Sixth Circuit Rejects Negotiation Class Certification in Opioid MDL

In late September 2020, the U.S. Court of Appeals for the Sixth Circuit declined to embrace a novel form of settlement class known as a “negotiation class.” The class had been proposed as an attempt to consolidate opioid lawsuit settlement negotiations with a group of drugmakers. A U.S. district court judge previously approved the class in September 2019, but the Sixth Circuit disagreed, finding it in violation of federal civil procedure rules.

The Proposed Negotiation Class

The proposed negotiation class would have encompassed over 34,000 municipal entities across the country bringing them together en masse to negotiate a settlement with opioid manufacturers over racketeering and state-law claims related to the opioid crisis. Cities and counties would have been included automatically, requiring any who did not wish to participate to opt-out within 60 days of class certification.

The negotiation class would also have been held to certain rules. For example, 75% of voting class members would have been required to approve any settlement. Also, population weighting was to be applied for each government entity participating in the class. The proposal included methods for calculating each city and county’s share of any settlement, based on the number of addiction cases, distribution, and deaths from opioid overdoses.

Challenges to the Proposed Class

The negotiation class was intended to streamline settlement negotiations between opioid manufacturers and political entities fighting opioid addiction within their populations. Opioid manufacturers, however, opposed the creation of the negotiation class, as did six Ohio cities.

On appeal, the Sixth Circuit overturned the district court’s decision to certify the negotiation class. The Sixth Circuit held that while Federal Rule of Civil Procedure 23 does allow for the creation of a class in order to pursue a settlement, “there is no discussion in Rule 23 identifying negotiation as a separate category of certification distinct from settlement.”

The court rejected the plaintiffs’ argument that Rule 23 grants federal judges flexibility in certifying classes, including the flexibility required to certify a negotiation class in this particular case. The court also noted that certifying a negotiation class in this situation could interfere with municipal entities’ abilities to pursue claims under the laws of their own respective states. By lumping all the participating cities’ and counties’ claims into a single settlement, the negotiation class ran an unacceptable risk of harming potential state-level claims.

Looking Forward: Effects of the Sixth Circuit Ruling

The Sixth Circuit’s opinion went to some length to clarify the scope of Rule 23. It also emphasized that courts are not free to create new rules or procedures, such as the proposed negotiation class, simply because a civil procedure rule does not explicitly prohibit such a class.

Although the court acknowledged the “innovative and effective” nature of a negotiation class, it also noted that, currently, courts are bound by Rule 23 as written, and that “we do not see how the negotiation class can be squared with Rule 23.”

Currently, multi-district litigation (MDL) consolidated in the Northern District of Ohio encompasses claims from over 1,300 public entities, including many cities and counties, over issues stemming from widespread opioid abuse. At least 34,000 municipalities are anticipated to have a stake in the results of opioid lawsuits. Without the negotiation class consolidating these claims and parties into a single settlement negotiation process, claims will need to continue either with individual plaintiffs or with smaller classes focused on narrower interests. Given the Sixth Circuit’s emphasis on protecting state-level claims, the creation of one or more classes that combine municipalities in a single state seems likely.

Experts for Opioid Litigation

A wider range of opioid-related cases throughout the country may also mean that more expert witnesses will be employed to clarify key issues. Physicians and pharmacologists, for example, may be asked to explain the mechanisms by which opioid medications become involved in addiction and in overdose deaths. Experts with experience in pharmaceutical sales and distribution may also be required to illuminate key points regarding how prescription opioids reached the hands of users who then overdosed.

We will likely see further efforts to consolidate these cases where feasible. Without a single negotiation class, however, it’s likely that pharmaceutical companies will face more lawsuits, and these cases may remain open for some time.