Negotiation Class Certification In Opioid Epidemic Litigation

Opioids by K-State Research and Extension is licensed under CC BY 2.0.

Blythe McGregor, Associate Member, University of Cincinnati Law Review

U.S. District Judge Dan Polster believes that a unique crisis calls for a creative solution.[1] In September 2019, Judge Polster certified a “negotiation” class as a means of resolving the more than 2,000 claims of local governments throughout the United States. Plaintiffs allege that the defendants (opioid makers, distributors, and pharmacies) are responsible for the nation’s opioid addiction epidemic because drug makers marketed opioid drugs with no regard to the risk of addiction and distributors failed to report suspicious drug orders.[2] On November 8, 2019, the Sixth Circuit agreed to review this certification.[3]

A class action is a procedure by which one or more members of a similarly situated group may sue or be sued on behalf of all members of the group.[4] Historically, certification of class actions has been approved for settlement and litigation purposes only.[5] Rule 23 of the Federal Rules of Civil Procedure governing class action codifies only these two types of classes.[6]

The Supreme Court has contemplated and accepted class certification for a purpose beyond litigation. Notably, the Court in Amchem Products, Inc. v. Windsor[7] analyzed a class action that was certified for settlement purposes only.[8] A negotiation class action, however, was first proposed by law professors Francis McGovern and William Rubenstein,[9] the former of which served as a Special Master in the opioid epidemic district court case.[10] Judge Polster approved the negotiation class as a 23(b)(3) class.[11] Therefore, the judge concluded that “questions of law or fact common to class members predominate over any questions affecting only individual members and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.”[12]

A negotiation class would differ from previously certified classes in a few ways. Like a litigation class, class certification and the opt-out process would occur before a settlement is reached.[13] The class size would thus be set, and Judge Polster claimed this would give the defendants a sense of the “scope of the group with which they are negotiating.”[14] Class member-plaintiffs are not without the means to protect themselves from an unfavorable settlement. While in a settlement class action the terms of the settlement are reached and class members are then given the chance to opt out,[15] negotiation class members would only know the method of allocating a potential settlement when they make the decision to opt in or out.[16] After a settlement is reached, each member of the class will vote yes or no as to whether the settlement is sufficient, and the settlement will not be approved unless 75% of members vote yes.[17] For the particular class certified by Judge Polster, various vote counts will be completed by number, population, and allocation to ensure that control cannot be gained by smaller counties, small recovery counties, or litigating or nonlitigating counties.[18] The court also must approve any proposed settlement.[19] While class members are able to protect themselves, opting into the class is not without risk. If plaintiffs are dissatisfied with the dollar amount of the resulting settlement, either other members will be dissatisfied as well and vote the settlement down or, if 75% of other class members approve of the settlement, plaintiffs will be bound to the settlement even if they voted no.[20] Defendants are not required to negotiate with the class.[21]

Judge Polster believes adopting this novel procedure will promote global settlement, i.e., a settlement that resolves the majority of the lawsuits arising from the opioid epidemic.[22] Settlement in the opioid suits brought by local governments is essential because it would provide relief to the multitude of communities suffering from the epidemic as quickly and uniformly as possible.[23] Likewise, the defendants desire a global settlement to free themselves from further liability. Thus, they do not want plaintiffs to have the chance to opt out after settlement is reached, which would be the case if a settlement class were certified.[24]  A negotiation class action provides a creative solution to this problem.[25]Judge Polster also looked to the purpose of Rule 23 in holding that the new procedure is compliant with the rule.  The purpose of Rule 23 is to provide “practical means for addressing complex litigation problems.”[26] Also, the text of the rule does not expressly limit class actions to only those of the settlement or litigation variety.[27]

Judge Polster then determined that the proposed negotiation class satisfied all requirements of Rule 23(a). Rule 23(a) requires that the “class is so numerous that joinder of all members is impracticable,” “there are questions of law or fact common to the class,” “the claims or defenses of the representative parties are typical of the claims or defenses of the class,” and “the representative parties will fairly and adequately protect the interests of the class.”[28] The thousands of public entity plaintiffs easily satisfy the numerosity requirement.[29] Common factual questions about defendant’s knowledge of conduct regarding the distribution of opiates and the similarity of claims satisfies the commonality requirement.[30] The interests of the class representatives and class members are the same: they are all interested in recovering money that they had to pay to cope with the opioid epidemic within their communities.[31] Thus, the typicality requirement is met.

Next, the class representatives are capable and willing to represent the other class members in litigation as they are similarly situated government entities who have been engaged in this type of litigation for years.[32] Thus, these representatives will “adequately protect the interests of the class.”[33] Lastly, Judge Polster held that the class can be certified under 23(b)(3) because common issues of fact or law predominate over questions affecting only individual plaintiffs and a class action is a superior method of adjudication. Judge Polster held that the common elements of plaintiffs’ Racketeer Influenced and Corrupt Organizations Act (RICO) and Controlled Substance Act (CSA) claims predominate over individual elements.[34] Here, certification as a 12(b)(3) class is appropriate even if the injuries differed from plaintiff to plaintiff because the majority of Rule 23 class action elements can be established by class-wide proof.[35] A class action is a superior method of adjudication here because only a small percentage of proposed members are currently involved in litigation.[36] Those that are currently litigating are in the earlier stages of litigation, so certification of a class would not interfere with existing litigation.[37] The existing litigation would only resolve a small percentage of the class’s claims; so, certification of the class would resolve many more claims than the existing individual litigation alone would achieve.[38]        

Despite Judge Polster’s analysis, six Ohio cities sought to appeal the certification of a negotiation class.[39] The six Ohio parties take issue with the negotiation class’s notice procedure.[40] Specifically, they allege that the procedure violates Rule 23 because class members would have to opt in or out before a settlement is reached and thus before class members knew the exact terms of the settlement.[41] These parties view the expressly enumerated types of class actions in Rule 23 as exhaustive. Rule 23 contemplates class certification “for purposes of settlement” but does not discuss a negotiation class and the appealing parties contend that a negotiation class does not comply with the procedure established for settlement classes by the rule.[42] Further, these parties argue that a negotiation class violates their due process rights.[43] Because class members are potentially opting into the class and binding themselves to a future settlement, they are waiving their constitutional rights.[44] These parties allege that without knowing the exact terms of settlement, such waiver is not made knowingly and voluntarily as the Constitution requires.[45]

Several defendants also sought to appeal the certification.[46] These parties also believe the certification of a negotiation class contradicts the text of Rule 23.[47] Defendants suggest that the certification of this class is contrary to the federal court’s Article III authority: in approving the certification of the class, the court was not adjudicating a case or controversy but instead was simply creating an organization to aid with negotiation.[48] These parties also argue that the Rule 23 requirements are not met because of conflicts of interest between the class members and a lack of predominance of common issues for both the CSA and RICO claims.[49] Further, Defendants make due process arguments that the procedure does not provide adequate notice to class members.[50] Defendants claim that they will be harmed through use of a negotiation class because the process diverts resources needed to resolve the opioid crisis to an unapproved mechanism that may not even have an effective outcome.[51]

The certification of a negotiation class would have implications for parties on both sides of the opioid crisis litigation. The negotiation class procedure would provide the thousands of local governments not currently engaged in litigation related to the opioid crisis with a relatively efficient way of reimbursing the money spent to address the epidemic. However, some of the smaller jurisdictions lacking in funds and access to legal counsel may be confused by this novel process. Some jurisdictions may “opt in” to a class or vote yes to settlement terms that are not as favorable as terms that could result from individual litigation. Although, as Judge Polster pointed out, defendants will have the knowledge of the size of the class prior to negotiating,[52] the sheer mass of local governments that may opt in provides plaintiffs with greater leverage in negotiation than they would have in a typical settlement class action where the settlement is reached before the opt-out period begins. Binding class members to terms of a settlement that has not yet been reached may be problematic in other cases, but because of the desperate need for local governments to address the opioid epidemic in a timely fashion, certification of this unconventional class might be just the solution these local governments need. In fact, a negotiation class may be unconventional simply because there has never been a need for such a class. If the certification of a negotiation class is upheld by the Sixth Circuit, negotiation class actions are likely to be certified only in the rare occasion that the need for a singular remedy spans the nation. 


[1] Memorandum Opinion Certifying Negotiation Class at 2, In Re: National Prescription Opiate Litigation, No. 1:17-MD-2804 (Sept. 11, 2019). 

[2] Colin Dwyer, Your Guide to the Massive (And Massively Complex) Opioid Litigation, NPR, (October 15, 2019, 9:05 AM) https://www.npr.org/sections/health-shots/2019/10/15/761537367/your-guide-to-the-massive-and-massively-complex-opioid-litigation.

[3] Order, In Re: National Prescription Opiate Litigation, No. 19-0305 (November 8, 2019).

[4] Fed. R. Civ. P. 23(a)

[5] Memorandum Opinion Certifying Negotiation Class at 7, In Re: National Prescription Opiate Litigation, No. 1:17-MD-2804 (Sept. 11, 2019).

[6] Fed. R. Civ. P. 23. 

[7] Amchem Prod., Inc. v. Windsor, 521 U.S. 591 (1997).

[8] Id. at 601. 

[9] Francis McGovern & William Rubenstein, The Negotiation Class: A Cooperative Approach to Class Actions Involving Large Stakeholders, Duke Law Sch. Pub. Law & Legal Theory Series, Paper No. 2019-41 (2019).

[10] Memorandum Opinion Certifying Negotiation Class at 2, In Re: National Prescription Opiate Litigation, No. 1:17-MD-2804 (Sept. 11, 2019).

[11] Id. at 1.  

[12] Fed. R. Civ. P. 23(b)(3).

[13] Memorandum Opinion Certifying Negotiation Class at 3, In Re: National Prescription Opiate Litigation, No. 1:17-MD-2804 (Sept. 11, 2019).

[14] Id.

[15] Id. at 2.

[16] Id. at 5.

[17] Id. at 6.

[18] Id. 

[19] Id. at 7.

[20] Id. at 6-7.

[21] Id. at 7.

[22] Id. at 2-3.

[23] Id. at 2.

[24] Id.

[25] Id. 

[26] Id. at 9.

[27] Id. at 8.

[28] Fed. R. Civ. P. 23(a). 

[29] Memorandum Opinion Certifying Negotiation Class at 16, In Re: National Prescription Opiate Litigation, No. 1:17-MD-2804 (Sept. 11, 2019).

[30] Id. at 17-18.

[31] Id. at 18-20.

[32] Id. at 20-21.

[33] Fed. R. Civ. P. 23(a)(4).

[34] Memorandum Opinion Certifying Negotiation Class at 29, In Re: National Prescription Opiate Litigation, No. 1:17-MD-2804 (Sept. 11, 2019).

[35] Id. at 25-29.

[36] Id. at 30.

[37] Id. at 31.

[38] Id.

[39] Petition for Permission to Appeal Pursuant to Fed. R. Civ. 23(f) at 1, In Re: City of N. Royalton, OH, et al, No. 19-306 (Sept. 26, 2019).

[40] Id. at 8. 

[41] Id. 

[42] Id. at 8-9

[43] Id. at 19. 

[44] Id.

[45] Id. 

[46] Petition for Permission to Appeal Pursuant to Fed. R. Civ. 23(f) at 1, In re: McKesson Corp., et al, No. 19-305 (Sept. 26, 2019). 

[47] Id. at 8.

[48] Id. at 9.

[49] See id. at 13-22.

[50] Id. at 22-24.

[51] Id. at 25.

[52] Memorandum Opinion Certifying Negotiation Class at 3, In Re: National Prescription Opiate Litigation, No. 1:17-MD-2804 (Sept. 11, 2019).