November was an active month in the opioid manufacturers’ longstanding litigation – and it wasn’t good for the theories of the Attorney General and local governments. On November 1, Orange County Judge Peter Wilson ruled entirely in favor of the defendants, multiple opioid manufacturers, in a lawsuit brought by Orange, Santa Clara, Los Angeles Counties and the City of Oakland. On November 9, the Oklahoma Supreme Court overturned the $ 475 million ruling against opioid maker Johnson & Johnson. Does this signal a weakening of state and local authority to pursue these measures? Unlikely.
It is important to take a step back and look at the underlying theories of these cases. While thousands of government actions have been taken to address a public health crisis, actions against opioid manufacturers are largely based on theories that are marketing / advertising claims. Essentially, these cases focus on alleged misrepresentations by pharmaceutical companies in marketing their opioids to doctors, including the addiction of the products, appropriate and safe use, and the need for increased dosages. These misrepresentations were then allegedly linked to aggressive sales tactics that included substantial payments to doctors for their prescribing practices. In essence, these cases really are no different from the plethora of cases filed by attorneys general across all sorts of industries.
So why the recent losses? Both Oklahoma and California counties focused their cases on a theory of public harassment – in essence, they argued that the defendants’ fraudulent and misleading behavior resulted in the market being flooded with unnecessary opioids, affecting the public health and safety of their citizens harmed. Both courts opposed extending the public harassment to opioid harm. While both came to this conclusion in slightly different ways, they both focused on the fact that the underlying products in question were not only legitimate products but were also heavily regulated by the federal government. The Oklahoma court found that extending public harassment to legal products “would create unlimited and unprincipled liability for product manufacturers.”
In both cases, standard violations of unfair and misleading trading practices were also alleged under their respective state laws, but the focus was clearly on harassment. For Oklahoma, their UDAP allegations were dismissed very early in the process because of a broad state exemption for regulated products. In California, the UDAP’s allegations have also been lost for a variety of reasons, including plaintiffs ‘failure to make the misleading comments public (as opposed to in educational materials only) and plaintiffs’ attempt to claim that certain representations made the the FDA prosecuted, deceived approved material.
In the broader landscape of opioid maker litigation, these cases may create a desire, particularly among attorneys general, to pay more attention to their bread-and-butter UDAP allegations in order to avoid the pitfalls of the California case. Most states don’t have the broad exception Oklahoma has for regulated products, and the Oklahoma court didn’t seem to object to the fact that the underlying behavior was found to be fraudulent. However, a similar approach may not be available for all of the thousands of cities and counties that have litigation. For example, in Texas, counties do not have the authority to seek penalties under the Texas Deceptive Trade Practices Act; rather, this power is reserved exclusively for the Attorney General.
The lesson to be drawn from this is that states have very different powers when it comes to overseeing marketing behavior, and in particular the different nature of their UDAP laws means that the loss of one state in its jurisdiction will not affect other states, they claimed the same case. Understanding, and fully appreciating, the diverse and incredibly powerful authority of the Attorney General as we step into 2022 is vital.
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