That huge opioid verdict? Watch out – the energy industry is next

By Scott Keller

Alexander Hamilton famously wrote that our nation’s courts would be “the least dangerous” branch of government. But a novel type of “public nuisance” lawsuit threatens to weaponize our courts by crippling all sorts of industries.

Public nuisance claims traditionally have been limited to conduct interfering with truly public rights. For example, courts for decades have recognized public nuisance claims brought by governments to remove impediments from their public highways or waterways. Even then, courts generally did not recognize such claims where a legislature or administrative agency had already regulated an industry. After all, if the political branches of government regulated an industry, then they were telling courts what did and did not qualify as an unlawful “nuisance.”

But a series of recent lawsuits wants courts to ignore these limits on public nuisance claims and obliterate entire industries. These lawsuits seek to massively expand what counts as a public right, and they want courts to destroy companies that are already complying with existing regulations.

Last week’s blockbuster ruling in Oklahoma is the perfect example of public nuisance lawsuit abuse. A single state judge in Oklahoma held a company liable for $572 million under a public nuisance theory—even though no public right was at issue, and the company had complied with existing regulations in a heavily regulated industry.

This ruling involved a company that was manufacturing pharmaceutical opioids. It’s clear that manufacturing the pain pills involves risks for those who take them, but that’s why federal agencies already regulate the industry so closely. Make no mistake: This public nuisance theory of judicial power and legal liability would cover all industries disfavored in the current political landscape—not just the pharmaceutical industry.

The playbook for these lawsuits is simple: Get a single court to label any widespread public policy problem as a “public nuisance,” and then get enormous money awards against any company with deep pockets in that industry. Notably, the $572 million award in the Oklahoma case was just about one pharmaceutical company’s operations in one state. Apply this public nuisance theory to multiple companies in all 50 states and entire industries will be ruined. Never mind that a company complied with existing regulations in a heavily regulated area.

In fact, this same public nuisance attack is currently being waged against the energy industry. These lawsuits want a single court—somewhere, anywhere in the country—to declare climate change is a public nuisance and then get a hefty payout. Such a decision will, they hope, serve as a blueprint for subsequent rulings all over the country. According to these lawsuits, American oil and gas companies are to blame—even though climate change issues are complex and the rest of the world significantly affects our planet’s climates.

Our nation, of course, faces significant public policy issues. Governments must confront the opioid crisis, environmental issues, and many others social problems. But where there is no political consensus on how to approach a problem, the answer cannot be to bypass the political branches through a public nuisance lawsuit.

In other words, if there’s really a need for industry-crippling regulation, it should not be done through litigation. Ideally, it should occur through the legislative process, where elected representatives can make these crucial policy decisions. But at a minimum, this regulation should be set by administrative agencies charged by legislatures with developing answers to complex policy problems.

It is striking that the recent eruption of public nuisance lawsuits has occurred in two of our country’s most heavily regulated industries—energy and pharmaceutical companies. Heavily regulated industries should be the last place where courts heap on even more regulation through novel lawsuits. Yet it’s not enough, these lawsuits allege, that companies painstakingly comply with existing vast regulations. Rather, they want courts to disregard the policies already set by legislatures and agencies.

Courts should not take the bait. The rule of law depends on our courts being above the political fray. By leaving politics to our political branches, courts ensure a functioning democracy that settles public policy disputes at the ballot box and the statehouse—not the courthouse.