November has been an active month in the years-long litigation of opioid manufacturers — and it hasn’t been good for the theories put forth by Attorneys General and local governments. On November 1, Orange County Judge Peter Wilson, in litigation brought by Orange, Santa Clara, and Los Angeles Counties, along with the City of Oakland, ruled completely in favor of the defendants, several opioid manufacturers. And then on November 9, the Oklahoma Supreme Court overturned the $475 million verdict against opioid manufacturer Johnson & Johnson. Does this signal a weakening of state and local government authority to pursue these actions? Not likely.
It’s important to take a step back and look at the underlying theories of these cases. While the thousands of governmental actions have been brought to address a public health crisis, at their core the actions against opioid manufacturers are largely based on theories that are marketing/advertising claims. In essence, these cases focus on alleged misrepresentations made by pharmaceutical companies in the marketing of their opioids to doctors, including the addictiveness of the products, appropriate and safe utilization, and the need for increased dosages. These misrepresentations were then allegedly coupled with aggressive sales tactics that included significant payments to doctors for their prescribing practices. At their core, these cases are really no different than the plethora of cases brought by State Attorneys General in all sorts of industries.
So why the recent losses? Both Oklahoma and the California Counties focused their cases on a public nuisance theory – essentially arguing that defendants’ deceptive and misleading conduct caused the marketplace to be flooded by unnecessary opioids, which caused harm to the public health and safety of their citizens. Both courts rejected the expansion of public nuisance into opioid harms. While they each came about this conclusion in slightly different ways, both did focus on the fact that the underlying products at issue were not only lawful products, but were heavily regulated by the federal government. The Oklahoma court noted that expanding public nuisance to lawful products would, “create unlimited and unprincipled liability for product manufacturers.”
Both cases also alleged standard Unfair and Deceptive Trade Practice violations under their respective state laws, but the focus was clearly on nuisance. For Oklahoma, their UDAP allegations were dismissed very early in the litigation because of a broad state exemption for products that are regulated. In California, the UDAP claims all also lost for a variety of reasons, including plaintiffs’ failure to show the deceptive comments were actually made publicly (as opposed to just in training material), and plaintiffs’ attempt to claim that certain representations that tracked FDA approved material was deceptive.
In the broader landscape of opioid manufacturer litigation, these cases may drive a desire, especially for the State Attorneys General, to focus more attention on their bread and butter UDAP allegations to avoid the pitfalls of the California case. Most states don’t have the broad exemption that Oklahoma has for regulated products, and the Oklahoma court didn’t seem to take issue with the fact that the underlying conduct was shown to be deceptive. A similar approach may not however be available for all of the thousands of cities and counties litigating. In Texas for example, counties do not have authority to seek penalties under the Texas Deceptive Trade Practices Act; rather that power is reserved solely for the Attorney General.
The lesson to take away here is that States have widely varied authority when it comes to their oversight of marketing conduct, and the varied nature of their UDAP laws in particular means that a loss by one state in their jurisdiction won’t impact other states alleging the same case. It is crucial to both understand and fully appreciate the varied, and incredibly powerful, authority the State Attorneys General wield as we enter 2022.
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