A. Public Nuisance

In order to constitute a public nuisance, the activity or condition must: (1) substantially interfere with a right held in common by the public; (2) be unreasonable; (3) be within the defendant's control and be capable of abatement by the defendant; and (4) proximately cause the injury in question.^{Reference Schwartz, Goldberg and Appel10} According to the government plaintiffs, the addiction problems caused by the defendants' marketing practices have caused a decline in the quality of life in their communities and imposed a substantial financial burden on state and local governments to deal with the opioid epidemic.^{Reference Ryan11}

Virtually every government plaintiff has brought a public nuisance claim and an Oklahoma trial court recently held Johnson & Johnson liable for creating a public nuisance in that state. Nevertheless, a public nuisance claim will be more problematic in states that follow the traditional rule that liability for creating public nuisance should be confined to actions that violate a criminal law, take place on the defendant's land or cause damage to the plaintiff's land.

B. Negligence

Government plaintiffs have also alleged that the defendants were negligent in some respect. To recover under this theory, the plaintiff must prove: (1) that the defendant owed a duty to the plaintiff to exercise reasonable care to protect him against harm; (2) that the defendant breached this duty by failing to exercise reasonable care; (3) that the defendant's unreasonable conduct was a cause-in-fact and a proximate cause of the plaintiff's harm; and (4) that the plaintiff suffered damage as a result of the defendant's conduct.^{Reference Keeton12}

As far as opioid litigation is concerned, the most relevant form of negligence is negligent marketing. The concept of negligent marketing is based on the notion that product sellers should not engage in marketing strategies that significantly increase the risk that their products will be fall into the hands of consumers who will injure themselves or others.^{Reference Ausness13} Negligent marketing claims can be divided into one of three categories: (1) those that are based on product design; (2) those that arise from marketing strategies that target vulnerable or unsuitable consumers; and (3) those that involve inadequate supervision of downstream sellers.^{Reference McClurg14} Government plaintiffs contend that the defendants' marketing practices fall within the second and third categories of negligent marketing.

So far, these negligence claims have not been tested in the courts. Government plaintiffs apparently feel that the defendants' marketing tactics can be more appropriately characterized as either fraud or violation of statute.

C. Fraud

Fraud may be divided into fraudulent misrepresentation and fraudulent concealment. Fraudulent misrepresentation requires a false representation by the defendant that is material and is made with knowledge of its falsity or in a manner that is reckless as to whether it is true or false, and with the intent of inducing the plaintiff to rely upon it.¹⁵ In addition, the plaintiff must actually rely on the defendant's statement and it must proximately cause the resulting injury.¹⁶ Fraudulent concealment, another form of fraud, requires proof that: the defendant concealed a material fact or remained silent when he or she had a duty to disclose this information to the plaintiff; the defendant acted with scienter; the defendant intended for the plaintiff to rely upon the concealment; and the defendant's conduct caused harm to the plaintiff.¹⁷ According to government plaintiffs, opioid manufacturers falsely told the medical profession that opioids were safe and effective for the treatment of chronic pain. In addition, they are accused of failing to disclose their financial support and editorial control over statements by KOLs and seemingly neutral professional organizations.

At first blush, it seems that the drug companies engaged in fraudulent conduct when they promoted opioids for the treatment of chronic pain. However, the fraud, and any reliance that occurred as a result, would seem to be directed at prescribing physicians and their patients rather than at the government health care providers. Thus, it remains to be seen whether government plaintiffs can successfully stand in the shoes of doctors and patients who may have been defrauded.

D. Statutory Violations

Government plaintiffs also maintain that opioid sellers violated consumer protection and unfair competition laws, statutes prohibiting false claims and Medicaid fraud as well as federal and state anti-racketeering (RICO) statutes. For example, in City of Chicago v. Purdue Pharma,¹⁸ the City alleged that the defendant opioid manufacturers engaged in various deceptive marketing practices in violation of the Illinois Consumer Fraud and Deceptive Business Practice Act (ICFA).¹⁹ A few complaints have also accused opioid sellers of violating false claims and Medicaid fraud laws. The plaintiffs argue that the illegal marketing practices of opioid sellers caused them to pay for treatments that were either inappropriate or ineffective.

Government plaintiffs have also claimed that opioid sellers violated the federal Racketeer Influenced and Corrupt Organizations Act (RICO).²⁰ RICO imposes liability on any person who invests income from a pattern of racketeering activity in an enterprise, acquires an interest in an enterprise through a pattern of racketeering activity, conducts an enterprise's affairs through a pattern of racketeering activity or who conspires with others to do any of these things.²¹ Health care organizations and government entities have invoked RICO on a number of occasions seeking to recover from pharmaceutical companies for promoting off-label uses of prescription drugs.²² Some government plaintiffs now allege that opioid manufacturers violated RICO or comparable state RICO statutes by engaging in fraudulent marketing activities.

These statutory claims seem to be stronger than some of the common-law claims that were discussed above. Consumer protection laws, in particular, are broadly drafted and state officials are usually expressly authorized to sue on behalf of injured citizens. Federal and state RICO provisions are also fairly broad and have been successfully used against at least one drug company for engaging in unethical marketing practices.²³ However, RICO requires cooperation between the defendant and another entity and it remains to be seen whether government plaintiffs can prove that such cooperation existed.

E. Unjust Enrichment

The principle of unjust enrichment enables a person to recover from another when he has received a benefit and when it would be unjust for him to retain the benefit, as for example when the defendant has obtained possession or title to the plaintiff's property by fraud or by mistake.²⁴ In order to recover, the plaintiff must prove: (1) the existence of a benefit conferred upon the defendant by him; (2) that the defendant was aware of the benefit; and (3) that the defendant has accepted the benefit under circumstances where it would be inequitable to allow him to retain the benefit without paying for it.²⁵

In opioid litigation, government plaintiffs have contended that the defendants' wrongdoing directly caused them to suffer increased expenditure on public healthcare services, law enforcement, the justice system, child and family services. In addition, they have been harmed by their employees' lost productivity and lost tax revenue without receiving any of the purported benefits of opioid therapy deceptively promoted by the defendants. However, one problem with unjust enrichment as a liability theory is that it focuses primarily on the defendant's gain, not the plaintiff's loss. Therefore, in order to prevail on an unjust enrichment claim, the government plaintiffs will have to identify which of the defendants' profits were directly attributable to their fraudulent marketing practices.

G. Civil Conspiracy

A civil conspiracy claim requires: (1) an agreement to commit an unlawful act or to commit a lawful act by unlawful means; (2) the commission of an overt act in order to promote the conspiracy; (3) causation; and (4) damages to another resulting from the conspiracy.²⁶ Such a claim can be very useful for plaintiffs because if it succeeds, each member of the conspiracy is treated as a joint tortfeasor, which reduces causation and proof of damage problems for the plaintiffs because the acts of one defendant are imputed to other members of the conspiracy.^{Reference Behrens and Appel27}

Government plaintiffs in the opioid litigation cases have declared that opioid manufacturers jointly committed various acts of misrepresentation and concealment about the risks of using of opioids to treat chronic pain. They also contend that the defendants conspired with distributors and retail sellers to violate the Controlled Substances Act by selling opioids to suspicious parties and by failing to monitor and report suspicious purchases to the DEA. Nevertheless, government plaintiffs have not yet provided sufficient evidence of an agreement among the defendants, as opposed to parallel conduct, to make out a case for civil conspiracy.

A. Absence of Causation

It is axiomatic that the plaintiff must prove that a specific actor actually caused his or her injury. The traditional test for cause-in-fact is the “but for” or sine qua non test, which asks whether the injury would have occurred in the absence of the defendant's conduct. This test does not work very well when there is more than one defendant and the actions of each is sufficient to cause the harm and each is acting independently. Therefore, when multiple causes are involved, some states apply the substantial factor test to determine causation.^{Reference Owen28} Under this test, the court asks whether the defendant's conduct was a substantial factor in causing the plaintiff's injury. Another aspect of causation, usually considered under the rubric of “damages,” is determining the specific damages that a particular defendant has wrongfully imposed on the plaintiff.

Proving causation could be difficult in opioid litigation where the plaintiffs seek damages for such generalized costs as law enforcement, emergency room treatment, and degradation of the quality of life within third jurisdictions.²⁹ Also, where multiple defendants are involved (unless they are acting in concert), plain-tiffs may encounter difficulties if courts require them to prove which defendant caused which specific damage when multiple parties are all producing or selling the same products.³⁰

B. Absence of a Duty to Protect the Plaintiffs

In some situations, courts have relied on a duty analysis to conclude that manufacturers should not be held liable to non-consumers for product-related injuries. This result has been especially common in cases where victims of gun violence and their-party health care providers were concerned.³¹

It is hard to say what role the duty issue will play in the opioid litigation. Government plaintiffs have argued that they are owed a duty of due care by drug companies as the result of the obligations imposed upon these companies by the CSA). However, defendants can be expected to respond that the duty to monitor drug sales under the CSA only runs to the federal government and possibly to patients and is not concerned with protecting the economic interests of state and local governments.

C. “Remoteness” and Proximate Cause

In some instances, product manufacturers have attempted to avoid liability by claiming that the plaintiff's injuries were too “remote.” The doctrine of remoteness bars a plaintiff from recovering for economic losses which arise from injuries directly suffered by a third party.^{Reference Grossman and Percival32} The purpose of the remoteness principle is to protect culpable actors against the consequences of unlimited, and possibly catastrophic, liability.^{Reference Kimball and Olson33} Although some courts seem to regard remoteness as an independent doctrine, others have concluded that it should be treated as an aspect of either proximate cause or standing. In either case, it can be a very strong defense.

Like remoteness, proximate cause, sometimes referred to as “legal cause,” reflects the notion that some outer limit should be set on the imposition of liability for wrongful acts. Determining whether a defendant's conduct is a proximate cause often involves the question of foreseeability — that is, whether the injury is of a type that a reasonable person would see as a likely result of his or her conduct. In addition, courts often rely upon proximate cause to cut off liability when unforeseeable causes have intervened between the defendant's actions and the plaintiff's harm.^{Reference Dobbs, Keeton and Owen34} For example, intervening criminal act are often treated as “superseding” causes which are sufficient to break the chain of causation and relieve the defendant of liability.³⁵ However, most courts will not treat intervening criminal acts as superseding when they are foreseeable and within the risk created by the defendant's conduct. Thus, the risk of leaving one's car door unlocked may include the possibility that a criminal will steal it and hit a pedestrian or another vehicle.³⁶

The impact of remoteness and proximate cause claims in other cases has been somewhat mixed.³⁷ In the case of opioids, the further up the chain of distribution, the stronger proximate cause will be as a shield against liability. For example, opioid manufacturers can argue that the intervening acts of distributors, retail pharmacies, prescribing doctors, and drug users are a proximate cause of the plaintiffs' injury rather than their own conduct. Even retail sellers, who are less closely removed from the plaintiffs' harm, can still point to the actions of prescribing physicians, illegal drug sellers and drug users as the proximate cause of the opioid epidemic.

D. Restriction of Recovery for Economic Loss

There are two doctrines, not universally followed, that could prevent government plaintiffs from recovering for purely economic losses in tort actions such as public nuisance and negligence. These doctrines are the economic loss rule and the municipal cost recovery doctrine.

E. The Economic Loss Doctrine

The economic loss rule prevents plaintiffs from recovering when the only loss they suffer is economic in nature as opposed to personal injuries or property damage.^{Reference Sharkey38} The rule is traditionally applied in negligence and products liability cases, but not to such cases as fraud, Medicaid fraud, or violation of consumer protection laws. For example, in East River Steamship Corp. v. Transamerica Delaval, Inc., ³⁹ the United States Supreme Court distinguished between interests protected by tort law and those protected by contract law. According to the Court, tort law is intended to protect plaintiffs against personal injury or property damage, while contract law protects reasonable economic expectations. Furthermore, if the parties are in a contractual relationship, they can determine where the risk of economic loss should lie by addressing the issue in the contract. Thus, the economic loss rule protects freedom of contract by ensuring that tort law will not apply where a plaintiff's economic interests can be adequately protected by contract law principles.

Defendants will probably invoke the economic loss rule, claiming that the plaintiffs' losses do not involve physical damage to property or personal injuries to themselves in contrast, for example, to the cases where government entities successfully recovered for asbestos cleanup costs to public buildings.⁴⁰ In response, government plaintiffs will contend that the economic loss doctrine is not applicable because they have no ability to contract with the defendants beforehand to protect themselves against the effects of widespread opioid addiction.⁴¹

F. Municipal Cost Recovery Rule

The municipal cost recovery rule, also known as the free public services doctrine, provides that a government entity cannot sue a tortfeasor to recover for the costs of public services that were incurred because of the tortfeasor's negligence.^{Reference Ausness42} This doctrine has been adopted in a number of jurisdictions, though not in a majority. Product manufacturers have successfully invoked the municipal cost recovery rule in at least one case,⁴³ but other courts have rejected it.⁴⁴

Opioid manufacturers, distributors, and retail sellers can be expected to invoke the municipal cost recovery rule in those states that recognize it. However, government plaintiffs may respond that the rules should be limited “one-off” types of accidents and should not applied to continuing nuisance-like conditions, such as the opioid epidemic.

A. Class Actions

One form of aggregation is the class action. A class action allows a group of plaintiffs with similar claims against a particular defendant or group of defendants to sue through one or more representatives without each class member having to sue individually.^{Reference Bradt49} Rule 23(a) of the Federal Rules of Civil Procedure sets forth four requirements that must be met in order to qualify for class action certification: numerosity, commonality, typicality, and adequacy.^{Reference Hines and Wood50} The numerosity requirement provides that the class must be so large that joinder is impracticable. Under the commonality requirement, the plaintiff has to show that the litigation involves questions of law or fact that are common to members of the class. The typicality requirement dictates that the claims of the representative party and the class members must be similar. Finally, the adequacy of representation requirement is concerned with the expertise of the representative party's counsel, the extent of the representative party's interest in the litigation and the absence of any conflict of interest among class members.⁵¹

In addition, the representative party must show that separate actions by or against individual class members risk establishing “incompatible standards of conduct for the party opposing the class” or that final relief of an injunctive nature is appropriate or that common questions of predominate and that a class action would be a superior method to resolve these common questions fairly and efficiently.⁵² If a class is certified, class members are bound by any action taken by the court or any settlement negotiated by the representative party unless a class member opts out.^{Reference Erichson53}

Unfortunately for government plaintiffs, several developments have impaired the utility of class actions in mass tort cases. First, the United States Supreme Court ruled against the certification of several personal injury class actions because they failed to meet Rule 23(b)'s numerosity, commonality, or typicality requirements.⁵⁴ Second, Congress enacted the Class Action Fairness Act⁵⁵ (CAFA) in 2005. CAFA extended federal subject matter jurisdiction over class actions, even when there was only minimal diversity, if the amount sought by the putative class was at least $5 million. In theory, CAFA should have increased the use of class actions in federal courts, but in reality it made them less desirable because federal courts often refused to certify these cases on the grounds that they did not meet Rule 23(b)(3)'s predominance requirement. Thus, CAFA had the effect, possibly intentionally, of moving class actions to federal courts to die.^{Reference Burbank56} This, in turn, led litigants to regard consolidation in an MDL as the preferred form of aggregation.^{Reference Marcus57}

B. Multidistrict Litigation

At the federal level, the process of consolidation is statutory. The Multidistrict Litigation Act of 1968⁵⁸ authorizes the Judicial Panel on Multidistrict Litigation (JPML) a group of seven federal judges appointed by the Chief Justice of the United States,^{Reference Fallon, Grabill and Wynne59} to transfer related cases that have been filed in various federal courts across the county to a single federal district court for pretrial proceedings.^{Reference Bone60} These constitute about a third of the overall cases on the federal docket and about 90% of them are products liability cases.^{Reference Bradt61}

In theory, these cases are supposed to be returned to the transferor court at the conclusion of pretrial proceedings, but in fact almost all of them are ultimately settled.⁶² Nevertheless, consolidated cases are not class actions and the actions of one party cannot bind the rest of the parties whose cases have been transferred under the MDL statute.^{Reference Bradt and Rave63} Nor can parties be bound even if their cases have been consolidated.^{Reference Burch64}

Once cases are transferred to a single court, the transferee court has the same powers as any other judge presiding over consolidated litigation^{Reference Sherman65}. Thus, the transferee judge may rule on pretrial motions, including motions to dismiss and motions for summary judgment.^{Reference Brown66} The judge may also conduct discovery and may appoint steering committees to manage proceedings on behalf of the parties.^{Reference Erichson67} In addition, it is not unusual for the transferor court to authorize bellwether trials with the consent of the parties to obtain information about the settlement value of the consolidated cases.^{Reference Redish and Karaba68} Finally, parties whose cases were not originally transferred by the JPML are free to join the proceeding as “tagalong” parties if their cases involve common questions of fact with actions previously consolidated under the MDL statute.^{Reference Ostolaza and Hartmann69}

In late 2017, the Judicial Panel on Multidistrict Litigation appointed a district court judge in the Northern District of Ohio, Dan Polster, to hear all of the lawsuits currently pending in federal courts involving local government plaintiffs and opioid defendants. The JPML's transfer did not affect cases that brought by state officials in state courts or lawsuits brought by private individuals if they had not been transferred to a federal court. Judge Polster has appointed steering committees to conduct discovery. The parties also agreed to conduct a number of bellwether trials in 2019. Two of these have been slated for trial, and Judge Pollster recently refused to dismiss the plain-tiffs' public nuisance and RICO claims in one of these cases.⁷⁰

A. The Tobacco Settlement

There are some clear parallels between the tobacco litigation of the 1990s and the current government litigation against opioid manufacturers, distributors, and retail sellers. In both cases, the defendants marketed a dangerous product and misrepresented the risks associated with its use. Moreover, in both cases, lawsuits were brought by government entities to recover for the economic costs that were incurred as a result of the adverse health effects associated with harmful products. Finally, government plaintiffs in both cases relied heavily on private attorneys to finance and prosecute these lawsuits. For this reason, it is worth considering what insights the tobacco litigation might provide on the prospects for a settlement in the opioid litigation and the form such a settlement might take.

Individual personal injury actions against tobacco companies to recover for the health effects of smoking began as early as the 1950s and universally failed, in part because the defendants successfully invoked conduct-related defenses such as contributory negligence and assumption of risk.^{Reference Taylor72} However, in 1994, the state of Mississippi brought suit against a number of cigarettes companies seeking indemnification for the medical costs of treating smokers and Florida, Texas, and Minnesota quickly followed suit.^{Reference Dreveskracht73} In 1997, Mississippi settled its case for $3.6 billion and Florida, Texas, and Minnesota settled that same year for $11.3 billion, $15.3 billion and $6.6 billion respectively.^{Reference Sloan and Chepke74} Eventually, more than forty states brought suits against “Big Tobacco.”^{Reference Dagan and White75}

The decision to seek a “global” settlement with the states was no doubt precipitated by a series of public relations disasters that occurred during this period. The first involved the unauthorized release of thousands of documents belonging to the Brown & Williamson Tobacco Corporation by a former employee.^{Reference Player76} These materials, known as “the Cigarette Papers,” documented more than thirty years of fraud by the tobacco industry.⁷⁷ For example, the papers showed that tobacco companies were well aware of the addictive qualities of nicotine and sought ways to manipulate nicotine levels in their products.⁷⁸ In addition, the Cigarette Papers revealed that tobacco companies had placed highly toxic additives in their cigarettes.⁷⁹ The release of this damaging information, coupled with the decision of the Liggett Group to break ranks with the other defendants, led the remaining tobacco companies to finally seek a settlement with the rother states.⁸⁰

In mid-1997, the parties announced that they had reached a $368.5 billion agreement that would settle all pending lawsuits against the tobacco industry.^{Reference Bianchini81} This complicated agreement not only settled lawsuits by the states against tobacco companies, but it capped payments to injured smokers and banned punitive damage awards.^{Reference Dagan and White82} These limitations on civil actions required congressional approval. However, legislation sponsored by Senator John McCain failed to pass in the Senate.^{Reference Sloan and Chepke83}

After the failure of the first settlement proposal in June 1998, the tobacco companies and the state Attorneys General quickly reached a less ambitious settlement known as the Master Settlement Agreement (MSA). The MSA required the tobacco companies to make annual payments to the states in perpetuity.^{Reference Haile and Kruegar-Andes84} The MSA also provided a process by which the plaintiffs' attorneys who financed the lawsuits could be compensated.^{Reference Godesky85} The MSA was not the product of either a class action or a MDL proceeding; rather, it was a private agreement that would be enforced by individual consent decrees.^{Reference Wood86}

The MSA has been criticized for not doing enough to reduce smoking. To be sure, fewer people smoke, in part because tobacco companies had to raise the price of cigarettes in order to pay for the costs of the settlement.^{Reference Taylor87} In addition, the MSA's restrictions on advertising may have helped to discourage smoking. On the other hand, very little of the settlement money was actually spent on programs to reduce smoking, although the money that was sent to the American Legacy Foundation (now the Truth Initiative) was spent on smoking prevention.^{Reference Dreveskracht88}

B. The Vioxx Settlement

Unlike the tobacco settlement of 1998, the Vioxx settlement grew out of a MDL proceeding that consolidated thousands of individual personal injury actions. The case involved Vioxx (Rofecoxib), a prescription drug developed by Merck to treat pain and inflammation associated with arthritis, menstrual pain, and migraine headaches.⁸⁹ More than 105 million prescriptions were ultimately written for the drug until it was taken off the market in 2004.^{Reference Sherman90} Thousands of lawsuits were subsequently brought in federal and state courts against Merck, alleging that the company failed to warn prescribers about the drug's increased risk of strokes and heart attacks.^{Reference Grabill91} The JPML consolidated the federal cases before Judge Eldon Fallon in the Eastern District of Louisiana and even larger groups of cases were consolidated in state courts.^{Reference Erichson and Zipursky92}

Sixteen lawsuits were eventually tried as bellwether cases.^{Reference Lahav93} Of these, six resulted in damage awards for the plaintiff, while the defendant won ten jury verdicts.⁹⁴ These lawsuits provided an impetus for settlement even though most juries found in favor of Merck. Because those juries that did find in favor of the plain-tiffs awarded punitive damages and substantial compensatory damages.^{Reference Erichson and Zipursky95} After months of negotiations, the parties finally reached a settlement on November 9, 2007.^{Reference Grabill96} The 65-page settlement agreement, negotiated between a six-member Negotiating Plaintiffs' Counsel Committee and Merck, required the drug company to contribute $4.85 billion dollars to a compensation fund in order to settle all of the existing claims against it.^{Reference Sherman97} To be eligible for compensation, a plaintiff had to prove that he or she had taken Vioxx over a certain period and as a result had suffered either a stroke or a heart attack.^{Reference Erichson and Zipursky98} Approximately, 30,000 plaintiffs received compensation from this settlement fund.^{Reference Grabill99}

It has been suggested that the Vioxx MDL experience might serve as a model for future mass tort litigation.^{Reference Sherman100} However, there are a number of factors that facilitated a settlement in the Vioxx case that would not be present in the opioid litigation scenario. First of all, there was only one defendant for the plaintiffs to negotiate with. This made it easier to reach an agreement since there were no apportionment issues to complicate matters. In contrast, there are a variety of defendants involved in the opioid cases with different levels of responsibility for the addiction problem. Second, Vioxx had a short latency period so additional claims were unlikely to be brought by the time the settlement was reached.^{Reference Sherman101} In addition, the court ruled that the statute of limitations had run, thereby obviating the risk that a settlement would encourage others to sue.^{Reference Dodge102} Finally, the settlement agreement contained a “walkaway” clause, allowing Merck to repudiate the deal unless at least 85% of the plaintiffs agreed to its terms.^{Reference Grabill and Sherman103} Thus, the agreement not only capped Merck's liability, but it provided protection against future lawsuits.

Like the tobacco settlement, the Vioxx settlement may not provide much of a template for a future opioid settlement. In the first place, there are many defendants, not just one, for the plaintiffs to negotiate with. Second, because many counties and municipalities have not become parties to the opioid litigation at the present time, it would be difficult for any settlement agreement to provide the sort of protection from future litigation that the Vioxx agreement did. That being said, it should be noted that Judge Polster recently certified an opt-out “settlement class” that would include these potential plaintiffs. This suggests that while a settlement in the opioid cases may be informed by past settlements, it will have to incorporate new and innovative approaches like the proposed negotiation class action to be successful.