Connect

To receive new posts automatically via e-mail, enter your address:

Delivered by FeedBurner


July 9th, 2019

ATRA Announces Mid-Year Addition of Oklahoma to Judicial Hellholes List

Once a national leader in enacting fair and balanced civil justice reform for plaintiffs and defendants, Oklahoma, regrettably, has become a place where pervasive liability expansion threatens to destabilize the economy.

Oklahoma’s Attorney General Mike Hunter and his litigation against pharmaceutical companies over the state’s opioid crisis have dominated the news cycles in 2019. His actions, coupled with liability-expanding decisions by the state’s Supreme Court and a legislative bottleneck caused by legislators backed by the plaintiffs’ bar, have earned Oklahoma the unenviable distinction of being a mid-year addition to the annual Judicial Hellholes list.

ATTORNEY GENERAL MIKE HUNTER CHOOSES POLITICAL DONORS TO BRING UNPRECEDENTED STATE LAWSUITS AGAINST PHARMACEUTICAL COMPANIES

Oklahoma Attorney General Mike Hunter’s opioid litigation came to a head this year as the state began its long-awaited trial against Johnson & Johnson in May.  Prior to the start of the trial, he reached settlements with Teva Pharmaceutical Industries and Purdue Pharma.

Time and time again litigation has failed to solve the broader societal problems proponents state they want to address.  Public health problems, like the opioid crisis, require comprehensive solutions designed by Congress, state legislators and federal and state public health officials and regulators. They are obliged to serve and protect the public, and they are accountable to us all.  By contrast, lawsuits like AG Hunter’s case, are driven by a profit motive that risks putting private interests above those of the broader public.

Outside Law Firms Hired by the State

In 2017, when AG Hunter joined scores of other states and municipalities in suing the makers of opioids, he chose not to hire one of the many plaintiffs’ firms experienced in pharmaceutical litigation.  Instead, he awarded contracts to three law firms that had generously contributed to his campaigns over the years.  In fact, one of the firms he selected – Glenn Coffee and Associates – does not even tout litigation as a service offered on its website.  Prior to the start of the Johnson & Johnson trial, Glenn Coffee withdrew his services, but not before collecting millions of dollars from the settlements with Teva and Purdue Pharma.

Another, Texas-based Nix Patterson, a key player in the tobacco litigation in the ‘90s, boasts to clients the availability of its private plane – because apparently flying commercial just takes too long.  All told, the employees and families of the three firms selected by Hunter contributed at least $72,500 to his political campaigns.

When asked to justify the hiring of outside counsel in the opioid litigation, governments and their lawyers point to the “success” of the tobacco litigation from a generation ago. A closer examination of the experience in Texas proves that corruption can be a real problem in such cases when enormous sums of money are on the line, and litigation cannot assure that settlements are addressed entirely toward the underlying problem. For example, according to the Dallas News, then Texas Attorney General Dan Morales spent four years in federal prison because he forged documents to allow a personal friend to receive a share of the enormous legal fees generated in the state’s case, even though he had done no work in the matter.

Settlements

In April of this year, AG Hunter reached a $270 million settlement with Purdue Pharma, just weeks before the case was scheduled to go to trial.  In doing so, AG Hunter spurned the legislature’s fundamental authority regarding state funds and apportioned the money himself.  By contrast, the generous campaign donors he hired to represent the state on a contingency fee basis are to be paid directly almost $60 million in fees, nearly five times more than the amount designated for municipalities and counties in the state.  The bulk of the settlement went towards establishing a Health and Wellness Center at AG Hunter’s alma mater, Oklahoma State University, where his son also happens to be employed.

This settlement also serves as yet another reminder of how money secured through litigation often does not address the stated purpose of the lawsuit or directly help the victims.  The same was true with the landmark tobacco settlement a generation ago. While Texas receives $490 million each year under the settlement, only $10.2 million was actually allocated toward anti-smoking efforts in 2016. Matthew Myers of the Campaign for Tobacco Free Kids stated that “measured against the potential successes and the potential good that could have been achieved, Texas and many other states fell far short of their objectives.” This is hardly surprising considering barely 2 percent of the annual settlement payment to the state supports smoking cessation. There is one group, however, that did exceedingly well: the personal injury lawyers. The “big five” Texas tobacco settlement lawyers receive about $120 million each year for their work in the 1990s.

In a sharp rebuke of AG Hunter following the Purdue settlement, the Oklahoma legislature and Governor Kevin Stitt joined forces to close the loopholes exposed by the settlement and preserve the legislature’s authority to expend state funds and determine how they are to be allocated.

This new legislation jeopardized the validity of Hunter’s settlement with Teva Pharmaceutical Industries reached just days before the company’s May trial was scheduled to begin.  Following enactment of the new reform statute, the judge in the case demanded full transparency from Hunter and requested that he explicitly state how the money was to be allocated in compliance with the new law. This request was in response to concerns raised by Governor Stitt and two high-ranking lawmakers who feared that the AG’s handling of the settlement might violate the new law. In a motion filed on June 24th, AG Hunter laid out the details of the settlement and disclosed that the outside counsel would receive $12.75 million – 15% of the $85 million settlement.

Inventive Public Nuisance Legal Theory

The state’s trial against the remaining company, Johnson & Johnson, began at the end of May.  Relying on an overly expansive view of the state’s “public nuisance” law, Hunter alleges that Johnson & Johnson created a public nuisance by expanding the market for opioids through deceptive marketing campaigns involving misrepresentations and omissions about their lawful, regulated, non-defective product.  AG Hunter voluntarily dropped the other claims he had previously filed against Johnson & Johnson, including claims of fraud and deceit and unjust enrichment.

Historically, public nuisance law is at issue in cases involving private property and public spaces, not the manufacturing of a legal and highly regulated product.  A successful claim for public nuisance usually involves instances in which there is an interference in one’s enjoyment of personal property. Typical cases include manufacturing plants emitting noxious fumes or restaurants blaring loud music.  Here the state is looking to expand the law in order to cover harm resulting from a public health crisis.  If the attorney general is successful, Oklahoma law would be well outside of the legal mainstream as evidenced by a May 2019 decision in North Dakota where a judge dismissed a similar claim against Purdue Pharma.

Manufacturers of all products would view a victory for the state in this case with great concern as its applicability likely would grow as states look for additional sources of funding for public health problems.  By this logic, cell phone manufacturers could be held liable for harm caused by distracted drivers.  Similarly, auto-manufacturers might be held liable for accidents caused by drunk drivers.  If allowed to stand, this case certainly opens the door to those possibilities.

Hunter’s use of public nuisance law in the opioid context is of particular interest given that he took a dramatically different position regarding public nuisance in another high-profile case. In May 2019, Hunter joined 17 fellow state AGs in filing an amicus brief in a climate change case in a federal appeals court in California in which the AGs argued that the use of public nuisance law is inappropriate in that matter. The brief states that “the issues surrounding climate change and its effects—and the proper balance of regulatory and commercial activity—present political questions that cannot be resolved by judicial decree.”  It should also be noted that in July of 2018, he authored an op-ed entitled, “Lawsuits are not the answer to climate change.” In this piece, he explicitly stated, “you cannot litigate what legislators refuse to legislate and regulators refuse to regulate.” This is a sound and reasoned analysis, but he fails to follow the same reasoning in his opioid litigation.  In fact, one could switch out the words “climate change” for “opioids” as done here, and his op-ed, in our view, would be equally true.  He also cautions that if the courts adopt this expansive view of public nuisance law, it would lead us into a situation in which virtually anything could be deemed a public nuisance.  We agree with AG Hunter – in the context of the climate change case.

While the litigation around climate change and the opioid crisis are different matters, they each intend to establish public policy through litigation while “solving” complex problems.  Attempting to resolve a public health crisis in court requires the court to assume the responsibilities and authority of the other two branches of government.

OKLAHOMA SUPREME COURT MAKES HABIT OF ISSUING LIABILITY-EXPANDING DECISIONS

Throughout the first half of 2019, the Oklahoma Supreme Court significantly diminished the role of the legislature with regard to civil justice policy by handing down activist opinions that either strike down existing laws or interpret them with a complete disregard for their plain meaning.

Court Strikes Down Check on High-Dollar Lawsuits

In April 2019, the Oklahoma Supreme Court issued its long-awaited decision in Beason v. I.E. Miller Services.  In doing so, the court abandoned established legal precedent and held that the state’s statutory limit on noneconomic damages was a special law, and therefore, unconstitutional.  In doing so, the court became an outlier, as a majority of courts, both state and federal, have found these statutory limits to be constitutional.

In 2011, the state enacted legislation that limited noneconomic damages in civil cases involving bodily injury to $350,000. In striking down the law, the court reasoned that it “targets for different treatment less than the entire class of similarly situated persons who sue to recover for bodily injury.” The court also stated that a defendant’s culpability has no bearing on the extent of the suffering a victim sustains. However, as pointed out in Justice Winchester’s dissent, the statute included exceptions in cases of gross negligence, reckless disregard, intentional actions, or malicious conduct.  It also did not impact other damages such as lost wages, medical expenses and future loss of expected wages.

This was a blatant overreach by the court, as Justices Edmonson and Fischer stated in their dissent, “[a] legislative cap on damages…is included within the historically recognized role of a legislature in defining, creating, or abolishing a legal cause of action.” Most courts have respected the prerogative of legislatures to enact reasonable limits on awards for pain and suffering. Unfortunately, the Oklahoma Supreme Court did not.

Activist Court Expands Damages Despite Clear Legislative Language

The elimination of the statutory limit on noneconomic damages is far from the only way in which the court has increased potential damages for defendants in 2019.  It also expanded a treble damages statute, which it described as “absurd.”

In McIntosh v. Watkins, a defendant, who was driving under the influence, rear-ended a vehicle, injuring the two occupants.  Both vehicles pulled over to discuss the accident, but when the plaintiff stated that he needed to call the police to report the accident, the defendant returned to his vehicle and fled. He was later arrested and charged with driving a motor vehicle while under the influence of alcohol and leaving the scene of an accident involving damage.

Months later, the parties settled all of Plaintiff’s bodily injury claims, but the issue regarding whether the plaintiff was entitled to treble damages for the damage sustained to his vehicle remained unresolved. The applicable statute stated that treble damages are available only in an accident “resulting only in damage to a vehicle…” Since the plaintiff had sustained physical injuries as well, the trial court ruled he was not entitled to treble damages.

In a 5-4 decision, the Supreme Court reversed the lower court and stated that the statute applied even if a victim sustains an injury.  The majority decided that, in its view, the statute was ambiguous and its opinion prevented an “absurd interpretation” that would lead to greater harm.

In a strongly worded dissent, Justice Wyrick wrote, “The majority arrives at this counter-textual conclusion by employing an all-too-familiar interpretive device: when a statute doesn’t say what the Court thinks it ought to say, it declares the statute ambiguous and then, under the guise of ascertaining “legislative intent,” resolves the so-called ambiguity by assigning to the statute whatever meaning aligns with the Court’s policy preferences.”

It is the legislature’s job to establish public policy, and it is inappropriate for the judiciary to substitute its judgment for that of the legislature, no matter how mis-guided they believe it to be. Judges who allow their decision-making to be guided by policy preferences, rather than the plain meaning of a statute, undermine the adherence to the rule of law.

Oklahoma Supreme Court Improperly Impedes Legislature’s Workers’ Compensation Reform

In March of 2019 the Supreme Court once again undermined the legislature’s civil justice reform efforts by shifting the burden of proof in workers’ compensation cases onto the employer.  The case arose out of a “slip-and-fall” incident in which a nursing assistant injured her knee when it gave out and she fell.

When asked at her hearing whether she had slipped on any substance on the floor, the nursing assistant stated that she was not aware of anything on the floor; in fact, she said that had she seen anything on the floor, she “would have picked it up or wiped it up with paper towels.” It was thus uncontroverted that her fall was not caused by some slippery substance on the floor, but rather was the result of her knee giving out.

An expert for the defense concluded that the assistant suffers from patella-femoral malalignment, a previously unidentified pre-existing condition, that can cause her right kneecap to dislocate out-of-socket and to relocate into socket.

An administrative law judge, the Workers Compensation Commission sitting en banc, and a three-judge panel of the Court of Civil Appeals all reviewed the evidence in this case and unanimously concluded that the assistant failed to prove that her knee injury was compensable. Crucial to this conclusion was that her expert witness had based his compensability conclusion on a fact that did not exist: that the assistant “slipped on a wet floor while getting ice.” That fatal flaw in the expert’s conclusion left the assistant unable to meet her burden of proof.

The divided Supreme Court reversed the denial of benefits finding there was no credible evidence that the claimant had a pre-existing injury, improperly shifting the burden of proof from the plaintiff to the defendant. The majority seemed only to consider the facts in support of reversing and not the actual merits of the plaintiff’s claim.

In his dissenting opinion, Justice Wyrick wrote that, “the majority’s apparent adoption of a standard of review expressly rejected by the Legislature when it enacted the AWCA [Administrative Workers’ Compensation Act, Oklahoma’s Workers’ Compensation reform] is indicative of a broader and more troublesome trend of decisions of this Court reverting our workers’ compensation laws to what they were prior to the AWCA.” And that these efforts are “merely the latest in the Court’s death-by-a-thousand-cuts dismantling of the Legislature’s efforts.” Once again, the Oklahoma Supreme Court substituted its judgment for that of the elected – and accountable – legislators.

LEGISLATORS DO TRIAL LAWYERS’ BIDDING, REFUSE TO MOVE MUCH-NEEDED LEGAL REFORMS

The Oklahoma legislature has a rich history of addressing issues through legislative reforms.  For much of the early 2000’s, the state was a national leader in enacting reform legislation to ensure a fair and balanced judicial system.  This contrasts sharply with recent years when the legislature has failed to enact commonsense reforms.

House Judiciary Chairman Chris Kannady has been a key member of the Oklahoma legislature since 2014.  A well-known beneficiary of trial lawyer campaign contributions, Representative Kannady works for Foshee & Yaffe, an Oklahoma City law firm with a robust personal injury practice.  The firm currently is looking to aggregate plaintiffs for litigation against Bayer for injuries alleged to be caused by RoundUp®.

It is worth noting that Representative Kannady also took the highly unusual step of leading the movement to oust several fellow Republican legislators during the 2018 elections.   He and others worked to successfully defeat eight incumbent Republicans.  Unfortunately, many of these legislators were consistent supporters of legal reform in the past.

A return by Oklahoma to its reform mindset would be a welcome development.  In particular, legislation such as the Transparency in Private Attorney Contracting Act (TiPAC), a version of which has been enacted in 23 states, would ensure greater transparency in the hiring of outside counsel by the state, and, in the process, help to ensure that litigation brought by the state serves the interests of Oklahomans, not the profit motives of outside law firms. This would be a good start to return to national leadership on reforms and to remove the state from the “Judicial Hellholes” List.

Share