Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every
Speaker 1: day we bring you insight and analysis into the most
Speaker 1: important legal news of the day. You can find more
Speaker 1: episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud
Speaker 1: and on Bloomberg dot com slash podcasts. A fifty billion
Speaker 1: dollar offer by drugmakers and distributors to sell the opioid
Speaker 1: litigation has ignited a fight between state attorneys general and
Speaker 1: thousands of local governments over how much the pharmaceutical industry
Speaker 1: should pay for its role in creating the opioid crisis.
Speaker 1: Many attorneys general are backing the offers, while lawyers for
Speaker 1: local governments are rejecting them. Joining me is Eric Gordon,
Speaker 1: a professor at the Raw School of Business. Municipalities learned
Speaker 1: a hard lesson from the Big Tobacco Settlement. So is
Speaker 1: the problem that despite what seems like a large number,
Speaker 1: they think it isn't enough. Is that the only problem?
Speaker 1: I think it's not so much just the amount. The
Speaker 1: these want to make sure they get what they think
Speaker 1: is their fair share. As you said, in the tobacco settlement,
Speaker 1: the city thought that the states hogged the money, and
Speaker 1: they don't want to repeat of that. And there's a
Speaker 1: second issue. There's the timing of when they'll get the money.
Speaker 1: So they don't want to get the money over ten
Speaker 1: or twenty years. They want to get the money now
Speaker 1: because whatever is the link or lack of link to
Speaker 1: the opioid things, a lot of cities are in big
Speaker 1: financial trouble and a billion dollars today is a lot
Speaker 1: more valuable than a hundred million dollars a year over
Speaker 1: ten years. States also opposed the deal. So when you
Speaker 1: look at those numbers, how far away from a global
Speaker 1: settlement are we or can that all change really quickly?
Speaker 1: I think it can change quickly, not easily, but you know,
Speaker 1: I think the judge can do some head hitting, and
Speaker 1: I think the States in the city says a tough choice,
Speaker 1: which is get this settled, even for an amount that
Speaker 1: isn't the amount we hope for, and get it settled
Speaker 1: now and start getting money now, or battle this out
Speaker 1: over what could be two, three or four years. So
Speaker 1: I think the pressure is on to settle it, but
Speaker 1: you know, there's some history that makes it a little
Speaker 1: tougher and there's a lot of elbowing going on. Interestingly,
Speaker 1: I'm not sure the toughest fight is between the plaintiffs
Speaker 1: and the defendants. I think the toughest fight is amongst
Speaker 1: the plaintiffs themselves. Let's talk about the two sixty million
Speaker 1: dollars settlement. On the eve of the first federal opioid trial.
Speaker 1: The lawyers were negotiating until about one in the morning,
Speaker 1: others were getting ready for trial. Before they settled. That
Speaker 1: trial would have been what's called a bell weather. Which
Speaker 1: side fared best in the settlement, the plaintiff, Ohio counties
Speaker 1: or the drug distributors. It's hard to tell which of
Speaker 1: them fared better. What you can say is that the
Speaker 1: bell weather really didn't become much of a bell weather
Speaker 1: because in the bell weather, you get to see the
Speaker 1: other side present their case, you get to see their
Speaker 1: witnesses under cross examination, and you get to see a
Speaker 1: real fact finder in this case, a real jury make
Speaker 1: a decision, and on that basis, you have a lot
Speaker 1: more information to decide what terms you're willing to offer
Speaker 1: or accept in a settlement. Here, they didn't go through that,
Speaker 1: as you said, I mean literally on the courthouse steps.
Speaker 1: They settled it. So the bell weather didn't work all
Speaker 1: that terrifically as a bell Weather. The one thing it
Speaker 1: did do is it gave a range of settlement amounts.
Speaker 1: It was two hundred and fifty million dollars, not two
Speaker 1: and a half billion dollars. So we sort of know
Speaker 1: the order of magnitude in which people are willing to settle,
Speaker 1: but we haven't seen what happens when you really go
Speaker 1: into the courtroom. So it's only sort of a half
Speaker 1: bell Weather. And one of the factors there seemed to
Speaker 1: be the ability of the municipalities to get the money quickly. Yeah,
Speaker 1: the municipalities wanted the money, and they wanted it. Now
Speaker 1: they're in financial trouble today and these things of spreading
Speaker 1: the money over ten years or getting you know, sort
Speaker 1: of payment and kind getting anti opioid drugs over the
Speaker 1: course of ten years was not as appealing to them
Speaker 1: as getting millions of dollars of cash in the door
Speaker 1: right now. The lawyer for the cities and counties is
Speaker 1: one of the best plaintiffs lawyers in the country, and
Speaker 1: he was preparing a real show at trial. So is
Speaker 1: a problem also going to be the plaintiff's attorneys and
Speaker 1: how much they get and how tough they are. Well
Speaker 1: they're tough, but those of us who have litigated or
Speaker 1: negotiated deal us know that you'd rather face a really smart,
Speaker 1: really experienced opponent, even if he or she is really tough,
Speaker 1: because at least their experience and they know how to
Speaker 1: settle things. It's much tougher to deal with an amateur.
Speaker 1: I think there's some disappointment that we didn't get to
Speaker 1: see the plaintiff show, because they always put on a
Speaker 1: good show. The plaintiffs attorneys are going to ask for
Speaker 1: lots and lots of money in June. You know from
Speaker 1: our other conversations, I'm not always a fan of plaintiff's
Speaker 1: lawyers who skim off millions of dollars and leave their
Speaker 1: clients with very little, but this case is quite different.
Speaker 1: In this case, the plaintiffs lawyers did a tremendous amount
Speaker 1: of work. They went through piles and piles of documents
Speaker 1: and evidence, so they're going to want a lot of
Speaker 1: money and they probably have earned it. Did the plaintiffs
Speaker 1: lawyers really do the groundwork rather than the attorneys generals
Speaker 1: of the dates? It was a team effort, but clearly
Speaker 1: the plaintiffs lawyers added some value because the attorneys general
Speaker 1: are not staffed to do cases like this, especially the
Speaker 1: attorneys general from some of the smaller states, so they
Speaker 1: all worked together. But I think it would have been
Speaker 1: tough for the attorneys general to get the results they've
Speaker 1: gotten and are likely to get without the help of
Speaker 1: really experienced plaintiffs attorneys. Is the opioid litigation a lot
Speaker 1: like the tobacco litigation or is it different because of
Speaker 1: the opioid crisis that the country is still suffering through.
Speaker 1: I think the opioid litigation is tougher because the damage
Speaker 1: is more horrifying. In the tobacco litigation, people died of
Speaker 1: lung cancer, and that's a horrifying way to die, but
Speaker 1: people died quietly and privately. The opioid crisis is very public.
Speaker 1: You walk down the streets of almost any town, small
Speaker 1: towns as well as big cities, and you see the
Speaker 1: results of the opioid crisis, and it reached people who
Speaker 1: had no idea about the dangers. We we knew about
Speaker 1: the dangers of tobacco for a long time, and people
Speaker 1: kept smoking anyway. A lot of the people who suffered
Speaker 1: in the opioid crisis, we're just taking pills that their
Speaker 1: doctor prescribed um and they look to their doctors for
Speaker 1: prescribing things that would make them better, uh not addicts.
Speaker 1: So I the opioid thing is I think a level
Speaker 1: even worse than the tobacco disaster. Is that why the
Speaker 1: manufacturers and distributors want to settle fast without even going
Speaker 1: to trial. They're not even going through trials to see
Speaker 1: what will happen before they say will settle. I think
Speaker 1: a lot of the defendants think that there's no chance
Speaker 1: of getting a fair trial. I think they fear that
Speaker 1: when the story of the opioid crisis is told to
Speaker 1: the jurors, that the jurors are just going to sock
Speaker 1: it to them without paying much attention to the science
Speaker 1: as the law. I think they're just frightened about the
Speaker 1: prospect of no, no such thing as a real fair
Speaker 1: trial for them. Did we learn anything from the Oklahoma trial?
Speaker 1: We all we learned that there it was a fact finder.
Speaker 1: It was a judge, not a jury, but a tough
Speaker 1: judge who you expect to be less emotional than a jury,
Speaker 1: said well you're guilty, you did really horrible stuff, and
Speaker 1: you're going to pay a lot of money. If you
Speaker 1: lose in front of a judge, you're almost certainly going
Speaker 1: to lose in front of a jury. Is there anybody
Speaker 1: to tell what the timeline is here? We're talking months years.
Speaker 1: I think we're talking months, not years, and we could
Speaker 1: be surprised and get a settlement within a couple of weeks,
Speaker 1: but I think months is more realistic. I think there's
Speaker 1: going to be urgency on the side of the cities
Speaker 1: and states who need the money to not wait for years,
Speaker 1: And I think on the defendant side, they want to
Speaker 1: get this behind them. They want some certainty on it.
Speaker 1: The stock market does not like uncertainty and might be
Speaker 1: discounting the value of the companies by even more than
Speaker 1: the companies will end up paying, So both sides have
Speaker 1: reasons to get it settled sooner rather than later. Thanks Eric,
Speaker 1: that's Eric Gordon, a professor at the Raw School of Business.
Speaker 1: Thanks for listening to the Bloomberg Law Podcast. You can
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Speaker 1: and on Bloomberg dot com slash podcast. I'm June Bolso.
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