By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She is currently writing a book about textile artisans.
Four California communities – the counties of Los Angeles, Orange, and Santa Clara, and the city of Oakland – today faced off against four drugmakers, Allergan, Endo International, Johnson & Johnson, and Teva Pharmaceutcal – in a trial via videoconference in California.
This is the second opioids action to move forward to trial. The first resulted in a $572 million verdict against J & J, handed down by Oklahoma state judge Thad Balkman in August 2019 (see Judge Issues $572 Million Verdict Against J & J in Oklahoma Opioids Trial: Settlements to Follow?). Thousands of similar proceedings are pending, and the California action will help litigants define a reasonable settlement values for these lawsuits. Next up after the California action is a case due to commence in federal court in West Virginia in May, followed by a New York state trial slated for June.
I’m posting this bit later than I usually like to do. The reason: I wanted to be sure the California trial went forward as scheduled before I filed. Litigants often settle just before a trial is due to start – as indeed was the case the last time I wrote about an upcoming opioids trial, in October 2019, Four Companies Settle Just Before Bellwether Opioids Trial Was to Begin Today in Ohio. I remember that event well, as I was waiting for the trial to begin before uploading my post discussing the pending trial. I was in Madrid and had plans for a short visit to the Prado once my post was up. Instead, when the last-minute settlement was announced, I scuppered those plans and revised my post to reflect the late-breaking development.
So, today, I decided to hold off on finalizing any post until I could confirm the California trial had begun.
While I was waiting to figure out what was happening in California (which did begin as scheduled, according to Reuters), I spied an NPR piece, Court Blasts Drug-Maker Endo For Trying To ‘Improperly Corrupt’ Opioid Trial, reporting on a Tennessee state judge’s entry of a default judgment against Endo Pharmaceuticals for “discovery misconduct.” According to NPR:
The judge presiding over the civil trial also concluded the drug maker and its attorneys made at least a dozen false statements during the pre-trial fact-finding process.
“It appears to the court that Endo and its attorneys, after delaying trial, have resorted to trying to improperly corrupt the record,” wrote Chancellor E.G. Moody …
Judge Moody didn’t mince words, describing at length the discovery abuses that led him to issue his order, which I have embedded at the end of this post. This order represents an unusual reprimand for a law firm of the stature of Arnold & Porter.
The judge’s ire is apparent:
This court has already held Endo and its attorneys in contempt of court for failing to conduct a reasonable search and for failing to produce responsive documents in response to Plaintiffs’ discovery requests. The Court is especially concerned about the many false statements to Plaintiffs’ counsel and to the Court by the Endo Defendants’ attorneys in the course of the discovery process. Now that Endo has completed its productions, the only remaining question is what sanctions to impose.
The judge didn’t buy Endo’s argument that what he called discovery misconduct was merely a simple misunderstanding between plaintiffs’ counsel and defense counsel. Instead:
The Court finds that the record demonstrates otherwise. It is clear to the Court that Endo and its counsel at Arnold & Porter wilfully withheld responsive records in violation of this Court’s September 28, 2018 Order to Compel, in violation of this Court’s February 12, 2020 Certification Order, and (more generally) in derogation of Plaintiff’s reasonable document requests and Endo’s discovery obligations. Many of the records that Endo knowingly withheld were highly relevant … It is apparent that Endo intended to defend itself at trial by touting its anti-diversion measures, while simultaneously depriving Plaintiffs of evidence that would have undercut that defense. Accordingly, the Court finds that Endo wilfully withheld this information during the discovery phase to gain a litigation advantage at trial. The Court further finds that Endo and its attorneys’ false statements violated the Tennessee Rules of Civil Procedure and the Tennessee Rules of Professional Conduct.
After continuing in a similar vein for another page and a half, judge Moody reaches the crux:
Under the circumstances, the Court finds that entry of a default judgment is warranted. This case involves a “clear record of delay or contumacious conduct [citation omitted].” This Court had to compel or sanction Endo to participate fully in discovery multiple times, which was part of a pattern of delay. Endo’s discovery misconduct (and untruthful statements to the Plaintiffs and the Court) were repeated, without reasonable excuse, delayed various aspects of discovery by more than a year, and were intensely prejudicial. Plaintiffs did not contribute to these delays. The Court finds that this was part of a coordinated strategy between Endo and its counsel to delay these proceedings, deprive Plaintiffs of information that would support their case, and interfere with the administration of justice….
It is obvious that monetary sanctions are not sufficient. Endo and its attorneys have not shown any remorse, admitted their wrongdoing, or apologized to opposing counsel or the Court for their actions.
For all of these reasons, the Court hereby enters a DEFAULT JUDGMENT in favour of the Plaintiffs. Although this is a harsh sanction, justice demands it under the circumstances. Anything else would make a mockery of the attorneys who play by the rules and the legal system [original emphasis].
If the judge’s recitation of the facts is correct, I think it’s unlikely his decision will be overturned on appeal. So the next phase of the proceedings will be a bench trial during which he will determine the amount of the damages to be awarded. Over to NPR again:
Gerard Stranch, one of the attorneys suing the drug maker on behalf of local governments in Tennessee, said Endo and its lawyers “conspired to hide the truth” over a period of years as the fact-finding phase of the trial proceeded.
“[Endo’s] lawyers crossed the line and worked with the company to subvert the court’s orders and then made false statements to the court about it,” he said.