Chaos over ‘mountains of fees’ for private lawyers mucking up opioid settlements, AGs complain

A coalition of 11 state attorneys general is accusing cities, counties and their private lawyers of engaging in fee-driven litigation that has interfered with the states’ ability to negotiate global opioid settlements with companies.

Stating “state Attorney Generals make better plaintiffs,” Ohio AG Dave Yost said the thousands of lawsuits against consulting firm McKinsey & Co. represent a money grab by local government officials and the lawyers they hired to represent them on contingency fees.  Echoing arguments made frequently by business groups including the U.S. Chamber of Commerce over municipality litigation, Yost and the AGs of Texas, Kansas, Louisiana, Connecticut and several other states said, “these cases harm our system of government, needlessly clog the courts, and result in a delayed and less-effective remedy.”

“We are entering an era where phalanxes of political subdivisions file salvos of copy-cat complaints to multi-State actions seeking duplicative remedies to gain a seat at the table,” the AGs said in an amicus brief filed with U.S. District Judge Charles Breyer in San Francisco on Jan. 3. “These political-subdivision complaints …and the resulting mountains of fees claimed by private counsel, become a costly scourge on these classes of suits, the courts, and indeed, on our government structure.”

Yost and the other AGs filed the brief even though most of their states are represented by private lawyers who stand to reap billions of dollars in fees from the opioid settlements they helped negotiate. Ohio is represented by multiple law firms including Hagens Berman and former Mississippi AG Mike Moore and Texas and Montana are represented by Motley Rice, for example.

The AGs sought to intervene in multidistrict litigation against McKinsey after 47 states and the District of Columbia negotiated a $575 million settlement with the firm last year over claims it assisted Purdue Pharma with deceptive opioid marketing schemes. Their complaints are similar to ones the National Association of Attorneys General made in 2020 to U.S. District Judge Dan Aaron Polster, who is in charge of federal multidistrict litigation against opioid manufacturers and distributors.

In that letter, NAAG criticized plans for a $3.3 billion common benefit fund that would steer billions of dollars in fees to private lawyers even though Judge Polster had no jurisdiction over state lawsuits. Those lawyers – many of whom contribute to state and local politicians – now stand to earn $2 billion in fees from a $26 billion multistate settlement with opioid distributors and Johnson & Johnson.

In their brief in the McKinsey case, the state AGs said cities and counties are political subdivisions without the independent power to sue over broad harms to society. Granting them that power is equivalent to “splitting the atom of sovereignty” which exists only for the states and the federal government, the AGs said.

As lawsuits mounted against Purdue and other opioid producers, private lawyers fanned out around the country, recruiting municipalities as clients with promises they could win funding for local programs safe from appropriation by state legislators. They typically cited the $260 billion tobacco settlement with the states, where little money actually flowed to local governments or antismoking programs.

With opioid litigation, “brilliant and capable plaintiffs’ attorneys’ rent-seeking will align with the desire of local governments to obtain funds free-and-clear from the normal purse-strings control of State legislatures,” the AGs said. “In other words, the political subdivision cases are designed to shift the control of any recovered funds from state to local officials.”

Yost took direct aim at his counterparts in Ohio, saying “a menagerie of 58 Ohio counties, cities, villages, townships and fire districts filed a single complaint against McKinsey on March 4, 2021, exactly one month after the AG Settlement was announced. These claims were not even asserted until after Ohio released them.”

As NAAG complained to Judge Polster back in 2020, the AGs said local lawsuits hamstring their ability to negotiate global settlements with companies. Defendants want an end to litigation and unless AGs can guarantee that, settlements remain elusive.

“Political subdivision MDLs have made settlement more difficult for the States. The multistate settlement with opioid distributors was delayed for years because of the competing claims from political subdivisions pending in MDL.”

The AGs cited U.S. Supreme Court precedent to support the idea states could override the legal powers of the subdivisions, even if that meant forcing them to accept a civil settlement. In 1886, the Supreme Court said “there exists within the broad domain of sovereignty but these two” – the states and the federal government. The court reiterated this in 1982, saying the dual system of government “has no place for sovereign cities.”