(Reuters) – A federal appeals court on Thursday overturned a judge’s approval of a novel plan by lawyers representing cities and counties suing drug companies over the U.S. opioid crisis that would bring every community nationally into their settlement talks.
The 6th U.S. Circuit Court of Appeals by a 2-1 vote declined to approve an unprecedented “negotiation class” of 33,000 cities, towns and counties who could have a vote on whether to accept any settlements proposed with drug manufacturers and distributors.
U.S. District Judge Dan Polster in Cleveland, who oversees 2,900 opioid lawsuits, to promote global settlement talks approved a proposal that could bind cities and counties that have not sued and allow them to participate in the talks.
Any settlement would need the support of at least 75% of class members.
While companies did not need to use the negotiation class to settle cases, many, including the drug distributors McKesson Corp, Cardinal Health Inc and AmerisourceBergen Corp, objected.
Many state attorneys general also argued that Polster’s ruling could complicate settlement talks and interfere with states’ rights over their political subdivisions.
U.S. Circuit Judge Eric Clay said the federal rule governing class actions does not authorize the framework.
“However well-intentioned the district court’s actions might be, the fact of the matter is that the court, when it certified the negotiation class, exercised power it did not have,” he wrote.
The local governments’ lead lawyers – Paul Farrell, Paul Hanly and Joe Rice – in a statement said they are working to develop other models to allow companies to resolve the cases.
Some companies have proposed deals that do not use the negotiation class, including the three distributors and drugmakers Johnson & Johnson and Teva Pharmaceutical Industries Ltd, which in October 2019 proposed deals worth a collective $48 billion.
Negotiations are ongoing and dollar amounts have been shifting.
Reporting by Nate Raymond in Boston; Editing by Bill Berkrot and Jonathan Oatis
Our Standards: The Thomson Reuters Trust Principles.