society; one should show proper respect to the “Job Creators” after all.

      Reply
  10. Wukchumni

    Opioids have perhaps killed more Americans, than all the soldiers that died in our wars since 1776, and will certainly eclipse that mark sometime soon…

    Reply

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